The increasingly strict regulations regarding compliance and fair treatment of customers across many industries – financial services, utilities and telcos being the most obvious examples – are great news for consumers. For organisations themselves, however, they pose a number of challenges.
Failure to comply with regulations can potentially result in significant fines from regulators but perhaps more importantly in the long-term, it can have serious ramifications for the company’s reputation. It’s a double-whammy that few companies can emerge from without significant damage.
Compliance isn’t optional. But rather than treating it as a necessary evil, there are businesses that are taking a proactive approach that will ensure they meet the appropriate requirements, while also gleaning information that will improve the customer experience in both the short and long term.
A focus area for these new regulations and compliance is outcome testing. The Financial Conduct Authority’s (FCA) focus on treating customer fairly revolves around two key principles:
- All firms must be able to show consistently that fair treatment of customers is at the heart of their business model.
- Above all, customers expect financial services and products that meet their needs from firms they trust.
It is this latter point – ensuring that customers purchase products that are suitable and meet their needs - that is driving the need for many of the current outcome testing activities. For the purposes of this discussion, we’ll use the example of a financial services organisation that has been running such a programme for a couple of years . The process that it uses can be simply described as follows:
- A customer submits an application for a product –credit card, current account, ISA, etc. via the company’s website
- Within 24 hours, the customer receives a document via email summarising all the salient features of the product they have purchased – e.g. APR, repayment terms, notice periods. All are laid out very clearly for review.
- As part of that communication, the customer answers a few questions confirming that they understand the key attributes associated with the product. In addition, there is a final question which asks, quite simply, whether they are happy with their purchase.
- If the customer responds with “no” to any of the questions, an alert is triggered within the organisation. A member of the customer care team will then make a call to the customer within 24 hours to explain and discuss any parts of the product that the customer wasn’t sure about.
- The customer care representative will then run through the questions again to ensure the customer is now sure about each element and is happy with their purchase. If there are still any areas of confusion or doubt, the representative is able to either recommend another product that’s more suitable or, if necessary, cancel the order.
It’s a simple process but the benefits are far reaching.
At a customer level, it’s very reassuring to have a summary of what can be a fairly complex purchase, particularly with a proactive follow up to resolve any niggling doubts. This helps get the relationship off on the right foot – vital when these are long-term products – and provides a cooling off period or safety net for any customers who need it.
From a business perspective, clearly there is an immediate benefit in getting the relationship with the customer off to a good start however this is really just the tip of the iceberg.
From a regulatory perspective, the process provides an audit trail of the customer interaction that proves that the company took every reasonable step towards ensuring that the customer made the right purchase and that they fully understood that purchase. With PPI claims still stinging every leading financial institution in the country, having this audit trail available is a hugely valuable tool in addressing any questions over adherence to FCA regulations and compliance.
Taking it further
That’s the prime business case dealt with, but smart companies are taking this a number of steps further. Rather than just ensuring compliance on a customer-by-customer basis, many organisations are now using some Voice of the Customer (VoC) practices to make the most of their outcome testing programme. For a start, the financial organisation we have referenced above has implemented an aggregated alerting capability.
By setting a target KPI around customer responses to their follow-up questions, the head of risk and compliance is immediately alerted via an automatic trigger if the business’ overall KPI drops below a certain level. Through root-cause analysis, they can investigate what is causing confusion for customers and implement steps to address the issue. By drilling down to this level, the compliance team is then able to work with the product management and marketing functions to resolve the issue. This may be a simple matter of changing the information on the website to more clearly explain the terms and conditions, or may require a re-engineering of a product to better meet the needs of customers.
Voice of the Customer and outcome testing may seem like strange bedfellows, but there are many parallels in the approach, tools and actions that are used by both.
Not only does this allow businesses to identify and resolve customer issues, like any good VoC programme, it also allows the organisation to track the results of any changes made. Particularly in cases where all that is needed is a change to the way the information is phrased, it’s simple to measure and monitor the impact of that change by continuing to track the KPI associated with that area.
The win here is that not only do the scores return to where they should be (great, but metrics can never be the end result), but the overall experience for the customer is that bit smoother and the team is free to focus on improving the next potential issue.
Voice of the Customer and outcome testing may seem like strange bedfellows, but there are many parallels in the approach, tools and actions that are used by both. Furthermore, with both disciplines, there are significant benefits that can be realised by businesses who take a truly proactive and pragmatic approach to each. These benefits go beyond “nice to have” and are capable of delivering strategic, long-term business change that more than demonstrate Return on Investment.
Ultimately, though, it’s about doing the right thing by the customer by listening to them, taking action where necessary and then rolling out the lessons learned across the business. And if that process ensures that companies avoid huge fines from the FCA – well, so much the better!
About Chris Brown
Chris Brown is Director: Customer Experience Management at Confirmit.
He is a highly experienced CEM practitioner, with a proven track record of delivering operational, financial and organisational achievement on behalf of some of the world’s leading research and corporate organisations.
His current role is to provide support and guidance to Confirmit’s corporate clients, ensuring the successful definition, design and implementation of corporate-wide CEM/ VOC programmes and ultimately the delivery of genuine business value back to the business, through the use of Confirmit’s industry leading technology.
His background is in the market research industry, having spent 25 years delivering market research projects, from simple field & tab, to the most complex multi-country, multi-million pound projects.