Banking on Customers

Hey! WAKE UP!

2009-02-20T09:29:00.006-05:00

Sorry, it's been awhile between posts. I was re-grouping, as I think a lot of us are. But that's over.

As reported in Payments News, Wal-Mart just announced that they are rolling back the price on their pre-paid Visa debit card to $3 from $9. Re-loads are $3, and there's a $3 monthly fee, but there is no reload fee if the card is loaded through direct deposit, or through a payroll check cashed at the store. The $3 monthly fee is waived if $1,000 is loaded in a month and there is no fee for withdrawing cash from the card at the Wal-Mart POS.

In addition, they're rolling out a major financial education and money management program for their customers.

Hmmm, a very low cost DDA replacement, a highly trusted brand, locational convenience, aggressive customer education. Looks to me like they might be serious about this financial services thing. And what about their competition? Bank brands are in the tank, fees are going up, not down, and services across the board are being eliminated.

The retail banking value proposition, the core of the business, is rapidly being co-opted by one of the most powerful players in the land. Seems to me that somebody ought to be responding to this, but how do you compete with Wal-Mart?

The only competitive position that works against price is value. And the value that retail banking can bring to customers is knowledgeable, caring people who can help their customers through difficult times. It's time to get back to thinking about the reason banks exist, to serve customers, and let the media and the finance people worry about the rest of the stuff. Get front line people back into a positive frame of mind. Remind people that customers need their help now more than ever. Train people to be sensitive to the very real concerns that their customers are facing. Give managers the flexibility to waive fees to keep a valued customer.

It's always hard to manage customer relationships through down times, and this one is tougher than most. But that's not an excuse to walk away from the basic business of banking, which is to help people.

Because obviously, if banks don't do it, there's someone right around the corner who will. Check out this video and have a good talk with yourself about what you and your organization need to be doing.

Great new blog on the future of banking

2009-01-09T22:15:00.004-05:00

Happy New Year! I hope that 2009 is a good year for all of us.

There's a great new blog called the Future Banking Blog, written by Jeff Carter of Bank of America. Jeff leads the Bank's Center for the Future of Banking in conjunction with the MIT Media Lab. They're out on the extreme ragged edge of the impact of technology and society on financial services, and they already done some great work that will help move our industry forward.

It's worth your time to check out the blog and to see what the Center is doing.

What to say? Ask SunTrust

2008-12-08T07:36:00.009-05:00

The immediate crisis to the system appears to be over, and from a customer's point of view, it's a mess. Investments are wrecked, banks have vanished, the big have gotten bigger, and now there's real concern about the long term impact of the crisis on jobs and the economy. The credibility of any brand in the financial system is low, and trust has got to be a limited, and precious commodity.

How does a bank position itself in this environment? There are a lot of different approaches being taken; from the dramatic increase in available ATMs created by an acquisition, to fairly generic "safe and secure" messaging that a lot of smaller banks are using. It's a difficult time to be communicating because uncertainty in the environment puts any communication at risk of either missing the mark or alienating the target audience.

SunTrust, I believe has nailed the messaging for this environment. The following spot is running now, along with a very powerful companion spot in radio.

Entitled "The Joneses," the spot talks about giving up conspicuous consumption for "real, true, and honest," and how people want a bank that does the same. The message is positive, simple, in plain english, and it tells people that it's not only OK, it's right to be frugal and careful about their money. And it says that SunTrust feels the same way.

No shouting about safety, no bragging about size, no artificial scenarios. A clear, simple, powerful message supported by strong visuals.

SunTrust has captured a positive vibe that may be perfect for this environment. If they can bring that message from the media all the way through to the teller line, they have an opportunity to differentiate the bank in an environment where differentiation is really difficult.

But, it's all about execution. To be effective, great messaging needs to be supported by aggressive communications and coaching across the organization.

What to say? Ask SunTrust.

The four people that matter in a crisis

2008-11-03T17:19:00.002-05:00

Priorities. The hardest part about working through a crisis environment is figuring out what’s important and what isn’t. Obviously working out mortgages and fixing the plumbing of the company is the first priority in any difficult situation, but what next? What gets priority?
It seems to me the highest priority should go to taking care of the people that really matter to the success of your company. And, like everything else, some people are more important to the equation than others. I think there are four people who are critical to the recovery of a financial institution in a crisis. Others matter too, but these are the most important.

1) The front-line employee – No one in a financial services institution has a tougher lot than the person who faces the customer each day. They’re worried about their own economic situation, they may be worried about keeping their job, they might not have a clear understanding of what’s going on in their company, and their entire reason for being is to deal with people who are anxious, worried, and occasionally very angry. And for this they generally get the lowest salaries in an organization. The front-line employee is the single most important person in an institution, and in a crisis situation, they should be the first priority for coaching, motivation, communication and appreciation.

2) The front-line manager – In addition to being the critical link in making sure that the front-line employees are taken care of, the front-line manager also has the “privilege” of making sure all the reporting is done accurately, that everything balances, that all the company’s programs are being effectively delivered, that the right marketing support is in place, and after all that, they get to deal with the really tough customer issues that their front line people can’t handle. Keeping managers well informed and making sure that they have the coaching skills they need to help their people is an essential element of crisis management.

3) The good customer – No matter what, the place won’t run without customers, and good customers are critical to recovery. By good customers, I’m not necessarily talking about the high net worth/private banking customers, I’m talking about the profitable mainstream customers that have four or five products with the organization, have been there for several years, and are generally seen as “low maintenance.” Their steady revenue and loyalty can carry an organization through some very tough times. Too often they get lost in the shuffle, and often, all they need to stay fiercely loyal and happy is some recognition of their value. A letter, a phone call, anything that tells them you know who they are and that they are important will make a huge difference.

