The importance of the customer experience
Written by Jesper Bengtsson
The life-time value of a customer can be astronomical and even more so considering the potential impact of the ripple effects of a happy, or disgruntled customer on his or her friends and family. Because of social media and the connected environment we live in, a good user experience can lead to thousands of new connections while a negative one can lead to the detriment of potentially more than that.
However, there are several common misconceptions about how brands achieve the level of loyalty that makes their customer stick with them for a lifetime. While offering good customer service, a great product or a cool advertising campaign is certainly a prerequisite for commercial viability – today, accurate delivery in independent customer touch points does not automatically render market success. An appealing ad campaign does not mean anything in the long-term if it isn’t supported by an equally great user experience. Ensuring this seamlessness throughout the customer journey is one of the main challenges facing most organizations today – not only making sure that each department is independently best-in-class, but that they as a whole work together. It is first then, when the experience is truly, uninterruptedly positive that people showcase the self-promotion to “brand ambassadors” that in marketing is the representation of true loyalty. True loyalty stems from a deeper connection, it hits at the very core of all of us.
Companies need to go beyond answering the common, but superficial, questions such as “Does this do what I need, to a price I can afford?” that we as customers ask ourselves. Instead, expended effort of companies to understand must be greater, giving clear answers to the deeper ones: “How does this make me feel? Is this me? Does this fit into my world view?”
Layers of experience impact
In order to bridge this gap, companies need to readjust the way they look at their customer relationships and their role in them, going from solely attempting to accomplish their own business objectives and increasingly to trying to understand their customers: profit will follow. Essentially, it is about going back to the basics of commerce. At a very fundamental level – the market merchant selling homemade goods can exemplify it, with a keen ear to the requirements and expectations of his customers; he tweaks and modifies his product to the customers needs. If the customer wants sweeter bakeries, the merchant follows.
Many companies today have lost touch with their customers – whether it’s shareholder pressured short-sightedness, an unwillingness or an inability of senior management to access what is being said “on the ground” the fact remains that diminishing customer insight for the people who do the decision-making is a persistent problem. Today, few senior managers take the time to ground their decisions in what is actually happening on the floor. Insights are often dispersed and reduced to cells in a spreadsheet. Attitudes of the whole user experience get lost in silos as managers are occupied with how to improve their own numbers – modular perspectives trumps the holistic view: there’s a pervasive cross-functional disconnect. Addressing this dilemma, a senior manager facing exactly this realization said to HBR: “Our dashboard metrics were like a watermelon. On the outside everything was green, but when you looked inside, it was red, red red.”
The challenge for financial services
As early as in the 1970s, Arvin Toffler popularized the term “information overload” – a concept I believe we all can relate to today. The connectedness brought possible by the array of technological devices accessible to us today not only bring immense possibilities for decision-making, it also puts a lot of pressure on businesses to deliver a distillation of what is essential for the customer. Furthermore, the overwhelming amounts of marketing communication facing us everyday through not only traditional channels but also increasingly web, mobile and social media can make it hard to get the message across. The importance of having a product or service and great messaging around it is no longer enough – the whole experience needs to be enticing.
While this problem is relevant for all industries, some even more than others – no industry has been facing more heat in recent years than the financial services industry and, investment banks in particular. Following the downfall of Lehmann Brothers and the uncovering of scandals of large-scale market manipulations, these banks and unfortunately many fringe industries have felt an increased customer distrust and attrition of loyalty and although I am painting a grim picture – it does not necessarily have to be all doom and gloom.
A paradigm-shift has for a few years been taking place with several Silicon Valley-based tech companies such as Uber, Airbnb, Instagram and Twitter who are all championing a new era of user-centered design. Slowly, incumbents are taking note. Technology advisor Gartner are predicting that global behemoths are now awakening from their slumber, with expectations saying that 89% of companies expect to have customer experience as their primary competitive driver by 2016. Like the market merchant, financial services companies would do well in (with a keen ear) tuning in to the requirements and expectations of their customers.
People that deal with critical life decisions such as mortgage, financial advice or business loans often feel at a loss in distilling the complexities of financial services information – it’s not only a part of the general bombardment of information, but it is very complex at that. The consequence: they find it easy to walk away. Naturally, all customers have different expectations, requirements, and pre-conceptions of, for and about every interaction they’re faced with. Examples of pain points facing customers of financial services today are:
- Many people today find their financial literacy severely lacking and believe they could benefit from additional advice and answers relating to for example mortgages, personal finance and insurance.
- Money not being enough: a lot of people are concerned by their insignificant levels of savings. A lack of emergency funds creates worry about not being able to pay for financial obligations such as credit card debts, student loans, auto loans and medical debts.
Catering to these very basic needs: helping the customers address the fears of job loss, health and foreclosure by increasing their financial literacy could be one of many ways for banks (and other financial services) to connect with their customers. A recent success-story of a financial services company that is attempting to do exactly this is Oscar Insurance, a New York-based, venture capitalist-backed “£100 million startup”. In just under 6 months, they have through championing the fundamentals of user experience, captured a share of over 10% of the insurance market in the New York area.
The challenge for financial services companies is essentially about having the customer leave every interaction feeling more knowledgeable, not more confused. Facilitating this switch of customer mindset, making every interaction feel meaningful by helping the customer go from confused to confident or suspicious to clear will definitely result in an increase in loyalty, and profits will follow.
While there are certainly enough facets of both the changing competitive environment and the importance of customer experience to cover books, perhaps Mercedes Benz USA President and CEO, Steve Cannon, said it succinctly:
“Customer experience is the new marketing”