CASE 12 Menton Bank (Cumstorsme Lovetock ‘Problems arise wiken a large bank, attempting to develop a stronger customer service orientation, enlarges the tellers’ responsibilities to include selting activities. “"1'm cancemed about Karen,” said Margaret Costanzo to David Reeves. The two bank officers were seated in the former’s office at Menton Bank. Costanzo was a Vice President of the bank and manager of the Victory Square branch, the third largest in Menton’s large branch network. She and Reeves, the branch’s Customer Service Director, were having an employee appraisal meeting. Reeves was responsible for the ‘customer service department, which coordinated the activities of the Customer Service Representatives (CSRs, formerly known as tellers) and the Customer Assistance Representatives (CARS, formerly known as new accounts assistants). Costanzo and Reeves were discussing Karen Mitchell, a 24-year-old customer service representative, who had applied for the soon-to-be-vacant position of head ‘CSR. Mitchell had been with the bark for three and a half years. She had applied for the position of what had then been called head teller a year earlier, but the job had gone to a candidate with more seniority. Now, that individual was leaving—his wife had been transferred to a new job in another city—and the position was once again open. Two other candidates had also applied for the job. Both Costanzo and Reeves agreed that, against all criteria used in the past, Karen Mitchell would have been the obvious choice for head teller. She was both fast and ac- curate in her work, presented a smart and professional appearance, and was well liked by customers and her fellow CSRs, However, the nature of the tellers job had been sig- nificantly revised nine months earlier to add a stronger marketing component. CSRs were now expected to offer polite suggestions that customers use Automated Teller ‘Machines (ATMs) for simple transactions. They were also required to stimulate cus- tomer interest in the broadening array of financial services offered by the bank. “The problem with Karen,” as Reeves put it, “is that she simply refuses to sell.” ‘The New Focus on Customer Service at Menton Bank. Although it was the largest bank in the region, Menton had historically focused on corporate business, and its share of the retail consumer banking business had declined in the face of aggressive competition from other financial institutions. Three years ear- lier, the Board of Directors had appointed a new Chief Executive Officer (CEO) and given him the mandate of developing a stronger consumer orientation at the retail Tevel. The goal was to seize the initiative in marketing the ever-increasing array of financial services now available to retail customers. The CEO’s strategy, after putting in a new management team, was to begin by ordering an expansion and speed-up of, Menton’s investment in electronic delivery systems, which had fallen behind the com- petition. To achieve this strategy, a new banking technology team had been created. During the past 18 months, the bank had tripled the number of ATMs located in- side its branches, replacing older ATMs with the Iatest models featuring color touch screens and capable of a broader array of transactions. Menton was already a member of a several ATM networks, giving its customers access to freestanding 24-hour booths in shopping centers, airports, and other high-traffic locations. The installation of new ATMs was coupled with a branch renovation program, designed to improve the phy: ‘eal appearance of the branches. A pilot program to test the impact of these “new loo branches was already underway. In the longer term, top management intended to redesign the interior of each branch. As more customers switched to electronic banking from remote locations, the bank planned to close a number ofits smaller branches. ‘© 2009 Christopher H Lovelock 521De sd ee 522 Case 12 * Menton Bank Another important move had been to introduce automated telephone banking, which allowed customers to check account balances and to move funds from: one ‘account to another by touching specific keys on their phone in response to the instruc- tions of a computerized voice. This service was available 24/7, and utilization was ris- ing steadily, Customers could also call a central customer service office to speak with a bank representative concerning service questions or problems with their accounts as well as to request new account applications or new checkbooks, which would be sent bby mail. This office currently operated on weekdays from 6:00 a.m. to 8:00 p.m. and on Saturdays from 8:00 a.m. to 2:00 p.m,, but Menton was evaluating the possibility of ‘expanding the operation to include a broad array of retail bank services, offered on a 24-hour basis, ‘The technology team had completely redesigned the bank’s website to make it possible to offer what were described as the region’s most “user-friendly” Internet banking services. Customers had online access to their accounts and could also obtain