Customer focus pocus

Banks are working a little magic to make sure their customers have the best service experience possible...

By Brad Meehan

February 4, 2011

If we are to believe the advertising, it seems that retail banking these days is all about the customer. All banks highlight their customer focus and, as a result, customer expectations have risen.

The challenge (as always) is not developing the strategy or setting the expectation ... but executing with consistency.

Delivering an experience that both aligns with the brand promise and supports value creation objectives in both the short term (eg. cross-selling) and the long term (eg. improved average lifetime customer value).

The reason banks are striving to deliver great customer experiences is that clever analysts have worked out the value of a positive experience. In the past, the business case for an investment aimed at improving the customer experience was more qualitative in nature and was supported with anecdotal evidence (eg. how we service our customers is important, we just can't quantify it).

In capital constrained environments, these business cases were often trumped by business cases that demonstrated a more robust net present value (NPV). Things have changed now.

Positively geared?
Through combining customer satisfaction information (often at a specific experience level) with average lifetime customer value metrics, banks are now able to quantify the value of positive experiences.

This is critical as it means they can quantify the value creation opportunity, which helps to secure the funding to realise the value. Clever managers then measure the impact the investment has, highlight the return and use these numbers to support further investment.

One of the other advantages of adopting a more scientific approach to customer experience management is the improved ability to optimise a bank's investment in recognition of the law of diminishing returns.

This all makes sense, but customer experience improvement is still a complicated task.

When managers consider the factors that influence the customer experience, they realise the breadth of the challenge. Almost every aspect of how a bank operates impacts the experience of their customers. The perceived complexity of the task is too overwhelming for some, so they either do nothing or focus on improving a particular aspect of the experience, usually putting out fires that need immediate attention.

In contrast, firms that achieve excellence and differentiation in this area do the following:
1.  Adopt an enterprise level approach;
2.  Systematically infuse the customer perspective into their business;
3.  Quantify the value creation opportunity upfront to enable the optimisation of their investments and ensure sustained executive support;
4.  Implement effective customer experience measurement systems and integrate these measures into their performance management framework; and
5.  Understand that optimising customer experience delivery is a continuous process.

To adopt an enterprise level approach, it is important to understand the breadth of factors that impact the customer experience. Develop a clear, consistent and common understanding of what is meant by a positive or branded customer experience.

The winners in this space invariably develop a clear and easy to remember set of customer or brand principles that form the basis for how current performance is assessed and the future state is determined. Developing an enterprise level framework that applies the principles at a product and channel level is often a good start.

Infusing the customer perspective into the business can be achieved through implementing a robust Voice of the Customer program that delivers both strategic and tactical insight through a proactive and reactive approach.

Providing your business with granular information on customer sentiment allows strategic direction and operational decisions to be based on evidence in regard to customer value and preferences.

A good Voice of the Customer program should also provide your business with vital metrics to form the basis of your customer experience measures. Combine these with visibility around average lifetime customer value and your executive team will have a set of customer engagement metrics that can demonstrate the link between the customer experience and organisational profitability. This is critical for ensuring the optimisation of investments and sustained executive support.

It is also important to recognise that while the customer experience journey initially centres on developing enterprise and operational strategies, followed by identifying and removing issues that drive dissatisfaction, the focus should then progress to:

• Ensuring excellence from a quality and consistency perspective;

• Decreasing the time required to gain, understand and action insights; and

• Continuously investigating and implementing more effective ways to reinforce the brand promise and differentiate the experience delivered.
  

Organisations that adopt this approach have a far better chance of delivering sustainable improvements in the customer experience they deliver.

Brad Meehan is managing director of Strativity Group in Australia and New Zealand.