Will Thompson’s Departure Hurt Wachovia’s Customer Experience?

Last week, Ken Thompson (Wachovia’s CEO) was asked to retire by the bank’s board of directors. What will that mean to the bank’s culture that has grown increasingly customer centric under his leadership? Here are a few factoids:

• According to American Customer Satisfaction Index (ACSI), Wachovia has the highest customer satisfaction of any bank it tracks, and has led the way since 2001.
• Forrester’s Customer Experience Index (CxPi) ranked Wachovia 4thout of 14 banks, only falling behind smaller banks: credit unions, BB&T Corp., and Citizens.
• Of the 14 banks in the Forrester’s CxPi, Wachovia placed 2nd in phone satisfaction, 5th in store/branch satisfaction, and 4th in Web satisfaction.

To get a sense of Thompson’s imprint on the bank’s customer-centric culture, I examined his letter to shareholders in Wachovia’s last 7 annual reports. They show a clear and consistent focus on customer experience as a strategic mission. Here are excerpts from each of those annual reports:

• 2001: “The merger of First Union and Wachovia produced an improved market position, exciting growth potential and an operating strategy designed to generate enhanced shareholder value. We are focusing the resources of two fine companies on building a level of service, quality of product and degree of caring for customers that we believe will set Wachovia apart.”
• 2002: “Delivering the Promise In 2003, we intend to demonstrate Wachovia can grow organically as well as anybody in our industry. To do so, our goals are to deliver: Best-in-class sales and service excellence; Best-in-class risk management and financial disclosure; and Top quartile earnings growth.”
• 2003: “In every meeting of the merger integration team, the first comment when considering integration activity was “how will this affect our customers?”… We believe that having fully engaged employees who find real meaning in their work is crucial to our success. It is crucial to attracting and retaining the most talented people; it is crucial to providing consistently superior customer service; and ultimately it is crucial to enhancing shareholder value over the long term.”
• 2004: “Our revenue and earnings performance in 2004 is no accident, but the result of several years of hard work during which all of our employees, from the top levels to the front line, focused their full attention on providing the best possible service experience for our customers.”
• 2005: “With all of these advantages, we have no intention of taking our eyes off the ball. We’ll continue to focus on being the best at providing excellent service to our customers, at being the employer of choice, and in making a real and lasting contribution to the communities we serve.”
• 2006: “Wachovia’s success in leading the industry in customer service for the last six years has attracted attention, and competitors are trying very hard to replicate our success… So in response we remain obsessive about our attention to service… While we earn high marks for the quality and breadth of our product offerings, we are challenging ourselves to be better at seamless coordination between delivery channels, alignment of incentive plans, and ensuring that competing priorities do not hurt our results.”
• 2007: “While most of 2008 will likely continue to be a tough financial environment, we are focused foremost on two things: 1) Vigilantly and conservatively managing risk, and 2) Continuing to take good care of our customers. We believe that the actions we took in 2007 have already taken a lot of risk out of our company, and when the external environment once again improves, we’ll benefit from our steadfast focus on our core businesses and on our customers.”

Other execs can learn a lot from Thompson. He understands a key formula in retail banking: employee engagement leads to good customer experience which leads to higher loyalty which leads to growth. This excerpt from the 2004 annual report represents a blueprint for all CEOs who want to transform their firm’s customer experience:

Our longtime shareholders will recall, however, that it was not that long ago – 1999 – when our customer service had slipped, and we learned a hard lesson in customer attrition. One of my first actions when I became CEO in mid-2000 was to tackle service quality. We increased staffing levels in our financial centers, call centers, and operations area. We revised our incentive compensation plans to emphasize not only sales performance, but service as well. We instituted a clear measurement system to track customer satisfaction through our Gallup surveys of 60,000 to 70,000 customers quarterly. And I chair the monthly meeting of senior managers that ensures we quickly address any operational or system issues that create obstacles to providing good customer service.

The bottom line: Great customer experience takes Thompson-like leadership.