Ron linked over to this white paper which makes for provocative and useful reading during these economic times. I say useful because I believe are in an industry transition time that will re-define companies including banks, and the economic situation is symptomatic.

The report also happens to fit with my belief that amongst other things, banks are still focussed on products, and not on customers. My belief is that is not a winning formula at the best of times, but with the advent of customer empowerment, and expectation of self service, product centric is a disastrous strategy. It only works when all banks follow largely the same approach. The thinking goes that if there are banks that can really break out then that will make an enormous difference to their success.

The Importance of Customer Experience in a Down Economy | Customer Futures

Forget the 4Ps: use the 4Es.
He advocates replacing the 4Ps with the 4Es: from

Product, Price, Place, Promotion

to

Experience, Exchange, Everywhere, Evangelism.

The paper is constructed as a series of essays. The challenge with discussions on product vs customer centric often gets stuck on what those terms mean. On page 44, Rory Sutherland of Ogilvy offers the above to replace the traditional 4 P’s. This at least offers a framework to think about it differently, and avoid having to define product vs customer vs channel vs segment, which is often when the conversation leads. The essays are a little messy in structure, so don’t expect a text book. This makes them the more interesting too, because there are some real gems.

Relevance to Bankwatch:

In support of the above there are two fundamental shifts which have occurred.

Internet has flattened old hierarchies, made information freely available, and eliminated distance. This produced a revolutionary shift in customer expectations, and customer buying methods. It has also had the impact of opening previously closed kimono’s and exposed old style advertising for what it is … management of people’s opinions. Internet has allowed people to form their own opinions, and act on them. That empowerment is fundamental to many changes we see now.

One market shift is therefore ‘customer empowerment’.

Another driver, comes from the way customers are continually required to manage their own affairs, at the ATM, the pin pad, online banking, bill payments, office card access, airport check in, car rental drop off, quick hotel checkout, travel booking. This frequency of self service is now pervasive and required several times daily for everyone. Organizations have been depersonalized and become represented by their self service touch points. Self service has been underway for a long time, and internet has only accelerated that process for banks’.

Customers appreciate self service, but the sheer pervasiveness of it, has altered how they think about service. It means customers are continually, comparing and evaluating service through the filter of self service. Without realizing it, customers are comparing your bill payment web process flow, to the Hilton quick check out, the credit card pin pad machine to your ATM, the simplicity of gmail with your online banking, etc etc. People do not interact with products; they interact with self service touch points. While they will appreciate better rates, and lower fees, the value is experienced or lost at the point of interaction. If we think of this another way, customers will put up with fees or rates that are not optimum if they are being impressed by the service. In particular of the (self) service allows them to easily switch and pick their services, the value equation is strengthened even more.

Another shift then is the advent of ‘the experiential economy’.

So anything that offers a framework to define and think about customers in a granular yet different way is useful.