Despite an increased focus on customer experience initiatives by banks of all sizes, new research has found that not all of these efforts may be resulting in revenue growth.
In fact, while some banks and credit unions are significantly outperforming peers, others aren’t focusing on efforts that customers care about most.
In a study from PeopleMetrics entitled, “A Shifting Landscape: Customer Experience Trends and Practices in Retail Banking“, it was found that banks are engaged in a surprisingly large number of customer experience initiatives. In fact, it was found that 7 out of 10 executives were working on customer-centric practices.
While a good start, the research found that most banks have shied away from activities that require investment of human or financial resources. Part of the problem is a lack of association by banks between customer experience initiatives and a tangible ROI.
The important question is which activities lead to revenue growth. By evaluating activities being implemented at growth and non-growth banks, the research found that there were four fundamental customer experience practices that could be directly tied to revenue growth at financial institutions. These insights were drawn from a more encompassing PeopleMetrics study 2013 Most Engaging Customer Experiences (MECx) completed earlier in 2013.
The practices that were found to be most correlated with financial performance were:
- Taking action on individual customer feedback
- Utilizing a decision-making process that emphasizes the customer
- Sharing a common definition of what a positive customer experience is
- Establishing a goal for customer experience improvement
The two most important differentiators are that growth banks have invested in technology that helps to close the loop between customers who report a problem, indicate a need or recognize an employee who performs well. Growth banks and credit unions also have a set of criteria they follow when prioritizing, funding and resourcing customer-aligned initiatives.
According to Kate Feather, EVP of PeopleMetrics, “Growth banks have embraced practices that create customer understanding and action taking at all levels of the company. Banks just beginning their customer experience transformation, or struggling to see results from their current efforts, should start with these four disciplines.”
Perception vs. reality disconnect
Unfortunately, while bank executives are well intentioned in their customer experience efforts, many may be focusing on the wrong objectives and the result is a disconnect between the impact banks believe they are making and the impact customers feel on a daily basis. In fact, the PeopleMetrics study found that 78% of bank executives believed their efforts were successful, while only 28% of customers said they had seen noticeable improvements in their banking experience.
Moving forward, it will be important for banks to align their priorities around what the customer cares about most. For instance, while banks continue to focus on technology advancements as a way to improve the customer experience, the customers place technology improvements much farther down their list of needs. Alternatively, customers believe banks should focus on improved products and a stronger focus on putting them first, with banks similarly giving these improvements less focus.
Because moving forward with new technologies is still important to most banks, the key will be for banks to build out technology in a way that demonstrates a customer centricity.
What are customers looking for?
As most research studies confirm, customers banking with community banks and credit unions give their institutions, on average, higher customer satisfaction ratings. But size alone doesn’t matter. USAA and other larger organizations reviewed in the study still show they can deliver a strong customer experience.
The PeopleMetrics study found that regardless of the size of organization, all customers are first and foremost looking for an ‘enjoyable experience’ followed by functional elements such as ‘easy’ and meets needs’. When organizations of different sizes were reviewed, the largest gap between organizations was in the ‘enjoyable’ dimension (15 points).
Since ‘enjoyable’ is more of an emotional dimension, it is more difficult for a bank to achieve (when was your last enjoyable banking experience?). PeopleMetrics has an extensive discussion of this concept with case studies provided in their report, but five dimensions were found to be the most impactful with organizations who make the customer feel valued, appreciated and cared for doing the best:
- Cared For
PeopleMetrics provides several recommendations to organizations that want to realize revenue gains from their customer experience initiatives.
Take action on feedback
Growth banks not only ask for customer feedback, but have made the investment in technology that allows them to take action on the feedback immediately. Without this feedback loop, both customers and employees will not get maximum benefit from customer experience initiatives.
Commit to guiding principles
Moven and other growth banks examined in the study put the customer experience at the center of all that is done by the organization. These Guiding Principles not only lead the organization but provide a standard for measurement.
<Make it personal
While smaller organizations have an inherent advantage in making the customer experience personal and enjoyable, larger organizations can leverage technology that can help to replicate this engagement. With the help of internal and external data, larger organizations can better identify needs and provide solutions that are in the best interest of the customer.
Invest in long term relationships
Moving from a transactional mindset to a customer centric view benefits both the institution and the customer. By taking a long term view, banks and credit unions can focus on growing relationships that are mutually beneficial.
Focus on your people
The foundation of a strong customer experience culture is the ability to find (and keep) the best possible front line employees. Through effective training and a CX rewards structure, it is possible for any organization to take the customer experience to the next level.
According to Kate Feather from PeopleMetrics, “For banks and credit unions who have mastered the practices discussed in the study, there’s a big opportunity to create a truly innovative customer experience.” She adds, “Customers in the study told us they want banks to make them feel ‘valued’ and ‘cared for’. This is far beyond the functional elements of banking, and offers insight on how leaders can design a customer experience that actually builds lasting, emotional connection with a customer.”
Jim Marous is a marketing services leader focused on building strategic solutions for the financial services industry and is a highly rated industry speaker.