May 19, 2021

Churn analysis and the Net Promoter Score: Can NPS predict customer retention?

While customer acquisition is a critical parameter for any business to grow, neglecting current customers in pursuit of new ones can have a damaging impact. Developing and maintaining a loyal customer base can generate long-term business growth: retaining customers can lead to savings on customer acquisition costs, as current customers already know your products and, according to research, 60% of customers would tell a friend or family member about a brand they are loyal to. Loyal customers are also more likely to join loyalty programmes and spend more on products, even when offered equivalent and lower priced products by competitors.  

Having leaks in the customer pool, also known as customer churn or attrition, should therefore be a grave concern for any business. There exists a wide body of research devoted to analysing customer switching behaviours, and churn prediction focuses on spotting customers who are likely to discontinue the use of a service. Among the plethora of factors that could make a customer churn, it is widely accepted that dissatisfaction with the service they have received is a key driver. Targeting the causes of this dissatisfaction is therefore at the core of developing churn prevention or customer retention strategies. 

When talking about customer loyalty, the discussion naturally turns to the Net Promoter Score (NPS). As a customer sentiment metric, NPS has taken the world by storm since its introduction in 2003, offering an attractive ratio of relevance to simplicity, and has been adopted by two-thirds of Fortune 1000 companies. The question asked is simple: 

Source: KAE

NPS provides a straightforward metric for tracking customer advocacy, then, acting as an indicator of customer satisfaction and loyalty as well as giving information on a company’s reputation versus its competitors. But is NPS a good predictor of customer retention? Surely it makes sense to think that loyal and satisfied customers are less likely to churn and more likely to establish a long and fulfilling relationship with a brand. 

In fact, there might not be a straightforward relationship between NPS and customer renewals: as self-reported NPS at a given point is subject to many biases, it might not by itself be useful for reliably forecasting renewal revenue for an individual organisation. Differences in how, when, and from whom results were obtained can also determine the quality and direction of results, even if in general companies with higher NPS scores experience lower churn rates. One example of a company with a high NPS and high customer retention is Amazon. According to CEO and founder Jeff Bezos the company reached 200 million subscribers in its Prime membership program worldwide in 2021. Research shows that up to 70% of customers who sign up for a trial membership convert to paid membership and it is estimated that 93% of consumers renew their paid membership after one year, with the retention rate going up to 98% after two years. Another example can be found in Netflix. The streaming service has developed a loyal customer base over the years, and most of the customers that pay for Netflix do not subscribe to other streaming services.  

In recent years there has been an increasing consensus among customer satisfaction experts that it is risky to rely on a single metric to measure customer loyalty, and a consequent increasing interest in multidimensional or hybrid approaches that combine demographic, behavioural and attitudinal customer data. By itself, NPS does not give insight into why customers are happy or unhappy, it tells us nothing about actual customer behaviour nor does it provide any insight into return on investment. But simply asking a follow-up question such as “Why did you give the answer that you gave?” can offer deeper insight. If an organisation wants to learn why its customers churn, the answer may well lie in this kind of textual feedback. By mining this written feedback, organisations may be able to spot and classify complaining, neutral and satisfied customers with greater accuracy. All this information can be used to develop targeted customer retention strategies, the effect of which can then be rapidly assessed at many points along the customer journey via NPS.  

Moving from the aggregate to the individual level, NPS offers a fast and straightforward way of identifying unsatisfied customers. Scores correlate to how satisfied customers are with the service or product at the time of asking the question, so if it is possible to reach out and act almost immediately, through strategies implemented by customer services teams, companies can attempt to win back dissatisfied clients or mitigate negative word-of-mouth before it occurs. 

In conclusion, NPS alone is not a good predictor of customer retention and does not give many valuable insights into churn. A hybrid multidimensional approach combining demographic, behavioural and attitudinal data can provide a more accurate measure of customer loyalty than a single self-reported loyalty metric. The real value of NPS comes from quantifying the effects of individual elements of the customer journey, such as experienced pain points or channels of contact, and from enabling organisations to act quickly to address issues. To gain insight on churn, looking at customer spending patterns and verbatim feedback is an effective way to identify customers who may churn and unveil drivers of attrition. 

September 18, 2020

How inclusive is your website design?

Inclusive Design is a key frontier in web design and may have a significant impact on the number of customers you reach

As the Covid-19 epidemic has forced many of us to retreat to our homes over the last six months, some for extended periods of time, the quality of the digital experiences available to us has become more important than ever. As our world becomes increasingly digitalised, with more products and services migrating entirely online every day, it is crucial that as many people as possible remain able to access them.

One in five people in the UK currently live with an impairment that could make it difficult for them to access websites and apps, experiencing limitations in their vision, hearing, physical movement and dexterity or cognitive processing, and this number is only likely to increase as the age profile of the population continues to get older. Despite this overwhelming need, Inclusive Design remains a relatively niche topic in customer experience discussions, and around 70% of websites in the UK are estimated to be either wholly or partially inaccessible for users with an impairment or disability. Perhaps partially as a result of this, around a quarter of disabled adults in the UK have never used the internet.

While one in five of us has a permanent disability, a third of us will have an impairment at any given point in time – for example from a temporary injury – and everybody will experience periodic situational impairments, such as when we are in a very loud environment or need to interact with content in a language we don’t speak fluently. Despite this overwhelming demand for websites to be accessible to people with a range of impairments, very few are designed optimally, or with inclusivity specifically in mind. That also means that there is a potentially huge untapped market open to any brand that does make their online presence widely accessible. In fact, research shows that products and services designed with the needs of people experiencing poverty, disability or the effects of ageing in mind can reach four times the intended number of consumers, significantly impacting the bottom line. The Papworth Trust found that the people most likely to be living with a disability are those over state pension age, suggesting that as our population ages, inclusivity will become an increasingly important CX consideration for websites.

