Secrets to Building One-to-One Digital Banking Experiences

In this exclusive interview, Don Peppers, best-selling author on marketing and building improved customer experience, discusses how banks and credit unions can deliver exceptional experiences as part of the digital transformation process. He also reveals the importance of trust, humans and new technology in financial marketing.

Consumers are becoming more connected than ever across laptops, mobile phones, smart watches, connected cars and in-home Internet of Things (IoT) devices. This provides amazing opportunities and challenges for financial marketers as they attempt to communicate and engage throughout the customer journey.

According to Frost & Sullivan, customer experiences will overtake price and product as the key brand differentiator by 2020. This increases the importance of continuously building a strong brand and loyalty across multiple channels, formats and device types. The objective will be to personalize each consumer’s experience during the acquisition, engagement and customer service stages in a way that is both authentic and aligned with the experiences provided by digital leaders in all industries.

More than ever, consumer communication needs to move from a reactive to proactive perspective, offering real-time advice and solutions based on the needs and behaviors of the consumer. This applies to every form of marketing (direct mail, email, digital, display, search, social and content) across the entire customer journey.

Some recent statistics that highlight the importance of building one-to-one digital relationships include:

  • Over 50% of companies will redirect investments towards customer experience innovations. (Gartner)
  • Delivery of contextual offers is extremely or very important for more than 80% of financial institutions. (Digital Banking Report)
  • 60% of marketers struggle to personalize content in real time, yet 77% believe real-time personalization is crucial. (Adobe)
  • 94% of marketers are focusing on their data and analytics capabilities, personalization technologies and customer profile data management capabilities to deliver personalized customer experiences. (Forrester)

For a perspective on the intersection of digital transformation and customer experiences, we interviewed one of the world’s leading authorities on customer-focused business strategies, Don Peppers. Don is probably best known as the co-author of the book The One to One Future which he wrote with Martha Rogers. The first of 11 books, The One to One Future was called “one of the two or three most important business books ever written,” by Inc. Magazine, while Business Week said it was the “bible of the new marketing”. Most interesting is that Don and Martha wrote the book in 1993 and it is as relevant today as it was then.

During this Banking Transformed podcast interview, we discussed how to build and maintain a customer-centric business during periods of digital transformation. We also discussed the importance of a strong customer experience and the impact of corporate culture, strategy, technology, and data analytics.

How does digital transformation change the building of customer relationships?

Peppers: I think digital transformation is the be-all, end-all in terms of companies wanting to think about their business from the customer’s perspective. It used to be, before we had the World Wide Web, and interactive tools, and smartphones, and before 24/7 connectivity that businesses based their marketing on what they called ‘unique selling propositions’. That unique selling proposition applied not to particular customers but to your product.

Customers fundamentally were anonymous points in a market; you didn’t talk to individual customers except almost by accident. You didn’t try to treat different customers differently when it came to what you were offering customers, because that was just not very cost effective.

With digital technology you have the ability to inexpensively interact with customers, one customer at a time. You can also track the data of individual customers and call it up relatively easily. Finally, you have the ability to customize your offering based on what you know about customer A or B and what they had told you interactively about how they wanted to be treated. That has created a sea change in marketing.

Is the mission the same, but the tools are different?

Peppers: Before digital interactivity and before the data revolution, companies and marketers couldn’t really even imagine a world in which you could afford to treat one customer different from another customer. You had to treat all your customers the same, because that was the only cost-effective way you could manage an Industrial Age institution.

The only exceptions were in the business to business space, where instead of dealing with millions of customers you had maybe dozens or hundreds of customers and you had individual account managers in charge of each individual customer set. That’s the kind of model – client service model – that I think has been adopted more and more by banks.

What is the biggest challenge today in creating a great customer experience?

Peppers: There are three categories of obstacles that companies face. One is around capabilities. Do firms really have the capabilities necessary to do what needs to be done; and what are those capabilities?

