Androscoggin Savings Bank in Lewiston, Maine, knew it was doing “OK” in the area of customer service, but it had no concrete evidence to back up that assessment. And in community banking, where what you’re often really selling is customer service, Androscoggin decided that doing OK was not going to cut it.
Executives at the bank, in late 2003, decided that they needed a more accurate way of measuring customer service. They hired a mystery-shopping provider to conduct an initial benchmark “shop” of the $472 million-asset bank.
The results were “a real eye opener for us,” said Steve Richardson, assistant vice president and training specialist for the bank.
Mystery shopping is a way of testing a retailer’s customer service operations, employee integrity, merchandising, and product quality. Anonymous “mystery shoppers” pose as regular customers, evaluating the bank from the viewpoint of a customer. According to the Mystery Shopping Providers Association, there are about 600 mystery-shopping companies in the United States, and about 200 more internationally. The MSPA has 180 member companies, 99 of which deal with the financial services industry.
“Our clients use mystery shopping to measure and monitor customer service and sales skills,” said Judi Hess, founder and president of Customer Perspectives in Hookset, N.H.
Hess recommends that banks conduct a benchmark shop of their locations as the first step. “Most clients that are starting mystery shopping do a baseline to see what’s currently in place,” she said. “We use that report to help the trainer see what’s good and what’s bad.”
While Androscoggin’s initial score was in the superior range (80 percent to 89 percent), it was lower than the local competitors’ average score (87 percent).
Richardson said he was amazed by the intricacies of the mystery shop, which included evaluations of branch appearance, signage, lobby, landscaping, and the length of time before customers were acknowledged by bank staff.
It became apparent that there were certain areas the bank needed to improve upon. Androscoggin’s scores for suggesting other services and “planting seeds for the future” were initially low, down in the 50s and 60s. Richardson said.
“What we find most often is that banks are not doing very well when it comes to being proactive. They know how to be reactive, but not proactive,” said Jackie Buddle, president of Creative Image Associates.
Buddle said she frequently deals with banks who are mystery shopped, but then expect their scores to go up simply because they are being monitored. The data must be shared with the individual who was shopped and then with the team, Buddle said. They need to say to themselves, “What are we missing? What can we focus on?” she said.
“I would be the first to say that (mystery shopping) is only one piece. Other key components in improving customer service are training, integrated recognition, and reward programs tied to behavior, not score,” she said.
Using data from its benchmark evaluation, Androscoggin went into action, holding training sessions that focused mostly on the areas that needed the most improvement. Richardson regularly travels to the banks 12 branches to train employees, usually in the morning, so they can immediately put their new skills to work.
The bank is mystery shopped every month and given a quarterly consolidation sheet.
“We’ve seen gradual improvement from quarter to quarter,” Richardson said. Androscoggin improved its overall score from 80 percent in December 2003 to 94 percent in September 2004. More importantly, the bank’s sales have increased, and cross sales and referrals to the trust department have gone up.
“That’s the bottom line,” Richardson said. “The goal is to increase sales.”
The costs of mystery shopping vary depending on how much detail is involved and the volume, Hess said.
“It’s some of the best money we’ve ever spent,” Richardson said. “It’s tangible, it has on-the-job application, and it produces measurable results. We’re even thinking of expanding the program to our drive up tellers and online banking.”
“For a community bank, the mindset is usually ‘well, we’re small, this is something we don’t need to do.’ I would say just the opposite,” Richardson said.