Financial Services Six Sigma

The weekend edition of the Wall Street Journal on September 15-16, 2007 contained an article titled “Customer Service Is Best For Banks” by Liam Pleven.  The article was based on research conducted by Sandler O’Neil & Partners (an investment bank) through visits at 12 NYC banks. The researchers evaluated 3 branches of each bank on the following criteria:

            - Wait time
            - Branch appearance
            - Staff professionalism

In the article we were provided with some of the findings that the researchers came away with and quite frankly I am wondering why these “indicators” were selected to measure customer service (the reason dawned on me later on…and I will explain).  For example one of the Sandler O’Neil & Partners researchers told a banking representative that he was banking at a rival institution (as a means to solicit feedback).  The representative then made a disparaging comment about the other bank – this was deemed poor customer service.  Another example of ‘bad’ customer service – as determined by the researchers was being handed a “94 page brochure”.  While these may not be shining examples of good service, they hardly qualify as explanations for why a customer may leave a bank or have a complaint. 

While I care about wait time when standing in line, I don’t feel that rating the appearance of an institution will give us an indication of their customer service level.  Yes, a good lawyer could make a case for appearance having much to do with customers being content…but here we are not in a court of law or an attorney’s office.

Unfortunately the article didn’t really help define Service Excellence and how to measure it.  And frankly they couldn’t because the researchers’ hands were tied, here is why:

1. To measure Excellence you need the voice of your customers – especially the ones that left you or did not select you & industry benchmark data (what your competitors are doing)

2. When you think about a bank branch, given the thousands of transactions initiated therein - wire transfers, money orders, new account opening - the majority of them are completed in the back office.  It is there that errors are caught or generated because of poor data collection.  These errors most often lead to customer complaints or transaction errors.

And so to really measure Service Excellence you need access to process and customer data.   An investment bank conducting an undercover study will not have this information – they only see and experience a small part of the picture: the branch. Unfortunately, this forces the researcher to rely on cursory and somewhat meaningless measures to define the performance of a bank. 

S. Shahbazi ProcessArc, Inc. - Financial Services Six Sigma 

Posted by Shahbaz Shahbazi at 09:29 AM | Permalink | Comments (2)

Robust organizations constantly strive to get more out of their sales force or sales network.   Improving sales processes/performance is a common area of focus for Six Sigma.  The goal of a recent project in a lending organization was to determine the root cause of why sales volume was staying flat.  Unlike most Six Sigma projects that require rigorous data collection, analysis, reanalysis and more data collection, we stumbled on the root cause of this problem while in step 1 of the methodology – collecting the voice of customers (VOC).  We selected a group of customers to visit – in this case “secondary” customers, i.e., brokers.  While these customers are regarded as loyal to the company (continue to do business with the lender), they had not increased their relationship (sales volume) with the lender during the previous 2 years.

Prior to the customer visit, a cross functional team developed a list of questions to drive at the root cause of the flat performance.  A date was set for the interview, and a team of people from the lending firm visited the brokers.  The first question posed to all brokers was “what do you like most about working with our firm?”  And regardless of the customer (broker) visited the answer surprisingly was the same: “I like being recognized as one of your top 20 brokers.  I particularly like the incentives that come along with being a top producer for you.”  The natural next question was “then why have you not increased your business with us?” The very simple response was (abbreviated of course): “because you have not changed your targets and regardless of whether I give you $1MM or $3MM you pay me the same amount.”  Well, there we had it – the market size was increasing, the brokers were doing more business, but because our targets for the brokers had stayed static for the past 18 months the incentives had also stayed static.  What the customer was telling us quite plainly was that they were only working as hard as they needed to attain the targets/goals that had been defined for them.

The assumption that a target will function as a constant in the marketplace is erroneous but this epiphany will not visit you unless you ask, probe and talk to your customer. We always harp on data driven decisions and metrics as a means to control/monitor…but through this simple exercise we were reminded that these metrics have to stay relevant in order to drive the desired behavior.

S. Shaffie ProcessArc, Inc. - Financial Services Six Sigma

Posted by Sheila Shaffie at 11:01 AM | Permalink | Comments (1)