Business Management Articles / Banking
Service Management
AFTER SALES SERVICE IN BANKING
by
Rene T. Domingo (email comments to rtd@aim.edu)
After sales service is an integral part of
customer service and a key determinant of
customer satisfaction and even competitiveness
in any industry, manufacturing or service,
particularly banking. Most banks have mastered
the art of selling their services or the customer
processes 'before sales'. Unfortunately, there
is an observed lack of emphasis in banking
services 'after sales'. Most banks can easily
find models and benchmarks of superior after
sales service in manufacturing sectors, like
autos and household appliances, and in other
service sectors like hotels and airlines.
These industries have discovered that excellent
after sales service is the basis of customer
retention, repeat sales, word-of-mouth endorsement,
customer loyalty, and future sales. Lack of
it or sloppy after sales service would mean
the exact opposite: backlash from current
customers as well as avoidance of the establishment
and its products by future customers. Survival
in the next millennium may depend not only
on innovative bank products but also on innovative
and responsive after sales service.
Many managers would associate after sales
service with the handling of customer complaints
or warranty returns. Problem solving, while
it plays a key role, is not the only component
of after sales service. It includes everything
that happens, good or bad, to the customer,
after every sale or transaction, which may
not be a sale, like closing or withdrawing
an account, or pre-terminating a loan or time
deposit. After sales service therefore means
monitoring and analyzing customer satisfaction
or dissatisfaction, and doing something about
it. Short term activities include sending
apologies and solving a problem or correcting
an error. Long term ones include process improvement
and process standardization. In banking, 'after
sales' service should be more accurately referred
to as 'after transaction' service, since majority
of customer transactions with banks are not
selling or buying activities, like opening
an account or applying for a loan or credit
card.
After sales satisfaction or dissatisfaction
can be assessed and acted upon after the sale
of a car, the return of a defective car (lemon),
when the hotel guest is checking out, or after
the restaurant customer has finished his meal.
These relatively infrequent transactions from
the customer's point of view are identifiable
events that are clearly the appropriate time
to get feedback after his experience. Unlike
in car dealership and the hotel-restaurant
business, banking transactions are much more
numerous. In a month, a bank client may make
scores of ATM or teller-assisted withdrawals
and deposits, issue two dozen checks, and
use his bank credit card daily. Just when
should banks check for customer satisfaction
amidst this flurry of activities? The clearest
time to check for customer satisfaction, or
more precisely, dissatisfaction, is 1) when
he lodges a complaint about a bad or erroneous
service received, or 2) when he terminates
his relationship with the bank or his availment
of any one of its products or services.
In the first case which demands problem solving
or error correction, most banks have systems,
procedures, and polices to deal with this
'after sale' situation. However, much remains
to be improved even in this most basic case.
Resolving an erroneous debit to one's current
account or credit card account, or a complaint
about delayed statement is not as swift or
instantaneous as most customers would want
them to be. Disappointingly, resolution usually
takes one cycle or a month, accompanied by
indifference without any assurance that the
same mistake will not recur. Superior after
sales service means one-day, same-day, same-hour
problem resolution, accompanied by a written
apology, explanation and of course the corrected
statement. In my opinion, no bank has reached
this high level of the most basic of all after
sales services. Of course, the ideal bank
would aim for and achieve zero error and zero
delays in the first place, and would have
no need for this type of after sales service.
Rarer than fast problem resolution is the
follow-up of lost customers, as in the second
case. Banks seldom, if ever, follow up on
closed-accounts - current, savings, time,
and credit card. Probable reasons for this
indifference to lost accounts are 1) closed
accounts are so numerous to be monitored,
unlike in the case of returned cars or lemons,
2) the amounts represented by these attrition
are small, 3) the lost accounts are offset
or more than offset by the new accounts opened,
4) management thinks accounts are closed for
personal reasons and not because of the bank's
failure. Whatever their nature or magnitudes,
closed accounts are perfect opportunities
to discover the root cause of customer dissatisfaction,
if indeed it was the cause of the termination,
and take action or improve service to prevent
future attrition or even woo back the lost
customer. It is prudent, in the spirit of
continuous improvement, to always assume that
accounts are closed because services are below
expectation or competitors offer something
better. Massive withdrawals, infrequent deposits,
or inactive accounts, and other customer activities
or inactivities that are a prelude to termination
of service should also be examined for after
sales dissatisfaction.
As important as customer dissatisfaction is
customer satisfaction after sales. A bank
should learn to ask satisfied customers what
it did right, and not only what it did wrong
to them. Banks should get immediate and regular
feedback from new account holders, new cardholders,
and new loan applicants about their level
of satisfaction, reasons for choosing the
bank, and their expectation. The bank's best
practices, as determined by its satisfied
customers, should be standardized and adopted
bank-wide. The highest form of after sales
service is opportunity seeking and not problem
solving.
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