Why focusing on customers is crucial for post-crisis business

The financial crisis of 2007-2009 has highlighted inefficiencies and other weaknesses in banks’ business models and support structures.
Raising capital has become difficult, and many banks have had to re-examine their delivery model and product mix.

The ongoing upheaval in the financial markets has opened a window of opportunity for institutions to build leading operational and technology platforms. Institutions that prepare now for the post-financial crisis business environment will enjoy multiple advantages over their competitors who confront the new market with existing delivery channel, technology, and operational models.

Financial institutions recognise that customer-focused strategies will be critical to their future growth, but in reality, many have been better at the rhetoric of customer-centricity than the practice. To become truly customer-centric, financial institutions need first and foremost to gear their cultures towards serving the customer. That means putting customer needs, not short-term profits, first. It means providing customers with a choice of channels and interfaces – the more business that clients do, the more channels they tend to use. It means breaking down product silos so that customers can be served effectively at their first point of contact. And it means motivating staff on the basis of customer-related metrics as well as financial ones.

Responsibility for the quality of the customer experience is often dispersed among business unit heads and product line managers. The winners of tomorrow will focus on these areas:

Technology

Technology is often mentioned as an obstacle to the sharing of data across products, business units and customer channels and also requires customers to resubmit the same information to the organisation on multiple occasions. Improving IT systems cost-effectively will be the top area of focus for such companies in years to come, as they aim to retrieve relevant customer data in real time and to analyse customer behaviour in order to anticipate and meet their needs.

Information

Enabling information to be shared is one thing; using that information effectively is another. Most financial institutions produce large reports on a daily basis and managers almost drown in heaps of information available in reports. However, to make the right decisions at operational and executive levels, managers require focused information, that tells a story about business performance and highlights operational areas that require attention.

As well as filtering data to get a single view of existing customers, leading institutions also analyse customer data for pre-sales purposes – whether using customer acquisition models to identify new branch locations, churn models to improve retention levels, or customer life-cycle models to design and link different products.

Abandon product silos

Retaining existing customers is always easier than doubling your existing numbers. Yet, few organisations strive to cross-sell additional productions to existing customers. Making the most of current customers requires organisations to share data on customers across product lines. Some of this represents the technical challenge of knitting together different IT systems. But it’s also a cultural challenge – accepting that the value of a customer may shift between different parts of the business over time and extending incentives to staff to share customer data for the good of the overall organisation.

Understand the customer

Anticipating and addressing shifting customer needs requires organisations to gather and analyse, demographic data more effectively, to offer products that are more tailored to personal circumstances and to view the customer through the prism of future as well as present value, something that few organisations currently do. Such analysis enables organisations both to maximise cross-selling and up selling opportunities and to prevent customer churn – one of the main reasons that customers leave organisations is change in their circumstances and requirements.

Empower customer-facing staff

The people on the front line are critical – interaction with the customer is the moment of truth, when a complaint is being made or an urgent query is being addressed, have a greater impact on customer loyalty than product performance or process efficiency.