Customer journey analytics for the financial sector. How do customers make decisions regarding their bank?

Table of Contents

Abstract

Table of Contents

Abbreviations and Acronyms

List of Figures

List of Tables

1 Introduction
1.1 Professional Background and Motivation
1.2 Purpose and Research Questions
1.3 Outline of the Thesis

2 Customer Journey Analytics (CJA)
2.1 Introduction and Definition
2.2 Customer Journey Mapping (CJM)
2.3 Touchpoints

3 Customer Journey Analytics in the Financial Industry
3.1 The Financial Industry in the Current Environment
3.2 Channel Strategy
3.3 Implementing a CJA Project at a Financial services provider
3.4 Hypothetical Customer Journey

4 Empirical Research: Research Methodology
4.1 Gathering Data for CJA
4.2 Critical Reflection of Gathering Data through Interviews
4.3 Empirical Research: Data Collection

5 Results
5.1 Expert Interviews
5.2 Customer Journey Maps
5.3 Discussion and Evaluation

6 Concluding Recommendations
6.1 Mapping the Journey in the Target Vision
6.2 The Customer Journey Map in the Target Vision

7 Conclusion and Critical Reflection

Reference List

List of Appendices
Appendix 1: Customer interview 1
Appendix 2: Customer interview 2
Appendix 3: Customer interview 3
Appendix 4: Customer interview 4
Appendix 5: Customer interview 5
Appendix 6: Customer interview 6
Appendix 7: Expert interview Sparkasse 1
Appendix 8: Expert interview Sparkasse 2

Abstract

The relevance of traditional advisor-based bank consultations is in decline. Less young people consider the profession of a qualified bank advisor as a professional career perspective and more customers call an online bank their primary financial provider. The financial industry is facing wide-ranging changes due to historically low interest rates, higher regulation and in particular, the rise of online banks and digitization. Traditional retail banks in Germany have been losing market share, bank branches have been merged as well as products and services changed. However, the German savings banks have been pursuing a comprehensive consultation approach (Sparkassen-Finanzkonzept) aiming to build a competitive advantage, increase customer loyalty and expand the product usage rate by existing customers. With a view to customers, the exploration of the decision-making process regarding banks and their financial products and services is pivotal for the bank’s strategic process and product management as well as marketing measures. While customer surveys and market analysis are widely spread to adopt strategic implications, an in-depth elaboration of the customer’s journey is an almost untouched approach to gain insight into the customers experience. This study conducts a customer journey analysis to examine the experience of actual customers with a focus on comprehensive bank consultations in German savings banks and thereby uncovers reasons for a low perception of the consultation approach by customers. The paper provides improvement proposals for several units of the bank. An improved target vision for the customer journey is developed and contains minor and major possible managerial implications.

Abbreviations and Acronyms

Abbildung in dieser Leseprobe nicht enthalten

List of Figures

Figure 1: The consumer decision journey by McKinsey

Figure 2: The customer journey in the customer experience cycle

Figure 3: Correlation: channels used and products hold

Figure 4: Sparkassen-Finanzkonzept pyramid for private retail banking

Figure 5: Most common methods of data gathering for CJA

Figure 6: Customer journey map of customer 1

Figure 7: Customer journey map of customer 2

Figure 8: Customer journey map of customer 3

Figure 9: Customer journey map of customer 4

Figure 10: Customer journey map of customer 5

Figure 11: Customer journey map of customer 6

Figure 12: The journey map in the target vision

List of Tables

Table 1: Key differences banking-related multichannel and omnichannel approach ,,,

Table 2: The consultation sequence of the comprehensive consultation concept

Table 3: Classification of interview participants

1 Introduction

The first chapter introduces the thesis and describes author’s personal motivation and decision for the chosen topic. Following, the objective and focus of this paper is stated. Finally, the reply structure to the research question is described.

1.1 Professional Background and Motivation

I have been working for a German savings bank¹ for more than 10 years, and in doing so, always pursued a high customer-orientation on my job. At first, in a branch manager position in the retail banking unit. In this position, I consulted customers on financial products and in doing so, applied the comprehensive consultation concept. Currently, I am holding a management position as the head of unit for the sales distribution and marketing department of the bank. My former and current job both significantly affect the experience of customers using products and receiving advice from bank customer advisors. The more professional experience I gained in the financial industry, the more I lost the capability to imagine the customer’s experience from their view. As a result, I decided to choose this topic to gain insight into the customer’s point of view. Moreover, profound literature and studies about customer journey analytics carried out within a German savings bank are not available and therefore, the research field is interesting. Additionally, customer journey analytics can support to solve actual business issues and improve the customer experience to aim for corporate objectives. This is in the fundamental interest of my professional activities.

1.2 Purpose and Research Questions

The purpose of this study is to explore the experience of private retail bank customers regarding the comprehensive bank consultation approach (Sparkassen-Finanzkonzept, SFK)² of the savings banks in Germany. The study aims for solving the business issue “low perception of the value and benefits of comprehensive bank consultations by private retail bank customers of savings banks in Germany”. Due to a lack of studies available proofing the actual evidence of the business issue, it is considered a hypothesis. The research question is addressed through conducting a customer journey analysis with actual customers, further empirical research and complemented with theoretical findings.³ The empirical part mainly focuses on the sample bank Sparkasse 1.⁴ The study finally provides initial managerial implications to reach an improved target vision of the examined customer journey. Further quantitative and qualitative research is recommended to validate practical implementations proposed in this study.

