Walking the talk


Retail banks invariably claim that their visions and strategies are “customer focused”.  Some publish their net promoter scores (NPS) and a few even hold their executives to account on such measures.  In the UK, the Competition and Markets Authority’s recently completed two-year investigation into retail banking proposed that banks should be required to publish measures of customer satisfaction in their branches.

All good stuff, intended to stimulate competition in customer service. But a focus on simple metrics can generate a false sense of security or achievement, without cultural change actually taking place. This bulletin draws on Frontier’s experience to explore the factors needed to move customer focus strategies on from talking the talk to walking the walk.

Let’s start with a (pretty spectacular) recent example of the gap that can yawn between words and deeds.  Until early September 2016, Wells Fargo was perhaps the most celebrated of the many banking organisations around the world that proclaim themselves “customer-centric”.

It’s all there in the talk: Wells Fargo’s latest annual report dedicates fifteen pages to case studies on how the bank has acted to support its customers, and there is a plethora of metrics used to track how well the bank does against its customer targets.

The bank’s vision proclaims its desire “to satisfy our customers’ financial needs and help them succeed financially”, a key statement supported by others on values, strategy, and culture. But all this warm talk did not save the bank from failing to walk the walk, stumbling into one of the most damaging scandals in financial services.  Staff are alleged to have opened over two million “fake” (unauthorised) bank accounts for customers in order to improve business performance scores.

The post mortem on this unedifying episode is far from over.  But from what we know already, it seems clear that Wells Fargo forgot the old adage that “what you measure, you get”, and the lessons learnt in the banking crisis that volume-based performance incentives can lead to highly undesirable behaviours.  And, at the very least, it suggests a serious lack of consistency in the delivery of Wells Fargo’s vision and values.


So what can financial service organisations do to make sure that customer focus is not an empty catchphrase?  They can focus on three, deceptively simple, core elements of a successful approach.

  1. Listening and understanding
  2. Championing real improvement
  3. Engaging and communicating

As long as these three tasks are at the heart of your strategy, it doesn’t matter that much what you call them or how you organise yourselves to undertake them.  However, you need to beware of distractions: having an “insight centre” that looks like the bridge of USS Enterprise may create great PR, but it is pointless if the screens don’t tell you why customers prefer your competitor’s offer.

Customer focus is a much broader ambition than customer insight.

Moreover, it’s critical to understand that “customer focus” is a much broader ambition than “customer insight”. Knowing how and why your customers behave as they do is only one step towards building an organisation that is truly responsive to customer needs. The key is to keep checking that your whole operation is focused on delivering all three essentials effectively, and that you are not sending counter-signals with any of the levers at your command.


Here, from our experience with clients, are some ways of achieving effective delivery of these core tasks. For the first:

  • Set clear objectives for the customer experience and insight teams. Help them to focus on customer language and feelings. Obviously, you need to make sure they know the three objectives, but also to make sure they are motivated (i.e., assessed) on this basis. Don’t allow them to be distracted by the financial metrics – those are for the product teams.
  • Create fierce independence in those teams. Give them a remit and vision that makes it clear you are aiming for evidenced-based decision-making, not decision-based evidence-making.  Try to create an “internal brand” for insight that marks its independence and encourages the team to deliver bad news. Be careful about letting the customer insight function own the customer experience. If you want independent assessment, don’t ask the same people to pull levers and assess impact of doing so.
  • Make insight feel like a call to action. Don’t allow the insight team to fall into the habit of circulating so-what reports and charts: information and insight are not the same thing. The insight team should have clear views about what customers are doing, feeling and thinking. It has a responsibility to continually educate the organisation, and its communication skills matter.
  • Set the highest standard for inputs. Everyone has surveys, so:
    • make sure you have the fastest access to behavioural data (and use it to manage customer relationships, not just risks);
    • make sure you understand customer psychology, so you’re not fooled by the apparent statistical significance of a survey that is psychologically flawed;
    • focus on the things that matter, not the things that can most easily be measured;
    • never rely on a single piece of data; triangulate insight from different sources;
    • watch out for group-think – have someone actively searching for insight that challenges existing views.
  • Build insight from frontline colleagues, who are the business’s best ambassadors and best sources of customer insight. Put in place effective channels of communication, and make sure the insight team taps into these.
  • Learn from history. Make sure that evidence from previous periods and past actions is captured and fed into future decision-making processes. Don’t bury the vital evidence from things that don’t work.
  • Resist the temptation to focus on headline averages. Analysing specific customer groups will always provide more insight, and achieving marginal gains is often more important than measuring average levels. These points are highly important for retail banks, given the way in which revenue streams are concentrated around specific customer segments. Blurring the segments blurs the understanding.
  • Encourage effective trialling. Surveys will never tell you exactly why customers do what they do today (after all, often customers themselves don’t know), or what they will do in the future.  Make sure you can isolate the real behaviour drivers by trialling different elements separately. The digital revolution makes trialling easier than ever, and building the fastest and most flexible trialling capability in the market can be an enduring competitive advantage.  Above all, embed the understanding that trials that overturn the prevailing hypothesis are not failures, but successful lessons, so that the learnings are not lost.


Analytics and smart people can only get you so far.  The management task in creating customer focus is much broader than creating a good insight team, so that the whole organisation is directed towards improving real things for customers, rather than gaming metrics.

The whole organisation is directed towards improving real things for customers, rather than gaming metrics.

