The Relationship Experience

The RelationshipExperience

How banks must align their strategy to create a successful customer experience

Research Report

About the Research

The Relationship Experience, a research project launched byBAI in partnership with NewGround in June 2006, is based on a nationally representative survey completed by 2,430 U.S.consumers in August 2006, over 40 telephone interviews with senior retail executives and a comprehensive diagnosticsurvey of the branch experience (brand, place, culture andtechnology) completed by over 450 retail banking executivesfrom U.S.-based national, regional, and community banks.

The research was designed to understand the specificbranch-based experiences that have the greatest impact oncustomers’ relationship receptivity and loyalty with their primary bank. It also sought to quantify how these factorsimpact the deposit and loan wallet share that customers allocate to their primary bank. Our analysis generated a customer segmentation framework along with tools andinsights that banks can utilize to enhance the branch banking experience.

This research follows BAI’s 2005 The Frontline Experienceresearch project, which surveyed over 3,700 U.S. consumersto understand and segment how retail banking customersdefine the concept of having a relationship with their bank.

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The Relationship ExperienceHow banks must align their strategy to create a successful customer experience

The relationship revolution has begun.

The business climate continues its seismic shift fromthe service-oriented society that reigned during thelast two decades to the experience economy that isbeginning to take hold in this century. In this emerging experience economy, consumers are seekingmore than just good service from their financial services providers, they want a personal, memorableand customized relationship with them.

As a result, the financial services industry is undergoingits own paradigm shift as companies move from aretail delivery strategy built around just “service” toone that is built around the more holistic and collab-orative idea of “Customer Experience.” For banks, therepercussions of this changing dynamic are massive,particularly as the industry itself becomes ever moreconsolidated and competitive. Frontline employeesand managers will play a make-it or break-it role in how each financial services provider handles this transition, as BAI established in last year’s TheFrontline Experience and 2004’s The Frontline Factor.

The stakes are high. The bank that proves that it cansuccessfully align its goals for the organization’s brand,place and culture and can articulate and deliver thisclear vision to customers will reap tremendousrewards. The bank that cannot create and instill a unified, forward-thinking management vision evenwithin its own staff will flounder.

According to the latest pioneering research from BAI,sponsored in part by NewGround, the road ahead islikely to be a challenging one for financial institutionsas they strive to meet the twin objectives of carryingthese changes forth with their customers and theiremployees. Some banks lack the clear insight as to whatkind of value proposition they currently offer their customers, and what their customers want from themgoing forward, according to the research. Clearly, under-standing what customer views and expectations are —and, importantly, where disconnected or mistaken per-ceptions may lie — is a critical first step in proceedingdown the road to the relationship experience.

But where is the road map for the rest of the journey?

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Getting into a Relationship

After years of battling to win over deposits and invest-ments by virtually killing their customers with kindness— in the form of great service quality — in order tocompete in the new experience economy, banks musttake their approach to the next level. According to previous research from BAI, relationships have becomeparamount in the eyes of most bank executives and atleast some consumers. While banks are acutely aware ofthe importance of having relationships with customers,

many executives are at a loss on how to cultivate thoserelationships, or even how to differentiate which customers are open to building deeper ties. Accordingto The Relationship Experience, a new BAI studylaunched in partnership with NewGround, Accenture,ARGO Data Resource Corporation, SAP and Unisys,there are pronounced differences among customers’interest in engaging with their banks.

As part of a nationally representative survey of 2,430U.S. consumers in August 2006, BAI sought to defineconsumers’ loyalty, based on their satisfaction with their

The Relationship Experience

Just like personal relationships, developing therelationship experience takes a fair share of patience and passion. And, similarly, sometimes the communication can get muddled or confusedalong the way.

Enter WayPoint.WayPoint is an innovative diagnostic model,

which illustrates the internal perceptions of a financial service provider’s specific brand,place and culture in order to help companiescreate a consistent and cohesive shared visionof retail delivery.

Created by NewGround in partnership with BAI, WayPoint represents a uniqueorganizational management diagnostic both in its level of detail and completeness, and in thefact that it evaluates an organization based onthe critical blend of brand, place and culture thatis central to creating an individual “CustomerExperience.” WayPoint also holds the uniquedistinction of being the only comprehensivediagnostic focused on financial services retail delivery.

Specifically, WayPoint plots individualperceptions of the financial services providerwithin one of four different retail deliveryquadrants, as paralleled in the The ExperienceEconomy by B. Joseph Pine II and James H.