The Inclusive Design process begins with including people who normally have trouble using products, services or websites in the design process, and having them test iterations before a final version goes live. It involves asking for feedback from customers (as well as those who have previously been excluded) and making appropriate adaptations as a result. It also involves design teams adapting their mindset, so that inclusivity is not considered a bolt-on part of the design process but is instead considered automatically at every stage.

What do inclusively designed websites look like? Firstly, they do not assume that a one-size-fits-all customer experience exists, but target experiences based on the individual customer’s needs. While assistive devices have for many years aimed to remove barriers and enable users to interact with a one-size-fits-all product, Inclusive Design aims to redesign that product so that those barriers do not exist. Sometimes this involves utilising functionality that has already existed for years – Alt text, for example, wasn’t originally primarily used to improve a website’s SEO, but to make non-textual content parsable for screen readers. Sometimes, it involves fundamentally rethinking how information is displayed, to ensure that every page is easy to navigate and understand. An accessible website will rarely have a cluttered design, and will make use of large navigation buttons and text, so that it remains accessible on a variety of devices and screen sizes, as well as to people with a range of physical or mental health needs. It will make good use of keyboard shortcuts and make transcripts available for audio material. In short, it will as a default present information in a manner that is accessible to as many users as possible and will provide alternative formats where this is not possible.

This shouldn’t need to come at the expense of aesthetics, in fact the opposite is the case: an inclusively designed site will often conform to basic design principles better than its overly cluttered counterparts. The Royal National Institute for the Blind stated this well, when they said that “well designed graphics and multimedia are a positive aid to using and understanding websites, and do not need to be sacrificed for accessibility”. The Arts CouncilSkinOwl and Apple websites are some that Inclusive Design advocates have put forward as best practice examples of sites that are both widely accessible and beautifully-designed.

It has been said that CX is made up of three core components – success, effort, and emotion, and that improvements in emotion drive the most significant increases in loyalty. If every interaction with a brand’s website results in frustration or embarrassment, it is easy to understand how this can negatively impact loyalty to that brand. Conversely, a seamless process that makes customers feel truly included is likely to result in significantly improved brand perception.

July 27, 2020

Five ways great employee experience leads to better CX

Happy and engaged employees create better experiences, which leads to a more satisfied and loyal customer base

Of all the areas of life that have been disrupted in the first half of 2020, one of the most affected has surely been work life. While millions of office workers have been adjusting to working remotely, essential workers have needed to adapt to scores of new rules and regulations at their workplaces as the year has progressed. Regardless of how they’ve been affected, the majority of workers have faced significant change, and this is having an unprecedented impact on employee experience.

As we wrote recently, customer experience is likely to be a key differentiator for brands in the post-Covid world. In recent years, the significance of the impact of employee experience on customer experience has also been increasingly acknowledged. A customer’s first point of interaction with an organisation is usually through its employees, and this first interaction can be make-or-break for first-time or infrequent customers. If employees do not make a good impression, potential customers may leave and never come back. Companies that can provide excellent employee experiences in this fast-changing world, then, and translate this into great customer experiences, will be in a strong competitive position. Below, we have listed five of the key ways in which the employee experience affects customers:

1. It’s been statistically demonstrated that an engaged workforce makes businesses more profitable. A study published in the Journal of Occupational and Organizational Psychology has shown that employee commitment to their organisation has more impact on business performance than vice versa. The research looked at the commitment of a sample of retail bank employees, the financial performance of the bank over time and the customer satisfaction of the business areas the employees worked in. It found that within a year it was already possible to see a reciprocal relationship between job attitudes and business performance. Research elsewhere has found that companies with highly engaged employees outperform their competitors financially by nearly 150%.

2. This improved profitability is at least partly due to superior customer experience. 87% of Starbucks customers’ affinity for the brand has been found to be driven by the way the company treats its employees. Nordstrom is famous for its world-class customer service to the extent that there have been books written about it. It’s no coincidence that Nordstrom also offer exceptional employee experience: they’ve been ranked one of the Top 100 Places to Work in the U.S. for over 20 years.

3. Engaged employees simply understand how to deliver good customer experience better than unengaged ones. A staggering 70% of engaged employees indicate a good understanding of how to meet customer needs, compared to just 17% of disengaged employees. U.S. supermarket Publix is employee-owned and regularly wins customer satisfaction awards, in part because these engaged employees have a reputation for regularly looking for small ways to make customers’ lives easier.

4. The impact of employee experience on customer perception of an organisation goes beyond their direct shopping experience. In the age of social media, some organisations have seen just how directly a negative employee experience can impact their bottom line, when media stories about poor staff conditions have attracted the attention of potential consumers. In 2016, for example, Chairman Mike Ashley told The Guardian in 2016 that the negative press surrounding leaked working practices at Sports Direct resulted in a 57% drop in first-half profits that year. This can have an impact even on organisations that have a strong customer experience track record: the “Boycott Amazon” movement has been gathering pace in recent years, in part because of increasing awareness of the poor working conditions experienced by many of Amazon’s warehouse employees.

