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Increasing the Net Worth of the Customer Experience

When the Customer Is King, Customer Experience Rules

Banco Santander SA Chairman Emilio Botin instills a guiding philosophy in the global financial services firm he leads: The customer is king. This philosophy is at the core of the company's ambition to continually improve in ways that will attract and retain customers, and solidify their loyalty. 

The organization uses a comprehensive customer experience excellence strategy to support both its customer-centric approach and its business goals. The strategy includes such elements as an extensive voice of the customer program, its We Want to Be Your Bank program, retention activities focused on increasing what the bank calls linked customers (derived from their segment and number of products), and a quality program called Meta 100.

"It's difficult to obtain a perception of quality, but it's easy to lose it," says Marketing Director Luis Colorado. "So it's essential to focus on quality. It is correlated with new customers, with linked customers, and with the budget and P&L. You must deal with it every day."

Everyone from the bank's corporate leaders to its frontline staff strives to deliver that quality at every interaction, through every touchpoint. This starts by understanding what customers value. Banco Santander gathers feedback through various means to learn customers' needs and preferences.

One feedback channel is satisfaction surveys, which the bank sends quarterly to select customers. The goal is to learn not only how customers feel about Banco Santander and its products and offers, but also about offers they are receiving from other financial institutions. "It's important not only to know what the customer thinks at a specific moment, but also what are their [preferences]. For instance, right now our customers want more secure offers in everything," Colorado says. "We learn their needs and expectations, and we try to set our value proposition to those needs." 

Another highly informative feedback channel is the branch network. Every Monday morning the marketing team sends the branches their different opportunities for the week for every portfolio of customers. Most are sales leads; some are service leads, like calls to update customers on what is happening with their portfolio. When financial advisors speak with customers during these calls, they often obtain new information. "All the people in our branches must put in their agenda in writing what customers say to them [during these calls]," Colorado explains. "This is very valuable information."

Basically, the goal is to use all the information the bank has about its customers to create customized value propositions for its different segments while creating specific opportunities for the branches. This improves both the customer experience and the value customers potentially bring to the bank.

Using customer data from feedback and interaction touchpoints, each week the marketing team sends the branches many different opportunities with specifics as to which customer, which product, which offer or promotion at what price, and so on. "We have a large amount of different variables in activity for all of our customers," Colorado says, "so we try to develop not only those opportunities, but also the global customer strategy addressing the different characteristics of customers."

Based on each customer segment, Colorado's team determines how many contacts the bank plans to do for the year. For instance, in personal banking there are different contact strategies, based on the type of portfolio customers have. In some cases the financial advisors need to make one contact per month with a specific customer. But a customer with a larger portfolio could have up to, say,
25 contacts per year.

Part of this contact strategy is supporting one of Banco Santander's key growth initiatives: increasing the number of linked customers—depending on their segment and their specific number of products. The marketing team sends targeted offers to the bank's millions of linkage customers based on customer and marketing data. "We deal with customer linkage every week," Colorado says. "Every Monday morning we analyze the linkage figures of the previous week in order to made commercial decisions." 

Colorado's team then tracks and measures the results of all the campaigns and opportunities it sends directly, as well as those it sends to the branches. "We analyze, analyze, analyze to determine if something works or not," he says. "Every week we track four metrics, including ROI and expected return ratio; we calculate all these variables for the branches, the Internet, the mailing, and telemarketing for all of our customers."

According to Colorado, the marketing team uses customer and marketing data to compare the expectations customers cite in surveys with their real actions to develop their value proposition. The value proposition then becomes a strategy of contacts, products, and non-financial proposals.


We want to be your bank

One of the bank's most significant changes was developed by understanding customers' underlying needs, their value, and their preferences. In 2006 Banco Santander launched the program "We Want to Be Your Bank." It comprises activities and actions that will improve quality and, as a result, increase retention and loyalty.

"The first action we took was to stop charging commissions to most of our clients," says Channels Director Jorge Martinez-Arroyo. "It helped improve quality quickly. In terms of quality, I think We Want to Be Your Bank is the most important thing we've done. Quality improved and retention improved greatly."

"In Spain we don't have free banking," Colorado adds. "So, if the customer has one of the different payroll accounts or mortgage or one of 10 different types of products, then it's free banking, no service commission, forever." 

The We Want to Be Your Bank program reduced churn by half. As a result, the bank is now able to cross-sell more products to more customers. "The We Want to Be Your Bank program was our main strategic action," Martinez-Arroyo says. "You have to take into account that when we launched the program, it erased commissions from three million clients. Now it's 4.2 million. It had direct impact into the P&L of about 82.5 million. It was a big, big decision."

The program pays back in terms of retention and wallet share, Martinez-Arroyo says. "The idea is, you improve quality and you [increase revenue] through retention and through share of wallet. In fact, the program paid off in less than a year. Banco Santander increased its market share as a result. "We are able to offer customers not only free commissions, but also other types of non-financial [products] like offers for travel and so on," Colorado says. "Right now we are developing different proposals that we will launch next year. It is essential to work on these things, because it's difficult to differentiate. We don't want to be talking only about price. It's stupid."

