USAA Leads And Citibank Lags In Customer Advocacy

Forrester just published Customer Advocacy 2008: How US Consumers Rate Their Banks, Brokerages, And Insurers which is an annual ranking of 41 financial institutions. For this analysis, customer advocacy is defined as:

The perception on the part of consumers that the firm does what’s best for its customers, not just the firm’s own bottom line.

It turns out that the customer advocacy ratings across all three groups of financial institutions dropped this year after increasing last year. And the overall rating across financial institutions is at its lowest level in five years.  Here are some other highlights of the rankings:

  • Top five firms: USAA (was also #1 in 2007), Independent financial advisor, Credit unions,  AAA, and State Farm.
  • Bottom five firms: Citibank (was also #41 in 2007), Regions Bank, JPMorgan Chase, Wells Fargo, and TD AMERITRADE.
  • Largest decline from last year: A.G. Edwards in brokerage, AIG and New York Life in insurance, National City in banking. 

The bottom line: As I’ve written to Citibank’s CEO Vikram Pandit in the past, Citibank needs a customer experience overhaul!

Lesson From The Streets Of New York: Keep It Real

My family was recently in New York. We had a great time — except for the Yankees sweeping the Red Sox. And if you’re interested, at the bottom of the post I’ve listed a few of the restaurants that we enjoyed during our visit.

While we were walking around the city, we ran into a number of people asking for money on the streets. One guy was selling candy on the subway. Here was his shpeel:

I’m here to sell candy. The money is not going to charity or any organization. I will use the money to buy more candy to make more money. And I will spend the money wisely.

Another guy on a street near Yankee Stadium was holding out a cup and had a sign that said: 

I’m not going to lie. I really need a beer. Keep it real.

Both of those interactions made us laugh. But then I thought: “why is the truth so funny?”

My take: It’s unfortunate, but we’ve all become used to having things “marketed” to us in a less than honest fashion. Consumers end up developing filters for either ignoring or just not believing any advertisements. So when something shows up as being truly honest, it stands out.

Our research shows that many types of firms (especially banks, insurers, credit card firms, investment firms, and health insurers) get more loyal customers when they are seen as a “Customer Advocate” (take a look at an earlier post called Banks Prepare For Customer Experience Wars). And, what better way is there to show advocacy than by being honest?

So here’s a new strategy for firms to consider: brutal honesty.

The bottom line: Honesty may be more than just novel, it may also be profitable.

Some restaurant recommendations in New York:

  • La Bonne Soupe (48 West 55th Street, between 5th and 6th Aves). Great spot for lunch. As the name suggests, great soups. But also excellent fondue, chopped steak, and other french bistro options. My kids tried Escargots de Bourgogne for the first time and loved it!
  • Rosa Mexicano (61 Columbus Avenue at 62nd Street). We really enjoyed dinner here. Make sure to get the guacamole appetizer that they make at your table. We enjoyed both the chicken the goat tacos (which are prepared more like fajitas — you assemble them yourself). The short ribs were also outstanding. When you’re done, order the guacamole ice cream if they have it. The mix a bunch of things with ice cream at your table — just like they make the guacamole. But don’t worry, there’s no avodaco in the dessert.
  • Balthazar (80 Spring Street). This was another French bistro lunch spot that we really liked. Everything was good — from the french onion soup to the french ham and gruyere sandwich. But you must try the roast pork chop. Much pricier than La Bonne Soup.  
  • Rice To Riches (37 Spring Street). If you like rice pudding (and who doesn’t), then you need to drop in here. You will be treated with a wide range of flavors and a really funky environment. Great place for dessert or just an afternoon snack.
  • Norma’s (in the Le Parker Meridien, 119 W 56th Street). An unbelievable breakfast spot — a truly unique menu. We loved everything: flat-as-a-pancake crab cakes, very-berry brioche French toast, nutella fruit-filled crepes, and risotto oatmeal. But plan on spending top dollar for this breakfast experience: $25 or more per person.

