On the 20th of July, 2018, a police officer on duty at a Savings and Loans Company brutalised a customer. The issue attracted attention from the general public and certain key stakeholders such as the nation’s president (President Nana Akufo-Addo), the Ghana Bar Association, and parliament among others.
From my perspective, the root-cause of the incident was poor customer service. Occasionally, a dissatisfied and aggressive customer might voice a complaint openly and loudly in the banking hall for everyone else to hear – impacting negatively on the experience of other customers and also disrupting banking operations.
However, a better customer service approach can go a long way to calm the customer – and if possible convert him/her from the state of dissatisfaction to satisfaction.
Similarly, an uncooperative customer might be rude, demanding and difficult to be pleased – but an effective customer service disposition on the part of staff can accommodate such a customer.
It is worth mentioning that despite a rural bank’s best efforts to improve service quality, there can be service failure – such as network problems which might have adverse effects on turnaround time, thereby incurring customer-displeasure. However, effective management of service failure might ease customers’ negative reaction.
In fact, excellent customer service can be a game-changer for RCBs. Why? It is because banks and Specialised Deposit Taking Institutions offer homogenous products and services – and therefore it is the quality of customer service provided by a specific institution that will serve as a differentiator.
It has been observed that poor customer service can cripple financial institutions such as RCBs. This article will consider some of the repercussions from poor customer service.
Before I begin with repercussions from poor customer service, I would like to take this opportunity to commend the board and management of Juaben Rural Bank led by the supervising manager Mr. Kwabena Agyei Poku. Why? The bank performed exceedingly well in the 2017 financial year. I would also like to urge the staff to go that extra mile so as to achieve the bank’s target for 2018 financial year.
- Loss of current customers (increased customer-attrition)
Some customers who experience poor customer service are likely to switch to other financial institutions that might offer better services. This will no doubt have adverse effects on RCBs’ customer base as well as deposit mobilisation.
Research has revealed that 68% of customers who quit can be attributed to poor customer service attitude of staff. This implies that poor customer service can lead to customer attrition.
Some dissatisfied customers do not defect alone – they often persuade others to follow them, especially when they discover better alternative elsewhere.
Management of RCBs should therefore not take customers for granted. They should not think losing one customer is no big deal.
- Loss of potential (future) customers
Customers who experience poor customer service often tell friends, family members and other acquaintances about their bad experience.
This negative word of mouth communication discourages potential customers from including a particular bank in their set. According to some marketing experts, the average person with a problem tells 9 or 10 people.
In this era of social media, customers can easily spread news of their discontents which can snowball quickly as other unhappy customers join in and publicize their unhappiness with the offending organisation.
- Damage reputation
Poor customer service has the potential to tarnish the image of RCBs due to negative word of mouth communication.
Image is everything in banking, because a good image engenders customer trust and confidence – which will enhance deposit mobilisation and new customer acquisition. When a rural bank is faced with reputational risk because of poor customer service, it will undermine the confidence of both existing and new customers. Some customers who defect because of poor customer service tend to be ‘terrorists’, and use every opportunity to speak out against the brand. This has the potential to weaken the brand.
- Affect bottom-line
As already mentioned, poor customer service has the tendency of leading to loss of customers. This might compel RCBs to spend more on advertising and other forms of promotion with a view to acquiring new customers. This will increase operational expenses, which might impact negatively on profit. Some research has revealed that it costs five times more to get a new customer as compared to maintaining existing ones.
It has also been observed that businesses that grow their customer’s retention rate by as little as 5% typically see profit increases ranging from 25-95%. This implies that poor customer service is bad for the bottom-line.
It is worth noting that poor customer service can sometimes lead to crisis situations and might call for crisis management (Damage Control). This might entail costs such as compensation for victims of poor customer service, bad publicity among others.
- Sanction from the regulator
In an extreme situation, poor customer service might attract attention from the regulator to apply the necessary sanctions.
In view of the negative consequences of poor customer service, RCBs should do their utmost to offer superior customer service. They should appreciate the fact that they are in business to serve customers and therefore should go the extra mile to delight them. Staff of RCBs should get rid the mindset that they are doing customers a favour when they get the opportunity to render services to them. Customers are rather doing them favour by choosing to transact business with their respective banks.
RCBs should keep in mind Sam Walton’s quote about the importance of customers:
“There is only one boss – the customer: and he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”
Staff of RCBs should also ponder this quote of Henry Ford: “It is not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages”.
The Author is the Head of Proven Trusted Solutions, an employee-training and development and marketing research firm.
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