Embrace change, take risks, and disrupt yourself

Hosted by top 5 banking and fintech influencer, Jim Marous, Banking Transformed highlights the challenges facing the banking industry. Featuring some of the top minds in business, this podcast explores how financial institutions can prepare for the future of banking.

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How to Win Tomorrow's Digital Consumer

Consumers insist on experiences that are personalized, friction-free and that make their lives easier. It’s no longer enough for organizations to state they are making improved customer experiences a priority. The consumer needs to feel that the companies they buy from know them, look out for them and are willing to reward them.

To get a perspective on how advanced technologies are impacting customer experience strategies, I am fortunate to be joined by Blake Morgan, author of the book, “The Customer of the Future”. Blake is considered one of the leading authorities on the changes occurring in the world of customer experience. She has worked with some of the most prominent global brands and is a contributor to Forbes and the Harvard Business Review. She is also the host of the podcast, The Modern Customer.

Jim Marous:
So, hi Blake, I'm glad to have you on the show today. As I mentioned in some side conversations I came across you and your book in a tweet that was done between Theodore Lao and you. Your new book really intrigued me because it really consolidated a lot of the thoughts around the customer experience. I'm wondering can you do a little bit of a preview as to what your book's about and the 10 concepts you present in the book.

Blake Morgan:
Absolutely. Now I know who you're talking about, Theo on Twitter. I sent her my book. She's so generous and supportive, so I'm really glad that you saw her tweet. So what I wrote about in my book was essentially what I believe to be the 10 critical principles and pieces of a modern customer experience strategy. And I had originally set out to actually write a book for HarperCollins about all about technology because I believe, well this is the secret sauce.

Blake Morgan:
It's the technology that makes companies like Netflix, Spotify, Apple, Amazon, is the technology that makes their experiences so addicting. But what I found is I started doing interviews with executives, particularly CTOs, is that it wasn't the technology at all. It was actually the human element that many companies weren't getting, right. It was mindset, company culture, leadership development strategy. These were actually the missing pieces, it wasn't that a company was missing any technology. And so the book has 10 pieces but they can be bucketed into three areas for the sake of a conversation because 10 is just too many, three is easier for the human brain to digest and so they are the psychological, technical and then the miscellaneous experiential aspects of an experience strategy.

Blake Morgan:
And so again, I had set out to write a whole book about technology because I was getting a lot of attention for my work on technology. I was invited to speak at Rutgers executive MBA program. I had done tons of articles. I wrote for Harvard Business Review. I thought this is what the world wants to hear from me, but then I realized that the world didn't need another technology book and it was actually the common sense stuff that companies completely were blindsided to.

Jim Marous:
Well, it's interesting because it would be so much easier if it was just the technology, if you could buy your way into digital transformation from a customer perspective, but I think you're right. It's a whole lot more than testing out technology side.

Blake Morgan:
Yeah. Often, people ask me these questions like, well, "If it's so simple, why don't companies do it?" But most people when they go to work, they're just trying to survive the corporate world. They're just trying to get through their performance review for that quarter. And so that often is just meeting your numbers, making your sales, making Wall Street happy. These are not the things that create a good experience.

Blake Morgan:
The things that create a good customer experience are the long-term investments potentially being misunderstood for a little while so you can pivot your business. And at the top, that's hard. It's a hard pill to swallow for these CEOs that are brought in, maybe they hope to be there just a few years, turn the company around, make it profitable and move on to their next job.

Blake Morgan:
Or even lower level leaders and managers, they're really just worried about what's happening right in front of them. They don't have the luxury of being a visionary or a futurist or transforming anything. And so it's really the culture and the metrics that are part of the problem as to why for you and me, many of our everyday experiences are just not up to par.

Jim Marous:
Well, we were expecting more and more. Because I think the everyday consumer knows what's potentially possible, because they see it in a lot of the interactions they have with the giant tech companies. But the problem is we're missing the boat. I once said, "It's unacceptable that my dry cleaner knows more about me than my financial institution." And in many ways it's getting back to the basics of human communication relationships.

Blake Morgan:
Absolutely. And it's funny, that's a great point about the dry cleaner because yeah, my own dry cleaner, she'll say like... I always come in and yoga pants and sweat pants and she's like... And I bring in these very nice dresses that I use for my job. She's like, she knows when I've been on the road, like presenting on stages and stuff, but the point is that right, many of our insurance companies, banks, they really don't do personalization well. They're not managing data well and they're not even set up to do it.

Blake Morgan:
Because inside of these banks or insurance companies, different departments don't share data around the customer and that's why the customer, she expects zero friction experience, one that is seamless and she's not getting it. Because inside the company nothing is seamless, nothing is zero friction. And that's part of the challenge is we can't even talk about digital transformation or any of that until we're organized or structured in a way that makes sense considering what's happening with technology and the modern customer today.

