IBM Global Business Services                                Customer Relationship                                    Manag...
Unlocking client advocacy in Canadian retail banking	    The client focused enterprise     By Emeline Tjan, Mary Anne Peek...
, д , не з быв я про исследов ния и опер тивный                                                                           ...
Unlocking client advocacy in Canadian retail bankingThe client focused enterprise                             Are banks fu...
only devised incremental changes to base              The impact of fee income is compounded     features and fees, such a...
An outside perspective                                  By Susan Fournier, Associate Professor, Marketing, Boston Universi...
5                           resources and investments. IBM calls                                 client satisfaction measu...
captures and integrates these attributes by                             banks (25 percent). This suggests that the    aski...
Can a focus on improving                                                     communications, and over 3.5 times as likely ...
banks. So, as banks assess the best way to             more costly to deliver. Poor experiences can                       ...
FIGURE	4.                                     Banks leave money on the table by not focusing on client emotive needs – a 7...
credit for doing “everything right,” while antag-                         “I believe all banks enjoy the business of the  ...
processes associated with key “moments of             the natural barriers size and silos can create.                     ...
For example, for a high-net-worth client, a            has been developed to help understand                             m...
• Solution experience: Banks need to              metrics need to include key operational metrics        provide easily ac...
1. Perform a baseline advocacy measurement             8. Develop a value case and refine the target                      ...
с точки зрения клиентского пути                                   FIGURE	6.                                   Client event...
About the authors                                      About IBM Global Business Services     Emeline Tjan is an Associate...
Адвокаты бренда и канадские банки
Адвокаты бренда и канадские банки
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Адвокаты бренда и канадские банки

  1. 1. IBM Global Business Services Customer Relationship ManagementUnlocking clientadvocacy inCanadian retail bankingThe client focused enterprise
  2. 2. Unlocking client advocacy in Canadian retail banking The client focused enterprise By Emeline Tjan, Mary Anne Peek, Scott Lieberman and Robert Heffernan Canadian banks may find new opportunities to gain marketshare, attract new clients and improve client retention if they increase their awareness of their clients’ attitudes toward their organizations and the impact these perceptions have on profitability. By identifying which clients are advocates, apathetics and antagonists, banks can more precisely targetегмент ция стр сти :) client experience improvement initiatives based on a more informedдвок ты understanding of client preferences and future value. To boost the bottomп тики, п тичные line, we believe banks must instill a cross-functional, cross-channelнт гонисты discipline to better understand – and act upon – clients’ perspectives of their banking experience. Introduction Despite significant investment, the largest We consistently hear banks touting their banks are not well positioned to grow their commitment to meeting the needs of client bases: our research shows the majority their clients and putting their clients first. of clients will be reluctant to commit to a Accordingly, branches are once again deeper relationship as a consequence of their in vogue, and executives have declared cumulative experience with the bank. improving the client experience is the first In order to acquire more clients and keep priority for many organizations. Building the the ones they have, bank executives need to base one client at a time through cross-sell, understand client attitudes and their impact on retention and new customer acquisition is behavior. Clients who have a positive attitude a top priority in nearly every retail bank’s toward the bank are advocates, while those agenda. However, many banks have yet to whose experiences shape negative opinions identify the right segment-based strategies, become antagonists. As such, a bank’s ability marketing and sales programs, employee to effectively manage and influence client incentives, and process and technology attitudes becomes paramount to sustained improvements to produce higher returns. growth and profitability. Unlocking client advocacy in Canadian retail banking
  3. 3. , д , не з быв я про исследов ния и опер тивный мониторинг для про ктивного менеджмент . In this study, we establish the link between Identifying bank clients who can be converted advocacy and higher profitability, and explore into advocates must be a tenet of any three critical questions: customer focused growth strategy. To move customers into advocate-level relationships, • How well are banks positioned to grow on a the customer experience must be well under- client-by-client basis? stood, continuously monitored and proactively • Can a focus on improving advocacy unlock managed. We believe banks that effectively growth potential? improve operations to align with the desired • How can banks capture and exploit this customer experience can create a new and opportunity? sustainable competitive advantage. About the research The goal of this study was to understand clients’ perceptions of their primary bank’s performance based on their ranking of key attributes of what we’ve defined as the customer focused enterprise (CFE). Canadian banks were categorized into four tiers based on asset level and geographic presence: National, Regional, Non-Traditional Banks and Credit Unions. 