17th May 2017
Why your brand needs a customer experience revolution
Customer experience is the key to success in the 21st century, so why are financial services playing catch up?
17th May 2017
Customer experience is the key to success in the 21st century, so why are financial services playing catch up?
In the 21st century, companies who make life easier and simpler for customers are cleaning up against their rivals. In the US, Domino’s now offers a “zero click” pizza app – which gets the ball rolling on your order from the second the app is opened - no further touches required. Since the app was launched last year, Domino’s share price is up 50%. Over five years, it’s up almost five-fold.
In the world of messaging, What’s App has been a runaway success story over the past five years, attracting over 1 billion users on the strength of what are essentially incremental improvements to the process of sending and receiving messages. Three years ago, Facebook paid almost $20bn for the company – which as yet is barely generating any revenue.
In financial services, the customer experience revolution has barely begun. Most banks now at least have serviceable apps that allow you to do day to day banking through your mobile. But when it comes to opening accounts, applying for credit or buying insurance, the experience is less than slick.
When you apply for a loan or credit card, it’s easy enough to find a list of interest rates. But these prices are not offered to every customer. It’s only possible to know what rate you’ll be charged once you’ve filled in a lengthy application.
If you’re accepted, you may or may not be offered the attractive rate that led you to apply. And if you’re not – and you decide to cancel – then your chances of successfully getting accepted by another lender will have been damaged by the fact that you made the first loan application.
Imagine going into a shop where everything had a price which was only indicative. When you took something to the till, the cashier would politely inform you that the actual cost could be more than the price printed on the tag. Sadly, he wouldn’t be able to tell you what the real price was until your card details had been processed and the money had been taken from your account. This is essentially the experience for today’s customers in the credit market. Pure craziness.
Insurance isn’t much better. While comparison sites will serve you up a hundred different prices, each policy in your list of results will have different features. Once you’ve picked one, you’ll be pushed through to finish your application on the insurer’s site – and then offered a number of additional insurances. By now, however, you will have lost the ability to compare the prices of the extras with the rest of the market.
So it may be that the policy you’ve opted for – plus the add-ons that you’re about to buy – is much more expensive than the package you could have got from another insurer, even though they looked more expensive in your list of initial results. The only way to find out for sure is to go through the application for each insurer in the table.
The retail analogy here is a supermarket that has a sign on the shelf which reads “Discounts on selected brands”. Unfortunately, it doesn’t say which brands. The only way to find out how you get the offer is to get in the queue for the checkout and get each item in your basket scanned. Once you get to the front, if you don’t like the look of the price, you’ll have to go back to the shelf, swap out your items, and then queue up for the checkout all over again.
If there’s a silver lining to the sorry state of affairs in banking and insurance, it’s that there are great opportunities for the brands that can modernise and create a customer experience which is fitting for the 21st century.
Even incremental improvements in the ease and simplicity of applying for products can positively surprise customers in a market where people are used to being underwhelmed.
At Fairer Finance, we see our ratings as a barometer of progress on customer experience. Our latest set of ratings, published over the last few weeks, reveal that customer happiness levels have remained fairly stagnant over the three years since we launched.
Trust in the sector, however, is improving – albeit slowly.
But while the aggregate picture is not one of transformation, there are some good individual stories, which demonstrate the rewards on offer. Virgin Money, for example, has climbed from the bottom half of our credit card tables to the top half over the past year.
Its journey began when it stopped outsourcing its card to MBNA and brought its offering in-house. As part of this exercise, it created a new customer journey and rewrote its terms and conditions.
Before the shift, its transparency score was at 30% - and its customer happiness and trust scores were 56% and 43% respectively.
In our latest set of ratings, Virgin’s transparency score came in at 70%. While its customer happiness and trust scores have now risen to 63% and 48%. Importantly, its progress has demonstrated a direct correlation between improved transparency and customer satisfaction levels. In turn, this converts to higher retention, higher advocacy levels – and better profitability.
Most people in financial services understand the business case for improved customer experience and transparency – but the necessary work is not always prioritised as few competitors have been making the strides which force others to sit up and take notice.
That is now changing – with most providers working on improvements, if not visibly then behind the scenes. Delivering excellent customer experience will soon become a necessity not just a nice to have.