information about bank services, branch locations and service hours, location of ATMs, as well as answers to commonly asked questions. Finally, the bank had recently started issuing new credit cards containing chips imbued with radio- frequency identification (RFID), which speeded transactions by allowing customers to wave their cards close to a special reader rather than having to swipe them in the traditional way. All these actions seemed to be bearing fruit. In the most recent six months, Menton had seen a significant increase in the number of new accounts ‘opened, as compared to the same period of the previous year; and quarterly survey data showed that Menton Bank was steadily increasing its share of new deposits in the region ‘Customer Service Issues New financial products had been introduced at a rapid rate. But the bank found that many existing “platform” staff—known as new accounts assistants—were ill-equipped to sell these services because of lack of product knowledge and inadequate training in selling skills. As Costanzo recalled: “The problem was that they were so used to sitting at their desks waiting for a customer to approach them with a specific request, such as a mortgage or car loan, that it was hard to get them to take a more positive approach that involved actively probing for customer needs. Their whole job seemed to revolve around filling out forms ot responding to prompts on their computer screens. We were way behind most other banks in this respect.” {As the automation program proceeded, the mix of activities performed by the tellers started to change. A growing number of customers were using the ATMS, the website, and automated telephone banking for a broad! array of transactions, inchud- ing cash withdrawals and deposits (from the ATMs), transfers of funds between ac- counts, and requesting account balances. The ATMs at the Victory Square branch had the highest utilization of any of Menton’s branches, reflecting the large number of students and young professionals served at that location, Costanzo noted that customers who were older or less educated seemed to prefer being served by “a real person, rather than a machine.” They were particularly reluctant to make deposits via an ATM. ‘A year earlier, the head office had selected three branches, including Victory Square, as test sites for a new customer service program, which included a radical redesign of the branch interior. The Victory Square branch was in a busy urban loca- tion, about one mile from the central business district and less than 10-minutes’ walk from the campus of a large university. The branch was surrounded by retail stores and close to commercial and professional offices. The other test branches were among the bank's larger suburban offices in two different metropolitan areas and were located in a shopping mall and next to a big hospital, respectively. "As part of the branch renovation program, each of these three branches had previ- ously been remodeled to include no fewer than four ATMs (Victory Square had six), which could be closed off from the rest of the branch so they would remain accessibleto customers 24 hours a day. Further remodeling was then undertaken to Tocate @ Rotomer service desk near the entrance; close to each desk were two electronic Snormation terminals, featuring color touch screens that customers could activate to Ghtain information on a variety of bank services. The teller stations were redesigned fo provide two levels of service: an express station for simple deposits and for cashing of Epproved checks as well as regular stations for the full array of services provides! by tle, The number of stations open at a given time was varied to reflect the volume of anticipated business and staffing arrangements were changed fo ensure that more taller were on hand to serve customers during the busiest periods. Finally, the platform area in each branch was reconstructed to create what the architect descxibed ‘a8 “a friendly, yet professional appearance.” Human Resources With the new environment came new training programs for the staff of these three ranches and new job descriptions and job titles: customer assistance representatives (for the platform staff), customer service representatives (for the tellers), and customer Service director (instead of assistant branch manager). The head teller position was re famed head CSR. Details of the new job descriptions are shown in the Appendix at the tnd of this case. The training, programs for each group included sessions designed to evelop improved knowledge of both new and existing retail products. (CARs received move extensive training in this area than did CSRs.) The CARs also attended 2 15-hour course, offered in three separate sessions, on basic selling skills. This program covered tery steps in the sales process, including building a relationship, exploring customer needs, determining a solution, and overcoming objections. “che sales training program for CSRs, by contrast, consisted of just two 2-hour ses- sions