Established financial service providers are losing customers to new entrants, who offer more customer-focused, timely, easy-to-understand and innovative services. In order to rebuild customer loyalty, established providers should focus on fixing service failures, and offer what customers really need at different stages of their lifecycle. Gimmicks are not the best ideas as they inflate customer expectations.
Established financial service providers are facing a whole new breed of competitors. They are strong consumer brands branching into financial services, and aggregators offering products with the transparency that customers look for. These competitors have at least one thing in common: their services are way better than what the established players offer.
The way people choose and consume financial services has changed. With the help of technology, products are more customer-focused and innovative. It is the customer experience, not only price, that determines a provider’s success.
Clarity and simplicity
While authorities and regulators demand more transparency in financial products, ultimately it is the customers who force financial organisations to make their products and services clearer and simpler. In most markets, customers can now compare services from different providers, which often also offer incentives and assistance to lure customers to switch. Overly complex products, therefore, are likely to lose customers.
Prevent service failures
One of the main reasons for people to switch service providers is service failures. Depending on the complexity of the product and its impact on people’s lives, customers always need quite specific information and assistance. Basic services such as providing essential information in a timely and easy-to-understand manner can also prevent unnecessary customer irritation.
Fill the gap in customer context
Financial products and services are essential to customers’ lives, and affect the choices they make in the present and future. Measuring customer satisfaction and running Voice of the Customer (VoC) programmes are very helpful in capturing how customers interact with an organisation. Understanding the customer lifecycle helps fill some of the missing context, such as what customers are really experiencing, and why successful products cause irritation.
Do not surprise with gimmicks
Creating ‘wow’ moments, oftentimes with incentive-based schemes, might actually be bad for the overall customer experience, because it sets expectations too high to be met again. Therefore, making basic transactional services easy to use, or offering expert guidance for complex products are better ideas to improve services.
It may sound simple to consistently meet customers’ basic expectations irrespective of channels, but it requires internal alignment and external focus. Addressing obvious and basic service failures is a good place to start, and often yields surprising results.
Building ‘wow’ moments in certain interactions does not automatically result in a ’wow’ experience for customers. Offering consistently good services throughout the customer engagement is what matters. ‘Wow’ moments can be destructive if they set the bar too high for future interactions. Therefore, it is crucial to deliver good services consistently so that the customers will experience ‘wow’ services.
Genuine customer loyalty
Customers tend to have “captive loyalty” towards financial service providers. This means customers may not care enough to consider alternative providers, find it too much work to switch, or believe all providers are the same. Without loyalty, customers are likely to change to other providers when better or more convenient options are available. In order to create genuine loyalty with good services, it is important to identify the main events in the customer lifecycle that have real-life impact, and go to meet those needs.
Experience, not product, matters
Financial service providers must understand their customer perspective in order to build a relationship with them. Their services must fit into their customers’ lives, otherwise, more customer-focused and agile competitors are going to steal their customers. Ultimately, customers choose providers based on the experience, not the product.