Brett King

Posts Tagged ‘multi-channel’

The digital relationship revolution

In Customer Experience, Engagement Banking, Media, Social Networking on February 21, 2011 at 18:01

Everyday we’re making choices in the digital and physical worlds between one brand and another. Sometimes we choose a brand because they provide us with great service, but sometimes it’s simply because they provide adequate service and there isn’t really a better option. Mostly the choice of the interaction isn’t about great service at all; it’s about convenience. Generally speaking it’s not because of their products or their so-called services. It might be the way in which they connect me to certain products or services, but it isn’t generally what they produce.

Some days I’m incredulous at how some organizations manage to survive based on their apparent single-minded dedication to frustrating an efficient and productive service relationship. Other days, I’m amazed at myself for the ease with which I accept such maltreatment and why I don’t have the energy to turn around and leave. Often, it is because I don’t have a choice, there simply isn’t a better alternative. Sometimes it is because, defeated, I accept that my exiting investment in the relationship is sufficient a reason for why I should stay, knowing that I’m not going to generally fair much better elsewhere or I would need to incur costs to make a change.

Why most service businesses suck

Most service organizations might start off with good intentions, but over time they build processes that are designed to standardize or make the delivery of their services more efficient and cost effective. Somewhere in the process of defining the most efficient instance of a process, many organizations appear to forget why it is that they have a business in the first place, namely – the customers they serve.

The act of simply documenting a business process, scripting a flowchart or coding business objects, could in itself, be the very thing that destroys an organization’s ability to react to the needs of its customers. Granted, there must be order… but when the creation of order dehumanizes the participants, or kills off the ability to offer exceptional service, then in the end, the process itself is simply killing the opportunity. Over time, that process is burdened by more ‘rules’ or policies that not only disrupt service capability, but also reduce the cost effectiveness of the process too.

Sounds dramatic? Maybe I’ve been watching too many chick flicks lately. Maybe my inner self is crying out for something better. So here’s the thing…

Doesn’t the digital space itself do the very thing that I’m suggesting? Doesn’t an electronic interaction break the service opportunity into components of a database, an expert system, a user interface, a channel deployment, or a touch-point? So how is it that I, a glorious technophile and champion of all things digital, is suggesting that service requires humanization, heart and flexibility?

The digital connection

Well…it might just be feasible that what social media is really doing today is more than socializing the web. It might be possible that this drive towards great usability, human interaction design, multi-touch, augmented reality, geo-location and connectedness is actually creating a digital service platform that could revolutionize the ability of an organization to look after me as a customer.

Social media is about connections. I’m connected with my friends, my family, my business associates, my old school buddies, but I’m also potentially connected with those organizations I interact with day to day.

I’m using my “App” phone and my tablet to do my banking, check in on my flights, send messages to friends, play games (I call this downtime), watch a movie or read a book. My relationships in this space can be deep, emotional and powerful, such as when I see a picture of my kids on Facebook while I’m far away on a business trip. They can elicit a smile, such as when I see a funny status update, or even when I have a great, and really simple engagement with a service provider; like downloading a book on Kindle, starting to read it on my iPhone and the finding my place again later when I turn on my Galaxy Tab or iPad.

Building better relationships

The concept that you can’t build relationships in the digital space, that face-to-face or human interactions can consistently provide better service experiences, is simply an excuse not to expand your view of connections.

The digital landscape doesn’t destroy relationships, it doesn’t always replace physical either, but the multi-channel space can definitely enhance relationships between a brand and a customer.

Computers don't destroy relationships...people do

When I anticipate your needs before you do and I present you with a simple, targeted and compelling journey – that is great service. When I show you can trust me because I don’t inundate you with irrelevant marketing campaign messages to your phone or inbox, but when I have something to tell you it really hits the mark – that is building a relationship. When I don’t treat you like an idiot by trying to convince you will have a smile from ear to ear if you simply change banks, airlines, brand of shampoo or which mobile carrier you are using – I’m showing you I can be honest, rather than believing you are naïve.

The art of interactive relationships is about building great journeys in a world of transparency, a world of increasing demand for service and simplicity, and where you don’t get points for branding, you get points for the ability to connect and deliver.

We can talk about PFM, personalization, direct marketing, behavioral economics, usability, interaction design, and other such buzz words incessantly, but ask yourself this…

Are your customer facing processes defining your organization’s ability to have a relationship with the customer, or are your thinking of new ways to enable relationships with customers every day?

