the customer engagement imperative for financial services

1The Customer Engagement Imperative for Financial Services

The Customer Engagement Imperative for Financial Services

Executive Summary

Banks and insurance companies have operated for hundreds of years enjoying complete control over the supplier-customer relationship. This has historically been a seller’s market, but times have changed. The past decade has seen the industry transform into one where the customer wields substantially more power.

Financial services institutions seeking to remain competitive must better engage their customers using an omni-channel approach, numerous touch-points, and real-time data to connect in ways simi-lar to other retailers. The marketplace demands it, technology enables it, and leading edge influencers are making it happen.

This paper discusses best practices for customer engagement through examples and definitions. It also highlights strategies that financial services companies can use to become leaders in customer engagement.

ContentsExecutive Summary 1

Major Changes for Financial Services 1

Customer Engagement in the Marketplace 2

Best Practices in Customer Engagement 2

Understanding the Customer Journey 2

Don’t Just Sell, Educate 3

Leverage Existing Big Data 3

Embrace Multiple Touchpoints 3

Predictive Analytics and More Relevant Offerings 4

Omni-Channel Commerce is Not Just Digital 5

The Tangible Benefits of Omni-Channel 5

Maintaining a Culture of Customer Engagement 6

BestPracticesfortheFinancialServicesIndustry


Major Changes for Financial Services For some consumers, products and services promoted by financial institutions are considered mundane, and traditionally exhibit lower levels of customer engagement. People may buy mortgages, insurance, and savings plans because they feel they have to, but few customers express the opinion that these institutions truly have their best interests in mind.

For years, the chief generator of business for these institutions was their brand. Banks established a strong physical presence in the community – literally. Their buildings were first made of stone and later housed within a city’s tallest towers, cementing the perception of strength.

Over the past few years, the rules of commerce have changed radically, and there has been a rapid transition into a buyer’s market. In the retail arena – for consumables of all types – customers do not just shop. They conduct extensive research

and compare prices and terms through a variety of digital touchpoints. Loyalty is becoming a hard-won and fleeting commodity, and granite buildings do not impress as strongly as personalized mobile apps.

Today’s customers are both educated and empowered. They expect more from every company they do business with, including those in financial services. Even where local laws hinder new banks from establishing a presence, their products and services are being noticed, and are expected to be matched. The customer is in control, and the market is being forced to respond.

The new imperative is customer engagement – a direct and personal interaction with each individual customer, delivering relevant content and personalized opportunities, using data and technology to win and retain business.

Customer Engagement in the MarketplaceMoneySupermarket (www.moneysupermarket.com) is a one-stop online shop for a wide variety of products, from loans to insurance and from travel to mobile phone plans. An extensive selection of comparison engines helps customers search across a range of providers, and community pages provide financial and budgeting advice alongside discount vouchers to local restaurants. MoneySupermarket uses a distinctly non-bank approach to selling financial products and generating interest, not merely for the first sale, but for repeat business and continuing customer engagement.

This approach represents the new style of digital marketing, where experience is more of an active concept driven by the customer, rather than by the institution. Compared to more

traditional approaches – where consumers may not have fully understood what they were buying, or where it was difficult to gauge whether one insurance policy was better than another – a wide range of comparison engines and advice pages now allow for complete involvement and commitment.

This non-bank image is attractive to customers who don’t trust the old-school branding of some institutions. High-interest credit cards, low-yield savings accounts, and excessive user fees have tarnished the reputation of retail banking, as have stories of claims denials and rising premiums in the insurance industry. Where there were once only a few choices there are many, and consumers are recognizing the advantages of working with newer organizations eager for their business.

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Best Practices in Customer EngagementTo meet evolving consumer expectations, financial services firms need to employ a variety of new strategies to engage customers. These may require new ways of thinking about consumers and a more nuanced understanding about their own products and services. They may also require some experimentation and a certain degree of agility.

UnderStandIngtheCUStomerJoUrney

The first step in this transformation is to understand specifically how consumers relate to vendors and purchase products, and then use this ongoing knowledge to provide a better purchase experience.

Consumers are spending more time researching the products they wish to buy, including complex products offered by the financial services industry. This process might start with the consumer clicking on a strategically-placed banner ad on a financial services blog, or in response to a promoted post on Twitter. It can lead to a request for a free quote, which can be moved forward through an on-screen chat session, and may culminate in a meeting with an insurance agent, ideally in the customer’s home, aided by tablet-based support and registration software.

don’tJUStSell,edUCate

Financial services companies are already experienced in marketing the complex products and services they provide, but they have always done so at a high level. This isn’t enough to capture the attention of today’s consumer, who expects to learn about how these products and services will fit into the context of their lives.

