Although banks have continually sought to offer better products and prices to improve the customer experience, since the financial crisis many have been hampered in these efforts by regulatory burdens and a cost-cutting mindset. The inability to devote sufficient resources to delighting customers is a paradox, because banks have a real need to attract new customers and deepen existing relationships given today’s low-growth environment, near-zero interest rates, compressed margins and increased competition.
To address this challenge within the scope of existing resources, banks should focus on pivotal customer events. These are the interactions of greatest emotional importance between a customer and a service organization. They represent inflection points where customer advocacy can be cemented or lost forever; in other words, they have significant potential to either create or destroy value.
Framing Events
Customer events typically comprise one or more moments of truth that a customer may experience across a transactional relationship. For example, buying a first home is an incredibly important event. However, within that event, making an offer, getting the loan approved, having the documents signed and settling on the house all constitute moments of truth. A customer will judge the overall event based on the sum of these moments: getting even one wrong out of four can severely disappoint.
Perfecting the framing of “events” is key. Events are triggered by a specific catalyst, whether driven by the customer or by external forces, and they center on a specific customer goal. From the customer’s perspective, an event has a clear start and end. From a bank’s perspective this means moving focus from a product-oriented transaction – “add a joint account holder,” “open a new deposit account,” or “increase a credit limit” – to a larger customer problem or opportunity: “I’m getting married,” “I want to switch my bank,” or “I want to pursue an opportunity to expand my business.”
Importantly, our experiences suggest the five-to-ten most critical customer events cover more than 70% of the opportunities that a bank will ever have to create advocacy within a customer relationship. Thus, focusing on a shortlist of the most pivotal customer events provides an organization with a very efficient and effective way to align and deploy customer-centricity efforts.
To create this shortlist, a bank can start by developing a comprehensive list of all customer events. It can then weigh their frequency of occurrence, importance to the customer, worth to the organization (in revenue, profit, or value at risk), potential to anchor the relationship and current performance to distill those of greatest value to the customer and the bank.
Once a bank identifies its pivotal situations, it can design “wow” customer experiences, with the needs of a target customer taking center stage. The experiences should use simple, efficient processes and be measurable with critical metrics. Bankers should also look beyond traditional boundaries to develop truly differentiated solutions aimed at creating real customer advocacy and customer value, rather than merely minimizing detractors through a series of incremental improvements.
For example, a wallet or handbag is an accessory most people take for granted – until it disappears. Its loss or theft impacts our lives on many levels. There is, of course, the immediate loss of cash and essential forms of identification, from a driver’s license to a healthcare card. And there’s the loss of receipts and the less tangible, but sometimes more painful, loss of a treasured photo or keepsake. Finally, there is the loss of financial instruments, debit or credit cards, and the potential for loss of more money and identity. Add to this the time and place that the theft may have occurred (for example, on a night out, at a shopping mall, or on a business trip), and the loss is more than a financial transaction; it can generate a serious state of emotional distress.
Replacing a lost card is a one-dimensional, product-specific, and transactional approach to defining and solving a small part of this problem. Yet, card replacement within 24 to 48 hours is the only proposition that many financial institutions offer. Seeing the loss of the card as part of a larger loss – the wallet and everything it contains and represents – requires a multidimensional approach that is oriented to the true customer need. The lost wallet event is just one example of a reframe that can powerfully focus the organization on what matters.
So, what does that mean in practice? If you lose your credit card overseas, for example, one major credit card provider will ring a hotel or any restaurant you want to visit and guarantee payment on your behalf. A major Australian bank provides customers access to emergency cash at an ATM by using a unique code accessed through mobile banking or the call center; customers can even share the code with loved ones who find themselves in a tight spot. The same bank also provides a list and contact details of commonly used service providers to help customers restore their lost items.
Is this going too far? We don’t think so. Such proactive intervention enables customers to keep going until they get their replacement card, ensures they continue to spend and does not expose the provider to significant incremental risk.
By coming through for customers in these kinds of critical events, service providers gain a unique opportunity to create the sort of advocacy and customer value they could otherwise only dream of.
Mr. Gordon is a partner and Mr. Bustos-McNeil a principal in the Financial Institutions practice of A.T. Kearney, a global management consulting firm. Mr. Gordon, based in New York, can be reached at [email protected]; Mr. Bustos-McNeil, based in Sydney, Australia, can be reached at [email protected].
