IS YOUR BANK DIFFERENT? PROBABLY NOT

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1 BEHAVIOURS, NOT SLOGANS, ARE WHAT TRULY DIFFERENTIATE BANKS IS YOUR BANK DIFFERENT? PROBABLY NOT By Jai Gill and David Helvadjian

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3 BEHAVIOURS, NOT SLOGANS, ARE WHAT TRULY DIFFERENTIATE BANKS IS YOUR BANK DIFFERENT? PROBABLY NOT By Jai Gill and David Helvadjian Like most companies, banks and financial institutions invest enormous amounts of time and money in crafting what they think is a unique identity. That identity is meant to appeal in an emotionally engaging manner, build deeper customer relationships, and positively affect market share and profitability. The bank focuses its employee training and development, marketing, and public relations efforts on creating something special, singular, and deeply resonant. Just like every other bank. In mature markets such as banking, where products are akin to commodities, creating brands that are perceived to offer better value than their competitors do is a real challenge. But differentiating from several other banks while essentially offering the same services can be the key to acquiring and retaining customers in competitive markets. The challenge is won when customers believe that a bank is truly different specifically if they can agree that Bank X is the best. It s the rare bank customer who can say so, however. In a recent banking study Gallup conducted in New Zealand, only 7% of customers polled believed one bank was the best in the whole industry, while 44% of customers said that all banks and financial institutions are about the same. This is not unique to New Zealand, as Gallup has found similar responses from banking customers in other parts of the world. Some banks may find that perversely reassuring if all banks are the same, customers are likely to be loyal because they have no reason to go elsewhere. That s false comfort, though: Gallup has also discovered that customers in New Zealand who agreed that one bank is the best are twice as likely to be fully engaged with their bank as those who believe that all banks and financial institutions are the same. Similarly, they are nearly two times as likely to be extremely satisfied with the bank s products and services and to be extremely likely to recommend the bank to their friends and family, compared with those who perceive no differentiation. So it pays, literally, to give customers a reason to think your bank is the best. And while we are not suggesting that the marketing and communication initiatives by New Zealand banks are ineffective, they clearly are not realising the full potential of their marketing investments. To put a fine point on it, they re missing one critical aspect of developing a banking brand: behaviour. WHAT ARE YOU DOING? Every bank says it cares about its customers, that it provides excellent services, and that its products are good for customers. Most of them are right. But how many banks can prove it every day with every customer? Customers respond to actions that prove the bank does what it says it will do. Such moments determine whether or not customers remain engaged with the bank s products and services. And when an experience with a brand representative doesn t connect with a customer s perception of the brand based on the bank s external messaging, the customer is likely to experience brand ambiguity. That may prevent the customer from becoming engaged with the bank. This is why frontline employees must be authentic representatives of the brand. If frontline employees don t reflect the brand values, the differentiation that most banks assume exists will never be experienced by its customers. Banks generally believe that Copyright 2012 Gallup, Inc. All rights reserved. 3