Let’s Learn From Delta’s [Continuing] Customer Experience Miscues

Let me start this post with a clear disclaimer — I never consider my personal experiences when evaluating customer experience in my research. Every large company periodically delivers subpar experiences, so anecdotes aren’t necessarily indicative of a company’s overall customer experience efforts. 

Having said that, I feel the need to share my experience with Delta Airlines over the last 2 days, because there’s something to learn (or maybe unlearn) — and, to be completely honest, I feel the need to vent.

The summary: It took me 13 hours to get from the airport in Richmond, Virginia to Boston’s Logan Airport. Along the way, Delta found many ways to make the experience miserable.

The painful details:

  • Yesterday, a colleague of mine and I boarded our plane to New York (JFK) in Richmond, Virginia and the plane pulled away from the gate at 6:15 PM — right on time.
  • Minutes after pulling away from the gate, the pilot said that we were on a ground hold and would need to wait there for a while. No real details. 75 minutes later we were brought back to the terminal and allowed to get off the plane.
  • By the time we got off the plane, there were no more options for us at the airport — either on Delta or on any other airlines. (Note: JetBlue flight #1076 for JFK left ON TIME for JFK while we were sitting on the tarmac)
  • The agent at the counter in Richmond was completely unhelpful. All she said was that we were now booked on a flight out of JFK for the following day. She was completely unwilling to explore any alternatives — even those that I suggested. She didn’t seem to care — even a tiny bit — that our 4 hour trip was now going to span a couple of days.
  • Well, we finally got to the JFK terminal shortly after 10:00 PM. It turns out that our connecting flight left about 9:49 PM (Delta didn’t think we were “important enough” to wait for us to make the connection). Now, on to the Delta customer service agent in JFK.
  • The agent told us we had no options to get home that night (although I have since found out that there was a JetBlue flight #1028 that left later that evening). We were booked on a 10:15 AM flight. Luckily I know about the Delta Shuttle — and was able to push him to book us on the 6:30 AM flight.
  • I asked him which hotel Delta was going to put us at. He then informed us that Delta was not going to provide a hotel because it was not responsible for the problem. He used some technical terms that (in his mind) absolved Delta from all responsibility for our situtation. Then I mentioned that it was, of course, Delta’s fault — the JetBlue flight that left after we pushed from the gate seemed to get to JFK without a problem. His response was precious — “How do you know that?!” (As if I must be either mistaken or lying — neither of which was true). It reminded me of a Seinfeld episode. He was obviously well trained in the techniques of avoiding responsibility.
  • Well, the agent did give us a phone number of a service that helps Delta’s stranded customers find hotels in the area. So we called the number. The guy on the phone gave us the phone number for one hotel. We called the hotel and they had no vacancies. Thanks for the help Delta!
  • Well, we found a hotel in the area (on our own) and actually made it to LaGuardia the next day a bit early. So we tried to get on an earlier flight (6:00 instead of 6:30). You’ll never guess what the agents told us — “that will cost an additional $150.” That’s right, she wanted to charge us more money to get us home a day later! When we told the agent about the terrible experience that we had been through, she did a little research on her system and then said — it looks like your plane from Richmond left on time. The implication: Delta doesn’t need to go out of its way for us because it pushed the plane away from the gate at the scheduled time.
  • We finally “convinced” the agents at the desk to let us on the earlier flight (which was completely empty) without any additional charges.
  • Then, finally, we landed at Logan Airport at 7:00 AM today. 12 hours, 45 minutes later.