1 This quantitative research is part of the IBM customer focused enterprise study completed in 006. Over ,500 Canadian banking consumers were surveyed via telephone and the Internet. The questionnaire consisted of 8 questions about interviewees’ perception of CFE operational characteristics as they pertained to their primary bank, as well as their purchase intentions and some general financial services profiling questions. Clients were classified into advocacy segments based on their answers to three questions: those who would двок т - определение recommend their bank, those who would go to their bank first for a new financial services need and those who элементы: уст новк , would not switch if offered a competitive product. Advocates, the top tier, have a high likelihood to recommend, действие, лояльность high purchase intent and low switching intent; apathetics comprise the middle tier, and antagonists are the lowest tier and most likely to switch banks and to not recommend their existing banks. To measure clients’ perception of bank performance, we asked clients to rate their primary bank on a number of rational and emotive CFE attributes. The rational attributes were used to evaluate clients’ perception of their physical interac- сего было 28 вопросов tions with the bank and included statements such as: my bank corrects errors when they occur; my bank uses the information it already has received from me, rather than asking for me to provide it repeatedly; my bank десь приведены некоторые gives me plenty of ways to bank, including in person, on the phone or online. The emotive statements wereэмоцион льно и р цион льно designed to provide understanding of how clients felt toward their bank and included statements such as: myориентиров нные вопросы bank values my business; my bank understands my financial goals; my bank weighs both sides of the issue when I have a problem and resolves it fairly. Workshops were held with a team of senior IBM Financial Services and CRM consultants, along with statistical analysts, to review the research findings and develop recommendations for banking operations. орош я ком ндн я р бот , This study is a continuation of the IBM “CRM Done Right” series, following 004’s “CRM Done Right: Executiveвидимо... Handbook for Realizing the Value of CRM,” as well as the 006 executive handbook, “Advocacy in the Customer 2 3 Focused Enterprise.” A version of this study based on U.S. respondents was completed in 006. IBM Global Business Services IBM Global Business Services
  4. 4. Unlocking client advocacy in Canadian retail bankingThe client focused enterprise Are banks fully positioned to grow to being a “one stop shop” (such as offering on a client-by-client basis? insurance), with all of their provocative up-sell and cross-sell opportunities, are denied to Customer acquisition and retention are becoming more complex traditional players due to regulation. In recent years, the tactics Canadian banks Other emergent growth strategies quickly lose have used to grow their businesses have their charm as they become widely adopted been largely a mix of channel innovations, across the industry and lose their competitive conventional advertising and branding efforts Emergent growth differentiation. Arguably, the last 20 or 30 years and product extensions/pricing changes, all have seen the largest growth in new banking strategies offer while working within the various regulatory channels and access points. Mobile devices short-term constraints of the Canadian marketplace. and the Internet have joined the complex Additionally, on the domestic front there are differentiation channel mix in which the phone, ATM and the very few attractive “land-grab” growth strate- among banks, but branch were already providing client experi- gies available through the acquisition of other ence challenges to Canada’s banking arena. quickly lose their banking interests or tapping underserved While each newly enabled banking mode has appeal as they markets. Banks find themselves working the potential to provide short-term differentia- become widely against competitors for the same clients, tion, each ultimately becomes a “must-have” enticing clients to leave their existing banks adopted throughout within the industry, providing new costs and while at the same time trying to maintain a grip challenges without always providing sustain- the industry. on their captive client base. able competitive advantage. мы уже в FB! - что? Perhaps the most divisive industry adapta- During this time, economic segmentation tions of late have been the introduction of also became a growth strategy, as banks non-traditional banks and the entrance of began looking to appeal to the high-net-worth non-traditional players into conventional segments. At the same time, some banks banking. Some non-financial companies, such found new markets within low-income groups as grocery brands or home goods stores, and the under-banked (such as immigrant are finding innovative hooks into the banking populations). In both cases, the acquisition market by offering banking services and and retention puzzle became more complex, convenient banking locations to their already not easier. populous and loyal base of clients. Other providers, such as insurers, are expanding Products and fee strategies have their limits their product lines into traditional chequing, Changing products and product features savings and mortgage products. At the same has had varying impacts on becoming more time, product expansion strategies related competitive. In some instances, banks have интересные сегменты: м лодоходные и недообслужив емые (которым не до б нков) Unlocking client advocacy in Canadian retail banking
  5. 5. only devised incremental changes to base The impact of fee income is compounded features and fees, such as changes found in by the fact that banks are facing increased basic savings and chequing accounts. Other competitive pressure from other entities, such products, such as lending vehicles, have seen as insurance companies and non-traditional more dramatic changes in features, including banks providing cash management-like creative payment schedules and incentives. products (e.g., chequing, bill payment) with In the case of incremental change, banks lower-fee and no-fee structures. These have found little competitive differentiation as competitors may be able to attract traditional products become more commoditized. When customers irritated by higher fees, as they are they do, copycat strategies often cause the able to supplement revenue streams from their advantage to be short-lived. When products core businesses. become more complex, banks may often find themselves with more challenging commu- Finally, cost containment efforts made in the nication problems with their clients, both in “name of the client” have had little impact on terms of providing information to clients and differentiating the client experience. Many equipping front-line staff to tell the story. banks have dramatically improved operating efficiency, but lost connections with their Banks have also sought to derive new clients. Banks continue to invest in call centre sources of revenue from existing products consolidations, channel integration and by establishing