Financial Services Firms Claim the CX Advantage
 

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Financial Services Firms Claim the CX Advantage

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Financial Services Firms Claim the CX Advantage Document Transcript

  • 1. Introduction There are significant business benefits to good customer experience (CX) — and knowing how to engage with customers is vital. In the age of the customer, being able to interact with and respond to customers across various channels can confer a competitive advantage — and with everyday communications increasingly moving to social channels, companies need to address the opportunity this platform presents. Financial services firms in particular can still gain an early-mover advantage by focusing on improving customer interactions. In September 2013, Lithium Technologies commissioned Forrester Consulting to dive deeper into current trends around customer engagement through social channels. To do so, Forrester leveraged data from Forrester surveys and supplemented that data with a custom survey of 1,386 online consumers in Canada, France, Germany, the UK and the US. High Moderate Customer Experience Drives Business Results Not only does CX correlate highly to future business, it also affects new business generation through peer recommendations. Forrester’s North American ® Technographics Customer Experience Online Survey, Q4 2012 (US) looked at how CX affects brand loyalty based on three measures (see Figure 1): Repeat business. Positive customer experiences mean that customers are more likely to do business with the company again. Customer commitment. Quality CX bolsters sustained business, as customers are less inclined to switch to a competitor. Word of mouth. Satisfied customers also facilitate new sales by recommending the companies they’ve done business with to others. Low Willingness to consider the company for another purcahse Likelihood to switch business to a competitor Low Moderate High 0.71 -0.42 Likelihood to recommend to a friend or colleague Base: US online adults (ages 18+) who have interacted with brands in the past 90 days Source: North American Technographics® Customer Experience Online Survey, Q4 2012 (US) 0.64
  • 2. large US brands across 14 industries. As in 2012, average CXi scores in 2013 indicate that the quality of CX varies greatly by industry. Particularly in the financial services industry — which includes investment firms, banks, and credit card providers — the spread between industry leaders and laggards is quite large (see Figure 2). This shows variable CX maturity, suggesting that CX leadership in financial services is still up for grabs. Financial Services Firms Can Still Have An Early Mover Advantage . . . Forrester’s Customer Experience Index (CXi) measures the ease, usefulness, and enjoyment of doing business with a company. Updated annually, the report provides benchmarks of the quality of customer experience for 154 = Average industry score Very poor 20 30 40 50 Poor OK Good 60 70 Excellent 80 90 Industry (average) Retailers (82) 75 Hotels (79) 72 Parcel delivery/shipping providers (77) 88 74 Consumer electronics manufacturers (74) 80 67 Insurance providers (73) 83 64 Investment firms (73) 83 61 Banks (71) 83 53 Credit card providers (70) 85 63 Rental car providers (68) 82 67 Airlines (67) 76 54 Wireless service providers (65) 81 55 TV service providers (58) Internet service providers (57) 45 77 45 Health insurance plans (56) 89 69 67 49 Base: US online consumers who have interacted with brands in these industries Source: North American Technographics® Customer Experience Online Survey, Q4 2012 (US) 66 100
  • 3. . . . But Financial Services Firms Are Competing With Companies In Other Industries CX professionals often focus on what their direct competitors are doing and how their company stacks up. But CX leaders in any industry can have an impact on the expectations that customers have for insurers, credit card providers, and banks. A whopping two-thirds of consumers that Forrester recently surveyed said that great experiences with some companies make them expect more from all the others (see Figure 3). This raises the bar for brands across industries and makes a focus on CX even more essential. “How strongly do you agree or disagree with the following statement: ‘Great experiences with some companies make me expect more from all other companies.’” Base: 1,386 online consumers from Canada, France, Germany, the UK, and the US (percentages do not total 100 because of rounding) Source: A commissioned study conducted by Forrester Consulting on behalf of Lithium Technologies, October 2013 Social Media Is An Influential Platform For Customers Thanks to online rating sites, customer support forums, and company social media pages, what were once private conversations about customer problems and poor service are now painfully public. A company’s ability to respond to individual customer complaints can have a significant influence on other consumers. ® Forrester’s North American Technographics Customer Experience Online Survey, Q4 2012 (US) asked respondents about the impact of engaging with companies — or watching companies engage with other customers — on social media. Respondents rated their agreement with each statement on a scale from 1 (strongly disagree) to 5 (strongly agree). 37% of them agreed that they react favorably when they see a brand be proactive and responsive to other customers’ complaints (see Figure 4).