4) The new customer – With all the tumult in the market, a lot of people are rethinking their choices and are deciding to change organizations. Some are showing up in your offices and on your website. They may be showing up because your organization is perceived to be a safer or more stable place to do business, but that will only get them in the door. What happens in the six months after they switch will determine if they will become the good customers described above, or will continue to look for a new place to do business. A well orchestrated on-boarding program can reinforce their purchase decision and lock them into the organization.

There are a lot of things, and a lot of people to worry about in a difficult situation, but focusing on the four people that really matter can clarify priorities and help an organization move past the short-term issues and build a solid customer base for the future.

What’s coming…

2008-10-17T05:47:00.003-04:00

I attended the Finovate 08 conference in New York yesterday. For those of you who are unfamiliar with the event, it is a deep immersion into emerging companies in the financial services space. Twenty-four companies present and demo their offerings in one day, with each getting just seven minutes to make the sale. There are opportunities for deeper conversation and questions in a separate forum, but the real focus is on the demo.

So after 24 presentations, what’s my take on innovation in financial services and its impact on the customer? It’s going to be good -- very, very good. Let’s play out a scenario:

I’m a 20 or 30 something, and I’m starting to make some good money and get serious about my financial situation. I sign on to Mint, Quicken Online, Thrive or Wesabe, where I can see all of my accounts, bills and investments in one place so I know where I am. And, if I want to do it all on FaceBook, I can get the MyMoney app and run my banking right out of my home page. I go to CreditKarma to check out my credit rating and based on my rating, it looks like I can get a better deal on my credit card and some other stuff as well. Then I check out my credit card choices at FiLife, BillShrink, or RateSurfer and discover a couple of cards that match my lifestyle and can save me money. If I'm looking for a great rate on a mortgage, I can go to SmartHippo.

It’s time that I start thinking about investments but I’m really clueless and intimidated, so I go to WeSeed to learn how to invest and share ideas with others who are learning as well without risking my money. Once I get more sophisticated, I can go to Boulevard R for some financial planning guidance and then when I’m in the market, I can analyze my positions at Inner8. To add to my portfolio I can visit MoneyAisle and have banks compete for my CD in an automated reverse auction, or I can invest in person to person loans at Lending Club or Loanio.

After a couple of years, I decide to start my own business so I use Small Business Finance Works through my bank’s online banking service (Note: This won't be live until December).

There’s a remarkable explosion in the integrated delivery of information and services going on and what we saw provided some great examples. The value of the customer experience is being enhanced and customers are going to benefit.

The question is how do existing, physical world organizations capitalize on this explosion and move to the next level of customer service? Embrace new applications and new technologies, allow customers to use and accept them on their own terms, and find ways to build them into the overall service delivery strategy. The opportunity is there to create a financial services enterprise that completely changes the playing field. It will take strategic vision, and a lot of hard work at the street level, but it will be worthwhile.

The truth is that the alternative will probably be to watch an entire generation move to a different way of managing their money. Not necessarily a good thing.

Why do we do this?

2008-10-09T17:39:00.002-04:00

I had the opportunity to take a cab ride this week from my hotel to the airport. It was 4:30 a.m., I was tired, and in no mood to talk. But my driver would have none of that. He talked about cabs being robbed, his kids, his grand kids, the last family reunion they had in Atlanta, and how he loved to “ride” in his cab because he was too poor to have a car when he was “coming up.” Cab driving was his second career; his first was working for 34 years at the Swift meat packing plant. He’d been driving for 20 years.

He made what could have been a dreary, mundane experience terrific, just by talking to me about him. He was eighty years old.

It occurred to me that it’s easy to forget why we mess with customer experience and customer service. It’s not about improving efficiency, increasing profitability, decreasing attrition, or keeping a high first call resolution percentage. Those are metrics, ways of keeping score. It’s about helping people live successful and prosperous lives in a world where that’s difficult to do. My cab driver has spent 80 years on this planet working hard, raising his six kids, putting four of them through college, dealing with high gas prices, factory closings, health issues, and job loss. I doubt that there’s a lot of space in his world to think of or care about banking or payments.

Maybe instead of worrying about the metrics that help us keep score or on trying to “surprise and delight” when we can’t really deliver some of the most basic services, we should just work hard to get out of people’s way so that they can do what they need to do. Maybe not being noticed is the highest level of service that we can provide.

Setting realistic goals in terms of customer experience and understanding the customer in their context may be the best way to deliver the level of service that is really valuable to the customer, so people can get on with the stuff in their lives that really matters.

What now?

2008-09-29T20:51:00.002-04:00

Sooner or later, this will all settle down. I’m not sure how, but it will, and when it does, it’s going to be different; fewer, bigger players, constrained lending and underwriting policies, and, most importantly, a focus on the real business of banking, the preservation and growth of individual and business capital.

A few banks, the banks that you don’t see in the headlines, have been focusing on that all along. This idea was brought home to me by a person from one of the banks that’s actually doing just fine right now. One of the key reasons that they’re doing just fine is that they didn’t make high risk mortgages. Why? Not because they thought the risk was too great, not because it wasn’t in their strategy, but BECAUSE IT WASN’T IN THE BEST INTEREST OF THEIR CUSTOMERS TO MAKE THOSE LOANS. Think of it, bankers realizing that putting a customer in an over-leveraged loan was a bad idea for that customer. No doubt a lot of those customers ended up with loans from other institutions, but this bank didn’t make that loan.

The lesson…when you start and finish by thinking of the best interest of the customer, and you manage your business prudently, you rarely go wrong. So, what now?

The customer will re-emerge as the center of the banking universe. Banks will realize that core deposits and basic lending products are the most important assets on their balance sheets, that their customers are the ones who own those products, and there will be a shift to acquiring and retaining customers as a core strategy.

