Customer Experience can become the crucial differentiator for financial services that are almost completely commoditized. Yet resources and investments for customer experience remain limited. Why are organizations reluctant to invest in better customer experience? It could be because they believe the customer experience they offer is in keeping with customer expectations. But the results of a recent study are revealing: 80% companies surveyed believe they deliver superior customer experience, however when their customers were surveyed, only 8% agreed. Poor customer experience results is negative word of mouth, increased marketing dollars to bolster sales, harried sales teams, the loss of market share and lower profitability. Addressing customer experience should be a top priority for financial services.

Think about this: you have a CEO because your business needs leadership; you have a CFO because finance is a critical function; and you have a CTO because without technology business would flounder. Do you have a CCO, or a Chief Customer Officer or a Chief Experience Officer, because your clients and consumers are the raison d’être of your business? If you have a CCO, does he or she sit on the executive management team of the company and champion the voice of the customer?

It is an inordinately simple supposition: if the voice of your customer is not adequately represented, it is not respected.

In the financial services business, where products are largely commoditized, the real differentiator can be customer experience. What customers think about a financial service can often mean what they are willing to pay for it. Customers are willing to pay more, buy more, be loyal and become brand advocates for those who provide a superior experience.

Defining customer experience and understading its impact

CEx is the sum of all experiences a customer has with the company over the duration of their relationship, starting with awareness and moving on to discovery, attraction, interaction, purchase, use, cultivation and advocacy.

As financial services become commoditized, so does the treatment of customers. Adding to the difficulty of creating a positive customer experience is the fact that products and services are becoming complex and ensuring consistence of experience across transactions and channels is becoming an uphill task.

Counter intuitive as it sounds, to the more aggressive and competitive financial services providers, this may spell good news: the tougher the task of creating great CEx, the fewer the winners. This, of course, is just one reason why your company may need a CCO to lead the initiative, listen to customers, make CEx compelling and raise the bar to be counted amongst the set of respected leaders in the CEx space.

Ignoring customer experience can be costly: A Case of a lost empire

The larger the market share of a company, the greater the risk that it will take its customers for granted. The Harvard Business School terms this the “Dominance Trap”. As profits increase, managements begin to confuse customer profitability with customer loyalty. They miss the fact that the most lucrative and influential buyers may also be the angriest and most alienated.

The case of financial software powerhouse Intuit illustrates this well. Its popular Turbo Tax program that commanded 70% of the retail market for tax-preparation software and 83% of the online market began upping tech support prices and limiting software licenses to a single computer. Customers were annoyed. Store-based retail hit a plateau and competitive webbased sites mopped up users who were abandoning Intuit online. Two years later Turbo Tax’s share of the online market dropped significantly.

Companies taking the traditional route to measuring the pulse of the customer via market research and C-SAT feedback are susceptible to a common trap. They stop listening to customers and see them as statistics. Sentiment analysis is abandoned in favor of metrics that reduce customer feedback to numbers.

The ability to go beyond C-SAT and ensure that customer delight is turned into customer devotion is lost.

The Top 5 Barriers to CEx improvement provide an insight into the problem financial services face and the possible resolution:

1. Companies are product and service focused with no clear customer experience strategy. The lack of strategy gets accentuated in a complex multichannel environment.
2. Lack of organization wide appreciation of customer experience. Employee motivation levers are not tuned for customer experience enhancement.
3. Lack of customer experience specific management process and metrics e.g. current C-SAT used as proxy for critical behavior trends like Loyalty or Advocacy
4. Inconsistent VOC programs across channels
5. Lack of budget and urgency to fix the “experience leakage”

The perspective of companies and their employees with regard to brand promise and CEx needs an overhaul. CEx has to be treated as an organization-wide goal. Having a CCO on the executive management team helps drive customer priorities and budgets in the right direction. But institutionalizing CEx as an organizational goal means consolidating and cleaning customer data across department lines and moving employee engagement several notches up to create superior CEx. It can be an expensive, time consuming and often frustrating exercise.

Other factors, some typical to the financial services sector, come into play. By their very nature, financial products are complicated. The fine print makes it difficult for customers to confidently understand if a product fulfills a particular need. To address this, companies grow their sales force, increasing the dependency on intermediaries who are product focused and not segment driven. Ironically, this adds to the customer pain rather than diminish it.