Gilmore. The WayPoint quadrants are defined as:Traditional — also known as “All Things to All

People.” This retail delivery style comprehensiveservice offering, not focused on any particularmarket, which is also departmentalized, zoned by function and takes a “shotgun” approach to its market.

Differentiated

Undifferentiated

Market Pricing

Progression of economic value applied to retail platform quadrants

Premium

CompetitivePosition

Revelant to

Irrevelant to

Needs ofCustomers

Experience

Traditional

Products

Market

SOURCE: THE EXPERIENCE ECONOMY, JOSEPH PINE & JAMES GILMORE

SIDEBAR FIGURE 1

Each of the quadrants has different long-term implications —particularly with competition and pricing.

WAYPOINT POINTS THE WAY

primary banking provider, their likelihood to obtainmore products or services from that provider or to recommend that bank to a friend or family member.The research was designed to understand the specificbranch-based experiences that have the greatest impacton customers’ relationship receptivity and loyalty withtheir primary bank. The study also sought to quantifyhow these factors impact the deposit and loan walletshare that customers allocate to their primary bank.Surprisingly, only about one customer in five (20%) is“loyal” to their primary bank relationship, while one infour are positive about it, and 55% of those customers

would qualify as hesitant or at risk of leaving.

Notably, although perhaps not surprisingly, the surveyalso found that customers predisposed to relationshipswith banks are most loyal to their banks and are lesssensitive to pricing, putting a premium instead on“excellent customer service” and “warm, enthusiasticand friendly employees.” This finding builds directlyon what BAI uncovered with its 2005 research project,The Frontline Experience, which surveyed more than3,700 U.S. consumers to understand and segment howretail banking customers define the concept of having a

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Product — aka “Specific Things to All People.”This retail delivery style is focused on product and service offering, offers a narrower selection of products and services than traditional, and hasfewer barriers within the environment. It emphasizesa better retail design and a more upscaleenvironment.

Market — aka “All Things to Specific People.”This retail delivery style is characterized by focusing on a specific market, with a crafted product offeringaround that market. It stresses the idea of finding “the right product for the right people,” and createsfew barriers to entry with retail locations that aremore like stores than traditional branches.

Experience — aka “Specific Things to SpecificPeople.” This retail delivery style emphasizedexperiential engaging environments, which are multi-sensory and well-branded. Banks in thisquadrant have branch locations that often resembleboutiques and combine a powerful on-stage and off-stage presence.

WayPoint also plots the management teams’perception of where they are in relation to where they would like the organization to go in the future.This provides the valuable insight essential for thesenior management team to not only chart a coursefor the company’s future retail delivery, but also tosee where existing gaps lay. For example, WayPoint’sbaseline statistical report, based on online surveyswith retail executives, uncovered a wall between front office and the back office, which can dilute the customer experience and limit what a financialservices provider can offer.

According to Kevin Blair, president and chiefoperating officer for NewGround, WayPoint respondsdirectly to the need in business today for a diagnostictool — one that can look at performance and culture in a way that involves and supports the managementand the staff who must ultimately deliver theexperience to their customers.

“Our belief has been that the first step isdetermining the alignment, or the misalignment, of the management team,” Blair says. “This is thevery foundation of building a company in theExperience Economy.”

Reply 12%

Replies:

1. Slightly unchanged and narrowing of competition, alter delivery slightly

2. More competition, service offering expanding, more energetic sales culture

3. Unsure of what changes may occur

4. Designed more around the market and consumers’ preferences

5. Dramatic change, increased, non-traditional competition, focus on relationships and non-traditional service offering

Reply 237%

Reply 32%Reply 4

13%

Reply 546%

SOURCE: NEWGROUND WAYPOINT DIAGNOSTIC, BAI RESEARCH

SIDEBAR FIGURE 2

Future of Banking

4


relationship with their bank. That landmark reportestablished that while bank executives underscored theircommitment to the relationship, it was the customer’sreceptiveness that determined the likelihood for customers to commit to a bank. As the 2005 surveydiscovered, about 39% of consumers expressed thatthey were willing to consolidate their money with one institution, and 41% of consumers overall saidthat they would trust their bank to handle all their financial needs.

Who’s Worth the Effort?

