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Take care of customers

Few challenges facing financial institutions in the coming year are as significant -or as neglected – as improving meaningful interaction with customers.

When the going gets tough, let us all batten down the hatches and hide – an understandable reaction from the financial services industry but short-sighted. Lead-generation initiatives are still rife but, as Gartner pointed out in its recent report, companies need to avoid the “major mistake” of focusing on customer acquisition.

Investment is under close scrutiny so the idea of spending money on improving interaction and the experience of the customer may seem ridiculous. After all, financial services companies have been developing their customer experience for years. The huge contact databases are in place alongside the call centres and mailshots.

But that is exactly the point and why so many will be found wanting this year. Few financial services organisations approach customer service as anything other than a necessary evil – a drain on resources.

Interaction with customers – the lifeblood of the organisation – is regarded as a cost, and cost, says accepted wisdom, is to be reduced wherever possible. The alternative seems outrageous – to recognise objectively where that expenditure is misdirected and revitalise the whole concept of having a relationship with each customer.

How can you determine what most companies still have not got, a model for identifying the quantifiable return on investment on customer interaction initiatives? What is for certain is that this is an absolute necessity now not just a desirable option.

When pressed, most financial players would agree that their efforts to engage and satisfy customers&#39 expectations range from less than ideal to downright woeful. It gets worse – consumer expectations are rising constantly due to a variety of factors. Many are better informed, the annoying drip, drip of adverse publicity in financial services leads to suspicion and cynicism, they can enjoy far higher standards of customer service elsewhere and – most potent of all – many have bitter experience of late-night calls from unknown and unknowing contact centre agents or wasted minutes of music-on hold when trying to resolve a query directly.

It is time for institutions to recognise that, for financial products, consumers are more promiscuous than ever. Moreover, those products are rap-idly becoming commodity items and that the only serious differentiation is the service offered behind the glossy brochure.

With margins squeezed in the 1 per cent world, complacency is no longer an option. Creating or regenerating lasting customer relationships, positively inclined to up-selling and cross-selling, demands planning, imagination and, yes, investment.

Mortgage lenders, for example, are recognising that marketing has shifted from the strong campaigning for acquisitions of several years ago to a culture that is struggling to retain consumers faced with unprecedented choice. Never before have relationship-building skills been in such demand, although, amazingly, it remains unacknowledged by many financial institutions.

In turn, this calls into question current business processes supporting customer service, some of which may not support the necessary level of interaction that will be needed to ensure long-term retention.

The single most significant and far-reaching initiative could be to conduct an in-depth review of the processes involved in all contact with customers. Invariably, omissions, repetitions and other inefficiencies are identified as a result – inefficiencies that can prove frustrating and costly to everyone involved but, most important, to the consumer.

The resulting changes should not be haphazard but carefully monitored through the judicious use of tests and control groups to see the effect on consumer behaviour. A single well-timed phone call may cost four times as much as three letters but could hold the key to long-term loyalty and the return on investment for that type of customer.

If ever it was straightforward, addressing the needs of customers is no longer simple but, when carried out meaningfully and with commitment, it produces dramatic change.

Flexibility is crucial – recognising what works and in what circumstances – with a blend of personal and automated services. For example, personal interaction may not always be the most effective method and recent advances in customer automation – such as developments in speakerindependent recognition systems – can deliver demonstrable benefits to all parties, including saving money.

But, of course, financial organisations should not abandon the customer simply because the process is automated, leaving them at the mercy of some interactive voice response system. Forward-thinking financial services organisations will map out their relationship processes, examining the profitability of each step based on what the customer – not the institution – is getting from the relationship.

These are the companies with the willingness to listen to a customer&#39s unresolved issues, even when the initial contact was unrelated to the complaints. They will also have the processes in place to be seen to aim to resolve those issues. In short, that they care whether or not that individual customer is satisfied.

They are the companies which will thrive at the expense of the traditional, ostrich-like organisation that may have 20 million names in its database but which is haemorrhaging highly informed, valuable customers at an alarming rate.

Faced with competition, little discernible loyalty and a largely commodity portfolio, simply developing and marketing financial products is no longer enough to survive.

To ignore customer relationships and the processes to measure and support them is to ignore a major strategic advantage. Return on investment is paramount and fostering effective customer relationships does not need a blank chequebook. It is the mindset of those willing to invest that will make the difference. In short, those who understand that profitability comes from caring whether or not that customer is not only satisfied, but extremely satisfied.

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