4 Ways to Build Customer Equity by Building Trust

Customer Experience
Customer Experience
A more transparent future will challenge financial services companies unless they move from being internally focused to being customer centric.

Most financial services firms today consider themselves to be trustworthy, and by yesterday's standards they are. They post their prices and rates honestly, they try their best to maintain the quality and reliability of their service, they protect the security of their customers' funds, and they generally do what they promise. But even though they don't actually lie or steal, the fact is that the vast majority of financial services companies still generate substantial profits by fooling customers, or by capitalizing on their mistakes, or by taking advantage of them when they simply aren't paying attention.

That approach in today's environment is a direct route to customer attrition. Retention and growth now entail acting in customers' best interest.

Acting in the customer's interest requires companies to balance the benefit of an immediate profit against the cost of earning the respect and confidence of a customer-an asset that is, in the long term, far more valuable. Financial services companies must become more trustable, because as the rising power of customers exposes untrustable behavior the question of a company's trustability will go to the heart of its value proposition. Trustability will become an essential element of any bank's customer service in the future in much the same way that having a website has become an essential element of customer service today.

To survive in this new, hyper-transparent world in which extreme trust is a prerequisite for business success, a financial services firm must pursue four basic courses of action:

Good intentions. Having empathy for customers, and treating each one the way you yourself would want to be treated if you were that customer, is the single most important element of trustability. To be trustable, you have to adopt a customer-centric philosophy, and then reengineer your value proposition and customer experience from the standpoint of the customer. This will have consequences for your operating policies, of course, but the eventual implications for your firm's culture will be even more profound. If your own call center reps, tellers, and loan officers don't believe you are a trustable company, then your customers won't either.

Rethinking control. In the transparent future, you won't be able to retain control over communications about your brand. The only thing you will control is how well your business processes protect your customers' interests. To make your command-and-control, hierarchical firm more trustable you will have to give more authority to individual employees, empowering them to "sense and respond" in real time to customer issues. And don't be too afraid to allow your workers to show your company's human side, including its vulnerability. A little vulnerability will encourage customers to be empathetic to you, and empathy generates trust.

Community. One of the secrets behind the e-social revolution is that people have an irresistible urge to share with others. They make their opinions known, they contribute ideas, they collaborate on things such as Wikipedia and open-source software, and many companies even find that customers provide the best kind of customer service for other customers. If you want to become more trustable you have to tap this sharing instinct, first by sharing your own honest counsel with customers. Talk to them not just in terms of how they can get more value from their financial products, but how they can better manage their resources, and how they can save and spend responsibly. Facilitate customers collaborating with other customers, through online community platforms, social sharing sites, product reviews, and problem-solving customer forums.

Competence. To be trustable not only must your intention be to act in the customer's best interest, but you also have to have the competence to act on that intention. On a basic level this means paying close attention to the quality of your product and service. But just as important, you should upgrade your data, analytics, and systems. Quantifying the financial benefits of long-term customer trust and confidence requires good analytics. Customer lifetime values are not easy to compute, but in the financial services industry, more than in most other categories, the statistical data is clearly available and there is no shortage of analytical tools to make these calculations. If you want your company to become more trustable, you'll have to begin paying attention to the data and pushing the envelope on analysis.

The bottom line: In a world of extreme trust you always have to take a step back from whatever business policy you're considering, whatever new idea you're thinking about, and ask yourself: "If this became public, would it be an embarrassment to us? Would we be proud of it? Would any of our customers hold it against us?" Because in the highly interactive, extremely transparent future everything you do, every policy you have, will become public. Hidden fees won't remain hidden, and bad intentions will be quickly exposed. If you want your financial services company to be genuinely trustable, then you have to have clean hands, not just a good alibi.