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Inform Customer Experience Management by Understanding What Customers Value

Introduction

The migration away from the branch channel that started decades ago has accelerated in recent years – aided by the confluence of the pandemic and technical advances.  Banks now operate in an age where it is possible to deliver a seamless integrated digital first retail banking delivery model.  Such a digital first business model needs to accomplish two objectives in the digital space: it must foster trust and deliver personalization.

Kinēsis’ research into issues of trust and personalization, suggests there is much work financial institutions need to do to achieve the objective of fostering trust and delivering personalization.  Nearly as many customers do not trust their primary financial institution as those who do.  Meanwhile digital channels exhibit a weaker relationship between trust and satisfaction compared to non-digital channels.

Customer perceptions of trust and satisfaction with their primary financial institution vary greatly based on what they value in the relationship with a financial institution. Importantly, for managers of the customer experience, what customers value in a relationship with a financial institution also reflects channel preference and selection.

Understanding customer segments should inform channel management.

Customer Segments

In our research, Kinēsis segmented survey respondents into four groups based on their answers to a battery of questions regarding which retail financial services are most important to them.  This segmentation grouped respondents into four attitudinal segments which we describe as follows:


Show Me The Money
These customers seek financial value from financial institutions.  They are significantly more likely than other respondents to feel value for money and competitive rates and fees are most important when doing business with a financial service provider.

Serve Me
These customers value personalized service from their financial service providers.  They tend to feel the most important attributes of a financial service provider are personalized service with polite and knowledgeable staff, providing quick and efficient service and fast resolution to any issues.

Products Please
Customers who grouped into this segment are were more likely to value a broad range of products, loyalty programs, ethical and sustainable business practices, recommendations and an appealing brand.

Don’t’ Make Me Wait
These customers value efficiency.  Almost exclusively they respond quick and efficient service and fast resolution to any issues are most important to them.

Let’s explore how customer attitudes and values can reflect themselves in trust, satisfaction and behavior.

Trust in Financial Institution

Customers who value products and services have stronger trust in their primary financial institution, while those who value efficiency display weaker trust.

Trust in Financial Institution

When asked the extent to which they agreed with the following statement, “My primary financial institution looks after my long-term financial wellbeing.”  Customers who value products and services professed the strongest agreement with this statement, and were significantly more likely to agree with this statement compared to customers who value efficiency.

Satisfaction with Financial Institution by Channel

Customers who value products tend to be more satisfied, while customers who seek financial value tend to be less satisfied.

Satisfaction with Financial Institution by Channel for Customer Segments

In general, automated channels appear to have higher satisfaction compared to personal channels.  Customers expressed the highest satisfaction for mobile apps and the lowest satisfaction for contact centers.

Preferred Channel to Open Account

Customers who want quality products and services are significantly more likely to want to use a mobile app to open an account, as opposed to visit a branch.

Preferred Channel to Open Account

About half of the respondents preferred to open an account at a branch, about one-third would prefer to use the website, while only one in ten would prefer a mobile app to open an account.  The customer segment most likely to find appeal in using the mobile app are those who value products and services.

Preferred Channel for Problem Resolution

The contact center is the preferred channel to resolve a problem, followed by the branch.

Preferred channel for problem resolution.

Customers who want quality products and services are significantly more likely to want to use a mobile app to resolve a problem, as opposed to visit a branch.

Preferred Channel for Information

When asked how they prefer to get information, a plurality of customers prefer to use the website, followed by the contact center. 

Preferred Channel for Information

Customers who seek service quality are significantly more likely than financial value seekers to want to visit a branch to get information.

Preferred Channel for Advice

It is clear most customers still prefer the branch when seeking advice.  Seeking advice is a type of transaction we refer to as a moment of truth, with high importance on the relationship with the customer, and it’s clear a little hand holding is appreciated across all segments.

Preferred Channel for Advice

Customers who seek service quality are significantly less likely than others to want to visit a website to seek financial advice.

Preferred Channel for Funds Transfer

The majority of customers prefer mobile apps to websites for funds transfers.

Preferred Channel for Funds Transfer

Customers who seek quality products or services are significantly more likely to prefer mobile apps to transfer funds, compared to those who seek service or efficiency.

Conclusion

When segmenting customers by what they value in a financial institution, differences begin to appear between customer segments in both measures of trust, satisfaction and behavior.

Customers who value products and services tend to trust and be more satisfied with their primary financial institution.  This most likely reflects the transition from a branch centric model to a digital first model.  Customers who are product oriented are less likely to require personal attention.  Not surprisingly, these customers are also more likely to use a mobile app to complete a variety of transactions.

