Everyone is still trying to make sense of CX.
Chances are you’ve encountered endlessly diverse interpretations, opinions, strategies, theories and analyses by now about the emergence of customer experience (CX) as a fundamental business strategy. However, one principle connects them all: CX is critical, and it will only become more important as digital consumerism grows.
Harvard Business Review defines CX as “the cumulative impact of your customer’s end-to-end journey with you, the multiple touchpoints over time which create a true competitive advantage to companies that get it right.”
CX must take shape as a holistic strategy that begins at the consumer level — before they become customers — beginning with a consumer’s very first interaction with your brand, wherever and whenever they encounter it.
Institutions need to create a consistent, true-to-brand, multichannel engagement strategy that marries customer expectations with organizational goals in order to turn consumers searching for information and acceptance into high-value customers for life.
The story of CX unfolds in five parts:
1. Market differentiation
The time to supercharge your customer data has arrived. As rapidly advancing technology and innovation threaten old-world value propositions, financial institutions find themselves forced to shift their focus from simply providing “service” to using vast amounts of stagnating customer data to deliver “experiences” in order to stand out and compete.
So how many brands truly deliver an excellent customer experience? Surprisingly, not many: More than 50% of banking providers consider themselves ahead of the competition when it comes to the relevance of their messaging, product and service personalization, but consumers do not agree, according to a Forrester study conducted on behalf of Equifax.
To stake your claim as a customer-centric institution, you have to constantly stay in touch with your customers’ experiences. Delivering world-class service and building consistent customer experiences requires you to gather actionable insights from every engagement touchpoint you can.
So, what’s the financial upside of CX? That’s the million-dollar question.
2. Revenue impact
CX is unlike everything else you measure. It’s not a short-term/today line-item metric or KPI — it’s long term. It’s a lifetime journey across all touchpoints and channels. The ultimate measurement for customer experience is customer lifetime value.
That said, CX and revenue are linked incrementally, and service improvements can result in significant long-term gains.
A recent study by McKinsey & Company found that, on average, brands that improve CX increase revenue by 10 to 15%.
Consumers want to feel understood as individuals by receiving relevant offers and messaging. But in reality, financial institutions struggle to use customer data to create more meaningful experiences — even when excelling at CX just a little bit more than the competition gets you noticed.
Clearly, customers will pay more for a better experience. By simply prioritizing CX, you can more easily meet and exceed long-term revenue goals by increasing wallet share, lessening costly attrition, reducing operating costs and boosting your bottom line.
3. Delivering relevance
Consumers want inclusion. They crave hyper-personalized experiences. Every generation wants it and each reacts differently, but that personal touch makes people of any age feel seen and understood.
Unfortunately, most financial institutions ignore the two basic results-producing functions of any business — marketing and innovation — by relying on organic growth and outdated, inexact strategies that would make Peter Drucker cringe.
A recent study by Temkin Group showed a decline in the number of companies that scored a “good” or “excellent” rating, down from 45% in 2017 to only 38% in 2018. Even though financial institutions have access to more customer data than most industries, they clearly struggle to make sense of all the digital information they accumulate to effectively understand future behavior. Those institutions that can look into the crystal ball of data and gather meaningful insights enjoy a significant competitive advantage.
To stay relevant, financial institutions need to take their customer insights to a new level by harnessing big data to identify needs, predict future behavior and create hyper-personalized experiences.
4. Change management
Attrition is costly. Churn impedes growth. And nothing affects retention and turnover more than poorly managed customer experiences during change events, such as online banking conversions and M&As.
Unfortunately, CX often doesn’t receive the critical attention it deserves, and institutions learn the hard way about the damaging effects of insufficient customer engagement.
According to J.D. Power’s 2017 U.S. Retail Banking Satisfaction Study, nearly half of bank customers will leave in the first year following a merger or acquisition. Change events are unique moments of opportunity for financial institutions to create a powerful competitive advantage by reducing friction, building loyalty and strengthening their brand.
Thriving through change requires relentless attention to CX. Make change readiness and management part of your strategic plan to drive loyalty during a time when loyalty is challenged most.
5. Brand support
Think of CX as a brand. Are you delivering a CX experience that lives up to your brand promise of authenticity and passion? Because as we move closer to a faceless digital economy, how consumers feel about doing business with your brand only grows in importance.
In fact, consumers are 85% more likely to recommend a financial institution after a “very good” customer experience, the Temkin Group study also found.
Reputation management becomes key because you will never have the chance to apply parts one through five if you don’t represent your brand in a way that brings customers to you. Your brand includes your online presence, your reviews, your messaging — the whole of the experience you’re providing to existing customers that result in referrals or deferrals.
Try a little honest self-evaluation. The process may be difficult, but the answers will be revealing and helpful toward delivering on your brand promise. Are you listening? Compelling? Discoverable? Frictionless? Relevant? Engaged?
Financial institutions that commit to a unique brand strategy centered firmly on delivering quality, consistent, omnichannel CX to consumers reap the benefits of happier, more engaged customers.
Bringing it all together
CX is not a sprint — it’s a marathon. And what makes CX such a fascinating story is its long-term impact on financial institutions and the lives of their customers.
Financial institutions that excel at CX make great use of their demographic, behavioral and psychographic customer data to create true-to-brand, inspiring moments that answer the questions, “What do I need now?” and “What will I need in the future?”
Source: Scott Hansen