Then, it’s about execution. Some banks will decree a "focus on the customer" and continue to deliver lousy service at a high price. A few will take a hard look at their organization and realize that they need to completely re-align, re-train their customer service teams and aggressively coach their front-line managers. And one or two will continue to do exactly what they were doing before because they never stopped thinking about what was best for the customer.

A.P. Giannini, the founder of Bank of America said, “If an institution becomes great, it is usually by the consent of the people it serves.” At this time, in this place, truer words were never spoken.

Customer Experience in Tough Times, The alligators are in the way

2008-09-12T11:47:00.005-04:00

A condensed version of an article that I wrote appeared today in the American Banker. Here's the full version of that article.

Viewpoint: Customer Experience in Tough Times, Alligators Are in the Way
By Thad Peterson, vice president, sector strategy and solutions for Maritz’ financial services sector

Decreased liquidity, layoffs, fee increases…the depressing words we see every day in almost every publication, banking or otherwise. Clearly, the focus of bank management and shareholders right now is on getting through the storm, as it must be. But there’s a group that often indirectly suffers the consequences of cost-cutting decisions made in management committee: the customer. And that’s not a good thing.

Think about the world from your customer’s point of view. Retail customers see headlines about bank failures that can cause worry, regardless of relevance to their own situation. They may be seeing fewer people in their branch, or listening to hold music longer when they call with a problem. Maybe some of their fees have gone up for no particular reason. Small business customers worry about getting through this rough patch, and credit has either gotten more restrictive or has dried up completely. It’s a lousy time to be a bank customer.

This is a classic “alligator-swamp” issue, and in most cases, the customer experience swamp is less important than the alligators surrounding the bank. While it’s understandable, there’s risk to sacrificing customer experience: lost customers, profit, and market share. There isn’t a perfect solution to the problem, but there are a few things that can be done to lessen impact on the customer experience.

Are Your Employees prepared to help?

Regardless of what’s happening with the bank, customer service representatives and tellers are dealing with the same problems, and the same people, that they were dealing with before. Only now they have nervous customers, and probably fewer people to help deal with them. Research shows that bad customer service can have a dramatic impact on customer attrition. A Maritz study done in 2006 shows that in a normal environment, 43% of customers leave a bank because of service-related issues. Of those, 77% attribute the bad service to employee attitude or behavior. That means about 30% of your attrition is due to a customer’s perception of the service that’s being delivered by the front line, making it imperative that your front-line employees are armed with the information, training and support they need to keep customers happy.

A few keys to success:

• Listen and Learn: It’s critical to keep a pulse both on how the front line is feeling and what they’re hearing from customers in order to address possible emerging issues head-on. Listening is key, as is measuring satisfaction on an ongoing and consistent basis to provide a benchmark for assessing whether things are really as bad (or good) as you think.
• Reinforce messaging in multiple ways: The front line needs clear and accurate information in order to answer questions and present the bank’s case to customers. Press releases and other announcements about new developments or strategies should go to every employee, along with a scripted response to likely questions.
• Coaching, and more coaching. Managers must ensure their team is working effectively with customers to resolve issues or concerns. Consistent and visible coaching can help employees feel valued, and better understand their influence and role in the bigger picture. Identify ways to keep them engaged and motivated – a particular challenge when so much negative news is rampant about the banking industry. .

Love your good customers

Unfortunately, no amount of employee coaching will make your worst customers profitable. That’s why it’s so important that your best customers “feel the love,” especially in difficult times. This doesn’t just mean private banking customers. There are profitable checking and savings customers that deliver significant value at a fairly low cost. These efforts don’t have to be elaborate or expensive either. For example, Wachovia started an effort to call over a million customers to simply thank them for their business. They key is to make customers feel appreciated and not to view you as a faceless, uncaring organization.

It’s expected that banks will lose more customers in troubled times – but prioritizing who and what is most valuable is key. Do you know which customers are significant money losers?

How do you keep the good customers?

• Knowledge is power – Branches and call centers need to know their customers in order to help them. A lack of data ensures a generic customer experience.
• Rate exceptions and fee waivers – Banks go back and forth about rate exceptions and discretion in fees all the time, but flexibility at the front line is critical, especially when banks are belt-tightening and angering customers. Without the power to provide an exception, the manager appears powerless, both with customers AND with their own team.
• Active communications – Aggressive outbound communications are vital to maintaining customer relationships. This means more than bank statement messages, and banner ads dropped on the website. Personalized direct mail or email is a powerful tool, but the message needs to be delivered quickly enough to be relevant to the customer.

Survive the alligators and maintain the swamp; and prepare to grow

Delivering excellent customer experience is hard to do even in the best of times. A little flexibility, creativity and extra communication with both front-line employees and customers can go a long way with maintaining your customer franchise in challenging times. And, youll be prepared to grow when things get better.

The Network Effect…or not

2008-08-12T16:09:00.002-04:00

There’s a phenomenon called the network effect that dictates that the value of some products or services, like say, phones or faxes, is directly correlated with the number of phones or faxes that are in use. Put another way, one fax machine is worthless, as it can’t send to anyone. But with every incremental fax machine, the value of the network increases exponentially. So how does this apply to banking?

I was recently in a small southern city and I saw a branch for a bank that’s headquartered in another part of the country. It’s a regional bank, so it’s not a national brand, and there it was standing by itself in this little southern city. I went online and found out that there are in fact three branches of this bank in that city. For perspective, both Wachovia and SunTrust each have 10 branches in this city. This bank from the Midwest, with no brand presence and no history in the market is trying to build business outside of its core footprint, in the face of well established and powerful competition. If you were to consider becoming a customer of this organization, you’d have to accept and trust a new brand and then you’d have to make sure that their three branches will meet your needs for convenience. That’s a tall order.