Preference for financial value and efficiency do not appear to have significant behavioral differences, however, attitudinally, they display different feeling of trust and satisfaction.   Customers who value efficiency display weak trust in their primary financial institution; while those who seek financial value are generally less satisfied with their primary financial institution.

Customers who value service quality are most likely to be left behind in a switch from a branch distribution channel to a digital first deli very model.  These customers represent 25% of all bank customers. They are less likely to use a website and app and more likely to visit a branch.

As the industry transitions to a digital first delivery model, managers of the customer experience will need to pay close attention to the customers who value personalized service and human interaction in the customer journey to foster both trust and satisfaction.

Integrated Digital First CX Model:  What do Customers Want from Digital Channels?

In previous posts to this five-part series on building an integrated digital-first service model we discussed matching different waypoints of the customer journey to the channels best suited for the specific waypoint.

Beyond the overall CX at the institution level, we also researched CX attributes specific to the digital channel.  In an effort to identify digital features to prioritize in digital channel design, Kinēsis investigated both the appeal and trust of various digital banking attributes.

Timely information, cyber security, and financial value are the most appealing digital banking features.

Digital Attribute Appeal

The following chart displayed the relative appeal of digital service attributes on a 5-point scale:

Timely information about overdraft and upcoming direct debits alerts received two of the top three appeal rankings (4.2 and 4.0, respectively).  Assistance with cyber security threats, and offers and perks from places shopped often round out the top four. 

The next tier of five attributes, with average appeal ratings of 3.3 to 3.0, contain themes of information and personalized advice:

•     Personal financial reports and analytics/ Dashboards

•     Savings tips based on my spending patterns

•     Balance updates until my next payday

•     Tips to act more sustainably based on my behavior

•     Budget information based on spending

Chatbots and gamification (making the app more fun with elements of game playing, such as badges, points, etc), round out the bottom two attributes.

Digital Attributes & Trust

To add context to the digital attribute appeal ranking, we asked consumers if each of the attributes would increase their trust in the financial service provider.

Mirroring the appeal rankings, cyber security and timely information have the highest likelihood of increasing trust in the financial institution.

Cyber security assistance and alerts about overdrafts and upcoming direct debits increased trust for just about 19 out of 20 customers. 

Only about 4 in 10 customers felt chatbots or gamification would increase their trust in the financial institution.

In order to provide CX managers context to make informed decisions about which digital attributes to prioritize, the trust and appeal rankings of each attribute are plotted on the quadrant chart below.  Each of the quadrants below labeled (Q1 – Q4) are defined by the average appeal and trust rankings. Those in quadrant 1 (Q1) have higher than average appeal and trust, while those in Q4 have lower than average appeal and trust.

Investments in timely information, financial value and cyber security assistance have the most potential for return on investment.

With higher than average trust and appeal ratings, alerts about upcoming direct debits and overdrafts, offers and perks from places shopped often and cyber security assistance are the four digital attributes positioned to yield the highest return on investment in terms of appeal and trust.

Personal financial information such as analytics/dashboards, budget information, savings tips, and balance updates have below average appeal, however higher than average trust implications, and therefore should be prioritized next.

Tips to act sustainably, chatbots and making the app more fun with gamification have both below average appeal and they do not appear to have strong associations with trust of the institution, and therefore should be prioritized last.

Next, we will consider the implications of this research for CX managers.

Integrated Digital First CX Model:  Customer Preferences for Financial Service Provider

In a previous post to this five-part series on building an integrated digital-first service model we discussed matching different waypoints of the customer journey to the channels best suited for the specific waypoint.

In an effort to help CX managers make informed decisions regarding their overall service mix, Kinēsis asked consumers to rate an assortment of financial service CX attributes with respect to their importance, as well as the relationship between the importance of these attributes and the customers’ trust that the financial institution looked after their financial wellbeing.

Efficiency and personalized service are the most important dimensions of the customer experience.

Attribute Importance

The following chart displayed the frequency customers stated each attribute was important to them when doing business with a financial service provider.  To force respondents to consider only attributes which were important to them, they were only allowed to select up to five attributes.

Again, efficiency and personalized service are the most important dimensions of the customer experience.  The most frequently cited service attributes surround themes of efficiency (online and mobile services, quick and efficient service, fast resolution to any issues) and personalized service (polite and knowledgeable staff, and ability to manage accounts in ways that suit me), followed by polite and knowledgeable staff, the ability to manage accounts in ways that suit the customer, and competitive rates and fees.

Attribute Value & Trust in Institution

The least frequently cited attributes surrounded products and the brand (customer loyalty programs, broad range of quality products, recommendations of appropriate products & services and appealing brand).

