Guess What? Customers are grumpy!

There's an article out today citing a new study that indicates that "A rise in fees has led to growing dissatisfaction with retail banks." Great strategy...make it tough on customers when they are going through tough times and bet that they'll stick around down the road.

We need to see the world through their customer's eyes. All we have to do is to think about our own lives. Who do we stick with, the friend who's with us in good times and bad, or someone who manages to disappear when things get a bit tough?

Customer experience is a mirror of human experience. What applies to individual relationships applies as well to commercial relationships. Now is the time for banks to build strategies that show their customers that they have their best interests in mind, not the CFO's.

Excellent!

The movie “Bill and Ted’s Excellent Adventure” made a cliché of the word “excellent” just as “brilliant” seems to be the latest clichéd expression from the UK today. Excellence is now an embedded component of business and banking culture. Ever since Tom Peters, excellence has been a mantra that rarely fails to bring nods of approval in management committees around the world.

There’s an article on destinationcrm.com by Lior Arussy, entitled “The Excellence Myth” an excerpt from his book, Excellence Every Day. His position is that while companies talk about pursuing excellence, they generally go out of their way to make it hard for their employees to deliver it. He thinks (and I agree) that the only way to achieve excellence is to enable your employees to make that happen.

He also states that “There is nothing more powerful than listening to your customers. A simple message delivered in the voice of the customer can be more insightful than hundreds of pie charts and Excel spreadsheets.” And he goes on to say that executives should take the time to visit customers in their own environments, a terrific idea that would do much to actually improve customer experience in banking.

In a past life I worked at a bank that required all senior officers to visit a bank branch and perform one of the branch functions for four hours every quarter, and if you missed, you risked your bonus. It was incredibly valuable because we got to see the impact of our decisions (or lack thereof) on the people who had to implement them, and we saw the reaction that customers had to our institution. More recently, I participated in a session where customers and front line staff were brought into meetings with senior managers, which accomplished the same purpose.

In every instance where I’ve had the chance to listen to customers and employees directly, my reaction has been the same…incredible respect and humility. Listening to a customer tell you about her inability to change her name on a DDA after her marriage, or to an associate tell you about how he is put in the same queue as customers to resolve credit card problems, can only make you realize that there is much to be done to get service in financial services to a universally acceptable level. Excellence indeed. Adequacy is a more appropriate goal.

I suggest that instead of being Bill and Ted and spouting clichés about excellence, all of us should go hang out at a branch for a few hours or sit as a CSR in a call center. That experience will do more to move the quality of service delivery forward than a thousand consultants or a hundred blogs (even this one).

My grandfather's grocery store

My grandfather ran a small grocery store in Walsenburg Colorado, a coal mining town near the New Mexico border. If you were to go into his store in 1923, you would have seen a counter on the left with fresh food and meat, and dry goods arrayed on the shelves on the other side. There was only one aisle, and I doubt if there were ever more than 10 customers in the store at any time. My grandfather and my uncles were the butchers, the produce guys, the shelf stockers, and the cashiers.

When you went in to get your groceries, they would provide what you needed by engaging you in conversation. There was simply no other way to get what you wanted, unless they already knew you well enough to get you exactly what you needed. Obviously, if the only way to get what I need as a customer is to engage in conversation, then the person that I’m dealing with will treat me courteously or risk losing my business. And it’s a small town, so if my grandfather lost one customer because of rudeness, it wouldn’t be too long before everyone knew.

This was before “customer experience” was invented. Service was by necessity personal, one to one, direct. And this was the way it was in most businesses, including banking. Schafer’s grocery was the only store in town until 1955 and then Safeway came in, much as Wal-Mart came in later. When they arrived, they brought a world of variety that was previously unimaginable, a giant world of stuff emerged. And almost immediately, my grandfather was out of business.

It’s kind of cool to understand how radical a supermarket was when it was introduced. What it did was to enable the customer to do a lot of the work with the tradeoff being wider variety. It also changed the dynamic between the customer and the merchant. No longer could the customer rely on the merchant for information or recommendations on what to buy. There were too many products and choices. So the customer moved to the brand and the product for their information. With their migration to the brand and product, the level of trust that they needed to have in the merchant was diminished as well. The merchant’s people became less important.

