(This article written by Scott Nelson was published on NEFA Newsline July/August 2021)
While putting the customer first is an old business fundamental, technology holds an important place in the future of the customer experience in the equipment finance industry.
“Put the customer first” is a business fundamental as old as the occupations of baker, brewer and candlestick maker. But our relationships with customers have changed dramatically since the time of town square markets. Thanks to exponential technologies like the Internet, social media, software-as-a-service and the Internet of Things (IoT), change is accelerating dramatically and the world of equipment finance is no different than other industries. We too are having to keep up with change and one could even say we have been behind given our anxiety around fintechs, cybercurrencies and new ecommerce competitors.
Let’s look at some fundamental views of “customer first” and see how technology can help leverage or practice those fundamentals.
Empathy Inside and Out
Simon Sinek first challenged business leaders with a new understanding of the importance of “Why?” “Why” defines the mission of a company and motivates employees. He then taunted us with the concept that customers do not, in fact, come first, employees do. Employees come first because employees make customers happy and only happy employees are good at making customers happy. The result is that the mission of a company – why the company exists in the eyes of customers – is critical to motivating employees and pleasing customer.
Sinek teaches that the key to making either one happy is empathy. Understanding and defining a “why” for the company requires empathy with the customer and then the employee to align their values with the mission of the company. Making and keeping employees happy come from being empathetic to their needs and then serving those needs with the production of the business. The key to success for that production, of course, is that it meets the needs of the customer – which also requires empathy. Therefore, putting the customer first requires empathy for both employees and customers – empathy both inside and out.
Empathy is a result of relationships, but those relationships do not have to be the traditional face-to-face or the lunch-once-a-month variety. Technology can facilitate empathy. Digital communications and connected equipment can provide a wealth of data and information on not only a customer, but a group of customers – a segment of the market. The core of empathy is listening, observing and questioning. Technology can “empathize” with customers 24/7/365. Technology can ask questions of data from customer activities to predict what they need and why they need it. Technology can inform an understanding of both intent and objectives. Technology use for empathy helps put, and keep, the customer first in your daily operations.
Focus on “Net New” and Then Dig In
Peter Drucker may be the most cited expert on the fundamentals of business and innovation because he reduced the ambiguity and complexity of business to a clear and simple direction:
“The purpose of a business is to create and keep a customer.”
– Peter Drucker
“Create and keep a customer” – what could be simpler? But many businesses lose track of the fact that they must do both – it’s “and” not “or” – to grow. One of the problems in equipment finance is that creating the customer is much more expensive and keeping customers – renewing leases, converting to sales – is very profitable. But keeping customers alone will not grow the company.
The good news is that the technology available today helps with both. Connected equipment and customer connectivity - mobile apps, portals, digital communications – help automate the steps required to keep a customer. Connected equipment can tell the Contract Management System (CMS) the usage level and maintenance state of the equipment thereby informing its residual value, which in turn can alert the lessor and lessee the best time to change terms or renew. Cloud-based systems can combine lease terms with updated economic parameters to enable lessors to help lessees take advantage of changing economics to the financial benefit of both.
But growth in equipment finance is “all about volume,” to quote one lessor commenting on the key to success. Volume in this case is organizations of new leases and new customers that are key to growing the book of business and increasing margins. Again, the use of technology is key in the context of competitors who are constantly finding new ways to use new digital tools to satisfy customers with convenience and new services. They automate origination, payment and even advice, helping lessees manage their leases to better serve their business. Every business must adapt its offerings to meet new needs in better ways to both create AND keep customers. Technology can help maintain the balance.
Customer Focus Leaves No Time for Competition
None of us has enough time in the day. We talk about worklife balance, the “habits” successful people use to be more productive with their time and how to automate “the little things” so that we can focus on the important things. Intuit founder Scott Cook felt that while it is uncomfortable, it is effective when it comes to “customer first”:
“Instead of focusing on the competition, focus on the customer.”
– Scott Cook
Ignoring the competition is dangerous, but if we focus on them, we do lose site of the customer. This piece of advice is one of the more difficult to follow, but it delivers an impact few businesses achieve. Sinek cites a discussion he had with an Apple executive wherein he tried to taunt the Apple leader with the observation that the new Microsoft Zune was “much better than the iPod.” The Apple exec replied, “I am sure it is.” Upon analysis of the lack of engagement on his taunt, Sinek came to understand that Apple as a company competes with itself with a singular focus – helping customers use technology to better their lives.
Equipment finance and banking today are both on edge regarding the emergence and onslaught of fintech – SaaS technology providing financial services. Intuit is a fintech and its founder says don’t focus on your competition, focus on how you can help your customers be successful. Of course, the second half of the moniker reveals how these companies do this so well: Fin + Tech, technology.
Digital technology never sleeps, it is up and working 24/7. Digital technology obsesses about time – the elimination of it. Digital companies use data to operate processes at higher speeds with less risk. They know that “haste makes waste,” but they attack it relentlessly with historical data to model processes and then learn from operational data as they automate. Of course, the customer advantage of this speed is customer convenience. A digital company will measure that convenience, and customer satisfaction, by including direct feedback from the customer – both passive and active – as part of the customer experience. A fintech like Intuit uses the technology to not only serve their customer, but also to focus on their customer.
“Putting the customer first” is not new, but its practice changes constantly. Leaders in mature, highly regulated industries like banking and equipment finance probably feel like technology today is making “putting the customer” first more difficult while simultaneously coveting the opportunity it creates. The fundamentals taught by Sinek, Drucker and Cook help balance and even exploit this tension. The good news is that the fundamentals of customer-first are familiar and do not change – empathy, creating and keeping a customer, and prioritizing how the organization uses its time.
Organizations must mechanize these customer-first fundamentals with existing strengths and skills while finding how the company can best meet changing expectations leveraging technology to create new processes and offerings. Remember, good technology deployment is transparent – customers don’t care about the technology; they care about the products and services that help them achieve desired outcomes.