  • 4. “How strongly do you agree or disagree with each of the following statements?” (Responses of 4 and 5 on scale of 1 [strongly disagree] to 5 [strongly agree]) I have a very favorable reaction to a brand when I see that a company has responded to fix a consumer’s negative comment on a social site 37% Complaints about customer service from other consumers on social sites strongly influence my view of a company 26% I think information or support from other customers on a company’s social community or forum is reliable 25% In the past 12 months, I have read customer service-related comments on social media before selecting a product or service 25% In the past 12 months, I have used social media to comment or complain about an unsatisfactory online customer service experience 19% Base: 7,440 US online adults (ages 18+) who are online monthly or more Source: North American Technographics® Customer Experience Online Survey, Q4 2012 (US) Younger Consumers Want Brands To Listen And Provide Support Through Social Channels Consumers are moving past simply wanting companies to recognize and hear them; they want deeper engagement. Younger people (aged 18 to 24) in particular want businesses to engage with them in social channels: 41% want companies to provide customer support via social media (see Figure 5) and 39% would like companies to listen and respond through social channels (see Figure 6). Nearly twice as many people between the ages of 18 to 24 want brands to offer customer support on social media as their counterparts aged 45 to 54. Those aged 35 and above are noticeably less likely to want customer support through social channels. In addition, social brand engagers are much more likely to purchase, consider, and recommend brands. Findings ® from Forrester’s North American Technographics Youth Survey, 2013 suggest that youth who engage with brands on social media have a significantly higher probability of having made a purchase from the brand in the past, considering it for a future purchase, or recommending the 1 brand. As these younger generations age, and even younger social natives start to have their own discretionary spending, the importance of social media interactions — and the expectations of customers for how companies should interact in social channels — will only grow.
  • 5. “Do you want brands to provide customer support through online social media?” 41% 18 to 24 years old 25 to 34 years old 40% 27% 35 to 44 years old 45 to 54 years old 55 and above 21% 18% Base: 1,386 online consumers from Canada, France, Germany, the UK, and the US Source: A commissioned study conducted by Forrester Consulting on behalf of Lithium Technologies, October 2013 “Do you want brands to listen and respond to you through online social media?” 39% 18 to 24 years old 25 to 34 years old 38% 27% 35 to 44 years old 45 to 54 years old 55 and above 23% 18% Base: 1,386 online consumers from Canada, France, Germany, the UK, and the US Source: A commissioned study conducted by Forrester Consulting on behalf of Lithium Technologies, October 2013 Conclusions Customer experience drives customer loyalty, which in turn drives business results like increased revenue and customer retention. And yet, the huge gap in customer experience scores between CX leaders and laggards in the financial services industry indicates that many investment firms, banks, and credit card providers have yet to take advantage of the power of CX. As social interactions become more integrated into day-to-day interactions between companies and their customers, the expectations and needs of younger consumers spell a need for greater focus on social channels in the years ahead.
  • 6. Methodology This Technology Adoption Profile was commissioned by Lithium Technologies. To create this profile, Forrester leveraged its ® North American Technographics Customer Experience Online Survey, Q4 2012 (US). Forrester Consulting supplemented this data with custom survey questions asked of online consumers. Survey respondents included adults from Canada, France, Germany, the UK, and the US. The auxiliary custom survey was conducted in October 2013. For more information on Forrester’s data panel and Tech Industry Consulting services, visit www.forrester.com. Endnotes 1 Source: “The Facebook Factor: US Online Youth,” Forrester Research, Inc., September 19, 2013. Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester’s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. © 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to www.forrester.com. 1-N26YSP