But consumers are a varied bunch. And what the 2006survey reveals is that there is a real gap in sentimentbetween the “loyal” customers and those who are atrisk of leaving the bank or merely positive about theirbank. Case in point: 83% of those customers whowould be defined as loyal, because they are more trust and relationship-driven, say they would trusttheir primary bank for all their financial needs. That’salmost twice the rate of theso-called hesitant group,only 42% of whom wouldtrust their bank to handleall their financial needs.

The relationship is key —some customers are recep-tive to it, and others are not.The majority of customerswho are not as receptive to arelationship will tend tomake their choices abouttheir financial institution— how much of theirdeposits or investmentsthey should entrust to thatprovider, or whether to gothere first when opening

new accounts — based simply on convenience, serviceand value. But the core group of customers who eitheroffer a high value to the bank or are receptive to forming a relationship stand out in terms of their commitment to their financial services provider andwhat they bring to the table.

But how exactly should banks go about building arelationship with customers? There’s little doubt thatmost of the basic building blocks are in place withmost successful institutions doing a good job initiallyin engaging customers. The problem lies in that critical next step — as the relationship between thecustomer and the bank matures, it seems, the honeymoon ends. The level of engagement declines,and often customers begin to lose trust and confidencein their primary financial provider and become more open to shopping around at other financialproviders when considering new accounts or products.It is imperative that banks identify the “relationship” segments and continue to engage with them through-out the relationship.

Recognition& loyalty

Advice &consultation

PriceExperienceProductperformance

Access &convenience

RelationshipCustomerservice

11%13%18%21%

24%29%

53%

63%

0

10

20

30

40

50

60

70

80

Recognition & LoyaltyAdvice & ConsultationPriceExperienceProduct performanceAccess & convenienceRelationshipCustomer Service

“What primary value propositions does your bankcommunicate or offer to your customers?”

(Percentage of Mentions)

SOURCE: BAI RESEARCH

FIGURE 1

Customer service and relationship-building are the top value propositions communicated to customers

Note: Respondents provided multiple responses.

All the Bank’s a Stage

So, how can banks keep the love alive with theirclients? BAI’s research underscores the importance ofcreating experiences — memorable events that engagea customer and speak to their specific needs in a personal way. Drawing insights from The ExperienceEconomy: Work Is Theatre & Every Business a Stage byB. Joseph Pine II and James H. Gilmore, the researchconfirms that in order to keep the relationship firesburning with their customers, banks need to createexperiences that encompass more than just good customer service.

Going one step further, it’s clear that the frontline staffplay an essential role in creating those personal, mem-orable and customized experiences with customers. A frontline employee who understands his or her fundamental role in creating the experience with the customer can be worth their weight in gold, literally.

NewGround believes that, based on its own researchand work with the financial services industry, banksneed to consider how they invest in these frontlineemployees to help them understand the bank’s strategic goals and its desired approach to the market.Employees from teller on up through the ranksshould have a clear grasp of their bank’s unique brand,place and culture, so that they might translate thatinto how they approach their customers and createexperiences as appropriate. Senior managers andfrontline employees alike need to have a shared, cohesive vision of their retail delivery approach inorder to effectively transform their organizations.Having managers or staff who are unclear or out ofstep with delivering a dynamic customer experiencecan lead to organizational dysfunction and ultimatelydrive away otherwise loyal customers.

Unfortunately, being out of alignment is more common for financial services companies than onemight think, according to NewGround’s WayPointmodel. WayPoint is the industry’s first diagnostic that

helps organizations measure the perceptions and delivery of their brand, place and culture (please seesidebar on WayPoint on page 2). More than 95% ofthe organizations that have participated in theWayPoint diagnostic have considerable misalignmentof their retail delivery perceptions. There are also significant gaps in the alignment of brand, place andculture within organizations in their delivery of adynamic customer experience. The research also concludes that organizations with larger retail deliverynetworks often have a lower propensity to differentiatethemselves and fail to deliver dynamic customer experiences through all of their environments.

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The Relationship ExperienceThe Relationship Experience

WAYPOINT DIAGNOSTIC MEASURES:BRAND, PLACE AND CULTURE

Brand

• Positioning

• Awareness and familiarity

• Relevance, esteem and brand loyalty

• Vision

• Expectations and perceived quality

Place

• Desired levels of convenience

• Channel preferences and usage

• Channel attributes and functionality

• Branch layout, design and merchandising

• Virtual presence

Culture

• Organizational design: layers, positions, roles and goals

• Staff skills and knowledge

• Employee performance and satisfaction

• Compensation and training

Moving in the Right Direction

The good news? Bankers get it.

