Live from BAI Retail Delivery : Branches Are for Errands, Not Sales

Banks may be eager to tout their comfy branches, with their free coffee, newspapers on hand and plasma TV screens. Yet all too often, they lose sight of what the customer really wants: service that�s simple, easy and fast, said James McCormick, president of New York City-based First Manhattan Consulting Group LINK TO (www.fmcg.com/).

In a Thursday afternoon session entitled "Keys to Gaining Share: Which Strategies Are Working; Which �Best Practices� Are Problematic," McCormick said mystery shops conducted by FMCG found customers generally unimpressed by attempts to turn the bank branch into Starbucks. He said customer comments included remarks like: "I don�t come to my branch for the coffee and treats," and, "Why would I come to the branch to sit down and read the paper?"

The problem, McCormick said, is that many banks are trying to provide a sales environment when the typical customer is in an "errand mode." According to FMCG�s research, customers want to sit down and consider a new product in only one in 100 visits to a bank branch. "So if you build your system around the sales event, that approach is going to be sub-optimal for all but 1% of the time. It�s a nonstarter," McCormick said.

During mystery shops, the number one customer-suggested improvement, McCormick said, was faster service, meaning shorter wait times in the lobby and drive-through.

It doesn�t help that many banks are bewildering customers � and their own employees � by piling on increasingly sophisticated features to products. "It adds to the challenge of staying current," McCormick warned.

From conducting 1,400 mystery shops in opening new accounts since 2003, FMCG found that only 3% of these visits featured what McCormick calls a "good profile session," which means waiting less than 15 minutes to see a representative, having an effective needs-based discussion and getting a follow-up call after the account is opened.

Banks that are winning with customers have "a mindset of simple, easy and fast," McCormick said. "Their product lines are more basic, their policies and procedures are streamlined. And it doesn�t take a lot for the customer to understand how everything works."

One day last October, FMCG conducted mystery shops at 15 branches of one bank with the goal of opening an account. The bank was then pushing a new checking account that had identity theft protection features. Trouble was, none of the employees could satisfactorily explain those features.

"They just failed in front of the customer," McCormick said. "The customer is sitting there thinking, �Gee, I don�t know if I want to bank with a bank that is so complicated they don�t even know how their own features work.�"

For more on the complications of delivering good customer service on the frontlines, see "Give the Customers What They Want," in the Nov./Dec. 2005 issue of Banking Strategies.