Tips from a corporate giant

One of the areas in which Amex ranks highest is innovation. That’s why I encouraged the students in my MBA course on innovation in financial services at the University of Toronto’s Rotman School of Management to attend a recent talk by Rob McClean, CEO of American Express Canada. The talk was entitled “Reinventing Personal Service in a Digital World.”

Here are some takeaways from McClean’s talk that you could apply to your business:

– Speed and convenience count

A key focus for American Express is raising the bar on speed and convenience. Consumers today are less tolerant of delays than they were in times past. When they want an answer, they want it now. That’s true of customer service queries and even truer when clients log on to your website.

Clients will not put up with delays that they would have even a year or two ago. For example, if clients use their smartphones to check their account balances and your site isn’t optimized for mobile access, those clients won’t cut you the slack that they might have in the past and will simply move on to another site.

And that trend is not true just among millennials. It also applies to baby boomers, who increasingly are using their smartphones as the primary way to communicate online.

– Be seamlessly indispensible

To talk about how tough it is to stand out in today’s hyper-noisy world has become a cliché. On that topic, McClean talked about Amex’s goal of being “seamlessly indispensable” to its customers.

Amex spends time observing its customers’ daily routines, looking for pain points that it can help resolve. McClean used the Starbucks app as an example. Rather than standing in line, why wouldn’t you prefer to pre-order your coffee, pay online, then pick up the coffee when you arrive? Along similar lines, he talked about the success of Amex’s Front of the Line program, through which Amex notifies the program’s members of upcoming concerts that fit their interests with the opportunity to pre-order tickets before they are available to the public.

Every business needs to ask itself the same question as Amex: “How can I make myself seamlessly indispensable to my customers: solving problems before clients are even aware of those problems?”

For example, think about positioning your associate as a resource to help the adult children of key clients make good financial decisions.

– Test new initiatives

The importance of speed and agility was a recurrent theme in McClean’s talk. He outlined how, at one time, Amex waited until it had the perfect product to go to market. Today, the company will launch a product that, although very good, may be less than perfect. Once that product is on the market, the company uses responses from customers to refine and improve that product, going through numerous iterations until it is exactly right.

Speed to market has become a key differentiator in every industry, as demonstrated by the tech industry, in which market leaders move quickly to establish an initial presence, then refine products through subsequent upgrades. That kind of “agile development” thinking is gaining currency in the financial services sector as well.

As one example, my students went on a tour of the “digital factory” at one of Canada’s top banks, where we heard about how projects that used to require two or three years are now broken down into component parts that can be completed in two weeks. As a result of this agile development approach, the bank has dramatically reduced the time for customers to apply for credit cards and to open new accounts online.

The key to this trend is a “test and try” mindset. Every advisor has had ideas for better ways to communicate with existing or prospective clients, but all too often, those ideas die in the quest for perfection. The test for new initiatives should not be whether they are as good as they could be; rather, the criterion should be whether they are meaningfully better than what’s out there now. In the new world that we’ve entered, getting out there quickly with a good solution, then getting market feedback to improve it, will be the new standard of success.

– Get into data management

Given the increasing amount of customer data that are available, McClean made the case that every business has to become a data-management company. He discussed how Amex is using triggers to drive responses aligned with customer needs.

For example, someone changing their address to an area with bigger homes will lead to one kind of response; changing their address to a location that suggests they are downsizing will prompt a different offer.

The more relevant and targeted your offer to a client’s situation, the better the response. McClean said that real- time digital offers get four times the response of traditional, offline offers.

He also made the case that if you have a trusted brand and you give customers a reason to share information with you, they are generally willing to do so. Further, he described how an offer to use free Wi-Fi at Toronto’s Pearson International Airport allowed Amex to get permission to communicate with one million email addresses, which the company used to follow up with conversion offers.

– Develop a “mobile first” mindset

McClean outlined how customers’ smartphones are becoming the primary – sometimes, the only – way in which consumers are interacting online. Today, purchases made using mobile devices (referred to as “m-commerce”) make up almost 50% of online purchases and, in the next year, will surpass traditional online shopping.

Everyone has to respond to this change. At Amex, an astonishing 80% of new card applications through the digital channel are coming in via mobile devices – something that would have been inconceivable a few years ago. As a result, mobile access is becoming the gateway to the Amex experience and the manifestation of the Amex brand.

That’s why Amex aims to make its mobile interface responsive and intuitive, and every new Amex app is mobile-enabled and optimized. Compare that with all too many advisor websites on which the mobile experience is an afterthought. If you haven’t logged on to your site using your smartphone, give that a try. You may be shocked at how clunky the experience feels.

– Contend with new competitors

No matter how good a job you do, there will always be competitors who arrive on the scene with better short-term offers or lower prices.

In the question-and-answer period following McClean’s talk, I asked him about the success of the Chase Sapphire credit cards, issued by new York-based JPMorgan Chase & Co. Under the leadership of an Amex alum, Chase has used accelerated “points” offers to gain the largest market share among households with incomes above US$125,000.

McClean’s response: as a market leader, you have to walk a fine line. On one hand, you can’t be oblivious to new entrants using price to carve out market share. On the other hand, you can’t be panicked into a response.

If you are confident that your strategy delivers compelling value for the large majority of your customers, you may have to accept the short-term defection of a small number of customers as the cost of doing business. And that’s especially true if the underlying economics of your competitor’s business model may not be sustainable over time.

I walked away from McClean’s talk with some important lessons for advisors. By adopting Amex’s customer focus, test-and-try mindset and culture of innovation, you can increase the odds that you too will be among the winners.

Dan Richards is CEO of Clientinsights (www.clientinsights.ca) in Toronto. For more of Dan’s columns and informative videos, visit www.investmentexecutive.com.

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