5. Engaged employees actively find new ways to make customer experience better. The companies that give their people space to innovate are also the ones that tend to provide strong customer experiences. It is no coincidence that Google, a company that has been almost relentless in the optimisation of its product roster for over 20 years, is still seen as the default search engine by much of the world. And even seemingly small-scale improvements can make a big difference. An analyst at New Zealand’s Contact Energy, unhappy with many of the repetitive tasks required for their role, developed an automated process to handle those tasks. Recognizing that this initiative delivered results, the company rolled out the solution more widely, and today the company actively works to improve customer experience by automating simple jobs so that agents are free to spend more time dealing directly with customers. Improved customer satisfaction was an almost indirect side effect of improvements to the day-to-day experience of employees.

Happy and engaged employees create better experiences, leading to more satisfied and loyal customers and, ultimately, brand and company growth. The workplace status quo has already been comprehensively shaken up over the last few months. Organisations that take the opportunity to make lasting improvements for their employees may also find they win a loyal new customer base.

Written by:

Fran Cavanagh

July 2, 2020

What will the “new normal” look like for retail ?

Adjusting in-store and online shopping experiences to address new realities

After what have surely been some of the strangest few months for the retail industry in recent memory, brick-and-mortar stores are starting to re-open in many areas that have been worst-hit by Coronavirus outbreaks. Consumers and retailers alike seem enthusiastic about this return to some semblance of normality: some keen shoppers were seen piling into London’s flagship Nike store when it reopened earlier in June, and in the absence of most out-of-home entertainment options, shopping trips are becoming established as a highlight of many people’s weekly routines.

The prospect of reopening is not without its challenges. Brick-and-mortar retailers all over the world are figuring out how to conform to a variety of new regulatory requirements, and nearly everywhere there will be a need to reassure nervous consumers who have become used to shopping conveniently and safely from home that it is safe and desirable to return to physical stores. That won’t be a straightforward task: in the U.K., for example, YouGov has found that 46% of consumers are uncomfortable with the idea of shopping in newly-reopened stores.

As they reopen,  retailers will need to balance measures aimed at getting high volumes of customers through their doors with those designed to ensure customer safety, and to do all of this while providing a better customer experience than ever before. The “CX Factor” could in fact become the crucial differentiator between the post-Covid retail winners and losers, if customers continue to avoid stores that don’t offer a compelling reason for visiting them in real life. Customer experience has long been an important differentiator for brick and mortar stores: according to Kantar, more than two thirds of customers are more likely to choose a brand if it exposes them to new experiences or sensations. But a certain degree of customer inertia was likely helping to keep some underperforming retail brands profitable, even as e-commerce competitors and those with distinctive in-store offerings were eating into their profit margins. This status quo has been well and truly shaken up, and customers who have been forced to form new habits can’t now be relied upon to automatically retain their old loyalties.

Some of the restrictions retailers will face during this “new normal” phase will undoubtedly pose challenges: reduced stock offerings and limited ability to try on items in fitting rooms are unlikely to be popular with consumers. Creative retailers will find ways to differentiate themselves and come up with innovative new approaches to customer service, for example by offering more personalised experiences and more options for customers to engage online. Some luxury brands are already shipping direct from stores using a premium delivery service like Addison Lee, while others are setting up luxury drive thrus for a click-and-collect-style service, complete with extra styling. Elsewhere, staff at some clothing retailers are arranging video calls with customers to personally show them the latest merchandise before they make a store visit, booking fitting rooms for them with specialised apps and viewing their wish lists online. Others are using Instagram live streams to publicise new product launches. Augmented Reality looks set to truly get its moment in the sun in 2020. Virtual changing room apps that allow a garment to be “tried on remotely” in store could quickly go from being a fun novelty to a truly practical solution, allowing customers to steer clear of the hassle of returning items and retailers to avoid the subsequent quarantining of returned products.

The challenges facing brick-and-mortar retailers are significant. GDP growth has dropped hugely in the U.S. and much of Europe in the first half of 2020, and the public are understandably tightening their belts by cutting down on discretionary spending. In the continuing absence of many forms of out-of-home entertainment, though, in-person shopping experiences may prove popular as countries reopen this summer. Retailers that can provide a good enough reason to visit them in person will have a distinct competitive advantage. So will those who can provide a great and distinct online experience, as consumers adapt to new ways of shopping. Those who can do both will likely find they have a winning combination.

April 27, 2020

How AR has evolved to play an important role in CX?

Augmented reality is starting to fill in genuine gaps in the customer experience, easing pain points and simplifying customer journeys

Augmented reality (AR) is the blend of the real world and interactive digital elements, and while sounding like something from science fiction, it has become an increasingly common part of retail experiences in recent years.

While in the past AR technology had a bad reputation as something that was shoehorned into marketing and customer experiences without fully being thought out – think Jack Daniels transforming their bottles into a pop-up story book explaining their manufacturing process or Chiquita, the banana company, using AR to boast about their sustainability credentials – recently, it has become an incredibly useful part of the customer experience offered by several brands.

The key is to use AR in a way that serves a purpose, rather than as a gimmick that leaves customers wondering why it was used at all. In Jack Daniels’ case, the brand had been telling their story successfully for years on their bottles, without the help of a pop-up story book. For Chiquita, AR technology could have easily been replaced by something simpler. San Diego’s upscale restaurant, Harney Sushi, tackled the same issue by allowing customers to scan edible QR codes. They would be routed to a website where they could access a wealth of information about how and where their fish was sourced from alongside other information about sustainability.