There is a network effect that impacts banking. It’s the combination of branches, ATMs, online, call center and advertising that creates the sense that the bank is big, everywhere and able to meet your needs regardless of channel. It works for the customer because they can do what they need to do wherever they need to do it, and it works for the bank because they can leverage their marketing and operating expense across a network of branches and ATMs. Plopping a few branches into a city and betting on organic growth seems to me to be an expensive use of scarce bank resources.

So how should a bank build a franchise in a new market if not through branches? Well, there’s this thing called the internet and there are a fairly large number of individuals who prefer to do their banking online or by phone and who have little need for physical branches. These people respond to offers that deliver value, just ask ING Direct. A bank that wants to capture customers in a market outside of their traditional footprint could probably do a heck of a job on marketing and customer value propositions with the money that it takes to acquire or build and run branches. It’s also an opportunity to establish a brand in a market fairly efficiently, and if it doesn’t work, there’s not much cost to bailing out.

Customers benefit from a well established branch and ATM distribution system in a market, and banks do too. Too few branches in a market limits the ability of a bank to meet their customer’s needs and from an operating point of view, it turns branches into the world’s most expensive billboards.

Leverage the network effect, either in the physical world or online.

BTW, there's an article in today's American Banker by Kate Berry that discusses USAA's planned expansion to additional segments related to the military. This is a bank that has one branch, but has millions of customers all over the world. They're a great example of how to penetrate a market with no physical presence, and I think that this model is a real threat to traditional brick and mortar banks.

Free book from Forrester

2008-08-11T09:37:00.002-04:00

Bruce Temkin of Forrester Research has written a short online book entitled The 6 Laws of Customer Experience that's available on his blog, Customer Experience Matters. It's a concise statement of the truths that drive customer experience and it's worth your time.

Check it out.

Gen X, Gen Y, and the future of banking

2008-07-22T12:24:00.002-04:00

The following is a press release that was released today on some research that Maritz did on the generational impact of loyalty. Please let me know if you'd like a copy of the executive summary.

Younger Generation of Customers are Less Loyal to Banks
Banks Must Shift Gears to Attract and Retain Gen X and Gen Y

ST. LOUIS (July 22, 2008) Banks’ most loyal customers are their oldest customers, while Gens Y and X are the retail banking customers of the future. They’re also the least loyal and hardest to please, according to a recent Maritz® Poll. The results revealed more than half of Gen Y (61 percent) and Gen X (53 percent) respondents have considered changing or actually have changed their primary banking institutions in the past two years, compared with 20 percent of Silent Generation and 37 percent of Baby Boomer customers.

“For the most part, the current customer experience model at banks caters to the Silent Generation and Boomers, who more frequently bank in-person at branches. But, younger generation customers are much more mobile and rely more heavily on online interactions,” says Thad Peterson, division vice president, sector strategy and solutions for Maritz’ financial services sector.

“The banks’ most unstable relationships exist with younger customers, because younger people often haven’t settled into a stable financial pattern yet,” explains Peterson. “Banks looking to build long-term relationships with Gen Y and Gen X customers need to think about three basic steps:
#1) Attracting Gen Y and Gen X as customers in the first place – Locational convenience has always been the primary tool for attracting new banking customers. That’s no different with Gen X and Y, but the definition of locational convenience is changing. Now it includes online and mobile and they expect anytime anywhere banking. Banks need a strategy to attract and retain prospective customers who rarely step into a banking office.
#2) Identifying and offering products and services that give young people roots at the bank – like providing incentives for online bill paying services and debit rewards programs.
#3) Treating them the way they want to be treated. Ensure that the customer experience is appropriate for Gen X and Gen Y, and consistent at all major bank touch points.”

In general, the survey results show that younger people can be more impatient, less tolerant and just plain harder to please than their Baby Boomer and Silent Generation cohorts. The survey, which looked at customer satisfaction and loyalty among retail banks, found that younger customers also are more likely than older customers to find fault or have problems with their primary banking institutions:
• 37 percent of Gen Y and 36 percent of Gen X believe they would get better customer service at a different bank, compared with only 24 percent of Boomer and 16 percent of Silent Generation respondents.
• 22 percent of Gen Y and 21 percent of Gen X reported being upset in the past year about high fees, whereas only 14 percent of Boomer and six percent of the Silent Generation respondents reported the same.
• 18 percent of Gen Y and 17 percent of Gen X reported being upset about a lack of ATM locations, compared with only 11 percent of Boomer and three percent of Silent Generation respondents.

So How Do You Woo the Gen X and Gen Y Customer?

It is no longer uncommon practice for businesses to reach out via social media in an attempt to attract these younger customers. Even companies like American Express and Bank of America are using social media networks like Facebook to try to connect with Gen Ys. Peterson advises companies against relying too heavily on social media as a way to initially reach younger customers.

“Using Facebook to attract new customers is like standing in a corner passing out business cards at a cocktail party,” says Peterson. “If you don’t have a genuine relationship with them, all you are going to accomplish is to diminish the value of your brand to that individual.”

If social media isn’t the way to the “promised land” of Gen X and Y’s loyalty, then what is? Peterson has some suggestions:
• Be the source for their first primary debit card – Gen X and Y comprise the debit card generation.
• Highly incent them to migrate to online banking with a significant reward for paying bills online.
• Make sure front-line employees are treating Gen X and Y the way they want to be treated and can solve problems on the spot – a key to securing lifelong patrons.
• Stay in tune with how younger customers want to connect – online banking, bill pay and mobile banking are three customer touchpoints that must be state-of-the-art and part of every bank’s overall customer experience.

Peterson notes that Washington Mutual is one institution that successfully caters to the needs of younger customers. WaMu no longer requires a signature to open a checking account. The bank simply uses the first signed check as the authorization signature – incenting new customers to do business with the bank by simplifying the process and eliminating a trip to the bank. It appeals to the Gen X and Y customer desire to just “get it done,” says Peterson.