what have become known client service improvements, but we see little by consumers as “nuisance fees.” However, improvement in clients’ attitudes and percep- clients have become sensitive to these fees; tions of service capabilities. our study showed that 69 percent of clients ройгрыш в бизнес-схем х, не коммуник циях. Becoming a customer focused enterprise agreed that their bank’s fees are too high. Banks continue to explore how to create The increase in fees, coupled with little new more meaningful client experiences to product innovation, has affected customer enhance client relationships. However, for perceptions of banks. banks, creating both meaningful and prof- “Fees go up, service stays the same… I am itable client experiences is a significant challenge, particularly given the typical volume expected to do more, yet fees go up.” of customer interactions, the complexity of – Canadian banking customer, IBM survey client access points and the limited purview of decision makers on how their choices affect client experiences. Based on the IBM study completed last year, “Advocacy in the customer focused enterprise: The next gener- ation of CRM Done Right,” a new approach has been developed for delivering customer experiences – one designed to enhance clients’ perceptions and build a competi- tively superior experience, while prioritizing4 IBM Global Business Services
  6. 6. An outside perspective By Susan Fournier, Associate Professor, Marketing, Boston University School of Management This research is a must read for anyone that is serious about becoming a “customer focused” firm. It deals with a timely metric (advocacy, supposedly “the one number that matters”) in a powerful marketing paradigm (relationship marketing and CRM) and explores this within a customer-facing service industry (retail banking) that faces significant imperatives for organic growth. IBM’s study fine-tunes and advances our understanding of the real content and process issues that are at play ействительно. в отличие in the pursuit of strong customer relationships. It sensitizes us to the emotional and experiential elements thatот многих других они в своем truly drive the quality of customer relationships, but on which most firms do not perform. The research refinesисследов нии отр зили, что our understanding of “advocacy” and the attitudes and behaviors that comprise it. There is much added value двок ты - к к и все клиенты- in IBM’s three-part advocacy model: wherein advocates are those not only willing to recommend the brand toн ходятся в конкурентной others, but who also stick with the brand in the face of competition, and consider cross-selling opportunities toсреде, не в в кууме или boot. Companies can get greater predictive and diagnostic power from this more complex attitude-plus-behavior тмосфере поклонения своему metric and the segmentation schemes that derive from it. All of this is guaranteed to improve the relationshipбренду. strategies and executions that retail banks develop for their brands. Perhaps most importantly, IBM’s research makes us ponder a very perplexing conundrum: how could so many banking service providers re-brand, re-engineer, strategize and act in the service of enhancing consumers’ relationships … and yet get it so very, very wrong? The results are striking: nearly 50 percent of customers of national banks have antagonistic relationships with their banks. Let me repeat: one out of every two customers сож лению, многие не опир harbors an adversarial relationship with their retail banking brand! These customers are not simply disinter-юся н ценностные метрики, ested in developing deeper relationships with their banks. They are not simply non-responsive to the outreach лишь н поведенческие. из and relationship-expanding efforts of the firm. These consumers harbor very deep and strong negative feelingsповед тяжело вытянуть долго toward their banks; they essentially find fault in everything that bank might do. These current customers seeсрочную приверженность, но their banks as opportunistic, self-interested parties looking only out for themselves. And this despite serviceи доверять ей без дополнения experience initiatives, CRM systems, and relationship programs intended to strengthen partnerships betweenдел ми тоже не стоит. ужны customers and the brand.обе метрики.. I for one am looking forward to future extensions of this research into other industries and settings. I am particularly excited by the prospect of moving beyond our fixation with leveraging advocates on the positive side of the relationship continuum and learning to deal effectively with the “disengaged” and “antagonists” that this research identifies as significant customer segments for the firm. Current wisdom suggests we fire “high- cost-to-serve” customers such as these. But with upwards of 70 percent of your customer base in these two segments, this hardly seems a viable alternative for the firm. 5 Unlocking client advocacy in Canadian retail banking
  7. 7. 5 resources and investments. IBM calls client satisfaction measures result in a histor- companies that excel in the client experience ical view of client attitude and are not enough arena “customer focused enterprises” (see and, in many cases, not included in making Figure 1). strategic business decisions for future opera- tional enhancements. Most customer This framework – in combination withsatisfaction measures advocacy scores discussed in the following Our study tests different attitudinal state- paragraph – is critical in structuring customer ments in an effort to identify the attributes look back; customer relationship management improvements. that contribute to positive client behaviorattitude measures like patterns and future intent. Accordingly, through CFiq look forward. Unlocking client advocacy: The IBM Customer statistical regression analysis techniques, we Focused Insight Quotient (CFiq)TM derived a combined measure that captures A commitment to the client experience is the key indicators of client relationship health: foundation of an effective growth strategy. clients’ likelihood to recommend; their intent To move from a client strategy focused on to purchase; and their willingness to stick efficiency to one that creates an effective, with their bank even when confronted with mutually beneficial relationship between bank competitive offers. Termed the IBM Customer and client, we believe bank executives need to Focused Insight Quotient (CFiq), this measure adopt a new view of client attitude. Traditional FIGURE 1. Competencies of a customer focused enterprise. Companies who understand customer Solution