By Kim King, NewRiver, Inc.
October, 2001 – Customer service communication methods have exploded over
the history of the financial services industry. The 70s boasted face-to-face, personal
sales and service, allowing customers to “touch” and thus trust the companies
with whom they conducted business. As the pace of life accelerated, sales and service via
telephone became an additional accepted method of consumer communication in the 80s. Major
financial service companies quickly expanded this service to 24 hours. Currently over 35%
of business is conducted during non-business hours. The 90s brought the age of Voice
Response Units, and customers are now comfortable conducting 30% of their business without
human intervention. During each evolutionary phase of customer contact, financial service
companies worried that prior communication methods would become obsolete or diminish in
value. Interestingly, all communication options are alive and well. Giving customers
choices simply increased retention, brand loyalty and the number of times they
communicated with their financial service providers.
In the 21st century, over 50% of American homes possess one
or more computers. Consumers are becoming more and more comfortable conducting business
and communicating with their providers electronically, especially with the purchase and
service of mutual funds and variable annuity products. Although a majority of the major
financial firms provide Web sites that offer sales and marketing information and the ability
to perform simple transactions, few provide customers the option to receive full service electronically.
The advantages for customers are numerous:
They are able to access current, compliant information at
their command, 24 hours a day, 7 days a week. For customers with laptops, cell phones,
e-mail and PDAs, this convenience extends to anywhere in the world.
Electronic communication can be a distinct advantage. How
many of us have been caught in the proverbial telephone “queue purgatory”,
knowing we can’t afford to stay on the line but can’t afford to hang up after
waiting fifteen minutes? E-mail can fulfill the same need without inconveniencing the
customer. An answer can be provided immediately, or customers can be alerted as to when
they will receive a response, saving precious time and eliminating aggravation.
Most importantly, customers are able to receive compliance
materials electronically, eliminating the need to receive and store bulky documents. These
documents include annual and semiannual reports, statements of additional information,
fund fact sheets, confirmations and prospectuses. For instance, one major company’s
variable annuity annual report is over 700 pages. Electronic delivery allows a customer to
quickly and easily focus on areas of interest and then archive those sections on a hard
drive or disk. Once reviewed, they may also simply delete the document.
Lastly, the environmental concerns of paper delivery and
elimination weigh heavily on customers’ minds. This consumer concern should not be
taken lightly. Consumers do not want to be part of the current “waste cycle”. As
a case in point, one major financial services company ran a “Do You Want To Save A
Tree?” campaign, attempting to increase the consent of customers who might elect
electronic servicing. They received a 12% positive consent response rate. The campaign was
an overwhelming success and far surpassed typical campaign results.
The advantages to financial service companies are also numerous:
Perhaps the most important advantage is that documents and
marketing materials are always current and compliant. Second, the cost savings for
companies can be extremely attractive. Third, electronic communication provides an
opportunity to execute true one-to-one marketing, providing customers with targeted
messages and product marketing only in areas where they have interest and possess a high
propensity to buy. Fourth, companies always have a record of customer communication.
Fifth, interacting with customers when they want and how they want increases retention and
brand loyalty. And lastly, electronic customer service is currently a distinct competitive
advantage in the marketplace.
Today’s consumers are multi-dimensional in their
communication needs. A customer may have a broker, an online account and conduct other
business by telephone. Electronic delivery not only addresses multiple customer segments
but also individual customers’ multiple needs. Companies must meet consumers in the
space where they are comfortable. Control and choice are the needs and demands of
consumers in the 2000s, and firms must offer both to attract and maintain them.
As in the past, new and innovative means of customer
servicing require change and effort on the part of financial service companies. Electronic
delivery falls into this category. Companies have the option of building the required
infrastructure internally or outsourcing from a third party vendor who specializes in this
niche service. Off the shelf solutions are affordable and installation is fast and reliable.
Whichever method a company selects, it is paramount to
understand that electronic delivery is here, and here to stay. And, as with other decades,
the need is and will continue to be driven by consumer demand.
Kim King is Managing Director, Global Investor Services for
NewRiver, Inc. (www.newriver.com), the
leading provider of e-delivery services for the financial industry. She has more than 25
years of financial services experience, and is a former Divisional Vice President of
Prudential Investments. She can be reached at email@example.com.