Jim Marous:
Do you see a concern that or have you seen in your interviews, in your exposure in the marketplace that a lot of organizations, even though they have the data, even though they can process it well, that a lot of the results, a lot of the outputs become internally focused. Maybe cutting costs maybe increase in revenue as opposed to externally focused, really improving the consumer experience.

Blake Morgan:
Yeah. One of the big missteps that I talk about in my book is really simple. It is the problem of being product focused over being customer focused. So it's too much of a focus on what's happening inside our company. And I can tell you I used to work at a Fortune 100 software company that was created in the 1960s. And what I found at this Silicon Valley dinosaur was that in our customer service meetings, because I was an executive and running customer service. You couldn't understand if you were outside of our company, the amount of acronyms and jargon specific to this company was so confusing.

Blake Morgan:
It would have been on another planet for someone outside the organization. And the point is, the company had become so internally focused that it's really a problem because companies need to be looking out at the horizon, what's happening around the company, around the changing consumer and less so about, well, here's how we've done business for decades. And here's how we do things here and here's how our operations work and our processes, and you better follow directions.

Blake Morgan:
Because honestly, I was a change agent at this company and no one appreciated me. A lot of people didn't like me because I ruffled feathers. I wanted change and they didn't want it. They weren't ready for it. And I left that company and I never looked back. Now I'm out on stages now telling stories and inspiring groups, but I think being a practitioner in these companies, like these poor people, it can be so hard.

Jim Marous:
Well, change be it on a personal level or on a cultural level corporately is so difficult by its own nature. People don't love that. People don't like change. They don't seek for change in most cases. Add to that right now that many, many companies right now are financially not only stable, but thriving and as a result, there's no pain that these people are trying to fix. So it even worse more against why should I change? Nothing's broken.

Blake Morgan:
Mm-hmm (affirmative). Yeah, that's a great point and I think they can't see that things might be great now, but that doesn't mean things won't change. It reminds me how many millionaires and people who are really successful, they've also been broke many times, like people who have wild success that take a lot of risks. They often have been completely broke. They lose all their money, then they make it again, then they lose it again.

Blake Morgan:
This is not a lifestyle I'm recommending, but it's just the point that when things are good and you're making money, it's hard to imagine that life will ever change. But we know with some of these huge companies like Kodak or even Sears, things that are good now, but you don't know when an Amazon is going to come and disrupt your business or an Uber or a Disruptor. Because we have so many interesting startups now taking what is, and these are experiences that many people do not like, and I'll give you the example of insurance or the airlines or cable, and just saying people hate these experiences.

Blake Morgan:
We're just going to completely throw out all the rules, reinvent and bring consumers something so delicious they just can't say no. And there it goes that business. Because this is an old story, but even Kodak at the time, they used to have I think around a 100,000 employees and today maybe they have less than six. And they had in the 70s, I believe they had technology to create digital cameras. And many of your listeners probably have heard this story, but in case one of your listeners hasn't.

Blake Morgan:
Kodak had the technology to create the digital camera, but they didn't want to take away profits from their traditional camera business. And so of course the smartphone came about and other digital camera companies years later and Kodak clearly shot itself in the foot. So disruption is painful, being it's exhausting constantly having the energy to not only take care of what's in front of you, but educate yourself. It's exhausting as a person.

Blake Morgan:
I mean, I'll tell you now I'm pregnant, we were talking before the show, I'm having my second child. I'm working out like a maniac now because I know when I'm finished with this baby if I work out now and I think about the future, once I have the baby, I'll be back into fighting shape. So sometimes it's a personal anecdote, but sometimes doing things, even if you're not totally getting all of the benefits now is really important. But preparing for the future.

Jim Marous:
Well and change is not optional. I mean, it's going to happen to all of us. Plus I say that change is happening faster than ever before, but will never happen this slowly again. It used to be, I mean, Kodak, their transformation, their disruption took over a decade. Sears took almost two decades. But their response to disruption was to buy Kmart.

Jim Marous:
Well, it was doubling down on a bad model as opposed to what Walmart did, which says "We're going to use the stores as an advantage and then add digital," which was the Amazon effect, but a completely different result. I think the challenge is most companies, most employees don't realize that you aren't going to be able to avoid the sheriff. He's coming. Yeah.

Blake Morgan:
Yeah. I actually was recently at an event in New York and I met an executive who used to work at Sears and he used to run customer service and their CRM. He told me that the company basically wanted to be like Amazon, which is funny when you think about it because it doesn't make any sense. And what he found in these meetings is that the CEO would pit different departments against each other or different groups in the business and it was extremely competitive inside the company.