experience is about authority are able to approach understanding the impact that products their customers in ways that build and services have on the overall customer advocacy through understanding experience. By solution, we refer to their customers’ perspectives, while products and services that address Customer simultaneously linking the value of the Solution broader customer needs and desires. authority customer to the enterprise. experience Customer focused companies commit to a Customer dialog is a business’ human performance approach to growing ability to communicate and transact and sustaining employee commitment with customers intelligently and that allows employees to better meet responsively during each interaction personal and organizational objectives, on a customer-by-customer basis. all while better serving the customer and Customer Human being a stronger customer advocate. dialog performance Integrated execution allows Customer focused companies should companies to integrate channels to transform the organization so that support a consistent experience, functional groups and lines of business and allow intelligent, cross-channel collaborate to fulfill customer-centric execution of customer interactions. strategies and initiatives. Integrated Customer execution focused organization Source: IBM Global Business Services. 6 IBM Global Business Services
  8. 8. captures and integrates these attributes by banks (25 percent). This suggests that the asking clients to state their level of agreement largest banks – by our estimates – are disad- with three simple statements: vantaged in achieving sustained growth by attracting and keeping clients, despite • I would recommend my bank to friends and advances in back-office and client-manage- family. ment capabilities. • I would go to my bank first for future financial services needs. For example, if a bank needs to increase wallet share by 15 percent on average, it would need • I would stick with my bank if offered a to achieve significant success (wallet share competitively priced product. increase in excess of 50 percent) with the The CFiq results are eye-opening – according 24 percent of clients who are advocates and to this measure, only 27 percent of retail most receptive. A bank would likely have little banking clients are advocates of their bank success gaining ground with apathetics and (see Figure 2). antagonists. What’s more telling is that the smaller players, Therefore, as banks continue to explore tradi- such as credit unions and non-traditional tional organic growth levers, the business case banks, have a higher proportion of advocates for growth initiatives should include a realistic than the national banks when segmented by view of the potential economic value, based on CFiq scores. Thirty-four percent of all credit both customer value and attainable advocacy union clients are advocates of their bank – 36 measures (such as CFiq), by moving those percent higher than customers of national levers on a bank-by-bank basis. FIGURE 2. Banks are disadvantaged in achieving client-by-client growth. A little over a quarter of Canadian bank clients are ...the national players face the most difficult “advocates” of their bank... organic growth challenge related to advocacy Percent of all Canadian bank clients Percent of client base who are advocates by bank segment 27% 34% 34% Advocates 27% 25% 76% All others Advocates = customers who would: . Recommend their bank to others . Look to their bank for future financial services products . Stay with their bank if offered competitive products National Regional Credit Non-traditional Unions banks note: =1415 customers Source: IBM Customer Focused Enterprise Retail Banking Study 2006 (Canada).7 Unlocking client advocacy in Canadian retail banking
  9. 9. Can a focus on improving communications, and over 3.5 times as likely advocacy unlock growth to trust their bank. Further, application of the CFiq shows that only 20 percent of advocates potential? believe their bank’s fees are too high, as The possibilities are tremendous compared to 52 percent of antagonists. Although the challenge appears daunting, with Indeed, as banks look to drive organic growth, an understanding of the critical drivers of client it should be paramount for banking execu- attitude and the economic potential associ- tives to determine how to assess and invest ated with improving those factors, banks can in improvement opportunities to both maintain begin to position their organizations to realize high-value clients and/or migrate lower-value improved growth potential. clients to a higher state of advocacy. Our study shows that advocates, on average, Although credit unions significantly outper- hold 17 percent more products than antago- form larger banks in terms of proportion nistic customers, and the profitability of of advocates, the profile of the advocates products held by advocates is 21 percent of both small and large banks is similar. higher (see Figure 3). Advocates respond positively to statements about their experience with their bank (e.g., The factors that contribute to this economic seeks my input to develop new products and value are also encouraging. Clients who services, creates customized offers), whether are advocates of their bank are almost four they bank with credit unions or national times as likely to be responsive to offers and FIGURE 3. Significant value can be unlocked for banks that proactively grow their share of advocates. Financial impact Underlying contributors Products per customer A Profitability of products Responsiveness to offersC Trust their bankD held (index)B .00 88. 55% .55 17%+ 7. 21%+ 3.7x 4% 5% 3.5x % Antagonists Advocates Antagonists Advocates Antagonists Advocates Antagonists Advocates note: =1413 customers Notes: A) calculated average number of products held by consumer, B) weighted profitability index created for each retail product based on industry product profitability IBM project experience, C) responsiveness is a combination of customers who strongly agreed with ‘bank understands my financial goals and ‘bank provides relevant offers’, (9,10 responses) D) trust based on customers who strongly agreed with “I would trust my bank to manage my information on behalf of other companies’ (9, 10 responses). Source: IBM Customer Focused Enterprise Retail Banking Study 2006 (Canada).8 IBM Global Business Services