designed to develop skills in recognizing ane probing customer needs, presenting product features and benefits, overcoming objecions, and referring customers ‘0 Dias. All staff members in customer service positions participated in sessions de- Signed to improve their communication skills and professional image: clothing ond persona) grooming and interactions with customers were all discussed. The trainer eed. “Remember, people's money is too important to entrust fo someone who doesn’t ook and act the part!” Cas were instructed to rise from their seats and shake hands with customers. Both CARs and CSRs were given exercises designed (o improve their listening ski died their powers of observation. All employees working in places where they could be eon by customers were ordered to refrain from drinking soda and chewing gum while on the job. (Smoking by both employees and customers hai been banned some years earlier under the bank's smoke-free office policy.) “Although Menton Bank's management anticipated that most ofthe increased ex: phasis on selling would fall to the CARs, they also foresaw a limited selling role for the Piatomer service representatives, who would be expected to mention various products Sa Jaalitice offered by the bank as they served customers at the teller windows. For Gratance, if a customer happened to say something about an upcoming vacation, the COR was supposed to mention taveler’s checks, Ifthe customer complained about bounced vReas the CSR should suggest speaking to a CAR about opening a personal ine of credit that would provide an automatic overdraft protection. Ifthe customer mentioned invest- rante, the CSR was expected to refer him or her to a CAR who could provide information Damoney market accounts, certificates of depositor Menton’s discount brokerage service CSRs were supplied with their own business cards. When making a xeferval, they were Cxpected to write the customer's rame and the product of interest onthe Back ofa card give itto the customer and send that individual tothe customer assistance desks Inan effort to motivate CSRs at the three branches to sell specitic financial prod ucts, the bank experimented with various incentive programs. The first involved cash Dottases for referrals to CARs that resulted in sale of specific products. During a one month period, CSRs were offered a $50 bonus for each seferral leading to a customer pening a personal Tine of credit account. The CARS received a $20 bonus for each Case 12 * Menton Bank 523524 Case12 + Menton Bank account they opened, regardless of whether or not it came as a referral or simply a walkin, Eight such bonuses were paid to CSRs at Victory Square, with three each going to just two of the full-time CSRs, Jean Warchawski and Bruce Greenfield. Karen Mitchell was not among the recipients, However, this program was not renewed, since it was felt that there were other, more cost-effective means of marketing this product. In addition, Reeves, the Customer Service Director, had reason to believe that Bruce Greenfield had colluded with one of the CARs, his girlfriend, to claim referrals which he had not, in fact, made, Another test branch reported similar suspicions of two of its CSRs. A second promotion followed and was based on allocating credits to the CSRs for successful referrals, The value of the credit varied according to the nature of the product—for instance, a debit card was worth 500 credits—and accumulated credits could be exchanged for merchandise gifts. This program was deemed ineffective and discontinued after three months. The basic problem seemed to be that the value of the gifts was seen as too low in relation to the amount of effort required. Other problems with these promotional schemes incluced lack of product knowledge on the part of the CSRs and time pressures when many customers were waiting in line to be served ‘The bank had next turned to an approach which, in David Reeves’ words, “used the stick rather than the carrot.” All CSRs had traditionally been evaluated half yearly on a variety of criteria, including accuracy, speed, quality of interactions with cus- tomers, punctuality of arrival for work, job attitudes, cooperation with other employ- ees, and professional image. The evaluation process assigned a number of points to each eriterion, with accuracy and speed the most heavily weighted. In addition to appraisals by the Customer Service Director and the branch manages, with input from the head CSR, Menton had recently instituted a program of anonymous visits by what ‘was popularly known as the “mystery dient.” Each CSR was visited at least once a quarter by a professional evaluator posing as a customer. This individual's appraisal of the CSR's appearance, performance, and attitude was included in the overall evalua- tion. The number of points scored by each CSR had a direct impact on merit pay raises and on selection for promotion to the head CSR position or to platform jobs. “To encourage improved product knowledge and “consultative selling” by CSRs, the evaluation