MONTHLY DIGEST

Opinion on current trends or market issues

Know your customer or lose your customer

David Marshall

As consumers become increasingly empowered through choice, channel and the vast variety of products and providers, they can be left uncertain of the best product for their situation. These ‘empowered’ consumers will ultimately decide which lenders have earned their trust. It’s imperative that businesses understand their customers' needs in order to develop long lasting relationships.

For businesses, this presents a huge opportunity - particularly to those who know their customers well.

It’s no longer about just catering to the growing use of technology, instead it’s about winning customers over by understanding them better and demonstrating a great customer experience through the most appropriate product offerings and a personalised experience.

The power of a single customer view

Every business that wants to provide its own personalised service needs a single customer view. It requires data matching techniques to merge all the data from across the business, to create a holistic view of customers, their behaviours and financial information. Armed with this information, it’s much simpler to accurately fulfil the customer's needs.

Creating a complete view of each customer is relatively easy when the customer’s personal information stays constant over time. However when your customers’ information is in multiple databases and each contains different personal information, this can present a challenge; which can make your understanding of your customers incomplete.

Building trust through understanding

The BBA recently stated “It is essential that we restore the trust between banks and their customers, so that people can be sure their bank will not try to sell them complicated products they do not need.” Lenders are now taking this seriously and with an increasing emphasis on Conduct Risk, it’s imperative to accurately understand each customer to ensure you provide the most suitable product to the right person at the right time.

A single customer view, gives companies valuable knowledge of their customers’ credit commitments, their exposure within their organisation (and with other lenders) and their spending behaviour. Furthermore, they could potentially know each customer’s income, the equity in their property, their ability to afford credit and the number of short term loans taken out. With this level of information, it enables businesses to provide the most appropriate solution to the customer.

Making it really personal

If, for example, one database indicated that one of your customers had moved home; you could reasonably deduce they might have a requirement for a personal loan. Another database, however, might reveal they have sufficient savings, and if they were to have any credit requirements, it would be for a temporary overdraft. This bigger picture brings together all the pieces of the jigsaw to help you make better, quicker and appropriate decisions.

Only by breaking out of internal silos can you create a real picture of your customer. Knowing specifically what each customer can afford and manage to repay, means you can provide the best solution to each customer’s needs. By doing so, you create positive customer experiences, improving customer retention and enhancing your brand reputation.

It’s a consumer expectation

Because customers have more ways than ever to access finance – tablets, smartphones and laptops; it’s also simpler for your customers to switch providers when they’re unhappy. Clearly, understanding your customers better and offering them products which are appropriate to their needs, is essential in light of increased competition and forthcoming regulatory changes to make switching accounts easier.

As always, if a customer has had a bad experience they may not remain customers for long – in fact 52% of customers who were sold inappropriate products, walked away from their current provider*. If on the other hand, your customers feel you know them, understand their needs and then meet those needs with appropriate and relevant products, they’re much more likely to stay with you and remain loyal.

So what’s next? Assigning unique identifying numbers specific to individual customers keeping every piece of financial data together should be the way forward. Experian’s Single Customer View solution uses Experian’s extensive data sources to assign an ExPin number to each individual customer. As that customer’s information changes over time, the number will effectively pin that information to the customer – ensuring you always know your customer.

*Experian Single Customer View research 2012

David Marshall
Senior Product Manager

David has worked for Experian for over 10 years with experience in fraud and credit risk consultancy, and more recently as a Senior Product Manager working directly with clients to develop customer acquisition and affordability solutions. With proven success working extensively with clients in Europe, Africa, Asia and South America on strategic developments and new market entry initiatives, David is well positioned to deliver best practice solutions, data and analytics to our clients.

 

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