I’m going to go out on a limb and make a bold statement: Just because you have good customer service people doesn’t make you a customer-centric company.
Around the clock, in just about any venue in the world, in almost every industry imaginable, company executives are deluding themselves into thinking they are highly focused on their customers because they have a few shining stars in their customer service department.
I run across this problem continually with clients and in conversation with executives who want to prove to me that they are the epitome of customer service. Their discussions are peppered with the phrases, “customer-centrism,” “customer retention,” “customer satisfaction” and pretty much anything using “customer” as a preceding adjective.
‘It is often the case that retail bank executives’ idea of being customer-centric is offering more appropriate products for individual customers.’
But typically, they don’t see the returns, especially when it comes to identifying advocates from their customer base or increased purchasing through up-selling and cross-selling—or even lower churn rates—that justify a self-designation of customer-centrism.
What these people don’t understand is that, in an era when the customer has control, the customer is expecting to participate in the decision-making around his or her future. A sufficient level of transparency is necessary for those customers to make intelligent decisions around something related to their future.
For a company to provide that transparency takes a lot more than just a friendly smile and some bits of useful knowledge from top-flight customer service people. It takes knowledge of the customer, gathered through analytics and data mining and by listening directly to the customer, aka the voice of the customer. It takes sales and marketing programs that are attuned to the conditions of the era, one dominated by an empowered customer who, as an individual, not only has unprecedented choice when picking where he or she is going to acquire products and services but also has unprecedented range in affecting what others think—both positively and negatively—about the companies providing those products and services. Customers as a class (if you can call them that) have the tools and reach to affect what any company does or says. And this will be increasingly powerful as the 21st century progresses.
|Drilling a little deeper: Wachovia Bank
Wachovia is the result of several mergers and acquisitions in the mid- and late 1990s. Wachovia Bank was first acquired by First Union Bank, a bank so notorious for its poor approach to customers that, after it acquired Wachovia, it took the name of Wachovia for a fresh start. Now this bank is consistently cited as the most truly customer-centric bank in the United States, with regular advocacy scores of more than 40 percent—more than twice that of most other U.S. banks, according to the 2006 Forrester Group Trends Customer Advocacy study). Given that Wachovia has 13 million customers, that’s a hefty chunk of advocates.
What does the company do to earn this customer trust?
First, it concentrates, not on lifetime value of a customer—meaning, how much the customer is “worth” to us over his or her history—but on customer equity, a measure of how much value the customer will provide through his or her household over time. And it couples that measure with the value the bank provides to the customer through an understanding of what the customer actually will need over that timeframe, distinguished by different needs at different times. This allows Wachovia to develop a “value profile” for each household.
Wachovia also examines the effect on the customer of a sale of a specific new product or service over time before anyone beings a discussion with the customer about a product. Wachovia doesn’t ignore how that purchase could affect the sale of other future products and services for that specific customer. All of this data is used, not to figure out the next product to sell but to optimize the approach to the individual customer and his or her household.
Think not? Let me get anecdotal on you for a minute. If you’ve read my blog, you’ll know I’ve been engaged in a months-long battle against DirecTV’s anti-customer policies. I waged a significant campaign against it, in fact, that drew commentary and, finally, response from the newly minted senior vice president of customer care (she’d been on the job three weeks) responded, and she is now writing a bi-monthly commentary on how DirecTV is taking care of its customer problems. That happened simply because I’m aware of my empowerment as a customer and have the tools to do something about it.
But there is more.
It also takes employee incentives—no one does anything for free—and often a significant change in processes and investments in technology to make sure that this customer-centric behavior is institutionalized throughout the company. To support such institutionalization typically takes a significant culture change at the company, which is very hard. Especially hard because the illusion of customer-centrism is often pervasive and has to be overcome before a real “voice of the customer” driven culture is pre-eminent.
Retail banks, in particular, have been spending a lot of time and money trying to be customer-centric. Yet, it is often the case that retail bank executives’ idea of being customer-centric is offering more appropriate products for individual customers. That led to a large investment during the late 1990s and early part of the millennium in tools for segmenting the large quantities of customer data so that the banks could analyze which products would be best suited for which segments.
Unfortunately, this type of thinking can lead to an apparent success that is actually a miserable failure. For example, one large Singapore retail bank sold an 80-year-old woman a 10-year certificate of deposit of significant size. While the numbers reflected “new product sale” and, thus, success, the woman’s family was so outraged at an investment that wouldn’t mature until she was 90—an obviously unthinking act—family members pulled out all their hefty holdings from the institution.
Even though the bank rep was charming, solicitous and efficient according to reports on the scene, what neither he nor the bank took into account was the kind of experience that the customer was having. Which is the truest differentiator.
If you’ve seen the results of recent IBM and Walker Information studies , you wouldn’t be surprised by customers’ attitudes toward retail banks, unless you—like retail bank executives—believe banks have been carrying out customer-centric policies and programs.
Sixty-six percent of the respondents of the 2004 Walker Loyalty Report for Financial Services said they were not willing to continue their relationship to the bank, though 75 percent were, at least, somewhat satisfied. This can be considered adequate customer service, but there’s clearly no culture dominated by the “voice of the customer.”
IBM, in its 2006 study, Unlocking Customer Advocacy in Retail Banking—consistent with Walker Information’s results—found that only 24 percent of all customers considered themselves advocates of their banks, meaning that they would be willing to recommend the banks. And nearly 50 percent were antagonistic. These customers, and the apathetic 27 percent “high cost to serve” customers who are either barely profitable or simply too expensive to maintain, together make up 70 percent of the retail bank industry’s customer base.
So what’s a financial executive to do?
For starters, listen to the “voice of the customer”—the real voice, not the perceived one rolling around in your head. Bring real customers in to understand their perspectives, their ideas on what they need. Then figure out how that works with your company’s game plan.
Build the infrastructure for a continuing communication with those customers by providing the processes and technologies that foster this communication.
Give the customers control over their experience. For example, while online banking was implemented as a cost control by most banks, the unexpected result was that customers loved the idea of having instant control over the movement and knowledge of their finances. It improved the level of customer experience.
Make sure that all the processes, technologies, programs, communications channels, data sources and reporting are aimed in the direction of a culture that is defined by the creation of customer advocates.
While you might not be working for a retail bank, let the lessons of retail banking be a warning and a useful insight. Just because you have a few (or even a lot of) really good customer service folks who have a smile and a cup of java (real or virtual) for a customer doesn’t mean you have a customer-centric company. There is clearly a lot more to that than nice folks—though, having nice folks is a start.
Smile and bring those customers in to start consulting with them on what they need to make you smile because you are really focused on them. It will make you happy.