The governing train of logic in banking runs something like this:

To maintain high stock prices, banks must increase share of customer wallet. To improve share of wallet, they must build brand equity. To build brand equity, they must become customer-centric-focused on customer needs. And to become customer-centric, they must first become CSR-centric-focused on their customer service and sales representatives.

At present, banks are far from being CSR-centric. Indeed, a fair generalization is that most do not yet act as if they understood the pivotal importance of the front-line function. In a world in which the majority of customer contacts with banks are impersonally electronic, sales and service reps are probably the only live bank employees with whom the customer is permitted to interface. The front-line people therefore shoulder a great responsibility, bordering, so to speak, on the ambassadorial.

It is not a responsibility that is being universally well discharged. The current quality of the CSR/customer interface in banking can be broadly characterized as detached, mechanistic, and silo-oriented, whereas it should be empathetic, consultative, and cross-product-based. Consider a few examples:

A customer with a large and profitable deposit account calls a credit card telephone center to complain about a late charge. The service rep will not remove it.

A credit card customer whose need for additional credit can best be met by a home equity line is not so informed by the card center representative who takes his or her request for a bigger card lending limit.

Incidents like these repeat themselves many times in the course of a typical day. There are literally thousands of sales and service reps who by reason of inadequate training, incomplete knowledge, and limited empowerment are not fielding calls optimally or even satisfactorily.

These representatives need to be retrained and retooled. But before this can happen, management will have to rethink its current approach to the front-line function.

The principal problem is that at most institutions the function is "managed up," whereas it should be "managed down." That is to say, middle and top managers of the front-line function tend to spend most of their time on administrative work and on reporting to and interacting with their superiors. They spend very little time coaching and thereby refining the efforts of the rank and file.

The crucial front-line people will not discharge their near- ambassadorial duties adequately until managers commit themselves to reaching downward in order to continuously support the work of the rank and file. Such an approach involves an iterative effort to create and polish a set of frameworks that should guide the CSR/customer encounter.

In practice it is probably unrealistic to expect front-line representatives to master more than six tasks and the response frameworks that accompany them. These include:

Qualifying customers for products.

Explaining the attributes of these products.

Persuading customers of the superiority of the bank's version of these products.

Helping customers to convince a third-party decision maker-for example, helping a wife to convince her husband.

Guiding customers to bank colleagues who can better serve them.

Offering general financial counseling, including introducing customers to an entirely new asset allocation.

The last is perhaps the toughest to learn, but it is also the one that could yield the greatest benefit to both the customer and the bank.

People usually fail to achieve their financial goals because of incorrect and often excessively conservative asset choices. By helping customers to change their asset allocation, the bank can position itself as the guardian of their financial future rather than as a mere provider of commoditized credit and transactions services and sometime seller of miscellaneous investment products.

This kind of perceived guardianship is indispensable to building a brand image, which in turn could allow the bank to increase market share, charge higher prices than competitor institutions, or both.

At a bank successful in creating the appropriate response frameworks and motivating sales and service reps to learn and apply them, the following scenario might become the norm:

Customer X calls the brokerage subsidiary of a bank and expresses an interest buying an municipal bond. The rep finds the appropriate instrument and makes the sale.

But the representative is not finished. He or she continues: "Mr. X, this bond is a good deal, but to determine what to offer you in the future, can you tell me a little about yourself, your financial goals, and the composition of your investment portfolio?

"I see that you are heavy in bonds. You say that you are risk averse. Did you know that, in the long run, owning can be less risky than loaning? The expected total return on an equity investment held for 20 years is three to five times greater than that of a bond investment held for the same period. Sure, the stock return is more volatile, but if you have enough liquidity to meet emergencies and therefore don't have to sell into a bear market, stocks could be better for you.

"Let me have my colleagues run some numbers for you to show how you would do if you invested in our ABC stock mutual fund versus what you would earn from bonds. I have an idea that if you changed your asset allocation, you could achieve your financial goals even if you saved less of your income. Wouldn't it be nice to get where you want to go financially while at the same time increasing your current consumption?"

In this encounter the well-trained rep sells a product, elicits personal and financial data, and addresses overall financial problems creatively, perhaps using decision-support software that predicts financial purchases. Just as importantly, the rep serves as an intelligent navigator, guiding customers to counterpart representatives in other parts of the bank or its subsidiaries who can further cement the relationship.

A corps of sales and service reps that can do these things is a priceless asset-one that will probably generate marginal revenue significantly greater than its marginal cost, which of course may be considerable.

Although examples in banking are rare, a few nonbank financial firms have spent what it takes to build greatly superior CSR populations. Consider the case of Commercial Financial Services, an Oklahoma-based loan collector.

Commercial Financial requires six weeks of intensive training for all new hires-including three weeks of classroom study and three more of tightly monitored live customer interactions. The company also mandates ongoing training exercises for veteran employees. Equally important, the company is committed to a high-pay policy. Its generous compensation package includes a profit-sharing plan and such sweeteners as all-expense- paid junkets to the Caribbean and elsewhere.

All this costs a lot, but it doesn't cost too much. The training and compensation packages have proven powerful tools with which to challenge and motivate employees. As a result, employee retention is unusually high, as are company profits. Indeed, Commercial Financial is described by analysts and observers as one of the most successful companies in its field.

In the final analysis, upgrading front-line representatives and better managing them can be seen as one of three major initiatives required to elevate marketing to a bank core competency. The other two are:

Building an institutionalized understanding of customers (a comprehensive data base) and the models needed to convert this understanding into predictive insights about future behaviors.

Creating a flexible organization, one that is better able than at present to plan and coordinate marketing initiatives.

Furnished with a superior three-legged stool-better sales and service representatives, richer knowledge, and improved organizational fluidity- banks can bid to achieve the thus far elusive goal of customer-centricity.

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