Assigned the task of mending relations between First Union Corp. and its customers, Beth A. McCague knows she has a climb ahead of her.

Roughly a year into her job, it appears Ms. McCague has made strides. Chairman Edward E. Crutchfield Jr. is sitting in on customer complaint calls, and satisfaction surveys are starting to show there has been improvement.

But the job is far from over. Ms. McCague's role at First Union is one of the clearest examples of the struggle that banks - particularly those that have been through large mergers - face as they try to attract customers and keep the ones they inherited.

At First Union, customer losses hit the company at its bottom line. The $253 billion-asset company twice revised earnings estimates last year as it struggled to integrate its April 1998 purchase of CoreStates Financial Corp. of Philadelphia. Last summer it announced it had lost 19% of CoreStates' customer base because of service issues and said it planned to hire more branch employees to help stop the bleeding.

Ms. McCague, who was named to the newly created position of senior vice president and head of corporate service strategy last year, brings the patience and persistence of an experienced climber - she says she has scaled Mount Kilimanjaro - to her work.

"Nothing big is done overnight," she said in an interview, "but if you know your goal and remain methodical about how to accomplish that goal, you can succeed."

A 25-year First Union veteran who until last year was president of its Tennessee bank, Ms. McCague said she believes the company tried to do too much too quickly in 1998. And 1999 "was a year of challenge, and a year of learning," she said. "We had major conversions and a redesigned model, and doing everything at once exposed us to problems we had never faced before."

To assist in the recovery effort, First Union last May formed a 23-employee service "SWAT team" led by Mr. Crutchfield. It meets once a month to identify problem areas and make sure resources are in place to correct them.

Ms. McCague claims some results already. First Union's research department, which produces copies of canceled checks and other statements, had been filling fewer than half its customers' orders in a single day. Ms. McCague formed a team of researchers and branch personnel to streamline the process. Now, she said, more than 90% of the time the division produces search results within a day.

Guided by what they learned from examining the procedure, the committee also decided to upgrade First Union's microfiche system to produce better copies and is considering moving to an optical system that would let customers view checks over the Internet.

Other efforts have gotten top executives directly involved. Last year First Union instituted an employee help-line staffed entirely by top executives. Branch employees who run into problems are encouraged to call the hotline and get help from the executive on duty.

Ms. McCague said the help-line program has helped top managers and branch workers to bond.

"It shows support for the front line and helps senior executives who might not normally be in the field understand what it is like to do business with First Union," she said. "It has proven to be very helpful in allowing our leadership understand some of our problems."

More recently, the company started a program that moves senior executives closer to customers by having members of the SWAT team - including Mr. Crutchfield - listen in on calls to the company's 800 line. Ms. McCague said she hopes the executives can spot trends and address simmering service problems before they bubble over.

Ms. McCague said she believes service levels have stabilized. Survey results show that First Union's customer satisfaction scores have improved each quarter since last year. The new challenge, she said, is to move beyond addressing complaints and toward finding ways to improve.

"Our goal has never been just to get service levels back to where they were 18 months ago," she said. "Customer expectations are increasing all the time. We want to have the systems in place to make it easier for our customers to get exactly what they want."

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