30th October 2015

Part of LEXDEN’S MASTERCLASS IN FINANCIAL SERVICES CUSTOMER EXPERIENCE

WHY CX MATTERS

TO FINANCIAL

SERVICES

CUSTOMERS

Presented by Tom Kerr FMRS, Head of Insight, Lexden

We are creatures of habit

• Daniel Kahneman • System 1 thinking = unconscious, habitual, effort-less

• System 2 thinking = conscious, considered, effort-full

• The power of brands • The positive associations which we attach to an organisation, product, or

service make it easy for us at purchase time and beyond

• ‘if I buy Apple products I am a cool cat who is up with the times’

• ‘I feel smug when people ask me where I got my (Primark) dress’ The same participant went on to say,

‘buying dresses from Primark means I can buy a handbag from Mulberry’

She then said,

‘my boyfriend has no idea how much it costs’

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It’s about how it made her feel!!

Just a little bit smug Significant

Smart with money Progressing

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The power of brands

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High

Price

Quality Low High

Which brands are you willing to pay more for?

Trust Ethics

Reward Provenance Authenticity

Transparency

Meeting customer needs

Care

Identity

Belonging

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Help me

Know me

Listen to me

The BBC programming has tapped into consumer trends really well

Busy lives

Cautious spending

Reward - quality of life

make life easier/better

Using the retail sector for context

The retail story

• 1970’s and 1980s • Pile it high and sell it cheap • The introduction of one stop shopping

• 1990s and 2000s • Wider aisles • Trolleys without wobbly wheels • Out of town superstores/car parks • Big weekly shops

• 2010s • New categories/diversification • Convenience stores

• 2014/15 • Quality – top up shopping = Waitrose • Surprise and delight = ALDI/Lidl

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Effectiveness and efficiency

Experiences and novelty

Price and convenience

Cost cutting and convenience

As consumers move from a ME to a WE culture, companies will have to change their customer engagement model

New engagement models:

• Embed sustainability and authenticity as central goals in product and service strategies of the business

• Engagement of internal stakeholders in the ongoing process of process improvement

• Acknowledgement that potential future motivations of existing and potential consumers will change!

• Alignment of the business’ purpose and brand promise with these changes

Source: Understanding tomorrow’s consumer landscape, Anne Lise Kjaer in:

The Future of Business, Critical insights into a Rapidly Changing World from 60 Future Thinkers, edited by Rohit Talwar, 2015

2020s

1980s

Limited Branch hours

Cheque books

Loans

Savings

Mortgages

Credit Cards

Check Guarantee Cards

General insurance

Investments

Foreign Exchange

Self Serve 2.0

ATMs

Telephone Banking

Extended Branch Opening hours Internet

Banking

Mobile Banking

RFID/NFC

The accelerating changes in technology have and will change customer’s experiences and increase their expectations

Building Society Savings books

Branch closures

Cyber Crime

Virtual Money

Human – Machine

Convergence

Branchless Banking

Credit 2.0

Social Media 2000s

Years till mass adoption of technology

• Aeroplane 68 years • Telephone 50 years • Radio 38 years • Television 22 years • PC 14 years • Internet 7 years • iPod 3 years • Facebook 2 Years

Mobile Wallet

Source: Bank3.0, Brett King, 2013

Changes over decades have fundamentally changed the customer experience … … and change is accelerating

Source: Analysis undertaken by Thought Research October 2015, and Breaking Banks, The Innovators, Rogues and Strategists Rebooting Banking, Brett King, 2014

New Payments

“Neo Banks”

“Traditional” Banks

New Entrants

Frictionless Banking

P2P Lending

EAST: The UK’s Behavioural Insight Team (aka “The Nudge Unit”) has successfully changed consumer behaviour

Source: Inside the Nudge Unit – How Small Changes Can Make a Big Difference, David Halpern, 2015

EASY Make it easy. People are much more likely to do

something if it’s easy and low hassle

ATTRACT People are drawn to that which catches their

attention, and that which is attractive to them

SOCIAL People are strongly influenced by what others are

doing or have done

TIMELY Interventions are more effective before habits have formed, or behaviour has been disrupted for other

reasons

The EAST mnemonic

Four stages of customer internet experience

Stage One: Experiencing Functionality

“The Site Works Well”

• Usability and Navigation

• Speed

• Reliability

• Media Accessibility

• Security

Stage Two: Experiencing Intimacy

“They Understood Me”

• Customisation

• Communication

• Consistency

• Trustworthiness

Stage Three: Experiencing Internalisation

“It’s Part of Me”

• Exceptional Value

• Shift from Consumption to Leisure Activity

• Active Community Membership

Stage Four: Experiencing Evangelism

“I Love to Share the Story”

• Taking the Word to the Market

• Defender of the Experience

The Disney Institute suggests three strategies to perfect CX

1. Create an organisational

common purpose

The essential foundation on which all other service decisions can be developed, a common purpose is a succinct explanation of what you

want the customer experience to be at the emotional level. It represents to all employees what you stand for and why you exist, and

it is the primary tool for getting everyone “on the same page.”

2. Get to know your customers holistically

Your knowledge of the customer must extend far beyond the boundaries of traditional service criteria. Truly understanding their

needs, wants, emotions, and industry stereotypes is the key to creating personalised interactions.

3. View exceptional service as an economic

asset rather than expense

With lifetime customer relationships at stake, the return on investment for providing consistently exceptional service clearly

justifies the short-term cost.

Source :Advancing the Customer Experience, HBR sponsored by the Disney Institute, 2014/15

People tend to “misremember” previous experiences

Source: Happiness by Design – Finding pleasure and purpose in everyday life, Paul Dolan, 2014,

Thinking , fast and slow, Daniel Kahneman, 2011

Peak-end Rule

“when ask how much you enjoyed something two factors will explain your answers: the peak moment of pleasure or pain and the final moment of pleasure or pain”

Duration Neglect

“your overall assessment of an experience doesn’t even pay that much attention to how long it lasted”

Examples:

• While job satisfaction is a good predictor of employee attrition rate, data from the UK and Germany suggests that peak and end job satisfaction are a better predictor of quitting

• A very average film can becomes a blockbuster if it has a great and exciting ending!

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Customer Experience - It’s about how it makes me feel!!

Mildly pleased…

..or a little bit more elated…