Seven steps to customer-centricity

07/12/2022 Article
Stuart Harle Qorus Benchmarking Lead

The secret of becoming customer-centric is often quoted as: ‘Putting your customer at the heart of your business’, or something similar. But it’s quiet a sweeping statement that rarely helps organizations face up to the challenge. 

Customer-centricity is a long-term business-wide strategy, not just for the Marketing department or as an add-on project in your digital transformation program.

Being customer-centric is a response to a rapidly changing and challenging business environment and has many long-term benefits, but because it is more than a slogan it is hard to do well, and many organisations fail or live in limbo that is bad for the organization and its customers.

Our partner, Smarter Way Mentors, customer-centricity experts, have helped us put together some practical ways to achieve the strategy.

1. It’s about the customer, not the product. 

It is not about the channel either.

Many banks and insurers are struggling to stay relevant to their customers. Most products, services and channels offer the same features, functionality, levels of service and experience. FinTech product features, such as real-time transaction reporting, freezing cards and account aggregation through Open Banking have been easily copied by traditional banks. Most banking apps do the same things.

Relevant organizations have one thing in common. They engage with their customers to understand the dynamics of the relationship. They then act according to this insight and consistently.

They don’t guess what their customer might need using transaction-based algorithms. They use direct human-to-human customer feedback that gathers facts, opinions, and sentiments, rather than ‘simulated experiences’ made up by their people (who see it from a very different perspective).

These organizations think in terms of the customer’s long-term value realized through satisfaction, trust, and loyalty. They don’t focus on short-term product profitability or this years’ market share (which is usually the way they are motivated).

They also recognize that they should treat customers fairly, but not equally. All customers do not deserve the same level of service and they allocate resources based upon value that keeps and grows the number of their most valuable customers as a priority.

With this knowledge and deep understanding of their customers they address their problems to be solved, dreams to be achieved and day-to-day jobs to be done. This makes and keeps them relevant.

2. Digital first, but don’t forget customer’s capabilities

Consumers choose providers based upon their ability to deliver and increasingly search out who can through social proof. Every time you cannot meet an individual customer’s expectations you damage satisfaction, trust, and loyalty to a wider audience.

Recently, we’ve seen a rapid switch to digital service delivery, especially through mobile banking that appears to meet customers’ day-to-day needs during Covid and offers organizations significant cost savings. It’s enticing to think that’s the way it will be.

Build digital and ‘mobile first’ capabilities, but don’t forget valuable segments of customers who can’t access this technology.

3. Get the right people, with the right soft skills

Hire for the skills you need, including ‘soft skills’ like empathy, as well as practical experience and achievements.

Select segment managers who relate to their segment (through their age, demographic, or life stage). If you don’t, it’s very hard to understand and relate to your customers.

Don’t be afraid to change your team to get it right. Getting it wrong can cost you and your team dearly.

 

What you do need is good analytics capabilities to create insight that can improve satisfaction, trust, and loyalty to create sustainable value.

4. Build and manage customer segments

Start simple, with data on: ‘whether or not the customer pays the bill’ (the value they contribute to your business for the services that they consume); product tenure; assets and liabilities; channel usage.

There’s no need for a sophisticated data warehouse from Day 1 - it will only delay understanding your customer and getting results.

What you do need is good analytics capabilities to create insight that can improve satisfaction, trust, and loyalty to create sustainable value.

Segmentation means that an organization will discover that its customers deliver a range of value to them for the services that they consume, and not all will ‘pay the bill’. It’s tempting to discard these customers and concentrate on the more valuable segments. We’d suggest that further analysis to reveal the reason they don’t ‘pay the bill’ is required to find a profitable proposition that they want to buy and use. If we followed the former, and discarded unprofitable customers, there’d be no loss-making student bank accounts, and think of what means for the organization’s future profitability when they’ve graduated and need your products and services.

5. Gain insight from your segments

As we stated earlier, meet, and listen to your customers - don’t rely on ‘tick-box’ surveys or the views of your people where confirmation bias can distort the facts.

Practical insight comes from ‘hard’, ‘soft’, and behavioral data. It’s created through a simple formula: segment managers + customer insight specialists + data analysts = valuable propositions.