Mortgages, for example, can be extremely complex and difficult to understand, purchased by most people during periods of great apprehension, hope, and emotional turmoil. A home remains the largest purchase most people will ever make. It also represents years of financial obligation. Mortgage institutions and agents should not lose sight of the considerable commitment a mortgage represents for the average person.

Proactive mortgage brokers, financial institutions, realtors, and alternative finance sources are recognizing that the education process must move further, including assisting clients in selecting adjustable rate loans, or guiding them towards shorter mortgage terms through the use of prepayment privileges and strategic borrowing. These professionals recognize that each of these customers is a potential source of additional business, as well as referral business.

leverageexIStIngBIgdata

One of the greatest advantages financial services firms have is the vast amount of data they own about how their customers use their products. For example, retail banks have data about the checks consumers write, the bills they pay, as well as when and where they use their debit and credit cards.

This transactional data, properly leveraged, can provide a wealth of information for the bank, and also for the consumer. The bank can use data to anticipate the next product a consumer might want or need, or it could use it to offer budgeting and savings advice.

Data has a powerful ability to provide deep insights to surprise and delight customers – and keep them loyal. This data also provides a competitive advantage, because it cannot be easily replicated by other financial services providers. As such, it needs to be factored into truly engaging touchpoints – advice, guidance, illustrations and infographics, dashboard summaries, and opportunities for money saving or other life-enhancing events.

emBraCemUltIPletoUChPoIntS

When dealing with a provider of any type of product or service, the customer expects to have a seamless experience, regardless of device and touchpoint.

This is the omni-channel nature of the customer journey and purchase process, and there will be more touchpoints required. The financial services and insurance industries have companies – some old, some new– aiming to disrupt it.

Google and PayPal, of course, fit into this bucket, but so do brand new lenders and international companies entering new markets. These innovators are bringing new techniques that challenge old approaches, and speak the language to address the needs of the modern customer. An example of this is usage-based insurance.

PredICtIveanalytICSandmorerelevantoFFerIngS

With today’s advanced digital marketing tools, companies know more about their customers and the micro-segments they fit into individually and geographically. Many customers voluntarily provide personal details about themselves, their preferences, and their behaviors, allowing companies to generate targeted relevant campaigns and offers for new services and tailored bundles.

One example of this might be when a high-value, premium customer switches insurance companies, and the original company wants them back. 360-degree profile data may show that the customer has a new spouse or a new teenage driver


in the family, has moved to a new address, or purchased a new home or car. Predictive analytics enable the company to identify the right time and the right message to reach out to attract the customer back with a relevant, personalized offer and a higher likelihood of conversion. Contact can be made through the means that the individual expressly prefers, via email, postal mail, one-on-one interaction with an agent, or any appropriate channel.

This can be expanded into pricing insurance rates based on an analysis of driving behavior verified by an onboard device installed in the customer’s vehicle. This form of usage-based insurance is representative of the new approach to the insurance relationship – high-frequency, high-touch, data-driven, with the customer in a direct and real-time relationship, which includes a heightened sense of control.

Insurance clients can control their own premiums by modifying their driving habits. Frequently traveling over the speed limit may seem of little relevance within the context of a once-per-year insurance renewal, but if the analysis results in a connection between changes in driving habits and increased or decreased monthly premiums, it motivates and empowers customers, and enhances their relationship with their insurance vendor.

Auto insurance products which consider the factors related to driving habits and pay-how-you-drive are available from a number of companies, including Allstate Drivewise and Progressive Snapshot® in the USA, plus AXA Drive Recorder in Europe.

A similar scenario applies to banking, where branches need to generate new customer leads and offer more relevant services. It makes little sense to place a mortgage loan officer inside a branch where few people will walk in to transact business. The early stage of the purchase process is now online. Face-to-face interactions with experts should happen later, by appointment.

Omni-Channel Commerce is Not Just DigitalOmni-channel marketing is the combination of numerous and frequent touchpoints – whatever the customer chooses. Providers of financial or insurance services must review their strengths and areas for improvement in the sales cycle. Person-to-person interaction, for example, is generally more effective at the end of the sales cycle, helping to create trust and close the deal. But it is becoming less effective at the beginning of the sales cycle, and can be accomplished through digital touchpoints.

Opportunities for upselling and cross-promotion are far more powerful through omni-channel, and customers can lead the way by clicking prompts or notices that relate to their current interests and priorities. For example, a budgeting or bill payment calculator might appear as a free post-holiday app, when credit card bills appear and tax season approaches, capitalizing on their renewed commitment to fiscal

responsibility. Alternatively, promotions for long-term savings plans for a child’s education might be more popular in early fall. It is no longer up to the institution to make this decision. It is up to the institution to analyze user data to determine ideal sales and support opportunities.

