By Nick Miller
Starbucks and Dunkin’ Donuts. Their basic coffees taste a little different but their customer experiences are significantly different—from store lighting to coffee options to food choices to team members’ rap with customers—reflecting widely divergent company values, target markets and strategies.
Like banks, the companies sell similar core products. Unlike banks, they have designed their customer experiences to appeal to some clearly defined customer segments and not others.
A designed customer experience translates a company’s brand and strategy into activities and style that consistently engage target customers and gain their trust so they become loyal and buy more from the companies whose experiences they prefer.
For banks, the path to stronger differentiation, more loyal customers, and higher revenues lies in:
- Choosing specific target customer segments.
- Carefully designing and choreographing even the smallest details that produce preferred experiences.
- Rehearsing team members to ensure they perform their roles as designed.
- Managing the details of the process daily.
A success case
The mass affluent group of a major bank saw an opportunity to invite families holding a portion of their wealth with the bank to consolidate their holdings. The bank decided to offer a basic financial planning service as part of the package. Previous attempts involving pricing, products, and differential service levels had produced no result. They knew through focus group feedback that trust and “feeling involved” would be keys to the credibility of the offer.
This time, though, they paid attention to each detail of the sales process, from the moment of first contact, through development of alternative financial plans to account maintenance. Yes, down even to the smallest details around how customers would be greeted, where they would sit and what customers would be handed to read while they waited for the financial planning adviser. This meticulous attention to detail paid off handsomely as the bank quickly exceeded its targets around numbers of completed financial plans. Fees earned per completed plan were four times initial estimates. Better yet, over the last six years, portfolio sizes and fees have grown nicely.
Lessons from the story:
- Strategy. The bank identified a market objective and devised an approach offering a differentiated value proposition to specific target customers.
- Design. The bank crafted an end-to-end sales process. No detail was too small to consider.
- Deployment. The bank created scripts, presentation aids, guidelines about where and how meetings should be arranged, and outlines and other tools to ensure that all staff “followed the script” to create the customer experience the target population would find attractive. The financial planning advisers were trained to deliver the value embedded in the process and to represent a set of values that desired customers would find attractive.
While attentive, consistent and effective customer service is part of the overall customer experience, it is largely reactive, task-oriented, and in direct response to a customer—generally during a face-to-face event.
Customer experience, however, is far more inclusive and demanding. Customer experience is influenced at every touch point between the institution and the customer—from the delivery and appearance of a statement to the physical attributes of the branch office, to the website, to the phone channel, to the ATM.
Getting it right—customer experience implementation
Implementing a customer experience strategy requires a top-down, multidepartmental commitment. Fortunately, customer experience possibilities are vast and leave ample room to be innovative and create the experience that works for any organization. Six steps can improve customer experience and pay dividends many times over:
- Focus. Choose the target customer segments the bank wants to attract. Strategy, differentiation and value propositions require choices.
- Assess from the outside in. While some famously successful customer experience elements are the result of a CEO’s whim or sudden insight (Richard Branson comes to mind), most successful customer experience strategies are the result of deep understanding of targeted customer segments—their values, aspirations, self-images, fears, irritations, daily habits, preferences and routines—learned through direct observation, focus groups and pilot programs. Bank managers must then decide which of these elements are most critical to the buying decisions particular companies want to make.
- Develop strategy. A well-developed customer buying experience strategy defines a company’s approach to engaging, retaining and, expanding its most desired customers better than its competitors, including offers, price points and distribution channels.
- Choreograph customer interactions. This is the spot where most banks, in our experience, fall short—mapping details and communicating them to team members. In the digital space, this mapping process is a requirement for development of the software. For those elements of the strategy that involve person-to-person conversations (in branch, by telephone, in other locations), banks must think through customer interactions in detail—mapping out physical and virtual customer pathways, including customer interaction with staff, interactions between staff members, physical layouts of branches and ATMs, and the content and design of website pages.
- Rehearse, rehearse, rehearse. For “live and in person” experiences, a solid performance takes tremendous discipline and practice. This is another spot where most banks fall short: too little rehearsal, not enough coaching. Without sufficient training and rehearsing, the desired result will not be attained, and the prior steps will have been wasted. Staff should be practicing key customer interactions … daily.
- Execute, measure and adjust. Measuring the effect of the customer experience initiative is essential in building support, encouraging staff and demonstrating the inherent value of the program. Most importantly, use information gained in the measurement process to re-evaluate and adjust the program to make sure the customer experience being provided is resonating favorably with the customers.
Obstacles to creating customer experience
Completing the six steps will be more challenging than it looks. While an overwhelming majority of executives acknowledge the importance of differentiation, relatively few banks have accomplished it.
First, allocation of leadership mindshare and capital. To an increasing extent, bank senior managers are shifting investments away from differentiation and value at “the front line” to digital banking, other technology initiatives, compliance, and managing relationships with regulators.
Second, focus on cost reduction in the branches. With declining branch transaction volumes, banks are investing executive and staff time to reduce branch network footprints and branch staffing levels. At this point, bank initiatives to convert branches to open floor plans and to staff with universal bankers typically emphasize functional and procedural cross training and efficiency rather than orchestrating client experiences.
Third, failure to understand staff orchestration. While senior bank leaders learned to focus intently on development and implementation of compliance and credit procedures (both subject to unblinking regulatory scrutiny), many senior bank leaders developed a “laissez-faire” posture with the practices and procedures of sales and customer service, viewing them as somehow an art form, often leaving these to sales training providers to define through their packaged training programs. As a result, banks tend to underestimate the level of detail needed to choreograph and manage customer interactions that generate an intentional, designed, consistent customer experience.
Fourth, bank organizational structures. Orchestration of client experience, particularly when humans are involved, cuts across bank departments and lines of business, each of whom pursue their own objectives (first) with a nod to enterprise issues (second). The weight of line-of-business goals often squashes cross-business line efforts, even when a senior “customer experience leader” is appointed.
Banks willing and able to press through these mental obstacles will reap handsome rewards. For example, recent research from Barlow Research Associates demonstrates that engaged, loyal small-business customers create almost double the amount of revenue at their primary banking institution compared with customers who are disengaged—money in the bank! Time and resources invested to develop more loyal customer relationships are rarely wasted in retail.
Attracting and developing their buying loyalty depend heavily on customers’ subjective experiences of sellers. Banks can design buyers’ subjective experiences of sellers through storyboarding and other techniques and deploy the processes, procedures and people who can generate the preferred experiences for the desired customers consistently, as designed.
Since we started with Starbucks, let’s finish with it. Scott Bedbury, senior vice president of marketing at Starbucks during the formative years between 1995 and 1998 said:
“To me, the question is not how can you be different, but how can you be different in a way that resonates deeply with people? …To me, the answer is that being different is ultimately about values—your values, your brand’s values, and your company’s values. Your values are what sets you apart.”
Your values are what shine through in the customer experience.
Nick Miller is President of Clarity Advantage, a consulting and training firm focused on helping banks generate more profitable relationships, faster, with small-business and consumer households. Email: firstname.lastname@example.org.