Financial Firms Are Leading the Pack When It Comes to Customer Experience
Decades ago, consumers stuck to their financial institutions because of inertia more than intention. Switching was hard, and competitors were few. This has all changed in the last decade, where new entrants are putting pressure on incumbents, and the consumer can easily compare and change financial providers.
Financial services firms have responded by investing in customer experience to build loyalty and stave off competition. In fact, new research from Forrester shows financial services firms lead all industries in consistent commitment to putting the customer first. And that commitment is paying off in customer loyalty and the one number that matters more than any other — revenue.
Forrester used a scoring framework to identify companies that lead the industry in employing best practices in people, process, and technology. Through this process, they found that 44 percent of financial firms qualified as experience-driven-businesses — the highest percentage of any industry surveyed.
Financial services firms are unquestionably getting results from their focus on customer experience. These firms that they have defined as experience-driven businesses (EDBs) deliver on metrics that align to their revenue growth, address rising customer expectations, and acquire customers in new markets.
The numbers tell a compelling story:
- Financial firms who are defined as experience-driven businesses by Forrester are 1.3x more likely than others in their industry to significantly exceed expectations in revenue growth.
- They are 1.5x more likely to exceed expectations in bottom-line profitability.
- They are 1.8x more likely than other firms to see improved customer satisfaction scores.
- They are building customer advocates. Firms who are concentrating on experiences were 1.5x more likely to cite increased customer advocacy as a benefit of their customer experience investments. It’s also led to 2.5x the average year-over-year increase in new visitors to their websites.
“Experience-driven financial services firms outperform on their top priorities. As a result of their focus on improving experiences, experience driven FSIs win customer loyalty at higher rates than less mature firms. In return, they enjoy strong customer advocacy, more website visitors, and higher rates of revenue growth.” —Forrester, “The Business Impact of Investing in Experience”
How do EXBs run differently?
Forrester found EXBs leverage data for goal setting and customer insights to drive their strategy, and agile development along the way allows them to fine-tune their campaigns for maximum effectiveness.
I found it most interesting that Forrester instructs financial firms to go beyond the “what” and “how” of customer behavior to reveal the “why” behind customers’ deep-seated needs. Financial firms with a strong customer-focused mindset have developed design-thinking practices, and fused empathy with technology to understand what will most serve and delight their customers. Forrester relates one example of how a bank listened to its primary target customer of military personnel and learned that mobile check deposit was a key need for this audience.
Forrester also recommends financial firms focus on customer journeys that affect customer loyalty the most. We all have the experience of needing help from a financial firm in a time of great need. It may be an insurance company after a loved one’s death, or a bank during a home purchase or sale. Financial firms who are thinking holistically about customer needs in these times are not just building happy customers, they are building customer advocates. This is what provides the glue for long-term business success in financial services.
Forrester’s findings are no surprise to us. The leaders we work with are showing the industry what’s possible when a company focuses on customer experience and makes the right investments in people, process, and technology.