I think that business consciously moved away from a customer centric model to a profit centric model, and in general, customers loved it. The world before mass marketing was a fairly uninteresting place to buy stuff. Variety was very limited and local, choices were simple, and people generally didn’t have a lot of money to spend on luxuries. The explosion of retail from the supermarkets and then into other categories happened at the same time that the world was rapidly becoming more affluent and mobile.

With the increase in business models, there came an increase in busy-ness. As life became richer, it became more complex. Technological conveniences freed up time for people, and people used that time to do more things and to buy more stuff, and that became a virtuous cycle. Buy stuff to better my life and save time, use that time to make more money so that I can spend it on more stuff. And service was not an important part of the equation. Business managers aren’t stupid and when they saw that service wasn’t as important, they figured out ways to lower the cost of service, which increased profits. Increasingly technology was used to displace service quality.

Somewhere along the line, in almost every industry, customers reached a threshold of pain around service. The tradeoff between stuff and value no longer outweighed the pain of getting or using the stuff caused by the efficiency of the model. I think businesses got away with this situation until the emergence of the internet. Now, anyone with a complaint can make sure that hundreds if not millions of prospective and current customers hear about it.

Technology has gotten to the point where we are capable of replicating my grandfather's store on a mass level. We are now able to know our customers and their consumption behavior, and we have a number of different ways to speak directly to our customers. So if we can replicate his store, what should we do?

1. Let customer need drive service delivery - The customer needs exactly what she needs, exactly when she needs it.


2. Engage in dialog to make sure that all customer needs are being met - Listening and talking are the only true ways to understand what a customer needs.


3. Be aware of all customer interactions - I can't tell if the customer has gotten what she needs unless I know everything that she's buying in my store.


4. Satisfy the customer first, then sell something else - It's ok to suggest something else to the customer, like yeast to go with the flour that she's buying, as long as you've got the flour she needs.


5. Don't be rude, it's a small town - Technology enables a personal level of service but it also enables global gossip. Bad news travels at 11MPS.

We've gone through a revolution in delivery of goods and services, and we lost some of the important things that work well along the way. Think of my grandfather's store as you consider your customer experience and consider moving the customer relationship back to where it needs to be...personal, one to one, direct.

Green is good…as far as it goes

I was just interviewed for an article in Smart Money magazine on the economic impact of green initiatives in financial services and other industries, and that got me thinking of broader issues related to sustainability and our industry. The good news about the elimination of paper in our paper intensive industry is that any move to reduce the amount of paper in a customer’s relationship improves the profitability of that account for the bank. Clearly there is a sea change underway and the momentum is rapidly shifting away from paper based and into electronic forms of communication and information management at the customer level;

• Electronic bill pay continues to ramp up steadily

• Online banking has achieved critical mass

• Debit card usage is overwhelming both credit and check transactions

All good stuff and all beneficial to the bank AND the environment. But there’s still a huge amount of paper generated within financial services because the standard for permanent and safe storage of important information remains the officially signed, paper document. Every mortgage requires a small book’s worth of paper to document the minutiae that the lawyers and regulators require. Insurance policies are generated in paper and then stashed in file folders or safe deposit boxes. And a large number of people still insist on paper statements and physical bill payment no matter what.

So, we’re in a limbo land where we are supporting two different information streams for customers. While there are efficiencies in the short term by converting the easily converted to electronic, at the end of the day we will be forced to support two systems which will limit the cost savings that moving to electronic will create.

What’s missing, and what’s going to be necessary to ultimately move all of financial services to a paperless environment is an accepted form of online storage and digital signature. Both exist, but neither has the level of acceptance that will be needed to generate mass acceptance. There have been several attempts in the past to deliver virtual safe deposit boxes, and there are few out there, including The E-Safe. The problem with the existing offerings is that they are for profit ventures and the value proposition isn’t strong enough for a mass market adoption.

What’s needed is a ubiquitous, free (read Ad-supported) safe deposit box capability that is universally trusted because it’s offered by a universally trusted brand like Google, or PayPal and hung off of FaceBook or MySpace. Another option would be for the card associations to offer this as a free benefit to their issuer bank customers. Once there is a ubiquitous free secure storage capability, the migration to electronic documents will increase and with that, the demand for and acceptance of digital signatures will follow.

The banks are making good progress on moving to a paperless environment, but without ubiquitous, online secure storage, the conversion won’t be complete. Someone ought to be working on this.