process was revised to include points assigned for each individual's suc- cess in sales referrals. Under the new evaluation scheme, the maximum number of points assignable for effectiveness in making sales—ditectly or through referrals to CARs—amounted to 30 percent of the potential total score, Although CSR-initiated sales had risen significantly in the most recent half-year, Reeves sensed that morale had dropped among this group, in contrast to the CARs, whose enthusiasm and commit- ment had risen significantly. He had also noticed an increase in CSR errors. One CSR had quit, complaining about too much pressure. Karen Mitchell Under the old scoring system, Karen Mitchell had been the highest-scoring teller/CSR for four consecutive half-years. But after two half-years under the new system, her ranking had dropped to fourth out of the seven fulltime tellers, The top-ranking CSR, Mary Bell had been with Menton Bank for 16 years, but had declined repeated invitations to apply for a head teller position, saying she was happy where she was, eaming at the top of the CSR scale, and did not want “the extra worry and responsibility.” Mitchell ranked first on all but one of the operationally related criteria (Interactions with customers, where she ranked second), but sixth on selling effectiveness (Exhibit 1), Costanzo and Reeves had spoken fo Mitchell about her performance and expressed disappointment. Mitchell had informed them, respectfully but firmly, that she saw the most important aspect of her job as giving customers fast, accurate, and courteous service, telling the two bank officers: I did try this selling thing but it ust seemed to annoy people, Some said they were ina hurry and couldn't talk now; others looked at me as if [ were slightly crazy to bring up the subject of a different bank service than the one they were currently transacting, And then, when you got the odd person who seemed interested, YouCase 12 Menton Bank 525 EXHIBIT 1:_Performance Scores of the CSRS ‘Monton Bank: Summary of performance evaluation scores for customer service representatives at Victory Square branch during latest two half-year periods Operational Criteria’ Selling Effectiveness? Total (iiax: 70 points) Tax: 30 points) Score Length of Full-Time i SR Name? Bank Service astHalf 2nd Half tstHalf 2nd Half tstHalf 2nd Half Mary Bell TSyears, 10 months «SS ea 6 20 aC Scott Dubois 2 years, 3 months 8 6 6 9 8 80 ance Greenfield 12 months 48 a 20 26 68 8 Keren Mitchell 2B years, 7 months 6 67 B 2 20 79 Sharon Rubin ‘year, & months 53 5 8 8 6 64 Swee Hoon Chen 7 months ~ 50 ~ 2 — n Jean Warshawski 2 years, 1 month 7 55 21 28 79 83 ‘Note 1 Tors based on sun of ating points agunst various enter, including accuracy, work production, attendance, and punctuality, pestonal appearance, organization of work, initiative, cooperation with others, problem-solving ability, and quality of interaction with customers 2. Points awarded for bath direc sales by CSR (eg, teaveler's checks) and referral sling by CSR to CAR (eg, debit ear, certificates of do posit, persona line of credit) 4, Full-time CSRs only (parttime CSRs were evaluated ceparately) could hear the other customers in the line grumbling about the slow service, “Really, the last straw was when T noticed on the com- puter screen that this woman had several thousand in her savings account so I suggested to her, just as the trainer had told us, that she could earn more interest if she opened a money market account. Well, she told me it was none of my business what she did with her money, and stomped off Don't get me wrong, [ove being able to help customers, and if they ack for my advice, Il gladly tell them about what the bank has to offer.” Selecting a New Head CSR ‘Two weeks after this meeting, it was announced that the head CSR was leaving. The job entailed some supervision of the work of the other CSRs (including allocation of work assignments and scheduling part-time CSRs at busy periods or during employ vacations), consultation on—and, where possible, resolution of —anty problems occurring at the teller stations, and handling of large cash deposits and withdrawals by local retailers (see position description in the Appendix at the end of this case). When not engaged on such tasks, the head CSR was expected to operate a regular tellez window. ‘The pay scale for a head CSR ranged from $10.00-§15.00 per hour, depending on qualifications, seniority, and branch size, as compared to a range $8.40-$12.00 per hour for CSRs. ‘The pay scale for CARs ranged from $9.20-$13.50. Full-time employees (who were not unionized) worked a 40-hour week, inchiding some evenings until 6:00 p.m. and certain Saturday EXHIBIT 2: onk Tellers Today Are Expected to Shoulder ‘mornings. Costanzo indicated that the pay scales were typical for banks in the region, although the average CSR at Menton Wider Job Responsibilities to Meet the Demand for Greater Customer Service Orientation526 Case 12 » Menton Bank ‘was better qualified than those at smaller banks and therefore higher on