Beyond the appeal of each attribute, Kinēsis investigated their relationship to trust in the financial institution.

While brand appeal, recommendations of appropriate products & services and a broad range of quality products were cited with the least frequency in terms of their importance, customers who cited these attributes as important were more likely to trust their primary financial institution.  While customers are not as likely to include these three attributes in their list of top-5 important attributes, brand appeal, recommendations of appropriate products & services and a broad range of quality products do appear to have a positive relationship to trust in the institution. 

Next, to inform decisions about digital delivery, we will investigate customer preferences specific digital banking features.  What do customers what from the digital channel?

Customer Waypoints & Channel Preferences in and Integrated Digital CX Delivery Model

What started decades ago as a migration away from the branch channel has accelerated during the Covid-19 pandemic – aided by technological advances that were not available just a few years ago.  This confluence of the pandemic and technical advances is culminating in an age where it is possible to deliver a seamless integrated digital first retail banking delivery model.  Such an integrated delivery model is based on the understanding that customers have different needs at different moments in their customer journey.  This delivery model matches channels strategically to these different needs at the correct moment for the customer.

Customer Journey Waypoints

A waypoint is a point of reference when navigating a journey.  Not only do the customer journeys take place across a multiple channels, but they take place across multiple transactions or waypoints as well.  To investigate how customers navigate digital and personal channels, Kinēsis researched customer channel preferences for six different customer journey waypoints: opening an account, problem resolution, seeking advice, getting information, making a deposit, and transferring funds.

Two CX Risks: Exposure & Moments of Truth

Business is often a process of balancing risks.  The customer experience is no different.  Managers of an integrated delivery model should be aware of the two primary risks they face: exposure and moments of truth.  Exposure risk is the sheer frequency of customer encounters in the channel.  Poor experiences in a high exposure channels spread this poor experience across more customers.  Moments of truth are critical experiences with more individual importance of the waypoint.  Poor experiences in a moment of truth interaction lead to negative customer emotions, with similarly negative impacts on customer profitability and word of mouth.

Waypoints and Channel Preferences

The foundation of an integrated digital first CX model is based on matching the best suited channels based on the needs of both the customer and the institution.  Customer channel choice is not uniform.  Rather, customers select channels they deem appropriate based on the waypoint of the customer journey they find themselves.  For customers conducting a transfer or deposit, mobile apps are the most popular channel (preferred by 58% and 53% of the customers, respectively).  Customers seeking information have a broader range of preferred channels, but a plurality (40%) prefers to seek information via the website.  The contact center’s preferred role is problem resolution (51%); while the branch is preferred to both seek advice and open an account.

The following table illustrates these different channel preferences for different waypoints in the journey, as well as overlaying channel use, satisfaction and the moment of truth potential for each waypoint:

Frequency of Customer Preferences by Waypoint

The above table illustrates the current state of the integrated digital first business model.  The digital channels, with the most exposure risk, are the primary customer choice for waypoints which represent low moment of truth risk. 

•     Automated transactions such as transfers and deposits are preferred with an app. 

•     The website serves as both an information center, and to a lesser extent transactional center. 

•     The contact center’s primary role is problem resolution, and as a result carries significant risk in terms of moments of truth. 

•     The branch is where customers come to seek advice as well as initiate or deepen a banking relationship by opening an account.

Again, managers of the customer experience should be cognizant of both their risk in terms of exposure and moments of truth.  With an average of nearly one visit every other day, poorly executed mobile experiences represent significant exposure risk, yet the nature of these transactions represent low moment of truth risk.  Fortunately, 88% of customers are satisfied with their financial institution’s app, with a near super majority of customers describing themselves as very satisfied.  The branch and contact center have the opposite risk profile.  With, respectively, an average of just 7 and 17 visits annually, they do not represent a significant exposure risk.  However, both the contact center and the branch represent significant risk with respect to encountering moments of truth.  While digital channels are the daily face of the institution, when faced with a moment of truth, customers appear to prefer a see a real face, or hear a comforting voice.  Customers interact with branches and contact centers much less frequently – but when they do – it is important.  In this light, the relative dissatisfaction with these channels (average satisfaction 4.2 and 4.0, respectively) relative to apps and websites (average satisfaction 4.5 and 4.4, respectively) is cause for concern.  The computers appear to be out performing the people – but they perform on an easier playing field.

The current environment with pandemic-related disruptions has pushed most customers into accelerating digital adoption.  However, there is an element of trust missing with digital delivery.  As most customers shy away from digital channels when their need advances up the moment of truth scale.  Trust will be key in deepening digital relationships.

