Link between customer engagement and revenue growth How Customer Engagement Can Boost the Bottom Line in Banking Presented by: Jay Freeman, Senior Advisor Applied Behavioral Economics for Organizations Copyright © 1996-2002, 2012 Gallup, Inc. All rights reserved. 3 Applied Behavioral Economics for Organizations Each node is an intervention point that can be optimized. Recognizes the role that human nature plays. “Performance Optimization” Emphasizes the essential emotional connections that employees and customers form. Recognizes that employee and customer engagement interact to drive even higher levels of performance. Copyright © 1996-2002, 2012 Gallup, Inc. All rights reserved. 4 Customer Engagement Hierarchy Increased Financial & Operational Effectiveness Can’t imagine a world without Perfect company for people like me Treats me with respect Feel proud to be a customer Fair resolution of any problems Always treats me fairly Always delivers on promise Name I can always trust Overall Satisfaction Likelihood to Recommend Likelihood to Continue Passion Pride Integrity Confidence Rational Foundation Your company is irreplaceable to me. I feel passionate about you. Your company is prestigious. It is part of who I am. When we have a problem, you always treat me fairly. I can safely assume that you will always keep your promises. Your company executes and fulfills my basic expectations. Copyright © 2008 Gallup. Inc. All rights reserved. 5 Customer Engagement Groups | Four Customers Fully Engaged Engaged Not Engaged Actively Disengaged Strongly attached and loyal. Your most valuable customers Beginnings of emotional attachment but not strong Emotionally and attitudinally neutral Active emotional detachment and antagonism Copyright © 1994-2000 Gallup, Inc. All rights reserved. 6 Engaged Customers How do Customer Engagement behave differently? Copyright © 2012 Gallup, Inc. All rights reserved. 7 Engaged Customers more likely to Recommend and less likely to switch Customers satisfied with Main Bank (T2B): 88% Fully Engaged customers: 26% Actively Disengaged customers: 18% 32% said Extremely Likely to Recommend 67% said Not at all Likely to switch 100% said Extremely Likely to Recommend 91% said Not at all Likely to switch 0% said Extremely Likely to Recommend 32% said Not at all Likely to switch (T2B = those scoring Overall Satisfaction with either a 4 or 5, out of 5) Wells Fargo Experience “We want to satisfy all our customers’ financial needs and help them succeed financially.” -Wells Fargo Vision and Values Unit of measure = products per HH Benchmark for greatness = total wallet opportunity Copyright © 2012 Gallup, Inc. All rights reserved. 9 Wells Fargo Experience Retail HH X-Sell 6.3 3.8 2001 2011 66% growth over decade (0.06 solutions per HH per quarter) Copyright © 2012 Gallup, Inc. All rights reserved. 10 A x E = R — Example Customer/Employee Encounter “The employee-customer encounter . . . is the crucible where value is created in sales and service organizations.” In our emotionally driven economy, human nature plays a central role in the emotional connections that employees and customers form.” -John Fleming, Gallup’s chief scientist for marketplace practice and HumanSigma consulting and coauthor of Human Sigma: Managing the Employee-Customer Encounter Copyright © 2012 Gallup, Inc. All rights reserved. 11 Driving to engaged customers AxE=R Activities x Effectiveness = Results 1. The desired result is cross sell derived revenue 2. The effectiveness measure is increased CE 11 3. Now, solve for A Copyright © 2012 Gallup, Inc. All rights reserved. 12 What are the Drivers of Engagement for Banking in Australia The Key Drivers of Engagement for Banking Industry: Odds Ratio (Impact on Customer Engagement) – Always Handles my problems effectively 33 – Always makes me feel like a valued customer 29 – Always makes it easy for me to do business 29 – Looks out for my financial well being 22 – Understands my needs and aspirations 22 – Provides exceptional customer service 22 – Provides me with a comprehensive range of products and services 21 – Fits my lifestyle 21 – Delivers a consistent brand experience across all channels 20 – Rewards me for the business I do with them 18 – Has products and services specifically tailored to my needs 18 – Friendly bank 17 – Provides me competitive rates and charges 14 – Innovative / Creative 10 – A local bank 7 – Secure bank 6 Assessing Customer Experience Correlation Vs. Coaching Complexity Difficulty to Observe and Coach High Low Went out of way to please Solutions perfect for me Warm Greeting/ Smile Use of name Correlation to Customer Engagement The degree of correlation to CE is linked to the degree of difficulty to observe manage and coach High What activities lead to top box on this dimension? • Resolve a problem or annoyance in a superior manner (especially non verbalized) Went out of way to please • Uncover a previously unidentified need and solve for it • Dramatically exceed an expectation Copyright © 2012 Gallup, Inc. All rights reserved. 15 Storytelling Copyright © 2012 Gallup, Inc. All rights reserved. 16 Wells Fargo Experience “We want to satisfy all our customers’ financial needs and help them succeed financially.” -Wells Fargo Vision and Values Unit of measure = products per HH Benchmark for greatness = total wallet opportunity Copyright © 2012 Gallup, Inc. All rights reserved. 17 Copyright Standards This document contains proprietary research, copyrighted materials, and literary property of Gallup, Inc. It is for the guidance of your company only and is not to be copied, quoted, published, or divulged to others outside of your organization. Gallup®, HumanSigma®, Q12®, and The Gallup Path®, are trademarks of Gallup, Inc. All other trademarks are the property of their respective owners. This document is of great value to both your organization and Gallup, Inc. Accordingly, international and domestic laws and penalties guaranteeing patent, copyright, trademark, and trade secret protection protect the ideas, concepts, and recommendations related within this document. No changes may be made to this document without the express written permission of Gallup, Inc. Copyright © 2012 Gallup, Inc. All rights reserved. 18