Where's the future of financial services CRM?
Financial services companies trade upon the relationships they hold with their clients, and those relationships depend on serving those customers' needs. But what do they really want and need? The surprising answer, according to Harris Interactive, is that after excellent service has become the 'norm', it is actually emotional factors that top customers' list of needs.
The company's research in the UK also found that consumers are also looking for financial institutions that treat them fairly, act responsibly, and have friendly staff. But, given that these emotional needs are so prevalent, it leads us to ask the question: how many financial organisations are actually focusing on such needs when designing their products, services or communications?
What stands out and signals the importance of these 'softer' traits is that offering a wide range of products and services is only slightly more important than being ethical. In fact being ethical and relevant to you personally is more important that being up to date, having a large branch network or having a strong online presence.
There was a time when being big, having a large retail branch network and large number of cash machines was particularly attractive. Today those needs are less prevalent, and consumers are now looking for something different, and needs do vary bank by bank. Some are looking for a deeper emotional relationship with their bank, one that goes beyond trust and fits with their lifestyle and priorities. Some others simply want a bank that delivers good products and services, the channels of delivery are far less important.
When analysing consumer needs by their main bank, it is clear to see that the communication strategies of both the Co-operative and First Direct are working. Both have either managed to attract customers aligned to their strategy or have effectively communicated what they stand for to their customer base and make it an important point of differentiation. Interestingly, within the credit card and general insurance markets, similar differences by brand exist. In particular the AA, Tesco and LV= stand out from the crowd within motor insurance.
So even on the most basic level we can see the power of brand and communications and how they have a role to play managing the customer relationship. They help set customer expectations even within those categories that many see as a commodity product. Of course, we have to accept that there may be a bit of post-rationalisation here. Despite this, clearly some banks are attracting customers who have distinctive rational and emotional needs.
Many organisations talk about how they have 'consumer centric' processes, some even shout about how they have recently integrated their legacy systems into a single customer voice or have developed a customer segmentation to help them effectively target profitable customers. But managing customer relationships effectively is not simply about integrating the latest technology or software, nor is it just about data mining and finding out who your most profitable customers are. Nor dare I say it, is it about a market research project. All of the above are simply enablers.
When you actually sit back and consider what you are trying to manage - that is, what customers think, how they feel, and how they will act in the future - you begin to see the sheer size of the task. Most businesses can target effectively and design products to meet rational needs, but unless a business truly understands what makes their customers tick, it will struggle to connect emotionally.
Effective customer relationship management is not a process, then: it's a culture. That's why, alongside welcoming innovation and change, having customer centric values (such as fairness, trust and respect) engrained into the ethos of an organisation are so important for a financial services company these days. It's only when customer centric values become part of the organisation's DNA that we can truly begin to see through customers' eyes, design products and services around their holistic needs and begin to understand and improve the third dimension of the relationship which is how they intend to behave.
It's not just the sales, marketing and operational teams that have a role to play here. The HR department alongside Finance (both often overlooked) have critical roles too. The HR department not only needs to carefully develop the desired business culture, it also needs to maintain it by recruiting and training individuals that share the same values and behaviours. Both tasks are a lot more difficult than they sound. Finance needs to ensure all financial information is up to date, accessible and most importantly in a format that people understand. It's the collaboration of all these functions that helps an organisation maximise its success.
Customer relationships are constantly re-evaluated based on what they see, hear and experience. As the industry reduces 'facetime' with its customers and as direct interaction reduces, service perceptions will become more and more the reality. Companies need to be as consistent and memorable as possible when they are delivering people based service as its importance is likely to be heightened for consumers.
As the 'human touch' reduces, service failures will be remembered for longer as the next staff interaction could be a year or more away. Ask yourself: when was the last time you went into your local branch or contacted your bank by telephone? Therefore, more than ever before, to ensure healthy customer relationships are maintained it's important that financial organisations deal with customer complaints well, through multiple channels.
So how can financial services firms improve the relationships they have with their customers? Clearly they need to ensure that products and services meet customer needs and expectations, but also that relationships are more holistic and complex than that. These organisations must behave how they would like to be perceived. Ultimately it is how we make customers feel, think and act upon all three dimensions (rationally, emotionally and intentionally) via our products, services and brand and communications that drive growth.