They say there are two sure things in this world – death and taxes – but there very well could have been a third part to that equation under different circumstances.
It used to be the case that your bank was such a constant, looming presence that you were more likely to leave your partner than even consider switching. Sadly for financial services executives, that is no longer the case. With the economic crash of 2008 came the unmistakable stench of suspicion which has taken lenders more than a decade to scrub clean.
Today, finance professionals in the UK argue that customer satisfaction is higher than it has been at any point since The Great Recession. What they won’t tell you, however, is that the volume of customer complaints is also at a record high. What then can be gleaned from these two seemingly conflicting pieces of information? Perhaps in today’s consumer-centric market, customers are simply more likely to vocalise their displeasure than before. Or, more likely, is that the concept of customer satisfaction isn’t fit for purpose. Maybe it’s both.
Like most things in life, the top brass has opted to throw money at the problem in the hope that it goes away, but this only serves as a bandage for a much more complex wound. For too long, the industry has been dominated by reward schemes designed to be customer initiatives, but they aren’t particularly effective nor do they come cheap. These plans merely incentivise the customer to chase the reward no matter who the provider is – good for acquisition but quite the opposite of brand loyalty.
Companies have some so universally reliant on these schemes that they have collectively lost the vital opportunity for differentiation. Their unwavering adherence to that ‘best practice’ and subsequent race to the bottom is in stark contrast to a time when they had to play it smart if they wanted to earn and retain customers. The loss of such innovation has been to their detriment and may explain why customers in particular are finding more reason to vent their frustrations.
What is crystal clear is that the finance sector needs to adapt to its customers, but what does that look like in real terms and how will it affect the shape of things to come?
When banks fail to meet customer expectations
There has been much debate about the future of banking within finance circles. While some are adamant that the emergence of digital-only banks will dramatically transform the industry (and the way consumers think), others remain skeptical. Interestingly, the Monetary Authority of Singapore will next month invite five digital banks to apply for licenses. If approved, they will no doubt face an uphill battle for survival, and their best shot at stealing a market share is innovation.
Most crucially of all, such upstart financial institutions tend to fare better in markets where established competitors are failing to provide customers with optimal service. Sound familiar? This evolution will not be limited to markets in Singapore. Over the next five years, every industry will endure change at an unprecedented level as people, technology and networks get smarter than ever before. Companies will have to either reinvent themselves accordingly or risk fading into obscurity.
We caught a glimpse of this phenomenon in action recently when one LinkedIn user shared his experience of returning to the UK and realising he’d left his wallet behind. His subsequent dialogue with the four firms he banked with turned into an impromptu lesson in CX.
He spent 15 minutes on the phone with his first major bank, only to discover he’d have to drive 20 minutes to speak to somebody at the branch in person. 10 minutes of queuing up and a short conversation later, they offered to send a replacement card out in the next 7-10 working days to an address he wouldn’t be at a week later. The second bank, also a major firm, reached the same conclusion, though without the unnecessary drive-by.
Next, he dealt with Monzo. No phone call necessary and he ordered a new card through their app in seconds. The new card could be used immediately via Apple wallet, while the physical card would take under 24 hours to arrive. His new PIN number could be set manually in the same app. Finally, Starling’s process was identical to Monzo’s, except the new card could take up to 48 hours to arrive. To conclude his experiment, he also opened a new account with Revolut. The total time spent to do so, including ID verification, was three minutes, and his new account could also be used instantly through Apple wallet.
A short while later, he closed his accounts with the two major names.
Money can’t buy customer loyalty
Try putting yourself in your customers’ shoes. Why would you want to keep doing business with you? If the best possible answer you can come up with is your rewards program, then it’s time to head back to the drawing board and create new, compelling drivers of loyalty. It’s too easy to entice your customers to stay with a bribe, but that won’t cut it in the long term. Somebody else will come along soon enough with an offer just that little bit more appealing than yours; then what reason is there to turn it down?
A valuable business is one which consistently provides value, and research indicates that customers are willing to forego soulless loyalty schemes in favour of a superior Customer Experience. To put it bluntly: loyalty is earned, not bought. By offering the kind of service that the customer wants, not only do you stand to retain your customers for longer, but win business from your competitors.
Of course, devising a great CX strategy is easier said than done and comes with its own challenges, but the good news is that if you get it right then your brand stands to win big. A European study found that if a commercial bank is able to increase its number of satisfied customers by just 10,000, it can yield an additional annual income of €9.6 million. Likewise, in 2018 Financial Institutions with above average customer service ratings gained approximately 8,675 new current accounts compared to a loss of 3,457 accounts for those with a below average score.
With such gains to be made, you might begin to wonder how exactly to deliver the service your customers demand. After all, corporate executives have spent decades trying to second guess customer needs with little success, but the answer is staggeringly simple. To formulate the ideal CX strategy, leverage your greatest asset: the customer themselves.
For a fraction of the cost of those inefficient loyalty initiatives, you could pool your resources together to unearth customer expectations and discover what actually matters to brand loyalty. By asking your customers the right questions, you can coax out the answers you’ve been looking for. You’ll find the missing pieces of the puzzle that differentiate your brand from the increasing number of clones, access a worthwhile measure of customer sentiment, and diagnose areas for improvement in order of priority. You can even compare your performance against your competitors in a way that doesn’t benchmark against exhausted industry ‘standards,’ ensuring that you become the point of innovation in finance.
If you wish to discover how Promising Outcomes can help you achieve this, contact us below for more information.