It creates a ‘sparks’ of insight that become hypotheses to be tested with customers to understand whether they would buy and use the proposition.

Use the Champion/Challenger technique with groups of customers to determine optimal segment treatment and use it to challenge internal preconceptions and to break-down internal barriers to a radical rethink about how you manage your customers.

Finally, once you’ve created and have the right person managing the segment, track its behavior and value and take immediate action to rectify the position if required.

Often the algorithms rely on ‘what has happened’, not ‘what is about to happen’ data and offer the wrong solution, at the wrong time, causing poor satisfaction and trust.

6. Deploy a customer-centric marketing strategy

Understand how your customers choose and buy your products, and always deliver to their capabilities, not yours.

What has been stated earlier applies here. This is where your strategy meets reality.

If you’ve skimped on, or skipped, some of the previous steps you’ll be found wanting when you interact with your customers. Thinking or stating that you are customer-centric but behaving in a product-centric way (mass marketing, selling to anyone who will buy the product) will lead to customer frustration, lower satisfaction, loss of trust and loyalty.

The Covid pandemic and its impact on the way customers were interacting with their financial services providers sped up customer adoption of digital channels, such as mobile banking and insurance apps. Human-fronted channels such as branches and call centers that play an important role in helping listen, understand, and gather customer’s problems, dreams and life-cycle events were replaced by ‘dumb’ devices that push information to customers. 

Banks risk losing relevance because they’re no longer listening to their customers and pushing their agenda based on transaction data-based algorithms based on a snippet of the customer’s financial behavior. Particularly when many now have bank accounts and products with multiple suppliers.

Transaction data-driven algorithms that try to guess what the customer might want to buy next are not a replacement for customers sharing their problems and plans 

Often the algorithms rely on ‘what has happened’, not ‘what is about to happen’ data and offer the wrong solution, at the wrong time, causing poor satisfaction and trust.

Customer-centric organizations listen to their customers, ‘sensing and responding’ to what they share as a solution at the right time, making offers that are personalized, relevant, and timely. This also applies to how the organisation interacts with them. Gather and comply with how your customer wants you to interact with them.

Use ‘closed-loop’ CRM based on analytics and ‘next best action’ principle across your channels. Next best action uses simple machine learning to offer the most appropriate interaction, whether it is a helping complete a service enquiry or offer a solution to a problem or life-event that you know about or continue the buying journey and fulfillment of one in progress.

Your CRM system is the core of your customer-centric strategy. It is the corporate knowledge that feeds your analytics and uses the insight from it to deliver smarter, consistent interactions. Without it each interaction, whether by channel or communication occurs randomly without consistency, irritating your customer, who thinks that you don’t listen.

It requires organizations to think about customers differently. One that is customer-centric, and not just a bland snippet such as ‘putting customers at the heart of your business’.

7. Build trust for long-term value and loyalty

Banks are no longer trusted by many of their customers to do the right thing for them. Without trust, customers aren’t loyal and seek alternative solutions to help them solve their problems and achieve their dreams.

How do banks win back their customer’s trust?

It requires organizations to think about customers differently. One that is customer-centric, and not just a bland snippet such as ‘putting customers at the heart of your business’. It’s difficult and requires flawless execution of the previous six steps.

Our formula is our Customer Imperatives:
• Know and treat me as an individual;
• Notice what I need;
• Be easily available;
• Be on my side (and reassure me you are);
• Leave me in control;
• Recognize my value to you.

These are built on research with proven results. Apply them to yourself. Are they how you’d like to be treated and valued by the organizations that help you manage your money?

These imperatives rely on you being able to apply your customer-centric capabilities and technology for your customers’ benefit, not yours.

We’ll explain more in our next article about customer-centricity: Customer Imperatives. Follow us to make sure that you receive it.

Take your first step

Becoming customer-centric is challenging and I hope these tips help.

Our first step: ‘It’s about the customer, not the product’ is about understanding your customers, their problems to be solved or dreams to be realized, not trying to sell them your products.

Ask yourself: “How well do we understand your customers?”

Find out now by taking our free, quick, and confidential benchmark assessment that will tell you how well you do and what you need to do to start you on your journey to improving your customers’ satisfaction, trust, and loyalty. 

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