Rob Markey of Bain & Company hosted this compelling discussion of customer loyalty in the financial services sector, with three well-known companies that are actively using Net Promoter to get closer to customers and reposition for customer-led growth following the tumultuous events of the past 18 months.
Rob opened with a sobering description of the run-up to the late 2008 financial meltdown. I won’t recount the gory details, because I’m sure most of us remember it all too well. What I heard yesterday, which was new for me, was a view of the amazing pressure and challenges that was taking place within the industry.
With that “pressure cooker” context, Rob turned the discussion to the customer. What happened with customer relationships?
I have summarized below some of the key turning points and guiding principles that each of these leaders used to help their companies maintain a focus on the customer when it was perhaps the hardest environment for this.
Susan Sobbott, American Express OPEN
Susan described their step by step escalation of cost controls and credit availability, in reaction to the major shifts they were tracking in the market. Their base of customers had traditionally been very unlikely to default, but many of these customers who had a lot of assets (such as multiple homes) were suddenly in a very different credit position. So they were forced to take credit back from some of these customers.
The good news is that Amex was able to avoid cuts in customer-facing staff. They understood who their best customers were, and put a fence around them to protect them. In addition to their in-house models of creditworthiness, they also did a manual reviewed on every one of our their key customers to make sure they were being as fair as possible. We also were very protective of their rewards programs, since this is so central to their value proposition.
When it came to NPS, Susan described an interesting dilemma. Her organization had traditionally focused customer feedback and Net Promoter on the feedback of their most important target segments. But as the economy changed, more and more customers moved into the high credit risk categories, skewing their segmentation approach. Were these customers just temporarily out of their target? What they learned was that they needed to go back to this segment and understand how the relationship had changed when credit lines had to be reduced. They also improved the speed of their feedback loop…moving from quarterly to monthly surveys, which has increased the value of the feedback they are getting. They learned that these customers cared a lot about their relationship with the company, and that the customer wanted to protect that long-term relationship.
How could they work with their customers for the long-term? One interesting example Susan gave was in their outreach to help small businesses figure out how to grow in the difficult economic climate:
“We were lucky to have built a social network for small business prior to the downturn. So we were able to leverage that, since no one else was providing information for small businesses. We were able to step into that role as an information resource.”
Susan believes the actions they took to reduce risk, while painful at the time, have now put them in a better financial position to extend credit as the economy improves, especially for their best customers.
Isabelle Conner, ING
Isabelle described the far reaching nature of the recent financial events for her industry, and her company. For the first 18-and-a-half years of ING’s 20 year history they were growing and profitable. Then, almost overnight, they found themselves in a similar boat to many other financial institutions, struggling with massive changes in the market.
When it came to customer relationships, they made no changes across the board that would impact the customer negatively. Instead, they understood that as a highly decentralized organization, each unit had to make prudent decisions about extending credit. They had to balance their desire to support long-term customers with additional credit, and the financial reality of the market situation. As Isabelle put it, “Each business looked inward and had to figure out how to get through it.”
One thing that was consistent for her, throughout the financial crisis and still today, is the customer experience that they need to deliver. She summed it up nicely by saying that customers want it to be “easier” to do business. This theme of making ING easier than ever to interact with is at the core of their strategy, and their efforts with Net Promoter.
Now that the firm is looking toward the future, her main focus is on re-engaging their 120,000 employees across the business. Helping them to make “easier” part of their mindset and the way they behave every day. As Isabelle put it:
“For about a year we were in denial. But we are getting a lot of new engagement around what customers really want, which is for it to be easier to do business with us. Customers want transparency and they also want trust. And what we’ve learned is that by making things easy, you also build trust.”
John Marcante, Vanguard
John explained that, on one level, his firm was fortunate because they don’t hold investments. Therefore, the crisis caused less of a cash concern for Vanguard than for some other financial players. But there were huge challenges to manage when it came to customer loyalty and perception.
For example, when the market went down 45% in March 2009, they were faced with tons of people calling in with great concern. Their response was to invest a lot of time in increased customer outreach. The last thing they wanted was for people to overeact and make a bad short-term decision. As John put it, “If you weren’t being proactive about reaching out to customers, you were likely to lose them with portfolios moving in a negative direction.”
John explained how they experimented with one change that, ultimately, impacted customer relationships too much, and they had to reverse course. They had historically provided their most important high net worth clients with short-term coverage for check overdraws. As John explained, “we had never had someone who didn’t pay us back.” When they stopped this courtesy practice, it only took them 2 weeks to realize this was the wrong direction to go. “We saw it show up in the NPS, and realized it was an issue. The survey came back and people were saying, ‘Now that times are tight, you are running away.’” They understood quickly that they needed to stay focused on the long-term customer relationship.
Rob asked John what Vanguard is doing to position itself for success as things improve.
John described their aggressive approach to retaining customers, since it’s so much more effective to retain customers than to acquire new ones. Much of this is focused on coaching the front line on how to provide excellent service, no matter what the situation. He told an amazing story about a 2 hour call with a husband and wife couple, where the husband was getting ready to go in for brain surgery. Their goal was not to cut the call short. Instead, the entire team celebrated that call, because ultimately, it’s times like that when the way you act truly matters.
As John put it, their end goal is to activate their Promoters. “Ultimately, if we can help customers share their stories, we believe it will come back to us in good ways.”
