The same questions are being asked in boardrooms across the UK - What is driving customer behaviour? When is price less important than experience? What do customers want, and how do they want to access it?
What do they want, and how do they want it?
Understanding your customer base and what makes them tick is fundamental to driving customer loyalty and therefore business efficiency. That’s why data is a multi-trillion pound industry, and that’s why we created CLIX. Running from our Customer Loyalty and Experience Index, CLIX has been measuring customer perceptions of brands since 2012.
Where does your brand stand?
The retail sector has traditionally been the baseline and gold standard in developing and delivering customer experience, and so it has driven customer expectations. The financial sector could arguably have been said to be at the opposite end of that spectrum, and for a while, seemed content to stay there. In the aftermath of the financial crash of 2008, customer trust in financial firms was understandably undermined. But times have changed and recent years have seen the gap between retail and financial services brands decreasing, as a number of financial service firms have taken major lessons from the retail sector and adapted accordingly. The lessons learned from retail have shown the operational benefits to strong customer experience. For financial services firms, ‘failure demand’ is a drain on resources and cost efficiency, whereas a positive customer perception creates the platform on which to build loyalty – retention, additional product purchase, and of course recommendation (NPS).
CLIX has been gathering data on customer perceptions of brands since 2012, and even in its earliest incarnation showed a clear correlation between customer experience and customer loyalty. As customer experience has many possible drivers, CLIX captures a broad range of lenses to help identify and understand their relative importance.
One of the most stark, but arguably predictable findings of CLIX 2019 was the fundamental benefit of a strong digital strategy. The top five brands for digital experience have the strongest scores for customer intent to remain with their provider, some 2.5 times greater than the industry median. The research clearly shows how important it is to accurately target individual customer groups and ages as well as recognising customer preferences for engagement.
Results are not always predictable, for example we found that one in six 18-24 year olds have a stronger affinity for branches than your typical digital marketing manager may have guessed! Even for a group who are traditionally defined as mobile first and apps obsessed, there’s a definite need for real life contact with their financial service providers; particularly for first engagements with financial services products such as mortgages - which demand high levels of investment and trust. For those products, gaining and retaining digital native customers isn’t as simple as moving to app or mobile servicing.
The top two
CLIX has shown us two key areas that are trending in terms of conversion to customer loyalty. They are happiness and purpose. These could be the winning weapons in securing customer affinity and longer-term customer loyalty.
Happiness is a commodity
CLIX is able to assess happiness beyond the usual measures around Customer Satisfaction (CSat) and NPS, by posing questions and gathering feedback directly relating to happiness. The cost of products and services is still important to consumers, but CLIX shows a direct and strong correlation between the perception of value, and happiness with a brand. As well as a more obvious but nonetheless strong link between customer happiness and likelihood to recommend the service.
Beyond the profit motive
Financial services is a particularly illuminating sector when we analyse customer perception of purpose and ethics, scoring consistently negatively in our research. But this presents considerable opportunity as research shows consumers are increasingly discerning about the broader role of companies they engage with. The CLIX results show a clear correlation between a firm’s clarity of purpose and customer loyalty. This creates a challenge for firms to articulate and align their business models to a wider social purpose. Only three of the 83 financial services brands generated a net positive score for purpose, suggesting that this articulation of their existence beyond the generation of profit has yet to reach end consumers in any meaningful way.
The CLIX data shows a correlation between perception of ethics and likelihood to recommend, the latter being a tangible commercial metric for senior management across much of the sector. This points to an opportunity for interests to align when delivering and rewarding responsible stewardship.
Introducing the disruptors
You don’t need a tailored data set to know that FinTech start-ups have seen a meteoric rise over the last three years, with names like Monzo, Revolut and Starling leading the way for a new generation of financial sector propositions. Undoubtedly the rise of FinTechs has been in large part because of their fundamental understanding of customer needs and how to harness them. Strong propositions, user-friendly interfaces and clear values have made these firms into established names. This demonstrates that start-up brands can make a big impact, on both the industry and the legacy banks they seek to compete with. The incumbents have not been idle, and our research shows evidence of some traditional banking players rising to the challenge. The likes of Nationwide, Lloyds, Barclays and NatWest score particularly well for customer experience with those customers who prefer to interact with their bank via an app. The competitive landscape is set to change again, with the MegaTechs now entering the fray.
Turn theory into practice
This is a constantly evolving environment; customer habits and preferences change rapidly. Like the technology we use, expectations are constantly being upgraded and in order to stay relevant, businesses need to know what their customers are thinking. Customer perception is tangible, measurable, and continues to develop as the key brand differentiator. With over 100,000 customer responses since 2012, CLIX is a data set that offers unique analysis of a broad range of customer feelings. This isn’t about page views or bounce rates, it’s about points of view, feelings, relevance, and connection.
Aside from the insights that can be garnered about a client’s customer base from CLIX, the data provides a clear view of where brands sit in the market compared to the stars of the sector and the direct competition. CLIX provides the tools to measure success, help focus the development of strategies and make business cases with pertinent, insight-based backing.
By Jehan Sherjan and Paul Willis.