Creating Value from the Customer Journey
Financial institutions are increasingly looking at how to better understand the Customer Journey and finding ways of using this information to make themselves more relevant. This is due to increased competition, the need for differentiation, the need for improving customer service levels and the drive towards omni-channel engagement.
As Customers and Clients are becoming more focussed on getting the right product/service at the best price, institutions need to adapt how they collect data to supply their analytical systems for new insight generation. This data also needs to support the personalisation of the customer experience to provide differentiation and avoid the institution’s offerings becoming commodity. These requirements are especially true for Generation D customers.
What do we mean by Customer Journey?
When a Customer has a financial requirement, typically they’ll begin by researching what products and services are available from a range of suppliers. If they already have a relationship with an institution, they may look directly at their website – as either a browser or logged in as a Customer – to understand what offerings are available.
The whole process of looking for information on a financial product can be tracked by an institution for a portion of the overall process. They do this by examining the Digital Footprints (the electronic recording of an event, activity or state that captures the fact that shows something happened at a specific point in time) the Customer leaves as they navigate around the website or app. By capturing this information, and aligning it with a defined sequence (such as time), the institution has a detailed view of the Customer’s Journey with them. The journey tells the institution all the things the Customer did, and did not do, whilst looking for information. This also spans other engagement and contact types such as contact centre calls.
This all becomes more complex as changes in Customer engagement models means institutions now have to cope with a range of channels (omni-channel) the Customer can be engaging through. All of these requirements often sit at the core of an institution’s Customer Centricity programme.
Example Use Case
To demonstrate this, let’s look at a Use Case from Banking.
Imagine there is a Customer browsing an institutions website and they’re looking at high value, long term loans. This information suggests they are potentially looking for a property mortgage. This alone is useful to an institution but there is much more value to be gained.
By having a Customer360 capability in place, the institution can recognise the specific Customer doing the browsing. Now consider, as part of the Customer360 capability, the institution has determined that the Customer has a spouse who is also a customer of the institution (part of a house hold view). The institution is now in a position to use its history of the Customer and their spouse, together with the knowledge of what they’re looking at, to make a customer-specific targeted offer based upon the overall net worth of the house hold.
The diagram below shows how the data for this Use Case interacts with other capabilities, such as Business Process Management, to deliver the end result. The controlling process uses data and analytical insights to:
- Determine current and historical financial position for individuals in question
- Calculating the net worth of the house hold
- Understanding the Digital Footprint and engagement sequence to determine likely need
- Apply rules and process logic about the likelihood of an offer acceptance
- Make the mortgage offer.
The red line above shows how data flows around the different layers of capability to drive a desired outcome. What the institution has done is use the many sources of Customer360 data to create a rich view of the Customer then use analytics to work out what to offer, when to offer it and how to offer it. This requires a trusted source of data to be made available, to the institutions analytical and business process management capabilities, so more optimised business processes can be executed.
One by-product of this approach is the idea of an institution considering which customers it wants to make offers to. The Customer Journey, combined with other internal data sources, enables an institution to determine the ‘value potential’ of a customer.
- Customers with a high value potential are worth optimal service delivery
- Customer with a low value potential are worth a more minimal service delivery
Timing is everything
The timing of activities becomes really important in the Customer Journey as doing the right thing, at the wrong time doesn’t help. Many institutions look at the ‘Next Best Offer’ (aka NBO, what to try and sell next) but also need to consider the ‘Next Best Action’ (aka NBA, what to do next) as this may drive a different approach. Timing is important because:
- ‘Wrong Offer’ at the ‘Wrong Time’ creates the impression of a complete lack of personalisation
- “The institution knows nothing about me, or cares about me, when they should”
- ‘Right offer’ at the ‘Wrong Time’ is a wasted good opportunity
- “Doesn’t the institution know anything about my needs?”
- Real-time data availability to ensure omni-channel engagement is both timely and accurate
- The institution may not have long to work out the NBO and NBA then make the right offer through the right channel
- Next Best Action might suggest a non-sales oriented approach to drive customer retention
- There may be good reasons why making an offer right now isn’t valuable, so how else does an institution keep the customer engaged until the point the offer can be made?
- ‘Right Offer’ at the ‘Right Time’ is most likely to yield the desired outcome
It’s not all about a selling opportunity
The Customer Journey is a useful capability, when combined with others such as BPM and analytics, to determine a number of highly useful insights that drive engagement behaviour from the institution. These include:
- ‘Next Best Offer’ may suggest that a customer is about to churn – an outbound customer service communication prior to offer delivery may be a more effective strategy
- The customer may have a service issue with a specific product, so even if an upsell opportunity is identified – waiting until the issue is resolved increases likely take up
- High value potential customers need to be retained so this is a priority over a short term upsell opportunity
- Asking a customer to share some additional data in return for something of value may yield higher, longer term rewards
Where does the value come from?
The Customer Journey is a useful source of data to generate insights when combined with traditional sources, so we need to understand where the value generated comes from.
In general terms, the value will come from a range of areas where insight into customer behaviour is used to provide actionable insights leading to value creation. This is often expressed as the ability to personalise the experience for a customer. Examples include:
- Retention of high value potential customers will lead to more revenue over the period
- Better understanding of a specific customer’s behaviour generates the opportunity for up-sell
- Better understanding of house hold and relationships generates the opportunity for cross-sell
- Better insight into individual customer requirements, plus demographic requirements, leads to more effective marketing campaigns with higher conversion rates and lower costs
- Better understanding of customer needs reduces need of costly interventions via the contact centre
Using the data generated by the Customer Journey creates personalisation insights that lead to value creation opportunities across the lines of business of a Financial institution. These are both desirable from a Customer Centricity viewpoint but also becoming more necessary as customers require their financial services providers to be more responsive, more flexible and to add more value.
Data generated from the Customer Journey is critical to retaining customers, increasing revenue and margin, reducing operational costs and surviving in a digital world where service differentiation is often the only differentiation.