And what the research shows is that a vast majority ofbankers realize that the retail banking products andservices they offer have largely become commoditized.They see service excellence and relationships with customers as the key means of differentiating themselves from competitors. Indeed, 63% of bankers interviewed pointed to customer service as a major selling point, while 53% thought their relationship-building was their top value proposition.(Figure 1) Far fewer bankers saw traditional forms ofdifferentiation — like price or name recognition —holding as much sway over their customers in the faceof comparable product offerings and thin pricingmargins. Even more hopeful, most of the bankers BAI interviewed do see creating great customer experiences and differentiating delivery as a way to setthemselves apart from the pack.More than one-third (35%) citedexperience, and another 19%said it was through delivery.(Figure 2)

Clearly, bankers recognize thatthere are changes on the roadahead. And, further, many arealready on their way to achievingthe relationship experience. Butthey recognize that there’s still away to go. To sum it up, in thewords of one banker interviewedby BAI: “In this industry, differ-entiating solely on products isvery tough; differentiating basedon price is a losing proposition;and differentiating based on service is hard to measure becauseany bank [could say] ‘We deliver

better service; we deliver personalized service.’ Witheverybody saying the same thing, there’s probably no differentiation. Experience is our route to differentiation, and we believe differentiation is the key to standing out and being a player.”

Why Relationship Matters

Financial services are shifting from the traditional service delivery that succeeded in the past to a customerexperience delivery — wherein companies need to domore than just deliver a good product in a good way,they also have to customize their product offering tomeet the customer’s exact needs in addition to makingthe experience feel memorable and special. In manyways, this new delivery approach adheres to the age-oldmantra that, “It’s not just what you do, but how you doit.” But, as many organizations are realizing, actuallycreating a delivery strategy around this ideal is easier saidthan done.

The idea behind delivering an“experience” has been viewed bysome as a rather groundbreakingand controversial idea. In TheExperience Economy, authors B.Joseph Pine II and James H.Gilmore make a strong case forhow this notion is simply themost natural next step in the evolutionary progression ofretail. (Figure 3) Businesses witha decidedly unique service orientation — think Starbucksor Nordstrom — have for thelast three decades been overtak-ing less noteworthy commoditybusinesses. But, as this uniqueservice orientation has becomemore commonplace, the bar isbeing raised again.

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Experience35%

“Do you believe that retail bankinghas become commoditized?”

Delivery19%

Relationship 12%

Don’t Know 12%

Customer Focus 8%

Product 8%

Technology 8%


Solutions vary – most executives think that relationship management,

differentiated delivery or uniqueexperiences provide the edge...

FIGURE 2

Bank executives can see the writing on the wall. BAI’sresearch revealed that 94% of bankers agree to someextent that retail banking has become commoditized,and are concerned about it. For banks, the drive tokeep up with the competition has created a lack of differentiation among product offerings and pricing. A perfect example of this is free checking — a novel,eye-catching offer when it first hit the market morethan a half a dozen years ago, now virtually every bankoffers some kind of free checking product. Indeed,many leading banks like KeyCorp, Citigroup andWashington Mutual & Co. have been forced to kicktheir offerings up a notch by adding further perks —iPod giveaways and rewards programs — in order tomake their free checking offers more attractive.

Pine and Gilmore believe that the cutting-edge successstories of retail’s future will need to define themselvesby going that extra mile and orchestrating memorableexperiences for their customers, which the customerswill come to associate (positively) with the company’sproducts and services. To illustrate their vision, Pineand Gilmore use the analogy of the retail delivery channel as being the theater stage, and the services orgoods being delivered as the props. The memory of

seeing a play or a musical relies just as much on theplayers who are performing, their passion and talentand their knowledge of what they’re performing, andthe ambiance of the theater as much as the work that’sbeing performed — and arguably, these factor just asstrongly into why a person would keep coming back.Similarly, Pine and Gilmore reason, successful retailoperations will engage customers by “staging” theirown unique experiences — ones in which organiza-tions must consider all aspects of the service that’s beingperformed. A prime example for this today is the WaltDisney Co. — other companies make animated filmsand have theme parks, but Disney has created a brandthat remains one-of-a-kind and unmatched based notonly on what it is delivering, but how skillfully it isdelivered and the experience that surrounds it.

