Customer Centricity in Banking: Driving Revenue and Loyalty. Developing the 21st century workforce TM

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1 Customer Centricity in Banking: Driving Revenue and Loyalty Developing the 21st century workforce TM

2 In today s hypercompetitive banking environment, most financial-services firms are overlooking the one controllable element that will allow them to stand out from their competitors: an unwavering commitment to providing a dynamic customer experience. A harsh reality faces the banking industry today: Consumers use the words untrustworthy, self-centered, and greedy to describe their interactions with banks. Trust is gone, and many account holders feel trapped with a bank they perceive as undesirable. Today s hypercompetitive banking environment has only served to increase the risk consumers perceive when selecting a bank. Financial institutions can no longer rely on older business models. The landscape is changing, and competition from unexpected global entrants is requiring a new focus on the customer. In the past, financial-services firms could rely on return on investments, cheaper capital, and even name recognition as their calling cards. Smaller banks could compete effectively using knowledge of the local market and specialization. These days, however, it takes something more. Customers are demanding an exceptional customer experience and firms that are founding their operations on this premise are reaping the rewards, including improved customer trust, increased loyalty, and a growing share of wallet. At the Barclays Global Financial Services Conference, the most commonly described strategy of some of the world s largest banks was customer centricity, which means to understand your customers points of view and respect your customer s interest. Yet even with an understanding of the need to keep customers at the focus of the business, there s no guarantee that this will translate to increased revenue and sales. 2 CUSTOMER CENTRICITY IN BANKING: DRIVING REVENUE AND LOYALTY

3 Many executives still wonder: How can we ensure that we deliver a truly world-class customer experience? The key to success is for banking organizations to expand the traditional focus on customer relationship management to encompass customer experience management. Rethink the Customer Engagement Model through: Identifying and anticipating customer needs Leveraging customer data to sell more Mitigating risk and increasing value Maintaining a consistent omni-channel experience Focusing on positive defining moments Naturally, technology has influenced the way organizations interact with their customers. However, those firms that maintain a true outsidein perspective and focus on what customers think and want are often the ones that perform best. For example, their innovative and experimental channel strategies focus on how customers prefer to be reached. This commitment to understand customers needs helps to deliver an end-to-end experience that reflects a holistic, multidimensional view of the customer rather than a narrow view driven by internal systems and organizational complexity. As a result, these organizations see their business through their customers eyes. Mitigate Risk and Increase Value Providing value to customers is important in any business and the more value that is delivered, the more loyal customers become. Loyalty is a key component to retention and value is driven by the ability to create trust and confidence in customers. Obviously, customers enjoy extraordinary service that goes above and beyond their expectations. Delivering the unexpected can provide memorable experiences. Yet over the long term, customers are more likely to become loyal to an organization that understands and eliminates the risk they perceive in doing business with that organization that constantly tries to earn their customers trust and confidence. Customers want to be sure they will be safe from disappointment. Is my personal information secure? Is my money safe? Are my investments the right ones for me? Will I be charged hidden fees? Will I receive the return I m anticipating by year s end? Different customers are averse to different types of risk and have different levels of risk tolerance. Creating trust and confidence that will eliminate customers risks of doing business first requires financial organizations to have a clear understanding of the various types of risk their customers have financial, personal security, time, etc. identifying which are most important to them, and then assessing their customers experience throughout their lifecycle. By listening to customers and having the right feedback systems in place, financial organizations are able to uncover gaps in customer experiences (at various touch points across channels) where the customer s risk is not mitigated. This objective should be the focus of any customer strategy. For example, if a certain segment of your customers are reluctant in providing their personal information through online banking or over the phone, are there systems in place? Are employees trained to assure those customers that their information is secure? Another segment of customers may be intimidated when they enter a branch: Will this bank ignore me because I keep a low balance in my checking account? If I don t earn enough to qualify for this loan will the loan officer make me feel inadequate? Loan officers and account reps need to have the interpersonal skills needed to uncover and mitigate these types of emotional risks. Outstanding, brand-driven customer experiences begin with making customers feel confident that their risks will be minimized when doing business with you. Wowing your customers with over-the-top surprises that go above and beyond their expectations is nice, and it makes for good PR, but there s more to it than occasionally exceeding expectations. Delivering consistent customer experiences across all channels and touch points that create a level of trust and confidence among customers is the key to CUSTOMER CENTRICITY IN BANKING: DRIVING REVENUE AND LOYALTY 3