Don’t tell me I have to do it your way because that is your process. Don’t tell me you haven’t deployed an iPhone App or you aren’t on Social Media yet because you don’t know where the ROI is.

Meet me in the middle. Try to understand me, and try to deliver what I need, when and how I need it. If you do that honestly and transparently, I will trust you with my commerce.

If you don’t – your just another brand using just another channel to try to get my spend. That’s not a great start to a relationship.

Finally, I’d like to thank my sponsors for this blog – the US Bureau of Citizen and Immigration (sic) “Services”, TSA, HSBC, Qantas, American, British Airways and United Airlines, countless hotel chains, and customs officials of many countries for their inspiration…

What The Beatles’ success on iTunes means for Banking…

In Customer Experience, Economics, Media, Retail Banking, Strategy on November 26, 2010 at 03:01

The Beatles are arguably one of the most successful bands of all time, but their foray into the digital music space has long been frustrated. In their first week on the iTunes store, however, the Beatles amassed a staggering 2 million individual song downloads and over 450,000 in albums sales. Not bad for a band who stopped recording music 30 years before the iPod was even invented. Their success is evidence of something else entirely, and it should terrify banks mired in physical methods of banking.

Apple versus The Beatles (also Apple)

The fact that The Beatles held out on launching their ‘content’ into the digital space for so long is sadly typical of many very traditional businesses confronted with changing modality and business models. The Beatles conflict intellectually with the digital space actually commenced as a legal battle between Apple Computers and Apple Corps (The Beatles Holding Company) that started more than 30 years ago in 1978. At that time The Beatles filed a lawsuit against Apple Computers for trademark infringement. In 1981 the initial case was settled for just $80,000. Conditions of the settlement were that the two “Apples” would not infringe on each other’s businesses, i.e. Apple Computers would not enter the music business, and Apple Corps would refrain from selling computers. Thus, in 1986 when Apple allowed users to record songs to their computers, it was perceived they were in breach of that agreement. The legal jostling continued until February 2007, when a reported settlement of some $500 million was reached over the trademark dispute in favor of Apple Corps.

Modality shift kills physical music distribution

Confronted with the digital age most of the recording industry bristled. They saw changing modality, a shift to digital music as a threat to their entrenched distribution channels. Rather than embrace digital distribution the likes of the RIAA, when confronted with innovation in their sector, lashed out with lawsuit after lawsuit, starting with the famous case against Napster. The RIAA’s strategy was built on the sole premise of trying to prevent people from using file sharing networks so their existing distribution networks could be propped up indefinitely, and they celebrated Napster’s decline into bankruptcy as a sign of success for this strategy.

Clearly most saw the writing on the wall, but rather than change, the RIAA and the industry as a whole buried their head in the sand, hoping to limp along till change was absolutely inevitable, or worse thinking that they were immune to change. By all accounts, the RIAA was woefully unsuccessful in this strategy. Today, new artists live or die based on their ability to move product in the digital space, and The Beatles move at long last into the digital space singles that the last bastions of support for traditional, physical music distribution is crumbling. In fact, physical “record” sales peaked in 1999 at $14.65 Bn. By 2007 Physical sales of music content were already less than in 1993 having reduced to around $10 Bn, and by then end of 2010 it is expected digital music sales will finally overtake physical sales all together. Clearly the sector was in massive trouble with its decision to resist digital sales and the hundreds of millions spent by the RIAA on legal bills were largely a complete and utter waste of money. Those precious funds should have instead been put into revitalizing the industry digitally. The RIAAs actions in this light were reprehensible.

The RIAAs attempt to kill off digital distribution failed dismally

It’s not just ‘physical’ music that’s at threat

Others have faced similar battles in recent times, including Blockbuster who filled for Chapter 11 in September of this year, clearly signaling the near death of physical distribution of DVDs. Encyclopedia Britannica faced the same type of troubles when Microsoft introduced Encarta to show Windows’ multimedia capability in the mid-90s. This almost spelled the end of Britannica’s 300 year old business overnight.

What is under attack here is not DVDs, it’s not The Beatles, RIAA, Books or CDs and vinyl – what is under attack is Physical Distribution of goods that can easily be digitized. In that sense, the bank sector is in massive trouble because almost everything a bank does can be digitized.

