“It is vital not to lose sight of the people who pay the bills, your customers.”
Graham Flower, Smarter Way Mentors
Nobody shrinks to greatness
Because of the Covid-19 pandemic, many businesses are instigating severe cost cutting exercises. It's all too easy to allow the accountants to slash costs from operations, causing long-term damage to a businesses’ ability to grow.
We have identified six universal customer insights that help businesses reduce costs and grow revenue by being relevant to their customers.
These insights help you understand how to assess and optimise the most underappreciated and poorly managed asset your company has, namely customer interaction.
Time to think differently about customer interactions
In our experience, most companies treat customer interaction as a cost to be minimised, automated and ideally eradicated. Never has an opportunity to interact, creating sustainable value for both the organisation and the customer, been more important.
No-one contacts a company to waste their time or to get frustrated. There is always an important underlying reason.
This simple observation is key to creating a business that is built on its ability to ‘sense and respond’ to its customers.
To be relevant to your customers by sensing and responding to them requires you to adopt a new covenant with them.
What customers want – the Customer Imperative
Thousands of our customers have told us how they want to be treated. We’ve summarised this into our Customer Imperative that comprises six simple concepts:
Know and treat me as an individual;
Notice what I need;
Be easily available;
Be on my side (and reassure me that you are);
Leave me in control;
Recognise my value to you;
Know me and treat me as an individual
It is a basic human desire to want to be treated as an individual. We all have different attitudes to money, our individual financial needs differ, and we prefer to deal with a business in a certain way. You need to know your customer on more than a superficial level – and not as a compliance exercise!
Customers will volunteer a surprising amount of personal information provided they trust you to use it for mutual benefit. (You must use it for mutual benefit, or they’ll withdraw it.)
Case study: We offered our customers a review of their relationship with us, covering the way they wanted to get service from us and how we could help them more. Through an informal, but structured conversation, customers told us of their plans, worries and dreams over the next 12 to 18 months. We then discussed how and when we could help them when they needed it, agreeing with them a plan that we actioned through our CRM system.
It's important to note that this was not aimed at pushing investment products, that most customers hate, but a continuous building of our relationship.
Customers volunteered personal information about themselves and their family, such as when they were planning important life-stage events such as getting married, starting a family, or retirement. We configured our CRM system to capture the information in a structured way (allowing free-format comments too) that allowed us to understand how and when we could help.
The valuable data that we gathered helped us understand the future value of individual customers and tailor an individual plan to realise that mutual benefit.
It also allowed us to understand where next years’ sales were coming from and plan based upon customer demand. Marketing budgets were used more effectively by targeting potential shortfalls in advance, rather than reacting to them when it was too late.
Customers frequently expressed pleasant surprise when the member of staff called them when they’d agreed!
Using it means that you no longer have to ‘carpet-bomb’ customers with push marketing that irritates customers and yields poor returns on investment. As you sense and respond to what they have told you, working in partnership, at their pace you’re proving that you’re in the relationship for a lifetime, not a ‘quick buck’.
Notice what I need
This is not just passively listening but doing something about it when you ‘hear’ something that means you can help the customer.
It might be a better way for the customer to access our services through more convenient channels or to get more benefit from a product.
Listening could be through a combination of customer experience surveys, ad hoc feedback and conversations, customer complaints, face-to-face research, social media, abandoned interactions, product activity decline and dormancy.
Case study: We analysed channel usage to understand how individual customers used them. We knew that many customers were concerned about using offshore call centres and many were questioning the impact of all the paper used by banks on the environment. Our teams asked heavy users of telephone banking how they were using the service and whether they’d considered using Internet banking and mobile banking as an alternative. They explained how they could benefit from using alternative channels, reassuring customers of the security in place, how they could stay on top of their finances more easily and how it could reduce the bank’s impact on the environment by using electronic statements instead of paper ones. Customers adopted Internet banking quickly, and vast amounts of paper were saved.
Each customer held a range of tailored individual and service solutions ready to be used at the appropriate moment, irrespective of channel. If the customer was asking about a loan, it would notify employees of the ‘pre-approved’ facility available to that individual customer.