Poor brand support to communicate brand promise can also impact CEx. Over a period of time, negative word of mouth chokes the brand as marketing and customer acquisition costs spiral out of hand. The final nail in the CEx coffin is the lack of customer empathy. A simple query by a customer can lead to multiple interactions with treatment directly correlated to the product rather than customer history of loyalty and value.

Becoming customercentric to improve overall experience

Financial services companies have no option but to undertake the journey from being product centric to being customer-centric (see figure below). They need to align the organization design to customer segments and build a customer interaction layer that is experience and relationship centric.

An example is USAA that undertook a radical realignment from a product centric model to a customer centric model by putting 9,000 customer facing resources under a common organization of Customer Experience. It is in the process of aligning the rest of organization as well with the customers’ needs.

Vivid portrayals of target customer personas and interactions as event maps help companies build an outside-in view from the perspective of various customer groups. Such an approach provides a deeper, personalized connect with each target group. The approach should be matched with an insideout business-centric view coupling the company’s objectives and capabilities with customer needs.

Financial services companies have multiple customer experience initiatives running simultaneously. These are supported by non uniform capabilities and technical infrastructure across business units. The result is a variation in customer experience across channels and lines of business. Complicating matters is the fact that even the best integrated CRM solutions do not carry the leading edge capabilities required to deliver a differentiated experience. The suite requires heavy customization and enhancements to deliver such an outcome.

These issues are tackled by first creating an Integrated Multi- Channel Customer Interaction Model and Experience Strategy followed by assessing the gaps within the existing CRM solution. The second step is to implement solutions that focus on improving customer experience e.g. IBM UNICA for Interactive Marketing, Pega CPM or RightNow Cx for Personalized Customer Service and so on. The enhanced capabilities will provide the ability to execute a customer-centric vision.

The traditional approach focused on Moments of Truth that matter to the company e.g. opportunities that matter to sales or cases for customer service but it ignored the handoffs between departments or channels that comprise a customer’s perception of experience. How many CRM solutions incorporate customer contact fatigue, channel characteristics and organization capability constraints as an integral part of processes at customer touch-points?

Typical CRMs judge relationships primarily based on transactional data within a company’s data warehouses, not on an understanding of the customer perceptions. As an example, not many CRM programs measure Social Word of Mouth.

Improving customer experience

Organizations need a systematic approach that starts from the customer interaction architecture layer, moves to process layer and finally embeds itself within the technology layer. In addition to channel / touch point design, CEx can be embedded into process design as well. Can a high volume business focus reinforce positive customer experiences every time? This is only possible if customer needs are addressed in a manner that makes superior CEx a process function independent of individual employee’s capability to handle that interaction.

Organizations may lack the capability to quantify the ROI extracted from building personas and interaction journey maps. But when properly created and embedded into design processes, personas, journey maps and customer-centric architecture help identify the most profitable customers and quickly design better business functions to meet their needs. But intervention is essential for diagnosing and plugging CEx Leakage Points.

Does superior customer experience also mean higher costs? In order to realize cost reduction along with superior CEx goals, an organization needs to create an interaction strategy that is based on differentiating customer needs. While on one hand it needs to focus on the critical customer needs, where exceeding customer expectations can be a differentiator, there are other points, where it may be possible to satisfy customer expectations by matching the benchmark performance.

Beware, the CEx process can lead to the wrong decisions and actions. Organizations begin to believe that a branding and marketing effort is the same as improving CEx. After all, doesn’t marketing place more knowledge in the hands of the consumer and enable wider choice?

This can be misleading. Good CEx builds an understanding between the customer and the organization, resulting in better product design, news ways to communicate product benefits, and fresh approaches to customer retention.

About the author:

Rajbir Singh
Customer Centric Transformation Principal

Rajbir Singh is a Customer Centric Transformation Principal at HCL and has helped many insurance, banking, media and telecom companies improve customer experience and CRM capabilities. He has been with HCL for over seven years of which the last five have been in Business Consulting. He has worked with customers in US, UK, India and West Asia.