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Talk to the executives of any firm and they'll tell you how much their customers mean to them.  So, is customer-centricity nothing more than the latest marketing spiel? Not at all. The true sense of customer-centricity is to make a cultural shift from the traditional product or sales focus of a company to creating a consistently great experience for the customer. And recent research by a global think-tank shows that organizations fall woefully short in walking the talk. Despite a resounding majority of respondents asserting that customer experience was important or critical to their competitive strategy, few of their organizations were implementing this on the ground.

This could be an expensive mistake, as other studies by the same firm show that the quality of customer experience is the foundation for building loyalty, advocacy and sales.

Customer-centricity is such a fundamental value that it should be instinctive. So why is it so hard to achieve? The answer lies in the fact that customer-centricity can only come through a wholesale change in organizational culture, and that's easier said than done. Slick marketing is no proxy for quality interaction and it is not possible for unengaged employees to engage customers. Thus, customer-centricity places the onus of creating a great experience with employees, and such empowerment flies in the face of established practises to centralize decision-making and the commoditization of customer service.

Other challenges come from not really knowing what the customer needs, not having a single point of accountability in the organization and not knowing which customers bring in the most profit. But those companies that have customer-centricity in their DNA know how important it is to instil organizational belief, communicate constantly, and empower employees to deliver positive experience. On top of this, asking a company answerable to its shareholders to trade short term gain for customer experience improvement on the promise of long-term rewards is sometimes hard to swallow.

Years ago, a leading management journal demonstrated that profit and growth were stimulated by customer loyalty; now, with the availability of real-time feedback and tools to measure cause-and-effect, companies are seeing the power of customer experience first-hand. A customer-centric firm can look forward to growing revenue from existing customers; improving retention, loyalty and hence profitability; reducing costs and above all, creating a competitive differentiation which is hard to copy.

When an organization is fully focused on its customers, it does not compromise customer engagement for another priority; rather, it will strive to exceed customers' expectations at every opportunity, to create customer delight and build a mutually beneficial relationship - this is the only real defence against becoming irrelevant and losing customers to rivals that compete on more than price alone. Customers now expect more for their money - the silver-lining here is that they are willing to pay for it.

Posted by Dougal Edwards at 4:30 AM | Permalink | Comments (0) | TrackBacks (0)

Before starting this blog series on customer-centricity, I'd like to dispel a common misconception by stating clearly that customer satisfaction does not equal loyalty. Satisfaction, although important, is just a snapshot in time of the customers' state of mind. Whereas loyalty is a measure of their willingness to further engage with the brand in question. A loyal customer results in repeat business and customer advocacy - the holy grail of the customer-centric organization.

Numerous studies have demonstrated that great customer experience engenders loyalty. This knowledge is driving organizations to try to become more customer centric by shifting focus away from sales and products to improving customer experience.  The challenge for these organizations is that they lack the skills to act; for every success story, there are many, many failed attempts to bring about such wholesale organizational change.

Customers are critically important to companies - yet why are so few truly customer-centric? How can organizations make this shift? What do they risk by becoming more customer-centric and also by not? Are there any best practices laid out for transforming an organization's culture to make it customer-centric? What are the critical success factors at play?

I will deal with each of these in subsequent posts. I will talk about that inalienable component of customer-centricity - customer experience. I will also cover the attributes that are essential to make it compelling - the usefulness, usability and desirability of any experience. Those with an interest in customer experience may find the discussion on interaction design improvement and recommended best practices useful.

Posted by Dougal Edwards at 6:11 AM | Permalink | Comments (0) | TrackBacks (0)

With bad news, now coming from Europe, showing no signs of letting up, the debate rages on about how to fortify the world's financial systems. That we will see more regulation and government intervention, is a no-brainer, but that apart, I foresee some 'collateral' developments as the banking sector goes about putting its house in order.

The feverish growth of yesteryears will become a thing of the past, making way for a new normal that is firmly grounded in reality. Sharp manufacturing and asset growth, unnatural bonuses, stock-market surges will all be scrutinized carefully to avoid repetition of earlier misdemeanors. Many institutions, presumed too big to fail, may fight for their very survival, particularly once government support dries up. 

If the crisis was precipitated by the greed of a few, recovery has been led by the generosity of many as corporate and banking institutions try to give back to customers in monetary and other ways. They will seek value over volume by taking a more discerning approach towards their products, services, processes, customers and partners.

