Andrei Litvinov - Senior Vice President, Life Financial Group & Irina Chichmeli - Head of Marketing, Life Financial Group

When Andrei Litvinov and Irina Chichmeli took the stage at the London Net Promoter Conference, they showed a new face of financial services emerging from a somewhat unexpected source – a rapidly growing group of regional banks in Russia.

Life Financial Group operates a network of over 230 branches in 58 regions of Russia, offering a wide range of consumer banking and business banking solutions under a variety of brands. Their motto is “Profitable growth, higher productivity, lower risk.” And the company is demonstrating how NPS fits hand-in-glove with this motto by building what they call a “loyalty-based business model.”

As conference delegates sat in the heart of London’s financial district hearing their story, I was tempted to grab some financiers off the street and bring them in for a dose of creative customer service. What Andrei and Irina described, in words and in photos, was a customer experience that was highly personalized, tailored to the local branch, and community-oriented…the antithesis of what you might expect in a typical banking experience.

But there is a method to the company’s creativity. By identifying loyal customers using NPS, they can link customer experience to key financial metrics, including faster top-line growth and lower risk. They have also developed an increasingly detailed understanding of how loyalty and NPS link to other key areas of experience such as “wow” service, employee loyalty and brand reputation.

Making the Link to Business Outcomes

Andrei Litvinov, senior vice president at the bank, explained their goal of differentiating through long-term relationships with customers. They aspire to be known for excellent service, not simply for product features or benefits. Their goal is to achieve an average customer lifetime of 20-25 years, and to build this competitive advantage today so they will be ahead of the market when economy rebounds.

Luckily, they have had a head start. Irina Chichmeli, head of marketing, explained how they experimented with a generic service strategy in the early days of their customer loyalty journey – but realized they would need something more specific to translate to their employees and branch leaders.

After measuring NPS for 3 years and working primarily with comments to drive improvements, they realized a stronger business case was needed to link customer attitudes (as measured by NPS) to economic measures of loyalty (such as customer account balances, profitability, and word of mouth). To accomplish this, they structured a pilot program with about 1,000 SME business clients in 6 branches.

Through the pilot they were able to observe some key business linkages:

• Promoters grew account balances by approximately 14% while Passives and Detractors had declining account balances.
• Promoters generated 25% more fee revenues than non-Promoters
• Positive word of mouth was nearly 3 times greater for Promoters vs. non-Promoters.

The Role of Branch Managers and Employees

The pilot also confirmed the extent to which branch operations influence the overall customer experience.

In fact, the likelihood of customers recommending the bank is only partially influenced by operations at the branch level. About 60% of the variation in their Net Promoter Scores was due to other structural factors such as interest rates and fees, the availability of credit, and perceptions of the bank’s overall financial stability—items that management controls at a strategic level.

But branch managers now understand their critical role in the remaining 40%. These operational factors can be controlled or influenced by the branch—things like the staff’s ability to resolve issues, the friendliness of employees, the branch atmosphere, and the experience while waiting in line. Pilot data also confirmed that timely and effective follow up with Detractors can effectively turn around customer attitudes.

What’s Next?

Armed with these insights into the business, NPS has become a key KPI for the company’s balanced scorecard. Their focus now is to roll out the program to all branches, capitalizing on the results and insights from the pilot. Now that they have begun to connect the dots between branch profitability, customer loyalty, employee loyalty, and service quality, branch managers are excited to take the program to the next level.

Isabelle Conner, head of global marketing for ING, started by recounting the woes of the financial services sector. Customers' opinion of the entire industry was weak even before the financial crisis, and now the challenge is greater than ever.

How is ING planning to recover and stand above the crowd? She described her strategy for making the customer experience "Easier." ING's Easier strategy is all about building trust with customers. It has five pillars:

1. Easy to Contact

2. Fast and Efficient

3. Clear Overview

4. Transparent

5. Professional Advice

As she described it, these 5 pillars represent elements of both "service" and "trust" in the brand. The goal is create experiences that follow these 5 key elements, which come up time and again when customers describe the experience they want to get from ING.

Where are they on their Net Promoter journey?

ING has chosen NPS as the customer outcome measure for progress on the Easier strategy. INGs own consumer research shows that customers trust friends and family first for advice, followed by social networks and opinions of other consumers. Advertising comes at the end of the list. Based on this, it is clear that Word of Mouth based on real customer experience is the path to take, and NPS is a good fit for this.

Their initial push is to launch and tune the process in two key countries/markets. She selected the markets to include one key market in their insurance business, and one in banking. What the two have in common is strong leadership, who are ready and eager to make change happen. The goal of the pilot is to develop internal Promoters, to support the next phase of change throughout an organisation with over 100,000 employees around the world.

Her presentation led to a question from the audience about how to effectively drive adoption of change in highly concensus-driven companies. Isabelle came back to the question of leadership first. The CEOs of the two pilot countries have a reputation for successful change. She described them as "revolutionaries." Secondly, she added that it is important to invest time behind the scenes with leaders around the organisation. She has already run 47 workshops around the "Easier" strategy with management teams within ING globally. And her work has just begun.