1. What are the strengths and weaknesses of customer satisfaction as a performance measure in this case? In general?
In the past, banks generally would not use customer satisfaction as one of the indicators for the performance evaluation. However, customers’ service expectation has become much higher and highly related to the profitability of the bank in the 1990s’. Customers are requesting comprehensive selection of banking products with thorough customer service. Under the trend, Citibank added the customer satisfaction as non-financial indicator in the new measurement, performance scorecard, to evaluate the performance of branches. The strength of new measurement would motivate the bank to maintain and reach higher quality services, bringing more potential customers into the bank. In addition, it allows the bank to set the best-service branch as a benchmark which others could either learn or follow by improving the performance. By doing so, Citibank encourages all the branches to provide better service not only to shape the overall images of bank but also to honor each branch. However, the new measurement also comes with disadvantages. The different branches have different customer composition which makes it hard to evaluate the customer satisfaction under the same way. Take James’ branch for example, his branch was composed with diversified customers, ranging from sophisticated business customers to informed individuals. The branch may need to deal with more complicated and diversified transactions compared to other branches, which only have individuals doing simple transactions with their financial needs. In addition, some indicators, such as ATM, of the customer satisfaction cannot be controlled by branch managers. Customers usually consider the banking services as a whole when making the evaluation of a branch; hence, skewed results may easily happen in certain situations. The managers won’t have authorization to change these centralized services;...
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