Leveraging Regulatory Data to Improve the Customer Experience

by   |   February 25, 2014 5:34 am   |   0 Comments

Steven J. Ramirez of Beyond the Arc

Steven J. Ramirez of Beyond the Arc

While strong customer service has always been an important facet of any successful company, evolving consumer preferences and the changing pressures of the regulatory environment in many industries have converged to further raise the importance of customer experience.

Companies have long valued the insights provided by surveys, customer feedback and other sources. However, these same companies often struggle with how to derive customer insights from a varied mix of data types – transactions from point-of-sale, the feedback received through unfiltered social media comments, regulatory data, in-store feedback and other sources.

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One of the channels of feedback growing in importance is data available via regulatory bodies. These government agencies collect information on revenue, market data and more recently, consumer complaints. Agencies including the Federal Trade Commission, Department of Transportation, and Consumer Product Safety Commission generate data that enters the public domain and can be analyzed and used to improve customer interactions, avoid regulatory actions and gain competitive advantage.

A perfect example of how companies can use open data to eliminate customer dissatisfaction comes from the financial services industry. The Consumer Financial Protection Bureau (CFPB) has collected almost 200,000 complaints since July 2011 filed by customers against the banks and financial institutions that serve them. The data masks the identity of the consumers, but the complaint database names more than 1,500 companies that are the subjects of consumer dissatisfaction. That database captures complaints on mortgages, credit cards, student loans, consumer lending and other categories.

A Lesson From the CFPB’s Actions Against Credit Card Issuers
Given its zeal for uncovering unhappy customers, it’s easy to see why many banking executives are viewing the CFPB complaint database as an adversarial regulator. For those who take the time to analyze this data, these market signals from customers also represent an opportunity.

The benefit for banks wishing to proactively address issues is that the CFPB complaint database enables companies to zero-in on exact problems, without having to wonder about what might improve the customer’s experience. It also provides a method of prioritizing efforts in order to save resources while responding to the most critical problems first. Finally, a public database alerts the bank executive to issues that competitors are having trouble addressing, giving them the chance to improve the customer experience first.

For example, in 2013, an analysis of issues with credit card complaints shows billing disputes as the clear number one target for complaints. These issues are a key indicator of what the CFPB is examining when it comes to customer experience and regulatory compliance. In September 2013, JPMorgan Chase learned this the hard way; the bank was ordered to repay its customers $309 million and was fined an additional $80 million for unfair billing practices aimed at its customers.  If the bank had been analyzing this data, they might have identified and corrected the billing problems before the CFPB imposed such costly penalties.

CFPB data show billing dispute complaints spiked in March 2013; six months later, the agency levied fines against JP Morgan Chase for unfair billing practices.

CFPB data show billing dispute complaints spiked in March 2013; six months later, the agency levied fines against JPMorgan Chase for unfair billing practices.

Best Practices for Improving Customer Experience

Most issues in the CFPB database begin as customer experience problems. By the time they end up reported to the regulators, they are serious complaints. To identify pain points early on and take action before problems escalate, companies should take advantage of CFPB data along with social media and other customer feedback channels. Collating data from customer contact centers and in-person feedback from bank branches can highlight areas requiring action. Monitoring consumers’ statements on Twitter and Facebook can further refine this developing picture.

Indeed, social media feedback often forecasts a spike in complaints to the regulators. In 2012, Citi experienced an increase in complaints around billing practices on social media sites such as Facebook and Twitter before a similar spike in complaints to the CFPB.

Complaints about billing practices on social media presaged formal complaints to the government.

Complaints about billing practices on social media presaged formal complaints to the government.

By gaining actionable insights on a regular basis, businesses can address customer experience and compliance issues as they arise. To manage this process, companies can utilize a Voice of the Customer program that provides an effective, systematic approach for finding, tracking, and fixing emerging issues to mitigate risk and strengthen customer relationships.

Customers often try to resolve their concerns with a company before taking the matter to a third party, like social media before filing a complaint or ending a relationship.

Customers often try to resolve their concerns with a company before taking the matter to a third party, like social media before filing a complaint or ending a relationship.

Regulatory data such as the CFPB database can also serve as a strategic resource for business intelligence. Companies can analyze this publically available data to see how they compare to competitors in terms of compliance and customer experience. For example, if a mortgage provider sees that its main competitors have a prevalence of complaints about the application process, the company can take action to differentiate itself by testing new application channels, such as mobile, or creating a more positive customer experience with new customers seeking mortgages. From a compliance standpoint, financial companies can look at competitors who have received steep regulatory fines from the CFPB, and identify their own vulnerabilities and take steps to mitigate risk.

We’re in the age of the customer, a 20-year business cycle that has emerged in which consumers have unprecedented choice and access to information. In this environment, unfiltered insights into consumer experiences with your company are incredibly valuable. By analyzing Voice of the Customer sources, companies can better understand and act on customer pain points to build long-term satisfaction and loyalty.

Steven J. Ramirez is CEO of Beyond the Arc, Inc., a firm that combines data science and customer experience strategy to help clients deepen customer relationships and differentiate themselves in the marketplace. The company’s social media data mining helps clients improve their customer experience across products, channels, and touch points. Follow Beyond the Arc on Twitter: @beyondthearc.

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