Getting Real with Customer Experience

At a recent cocktail party I had the opportunity to talk with a community banker about his company’s strategic focus and the fact that despite a well thought out plan, the company wasn’t seeing any significant improvement in results. During the course of our conversation, here is what I heard:

• “We don’t have the scale to compete on price; hence our plan is to compete on value.”
• “Everyone has the same products, and even if we offer something new and creative it can be rapidly duplicated by our competition.”
• “Because our products are not really different from those of our competitors, we chose to focus our strategy in training and empowering our employees around customer advocacy and experience.”
• “While our efforts seem to be recognized by our customers (our Net Promoter scores are on par with Apple and Amazon), our number of services per household isn’t growing. The end result is that the bank is treading water despite its best efforts to use customer advocacy and experience as a point of competitive advantage.”

Sound familiar? It makes me wonder if all the industry investments in customer experience will pay-off. The premise behind most customer experience programs is that through improved front-line employee knowledge on products and services, enhanced skills in asking needs-based, open-ended questions, incentives tailored to doing what’s right for the customer and empowerment to act at the point of contact, customers will have a better interaction with the institution and thus buy more services. Can we grow revenues based on better service, or is this just a myth? Are all the pundits telling us the truth about better results through advocacy, or is it just another point of parity?

The answer to this question lies in four realities of any successful customer experience-driven program. Only by acknowledging these realities and crafting appropriate initiatives will the results lead to improved performance.

Reality 1: Experience does not equal higher price; rather, experience can position the bank to sell higher value added products. Just because the bank is good at something doesn’t mean someone will pay more for it. Instead, a positive customer experience is an ante to be in the game. Customers assume the bank has their best interest in mind and will be honest and capable in steering them to the right deposit account or offering a loan that is fairly priced. They expect to be able to complete a transaction in a straightforward, timely and efficient manner. They know if their bank doesn’t, myriad competitors offer the same service at a comparable price.

That being said, happy customers are receptive customers. By delighting them on the simple things they will be willing to engage about more complex services that can generate higher returns. The engagement door to value-added customer opportunities on treasury services, wealth management, mortgage, insurance, etc., starts with high quality customer experience.

Reality 2: Becoming a trusted advisor requires credibility. Would you ever buy a financial investment based on the advice of a teenager? Doubtful, but you might buy a gaming console from one that has a zombie-like focus on beating the latest edition of Call of Duty.

Trust is based on credibility, and credibility is based on relevance. For experience programs to work in increasing revenues and household penetration, delivery must be made in a manner that establishes credibility of the source offering the service. It can be a well-thought-out web site with content that helps customers educate themselves and make good choices (think Amazon book reviews) or a person that has the skills and knowledge to understand needs and deliver the right solution.

Investment in content, training and education to ensure that all channels and front line employees are articulate in the services they represent is mandatory. For example, branch platform personnel must be able to not only clearly articulate the features and benefits of deposit offerings but also be able to explain the benefits of a customer acting on a mortgage or wealth management referral. Should they be investment experts? No, but they should be able to explain why meeting with an expert is a good idea. Likewise, lenders need to know enough about treasury services to get the client to meet with the cash management team. This is not to say all contact points have to represent all things equally, but it does imply that customers can find it easy to navigate to the right source for information on the right service.

Reality 3: Simplicity is essential. Whether it’s the number of products the bank offers, the ease of navigating the web site or having an intuitive mobile application, customers need to be able to quickly digest the “what” and “how” of doing business with the bank. Furthermore, we can’t expect our employees to explain our services and capabilities and make referrals to experts if the processes or products are too complex. Using business checking as an example, does the bank have two primary offerings or four? Are the transaction limits per account or analysis features easy to understand? In some sense, wouldn’t it be easier to have a single product that has three options that dictate fees based on usage, i.e., number of transactions, online preferences and desire to earn interest?

The less employees and customers need to understand, the higher the credibility and, by default, the better the customer experience.

Reality 4: Liking you does not mean I will give you more business or refer a friend. Net Promoter Score, net new customers and services per household are the three measures used most often to track the success of customer engagement and advocacy programs. The dilemma is that banks with a high NPS often expect to see an immediate translation in increased new accounts and improved household penetration. When the results don’t translate they begin to question why the program isn’t working.

First, experience programs don’t create needs, and they take a long time to show results. Customers don’t necessarily have immediate needs for new services, and the payback could be months or years later when the need arises. For example, if I change banks today, I might open a checking and savings account but I may not buy a new house and have a mortgage need for several years. The key is to be well positioned when that need arises. Having the systems in place to create institutional customer knowledge increases the bank’s odds of getting the next piece of business.

So how did I conclude my conversation with the banker? I told him to go back and assess the expectations from the program based on the following critical components:

• A set of clearly established and realistic growth objectives;
• A deep understanding of front-line employee skills and the identification of strengths and weaknesses that should be addressed to establish credibility;
• Product offerings and features that are easy for a customer to understand; and
• Technology and tools to monitor, track and leverage individual customer interactions over time.

If we understand the realities of what customers expect and what we can influence, we can and will be more relevant to our customers, and they will spread the word.
-jb

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