Average queue length and average wait time are good methods to benchmark service levels and general staffing levels, but taken alone, they are not enough to stop attrition due to poor service. In the customer’s experience, the extraordinary is more memorable than the ordinary. Acceptable average wait times and queue lengths can be achieved, yet if the extreme wait times and queue lengths are not reigned in, churn due to poor service will not be impacted.
When comparing queue lengths and wait times to observed queue abandonment at an average suburban bank branch, there is a definite correlation between the perceived wait time (queue length) and abandonment. When queue length is longer than 12, queue abandonments spike. Similar trends exist virtually every day of the analysis period. In a one month period, almost 400 customers abandoned the queue, most of them during times of long lines. These 400 customers exhibited the most obvious sign of dissatisfaction and represent both lost opportunities to sell and an increased risk of attrition. We will address both lost sales and attrition related costs.
Studies show that 1 in 20 visitors to a bank branch makes a sales inquiry and banks have a very high conversion ratio when an inquiry is made (80%). These 400 abandonments represent 20 potential inquiries that walked out the door. If 80% of those were converted into 16 sales, an additional $3,200 in revenue was lost, or $37K for 12 months if we assume that the revenue from a single additional product or service is $200.
Attrition also represents a significant cost due to poor service. A November 2003 study performed by Gartner Group and ACNielsen determined that customers are likely to switch banks after having two bad service experiences. If we assume, conservatively, that 25% of these 400 abandonments, or 100 customers have had their 2nd such bad experience and only 15% of them switch banks, that is 15 lost customers in this one month. The deposit revenue represented by those customers is almost $7,500 (based on average deposits of $10K at the bank studied, and a net interest margin of 5%). Additionally, the opportunity to deliver or sell other services such as auto loans, mortgages, credit cards, etc. is also lost. If the average bank customer has 3.5 total services including 1.5 deposit accounts, the additional 2 services lost can account for an additional $6K in lost revenue (2 x $200 average annual revenue from non deposit products and services x 15 lost customers in this month). Total potential revenue lost due to poor retention totals $13.5K per month, or $162K per year from identifiably dissatisfied customers in this one branch. The actual number is likely much higher.
By understanding this data and taking action, many abandonments can be eliminated, thereby replacing a bad experience with a good one. Where banks are employing Brickstream to eliminate bad waiting experiences, the results have been stunning. In a 3 month period, one bank improved overall customer wait time satisfaction by almost 20% by taking some of the following actions:
· More accurate and responsive scheduling and resource deployment using accurate arrival and service data
· Displaying average service level numbers achieved in that branch at the head of the queue. Showing customers that 90% of customers wait less than 2 minutes changes customers’ expectations for this and subsequent visits
· Active “queue-busting” by managers to pull potentially complex transaction out of the queue in real time
As evidenced by the above, better management of customer’s waiting experience can yield $160K-200K in this one branch per year.
