Keep tabs on quality of trust service.

Why should you devote time to the measurement of trust service levels? Can service be effectively measured? How important is service quality? Finally, what techniques can be used to measure service quality? This article attempts to provide some practical guidance in an area traditionally considered very controversial in the trust industry because of the perceived difficulty of measuring service quality.

Generally, trust departments and trust companies have the following three development stages:

Stage 1: Create a profitable trust operation. This involves revenue and expense control maximization.

Stage 2: Improve the sales efforts when a trust department has achieved an acceptable profitability level.

Stage 3: Concentrate on sustained profitable growth after a certain profitability level has been achieved and a good growth pattern established.

This includes issues such as trust service quality, staff development, and marketing plan evaluations.

This article addresses stage 3 -- specifically trust service quality -- and the first step in development of a trust department's quality control program. This step involves the objective measurement of service levels in a trust operation.

Measurement Lacking

Few trust departments have comprehensive service measurement and improvement programs in place. In fact, some industry observers argue that trust services can't be measured effectively.

Service is viewed as something for which the provider must have an instinctive feel, and which defies general measurement criteria and applied standards.

Can trust services be measured effectively? The simple answer is that anything can be measured in some way. The real issues are threefold:

1. For what purpose is service quality be measured?

2. What methods are employed in the process?

3. How will the measurement process results be used?

Not an Easy Task

It is not easy to measure service quality, but its purpose is obvious. In business, everything that is considered important should be measured, and things that are unimportant should not.

A look at most management reporting systems shows that they tend to reflect management's desire and need to receive information on those activities it considers important. In the loan department, for example, the number of outstanding loans, loan quality, and the number of defaults are constantly measured.

It is through tracking programs that certain standards can be maitained and/or improved. If trust services are not measured, how does management know if they are adequate and what steps can be taken toward improvement if they are not?

Competitive Tool

Another reason to address service quality is that it can be a major competitive issue. If you visit almost any local banking community in the United States and question two or three trust departments in the same market, they still probably tell that their service levels are outstanding.

However, if you ask how their service differs from their competitors, you may not get an answer. Examining service lev els, measuring them, and having a program in place to improve them can be used to gain a competitive advantage in the marketplace.

Another reason for measuring service quality is that the trust industry is service driven and consumer oriented. A trust department's service level and quality are essential to understandig what its customers are demanding.

The trust department must be able to respond to customers' needs and effectively bring its products to market.

What Do Customers Want?

When the decision is made to begin measuring service quality, one of the first questions to ask is what functions or activities are to be measured. The answer comes from determining the customers' perception of what is important in terms of service quality. It may be timeliness, error-free statements prompt response to questions, or frequency of contact.

After the key issues are identified, prioritize them. It is preferable to begin with activities that are easily measured and leave the more complex ones for last. This process allows a success pattern to be developed when measuring service, and experience to be gained when implementing these programs.

Factors to consider when discussing service-level measurement include speed, accuracy, frequency, and intensity. Also, determine and document measurement goals and objectives that allow quantitative results.

Following are some techniques for measuring service quality:

* To measure the timely delivery of statements to customers, consider monitoring the date on which statements are released. During this process, statements that are exceptions to the normal operations release date are monitored and identified.

An exception list is created and distributed among the administrators and customer contact officers. These personnel then know if a statement has gone out at a time other than the normal operations release date. A permanent record is entered into the log every time one is mailed to a customer.

* If statement accuracy is a priority, spot checks of statements are made before the statements are mailed out. The statement appearance is checed and examined for obvious errors in areas like common fund pricing, stripped Treasuries, and stock splits.

The department also begins to maintain a log for reversal transactions posted on accounts after the statement mailing date. This process is an effective way of identifying inaccurately generated statements. It also identifies repetitive problem areas that require attention.

* To measure the staff's responsiveness to customer calls, use phone logs. Maintained by secretaries, the logs show the date and time a call came in, and required the administrator to notify the secretary of the response time so it can be logged.

Spot-check testing is also done by having a staff member anonymously call the administrator and determine how quickly the response is made. Finally, surveys are used to ask customers if they are satisfied with response time and the overall responsiveness of administrators.

* To measure the intensity of client-staff contacts, selectively review account files. Examine the details of correspondence and memos written to the file. Require relationship forms to be maintained on key accounts within the organization. Key accounts are those that can generate future revenue or involve people who can influence others in the community.

Relationship forms contain details about the customers' financial and personal situation that show a developing relationship between the administrator and the client. Face-to-face communication is normally proactive rather than reactive, and usually demonstrates a strong relationship.

* Finally, to measure investment communication, use focus groups of selected customers to get detailed reactions of how well they understand the investment process. The group also indicate how effective communications have been from the investment officer to the client.

Monitor the number of portfolio changes that are occurring as investment reviews take place monthly or semimonthly within a trust department. If all the investment reviews generate no changes, it is probable that little communication has occurred between the investment officers and the client.

Life Cycles

The quality of trust services can not only be measured, but also should be measured after a certain life cycle within a trust department.

When you begin to measure your service quality, you will find that well-defined service helps support profitability achievement by adding new accounts, building stronger relationships with existing clients, and maintaining accounts for longer periods.

Defined service levels and standards also help your marketing and sales activities because satisfied clients become referral sources. They are also an excellent reference source as you prospect for new business.

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