Restoring the customer's crown.

AuthorBernstel, Janet Bigham
PositionCover Story Part I

Forget about banishing people from the branch and steering them towards low-cost delivery channels like ATMs and the Internet. The key to success today is orchestrating an intimate experience that makes customers feel like pampered royalty--an experience that also ties in to, and grows out of, the institution's core brand promise.

After spending decades driving customers to more cost-efficient channels such as telephone banking and ATMs, banks are now trying to reverse the trend. As part of their CRM initiatives, many bankers are now reaffirming the branch as a valuable point of customer contact. The Cap Gemini Ernst & Young Special Report on the Financial Services Industry in October 2001 pointed out that globally one of the prominent trends was the renaissance of the branch channel and the realization that e-commerce is a complementary channel and not a substitute for face-to-face service.

While financial services institutions may now be recognizing that customers want more face time, it will rake more than the promise of a new toaster to bring John Q. Public back to the branch lobby. It will take a close examination of the brand promise, and a whole new attitude toward the customer experience.

"The brand is the sum of a thousand different experiences-- not an original thought or comment, but still true," says Tom Richards, an analyst with Financial Insight, an IDC company headquartered in Framingham, Mass. Unfortunately for banks, customers have done the math and banks have come up wanting in comparison to other retail industries.

"The financial services industry has declared itself as being customer focused, customer centric," claims Richards, co-author of the 2002 report "The Value Disconnect Challenge." Yet when you look at what's really gone on, you find a litany of things like cost reduction, head-count reduction, reduction in service levels and a diversion from branches. Our report provides some evidence that customers see through this and are not happy."

The result has been an erosion of trust, leaving satisfaction levels at an all time low. At the center of the discontent is the concept that customers take for granted what banks to well, such as cashing checks and handling deposits. Yet banks rate poorly in the areas that customers value highly, such as personalized attention.

"Today there is a situation where the customer has real needs that require a one-on-one experience and the bank's been telling them 'Don't come into the branch,"' explains Richards. "Here you have an enormous disconnect. The banks don't look at the branch as a revenue-generating customer relationship building arena, but as an opportunity to save money."

To survive in the competitive marketplace, organizations are struggling for ways to build stronger customer relationships. In order to achieve a higher level of what the Financial Insight analysts call "customer intimacy," they suggest recognizing and engaging in the "value disconnect challenge." In other words, stop working so hard on the things that don't matter to the customer and start focusing on those that do. According to the report, institutions that want to succeed in the challenge should take the following steps:

  1. Understand targeted customers

    Use market segmentation to identify the customers you want. Characterize those customers in terms of minimal expectations and valued...

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