It’s about being proactive. “But, how can we do this for everyone – we’ve 10 million customers!” I hear you say. That’s where understanding your customers and their value comes into play.
In sending and responding you need to be ‘relevant, timely, and personalised’.
To succeed, banks must learn and show three new capabilities:
Be relevant – this means applying themselves to that individual customer and their needs;
Be timely – this means not only a quick response, but anticipating the customer’s need;
Personalise the communication – it is more than getting their name right! It is about customising the message and its delivery to that individual customer’s contact preferences.
Be easily available
That’s not just providing access to self-service equipment or 24-hour channels, but it means adding the human touch (when it adds value to the customer and the business). Most customers still consider banks to be reliable providers of expertise and advice, but accessing that advice can be difficult for customers – especially if it is not face-to-face. It’s not practical for customers to stop what they’re doing and go to the branch to access expertise.
Banks think they’ve got all the services and channels for customers that they need – branches, relationship managers, ATMs, telephone banking, Internet banking, Mobile banking. But they see them from their point of view and not their customers’. These channels require a varying effort from the customer to access them (some are harder than others) and they still have to ‘go to the bank’.
Even when in the channel the customer often has to instigate help, which can be difficult, as they were not designed with that situation in mind (first- and second-generation cost-saving and lack of connectivity legacy thinking).
Banks need to make themselves more easily available: to go to where the customer is and not make the customer come to them. That means an alternative approach to the social media such as Facebook or Twitter or offering a web chat if they sense that the customer is having difficulty completing a transaction or sales enquiry whilst on Internet banking.
Case study: To save costs most banks offshored their telephone banking operations for all customers. This led to widespread customer dissatisfaction across the industry. Recognising the need to keep and grow its higher-value customers a bank on-shored telephone banking for their most valuable customers.
Fronted by an IVR to handle authentication, the system also recognised the customer’s current value and callers were automatically routed to a UK-based call centre and greeted by name, even if they called the standard number.
Be on my side (and reassure me you are)
All banks’ advertising says that they’re on the customer’s side, but does it really reassure them?
In a world where businesses bombard consumers with advertising that cannot live up to the promise, they’ve become somewhat cynical and particularly wary of banks given the number of mis-selling and other scandals.
Do things in the customer’s interest that they wouldn’t expect.
Case study: We implemented a programme to all call higher-value segments of customers when they’ve gone inadvertently overdrawn to stop them paying penalty fees and interest. Counter intuitive? Think of all of that lost income!
Realising that there was a much bigger opportunity, our teams called them to tell them that as a valued customer that you called to stop them paying unnecessary fees and interest and whether they needed our help. We saw amazing results – 98% of opportunities were worked within 48 hours and our team loved calling customers to help them and customers were relieved that the bank was calling to help!
Most calls strengthened the relationship and led to new product sales. It was so effective and well-loved that our teams used to ask for more opportunities!
Listening is more important than shouting. It's ironic that one department was trying to get rid of contact whilst another was trying to get it efficiently.
It might mean that your channels are easy to use and convenient for the customer and not designed to satisfy internal cost-savings.
Banks need to rebuild trust with consumers through actions, not words.
Leave me in control
The Global Financial Crisis from 2008 had many unintended consequences.
One thing that we noticed was the ‘rise of the self-directed consumer’: who know their value; are more demanding; financial savvy; more connected via social media; want to be in control of the relationship; and have no worries about punishing service providers who cannot deliver.
This has shaped the relationship between the bank and the customer from ‘parent-child’ to ‘peer-to-peer’, requiring banks to change the way they manage the relationship.
One skill bank must learn is leaving customers in control but be on their side by noticing when they need help and responding with easy to access to their expertise. That means they will need to understand them as individuals and their value to the organisation.
They need to follow these six Customer Imperatives!
