I am attending FICO World and blogging some sessions. First up is one presented by Doug Clare and Sally Taylor-Schoff talking about the impact of showrooming on financial services. Showrooming, of course, is the practice of examining a product in a physical location and then buying it online. Consumers have more and more apps to help with this and its becoming a big deal, especially in retail. But banks too can suffer from this with consumers checking out products and rates etc without engaging with the bank. Increasingly bank customers are looking beyond the bank for advice and product information:
- 71% looking for a new product from their bank talk to someone other than the bank first
- 65% use financial comparison websites
- 44% use social media as sources of information
- 33% access bank accounts from social networking sites
And the lack of trust in the banking industry makes this worse – only 15% express trust and confidence in the banking industry as a whole and 12% want to change their primary banking relationship (showing up in dramatic growth in consumers with many banks and a matching decrease in those with only one bank). Yet consumers want a cheap relationship – 91% expect basic banking to be free – and fees/service are big drivers of dissatisfaction. Satisfaction and loyalty are not even all that well linked as more consumers are satisfied with their bank than are sure they will stay with them (some are satisfied and expecting to leave).
The good news, however, is that engaged customers (though mobile apps for instance) are more loyal and a good experience with web/mobile banking is a key driver in recommendations. Mobile matters to net promoter scores and loyalty but it also helps keep costs down, as transaction costs in web and mobile banking channels are lower for a bank. Banks are investing in these systems with mobile and online banking showing as top spend and fastest growing areas for IT.
Retailers have been dealing with the problem of showrooming for longer and their responses can be divided up in to price matching and a focus on customer experience (across store, mobile, social with increased personalization). Retailers have invested heavily in new layouts and formats. Some banks are also starting to go down this path, especially community banks. Banks of course don’t have the same number of sales opportunities so building community and improving the customer experience are more about building long term engagement so that, when consumers need a new product, the bank is the first choice. These banks have designed new branches, more approachable and relaxed that offer more than just a bank experience. Mobile apps are another source of engagement and are expanding beyond the basic mechanics such as allowing you to capture expenses in the app. Social engagement is being used by some also, trying to make it cool to be part of the community or crowdsourcing product ideas. Personalization is also increasingly important to retailers, using advanced analytics to effectively target consumers with products. For banks, again, the sales opportunities are few and far between so its more about engagement over time to set the stage for a future purchase – not just marketing offers but actions across service, support and marketing.
Consumer companies are becoming more customer-centric, moving away from product-centric or line of business-centric models. Campaigns running on schedules with disconnected interactions over time and channels are being replaced with real-time, multi-channel responses based on consumer behavior. Becoming more customer-centric is easy to say but harder to do :
- Creating a customer view of data means handling new data in multiple systems and integrating it effectively
- Predictions are required in real-time, in-stream and at multiple levels
- Have to create customer dialogues that are as personalized as a human conversation but managed using technology
- Must operationalize decisions across multiple systems and channels, plugging decision management systems into a wide range of technologies
- Need to continuously improve, evolving and improving decisions over time both automatically and using test/learn strategies
Banks and others becoming more customer-centric are moving from database marketing (<1% response) to relationship marketing (1-2%), one to one marketing (2-3%) and now Dialogue Marketing (>5%). Combining multi-channel solutions, mobile apps and advanced analytics allows banks to drive toward highly personalized and targeted dialogues that strengthen over time. These dialogues cover proactive actions by the bank as well as reactive elements like onboarding and scheduling. These systems and approaches allow banks to treat customers right, drive out costs, respond faster, learn and improve.
All this is a big project for a bank and few, if any, have made it all the way through the transformation. But those who have tackled specific elements of it, moving in this direction of increasing engagement and personalizing treatments, are seeing positive results with increased loyalty.