This post is contributed by Patricia Foell, Senior Director, Strategic Consulting at Epsilon.
Across industries, across channels and across the globe, the words customer centricity are heard in every conversation about the customer experience. “The customer must be at the center of the business” and “know your customer” are common mantras. But what does this mean for consumer financial services institutions (FIs) that are often heralded as prime examples of focusing on products and not customers?
It means that consumer FIs—like banks—must return to their roots. Not more than 50 years ago, banks were truly customer centric. Customers went to their bank branches to conduct business. Bankers knew their customers, their needs, the types of products they owned and when to introduce new or different products and services. Bankers and customers had an actual relationship built on trust. Think back to the legendary movie “It’s a Wonderful Life” where George Bailey knows all his customers and can appeal to them based on his and the bank’s relationship with them.
Since then, the industry has undergone many positive changes. Competition means that consumers have an almost infinite number of choices. They can go beyond the bank’s footprint to secure the best pricing and products. Technology has made it possible for consumers to do their banking anywhere and at any time.
But, as the range of competing consumer products have grown, banking has become impersonal. Banks have developed entire organizations focused on marketing individual products to individual customers and managing the individual product P&Ls.
The end result is that a customer can own five different products with a bank and be treated five different ways. There is no holistic view of the customer that reflects the history, depth and value of the customer relationship. The latter can lead to bad customer decisions. For example, a customer may be charged a late payment fee for a product when they have very substantial investment assets with the bank. This silo effect is the opposite of customer centric; it pushes customers away and may ultimately hurts the FIs bottom line.
It is time to turn back the clock and realign the focus on the customer. Of course, this realignment will take a very different form than in the era of George Bailey, but banks must refocus to extend appreciation for and retain its best customers.
The key building blocks to returning to customer centricity:
- Enterprise database and tools that indicate not only the products the customer owns but the value of the customer as a whole to the bank.
- Focus on customer profitability in addition to product/channel metrics.
- Measurement of marketing effectiveness beyond individual campaigns and offers to the impact on the entire customer relationship.
- Loyalty strategies that encourage customers to deepen their relationships with the bank.