American Banker Online
We tend to associate success in critical business functions with the outcomes they produce. In customer service, a successful program is one that yields positive results for the largest number of customers. A customer calls an institution because he can’t log in to an online banking account and the customer service rep resets his password. Chalk up another win for the contact center — or so the bank’s management thinks.
This is certainly a valid approach to measuring performance, but it misses an important point. Customer service exchanges are between two people; in such human exchanges, the process often matters as much or more than the outcome.
In the world of criminal justice, this concept is known as procedural justice. The idea is simple — the way that people view the justice system is based more on the perceived fairness of the process than on the perceived fairness of the outcome. In other words, an individual that feels like she was treated fairly by all the “actors” in the system (police officers, lawyers, judges, etc.) is likely to have a favorable impression of the system even if the final verdict doesn’t go her way. The validity of this idea has been demonstrated in numerous studies and real-world experiments, including police officers in Queensland, Australia, taking a more respectful approach to administering random breath alcohol tests and a judge who runs an unconventional court in Newark, New Jersey.
Procedural justice has become a central point in the ongoing discussion on how to improve the criminal justice system because it’s a cost-effective way to increase citizens’ respect for and compliance with the law. The concept also raises an interesting question—is there a case for banks to focus a little more on process and a little less on outcomes in their interactions with their customers? Research suggests yes.
In a recent J.D. Power direct banking customer satisfaction study, one of the most striking findings reported was the satisfaction gap between customers who called into the contact center with a problem and received an apology from the customer service rep (852 satisfaction score out of 1,000) and customers who called in with a problem and didn’t receive an apology (752 satisfaction score). That’s a 100-point difference just from an action that costs absolutely nothing. As Bob Neuhaus, a financial services consultant at J.D. Power, put it, “Apologies are very important in direct banking, which has lower touch by definition. This is where personal touch has to be there; it’s an opportunity to provide it, and it does make a difference.”
The need for that personal touch is evident in other bank/customer interactions. In a recent survey fielded by FICO, U.S. consumers were asked, “If your bank tried contacting you about your debts or a late payment, what would make you the most likely to respond?” The two top responses were: “The bank’s message is friendly and helpful” (30%) and “A live person from the bank contacts you” (26%). The least popular response was: “The bank reduces or restructures your debts” (8%). Talk about valuing the process over the outcome.
Here are elements that can drive the perception of procedural justice in the banking industry.
* Voice: Give individuals a chance to be heard and to provide input. In financial services, giving customers more of a voice can be elaborate (think Barclaycard giving customers direct input into product management) or simple (collection agents encouraging customers to explain why they’ve fallen behind on their payments).
* Respect: Treat individuals with respect and dignity. The strong preference of consumers to have a friendly conversation with a live person speaks to the importance of this dimension in banking. Discover, a customer service leader, has done an excellent job pressing this advantage in their “we treat you like you’d treat you” advertising campaigns.
* Neutrality: Assuring individuals that the decision-making process is fair and unbiased. Lenders can struggle with this recommendation, as automated credit decisioning processes can appear opaque from the consumer’s perspective — even if the decisions are actually unbiased and in full compliance with fair lending regulations. Lenders should look at required disclosures like adverse action notices as opportunities for providing financial education and building trust.
* Education: Help individuals understand how the system works. Financial terminology is almost universally dry and difficult to comprehend. Banks should invest time and energy in communicating with customers in clear and engaging language (see Simple’s Reg E disclosure email for a masterful example).
* Helpfulness: Look out for the individual’s interests to the extent possible. In financial services, this recommendation is the most relevant and important aspect of creating a perception of procedural justice. Are you acting as an advocate for the customer? Are you looking for opportunities to help him or her improve financial wellness even at the expense of short-term revenue? Customer decisions across the entire life cycle, from cross-sell to fee waivers to debt refinance, should be influenced by these questions.
From a consumer perspective, the financial industry and the criminal justice system share some similarities: Both are governed by lots of rules, filled with jargon and pose risks for both financial loss and personal embarrassment. Given that, procedural justice is a criminal justice innovation that banks should be looking at closely.
This article was licensed through Dow Jones Direct.
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