I also see banks going back to basics, making products and services simpler, fairer and more transparent. Similarly, their processes will also get simpler, convenient and transparent. They will also look up to other industries such as telecom and consumer electronics that have leveraged innovation and efficiency to make products progressively smarter, faster, simpler and cheaper. And while doing so, I expect banks to redouble their customer focus, paying heed to individual needs and identities. Customers are wary of trusting too easily and even when they do, want to maximize value for every penny spent. In such circumstances, banks will no longer be able to push the same offering to one and all, regardless of need. The age of right-selling is upon us.

The good part is that these moves will lead the industry towards a more progressive outlook which respects security, compliance, openness and places long term survival over short term gain. And it remains to be seen whether banking will forsake simple innovation for the disruptive variety, which generally gathers momentum during economic upheaval.

Posted by Rajashekara V. Maiya at 5:30 AM | Permalink | Comments (0) | TrackBacks (0)

Canada's sedate banking industry has been roused by the arrival of new age non-traditional players like virtual and Internet-only banks. When customers gave them the thumbs up, it forced the big boys to sit up, take notice and launch similar initiatives. Thanks to these innovations, the industry has managed to come out of the trough it found itself in during the crisis.

Five players dominate the sector, which is consolidating further to acquire related services offered by smaller intermediaries like mutual funds and investment trusts, positioning banks as universal financial service providers and important drivers of economic growth. Besides merger activity, the other trends in this market include internationalization, competition, supervision and investment in channel infrastructure.    

Because Canada is a mature and stable market, it holds little hope of growth - hence, its institutions are making their way to foreign shores, particularly those of the U.S, U.K and Latin America. Likewise, the country has been seeing the entry of foreign banks like HSBC, ING, BNP Paribas, Citigroup and ICICI, although they currently do not pose a significant threat to the 'big five'.   

Besides the Internet shake-out mentioned earlier, Canadian banking is also undergoing a change of product and service profile. With the infusion of young blood into the population, the market is changing to suit new tastes for self-service banking and electronic channels. That being said, this is one market where there is equal emphasis on strengthening branch infrastructure; between 2007 and 2009, the number of branches grew 28%. Even today, branches are being viewed as an influential channel for the delivery of high quality customer experience.

Alternative channels including online and mobile banking, data management and business intelligence are the targets of most technology investment. The financial gloom of the crisis has slowed down IT spending; however, it is important for Canadian banks to realize that in a stable and slowly growing market, technology, as a driver of operating efficiency is one of the key contributors to profitability. Hence, they cannot afford to take their foot off the gas pedal for too long.

Posted by Anuradha Mallya at 4:44 AM | Permalink | Comments (0) | TrackBacks (0)

Think of Return on Capital (ROC) as the acid test of business; ultimately all banks will judge and be judged by how well they use this resource. Since all other indicators like efficiency, productivity and customer retention flow back into ROC, this is the preeminent driver of business value, and the cynosure of any project investment. But past economic travails and rising expectations from regulators and customers alike are making it harder for enterprises to meet their ROC and other targets. This is where innovation can step in to improve agility, compliance, customer engagement and delight and enable banks to differentiate themselves.  Channel innovation in particular can contribute to business value by improving productivity, lowering costs and enhancing the efficiency of delivery infrastructure. But there's a right way to go about it.
 
First of all, channel innovation must ensure that not only are channels really handy to the customers when needed, but more importantly, not stepping on toes when they're not needed! Balance ubiquity with a respect for customer privacy. Second, channels must be equipped as per the context of usage, paying attention to the customer's touch-point location, his/ her characteristics, preferences and so on. Hence, it's not a good idea to ply a shopper with investment advice through a kiosk located within the store when she's only trying to check her bank balance. And while it's great to offer a selection of channels, all of them must enable a comparable and consistent experience for the user.
 
Although channel innovation is a product of technology, it cannot survive by that alone; it needs creative strategy to give it life, and needs to be used innovatively to make 'difference' to the end customer. That's why it is so important for banks to harness the power of social networking by connecting their channels directly to platforms where the customers are hanging out, talking, sharing and influencing others with their opinion, so that they can mount a timely and appropriate response when needed.  Equally, banks must be imaginative enough to recognize the potential of new age media including mobile, TV and VOIP and location-based technology like GPS, RFID, among others in extending relevant and contextual services to customers wherever they may be and whatever they may be doing.
 
However, while doing all of the above, banks must ensure that they do not compromise even to the slightest degree, the convenience of their customers and the security of their transactions. After all customers won't stick around if they no longer feel safe.
 
I have detailed how channel innovation can bring about business value in the coming issue of FinacleConnect and will update this page as soon as the journal is released. 

Posted by Chandramouli Kundagrami at 6:30 AM | Permalink | Comments (0) | TrackBacks (0)