  10. 10. banks. So, as banks assess the best way to more costly to deliver. Poor experiences can grow through client acquisition and retention, result when a client needs to contact the bank understanding what motivates and drives multiple times to resolve an issue, or when behavior among different advocacy levels, a process that is supposed to tie together and then executing the right set of strategies different areas within the bank is broken. Fixing to increase advocacy, will likely prove a viable broken processes and understanding how to avenue for achieving growth. better resolve client issues can directly impact the bank’s cost to serve and build a platform Leading banks often use different approaches for winning customer advocacy. for achieving client advocacy. One national Canadian bank focused on the customer A significant opportunity experience as it is delivered by the advisor, According to our research, the three factors Understanding the enabling it to track relationships and increase most highly correlated with advocacy areeconomics associated with internal referrals among its existing retail and emotive drivers of the client relationship: different advocacy levels investment customer base. Another bank 1. The bank listens and follows up. can help banks identify invested heavily in cross-channel technology, but is still lagging in advocacy measurements. 2. The bank values my business. the most effective growth 3. The bank provides relevant offers. initiatives. Actively manage the entire customer portfolio Focusing on expanding the pie of advocates Clients who are advocates of their bank score is only one side of the equation. When we these items higher than all other factors. The evaluated the national banks (which included news on how banks performed on these attri- RBC, Scotiabank, CIBC, TD, and BMO), we butes, however, is not positive. In total, clients found that 36 percent of the surveyed clients give their banks credit for delivering on the of the largest banks are antagonists. Thus, rational factors 43 percent of the time, but understanding and managing the economics only agree their banks deliver on the emotive of antagonistic clients could yield better profit drivers 24 percent of the time – identifying margins because it helps reduce poor invest- the opportunity for a 76 percent improvement ment choices and their associated costs. A (see Figure 4). poor client experience – a primary trigger that develops antagonists – not only creates negative impressions with clients, but is often Unlocking client advocacy in Canadian retail banking
  11. 11. FIGURE 4. Banks leave money on the table by not focusing on client emotive needs – a 76 percent improvement opportunity. Rational attributes Percent agree (efficient) (weighted index)* Average rating Provides plenty of ways to bank 66% Corrects errors when they occur 65% 43% Uses information already received 4% Consistent level of knowledge 5% Banks under delivered Emotive attributes Percent agree on emotive versus (effective) (weighted index)* кт недообеспечения клиентов rational expectations Employees listen and follow-up 8% by nearly a 2:1 marginн эмоцион льных мотив х - $ и Values my business %ничего кроме денег. Relevant offers 8% Average rating ерк нтилизм б нку - не к лицу :) Resolves fairly 6% 24% Understands my financial goals 5% Employees provide advice % Seeks my input % Creates custom products % Highest correlation with advocacy note: =1413 customers Note: Percent of clients who agree (9 or 10) with the attributes weighted by the level of importance of each attributes, as defined by the regression analysis correlating rational/emotive attributes with advocacy. Source: IBM Customer Focused Enterprise Retail Banking Study 2006 (Canada). This gap in emotive delivery is indicative of cations with their clients and provide more ожно подум ть, что оптимиз banks traditionally investing in more rational meaningful financial advice that may impact aция р цион и эмоц мотивов идет operational improvements. Accordingly, as client’s sense of value and turn him or her intoотдельно.. banks have invested in improving the effi- a more profitable advocate. е предст влены конкретно виды ciency of front- and back-office operations,р бот, которые р цион льны и A polarizing effect clients have seen a positive impact in theэмоцион льны. бщие вопросы. As banks evaluate ways to better manage their bank’s ability to serve their daily transactional client base, executives should also consider needs across channels and deliver faster and the differences in profile between advocate more consistent answers to routine inquiries. and antagonistic clients. While we did not find However, from a clients’ perspective, factors demonstrable differences in the demographic that contribute to building meaningful relation- profile of clients who were advocates versus ships have been less of a focus (e.g., emotive antagonists (i.e., antagonists are just as likely attributes such as listening and provide to be high-net-worth customers as advocates), advice), resulting in the current gap. Going we did find significant differences in how each forward, bank executives should consider group felt about the bank. While the gaps how improvements on the emotive side of the related to individual drivers are significant, we equation can yield net increases in the depth found even greater contrast in aggregate (see of individual relationships. For example, they Figure 5). Advocates of banks gave their bank should explore how to increase communi- 0 IBM Global Business Services
  12. 12. credit for doing “everything right,” while antag- “I believe all banks enjoy the business of the onists found fault in almost everything their individual; however, I believe my current bank bank did. It is clear that clients who take an advocate posture are attuned to the actions of actually focuses on individuals.” their bank and are open, willing and positive “I have been dealing there so long I trust them toward interactions. However, antagonists who Banks need strategies completely.” may have had a number of potentially bad that take into experiences or ineffective interactions don’t “I would not go to another financial institution consideration the give their bank credit for even the fundamental at any time, for any reason.” attributes of a bank’s delivery system (such polarized attitudes – Advocate quotes from IBM study as providing plenty of ways to bank with it) -- and behaviors - and in many cases are not responsive to new When building communications strate- - of advocates and improvements or tactics. gies and evaluating front-office operational antagonists. improvements, bank executives must “I don’t think any bank values your business. consider client advocacy scores and their We are only cogs on a wheel, and if we leave, impact on customer strategies and business