Much of what our banking experience today means is wrapped up in the banking sector’s love of physical distribution. The centre of retail banking from an organization structure perspective in most cases remains the branch, which started life arguably as a physical distribution point for cash. Branch P&Ls exceed ‘digital’ by a factor of 50-100 times in most retail banks of today – an inequity that speaks volumes to ghastly outmoded thinking in bank boardrooms. Cash, Cheques, Plastic Cards, Branches themselves are all inevitable victims of this modality shift.

The Financial Times reported last week the following sentiment in the banking sector:

Banks across the UK, Europe and the US are now bringing service centres back into their local markets and investing heavily in their branch networks. More significantly, many are attempting to restore their battered reputations by putting customer satisfaction at the heart of their business
Financial Times, November 17, 2010

Physical banking is dead (at best dying)

This strategy is massively flawed. While improvements in customer service should be applauded, the fact is, based on distribution metrics, take up of mobile banking, internet banking, mobile payments, and other such indicators, the investment should be going into improving customer journeys, experience and service in the digital space. Most banks need to increase their investment in the digital space ten fold in the next 3 years at a minimum.

Like The Beatles, most banks when threatened with this modality shift, will find it extremely uncomfortable. The reality is, though, if they embrace the change revenues will follow. To give you some indication of the vast gap between shifting modality and the reality of bank distribution strategy, most banks still classify Internet Banking as a ‘transactional platform’ for saving distribution costs. For most customers today, though, they are 30-50 times more likely to visit your bank by logging in to Internet or Mobile Banking than visiting a physical branch. The problem with bank strategy in this respect is, if you come to a branch a core strategy is to try to sell you a new product. Today, most banks don’t sell anything through Internet Banking. If they did, most banks would be shocked to find out that they’d be actually selling more product online than through their entire branch network today.

It’s not branches that is under threat today – it is physical distribution. Banks can take the music industry approach and stick their head in the sand until things are absolutely inevitable, or they can adapt.

The 5 Stages of Social Media Grief

In Blogs, Customer Experience, Groundswell, Internet Banking, Retail Banking, Social Networking, Technology Innovation, Twitter on July 22, 2010 at 08:44

This week I’ve met with some very interesting people and the subject of social media has been high on the agenda. Yesterday, I met with Tom Cannon, who is leading the charge on the Internet Banking initiative that is part of HSBC’s “OneH” project – essentially their customer dashboard, single-view of the customer baseline technology. Earlier in the week with Sam Oakley from WolfStar, John Beck the Technology Editor for the Financial Times/The Banker magazine in London, and my good pal Christophe Langlois from Visible Banking, amongst others.  At these sessions we invariably repeated a discussion I’ve had 30 times in the last few months with innovators in the banking space the world over. The question simply being “when will the banking senior executives get social media?”

Facebook, Twitter, Foursquare – when will it end?

Facebook this week announced their 500 millionth active user. That number is pretty significant. Firstly, any corporation that can claim it’s customer base would make it the third largest country in the world (behind only China and India) has a case for celebration. Secondly, it doesn’t look as if its growth will slow any time soon. Lastly, their growth is not restricted by physical distribution or inventory constraints, their marketplace is anywhere you are.

Twitter is not far behind, with 190 million users as of June 2010, and 65 million tweets a day. Foursquare, the Geolocation Social Networking service is up there too – adding 100,000 new users every week at the moment.

When will it end? It’s won’t – that’s like asking when the internet and mobile phones will end. Which brings me to the realization that dealing with innovation in banking is a lot like dealing with grief.

So here are the 5 stages of Innovation Grief for Banks and Bankers (It probably works for most companies actually)

Stage 1 – Total ignorance

When a new innovation comes out banker’s simply ignore it because ‘banking has been around for centuries and it fundamentally doesn’t change…”

Stage 2 – It’s just a fad

“Visionaries see a future of telecommuting workers, interactive libraries and multimedia classrooms … Commerce and business will shift from offices and malls to networks and modems … Baloney. Do our computer pundits lack all common sense? The truth is no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works … Yet Nicholas Negroponte, director of the MIT Media Lab, predicts that we’ll soon buy books and newspapers straight over the Internet. Uh, sure.” – Clifford Stohl, Newsweek, 27 February, 1995

Ok so now it’s on our radar, but it’s just a fad – all the fuss will blow over soon.

Stage 3 – I still don’t get it, where’s the money?

