How to create a Service/Product Quality Index: If you are serious about providing quality service and products--and you should be--you can develop simple metrics to monitor your progress.

• Author: Thamara, Thomas

SERVICE AND PRODUCT QUALITY is universally critical in both good and bad times.

Howard Schultz, CEO of Starbucks, says that service and product quality (also referred to as "customer care") is the total customer experience, starting with the reception and all that happens within the store.

Harvard Business School research shows that businesses that offer high quality services/products in their targeted markets are more profitable and gain market position more rapidly than those with lower quality offerings, although there is a moderate cost (reduced short-term ROI) to achieve that quality.

High quality, in fact, provides financial firms a competitive edge in all aspects of their businesses: for example, transparency of fees/support services/financial advice and so forth. Some bank customers of late feel that they are being nickel-and-dimed by a lot of bank policies and pricing. Some studies show that approximately 66 percent of customers see it that way.

What is the definition of service and product quality? It is determined both by the service package offered as well as the perceived value of the service--quality of the staff offering the service and the quality of the service offerings--all in relation to the service offerings of your key competitors in your targeted markets.

In this article, I will provide insights into the current thinking about quality customer care, offer tips on implementing such care, and describe a way to measure quality care--so that you can monitor your implementation progress.

Best practices

What are some current best practices in customer care?

Some companies are offering their call center people rewards for solving customers' problems on the customers' first call, rather than keeping calls short. This approach has a tendency to reduce overall customer calls. Moreover, front-line people are trained to engage the customer more and ask the kind of questions that lead to cross-selling opportunities.

Southwest Airlines allows customers waiting to talk to a call center representative to hang up and receive a call back, without losing their place in the telephone queue. Banks can also do what Hewlett-Packard does, that is, remind customers of payment-due dates to avoid late fees, and time to replace ink cartridges to avoid inconveniences to the customer.

Some banks even encourage staff to have a short chat with customers when there is no rush of people waiting on line. Others have set up a quality committee that meets periodically to assess progress on building a quality culture, since many bank services/products, as a rule, are more or less alike (a commodity), except products such as credit default swaps, derivatives and so forth. This fact emphasizes the point that the best and only way to compete is via higher quality services.

Some companies also get inputs from customers on things such as product development and servicing needs. They apply consultative selling for more complex products. Employee training on service issues--informing call center people on typical customer problems--are very useful aids in enhancing customer care/support. An interesting example is that the largest retailer by sales in France (Carrefour) competes successfully and profitably only on quality of services offered, since current French laws prohibit retailers from competing on price. Some banks send e-mail and text alerts to customers on pending issues. Banks are also successfully employing social media, such as Facebook, Twitter and so forth, to reach specific customer niches. Wells Fargo & Co. is a national bank that uses this approach (for another example, see sidebar about North Shore Bank, Brookfield, Wisc.).

Some companies employ an executive in charge of customer service and satisfaction as a focal point of their service strategy.

The quality of customer service staff as well as transparency of fees are two things that impact the customers' perception of trust with their primary financial services institution. Banks that fail to provide either will find it harder to maintain their share of the wallet. Trust scores are up for smaller commercial banks and credit unions (90 percent) versus 84 percent a year earlier. Trust score dropped for large banks from 79 percent to 75 percent, regional banks from 72 percent to 71 percent, midsize banks from 69 percent to 67 percent (cited in American Banker).

Financial firms should also be obsessive over hiring, training and rewarding employees to provide the best customer service. Quality of customer service is measured by a combination of perceived quality and efficiency of services/processes. Cost-cutting is not a way to improve customer service.

Implementing quality customer service

Below are three components of a quality customer service approach.

1. Front-line personnel, which should never be underestimated since they are, in fact, the "face of the bank," and to most customers, the folks who keep "issues" from becoming incidents. Building trust with customers takes time and it is built on every action the associates make--how they treat customer calls, how they respond to queries, how they communicate with customers who cannot make mortgage or credit card payments and so forth.

2. Relationship banking is a marketing technique for building a long-term, continuous relationship with your "core" customers, in contrast to sporadic or transaction-based...