someone else will sign up!” case assumptions. For example, consider a company that seeks to improve the service “Big name banks…are not worthy of my spit, it provides clients through its contact centre. never mind my business.” By recognizing that a portion of clients are already antagonistic, a bank may choose to “I would dump them in a heartbeat.” make a small investment to test and improve – Antagonist quotes from IBM study FIGURE 5. Significant gaps should be addressed in the attitudes of banks’ client base. Antagonists Advocates Percent who agree Percent points difference in responses Percent who agreeудесн я под ч д нных! Larger gap % Bank values my business 7% 5% % Employees listen and follow-up 74% 5% % Same level of knowledge across channels 70% 4% Give the bank 8% Proactively corrects errors 75% credit for doing 47% “everything” right Find fault with 6% Provides relevant offers 5% “everything” their 4% bank does 7% Resolves fairly 54% 8% 4% Bank understands my financial goals 5% 7% 5% Provides me with plenty of ways to bank 8% 6% 57% Bank uses the information it already has received 80% Smaller gap 4% note: =1413 customers Source: IBM Customer Focused Enterprise Retail Banking Study 2006 (Canada). Unlocking client advocacy in Canadian retail banking
  13. 13. processes associated with key “moments of the natural barriers size and silos can create. truth” to help contact centre employees deal This means the CEO and senior executives with antagonistic clients and keep a broader need to practice, encourage and reinforce problem from recurring. In addition, as banks positive behaviors that increase the value of begin to understand the triggers of advocacy the customer experience. Without the support and antagonism in specific environments, and true belief in this strategy for growth from management will be able to build mechanisms senior executives, it can not sustain itself and to predict when customers are likely to move will likely fail. toward an advocate relationship, as well as identify and proactively address high-impact A few companies successful at building service failures. long-lasting relationships with clients have ссылк charismatic leaders who inspire ongoing How can banks capture the innovation and passion for the client. Take, opportunity? for example, Donald Bell of WestJet Airlines. In order to increase your share of advocacy Mr. Bell has set the tempo for his customer To change customer and increase the odds that your bank will be focused enterprise. He is known as the attitudes, leaders successful at growing organically, you’ll need “spiritual leader” and “culture guru” of his organization. Bell leads his customer focusedmust first change the to act decisively: mission by experiencing his business andmindsets inside their 1. Adopt a transformative mindset. customer base (or “guests” as they call , organizations. 2. Apply an outside-in perspective. them) first-hand: he pilots a plane once a week to discuss experiences with front-line 3. Break traditional design approaches and employees and customers.6 Most organiza- constraints. tions may not need a culture guru per se to be successful, but need to capture the “When you create your own destiny, you essence of these leaders’ commitment and prevent others from doing it for you.” approach to inspire change. – Anonymous Apply an outside-in perspective Shift mindset Brand communications set expectations, but The foremost consideration executives need clients’ experiences shape their attitudes. A to accept is that improving client attitude must client’s experience is based on the specific start at the top. A mindset shift is required, interactions he or she has with the bank. beginning with executive management; it These interactions differ by client segment. must become a “way of life” for the organiza- When delivery is not aligned with expectations, tion and central to the culture. This implies it is a moment of truth can turn into a bad experi- a “top-down” led strategy. Banks must create ence for the client and negatively impact his or the culture and organizational model needed her attitude toward the bank. But when experi- to promote greater commitment, account- ence exceeds expectations, and is aligned to ability and competency for leaders and staff benefit both the client and the bank, sources – allowing large organizations to become of delight can emerge to positively impact a more agile in delivering consistently in spite of client’s perception of the bank and alter corre- sponding patterns of behavior. IBM Global Business Services
  14. 14. For example, for a high-net-worth client, a has been developed to help understand moment of truth might occur when a large customer behavior. Customer Experience transfer of funds is completed. This moment Management (CEM) has emerged to focus of truth may be a source of delight when on the fundamentals of understanding the transaction is completed the same day, customers – not simply from an analytical preventing loss of interest income. For a perspective but from a relationship point college student, a moment of truth may be of view, and not as an alternative to having when he is out with his girlfriend and uses a competitive product or reasonable price, his credit card to pay for their pizza. This but as a differentiator. CEM is about under- interaction could be a source of frustration if standing that the attitude of customers Leaders must tailor his card is rejected due to a bank error, nega- (based on their cumulative experience) customer experiences tively affecting his attitude and receptiveness affects their behavior and willingness to for different advocacy toward the bank for years to come. The inter- deepen their relationship with the bank. levels – and implement action may be very positive, however, if the Whereas, knowing customer profitabilitythe operational changes bank, for example, allows the transaction to profiles and segments are valuable, truly complete and later sends a warning e-mail understanding the attitudes and resulting needed to deliver these with payment options. behaviors of customers is fundamental to experiences. how an organization brands, sells, services To understand and effectively manage client and retains relationships. To accomplish this, attitude, banks need to identify specific companies are transforming their organiza- moments of truth by advocacy segment tions from a traditional internal orientation to and design competitively superior target an external, customer perspective and rela- experiences, while prioritizing resources and tionship structure. investments. Personnel who interact