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Improving—and Systematizing —the Customer Experience
BY KENNETH CLINE
Wells Fargo’s Jay Freeman says consistent execution
is the key to improving the customer experience.
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SYNOPSIS | Improving the customer experience is a key strategic issue in retail banking, but there's much debate about the best way to achieve this. Wells Fargo's Jay Freeman says his company believes in ascertaining what customers really want and then delivering on those expectations consistently across the franchise. While branch ambiance and distinctive marketing can help, Freeman says methodical day-to-day execution is the key to success.
Improving the customer experience has become a central strategic issue in retail banking as institutions realize it offers the chief means of distinguishing themselves in a commoditized industry. It was certainly the hot topic at BAI's Retail Delivery Conference & Expo last November, where some speakers advocated taking the process to a Starbucks- or Disney-like level in which a distinctive customer experience is integral to the brand.
BAI's SmartTactics Conference & Expo, in April, will also feature much discussion about the customer experience but with a different tone, reflecting the wide divergence of industry opinion on this issue. General session speaker Jay Freeman, executive vice president, regional banking sales, service and development with Wells Fargo & Co., will discuss the customer experience as Wells sees it: not so much a matter of branch ambiance and distinctive marketing as a grind-it-out approach to improving customer service. As Freeman says in the following interview, "Standardizing a process for delivering a great customer experience consistently across a broad distribution network is all about execution."
Freeman does believe in the importance of connecting
with the customer on an emotional level, as opposed
to simply improving customer satisfaction scores. But in
his view, achieving that emotional resonance comes from “exceptional execution against customer expectations.”
Wells’ process is all about ascertaining the things customers
really care about — like reduced wait times in branches,
for example — and then delivering on those expectations
consistently across the franchise.
“The solution is a comprehensive, end-to-end process
— not a magic bullet,” Freeman says.
Q | In banking today, there’s an intense focus on improving
the customer experience. But that means different
things to different banks. What does it mean to Wells
Fargo?
FREEMAN: Our vision and values state very clearly that
what we want to do is help our customers succeed financially.
Through that process, we believe we earn the right
to become the principal provider, the preferred resource,
for all our customers’ financial services needs.
That only can happen if we have gotten well beyond the
point of having satisfied those customers with the process and
service that we provide. We have to earn some level of loyalty
with those customers — to connect with the customer on an
emotional level. Our vision provides a very clear context, an
actionable definition, of what customer loyalty and delivering
the customer experience is all about.
Q | So your focus, then, is not so much on some of the "experiential" tactics being discussed in the industry today, i.e., the creation of a Starbucks- or Disney-like customer experience?
Freeman: The appearance of our banking stores is certainly important, but the central focus has to be on what our customers want or expect. To understand what truly motivates them to feel they're getting the value they signed up for, on a rational and emotional level, the central question is: How can we achieve something more akin to passion in the relationship with those customers?
That achievement certainly can be aided by things that we do cosmetically within our stores, but it's a bigger equation than that. We think the solution is a comprehensive end-to-end process relative to the customer experience.
Q | How do you track the kind of customer loyalty you're hoping to instill? What kind of metrics do you use, and how do you know whether you're reaching the target?
Freeman: There are leading indicators, there are current indicators and there are lagging indicators.
Probably the most important lagging indicator is the effect of customer loyalty on our revenue growth. We look for significant improvement and momentum in the depths of the relationship, frequently referred to as customer cross-sell, maintained by the households we serve. We surpassed a major milestone last year when the average number of products maintained by our retail banking households exceeded five. While it's difficult to get comparative information in this arena, we believe a five-plus products per household ratio is definitely among the best, if not the best, in financial services.
Notice I said five-plus. Another thing we look at is the total number of households with eight products or more. This is another area where we've seen significant improvement. In 2001, roughly 12% of our customers had eight product relationships. Today, it's around 20%. So, we know it's doable, because one-fifth of our customer base already has eight products with us. And, since the average American household has somewhere between 14 and 16 financial services products across multiple providers, the potential to fuel growth through cross-sell is vast.
Now, while depth of products is a lagging indicator, it's not particularly actionable is it? So the question becomes: what are the things that you do today and tomorrow that will have the long-term effect of deepening that relationship? The answer to that question may seem simple but you've got to determine what's most important to your customers and then execute on those things brilliantly. What's most important to your particular customers will differ and depend on your customer base, your channel delivery options and your product offerings.
We know the one common denominator that permeates not only retail banking, but also retail in general, is convenience. People expect convenience and don't expect to be left waiting. Managing wait time is a key priority within our organization and we believe solving for this issue is a ticket to play in the customer experience arena.
The other thing we've learned is that the way customers are welcomed into our stores is also important. It is said that the best retailers make a customer feel like an honored guest in their stores. Again, this may sound simplistic but it matters and it's difficult to do with consistency.
So, among other factors, minimal wait time and enthusiastic welcoming are two important leading indicators that are going to start that value chain, which ultimately develops the depth of relationship we talked about earlier on, which is the lagging indicator. That's all well and good, now how do you put this into practice?
One important key is regular measurements against the expectations you've established. This measurement process provides you with an understanding of how well you're doing against meeting your customers' expectations. Wells Fargo conducts surveys that give us a statistically meaningful base of customer input at a store level, every month. It becomes an important element in the scorecard against which the stores are measured, and against which we manage.
Q | Do you poll customers from every branch or just a selection? How comprehensive is this poll?
Freeman: Very comprehensive. We do 50,000 customer surveys every month. Over the last two and a half years, we've conducted over a million customer surveys.
