Buffett then clarified: “The phrase is not “satisfy my customer,”” … “Any business that has delighted customers has a salesforce out there. You don’t have to pay them, you don’t see them, but they’re talking to people all the time.”
These are the words of the man they call ‘The Sage of Omaha,’ Warren Buffett, the legendary value investor, CEO of Berkshire Hathaway, and one of the wealthiest people in the world.
Buffett was speaking at the Goldman Sachs’ 10,000 Small Businesses panel event at LaGuardia Community this year.
Buffett shared a personal story about trading-in his 2006 Cadillac to purchase his new 2014 Cadillac XTS in 2014. He said: “I don’t remember how much I paid, but I remember the experience I had”, “Have them walk out the door thinking, ‘I have never had a better experience with a human being,’ and they will come back to buy your car”.
He warned that the price of not delighting your customer is losing the vote of the customer. “Either I felt very good about the person who dealt with me, or I thought the next time I will go someplace else” he said.
However, Buffet was so impressed with the salesperson at the dealership that he sent a letter of praise to General Motors chief executive Mary Barra. Delighted clients feel compelled to delight back. They stay loyal and share the delight back by advocating and by gratitude.
Almost every bank on the planet could offer better customer service. When it comes down to the customer service elements of banking, the fundamentals are the same as for any other business, including a car dealership. For me, the same basic principles of customer service can be used if you work in a shop, bank, call-centre, or even a charity.
There are many examples of bad customer service, but I want to focus on the success stories. We live in a world where we are surprised when we receive exceptional client service. Sometimes, even surprised with just good customer service. However, shouldn’t this be normal? So, why do so many companies get it wrong?
The customer retention strategy for this segment has primarily focused on improving customer stickiness by enhancing the user experience. Large banks have been investing heavily in improving their front-end internet and mobile banking applications to enhance the customer experience and bring it on par with the user experience offered by competitors, including challenger banks.
Some of the large banks such as Lloyds, Barclays and Caixa Bank have setup coffee shops and co-working spaces in their high street branches to foster face to face connections with customers, especially the millennial population, and to offer banking which is contextualised into their customers’ lives and hence encourages repeat visits. We may live in a digital world but face-to-face contact is still vital.
Monzo uses a unique approach focusing on transparent customer engagement to build customer loyalty and to grow its market. The bank involves its customers in almost every part of its operations, including asking customers for feedback on product launches and fees, allowing them to invest in the company through equity crowdfunding rounds, and even sends every customer a copy of its earnings report. It also holds community events across the UK. The challenger bank has on-boarded more than 2 million customers since it was established in 2015.
Banks, such as the UK-based Nationwide or Sparda Banks in Germany, have invested massively in long-term digital transformation initiatives. However, many of the smaller banks are unable to do so. The customer retention strategy that many are adopting is to focus on specialisation and technology outsourcing.
The white paper goes into more detail on how Open Banking regulation, Macro-economic challenges and Strategic Imperatives determine the shape of banks.
*This is the second of Three Blogs on Customer Retention based on a whitepaper, developed by IBS Intelligence and Temenos, which analyses the dynamics and drivers of customer retention and looks at the various strategies currently in play within the European banking industry.