1.3 Outline of the Thesis

The second chapter describes and defines central terms of the research topic based on reviewing relevant literature and studies. The third chapter is based on theoretical findings and briefly describes the current developments and challenges of the financial industry and additionally their strategic directions on channels. Thus, it provides required industry-relevant background knowledge for the further paper. Following, considerations for implementing a customer journey analytics project at a financial services provider are elaborated and subsequently, the theoretical customer journey is illustrated. The fourth chapter describes and evaluates the applied research design and data collection methods. This groundwork lays the base for the empirical research in chapter five, which firstly describes the findings of the conducted empirical research. Secondly, the findings are generally discussed and evaluated. At this point, gained theoretical knowledge is applied to portray empirical results in customer journey maps which are complemented with initial improvement suggestions for the sample bank. Finally, chapter six combines and aggregates the empirical findings to create a customer journey map of the target vision. Managerial implications are provided and their feasibility and workload are evaluated. Intended effects on defined indicators in the sample bank are explained. The final chapter seven briefly summarizes the key results and critically reflects the recommendations and the research design.

2 Customer Journey Analytics (CJA)

2.1 Introduction and Definition

The purpose of customer journey analytics (CJA) is to help understand the experience a customer makes using a product or service of an organization, also described as “walking in customer’s shoes”.⁵ It provides a structure for the sequence of experiences a customer makes purchasing a product or using a service. Every step a customer makes is described separately.⁶ A customer journey is also known as experience journey or user journey, oftentimes displayed on a customer experience map.⁷ Research- and business-related applications of the CJA are most commonly published under the term customer journey mapping (CJM). This mapping is described below.

Customer journey analytics is based on the single customer experiences of subordinate journeys, which can last minutes to years.⁸ However, most analyses in the field of CJA and mapping are carried out on journeys with durations of minutes or hours. This can be in contrast to customer lifecycle maps, which are clearly distinguishable by their broader approach based on lifetime relationships between a customer and an organization.⁹ All the single journeys and touchpoints a customer goes through with an organization and the brand build the foundation for their individual customer lifecycle map.

Segelstroem (2013) states that the most commonly used elements of CJAs are:

- Time-aspects
- Interactions
- Emotional triggers

According to Segelstroem (2013) customer journey maps are appropriate to interpret customer research by service designers.¹⁰

Suppliers have to consider a wide range of factors when it comes to offering products and services such as:

- legal requirements,
- profits and costs,
- efficiency of processes,
- corporate culture,
- competitors,
- and conflicts of interest within the organization.

The success of products and services is most commonly measured utilizing quantitative factors such as the churn rate or sales figures. Customer satisfaction is also measured using quantitative factors found in customer polls and studies by third parties by management consultancies.

CJAs have a different approach and focus exclusively on the customer experience. The customer experience results stem from the interactions between a customer and an organization. This includes both the conscious and unconscious experiences.¹¹

CJA or customer journey mapping (CJM) can be considered as part of the broader approach of customer analytics. Most activities of customer analytics are derived from the evaluation of large amounts of data (big data), e.g. customer purchase records, transactional data, or surveys. Further analytical methods utilize statistical analysis to detect patterns in customer behavior.¹² In contrast to these metric-based approaches, CJA, and in particular CJM, focuses on the individual customer level by examining the behaviors and experiences of just a few chosen customers. Oberholzer & Eichholzer (2017) recommend interviewing a total of eight customers for the CJA project.¹³ In conclusion, CJAs are compiled by big data as described above and small data¹⁴ to find detailed insights into the customer’s behavior. The CJM described and applied in this paper is based on small data only.

2.2 Customer Journey Mapping (CJM)

The experiences of an individual customer are illustrated in customer journey maps. These maps cover the decision-making process and other choices a customer makes, e.g. opening a bank account or staying a loyal customer.¹⁵ The purpose is to understand and address customer needs and pain points.¹⁶ The map combines the storytelling of the customer’s experiences and its visualization, which helps to identify problem areas during the different stages a customer goes through: (1) becoming aware of the product or service, (2) purchasing it, and then finally (3) using it. Additionally, it helps determine opportunities to improve a product, service or process within an organization. This also includes contradictory processes and actions within the same organization. While different departments organize their actions based on a defined operational and organizational structure, they can indeed compete with each other without even being aware of it. CJM can provide insight into these unfavorable conditions by illustrating the customer’s entire experience on a comprehensive map.¹⁷,¹⁸ The customer acts as a process evaluator and development manager.

Overall, the key elements of CJM suitable for different industries can be categorized in three main groupings:¹⁹,²⁰,²¹

1. Customer’s viewpoint: this category is the most important part of the CJM and describes the actions and feelings of the customer. It includes pain and pleasure points. While pain points describe actual or perceived negative experiences, pleasure points describe the opposite, i.e. positive experiences. In this paper, pain points are defined as any experience a customer has, where the organization does not meet their expectations. Pleasure points are defined as experiences, which surpass the customer’s expectations of a product or service.

The customer viewpoint can be distinguished also into three parts:²²

a. Actions and comments

All steps, actions, and comments the customer makes on their journey are documented neutrally in regard to touchpoints.

b. Perceptions

Basically everything that one could conceive as a customer perception is recoded. These are mainly defined as functions, services and noises. This also includes the behavior of any persons, e.g. employees and other customers.

c. Emotions

Pain and pleasure points and emotions are considered here. Emotions are described on a curve and can be positive, neutral, or negative. Their intensity varies.

2. Interactions of customer with organization: this category is the connection from the customer to the organization and vice versa. There are several ways to connect through a wide variety of channels. Every single case of “touching” the organization by the customer counts. These touchpoints are described below.
3. Organization’s viewpoint: the organization implements process and activities to generate touchpoints. Additionally, strengths and weaknesses of each step in the customer journey are identified. Additionally, chances and risks are determined. This category is the first step in the process to improve products and services, which result from CJA projects.

2.3 Touchpoints

There are different approaches to define and cluster touchpoints. Touchpoints are defined as the interactions between a customer and an organization.²³,²⁴ They are often considered as the channels of an organization and listed by the organization’s departments. However, this view is criticized as too company-focused and isolates departments into silos. Channels are clustered in general categories from the company’s point of view, while touchpoints are described more specifically from the customer’s point of view.²⁵ For instance: a call center is considered a channel, which covers inbound and outbound phone calls for scheduling appointments with a customer advisor. Inbound and outbound phone calls are two separate touchpoints. The call center is one single channel. Both touchpoints are based on using a singular channel for the same purpose; the touchpoints are different: an inbound phone call requires an activity originated by the customer, while outbound phone calls to acquire appointments have a totally different character. The same applies to third-company touchpoints like reviews of the organization. The website of an organization is also considered a channel. Checking customer reviews on Google is a touchpoint. In contrast, once the customer gets directed to the company’s official website, he starts using a channel.

This can be related to the traditional funnel approach of touchpoints. In this approach, marketing is a one-way street: all marketing is directed to the customer. The customer decides which product he picks at the end of a funnel – after considering other brands. There are several different types of marketing funnels available, but they are all based on the same traditional principle: a non-dynamic funnel.²⁶ This approach lacks the consideration of the customer’s point of view and their interactions with the company, e.g. writing a review. Today’s marketing and customer’s decision-making process is more dynamic due to more competititors and choices as well as digitization. The consumer decision journey tries to incorporate the decision-making process of customers in the current environment.²⁷

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: The consumer decision journey by McKinsey²⁸

Oberholzer and Eichholzer (2017) describe the customer experience circle to capture the entire relationship between a customer and the organization. The circle is illustrated on the next page.

Abbildung in dieser Leseprobe nicht enthalten

Figure 2: The customer journey in the customer experience cycle²⁹

Business problems can occur anywhere along the journey and within the different stages of the customer experience circle. The examination of business problems for deriving solutions as well as management implications are key goals of a CJA project.

Examples for the customer experience cycle (figure 2):

A) Why are our products and services less exciting and lead to lower viral effects compared to our competitors?
B) Why do our customer advisors schedule more consultations than other competitors, but are less successful in actually selling the products?
C) How can we increase the rate of existing customers purchasing additional supplementary or complementary products or packages?
D) Why do customers complain frequently about technical issues of our products?
E) How can we increase customer loyalty?
F) Why has the termination rate increased recently?

3 Customer Journey Analytics in the Financial Industry

3.1 The Financial Industry in the Current Environment

Germany has a three-tiered banking system made up of private banks, public savings banks and cooperative banking associations. The development of this unique system has a long history and leads to the highest relation of banks per capita of all developed countries. This results in an excess capacity of branches and bank employees.³⁰ Online banks with a limited number of products and services operate without a cost-intensive network of branches and customer advisors. They have become increasingly important during the last two decades. While the customer numbers totaled only 3.9 million in the year 2000, the expectation for the year 2020 is upwards of 22 million customers.³¹ Compared to other countries, German customers are more likely to use an online bank as their primary financial institution. A survey from 2016 revealed that only 74% of customers in the German market consider a traditional financial institution with branches as their primary financial institution;³² the same survey showed higher results (81%) in the US market.³³ Online banks are the most successful market player in gaining market share in Germany. They are considered as primary financial institution by 20 % of customers in Germany, compared to an average 10 % in other countries.³⁴

Online Banks pursue the simple strategic approach of offering certain products with less service and for lower or no fees. Traditional financial institutions in Germany have been responding by implementing or improving a comprehensive conceptual product, service, and consultation approach with a large product portfolio to cover all needs and wants of their customers. While the fact that online banks have simply gained more customers is a clear issue for the traditional institutions, a large number of Germans consider an online bank as their primary financial institution, which is a far more serious than a simple warning signal. This indicates that the traditional institutions’ approach of the comprehensive consultation concept is either not wanted by a significant number of customers or its benefits are not perceived valuable by them. Moreover, online banks are more profitable than their traditional counterparts.³⁵ Customer relationship management systems (CRM) have become more common recently. These IT solutions aim for managing customer relationships and increase revenues by collecting and analyzing data of customer behavior.³⁶

The German banking sector appears to be especially overbanked. The average return on equity of the German banking sector indicates just that. Between 2004 and 2015, the average return on equity was a meager 2%. Comparing the German market to banks in France (8%), the UK (6%), Japan (4%), Switzerland (7%) and the US (8%), the assumption that German banks have far-reaching changes ahead is obvious.³⁷ With this in mind, the personnel base working in the sector has been stable since 2007 and it is the third largest employment sector with a share of 1.3% of the total labor force after the mechanical construction (2.3%) and the automotive sector (1.8%).³⁸

The occurrence of Fintech is the most recent threat for traditional German financial institutions. These start-ups combine technology and financial services to create an innovative benefit for customers.³⁹ The customer potential of Fintech is estimated at 40% of internet users or 31 % of the population in Germany.⁴⁰ Ernst & Young came to similar results in their own study from 2017, stating that 35% of the population are prospective Fintech adopters.⁴¹ The march of technology has forced traditional institutions to find innovative solutions to this development that endangers the checking account as the most important base product. Losing transactions to Fintech, non-banks and near-banks are putting additional pressure on customers, affecting their loyalty to traditional banking institutions leading to decreasing revenues. In a representative survey, 22% of respondents state that they would consider financial products from Amazon, Facebook, Google, or Apple; almost 14% would consider opening a checking account with the mentioned providers acting as non-/near-banks.⁴²

Germany’s banks have been slow in developing and forcing digitization.⁴³ For instance, contactless payments have a high growth rate, but only have a share of [1]% compared to 47.6% of cash payments in Germany.⁴⁴ This statistic is one of several indicators to judge the level of implementation of new technologies in the sector.

Finally, the banking sector is challenged by historically low interest rates and regulations that have been resulting in branch closures⁴⁵, merges of institutions, and the rise of selling third-party commission-based products. Due to these reasons, advising customers has become more important as it enhances the opportunity to up-sell and cross-sell additional products to earn revenues independent of the market interest rates and equities.

In conclusion, the retail banking sector in Germany is facing the following current challenges and developments:

- Online banks are relatively popular. Their market share is still growing.
- Traditional financial institutions have a large network of branches. This is a major reason why the sector is the least profitable in regard to other developed countries.
- New innovative competitors and changing customer demands for digital solutions make it necessary to catchup with the digital development.
- Historically low interest rates enhance opportunities to sell commission-based third-party products.
- A stable, large labor force remains as it has in the past.

The developments and changes listed above are directly impacting the customer journey in banking. There are further developments challenging traditional banks, which affect the customer journey to a lesser extent and are not included in the scope of this paper. Those not included in the scope are briefly described below:⁴⁶

- Globalization with an increased international competition in the supply and value chain.
- Demographic changes with an aging society and migration to urban areas.
- More corporate responsibility and sustainability reporting requirements with regard to climate change and ethical criteria.
- More banking regulations and supervision.

3.2 Channel Strategy

In this chapter, the most important currently applied distribution and marketing channels of the German retail banking sector are listed and described briefly. Then, changes in the strategies of the sector are predicted.

Most important sales and marketing channels of the German savings banks and the private banking sector are:⁴⁷,⁴⁸:

- Branch

- Customer advisor and service employees
- Paper-based and digital advertisement (e.g. on ATM screens)

- Online banking
- Mobile banking app
- Website
- Social media
- Inbound and outbound calls

In a study carried out by Horváth & Partners Management Consultants (2015), approximately 100 employees in management positions at banks and insurance providers were consulted regarding the multi-channel strategic approach of banks and insurances in Germany. Nearly 61% of them agreed on the hypothesis: “customer advisors consult and care of their customers exclusively on the single sales channel on which the product was initially sold.” ⁴⁹

According to this study, the integration of different sales and marketing channels to create a coherent customer experience is not applied in a satisfactory manner. The consumer journey is highly influenced by the distribution strategy and how different channels interact with each other. In particular, the German banking sector was subject to wide-ranging changes in customer channel demands.

The target vision of the multi-channel approach aims for a coherent multi-channel strategy. The different marketing and sales channels are integrated to avoid competing with each other or being considered separately. In this approach, the customer advisor has an overall responsibility for the customer and does not care about which channel the customer chooses.⁵⁰ This offers interesting insights and conclusions for the customer journey. Indeed, the internal and external view of a journey can differ significantly.

As mentioned earlier, some activities of different departments of an organization can contradict each other. According to the conclusions from Horváth & Partners Management Consultants (2015) different channels actually compete with each other in the financial industry. This can be traced back to the widespread application of sales goals for customer advisors over certain sales channels. As the study suggests, sales goals for customer advisors should be measured independently of the channels the customer uses and not be limited to specific channels.

While Horváth & Partners Management Consultants (2015) still define the target image as a multichannel approach, the term “omnichannel approach” suits better as it explains the current strategic channel approach many traditional banks in Germany take. The mentioned adoptions in the bullet point list are already applied or intended to be applied by those. The major difference between the replaced multichannel approach and its successor is the focus on transactions with a bank-centric view (multichannel) and the focus on interactions with a client-centric view (omnichannel).⁵¹ In other words, completely integrated and synchronized channels are necessary to reach a positive and smooth customer experience without losing information. Customers do not tend to distinguish sales channels and demand a customer journey without friction.⁵²

Abbildung in dieser Leseprobe nicht enthalten

Table 1: Key differences banking-related multichannel and omnichannel approach⁵³,⁵⁴,⁵⁵,⁵⁶

An examination of US and Canadian banks published in 2017 states that there is a positive correlation between the channels used and products held by customers. Therefore, customers using multiple channels are more than two times as profitable as those who interact solely through a single channel.⁵⁷

Abbildung in dieser Leseprobe nicht enthalten

Figure 3: Correlation: channels used and products hold⁵⁸

Another interesting outcome is the implication that customer advisors’ sales skills are valuable for the bank. Customers complete purchases with personal consultations in a branch with a 25% higher probability than those completing purchases on digital channels.⁵⁹

A study by McKinsey & Company (2017) supports these findings and reveals a connection between the intensity of communication with the bank and product usage. Credit card customers use their card more often when they interact with the bank through different channels. The level of product usage declines along with the number of channels used by the customer.⁶⁰

The German Savings Banks Association states in a strategy paper that customers visit the branch only once a year, while they get in contact 350 times on digital channels, e.g. website or mobile app. Consultations on complex financial products are still mainly handled by personal consultations in a branch, while basic services like transactions are favorably demanded and offered on digital channels. The strategic approach of the Savings Banks Finance Group states that the consultation of complex financial products is offered in professional consultations in branches due to a lack of customer demand of complex products on other channels.⁶¹

Taking a critical look at the multichannel approach and the development of the financial industry in Germany the importance of offering products through multiple channels seems overrated; the advisor-based product sales approach is still the most important due to highly established sales structures in the financial industry in Germany. The demand for financial products is mainly triggered by an integrative marketing and sales strategy with intensive customer handling. The correlation of channels used and products held stated in the study cited above does not proof a causal association. The correlation can also be explained by a higher customer loyalty caused indirectly by intensive communication and channel use. The omnichannel approach is capable of taking into account the necessity of personal consultations supplemented by digital technologies and channels to improve customer experience.

3.3 Implementing a CJA Project at a Financial services provider

3.3.1 Project assignment and consequences

A CJA project can result in improvement proposals with a sizable influence on several units of an organization as stated in Chapter 2.2. The analysis can uncover silo mentality. This attitude occurs in organizations with a lack of capability or willingness of independent divisions to share information freely. The intensity and the consequences on the company’s efficiency depend highly on the corporate culture, e.g. the degree of competition as well as process alignment.⁶²,⁶³ In other words, the customer’s journey experiences can be affected negatively through organizational silos.⁶⁴

Therefore, establishing a customer-experience improvement project based on a CJA should be prioritized by the top management.⁶⁵ In other words, expecting the analysis to simply validate the process efficiency and customer orientation in the current state will most likely result in inconclusive results⁶⁶ as well as wastes time and resources. Indeed, a global examination of CJM reveals that these projects have the most positive impact on the organization’s customer experience, when it is owned by a CEO, COO, or multiple stakeholders.⁶⁷

Depending on the purpose of the analysis and its objectives, the management should take into consideration that CJAs can result in far-reaching implications. Consequently, management should express the willingness to implement strategic, processual, and operational adaptions concluded by the researched journeys. In cases of conducting the CJA for a financial services provider, the sales distribution, marketing, and organization and process management units should be involved in the first step.

3.3.2 Specific CJA characteristics of the financial industry

The prerequisites of a CJA project for financial services providers in a developed country differ significantly from a CJA for simple, one-off purchases, e.g. a TV or new shoes. One key difference is the recognition of the need or want to purchase the item or service by the customer. When the customer recognizes the need or want to purchase a new TV, he actively seeks information and offers online and in retail stores. Of course, former touchpoints with TV brands play a major role for their research.

- In case of financial services, the customer rarely demands for products without the aid of an outside influence. The financial services industry in Germany is highly established given its large number of sales representatives and banks, who active selling these products and services as stated in above. In other words, customers generally only recognize of their need or want with the active involvement of bank advisors.
- Furthermore, the strategic direction to establish lifetime customer loyalty and the specific characteristics in the product design of financial products have to be considered in the initial setup of an CJA project in the financial industry. For example, opening a checking account or applying for a credit card is – from a narrow point of view – a single journey. On the other hand, a credit card is often linked directly to an existing checking account. Applying for and using a credit card is an ongoing journey with several touchpoints and sub-ordinated journeys and services. These touchpoints can be considered separately and independently. However, observations of stand-alone journeys are examined and described in this paper if they are related to the comprehensive consultation approach and can help to improve it.
- Every product hold by the customer determines the overall brand awareness of the customer and directly influences the possibility to expand product usage and to sell additional products. In addition, charges and fees are often paid periodically. The active use of a financial product by the customer is in the interest of a provider as it considerably influences the costs and earnings of the product. Customer analytics play a major role in the industry: non-usage of credit cards or bank accounts increase the possibility of customers cancelling their account. Unusual purchases are indicators of unauthorized transactions (fraud prevention).⁶⁸

For these reasons, the customer journey maps in this paper was complemented with a “Follow-up” and “Long-term” part.⁶⁹ In a more stringent interpretation, a customer lifecycle map⁷⁰ matches the specific requirements of the financial industry better. To distinguish between the customer lifecycle, a customer journey, and service blueprint is difficult as their approaches overlap in application. Convincing a customer to schedule an appointment for a comprehensive consultation can be considered as a purchase decision in a broader interpretation. As a result, the term customer journey analytics fits the research objective of this paper.

The customer journey maps in this paper are distinguished as four major parts:

1. Pre-consultation

This part describes the awareness of the bank, brand, advisor, product and product usage as well as all activities which are related to the scheduling and start of the appointment.

2. Consultation

The actual consultation is conducted.

3. Follow-up

All interactions and touchpoints which come after consultations.

4. Long-term

Occurrences not specifically associated to the consultation as well as helpful additional experiences the customer shared.