When AR is used for a specific purpose that suits the technology, it can be very useful and impactful. Brands like Sephora have used AR to aid their customer journey, as trying on make-up with AR mirrors allows customers to test different shades of colour before making a purchase. Moving this to their online experience means that customers can test make-up from the comfort of their own home, in real time. This allows customers not only to test the products easily but, with facial recognition, while they’re moving as they would in real life.

Other brands have used AR to target pain points in the customer journey. Argos and Ikea have used AR to allow customers to simulate how furniture would look and fit in their homes. This circumvented a long-winded process of measuring and imagining but also allowed customers to have more time to explore products online and offline. In a similar vein, KLM have added an AR baggage size check, which allows customers to check if their baggage fits inside of the overhead compartments before they get to the airport. All of these companies are using AR technology to make the customer journey smoother and easier, instead of using AR for the sake of it.

Amid the Covid 19 pandemic, AR suddenly has a crucial role to play in facilitating all kinds of customer experiences that have had to abruptly move online. AR has meant that luxury shopping can continue even while a lockdown is in place, with brands like Rolex and Gucci using augmented reality apps to allow customers who would never buy luxury items sight-unseen to “try on” their products while they can’t get to a physical store.

As AR technology in marketing has matured, it has continued to become more and more relevant. No longer just a gimmick, it is now being used to fill in genuine gaps in the customer journey. Easing pain points, simplifying customer journeys and even sourcing more niche products and services (take a look at the Inkhunter app to see how they’re making finding the perfect tattoo easier) are just some of the new ways AR is being used. And you can be sure that more and more ingenious uses for AR technology will continue to come to light as the technology itself continues to progress.

March 13, 2020

Hyper-localisation: a retail reality that is here to stay

Overcoming the barrier of meeting local markets needs

2020 has brought yet more stories of the decline of the British high street. Yet a countervailing trend suggests that consumers are at least as, if not more, interested in accessing local information, services and experiences than ever. A person’s postcode is increasingly a more important determinant of their behaviour than traditional demographics. Businesses that can tailor their customer experience strategies to meet increasingly hyper-localised demand will have a significant competitive advantage in 2020 and beyond.

Research suggests at least 80% of consumers conduct web searches for information local to them. They act on these searches quickly, with half of the people who performed a local search on their smartphones, and 34% of those who searched on their tablet/desktop, visiting a physical store to browse further or complete a purchase within a day. While in-store, the competition doesn’t end: one in six will then do further searches on their smartphone to look for price comparisons.

The way consumers are searching for local information online is evolving rapidly: as search engines are getting ever better at predicting the information people are most interested in by looking at datapoints like their current location and previous search history, fewer people feel the need to explicitly add phrases like “near me” to their searches for local services (as they know the search engine will figure that part out for them). The terms “nearby and “closest” have both dropped in popularity on Google Trends since 2019, and businesses – especially retail companies with many local branches – will need to regularly review their SEO targeting to make sure they stay top of mind and don’t fall down the crucial local search rankings.

Online reviews are an increasingly important decision-making resource, to the extent that they may be supplanting word-of-mouth recommendations from friends and acquaintances. Of the 90% of consumers surveyed who have searched for a local business in the past year, 82% had also read reviews for a local business, and on average they would read 10 reviews before making a decision. Contrary to the idea that local communities are losing their distinctiveness, local businesses that are particularly authentic or convenient are still widely attractive to consumers. Businesses that can build up a buzz in a local area, through positive reviews on social media pages and sites like Trustpilot, will be particularly successful.

To stay locally relevant, large organisations must employ particularly smart personalisation strategies. Customer data is a key resource, with most large retailers now having access to rich behavioural data about their customer base – levels of affluence or price sensitivity at a postcode level, for example – that can significantly influence shopping behaviours across store locations. Stores that don’t keep on top of trends in their local customer bases can rapidly lose revenue: a recent case study described how one major supermarket’s inability to adapt quickly to changing local preferences had led to 3.2Mhouseholds – each averaging a 6.58 shopper visits per year – shopping elsewhere, resulting in $1.2B in lost revenue.

While retail trends will continue to come and go, consumers’ interest in local information and services is proving to be evergreen.

Written by: 
Fran Cavanagh

April 17, 2019

Vantage: Monzo

We interviewed Monzo's Simon Balmain...

FinTech ‘unicorn’ Monzo provides app-based banking to almost two million customers and was rated top for account satisfaction by Which? in 2018. Hear from Simon Balmain, Customer Operations and Community Specialist at Monzo, on how radical transparency became an award-winning formula for world class customer experience.

Please tell us more about Monzo, your journey up until now and what makes the company and its vision unique?

Simply, Monzo began out of the obvious gap in the market for something better to exist. Other sectors have had modern, progressive, forward thinking apps and services almost since the beginning of the smartphone era (in the mid-2000s), something that didn’t materialise in the financial services space for a while after. It’s no mean feat to build a modern bank, and the incumbents had no reason to be at the cutting edge, so it took a while. We started distributing alpha prepaid cards at the end of 2015 and ran the prepaid programme until early 2018 whilst we got our full license and built our own infrastructure – then we transitioned all our beta customers to full, modern bank accounts. Fast forward just a year after ending the prepaid programme and we’re pushing towards 2 million current account customers. Our aim is to serve as our customers financial hub, and to create the most delightful, thoughtful and engaging user experience as possible to really give people empowerment over their financial lives.

“Fast forward just a year after ending the prepaid programme and we’re pushing towards 2 million current account customers.”

