Financial services in the UK are in a bad way. The banking crisis of 2008 and a subsequent series of scandals have left trust in the sector at an all-time low. There are few, if any, differentiated brands. The standards for customer service have been raised by companies outside the industry, such as Amazon and Netflix. The organisations themselves are too complex and are hampered by a multitude of legacy systems. And corporate cultures are the biggest barrier to change, lethargic and discouraging the bravery required for real transformation.
This was the gloomy picture that emerged at Marketforce’s Customer Experience in Financial Services conference in London earlier this month. Unsurprisingly, most of the speakers saw an increased focus on the customer as the key way to rebuild trust in the industry. But they also recognised, in the words of Janet Connor, managing director of insurance company More Th>n, that “this is a journey, and we’re nearer the start than the end”.
There was also controversy, introduced by Mark Mullen, CEO of bank First Direct, who argued that there is no positive correlation between customer experience and profit.
“We don’t believe enough that we have to improve customer experience to actually do it,” he said. “The regulator has forced our hand.”
The regulator of the UK financial services industry, the Financial Conduct Authority (FCA), has indeed turned its attention to the experience of customers with firms in the sector. But a vote taken at the conference suggested that this intervention is welcomed by an audience that knows it needs to change, but is struggling to do so. Three-quarters of the delegates said they thought the regulator’s move would help companies to improve the experience of their customers.
“The regulator is asking people to ask the hard questions and forcing organisations to confront the skeletons in the cupboard,” said Mark Evans, marketing director of insurer Direct Line Group.
Another vote reinforced the idea that the UK regulator is pushing on an open door. Asked what the likelihood was of board investment in customer experience in their organisations, 55% of delegates said it was very likely, while 36% said it was relatively likely. How to use that investment was a much more vexed topic.
Mind The Gap
Jim Allen, customer experience director at Deloitte, argued that the fundamental problem in customer experience “is the gap between what firms think they deliver and what customers see.”
First Direct’s Mullen put it another way.
“To build a customer-oriented business, you need to be a customer yourself,” he said. “It’s the simple things that get in the way of the customer journey. People don’t get frustrated because their bank doesn’t do the sexy stuff; they get frustrated because it doesn’t do the basic stuff.”
The point about seeing your organisation with the eyes of a customer was reinforced later in the day by Direct Line’s head of customer strategy & experience, Manuela Pifani. But she also talked about listening to your customers continuously, across the different levels of the organisation, from brand to transactions, through all different channels. And she stressed the importance of complementing customer insight with internal insight, particularly from frontline staff.
“Frontline staff know 100% what the problems are, and 100% what needs to be done about them,” she said.
This increased emphasis on frontline staff was something that Connor from More Th>n also highlighted. She talked about the more trust-based relationship that the company’s customers have with its frontline staff, and the way the company has changed the incentives it offers those staff.
“We’ve moved away from sales-based incentives to reward people on quality of service,” she explained. “Us just doing enough is frustrating for our customers and a missed opportunity for us to show what we can do. So we’ve given frontline staff a lot of latitude in the decisions they make, but it takes a lot of effort to show them that we mean it.”
This approach was echoed later by Karan Martin, customer service director at insurer Legal & General, in her session about incentivising staff.
“For frontline agents, we found the best results came from measuring people against metrics they can control, for example the warmth and friendliness of their relationship with customers, or their depth of knowledge.
“It’s easy to get carried away with sales targets. We use customer experience as a gateway metric; if you don’t meet your CX targets, you don’t qualify for the bonus scheme. That establishes the balance we want.”
In the discussion of measurement, the speakers were enthusiastic in their praise of Net Promoter Score. Connor talked about using it as a way of measuring how customers assess the quality of service the company delivers, describing it as “a huge front-line change tool”, but warning at the same time that it has to be part of a mix of metrics.
David Barral, CEO UK & Ireland for insurance giant Aviva Life, declared himself a huge fan of transactional NPS, for its focus “on what customers really value”.
“We’re in year five and the use of NPS has currency in the company,” he said. “It’s a huge rallying call for frontline staff and there’s a real belief in its importance. But it’s not the be-all and end-all.”
Pifani too talked about how moving to NPS as a metric from customer satisfaction. But she emphasised the importance of drilling down into what drives NPS, in the case of Direct Line: service, product and value. And she talked about the brand’s use of customer effort as a secondary metric.
“The easier it is for customers to achieve what they want, the better,” she said.
This introduced the belief among some speakers that delivering good customer experience reduces cost. Pifani suggested it, as did Angus Clacher, consulting services director at design and technology consultancy RMA-Consulting.
“Well-designed solutions reduce the cost to serve,” he argued. And he adapted a Steve Jobs remark to make his point: you’ve got to start with customer experience and work back towards the technology, not the other way round.
Other speakers went further, arguing that the good customer experience creates value for the customer, and therefore for the organisation.
“Creating value for the customer will encourage them to do business with you,” said Legal & General’s Martin. “We found that customers who were sold to during a service call were more accepting than those who got a sales call. They saw it as the organisation taking an interest in them,” she said.
Deloitte’s Allen argued a similar point when he said the time was right for innovation in customer experience.
“Product innovation is hard to achieve in this market, and it’s easy to copy. Operational excellence has been an area of focus, but it can result in a race to the bottom. Customer experience is valid right now because it’s a way of differentiating your brand and of outperforming the competition, but it’s much harder to copy than product innovation.”
Barriers To Change
But despite the enthusiasm among both speakers and audience for change, the difficulties continue to loom. Anne Boden, the former chief operating officer of AIB highlighted the extent of the problem: “Organisations are too complex, the culture discourages the bravery required for change, and there are massive numbers of legacy systems”.
To make change happen, she listed three requirements: people looking beyond the financial services industry for inspiration and examples; bravery and the desire to stir up innovative thinking; and taking action. “Do it,” she said, “don’t just plan it.”
And she issued a stark warning to those who weren’t able to change.
“We have to decide to structure our organisations differently, or other people will eat our lunch,” she said. “Companies like Google and Facebook will own the customer relationship and we’ll be left running utilities. We either react and respond to this complex world, or someone else will.”