Customer Satisfaction and Net Promoter Scores Fail to Detect Unfair Treatment and Discrimination

July 17, 2012 - PRLog -- High Customer Satisfaction Scores Do Not Predict Fair and Equitable Treatment

Many companies advertise high satisfaction scores as a means to attract customers by fostering trust and an image of meeting customer needs. Such advertising can be misleading.

It’s assumed that high customer satisfaction and net promoter scores mean customers are fairly treated.  It’s up to the consumer to judge whether or not the quality of service and product meets his or her needs or expectations. It is up to the consumer to make the best decision and reject faulty products and unsavory practices. If the consumer judges that his or her needs are met he or she is highly satisfied and will purchase the product and recommend. If the consumer is highly satisfied and will recommend the financial institution then the customer is treated well. The premise is false and can lead to significant risk for a financial institution or any company. Business risk in terms of lost revenues associated with providing unsuitable or faulty products. Reputation risk associated with allegations of discrimination and customer complaints and charges of unfair or misleading acts or practices. Legal risk associated with violations of the consumer protection laws.

Specific examples include:
- Spending 40 minutes with a non Hispanic white customer describing the mortgage products offered, rates and terms and application procedures while spending 5 minutes with a simialrly situtated African American customer and refering the customer to a mortgage specialist about government sponsored or assisted mortgages;
- Telling a potential customer inquiring about a home equity loan the customer will not qualify for the loan amount requested but will qualify for a lesser loan amount and to make the difference up with a credit card;
- Not informing a reverse mortgage customer that he or she must reside in the home and if not the loan will come; or
-Telling a new checking account customer to open a credit line linked to the checking account to cover overdrafts without informing the customer about the interest associated with the credit line and the fees associated with transfers to cover overdrafts

Instances where companies and customers are highly satisfied but unfairly treated cover complaints and allegations of unfair treatment against mortgage companies and credit card companies. Companies such as Countrywide Mortgage, SunTrust, Wells Fargo and Discover are ranked high, if not highest by trusted companies, such as JD Power in terms of customer satisfaction. Some of the allegations and complaints include the sale of inappropriate products, charging Hispanic and African American customer’s more than similarly situated white customers and misleading telemarketing practices in the sale of products, including credit protection and identity theft protection.

Paul Lubin's book Protecting Street: Measuring the Customer Experience in Financial Services for Business and Public Policy, http://www.routledge.com/books/details/9780415996013/ describes
time tested market research methodologies that can help ensure high customer satisfaction and long term customer loyalty and fair and equitable customer treatment. Mystery shopping, matched pair testing,  post application consumer telephone surveys, employee interviews, consumer focus groups, file audits and statistical modeling are tools companies and government can  use to help ensure consumes are treated fairly while receiving understandable and sound information about financial products.