First in service
Editor's note: Mary Bursek is a consultant with the Service Quality Research division of Questar, a Minneapolis research firm. Connie Remenschneider is corporate quality manager with First of America Bank Corporation, Kalamazoo, Mich.
As consumers increasingly see the banking industry at parity, many banks are finding that the best way to maintain a competitive advantage is by delivering top quality service. These banks, like other service oriented businesses, know that customer satisfaction is essential for retaining their customer base and increasing profitability. It is also vital to internal, day-to-day operations. Identifying relationships between employee satisfaction and customer loyalty through sound methodology and statistical analysis helps companies focus on organizational practices that directly affect customer loyalty.
To satisfy customers - internal or external - management must understand four key issues: 1) What their customers needs are; 2) Why they are important; 3) How they impact customer loyalty; 4) What they can do differently to better meet those needs.
First of America Bank Corporation (FOA) has been measuring its service quality for several years. Headquartered in Kalamazoo, Mich., FOA has grown into a super-regional bank holding company with 15,000 employees, nine corporate divisions and 21 banks in four states (Indiana, Illinois, Michigan and Florida) with more than 600 branch offices.
Because the affiliate banks had been brought together through mergers and takeovers, the corporate culture of each bank was vastly different. In addition, each of the nine FOA corporate divisions had its own unique structure and separate quality team.
In 1990, FOA selected the Service Quality Research Division of Questar, a Minneapolis research firm, to measure quality management practices. FOA was particularly interested in Questar's Service Management Practices Inventory (SMPI), an employee-based survey designed with Ron Zemke, a Minneapolis service quality consultant, to assess management practices that support quality service. After FOA's bank managers and division heads saw how the SMPI could help them manage more effectively, they requested that their customer surveys be as helpful.
Multiple vendors
Previously, FOA had used multiple research vendors to perform different surveys at different times. The many methodologies and reporting formats made it difficult to draw broader conclusions. The company's experience with the SMPI led it to try a more comprehensive approach to linking employee and customer satisfaction.
The corporate management of FOA had three research needs. It wanted to measure employee perceptions of quality management practices, internal customer satisfaction between corporate divisions and affiliate banks, and customer satisfaction in branches at the point of contact. It also wanted to link employee and customer survey results.
On the branch level (where banks are locally owned and operated), the philosophy was "community banks first," with an emphasis on serving the banks' individual communities. The organizational goal was to apply the same customer-oriented philosophy on a company-wide basis, from the corporate divisions down to the branches. The research goal was to help divisions and branch affiliate senior management pinpoint areas for improvement and develop action plans. To accomplish these goals, FOA needed service quality research that would give everyone a common mission and the same base of information from which to start.
An integrated effort
FOA knew that for research to be effective, a research team must recognize that each organization has its own unique set of challenges to meet, and its own individual corporate goals. Thus, service quality research must be tailored to the exact situation, structure and objectives of the organization.
FOA began developing three separate quality surveys in the spring of 1993. FOA started with a meeting of corporate division and bank affiliate executives to gather feedback on how to better meet their needs, determine what they wanted to measure, and improve prior surveys. This group represented the true users of the survey results, and the answers were as diverse as FOA itself. The group determined that data would need to be segmented by region, community and by branch.
Getting started
To achieve true service quality, the entire company must embrace a single-minded mission to improve quality between internal groups and for customers. This requires diligence and commitment from all levels of a company. Early employee involvement was key to the success of FOA's efforts.
For example, at the outset, FOA formed a project management team of a hand-picked group of critics of previous research - all champions of quality service. The team included employees ranging from bank presidents to customer contact staff and branch personnel. Questar consultants helped guide the process. Working together, the team discussed each step and made decisions, keeping the customer in mind every step of the way.
Actual end users of the data were involved in the survey design, with Questar representatives acting as advisors to keep the team faithful to proven research methods. This pre-survey information gathering ensured that the survey results were on target. The outcome was a decision to design four separate surveys to pinpoint the issues valued by both internal and external customers, and to determine how well the branches and divisions performed on each count.
Four surveys in three months
To measure employee and customer perceptions of the same service dynamics, Questar recommended that internal and external surveys be conducted at roughly the same time. The surveys consisted of the SMPI, internal customer surveys measuring the branches' satisfaction with each of the nine corporate divisions, and two surveys to measure external retail and commercial customer satisfaction of branch services.
To develop the two external surveys, four retail and two commercial focus groups were conducted to identify key service issues. For the internal division surveys, the nine corporate division heads were interviewed to determine what information they needed to help improve service quality. Questar identified 16 common internal customer satisfaction requirements across all nine FOA divisions, universal issues such as wanting calls returned and quick response. Then, additional actionable survey questions were developed for each division based on specific concerns and hot issues. Up to 10 additional questions were developed for each division. This resulted in nine different surveys, each highly focused yet allowing for internal benchmarking across common questions. The survey also allowed the data to be segmented by management and non-management respondents. The SMPI was administered at the same time. To help clarify quantitative data and capture new issues, all the surveys were designed to include open-ended comments.