  • Lead from the top. Begin all major decision-taking with a question like “how will this action benefit customers?”  And make it clear, throughout the organisation, that top-level decisions will not be taken unless the answer to this first question is clear.
  • Drive insight and empathy through the whole organisation. Make sure that the customer is not exclusively owned by the marketing team; everyone in the organisation has a responsibility to represent the customer. Help them to do so: identify the insight needs of each function and business unit and map them to the customer insight work programme. Encourage everyone to be inquisitive about how specific groups of customers feel about products and service.
  • Organise – and plan – for cross-functional innovation. New propositions can come from many sources. Dedicate teams to focus – obsessively – on improving the customer experience, working on the principle that lots of little improvements may be better than one big one.   The hardest improvements tend to require cross functional working, and silos are dangerous.  They are not only a barrier to insight: they kill dynamic innovation.  Improving the whole customer experience requires lots of small, congruent ideas and improvements, generated across the organisation and applied right across its customer frontline.
  • Reward humility. Encourage people to be clear and honest about what they don’t know, or don’t like, and keep on asking. Chasing down the things you don’t know is difficult but often creates the most valuable insights. Make sure that no information is “taboo” or delivered under a senior expectation for a particular outcome.
  • Be honest with yourselves about your drivers of income. Most banks earn (often significantly) from activities they prefer not to talk about too loudly: so-called “bad income” from sources such as penalty charges or back-book pricing.  If senior managers are unwilling to acknowledge this, telling themselves that such income is driven by “good” forces such as customer loyalty, they will block out, or subvert, customer insight. Self-delusion also creates a cultural disconnect between what people in the organisation are told (“we want to be fair to customers”) and what they are really expected to achieve (revenue numbers).
  • Constantly review your incentive regimes. There is (rightly) now greater attention on senior management incentive schemes and the responsibility of remuneration committees of the Board to keep these in check. But incentives need to be watched throughout the organisation too. Many of the recent scandals in retail banking have had at least some roots in the incentive structures put in place for staff.  If reward is linked to volume, there is always a risk that frontline teams will resort to pumping the numbers, if not always as spectacularly as seems to have occurred at Wells Fargo. All incentive structures create some distortion, so even “customer focus” measures have to be watched for gaming, and refreshed frequently.


Customer perceptions are created by daily interactions with the business, not just by the things a business actively tries to communicate.   Discipline and challenge are required to put the customer at the heart of these interactions, and behavioural economics can help create a holistic view.  Here are some tips for the engagement task.

  • Build trust by hiding nothing, and creating a clear narrative. Design communications with customers’ needs in mind, not the small print and disclaimers, or the financials, or untested management assumptions about what the message should be.  They need to be created outward-in, not inward-out.
  • Focus your customer communications on genuine, tangible points of difference between your offerings and your competitors’, even if these are quite modest. Of course, there’s no harm in looking for big “wow! factors”, but they are – by definition – hard to find, and doing small things well boosts customer confidence. People find buying financial products quite stressful enough without being bombarded by overblown generalisations about customer love. Meanwhile, always remember these points of difference will be lost in the noise if you don’t deliver the basics well.
  • Try to make all related communication activities congruent – i.e., in harmony with each other. Behavioural economics teaches us that incongruities destroy trust and make it much harder to land the messages you want to send. So media coverage, corporate affairs and internal communications need to add to the same customer narrative, and follow it through in their individual activities.


It’s observable that few of the organisations which have a strong reputation for customer service or trust shout about it quite so much.

This final point creates a dilemma for the banks.  Most, if not all, UK banking institutions are trying to improve their brand images by emphasising their customer focus, and at least two have declared their ambition to become the “best bank for customers”.  Their messaging revolves around emotional themes of supporting customers through life, being on the side of customers and doing the right thing.

It’s not hard to see why banks might want to send the message that they’ve changed, given the reputational damage they’ve suffered from such scandals as the past mis-selling of payment protection insurance policies (PPI). Moreover, emphasising customer focus externally helps to create “congruence” with internal messaging, and so to help drive through the cultural changes they are now seeking to achieve.

But is this the best way to go about it?  It’s observable that few of the organisations which actually have a strong reputation for customer service (or trust) shout about it quite so much.  However, that’s not conclusive, since they, of course, don’t need to.

With provisions against claims being reported to have topped £40bn, and with claims companies still busy, customers may well find such bank messaging incongruous with their other sources of information about such institutions. And incongruity usually erodes trust.  Careful trialling of their messaging by the banks is therefore needed to see if the “customer focus” story is actually doing more harm than good, and they would be better advised to focus on specific customer-useful products or services.


…And to where we started: with the obvious question.  What might the strategy outlined above have done to help protect Wells Fargo against the experience of its fake accounts scandal? To repeat, it’s still early days to draw conclusions.  When the full story is told, detailed analysis of what went wrong will be invaluable to the banks.  Any institution with the kind of culture articulated here will want to conduct a no-holds-barred, independently-conducted “could it happen here?” exercise at Board level. But meanwhile, this note may provide some useful pre-emptive pointers.

  1. Listening and understanding: independent customer insight and experience teams, well-connected with frontline colleagues, might at least have picked up some worries and – if clearly licensed to surface bad news – have been ready to surface these.
  2. Championing real improvement: top-level leadership needed to focus the organisation on real customer improvements rather than simple metrics, to match the incentive mechanisms to such real improvements, to avoid mixed signals to frontline staff, and to build early warning signals throughout the organisation.
  3. Engaging and communicating: congruent messaging, internally and externally, would have helped to embed real cultural change, and help motivate the whole organisation to “do the right thing”.

Nothing’s foolproof, and risks of this kind have to be managed by maintaining and testing internal controls as well as by listening to customers. But this brief summary indicates there are several elements that should, at least, have made it less likely.

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Retail and consumer
Financial Services
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Related People:
Simon Gaysford
Phil Maggs