September 21, 2010

Amid the economic turmoil, many people simply want a stable financial services relationship. Creating a strong customer experience can be a powerful competitive advantage in optimizing this valuable relationship, suggests Bruce Temkin, customer experience transformist'and managing partner at Temkin Group, a Newton, Mass.-based research and consulting firm. In an exclusive interview, Temkin discusses how banks and insurance companies can enable a positive customer experience and unlock the power of loyal customers.

What does the “customer experience” mean in financial services?

Temkin: Customer experience means loyalty. Customers who have positive interactions with their financial providers are more likely to purchase additional products, less likely to move business away, and more likely to recommend the institution to their friends and families.

Do financial institutions actually understand this?

Temkin: Many financial institutions are figuring this out. They increasingly are understanding that customer experience is a critical lever in building relationships with — and retaining — customers.

What are some misconceptions that banks and insurers have about the customer experience?

Temkin: Sometimes financial institutions think too narrowly about customer experience, as if it’s a channel-specific issue. So they think about usability of the website, fine-tuning scripts for the call center, and training for agents and tellers. But they miss the big picture.

Customers often run into problems when they cut across channels. But even that’s not the total picture. Everyone from product development to management to marketing communications to legal to, well, everyone, has an impact on the customer experience.

How does this holistic approach impact IT investments and strategies?

Temkin: To begin with, you need to invest in flexibility. Customer needs change, and so do market conditions. Sometimes customer needs will require platforms that allow for easy changes to business rules and process flows.

You also need to put a premium on the usability of the technologies that you pick. This will drive the need for more formal usability testing in all IT projects. Companies will also want to invest more in customer insight tools — making the collection, analysis and dissemination of customer insight an ongoing process.

What key tools and technologies enable a positive customer experience?

Temkin: There will be a continued investment in moving inflexible applications onto business process management platforms. Companies will put more emphasis on business intelligence tools, especially to analyze customer-facing activities. Companies will also need to invest in text-mining tools, since the richest feedback from customers is often in unstructured form, such as comments via e-mail, calls into the call centers and social media discussions.

How much of providing a great customer experience depends on technology, and how much depends on factors like corporate culture?

Temkin: Obviously, IT issues can cause major customer experience problems. But'technology isn’t often the key driver. There are four key competencies that companies need [in order] to be good at customer experience: purposeful leadership, compelling brand values, employee engagement and customer connectedness. A company with good customer experience competencies can overcome technology shortfalls, while a company with poor competencies can mess up even the finest technology.

Can banks and insurers customize the customer experience for individual segments?

Temkin: It’s totally customizable. But that doesn’t mean you need to design different experiences for every customer or customer group. Customer experience should be customized to meet your brand and business strategy. This means that companies need to have a good understanding of their brand values — I like to call them “brand promises” — and their target customer segments.

How has social media changed the customer experience equation?

Temkin: To begin with, it magnifies the importance of customer experience. If you treat one customer poorly and he tells five friends, that’s quite different than an unhappy customer going viral with a video on YouTube. Social media also provides a new opportunity for listening to customers. You can hear more — and more quickly — about what they like, dislike, or want from you and/or your competitors.

Do large and small companies face the same customer experience challenges?

Temkin: The goal for customer experience is to consistently deliver on brand messages that resonate with customers. ... Large organizations need to work harder at implementing systems and processes that can deliver consistently good experiences across many more customer interactions that involve more employees.