The analysis: Delta’s records probably show that we were on 2 flights that left on time — and therefore had a successful trip. Obviously, though, our experience doesn’t match that assessment. Hopefully Delta (and other firms) can learn to avoid the following customer experience miscues that we ran into:

  • Poor communications. I understand that delays happen. But the situation gets much worse when customers are left in the dark. We did not get a lot of accurate information about the status of our flight as we were waiting — raising our anxiety level and making it difficult for us to formulate potential solutions to the problem.
  • No accountability. Along the way, every Delta employee seemed to be trained in mechanisms for denying responsibility. The tone of our interactions may have been different if Delta trained its empoyees to recognize that stranding customers at an airport is ALWAYS its problem.  
  • No empathy. Along the entire ordeal, we did not run into a single Delta employee who said “I’m sorry” or even acknowledged our inconvenience. Maybe Delta can just teach agents to start interactions with stranded customers like this: “I know this is really inconvenient, let me see what we can do…”
  • No advocacy. All of the agents that we met were just trying to get rid of us. Not one of them asked what we wanted to do — and they certainly didn’t go out of their way to explore alternatives. A good lesson to learn: the most important time for helping customers is when they are in need. These moments of truth can build or break loyalty. In this case, Delta clearly achieved the latter.

The bottom line: You need to look at interactions from the standpoint of your customers (note to Delta and other airlines: “on-time departure” is not a good customer experience metric). It can provide a dramatically different view!

Epilogue: I sent Delta’s customer service group a link to this blog in their complaint form. But rather than reading it, they sent me an email that said:

“…We appreciate the e-mail you sent. However, please send us your experience in a text form or letter.” 

Looks like Delta doesn’t really care what happened to me — but it is finding every possible way to avoid taking responsibility.

Epilogue #2: I finally got a response from a representative who seemed to have glanced at the feedback that I had to cut and paste into an email. So the airline decided that I qualified for a $75 credit which it promissed to send via another email. But 2 weeks later — there’s still no credit. The ineptitude of Delta’s customer experience efforts is truly comical. Where’s Ashton Kutcher? I must be getting Punk’D.

Net Promoter And Satisfaction Battle For King Of The Ring

Let’s start with a confession: I’m a big professional wrestling fan; so I really enjoy a good battle. One thing that I’ve learned from the WWE, is that it’s the storyline that makes a battle come to life. And the Net Promoter vs. Satisfaction debate has all of the story trappings of a great tag team match!

One one side of the ring in the blue trunks is the tag team of Fred Reicheld, “father” of the Net Promoter System (NPS) concept and Satmetrix Systems, implementor of NPS-based survey systems. On the other side of the ring in the red trunks, we find Claes Fornell, “father” of the American Customer Satisfaction Index (ACSI) and ForeSee Results, implementor of ACSI-based survey systems.

Both of these teams are fighting for their approach to be recognized as “THE” measure for tracking customer relationships. To put this into perspective, this type of measure represents only one of the five levels of a voice of the customer program (see my earlier post on voice of the customer programs).

Let’s start by handing out some awards to the teams:

  • Best marketed: Net Promoter (Reichheld is very good at touting his concept — and in writing compelling books about it)
  • Most mature: Satisfaction (The ACSI has been tracking data since about 1994 and satisfaction has been around as long as I can remember)
  • Most quantitative: Satisfaction
  • Sexiest: Net Promoter (it’s caused a lot of hooplah)

Net Promoter has gained a lot of momentum over the last few years as many large companies have adopted it. The methodology is pretty straightforward: ask people if they’d recommend your firm. Based on their response, they get categorized as a Promoter, Detractor, or neither. You take the percentage of Promoters and subtract the percentage of Detractors and that leaves you with a Net Promoter percentage.

This debate was enhanced by a recent study cited in the Journal Of Marketing which found that…

Using industries Reichheld cites as exemplars of Net Promoter, the research fails to replicate his assertions regarding the “clear superiority” of Net Promoter compared with other measures in those industries.

Well, if you’re wondering what I really think about this Battle Royale, then here it is. Just like wrestling — the storyline is much more exciting than the reality of the battle. Here’s my take on the contest:

  • Net Promoter is not the “ultimate” measure for a customer relationship
  • Then again, neither is satisfaction.
  • But companies are better off when they have more satisfied than dissatisfied customers and more Promoters than Detractors.