You have to have the database and you have to be able to make that data available to people on the front line. You have to have the capability to interact with individual customers. While that is technologically easy today, it’s still not something that a lot of companies are entirely comfortable with.

The second obstacle has to do with organizational alignment and metrics. Most companies are still aligned along product-centric metrics. That means: I make a particular product very cost efficiently, and I try to sell that product to as many people as I can. With a product-centric model,  I have product managers and I have product profitability metrics.

The problem is that if you’re trying to treat different customers differently, you really need customer-centric managers. You need to divide your customers up into portfolios so you can manage them more cost efficiently. You need to know how one customer is different from another and then you need to actually act on that knowledge.

The third obstacle has to do with culture, and the mindset of the people in the company. As they say, you can’t write a line of code or a business process rule that results in employees delighting customers. The employees have to want to delight the customer.

You want your employees to provide better service for each individual customer, to create a better customer experience and to deliver that customer more value. That will generate a higher long term value from that customer, but the employees have to want to do this. That mindset makes cultural motivation a key issue. If you have the right culture — if you have that mindset among your employees — you can overcome misalignment and poor capabilities … because employees will make up for it, provided they’re enabled and empowered to do so.

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What is the importance of customer journey mapping?

Peppers: Customer journey mapping is a way that a company looks at an individual customer as that customer tries to meet their need or solve their problem. But, the truth is that the customer is not buying from you for the experience of going through that journey or having an experience with your product or service.

They’re buying from you because they think you can solve their problem. And, if the problem would just go away without them ever having to take that first step, or having to deal with anybody, that would be the ideal customer experience … in other words, no experience at all.

So, for a bank, the key issue in looking at the customer journey is trying to improve the customer experience by taking out the friction. While banks have largely been successful in using machinery and automation to streamline the customer’s experience, sometimes it is clear that the real objective is to minimize costs. Organizations need to achieve ‘digital nirvana’ from the standpoint of the customer. This is because it’s the customer who’s gonna give you long-term business success.

What do you see as the role of a human in the digital experience?

Peppers: I think a lot of businesses get confused between the goal of reducing costs and streamlining their processes versus improving the customer experience. There are a lot of businesses that look at their employees as simply a necessary cost of transactions instead of assets in cementing relationships with individual customers.

Humans can build an empathetic social engagement with a customer. A bot can’t. In a digital world, you have to have employees who have two qualities. They’re engaged in the business and they have an ‘owner mentality’ with respect to the organization. They want to treat customers right, but they want the organization to make a profit too.

You also need them to be enabled which requires training. You need to equip them with the right information. And then you have to empower them with the authority to make decisions. You can look over their shoulder, you can ask them to make decisions within boundaries. In the end, you need to trust people more and get real humans into the digital loop.

What role does trust play in the digital experience?

Peppers: The more we interact, the more critical trust is, because trust is what makes interactions efficient. You don’t have to count your change at a grocery store anymore because you know won’t get cheated. That trust makes interactions efficient.

It used to be that the only real qualities you needed was not to cheat a customer, and to be reasonably competent in your business. Today, customers expect you to proactively watch out for their interests, to proactively protect them from making mistakes or overpaying or incurring penalty payments and so forth. Those firms that are the most transparent, and that try to provide the best financial solutions for the consumer will be trusted the most and will win in the end.

What organizations are creating the best customer experiences today?

Peppers: My favorite has almost always been Amazon. For the last 20 years they have really made customer centricity a significant competitive advantage. Jeff Bezos has said that if it is good for the customer, it’s good for business. By constantly anticipating what it is the customer wants, they stay way ahead of their competitors. They anticipate what their competitors might do, and do it first.

I think Apple is another really good example. Apple has made their life’s work to be focused — almost maniacally focused — on the user experience with their products. This allows them to sell at a high price because they have tremendous brand loyalty among their users.

Privacy policies are another differentiator that Apple has put in place. They have done this because that’s what users want. It’s not because it’s profitable for the company. This provides them a tremendous benefit in terms of customer goodwill which has a long-term financial benefit.

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