with customers Break the traditions through a bank’s many touchpoints have As banks seek to improve the operating the profound opportunity to improve the model that supports client interactions, execu- customer experience by understanding tives should work to relieve traditional design customer perceptions, attitudes and approaches and constraints. Real areas for behaviors. While technology and process improvement can be found in the compe- play a key “enabling” role, the human tencies of human performance, solution conveyance of genuine service and relation- experience and operating model innovation. ship is critical. This discipline must include • Human performance: In the realm of visibility of the client experience as well as meeting emotive needs, human perfor- well-defined roles to provide leadership in mance is still the most impactful and this area. effective means of conveying important For example, a major Canadian bank attributes such as empathy, dignity, value recently appointed leadership roles within and responsiveness. Front-line employees each channel and created a framework for must understand the strategy and the customer-facing employees to collaborate implications for their behavior in order to and design targeted client experiences. achieve tangible results. A new methodology Unlocking client advocacy in Canadian retail banking
  15. 15. • Solution experience: Banks need to metrics need to include key operational metrics provide easily accessible mechanisms to such as customer profitability and channel capture and integrate client needs into the measurements. The customer strategy should overall banking experience – not just into create differentiation through the bank’s own elements of the product design and sales operational strengths and by emulating the approach. The experience needs to include capabilities of leaders outside of its peer group. listening to and understanding clients’ Additionally, the customer strategy needs to financial and other needs, dispensing be supported by a governance model that appropriate advice and customizing supports action. services that are relevant and appealing. A telling example of the need to have more For example, one of the leading banks in meaningful customer experience metrics is Canada orchestrates its customer experi- that of a particular Canadian bank. Because ence to reduce the overwhelming number of the bank’s campaign budgets were allocated offers its clients receive. The bank focuses by product lines, it struggled to deploy on less frequent, but more meaningful, non-product-specific, relationship-based interactions with the client, as opposed to a campaigns, thereby making it difficult to obtain more typical barrage of generalized commu- funding and improve the overall customer expe- nications and product promotions. rience. • Customer focused organization and Getting started: A practical approach to driving operating model innovation: Banks need customer advocacy to assess what customer relationship attri- At first glance, delivering the right client butes make them different or especially experiences to build client advocacy seems valuable from the clients’ perspective. Then intimidating and laborious, especially given they must deliver consistently on these the modern bank’s complex mix of client attributes at the point of interaction. When segments, product lines, interaction points and relationship cycles. The first step has to be one they deliver on these attributes, they must of understanding and analysis, one that takes understand what value accrues to both the an outside-in view of the client experience, banks and their clients, continue to improve both in terms of what the client expects it to the experience and integrate the positive be and what the operational reality currently attributes across the enterprise. is. This, in turn, provides the organization To drive the customer experience operating a basis to define a forward-looking opera- model, banks must create internal operational tional blueprint of the new client experience benchmarks that include customer metrics delivery capabilities and ultimately prioritize that are easily understood and can be acted investments toward actions that will have the on. From an external perspective, banks need greatest impact on the experience, as well as to assess the inclusion of client advocacy the greatest return for the company. At a high and profitability metrics from other banking level, the Customer Experience Management segments, as well as within the retail segments discipline includes the following steps: of other industries. Internal performance4 IBM Global Business Services
  16. 16. 1. Perform a baseline advocacy measurement 8. Develop a value case and refine the target analysis, such as the CFiq, by selecting an to determine the interactions that will deliver счет коэф. по их методике appropriate client sample set from a bank’s the most for the client and company and,н выборке из клиентов database that draws from the bank’s collec- ultimately, prioritize the areas the company tive lines of business and channels. should focus on first, those they should 2. Apply customer experience principles to implement later, and those not worth doing. customer events, aligning the company’s A value case should be developed to show brand promise with the customer’s expecta- the economic returns on customer experi- tions. ence investments. 3. Identify key experiences and events for 9. Implement the capabilities, deliver and бор моментов истины для each customer segment, creating a compre- measure these intentional client experi-р зных клиентов в к т лог и hensive catalog of moments of truth in a ences. Begin rolling out the new interactionн несение н рту событий Customer Event Map. capabilities and measure their results onклиент advocacy and client attitude. As a key 4. Understand customer expectations, needs measure, continually run advocacy analysis, and wants in order to develop an outside- such as CFiq, in a similar fashion to the in view and distinguish which actions will baseline in step 1 to obtain a living trend change client attitude toward advocacy. line of advocacy performance over time To quickly focus on the key experiences (every three months, six months, etc.) and to ополнить предлоения клиент м among the thousands of customer interac- respond in realtime to customer needs andн б зе н лиз рты ключевых tions, we recommend both an internal and make appropriate corrective actions.