All in the Execution

Within this vision of retail’s future development of thefinancial services industry, it’s easy to see how frontlinemanagers’ and staff ’s knowledge and skill play a

critical role in keeping customersengaged. After all, would a theater patronkeep renewing their season tickets if theactors couldn’t remember their lines andgave less than adequate performances? It’salso easy to see how difficult a conceptthis can be to execute upon, because it’sall somewhat intangible. Quantifying therelationship or the experience can bemore difficult than quantifying goodservice. Banks therefore must more carefully consider how they execute theirdelivery, taking into consideration notjust their service quality, but the overallimage they are creating through their ownspecial blend of brand, place and culture.

For bank executives, the recognition ofthisneed to develop more of a relationship

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Differentiated

Undifferentiated

Market Pricing Premium

0

10

20

30

40

50

60

70

80

Don't KnowMaybeYes

CompetitivePosition

Revelant to

Irrevelant to

Needs ofCustomers

ExtractCommodities

MakeGoods

DeliverServices

StageExperiences

SOURCE: THE EXPERIENCE ECONOMY, JOSEPH PINE & JAMES GILMORE

FIGURE 3

The progression of economic value that is occurring in other industries is also taking place in retail banking

built upon experience is grow-ing. In BAI’s 2004 survey of 520retail banking executives, nearlyhalf (49%) pointed to “relation-ship banking” as the primaryvalue proposition they were trying to communicate to custo-mers — even more importantthan quality customer service,which was most important to41% of the bankers surveyed.Executives at the country’s largestbanks see relationship as evenmore vital — 59% of bankers at institutions with more than$25 billion in assets pointed torelationship banking as theirmost important value.

For banks, the shift toward delivery that is more experience-focused will not only help them differentiateso that they can win and retain more customers, it willmake those relationships more lucrative as well.According to BAI’s consumer research survey, as trust and customer loyalty develop over time, price sensitivity becomes less of an issue. In many instances,loyal bank customers ranked excellent customer service and warm, enthusiastic and friendly employeesas much more important than having their provideroffer superior rates on products. With hesitant customers, who are less engaged with their financialproviders, the converse tends to be true — these consumers tend to value price as much more importantto them than customer service or employee manner.

Pine and Gilmore’s Experience Economy essentiallyasserts the same notion — the more compelling pur-veyors of “experience” retail tend to attract customerswho are willing to pay a premium for it. After all, manycaffeine-loving consumers do not question paying a bitmore to buy their lattes from Starbucks than fromsome lesser-known coffee shop around the corner.Bankers are on-board with the idea that this same basicpremise translates to the financial services industry.

According to BAI’s research,81% of bank executives firmlybelieve that developing relation-ship experiences will increasebehaviors that lead to financialsuccess through a combination ofincreased customer satisfaction,greater loyalty and earning moredeposits and profits.

But, according to research fromNewGround based on itsWayPoint diagnostic, banks stillbelieve they have work to do tomeet the new demands of theexperiential model. A whopping95% of participants in WayPoint’s

baseline statistics report admit that they have a traditional retail delivery model, in spite of the fact thatthe market is shifting towards an experiential model —indicating a major disconnect between what the consumer expects and what the financial servicesindustry is providing. Only 8% of respondents say thattheir branches deliver a differentiated experience, whilejust around one-third (34%) believe their branches tobe “engaging.” More than a quarter (29%) considertheir branches to be generic — another 3% would goso far as to say “boring.” (Figure 4)

Keeping the Frontline Aligned

While 53% of the WayPoint respondents perceivethemselves as being ‘relationship-focused’ in their business culture, only one-quarter of them (25%) feelthat their frontline employees offer up a total customerexperience. And, perhaps most startling consideringthat the bankers can see where the market is going, only 5% of bankers surveyed say that their training programs focus on the total customer experience.

8


Generic29%

Boring3%

Current26%

Engaging34%

Experience8%

SOURCE: NEWGROUND WAYPOINTDIAGNOSTIC, BAI RESEARCH

FIGURE 4

Our current frontline retail experience can be described

as follows:

Forty-six percent of respondents to WayPoint’s diagnostic model believe that there will be significantchanges in banking to come — including more competition and an increased focus on customer relationships. More than half of the respondents(55%) say that branches in the future will be more“dynamic” and “multi-sensory” in order to promotestronger customer provider ties and raise the game ofrelationship banking. (Figure 5)

Leaders in the retail banking industry have alreadyillustrated the shades of things to come. WitnessWashington Mutual’s patented “Occasio” branches —where customers are often welcomed by concierge,and traditional teller windows are banished in favor of dialog towers. These branches also often have children’s play areas so that busy parents have a lessharried experience while doing their branch banking,and they are encouraged to spend a little more timeengaging with employees. Similarly, CommerceBancorp has developed an almost cult-like followingamong its customers, not only by offering an almostunprecedented level of customer service, but by offering added benefits like free coin-countingmachines that draw consumers into the branches(whether they bank with Commerce or not), andseven-day-week service at many locations.