My recommendations:

  • Don’t expect any single measure to be eutopia. Both measures are good, but neither one has enough information to fully guage customer relationships and to provide enough diagnostic information to make all of the necessary improvements.
  • Focus on one measure to build alignment. Picking a single measure to focus on (whether or not it’s perfect) can be very valuable in aligning the organization. If you can get your entire company focused on either raising satisfaction or increasing the number of Promoters, then you will likely see some significant improvements in the reallt important metrics: retention, sales, etc. So, if in doubt, pick one and move on.
  • Evolve your metrics over time. The previous two bullets may seem to contradict each other, but they don’t when you look at it over time. The value from locking into a single measure like Net Promoter is as much from aligning the organization as it is around the perfection of the metric. But after the organization gets aligned, firms will need to build out the portfolio of metrics — and find out for themselves which measures are both predictive and diagnostic.
  • Look at Customer Advocacy. The ring was too crowded to add another contestant to the match earlier in this post, but for some industries we’ve found another measure that is a powerful indicator of loyal customer behavior. So, in the purple trunks is Customer Advocacy, the perception that the firm does what’s best for customers, not just what’s best for its own bottom line. We strongly recommend that financial services and healthcare firms take a very close look at this measure.

The bottom line: Don’t get too caught up in determining the winner of this battle. Just make sure that you do something and are prepared to learn and evolve over time.

If you’re a client of Forrester, then I also recommend that you read these two research documents:

Banks Prepare For Customer Experience Wars

Greetings from day 2 at Forrester’s Finance Forum 2007 in New York. There was a lot going on today. Bill Doyle, one of Forrester’s top analysts, kicked off today’s session by announcing the results from Forrester’s 2007 Customer Advocacy rankings. USAA, once again, topped our list (see my earlier post about USAA). These rankings are based on feedback by consumers about whether or not they think their financial insitutions act in their (the consumer’s) best interest. There’s too much to say about customer advocacy to squeeze it into this post, so I’ll be spending more time on this concept in future posts.

As I mentioned yesterday, we published the results from a joint survey on customer experience in banking that we did with the American Banker. My report that analyzed the data is called “Banks Prepare For Customer Experience Wars” (full report is only available to Forrester clients) just went live on the Forrester Website. The research looked at some of Forrester’s consumer data alongside the survey of 190 North American banking executives that we did with American Banker. When we look at the overall responses from banks, we find that they:

  • Know that customer experience is important — 97% said that it was either very important or critical.
  • Are focusing on organic growth — outpacing the focus on customer acquisition.
  • Recognize that they aren’t meeting customers’ needs — especially online, where less than one-third of respondents gave their interactions a vote of confidence.
  • Lack a solid customer experience strategy — nearly half of the banks point to a lack of a clear customer experience strategy as a major problem.

Then we looked at the difference in responses between large banks (>$30 billion in assets) and smaller banks (<$30 billion in assets). Here’s some of what we found:

  • Customer acquisition is more important to smaller banks.
  • Online experiences plague all banks — especially smaller ones.
  • Branch experiences are better at smaller banks.
  • The lack of cooperation causes major problems for large banks.
  • There are more customer experience activities underway at large banks.

If banks know that customer experience is important, why do they deliver such poor experiences? Often times the issue comes down to one word: “Silos.” Banks have created stovepiped organizations; each group focuses on its own channel (e.g., Web, call center, agent, branch), its own product (e.g., deposit, mortgage, credit card, brokerage, insurance), or its own functional area (e.g., marketing, IT, retail delivery). As a result, most banks lack enough of a coordinated effort to meet their customers’ needs.

But times are changing. The convergence of three factors – consumers, competition, and capabilities – will put enormous pressure on financial services firms to break down their rigid silos and improve their customer experiences.

What do banks need to do? If you’ve been reading my blog posts, then I think you can guess what I’m about to say. They need to head towards Experience-Based Differentiation.

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