Magazine article American Banker

It Can Pay to Lead Customers Rather Than Follow Them

Magazine article American Banker

It Can Pay to Lead Customers Rather Than Follow Them

Article excerpt

"Listening to the customer" remains the foundation credo at many financial services companies.

Market research, such as customer surveys, focus groups, and the more sophisticated - and expensive - psychographic research, are often seen as the best ways to hear and understand the customer. They are viewed as the key to discovering the next major product or service offering.

Now, however, financial institutions are beginning to understand the limits of expecting customers alone to determine their future product or service requirements.

Fortune magazine recently quoted Barry Diller as saying: "We become slaves to demographics, to market research, to focus groups. We produce what the numbers tell us to produce. And gradually, in this dizzying chase,

our senses lose feeling, and our instincts dim, corroded with safe action."

Market research remains important but by itself cannot supply the information and insight required for the future. Worse, heavy reliance on today's customer attitudes can even be dangerous to financial performance and growth.

What customers do not know. Customers often cannot tell you what new products or services they want. Asking customers about their wants would not have prompted development of the Sony Walkman. Consumer testing would not have shown that millions wanted and would buy a personal sound system.

Within financial services, the dominance of the automated teller machine

and its redefinition of the role of the bank branch and teller interaction

were also not predicted by customer research. In fact, many bank customers

still say in focus groups that they want personal attention.

Avoiding inertia. Customers are often satisfied by current products and

services. The "inertia factor" constrains them from being open to new options until an incentive to use those options is introduced.

The experience of banks such as Wells Fargo and nonbank competitors such

as Merrill Lynch shows that customer satisfaction with a more nontraditional business approach can be high. …

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