As an oft-cited business analogy to Wayne Gretsky’shockey prowess goes, bank executives can indeed seewhere the puck is going. But getting from where theyare, in many cases, to where they need to be in termsof building a brand, a place, and a culture around therelationship experience may still prove an uphill battle.

Lost in Translation

One of the key challenges to developing a modelaround experience is that it can be difficult to measure in its effectiveness. About two-thirds (65%)of bank executives BAI interviewed believe that a better way of measuring customer impressions shouldexist, so that banks have a better idea of how theywere performing in terms of turning those customerexperiences into more accounts, deeper relationshipsand more profits. (Figure 6)

Another issue is that it can be difficult to communicatea commitment of exceptional customer experience tofrontline employees, unless the senior management iscrystal clear on its own view of the organization’sunique brand, place and culture. After all, the concept

is much more ephemeral than giving representa-tives a quota of new accounts to open, or even acustomer service playbook to cue interactions.

In spite of banks’ best efforts to create a positiveand meaningful relationship experience plan,NewGround’s WayPoint diagnostic modelpointed out how the bigger picture can get lostin translation. More than 95% of participants inthe WayPoint diagnostic have considerable misalignment in the perceptions of their retail delivery across the organization. Senior managers and frontline staff need to have a consistent view of their company and its practices from its hiring to its marketing and measurement, from how it trains employees tohow it offers incentives to them.

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Reply 13%

Replies:

1. The majority will remain traditional banking environments

2. Environments that are designed around branded products and services

3. An environment that is sales focused

4. Environments that are designed around the specific needs of targeted customers

5. Dynamic multi-sensory experiences that focus on targeted customers and promote relationship building

Reply 24%

Reply 317%

Reply 421%

Reply 555%

SOURCE: NEWGROUND WAYPOINT DIAGNOSTIC, BAI RESEARCH

FIGURE 5

Which statement best describes the banking delivery environment of the future:

Within the relationship experience model, much ofthe success of the organization and its approach relieson the interaction between the frontline employeeand the customer. Six out of 10 respondents toWayPoint’s baseline statistics report said they believethat the ideal future frontline employee will focus onthe customer experience and will be a trusted financial service solution provider. And nearly allbankers — more than 93% — indicated that thesefrontline staff positions would require a combinationof customer relationship and sales skills to succeed.

Yet, ironically, even among respondents who believethat their branches are already an “experience” for the customer, only one-third (33%) say they currentlyincorporate formal training on relationship manage-ment. This points out a troubling disconnect betweenhow well banks are creating an experiential environ-ment and actually educating their frontline staff onhow to deliver it.

As a result, frontline staff are often left with conflictingobjectives that do little to establish the company’s position and image. For example, in spite of the factthat the amount of time consumers spend in the retailbranch is directly proportional to how much business

they conduct, 22% of respondents to the WayPointdiagnostic say that their main focus is on moving customers in and out of branches as quickly and efficiently as possible. Only a meager 8% of bankers say that their environments are engaging enough tomake customers want to linger, browse, shop and buynew products.

Conclusion

The relationship revolution is indeed underway.

Consumers have grown to expect good prices, low feesor no fees, a great selection of products, convenientlocations, and in many cases, stellar customer servicefrom their bank. The only avenue by which the mostcompetitive and outstanding banks can still aspire tostand out is by offering their customers a compelling,personal and memorable experience — just as retailsuccess stories in other industries have already shown.Understanding this, bankers are already making aneffort to cultivate these impressions within theirorganization — but in many cases, they’re fighting thetide of tired retail operations, outdated serviceapproaches and conflicting messages that do little toforward this new way of thinking.

Communication issues are a classic challenge in relationships. So, perhaps it’s not surprising that asfinancial service providers strive to develop more full-fledged “relationships” with their willing customers, the first issue that they need to contendwith is one of communication. In order to conveytheir institution’s unique brand, place and culture andthe experience implicit within, banks first must beable to instill this ideal within their own employees,especially at the frontline.