Monzo was an early challenger to the incumbents, but now faces challenges of its own. PSD2 will exacerbate this issue as the barriers to provide banking services fall. Monzo has successfully competed on experience so far. Do you believe this strategy is still the right one, and if not, how are you changing your approach? 

Yes, we absolutely do. It’s interesting, actually. Even as other incumbents modernize their apps and offer access to other accounts in line with PSD2, research still suggests that their stickiness, or user engagement, is still being measured by how many times people open their apps per week. Our stats can be measured by how many times our customers are opening the app every single day. That comes down to a delightful, helpful user experience. The app feels like it’s made for each customer, the human being using it, and is not just a place to view information like many other apps. Ultimately, the first step in feeling like you’re in control of your finances is that mindfulness, that awareness. And so, the experience really has to be something you enjoy and that you tell your friends about. It’s funny – sometimes people will compare us to others by picking out one service or one feature and then find another service or company that does that one thing better. We’re totally fine with that. What we aim for is more of a digitally holistic experience.

Monzo heavily involves its customers through the Monzo community. According to your website, you have 40k total forum users and last month you registered 14.5k posts. How do you monitor this community activity at scale, while still making your customers feel valued? 

Our forum is really a place for our most engaged customers to come and chat with staff members and fellow customers, discuss ideas and feedback, and really feel part of what we’re doing. It’s played a role in almost every product development that I can think of, although it’s of course not the only place we gather feedback. More recently, we saw that major media outlets will quote what people are saying on our forum when writing about us or something that we’re doing, which is really cool. That’s something that not many companies have – an engaged user base of people who are actually fans of a service. We go around the country doing events and the one thing we always hear is how much people value our community. I can’t think of any other bank that has anything like it. Some other companies have forums that just become an overspill of customer support, and because their main customer support structure isn’t very good, people look for places to complain. Our support is world class, which means people come to the forum to actually discuss ideas and thoughts, and that’s invaluable! I don’t like the term “monitor” – our staff members who look after the forum are actively engaged with the discussions, not just there to keep an eye on things. We have a small team who look after the forum, but try to get as many other staff members as involved as often as we can. We’ve had people across all areas of the business, from our CEO and co-founder Tom Blomfield, to people who have literally just started at the company, get involved in Q&A sessions to talk about what they’re working on.

“Our support is world class, which means people come to the forum to actually discuss ideas and thoughts, and that’s invaluable!”

Customers certainly appreciate the fact that you consult them before making decisions. Have you found this to be an effective strategy for product development? And how do you manage the dissatisfaction of customers who do not see their requests being fulfilled? 

It’s one strategy. Of course, you need to have a strong vision as a company as well, which we always have done. Our co-founders are incredible visionaries, and that’s evident by the fact that our company culture and long-term aims are still pointed in the same direction now as they were at the beginning. What tends to happen more is that we have long lists of things we want to build or goals we want to achieve, and then we look to our community and talk to them about how this might work in relation to our app. That gives us an idea of how much demand there is for certain features. Some things come together really quickly, and some things take longer, and it can be difficult to gauge how much use there will be for them until you’ve shipped. Some features are deliberately niche, but we build them because it’s the right thing to do, like our Gambling Block, which we’re proud to say has helped some very vulnerable people conquer very heavy addictions. I wouldn’t say there’s much dissatisfaction. People typically understand that we can’t build everything all at once, and that companies have shifting priorities. Most of our users really believe in our vision, so if we don’t have a few specific things they need, we’re still overall a better experience than our competitors.

Transparency seems to be one of Monzo’s core values – you talk to your customers openly and keep them well informed. Do you think nowadays transparency is the winning formula to gain customers’ trust? Why? 

It’s a winning formula if it’s part of the DNA of your company. If your company doesn’t start out with those values, it’d be hard to bake them in after the fact. For us, because we’ve always been radically transparent, it’s been refreshing for people for whom the norm, before us, has been very opaque financial companies. We define radical transparency as this idea that you’d need to make a solid argument to not share information with your colleagues (internally) or your customers (externally). If there’s no good reason, then we default to transparency. There are very few examples where we haven’t been able to tell our customers what’s been going on, and generally that’s when something involves other parties or other companies who don’t operate in that way, or if we’ve had to sign any kind of NDA. There’s a trust factor, a relationship there for sure, but it also continually reassures people that we’re building this thing together. We’re making an app for everyone – not the 1%, not just people who are into software or tech, not just for people who are already inclined to check out different financial services, but for everyone. We can’t do that unless we keep everyone in the loop as much as possible.

“We define radical transparency as this idea that you’d need to make a solid argument to not share information with your colleagues (internally) or your customers (externally). If there’s no good reason, then we default to transparency.”

Consumers making digital shopping decisions of any type – including new banking services – make extensive use of online reviews. How does Monzo engage with these sources? What issues, if any, have you had with these sources? 

Well, I think there’s actually different demographics that value online reviews in different ways. A formal review system is less valuable to some demographics compared to social proof and word of mouth, which is where most of our growth to date has come from. Our Golden Tickets were a huge driver of growth, because anyone sharing them online was effectively giving us their stamp of approval to their peers. Other demographics will look at things like TrustPilot. We make sure that we have a relationship with sites like TrustPilot because we want to be able to spot any trends – whether those are good or bad. We haven’t really had too many issues – we have a very robust complaints structure, so if customers do have complaints, they’ll be in touch with us directly and generally we can address any grievances they have directly. We find that, if you have a great product, any bad online reviews would be coming from people who feel they haven’t been listened to or have nowhere to turn, and that’s where a great complaints team can make a difference.

