Customers today have more choices than ever. Not only that, they have more information about those choices than ever. And they can get that information anytime, anywhere, and on whatever device they happen to be using at the moment. These changes have collectively put customers in the driver’s seat.
If you’re a fan of strategy guru Michael Porter, you can think of this as a shift in one of his five forces of competition: buyer power. But even without a sophisticated analytical framework, you can feel this change in your daily life. That’s because you’re a customer, too, by virtue of the fact that you buy goods and services, day in and day out.
Try comparing the power you used to have as a customer with the power you have today. I recently tried this exercise by comparing the way I picked my bank in 1998 — when I moved to the Boston area for a job — with the options I have for picking a bank today.
In June of ’98, I wanted to switch to a local-area bank but didn’t know where to begin. I dreaded doing the research on top of moving my home and starting a new job. The woman who recruited me suggested that I sign up with Bank Boston because it had the most ATMs in our area. With a sense of relief, I did just that and went on with my life.
Over the intervening years, Bank Boston was acquired by Fleet Bank, which was later acquired by Bank of America. Today that makes me a Bank of America customer, even though I never decided to do business with it. Fortunately, the relationship has worked out okay. But what if it stopped being okay and I wanted to switch? How hard would it be to pick a new bank and switch in 2012?
To find out, I tried typing “banks in Winchester MA” into Google. Within 0.24 seconds, I had a list of seven banks with branches in my little suburb (population just more than 20,000), including two local banks and a private bank. One of the local banks had a website with a search engine that helped me locate surcharge-free ATMs all over the area, plus a “switch kit” to help me move my accounts.
What about Internet-only banks? Another Google search brought up quite a selection of those, including some I’d already heard about like Ally Bank and ING Direct. The search results also included links to reviews and recommendations as well as articles about how to pick the right online bank and whether going that route was right for me.
Of course, I could avoid a bank relationship altogether by joining the credit union offered through my employer. Or I could go with a cash management account from Fidelity, a company I’ve done business with for years. According to an email offer the company just sent me, I could get free ATM access worldwide, free online bill payment, free use of a debit card, free check writing, and free mobile deposits.
You get the picture: more options and more information. And the result is a shift in power that’s happening not just to me, and not just with banking, but to all of you and virtually every industry you buy from.
It’s happening to your customers, too. It’s easier than ever for them to find an alternative to your products or services and to buy from someone else this time around . . . or leave you forever.
In our upcoming book Outside In, my co-author Kerry Bodine and I make the case that the best way to thrive in this new reality is to systematically deliver a great customer experience — one that meets customer needs, makes it easy for them to do business, and makes it enjoyable for them to do business. We cite evidence that includes data from Forrester’s Customer Experience Index, which shows — among other things — that customers of credit unions consistently report a better experience than customers of any bank other than USAA.
Is it any surprise that during the four-week period in the fall of 2011 when Bank of America and other large competitors were announcing new fees, credit unions added about 650,000 new customers and $4.5 billion in new savings accounts? Or that USAA retains 97% to 98% of its members year over year and had one of its best years ever in 2008 — when most of the financial services industry tanked?
What will you do to help your business thrive in this new reality? Here is a suggestion to help you focus: I want you to go to the white board in your office and write something down in large letters so you’ll notice it every day. Or if you don’t have a white board, write it on a piece of paper and tack it up.
Here’s what I want you to write: “I need my customers more than they need me.”
That should be obvious. But unfortunately, it’s something we all tend to forget when we’re in our offices doing our jobs and not out in the world being someone else’s customer.
P.S. Attendees of Forrester’s Customer Experience Forum East on June 26th in NYC will get to see the real-life executive who inspired this advice, Kevin Peters, president of Office Depot North America.
Later that morning you’ll see Mary McDuffie, EVP of delivery channels and communications at Navy Federal, the world’s largest retail credit union. Mary will provide a sense of why credit union customer experience consistently beats bank customer experience. Fun!