4 creating engaged and committed customers for the long term. The Power of Customer Experience Two factors make customer centricity essential for banks performance in uncertain times: Customers are more diverse, with specialized needs and preferences. Understanding your customers requires more effective interactions between your customers and all levels of the organization. Customer expectations are rising while their sense of loyalty is eroding. Financial institutions are no longer safe just offering higher rates or more products. Customers are looking for value beyond the tangible. They want to feel appreciated, valued, and that they have a financial partner in the organizations they do business with. Satisfying their requirements demands more focus and consistency, and will require an understanding of customer need at the point of interaction. A cultural bias toward the customer can only be accomplished by design. Organizations that want to win the battle for customers must establish corporatelevel structures for performance measurement, oversight, and accountability, and this is directly linked to how well the customer experience is managed. Banks that strive to be customer-centric must: Create incentives that encourage all employees to cultivate a positive customer experience. Identify a customer centricity champion or chief customer officer to advocate for end-to-end customer focus. Assess the impact of new initiatives, policies, or processes on the customer experience before putting them into effect. The fact remains that when an organization seeks to deliver a brand-defining experience, there must be a company-wide commitment to consistently and extraordinarily wow the customer. However, worldclass customer-experience organizations know that the most effective strategies and technologies in the world are rendered useless unless the organization is able to effectively deliver on three key objectives: Understand the customer Connect with the customer Deliver on the promise of customer experience Understand the Customer Customer-centric organizations have the data they need to succeed through customer segmentation and analysis. These organizations also have a differentiating ability to translate these insights into the right products for the right customers. Customer-facing employees must be able to engage with customers in way that uncovers customers true needs. Connect to the Customer Through channel innovation, solution-centric selling, and effective partnering, customer-centric financial organizations are able to reach the right customers at the right times, in the right places, and engage in a two-way exchange of information. They maximize marketing investment to reach the right customers, with the right messages for the right products in the right channels. Deliver on the Promise of Customer Experience Customer-centric organizations also deliver consistent and highly relevant customer experiences that exceed customer expectations and fulfill the brand promise. This creates trust and loyalty that insulates customers and revenue from a myriad of competitors. Investment Required for Owning the Customer Experience Technology, social media, and the financial crisis have all had extensive impacts on how banks must consider customer experiences. Notably, there is 4 CUSTOMER CENTRICITY IN BANKING: DRIVING REVENUE AND LOYALTY

5 one constant: An emotional attachment to your brand is the critical element in protecting customers from your competitors and in protecting your bottom line. While banks must consider client segmentation, channels, analytics, and the constant threat from new entrants, employees are the ones tasked with creating positive defining moments. Your bank s employees continue to be the driving force behind your customers impression of your brand. Through extensive worldwide research and decades of experience partnering with banking clients, AchieveGlobal understands what it takes to win the battle of customer perception. A five-step process helps define the roadmap to take: 1. Define What Customer Experience Means to Your Organization All members of the institution must be able to translate the strategy of your customer experience into actionable daily behaviors. Leaders must be able to coach and create systems of accountability with their teams that support the desired customer experience outcomes. Employees should be able to say with conviction, I understand why this is important, what my role is in achieving the desired outcome, and I am committed to being a part of the solution. 2. Develop a Consistent Customer Engagement Strategy While employees are important contributors to the acquisition and service aspects of client The Five Pillars of Increasing Customer Value Perception Define "What" Customer Experience Means to Your Organization Develop a Consistent Customer Engagement Strategy Utilize Skills and Exhibit Behaviors Evolve Through Effective Leadership Maintain Corporate Support CUSTOMER CENTRICITY IN BANKING: DRIVING REVENUE AND LOYALTY 5

