Keith Pearce, Vice President, Solutions Marketing, Genesys, explores one of the great marketing paradoxes – encouraging customers to be disloyal. He suggests that retail banks should radically re-think the rationale for their customer service spend – it’s not about reducing customer service costs, it’s about stopping churn and thereby having a positive impact on top-line revenue.
Companies are adept at chasing new customers while watching the churn. Why else would they spend around $500B on advertising and acquiring new customers, $50B on CRM spend, and just $9B on the call centre (Ovum)? They offer new customers price incentives, free service, unlimited this and that, while often leaving existing customers on the receiving end of poor customer service – and so the churn continues.
The great paradox in the retail banking sector
It costs retail banks as much as six times more to attract a new customer than it does to retain an existing one (Ernst and Young), yet the industry refuses to focus on customer loyalty and the opportunities among its existing client base. Instead, it spends a lot of money and effort on advertising, no-interest over-drafts, free rail-cards – all of which results in increased incentives to consumers to change supplier.
One of the great marketing paradoxes is that retail banks often offer new customers a better deal than people which have been customers for the last year or two. So they reward people for being disloyal and leaving a rival bank, rather than cultivating loyal customers which will ultimately boost revenue rather than lose it.
Generally speaking, customers are not locked into staying with their bank through a contract and are not restricted to opening an account with only one bank. They can leave or open a second account elsewhere as and when they want, taking their capital with them. So what are retail banks doing to keep customers engaged? Better interest-rates? Offering better packages to reward their loyalty? Or is all their effort directing toward attracting new customers?
But how do we do this? Reward loyalty
No consumer really wants to change supplier – be it bank, insurance company or mobile phone network. Rather, customers feel forced to change. Why? Because they are dissatisfied with their service. According to Convergys Scorecard research, the top three dissatisfiers in customer service include taking multiple attempts to resolve an issue, the resolution taking too long, and customers having to repeat information.
So by addressing the issues that create customer effort and in themselves increase customer churn, retail banks should also look to reduce customer effort and to reward the loyalty of those customers who have been with them for an extended period of time.
The contact centre is often seen simply as a way of reducing the cost of customer service and not one of reducing customer effort which can directly impact revenue. But the retail banking sector is a prime example of where good customer service can transform a cost into a revenue generator by helping banks keep customers and even sell more products and services.
Building and re-building loyalty is easier than you thought
After the crash, the retail banking sector’s relationship with their customers suffered with 45% of consumers saying the crisis had a negative impact on their trust in the industry (Ernst and Young). As trust diminishes so does loyalty, and as loyalty diminishes the churn increases. Retail banks need to react to this shift in attitudes and rebuild and maintain a loyal customer base to maintain a healthy top-line.
So how can your contact centre help you do this? Well, loyalty has more to do with delivering on basic promises than it does with top-end service excellence. It is all about making it easier for customers to do business with you; in other words, reducing the customer’s effort. Increasing customer effort not only decreases customer satisfaction, but more importantly, decreases both customer loyalty and potential increased spend. And dissatisfied customers look elsewhere for the same services which is becoming ever easier with competitors incentives just the click of the mouse or tap of the iPad away.
There are tools out there that help to measure Customer Effort to enable organisations to identify which particular aspects of a customer’s experience are causing them the most problems, rather than wait until a particular service problem actually occurs.
When we put in place an audit, we take a series of interaction parameters – number of extra contacts, number of channels used, interaction durations, transfers, resolution lapsed time, total conversation time – and score them according to the priority given to the interaction, which will vary market to market, individual to individual. Organisations can then start to understand the customer experience from the customer’s point of view, identify which areas in particular are requiring too much effort and address the issues.
Build your individual Customer Effort Index
A Customer Effort Audit takes into account that it is not only the number of events that are significant in scoring customer effort, but that some events can have a multiplier effect on the impact to the customer. It’s therefore important to not only count the events, but to also weight their impact based on how it affects the customer.
This will generate a Customer Effort Index that can be used to assess the magnitude of the effort needed to complete the business transaction. Understanding this enables companies to start to eliminate frustrations from their contact centres and use them as a positive force for revenue retention – and revenue generation.
With customer frustrations eliminated and expectations met, the impact on top-line revenue could be significant. Retail banks can build a happier, more loyal customer base that will stay longer, refer more and invest in more services.
The bottom line? Grow your top-line
Customer service is not just about reducing costs in order to improve revenue levels. Retail banks need to recognise that there is a distinct need to re-balance spend on retaining the loyal customers they have already versus acquiring new customers.
This will mean exploiting customer service technology in order to reduce customer effort, so that customers will stay. As a result, retail banks will no longer be chasing new customers and simply watching the churn – instead, it offers an opportunity to grow top-line revenue by retaining a loyal customer base.