Don’t Ask Your Bank Customers If They’re Happy. Watch What They Do, Instead.

Customer surveys and Net Promoter Scores both share the same weakness: What consumers say doesn’t necessarily match their actions. Here’s the latest thinking on how to know what your customers really think. Their behavior often speaks louder than words.

Measuring customer satisfaction — the degree to which your customers are happy with the products and services your company provides—is a persistent challenge that seems only to get harder.

Four recent perspectives summarized below put a fine point on it: The data we gather is increasingly unreliable or incomplete; and getting it right demands the kind of sophisticated digital infrastructure that most retail organizations, including banks, simply don’t have.

These challenges come as banks continue to seek the right channel mix amid cyclical and secular change—from the pandemic-driven expansion of digital-banking adoption to the economic and regulatory headwinds encountered by boundary-pushing fintechs to a recent uptick in branch building. How do you know what’s driving loyalty, as opposed to just clicks? Is “primacy,” or becoming the bank a customer relies on as a hub of all their financial needs, even possible? For an industry whose foundational offerings have long been seen as commoditized, answering these questions is critical.

Banks, like any consumer facing organization, have sought to find a magic metric for customer satisfaction, or some way to aggregate information to spot shortcomings and improve. Unfortunately, methods to capture such insight may require more sophistication.

In recent weeks, we’ve encountered four perspectives: one marketing industry analyst knocks the validity of customer surveys in general. Another issues a takedown of net promoter scores specifically. A third fintech specialist puts the nail in the coffin for NPS specifically for financial institutions. A fourth analyst, also within the banking industry, offers the beginnings of a solution: Banks must raise their digital performance data game. But even that comes with a caveat: For the best results, your organization needs a much better-developed holistic digital experience.

“Banks, like any consumer facing organization, have sought to find a magic metric for customer satisfaction, or some way to aggregate information to spot shortcomings and improve. Unfortunately, methods to capture such insight may require more sophistication.”

Let’s start with the sweeping conclusion of a new report from call center software startup Callvu, which asked 625 respondents to fill out an opinion survey last December. (Yes, this was a survey about surveys). The report says: “America has a customer service measurement problem.”

Callvu’s study evaluates consumer behavior generally, not necessarily the specific customer experience offered by any particular company or industry. But it’s not hard to see in those responses a wake-up call for banks and other financial institutions.

For starters, Callvu’s survey uncovered evidence to suggest that most customer ratings can’t be trusted. Nearly half of Callvu respondents said that they had felt pressured to give a five-star rating to a customer service person who didn’t deserve it. That pressure most often came in the form of personal appeals from the employees, who told customers that they would suffer a specific consequence (being reprimanded or lose a commission) if they got anything less than a top score.

What’s more, a similar number of consumers said that they had been offered a “perk” or reward in exchange for a high rating. It isn’t just that customers feel pressured not to give a bad rating, but feel coerced, emotionally and financially, into giving a good one. As a result, Callvu’s report states that “companies hoping to use survey data to critique or reward staff may do so with skewed or incorrect data.”

Why Not Just Use NPS?

If the Callvu survey undercuts the effectiveness of surveys as a way of capturing customer insight in general, the popular substack Mostly Metrics focused on the questions companies ask in their surveys—specifically homing in on the Net Promoter Score (NPS). It may be known as the gold standard for customer service measurement, but Mostly Metrics wonders if it might better be described as “the Ozempic of metrics,” an over-simple solution, which may not work for the long term.

The case, according to Metrics author C.J. Gustafson, is this: NPS is “marketing first.” NPS asks the customer how likely they are to refer the business to a friend or colleague. “Someone actually trying to improve their company,” says Gustafson, “would never ask for such a naked metric, as it’s impossible to rely upon it for operational improvements.”

Frequent Financial Brand contributor Ron Shevlin agrees. In a recent article for Forbes, Shevlin correctly points out that NPS is measuring a simple binary — you either refer someone or you don’t — but on a sliding scale of 1-10. What’s more, as Shevlin notes, NPS is also a measure of how much you are inclined to talk about a company’s product or service, something you may choose not to do even if you love it.

