In response to rising attrition and defection rates, financial services companies have made CRM a priority over the past two years, but according to a recent survey, there is work to be done in terms of improving customer loyalty.
A recent global survey of 174 senior managers at financial services companies conducted by the Economist Intelligence Unit (a research division of The Economist magazine) for the consultancy BearingPoint Inc. found that CRM investments are falling short of expectations. Nearly three in four respondents said that the goal of their CRM projects was to build long-term relationships with their customers. The second priority (58 per cent of respondents), was extracting greater value from customers (upselling). Third on the list, and most important according to Christopher Formant, BearingPoint’s executive vice-president for financial services, was improving the customer experience.
“These companies haven’t paid attention to customer experience, and they’re trying to solve customer experience problems from the inside-out,” Formant says.
Instead, says Formant, companies need to adjust their CRM strategies based on the customers’ wants, needs and how they interact with the company. A key component of this new customer-retention strategy is improving the customer experience, Formant says. And survey respondents agree. Nearly all of those surveyed (91 per cent) said that a better customer experience would improve customer loyalty. According to the report, drivers of customer loyalty include quality of service (cited by 62 per cent of respondents), overall customer experience (38 per cent), price, fees and rates (37 per cent) and consistency of service (29 per cent).
“If this is the case, and most senior managers were insecure about customer experience, you’d think this would have been an area of focus,” Formant says. “It’s very clear to us that the strategic imperatives that senior management set forth were not carried out and they didn’t connect the dots”
A majority, 60 per cent, of respondents said that their customers were content. But 14 per cent said their customer relationships were stagnant, and only 22 per cent said their customers were likely to recommend their services to friends or family — a shockingly low number, according to Formant.
By and large, the CRM technology has worked as advertised, according to Formant. The problem has more to do with strategy and organization. According to the survey, 40 per cent of respondents said internal processes were the biggest barriers to managing the customer experience more effectively.
“Customers have said exactly what they want,” Formant says. “They are managing the relationship now. What we should be focused on is creating the experiences that create loyalty, that make them want to come back.”