Market Digest

Despite expending significant effort and resources on making branches more like stores, retail banks aren’t seizing every opportunity to win over prospective customers, according to the J.D. Power and Associates 2008 Retail Banking Mystery Shopping Study(SM) released today.

The inaugural study finds opportunities for improvement in three key aspects of the customer experience of shopping for a new bank: the new account experience; a customer-friendly retail environment; and ease of accessibility to branches.

The 2008 Retail Banking Mystery Shopping Study is based on responses from more than 475 trained mystery shoppers who audited assigned retail bank branches. The mystery shopping research evaluates bank branches across a variety of performance measures, including facility, tellers and new-account inquiry. Branch audits were conducted in major metropolitan and suburban areas in the Mid-Atlantic and Southeast regions.

New Account Experience

The study finds that when prospective customers meet with bank representatives to open an account, one-third of representatives, on average, do not shake hands, and one-half do not smile during the initial introduction. In addition, 14 percent of shoppers report that the new-account representative did not give them their full attention as prospective customers.

“Smiling and shaking hands with a prospective customer are easy things to do that should be delivered 100 percent of the time,” said Rockwell Clancy, executive director of financial services at J.D. Power and Associates. “Overlooking these simple gestures conveys a lack of respect for the customer or disinterest in their business, and can destroy the foundation of a relationship before it’s even started.”

The study also finds that while new-account representatives ask only an average of five profiling questions in assessing customer needs, when typically a broader range of inquiry is needed to adequately recommend the appropriate product to fit a customer’s situation. New-account representatives at some banks asked shoppers as few as three questions. The number of product options and recommendations that are provided to prospective customers also varies notably from bank to bank.

“Ideally, a new-account representative should assess customer needs and offer several product options before making a recommendation — which occurs at 64 percent of banks,” said Clancy. “However, 20 percent of representatives only offer one option and 16 percent give options without providing a recommendation, which indicates that some banks fail to provide prospective customers with important information and guidance for establishing new accounts.”

The study also finds that 21 percent of new-account representatives fail to ask shoppers if they want to open a new account at the time of their visit.

“Not seizing the opportunity to invite shoppers to become customers can cause banks to lose business,” said Clancy. “Ultimately, you have to ask for the business to close the sale.”

Retail Environment

Components of a customer-friendly environment — such as receiving a greeting upon entering a branch and complimentary amenities — are also lacking at many retail banks. Only one-half of shoppers report being greeted upon entering a branch. Additionally, only 42 percent of branches include amenities such as refreshments, televisions, play areas for children and computer access, which are all important in enhancing the overall customer experience and in easing wait times.

The study also finds that 24 percent of shoppers experienced a problem with the in-branch automatic teller machine (ATM). The problems most frequently cited include: trash or garbage on or near the ATM; no deposit envelopes; and ATM turned off or not working. According to the J.D. Power and Associates 2008 Retail Banking Satisfaction Study(SM), when customers experience problems with an ATM, overall customer satisfaction decreases by more than 50 index points on a 1,000-point scale, on average.

Ease of Accessibility

The Retail Banking Mystery Shopping Study also finds that retail banks have an opportunity to improve customer satisfaction in parking facilities they provide customers. Overall, two-thirds of shoppers indicate that parking was “extremely easy,” while others report more difficulties for the following reasons: the bank was in a downtown metropolis location; the branch was part of a larger building; there was an absence of a parking lot or garage; customers had to use a pay parking lot or garage; or shoppers had to park a long distance from the branch entrance.

Ease of accessing a branch is more important to overall customer satisfaction than both the number of bank branch locations and the branch hours, according to findings in the 2008 Retail Banking Satisfaction Study.

Source: J.D. Power and Associates