How to Use the Banking Crisis to Benefit Your Customers and Your Profits

Since I live in Switzerland, I could not avoid learning lots of details about what was going on with Credit Suisse. The bank has been portrayed as quite seriously mismanaged for a number of years in Swiss media, with the last few CEOs overseeing major declines in the bank's stock price while continuing to receive huge bonuses. Nevertheless, I was still surprised at the speed of the Swiss government and Swiss National Bank's intervention, resulting in the sale to UBS.

Credit Suisse is not alone

Credit Suisse is not alone, of course. Banks generally hold massive amounts of government bonds, and these have become less valuable as central bank interest rates have been raised. These same interest rises have in turn meant that corporate and private bank customers expect higher interest rates on their deposits. They have massively moved their deposits to other banks where their traditional bank has refused to provide better rates. This drove a confidence crisis too. The move was huge at Credit Suisse, and I believe it is the largest single thing that has provoked the crisis both there and at Silicon Valley Bank. Similar things have happened before, for example in 2008, so central banks are not surprised that something breaks when they aggressively raise interest rates.

Uncertainty makes companies nervous about costs

All of this has created a climate of uncertainty for all types of businesses and individuals. Personally, I expect to see businesses becoming more conservative in their investments, and actively pursuing cost reduction opportunities. And you, of course, could be one of those reductions.

This is no time to be passive

If you someone who believes customer experience matters, now is a time when it is absolutely critical for you to lead, rather than follow. You should already have enough data to understand which operational areas make a difference to customer loyalty, and which do not. You should all be familiar with the concept of ‘hygiene factors’, meaning things that just have to be acceptable, with little or no additional ROI for achieving exceptional performance. The authors of the book ‘The Effortless Experience’ use contact center work as their leading example of this type of task.

In any case, you should, and indeed must set out which customer-touching operations drive more loyalty when they are done better, and which do not. You should suggest concentrating cost reduction efforts on the hygiene factors and ensure that the other customer-touching tasks are preserved.

There are some cost reduction opportunities that do not impact customers

There is of course another whole area that you should talk about, even though it may upset some people: there are many huge expenses that do not have any impact on customers and should indeed be the top cost-reduction priorities in times of crisis. The first one that comes to mind is the location of your HQ building. Customers really don't care about that, so if you are in an expensive location, just move to a cheaper one. I have experienced one example where moving a five-minute walk away saved almost half the rent.

Surveys don't help much in times of rapid change

Surveys don't help a lot in times of rapid change. If you lead CX for a bank, your six-month-old survey is useless for predicting which customers are most likely to move their deposit accounts somewhere else if they can get a higher rate. The only way you can address that effectively is by using Customer Experience Analytics, meaning AI tools that let you understand which operational data points and trends most affect customer loyalty, and therefore Net Recurring Revenue, and this for every single customer. If you have seen customers defect over the last few weeks or months, AI (such as our own Spectrum AI) can identify what operational data points and trends are the best predictors of such defections. You then seek out those same characteristics in the rest of your customer base and try to address them before it is too late.

Conclusion - Tough times are continuing

In short, tough times are continuing for many banks and other businesses. We have already seen whole CX departments eliminated in some big-name companies. If you lead CX, please be as proactive as possible. Demonstrate your customer loyalty understanding an leadership now, when it is most needed.

The CX Iconoclast Podcast with guest Dr. Paul Marsden

What on earth makes your customers tick? That’s easy, according to our guest Dr Paul Marsden (CPsychol), because it’s the same for everyone. And leaders interested in driving great customer outcomes would do well to keep the three core needs of fellow humans. Listen to Paul's conversation with Richard Owen on the latest episode of The CX Iconoclast podcast: https://lnkd.in/gHQwZjaz

Notes

OCX Cognition predicts customer futures. Our breakthrough SaaS solution, Spectrum AI, lets enterprises transform what’s possible in customer experience. Reduce your customer risk, break down silos, and drive speedy action – when you can see what’s coming, you can change the outcome. Building on more that 15 years of CX-focused expertise, we’ve harnessed today’s advances in AI, elastic computing, and data science to deliver on the promise of customer-driven financial results. Learn more at?www.ocxcognition.com.

Maurice FitzGerald is a retired VP of Customer Experience for HP's $4 billion software business and was previously VP of Strategy and Customer Experience as well as Chief of Staff for HP in EMEA. He and his brother Peter, an Oxford D.Phil in Cognitive Psychology, have written three books on customer experience strategy and NPS, and a fourth book that focuses on Peter's cartoon illustrations for the first three. All are available from Amazon.

The author can be reached here on LinkedIn or at?maurice.fitzgerald@ocxcognition.com. Please let me know what you think and what sort of content you would like to see here.