The Customer Confidential Podcast
My first several clients at Bain included a number of banks. They hired us to help them develop stronger relationships with their customers. The big problem, however, was that they couldn’t really identify all the ways they interacted with any individual customer. In fact, they didn’t even know for certain how many customers they had because their information systems were built around products. They had no way to know that the Rob Markey who opened a new savings account this week was the same one who already owned a certificate of deposit and a checking account. So, their servicing, marketing, and operations had to approach every customer interaction without the benefit of history or relationship knowledge.
Thirty years later, things have started to change in banking. But there’s still a very long way to go. Zack Anderson, chief data and analytics officer at National Westminster Bank (NatWest), is trying to shepherd a 250-year-old bank into the cutting edge of customer intimacy by bringing all the bank’s customer data to bear in building stronger relationships.
“Doing the hard work of knitting data together can give you great analytical results for a period of time. It can give you good insight about what customers are doing, where they’re at, or their relationships,” Zack says. “That’s powerful, but to make it an enduring capability of whatever organization you’re in, you have to invest in the identity side and build it into your processes.”
Zack emphasizes the importance of mitigating data architecture and solution design issues. But coalescing data into one location—a common organizational belief—only gets you so far. The second part, using that data to understand your customers, is where lifetime value emerges.
“Customers consume multiple products across multiple franchises, and they are more complex than we often think they are.” Zack says. “The evolution to shifting the products to recognize the complexity of those customers unlocks a tremendous amount of value.”
Understanding your customers and creating lifetime value demands time and resources—both of which can be a hard sell to investors and leadership teams. The payoff, though, is seeing customers engage with products that fulfill their needs and allow them to achieve their goals.
“When you begin to really see those customers in a more complete way,” Zack says, “you can start to recraft the products to maximize lifetime value, as opposed to building a product on its own and not necessarily seeing all the potential of it.”
In this episode, Zack and I discuss the arc of NatWest’s journey toward acquiring a deeper perspective of customers’ candid opinions and how that has improved data analytics. He describes how NatWest has learned to engage customers with highly relevant messaging that meets their true, often unstated needs.
In the following excerpt, we discuss how ensuring a personalized approach to consumer messaging is a delightful, rather than frustrating, experience.
Zack: If you spam people in a channel, they start to ignore it. And if you start to send people things that are relevant and help them in those channels when you don't have something to sell to them, they tend to consume those channels more readily. It’s training people to look at a channel and get value out of it.
And then, the trick is there's an implied commitment for a company to then use that channel in ways that are appropriate so the customer finds value in it.
For us, that's been shifting our mix from all sales messages to an increasing number of helpful messages and decreasing the number of people who get an email for a product so that it's targeted.
I would love for every fifth message we send to a customer to be relevant to them.
Rob: If you can identify a customer who has a need and match a product to the need as opposed to matching a target to a customer, you end up with higher response rates and higher satisfaction. They use the product and keep it. You get better price realization. Sometimes they even like you so much that they recommend you. It’s all good.
Zack. That's exactly right. That's the positive cycle.