With the overwhelming majority of executives identifying customer experience as a top priority for CEOs, McKinsey & Company have identified four pillars of great customer experience performance.
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The stakes are high for organisations facing the challenge of meeting rising customer expectations amidst growing competition, the report said. McKinsey focused on financial institutions, which face a stiff challenge to differentiate their offerings while reducing cost and complexity for customers — and to do it at a profit.
“Overcoming these challenges is critical not just to meet rising customer expectations and to compete with new digital attackers but also to generate significant business impact,” the report said.
If an organisation can achieve a high level of customer satisfaction, the financial rewards are there. Research cited in the report indicates, “that for every 10-percentage-point uptick in customer satisfaction, a company can increase revenues 2 per cent to 3 per cent.”
Achieving that high level of approval is no easy feat, but the report identified four pillars of great customer experience by “analysing and ranking correlations between customer satisfaction and operational factors.”
To understand what constitutes distinctive CX in financial services, McKinsey performed benchmarking research on five key customer journeys — the series of interactions a customer has with a brand to complete a task — in banking and insurance. Here are the four takeaways:
1. Focus on the few factors that move the needle for customers
The report found only a small number of key elements impacted significantly on overall customer satisfaction (Exhibit 1). It goes on to recommend banks identify and focus on these key factors, while investing fewer resources in less impactful elements.
2. Ease and simplicity: The payoff trade-off
Modern customers appreciate convenience and will trade off other factors for it, the report said.
“For example, in France, customer satisfaction drops by up to 30 percentage points when the time to open an account exceeds 45 minutes. That 45-minute point marks the ‘satisfaction cliff.’ But what’s really important to note is that there is a diminishing payoff in reducing the time it takes a customer to complete a journey. In France, again, the impact on customer satisfaction when taking between 15 and 45 minutes to open an account is relatively minor (the ‘satisfaction plateau’). Cut that process to below 15 minutes and satisfaction increases by up to ten percentage points. Companies need to work out the trade-off, then, between the investment in improving the ease and simplicity of a process and the resulting improvement in customer satisfaction and new value created,” the report said.
3. Master the digital-first journey, but don’t stop there
The report found that there was still room to improve customer experience through digitisation. While customer journeys that started online and incorporated non-digital interactions were successful, those that were most digitised lead to the greatest customer satisfaction.
4. Brands and perceptions matter
The report found customer journeys are most successful when complemented by positive perception. The research showed two banks that provided a similar customer journeys were perceived differently in regards to customer experience. The difference was largely attributed to one company’s successful advertising.
Organisations must also manage and grow their customer relationships to turn customers into advocates. The existence of a relationship alone is not enough and businesses need to do more in order for customers to advocate their products and services.
While the four pillars should have universal appeal, the report stressed the need for organisations to customise. Certain elements will be dependent on country, product and age group, and customer experience designers need to consider their individual demographics, the report said.
The McKinsey & Company report concluded, “A company’s success in building out great customer journeys requires agile capabilities that excel at rapid iteration and testing and learning. Reacting to live feedback from real customers is often the difference between a good and a great customer experience.”