Conclusion

Momentum toward digital banking has been building for decades as emergent technologies, aided by the pandemic, increase the utility and use of digital channels.  This confluence of the pandemic and technical advances is culminating in an age where it is possible to deliver a seamless digital first integrated retail banking business model. 

Such an integrated delivery model is based on the understanding that customers have different needs at different moments of their customer journey.  This delivery model matches channels strategically to these different needs at the correct moment for the customer.

Neither size nor a focus on technology provides an advantage in terms of the overall customer experience.  The evidence strongly suggests, being closer to the customer, and matching different waypoints of the customer journey to the channels best suited for the specific waypoint is the best CX model:

•     Automated transactions are preferred with an app. 

•     The website is best positioned as an information center, and to a lesser extent transactional center. 

•     Problem resolution in customers’ minds is the contact center’s primary role.

•     Customers visit a branch to seek advice or open an account.

In future installments of this five-part series, we will:

A New Normal: Implications for Bank Customer Experience Measurement Post Pandemic – Stabilizing Relationships

Part 3: Onboarding Research: Research Techniques to Track Effectiveness of Stabilizing New Customer Relationships

As we explored in an earlier post, Three Types of Customer Experiences CX Managers Must Understand, there are three types of customer interactions: Planned, Stabilizing, and Critical.

Stabilizing interactions are service encounters which promote customer retention, particularly in the early stages of the relationship.  It is incumbent on an integrated digital-first banking model to stabilize new customers, without relying on the local branch to build the relationship.  It is important, therefore, to get the onboarding process right in a systematic way.

New customers are at the highest risk of defection, as they have had less opportunity to confirm the provider meets their expectations.  Turnover by new customers is particularly damaging to profits because many defections occur prior to recouping acquisition costs, resulting in a net loss on the customer relationship.  As a result, customer experience managers should stabilize the customer relationship early to ensure a return on acquisition costs. 

Systematic education drives customer expectations beyond simply informing customers about additional products and services; it also informs new customers how to use services more effectively and efficiently – this is going to be critical in a digital first integrated strategy.  Customers need to know how to navigate these channels effectively.  

Onboarding Research

The first step in designing a research plan for the onboarding process is to define the process itself.  Ask yourself, what type of stabilizing customer experiences do we expect at both the initial account opening and at discrete time periods thereafter (be it 30 days, 90 days, 1-year)?  Understanding the expectations of the onboarding process will define your research objectives, allowing an informed judgment of what to measure and how to measure it.

Kinesis recommends measuring the onboarding process by auditing the performance of the process and its influence on the customer relationship from the bank and customer perspective.

Bank Perspective: Performance Audits

Performance audits are a type of mystery shop, and an effective tool to audit the performance of the onboarding process.

First, mystery shop the initial account opening (across a channels: digital, contact center and branch) to evaluate its efficacy and effectiveness.  Be sure to link these observations to a dependent variable, such as purchase intent, to determine which service attributes drive purchase intent.  This will inform decisions with respect to training and incentives to reinforce the sales activities which drive purchase intent.

Beyond auditing the initial account opening experience, a performance audit of the onboarding process should test the presence and timing of specific onboarding events expected at discrete time periods.  As an example, you may expect the following onboarding process after a new account is opened:

Period Event
At Opening Internet Banking Presentation
Mobile Banking Presentation
Contact Center Presentation
ATM Presentation
Disclosures
1-10 Days Welcome Letter
Checks
Debit Card
Internet Banking Password
Overdraft Protection Brochure
Mobile Banking E-Mail
30-45 Days First Statement
Switch Kit
Credit Card Offer
Auto Loan Brochure
Mortgage/Home Equity Loan Brochure

In this example, the bank’s customer experience managers have designed a process to increase awareness of digital channels, introduce the integrated layered service concept, and introduce additional services offered.  An integrated research plan would recruit mystery shoppers for a long-term evaluation of the presence, timing, and effectiveness of each event in the onboarding process.

Customer Perspective

In parallel to auditing the presence and timing of onboarding events, research should be conducted to evaluate the effectiveness of the process in stabilizing the customer relationship by surveying new customers at distinct intervals after customer acquisition.  We recommend testing the effectiveness of the onboarding process by benchmarking three loyalty attitudes:

  • Would Recommend: The likelihood of the customer recommending the brand to a friend, relative or colleague.
  • Customer Advocacy: The extent to which the customer agrees with the statement, “You care about me, not just the bottom line?”
  • Primary Provider: Does the customer consider you their primary provider for financial services?

These three measures, tracked together throughout the onboarding process, will give managers a measure of the effectiveness of stabilizing the relationship.