4 Is Your Bank Different? Probably Not their onboarding or training programs or their corporate culture can effectively instil those values but unless employees can bring the brand to life, customers won t feel it. How many bank employees, do you think, know how to do that? If your bank s leadership team members are candid with themselves and have trouble answering that question, this is what we recommend: Formulate a brand identity, align organisational goals to the brand values, and clearly define behaviours to help employees bring the brand to life. For instance, one bank which we ll call Bank A has branded itself as a community bank. Its organisational goal is to promote a sense of loyalty and engagement in customers. Accordingly, all of its print and billboard advertisements feature photos of local places. It sponsors and supports local schools athletic teams, and it funds community organisations that prominently display Bank A s logo in their materials. But community is tricky to manifest in behaviour. Bank A, nonetheless, has found some unique ways to do it: On game days, employees are permitted to wear T-shirts featuring local schools and colleges. Employees are encouraged, and sometimes paid, to volunteer at community events, and the bank always sets up booths at street fairs, car shows, and the like. Its mortgage specialists keep photos on their desks of houses owned by local people who have originated loans with that officer (with the customers permission, of course). None of that costs very much the behaviours require more cleverness than money but all of them demonstrate the brand via the employee. Yet few banks mobilise that sort of behaviour. When Gallup conducted research across four banking brands in the Asia-Pacific region, we found that many frontline employees, when asked about brand behaviours, could only relay lofty organisational goals instead of specific actions. They could talk about customer-centricity, for instance, but they couldn t name specific behaviours that truly bring it about. Every company seems to claim it is customer-centric, which is, as an organisational aim, a nice goal. However, it does not separate one bank from another, especially from the customer s point of view, unless frontline employees know how to make customer-centricity a reality. To successfully develop a strategy for both employees and customers, a bank needs to focus on driving the right behaviours from its frontline employees. THE RIGHT PEOPLE Frontline employees must be selected for their ability to embody the behaviours that form the foundation of the bank s brand, and they must be coached to do it. It is extremely important to select frontline employees with a natural talent for executing the functional demands of the role as well as the behavioural profile that fits the organisation s needs. But beware: The demands of the role should not be a long wish list of nice-to-have traits, but rather specific attributes based on profiling the bank s best frontline employees. This is critical in creating achievable targets for personnel and also helps to scale the program across the branch network. The best companies in the world ensure that their frontline employees focus solely on creating great customer experiences and being responsive to the customer s needs. For example, a global bank based in London uses a specific talent-based selection approach to ensure every employee, not just frontline employees, has the required talent for the role, which is simply the price of entry into the company. It also results in making frontline employees far more coachable. In fact, Gallup found that frontline employees who were a natural talent fit for the role increased crosssell referrals by over 50% more than those who were not classified as a natural talent fit for the role. Therefore, an essential key to bringing the brand to life is to systematically select employees who relate to the bank s brand values. They are far more likely to successfully execute the company s strategy during those critical employeecustomer interactions in a manner that ultimately grows balance sheet metrics. Copyright 2012 Gallup, Inc. All rights reserved. 4

5 Is Your Bank Different? Probably Not To produce such consistent, scalable outcomes, the entire workforce must be aligned with these behaviours as well as with clearly defined goals, responsibilities, and measures because that s what makes a bank s branding real for customers. The right metrics regarding those behaviours can provide critical indicators to leaders and managers about their markets, giving them opportunities to act before the balance sheets are affected. Best practice is to use service metrics usually a set of customised drivers that the company tracks weekly, along with outcomes such as customer engagement, customer loyalty, and customer advocacy. For example, the leadership team at an Asian-Pacific bank identified the following key drivers for their brand identity: Be easy to do business with. Make customers feel valued. Treat customers with respect. The leadership team also decided to track customer engagement, loyalty, and advocacy to aid them in their decision making. By aligning the company to a common set of drivers and creating clarity on the deliverables for the bank when it came to the brand vision, the leadership group set a clear path for the rest of the organisation to follow. CONSISTENT MODELS All frontline employees are responsible for behaving the brand. But leadership, from executive ranks down, have their own behaviours to perform. Moreover, it s critical that every leadership team member owns the brand image because that solidarity will inspire trust throughout the organisation. It will also provide a foundation for whatever the bank determines to be its key drivers of success. In developing those key drivers, the leadership team must think through the behaviours that demonstrate the bank s values and request that their direct reports clearly articulate the linkages between tactical, brand-image plans and the impact on key goals and metrics and they need to do it constantly. Those linkages are the basis of the metrics against which success will be measured. Regional managers need to operate the company using the metrics that have been identified by the leadership group those that support the brand image and all others and are responsible for driving behavioural change at the account level. It is critical for them to hold their direct reports responsible for their performance on the key drivers as well as to develop tactics to move the bank forward on achieving its strategic goals. This must be localised, and regional managers should make adjustments based on the specific feedback they receive. Regional managers should use the metrics as a change management tool rather than a means of comparison. A Southeast Asian bank made the mistake of having its team leaders solely focus on, and be accountable for, the metrics rather than the right behaviours. This led to a short-term increase in service metrics, but it prevented the right behaviours from being institutionalised within the organisation. As a result, each branch focused on getting a score that employees didn t know how to affect, and the bank was unable to fully maximise the potential of its brand values. The ultimate success of any program lies in the way regional managers integrate these tools into their regular work stream rather than making them specific agenda items to be ticked off. To do this is not easy and will probably require proactive changes to internal reporting structures. One American bank tracked its service metrics on a daily basis for every branch and every interaction across the country. This helped regional managers monitor their territories and identify pockets of best practices (and the opposite). It also allowed them to respond immediately to resolve larger systemic issues affecting customers. The constant data stream provided instant feedback on the decisions that worked and the ones that didn t. Regional managers were held accountable for responding to the feedback and incorporating best practices into their work stream rather than just for their service outcomes. Additionally, this reporting system brought regional managers much closer to customers and allowed them to Copyright 2012 Gallup, Inc. All rights reserved. 5