событий external data overlay on the Customer Event Map to develop a prioritized Customer Event Figure 6 shows an example of one type of Heat Map (see Figure 6). This will highlight client experience analysis and plan. The “client the most significant value propositions for event heat map” provides a multilayer level the bank and its clients. of detail for client events, with the top level of client lifecycle shown at top, and events shown 5. Blueprint the customer’s “target experience,” below. The map is keyed by priority, showing or in other words, describe the type of inter- пис ние соотв действий н areas that contain loyalty and retention action that will build advocacy in the futureстороне б нк - релев нтных drivers, opportunities for differentiation, and client-facing operation. the company’s relative maturity compared toмомент м истины и ожид ниямот них 6. Perform a gap analysis to determine the competitors. A map like this can have multiple operational shortcomings and requirements uses. At the strategic level, this map can be needed to fulfill the target interaction. used to show stakeholders, both leadership and field staff, how the entire client experience 7 Develop the operational blueprint that will . comes together. At the tactical level, the map allow the organization to deliver the target provides clear categorization of bank activi- client interactions with the desired attributes. ties that can be planned for operationally and ост вить опер ционный пл н The operational blueprint includes business prioritized.требуемых опер ций и их три rules, process and organization, data, appli-бутов. cation and infrastructure decisions. 5 Unlocking client advocacy in Canadian retail banking
  17. 17. с точки зрения клиентского пути FIGURE 6. Client event heat map for retail banking (illustrative partial sample). Client lifecycle stages Grow, Aware Evaluate Open Initiate use Transact and support Close out renew and account рт может строится н р зных stayоргуровнях: от отделов до специ Identify and quantify client events - performance and impact листов. Observe Receive a Obtain forms/ Receive Obtain Reach end of Experience Initiate loyalty Obtain the bank in welcome quality of applications statement statement solution to term for term market program optimize my service inquiry product (e.g. activities account current product Understand Create my Deposit/ assistance (e.g. loan, mortgage, Save profile tracking item) portfolio Guaranteed current financial Transfer withdraw cash Experience information and based on my Investment status and balances changing life a life event objectives complete later if Certificate, Provide Use credit (Visa, Change stage triggers/ that triggers needed Registered documentation/ Create Homeline) options or needs awareness of Education Obtain exchange preferences the bank Assess automatic Savings Plan, life event information in response Conduct eligibility ad payments Write cheques Registered information to changing financial apply for pre- Savings Plan) needs planning/ Obtain solution qualification for Complete Use debit cards applications Obtain issue analysis advice for service Consolidate financial Transfer resolution accounts with Receive products and funds other financial Receive recognition services institutions expiration for value of notification on business Opportunities for differentiation Events related to loyalty and retention drivers time-limited Leave the offers before bank due to Gaps to competitive benchmarks Events related to loyalty drivers only conversion to dissatisfaction new fee or rate structure Source: IBM Global Business Services. The Customer Experience Management value. Banks must break with traditional, discipline is aligned with IBM’s CRM Done one-sided, inwardly focused client initiatives Right framework for developing sustainable, and drive toward a well-balanced, customer successful CRM operations (see Figure 7). It focused model to capitalize on the potential of can be applied to both day-to-day decision their most valuable asset – their clients. making and to a large-scale transformation program. Unlocking this growth potential is not easy. We believe it can be more effectively The CRM Done Right framework has five main accomplished through the adoption of a client- interlinked components that describe key advocacy-based measure, such as the CFiq, steps to completing transformation projects at that highlights the operational improvements large companies. A complete, detailed account key to enhancing the client experience and of this approach is available in the “CRM Done the value of the relationship. Right: Executive Handbook For Realizing The Value of CRM.” With the right approach, sustainable organic growth is more attainable. Those institutions Conclusion that understand their advocacy scores and For banks to grow, a strong commitment to the impact these measures have on the client strategic client growth options must be articu- base, develop a compelling customer expe- lated through a well-structured approach, rience, and operationalize the necessary designed to improve client attitudes toward improvements to create a customer focused bank capabilities and assess clients’ potential enterprise will have a distinct advantage. 6 IBM Global Business Services
  18. 18. About the authors About IBM Global Business Services Emeline Tjan is an Associate Partner in IBM With business experts in more than 160 Global Business Services Canada. Emeline countries, IBM Global Business Services can be reached at provides clients with deep business process Mary Anne Peek is a Senior Managing and industry expertise across 17 industries, Consultant in IBM Global Business Services using innovation to identify, create and deliver Canada. Mary Anne can be reached at value faster. We draw on the full breadth of IBM capabilities, standing behind our advice to help clients implement solutions designed to Scott Lieberman is an IBM Global Business deliver business outcomes with far-reaching Services, CRM Business Solutions impact and sustainable results. Professional. Scott can be reached at Robert Heffernan is the CRM Global Leader for the IBM Institute for Business Value. Bob can be reached at com. Contributors Steve Ballou, IBM Global Business Services Director, IBM Institute for Business Value Bruce Baron, Consultant, IBM Global Business Services Jonathan Hill, Consultant, IBM Global Business Services Scott Walters, Associate Partner, IBM Global Business Services Executive sponsors The research effort was sponsored by Steve Lavalle, Philip Grosch and John Armstrong, all of whom are partners at IBM Global Business Services. Philip leads the Canadian CRM practice and can be reached at philip. Unlocking client advocacy in Canadian retail banking