Customer empowerment is very different from the days of American-born British retail magnate Harry Gordon Selfridge, who famously advocated the "customer is always right" mantra. In our modern age, catch phrases are more aggressive. The new sayings—such as "the customer is king," "customer-centricity," and "the age of the customer"—prove that customers now have more power and influence than ever.
Here are some stats that back this up.
Recently, Forrester Research's Customer Experience Index revealed that Customer Experience Management (CEM) leaders outperformed the market average on the S&P 500 index by nearly three times, and CEM laggards not only underperformed on the average but had negative returns on investment.
Likewise, studies by Forbes and Economist Insights found that outperforming companies were 54% more likely to collaborate extensively with their customers and 24% more likely to give customers a seat at the boardroom table.
Knowing those facts is especially important for companies in the financial services industry because customer experience is, hands down, their greatest customer acquisition and retention tool.
Changes in the Financial Sector
The increasing focus on customer service is even causing a revolution among the financial institution governing bodies, as was the case with the Current Account Switch Service (CASS) campaign in the UK last year.
The UK Payments Council recently implemented new rules to:
- Increase competition between banks
- Support the entry of new banks
- Give customers a broader range of options in the financial sector
One of the biggest changes the council applied was the minimization of the wait time for customers who switched banks. Instead of waiting an inconvenient 30 days for the switching process to complete, customers now could move from one bank to another in a hassle-free seven days. The new standard increased the efficiency that services companies set for themselves and forced institutions to review the way they treated both new and existing customers.
Since the launch, there have been over 1.1 million customer switches (a 19% increase compared with the same time period one year before). Additionally, 70% of the public are now aware of the new service, and 61% of the public are confident in what the new service is and how it works.
Those impressive stats show how customers are gaining the upper hand in the financial sector. They are now in the driver's seat and require great customer service to keep them loyal.
Boosting Your Customer Service
So, the big question is what do you do now to get ahead of the customer experience game?
If you're a high-performing financial services company, you've probably already started to act on this knowledge. You are part of the 39% who are outperforming your competition by having a fully integrated digital/physical strategy to aid your customer experience programs.
If you're not, then you are part of the larger percentage who is struggling to apply these customer-focused practices to your business.
- Focus on being proactive with your customers rather than reactive. That is, don't wait for your customers to ring alarm bells before you decide to give them the services they want.
- Understand their customer journey and how they interact with your brand.
- Find out what customers want before they start complaining on social network sites about your company.
- Most importantly, realize that your goal is to keep your customers loyal, not just to win new customers.
In fact, this was a major focus of a new study by Forbes this year. In the study "Customers for Life: Technology Strategies for Attracting and Keeping Customers," more than 300 senior executives in North America were surveyed for their perspectives on customer experience. The findings revealed that while 94% of respondents said keeping customers for life was prioritized within their organization, 49% were unhappy with their current marketing technology's ability to support those goals.
Respondents said they knew that retaining customers and obtaining a single view of the customer were top marketing priorities, but even with this knowledge in hand, they still concentrated on customer acquisition. Some 38% of these companies primarily focused on retaining repeat customers for revenue growth, while nearly half (49%) focused on gaining new customers.
* * *
Change is coming to the financial sector. You can't stream all your resources into customer acquisition anymore. You have to spend resources on customer retention as well. Fancy ads and slogan budgets won't keep your existing customers with you—but good service will.
A CEM strategy and program should be at the forefront of your business plan and needs to be applied sooner than later. If you don't take proactive steps to start listening and acting on your current customers' feedback, you'll not only become a laggard, you'll eventually become obsolete.
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