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Financial services organizations understand the importance of building and maintaining customer relationships....
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I spent the first 14 years of my career in banking, where we were forever striving (and spending millions of dollars) to create and maintain databases that would provide a complete view of the customer. This was a corporate goal long before the era of CRM and customer experience management (CEM). Today, the vast majority of financial services organizations still have not achieved this basic objective, despite huge technology investments. You may ask, "How hard can it possibly be to create one database that incorporates all aspects of a customer's relationship with a company?" It's surprisingly hard, but not for the obvious reasons.
Customer centricity is not as easy as it seems
Approximately 15 years ago, new applications were introduced for banks and other financial institutions to help address the fundamental challenge of identifying "who is a customer." This software was used to reconcile multiple customer databases where the same person was included a number of times under variations of his or her name, address or other indicative information. At the time, this was a major accomplishment, and this software is now a standard component of most customer information file environments.
When the CRM movement began in the mid-1990s, it promised to provide a "holistic" view of customers. However, the majority of the CRM suites could not deliver on this promise due to the complexity of integration. This problem, particularly in the 1990s and early 2000s, has driven many investments in customer information file (CIF) applications. A number of the largest software providers around the world -- SAP and Oracle, for example -- have made significant investments in CIF applications, including complementing their CRM applications.
Building a customer-centric organization requires a change in culture
The good news is that better technology is now available, even if it is quite expensive. Why is it, then, that so many financial services organizations that could benefit significantly from being customer centric just can't seem to make it happen? Most of us have experienced the frustration of doing business with one department in a financial services company and then having another department not know anything about us or our transaction history. The problem is corporate politics.
Changing a corporate culture is extremely challenging and time consuming. Management is (relatively) quick to change systems, in part, because it's easier than changing their culture. Many corporate leaders hope that a new application will actually drive a change in culture. Sometimes it can, but often just putting a new system into a status quo organization only creates new problems. While there are exceptions, if an enterprise does not retrain its people and change accompanying policies and procedures, systems implementations will fail.
Customer-centric organizations align goals of sales, marketing and service
A major impediment to building a customer-centric organization is the conflicting goals of the primary customer-facing departments: sales, marketing and service. Somehow, in the drive to achieve goals, each department loses sight of customers as people and sees them only as "objects" that need to be optimized. (See Figure 1.) Clearly, the obvious answer is to shift the focus back to customers and to align corporate goals. The problem is that when some companies have tried to standardize goals, their revenues decreased, customer satisfaction fell and loyalty dropped off, because the three primary customer-facing groups failed to cooperate.
Figure 1: Conflicting goals of sales, marketing and service
Case study: Treat your customers like humans
We know it's possible and beneficial to align the goals of customer-facing departments because there are companies like L.L. Bean that do it right. What makes this Freeport, Maine–based retailer unique is that it did not have to change to be successful. Customer centricity has always been a core value of the company. Its founder, Leon Leonwood Bean, believed that you should "sell good merchandise at a reasonable profit, treat your customers like human beings, and they will always come back for more." (Source: http://www.llbean.com). His care for customers was legendary and his philosophy permeates the company to this day. While the family is no longer involved in running the business, Bean's service philosophy "set the standard for customer service in 1912, and his service-based philosophy is a fundamental belief that resonates throughout the company today."
It's all about leadership
Customer centricity is not a fad; it's a cornerstone of all successful businesses. It also involves much more than CRM. Customers like to do business with companies that know who they are and demonstrate that they really care. Today, many managers at financial institutions are investing millions of dollars to build customer-centric organizations. Just as clearly, too many of these efforts will fail. The linchpin is senior leadership. Enterprises can change, but it has to come from the top.
About the author
Donna Fluss is the founder and principal of DMG Consulting LLC, a firm specializing in customer-focused business strategy, operations and technology services for Global 2000 and emerging companies. Ms. Fluss is a recognized thought leader and innovator in CRM, contact center and real-time analytics. For over 23 years, she has helped end users build world-class differentiated contact centers and vendors develop high-value solutions for the market. She is the author of the book, "The Real-Time Contact Center" and many leading industry reports, including the 2006 Speech Analytics Market Report and the annual Quality Management/Liability Recording Product and Market Report.