Creating a successful relationship with customersrelies first and foremost on not only getting frontlinestaff and managers to sing from the same sheet of

10


Don’t knowMaybeYes

9%

26%

65%

0

10

20

30

40

50

60

70

80

Don't KnowMaybeYes

“Do you think there’s a better way to assess relationships withcustomers and determine their potential for the future?”


FIGURE 6

Two-thirds of executives believe a bettermeasurement does (or should) exist for

capturing customer impressions

11


music, but also to harmonize. Many bankers see wherethe industry is going, but are unsure how to get there,or even how far they may be from their destination.

Banks also need to determine where they are withregard to creating the relationship experience. Then,they need to design a plan for their own relationshipexperience — what it requires of the retail deliveryoperation and the staff, how that plan will differentiatethe institution, and how it fits with the company’s ownblend of brand, place and culture — if there’s notalready such a relationship experience plan in place.

Banks should consider seeking the advice and supportof partners that can help guide them along the path to creating and cultivating their own relationshipexperience. The additional efforts are well worth it.Based on research, banks that can effectively make theleap to a well-executed, experience-based model forretail delivery will reap the rewards of larger deposits,greater retention rates, better fee income, and generallymore satisfied and loyal customers to boot. For banksand their customers, it’s a win-win relationship.

TACTICS TO IMPROVE THE FRONTLINEEXPERIENCE (FOR EMPLOYEES AND CUSTOMERS) AND ENHANCE RELATIONSHIP RECEPTIVITY

• Define the desired customer experience.

• Focus on leadership — at corporate and branchlevels. Determine the leadership behaviors andactions that will have the greatest impact on theculture of the organization at the customer andemployee levels.

• Understand the organizational factors thatfacilitate the values and motivations (drivers) of frontline employee engagement and customer focus.

• Align employee capabilities to your strategy and contextualize frontline employee training.

• Simplify and/or automate operational and/ortransactional processes so employees havemore time to focus on customers.

• Customize customer relationship developmentactivities to customer attitudes and preferences.

• Launch a coordinated effort to measure thecustomer experience at the branch level at least once per year.


BAI

One North Franklin, Suite 1000

Chicago, IL 60606

Ph: 312-553-4600

Fax: 312-683-2426

www.bai.org

BAI is the financial services industry’s leading professional

organization focused on enhancing employee and

organizational performance. Through ground-breaking

research and an award-winning magazine, Banking

Strategies, BAI provides the latest insights on complex,

strategic issues in financial services. Through seminars,

graduate schools and conferences — including the

industry’s premier event, BAI’s Retail Delivery Conference

& Expo — BAI reaches thousands of financial services

professionals each year to deliver content designed around

critical business needs and to facilitate vital connections

between financial services professionals, industry experts

and solutions providers. Focusing on business issues and

performance drivers, BAI applies its extensive line of

training, metrics and employee assessments to help clients

leverage their most important asset — their employees.

The BAI research team for this project included:

Paul McAdam Senior Managing Director, [email protected]

Ajay NagarkatteManaging Director, [email protected]

About BAI

NewGround

15450 South Outer Forty Drive, Suite 300

Chesterfield, MO 63017

Phone: 636-898-8100

Fax: 636-898-8111

www.newground.com

NewGround is an integrated strategic marketing, branding,

design/build, merchandising, and employee education firm

that specializes in the financial industry. We capitalize on

our years of experience to help you increase the power

of your brand, design and build new retail branches or

operational facilities, and evolve your culture to better

deliver your company’s core values. Our breadth of services

and integrated delivery set us apart in the industry, and

ensure the best experiences for you and your customers.

The company is headquartered in Chicago, IL with principal

offices in St. Louis, MO; San Francisco, CA; Portsmouth, NH

and Toronto, Canada.

The NewGround research team for this project included:

Kevin BlairPresident and Chief Operating [email protected]

Kevin DulleDirector of Special [email protected]

Gaurav BanerjeeMarket Analyst and Applications [email protected]

About NewGround

Copyright 2006, Bank Administration Institute and NewGround Resources, Inc.Chicago, IllinoisUSA

ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrievalsystem, or transmitted in any form or by any means, electronic, mechanical, photocopying,recording, or otherwise without the prior written permission of the publisher and copyright holder.

This publication is designed to provide accurate and authoritative information in regard to the subject matter. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice.

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The Relationship Experience