TCF: Putting customers first profitably

By Jennifer Slaughter, director of professional services, EMEA, Skywire Software

Winning hearts and meeting needs
“Customer advocacy”– in layman’s terms, putting the customer first – has become a buzzword in financial marketing during the last few years. An advanced form of customer service, it responds to the challenges of customer choice, involvement and knowledge.

The Financial Service Authority’s (FSA) “Treating Customers Fairly” initiative (TCF) is putting financial firms under increased pressure to manage every aspect of their business with the customer in mind. Thus, interest in customer advocacy will continue to grow. Firms can take practical measures to look after customers’ interests and deliver commercial benefits. 

Today’s financial services organisations operate in a progressively more competitive climate, where customers have access to more choices, are less localised in their habits and are more demanding. When it was first introduced, customer relationship management (CRM) seemed to offer a method to cement customer loyalty. In many cases, however, it has proved to be little more than an aggressive marketing tool through which to cross sell, at the expense of genuinely improved customer service.

This only contributes to skepticism on the part of the consumer, who is then more likely to shop around and attempt to verify the information they receive.  Most obviously, the Internet offers a convenient platform to substantiate such information, whilst offering a plethora of alternatives and the effortlessness of an instant transaction. Firms must prepare to service consumers differently as each generation is progressively more proactive than the generation that came before.

Clearly, organisations need to re-establish the traditional ties with their consumers. How to reverse this steady erosion of trust, satisfy expectations and maintain competitive edge is often less clear.

Positive outcomes flow from unifying services Financial services organisations have been at the centre of much of the recent hype about customer advocacy.  Recently the FSA has undertaken thorough reviews of TCF compliance. The regulator has underlined the need to create holistic systems, which deal with the entire customer and product lifecycle.  The onus is on senior management to ensure that the principle of fairness is built into every aspect of a business’s operating model and culture, from product design through to effective complaints handling.  The FSA has urged firms to provide “clear, fair and not misleading communications” — not only up to the point of sale, which has been the regulator’s traditional focus, but also during and after sales activity.

Recently published reports on TCF clusters focus on four key areas: product design, management information, remuneration and strategic change.  The overwhelming message is that firms are falling short. In the words of the FSA, firms need to “move from implementation to delivery.”

The FSA has stated that TCF is “not just about process” but “also about the outcome” – which more effectively tests whether or not the customer has ultimately been treated fairly. It is here that customer advocacy has an important role to play.  This not only vastly increases customer satisfaction, and thus reduces any chance of incurring the wrath of the regulator, but also perfectly marries what firms need to achieve for regulatory purposes with straightforward commercial benefit.

Customer advocacy is all about an organisation shelving its firm’s centric mentality of products and services and instead thinking about outcome,” as the FSA requires.

Customers first
The essential logic is simple: financial services organisations must reverse the status quo of how they serve customers. An extreme example in financial services is how some firms have heralded transparency and fair treatment of customers to the point of recommending solutions by their competitors. Bold strokes clearly put the customer’s trust, time and knowledge first.

By shifting focus onto end user experience, customer advocacy boils down to the matter of enhanced customer communication. The challenge is that ensuring consistency and control in this area is notoriously difficult.  Even the boldest of endeavours will not necessarily result in success.  Moreover, ensuring that the customer has fully understood the communication they have received presents yet another hurdle, particularly as high levels of financial understanding, levels of literacy and numeracy are far from granted.

Nevertheless, the growth of consumerism means that consumers are more and more determined to be well informed and make more of their own decisions.  This is especially true today given the current economic climate of uncertainty driven by the credit crunch. Recent research from Forrester illustrates that half of online consumers will independently research into credit cards, mortgages or home loans.

Customers have become more comfortable with technology. More information is available on-line. Because of the fluctuating market, customers want as much information as possible so that they can make the informed choice. As a result, customers have become proactive about performing on-line research, which has driven up the need for financial services firms to provide quality customer communications.

Self-direction of this nature is expected by the average consumer, given their increased comfort with technology and the availability of information on a multitude of products and services.  All this has led to an increased customer preference for being proactive.

Bespoke service
Personalisation, of both the method and the content of communication, can make a company more relevant to this emerging breed of proactive consumer. It can also ensure that consumers understand the information they receive. Customers will always be more inclined to read information properly if they receive it via their preferred channels — a typical example is the senior who prefers to receive a statement in the mail, whilst a young person would rather download it from a Web site.
In many companies, one of the barriers to personalisation is the level of human intervention required to pull together information from disparate data sources. The majority of IT systems supporting customer communications are home grown and often unable to adapt rapidly or support different communication formats. However, there have been significant advances in the ease with which data can be integrated across multiple systems and translated into different formats, meaning it can easily be presented to suit the individual customer in whatever format he or she prefers.

Providing the right message for the right audience in the preferred format also is key.  Customer communications management (CCM) systems, in which rules can be embedded relating to communication across the board and with each individual customer, allow personalisation of content without costly human intervention.  They dramatically improve the quality of service that customers receive, which can only be helpful in securing a greater share of their wallets.  By enabling management to achieve greater control over (and better information about) customer communication, CCM also assists in the achievement of other goals, such as brand consistency and increased productivity.

Prove success – Measure, analyse and evaluate The other beauty of CCM is that it creates an audit trail, meaning that organisations are well placed to prove and monitor how well customers have been treated. This also helps improve service standards. Those firms that have comprehensive and integrated record-keeping systems will clearly be better placed to deal with enquiries and complaints promptly, as will those that have workflow-based systems which at least partially automate the administrative process. Firms can use this audit trail be used to demonstrate they’re meetings the standards of fairness and customer advocacy that are regulated.

The standard of fairness and customer advocacy will undoubtedly evolve and change over time, dependent upon the successes of rivals, changes in consumer expectations, technological advancement, and changes in service delivery.  These changes may not always be predictable.  It is vital therefore, that whatever systems organisations introduce as part of a customer advocacy programme have built-in flexibility.  In the area of customer communication, having the ability to change standard elements of communication from a central point will be key, both to giving senior management the control they need and keeping the cost of such changes to a minimum.

What has become abundantly clear in financial services’ current endeavour to succeed in the process of fair treatment is that putting customers first can be an elusive ideal, difficult to implement and sustain across an entire organisation.  However, this is where firms can take advantage of customers’ increasingly self-directed involvement in their business affairs. Increased personalisation is a way of engaging with a customer’s natural preference to be proactive and ensure their fair treatment.  Only by putting the customer back at the centre can financial organisations hope to regain the ground lost by our current climate of uncertainty.