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30th October 2015
Part of LEXDEN’S MASTERCLASS IN FINANCIAL SERVICES CUSTOMER EXPERIENCE
WHY CX MATTERS
TO FINANCIAL
SERVICES
CUSTOMERS
Presented by Tom Kerr FMRS, Head of Insight, Lexden
We are creatures of habit
• Daniel Kahneman • System 1 thinking = unconscious, habitual, effort-less
• System 2 thinking = conscious, considered, effort-full
• The power of brands • The positive associations which we attach to an organisation, product, or
service make it easy for us at purchase time and beyond
• ‘if I buy Apple products I am a cool cat who is up with the times’
• ‘I feel smug when people ask me where I got my (Primark) dress’ The same participant went on to say,
‘buying dresses from Primark means I can buy a handbag from Mulberry’
She then said,
‘my boyfriend has no idea how much it costs’
08/11/2015 LEXDEN
It’s about how it made her feel!!
Just a little bit smug Significant
Smart with money Progressing
08/11/2015 LEXDEN
The power of brands
08/11/2015 LEXDEN
High
Price
Quality Low High
Which brands are you willing to pay more for?
Trust Ethics
Reward Provenance Authenticity
Transparency
Meeting customer needs
Care
Identity
Belonging
08/11/2015 LEXDEN
Help me
Know me
Listen to me
The BBC programming has tapped into consumer trends really well
Busy lives
Cautious spending
Reward - quality of life
make life easier/better
Using the retail sector for context
The retail story
• 1970’s and 1980s • Pile it high and sell it cheap • The introduction of one stop shopping
• 1990s and 2000s • Wider aisles • Trolleys without wobbly wheels • Out of town superstores/car parks • Big weekly shops
• 2010s • New categories/diversification • Convenience stores
• 2014/15 • Quality – top up shopping = Waitrose • Surprise and delight = ALDI/Lidl
08/11/2015 LEXDEN
Effectiveness and efficiency
Experiences and novelty
Price and convenience
Cost cutting and convenience
As consumers move from a ME to a WE culture, companies will have to change their customer engagement model
New engagement models:
• Embed sustainability and authenticity as central goals in product and service strategies of the business
• Engagement of internal stakeholders in the ongoing process of process improvement
• Acknowledgement that potential future motivations of existing and potential consumers will change!
• Alignment of the business’ purpose and brand promise with these changes
Source: Understanding tomorrow’s consumer landscape, Anne Lise Kjaer in:
The Future of Business, Critical insights into a Rapidly Changing World from 60 Future Thinkers, edited by Rohit Talwar, 2015
2020s
1980s
Limited Branch hours
Cheque books
Loans
Savings
Mortgages
Credit Cards
Check Guarantee Cards
General insurance
Investments
Foreign Exchange
Self Serve 2.0
ATMs
Telephone Banking
Extended Branch Opening hours Internet
Banking
Mobile Banking
RFID/NFC
The accelerating changes in technology have and will change customer’s experiences and increase their expectations
Building Society Savings books
Branch closures
Cyber Crime
Virtual Money
Human – Machine
Convergence
Branchless Banking
Credit 2.0
Social Media 2000s
Years till mass adoption of technology
• Aeroplane 68 years • Telephone 50 years • Radio 38 years • Television 22 years • PC 14 years • Internet 7 years • iPod 3 years • Facebook 2 Years
Mobile Wallet
Source: Bank3.0, Brett King, 2013
Changes over decades have fundamentally changed the customer experience … … and change is accelerating
Source: Analysis undertaken by Thought Research October 2015, and Breaking Banks, The Innovators, Rogues and Strategists Rebooting Banking, Brett King, 2014
New Payments
“Neo Banks”
“Traditional” Banks
New Entrants
Frictionless Banking
P2P Lending
EAST: The UK’s Behavioural Insight Team (aka “The Nudge Unit”) has successfully changed consumer behaviour
Source: Inside the Nudge Unit – How Small Changes Can Make a Big Difference, David Halpern, 2015
EASY Make it easy. People are much more likely to do
something if it’s easy and low hassle
ATTRACT People are drawn to that which catches their
attention, and that which is attractive to them
SOCIAL People are strongly influenced by what others are
doing or have done
TIMELY Interventions are more effective before habits have formed, or behaviour has been disrupted for other
reasons
The EAST mnemonic
Four stages of customer internet experience
Stage One: Experiencing Functionality
“The Site Works Well”
• Usability and Navigation
• Speed
• Reliability
• Media Accessibility
• Security
Stage Two: Experiencing Intimacy
“They Understood Me”
• Customisation
• Communication
• Consistency
• Trustworthiness
Stage Three: Experiencing Internalisation
“It’s Part of Me”
• Exceptional Value
• Shift from Consumption to Leisure Activity
• Active Community Membership
Stage Four: Experiencing Evangelism
“I Love to Share the Story”
• Taking the Word to the Market
• Defender of the Experience
The Disney Institute suggests three strategies to perfect CX
1. Create an organisational
common purpose
The essential foundation on which all other service decisions can be developed, a common purpose is a succinct explanation of what you
want the customer experience to be at the emotional level. It represents to all employees what you stand for and why you exist, and
it is the primary tool for getting everyone “on the same page.”
2. Get to know your customers holistically
Your knowledge of the customer must extend far beyond the boundaries of traditional service criteria. Truly understanding their
needs, wants, emotions, and industry stereotypes is the key to creating personalised interactions.
3. View exceptional service as an economic
asset rather than expense
With lifetime customer relationships at stake, the return on investment for providing consistently exceptional service clearly
justifies the short-term cost.
Source :Advancing the Customer Experience, HBR sponsored by the Disney Institute, 2014/15
People tend to “misremember” previous experiences
Source: Happiness by Design – Finding pleasure and purpose in everyday life, Paul Dolan, 2014,
Thinking , fast and slow, Daniel Kahneman, 2011
Peak-end Rule
“when ask how much you enjoyed something two factors will explain your answers: the peak moment of pleasure or pain and the final moment of pleasure or pain”
Duration Neglect
“your overall assessment of an experience doesn’t even pay that much attention to how long it lasted”
Examples:
• While job satisfaction is a good predictor of employee attrition rate, data from the UK and Germany suggests that peak and end job satisfaction are a better predictor of quitting
• A very average film can becomes a blockbuster if it has a great and exciting ending!