Q | So, you know then, over time, what the customer satisfaction levels are at each branch?
Freeman: Yes. And it's actionable. Store managers can tell not only how well the company is doing on average, but also specifically how they're doing at their stores. Managers are empowered to act on the information, which is provided on a very frequent basis.
Q | Let's just step back a minute and look at this on a more theoretical level. What do you think about all this talk in the industry about banks needing to go beyond just improving customer service to trying to create a special ambiance in their branches, to reinforce their brand?
Freeman: Organizations are grappling for the right formula, and I think many are onto something. Research indicates that customer satisfaction, while an important baseline, doesn't get you much in terms of sales or retention lift. If you look at the degrees to which satisfaction tends to influence customer purchase behaviors, or degrees to which customer satisfaction influences your customers' potential to leave, satisfaction alone is just not a very strong indicator.
Our contention is that the missing ingredient may not necessarily be ambiance in a store, but rather it is emotional attachment. Customers who are loyal and emotionally bonded to your company are more profitable, buy more and stay longer. We're learning it has a lot more to do with fulfilling customer needs in a predictable way, treating customers fairly, and earning their trust. It's establishing high expectations with your frontline team around how customer-touch points are supposed to be managed.
Delivering a great customer experience consistently and cultivating engagement in every front-line team member can be very challenging. However, we believe it is certainly doable.
Take wait time, for example. We provide many tools to enable our stores to manage wait time, including staffing models, cash dispensing systems, and proven queue management strategies we call "stage-coaching."
We've found that for wait time, as with many customer experience endeavors, the solution is a comprehensive, end-to-end process - not a magic bullet. The goal is always to be as streamlined and simple as possible. The more complex, the more likely a system is to break down. Our industry is also about volume and there are literally millions of opportunities to get it right or get it wrong.
Q | Yet from a branding perspective, banks don't really stand out from each other. How do you convey a branding image without creating a Starbucks- or Disney-like experience?
Freeman: We think customers expect a "wow" experience, notwithstanding the product or service. In a very real sense, the brand promise is the product of exceptional execution against customer expectations.
Standardizing a process for delivering a great customer experience consistently across a broad distribution network is all about execution. That consistency is very hard to achieve, but is also very necessary. Our customers expect the same high-level experience from one store to another. They all see it as one Wells Fargo, so managing that variability of performance is really, really important to us.
It then gets back to the data. Having the measurable data that we've talked about gives us the opportunity to manage at a local level. But we can also look at the long-term trends and the variability of performance and manage that variability out of the equation at every turn possible.
Q | To return to that lagging indicator, the cross-sell ratio, there is debate in the industry about whether you can focus on service and sales at the same time. Do you inevitably do one at the expense of the other?
Freeman: We've learned it's not really an either/or question, that you can't have sustained success in sales without excellent and consistent execution on service. It goes back to vision and values. As customers, none of us are going to make a long-term, consistent, conscious decision to purchase from a company we don't trust, respect and admire.
When your organization is committed to providing good quality service, you then have the basic ingredients necessary to be successful over the long term in sales. Pursuing sales, in absence of a commitment to the customer experience, is a short-term strategy by definition.
There is a tendency to want to put sales or service into two separate boxes. We're convinced they're one-in-the-same. If a customer is sitting down with a banker and opening a new account relationship, that would be considered a sales discussion but is that not also a customer service experience?
The customer experience is really the end-to-end experience with the customer. It includes, traditionally, "sales discussions" and "service discussions," but it's really about the customer experience. We have just found you cannot separate one from the other.
Q | How do you maintain that sales/service balance in terms of providing incentives to your employees?
Freeman: Well, it's an academic discussion, unless you've got good metrics around all of the attributes that you want to measure. Many organizations struggle with this and lack a good metric around how their customers feel. We have made the investment and have that kind of data.
Once you've got that data in hand, it becomes a very doable undertaking to combine those customer experience measures together with other metrics to provide a complete performance dashboard for the store. In our case, we've built an incentive compensation plan around the activities and effectiveness metrics we know are closely linked with customer loyalty.
There's that old adage, "What gets measured gets done." When that new account is opened, for example, we follow up with that customer to ensure that they received their checks on time, or their debit card. We know that follow-up call is really critical, so we have a contact events management system. We can then schedule future follow-up calls with that customer. We can create measurement reports to see how this activity is happening in each store or across all of our 3,200 stores.
In essence, these are the attributes that we have branded. We think they deliver more tangible value to the customer and are the basic ingredients on which our success in cross-sell is based.
And finally, there's our team member engagement process. We believe the only way that you can really build an emotional bond with your customers is if you've got an emotional bond and a sense of commitment with your team members. We know our team cares about the customer. They are our competitive advantage.
So we poll our team members to assess their sense of engagement. We ask many questions to determine engagement. To what extent do they feel they're in a position that allows them to do what they do best every day? To what extent do they feel they've been given the tools and equipment to do their jobs effectively? To what extent do they feel they receive recognition for doing a good job? And so on.
Customers know when they're dealing with a service provider who really believes in their company and its mission, versus somebody who's just going through the motions.
So, all of our team members participate in annual surveys that provide feedback on how they feel about the various attributes we were just talking about. This provides feedback at a work team level that a local manager and the work team itself can then reflect on and act upon. We believe in local decision-making. With the active support of teams like Human Resources, Learning and Sales Development and Marketing, we think it's important to put customer and team engagement together and manage them as close to the team member and customer as possible.
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