LONDON/NEW YORK: Customer experience (CX) is emerging as an important driver of consumer purchase decisions and nowhere more so than in financial services, where a new study has identified "four pillars of great customer experience" on which marketers should concentrate their efforts.
Consulting firm McKinsey performed benchmarking research in five countries (France, Germany, Italy, USA, UK) on five key customer journeys in banking and insurance (retail customer onboarding, mortgage applications, car insurance claims, life insurance acquisition and onboarding SMEs).
It reported that there were significant financial gains to be made from delivering a good customer experience, with a 2-3% increase in revenues for every 10 percentage point lift in customer satisfaction, with gains coming from, for example, additional product purchases generated by cross-selling and upselling.
And it highlighted the four areas – focus, simplicity, digital-first and perceptions – that matter most when it comes to creating a great customer experience.
Focus on the few factors that have the most impact on overall satisfaction, McKinsey advised, as it pointed out that only around 20% of all the various characteristics of the end-to-end experience account for 40% of overall customer satisfaction.
Customers also value simplicity and speed when opening an account. The research showed that customer satisfaction dropped sharply if this process took more than 45 minutes and rose significantly if it was less than 15 minutes.
"Companies need to work out the trade-off between the investment in improving the ease and simplicity of a process and the resulting improvement in customer satisfaction and new value created," it said.
Digital-first journeys generated 10 to 20 percentage points more satisfaction than traditional journeys, and McKinsey noted that there was scope for these providers to improve still further by digitizing complete journeys.
While the practicalities of delivering the customer experience are clearly important, perceptions also matter.
Advertising and word-of-mouth recommendations can boost satisfaction scores by 30-40 percentage points, for example, but McKinsey added that banks need to take account of the detail in these figures and to understand their customers at a more granular level.
Data sourced from McKinsey; additional content by Warc staff