Again, new customers are at an elevated risk of defection.  Therefore, it is important to stabilize the customer relationship early on to ensure ROI on acquisition costs.  A well-designed research process will give managers an important audit of both the presence and timing of onboarding events, as well as track customer engagement and loyalty early in their tenure.

In the next post, we will explore the third type of experience – experiences with a significant amount of influence on the customer relationship – critical experiences.

 

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A New Normal: Implications for Bank Customer Experience Measurement Post Pandemic – Planned Interactions

Part 2: Research Tools to Monitor Planned Interactions through the Customer Lifecycle

As we explored in an earlier post, Three Types of Customer Experiences CX Managers Must Understand, there are three types of customer interactions: Planned, Stabilizing, and Critical.

Planned interactions are intended to increase customer profitability through the customer lifecycle by engaging customers with relevant planned interactions and content in an integrated omni-channel environment.  Planned interactions will continue to grow in importance as the financial service industry shifts to an integrated digital first model.

These planned interactions are frequently triggered by changes in account usage, financial situation, family profile, etc.  CRM analytics combined with Big Data are becoming quite effective at recognizing such opportunities and prompting action toward planned interactions.  Customer experience managers should have a process to record and analyze the quality of execution of planned interactions with the objective of evaluating their effectiveness – regardless of the channel.

The key to an effective strategy for planned interactions is relevance. Triggered requests for increased engagement must be made in the context of the customer’s needs and with their permission; otherwise, the requests will come off as clumsy and annoying, and give the impression the bank is not really interested in the customer’s individual needs.  By aligning information about execution quality (cause) and customer impressions (effect), customer experience managers can build a more effective and relevant approach to planned interactions.

Research Plan for Planned Interactions

The first step in designing a research plan to test the efficacy of these planned interactions is to define the campaign.  Ask yourself, what customer interactions are planned through these layers of integrated channels.  Mapping the process will define your research objectives, allowing an informed judgment of what to measure and how to measure it.

For example, after acquisition and onboarding, assume a bank has a campaign to trigger planned interactions based on triggers from past engagement.  These planned interactions are segmented into the following phases of the customer lifecycle: engagement, growth, and retention.

Engagement Phase

Often it is instructive to think of customer experience research in terms of the bank-customer interface, employing different research tools to study the customer experience from both sides of this interface.

In our example above, management may measure the effectiveness of planned experiences in the engagement phase with the following research tools:

Customer Side Brand Side
Post-Event Surveys
 
These post-experience surveys are event-driven, where a transaction or service interaction determines if the customer is selected for a survey.  They can be performed across all channels, digital, contact center and in-person.  As the name implies, the purpose of this type of survey is to measure experience with a specific customer experience.
Employee Surveys

Ultimately, employees are at the center of the integrated customer experience model.
 
Employee surveys often measure employee satisfaction and engagement. However, there is far more value to be gleaned from employees.  We employ them to understand what is going on at the customer-employee interface by leveraging employees as a valuable and inexpensive resource of customer experience information.
 
They not only provide intelligence into the customer experience, but also evaluate the level of support within the organization, and identify perceptual gaps between management and frontline personnel.
Overall Satisfaction Surveys
 
Overall satisfaction surveys measure customer satisfaction among the general population of customers, regardless of whether or not they recently conducted a transaction.  They give managers valuable insight into overall satisfaction, engagement, image and positioning across the entire customer base, not just active customers.
Digital Delivery Channel Shopping
 
Be it a website or mobile app, digital mystery shopping allows managers of these channels to test ease of use, navigation and the overall customer experience of these digital channels.
  Transactional Mystery Shopping
 
Mystery shopping is about alignment.  It is an excellent tool to align the customer experience to the brand. Best-in-class mystery shopping answers the question: is our customer experience consistent with our brand objectives?  Historically, mystery shopping has been in the in-person channel, however we are seeing increasing mystery shopping to contact center agents.

Growth Phase

In the growth phase, we measure the effectiveness of planned experiences on both sides of the customer interface with the following research tools:

Customer Side Brand Side
Awareness Surveys
 
Awareness of the brand, its products and services, is central to planned service interactions.  Managers need to know how awareness and attitudes change as a result of these planned experiences.
Cross-Sell  Mystery Shopping
 
In these unique mystery shops, mystery shoppers are seeded into the lead/referral process.  The sales behaviors and their effectiveness are then evaluated in an outbound sales interaction.
 
These shops work very well in planned sales interactions within the contact center environment. 
Wallet Share Surveys
 
These surveys are used to evaluate customer engagement with and loyalty to the institution.  Specifically, they determine if customers consider the institution their primary provider of financial services, and identify potential road blocks to wallet share growth.
 

