They have started serving donuts and juice at my local branch of the Commonwealth Bank on Fridays. I usher my child past the plate of pink-iced treats and the man in the dark suit sitting, smiling, beside them. As a respectably cynical bank customer, I take my place in the queue, eyes narrowed, calculating just how many free cakes I would have to force-feed my two year old to cover the late fee on this month's credit card alone. But by the time I have withdrawn my money, and had a fee waived on the advice of a friendly customer service rep, I am feeling a little less like suing the bank for pushing childhood obesity and more inclined to allow my son to help himself to a couple of cheesy snacks on the way out.
I lean conspiratorially towards the teller. "Why are you giving away free food?" I ask.
"Because we wanted to do something different," he explains. "We sat down, we thought about it, and decided that we would serve morning tea on Fridays.'
"And who is that man?"
"He's the manager. People like talking to him. He'll sit there and chat to customers over morning tea."
Against a backdrop of rising interest rates, bank fees and a weakened global economy, customers might have hoped the new and much-touted "determined to be different" CBA promise would translate into "determined to charge you less". At this point, it appears to mean "determined to be a bit nicer to you".
In Sydney's Lane Cove, they're doing it with lamingtons. In Ponsonby, it's dog bowls. The local branch of ASB - a CBA subsidiary - noticed a tension between dog-loving customers and those who prefer to do their banking without the company of another man's best friend sniffing around their ankles.
Murray Beckman, chief manager for corporate development at ASB, explains: "Branch staff noticed an issue of customers bringing their pooches into the branch and other customers not liking that. They decided to put dog bowls outside the branch. The thought was that if it was shown that we cared about the pooches the owners would leave them outside. And it seems to work."
When Beckman talks about what "works" for ASB customers, he's talking about a philosophy of engaging each customer so intensely through detailed attention to outstanding service that customers quite literally "can't imagine life without ASB". That's the goal. To most long-suffering customers, that sounds almost surreal. But that's the question the bank is asking, and that is the stick by which it is it currently measuring its success.
It's a bold move, and risky, perhaps, if it were made in isolation. But ASB's customer engagement initiative is a next step in a process launched in 2001, when the bank began measuring employee engagement in an effort to improve already high-performing customer satisfaction ratings.
"We were measuring staff satisfaction through a 70-question survey we titled The Pulse - we took the pulse of the organisation," says Beckman. "However this never gave us results at a workgroup level and we couldn't align results to business outcomes."
Satisfied customers not enough
Engaged employees - ones who care about the people they work with, who understand what they have to do and have the tools to get on with their job - don't need much incentive to be nice to customers. They are having such a great time at work, it seems, they simply can't help themselves.
Employee engagement is a widely used concept these days. It was devised by the consulting arm of Gallup as a way of linking human behaviour with business outcomes and is measured via a quarterly survey of 12 questions that employees can fill out and return within minutes (and they do - for the past five years 95 per cent of surveys have been completed and returned). Once the results are collected and collated, they are used to understand employee engagement at both a work team level and on a company level. They also allow an organisation to compare its outcomes against a global ranking system of other businesses running the same Gallup program.
The process is not, of course, about gratuitous popularity. ASB's vision, "to be New Zealand's best bank and financial services provider, excelling in customer service" has a solid business rationale. As Beckman puts it, "Customer service is the only differentiator we have." But when the results of the first survey ranked ASB as above only 70 per cent of other businesses on the Gallup database, "we were absolutely shattered", says Beckman.
"We thought we were pretty good, but we realised there was a lot of work to be done." Within three years, however, ASB had risen in the Gallup rankings to outperform 90 per cent of the companies on the database, and in 2008 ASB's performance was awarded a "world class" ranking.
More to the point, perhaps, is that the bank expresses the success of the program in terms of a $NZ7-billion ($5.7-billion) increase in assets in the first three years of implementing the survey. Its operating surplus has risen 20 per cent for four consecutive years. In 2003 there were remarkable results: the personal banking division increased its assets by 18 per cent, business lending went up by 12 per cent, and the cost-to-income ratio fell below 50 per cent for the first time ever.
ASB still wasn't satisfied. And so to the dog bowls. "We decided something was missing," says Beckman. "The engaged customer seemed to be missing. We worked out that satisfied customers are not enough. Satisfied customers can and do leave. Engaged customers become ambassadors for the bank."
