What is Customer Centricity in Banking

Dreamforce 2014 has finished. It is Salesforce’s event to bring partners, customers and staff together for a week of entertainment, motivation, networking and learning. It’s a massive event with a headline number of 145,000 people attending. With around half that number as full conference delegates the event is estimated to generate over $100m in revenues for the city of San Francisco.

Today Salesforce positions itself as the Customer Success Platform with much of the week dedicated to that story. Mostly this manifested itself through stories of how customers have been successful in rolling out the platform along with some new product announcements.

During the week I got to speak to some interesting folk around the subject of Customer Success/Centricty in Financial Services. We talked about the maturity model, what it is, how it can be measured and benchmarked. From those discussions some thoughts crystalised.

If we are to be regarded as customer centric then the customer’s success must truly be at the heart of the business, an integral part of the culture and how people are ultimately recognised. This is the difference between a customer centric business and a product centric business. We can readily define an organisation’s maturity along the continuum from product centric to customer centric, or indeed what an organisation’s compass is by reviewing the goals people have,  what they get up to do every day and the lens they apply when making decisions. Salesforce seem to do this well. Mark Benioff the CEO often talked about “Whatever the customer wants, that’s what we should do”. Co founder Parker Harris and head of product was consistent with this message, applying the customer lens to decisions around what products should be built, how that should be done, when and with what features, applying this customer lens early and often throughout the product development lifecycle.

I was asked to compare the Salesforce culture around customer centricity to that at Microsoft, where I worked for 5 years before starting Moroku. I reflected that those at the interface with customers were generally very customer centric though there appeared to be a correlation based on how many customers an employee was serving, with customer success appearing to fall away the more customers an individual served. Once we stepped away from front line staff however, sales and service predominantly, customer centricity was rapidly replaced by company or product centricity forming the majority of peoples’ focus. So true was this in fact that I struggle to recall a customer success metric on any of the dashboard reviews.

Which brings us to the core of the matter. What is Customer Centricity and how do you measure it? How do you do this in Financial Services? Much focus is given in the industry to the Net Promoter Score, a popular scheme for measuring customer loyalty and therefore a way to measure customer centricity. But it’s not a way to measure customer centricity. And the reason NPS is not a way to measure customer centricity is that it doesn’t measure customer success and therefore it’s not actually about the customer. It is about trying to determine if or how much the customer likes you. So the lens is you, the company, or its product, not the customer. Net Promoter Score measures nothing inherent in the success of the customer. It’s purpose is to guide the business towards greater profitability by measuring how often customers are likely to recommend your products and services, i.e. your business success, not theirs.

Customer success and centricity in banking as with any industry boils down to measuring the fundamentals in the purpose of the relationship as far as the customer sees it. In this regard payments is largely simple: Customers want fast, secure transactions with competitive costs across fees and spreads. On top of that they are looking to the relationship for financial management leadership, assistance with navigating the complexities of managing ones finances and delivering successful outcomes in terms of wealth and profitability. In retail this may appear counter-productive. A product centric bank will see high interest revenue from credit cards as good. A customer centric bank may see this as bad as more and more customers rack up higher credit card debt and become less successful in managing their financial future. In response to higher credit card debt may choose to measure the how good it is at moving customers into structured debt programs once unstructured debt starts getting out of hand.

In America student loans exceed  $USD 1 Trillion. The majority of student loans are backed by the U.S. government. The creditor is the U.S. tax payer, who if students default on these loans will be subject to carry the burden of these loans. At 4% interest per annum, this $1T could generate $40bn in annual revenue. The problem is that there are more students who go to college and don’t complete their course than there are that do complete. i.e. more than half the students don’t acquire the skills they anticipated in order to pay off the debt. A customer centric bank would be measuring how well its student pay off their loans over time and how it assists its customers to build financial muscle, reduce debt and generate wealth over time. This success will generate customers for life.

A customer centric organisation will be thinking of customer’s success with its products and creating some way of measuring this performance and placing it on the dashboard. This could be done in real time or it could be calculated periodically. We all know the old adage: If you don’t measure it, you can’t manage or improve it. Chris Brown at MarketCulture has been building rigour and science into this process to allow organisations to measure and benchmark their centricity against others. This is a fabulous program with tier one organisations around the world committing to the program and it was a pleasure to catch up with Chris at Dreamforce.  As such metrics get defined they must be placed on everyone’s dashboard, measured, managed and improved upon.

At Moroku we believe that competing on purpose not price is a much more sustainable strategy. It’s why we focus on helping banks empower their customers to create financial futures. Social media has ended the days where it was possible to buy large volumes of customers through creative advertising. We all know that customers now speak the voice of the market through Social Media. Restaurants live and die by real time reviews. Customers go to Yelp, search for restaurants and read the top couple of reviews and make their decisions. This forces the owner to deliver great service one meal at a time, compete on purpose and sell the next meal based on the last customer’s success. There will come a time where Yelp for banking will yield results for customer centric banks and be brutal with those that aren’t.

Thanks to the team at Salesforce for a great conference. Motivated and Inspired.