In our earlier post on customer strategy, we discussed the decline in community FIs and the need to face a new reality in order to survive and thrive. If you are ready to face that reality, we are here to talk about how to take that on.
BEGINNING THE CUSTOMER STRATEGY JOURNEY
Congratulations for recognizing that the way it has always been is not the way forward. It’s time to get serious and start to map out how your FI will set this effort in motion. Yes, it’s a lot of work, but the results speak loudly: FIs who develop and implement a customer strategy consistently see a reduction in attrition, as well as increases in customer wallet share, same store sales, and employee engagement.
There are two key components to developing a customer strategy: (1) determining and implementing the strategy, and (2) ensuring you have the right foundation to support the new strategy and ensure its success. Teri Ginther, a Senior Consultant in the Galapagos Customer Strategy practice, has been through this herself and has helped others do the same. Here are her insights to help you prepare for a customer strategy journey:
DETERMINING YOUR CUSTOMER STRATEGY
Know where you are going. Yes, everything in banking is changing, but can you really change everything? And change to what? Chasing the latest, cool technology or introducing a new product because every other FI has it is not necessarily good change and it is not good strategy. Change for the sake of change is a waste of precious resources—time and money.
Start by pulling out your vision statement. If it hasn’t changed in a while, it’s a good place to start. Does it state where you want to be in the next five to ten years? More importantly, is it realistic and achievable? Creating a clear vision for your bank will prioritize and guide productive change.
Identify your opportunities. The first objective in creating a customer strategy is gaining a comprehensive understanding of the available opportunities. What and where are the opportunities to gain more households and/or expand current share of wallet? Are you effectively retaining your current customer base, and should you? What is the specialty that differentiates you from your competition? (And, yes, you need one.) What do you know about the customers in your markets – current or prospective? How have their needs changed in the last five years? These are all critical questions for determining an effective customer strategy that will make your vision relevant and achievable.
BUILDING A FOUNDATION FOR CHANGE
Regardless of your vision, there will be things that need to change. Whether you are making small modifications, significant changes, or both, you need a strong foundation to ensure successful change. While there are several elements needed, culture and customer-centricity are two critical components of your foundation.
Culture. The heart and soul of your company, your culture is built around your vision, mission, values, and brand promise. A culture that is widely embraced and deeply embedded in all functions and across all lines of business will be the foundation that supports change. Culture helps your employees (your most valuable assets and worthy of much more discussion) understand where you are going and why. It will guide their actions and behaviors and foster a sense of purpose. Employees who have a good job fit and a strong cultural fit will be engaged. Engaged employees create engaged, loyal customers.
Customer-centric mindset. Banks have always considered themselves customer focused: “We provide great customer service!” Important, but not enough. True customer-centricity means having a deep understanding of your customers’ needs and preferences and building experiences to meet them, based on your brand promise. Every part of your company must be guided by a customer-centric mindset: policies, procedures, the way you use technology, and even your staffing and hiring.
Create exceptional customer experiences. You are most likely thinking about the customer experience; maybe you’ve been working on it. If you are like most community FIs, you’ve had a ‘be everything you can to everyone in your market’ philosophy. While that may have been possible in the past, it is no longer feasible. The pace at which customer expectations are changing is too rapid and the cost of keeping up is too high. Your vision and customer strategy will point you in the direction of your optimal customer base(s). Your deep understanding of those customers, along with your brand promise, will guide you in building customer experiences that differentiate you from your competition and create satisfied customers.
By now, you may be overwhelmed. It is why many banks don’t get started – there is so much to think about and do. Here are three more takeaways that are critical to achieving success in your customer strategy journey:
Prepare for Change. You would likely find it easier to build a new company from scratch than to unravel and rebuild an existing one. Prepare your team for the challenge of “undoing and redoing” by helping them prepare for and accept change. The way it’s always been done is comfortable, but not likely the best way forward. A committed leadership team, coupled with early and frequent communication, will help you manage change and keep your employees focused on the goals.
Commitment. You can’t start until you have full commitment from your leadership team. No matter where you are headed, it will take the whole team to get you there. Granted, you have a business to run and your resources are probably already strained. There are technology updates to get done, something new in compliance, customer calls to make, a marketing campaign to run—where do you find the time to develop and implement new strategies? The real question is: What’s more important than staying relevant (and/or independent)? How often do you have the chance to reshape and rebuild an organization? Get your leadership team past the run-the-company obstacles and make strategy a priority. You can’t afford not to. When your leadership team is engaged and excited, you begin.
Patience. There is no magic wand to wave. The work will take time. Depending on the scope of what you’re attempting, a time frame of 18 months is not unrealistic to create your foundation and get your strategy implemented. Understand that you won’t change your FI tomorrow; however, you do need to start working on it today.
This is not something you should expect to accomplish alone. Galapagos can help. Call us and let’s talk about your bank’s particular journey.