Case study: Customer-facing teams were provided with a range of individual solutions (service and sales messages driven by data analysis) to start a conversation once they’d satisfied the query or request instead of the standard “Is there anything else we could help you with today”. Asking “Whilst you’re on the call, I was wondering whether you’d thought about saving money on your mortgage repayments.” [our data analysis showing that we probably could.] Customers usually responded warmly. Quick call. Lead generated. Employee set-up contact to call customer to discuss in more detail and identify the monthly saving they would make by switching their mortgage to them.
Recognise my value to you
Customers are good at assessing their value to your organisation, but are you?
It remains the case that around 20% of your customers earn approximately 80% of your value.
Do you understand what that means?
Do you know who they are?
Do you do anything about it?
Are you treating all customers the same, giving them all the same level of service and access to you?
Or, do you treat all customers fairly, based upon mutual value exchange?
Unless you calculate and actively use customer value models, then you can’t possibly recognise a customer’s value to you and reciprocate with an appropriate level of service and access.
If you treat all customers the same – irrespective of the value (or potential value) they share with you – the consequences for your business can be dire.
You need to understand:
Which customers create value for your business today?
Is that value sustainable?
Where did our best sustainable value customers come from? (How did you grow or find them?)
How to find more like them.
Case study: A major bank’s Student segment was destroying 7% of the Retail portfolio’s current value. On the face of it this wasn’t good, and many colleagues’ first reactions were to propose to stop acquiring Student accounts.
But when we analysed the bank’s highest performing segment of customers, 30% were once in the Student segment. Another 40% were in the medium-value segment of customers. Acting on first impressions alone would have denied the bank longer-term, sustainable value. Instead, the bank created strategies to grow the value of their Student segment once they’d graduated.
Understanding current value is useful, but you need to appreciate future value to make it an actionable strategy.
High-value customers are often the easiest to understand, but you must also consider the medium-value and low-value customer segments. Knee-jerk reaction strategies (such as exit strategies) are best avoided, as it is likely that you don’t know as much about those customers as your highest value ones. Interacting with these customers not only helps you understand them better but deploys tactical activity to grow their value, or ultimately undertake an exit strategy knowing that you tried to grow the relationship.
It's easier said than done!
Sounds great, doesn’t it!
The devil’s in the detail. These aren’t just statements endorsed by the CEO and distributed on posters, coffee mugs and t-shirts (yes, we’ve had them too!). They require a fundamental cultural shift – from the top to the bottom (and back up again).
Marketing must not just support the principles but live and breathe them. Credit and Risk must not just endorse them but show that they apply them. The back-office support teams must show a change in how they respond to internal and external customers. IT must build systems around the customer.
It must run through your organisation like the lettering on a stick of rock or be the secret society tattoo. We know this from our experience. We’ve facilitated such programmes and understand how this can create a formidable organisation.
It sets out a new covenant with customers treating them with respect and consideration, not just as a source of revenue or as a cost to be minimised.
Case study: Employees implicitly understand the Customer Imperatives, but you need to embed them in everyday processes and systems. We redesigned our customer interaction processes across channels. We created a single view of the customer across over 90% of the banks’ products (including those administered by third-parties). Our omnichannel view helped us ensure that we provided a joined-up customer journey. Incorporating customer complaint and feedback management into CRM system ensured that we didn’t offend customers with inappropriate contact and that everyone dealing with the customer was aware of the need to keep them.
A single customer view also allowed us to calculate accurate customer value scores, segment our customers more easily, and to apply sensible contact strategies that didn’t sell products that they’d already bought.
Creating Sustainable Value Assessment
Our Creating Sustainable Value Assessment helps our clients understand their current capabilities compared to best practice.
It identifies what you are good at and where you could make improvements.
However, its actual power is how it helps get your entire executive team to understand your actual capabilities (not what they think) and to agree the priorities for investment or disinvestment to move the business forward.
It is self-assessed, and we guide your team to conduct it remotely to comply with restrictions imposed by Covid-19.
Once you've completed your assessment, we help you implement the changes by mentoring your team, transferring our skills and knowhow to embed the improvements. We do not create consultancy dependency.
For more information, please see our short guide here.