I write this with an air of slight disillusionment. Every Thursday night of my youth, William Woollard and Judith Hann would whip up my expectations of the future with promises of silver suits, pills for food and hover cars. Tomorrows World made the future seem bright: a land of leisure, where a 3 day week was a choice rather than a necessity to conserve the nation’s electricity. Robots would carry out all the housework, and everything would be shiny and chrome.
As I grew up, I realised that Tomorrows World didn’t always get it right, and by 2003 after only 38 years of predicting things that didn’t actually happen, the show was cancelled. Everyone had become used to being promised things that didn’t actually materialise, and it was with a heavy heart that the ‘mad old uncle’ that the show had become, was finally put into a home.
But what was the problem?
The problem was that the reality didn’t meet the expectation. Expectation is normally defined as a ‘belief of what should happen’, and when it doesn’t happen then disappointment results. So, if you are running your own business and you want to avoid your customers becoming disappointed, you have to make sure that you go some way to meet their expectations.
Your customer’s expectations are not static; they evolve, changing over time as they become used to new ways of doing business. A good example of this is the mail order business. It was a few short years ago that ’28 days for delivery’ was a service level that was accepted by customers, but over time this has changed to ’14 days for delivery’, ‘7 days for delivery’ or ‘5 working days’ (the same thing but in a slightly nicer frock), and now to ‘Order before 4pm to receive it next day’. How and why has this happened and what does it mean for a mail order company?
Well, it happens through competition forcing mail order companies to improve their service levels in order to stay in the game, to improve their efficiencies to meet new service levels, and eventually to meet the end customer’s expectations. There is a lot of social science involved in mapping out the evolution of the customer’s expectations, and there are some jumps in the smooth curve, the most noticeable of which coincides with the introduction of the internet into the commercial world.
So enough of examples, what about your business, what about the financial services industry? Well, although the expectations of customers have not evolved as quickly in this fusty old library of a business as they have in the other more dynamic areas of commerce, the expectation curve is starting to hockey stick – due in no small part to the influence of service levels in other areas of a customer’s life.
Your customers do their banking online, their weekly shop online, book their holiday online, even order a car online. 5-7 years ago they would have visited their branch to do their banking, would have fought through the screaming kids and spotty checkout staff at the supermarket for their weekly shop, would have consulted a ‘tan-in-a-can’ travel agent for their holiday, and would have had a ‘relationship’ with a grinning salesman with a punchable face to purchase a car. Times have changed.
Even the King Canute that is the FSA, trying to turn back the tide of change, is beginning to realise that they are fighting a losing battle and need to get their act together. They have recently ‘made it known’ that they are open to consultation around new business models in the advice market, with direct to customer options being a particular focus.
A financial adviser friend of mine still claims that ‘his customers’ are different. They like the personal relationship, they don’t use computers to do business, they do business on the 19th hole. Well, if that is true….which I doubt….basing a future business case on these people being around in 5 years time is just foolish.
CACI is the UK’s leading consumer analysis company that maintains a database of over 40 million consumers in the UK (they’re people that come up with the Acorn classifications). Well, their profile of a Type 1 consumer, the HNW people, the affluent investors, my friend’s customers, includes this paragraph:
“…Unsurprisingly, given their affluence and occupations, these individuals are financially sophisticated, investing directly in stocks and shares as well as unit trusts, bonds and other forms of investments. Technologically literate, they are confident home PC users. The internet is a popular channel for purchases and financial transactions, including on-line banking…”
CACI are very accurate, their business depends on getting these things right; I would listen to them.
My friend and many like him are sleeping on the railway tracks, and when doing that, there is only so many times you can hit the snooze button before you get squished. That light at the end of the tunnel that he thinks is an exit strategy may just be the headlight on the train of change coming the other way.
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