Designing and Implementing the Peruvian Customer Experience

Background:Banco Santander Central Hispano - Peru.
In 1999, Banco Santander Central Hispano (BSCH) consolidated its first financial franchise in Latin America, offering financial services to 10 million clients in 12 countries. As a corporate strategy, BSCH - Peru acquired BancoSur (Banco del Sur del Perú) in February 2000 and positioned itself as fourth in size of deposits and third in profitability in the Peruvian Financial System, along with its global corporate backing and widespread branches. With its new market position, BSCH sought to increase market share 6.35% to 10% by the year 2000 by attracting new customers and gaining a larger product share from customers who purchase multiple products and have balances of $5,000 or more. This segment represents 80% of BSCH’s annual revenues.

Challenge
The financial market in Peru was considered saturated with 12 private banks all competing for small shares of high-income customers (3.4% of the population). BDA’s market research showed that stability was the most important driver in selecting a bank and two largest competitors had already positioned themselves as the most solid. Together, their combined market share was between 40% - 52% (depending on the product category).

To compete BSCH – Peru had to have stability as a matter of hygiene. It had to be both pervasive and permanent: it had to have many branches, high top of mind, and have high reserves or substantial global corporate backing. To achieve a competitive advantage that allowed BSCH to grow market share, first, it would first have to develop a new, customer-oriented, fast-paced, and highly coordinated organization. Second, it would have to develop the financial acumen of its customers.
In particular, BSCH determined to develop a bank-wide culture focused on making and managing commitments. On the basis of this culture, the organization would be structured to provide a consistent customer experience from branch to branch.

Second, BSCH would engage in programs for educating Peruvians to develop financial plans and then to respect and seek financial advice from its Financial Advisors. Even in the targeted, high-end segment, most Peruvians did not see the need for banking products beyond simple savings account, which was treated transactionally (especially since
people did not trust checks). People used credit cards but consumers had fears escalating interest rates and accumulating unmanageable levels of debt. More sophisticated financial products, such as DC’s and Mutual funds, had yet to penetrate the market mainly because consumers had yet to realize that financial services could address real concerns in their lives.

BDA’s Strategy
Banks in Peru generally marketed their products to stave off fear that Peruvians had about the economy or offered various kinds of lottery contests to stimulate deposits. An initial investigation showed that Peruvians had a richer set of financial concerns. The BDA team began with a diagnosis of business processes and of bank customers’ values. In the first diagnosis showed an organization with poor delivery to customers because its functional units were not aligned to satisfy promises to customers. Marketing, sales, and operations teams, had conflicting goals and with no manager standing for the customer’s interest. Members of the sales team spent time working on operational matters. No one from Marketing explained to sales people the compelling reasons for purchasing many of the products marketing teams had developed.

Strategic Findings and Plan of Action
BDA determined to redesign BSCH’s processes in three pilot branches and in two particularly miscoordinated areas. The first redesign in action would involve transforming the sales team and particularly the “Financial Advisor” to work with customers, listen to their concerns, and make promises both to customers and to managers. The second area of redesign would involve the relations between Marketing and Sales in order to make sure that Marketing staff took account of what salespeople learned and also made sure that sales people were trained in sale the benefits of new products. The goals of both redesigns would be to increase sales in the Important Clients targeted segment and to increase the speed of bringing new products to market. BDA worked with the BSCH senior team to design a pilot test that could focus BSCH ‘s strength, articulate its capability in financial planning, and build a customer oriented organization.

BDA’s Intervention: Design-in-Action with Three Pilot Branches.
BDA developed with Bank officers the strategic goal of repositioning the BSCH as the bank that offered to do justice to its customers’ savings and give customers the chance to receive highly differentiated rewards with prudent investments. To get BSCH ready for that position, BDA worked with three pilot branches and design and implement a new wealth-building offer and customer-oriented organization.

Contact Role design and Sales Force Mobilization
BSCH branches already had Financial Advisors who handled the transactions of customers with more than $5,000 in investments with the bank. The advisor resolved problems and sped transactions. They did not give nor were they expected to give investment advice on which product mix would make most sense or on how to maximize financial gains without taking uncomfortable levels of risk.

BDA designed an offer for basic financial advice on how to maximize long-term financial gains. As part of the redesign of the Financial Advisor role, BDA designed scripts for standard situations and then organized and trained the financial consultants to make offers to help clients achieve systematic, low-risk compounding. To raise levels of trust and professionality , BDA trained Financial Advisors to make promises on all executions, to ensure timely executions, and always to receive the customer’s level of satisfaction with the execution.
Further, BDA worked together with the Sales Area Managers of BSCH, designed five commercial practices and developed a plan to implemented in the entire branches network:

• Design a commercial practice for the Sales Area Managers to improve the use of the “Clients micro-database” by branch in the sales process. This practice helped the Sales Team to analyze and design financial options for BSCH’s customers.
• Designed the commercial practice for the using a “locomotive” or set of entry-level products. This practice was developed to analysis the opportunities the Sales Team would have to link new customers using a “locomitive” products
• The practice to design offers for Standard Clients that have less than 3 products. This practice was designed to coordinate efforts between the Sales Area Managers and Telemarketing to design offers to this segment that represent more than 80% of BSCH clients.
• BDA designed clients interviews for the Sales Team to learn to listen clients’ general financial concerns as a regular day-to-day practice. This interviews were organized by the Sales Area Managers and involved all the Commercial Banking
• To undertake sales opportunities through other roles, BDA designed the practice of cashiers referring customers to sales executives and turn this into opportunities to make offers.

