Commercial Loan Automation
Small Business Banking
We just had our very first CX Forum in July. It was a fascinating meeting in many respects. Every attendee had a vision for what they were trying to accomplish, but there was not much convergence around what CX really is. Even when I asked, “What are your top 3 projects for 2019?”, the answers were all over the place. This shouldn’t surprise any of us, because everything we do touches our customers. Branch opening and closing, conversions, product introduction, marketing, collections, etc. etc., they all impact our customer experience. How do you decide where to start?
Interestingly, as I opened a book on the topic by Jeanne Bliss, a foremost authority in the field, the first chapter addressed the need for a Chief Customer Officer (I’ll just call this CXO) role clarity. Bliss offers the following definition of success for the position: “ A CXO is successful when he or she can simplify how the organization works together to achieve customer-driven growth, engage the leadership team, and connect the work to the return on investment”. This last item in particular was of interest to me, since it is not often that our members measure the correlation between their CX measurement (as measured by net Promoted Score (NPS), Gallup’s Customer Engagement score and others) and customer behavior, such as longer customer tenure, greater customer cross-sell and other quantitative measures that lead to financial rewards.
CX still hasn’t received the preeminence and respect it deserves in many banks, possibly due to the lack of connection between the work they do and measurable results. And yet, we can all attest to splendid experiences that turned us into loyal customers, as well as botched opportunities that ensured we will resign as customers of the provider.
Further, CX needs to be proactive, using leading indicators to detect unmet customer needs, unspoken customer frustrations, and handle those way before defection becomes a viable choice for the customer. Therefore, the effective CXO isn’t the receptacle of whatever currently ails the customer, nor are they the appropriate executive to fix the problem. Rather, the CXO’s job is to identify and prioritize the experiences customers want to have again, and inspire the organization to execute on those experiences effectively and repeatedly.
My view is simple: excellent customer experiences and memorable moments will increase both the customer tenure with the organization as well as their consumption of our services, thereby growing both current and long-term profitability and franchise value (though the customer’s Net Present Value that will not last years longer than would otherwise be the case). Linking CX work to such results (greater relationships per household; greater retention; greater profitability) will help the function gain the respect and resource allocation it needs.
CX should live the following principles:
- Manage your customer as an asset. My mentor of old, Dick Kovacevich, was a strong proponent of this approach. We grouped all customers into five groups and goal ourselves on moving them from one group to the next as we met their needs and expanded the relationships. We measured progress also per 100 households, again reaffirming that each household is an asset that needs to be cherished and served to exceed their expectations.
This requires a change of mindset, and resonates well throughout the ranks, from the boardroom to the teller line. It also resonates with investors who follow your company and consider each customer as a revenue stream. The longer that stream stays with the bank, the more predictable and reliable are the earnings, and this is music to investors’ ears.
One important aspect of Dick’s approach is to only consider what customers DID vs. what they SAID they’d do. This wasn’t about surveys. It was all about actions and behaviors, all in the context of meeting the ever-changing needs of customers. There is a significant gap between customers’ words and actions, and actions speak louder than surveys.
- Align around experiences, not organization silos. This is a challenging expectation considering the historical structure of banks. We remain true to our past by passing the customer from one unit to another without enough regard for their journey. Ideally, there will be a single version of the customer journey, consistent across lines of business. This is a noble goal, and a hard one to achieve. Starting with the critical processes to form the key elements of the customer journey might be a good point of departure (from employee orientation that is CX-rich to account opening and product management).
- Listen to customers. You have hundreds of people touching your customers every day. They can be a goldmine of intelligence on your customers’ experiences, feelings and expectations. Yet we rarely use the call center, branch staff, our collectors, executive assistants and others to listen to the customer experience and quickly adjust our practices accordingly. The CXO needs to engage the company and its people through technology to collect data from your many listening posts, including your customer complaint system, synthesize it and facilitate organization-wide decision making on refinement and improvement of the customer journey.
Prioritize the actions that have the greatest impact on that goal while fitting your bank culture and leadership style.
- Be proactive. Ideally the CXO will know before the customers tell them what experiences delight them and where experiences are inconsistent or let them down. The CXO’s goal is to deliver consistent and preferred experience, which not only delights customers who appreciate the predictable and reliable nature of the experience, but also your compliance department, where consistency is a cornerstone value.
Use the intelligence gathered by your customer-facing team to early-detect revenue erosion and prevent it (a perfect example is watching for balance diminishment).
Further, proactively identify stress points in your customers’ lives and help them through such events, from divorce to death, from welcoming a new baby to retirement. Use your financial expertise to exceed your customer expectations by preparing “kits” to assist them through such moments with an organized approach, the necessary documents to get through the life event, and on-going support and caring throughout.
- Accountability and culture. Success for the CXO isn’t just about happy customers. It is also about bottom-line contribution and revenue growth. The CXO works with the leadership team to weave the CX mindset into preexisting processes and decision-making such that the entire team starts thinking in unison about the impact of their actions and decisions on the bank's customers. Set clear and measurable behavior expectations to ensure cultural integration of the CX dimension, as well as build accountability for its execution.
- Measure results. Some banks have developed a client engagement index. Sandy Spring Bank, for example, has an objective and well-reasoned methodology to yield that index. It is based exclusively on what customers actually do, and is not driven by survey results. The executive team assigned engagement values to all bank products, and customers’ use of these products is an important determinant of how they impact the engagement score. A CD carries much lower engagement than a core checking account or a commercial loan. Sounds reasonable, right? Even if the actual weights aren’t “accurate”, it is the relative weights and the movement up or down the score that are most telling.
Note: Surveys are an important and useful tool, but we should also recognize their limitations, hence my emphasis on actual behaviors.
How do you organize for such an effort? This reminds me a bit of the Chief Risk Officer’s role and its staffing quandary. The CRO provides an enterprise-wide view of the various risks within the organization, but does not necessarily measure them or report them, as units within the bank already do that work (the credit department, Asset/Liability Management group etc.). Their analysis and insights contribute to managing the bank’s risk profile according to the Board’s risk appetite statement.
Similarly, the CXO can’t manage or control the entire customer experience process across the many lines of business of the bank. They can, however, add the CX lens to all key processes that impact customers, helping to align the entire enterprise around the brand promise of the bank and toward revenue and customer base growth.