Fundamental changes to the financial services industry — driven by new technologies, increased regulation, outside challengers and increasingly empowered consumers — have led to disintermediation between institutions and their customers, and less differentiation among banking brands. Consumers have more options than ever; they can seek and find alternative providers in the click of a mouse or the swipe of a finger. In this hyper-competitive landscape, financial brands struggle to stand out.
Many institutions hope they can market their way to greater profits, but the answer is not just more or better advertising — it’s understanding what really drives consumers. It is more essential than ever that banks and credit unions “get” their customers on an intimate, more intuitive level. (Of course, “getting” customers can lead to better and more successful advertising as well, but this understanding should be fused across the entire organization, not just marketing messages.)
Banking providers that are truly relevant in people’s lives are those most closely connected to them. And if you think this sounds like little more than lip service… it isn’t. It’s the kind of thing that every employee feels when the organization operates under customer-inspired model — with empathy and understanding designed into every product, service and experience. Empathy and intuition are especially critical in the often-transactional-yet-hugely-personal industry that is banking (very few things are more personal to someone than their finances).
One approach to measuring the nature and strength of the customer-company relationship is through its Customer Quotient. CQ is unique in that it is based in the customer’s — not the institution’s — point of view. It is an emotional “blueprint” for what draws consumers to certain brands. To twist one of President John F. Kennedy’s more famous quotes, “Ask not what the customer might do for the you (e.g., purchase, recommend), ask what will your institution do for its customers.”
From the consumer’s perspective, companies that really “get” them each share certain characteristics, regardless of industry. Most critically, CQ shows that those companies that genuinely understand and connect with customers outperform their competitors in the marketplace. Taking a closer look at companies within the financial services industry, not only does the relationship between CQ and business performance hold true, but it is actually even stronger. In other words, good customer intuition is a crucial competency for financial services firms looking to grow their bottom line.
CQ focuses on the following five key elements listed below.
1. Openness
Having a meaningful two-way dialogue with customers (as opposed to one-way push marketing, or requests for feedback) shows greater transparency and builds trust. Remaining open and accessible helps people feel like they have been heard and are known by the institution.
Openness was particularly important for the insurance and investment sectors, given that relationships tend to be involved and long-term. One example of this is a global investment management firm that honed their communication skills by taking a dip into the Twitter pool with some of their pre-retiree consumers, creating a private, online “club” where neophyte members could discuss their experiences following investment companies and news sources. By learning alongside their customers in this safe environment, the company not only learned more about this crucial demographic (for example, they’re not “out of bounds” for Twitter), but also garnered a more holistic understanding of how investors process digital information flow, and what type of information payout makes it worth following a brand.
2. Relevance
Companies that have open dialogue with customers generally do a better job of “speaking their language,” embracing their values, and meeting their needs. This enables them to communicate in a way that feels authentic and relatable, yielding messages, products, services and experiences that resonate and are relevant to customers’ lives.
While this trait proves important across all sectors, “Relevance” stands out as particularly critical for credit card companies. Given that perks, rewards and offers are key drivers of card selection, it is essential that these benefits relate to what’s important to each individual customer. Earlier this year, Wells Fargo began allowing rewards program members to redeem their rewards at Wells Fargo ATMs nationwide, providing both convenience and flexibility. Customers can redeem their rewards in the way that makes sense for them: as a cash withdrawal or as a deposit or payment to another Wells Fargo account, including mortgages, loans and credit cards. Smart.
3. Empathy
Customers want to feel that employees – at the other end of the line, across the counter, behind the keyboard – are real human beings who understand what they are going through. As such, customer-inspired companies really feel what the customer feels – their pains, joys, frustrations, fears, and motivations. Companies that empathize with their customers have better “customer intuition” than their competitors, which allows them to move faster and with greater confidence.
Empathy stood out as a key trait for brands in the insurance and investment sectors, especially since a personal relationship with an agent or advisor is often a critical part of the experience. When Charles Schwab wanted to extend its successful workshop program to include topics and themes that were important to women, it engaged a group of female consumers to better understand their unique perspective. The result was a co-created series of financial planning workshops geared towards the specific needs and preferences of female investors, ultimately reaching more than thousands of clients and prospects.
4. Customer Experience
Customer-inspired companies deliver superior customer experiences. They value their customers’ time and appreciate and reward their loyalty. Making coherent and seamless customer experiences everyone’s responsibility (regardless of job function or level) shows customers that their needs are understood across the business and that everyone is working in sync to solve problems and exceed expectations.
Unsurprisingly, customer experience was critical across financial services sectors, but especially relevant to home and auto insurance, which often center on moments of crisis that require coordinated, efficient service. Progressive’s Snapshot program is a great example of a seamless, technology-enabled experience that also serves to save customers time and reward their loyalty and “good behavior.” Enrolled drivers plug the Snapshot device into their car, and the device collects and sends data to Progressive about how, when, and where they drive. This information factors into the rate the customer is charged; safe, responsible drivers receive a discount, without any additional effort on their part.
5. Emotional Rewards
When companies provide emotional rewards, it makes people feel smart and proud for choosing to be a customer. They feel personally fulfilled and know that they aren’t getting ripped off. They feel a sense of belonging, like they are part of a special, savvy group, and as a result, they feel better about themselves.
While these various emotional benefits were certainly important for any highly intuitive brand, they stood out as especially relevant for banks and credit unions. Local banks (or local branches) led the way here, creating a sense of belonging with an “everybody knows my name” environment. And when looking towards the future of finance, peer-to-peer lending and microloan services provide much stronger emotional rewards that make them attractive to customers. Traditional brands in the financial services sector must harness that same sense of meaning and pride, or risk losing more ground to companies that can provide greater fulfillment.