Retention Phase

Finally, planned experiences within the retention phase of the customer lifecycle may be monitored with the following tools:

Customer Side Brand Side
Critical Incident Technique (CIT)
 
CIT is a qualitative research methodology designed to uncover details surrounding a service encounter that a customer found particularly satisfying or dissatisfying.  This research technique identifies these common critical incidents, their impact on the customer experience, and customer engagement, giving managers an informed perspective upon which to prepare employees to recognize moments of truth, and respond in ways that will lead to positive outcomes.
Employee Surveys
 
Employees observe firsthand the relationship with the customer.  They are a valuable resource of customer experience information, and can provide a lot of context into the types of bad experiences customers frequently experience.
Lost Customer Surveys
 
Closed account surveys identify sources of run-off or churn to provide insight into improving customer retention.
Life Cycle Mystery Shopping
 
If an integrated channel approach is the objective, one should measure the customer experience in an integrated manner.
 
In lifecycle shops, shoppers interact with the bank over a period of time, across multiple touch points (digital, contact center and in-person).  This lifecycle approach provides broad and deep observations about sales and service alignment to the brand and performance throughout the customer lifecycle across all channels.
Comment Listening
 
Comment tools are not new, but with modern Internet-based technology they can be used as a valuable feedback tool to identify at risk customers and mitigate the causes of their dissatisfaction.
 

Call to Action – Make the Most of the Research

For customer experience surveys, we recommend testing the effectiveness of planned interactions by benchmarking three loyalty attitudes:

  • Would Recommend: The likelihood of the customer recommending the bank to a friend, relative or colleague.
  • Customer Advocacy: The extent to which the customer agrees with the statement, “My bank cares about me, not just the bottom line?”
  • Primary Provider: Does the customer consider the institution their primary provider for financial services?

For mystery shopping, we find linking observations to a dependent variable, such as purchase intent, identifies which sales and service behaviors drive purchase intent – informing decisions with respect to training and incentives to reinforce the sales activities which drive purchase intent.

As the integrated digital first business model accelerates, planned interactions will continue to grow in importance, and managers of the customer experience should build customer experience monitoring tools to evaluate the efficacy of these planned experiences in terms of driving desired customer attitudes and behaviors.

In the next post, we will take a look at stabilizing experiences, and their implications for customer experience research.

 

 

Click Here For More Information About Kinesis' Bank CX Research Services

Loyalty & Wallet Share

Loyalty. There is almost universal agreement that it is an objective – if not the objective – of customer experience management. It is highly correlated to profitably. It lowers sales and acquisition costs per customer by amortizing these costs across a longer lifetime – leading to extraordinary financial results. In retail banking a 5% increase in loyalty translates to an 85% increase in profits.

Loyalty

Loyalty is Emotion Driven

Banks often see themselves as transaction driven; delivery channels are evaluated on their cost per transaction. As a result, there is a lot of attention given to and investment in automated channels which reduce transaction costs and at the same time offer more convenience to customers. Win-win, right? The bank drives costs out of the transaction and customers get the convenience of performing a variety of transactions untethered by time or space. However, while transaction costs and convenience are important, loyalty is often driven by an emotional connection with the institution. An emotional connection fostered by interaction with actual employees at moments of need for the customers –moments with a high level of emotional importance to the customer – moments of truth.

Moments of truth are atypical events, where customers experience a high emotional energy in the outcome (such a lost credit card, loan application, or investment advice). In one study published in McKinsey Quarterly, positive experiences during moments of truth led to more than 85% of customers increasing wallet share by purchasing more products or investing more of their assets (Beaujean et al 06)

Impersonal alternative channels lack the ability to bind the customer to the institution. It’s the people. Effective handling of moments of truth requires frontline staff with the emotional tools or intelligence to recognize the emotional needs of the customer and bind them to the institution.

 

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Emotional Role in Sales & Acquisitions

Previously we discussed the concept of “moments of truth” where some experiences in the customer journey have far greater importance than others. These moments of truth represent increased risk and opportunity to leave a lasting emotional impression on the customer; a lasting impression with significant long-term implications for both customer loyalty and wallet share. The purchase and sales experience is one such moment of truth. One study published in McKinsey Quarterly has determined that the purchase experience of financial services motivated 85% bank customers to purchase more financial products or invest more assets with the institution. (Beaujean et al 06)

We also introduced the concept of defining emotions using two dimensions of mood: valence (positive or negative) and arousal. Again, as we previously observed, modern research into brain activity during the decision process suggests that decisions are made within the brain before we are consciously of them. Emotions provide a short cut to acting on decisions, and rational thought appears to justify decisions after they are made on the subconscious level.

So…given that emotions play a key role in financial decisions, what are the emotions bankers encounter as part of the sales experience?