Because of Stage 1 and Stage 2 banker’s are looking at social media’s incredible rise to fame and then looking at their competitors (who are mostly doing nothing) and saying, “well as an industry no one is making any money out of this, so let’s not bother just yet…”

How can you tell you are this stage? You have a Facebook page for the bank, but no one actively managing your social media listening post

Stage 4 – The Sonic Boom

Internet banking, mobile banking, social media is all the same for bankers. It’s like them sitting there watching the Concorde or an F15 doing a low-pass, fly-by and not yet registering what they are seeing as significant, until the Sonic Boom hits them and blows them off their feet. By then it is already too late because at Mach 1 or Mach 2 your competitors are already way, way in front of you. This is where the message finally breaks through the ignorance! BOOM!

This is the stage we are hitting for most banks today…

If you work in a bank how can you tell if you are at this stage – your bank has just hired a Head of Social Media.

Social Media is starting to hit banks like a Sonic Boom

Stage 5 – The Mad Scramble

Excuse the vernacular, but this is the “oh, crap” moment where bankers suddenly realize that they should have been heavily invested in this 3-4 years ago, and their lack of preparedness is highlighting to their customer base, employees and the world just how out of touch bankers are. The mad scramble may have occurred because of a PR disaster like those that BP has experienced with the Gulf Oil Spill, that Bank of America experience with Ann Minch’s Debtor revolt, or that Citibank experienced with the Fabulis debacle.

This is when the knee-jerk hiring spree starts with hit and miss initiatives occurring throughout the bank.

How do you know when you are at this stage? The CEO of the bank is talking about Social Media in press conferences and how the bank is committed to better reaching customers through this medium.

Getting out in front

So how do you stop the grief cycle within your organization? The first thing bankers need to do is rethink their organizational structure around customer. Social Media is a tool for reaching customers, for engaging customers. It is as important as investing in branches, it is just as critical as having a telephone number for customers to call, but more than that, it can help you transform your business internally too. To fix your organization to serve customers in the digital and social media age – you need to think independently of channels.

We talk about multi-channel alot these days, but clearly social media is showing us that new channels and ways of interacting can grow very fast. Who’s to say what will come after social media? Something will. The key is that channel complexity continues to grow, and no single channel should be singled out as more important. For customers branch is no more important than Internet, mobile than social media, call centre than ATM. These are tools to engage, and increasingly banks need to be more pervasive – everywhere the customer is.

So break the back of organization structure silos around channels. Think customer – think total channel engagement, and get moving on Social Media fast: BOOM!

The Three Phases of Customer Behaviour-led Disruption

In Book Excerpt on November 1, 2009 at 15:55

Excerpt from Chapter 1 – What the Internet and ‘crackberry’ have taught customers

There are three stages or phases to the disruption occurring within retail financial services. Each stage is disruptive enough to be a ‘game changer’. However, by the time the third phase impacts retail banking around 2015 (or perhaps earlier) the changes will be complete and irreversible.

The first phase occurred with the arrival of the internet. While many banks denied it at the time of the dot com bubble, the internet changed forever the way customers accessed their bank and their money. As we discussed in the psychology of customer behaviour, this gave them control and choice that was not available previously. Suddenly, customers were thrust into an environment where they could access their money as they wished, when they wished. As internet banking capability improved, the drive to visit the branch started to diminish and customers began to rely on the new channel as their primary access point with the bank for day-to-day transactions. Within just 10 short years, we’d gone from 50-60% of transactions either over-the-counter at the branch, through ATM or cash and cheques, to 90% of transactions through Internet, Call Centre and ATM. Game changing…

Embedded into this initial phase of disruption was also the emergence of social media and collective curation. As users started to participate in social networks, customers realized that these platforms had huge potential for empowering groups with common interests, or causes. No longer were brands protected by the corporation’s branding and controlled marketing communications, brands could be built up or obliterated at warp speed as a result of very public community opinion expressed through social media networks. While being a massive opportunity for banks, to-date very few have monetized social media because it is in conflict with the long-held philosophy that “if we want customers to have an opinion about our bank, we’ll give it to them”. That horse has already bolted.

The second phase is occurring right now. The emergence of the smart device such as the iPhone and Google Android enabled phones, is a driver for portable or mobile banking. While many banks may argue about security and the limitations of the screen or device itself, the fact is we heard exactly the same arguments about internet banking from those resistant to change within the bank. Already many banks are deploying what amounts to a cashless ATM on a mobile application platform – yes, you can do everything on a mobile phone you can do on an ATM except withdraw or deposit cash.

