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Summon up a list of hackneyed business phrases and “know your customer” would probably be in the top ten. The FSA requires financial advisers to know their customer before providing advice. Financial institutions are expected to know their customer to avoid falling foul of money laundering regulations. Supermarkets take advantage of loyalty cards to know their customer’s shopping habit. And we won’t even start on the way in which marketing gurus and consultants get in on the act and suggest the creation of multiple choice questionnaires to enquire into every nook and cranny of the lives of clients.
Do we know the customer or just facts about them?
But within this “fact finding” storm do we actually know our customers or do we simply know facts about them? Does it really help a supermarket to know that a client buys an avocado every Friday? Well yes it might help with stock control and market costing but is that enough. If the supermarket really knew why the customer bought an avocado it could transform the relationship. For example, is the customer buying the avocado because they like the taste, or because eating avocados can help to lower cholesterol? Knowing the fact is one thing, knowing why can open up an entirely new cross-beneficial relationship.
The latest mis-selling scandal
Arguably it may be this concentration on the facts which has contributed to the latest mis-selling scandal to hit the banks. Complaints about the sale of packaged banking accounts have risen dramatically over the last few years. In essence a packaged bank account which incorporates travel insurance, car breakdown assistance or other benefits is a good idea. These are all products which the client is likely to need so why not make the process simple and provide all the benefits under one roof.
The trouble is that many of these additional features come with caveats and restrictions and customers have found that when they call on the cover, it melts away. The level of complaints about packaged products is such that the FSA have imposed rules which banks must follow before offering these products. The rules, which come into force from 13 March, require advisers to establish whether customers are eligible to benefit from each element of the package and check eligibility annually.
When you add this latest mis-selling scandal to all the others which have passed in recent months the banks are having a hard time of it. So much so that when Lord Green admitted to a commons committee in January that Britain’s Banks were locked in a downward spiral of poor lending decisions and had a “computer says no” attitude to small business lending, the remarks went almost unnoticed.
But in truth it is not just the banks who suffer from customer blindness. Yes we could hark back to times when banks luxuriated in small business advisers who had the time to care about each of their customers. One of our friends remembers the time when as a small business adviser they spent the day helping a new wool shop to stock shelves prior to opening. But the pressure of time and costs has moved much of the world on and know your customer has moved into know facts about your customer.
Engaging customers and employees alike
But it doesn’t need to be like that. Businesses which work hard towards establishing a strong internal culture in which employees are fully engaged in meeting the vision are starting to discover that engagement doesn’t stop with employees. To truly meet and match the vision, the organisation needs to be redefined to encompass all those who come into contact with it, from suppliers to customers. Sharing the vision, engaging with suppliers helps them to meet the organisational objectives of the business. Taking time to engage with and really understand the needs and ethos of clients will help to shape the vision in a way which is beneficial for all.
In summary, know your customer may be a hackneyed phrase but when we truly take time to know and understand our customer, the world is a very different, and profitable, place.