The emotions financial service customers experience vary by customer, financial need, circumstance and product/service sought, however the emotions a prospective customer may experience include:

• Excited
• Convinced
• Enthusiastic
• Expectant
• Hopeful
• At Ease/Satisfied
• Distressed
• Anxious

These emotions map to the valance and arousal dimensions as follows:
Arousal_Valence_Map_Sales_Emotions

So…what do we do with this enlightenment?

First, knowing that people are motivated to maintain positive emotional states and change/mitigate negative emotional states, it is important for the banker to recognize the prospective customer’s emotional motivation and offer solutions which will achieve either of these ends.

Kinesis has conducted research into purchase intent as the result of financial service sales presentation which may be instructive. Click here for this research.

Time and time again, in study after study, we consistently observe that purchase intent is driven by two dimensions of the customer experience: reliability and empathy. Customers want bankers who care about them and their needs and have the ability to satisfy those needs. Specifically, our research suggests the following behaviors are strongly related to purchase intent:

 

Empathy

Interest in Helping

Discuss Benefits & Solutions

Personalized Comment

Listen Attentively

Express Appreciation

Reliability

Promised Services Get Done

Accuracy

Friendly & Courteous

Professionalism

 

Both empathy and reliability require employees with Emotional Intelligence.  These are employees with a positive outlook and a, strong sense of self-empowerment; self regulation; awareness of feelings (both their own and customers); master of fear and anxiety and the ability to tap into selfless motives.

Sales presentations are moments of truth with the potential to leave a lasting impression on the customer with significant long-term implications for both customer loyalty and wallet share – with obvious financial benefits for the institution.  We’ve found that branches with above average frequencies of behaviors associated with reliability and empathy experienced a 26% stronger three-year branch deposit growth rate than branches with low frequencies of these behaviors.

Next, we’ll take a look at moments of truth in the context of problem resolution.

 

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The Human Element: Sales and Service, Bank’s Last Link in the Marketing Chain

What if I told you that after all your efforts with marketing (product, positioning and price), there is a one-in-ten chance the branch representatives will undermine the sale?

Now more than ever, it is critical for banks to establish themselves as the primary provider of financial services, not only for deposit accounts but across a variety of financial products and services.  Increasing the average products per customer will require a strategic approach to both product design and marketing.  However, at the end of this strategic marketing process, there is the human element, where prospective customers must interact with bank employees to complete the sales process.

Bank teller waiting on customer

As part of our services to our clients, Kinesis tracks purchase intent as a result of in-branch sales presentations.  According to our research, 10% of in-branch sales presentations observed by mystery shoppers, result in negative purchase intent.

What do these 10% failed sales presentations look like?

Here are some quotes describing the experience:

“There was no personal attention.  The banker did not seem to care if I was there or not.  At the teller line, there was only one teller that seemed to care that there were several people waiting.  No one moved with a sense of urgency.  There was no communication materials provided.”

Here’s another example…

“It was painfully obvious that the banker was lacking basic knowledge of the accounts.”

Yet another…

“Brian did not give the impression that he wanted my business.  He did not stand up and shake my hand when I went over to his desk.  He very rarely made eye contact.  I felt like he was just going through the motions. He did not ask for my name or address me by my name. He told me about checking account products but failed to inquire about my situation or determine what needs I have or might have in the future. He did not wrap up the recommendation by going over everything nor did he ask for my business. He did not thank me for coming in.”

In contrast, here is what the shops with positive intent look like:

“The appearance of the bank was comfortable and very busy in a good way. The customers were getting tended to and the associates had the customers’ best interests in mind. The response time was amazing and I felt as if the associate was sincere about wanting me as a customer, but he was not pushy or demanding about it.”

Now…after all the effort and expense of a strategic cross-sell strategy, which of the above experiences do you want your customers to encounter?

Would it be acceptable to you as a marketer to at the end of a strategic marketing campaign, have 10% of the sales presentations undermine its success?

These are rhetorical questions.

Time and time again, in study after study, we consistently observe that purchase intent is driven by two dimensions of the customer experience: reliability and empathy.  Customers want bankers who care about them and their needs and have the ability to satisfy those needs. Specifically, our research suggests the following behaviors are strongly related to purchase intent:

  • Friendly/Smile/Courteous
  • Greeting/Stand to Greet/Acknowledge Wait
  • Interest in Helping/Offer Assistance
  • Discuss Benefits/Solutions
  • Promised Services Get Done
  • Accuracy
  • Professionalism
  • Express Appreciation/Gracious
  • Personalized Comment (such as, How are you?)
  • Listen Attentively/Undivided Attention

As part of any strategic marketing campaign to both bring in new customers as well as increase wallet share of existing customers, it is incumbent on the institution to install appropriate customer experience training, sales and service monitoring, linked with incentives and rewards structures to motivate sales and service behaviors which drive purchase intent.