At the end of 2018, Monzo placed first in a survey from Which? into how satisfied people are with their accounts. How do you think Monzo currently ranks in terms of customer experience compared to your competitors?

We’re very proud of ranking first in the Which? survey. Our aim is to always have a world class customer experience, and it’s nice to be able to top that list even when internally we’re still full of ideas to make the experience even better! So, with some hard work we hope we can increase the gap even further. I personally feel that a lot of our competitors still focus on information and functionality over experience, and although that’s a valid demographic to target, by nature it’s targeting more experienced customers. What we try and do is make the experience simple but powerful, so anyone can easily navigate and stay on top of their finances, whether they only use a few functions and features or whether they like to look around the app and explore every possible feature and area. There are things some of our competitors do very well on, and that we can (and do) learn from, but the overall customer experience is where we shine, and I think the Which? survey reflects that.

What type of employee engagement programmes does Monzo have in place (for both frontline and non-frontline roles)? And how do you think employee engagement impacts customer experience?

I feel our commitment to radical transparency is perhaps the greatest employee engagement programme you could possibly have and especially when it begins in an organic way. What that means is that everyone is free and able to learn as much about the company as possible and get involved in discussions that interest them, even if it’s not directly related to their job role. The open and transparent nature of the company means everyone is accessible. We’re lucky that we still have the small start-up mentality where many of our employees apply because they believe in what we’re doing as a company and have been customers first. So, all of that plays a part, and the other thing is that we have a strong focus on mental health in the workplace, and we look after our staff and their personal wellbeing. Maintaining a healthy work/life balance isn’t just encouraged, it’s a staple of our company culture, because burnout doesn’t help anyone. We have publicly committed to inclusion and diversity, and we celebrate our differences. As just one example, our public commitment to often marginalized groups, such as our transgender colleagues, has been so strong that talented transgender people have applied to work here solely because they see what an inclusive and supportive environment we’ve built. Engagement directly impacts customer experience, because people see that we’re all passionate about what we’re doing. That kind of positive culture is recognised both internally and externally.

How do you see expectations of customer experience in digital banking evolving in the near future? Is there any trend that you think is going to have a significant impact?

“I expect to see much richer context around transactions and predicted spending.”

I think a lot of apps are going to have to pick up the pace with their UX or risk falling to the wayside. What we’re doing is setting a new standard for delightful UX. With PSD2 and much more availability of API’s, people will be able to access and utilise services from a wider variety of places, so why would you settle for a sub-par app experience? As far as trends, I expect to see much richer context around transactions and predicted spending. There’s no reason why something like Google Assistant shouldn’t be able to really get to grips with your finances and show/tell you relevant information. With customer support, I expect that machine learning will come into play a lot more, and we can use a lot more context about transactions to understand and resolve any issues much faster.

Written by:

Simon Balmain

May 24, 2018

Vantage: Starling Bank

Starling Bank, the challenger bank recently named as the Best British Bank of 2018, has CX firmly on its mind

Starling Bank, one of the UK’s first digital only challenger banks, is known for its fast service and straightforward banking. Julian Sawyer, Starling’s COO, explains how important customer experience is to the evolution of the bank from product development to business growth.

Tell us more about Starling Bank, including what makes your vision unique?

Starling is a completely different kind of bank. Back in 2014, during her role as Chief Operating Officer of Allied Irish Bank, our founder Anne Boden became interested in how financial technology could be used to help customers manage their money. She also came to realise that the only way to do this was to start her own bank. And so that’s what she did.

Anne brought together a team, all of whom recognised that after the financial crisis in 2008, so much had changed – but not in banking. Our vision is to ensure that banking goes through a revolution, putting customers at the centre of everything we do and giving them digital tools to help them manage their money, all from one app.

In early 2016 Starling secured funding of £48 million ($70 million). Later that year, we were granted a banking licence by the Bank of England, enabling us to build the UK’s first mobile-only current accounts. Less than a year after launching in the App Store in May 2017, we were voted Best British Bank and Best Current Account Provider at the Smart Money People awards. We currently offer mobile-only personal accounts and business accounts and have plans to launch a euro account in the future.

Starling Bank recently became the first mobile-only bank to offer a business banking account: in your opinion, what are the challenges associated with being a first mover in offering new types of customer experiences?

There’s no doubt that being the first to offer a completely new product presents challenges. As a first mover there is no previous example of process to follow, or previous mistakes to learn from. It’s also harder to anticipate customer response to a new product launch that they perhaps haven’t come across before or feels unfamiliar to them.

However, being groundbreakers is also very exciting. We have an incredibly talented team at Starling who are brilliant problem solvers. Our key to understanding customer response is our Community – the platform through which Starling customers can discuss new features, updates and tell us what they like and what’s missing.

To provide innovative solutions for businesses, we’ve tried to smooth out all the friction associated with traditional business bank accounts – customers can open a business account in 10 minutes, not 10 days.

As Starling Bank is at the forefront of digital banking, how and who do you choose to benchmark your experience against? Do you even believe benchmarking is important with Starling Bank’s current position?

Looking forward is always better than looking sideways. We’re the first mobile-only bank to offer personal accounts, business accounts, connect to the Current Account Switching Services (CASS), become a direct member of the Faster Payments Scheme and SEPA, use 100% cloud based technologies and gain approval for our Marketplace enabling API integration with third-parties. We are also the first and only digital bank to offer all of the following: Google Pay, Samsung Pay, FitBit Pay, Garmin Pay and in-app provisioning of Apple Pay. We’re creating our own benchmarks for the industry.

