Refocus on Customers
By focusing too much on the technological aspect of CRM, banks have largely ignored their goal of improving their customers' experience. Certainly it's easy to see why technology garners attention from bank executives. CRM hardware and software requires the investment of significant money and lengthy periods to integrate with other systems. But it's not a case of install it, and the results will come. Rather, to get the most return from their investment, banks must look beyond these technologies and learn how to enhance the customer experience in order to provide better opportunities to build bank revenues and profits.
For the most part banks have focused their technology-related CRM efforts on systems that provide internal measurements, such as the number of customer contacts and average calls per agent hour. While these measurements might be important from an efficiency standpoint, they don't provide focused metrics pertaining to customer experiences and perceptions. The call center agent who handles 75 calls per hour might be fast, but if most of those customers need a call back, he isn't as efficient as another agent who handles half as many calls but manages to resolve every issue in one call.
To truly enhance the customer relationship with the bank--thereby reducing customer attrition and garnering a larger share of wallet--CRM needs to provide metrics that result in more positive customer experiences. That means evaluating customer experiences throughout the relationship.
When evaluating customer experiences with payment cards, for example, banks should look at six different stages in the customer life cycle: learning, acquiring, activating, using and managing, obtaining service, and changing or canceling. With most of today's CRM systems, the bank typically gets a read at only one or two junctures. Moreover, it measures a limited set of factors. To illustrate how important it is to measure each step, let's look at the new cardholder.
Suppose a bank only measures the onboarding of new customers. Even if a new cardholder is delighted at the way he or she was signed up and activated, there are several other life-cycle stages to measure. If obtaining a service representative or account manager were subsequently a bad customer experience because of an undermanned call center, that encounter could doom the overall relationship as readily as a poor experience earlier.
To get a more complete picture of customer experiences, banks should also augment the measurements from CRM applications by soliciting customers' opinions. This can be done several ways. Banks can create customer committees, such as focus groups or target-marketing groups, to provide regular opinions and suggestions; enable customers to provide feedback through multiple channels (i.e., a "voice of the customer" blog, minisurveys at ATMs); and talk to their customers when they enter their branches, which can also unearth cross-sell opportunities. Banks can also incentivize call center employees to survey customers' opinions about their interactions. Employees nowadays need to realize that all bank personnel must participate in the overall marketing effort.
Customers also need to be rewarded for their loyalty. Modern consumers have grown to expect a bonus for choosing a particular product or service, whether it's patronizing a particular restaurant, flying a certain airline, or choosing a financial services provider.
That's the primary reason behind the upsurge of rewards programs tied to payment cards. By offering rewards such as frequent-flier miles, cash-back bonuses, and college savings contributions, to name a few examples, providers have promoted increased card usage, but not necessarily increased customer loyalty. Payment card annual churn rates run at 20 percent to 35 percent, mainly because so many offers are so similar.
The same is true of other bank products, which are largely commodities in terms of pricing, benefits, et cetera. Reward programs might initially attract the customer to the bank, but they're not enough in and of themselves to maintain and grow the relationship. So, if there's no difference between competing banks' products, it's the bank itself that must become the differentiating factor. The customer will choose to do business where she has the best total experience--often choosing that over small-price or reward differentials.
By focusing on a customer's knowledge of her own experiences, rather than on the bank's impression of what the customer considers important, a financial institution can begin the process--and it is definitely a process--of enhancing customer relationships and getting true value out of CRM technology investments.
About the Author
Edmund Tribue is global practice leader of MasterCard Advisors' global credit risk management practice. Please visit www.mastercardadvisors.com
Market Focus: High-Tech -- The Complexity Chasm
As high-tech companies seek new directions, is the customer experience falling through the gap?