Managing logistics
One of the biggest challenges of the project was managing the logistics of sampling and survey distribution. First of America Bank Corporation's complex structure combined diverse management styles on the corporate level and diverse market segmentation with branches that cut across urban, suburban and rural communities. It was essential to keep the samples random, while meeting the specific segmentation needs of each corporate division and branch affiliate. To effectively link results from all four surveys, it was necessary that employees answering the SMPI be drawn from the same branches from which customers were being sampled.
In previous research conducted by FOA, external bank survey results were not identified by branch, and there was no way to tell if the respondent was a frequent branch customer. In addition, prior internal customer surveys had addressed only two of the nine corporate divisions. The primary goal of the new survey methodology was to ensure that results were segmented for the branch office and all surveys reflect a common snapshot in time.
Based on the project management team's recommendation, the customer survey methodology used was a combination of mail and phone interviews. The retail customer satisfaction survey was mailed to 77,600 current retail customers. Bank presidents were given a choice of receiving the data randomly by location or specifically by region or community. Surveys for the retail customers were mailed with a one-dollar incentive. At 41 percent, the response rate was significantly higher than the industry average of 30 percent for a mail distribution.
The commercial customer satisfaction survey was implemented through phone interviews with 1,729 commercial customers across 20 affiliate banks.
Both the SMPI and the internal customer survey were administered in the third quarter of 1993. The employee samples were compiled, cutting across corporate hierarchy, functions, job descriptions, etc. Because the surveys were designed to focus on issues important to employees' ability to provide excellent service to customers, the survey recipients were eager to give feedback. The internal customer surveys were distributed through inter-company mail. The SMPI was administered by pulling every fifth personnel file and inviting the employee to receive face-to-face instruction and complete the survey in person. This resulted in response rates for both surveys ranging from 92 percent to 100 percent from the divisions, and ensured a cross section of employees.
A satisfaction gap analysis and a key driver analysis were used to identify key issues for employees, internal customers and branch customers, providing satisfaction ratings in graphic form. This helped First of America focus on the most salient issues, summarizing the information for a clear understanding of where to allocate resources for fastest improvements.
The SMPI and the customer surveys were designed to facilitate the use of path analysis, a statistical technique for integrating results across different types of surveys. The results were then compared by location and by branch to correlate customer satisfaction with employee feedback on various management practices.
During project development, the project management team had determined how the reports should look and what they should show. This enabled the data to be compiled quickly once the fielding was completed.
Training sessions
A "train the trainer" approach was used to expedite dissemination and understanding of the reports. Training sessions were held for CEOs, quality service coordinators and one team leader from each division and bank. This method ensured that the process was tied directly to senior management. During these sessions, Questar trained attendees to understand and interpret the results so that they could immediately meet to identify improvement actions. Each manager received an interpretation guide and reports for their area, as well as a deadline to create an action plan.
Managers were asked to identify two to three areas of improvement and create a customized action plan. Employees were involved in group brainstorming sessions on key issues. They went on to develop creative strategies for meeting their unit's goals. This approach brought everyone on board, fostering a spirit of teamwork and employee accountability.
A unique approach to communicating results to all employees was developed for the southeast Michigan FOA affiliate, the largest bank in the system. A 13-minute video on the results was created to help spread the information quickly throughout the southeast affiliate's 147 branches and 2,500 employees. Using quarterly mini-surveys with Questar's support, the bank has been able to measure and maintain significant improvements.
Outperforming competitors
Using the integrated results from the surveys, First of America Bank Corporation is planning a process for ongoing measurement of customer satisfaction and service quality. The process will allow FOA to evaluate the impact of its improvement efforts, and also to more quickly identify new areas for improvement.
While the customer survey and the SMPI showed that there were specific areas in which the corporate divisions and the affiliate banks had to improve, the results were also encouraging. On the branch level, FOA was shown to outperform competitors in several areas of service important to customers.
By integrating the internal and external results, Questar was able to show that where branch employees were satisfied with management's commitment to service quality, customer satisfaction and loyalty was also high. Seeing these results in an objective form allowed FOA management and employees to acknowledge that employee commitment depends on how well they are supported by the corporate level. This in turn affects customer satisfaction.
The results provided a company-wide base for measuring improvement. Since the process involved the end-users of the data from the outset, the results couldn't be dismissed or discounted, as earlier survey attempts had been. First of America Bank Corporation now uses this information as a rallying point for the entire company.
Quality, an ongoing process
To monitor FOA's progress, the project management team has recommended that Questar perform the SMPI internal survey every year, with each division performing a checkup survey twice a year. Every other year, the retail and commercial bank customer surveys would be implemented.
Currently, the project management team has regrouped to determine ways to improve the process. Like the quest for quality service, research is an ongoing process. First of America Bank Corporation recognizes this and it is committed to service quality research, now and in the future.