Blake Morgan:
And so that culture was probably, and being overly aggressive and maybe overly ambitious and just saying, "We're going to be Amazon" coupled with this toxic culture, partly I think brought them down. So it was interesting to hear from someone who used to work there that yes, the culture was really, really terrible. And that's one of the pieces I write about in my book is that culture matters so much. I recently was at a dinner party and I met an HR executive who works at a company called Workday Software company in California where I live.

Blake Morgan:
And he told me the story of a young struggling sales guy in Workday's early, early time and he could not sell this ERP software. And he not only couldn't sell the software, so his job was in danger, but his daughter, he found out was diagnosed with dwarfism, which requires a certain amount of training and special development for her. But the insurance company wasn't covering. The insurance offered by Workday was not covering what she needed to continue to develop into normal healthy child.

Blake Morgan:
And so before quitting, he was going to quit. He went over to HR sheepishly and said, "Hey, can you guys make an exception on this insurance policy? I'd like to continue working here." To his shock, they did it. They gave him the insurance for his daughter. The guy was so thrilled, he had a complete turnaround at the company. His attitude was now so positive. He became one of the highest selling salespeople at Workday, helping to make Workday a billion dollar company.

Blake Morgan:
But what I personally love about this story is that the head of HR, she didn't even remember making this approval for this young sales guy. Because it was just so normal to do what's right for the employee. And so one of the things I written about recently on Forbes for 2020, my predictions is that culture will be number one over customers. Because if you want customer experience at your company, the first step is finding out what is the experience of our employees.

Jim Marous:
Well, it's interesting because you on that point, Amazon just announced that they're going to train 100,000 their own employees to get more digital-ready to get more future-ready to train them on technology and all that. And you think about that, what they determined was it's going to be a lot harder to find new tech-skilled, able employees out in the marketplace than it will to be able to take employees that already understand the Amazon culture and train them.

Jim Marous:
Well, how cool is that? When you think about it to be working for a company that says we're going to make it so that you're ready for the future as opposed to, "Oh, by the way, we're right now out there looking for your replacement." If you don't think that's going to convert to the consumer, we're fooling ourselves. This, as you said, dealing with a better customer- consumer experience starts with your employees. That's a very good point. Some of the other predictions you had, you had the prediction that thoughtfulness is in. Can you explain that a little bit?

Blake Morgan:
Yeah. I believe there's a drought right now of thoughtfulness, of empathy. Because this is one of the problems with customer experience. Many companies are building experiences for customers that they personally would never want to have. And so my belief is that thoughtfulness in business and in life is the one thing that will differentiate you. And I think being sensitive and considerate of other people's needs is actually a superpower. Because most companies are not.

Blake Morgan:
And so that's why one of my themes in my Forbes predictions and I wrote a whole blog about thoughtfulness for Porchlight books recently, is that thoughtfulness can be inconsiderate of the actual experience of the other person and thinking in advance, "Well, what would make their life easier and better?" That is so powerful. And most people, and most companies do not do that because they're so internally focused, they don't even know how inconsiderate they are.

Jim Marous:
Well, it's interesting because taking the consumer's perspective and understanding how certain processes are so tough with other companies. Isn't that why we're willing to pay $120 a year to shop with Amazon? It's not free shipping anymore because free shipping's everywhere, but it's those little experiences. Like if you have to return something and the fact that you're going to get the replacement item the next day, even if you haven't yet returned it, the old one to Amazon.

Jim Marous:
Well, that's a big frustration for a consumer that says, "I may have made a mistake." And the other one is Amazon doesn't care if it's their mistake or your mistake, they're going to fulfill what is a major pain point. Well, that's thoughtfulness on the exponential level, but it also makes it, doesn't it? That it sets the bar higher for every industry. It's not just the retail industry.

Blake Morgan:
Yes. Amazon has completely changed the game for everyone and even with self-service, like for me that's thoughtfulness that hey, not everybody wants to call a call center and waste their time. In fact, companies are bleeding money because they don't think about the actual customer journey and they haven't created thoughtful self-service programs. And for a call to a center that can cost between 20 and $50 per call just for something stupid, which is usually frequently asked questions like your audience focuses on banking.

Blake Morgan:
So maybe something about how much money they have in their account or loyalty points. These are things you can put on your website. And this is a very basic example, but most companies are just not being thoughtful enough about the customer journey. And as a result, they're wasting millions of dollars in phone calls that are also, you want to pull your hair out as a customer when you have to wait on the phone for the call center and it's unnecessary.

Jim Marous:
And we all have our examples of the cable company or the telephone company, or another company that just continues to put you through the same thing. And it's interesting because so many companies think that the answer with technology, is creating chatbots, which the customer immediately sees in most cases simply a way for the company to save on costs as opposed to making my experience better.

