The Nuttiness of Today’s Digital Transformation Focus

Patricia Sherlock

There is no other topic in financial circles more sizzling than digital transformation. The buzz is everywhere: conferences, trade papers and webinars. It is like Y2k on steroids. But are we looking at digital transformation the wrong way? I think so. Here’s why we need to change our mindset.

A recent Financial Brand article noted that “only 28% of digital transformation initiatives at businesses are started specifically with customer needs as the priority.” In contrast, 68% of digital transformation efforts were focused on business outcomes such as cost savings, revenue enhancement, etc. Research conducted by the Digital Banking Report reinforced these findings specific to the banking industry. This all translates into digital transformation being about the lender, not the customer.

Every retail business is challenged to make customer interactions outstanding or the customer will move on to their next best option. Research has shown that 32% of consumers stopped doing business with a brand they loved after one bad experience. Just one. In today’s marketplace, there are rarely second chances.  Accenture has even estimated that $1.6 trillion is lost by companies through poor customer experiences.

All business leaders know how important it is to deliver a stellar customer experience and how that translates into greater market share. It is no surprise that companies with the best customer ratings in J.D. Power’s Home Origination Satisfaction Survey also have better sales performance. Likewise, firms that have poor customer satisfaction scores have a rocky road ahead. A lender can only survive so long delivering bad or inconsistent experiences in the marketplace. At some point, customers will not do business with them when there are so many alternatives available. When your business is a commodity such as mortgage lending, the only real difference is the quality of the employee’s interactions with consumers.

Too often, what I see at companies are management teams hoping that consolidation will eliminate their competition. While the number of mergers has increased, the industry has still tremendous overcapacity.  According to the NMLS, mortgage lending has over 400,000 originators.

It never fails that when consolidations should ramp up, there is another wave of interest rate reductions such as the ones projected now. The barely functioning sales groups are given another chance.

What will finally kill these underperforming companies? In my view, it will be poor customer service.

Poor customer experience manifests itself in many ways. Examples include when originators and their support staff don’t call customers back in a timely manner; providing incorrect information; and missing deadlines because they failed to set expectations properly. Of course, this is not a complete list of selling sins that irritate customers but you get the idea.

The fault lies not with originators but with senior managers who don’t have the vision or willingness to make the investment to implement better hiring practices to ensure they have the right person to deliver a great customer experience with every transaction. These managers don’t hold originators accountable for customer service quality and they don’t provide the training or tools to upgrade originators’ sales skills to effectively meet today’s consumer demands.

Companies no longer have the luxury of waiting for an external factor to save them. All sales management teams should review every part of the sales process from the customer’s viewpoint and not what will save them money. Success is really about doing what is necessary to move a customer to refer their friends and families to a lender and to reuse their lender for another financial transaction.

Isn’t it time we put the customer first when implementing digital transformation efforts? The time is now.

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