Gartner Navigates 'The Client-Driven World'

NEW YORK -- At the Financial Services Technology Summit hosted here this week by research firm Gartner, industry pundits discussed "the client-driven world." Stessa Cohen, research director at Gartner, spoke at length about how banks need to shift their marketing and sales strategies to keep up with their "evolving, changing, and moving" customer bases. In short, she said, banks don't need a customer relationship strategy. More to the point, Cohen told the crowd, traditional CRM strategies aren't enough anymore. Every company now has to focus on empowering customers to access what they want, when they want it, and how they want it. Rather than focusing on the company's "360-degree view" of its customer, Cohen said that the objective now is, "Does the customer have a 360-degree view of you?" Consumers want a relationship defined on their own terms, not one based on what the bank believes the relationship should be. "Most institutions segment their customers--into consumers, small businesses, mass affluent, retirees and so on--and then ask their product managers, delivery channels, or lines of business to sell the products the bank has determined meet the needs of those segments," Cohen said. That model, she suggested, was inherently flawed. As an example, she recounted the experience of her elderly mother: Retailers assume that she wants products specific to her age and thus only send her information on those products. In actuality, her mother is more interested in discounts and products with good rates--a missed opportunity for better-targeted marketing. Society divides technology users into two broad categories, Cohen said:

• Digital Natives: members of Gen X and Gen Y who are adept at using technology; and
• Digital Immigrants: Baby Boomers and pre-WWII senior citizens who generally prefer face-to-face interactions.

However, though it's slow to show in the U.S., characteristics such as age are becoming less and less of a barrier globally in terms of using technology to access information. Cohen described how, in countries such as Sweden and Norway, where there's high broadband and mobile penetration, almost everyone is conducting business online or through mobile devices. Technology has also transcended both class and job status, Cohen added. The best predictors now, according to Cohen, are gender (e.g., 67% of female small-business owners prefer to buy new products from those they have an existing relationship with) and type of behavior (e.g., college students, contrary to popular belief, prefer branch-based services from banks). Therefore, banks and businesses need to learn how their customers prefer to receive information--and then follow those preferences exactly. In a truly "customer-focused bank," Cohen said, vendors should be competing based on price and service rather than the traditional channel- and product-focused approaches. Cohen referred to this as a "channel-agonistic" approach, where the bank offers services to customers who want, she said, "a variety of relationships with the bank regardless of channel or distribution network." Cohen shared four key characteristics banks need to have in order to be successful: solve; build; access/transact; and analyze/advise.

• Solve: Cohen cited one study that indicated that 30 percent of bank Web sites answer just 20 percent of customers' questions. Regardless of what channel customers take, everything should be seamlessly integrated. When a customer submits a question through email, he should be able to reference that interaction at the branch, rather than have the teller say, "Sorry, we don't have access to what you did on the Internet." Banks should make their processes transparent across all channels.
• Build: Customers should be able to build the criteria for the product or service that they want and then be able to rely on the bank to deliver it. Rather than a static drop-down menu, customers appreciate product flexibility, Cohen said, allowing them to compare prices and view features. She mentioned the example of Vanguard, a mutual fund company that allows customers to search for products alphabetically, by category, by investment goals, according to risk level, and so on.
• Access/Transact: Customer-focused approaches are all about allowing the customers to access and make transactions on their own terms, Cohen said. Product personalization and flexibility, therefore, are key: A simple "Hello, Josh" at the top of the page is no longer sufficient; instead, customers should be able to customize their accounts, whether that means seeing what bills are soon due or tracking the status of their loan repayments.
• Analyze/Advise: Cohen stated frankly that most customers have multiple accounts--something beyond banks' control. Nevertheless, customers still want to analyze their accounts and receive advice. Therefore, Cohen said, banks should learn the customer's view of money: To consumers, money is "a means to an end--pay off loans, save for college," she said. Consumers have specific financial goals that banks should be responding to. "Capture the goals and store them as preferences," she added, and then act on them: "Give them tools to measure benchmark goals."

As the saying goes, customers often don't know what they don't know, so advice that works in accordance with their goals is highly welcome. Cohen described a set of circumstances in which, after selling a house and making a profit of, say, $50,000, someone might deposit that profit into a bank account. In an ideal world, the bank would immediately be alerted to that deposit and would proactively provide various options to best manage that money--even if the solution exists outside of the bank. Related Articles Get Ready for the 'Digital Client' The emergence of the always-on, always-connected consumer calls for companies to rethink their CRM strategies, says a destinationCRM2007 speaker. Market Focus: Financial Services--Cashing In on Integration Financial services companies must focus on shifting away from siloed processes across departments and channels. Financial Services Firms Must Invest In Customer Advocacy Forrester's Finance Forum highlights the importance of interacting independently with target customers. Closing In on Bank Customer Churn Poor treatment or lack of branches or ATMs when they move are some reasons why bank customers switch banks; consider boosting loyalty by offering and promoting sticky services, one analyst says. Viewpoint: The Emotionally Detached Customer E-banking means fewer visits to the branch and fewer opportunities for banks to interact with customers. CRM Moves to the Mobility Phase Focusing on technology, experts at destinationCRM2007 are all about the mobility effect.