Jim Marous:
And you have to go through even more challenges and trying to get a human or if you change channels. Gosh forbid you move from mobile to online and maybe from online to a branch or a store and you go, how are we going to get from point A to point B? And it's so tough for the consumer.

Blake Morgan:
Yeah. But in contrast, chatbots actually can be amazing. I take care of myself. My husband can see our credit card bills, but facials, I get my hair done, I get massages. I do all these things because I spoil myself, because I work very hard and I feel like I deserve it. The point is-

Jim Marous:
It works for me.

Blake Morgan:
Now, okay, it's a little bit of a weird anecdote, but the point is that I transact with a lot of small businesses and I was so impressed with one of them recently, honestly I wanted to get my eyebrows waxed. And the way that they do this is you just send a text and through their chat bot, they set up the appointment for you all through text message and it seems so simple. But I was just so shocked that this small business had figured this out and it was so wonderful for me. Because I hate making phone calls and sometimes you're not always on your desktop computer to make an appointment with these small businesses, these beauty businesses.

Blake Morgan:
Don't knock all chatbots yet because I think some of them are really smart and they're great for especially small businesses that just don't have the bandwidth or even big businesses where the chat bot can at least figure out what the customer's trying to do initially. Especially with banking where it can figure out what you're trying to do and if the chatbot can't help you, they transfer you to a person quickly. [crosstalk 00:20:46].

Jim Marous:
It's certainly better than using the phone.

Blake Morgan:
Again, it's the thoughtfulness. It's better than using the phone. I hate using the phone. I hate talking on the phone. I like doing podcasts interviews, don't get me wrong, but I hate having to contact my healthcare provider. I mean, we all have a million examples. But it's just crazy to me. Some of these huge, huge companies are still so terrible at customer effort and how hard they make their customers work in order to make their company continue their legacy.

Blake Morgan:
And so I just think that these companies that are willing to look outside in and say, "Well, what experience would I want?" Would I want to have to contact my hospital on the phone? And being inspired by Amazon and how they've simply reduced customer effort and made customers lives easier and better.

Blake Morgan:
And that's my whole worldview is that life is stressful, especially for us hardworking people. You've got kids, you've got a lot of stuff going on. We're juggling all the time. The companies that are thoughtful, the companies that go above and beyond to make that stressed out customer's life easier and better. They provide value without asking more in return. These are the companies of the future.

Jim Marous:
Well and as your book points out, as your podcast points out, I think the differentiator of the future is going to be around customer experience. It's not going to necessarily be around price, it's not going to be around product. It's really going to be around who makes you feel most special and does it through personalization, modernization. And as you mentioned in your book, making it a seamless, easy customer experience and that overall, that's the key.

Blake Morgan:
And I will pick out one word that you just said, which is special. I think we could even just be basic. I don't even think customers want to feel special. But I think personalization now it's like table stakes that I, the customer, I expect the business to know who I am, what I might need, and what's happening with my data. I think personalization is just table stakes. I don't even believe customers want to really feel special. I think if companies can just deliver on their initial promise, customers will be really happy and the bar is very low still even with Amazon.

Jim Marous:
I think you're right. No negative experiences avoid the negative.

Blake Morgan:
Yeah, exactly.

Jim Marous:
As we look to 2020, what would you suggest to any company right now that they should put on their priority list to make sure they really address next year?

Blake Morgan:
I would say that think about self service data is huge. Analytics are huge. Having a code of ethics when you think about customer data analytics and privacy is really, really big as we move into a year of probably new regulation, particularly in the US for customer data.

Blake Morgan:
So again, if we can just be thoughtful about our approach to customer data and come up with a code of ethics for data. But not just for data, coming up with a stance on customer experience that our own companies, even if we're not good at it, that humility like, "Hey, we know that we're not great at this or we're working to improve it." That's going to create such a positive impact on your company culture.

Jim Marous:
So we're coming to the close of this podcast and gosh, these always happened so quickly. I try to make it 20 minutes so it stays within a drive time, but 20 minutes always feel so short.

Blake Morgan:
How is the drive in traffic?

Jim Marous:
Exactly. Yeah and you live in California, so maybe we should go an hour. So how do people follow you in your thoughts?

Blake Morgan:
Oh, well I always love to hear from the community. Twitter is great. BlakeMichelleM, come to my website, blakemichellemorgan.com or send me an email, [email protected] And I would just love to hear from anybody that wants to talk banking or transformation or any of that good stuff. And thank you so much for your extremely thoughtful questions.

Jim Marous:
Well, thank you and have a great holiday. And I know you're expected a new one next year, so you're going to be doing some real transformation in the process even though it's your second.

Blake Morgan:
Yes, exactly.

Jim Marous:
So have a great one and nice talking to you.

Blake Morgan:
Thank you so much. Take care.

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