Having spent a number of weeks speaking at, or chairing, various industry events – I’ve become aware how much focus there is on technology. FS firms in particular appear nervous about rise of FinTech/InsTech & convinced they should focus on digital & technology for growth.
Is that right? Does success & sustainable growth come from that focus?
In response, I want to share a two-part blog post, based on a talk that I’m giving to mutual lenders in London.
The topic concerns where to focus as a 21st century business. Hopefully it will help leaders grappling with competing demands on their time & attention. Here is part one.
Where to focus? (winds of change)
In our ever-changing world, where should you focus to succeed with improving performance & readiness for the future?
Many social & business commentators will highlight key trends to consider.
- The rise in the power of consumers (inc. transparency & ease of switching)
- The erosion of trust in organisations (esp. Financial Services)
- Increased regulation (including Conduct Risk focus from the FCA)
- Rise in services expectations driven by experience from other sectors
- Emergence of technology disruption/innovation scene (e.g. FinTech sector)
All these combine to make it ever more urgent for lenders to regain trust, by both meeting service expectations & communicating more appropriately. Both of those twin aims are informed by better customer insight: Genuinely understanding your customers & the jobs they want to get done (including when), better than your competition.
Fortunately, alongside the societal & technology challenges I listed above, opportunities also present themselves.
- Increased availability of wider range of data & computing power to analyse
- Growth in analytics tools/market (including Data Science & statistics)
- Improvements in marketing automation, service ‘bots’ & personalisation capability
- Evidence from disrupters (like Metro Bank & Aldermore) of service differentiation
- FCA focus on behavioural economics giving opportunities in ‘regulatory sandbox’
Based on my experience of both creating/leading such teams for over 15 years & coaching leaders across UK & Europe, there is tremendous commercial potential.
However, too many firms rush into hiring Data Scientists without clear business goals. As too many have discovered to their cost, the real value comes from improved customer insight (not technology or data science for their own sake).
On the encouraging side, a number of studies have shown that businesses who make extensive use of analytics can outperform their peers on both income & profit metrics. But, just as has previously been seen with the ‘hype cycles’ of Data Warehousing & CRM, a lot of technology spend can also be wasted. How can businesses avoid that pitfall?
Many lenders (and FS firms more broadly) aspire to ‘Customer Centricity’ as a business strategy. Far fewer achieve both improved customer experiences & sustainable profit growth as a result.
Insights 2020 findings
A key global study focussed on understanding why some businesses succeed at this challenge, whilst others fail, was Insights 2020. As reported in Harvard Business Review, this collaboration talked to over 10,000 practitioners & 330 leaders across over 60 countries. Insights 2020 identified 3 factors that distinguished those who achieved Customer Centricity, measured through customer satisfaction, digital engagement & commercial return.
These 3 priorities are:
- Purpose-led, data-driven, consistent customer experiences (multi-channel/journey)
- Embedded ‘customer obsession’ in culture (decision-making, performance management & embracing experimentation)
- Customer Insight team is a proactive, equal business partner
Getting clear on Customer Insight
So, that begs the question, what do I mean by Customer Insight?
Different organisations will have different answers. Some appear to equate the term with research, others with analytics. A few relate it to targeted database marketing & almost everyone can see the importance of quality data for any such work.
Benchmarking best practice within customer insight, especially for financial services firms, has taught me that a more holistic approach works best. The most capable teams, combine technical skills in data, analytics, research & database marketing. But, as the saying goes, it’s what you do with it that counts. Using those technical skills in concert, to achieve a deeper understanding of your customers that enables behavioural change, is where true customer insight lies.
My own definition of customer insight is:
“A non-obvious understanding about your customers, which if acted upon, has the potential to change their behaviour for mutual benefit.”
Key strengths needed (including soft one)
To achieve that depth of insight & impact requires two key strengths.
First, the use of the use of the four technical disciplines I mentioned above, in concert to produce synergy. I normally explain this through use of Laughlin Consultancy model for Holistic Customer Insight, a virtuous circle of how to operate in multi-disciplinary teams.
The second strength needed, is analysts who can speak to your business. There is no point discovering great insights into your customers, if these remain ‘on the shelf’ as ideas. For that reason, several leading customer insight teams have benefited by investing in softer skills training for their technical teams.
The model I use if a 9-step model, from incisive questioning (to determine real business need) all the way through to following up to ensure insights are acted upon in the business (to achieve customer & commercial targets).
Your data foundation
For most organisations, reaching that level of capability, begins with a focus on data.
When speaking with leaders from across many different sectors, a perennial headache is either getting the data they need or being able to achieve a Single Customer View. Such a focus on data, as the foundational layer or Customer Insight & Customer Centricity, make sense.
However, I would like to make a plea for a focus on two aspects that are too often neglected. Data Models & Metadata may sound too much like topics for technophiles or data geeks, but lack of both can have big business impacts.
Faced with the challenge of capturing & using more data, egged on by technology supplier, too many companies leap straight into a technology solution & technical build. However, with the pace of change & ever-growing list of data that may be needed (considering the growth of Internet of Things for example), businesses need a more sustainable & technology independent map. That is the role of the too often neglected conceptual & logical data models. These should be treated like blueprints for your business ecosystem.
Alongside that data gap, another common lack for analytics team is missing metadata. That is ‘data about data’. In all the excitement to gather more facts about customer segments, or potential triggers for marketing campaigns, the basic need for things like a data dictionary can be missed. Many insight or analytics teams rely on what senior analysts ‘hold in their heads’. But the expertise about what different data items mean, which can be trusted & how to interpret different values – all this is too valuable to allow it to walk out of the door.
That’s it for part 1. Part 2 coming soon…