6 experience strategy, world-class firms need to develop systems and behaviors that uncover known and unknown customer needs, create replicable behaviors, and drive a consistent experience throughout the customer interaction lifecycle. 3. Individuals Utilize the Skills and Exhibit the Behaviors Customer expectations are based on several factors: past experience, marketing, word of mouth, and experiences at other service organizations. Through use of defined skills and behaviors that have been aligned to your defining moments, your associates have the opportunity to create a positive gap between what a customer expects and their perception of the actual experience. As a result, customers come away from defining moments having experienced more than they expected. These critical components provide organizations with the opportunity to create loyalty among customers, a higher referral rate to potential customers, and, ultimately, greater sales opportunities. It s also worth noting that effective customer interaction uncovers unknown needs and the potential for a virtuous cycle of positive defining moments. 4. Leadership Support and Coaching Too often when a customer experience strategy is implemented, banking leadership focuses on the knowledge portion of the strategy, and neglects to focus on skill. In order to achieve the desired outcomes of a customer experience strategy, there must be active coaching at all levels. Doing this allows the organization to direct the skill processes that bring the strategy to life, and develop the appropriate skills and behaviors necessary to deliver on the promise of your brand. Branch managers and frontline leaders are important links in the leadership chain and conduct the critical day-to-day work that brings the customer experience to life. These leaders must continually assess the level of service their team members provide, give positive and constructive feedback, and work to build a team that exceeds customer expectations. Without this support, associates lack the consistent reinforcement and application to instill the desired behaviors for successful execution. In turn, customers will report inconsistent levels of satisfaction. 5. Effective Corporate Support at All Levels Operational focus is still critical to banking success and plays a critical role in owning the customer experience. But there are other critical components to consider. Too often corporate leadership focuses solely on productivity or revenue metrics. While these are also important, management must align those metrics and other dashboard measures to the appropriate skills and behaviors, which are linked to the desired customer experience. Doing so will align the tangible tasks and measures with the proper skills and behaviors that impact those results. 81% 81% of companies with strong capabilities and competencies for delivering customer experience excellence are outperforming their competition. - Peppers & Rogers Group 6 CUSTOMER CENTRICITY IN BANKING: DRIVING REVENUE AND LOYALTY

7 How We Can Help To start investing in a customer experience strategy, ask yourself the following questions: What is the essence of our brand promise? What will it take to create a consistent experience across all channels? What is the precise customer experience that realizes the promise? What skills, attitudes, and behaviors are needed to enable a successful implementation? What are the responsibilities of leadership to ensure successful support and reinforcement? What metrics will be aligned to support the ongoing measurement of the customer experience impact? AchieveGlobal is prepared to help design and implement a customer experience solution that s designed to impact the interactions that help define your business. Our experts can work with yours to develop and implement fact-based, customercentric strategies that are focused on providing differentiated experiences that build trust. CUSTOMER CENTRICITY IN BANKING: DRIVING REVENUE AND LOYALTY 7

8 About AchieveGlobal In the 21st century, the level of human skills will determine organization success. AchieveGlobal provides exceptional development in interpersonal business skills, giving companies the workforce they need for business results. Located in over 40 countries, we offer multi-language, learning-based solutions globally, regionally, and locally. We understand the competition you face. Your success depends on people who have the skills to handle the challenges beyond the reach of technology. We re experts in developing these skills, and it s these skills that turn your strategies into business success in the 21st century. These are things technology can t do. Think. Learn. Solve problems. Listen. Motivate. Explain. People with these skills have a bright future in the 21st century. AchieveGlobal prepares you for that world. World Headquarters 8875 Hidden River Parkway, Suite 400 Tampa, Florida USA Toll Free: Developing the 21st century workforce TM AchieveGlobal, Inc. M01438 v2 (03/2014)