What can advisors learn about attracting clients from one of the world’s most admired companies?
Each year, Fortune Magazine surveys 4,000 senior executives to compile its list of the world’s “most admired companies.” A perennial leader on that list is American Express, which in 2016 ranked right behind General Electric and immediately ahead of Costco.
One of the areas where Amex ranks highest is innovation. That’s why I encouraged the students in my MBA course on innovation in financial services to attend a recent talk by the CEO of Amex Canada on “Reinventing Personal Service in a Digital World.” And that’s why I went out of my way to attend the talk myself, to learn firsthand what Amex is doing to grow its customer base.
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Here are seven takeaways from the talk by Rob McClean at the Rotman School of Management at the University of Toronto.
Change or die
McClean began by talking about the critical importance of a clear vision that defines every aspect of your business. For Amex, “becoming the world’s most respected service brand” drives all its decisions around customer communication, products, staffing and pricing. Amex refers to the people who hold its cards not as customers but as “members,” something that’s reflected in how it runs its call centers.
By coincidence, the week before the talk my class had discussed a case in which Amex abandoned the traditional practice of measuring call center productivity by time per call and shifted the standard for success to whether members said their questions were entirely answered and whether they were fully satisfied at the end of the call.
The result: while calls lasted longer, not only did overall satisfaction increase and card attrition decline but there was a spike in spending and profitability, as staff had time to talk to members about Amex solutions that met their needs. Removing the pressure to keep calls short also meant the virtual elimination of transferring calls for someone else to deal with – something that customers hate, but is a common practice to reduce call times.
The first takeaway for advisors is very clear –define what you stand for and then ask the hard questions about whether 100% of your behavior and customer interactions reinforce that definition.
McClean explained that given consumers’ relationship with their money, in the financial industry key brand attributes for most customers are trust, security and reliability. While disruptive start-ups have the advantage of new technology, incumbents have the big advantages of trust and established relationships. Those advantages will only protect incumbents, however, if they evolve to deliver value and build relationships in today’s online world. No matter how successful a company is today, it has to adopt a “change or die” mentality or risk being left in the dust. That mentality is what drives Amex’s senior leadership – and it’s what should drive you as well.
Focus on speed and convenience
A key focus for Amex is raising the bar on speed and convenience. Consumers today are less tolerant of delays than in times past – when they want an answer, they want it now. That’s true of customer service queries and it’s even truer when they log on to your website. Clients will not put up with delays that they would have even a year or two ago. In most cases, if clients use their phones to check their account balances and your site isn’t optimized for mobile, they won’t cut you the slack they might have in the past and will move on to another site. And that’s not just true of millennials – it applies to boomers who are increasingly using their phones as the primary way they communicate online.
Be seamlessly indispensable
It’s a cliché to talk about how tough it is to stand out in today’s hyper-noisy world. To break through, McClean talked about Amex’s goal of being “seamlessly indispensable” to its customers.
Amex spends time observing its customers’ daily routines, looking for pain points that it can help resolve. McClean used the Starbucks app as an example – rather than standing in line, who wouldn’t prefer to pre-order, pay online and then pick up a coffee with your name on it, sitting on the counter when you arrive? Along similar lines, he talked about the success of Amex’s “Front of the Line” program, where Amex notifies members of upcoming concerts that fit their interests with the opportunity to pre-order tickets before they are available to the general public.
Every business needs to ask itself the same question as Amex – “How can I make myself seamlessly indispensable to my customers, solving problems before clients are even aware of them?” For instance, think about positioning your associate as a resource to help the adult children of key clients make good financial decisions, an idea I discussed in my article, How Just-In-Time Advice Deepens Relationships.
Test and try new initiatives
The importance of speed and agility were a recurrent theme in McClean’s talk. He outlined how at one time Amex waited until they had the perfect product to go to market. Today they launch products that are very good, but may be less than perfect. Once in market they use feedback from customers to refine and improve that product, going through numerous iterations until it is exactly right.
