Despite billions in CRM investment, financial institutions still need to ensure that their self-service experience differentiates them enough to be a tool for customer retention.
Posted Apr 6, 2004
A study recently completed by BearingPoint indicates that while financial services companies have achieved efficiency gains through investment of billions of dollars in CRM strategies, those dollars are not translating into industry-wide improvements in customer satisfaction and retention. According to the consulting firm, only half of the institutions surveyed invest more than $1 million annually on customer experience improvements.
The promise of economic recovery brings the specter of churn for many industries, but according to BearingPoint, few are as at-risk as financial services. Money is the ultimate commodity good, and the industry's push for self-service in the name of cost savings and expediency over recent years has given customers unprecedented power over the relationship. Self-service dulls the value of in-person services, one of the major differentiators available to financial providers.
"When I talk to senior management of our clients, what I hear is that very rarely do their retail or corporate customers come into the bank anymore," says Chris Formant, executive vice president of BearingPoint. "Everything is done in some disconnected way."
Many banks and lending institutions have lost their most substantial tie to customers as refinancing swept the country, much of it initiated by customers who were empowered to seek the best deal and put through much of the paperwork themselves. "We went to great lengths to put tools in our customers' hands so they could have time and place convenience, and as the market has turned up, [financial institutions] are very concerned about customer attrition."
The problem, Formant says, is that while CRM investment has largely delivered on its promises where efficiency and cost cutting are concerned, it has done little to improve customer experience and, ultimately, customer satisfaction. Fewer than one quarter of individuals surveyed said that they were sufficiently pleased with their financial services providers to recommend them to others. "The technology worked, but customers are in control of the relationship, and now [companies] need to figure out how to control the experience," Formant says.
He predicts that as financial institutions take a closer look at their operations and how they relate to customer experience, they will find "Gordian Knots" of technology and process built up that do little in the way of improving satisfaction and loyalty. Fewer than 60 percent surveyed have broken down their stovepipes of product lines and effectively communicate the complete view of the customer across their organizations.
"What other industry would push all of their clients out to have disconnected interactions, and then not want to find some way to make a terrific experience each time to encourage loyalty?" Formant says. "We're suggesting that, at the end of the day, after you have disconnected all your customers, if you have no way of differentiating yourself on the basis of customer experience...you're dead."
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