At a time when many financial institutions are striving to overcome (sometimes justified) public perceptions that they do not care as much as they should about their customers, there is some encouraging news in a new Accenture study about the factors that influence customer loyalty or defection. The 2012 Accenture Global Consumer Survey, an annual research project that assesses consumer attitudes toward marketing, sales and customer practices across 10 industries (including retail banking and life insurance), found that retail banking is among the most effective industries at providing tailored experiences -- which Accenture says is critical to a strong customer relationship.
Retail banks ranked second (behind travel and tourism and ahead of life insurance providers) in terms of consumers' assessment of their abilities to deliver tailored experiences, according to the Accenture research. Nearly half (48%) of the survey's respondents said that, compared to one year ago, they have higher expectations of getting specialized treatment from their banks for being a "good" customer, and 31% said they prefer companies that use information about them to make their experience more efficient. At the same time, 47% of those polled said it frustrates them when their banks don't use the information they have to make interactions and offers more relevant.
Overall, according to Robert Wollan, global managing director of the Accenture Sales & Customer Services practice, banks rank somewhere in the middle of the industries evaluated; however, "The banking industry overall has become a leader in improving the customer experience," he says. I asked Wollan to elaborate on the survey's implications for banks, given their intensifying focus on customer experience and the related investments needed to improve engagement and retention:
We often hear that banks are compared (often unfavorably) to other service providers (e.g., Amazon, Nordstrom, Starbucks) in terms of service/interactions. Is that a trend/behavior you observe? And if it's true, how do you think that influenced how consumers rated banks in this research?
Wollan: Across industries, we're inevitably comparing experiences with lower-complexity transactions, such as in utilities, to a more confidential, more complex and more personalized portfolio of needs that banks address for their customers. That said, we do see consumers transfer their expectations for service from one industry to another, and this trend is really accelerating as consumer expectations rise year over year. Banks can win back valuable ground with consumers by continuing to do a better job setting expectations with their customers upfront, and ensuring they deliver against those expectations. According to our study, broken promises are among the biggest reasons for customer switching in all industries. Banks can also leverage their unique position of engaging customers in some of the most personal, emotional and impactful areas of their lives -- a distinct advantage other industries lack when trying to develop deeper relationships and loyalty.
Based on the results of the survey, it sounds like the significant investments banks are making in customer analytics are paying off in their ability to target/customize. Do you think that is the case?
Wollan: Overall this is true -- consumers rated most customer service attributes higher across the board this year, with a significant increase in use and stated influence of corporate web sites as well as online expert review sites, news sites and product comparison sites. This all suggests growing impact of digital channels -- areas where some banks have made significant investments in online, mobile, analytics, and social media. The key message for banks is to keep up the pace, as consumer expectations continue to rise. For the third year in a row, we have seen a double digit rise in consumers saying they have "Much Higher" expectations -- if banks and other companies slow down their focus on these functions, they may quickly find themselves out of touch with consumer expectations once again.
One area banks could build on their past investments to create even more impact with consumers is with the rise of service personalization -- providing more options for obtaining service or more specialized treatment for being a good customer. Expectations for these kinds of services are moving up the rank among consumers, while interestingly, the expectation that customer service representatives will be increasingly knowledgeable continues to fall off.
Did the survey address privacy concerns -- that is, is there a limit to how much personal information people are willing to share with a financial services provider and what the bank can do with it? What trends are you seeing in this regard?
Wollan: Yes, most definitely. This was a new area of focus in this year's survey. The findings indicate that customers are willing to provide their data, but they expect something in exchange for it. Our key take-away is that consumers really care about how their personal data is used: They expect providers to create more relevant offers and services based on insights, but also want to trust that their data is secure and have some control its use.
"Realizing that the company cannot be trusted on how to use personal information I provided them" and "Realizing that the company is not using the information it has about me to make interactions and offers more relevant for me" are key frustration for consumers dealing with all industries and encountering them even while prospecting leads consumers to not consider doing business with the service provider in any industry.
Do you have recommendations for financial services companies as to how they could rank higher/improve how consumers feel about them? Do you see any risks -- competition, regulation, economic conditions, etc. -- that might cause their rankings or performance to decline in this area?
Wollan: Here are four key recommendations:
- Focus as much time on setting expectations (marketing, selling) as is spent meeting those expectations in service. This is a major gap that can lead to unsustainable levels of attrition as a result of broken promises (e.g., sales messages that create unsolvable service issues).
- Start thinking of each misstep as a chance to lose a customer -- customer service failure is more than just frustrating for customers. Consumers won't always give you the chance to save them by talking to a supervisor -- one in five indicate that their first reaction to poor service is to either quit doing business with the company immediately or begin shifting a portion of their spend to another provider.
- Turn listening to "active listening" to your customers. Not just when they escalate or get moved to the "save desk" -- but all the time. The vast majority -- 85 % -- of consumers state that there is something their service provider could have done to save them … they just had to be aware there was an issue and make every attempt to fix it first time around.
- Treat different customers differently. Defining the micro segments that are at risk and what the appropriate treatment is to save them is an approach that has been incredibly successful in wireless and can be extended to banks. Protect your existing customer base with this type of analytically driven approach.
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio