'Meets Expectations': The New 'Exceeds Expectations'

For financial institutions, delighting customers isn't a winning strategy. It doesn't drive loyalty and is unprofitable, according to CEB research

By The Staff of the Corporate Executive Board

In response to the turbulent economy, financial institutions are placing more importance on customer loyalty. This reflects a shift in revenue focus from acquiring new customers to deepening existing customer relationships.

To support this strategy, institutions are redoubling their efforts on managing the customer experience by focusing on "differentiation through delight." In fact, according to research conducted by the Corporate Executive Board, 54% of financial institution executives continued or increased their focus on exceeding customer expectations over the past three years.

Institutions often look to delight customers through exceptional service experiences. The expected payoff? By building loyalty that helps them stand out from competitors, organizations hope to generate revenue through retention, advocacy, and cross-sales.

However, new research from the Financial Services Practice of The Corporate Executive Board finds that the pursuit of customer delight can actually negatively affect profitability and have diminishing loyalty returns.

The key takeaway? Financial institutions that meet rather than exceed customer expectations maintain a profitability advantage of four percentage points.

Leading financial institutions do not try to create customer delight. Rather, they develop a rightsized customer experience management strategy that delivers the organization's value proposition at the lowest possible cost. By doing this, financial institutions guard against over-delivery and ensure scale to their service efforts.

This approach translates to increased customer retention while encouraging greater cost control, two key business imperatives in any tightened market.

Provided by Corporate Executive Board —What the Best Companies Do™

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