Based on your experience, what are the main pain-points that customers usually experience when banking online and/or via mobile?

Even the simple action of taking laptops out of the equation instantly makes digital banking easier. Managing your money from one app is transformative. All you need is your smartphone – no more card readers, spreadsheets or frustrating phone calls waiting to speak to your bank to cancel a card or tell them you’re going abroad. You can set up new payments, split bills, check your monthly spend, lock your card if you’ve lost it and send a message to our 24/7 customer service in-app, with only a few taps.

Are there any key trends and/or technologies that you feel will impact the customer experience element in banking (and any other industries) over the next year or so?

The rise of online banking and of digital challengers has already had a huge impact on traditional banks who are closing more and more branches every week. However this also means that there is a gap in service. Physical branches are closing, but the online services and banking apps are not being updated and improved at the same rate – not even close. Starling has been built from scratch by the digital generation – we are able to deliver the fast, intuitive, secure service that people are looking for. Our focus on faster banking, keeping customers updated on payments with features such as real time notifications, and an attention to detail when it comes to UX and UI is transforming the customer experience of banking. We expect these features to become the norm and as such we are raising the game for the other industry players or customer expectations.

In terms of specific technologies that will impact banking in the next year, Artificial Intelligence will be key. Further down the line, we believe that we will move towards a cashless society in which banking will become more invisible. For example, people will be able to walk into a store, do their shopping and be charged on their way out without having to queue and pay at a till.


About the Author:

As Chief Operating Officer, Julian Sawyer oversees business operations, including payment systems, card operations, customer service, human resources and supplier relationships. Julian worked as a management consultant at Andersen Consulting (now Accenture) and EY, specialising in large-scale transformation in the cards and payments industry.

He set up his own financial services consultancy, Bluerock, which he ran for thirteen years before selling it in 2012. After many years as a consultant, joining Starling gave Julian the opportunity to put all his learnings into practice, to build a bank with an amazing team of true professionals. He enjoys working at a fintech business since he loves delivering things, making things happen and moving things forward at pace.

More about the Vantage Series:

This post is part of the Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech & CX ecosystem.

KAE will be posting a number of interviews with companies that share their candid viewpoints and to really get under the skin of the FinTech world and Customer Experience within various industries.

If you would like to share your views and participate in the Vantage series, feel free to reach out to us at Vantage@kae.com.

Written by:

Julian Sawyer

January 22, 2018

FinTech vantage: Bud

The technology platform brokering a new deal between people and their money. We find out more from Bud...

Bud is a technology platform that links financial services together and strives to make banking better. We recently spoke to Jamie Campbell, Head of Awareness, to help understand more about Bud and how the PSD2 regulation and the rise of open banking could impact FinTech companies like them.

1. Tell us more about Bud, including what makes the company and its vision unique. What do you think are the critical components that will make Bud successful?

Bud is a technology platform brokering a new deal between people and their money. From the start, we wanted to create a platform that allows people to use any financial services in one easy to use app or website – the steep innovation curve of FinTech creates more choice and more complexity in the market which we aim to solve.

Our platform is harnessed by banks to create win/win collaborations with FinTechs, that in turn, create great experiences for their customers. Banks want to build better relationships with their customers, FinTechs want to reach new audiences, and customers want hassle-free finances that look after their interests. Bud is the only platform in the world that connects those three things.

Critical components that go into making Bud are threefold:

Aggregation. Beyond simple account aggregation, Bud pulls together multiple data sources, financial and non-financial, to create a digital picture of an individual’s finances. We perform our proprietary analytics and programmes over this data which leads to the next stage…

Journey recognition. Using all of those data sources to piece together an understanding of what that customer is doing with their money and signposting key events where Bud can help limit fees or cover with better services. For example, this can manifest as bill switching, finding more effective ForEx, sourcing new investment options, etc…

Marketplace. The final component involves providing the customer with the most relevant product at the right time to take advantage of those events. We currently have close to one hundred partners with enough variety to ensure that we can serve customers across all areas of the financial ecosystem.

2. Where is Bud currently on its journey and what barriers have you encountered along the way?

Bud has been running for two and a half years and has proven its model, initially with a customer-focused product launched via the FCA sandbox, and now with distribution partners such as HSBC here in the UK.

We have also been lucky enough to be involved in a scheme set up by Nesta, the innovation charity. Their Open Up Challenge was a push to get companies, such as us, to develop open banking-based solutions for SMEs. Following a successful six month build, we were delighted to win. There will be a ‘Bud for Business’ proposition in the market soon – plenty of banks are interested.

We are fully regulated by the FCA and are growing massively. Last year we increased the team by 400% and we have just moved into new premises that will allow us to double in size. We have roughly twenty job posts open (so if you are a developer looking to work with an award-winning company in the FinTech space, get in touch).

The barriers that we come up against won’t surprise anyone. Regulation is a barrier for everyone entering financial services. Regulation is a part of the fabric of Bud, it’s integrated into our operating model. The fact that everyone at Bud understands where we sit with regulation means that we can innovate quickly and help our banking partners better.

3. PSD2 has been heralded by many as a pro-FinTech piece of regulation. Are there any parts of PSD2 that FinTechs need to avoid being tripped up by?