ASB launched a pilot scheme in 2005 to measure customer engagement. "It was 100 per cent harder than putting staff engagement to an organisation," explains Beckman. "The pilot ran in 10 branches. We also surveyed customers of five personal account managers, customers of five rural managers, customers of five business managers, and five teams in the contact centre. We were asking 11 questions and 20 driver questions, which we reduced to just 10. The survey sets up the challenge for staff to think about how they can wow their customers - how they can excite customers." The idea is to get them to answer "no" to the key question "Can I imagine a world without ASB?"
Beckman reports a customer conversation he listened to when just that question was asked, "And now Mr X, on a scale of 1 to 5 where 1 is 'strongly disagree' and 5 is 'strongly agree', please answer 'I can't imagine a world without ASB'. There is laughter and Mr X says 'What a bloody silly question', pauses and then responds 'Actually, I can imagine a world without ASB - but I don't want to.'"
The dog bowls are one branch's way of connecting in a new way with their customers, as is morning tea in Lane Cove.
However, on Australia's side of the Tasman, despite using the same employee engagement program that has been so successful at its subsidiary, the Commonwealth Bank has remained the least popular of the big five Australian banks, irrespective of its dominant market share. When CBA chief executive and former ASB boss Ralph Norris took over in 2006, he brought with him proponents of the staff engagement experience at ASB: Barbara Chapman, group executive, HR and group services at the Commonwealth Bank; and Ross McEwan, group executive retail banking. This senior management team has injected a new focus on customer satisfaction at CBA and breathed new life into the approach. And it's driven from the top: CEO Ralph Norris' bonus entitlement is linked in part to lifting customer service ratings.
more than morning tea
The results are beginning to appear. A Roy Morgan Poll, released in May, shows that things are on the up. The Commonwealth Bank is the only one of the top five with improved customer satisfaction ratings for two consecutive quarters. For the first time, the bank has nudged its way out of bottom place (to fourth out of five).
But as Chapman points out, improved customer service is not just a question of sweetening up the customer with a warm greeting or even free morning tea. "We underpin employee engagement with a sales and service program, simplified technology, and a program of staff training and branch redesign," she says. "Gallup is one tool we use. Essentially, people come to work to do a good job. The Q12 helps us to understand what it is they need to do a good job.'
A legacy core IT infrastructure that dates back in part to the 1960s has been one impediment to doing a good job, as well as to making customer service more convenient, and in April this year a $580-million dollar overhaul was announced. The CBA is also successfully trialing extended banking hours and weekend opening as part of its attempt to differentiate itself from its former self as much as from its competitors.
But how much does it matter to a bank like CBA how its customers feel about it? With 10 million customers and profits margins most other industries would dream of, do they really need us to love them? The answer, it seems, is yes. It's called "winning in the emotional economy", a term made popular by Jim Clifton, the man who devised the Gallup approach.
It is Clifton's premise that a business cannot rely indefinitely on growing market share through price competition. Ultimately, he says, a company must "harness the power of human nature" by maximising the engagement between itself and its employees, and itself and its customers.
And it is business outcomes that Norris and his team are chasing. The rate of cross-selling financial products to existing customers at ASB is double what it is at CBA. In any economic environment, this would be a measure demanding improvement. In the current economic environment, the Commonwealth Bank, with a range of financial services and products to draw on from such brands as CommSec and CommInsure, the potential to increase business from its existing customer base is an outstanding growth opportunity with relatively low cost and low risk. Estimates suggest it is up to four times more expensive to recruit a new customer than it is to sell a new product to someone who already does business with you.
To Beckman at ASB, the issue is clearly about a passion for doing his job and doing it well: "The thing I most enjoy is when we give teams feedback and their scores have improved. They have found the way to wow their customers. You just see their eyes light up."
Like the time they received feedback from a retailer in Wellington, who described an imagined life without ASB as "mostly frustrating". He particularly applauded the weekend opening hours of the bank: "This is fantastic for a retail business like ours where you can run short of change for your till - or when you take so much cash you just have to put it in the bank."
Whether it's dog bowls or donuts, Saturday banking or improved online interfaces and faster processing times, be warned, the charm offensive is on.
Fairfax Business Media
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