The four pillars of distinctive customer journeys
New
research reveals that focus, simplicity, “digital first,” and perceptions matter
most.
In recent years, customer experience (CX) has emerged as a major
differentiator for large companies, including financial-services providers. In
a McKinsey survey of senior executives, 90 percent of respondents confirmed
that CX is one of the CEO’s top three priorities.
It’s a priority because the stakes are so
high. For financial institutions, for example, rising customer expectations are
pressing organizations to come up with more functional improvements even as
alternatives to traditional financial services are emerging. In this dynamic
environment, financial institutions face a stiff challenge to differentiate
their offerings while reducing cost and complexity for customers—and to do it
at a profit.
Overcoming these challenges is critical
not just to meet rising customer expectations and to compete with new digital
attackers but also to generate significant business impact. Our research
indicates that for every 10-percentage-point uptick in customer satisfaction, a
company can increase revenues 2 percent to 3 percent.
At a time when the customer-satisfaction
scores of top-quartile institutions can exceed those of bottom-quartile players
by as much as 30 to 40 percentage points, the financial payoff from
best-in-class CX can be significant indeed. These gains come from a variety of
sources, including additional product purchases generated by cross-selling and
upselling, such as when a borrower increases the value of a loan.
To understand what constitutes distinctive
CX in financial services, we performed benchmarking research on five key
customer journeys—the series of interactions a customer has with a brand to
complete a task—in banking and insurance.1The
survey findings in this article relate specifically to retail customer
onboarding but apply generally to the other journeys we studied.
Reaching the top quartile of CX performers
is no easy task. Cost, design, and value are emerging as key differentiators
for customers, yet companies often lack guiding principles to shape those
efforts. By analyzing and ranking correlations between customer satisfaction
and operational factors (such as the reasons a customer chooses one company
over others, cycle times, features offered, and the use of digital channels) in
our survey, four pillars of great customer-experience performance stood out:
1.
Focus on the few factors that move the needle for customers
We asked customers to assess different
characteristics of the end-to-end experience, including the first interaction
with the institution, the ease of identifying the right products, and the
knowledge and professionalism of staff. We found that only a small number of
characteristics (typically three to five out of 15) had a material impact and
accounted for the bulk of overall satisfaction.
For example, when analyzing the
characteristics of the customer onboarding journey, we found that transparency
of price and fees, ease of communication with the bank, and the ability to
track the status of the onboarding process accounted for 42 percent of overall
satisfaction. The next three highest-ranking characteristics—assessment of
broader customer needs; products and services received immediately after
account opening, such as debit cards and mobile and online banking access; and
ease of identifying the needed product—account for an additional 34 percent.
Conversely, characteristics such as the courtesy of staff, the timeliness of
callbacks, and the clarity of documentation had limited impact on satisfaction.
This finding strongly suggests that banks should concentrate mainly on those
things that make the most difference to customer satisfaction.
2. Ease
and simplicity: The payoff trade-off
Today’s harried customer values convenience.
Cutting down the time it takes to complete an individual journey, such as
applying for an account, by making it easier and simpler has a deep effect on
customer satisfaction.
For example, in France, customer
satisfaction drops by up to 30 percentage points when the time to open an
account exceeds 45 minutes. That 45-minute point marks the “satisfaction
cliff.” But what’s really important to note is that there is a diminishing
payoff in reducing the time it takes a customer to complete a journey. In
France, again, the impact on customer satisfaction when taking between 15 and
45 minutes to open an account is relatively minor (the “satisfaction plateau”).
Cut that process to below 15 minutes and satisfaction increases by up to ten
percentage points. Companies need to work out the trade-off, then, between the
investment in improving the ease and simplicity of a process and the resulting
improvement in customer satisfaction and new value created.
As more processes are digitized, journey
times will be cut back. But low cycle times alone don’t equate to superior CX.
Rather, our research indicates that customers respond most positively to the
ease of a transaction or process.
3.
Master the digital-first journey, but don’t stop there
We analyzed different types of customer
journeys: those that are completely online, those that start online and finish
in a branch, those that start in a branch and finish online, and those that
take place fully in a branch. We found that digital-first journeys led to
higher customer-satisfaction scores and generated 10 to 20 percentage points
more satisfaction than traditional journeys.
For all the advantages of digital-first
journeys, those journeys that are the most digitized across all the
interactions lead to the greatest customer satisfaction. Nevertheless, many
financial services do not provide fully digital services even when they exist,
such as digital identification and verification. This finding indicates that
financial-services providers can still significantly improve CX by digitizing
complete journeys.
4.
Brands and perceptions matter
It may not be surprising that companies
whose advertising inspires their customers with the power and appeal of their
brand or generates word of mouth deliver 30 to 40 percentage points more
satisfaction than their peers. But how advertising or word of mouth affects
perceptions is crucial. Two banks in the US, for example, performed nearly
identically across a set of customer journeys. However, customers viewed one
bank as delivering a much better overall experience than its rival, because the
higher-ranked institution’s advertising promoted its user-friendliness.
That perception had an important effect on
identifying promotions that were effective for attracting new customers but, on
average, had a nearly neutral impact on satisfaction. The average, however, is
misleading. Promotions are slightly negative for traditional banks but positive
for purely online players. In the same vein, physical proximity to a
financial-services provider tends to have, on average, little discernible
influence on customer satisfaction. Again, though, the value to customers of
physical proximity can vary widely from institution to institution and from
country to country, pointing to a need for financial institutions to understand
their customers at a more granular level.
Despite the impact of word of mouth in
shaping perceptions, our survey revealed that few customers recommend a
financial-services provider on the strength of their existing relationship with
it. An existing relationship alone does not turn a customer into an advocate.
Institutions that do more to please their existing customers and help them tell
their story to their peers might be able to mobilize a new group of influential
advocates for their products and services.
It pays
to customize
While the four hallmarks for outstanding
customer experiences tend to be universal, experience designers should focus on
a range of customer preferences based on country, product, and age group. For
example, we observed that the ease of navigating through the account-opening
process had a larger impact on satisfaction in Italy than in France.
Conversely, the assessment of broader customer needs is more important in
France than Italy.
When looking across products, we also
found detailed differences, such as the satisfaction factors for current
accounts and mortgages. When working with current accounts, customers derive
the greatest satisfaction from transparency on prices and fees; when they’re
applying for a mortgage, by contrast, they most value the ease of filling in
the application form.
Finally, there are also differences among
customer groups. The ease of communicating with the bank is more important to
customers 55 years and older than to 18-to-24-year-olds. Conversely, the
ability to identify the right products is more important to 18-to-24-year-olds
than to those 55 and older. This suggests that processes and value offerings
need to be modular with their emphasis varying with what matters most to each
customer segment.
Knowing what to do is the right place to start. But a
company’s success in building out great customer journeys requires agile
capabilities that excel at rapid iteration and testing and learning.2Reacting
to live feedback from real customers is often the difference between a good and
a great customer experience.
By Joao Dias, Oana Ionutiu, Xavier Lhuer, and Jasper van Ouwerkerk
http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-four-pillars-of-distinctive-customer-journeys?cid=other-eml-alt-mip-mck-oth-1609
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