Due to the myriad of information sources available on the internet and the increase in the number of internet-enabled devices, the customer journey in the financial industry becomes increasingly extensive and confusing. On average, a customer has 11 online touchpoints before completing a bank product. First, it puts the advisor-based consultation approach under pressure. It can lead to a smart and well-prepared customer who is well informed. For instance, in 88% of all processed mortgage loans the customer conducted research online before finally taking out a loan, but only 12% of all processed mortgage loans are processed completely online. Compared to checking account, an online completion without a customer advisor takes place in 47% of the cases. This supports the assumption of the German Savings Banks Association’s strategy that complex products require personal consultation.⁷¹ Secondly, tracking the customer journey is becoming more difficult because customers tend to break off their journey through switching channels and media. This places enormous demands on customized advertising activities.⁷²

3.3.3 Measuring CJA project success in the financial industry

A CJA project addresses a certain business issue that an organization faces. Once a business issue is identified, key performance indicators (KPI) are set. These indicators measure the success and value created by the applied improvement proposals out of a CJA. KPIs should be separately defined for customers’ and organization’s perspectives.⁷³ A more detailed approach clusters the perspectives into four categories: finance, customer, internal process, and education and growth. Finally, a balance scorecard collects the KPIs to help identify internal factors which influence external results.⁷⁴ Furthermore, CJA also identifies issues which were not known when the project was implemented and the journey fragmented.⁷⁵

Selected relevant KPIs for the financial industry and the business issue examined in this paper are:⁷⁶,⁷⁷

- Net promoter score (NPS): the NPS is an indicator for the probability of customers recommending products and services to their contacts.⁷⁸ The measure is commonly scale-based and gathered through surveys.⁷⁹,⁸⁰ Customers can be divided into different categories depending on their likelihood to recommend the organization and its products:⁸¹,⁸²

- Detractors: those not in favor of the brand and offers and who might damage the reputation through negative reviews.
- Promoters: those using several products and services and who share good experiences with friends and colleagues.
- Passive: those called “in-betweens” as they are generally neutral.

A similar approach which also clusters customers of banks in their level of satisfaction and emotional attachment to the organization is applied by the management consultancy Forum Marketing- und Kommunikationsberatung GmbH.⁸³ The consultancy clusters customers into five categories based on customer satisfaction, likelihood of recommendation, and other attributes. In other words, the level of admiration (fan) is classified:⁸⁴

- Fans: highly satisfied and reliable follower and influencer.
- Sympathizers: satisfied and a follower, but less active in announcing it.
- Mercenaries: satisfied, but price-oriented and less attached.
- Prisoners: dissatisfied due to a lack of information or service, but emotionally attached.
- Enemies: dissatisfied and not attached, tend to complain publicly.

The NPS can be considered as an important indicator for German banks. While for local banks the word-of-mouth recommendations and a positive public reputation matter, for online banks the viral effects and public reviews are pivotal. The empirical part of this study assumes that pleasure points, and in particular any positively surprising experiences the customer makes, improve the NPS.

- Conversion rate (CR): an indicator of how many leads are converted into customers. For example: a savings bank offers credit cards on their website and pushes the offer by paid advertisement on social media. The more users who click on the ad on social media and actually purchase a credit card, the higher the conversion rate. A related indicator is the sales qualified leads (SQL) indicator which measures the number of prospective customers converted into actual customers. For instance, how many conducted consultations result in a product completion.
- Customer lifetime value (CLV): the CLV indicates the value the customer will bring the organization in the entire business relationship or lifetime⁸⁵,⁸⁶ This factor is pivotal in the banking industry due to the long product lifecycle of financial products and the strategic approach of comprehensive consultations aiming to grow revenue by selling additional products to existing customers (increasing product usage rate per customer).⁸⁷ With regard to CJA, the examination of reasons on the different stages of the customer journey which lead to high churn rates is central. The churn rate is the percentage of customers who terminate a contract or stop subscribing to a service.⁸⁸
- Customer effort score (CES): the CES measures the friction of the customer’s journey and therefore affects the customer acquisition rate and churn rate.⁸⁹ It can help to predict customer loyalty and to examine process quality. Customers who describe their experience using their credit cards or checking accounts as easy or effortless are more likely to be loyal customers and do further business with the bank.⁹⁰ Additionally, a frictionless channel experience has become more important recently as discussed in Chapter 3.2.
- Experience rate (UX): the UX is also called user experience. It measures the customer satisfaction in regard to the immediate use of a product or service. For example, what percent of customers calling the call center or visiting the bank branch to solve an issue would respond in stating that their problem was solved.
- Retention rate (RR): percentage of customers who repurchase a product. This indicator is a part in calculating the CLV.⁹¹ It can also be considered independently for a CJA project. For instance, how many customers who applied for a loan, respond to mail offering to extend additional credit. The mailing could be sent six to twelve months after the original loan was paid out.
- There are also other common KPIs to measure the success of a CJA project. However, these are not within the scope of this paper because they are not significantly influential to the business issue and improvement proposals discussed. These less significant KPIs are (selection): return on investment (ROI), active app users, goal canceling rate, engagement metrics and costs per customer acquisition.⁹²

3.4 Hypothetical Customer Journey

The German Savings Banks Finance Group has implemented a comprehensive consultation approach called “Sparkassen-Finanzkonzept” building the basis for distinguishing the brand “Sparkasse” and its products and services from its competitors, e.g. online banks. The approach is also called a “Finanzcheck” and builds a structured concept aiming for a standardized sequence for consultations. The concept is simultaneously named Sparkassen-Finanzkonzept (SFK) or comprehensive bank consultation in this paper.

