Impact of poor service on customer
retention:
In 2005 when CTMA conducted its first
national customer experience baseline study amongst
customers of New Zealand retail banks, the study provided
strong evidence that many banks operate with a significantly
compromised customer retention strategy. This business risk
often remains unseen because a traditional approach to
measuring customer satisfaction often fails to show the
impact of poor service on the bank’s profitability.
The study estimated that the problems
customers experience when banking, and the way many banks currently handle customer complaints, may be
placing between 8% and 12% of their annual profits at risk.
The study presented participating banks with
valuable insights into their relative strengths, and
identified specific opportunities for improvement.
In subsequent annual updates, two disturbing
paradoxes have been observed:
-
Although
customers of some banks report fewer problems, overall
satisfaction and advocacy appears to have dropped.
-
When problems
do occur, there appears to be an increase in the
percentage of customers contacting their bank for help,
but a drop in satisfaction with the action taken by
banks in response.
It appears that although most banks are
attending to service quality improvements, customer
expectations are increasing. And, when customers go to their
banks for help, the problems are often not resolved to the
customer's satisfaction. |