“Banks need to listen to the younger generations,” says Peterson. “It’s critical for them to stay ahead of the curve and build good relations with younger customers. After all, they’re the future of the bank.”

About Maritz® Poll
Maritz® Poll is a copyrighted poll conducted since 1988 by Maritz Research. Maritz Poll comprises regular surveys on topics related to the automotive, financial services, hospitality, retail, technology, and telecommunications sectors as well as workplace issues. This poll was conducted in February 2008. The 1008 respondents were split evenly between males and females and randomly drawn from a national e-mail panel. Sampling error for the overall poll is +/-3 percent. Results of the poll may be used in print or broadcast media, provided credit is given to the Maritz Poll and/or Maritz Research.

About Maritz
St. Louis-based Maritz is a sales and marketing services company, which helps companies achieve their full potential through understanding, enabling and motivating employees, channel partners and customers. Maritz provides market and customer research, communications, learning solutions, incentive initiatives, meetings and event management, rewards and recognition, travel management services and customer loyalty programs.

Who's your master?

2008-07-14T20:55:00.003-04:00

I once had a boss at a bank that made a big deal about the fact that we, the managers served three different groups, the shareholder, employees, and the customer, and theoretically we were to serve all of them equally. You may imagine the looks of disbelief that we got when we tried to sell this to our associates. They knew that the only constituency that really mattered in this company was the shareholder, and if we could keep the shareholders happy, then management would see to it that the employees were kept happy, or at least, employed. As for customers, as long as we made our numbers, we could maintain the image that they were a priority. If we didn’t, well, then they would carry the burden in the form of lessened service and higher cost.

No matter where you work, or what you do, it’s hard to serve more than one master, and if there’s a choice, you’ll serve the group that has the greatest power over your destiny. So, the big question is if you have a choice from these groups, who do you serve, the shareholder, your employees, or your customer?

The July 7 edition of TIME Magazine has a column by Justin Fox on two guys who decided early on that the employee is the master, and they’ve built really strong businesses around that idea. Kip Tindell built The Container Store, and John Mackey built Whole Foods. To quote the article “The idea is that happy, empowered employees beget happy customers. Happy suppliers help too. All this stakeholder joy eventually redounds to the benefit of shareholders – but the magic fades if shareholders become the focus.”

In my view, this doesn’t mean that a business needs to be an employee utopia of kindness and support, although it’s a lot more pleasant to work in a company that has those values. Instead, what it means is that no value can be added anywhere in a company without competent people who clearly know what it is that they are supposed to do and do it well. Automated functions can displace a lot of the face to face interaction, but there are very few (are there any?) companies that don’t need to provide some form of customer support somewhere along the line. Even pure tech companies need people who are motivated to deliver a quality product or service to someone.

Any company’s value proposition depends on its people to deliver it. So, if delivering value to customers is the source of revenue and profits for a company, then the people who deliver it is the constituency that matters most. The employee, not the customer and not the shareholder, comes first, everything else follows.

In difficult economic times, priorities can appear to be quite different, particularly when CEOs are losing their heads and shareholders are more than a little grumpy. The reality is that no matter what’s going on with the economy, employees make value happen and they need to be the priority.

Who’s your master?

Hey! Pay attention to me!

2008-06-26T10:48:00.001-04:00

Don’t you wish you could say that out loud once in awhile? Last week I was traveling and visited a hotel where I have spent enough time to earn the occasional visit to the concierge floor. As it was a Sunday night trip for a Monday morning meeting, discovering that I had gotten to the concierge floor kind of made up for the loss of time at home, and I was looking forward to getting a snack and beverage in the lounge.

I got to the floor, and I couldn’t figure out where my room was, based on the signs, so I went into the concierge lounge to ask the attendant where my room was. She was talking on her cell, and it was clearly a personal call, but it didn’t sound like it was an emergency. I know this because I had the chance to listen to the conversation for about 30 seconds before I could get her attention. After she told the person on the phone to hold for a moment, I asked her where my room was, and she pointed the direction that I needed to go, and immediately resumed her conversation.

Ten minutes later, after unpacking, I wandered back to the lounge for my snack and drink. She was still on the phone. And, she was helping herself to the snacks, so her back was turned to me and she didn’t know I was there. I stood there, not knowing quite what to do. Should I tap her on the shoulder, stand and wait for her to get her food, or just push her out of the way? The problem was that she was grazing in place, nibbling off the different trays and it didn’t appear that she had any intention of leaving the spot. I opted to get a drink and make some noise so she would notice me and move, which she did, and I got my snack…she was still on the phone.

How many times a day do your customers deal with someone who’s not paying attention to them? It’s so common that we hardly notice, unless we’re in a place where better than average (lousy) service is expected. Think about how powerful it would be to have all of your front line associates really focused on the customer at the moment when the customer is working with them. Think about how pleasant that would be for the customer, and how rewarding it could be for the associate. What a powerful idea…paying attention to the customer.

We’re all busy, we all multi-task, but when associates are in front of a customer, that individual needs to be the center of attention until they are done. Or at the very least, stay off the cell phone.

HEY! PAY ATTENTION TO ME! Is that too much to ask?

Using the cloud to make it real

2008-06-10T08:30:00.006-04:00

There's an interesting article in CRM Buyer which was reported in banknet 360. It talks about a trend in banking away from traditional IT upgrades related to call center technology and moving to "Software as a Service" (SAAS), where call centers are created and managed virtually, allowing continual updating to the state of the art and management of decentralized call center operations. It's a big idea, because it allows IT departments to avoid the need to continually upgrade internal technology and it moves the IT cost from capital to operating expense.

