In my previous article titled “Banking On Experience Is The Way Forward”, I discussed about why it is important for not just B2C, but even B2B brands to focus on building their word of mouth by offering great customer experience. And even as this stands strong for all industries, I had a boring and bland experience last week with an investment bank that was trying to sell me a product. So, this is how my conversation went:
Investment banker: Dear sir I would like to outline an investment option that offers at least 7% per annum.
Me: I already have an investment with a similar interest return.
Investment banker: But I can tailor the investment to ensure you benefit better.
Me: (Interested) Sounds great. So how can you tailor it?
Investment banker: You can split your investments across three different asset classes so that your risk is minimised.
Tailoring an investment plan is possibly the most over-used and least powerful value proposition today when customers have easy access to investment comparison tools and are more aware of the bulls and bears. Remembering that customers have a choice of suppliers the critical question is what is your value proposition? Why should a prospect select you? Why should they stay loyal to you? Without a unique value proposition you will only get a random share of the available market.
So how do you create a winning unique value proposition?
When I facilitate Customer Strategy Executive workshops the creation of the value proposition is always the most challenging. I try to extract the following from participants:
I also get the group to think about something that is more than the core category offering. As an example, there are tons of coffee shops and they all try to make good coffee. But there is a limit to how much effort you can take to make better coffee. Instead, if you had a pet friendly coffee shop, or a coffee shop that only offered organic coffee, or only coffee from developing countries and you explained how patronising the coffee shop helps villagers in that country, suddenly you have something unique.
Let me give you few examples about unique value propositions in banking. A few years ago many major banks in Australia were shutting down their operations in the rural areas owing to logistics and cost reasons. This caused much trouble to customers in these far-flung areas who had to travel hundreds of miles to reach the nearest bank. In such a time, Bendigo Bank brought in a unique concept. They created community banks that were run by the local residents. Profits earned were pumped back into the bank and were used for community welfare and development.
Apart from providing basic infrastructure, Bendigo only had a profit-sharing relationship, but added value to this large customer base by empathising with them and finding a solution that worked for all.
Now let’s cut to the hustle and bustle of city life. As I discussed at length in my previous article, ING went out and about in Australia to provide exceptional customer experience despite going branchless. The costs they saved on infrastructure and manpower were transferred as higher returns to their urban customers who were tech savvy and preferred online banking.
From here, let us travel to Umpqua Holdings Corp. in Portland, USA. Even as the bank offered products similar to its competitors (you can’t get too creative here all the time in the financial sector), Umpqua went ahead and converted its branches into community centres. These branches became spaces for not just financial transactions, but also doubled up to host a variety of activities such as sports tournaments and yoga sessions to bring the community together.
What do you think is the underlying common value proposition that all these banks offered? An emotional connect that is more than just banking. They all also have a high NPS score.
While Bendigo provided a solution that helped people avoid cumbersome travels and also created a system to improve local development, ING focused on providing a seamless online experience to its tech-savvy customers and also improving their investment returns. Umpqua on the other hand focused on weaving in a culture of togetherness, familiarity with the bank and infusing a personal experience to remember the brand.
Now who doesn’t want to earn more at zero or low risk, and who doesn’t want to be friends with a banker who can provide details of the best deals ever? We all do. But, combine that with comfort, ease of accessibility for your customers, and add a dash of the emotion you are popular for, and it’s a winning deal.
In a recent benchmarking study that I conducted of the banking industry of Australia, I found that customers did feel that fees and investment returns were important. However, what had a greater impact was a proactive bank that informed them regularly of their investments, provided them easy to digest information, and advised them on how to improve their returns.
Even mobile apps were not top priority, which goes to show customers truly look for an emotional connect with the financial institution. For instance, just by being proactive, I found that banks could improve their Net promoter Score® by 45 points; and by ensuring that their customers are happy, the NPS could go up by 35+points. Customers that believe a bank had a clear value proposition for them vs the ones that did not was a whopping 134 points.
Also, the difference between customers who felt ‘staff at the bank would go the extra mile’ vs those that did not was 118 points.
Now let’s look at the other side of this spectrum. When I analysed the reaction of customers of brands who did not offer anything special – which means, they had no unique value proposition – I found the NPS dropping not by 10 or 20 points, but a massive 80+ points!
This clearly shows that a unique value proposition coupled with building an emotional connect between staff and customers can help banking institutions truly bank on their customers’ loyalty and build on word of mouth to grow sustainably.
NPS®, Net Promoter® and Net Promoter Score® are registered trademarks of NICE Satmetrix Systems, Inc., Bain & Company and Fred Reichheld.
Chris is a Global Brand and CX Expert. He is the Managing Director of Engaged Strategy, which is the world’s first official distributer of Nice Satmetrix. Chris is the developer of the Total Engagement Model, which designs and aligns key elements to maintain brand integrity and customer focus. He is a published academic author and a guest lecturer at the University of Queensland at a Masters Level.