Hidden benefits

The need to treat customers fairly is becoming a regulated necessity in the financial services market, but the positive offshoot is a renewed focus on the customer experience – a shift that can lead to improved customer insight and increased bottom-line gains. John Lillie, Country Manager of online Customer Experience Management specialist, Tealeaf, looks at how this new focus on the customer experience could transform business working practices.

In December 2008, all UK financial services organisations will have to prove to the Financial Services Authority (FSA) they are treating all customers fairly. Fines and thorough audits are the likely penalties for not meeting the standards set by FSA’s Treating Customers Fairly (TCF) initiative, but most importantly there is a significant opportunity for businesses to rethink their approach to customers.

The reasons for introducing TCF are clear - ensuring the requirements and experiences of the customer are pushed to the top of the corporate agenda. In the past, some financial services organisations have been guilty of unfair trading practices and, although in a very small minority, have tarnished the industry. Even those organisations which have historically acted ethically towards customers will benefit from TCF, because it promotes solid working practices. For example, organisations are being encouraged to collect, review and action feedback, and investigate the way they communicate changes to customers. Consideration as to the impact of processes and back office functions on the customer will also be a good method for showing positive TCF intent. A TCF strategy would also benefit from building customer satisfaction into staff targets, through all layers of the business, including the very top.

The final point about the involvement of executives makes customers – perhaps for the first time – a critical boardroom issue. This could be the key to convincing business leaders that rather than being simply a cost, customer service functions can be profit centres if managed correctly. The problem traditionally for organisations from all vertical markets, not just financial services, is that operational metrics (cost per support call etc.) are much easier to measure than the long-term implications of customer satisfaction. Those who re-evaluate their key metrics as part of a TCF strategy can potentially help generate more revenue through repeat business, up-sell existing customers and win new business through recommendations from existing customers. In fact these revenues increases can potentially far outweigh any cost savings that businesses may have made previously by offering ‘cost-effective’ service to customers.

There are some fears that FSA has not been clear enough in defining what it expects of financial services organisations. FSA courts self-regulation, publicly stating that the exact shape and approach businesses use to address TCF should come from the businesses themselves. Consider this line from the FSA website about TCF: “Firms should decide for themselves what fairness means to them,” a line which appears ill at ease alongside the possible consequences of fines and audits for those failing to comply.

Yet despite some ambiguity around what will constitute failure and success surrounding TCF, there are some clear indicators as to what FSA will be looking for. The first deadline in March 2008 looked for ‘appropriate management information or measures in place to test’ whether customers are being treated fairly. The December deadline ups the stakes, with FSA looking for evidence that organisations can prove, to themselves and to FSA, they are treating customers fairly.

So what can businesses do to improve their TCF focus? The over-arching theme is building awareness as to the importance of TCF in the business, creating a methodology and processes that will push TCF thinking throughout the organisation. This could mean a refocus on training and recruitment, an overhaul of metrics and rewards, and a restructuring of business personnel (creating more managers and directors with interests in representing customers).

The December target will look for systems in place to test TCF, and even if such systems are flawed, it is likely that FSA will be happy to see evidence and offer guidance as to how such systems can be honed. For example, most organisations will have a system for gathering and reacting to customer feedback. FSA will want to see that such a system is comprehensive, features questions relating to TCF and is fed-back to the relevant parties to action if problems are uncovered, perhaps handled by a dedicated call centre team which calls customers to talk about the feedback.

Looking in more detail at the six outcomes (see separate box), the other common theme is FSA’s aim to unify and make communications transparent. You can immediately see how this would link into communications with customers: creating written material that is simple to understand, training call centre agents to be thorough and clear when selling financial products, working with back office teams to ensure that all customer-facing systems reflect the need to consider TCF. Broken down in this fashion, the cultural shift needed to TCF-proof an organisation is still significant, but tangible.

There is however one area of the business where visibility of customer activity is poor (and in most cases simply not there), despite it being the fastest growing channel which customers use to interact with organisations: the web.

The most challenging part of TCF is that with FSA demanding clear and fair communication between customer and supplier, there is an entire part of the business where, for the majority of organisations, there is no way to prove anything about the customer experience.

For most customers, the web is the first exposure they have to dealing with an organisation. Research carried out by Harris Interactive on Tealeaf’s behalf, reveals that by the time the customer rings the call centre, having had a negative online experience, the call represents the last chance that organisation has of rescuing the customer before they lose the business to a competitor. There are two headaches associated with this scenario. Firstly, the organisation has no way of monitoring the front line of the customer experience (the website). There will be myriad reasons why the customer became dissatisfied – perhaps the layout of the site was poor, or a link was broken, or they didn’t understand a question on a form. But much like building a shop, and then failing to man it, it is impossible to answer questions that customers invariably have, or respond to their feedback, because there is no one there to hear it.

The second headache relating back to the website experience scenario is that when the unhappy customer rings the call centre about what has happened to them, the call centre agent has absolutely no idea what they are talking about it. This invariably leads to an already exasperated customer having to re-iterate information and means that the supplier is starting on a minus score in terms of customer satisfaction.

An emerging breed of technology, such as that offered by Tealeaf, addresses the problems outlined, giving complete visibility into the online customer journey. Information relating to the online customer experience can be integrated with the call centre agents’ customer management system. This means that when a customer does call, the agent can see exactly what went wrong by viewing their online session, either in real-time or an archived version of a previous visit. They can then walk the customer through the problem, or take ownership of the issue before the customer becomes dissatisfied. For existing customers who have logged into the website, the process is even faster as the agent can be pinged details of the web transaction through CTI (Computer Telephony Integration).

As well as meeting the immediate customer interaction challenge, the data collected from all the customer interactions can be fed to managers via dashboards that provide metrics of successful or unsuccessful customer interactions. This analysis can then be used across an organisation, from business owners to merchandisers to web developers and interface designers, who can update the site according to the intelligence gathered. However, equally important in the context of this article, the organisation will have a system which creates an audit trail relating to the customer experience which fits in with FSAs demands for TCF.

In summary customer experience management solutions, if implemented and used correctly, provide visibility into that great ‘unknown’ – the online customer journey – which is vital for any organisation serious about creating a unified strategy for improving the experience of its customers.