Customer experience: A performance driver. (Q&A).

Joe Wheeler is executive vice president of The Forum Corp. of Boston. He heads the company's customer experience practice. He is the co-author of the newly published book, "Managing the Customer Experience: Turning Customers into Advocates" (Prentice Hall).

Q: What is the customer experience?

A: The customer experience is the consistent, intentional delivery of your brand promise through every interaction your customers have with your people, processes, products and services. But in short. experience is everything. It's how your customers know your brand.

Q: Why is it so important to the financial services industry?

A: Your customers are going to have an experience. The question is which kind of experience do you want them to have? An intentionally and consistently good one, the kind that keeps them coming back for more? Or a routinely inconsistent. haphazard; often bad one, the kind that does nothing to differentiate you and actually encourages the customer to look for alternatives? Every bank wants to provide the former, but the vast majority leaves the customer experience to chance. And they do so at their own peril. A recent KPMG study found that customer loyalty in the financial services sector could hardly get any lower. Competition in banking is fierce, and the customer experience is one of the last areas left for banks to earn the loyalty of their clients.

Q: This seems to be a fairly new concept in banking, Why?

A: Creating a customer experience that becomes synonymous with your brand is increasingly recognized as a vital driver of corporate performance. Disney started the trend. Southwest Airlines adapted it to the airline sector. In the UK, First Direct started a new concept in banking using it. Howard Schultz of Starbucks applied it to selling coffee. Ian Schrager is perfecting it in the hotel sector and Amazon.com is applying it in the online environment. All of these companies are creating loyal customers by delivering customer experiences that create value for customers beyond the products or services the companies happen to sell. That's why this is such an important concept for banks. Much of the product that banks and financial institutions sell has become a commodity. The customer experience remains an unclaimed frontier. It's where the battle for customer loyalty, and ultimately corporate profitability, will be fought and won aver the next decade.

Q: Who in the banking world does it well?

A: Mellon Financial's CEO, Martin McGuinn, has personally led a two-year effort to refocus the company on the customer experience. The Bank of Montreal has seen impressive growth in its wealth management division because of its commitment to designing a loyalty-inducing customer experience for its most profitable clients. The Royal Bank of Canada also is a good example of a bank that gets it.

Q: What role does CRM technology play in the customer experience?

A: A lot of companies, banking and financial institutions in particular, make the mistake of thinking that investing heavily in CRM satisfies the need to address the customer experience. It's almost a case of avoidance--'We've checked the CRM box, now let's move on to something else, like price.' But companies that do that have it backwards. In fact. companies that do that tend to waste lots of money because they adopt technology without giving serious consideration to how it can support the customer experience. CRM is a tool, an important one that con be very effective, but only if it works in support of the customer experience.

Q: So, how do you dolt?

A: You design and build the experience by deeply understanding your most profitable customers, what they need to continue coming back, and how you can best deliver it to them. At the heart of the experience is a brand promise that goes far beyond product or service attributes to a relationship that customers identify with emotionally. To use a nonbanking example, someone who rides a Kawasaki motorcycle could ride a Harley. But no one who rides a Harley would ever ride a Kawasaki, because they are loyal to the Harley brand.

Q: What are the critical components to get it all done?

A: You really need three powerful pieces. First, you need leadership power, since research shows that companies with superior customer experiences drive the behavior from the top. Second, you need people power, because you deliver the experience through people, whom you have to hire, train and reward. And third, you need what we call triad power--the seamless integration of marketing, operations and HR. It's a lot of work. but the reward is lower customer acquisition casts and better financial results. Focusing on the customer experience is a three-for-one deal--you get better results, happier customers and happier employees. There's no better deal in business.