Furthermore, this approach’s objective is to force advisors to sell additional third-party products and collect information from customers to address them with customized offers. This strategic positioning can be considered as a differentiation strategy as it offers higher consultation quality. The comprehensive consultation concept itself is considered a comparative advantage by the savings banks.⁹³

The application of a comprehensive consultation approach is an integral part of the strategic direction of the Savings Banks in Germany. For example, it is mentioned first in the chapter ‘sales and distribution strategy’ in the annual management report of Sparkasse 1,⁹⁴ making it a fundamental part of all sales and marketing activities.

With this in mind, the examination of consultations conducted in which the concept was applied is an interesting research object in the current environment of the German savings banks. The CJA in this paper aims to improve the application of the concept and indicate necessary adaptations.

The comprehensive consultation concept is implemented with a guideline for the customer advisors, whereby detailed recommendations are provided for each step of the consultation sequence. The guideline also includes selling points and wording proposals for scheduling appointments and the actual consultation itself. It is offered by the Sparkassenverlag – the central media, advertising, and communication provider of the German Savings Banks Finance Group. The decision to implement the guideline within the sales units, monitoring its application, and quality of the consultations is independently made by every single savings bank.

The following table includes the major steps for the retail banking sector consolidated from the official guidelines⁹⁵ and complemented with touchpoints (in particular channels), examples, and an additional following-up step.

Abbildung in dieser Leseprobe nicht enthalten⁹⁶

[...]

---

¹ Reference removed due to data protection policy.

² The aim of this paper is for international accessibility by researchers, and therefore, specialist terms and the underlying concepts of the German retail banking sector and the savings banks in particular, are explained.

³ The theoretical part of this study is derived from academic resources. Due to the practical character of the topic, certain resources -which can be considered as non-academic- were utilized. In that case, the resources were set in an appropriate context.

⁴ Sparkasse 1 is a German savings bank located in XXX, Germany and part of the German Savings Banks Finance Group. The Bank is independent and locally managed. Its balance sheet total is XXX Euro. The total number of retail checking accounts is XXX. Due to the general corporate strategy of the savings banks, the bank`s business activities are concentrated on customers in the region of Sparkasse 1. [Reference removed due to data protection policy.]

⁵ cf. Holmlid / Evenson (2008), p. 343

⁶ cf. Nguyen / Pupillo (2012), pp. 317-330

⁷ cf. Segelstroem (2013), p. 168

⁸ cf. Sauro, J. (2015), p. 92

⁹ cf. Kalbach, J. (2018), p. 256

¹⁰ Service design is the activity of improving or creating services with a focus on meeting the user’s or customer’s needs. [cf. The interaction design foundation (ed.) (2018), retrieved from https://www.interaction-design.org/]

¹¹ cf. SAS Institute Inc. (ed.) (n.d.), retrieved from https://www.sas.com/

¹² cf. Sauro, J. (2015), p. 8

¹³ cf. Oberholzer / Eichholzer (2017), p. 21

¹⁴ Small datasets contain typically less than 30 customers [cf. Sauro, J. (2015), p. 12].

¹⁵ cf. Kalbach, J. (2018), p. 6

¹⁶ cf. Kaplan (2016), retrieved from https://www.nngroup.com/

¹⁷ cf. Sauro, J. (2015), p. 87

¹⁸ see also chapter 3.3.1 for a definition of silo mentality.

¹⁹ cf. Kalbach, J. (2018), pp. 6-9

²⁰ cf. Kaplan (2016), retrieved from https://www.nngroup.com/

²¹ cf. Custer, L. (2018), retrieved from http://asq.org/

²² cf. Oberholzer / Eichholzer (2017), pp. 3-6

²³ cf. Oberholzer / Eichholzer (2017), p. 5

²⁴ cf. Maechler / Neher / Park (2016), retrieved from https://www.mckinsey.com/

²⁵ cf. Walters (n.d.), retrieved from http://360connext.com/

²⁶ cf. Sauro, J. (2015), pp. 88-89 for an overview of the most commonly used approaches: Forrester Funnel, Diffusion of Innovation, Principles of Marketing

²⁷ cf. Court, Elzinga, Mulder, Vetvik (2009), retrieved from https://www.mckinsey.com/

²⁸ Source: Court, Elzinga, Mulder, Vetvik (2009), retrieved from https://www.mckinsey.com/

²⁹ adapted from Oberholzer / Eichholzer (2017), p. 14

³⁰ cf. Cermak, C. (2017), retrieved from https://global.handelsblatt.com/

³¹ cf. Investors Marketing Management Consultants (ed.) (2016), retrieved from http://www.investors-marketing.de/

³² cf. Ernst & Young (ed.) (2016), retrieved from https://www.ey.com/

³³ cf. Ernst & Young (ed.) (2016b), retrieved from https://www.ey.com/

³⁴ cf. Ernst & Young (ed.) (2016), retrieved from https://www.ey.com/

³⁵ cf. The Economist (ed.) (2017), retrieved from https://www.economist.com/

³⁶ cf. Plettenberg, P. / Kaucic, A. (2016), retrieved from https://www.atkearney.it/

³⁷ cf. Cermak, C. (2017), retrieved from https://global.handelsblatt.com/

³⁸ cf. Koch / Floetotto / Weigl / Schrock (2016), retrieved from https://www.mckinsey.com/

³⁹ cf. Dorfleitner / Hornuf (2016), p. 1

⁴⁰ cf. Olmann, M. / Pramann, J.-A. (2016), p. 96

⁴¹ cf. Ernst & Young (ed.) (2017), retrieved from http://www.ey.com/

⁴² cf. Soldwedel, A. / Inhoffen, L. (2018), retrieved from https://yougov.de/

⁴³ cf. GFT Technologies (ed.) (2017), p. 9

⁴⁴ cf. Deutsche Bundesbank (ed.) (2017), p. 24

⁴⁵ cf. Schwarz / Dapp / Beck / Khussainova (2017), retrieved from https://www.kfw.de/

