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The ATM: Ambassador in the changing CRM game

Edmund Tribue of MasterCard Advisors' Global Credit Risk Practice shares his insights about the changing world of CRM.

March 29, 2006

Edmund Tribue is the global practice leader of MasterCard Advisors' Global Credit Risk Practice. He is respected worldwide as a thought-leader on credit, financial and operational risk management in the financial-services industry. He and his team focus on corporate risk strategy, predictive-modeling empirically designed portfolio treatment actions, credit policy, operational procedures, project management and execution-platform business requirements for bankcard credit issuers, as well as specific aspects of Basel II. His solutions cover the entire product lifecycle and all portfolios across both the consumer and small business segments.

Across the United States, the number of bank branches has increased from 55,000 to 70,000 in the last decade. Even amid this de novo growth of retail outlets, teller service at the branch has taken a backseat to the ATM.

Because the banks are leveraging lower-cost channels and customers' changing preferences, ATM usage is up, and the ATM has become a key touchpoint for everyday transactions. But if banks view ATMs only in terms of cost containment or as a simple channel, they may be missing a big opportunity.

ATMs can play a major role in customer relationship management (CRM) by providing differentiated experiences.

Tech-savvy customers change the rules

Technological developments over the last two decades have transformed the consumer into the unquestionable leader in the consumer-company relationship. The tech-savvy consumer increasingly gets and disseminates any information he or she wants about any product or brand, anywhere, anytime. Product and pricing information are being pulled from Internet news groups and chat rooms - realms dominated by consumers but places where companies are increasingly making investments.

In line with the growth in consumer power has been the explosion of blogs. Their capacity to blur the lines between fact and fiction is worrisome for corporations that want to control their own messages. But if companies are entering this space, isn't that challenge being met?

Too often corporations think about controlling new media as point-challenges that need point-solutions.

Just as companies started rolling out investments in new Internet communications, podcasting caught most companies unawares. Podcasting allows individuals to post their own audio messages online - messages that are then available anywhere in the world at any time for downloading to iPods and other MP3 devices.

It's anybody's guess as to other ways consumers will find to convey their opinions about banks and brands, but gone is the day when companies could rely on advertising and public relations to control what is said and written about them. Nor can they consider these threats in a piecemeal fashion.

Saatchi and Saatchi advertising chief Kevin Roberts put it best: "Everything we used to do, everything we used to know, will no longer work." ("Crowned at last," The Economist, March 31, 2005.)

During this period of communications uncertainty, one trend that can help is that users of these media are basing their case for or against a brand and its products on their own customer experience. Making these experiences special - meaningful and differentiated - requires a balanced perspective. In order to maintain a voice about their brand, companies will need to invest in the new media. But they should not neglect leveraging all existing means, including the ATM, in this experiential strategy.

Edmund Tribue

Casting ATMs in this role is compelling. These machines are already collecting myriad customer transaction data and are accepted by consumers as part of their daily routine. Their role could be expanded to gathering additional information on customer experience relating to a bank's brand.

They could also provide tailored offers and recommendations, brand-satisfaction surveys and other means to gauge a customer's willingness to recommend the bank. This relationship focus and new data insights are the next stage in the customer-focused promise of CRM.

But before banks venture in this direction, they need to step back and consider the current state of CRM.

Despite its name, CRM has pretty much ignored the customer, and has concentrated instead on automation and internal efficiencies. CRM systems are among the most highly touted and costly information technology tools in the business world. Yet to date, they have proved largely disappointing.

What went wrong?

The answer lies in the way CRM has been implemented.

Most companies have concentrated on automating processes for their internal users, with particular emphasis on touchpoints, such as call centers and POS systems. But what about the customer?

This mindset is perfectly illustrated by the most common CRM objectives: increase sales, drive cross-selling, minimize resources, reduce ancillary expenses, and lower the number of costly channel interactions. Those objectives indicate an inside-out view that implicitly treats the processes and internal metrics as more important than the customer.

