It is difficult to charge someone for something that they are used to getting for free. That is unless the service receiver can either see value in it or the service is new and different enough that it is an “upgrade” to what they had been receiving. I’m talking about customer service at banks or credit unions. Now there are different types of service every customer needs. However, a lot of call centers are staffed as one size, fits all. Since above all banking is a service, how the customer is treated and if they get their issue addressed on their first contact will go a long way to making that customer happy.
Let me draw an example with another service industry, transportation. Specifically the airlines. There used to be very little competition in the airline industry but the funds airlines put into on-board service and aircraft maintenance were more or less guaranteed. Then what happened, the airline industry was deregulated. This was a huge boom to the traveling public with more routes opening up, airlines could serve where their was demand, and the biggest benefit being prices dropped. Also, new airlines stepped in with a different model on how to run an airline (Southwest). Let’s address this a little more. Customers accepted what Southwest had to offer because they knew what they were (or weren’t) going to get for service up front and the price was cheap. But the existing airlines now had to compete with this model and their customers were used to a certain level of service. It has taken a while but it seems that the airlines have finally organized themselves where they can make money (under normal circumstances). They offer lower fares but still provide more service than the low cost carriers. They still offer First Class which can be purchased or used to reward their frequent flyers.
I know this is a rather abbreviated example of what the airlines have experienced over the last 20 or so years. I wanted to use this to show that similar things have happened in banking in roughly the same timeframe. Even though banking is still heavily regulated. In a lot areas certain restrictions have been lifted. The biggest example would probably be interstate banking. We have seen many banks merge over time to where there are really two major tiers of banks. Community banks which stress their attachment to the community and service and large national banks who stress their branch networks and markets served.
Over the years I have worked for and with both types of banks. The smaller banks tend to offer more personalized service and can react to an customer quicker because approvals etc. have less layers of management to go through. However, due to their size they have smaller financial resources to tap for both technology and the number of staff to come up with new products and services. Larger banks do have greater resouces both financially and with the number of staff members. However, being able to call the bank and get the same person twice to fix a problem is next to impossible so customer frustration levels get elevated.
As I’ve stated in a previous post the cost of “technology” is decreasing so that hurdle should be lowering for smaller banks. What they can also leverage is not just taping into their own staff for ideas but opening up lines of communication directly with their customers and the community. By builiding an online community on the Web they can open themselves up to the whole world.
Banks don’t stress this to the outside world but they do look at how profitable a customer is and will use that information to price products for their more profitable customers. However, one idea that hasn’t been looked into is allowing customers to pay for better service and advice. Why can’t their be different tiers of support with agreed upon issues that will be handled by the lowest tier for no cost (a bounced check, an issue with a cleared check, etc.). But if someone wants some investment advice as to which CD is better for their needs etc they can either pay a one time fee or if they have a constant need they can “pay to upgrade” themselves. The customer could pay an annual membership fee for instance.
I recently ran across an article on NetBanker where it talked about a recent service from H&R Block for this year’s tax prep that described a similar approach. You can either pay one fee to file by yourself online or a separate fee to do it with a representative online and there are all different layers of service. This will get away from a one size, fits all approach. This way the customer who wants or needs greater expertise in customer service and is will to pay for it will. This could also effect the cutomers’ loyalty since you have given them the opportunity to upgrade themselves.
