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Questions about the Banking Reform Incentives Programs

Do staff need to be incentivised to deliver customer service? Surely providing great customer service is a given?

Apparently not, in the banking and mortgage industry.

In April 2017, as part of the Australian Banker’s Association’s Banking Reform Program report, Stephen Sedgwick AO set a 2020 deadline for the financial sector to implement changes to incentive payments for banking staff and mortgage brokers. The report delivered 21 recommendations on pay incentives, and has called on banks to ban sales-based bonuses to retail staff and scrap incentives based solely on sales performance – which can “promote behaviour inconsistent with customer interests.”

Sales-based rewards run the risk of staff pushing sales and products that may not necessarily be in the best interests or needs of the customer, just to get the sale and meet their targets.

The big four banks have thus responded with commitments to implement the changes and start focusing on customer service instead, sometime between July 2017 and the 2020 deadline.

Interestingly, Adelaide Bendigo and Adelaide Bank boss, Mike Hirst, said the industry was finally waking up to a customer-centric culture. “The good news for our customers is that most of the recommendations reflect what we’ve been doing for a long time,” he said.  Bendigo removed incentives directly linked to products and sales targets in 2002.  Clearly a bank ahead of its time.

This begs a few questions

Whilst these reforms are to be applauded, they raise a few questions.

  1. Will the new customer-centric focus be extended beyond the mortgage product range to other banking service encounters?
  2. Will front line staff (in branches and contact centres) be included in new customer focused incentive schemes, or is it all restricted to management? NAB’s announcement in August – that 700 NAB retail branch managers, assistant branch managers and sales team leaders in consumer call centres will move from their existing incentive plan to NAB’s Group Short Term Incentive (STI) Plan –  made no mention of including the call centre staff.
  3. How will customer service goals for managers and leaders be set and measured? Will it be on Net Promoter Scores, or customer retention or perhaps a reduction in loan defaults? How will the performance of contact centre agents factor into measuring the success of their supervisors and managers?
  4. What type of incentives will be implemented? Cash bonuses, holidays, gifts, paid time off?

Do Customer Service Incentives Work?

Yes and no.

If we take a look at the factors which influence incentive program success in the Contact Centre environment, the conclusion is that this success depends on three important things. (Whilst these factors focus on the way incentive programs work for Contact Centre staff – the principles are relevant for incentive programs for other employees and executives.)

FIRSTLY – which KPIs are being used to measure “customer service” achievement?

In a contact centre environment, these are the most common KPIs used for incentive programs:

  • First Call Resolution – a worthy KPI, but only really effective if tied in with NPS or C-Sat scores. As we covered at length in our article How to Implement and Measure First Call Resolution Effectively, internal measurement can only assume (by the lack of repeat contact) that the issue was resolved. You really don’t know for sure if it was resolved or if the customer just gave up, unless you ask the customer.
  • Average Handling Time – whilst delivering service in faster time makes the experience more efficient for callers, and reduces costs, the danger of incentivising handle times is that the contact centre is encouraging agents to rush calls, which can result in lower quality service to the customer. In contrast, instead of valuing quick time to resolution or processing high call volumes, Zappos looks at the percentage of a time an agent spends on the phone. Agents are expected to spend at least 80% of their time in customer-facing communications, and incentives are tied to a 100-point Happiness Experience Form which encourages agents to make a personal emotional contact, create a “wow” experience, and address unstated customer needs.

UK firm Photobox provide monthly awards based on a combination of multiple performance indicators, like C-SAT scores and team leader recommendations

SECONDLY – what kind of incentive is being offered?

Not everyone is motivated by cash.

Offering an incentive that will suit everyone is virtually impossible; however, evidence does exist to indicate that non-monetary incentives are often more welcome than cash, because providing a tangible reward is a more lasting reminder of a job well done. The key to motivating people is to offer a range of incentives, so they have a choice and can pick something that really pushes their hot button.

  • Some contact centres hand out points when an individual is spotted doing something well or is achieving good quality scores. Eventually, when the agent collects enough points, they can trade them for something from the “rewards cupboard”.
  • Some team members would rather have a day off than a bonus; but someone else may get more out of a gym discount than a choice of shifts.
  • An innovative suggestion is for an agent to win an hour off to relax while the manager takes their calls.

A further recommendation is to vary the incentives. Offer small incentives – like a daily box of chocolates for a job well done or being the first to reach a target, and also provide a longer term incentive program which keeps people motivated toward winning a bigger prize.

THIRDLY – measuring and reporting

Paul Wield from consultant MCX says that incentives schemes that work are a combination of reward, recognition, and real-time feedback.

  • Keep the buzz going through displaying real-time progress towards goals on wallboards for all to monitor, and individual progress on each agent’s dashboard.
  • While getting a cash increase in the pay packet is welcome, it doesn’t create the emotional engagement nor instil the pride that comes with being recognised and awarded in public. Peer recognition is important for self-esteem and provides motivation for further achievement and career aspiration.

Will CX Incentives Work in the Banking / Mortgage Sector?

Good question. We hope so, because any move to improve the banking service experience for customers is a positive one.

As supporters of the Contact Centre environment, we hope that bank executives recognise the important customer role that agents and team leaders play, involve them in CX strategy development, and include them in incentive schemes.

Premier Contact Point Assists with KPI Tracking and Team Motivation

When we deploy our Premier Contact Point solution into a contact centre, our expert analysts can provide  benchmarking data and assist with setting KPIs, and agent desktop and contact centre wallboard reporting tools to track progress, and keep all informed and motivated.

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