As big an idea as this is, it might be an indicator of something else that could be even more important to financial services. If call center technology can be moved to a hosted services environment that lives in the internet cloud, what else could live in the cloud? Could a lending system live in the cloud? Could you build a DDA system on someone else's servers? Of course you could. If one was to de-link the bank from banking and concentrate on the delivery of the function instead of the management of an infrastructure, what could banking look like? You could deliver service anytime, anywhere a customer could see the web, whether through a wi-fi phone, traditional cellular, a laptop, a home computer, a kiosk, a storefront, an RV branded with the bank's name, on the laptop of a personal banker, or even a branch? And you could do it with almost no technology back office. Clearly there are security issues that pervade this vision, but there are always security issues and they are eventually addressed. The key is that it's possible today to build a complete banking service with almost no IT infrastructure, and that service can be delivered wherever TCPIP connectivity exists.

I doubt if there's an existing bank that is able or willing to transition to a completely virtual banking system, it's just too difficult to overcome the existing infrastructure and embedded cost structure. But somewhere out there there's a person or a group who doesn't have an embedded infrastructure, that doesn't need to play by the traditional rules of bank building, and that has a vision of delivering superior banking products and services at a lower delivery cost than there is in the market today. The question is who and where, not whether because the economics of moving from capital to operating expense for financial services delivery is just too powerful.

Google is building an entire computing system in the internet space, including word processing, calendar, spreadsheet, mail, and just about anything else that you can do with a standalone pc. Amazon is offering their services platform to third parties for private use.

Who is going to create the first bank in the cloud?

Guess What? Customers are grumpy!

2008-05-28T19:12:00.006-04:00

There's an article out today citing a new study that indicates that "A rise in fees has led to growing dissatisfaction with retail banks." Great strategy...make it tough on customers when they are going through tough times and bet that they'll stick around down the road.

We need to see the world through their customer's eyes. All we have to do is to think about our own lives. Who do we stick with, the friend who's with us in good times and bad, or someone who manages to disappear when things get a bit tough?

Customer experience is a mirror of human experience. What applies to individual relationships applies as well to commercial relationships. Now is the time for banks to build strategies that show their customers that they have their best interests in mind, not the CFO's.

Excellent!

2008-05-21T15:40:00.007-04:00

The movie “Bill and Ted’s Excellent Adventure” made a cliché of the word “excellent” just as “brilliant” seems to be the latest clichéd expression from the UK today. Excellence is now an embedded component of business and banking culture. Ever since Tom Peters, excellence has been a mantra that rarely fails to bring nods of approval in management committees around the world.

There’s an article on destinationcrm.com by Lior Arussy, entitled “The Excellence Myth” an excerpt from his book, Excellence Every Day. His position is that while companies talk about pursuing excellence, they generally go out of their way to make it hard for their employees to deliver it. He thinks (and I agree) that the only way to achieve excellence is to enable your employees to make that happen.

He also states that “There is nothing more powerful than listening to your customers. A simple message delivered in the voice of the customer can be more insightful than hundreds of pie charts and Excel spreadsheets.” And he goes on to say that executives should take the time to visit customers in their own environments, a terrific idea that would do much to actually improve customer experience in banking.

In a past life I worked at a bank that required all senior officers to visit a bank branch and perform one of the branch functions for four hours every quarter, and if you missed, you risked your bonus. It was incredibly valuable because we got to see the impact of our decisions (or lack thereof) on the people who had to implement them, and we saw the reaction that customers had to our institution. More recently, I participated in a session where customers and front line staff were brought into meetings with senior managers, which accomplished the same purpose.

In every instance where I’ve had the chance to listen to customers and employees directly, my reaction has been the same…incredible respect and humility. Listening to a customer tell you about her inability to change her name on a DDA after her marriage, or to an associate tell you about how he is put in the same queue as customers to resolve credit card problems, can only make you realize that there is much to be done to get service in financial services to a universally acceptable level. Excellence indeed. Adequacy is a more appropriate goal.

I suggest that instead of being Bill and Ted and spouting clichés about excellence, all of us should go hang out at a branch for a few hours or sit as a CSR in a call center. That experience will do more to move the quality of service delivery forward than a thousand consultants or a hundred blogs (even this one).

My grandfather's grocery store

2008-05-05T08:06:00.006-04:00

My grandfather ran a small grocery store in Walsenburg Colorado, a coal mining town near the New Mexico border. If you were to go into his store in 1923, you would have seen a counter on the left with fresh food and meat, and dry goods arrayed on the shelves on the other side. There was only one aisle, and I doubt if there were ever more than 10 customers in the store at any time. My grandfather and my uncles were the butchers, the produce guys, the shelf stockers, and the cashiers.

When you went in to get your groceries, they would provide what you needed by engaging you in conversation. There was simply no other way to get what you wanted, unless they already knew you well enough to get you exactly what you needed. Obviously, if the only way to get what I need as a customer is to engage in conversation, then the person that I’m dealing with will treat me courteously or risk losing my business. And it’s a small town, so if my grandfather lost one customer because of rudeness, it wouldn’t be too long before everyone knew.

This was before “customer experience” was invented. Service was by necessity personal, one to one, direct. And this was the way it was in most businesses, including banking. Schafer’s grocery was the only store in town until 1955 and then Safeway came in, much as Wal-Mart came in later. When they arrived, they brought a world of variety that was previously unimaginable, a giant world of stuff emerged. And almost immediately, my grandfather was out of business.

It’s kind of cool to understand how radical a supermarket was when it was introduced. What it did was to enable the customer to do a lot of the work with the tradeoff being wider variety. It also changed the dynamic between the customer and the merchant. No longer could the customer rely on the merchant for information or recommendations on what to buy. There were too many products and choices. So the customer moved to the brand and the product for their information. With their migration to the brand and product, the level of trust that they needed to have in the merchant was diminished as well. The merchant’s people became less important.

