In common with most financial journalists,I get frequent correspondence from consumers who need information or to let off steam about a recent experience. My e-postbag contains more money problems than an FPC exam.
They range from easily remedied glitches to serious examples of bad business behaviour.
Although journalists by their very nature are cynical beasts, I am relatively optimistic about the financial servi-ces industry's efforts to try to get things right more often than not. But what does strike me as sad is that more and more of the investors who contact me are not so angry about the glitch itself as the way it has been handled by their adviser or investment company.
Repeated studies tell us that customers who receive good service will stimulate new business by telling up to 12 other people about it, while those treated badly will tell up to 20 potential customers. It is also reckoned that 80 per cent of those who feel their difficulties and complaints are handled fairly will stay loyal.
I think this is what is called a “no-brainer”. If you have to think deeply about it, you have missed the point.
Walsall-based Regency Financial Management partner Julie Walker believes her attention to customer service is the key to strong relationships which has led to whole families and groups of friends recommending her company.
Walker estimates around half her business comes from these recommendations. “I feel that as clients open up and provide such personal information about themselves, it is equally important for me to share some personal details about my life with them. This in turn builds trust and friendship,” she says. Just think of the money she is saving on advertising.
Bristol and London-based IFA Holden Meehan also takes this issue seriously. The firm sends out questionnaires to clients once a transaction is completed. Then – and here is the tough bit – it actually pays attention to the feedback and follows it through, making improvements wherever it can. A key finding is that its clients like regular contact once the business is processed, even if there is nothing to tell them.
But no matter how beneficial customer care is, some firms still prefer to avoid the issue or hope they can get away with a token effort.
Perhaps this is why the whole area is coming under greater scrutiny from the FSA. Its new Treating Customers Fairly team is gathering information from consumers, the industry and the media about customer service standards in the financial services sector.
Its initial findings suggest firms put much more effort into attracting new customers than looking after existing ones.
A tendency towards short-termism has also been identified by IFA Promotion. Chief executive David Elms believes those continuing to focus on cherry-picking as opposed to lifetime relationship marketing are going to find it increasingly difficult to survive. He says: “IFAs have to look at the margins they are going to make from knowing a client over many years rather than through a single transaction or potentially watch their business dwindle in a 1 per cent world.”
Add to this the increasingly high expectations of customers, who are becoming more empowered through research, and the pressure to add more value than your competitors is greater than ever.
Elms sees great potential in the internet as a cost-effective means for communicating with clients. This makes sense as investors are flocking to the web as an incomparable research tool. But dotcoms have room for improvement on the customer care front and many do not even have a telephone number on their site.
Research by management and IT consultancy Cap Gemini Ernst & Young claims internet banking is failing consumers, with 59 per cent of email not answered within eight hours. The survey also found that financial services companies are the worst culprits when it comes to sending out unwanted mail. Many consumers feel banks and credit card companies are jeopardising customer relationships in the rush to gain more business and increase profits.
Mick McAteer of the Consumers' Association sees stakeholder pensions as a good catalyst for improvement. He says: “There will be less to differentiate the products in terms of price, etc, and people cannot really draw any conclusions about future investment performance from past performance. I think companies will have to find a way of distinguishing their brand or building and maintaining customer relationships. Stepping up the quality of service could be the way they try to do this.”
The perfect balance between commercial and consumer interest was captured by John Lewis Partnership founder Spedan Lewis. He said: “If we rely upon our value alone, we shall obtain considerable success. If to our value we add a constant and careful cultivation of all the other arts of building up and maintaining goodwill, we shall be vastly more formidable than our competitors and do a very great deal better.”
The focus of this message is achieving higher profits and recognising the need to differentiate your business from the rest of the market through putting customers at the centre of everything you do.
Good customer care is essential to survive but exceptional customer care will set you apart from your competitors.