the scale, Karen Mitchell was currently earning $10.80 per hout, reflecting her education; which included a diploma in business administration, three-and-a-half years’ experience, and significant past merit increases. If promoted to head CSR, she would qualify for gn initial rate of $12.50 an hour. When applications for the positions closed, Mitchel ‘was one of three candidates. The other two candidates were Jean Warshawski, 42, an- other CSR at the Victory Square branch; and Curtis Richter, 24, the head CSR at one of Menton Bank’s emall suburban branches, who was seeking more responsibility Warshawski was married with two sons in school, She had started working as, a parttime teller at Victory Square come three years previously, switching to full: time work a year later in order, as she said, to put away some money for her boy college education. Warshawski was a cheerful woman with a jolly laugh. She had a wonderful memory for people’s names, and Reeves had often seen her greeting cus- tomers on the stzeet or in a restaurant during her Iunch hour. Reviewing her evalu ations over the previous three years, Reeves noted that she had initially performed poorly on accuracy and at one point, when she was still a part-timer, had been put dn probation because of frequent inaccuracies in the balance in her cash drawer at the end of the day, Although Reeves considered her much improved on this score, he stil saw room for improvement. The Customer Service Director had also on oc- casion reprimanded her for tardiness during the past year, Warshawski attributed this to health problems with her elder son who, she said, was now responding to treatment. Both Reeves and Costanzo had observed Warshawski at work and agreed that her interactions with customers were exceptionally good, although she tended to be overly chatty and was not as fast as Karen Mitchell. She seemed to have a natural ability to size up customers and to decide which ones were good prospects for a {quick sales pitch on a specific financial product. Although slightly untidy in her per~ Sonal appearance, she was very well organized in her work and was quick to help her fellow CRs, especially new hires. She was currently eaming $10.20 per hour as a CSR and would qualify for a rate of $12.10 as head CSR. In the most recent six months, Warshawski had ranked ahead of Mitchell as a result of being very success- ful in consultative selling (Exhibit 1). ‘Richter, the third candidate, was not working in one of the three test branches, and so had not been exposed to the consultative selling program and its correspon ding evaluation scheme. However, he had received excellent evaluations for his ‘work in Menton's small Longmeadow branch, where he kad been employed for three years. A move to Victory Square would increase his earnings from $11.20 to $12.10 per hour. Reeves and Costanzo had interviewed Richter and considered him intelligent and personable. He had joined the bank after dropping out of college midway through his third year, but had recently started taking evening courses in order to complete his degree. The Longmeadow branch was located in an older part of town, where commercial and retail activities were rather stagnant. This branch (which was rumored to be under consideration for closure) had not yet been renovated and had no ATMs, although there was an ATM accessible to Menton Customers one block away. Richter supervised three CSRs and reported directly to the branch manager who spoke very highly of him. Since there were no CARs in this. branch, Richter and another experienced CSR took tums to handle new accounts and Joan or mortgage applications. Costanzo and Reeves were troubled by the decision that faced them. Prior to the bank's shift in focus, Mitchell would have been the natural choice for the head CSR job which, in tum, could be a stepping stone to further promotions, including CAR, Customer Service Director, and, eventually, Manager of a small branch or a manage ‘ment position in the head office. Mitchell had told her superiors that she was interested in making a career in banking and that she was eager to take on further responsibilities ‘Compounding, the problem was the fact that the three branches testing the im- proved branch design and new customer service program had just completed a full Year of the test: Costanzo knew that sales ancl profits were up significantly at all three(Case 12 * Menton Bank 527 branches, relative to the bank’s performance as a whole. She anticipated that top man- agement would want to extend the program systemwide after making any modifica tions that seemed desirable. Study Questions 1. Identify the steps taken by Menton Bank to develop a stronger customer orienta~ tion in its retail branches, 2. Compare and contrast the jobs of CAR and CSR. How important is each (a) to bank operations and (b) to customer satisfaction? 3. Evaluate the strengths and weaknesses of Karen Mitchell and the other candi- dates for head CSR. 4, What action do you recommend for filing the head CSR position?