Here are a few statistics that support the second phase disruptive model:

  • 93% of U.S. population owns a mobile phone, and 27% of U.S. households are now mobile only
  • New mobile banking customers at Bank of America (BofA) during July-Sep 09: 150,000 (Sep); 210,000 (Aug); 220,000 (July) (Doug Brown, BofA)
  • 99% of mobile users view balances, 90% view transaction detail, about $10 billion of funds have been moved via mobile transfers/bill pay; 15 million location-based searches being performed (annual run rate)
  • More than 50% of iPhone users have used mobile banking in past 30 days (Javelin Strategy)
  • 33% of mobile banking users monitor accounts daily, 80% weekly (Javelin Strategy)

So if you didn’t need physical cash, what would happen then? This is the third phase― when we move to mobile payments on a broad scale – NFC-based (Near-Field Contactless) mobile wallets and stored value card micropayments are already here, but more is to come. The third phase also involves the convergence of your mobile phone and your credit/debit card, which is a logical technical step in the next five years. When these changes occur, our need for cash will reduce rapidly, then the disruption will be far-reaching…

Now, I can hear the proponents of cash already saying that cash will never die and that such an evolution in customer experience will just add to the complexity. To some extent I agree. However, the key to this is not whether cash will survive, but to what extent it will survive. If the majority of micropayments are all done via an electronic wallet or debit card based on a mobile device (or separate for that matter) and if larger transactions are all done electronically through internet banking or through mobile banking – what’s left?

In the UK 43 per cent of payments are done by Debit Card, and 23 per cent by Credit Card. Cash still makes up 32 per cent of payments, but as a percentage of the whole, it continues to reduce. Cheques make up just over 2 per cent of payments these days, so it is not hard to see these disappear entirely. If the growth of Debit card transactions accelerates further (not hard to imagine if contactless payment capability is built into your mobile) and other mobile payments like person-to-person (P2P) are enabled on your phone, this will further reduce legacy payment methods. It is not unimaginable to see a split of 85 per cent of UK payments done by mobile/card, and 15 per cent by cash in the next five years. In markets such as Japan, Korea, and Hong Kong the requirement for cash may be even less compared with mobile payments.

Changes expected in UK Retail Payments 2006-2015

There are the great unbanked who don’t yet have a bank account who currently rely heavily on cash, but as we will see with M-PESA and G-Money (Chapter 6) this is hardly a hurdle for mobile cash and payments. Success of the Octopus card in Hong Kong, T-Money in Korea and other such locations already proves the concept. We are only talking about the need for ubiquity to make it mainstream. What would quickly kill cash is a technical standard for mobile money that could be widely adopted globally by network operators and device manufacturers.

Even if only 50 per cent of cash transactions are replaced by electronic stored value cards, debit cards and mobile wallets in the next five to ten years, the current ATM and Branch infrastructure that supports cash becomes almost untenable from a cost burden perspective. If you no longer need to go to the ATM to withdraw physical cash or currency, then everything you do on the ATM today can be done on your mobile App phone. If branches no longer need to deal with cash, then a large part of the reason for their existence disappears. HSBC in the United Kingdom has recently announced its intention to stop support cheques, because usage has declined and there is no ongoing business case to support them. The Payments Council Board in the UK has agreed to set a target date of 31st October 2018 to close the central cheque clearing system. If cheques decline to the point where banks can no longer afford to support them and regulators no longer require the banks to provide support for them…

“There will be a critical review in 2016 when the Payments Council will decide whether sufficient change has occurred against agreed published criteria, to press ahead to do away with the cheque in 2018. There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement.[1]
– Paul Smee, Chief Executive of the UK Payments Council

Just like internet and mobile device disruption, this are not the inane ramblings of a technovangelist – this is an inevitable conclusion based on technologies already in place that are on their way to becoming the dominant channel of choice or mechanism of engagement. The behavioural adaption of consumers to the Internet and smart devices already indicates that this will likely take hold within the next three to five years.

Adoption rates are speeding up. Technology innovation is speeding up. Customers are adapting to these new changes quicker and quicker. Banks need to too.

Let’s just say by the time Phase Three hits – if the retail banks have not adapted, they will be clinically dead. Banks can either own the transaction and payment platform, integrate the technology, OR protest with their last dying gasp of breath that things are not really going to change. “The Branch is Back”, “Cash is King”, “Cheques will bounce back” – yeah, ok. You just keep telling yourself that and see how that works out for you.


[1] Source: Payments Council Press Release – www.paymentscouncil.org.uk