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Does Wells Fargo Prove that Customer Service is Worthless?

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Brian Cantor

The business world’s perpetually-increasing appreciation for the customer experience came under fire this week as a banking analyst took an aggressively contrarian stance.

When a business fails to value the customer service experience in today’s "age of the customer," observers commonly conclude that the business is squandering a significant opportunity to grow. It might technically be successful, but the assumption is that its success is coming in spite of—and definitely being curbed by—its lack of customer-centricity.

Analyst Richard Bove, however, provides an alternative viewpoint: some businesses are successful because they limit the time, effort and resources spent on the service elements of the customer experience.

In a report cited by major media like the New York Times, the Rochdale Securities analyst examines the conceptual inconsistency demonstrated by the success of commercial banking giant Wells Fargo: "I’m struck by the fact that the service is so bad, and yet the company is so good."

He therefore concludes, "Whatever it is that drives people to do business with a given bank, in my mind, now has to be rethought."

Does caring about the customer mean not caring about the business?

Offering a generalized response to Bove’s report, a Wells Fargo representative maintained that customer service is "central to our vision and values at Wells Fargo." And that sort of declaration is no anomaly for the nation’s largest financial institution by market capitalization; CEO John Stumpf recently told Forbes that existing customers—not shareholders--come first, and that if the bank fails to keep them happy, it cannot expect to win more business from them or court new business from additional customers.


Bove’s actual experiences with the bank tell a different story. He notes that he has never received a greeting upon entering his local branch, which is considered a staple of customer-centricity in the banking industry. He also details multiple instances in which personnel at the local branch were unequipped to deal with his personalized banking requests and inquiries.

The encounters were so negative that Bove terminated his relationship with Wells Fargo and moved his accounts to competitor JPMorgan Chase. The impressions were so resonant that Bove saw value in basing an analysis on Wells Fargo’s shortcomings in the customer service department.

And yet, Bove continues to boast about Wells Fargo’s success as a business, touting it as an undervalued entity and "one of the nation’s best run banking institutions."

"I have followed the company and its stock for decades and I am convinced that there is not a better run bank in the country," he declares.

From all accounts, the bank made no attempt to build a relationship of customer-centricity with him. Its representatives were underprepared, if not flat-out unprepared, to fully manage his transactions. But he still feels this is the best commercial banking business in the United States?

The key to Bove’s contention is the notion of a trade-off between customer service and customer acquisition. Bove argues that focusing on service takes attention, resources and money from activities known to deliver a more meaningful return for the business.

"What my Wells Fargo experience suggests is that a successful bank is one that keeps seeking new customers and selling them more products and not getting bogged down by offering service," he explains.

A brazen viewpoint certain to make many customer management professionals scream, the assertion is not necessarily unintuitive for the banking industry. "Switching" from provider to provider is not particularly convenient or attractive, and the result is that threats of departing for more customer-centric banking institutions often prove to be more "bark" than "bite." Customer service matters, but the direct impact on loyalty is often smaller than it is for shoe stores or hotel chains.

Given that reality, Bove is certainly within reason to ponder whether an aggressive commitment to customer service is the wisest use of a for-profit banking institution’s resources.

That reality also, however, sheds light on potential flaws in Bove’s logic.

Imperfect logic yields imperfect conclusions

By downplaying the role customer service plays in building a banking brand’s customer base, Bove would theoretically rely on this notion of the "sticky" customer—customers, even those disappointed by customer service, are unlikely to switch, therefore making a significant commitment to that experience wasteful.

But if that stickiness is a legitimate phenomenon within the banking sector, then it must also be true that efforts to court customers away from other banks will be largely ineffective. There is only so much product differentiation possible within commercial banking, and if service is absolutely not a determining factor in which bank a customer chooses, what exactly would be the motivation for a large segment of customers to switch to Wells Fargo?

Bove, of course, does not really believe in the sticky concept, because he, himself, recently left Wells Fargo due to frustration with the service. That, of course, raises the key contradiction in his findings—how can he downplay the role service plays in attracting and retaining customers if he, in fact, based his own banking decisions on quality of service?

The analyst is within reason to claim that he is an extraordinary case not reflective of the average customer—and thus not a sign that service is a meaningful differentiator—but if he accounts for that statistical dilemma, he must also account for the notion that others do not share in his perspective about the quality of service provided at Wells Fargo in comparison to other banks.

When I brought this story up to a coworker, she excitedly declared, "I love the customer service at Wells Fargo!" With that single anecdote, I already have enough evidence to counter Bove’s experience.

Moreover, broader customer satisfaction studies reveal that Wells Fargo is not a significant laggard in the commercial banking space. While its 73% score from the ACSI is low in comparison to credit unions and regional banks, it ties Citigroup among major banks and holds a significant satisfaction edge over institutions like JPMorgan Chase and Bank of America. Given that data, it is categorically wrong to say that Wells Fargo’s success comes as a result of downplaying customer service.

Insofar as Wells Fargo publicly maintains a strong commitment to the customer, Bove also cannot know what would happen if the organization really took its eyes off the customer experience. At present, Wells Fargo is succeeding while ignoring his advice—its customer service might not be all that great in execution, but it is still committing its time and resources to customer-centricity.

The bank is not, therefore, avoiding "getting bogged down by offering service" and thus not a valid case study for his controversial claim.

And, on top of all that, Bove has no concrete evidence about the factors that encourage and discourage customers from banking with Wells. For all we know, Wells Fargo’s efforts to court new customers would be significantly more successful if it used service as a key differentiator.

But bad analysis can still contain good lessons

While the aforementioned analytical flaws clearly cloud the validity of Bove’s assertion, they do not render one implication of his report moot: businesses do need to understand the value of service to their customers in their industry.

Enamored with how successful customer-centric organizations like Amazon and Nordstrom have been at leveraging glowing service experiences into business results, many customer management professionals incorrectly assume they should attempt to mirror those experiences.

As a result, they force "Kumbaya" customer service initiatives and aggressive social media and loyalty strategies into markets that do not appreciate or even care about such experiential factors. They benchmark their customer management strategies against the so-called "customer experience elite" rather than against the factors that determine the success or failure of businesses in their own industries.

Under the notion of "competing on the customer experience," businesses cannot afford to outright ignore what leaders in other industries are doing. And yet they still must put those strategies and insights into context.

Maybe your customers would rather have a quick, efficient call center interaction than a lengthy relationship-minded one. Maybe your customers would rather have a cheap product that works than a sweetheart return policy.

Bove’s report is therefore valuable in the sense that it will make businesses think about the ideal service templates for their own existing and potential customers. It will ask businesses to consider which customer service initiatives actually impact the business and which simply make people smile.

And that is a line of thinking all businesses must explore.