6 Is Your Bank Different? Probably Not BEHAVIOURAL ALIGNMENT MAP Leadership Regional Managers Team Leaders Frontline Employees Goals Develop brand vision Develop tactics to execute the vision Responsibilities Service Metric Focus Identify key outcomes of success at an organisation level Organisation-level customer engagement metrics Manage to the metrics that track progress on achieving outcomes of success Department/Division customer engagement metrics Translate tactics into service actions at a local level Manage to coachable behaviours that affect the metrics Key drivers to customer engagement Execute actions and provide feedback on customer responses Understand positive and negative behaviours that affect customer engagement Qualitative customer feedback make decisions much faster. By trying to improve a common set of service metrics, the regional managers became aligned on the larger organisational goals they needed to achieve while still having the flexibility to make the right decisions for their regions. The ones to carry out these decisions are most often team leaders. As discussed above, at the account level the brand reality is demonstrated through action that inspires critical employee-customer interactions. To continuously improve the customer experience, it is essential to reinforce good behaviours and identify behaviours that result in poor customer interactions. Team leaders are usually the closest to the customer-facing employees and therefore have the most opportunities to support and encourage engagement-building behaviours. Frontline employees can t succeed if their team leaders can t differentiate between good and poor behaviour. Therefore, team leaders need to be skilled coaches, and they need to focus conversations at the account level on behaviour and outcomes, rather than metrics. That gives team leaders the best opportunity to successfully achieve the goals identified by the leadership group. These managers need to identify and manage coachable behaviours because, while it is important for them to understand the metrics and align with the strategic direction of the organisation, it is crucial for them to hold their employees accountable to behaviours that lead to the right outcomes, irrespective of the type of banking relationship they share with their customers. One Australian bank used coaching as a management method for frontline employees and saw a 28% increase in fully engaged customers in under six months, which is a key service metric for that organisation. BEING AND DOING Because financial institutions are so similar they sell the same things for roughly the same prices and operate under the same laws it s very difficult for them to differentiate themselves from competitors based on the products or services they provide. Execution, therefore, is all that a bank really has to prove itself different and better. Execution must result in distinct, customer-engaging behaviours. Execution can t be an informal, vaguely defined value. If it is, those behaviours won t be consistent, won t relate to the brand, and won t have impact. Instead, the behaviours that distinguish a bank have to be explicit, based on brand strategy, and coached from the top of the bank to the bottom. Yet many banks believe that execution amounts to what bankers do on computers, not what they do with people. They forget that customers can t see what goes on behind the counter and that a customer-facing employee is the brand, as far as the customer is concerned. But not every bank has forgotten. Some are well aware that though they re selling banking products, they re operating on human connections. Those are the banks that truly are different and better. And their balance sheets show that their customers know it. Jai Gill is a Senior Consultant at Gallup based in Bangalore, India. David Helvadjian is a Senior Consultant at Gallup based in Sydney, Australia. Copyright 2012 Gallup, Inc. All rights reserved. 6

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