Why Fixing It Doesn't Fix It

Resolving problems builds loyalty, right? False! False!! False!!! Nothing erodes loyalty more than experiencing a perceived problem or error in the financial and health care industries.

Our money and health are very important to us; so, when our credit union or physician makes even a small, careless mistake, our trust in the credit union or the doctor has been shattered and we doubt their capabilities. It is this uncertainty that drives us to consider relocating our relationship.

We recently mined through 10,000 retail telephone interviews collected this year from our Service, Satisfaction & Loyalty tracking clients to illustrate how experience of problems undermines satisfaction and loyalty. Three major measures emerged from the underlying data.

The Brand Index represents a section of questions evaluating the customer or member's satisfaction and loyalty of the brand. The 2007 retail average of the Brand Index is 69%.

* The Branch Index corresponds to the attributes measuring branch level service quality. The 2007 retail average for the Branch Index is 81%.

* Problem Occurrence reflects the percentage that experienced a perceived problem or error. On average, 13% of our retail respondents reported experiencing a problem.

Those responding affirmatively were asked whether this issue was: resolved to their satisfaction; not yet resolved, or resolution in progress.

The graph below illustrates these findings. The first column shows client averages. The next column to the right, "Experienced a Problem," depicts the scores of the 13% that experienced an issue. For instance, perception of the brand plummeted from 69% for all 10,000 interviewed to 47% for those that experienced a problem or error.

The graph also displays the index scores cross-tabbed by whether the problem or error was resolved. Issues that were not resolved to the satisfaction of the customer/member gravely affected responses. The difference between issues that were satisfactorily resolved and those where resolution was in progress varied slightly (72% versus 77% Branch Index; 54% versus 52% Brand Index).

Both of these categories were significantly lower than the client averages (Branch Index 81%; Brand Index 69%), dispelling the myth that remedying a problem will produce a more loyal customer. Note that the Branch Index actually rose with "Resolution in progress."

Perception of the brand was affected much more severely than the perception of the branch when a problem occurred. In other words, respondents more often blamed the institution-not the teller.

The reason for this is that in most cases, the branch staff will usually address the issue, and this human contact will reassure the customer.

However, the member will still become agitated about the issue occurrence and blame the institution; thus, the reason for the negative brand perception.

This data validates that satisfaction and loyalty decrease when problems or errors occur, regardless of how well those problems are addressed.

However, the data also shows that resolving or attempting to resolve any issue is better than no resolution at all.

Kimberly Clay is the co-founder of Bancography, Birmingham, Ala., and manages the primary and secondary research program. For info: www.bancography.com. (c) 2007 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com