Speed-to-market has become a key differentiator in every business, as evidenced by the tech industry, in which market leaders move quickly to establish an initial presence and then refine products through subsequent upgrades. That kind of “agile development” thinking is gaining currency in the financial industry as well.
As one example, my students went on a tour of the “digital factory” at one of Canada’s top banks, where we heard about how projects that used to require two or three years are now broken down into component parts that can be completed in two weeks. As a result of this “agile development” approach, the bank has dramatically reduced the time required for customers to apply for credit cards and to open new accounts online.
The key to this is a “test and try” mindset. Every advisor has had ideas on better ways to communicate with existing or prospective clients, but all too often those ideas died in the quest for perfection. The test for new initiatives should not be whether they are as good as they could possibly be, but rather whether they are meaningfully better than what is available now. In the new world we’ve entered, deploying a good solution quickly and getting market feedback to improve it will be the new standard of success.
Getting into the data management business
Given the increasing amount of customer data that’s available, McClean made the case that every business has to become a data management company. He discussed how Amex is using “triggers” to drive responses aligned with customer needs. For example, if someone changes their address to move to an area with bigger homes, that will lead to one kind of response; if they change their address to a location that suggests they are downsizing, that will prompt a different offer. The more relevant and targeted your offer to a client’s situation, the better the response. McClean said that real-time digital offers get four times the response of traditional offline offers.
He also made the case that if you are a trusted brand and you give customers a reason to share information with you, they are generally willing to do so. And he talked about how an offer to use free WIFI at Toronto’s airport had allowed Amex to get permission to communicate with one million email addresses, which they used to follow up with conversion offers.
Develop a mobile-first mindset
McClean outlined how phones are becoming the primary (and sometimes the only) way that consumers are interacting online. Today, mobile purchases (referred to as m-commerce) make up close to 50% of online purchases and in the next year will surpass traditional web shopping.
Everyone has to respond to this change – this article describes how a leading provider of e-commerce software for retailers reoriented its entire business to focus on mobile. At Amex, an astonishing 80% of new card applications through the digital channel are coming in through mobile devices, something that would have been inconceivable a few years ago. As a result mobile is becoming the gateway to the Amex experience and the manifestation of the Amex brand.
That’s why Amex aims to make the mobile experience responsive and intuitive and why every new app is mobile enabled and optimized. Compare that with all too many advisor websites where the mobile experience is an afterthought.
If you haven’t logged onto your site on your phone, give that a try – you may be shocked at how clunky the experience feels.
Contending with new competitors
No matter how good a job you do, there will always be competitors who arrive on the scene with better short-term offers or lower prices. In the question and answer period, I asked McClean about the success of the Chase Sapphire credit cards, which under the leadership of an Amex alum have used accelerated points offers to gain the largest market share among households with incomes above $125,000. (The success of this program is outlined in the Bloomberg article, How Chase Made the Perfect High for Credit Card Junkies.)
McClean’s response was that as a market leader you have to walk a fine line. On one hand, you can’t be oblivious to new entrants using price to carve out market share. At the same time, you can’t be panicked into a response – if you are confident that your strategy delivers compelling value for the large majority of your customers, you may have to accept the short-term defection of a small number of customers as the cost of doing business. And that’s especially true if the underlying economics of your competitor’s business model may not be sustainable over time.
Today, market leaders in every industry face unprecedented challenges – only 12 % of Fortune 500 companies in 1955 were still on the list in 2014. That’s why my MBA course on innovation in financial services delves into the challenges successful organizations face in responding to new competitors.
As I walked away from McClean’s talk, I had a clearer understanding of why Amex consistently shows up on Fortune Magazine’s list of most admired companies. And I also walked away with some important lessons for financial advisors. By adopting Amex’s change or die mindset, customer focus and culture of innovation, you can increase the odds that you too will be among the winners going forward.
Dan Richards conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written commentaries, go to www.danrichards.com.
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