By contrast, an outside-in view starts with asking questions not about marketing and sales but about experiences - the customer's experiences. This approach supports business objectives, but also recognizes the need to create meaningful interactions that influence brand messaging and customer loyalty.

The outside-in approach to true customer-centricity

The good news is that the same technology that supports the inside-out approach also can enable a better, outside-in approach. For that to happen, however, fresh thinking is vital. Experiences that are analyzed should not be limited to the most obvious, such as reporting a lost credit or debit card. Banks need to examine experiences in all stages of customer interaction with a company's brand, products and services.

For example, at least six distinct stages can be discerned in the customer's payment cards lifecycle:

• Learning
• Acquiring
• Activating
• Using and managing
• Obtaining service
• Changing or canceling

Conventional CRM focuses on only one of those stages - acquisition - which involves marketing, advertising, sales and PR. A bad customer experience at any of the other stages can just as easily doom a relationship. Too many mediocre experiences can have the same effect.

What's Important To be successful, a CRM campaign must enhance a customer's experience, making the customer want to come back for more. Tech-savvy consumers are expanding the ways the word about FIs gets out into the marketplace, for better and worse. FIs need to forget what they thought they knew about CRM. It's not all about increasing sales.

To be effective, key touchpoints, interactions and the desired experiences must be identified. The gaps between how you want your customers to experience your brand, products and services versus what customers actually experience should be analyzed. We should look at the key customer interactions throughout the customer life cycle, and evaluate each one using the same attributes: consistency, availability, recognition, ease, sensory interaction, appropriateness and value.

To characterize the current state of customer experiences, five qualitative values - from "delighting" to "damaging" - to any process that may affect a customer's experience should be analyzed. Through this approach, existing assets like ATMs can be further leveraged or extended to help create experiences that delight the customer.

The value proposition and corporate culture

Customer experiences that differentiate the product or service also depend on how seriously a company takes its value proposition. A value proposition is the reason customers should want to do business with you instead of your competitors.

As obvious as it may seem, it's worth keeping in mind that the actual customer experience should reflect the value proposition, and should do so consistently. When contradictions exist, experiences routinely become negative, and consumers leverage their new media to get the word out.

Another critical dependency - and the one perhaps most difficult to alter - is a company's culture.

Frederick Newell frames the challenge this way: "Sales managers, product managers, sales personnel and others interacting with customers have all grown in their jobs selling whatever the company wants to sell to as many customers as possible. Many companies are creating sophisticated customer relationship management systems without realizing that such sophisticated tools require sophisticated users, and that their users will need training." ("Why CRM Doesn't Work.")

Newell's point is spot on. Employee training and the quality of customer experiences are indivisible.

Practical tips

Improving the customer experience also requires engaging the customer in a consistent, methodical and regular fashion.

The following best practices are being employed by a number of leading companies:

• Develop a customer council - a panel of customers who are consulted regularly for their opinions and suggestions.
• Create feedback mechanisms (on ATMs, for example) that provide the opportunity for continuous, unprompted feedback.
• Talk directly with customers where they are - in branches or in call centers. Give a voice to the front-line people who are dealing with folks every day.
• Train employees in active listening.
• Make sure compensation and incentive-structures reward the employee behaviors that create true loyalty, defined as the willingness to buy more and recommend to others.
• Start thinking about the customer experience as a journey that gets refined day by day, and manage CRM systems accordingly.

Private-sector enterprises are, of course, in business to make money for their shareholders. Doing so in the age of the empowered "never-satisfied customer" will require new corporate habits that have proved difficult to acquire, notwithstanding the billions invested in CRM.

A differentiated and positive customer experience is key. The loyalty they engender will mean increased retention, better margins and greater market-share. Companies that succeed in this quest will have ambassadors spreading the word for their brands on those pesky new media outside a company's control.