In the course of doing consumer research, I’ve heard the following stories from loyal financial services customers:
#1: A man in his late-50s, when asked by his bank in a focus group interview why he was a loyal customer, hemmed and hawed for a few moments before saying “it’s because of Jenny, the branch manager where I bank.” When asked what made Jenny so special, he replied, “I don’t know. But one time I came into the branch to make a deposit, and the pen at the counter was out of ink. Although Jenny had a customer in with her, she somehow knew that pen was out of ink, and came out with a batch of new pens. That’s Jenny for you.”
#2: A magazine reporter and her partner were trying to adopt a child, and had received word from the adoption agency that a child was available for adoption. But they needed a short term loan in order to make the trip to China to pick up the baby. According to the reporter, her bank “bent over backwards to approve the loan and get her the money in 24 hours” and for that she would “never leave them.”
#3: An IT executive traces his loyalty to USAA back to a single phone call. He called the firm to cancel a credit card and insurance policy. The rep said “I hope I’m not overstepping my boundaries, but we’ve found that many customer often cancel products because of events that aren’t related to USAA like a divorce or other family matter. We’ve set up a special department to help customers with these kinds of matters, is this something we might be able to help you with?” Since he was in the middle of the divorce, he took USAA up on that offer and has been a loyal customer since.
These may sound like unrelated stories, but there are lessons to be gleaned:
- It takes more than just “great customer service”. I recently commented on the expectations that consumers have of the firms they do business with, one of them being “interpersonal excellence.” The man in story #1 is an example of this. It wasn’t any single interaction that drove his loyalty to the bank — it was the personal attention he received from Jenny and the connection he had with her.
- Convenience isn’t enough. For banking customers, the added convenience of late branch hours or multiple ATM locations may be important, but the produce the stories that customers tell. In story #2, it was the bank’s operational excellence — its ability to turn the loan app around in 24 hours — than helped produce the story that woman tells.
- It’s the high-emotion interactions that count the most. Examples #2 and #3 highlight the fact that stories are more likely to be formed during highly emotional situations — like a loan application or divorce. McKinsey calls these “moments-of-truth”. The challenge many banks — and other firms — have is recognizing these high-emotion interactions when they happen.
So what should Marketing do?
1) Strategerize its “test and learn” agenda. That’s what USAA did. It posed the question: Why do customers leave? (NOT: What can we do to try and salvage a defection — when it’s probably too late to do so anyway)? Analytics execs should reexamine their group’s test and learn agenda to determine if they’re really asking the important strategic questions — or just refining their knowledge of campaign-level results. (This is a good example of Marketing focusing more on the “macro” and less on the “micro”).
2) Better integrate. The advertising folks use the term “integrated marketing” to refer to ad campaigns that are coordinated (or the same) across channels. That’s all well and fine, but for many marketing departments the bigger challenge is internal integration — and one prime example is the need for integration between analytics and market research. The two groups need to work a whole lot closer to develop and test theories about customer behavior.
3) Redefine customer segments. The stories that customers tell are clues into their expectations and the drivers of their satisfaction. Firms that continue to define customer segments by products owned or profitability miss these clues — clues that are more valuable to understanding how to sell and service customers than product propensity models that predict what to sell.