In the coming months, key industry stakeholders will make decisions that will go a long way towards cementing the broking industry’s future as truly customer-focused.
The intention will be to help mitigate the impacts of the royal commission and position the broker channel as the preeminent and most trusted source of support for consumers seeking to secure finance.
One such decision relates to improving the governance and oversight of brokers through the adoption of a new Governance Framework that includes the collection of post-settlement customer feedback and operationalise the proposed “customer first duty”.
So, how critical will it be to pick the “right” metric? Should the industry focus on being outward-facing (sales) or inward-facing (performance)? What should be measured to fully understand the customer’s experience? How many metrics are needed? Is the capture of one single metric a lost opportunity?
Outward vs Inward
When seeking to purchase a product or service, consumers do a lot of research. The type of purchase — transactional versus relationship — tends to determine how much time is spent on that research. Review sites factor more heavily in transactional purchase decisions; however, relationship buyers seek more. They want a trusted adviser/partner and, therefore, need more information about a business. They want to understand what customer experience the trusted adviser/partner will deliver.
In the past, the broking industry has been perceived as transactional, but moving to a “customer first duty” and focusing on a retained relationship will do much to change this. Customers that have a good experience are more likely to be retained and are more likely to be an advocate. In short, they will become much more valuable to the broker and their aggregator.
If customers are approached post-settlement for feedback, the expectation will be that their feedback will be used to improve their experience and the industry moving forward. It will be difficult for the industry to deliver this with a single, outward-facing metric.
What should be measured, and how should it be measured?
Customer feedback is like a mirror for a business and there are numerous reasons for collecting it. These are:
If you’re going to the effort of collecting feedback — and your customers are going to the effort of giving it — then it’s essential to use metrics that tell a story and achieve each of the outcomes described above.
It’s important to note any method that takes longer than five minutes for the customer to complete is too long. Customers are time-poor and easily distracted, so whatever data collection method you use has to be quick, simple and easy for both parties. You need to find the balance between collecting the most useful metrics and maximising response rates.
Can one score really rule them all?
There are a few methods available that can be utilised right now. Here’s a brief explanation of each and the pros and cons of using them.
One of the most commonly used methods, Google Reviews allows customers to provide valuable feedback on your business. The review is based on a single star rating (5 being the best) and allows for qualitative comments, which Google encourages businesses to reply to as a “response from the owner”. It’s an outward-facing metric with the primary purpose of generating leads.
Customer Satisfaction (CSAT):
CSAT captures your customer’s satisfaction at key moments in their life cycle; for example, during the sales process, while using a product, or while interacting with certain content. It asks the customer to rate their response to “How satisfied are you with your experience today?” using a numerical score (such as 1–10). The response skews towards the immediate experience and not as insight on the broader customer experience. It’s an inward-facing metric with the primary purpose of measuring satisfaction at a point in time.
Net Promoter Score® (NPS®):
NPS is intended to quickly capture who your promoters and detractors are. It asks one question using a 0–10 scale: “How likely is it that you would recommend [brand] to a friend or colleague?” The NPS is then calculated by subtracting the % in the negative category (scores 0–6 called “Detractors”) from the % in the positive category (scores of 9–10 called “Promoters”). Like CSAT, it captures your customer’s short-term sentiment at key moments in their life cycle. It’s an inward-facing metric with the primary purpose of measuring advocacy at a point in time.
Strength of Relationship Index™ (StoRI™):
StoRI™ was developed in Australia as a result of research in the financial services industry. It’s an aggregate score of the underlying drivers that are responsible for critical customer relationship outcomes such as trust, satisfaction, retention and advocacy. The metric, expressed as a percentage, is the accumulation of the scores achieved for 11 questions that measure the customer’s views.
While it’s an inward-facing metric with the primary purpose of measuring the strength of the relationship between a business and its customer to improve performance and identify growth opportunities, the results can also be used externally as authentic social proof.
In summary, the industry needs to consider whether one single metric will improve the governance and oversight of brokers.
As noted earlier, one of the key reasons for collecting customer feedback is to do something with the results to impact future customer outcomes and broker performance.
If a post-settlement customer feedback strategy is deployed, is it smart to utilise an “it is what it is” number that has little predictive power, can’t be used alone and doesn’t give brokers and aggregators insights about what to do next?
I believe the industry has a golden opportunity to get it right with its move towards introducing a “customer first duty”, provided it chooses an industry-wide, actionable metric that will allow all participants the opportunity to be consistently measured on what matters most to customers and provides opportunities for improvement and growth.
Ray McHale is co-founder and CEO of MyNextAdvice.
Ray has more than 25 years experience in banking and the broader financial services industry. He's developed intellectual property that represents the DNA of strong customer relationships which today helps brokers, aggregators and other advisers understand and develop better customer relationships and build trust with prospects.
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