Practice Strategies
WHAT THE CONSULTANTS SAY: RFi On Moving Beyond Numbers In Measuring Client Experience
In the latest series of commentaries from consultants, the firm RFi looks at how measuring the client experience, and evaluating it, is more than just a business of number-crunching.
This publication has approached a raft of consultants
operating in the wealth management sector to give their views
about a range of challenges and opportunities for the industry in
different parts of the world. A number of articles are being
released in these pages in the coming weeks and we hope readers
find them stimulating. The articles have been sought by this
publication and also by Bruce Weatherill, of Weatherill
Consulting, and also chairman of ClearView Financial Media,
publisher of this news service.
These comments are from Alan Shields, managing director, RFi, and his colleague, Victoria
Bateman, research director.
Within private banking, client experience is moving up the agenda
of leadership meetings and increasingly finding its way into the
key performance indicators of staff. With this in mind, ahead of
the release of RFi’s global study on HNW Client Experience, it is
worth taking some time to look at the facts and the challenges
facing private banks – in particular, those dealing with clients
in multiple jurisdictions. RFi’s study took into account the
opinions of 6,000 high net worth individuals across 12 countries,
examining their appetites, experiences and preferences with
regard to their private banking and wealth relationships.
The central aim of the study was to understand what client
experience looked like around the world, examine how expectations
differed on a country-by-country basis, determine the drivers of
improved experience and link them to financial performance.
Linking experience to share of wallet
In 2014 the two most common key measures often used by private
banks to measure client experience are satisfaction and advocacy
– sometimes used in isolation, sometimes in tandem – and there is
an implied recognition that there is a linkage between these
measures and financial performance. The truth of this is somewhat
difficult to prove, but one way to examine it is to look at
‘share of wallet’ – the proportion of a client’s total footings
that are held by a given private bank.
The chances are that most private banks’ client bases would look
like the graphic below, where a simple Pareto analysis shows that
a large proportion of clients’ assets are held outside of the
private banking relationship – on average private banks around
the world, manage/ administer less than 50% of their clients
investible assets. The rest of that wealth is shared across other
relationships that the clients may have.
So where does client experience fit into this picture? Here we
will focus on advocacy or likelihood of recommendation. RFi’s
study took into account the likelihood that a client would
recommend their main private bank to a friend or family member
and cross-tabulated it with the proportion of investible assets
that a client has with that private bank.
The result was pretty conclusive – the Promoters (those that
described themselves as a 9 or 10 on a 0-10 scale) were three
times more likely to hold more than 70 per cent of their wealth
with their main private bank than the Detractors (0-6 on a
0-10 scale) and twice as likely as the passives (7 or 8 on a 0-10
scale).
Ultimately this leads organisations to focus on Net Promoter
Scores (NPS), calculated by taking the per cent of detractors
away from the per cent of promoters to arrive at a figure that
can be either positive or negative.
Global comparisons
A simple measurement of NPS or overall ‘likelihood to recommend’
is obviously just the first step in understanding client
experience, but it is a start. One of the difficulties of using a
metric like this across multiple segments or jurisdictions is
that when it comes to experience, clients have very different
expectations and attitudes towards telling others about it.
A simple comparison of advocacy from RFi’s study provides a neat
view of the varying attitudes in different countries and an
insight into the challenges for regional and global players of
maintaining a consistent client proposition. The graph below
shows the differences in likelihood to recommend across nine
markets, using the UK as a baseline and showing the others
relative to the UK. What is shows is that clients in Hong Kong
are 12 per cent more likely to recommend their private bank than
in the UK, whereas Australian clients are 30 per cent less
likely.
However, this doesn’t necessarily mean that clients in one
country are more or less happy with their private banks. For
example, in some countries there is a tendency toward higher
ratings when asked questions such as this while in others there
are cultural issues that inhibit individuals from recommending a
service. It is this fact that makes it challenging for any bank
trying to understand where to focus its efforts when dealing with
multiple countries and trying to improve client experience.
It is also frustrating for those managers responsible for the
clients that are culturally less likely to recommend.
Moving beyond numbers
Increasingly we see private banks focus on improving NPS and
building this number into staff KPIs. For management this is a
very simple way of putting client experience into a box for
reporting purposes, but it is a very blunt instrument and one
that can be confusing for staff.
At the end of the day, because of the way NPS is calculated, it
can actually increase while the proportion of Promoters in the
client base goes down! For this reason many organisations are
seeking to understand the mix of Promoters/ Passives and
Detractors in their client base and how each of these is moving
over time. This is better but it still doesn’t make it easy for
staff to understand how they can impact on the score.
In order to get greater engagement from staff with regard to NPS,
private banks need to arm their people with a series of
prioritised actions that can drive up overall levels of advocacy.
What things can they do in their day-to-day role that will make a
difference. This is useful for staff and much more
empowering.
Leveraging relevant roles
Having determined the drivers and provided staff with action
points, it may also be worth private bank leaders re-looking at
how they apply KPIs for staff and the incentives that they have
to perform well in their roles. For example, as a member of the
back-office staff I may feel like it is very difficult for me to
help increase NPS as my role does not allow me to do many of the
things that have been proven to drive advocacy – proactivity is a
key one. This makes me unhappy and disconnected with my KPI of
improving NPS.
So what is the answer? We would contend that private banks should
look at the different staff that they have within their
organisation and the roles that they play in the overall client
experience then set KPIs accordingly. The overall aim of
improving NPS can remain, but it should be broken down into its
constituent parts.
Practically, what does this look like?
⦁ Back-office and operations staff are targeted
with decreasing the proportion of Detractors within the client
base. Something that will drive operational efficiencies and
turnaround times for clients.
⦁ Front-office staff and relationship managers
are targeted with increasing the proportion of Promoters.
Something that will drive proactivity and client service.
⦁ Senior managers retain the overall aim of
increasing NPS. Something which will encourage co-operation
between those responsible for service, technology, marketing,
operations, distribution etc.
Putting these together, the clients get a better all-round
experience and the business benefits from improved team spirit,
employee engagement and ultimately increased share of wallet.
The key learning
One of the conclusions of RFi’s study is that we need to look
beyond simplistic numbers like NPS and understand the underlying
drivers behind them. What are the reasons clients will or will
not recommend? How happy are they with different attributes of
the experience? And, how important are these individual
attributes in driving overall advocacy?
Once we have done this we need to work on getting greater
engagement from staff by empowering them to make a difference and
targeting them on things that they can action personally.