Click Here For More Information About Kinesis' Bank CX Research Services

Measure and Motivate the Right Contact Center Agent Behaviors

Increasingly banks must operate in a multi-channel environment.  While the changing role of the branch, combined with automated channels such as online and mobile, are getting a lot of attention, there remains a key role for the contact center in delivering an effective customer experience.  Central to this key role is designing an effective customer experience, comprised of the right sales and service behaviors – those which influence customer attitudes and behaviors in a profitable way yielding the most return on investment.

To provide direction with respect to what sales and service behaviors will yield the most return on investment, Kinesis conducted a series of mystery shops to identify which sales and service behaviors have the most influence on purchase intent. In addition to observing specific sales and service behaviors, mystery shoppers were also asked to rate how the call would have influenced their purchase intent if they had been a real customer. This purchase intent rating was then used as means of calculating the strength of the relationship between each behavior and purchase intent.

To determine the relationship between these service attributes and purchase intent, the data for these different studies was cross-tabulated by the purchase intent rating and subjected to significance testing. [i]

When the percentage of calls in which purchase intent significantly increased is tested against the percentage of calls where purchase intent significantly decreased, nearly all the sales and service attributes are statistically significant at or above a 95% confidence level.

 

Significantly Increased Significantly Decreased Test Statistic
Product knowledge 98% 35% 9.6
Explanations easy to understand 99% 45% 9.0
When thanked, respond graciously 98% 42% 8.5
Friendly demeanor / pleasant voice 100% 60% 8.4
Express appreciation for interest / thank you for business 92% 20% 8.3
Listen attentively 99% 60% 7.3
Ask probing questions 79% 10% 6.4
Offer further assistance 85% 25% 6.2
Speak clearly and avoid bank jargon 98% 68% 5.8
Listen attentively to your needs 80% 25% 5.3
Mention other bank product 99% 75% 5.3
Clear Greeting 95% 60% 5.1
Invite you to visit branch 64% 10% 4.6
Explain the value of banking with bank 57% 5% 4.4
Offer to mail material / mention website 66% 20% 4.3
Ask your name 68% 25% 3.8
Ask for your business / close the sale 57% 21% 2.9
Avoid interrupting 100% 95% 2.9
If no one available to assist you, offered options 100% 0% 2.2
Professional greeting 98% 89% 1.9

 

The differences between the highest and lowest purchase intent for product knowledge and ease to understanding explanations are the most significant, while a professional greeting is the least significant.

Dividing these behaviors into rough quartiles and comparing them side-by-side, reveals some interesting observations:

 

 

Quartile I

Product knowledge

Explanations easy to understand

When thanked, respond graciously

Friendly demeanor / pleasant voice

Express appreciation for interest / thank you for business

 

Quartile II

Listen attentively

Ask probing questions

Offer further assistance

Speak clearly and avoid bank jargon

When thanked, employee respond graciously

 

Quartile III

Listen attentively to your needs

Mention other bank product

Clear greeting

Invite you to visit branch

Explain the value of banking with bank

Offer to mail material / mention website

 

Quartile IV

Ask your name

Ask for your business / close the sale

Avoid interrupting

If no one available to assist you, offered options

Professional greeting

 

The attributes with the most significant differences between high and low purchase intent ratings appear to be those associated with reliability and empathy.  It appears mystery shoppers valued such “core” attributes as product knowledge or interest/enthusiasm for the customer.  They seem to be less concerned with more peripheral service attributes, such as asking for names, etc.  Influencing purchase intent is not as simple as merely using the customer’s name or answering the phone within a short period of time.  Rather it is a much more challenging undertaking of being competent in your job and having the customer’s best interests at heart.

[i] Significance testing determines if any differences observed are the result of actual differences in the populations measured rather than the result of normal variation.  Without getting into too much detail, significance testing produces a test statistic to determine the probability that differences observed are statistically significant.  A test statistic above 1.96 equates to a 95% confidence level, which means there is a 95% chance any differences observed are the result of actual differences in the populations measured rather than normal variation.  For all practical purposes a test statistic over 3.1 means there is 100% chance the differences observed are statistically significant (although in reality the probability never reaches 100%).  Finally, in interpreting the following analysis, it is important note that test statistics are not lineal.  A test statistic of two is not twice as significant as a test statistic of one.  The influence on significance decreases as the test statistic increases.  However, the test statistic does give us an opportunity to rank the service attributes by their statistical significance.


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