⁴⁶ cf. Henk, A. / Holthaus, J.-U. (2015), pp. 63-64

⁴⁷ cf. Sparkassen- und Giroverband Hessen-Thüringen (ed.) (2018), pp. 14-15

⁴⁸ cf. Deloitte Development LLC (ed.) (2017), retrieved from https://www2.deloitte.com/

⁴⁹ cf. Horváth & Partners Management Consultants (ed.) (2015), p. 6

⁵⁰ cf. Horváth & Partners Management Consultants (ed.) (2015), pp. 10-11

⁵¹ cf. International Business Machines Corporation (ed.) (n.d.), retrieved from https://www.ibm.com/

⁵² cf. Henk, A. / Holthaus, J.-U. (2015), pp. 70-71

⁵³ cf. Weiß, M. (2018), retrieved from https://www.bankenundpartner.de/

⁵⁴ cf. International Business Machines Corporation (ed.) (n.d.), retrieved from https://www.ibm.com/

⁵⁵ cf. Levey, Y. (2014), retrieved from https://www.slideshare.net/

⁵⁶ cf. McKinsey & Company (ed.) (2017), retrieved from https://www.mckinsey.com/

⁵⁷ cf. McKinsey & Company (ed.) (2017), retrieved from https://www.mckinsey.com/

⁵⁸ adapted from McKinsey & Company (ed.) (2017), retrieved from https://www.mckinsey.com/

⁵⁹ cf. McKinsey & Company (ed.) (2017), retrieved from https://www.mckinsey.com/

⁶⁰ cf. McKinsey & Company (ed.) (2017), retrieved from https://www.mckinsey.com/

⁶¹ cf. Deutscher Sparkassen- und Giroverband (ed.) (2018), retrieved from https://www.dsgv.de/

⁶² cf. Investopedia (ed.) (n.d.), retrieved from https://www.investopedia.com/

⁶³ cf. Gleeson, B. (2017), retrieved from https://www.forbes.com/

⁶⁴ for an example cf. Gingiss, D. (2018), retrieved from https://www.forbes.com/

⁶⁵ cf. Catlin, T. / Duncan, E. / Fanderl, H. / Lorenz, J.-T. (2017), pp. 27-28

⁶⁶ cf. Wacker, S. (2018), retrieved from https://www.der-bank-blog.de/

⁶⁷ cf. Mycustomer / Quadient (eds.) (2018), retrieved from https://www.quadient.com/

⁶⁸ cf. Sauro, J. (2015), p. 11

⁶⁹ A follow-up and long-term sequence are also applied in a slightly different context in the samples of customer journey maps in Kalbach, J. (2018), pp. 268-269

⁷⁰ cf. Bodine, K. (2018), retrieved from https://kerrybodine.com/

⁷¹ see chapter 3.2

⁷² cf. GfK Crossmedia Link (ed.) (2017), retrieved from https://www.thinkwithgoogle.com/

⁷³ cf. Oberholzer / Eichholzer (2017), p. 15

⁷⁴ cf. Kazmierczak, F. / Jelinski (n.d.) (b), retrieved from https://campaign.piwik.pro/

⁷⁵ cf. Sauro, J. (2015), p. 100

⁷⁶ cf. Kazmierczak, F. / Jelinski, J. (n.d.), retrieved from https://campaign.piwik.pro/

⁷⁷ cf. Glenn, R. (n.d.), retrieved from: https://www.digitalagent.com/

⁷⁸ cf. Sauro, J. (2015), p. 58

⁷⁹ cf. Oberholzer/Eichholzer (2017), p. 16

⁸⁰ cf. Sauro, J. (2015), p. 58

⁸¹ cf. Sauro, J. (2015), p. 59

⁸² cf. Glenn, R. (n.d.), retrieved from: https://www.digitalagent.com/

⁸³ cf. Becker, R. / Neitzke, G. (2016), pp. 30-33

⁸⁴ cf. Forum Marketing und Kommunikationsberatung GmbH (ed.) (n.d.), retrieved from https://forum-mainz.de/

⁸⁵ cf. Cavallone, M. (2017), p. 72 cited from Groenroos, C. (2012), pp. 1520-1534

⁸⁶ cf. Sauro, J. (2015), pp. 75-76

⁸⁷ see also chapter 3.1

⁸⁸ cf. Alawad, N. / Ragheb, M. / Tantawi, P. (2018), pp. 25 & 32

⁸⁹ cf. Glenn, R. (n.d.), retrieved from: https://www.digitalagent.com/

⁹⁰ cf. Strudley, C. (2015), retrieved from: https://futurethinking.com/

⁹¹ cf. Sauro, J. (2015), p. 81

⁹² cf. Kazmierczak, F. / Jelinski, J. (n.d.), retrieved from https://campaign.piwik.pro/

⁹³ cf. Sparkassen- und Giroverband Hessen-Thueringen (ed.) (2018), pp. 52-54

⁹⁴ Reference removed due to policies on data protection.

⁹⁵ cf. Sparkassenverlag (ed.) (2013)

⁹⁶ There are several marketing materials (media) offered by Sparkassenverlag to support the consultations by illustrating the structure of the comprehensive consultation concept (Sparkassen-Finanzkonzept).