Traditional banks provide online banking services, and some present internal bank advertisements for credit cards or other products. But the crucial part of the omni-channel solution is the capacity to deliver real-time next-best action recommendations, similar to a Netflix movie prompt or an Amazon purchase suggestion. Many banks do next-best activity recommendations already, using a limited subset of the data – hard facts like age, social demographics, where customers live, and account balance.

Real-time and upsell data analysis is needed, along with additional behavioral information. What banner did the customer hover over but not click? What eye beacon, such as an ATM, did a customer walk past last week? How often? These points represent big data, which is unstructured and consequently much harder to process and store. It is this type of data that leads to a guided quotation process to determine a customer’s interest in purchasing additional insurance or financial products. An accurate profile is extrapolated from the multiple touchpoint experience.

The more questions they are asked, the less likely customers are to complete the purchase, and the higher the chance of losing them. With complex products, the customer conversion process must be broken into different stages, with value delivered at each step. A vendor cannot ask a hundred questions, and then give an answer. They must ask five questions, deliver part of the answer, then ask another ten questions, and give another part of the answer, leading the customer along a path of achievement and positive feedback that eventually leads to a full sale.

The Tangible Benefits of Omni-ChannelThe benefits of moving to omni-channel engagement are wide ranging. For lead management, omni-channel facilitates the integrated and contextual engagement process from the origination of the lead across all other media. This develops into an extension of the insurance lead process, for example, by providing personalized policy selection and pricing, and driving a consistent customer journey toward the policy.

Onboarding is made easier by allowing the quote to be concluded through any channel, whether self-directed or with agent assistance.

Financial services companies can mitigate channel conflicts by including agents and brokers in the cross-channel purchase process. This brings increased business flexibility by providing an agile platform to reconfigure bundles quickly and manage complex processes across channels and partners.


About hybris software hybris software, an SAP Company, helps businesses around the globe sell more goods, services and digital content through every touchpoint, channel and device. hybris delivers OmniCommerce™: state-of-the-art master data management for commerce and unified commerce processes that give a business a single view of its customers, products and orders, and its customers a single view of the business. hybris’ omni-channel software is built on a single platform, based on open standards, that is agile to support limitless innovation, efficient to drive the best TCO, and scalable and extensible to be the last commerce platform companies will ever need. Both principal industry analyst firms rank hybris as a “leader” and list its commerce platform among the top two or three in the market. The same software is available on-premise, on-demand and managed hosted, giving merchants of all sizes maximum flexibility. Over 500 companies have chosen hybris, including global B2B sites W.W.Grainger, Rexel, General Electric, Thomson Reuters and 3M as well as consumer brands Toys“R”Us, Metro, Bridgestone, Levi’s, Nikon, Galeries Lafayette, Migros, Nespresso and Lufthansa. hybris is the future of commerce™. www.hybris.com | [email protected]

Version: May 2015 Subject to change without prior notice © hybrishybris is a trademark of the hybris Group. Other brand names are trademarks and registered trademarks of the respective companies.

Customers are engaged and served wherever and however they prefer, which fosters top line growth by helping agents and brokers become more productive and optimize conversion.

Cost savings can be realized through reduced claim and service cost, using online self-service opportunities integrated with call centers and best practice templates.

Maintaining a Culture of Customer EngagementFinancial services companies should not restrict their vision to their industry competitors, but should observe the online retail world as a whole. Financial products are products to be sold and purchased like any others. Up-to-date methods to locate and curate customers are required to reach the goal.

Consumers the world over have reset their expectations based on their experiences with innovative companies like Apple, Google, and Amazon. People who have never, and may never make an online purchase, are observing a significant shift in

the availability of free information through services such as Google StreetView. At one time, these services would have been proposed, studied, and funded before any activity started. Yet, in the digital age, these services have not only been created, but have essentially been made available for free. Such experiences lead to a culture of expectation, where suppliers must exist on an equal plane as customers to remain competitive.

If insurance companies, banks, lending institutions, and other traditional financial services players fail to meet the new customer engagement mandate, they will see newer and more agile entities move in to dominate financial services – as they have already done in the music, entertainment, publishing, advertising, and retail industries. Google is delivering insurance quotes in the United Kingdom, and Apple Pay is native on more than 40 million iPhone 6s sold since its launch in October, 2014.

To get ahead and stay ahead, financial services companies must immediately start thinking and acting like the new generation of technology-savvy customer engagement leaders. And this means creating and maintaining ongoing conversations with their customers.

the customer engagement imperative for financial services

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