One of the biggest signs that customer service in the banking industry is moving from getting lip service to getting top-management attention may be the 80,000 interviews Wachovia Corp. conducts with customers every quarter.
Saddled with a reputation for poor service brought on by integration woes and an ill-advised retail banking strategy, the company, then known as First Union Corp., knew it had to act decisively to stem a growing number of dissatisfied customers.
In 1999 it created the position of director of customer service excellence and set about identifying the people issues, process changes, and system improvements necessary to execute one the most massive cultural changes an organization can face - making service a constant focus of every employee.
Now the company, which bought the old Wachovia and adopted its name last year, appears to be in the vanguard of improving customer service in an industry that is paying more attention to that prized but extremely elusive goal.
A recent survey of 3,000 retail banking heads by First Manhattan Consulting Group found that customer service was the second most important driver of deposit growth, following pricing. It also found that one-quarter of the 15% of deposits that banks lose every year are withdrawn because of service-related issues.
"A lot of people realize that service is important, but it's not like you can wave your finger and have better service," said Gordon Goetzmann, managing vice president at First Manhattan. "To be really, truly service-oriented - that is a way of life."
Banking companies everywhere are trying to embody that way of life. This month, for example, FleetBoston Financial Corp. said it was setting aside $14 million to improve service by adding 500 tellers to its 1,500-branch network.
Customer service also emerged as a major theme at Thomson Financial's "Seventh Annual Best Practices in Retail Financial Services" conference last month. Jerry A. Grundhofer, the president and chief executive officer of U.S. Bancorp, touted his company's "five-star service guarantee," which pays $5 to any customer denied explicitly stated service levels.
In his speech David Daberko, the chairman and CEO of National City Corp., called service "the greatest challenge facing all financial institutions" and reported that his company polls 30 customers from each of its 1,150 branches every quarter to see how they were treated during recent visits.
But Wachovia may be the banking company that has come the farthest. Following a 1998 series of major acquisitions, including CoreStates Financial Corp. and Money Store, the company was struggling to keep its focus on the customer. The effort was further complicated by a major branch banking initiative that offended many customers by shunting them off to automated systems to conduct their business.
In a sign that things have turned, Wachovia reported last month that its customer satisfaction score in the American Customer Satisfaction Index increased by 9% from a year earlier, to 72, a score that would position it as an industry leader in service. The index is based on a survey by the National Quality Research Center at the University of Michigan Business School, in partnership with the American Society for Quality and Foresee Results.
By its own internal metrics, Wachovia has improved its customer satisfaction scores in each of the past 11 consecutive quarters - that's where the 80,000 calls come in. Wachovia works with the Gallup Organization to call customers within 72 hours of a visit to one of its 2,800 branches or a contact with one of its call centers to survey them about their experience.
Through Gallup, the banking company asks customers about such things as how long they had to wait in line and how comprehensive the employees' product knowledge was, and then rigorously reviews that information.
"Every financial center sees what customers have to say," said Beth McCague, a Wachovia senior vice president and the director of customer service excellence. "The more individualized you get the information about customer views, the more actionable that information is."
An important aspect of the program is that compensation for branch employees is tied to the results. The employees receive a combination of fixed, and variable pay, which is based on a number of criteria and paid out quarterly. The variable compensation "can be impacted significantly by the branch score for satisfaction," Ms. McCague said.
The average customer satisfaction scores in the company's internal surveys rose from 6.27 (out of 7) in the fourth quarter of 2000, to 6.35 a year later. Wachovia's customer-retention numbers are improving as well, Ms. McCague said, though she did not provide details.
The surveying does not end with the 80,000 phone calls - Wachovia also polls front-line employees on how well they are served by key fulfillment areas, she said.
And it has a "customer listening" program in which any employee who hears a customer complain or make a comment about a product or service can log it into a computer program accessible by senior executives in every functional unit. "This has driven process improvement in group after group," Ms. McCague said.
A peer-recognition program lets employees give credit to others and receives 2,000 submissions a month. The acknowledgements are sent through an automated process to those being recognized, as well as to their bosses.
Ms. McCague, a former president of First Union Tennessee, oversees a deliberately small group. Right now the group's biggest priority is to ensure a measured, low-risk integration of operations from First Union and the old Wachovia.
A big difference between this merger and others before it is that Wachovia is taking a "best of breed" approach to integrating operations, rather than choosing one system wholesale, Ms. McCague said.
With all these activities, Wachovia is ushering in a new way of life, she said. "Service is not one thing we do. It's everything we do."
