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The Business Value of Customer Trust

SEB’s Success Strategy: “Rewarding Relationships”

SEB aims to become the relationship bank in Northern Europe and in the many other countries in which it operates, from London to New York to Shanghai. Today, more than 17,000 employees serve more than 5 million private individuals, more than 1,800 large corporations, and 400,000 small and medium enterprises (SMEs), with the goal of building and growing long-term customer relationships.

Reaching that status—in SEB's parlance: delivering rewarding relationships—requires customer excellence, an outcome that its mission statement explains is "achieved by ensuring that the customer's perspective is taken into account in everything SEB does, by empowering employees to make the right decisions for the customer and for SEB, and by adhering to the fundamental tenet that customer loyalty leads to long-term profitability."

Delivering customer excellence—in other words, meeting customers' expectations in all situations to provide a high-quality experience—is "number one on our list of priorities," says Sören Lundgren, head of customer experience and service management at SEB. "It is a guiding principle of our bank, because we know that creating good customer experiences and having good revenue streams go hand-in-hand."

Change management
SEB has learned that change management is a critical and foundational component for implementing customer excellence. "Although many organizations primarily focus on customer experience measurement, the most important factor is really change management," Lundgren explains. "Measuring identifies an area needing improvement, but change management makes improvement happen."

SEB has been diligently working on refining its change management process for more than five years. "It is the most difficult part of the puzzle," Lundgren says. "We start with 'transformations' at the branch level that cascade down to individual teams. Those transformations address efficiency, but not at the cost of disappointing the customer. Traditionally, as efficiency increases, the quality of customers' experiences decreases—a mistake that SEB has been able to avoid by ensuring that the customer's perspective is never neglected in each and every change initiative."

The change management process first started in Sweden, but has since rolled out to other countries. "Change has become part of our lifestyle. It is a guiding principle for us," Lundgren says. "The moment you stop changing, you're finished."

Driving change in SEB is a central team called navigators, who report to the CEO. This team establishes the customer experience priorities and cascades direction down to the heads of all divisions and, ultimately, down to the frontline employees. The navigators also provide those priorities to divisional teams, which enables change on a more local level. "SEB made it clear that change is not optional—this is the way we are going to increase internal efficiency and external customer excellence," Lundgren explains. "It is not only for managers, but includes everyone in the bank."

Net Promoter Scores drive change initiatives
To guide its change initiatives SEB adapted and adopted the use of Net Promoter Score (NPS)—the willingness of a customer to recommend the bank to a friend or colleague. "We use NPS because it is the strongest indicator of loyalty and growth," Lundgren says. "When customers recommend SEB, they are putting their own reputation on the line."

SEB conducts more than 100,000 customer surveys annually to collect NPS data, along with a set of about 10 proprietary questions. The goal is to capture the state of the drivers that impact NPS, such as accessibility or service quality. By pairing the measurement of drivers with NPS, SEB is equipped with an early warning system and a set of indicators to appropriately direct its focus on the areas requiring improvement. This information is actionable at the branch and at the employee team level. "It also shows that there is no single 'prescription' for fixing poor branch performance—the solution depends on the specific symptoms of the unit," Lundgren says. "It allows us to know, in a specific way, what actions create 'promoters' and 'detractors' for the bank."

The surveys are deployed through an automated process. "When a customer contacts the bank through any channel, we register that contact in our CRM system," Lundgren explains. "Every evening, we mathematically select a representative sample and send a link to the online survey within 24 hours, and then aggregate and analyze the results monthly."

These analyses aim to understand what drives recommendation. "We analyze interaction effects rather than analyze results item by item or question by question," he says. "This results in a drive-chain. For example, we start [by analyzing] 'What makes us meet customer expectations?' The basis for this is 'products and services with quality.' Then we add 'ability to understand customer needs' and, finally, 'ability to create interesting meetings.' It is only when these three elements are in place that we meet customer expectations. These analyses serve as the basis for our strategic initiatives and help our customer-facing organization understand what it needs to focus on."

While most items remain the same, some survey questions are included when appropriate, depending on the channel. For example, it makes sense to ask a customer if an employee was friendly when the interaction occurred at a branch, but not when the customer used Internet banking. "We compare results by channel on our dashboard, and we aggregate across channels to get an overview," Lundgren says. Additionally, she says they adjust the surveys according to cultural differences and what might be necessary for a specific target group. They have a standard question data bank that contains about 40 predefined questions for these purposes and they select with the local team eight to 12 of the most relevant questions for the local market to use in any given survey. To validate the survey process, SEB conducts "triangulation studies" once or twice per year. For this research, a random sample of the bank's entire customer base is contacted by telephone and the same questions are asked. "Consistency is always high and within the margin of error," Lundgren notes. "As a consequence, we have a high degree of confidence in our findings and know that they are robust."

The bank's commitment to rigorous research is also demonstrated by its ongoing cohort studies. In these studies, NPS scores for a set of individuals who became customers at about the same time are tracked longitudinally, together with measures of their value to the bank. In this way, the bank is able to see the economic impact of satisfying (or not satisfying) customers over three, six, nine, and 12 months. "We have found that the revenue contributed by a satisfied customer is about five times greater than that contributed by a dissatisfied customer," Lundgren says. "That why we have implemented a recovery process for those customers giving us a low score."

The bank also uses cohort studies to follow NPS categories over time in order to assess its impact on loyalty, revenue, and business volumes. Says Lundgren, "When we compare detractors to ambassadors, we find that ambassadors contribute 115 percent higher revenue over a 12-month period. We see the same results with SME's, as well."

Additionally, the bank uses reverse cohort studies (backtracking) to profile customers who have left SEB. "We find that such customers typically gave us NPS scores [of] zero 12 months before they churned. NPS does a good job of predicting churn for us," Lundgren says. "SEB links the customer experience analysis with business results to track the impact of customer experience initiatives. The results of doing so demonstrate that the economic case for focusing on the quality of customers' experiences is clear and compelling."