PSD2 covers account aggregation services and payment initiation services. The main areas to look out for are in getting regulated and having the insurance necessary to conduct the activities. For some companies, it won’t make sense to get licences of their own in this space and will look to firms like Bud to ‘borrow’ the service.

But PSD2 isn’t just pro-FinTech. For banks daring enough, it can be a huge asset to help develop new services and experiences for their customers. That’s what we have found with the partners we are working with: those with a strong strategy will perform well – bank or FinTech.

4. Where will the impact of PSD2 and open banking be most felt – will this be in the consumer or commercial payments worlds? Why do you think this is the case?

Open banking use cases I think are more developed in the retail aggregation world. But the commercial banking experience today is way below par, and most banks have SME banking high on their agendas for change. I think that the biggest impact will be in uncovering a market-leading SME banking experience as a direct result of innovations, brought about by open banking.

Ultimately, the impacts of open banking will be judged on data gained vs data lost in both aggregation and payment services. The immediate impact will likely be low, just like any adoption curve, but as people start to see, use and share more of the features open banking provides the uptick will become more dramatic.

5. What do you feel is the most important differentiator for FinTechs now and how will this change post PSD2 implementation?

The beauty of FinTech is that it has created massive amounts of innovation in each product vertical. Whether that is around access to credit, currency exchange, investing, insurance. New providers, freed from legacy systems, are able to leverage more flexible technology stacks to deliver far more personalised services. This kind of innovation is desperately needed in the market – people’s individual financial situations are almost limitlessly diverse and, if it is to meet this need, the market must be able to match this diversity with its offerings.

Post PSD2 differentiation will come in the form of data interpretation and activation; how FinTechs capitalise on this new data set. Whether that be in speeding up on-boarding processes, faster credit decisions, more accurate rates, more personal service. The value and differentiation will come from understanding a customer’s demands and using data to serve those needs in better ways.

6. How important do you consider open banking to be when it comes to building customer relationships? Why?

It depends on what side of the fence you sit. For a FinTech provider, PSD2 will allow you to build a relationship with customers that, in some cases, are not yours – or at least not in the traditional finance sense (they haven’t bought a product from you.) For a bank, it is an opportunity to get a richer picture of your clients and their finances, to offer real benefits and personalised assistance.

It will become more straightforward to shop around for products, right the way down to current accounts, so the focus for most businesses with high customer numbers will most likely be on keeping their customers. To do that, they have to create or deliver authentically useful products and services. Otherwise, people will find them elsewhere.

We are seeing banks adopting a new strategy: offering all services, including competitor products, to their customers. Currently it is regretful if your customer buys from a competitor. But in the future, what will be worse is if they buy from a competitor that is not in your ecosystem.

So, regardless of what you want your relationship to be like with customers, open banking will certainly play a role. If your strategy is to become the brand of choice that people do business with, you have two choices: build competitive services in-house or link those third-party services into your product. Personally, I think the answer is obvious. Different to what has existed in the past, but obvious.

7. What needs are Bud trying to solve for its customers and how will Bud’s value proposition address these?

For a while now, we have been comparing challenger banks and banks on level ground, but it is an unfair fight. I wouldn’t want a bank that has twelve million customers to duck and dive and move as quickly as a challenger can. That is not their role. But they can outsource nimbleness. They can bring in flexibility, technological excellence and the streamlined experiences that customers see elsewhere.

Bud’s role is as middleware for the financial services industry. We connect many products – all of which are suitable for every type of banking customer – into one platform that gets distributed to millions of customers via distribution partners.

8. How will you ensure your business model stands the test of time as competition grows?

Competition in the FinTech space is great for us. The more providers, the more complexity, the more our recommendation engine and marketplace becomes valuable.

The business model is relatively robust; we split marketplace affiliate revenue with our distribution partners and earn a licensing fee from them. And thanks to PDS2 it is understandable that the market will only get bigger. For companies wanting to sidestep into financial services, it has traditionally been challenging. Whereas now, by partnering with a company such as Bud, all of the regulation is taken care of, the services are integrated, and technical upkeep is sorted. It is an off the shelf product available to any company with a large customer base.

9. What is the one pearl of wisdom you would share with anyone starting their journey as a FinTech and why?

Understand the regulatory requirements that your product will need as early as possible. Work with the regulator so they can understand the model/product. It is the ticket to the game in the UK, so make sure you buy it before you compete.


About the Author:

As Head of Awareness at Bud, Jamie raises the profile of the company both in business development and marketing. He was Bud’s first employee and has helped transition the company from B2B to B2C. Previously, Jamie was a senior strategist in Advertising, working on brands such as Coca-Cola and Heineken.

More about FinTech Vantage:

This post is part of the FinTech Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech ecosystem.

KAE will be posting a number of interviews with FinTechs that share their candid viewpoints and to really get under the skin of the FinTech world.

If you would like to share your views and participate in the FinTech Vantage series, feel free to reach out to us at FinTech@kae.com

About the Author:

As Head of Awareness at Bud, Jamie raises the profile of the company both in business development and marketing. He was Bud’s first employee and has helped transition the company from B2B to B2C. Previously, Jamie was a senior strategist in Advertising, working on brands such as Coca-Cola and Heineken.

More about FinTech Vantage:

This post is part of the FinTech Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech ecosystem.

KAE will be posting a number of interviews with FinTechs that share their candid viewpoints and to really get under the skin of the FinTech world.

If you would like to share your views and participate in the FinTech Vantage series, feel free to reach out to us at FinTech@kae.com

Written by:

Jamie Campell