inspect business procedures to verify performance

The Value of Mystery Shopping

Louis Vincent Gerstner Jr. is an American businessman, best known for his tenure as chairman of the board and chief executive officer of IBM from April 1993 until 2002.  He is credited with the quote, “People don’t do what you expect but what you inspect”.1

Like Sherlock with his magnifying glass, banks need to look for the clues of how well they are doing.  There are hard facts like open and close rates, cross sell ratios and overall profitability.  But then, there are the softer facts like how your customers feel about the bank or it’s staff, what they tell friends, and how many other institutions they have accounts with – all of which are rather hard elements to evaluate.

But moving the needle even a small percentage can have big benefits. “Increasing customer retention rates by 5% increases profits by 25% to 95%” (Study by Harvard Business Review)  For banks specifically, a recent study by Forrester Research indicates that banks can increase revenues significantly by delivering a better customer experience. This topline revenue growth is quantified in five areas, with over half driven by reductions in churn, followed by increased share-of-wallet, low price sensitivity, better word-of-mouth acquisition, and a more competitive cost structure. What are the fiscal impacts of keeping more of your most valuable customers longer? Bain found that “banks that are loyalty leaders enjoy a growth rate that is 10 percent higher and a cost of funds that is 80 basis points lower than banks that are price leaders.”

A well designed mystery shop program gives quantitative as well as qualitative feedback on the customer’s experience.  In a J.D. Power’s 2017 U.S. Retail Bank Study, it was noted that 37% of customers who switched their primary bank said they did so because of bad experiences.  And isn’t that what it’s all about?  The Customer Experience.

Your staff may be doing a fantastic job!  They may be meeting all of your customer’s expectations and more importantly their needs, even the unrecognized ones.  Or your staff may need some encouragement or training to reach the top of their game.  One of the best ways to find out is through a mystery shop.  The goal of a good mystery shop program is to find people doing things right. 

A well-structured program combines the bank’s service standards with real life scenarios and sales opportunities.  Your staff should know your products and how the products save the customer money, time or create peace of mind.  They should know how the products solve a customer’s problems and add value to their life, and of course the relationship with the bank.  Shops can be done as a baseline or to monitor service and training on an ongoing basis. Great service goes beyond being nice and friendly.  How are you serving your customers?

Every community bank says that their differentiating factor is their service, but do you feel comfortable that your customer has the same experience no matter which branch or contact point they interact with? Are you confident your customer facing staff is identifying every potential product opportunity that is available with each customer?  If not, or to learn more about evaluating customer interactions, contact us today.

1 Wikipedia

Photo by somegeekintn on Wunderstock (license)