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Innovative strategies for building more profitable customer relationships. Published quarterly online and in print.
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Examining Customer-Centric DNA

Customer Focus Sits at the Forefront in Financial Services

Success in the financial industry pivots around building strong and lasting relationships. When a client charges an organization with taking care of his financial security, he is putting a high level of trust in assuming that the business will act in his best interests and do its best to safeguard his finances.

The financial crisis has shone a spotlight on the need for organizations to be trustworthy and act in the best interest of their customers. This event brought to the fore the vulnerability of the financial industry, the need for regulations, and emphasized the importance of transparency.

This focus on relationships, trust, and doing what's right for clients makes it imperative that financial organizations adopt a customer-centric strategy. Yet, the industry has a transaction-based legacy. In many cases, customers are thought of in terms of their account balances only. Financial institutions often struggle to execute the philosophy of customer centricity and embed it in their day-to-day operations. It's too easy to fall back on the traditional ways of handling customers and accounts where products trump individual customer value.

Three pillars of customer centricity
Transforming an organization into a truly customer-centric entity isn't an easy task that happens overnight. However, organizations that invest in the right people and processes are able to become more client-focused, using this strategy as a differentiator in a cutthroat environment.

Customer data is of fundamental importance in this transformative endeavor. Often financial organizations believe they don't have sufficient customer information. Although this may be true, often we observe that many companies don't use existing available customer information to the full extent and instead seek to collect more. Similarly, we observe that customer data is rarely stored and shared, and what is shared remains in product silos.

Such processes fail to bring together the different data points that allow the organization to have a 360-degree view of its clients on which to base future decisions. Forward-thinking businesses are bridging their different data silos to get a holistic picture of customers. They use this information as the basis of their decisions, leading to a companywide strategy that drives business results while doing what's right for the customer.

When it comes to an organization's nature, customer focus needs to be ingrained in the makeup of an organization. After organizing their data, financial institutions need to determine who owns customer relations, and then work toward setting up departments to manage this holistic view of customers. Although organizations need to move from being product-focused to being customer-centric, it's possible for an organization to have a customer-centric strategy while retaining product expertise and working to make them the best for its clients.

Finally, customer focus needs to be visible throughout the organization, from the C-suite right down to frontline employees. Customer-centric organizations make decisions for the benefit of customers rather than just for financial gains. The attitudes of all employees must reflect that. At Peppers & Rogers Group, we help businesses implement this philosophy and ensure it's practiced and not merely praised.

Transforming into a client-focused company
In order to become customer centric, organizations need to steer away from the one-size-fits-all approach and instead treat different customers differently. While there are a variety of ways to achieve this with differing levels of complexity, we at Peppers & Rogers Group believe the strategy ultimately comes down to four main steps:

  1.   Identify who customers are, use the information to get to know them and understand them, and start treating them as unique individuals.
  2.   Differentiate customers by segmenting them according to current and future value, allowing the organization to design and execute strategies that address the diverse needs of different customer groups.
  3.   Interact with customers to ensure comprehension of their goals and expectations, leading to more effective future interactions.
  4.   Customize both communications and offers according to customers' expectations, needs, and value to the organization.

Savvy financial services organizations have already begun ingraining customer centricity into their DNA. Germany's Fidor Bank uses Facebook to connect customers' online, offline, and virtual worlds. And Barclaycard recently launched its Ring MasterCard in the U.S., where interest rates, payment schedules, and other features are crowdsourced by the community. These organizations, and others like them, are guided by forward-thinking business leaders who are cognizant that a great customer experience is a necessary differentiator without which the company's success is jeopardized.

Progressive organizations are working on their data strategy and governance to enhance their capabilities to identify and create a 360-degree view of their client-base. More advanced businesses are creating segmentation models that don't only focus on customer value, but also incorporate behavior and needs. They are working on customized client value propositions and contact strategies to better interact with their customers and get to know them.

Customer focus isn't the future. The necessity for organizations to become customer centric is here now.  Those firms that haven't embarked on a process to become truly customer centric should not waste any more time. Otherwise, customers will pivot towards competitors that exude customer centricity and trustability.