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Most financial services companies are constantly investing in improving customer value proposition.
However, how do you decide in which areas to invest?
Which investments will result in happier customers and more business?
1. Prioritize them based on your strategic priorities
The best answer to this question is obviously strategic and grounded on insights about your customer needs and your competitive advantages.
Ensuring all projects align with your strategy is the most important thing you will do to ensure that you will get the results you expect from these projects.
And on the flip side, constantly switching priorities or having a collage of unrelated projects will provide minimal impact.
It also often makes your message to customers and contributors confusing and unremarkable.
So, the best answer often sounds like this:
“Our customers are deciding who their primary provider will be, and they evaluate candidates based on responsiveness and the candidate’s willingness to hand-hold them through their most critical financial decisions. So, in the next 2-3 years, we will invest in becoming the most responsive and the provider who provides them with the most guidance.”
This is just an example, obviously.
What makes this example a strong answer?
First, a critical customer need is the starting point:
“Our customers are deciding who their primary provider will be.”
Then, it adds unique insights about these customers to make it actionable:
“they evaluate candidates based on responsiveness and the candidate’s willingness to hand-hold them through their most critical financial decisions.”
Finally, it provides a clear framework to prioritize investments. Potential investments need to be building blocks to achieve a goal.
“Become the most responsive and the provider who provides them with the most guidance.”
Not only does this framework help with prioritization decisions, and it is the starting point when communicating this message to your employees, partners, customers and prospects.
However, even with this general framework, you still need to decide where your dollar is best spent.
Which factors will make your responsiveness and guidance or whatever priority you set for yourself shine in your customers’ eyes?
2. Split the strategic priority into different factors and ask your customers how important and happy they are with them.
The bankers of a client of mine who strives to provide superior service spent a lot of time helping clients through manual processes.
In their minds, this counted as “face time with the client” and “superior service.”
However, in the client’s mind, this only meant that the bank was bureaucratic and had inferior technology.
Besides, I suspect many felt that the person who provided them with bank statements was not the best to discuss financial plans and needs.
Before assuming how customers will benefit from something, you should ask them (and non-customers in your target market) how important and happy they are with them.
So, if you strive for responsiveness, how does responsiveness translate into options they can compare.
For example, self-service versus immediate response versus same-day response.
Asking them about specific factors allows you to classify these factors into four categories:
Essential factors with which customers are happy. You are getting these right. Keep up the excellent work.
Unimportant factors with which they are happy. While these may seem harmless at first, these are often areas where you are overinvesting. Also, if you are communicating these factors to customers and prospects, they may be diluting your message and polluting your brand.
Important factors with which they are unhappy. This is what you should be on the lookout for. These are factors where you may be underinvesting and bruising your brand. Improving these is often a good idea.
Finally, unimportant factors with which they are unhappy. Having confirmation of which factors are unimportant is important. It will help you avoid second-guessing your priorities, even when people present evidence that customers are underserved in these areas. Stay the course.
2.5. Brownie points if you use segmentation and comparisons with main alternatives.
Especially for important factors, you can obtain further insights by segmenting your responses and comparing these answers with alternatives these customers have.
Segmenting will, for example, allow you to understand how responses from large clients compare with those from small clients.
Comparing with alternatives will, for example, allow you to understand if they are happier or less happy with you or our competitors regarding that factor.
Note that alternatives may be competitors, but they may be other things: Inaction (e.g. not buying a product), new entrants (e.g. a fintech) or even in-house solutions (e.g. self-insuring a piece of equipment).
However, even if your research provides you with a clear picture of what factors customers say they value and how happy they are with you and the alternatives, these answers have one significant limitation:
People don’t understand what is important to them or how important. Besides, they may lie (sometimes because they lie to themselves about that issue).
And finally, even if you did not have these limitations, you would still have the attribution problem.
When several factors are significant, how do you know how much each contributed to an outcome?
For example, even if answers suggest that webinars are important, how do you know if a new client resulted from a webinar, the new website, or your sales copy?
3. Use a statistical approach to search for what moves the needle.
This is why analyzing answers and their impact on a key indicator is important.
This indicator could be anything from sales, growth, churn, or an NPS score.
The important thing is that:
- It should be easy and unequivocal to measure
- It should reflect an impact you are looking for (the proverbial “needle” you want to move) and
- Even if it provides an incomplete picture of this impact, it is a good indicator that something deserves a deeper investigation.
Indicators that reflect an immediate action by the customer can often be analyzed using factor analysis.
So, for example, if you want to understand the impact of a set of features on willingness to buy, you can create different versions of offerings with varying combinations of these factors and the indicator to assess how sensitive the purchase decision is to these factors.
For example:
Offering #1: full service, same-day response, 1% fee cost
Offering #2: limited service, next-day response, 0.5% fee cost
Analyzing the output of these experiments can reveal how sensitive buyers are (buy/do not buy) to different combinations of factors, and it is particularly useful in pricing exercises.
However, other indicators do not reflect an immediate action.
For example, sales, growth, churn, or an NPS score are aggregate, over-time variables and are often influenced by multiple factors.
In this case, using multi-regression analysis, it is easy to assess which factors significantly impact this indicator.
For example, even if people say that webinars are important, you may find that happiness with webinars has no impact on sales or the NPS score.
When doing this analysis, you must beware of 2 issues:
The first issue is that inadequate sample definition can significantly distort conclusions. For example, samples that are not representative, too small, or the result of selection bias, taken at the wrong moment, or comprised of distinct cohorts, can result in misleading conclusions.
The second issue is that it is very easy to mistake correlation for causality because of how the experiment is designed. For example, a significant link between satisfaction with your financial training webinars and NPS could result from a systematic dissatisfaction with your technology.
But, as long as you keep these two issues in check, this analysis often reveals some powerful and unique insights, many unknown even to your customers, which your organization can use to strengthen your value proposition.
For example, when surveyed, people may downplay the importance of training for fear of admitting their ignorance. However, this analysis may show that high training scores correlate positively with NPS and negatively with churn rate: happy and loyal customers.
To summarize:
- Prioritize them based on your strategic priorities.
- Split the strategic priority into different factors and ask your customers how important and happy they are with them.
- Win brownie points if you use segmentation and comparisons with main alternatives.
- Use a statistical approach to search for what moves the needle.