“I’m a loyal JetBlue customer,” writes Shevlin. “And I give them a zero every time…I just don’t talk to my family or friends (or business associates, for that matter) about airlines.”

The faultiness of NPS is multidimensional, argues Gustafson. Part of it is timing misalignment. “Customers might rate their experiences differently based on external factors unrelated to their interaction with the company,” he says. Or, in the opposite instance, an institution can present a survey “right after they completed an action that provides demonstrable value,” thereby tipping the scales in its favor.

The key, says Gustafson, is understanding the why behind a score. NPS is “arbitrary and eliminates potentially useful information.” The idea that a customer giving a 9 or 10 is automatically a “promoter,” he argues, is just a hypothetical. Like Shevlin not talking about airlines, Gustafson says “just because someone says they ‘would’ recommend you to someone else, doesn’t mean they actually ‘do’.”

Much the same was stated a few years ago in The Harvard Business Review. There, in an argument for a new non-NPS metric, the authors listed a litany of the metric’s issues, many of which were covered by Shevlin and Gustafson. They also added a new, relevant wrinkle: NPS’s very creator, Fred Reicheld, saw that the measurement he invented had been “gamed and misused in ways that hurt its credibility,” so much so that even he stopped using it on its own.

The Promise and Peril of Digital Banking

The increasing reliance on digital banking presents tremendous promise and peril, according to a new study by Digital Banking Report (DBR), written for Pinwheel — even more so when viewed through the lens of customer service measurement.

The promise comes in the increasing role of primacy, or the concept of a customer relying on one institution as their primary financial hub. That goal is “more elusive than ever to achieve,” in part because of the increasing competition coming from neobanks and fintech disruptors who have “made switching financial partners more accessible than ever, luring once-loyal customers away with attractive digital experiences, simplified products, and creative rewards.”

Digital banking does, to a degree, reduce some of the issues found in the survey by Callvu. With less emphasis on face-to-face or contact by phone comes less possibility of having skewed customer ratings.

Yet “most legacy financial institutions fall short of the engagement levels set by industry leaders.” More cumbersome onboarding processes, for one, make “transforming account openings into engaged long-lasting relationships” that much harder.

The Importance of Engagement

It’s easy to say what not to do when it comes to customer service measurement. What’s harder is suggesting alternatives.

As the DBR white paper suggests, much of the needed measurement for banks centers on the digital experience. A process which, thankfully, provides more opportunity for measurement.

As Mostly Metrics substacker Gustfason recommends, customer journey analytics are a needed alternative to NPS or surveys because they allow institutions to “understand the entire customer journey, identifying friction points and moments of delight.” Whereas NPS might seek to evaluate the entire customer experience, journey analytics allow for a more granular approach, highlighting “feature level evaluation.”

The Financial Brand’s Jim Marous has also recognized the importance of customer journey analytics, suggesting that financial institutions can use them to “discover micro journeys from within macro journeys.” This means embracing digital customer experience platforms (DXPs), “a requisite for those institutions committed to improving customer experiences.”

A DXP can “manage content delivered to customers across channels.” Instead of just asking customers for their scores after a single interaction, or asking them to sum up the entirety of their experience with a bank, a DXP can “meet the increased expectations and divergent behavior of audiences today.”

What Are the Barriers to Entry?

Unfortunately, as Marous points out, “relatively few financial institutions currently use (DXPs).” A lack of “CX maturity” means that few organizations have the necessary data or analytics insight into their customer’s online experiences, creating an ever wider hole from which to dig out of when it comes to measuring customer service.

This creates an even larger advantage for neobanks or fintechs. These digitally-native disruptors are, for the most part, fluent in data and analytics in a way that institutions are not. That visibility allows them to “keep their profitable customers, improve customer loyalty, reduce churn, increase crosse-sell and up-sell, and increase customer lifetime value.”

These investments in DXPs are a modern alternative to the outmoded forms of customer service measurement that came before. NPS and customer surveys may never go away entirely. But for those financial institutions looking to compete against disruptive upstarts, it’s necessary now to start investing in the products that will allow them to move away from skewed snapshots and towards detailed pictures of exactly how their customers feel along every step of their journey.

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