Upside Down; Inside Out

We all know that great customer service is a crucial differentiator. So why, asks SEAN TOMLINSON, aren’t banks and insurers operating as true customer-centric financial services organisations?
Delivering great customer service might not be easy, but some companies have grasped the essentials better than others. What are they doing which sets them apart? And does it really matter?
Let’s answer those two questions in reverse order. Yes, customer service does matter. Customers punish poor service, both inside and outside the financial services sector. The Institute of Customer Service reported in January 2012 that ‘the four retailers with the lowest customer satisfaction all suffered a serious decline in sales’.
In financial services, we are still counting the cost of damage to customer trust caused by PPI mis-selling. In a recent study aimed at financial services organisations, 55% of respondents said that, despite our recessionary times, they would be more likely to switch their bank due to bad customer service than to get a slightly better deal.
Better than the rest
Turning to the second question, in financial services American Express is among those that stand out as providing superior customer service. Respondents  talk about its customer-centric products and services with, for example, enhanced benefits and ease of redeeming rewards points, although the lack of acceptance at some outlets is starting to damage its brand. Alongside American Express, many see First Direct, Metro Bank and USAA as exemplars of great customer service.
While new to the financial services scene, Metro Bank has caused a stir with its ‘customer first’ philosophy. This is perhaps because, with no legacy to contend with, it is easier for new organisations to structure ways of working around the customer experience. Metro’s Co-Founder Anthony Thompson says: ‘All our decisions are based around building the customer experience, not on the Return on Investment. When we were defining customer experiences, we kept testing ideas to ensure that we weren’t falling into the trap of being company-centric – every time we suggested something we would test it again and again to ensure it was supporting the customer experience.’ Other banks are now following this model of rewarding staff for satisfaction rather than sales.
In order to unravel why so many others fail to match these exemplar organisations, Steria recently canvassed the opinion of senior service engagement and customer experience personnel in the financial services sector. We found that, while there is an appetite for building a customer-centric financial services organisation, the enterprise operating model creates a structural barrier.
The traditional model is designed for the efficient management of resources in delivering services. These are often focused around groupings of skills within product lines or, to use another word, ‘silos’. Senior management has worked out constituent parts of the product delivery process then taken as much cost out of them as possible. However efficient this management of resources is from the company perspective, it doesn’t always deliver an effective, rewarding customer experience.
Despite a willingness to achieve customer centricity, financial institutions are still structuring themselves in such a way as to immediately damage the customer promise. One respondent to the Steria survey pointed out: ‘The channels are in some respects competing. So, for example, if there was an idea for the online channel to implement a programme that could help support the store channel or vice versa, they wouldn’t prioritise this. Each P&L is effectively operating alone.’
Four-step transformation
What’s required is a new model: one which fixes what has been described as the ‘broken’ enterprise operating model and puts the customer at the heart of everything. The four-step model below presents a framework for getting organisations to think from a customer-centric management (CCM) perspective.
Step 1: Identify the ‘customer purpose’ for each customer service offered. To ensure success you need to have a very clear idea of who your customer is and what they require.
Step 2: Plan the process for the customer (the customer journey) around customer needs in support of achieving the customer purpose.
Step 3: Identify the services required along each customer journey to deliver the customer purpose and build the organisation around the effective delivery of these services.
Step 4: Provide access to the service offerings by whatever channel the customer chooses and allow them to swap channels mid-journey if required.
Taking that first step is critical. When, for example, a customer looks to open a new online instant access savings account, the service doesn’t end when they have submitted all the forms. Instead, the end point is when the customer is able to achieve their purpose – to deposit money that is earning interest and to withdraw funds easily through all available channels.
If the account allows card withdrawals or payments online, the purpose has not been achieved until the customer has made a deposit into the account; that account is attracting interest; the card has been fully activated with the ability to withdraw funds from it; and the customer can make payments online. There should be a target timeline for achieving the customer purpose. Clear expectations should be set, not hidden within small print. This will ensure the customer understands exactly when they will be able to achieve their purpose and that their provider is working to achieve these timelines.
Our research suggests that too many organisations start their customer journey with Step 4, looking at their channel strategy without considering the customer purpose and planning the channels around customer requirements. Although the four steps are relatively clear, a CCM strategy requires a multi-faceted transformation towards ‘outside-in thinking’. This will include elements of customer data management, customer journey mapping, service oriented organisation design, systems integration and, crucially, cultural change.
Evolving model
Of course, the four-step model is just a starting point. Respondents to Steria’s survey into customer centricity said it would evolve further with enhancements more specific to their industry or organisation. For example, Paul Schofield from the Co-operative Banking Group commented that he would, ‘extend the model to include colleagues and organisational culture (human capital). It is important to get that bit right as our people will ultimately drive the customer experience.’
This employee engagement is a critical factor in the ability to transform into a true customer-centric organisation. Yet, for one of our respondents, there was what he describes as ‘a lack of basic understanding across the company of how individuals’ jobs will have an impact on customer satisfaction’. Unless your own people are engaged with and understand the end-to-end customer purpose and journey and means of delivering on the promise, it will never be achievable.
There needs to be real willpower and drive from the top of organisations to break down operational silos and ensure all the services required to deliver customer journeys are aligned in the most effective way with the customer purpose. For Peter Norris, Director of Group Lean and Service Management at RBS, this means building the organisation’s structure with the customer at its centre. He explains: ‘Start with the customer in respect of the service they need. Understand the customer journey and moments of truth – and ignore the organisation while doing this thinking.’
There is an ambition to build the customer-centric financial services enterprise and it is easy to see why: financial services are, by their nature, intangible. As such, service becomes a vital differentiator. Our proposed new operating model is the start of this transformation journey.