I think that business consciously moved away from a customer centric model to a profit centric model, and in general, customers loved it. The world before mass marketing was a fairly uninteresting place to buy stuff. Variety was very limited and local, choices were simple, and people generally didn’t have a lot of money to spend on luxuries. The explosion of retail from the supermarkets and then into other categories happened at the same time that the world was rapidly becoming more affluent and mobile.

With the increase in business models, there came an increase in busy-ness. As life became richer, it became more complex. Technological conveniences freed up time for people, and people used that time to do more things and to buy more stuff, and that became a virtuous cycle. Buy stuff to better my life and save time, use that time to make more money so that I can spend it on more stuff. And service was not an important part of the equation. Business managers aren’t stupid and when they saw that service wasn’t as important, they figured out ways to lower the cost of service, which increased profits. Increasingly technology was used to displace service quality.

Somewhere along the line, in almost every industry, customers reached a threshold of pain around service. The tradeoff between stuff and value no longer outweighed the pain of getting or using the stuff caused by the efficiency of the model. I think businesses got away with this situation until the emergence of the internet. Now, anyone with a complaint can make sure that hundreds if not millions of prospective and current customers hear about it.

Technology has gotten to the point where we are capable of replicating my grandfather's store on a mass level. We are now able to know our customers and their consumption behavior, and we have a number of different ways to speak directly to our customers. So if we can replicate his store, what should we do?

Let customer need drive service delivery - The customer needs exactly what she needs, exactly when she needs it.

Engage in dialog to make sure that all customer needs are being met - Listening and talking are the only true ways to understand what a customer needs.

Be aware of all customer interactions - I can't tell if the customer has gotten what she needs unless I know everything that she's buying in my store.

Satisfy the customer first, then sell something else - It's ok to suggest something else to the customer, like yeast to go with the flour that she's buying, as long as you've got the flour she needs.

Don't be rude, it's a small town - Technology enables a personal level of service but it also enables global gossip. Bad news travels at 11MPS.

We've gone through a revolution in delivery of goods and services, and we lost some of the important things that work well along the way. Think of my grandfather's store as you consider your customer experience and consider moving the customer relationship back to where it needs to be...personal, one to one, direct.

Green is good…as far as it goes

2008-05-01T10:46:00.003-04:00

I was just interviewed for an article in Smart Money magazine on the economic impact of green initiatives in financial services and other industries, and that got me thinking of broader issues related to sustainability and our industry. The good news about the elimination of paper in our paper intensive industry is that any move to reduce the amount of paper in a customer’s relationship improves the profitability of that account for the bank. Clearly there is a sea change underway and the momentum is rapidly shifting away from paper based and into electronic forms of communication and information management at the customer level;

Electronic bill pay continues to ramp up steadily

Online banking has achieved critical mass

Debit card usage is overwhelming both credit and check transactions

All good stuff and all beneficial to the bank AND the environment. But there’s still a huge amount of paper generated within financial services because the standard for permanent and safe storage of important information remains the officially signed, paper document. Every mortgage requires a small book’s worth of paper to document the minutiae that the lawyers and regulators require. Insurance policies are generated in paper and then stashed in file folders or safe deposit boxes. And a large number of people still insist on paper statements and physical bill payment no matter what.

So, we’re in a limbo land where we are supporting two different information streams for customers. While there are efficiencies in the short term by converting the easily converted to electronic, at the end of the day we will be forced to support two systems which will limit the cost savings that moving to electronic will create.

What’s missing, and what’s going to be necessary to ultimately move all of financial services to a paperless environment is an accepted form of online storage and digital signature. Both exist, but neither has the level of acceptance that will be needed to generate mass acceptance. There have been several attempts in the past to deliver virtual safe deposit boxes, and there are few out there, including The E-Safe. The problem with the existing offerings is that they are for profit ventures and the value proposition isn’t strong enough for a mass market adoption.

What’s needed is a ubiquitous, free (read Ad-supported) safe deposit box capability that is universally trusted because it’s offered by a universally trusted brand like Google, or PayPal and hung off of FaceBook or MySpace. Another option would be for the card associations to offer this as a free benefit to their issuer bank customers. Once there is a ubiquitous free secure storage capability, the migration to electronic documents will increase and with that, the demand for and acceptance of digital signatures will follow.

The banks are making good progress on moving to a paperless environment, but without ubiquitous, online secure storage, the conversion won’t be complete. Someone ought to be working on this.

"Shift Happens"

2008-04-22T22:01:00.009-04:00

I just got an email that had a link to this video on You-Tube, which was created by a group of educators to emphasize the need for a new way of looking at education. It's worth the time to watch it, as it clearly shows how much, and how quickly our world is changing. Too often we get trapped in our own linear view of the Universe, which is logical, since that's the only view that we can really have. But look what's going on, available information is exploding, knowledge transfer is global, and immediate and the world is very, very quickly becoming a different place.

I bring this up in the context of customers and banks as a follow on to the discussion of "Always on". Linear, "what worked before" strategies don't appear to make sense in a world that's changing as rapidly as ours is. Social networking isn't an interesting plaything of the millenials, it's the way that a large percentage of the population interacts. The internet isn't made up of web pages and people who read them, it's a virtual organism that nearly all of us depend upon for a large part of our knowledge access and social interaction.

It seems to me that we need to re-think the way that customers interact with our institutions in ways well beyond re-designing branch interiors (although that's a start). Here's a question to get you going. If you had unlimited capital, no mortgage hangover, traditions or history to deal with, and your only goal was to deliver a superior financial services experience to a selected target audience, what would you build?

Bet it wouldn't have teller windows.

Always on

2008-04-08T08:28:00.001-04:00

I’m at the beach today (sorry), and my laptop is connected to my neighbor’s wi-fi connection (with their permission). My son needed directions to someplace in town today. So how did I find those directions? I Googled the place, got the address, went to Mapquest, got directions, and then I sent them via SMS to my son’s cell. It took less than 10 minutes.