Scoring the customer experience

Following the success of We Want to Be Your Bank, Banco Santander launched its Meta 100 program. The objective is to survey more than 100,000 customers every year and obtain customer satisfaction rates related to various aspects of quality at the branch level, from service quality to ATM performance. Branches earn up to 100 points based on survey results, mystery shopping, and other measures. Meta 100 means to earn 100 points. 

Specifically, the quality surveys measure satisfaction in such areas as the quality of the advice that the financial advisors at the branch are providing to clients, the time customers spent waiting in line, and the staff's attitude towards the client. 

"Also in that survey we ask questions related to the financial proposals that we're sending to customers through marketing and so on," Colorado says. "We obtain information about whether they feel that a proposal is [relevant]. Customers may say, 'No, I am not interested right now, but the offer is interesting.' We want to know if they feel comfortable with the different offers that we are presenting."

The Meta 100 initiative was triggered by the bank's desire to further decrease churn and increase share of wallet. "We saw [through surveys] that some clients were disappointed with the quality of the customer experience," says Martinez-Arroyo. "We don't want a disappointed client not just because he may leave, but sometimes because he doesn't improve his position with the bank."

All of the branches have an objective of at least 70 out of 100. The bank will create a specific improvement plan for underperforming branches. Additionally, the bank's quality department tracks the survey results and follows up with action plans to resolve any issues.

We Want to Be Your Bank and Meta 100 have significantly helped Banco Santander improve its retention. "We went from being one of the worst banks in terms of retention to being one of the best," Martinez-Arroyo says.

Ensuring quality at every touchpoint

A cornerstone of that transformation was the additional focus on quality brought about by Meta 100 and other initiatives. "Every month as a committee we discuss the quality of the customer experience," Colorado says. "The quality department obtains information about all of the customers of the different countries. This is important because we obtain information about the quality of every branch that we can compare. We are always comparing and learning interesting information about trends." 

Improving the quality of the customer experience happens in part through sharing and acting on the information learned in the satisfaction and quality surveys. Management tries to find the best practices within each country's operations and share them with the bank's operations in the other countries. One way this sharing happens is through the bank's commercial banking academy; another way is regional meetings.

Once the bank establishes its main quality indicators, management includes them in the branch employees' bonuses. "That is the only way to really get things done," Martinez-Arroyo says. According to Colorado, a percentage of the variable salary in the branches is related to quality.

The bank also focuses heavily on the online and phone customer experience. "We use our alternative channels to improve the [perception] of quality that our clients have of Banco Santander," Martinez-Arroyo says. "It's not just about selling; it's also about retaining clients. We understand that using alternative channels increases client loyalty." 

As part of the quality initiative, the bank surveys select customers (based on their use of phone banking) every three months about their satisfaction with the service they received during a call to the contact center. The bank uses other indicators monthly like third party surveys, market benchmarks, and internal quality indicators. 

"We noticed that people are very sensitive to phone service," Martinez-Arroyo says. "When a client is disappointed with the service, it is very difficult to get him back or to make him feel better about the brand and about our service."

In terms of the phone banking, the bank focuses primarily on whether associates have solved a client's problem. About 400 outsourced associates handle about 300,000 calls a month. The calls are mainly for service; for example, customers want to know about their account or they want to find an ATM. The bank tracks first-time resolution to understand how many calls are transferred, as well as to track pure resolution, because not every question a client raises can be resolved by the contact center. 

"People do not use the phone to buy products," Martinez-Arroyo adds. "We do some cross-selling, for credit cards or other things, but…we want to fine-tune service before really developing sales. We already did the basics, in terms of checking the scripts, improving recruitment, improving training. But that's not enough. Then you have to dig down and review all the processes. That's where we are right now, reviewing all the processes and trying to reduce the number of transfers."

Although Martinez-Arroyo and his team are working on improving the customer experience in the contact center, they are currently focusing more on Internet banking than on phone banking to help Banco Santander reach its  retention and loyalty goals. "Phone banking is more oriented toward servicing clients, selling more complex products, or giving advice," he says. "But if we talk about methods for retaining, then we would go for the Internet." 

The bank uses marketing campaigns to increase customers' Internet usage. For example, the marketing team will send communications aimed at motivating clients to make a transfer. Later, a campaign will encourage them to buy products online. The goal is to encourage customers to use multiple channels based on transaction types.

"I may want a customer to go to the branch to, perhaps, sell him a pension fund or another product," Martinez-Arroyo explains. "I don't want to migrate the client to the Internet. I just want to migrate something that he does at the branch. What I'm doing is giving him more points of contact with me, which means I'm going to retain him more." 

According to Martinez-Arroyo, the common perception is that transactions are cheaper in alternative channels. The real benefit, however, is clients will transact more than they used to using these channels. "You are more likely to retain [them]," Martinez-Arroyo says. "We've observed a big improvement in the churn ratio."

All these initiatives have helped Banco Santander improve the quality of its customer experience. Ultimately, however, what's solidifying these improvements is the changes to the culture regarding how the bank's employees treat customers, like the bonuses based on Meta 100 scores. "When employees see there is a plan to improve quality and their salaries are impacted by quality, and they see that most of these things are sponsored by the CEO or the general manager, that's when you make that culture change," Martinez-Arroyo says. "That is required."