These new commercial practices will allow BSCH to identify the appropriate strategy for each Sales team role’s according to the customer experience that is to be produced.

New Delivery Process Design
At the start of the engagement BSCH’s delivery of products and fulfillment of requests was slow, incomplete, and profoundly miscoordinated. To begin with responsibility for delivery was shared by Sales and Operations. Both the sales and operations organization had their own processes, and each could blame the other for faulty delivery.

As a first step, BDA redesigned the processes involving the sale and maintenance of credit products. BDA developed and instituted a “Front-Back Office” that takes care of the operational and risk analyses in conjunction with the sale. This redesign allows the Sales team to follow up the credit applications and make reliable promises to clients on application processing. Moreover, the Sales Team could become more attentive to the clients concerns. The ad hoc “Front Back Office” established in the three pilot branches to enable Financial Advisors and other in sales to focus on clients was transformed into a stable Personal Banking Center that can be easily instituted for Sales teams of all branches.

The experience with the redesign of credit sales and processes led to a second, more profound intervention to make bank operations significantly more customer oriented. BSCH had developed a Customer Claim Service System (SAR) which tracked the course of customer complaints. BDA redesigned the SAR process so that when a complaint was made, a promise was issued of a date for a final report. Second, dates for completing non-standard promises were required under the new SAR system. Third, all promises to clients identified the bank officer responsible for completing the promise.
These redesigns enabled customers to see and appreciate its impeccability in caring for their concerns of convenience and integrity. With such impeccability, BSCH could already begin gaining market share and was preparing the way to reposition itself.

Customer-Oriented Organization Structure
The process changes at the branch level made BSCH more responsive to customers, but they did not produce coordination with the rest of the BSCH organization nor did they enable speed in delivery new products and services to the market. To achieve overall coordination and speed of products and services to market, BDA worked with bank executives to redesign the organizational structure so that it focused on taking responsibility for promises to customers.

When BDA arrived, the Marketing Department reported to General Management and had no direct relationship with the Sales Teams. As a result, the Sales teams neither knew which of the bank’s products had the most competitive attributes and benefits nor were trained to sell them. Under the new BDA design, both Marketing and Sales reports to Commercial Banking, whose officers make promises to corporate for the Bank’s sales results. Consequently, teams comprising people from Marketing and Sales work together all the way from the design of new products to the initial placement in the market.
BDA reorganized the Personal Banking Division around the four most prominent segments of customers that the Bank served. Each area attached to a segment is changed with developing sales strategies, goals, products, and impeccable execution. The four segments are:

• Preferred Customers: Customers with a full range of wealth-building products in addition to savings accounts such as mutual funds. BSCH promises this segment high quality service and highly sophisticated financial products from an international bank.
• Important Clients: Customers with $5,000 or more, and have 1, 2, 3 or more products (for instance, savings account, credit card, mortgage). BSCH promises this segment high quality financial advice for maximizing long-term financial gains.
• Standard Clients: Customer with less than $5,000 and have 1, 2 or 3 financial products. BSCH promises this segment safety and convenience, a full range of financial products, and expert risk analysis.
• Transactional Clients: Pay-for-service clients with no account at the Bank. BSCH promises quality financial services with strong customer care.

Not only does sales participate with marketing in developing and bringing new products and services to market but also Human Resources has been given responsibility for ensuring that BDA’s Sales Training reaches all members of sales teams throughout the country. In this way, Human Resources has a distinct role in making BSCH competitive as a customer-oriented institution that consistently offers customers ways to build wealth. HR is directly connected to the promise to the customer.

Results
The work of BDA and BSCH-Peru succeeded in instituting a culture of commitments where promises are made and honored impeccably in over 60% of the branches of BSCH-Peru. Through learning in action, the Bank officers have promised to expand this culture to 100% of the branches for the end of July 2000. Branch Managers now meet daily to review with their teams the timeliness with which promises are fulfilled. Sales Area Managers conduct similar meetings weekly.
These practices have made all team members aware of and responsible for fulfilling the entire organization’s goals. Each team member understands his or her role in achieving the semi-annual and annual results.
The training in listening to clients, the training of sales staffs and Financial Advisors, and the operational processes redesign has started growing market share significantly. The Personal Banking segment increased its sales in pilot branches to the Important Clients targeted segment by 98% between April and June 2000. The Enterprise segment, increased its sales in a similar target category by 46% in the three pilot branches. Once the pilot was implemented throughout the rest of the BSCH branches, overall revenues increased three fold.
BDA’s teams promised to reduce to zero the time devoted by the sales teams to follow up the operating and after sales processes of some credit products of the branches. This promise means to increase theBank’s sales capacity by more than 100% with no expansion of team size.