Sales tactics and customer satisfaction: what approach should banks take?

A JD Power report on US banks showed the highest customer satisfaction levels in five years, while warning that persistent failures around aggressive sales practices were beginning to threaten recent progress.

The report, based on a survey of 83,000 individuals, focused on US banks but highlighted culture and conduct failures that are also relevant in the UK, Europe and other markets.

The findings attracted attention after the Wells Fargo cross-selling scandal. According to the Wall Street Journal, over a 15 year period Wells Fargo opened as many as two million deposit and credit-card accounts without customers’ knowledge.

Aggressive sales practices threaten trust

Branch employees were under significant pressure to increase sales and regularly misled customers during interactions in order to sell products customers did not want or value, according to a Wells Fargo spokeswoman quoted by the newspaper.

The JD Power report confirmed fears that aggressive sales tactics remained common among retail banks and could undermine improvements in public perception over the previous five years.

The proportion of individuals who would recommend their bank reached its highest level in five years, rising from 30% in 2012 to 36% in 2016. Public perception had also rebounded since the financial crisis, with 79% of respondents saying they believed their bank acts in their best interest and 81% saying their bank acts ethically.

The cost of unclear selling

JD Power’s authors described concern about aggressive sales practices as cracks in the foundation of improved customer satisfaction. The proportion of people citing pressure to purchase investment products they did not want or need nearly doubled from 6% in 2015 to 11% in 2016.

The consequences were direct. Among individuals who felt pressured into a mortgage product, 72% regretted the lender they chose. Among those surprised by fees charged to their accounts, 46% said they were considering switching banks.

Poor customer interactions, aggressive sales practices and incomplete fee disclosures therefore had a direct negative impact on brand loyalty.

Monitoring conduct at branch level

For banks, a key challenge is monitoring conduct and culture at branch level. Former Wells Fargo Chairman and CEO John Stumpf resigned after the scandal and acknowledged oversight failures, asking whether the bank could have done more, faster or better.

Stumpf also told reporters that employees did not honour the bank’s values, implying limited ability to manage customer interactions across 6,000 branches.

Recordsure’s response for financial services is to give compliance and customer service managers digital tools to identify where customer interactions fall short of company guidelines and values. this visibility can support faster improvements to customer engagement at branch level.

Branches remain central to advice

The JD Power survey also confirmed that the bank branch remained central to financial product sales. Just 18% of new accounts were opened online, while 78% were opened in branch. Among Gen Z customers, 82% opened accounts at a branch, suggesting that younger customers still wanted advice from a trusted banker when making early financial decisions.

The quality of customer interaction was directly associated with customer value. Of customers who felt their banker completely understood their needs, 65% said they would definitely recommend the bank and placed 48% of investable assets at the bank on average.

Of customers who felt their banker did not completely understand their needs, just 20% said they would recommend the bank and they entrusted only 31% of investable assets to it. The report’s conclusion was that banks need to stop selling and start advising.