A few years ago, the computer was a task driven activity. If you wanted to do something you booted up, went to the task, did the task, and then shut down. This was driven by dial-up connections that were slow and sometimes metered so they were expensive to have on all the time.

Now, high speed connections and powerful computers make an “always on” connection practical. The computer and its connection to the cloud has become a utility that’s as easy to access as a light switch. I’ve noticed that our family is checking the computer several times every day for something, be it information, or entertainment. And this doesn’t include email and work related stuff.

What does that do to our perception of good service? If I can access information anytime, and it’s instantaneous, what happens to my mindset when I’m put on hold? How do I deal with a customer service rep that doesn’t have the right answer immediately? What’s my response to a line at the branch?

It seems to me that with near-perfect information always available, customers could re-define their perception of service quality. They will have higher demands for quality information and at the same time, lower tolerance for anything that takes longer than a few seconds to accomplish. It’s entirely possible that an institution’s standards for excellent service, as measured by first call response, queue times and customer ser vice responsiveness may be insufficient. There may be a need for new definitions of satisfactory or excellent service. And, it may be that traditional customer service simply can’t compete with online alternatives.

If that’s the case, offline customer service will have to be re-defined in order to find a value proposition that customers will accept. Perhaps business performance metrics should be about high value added content, highly personalized service and customer education. Speed and efficiency would be promised and delivered through online channels.

One solution that fits into customer expectations in this environment is real-time chat. It places human access and responsiveness in the context of the internet space. From this perspective, online chat becomes a strategic communications tool, rather than an add on “nice to have” channel.

In an “always on” world, customer service needs to be redefined, what do we need to do to turn the new reality into a strategic opportunity? Maybe it’s online chat now, and video chat in a few years.

Customer Experience can make money!

2008-03-27T09:39:00.003-04:00

Bruce Temkin of Forrester Research has just released a report entitled "The Business Impact Of Customer Experience -Poor Experiences Can Cost Large Firms More Than $180 Million Per Year", which he discusses in his blog, Customer Experience Matters.

The bottom line is that he validates the argument that Customer Experience provides economic value to companies. We've all known intuitively that this had to be true, but it's great to have a legitimate source make the case.

A great Customer Service Story!

2008-03-13T08:17:00.001-04:00

Once in awhile, someone does something really, really right. Here’s a great story about a customer service victory.

A friend of mine has been an American Express customer for a very long time. In 1995, he had about 500,000 membership rewards from the use of his personal card. His company shifted to corporate cards at about that time, and when his account was transferred from his personal card to the corporate card, his points vanished! He called them up and was told that nothing could be done, the points were gone. He elevated the issue up the chain, he wrote letters, nothing worked. He was a very grumpy customer.

Fast forward 12 years later to 2007. He calls American Express customer service to get a small issue resolved, and at the conclusion of the call, the Call Center Representative asked if there was anything else that she could do for him. Out of the blue and as a joke he told her that he had lost 500,000 points in 1995 and he’d like to get them back. She asked him to hold, and in a couple of minutes, she was back on the line, and his 500,000 points had been re-instated on his account plus a 100,000 point bonus for the aggravation! Amazing!

There are so many great lessons here.

1) It’s not good to take points away for arbitrary reasons
2) If you have a good, loyal customer, it might be a good idea to break policy now and again to keep them good loyal customers
3) Call Center Representatives can be the key to your company’s customer experience
4) Call Center Representatives can create fiercely loyal customers

My friend is now a fiercely loyal American Express customer. It’s the first card that he uses and he will never leave them.

Unless they take his points away again.

Great post from Frank Capek

2008-02-24T20:53:00.003-05:00

Frank Capek has a great post in his blog, Customer Innovations - Driving Profitable Growth. the theme is "Your company does not have a customer experience… only your customers do." What a great thought, and worth remembering as we work to improve our customer's customer experience.

Why are you in Business?

2008-02-21T13:38:00.003-05:00

There’s a whole bunch of stuff going on that we’ve predicted over the past several months;

Fees are starting to be “adjusted” upwards

Interest rates on some credit products are actually increasing in spite of downward rate pressure from the Fed

Non-Bank competitors are becoming more visible

There’s a new piece of research out from the Mercator Advisory group that validates this trend and also points out that banks risk losing their position of “trusted advisor” if they persist in aggressive upward pricing.

This isn’t surprising; it’s the logical result of a tough economic environment. But these actions may beg a more fundamental question…Why are you in business?

It seems to me that there are only two ways to look at business ;

I make money by optimizing the value of the customer to my business
I make money by optimizing the value of the business to my customer

Pretty much everything else is secondary.

If you are in the first category, your focus is on delivering the most efficient value to the customer. That might mean that the customer pays more for some things than absolutely necessary, and it surely means that the company will leave no stone unturned in its search for revenue and profit. Customer retention and lifetime value are secondary concerns. I think in this kind of company, the finance guy almost always wins, and the customer often loses.

If you’re in the second category, you focus on delivering profitable products and services to the customer in a way that keeps the customer satisfied with the company, and less willing to leave for a competitor. Longer term profitability and retention are priorities. The front line sales force should have a very large voice in this kind of organization.

In the current environment, it’s tempting to argue that any “adjustments” are short term and based on external factors, but customers know better. Customers know exactly what kind of company you are by what you do with them, for them, or to them.

The question is, do you?

Excitement and Romance in Customer Service!

2008-02-15T08:36:00.003-05:00

There's a great post on the Church of the Customer Blog yesterday by Ben McConnell on the importance of excitement in relationships, marital or otherwise. Ben talks about the need to inject some excitement and fun into the customer experience. Even though banking may not be the most exciting thing in our customers lives, there are ways to make it interesting and engaging, and sometimes even fun, that can give them more reasons to keep "going steady" with you. Check it out.