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WHAT THE CONSULTANTS SAY: RFi On Moving Beyond Numbers In Measuring Client Experience

Alan Shields and Victoria Bateman

RFi

10 April 2014

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, , 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.