Banking and financial services aren’t afforded the same opportunities to acquire new customers as other industries. Often times you get one chance to make a great impression on a potential customer before they move on to another bank or insurer.
By default, that means a failure with a financial service company’s customer experience (CX) can be more devastating than it is for, say, a retail business. A CX failure in the retail space is still damaging, but they have a greater chance of recovering near-term. Financial products and their customers, though, are very different. People need to engage more often with retailers than they do with a financial services company.
When you’ve spent decades working with top financial institutions like I have, you start realizing this fact very starkly. A whopping 44 percent of mortgage buyers begin their process online, according to the National Association of Realtors (while 70% of buyers file loan application paperwork online), and 42 percent of people don’t shop around for the best rates. That means when you’re selling “life products,” such as mortgages and insurance policies, it’s crucial to get CX right the first time — because the very nature of these products, people don’t shop for them too often.
For instance, a home buyer seeking a 30-year fixed-rate home loan (currently the most common type of mortgage in the U.S.) gets that mortgage and doesn’t look back for potentially decades. If you were the institution providing that loan, you obviously provided enough of a positive experience along the customer’s journey to make that deal happen. Congrats.
However, if you were part of the institution that didn’t get the home buyer’s business because of a failure somewhere along the journey (website, mobile app, contact center, physical branch, etc.), good luck ever seeing that customer again — 30 years is a long time. Not only did you lose that initial loan, but you’ve probably lost future business, such as the customer’s HELOC or option to refinance because of the pains associated with these processes due to regulation. Why? Well, from the customer’s perspective, it’s just easier to stick with the institution that they’re familiar with and already has their financial and credit history.
The need to provide a stellar customer experience in financial services isn’t specific to the business of home loans, either. For insurers, policies are tied to things that often have a long lifespan such as a car, home, or person. Consumers simply don’t shop around for new insurance coverage to the extent that they would with a new television set or digital camera. Financial products are not physical. A mortgage doesn’t break, forcing you to run out and buy a replacement. Sure, rates can change prompting someone to refinance, but again, that likely won’t matter.
Here’s another scarier problem for the institution that didn’t get the home buyer’s business: You likely aren’t certain about what part of the customer journey provided a bad experience. But let’s say you can clearly identify the parts in need of improvement. What parts do you attribute resources to fixing first? What’s the biggest priority? Which improvement will lead to you signing more loans?
The point here is that financial institutions can’t afford to be uncertain.
As the person who is responsible for managing customer experience, it’s on you to make sure you’re doing everything possible to improve it. That means measuring every part of that journey, including all the CX data within your process, comparing what your institution is doing with competitors, and ultimately being able to tell which areas of improvement will lead you to the highest rate of success. Fortunately, there is technology that caters to this sort of “Customer Experience Intelligence,” as well as analysts well-versed in related benchmarks and industry trends.