Strategic Framework For Building A Financial Services Practice

By M. Isi Eromosele

The strategic framework for setting a Financial Services Practice should be based on the interaction of five cross-functional business processes that deal with strategy development, value creation, multi-channel integration, information management and performance assessment.

These processes make a greater contribution to organizational prosperity collectively than they do individually and must therefore be treated as an integrated and iterative set of activities.

Phase 1: Strategy Development Process

Where you are and what do you want to achieve in your marketplace?

Who are the customers that you want and how do you segment them?

You will need to implement an eFinance strategy in the context of your overall business strategy. The strategy development process therefore demands a dual focus on your organization’s business strategy and its customer strategy and how well the two interrelate.

Business Strategy

A comprehensive review of your business strategy will provide a realistic platform to implement the eFinance strategy as well as generate recommendations for general improvements. Your organization will be enabled to fully understand its own competencies within a competitive context in order to be able to transfer them to the customer as customer value.

The following key business issues should be carefully evaluated:

• Your company’s profile, purpose, performance and position
• The current financial services marketplace
• Your competitors profiles and activity
• Your current delivery channels
• Your use of technology

Customer Strategy

The other half of the strategy development equation is deciding which customers you want most to attract and keep and which customers you would prefer to be without. Finding your niche and growing it is vital. While the prior review of business strategy will be instrumental in reaching a judgment on broad customer focus, consideration of the following customer issues help to refine customer selection and thus customer strategies.

• Nature and stature of customer strategies
• Customer segments
• Customer relationships
• Knowledge of and value of customer base
• Complexity of customer transaction behavior

 Phase 2:  Value Creation Process

How should you create and deliver value for your customers?

How should you maximize the lifetime value of the customers you want?

The value creation process is concerned with transforming the outputs of the strategy development process into programs that both extract and deliver value.

A balanced value exchange will ensure that both parties enjoy a good return on investment, leading to a good long-term relationship.

The value creation process consists of three key elements:

• Determining what value your company can provide to its customers
• Determining the value your organization receives form its customers
• By managing this value exchange, maximizing the life-time value of desirable customer segments

 The value the customer receives

The value the customer receives from your organization is the total package of benefits derived form your core product, or the added values that enhance the basic features such as service and support. The value can be calculated using the value proposition concept and undertaking a value assessment, importantly working from a customer perspective.

The value proposition

To determine if the value proposition is likely to result in a superior customer experience, it is necessary to quantify the relative importance that customers place upon the various attributes of your product or service.

An analysis of your customers is done to identify customers that share common preferences in terms of product or service attributes and to reveal substantial market segments with service needs that are not fully catered for in your existing offers.

The value the organization receives

Here, the customer value is an output of, rather than an input to value creation. As such, it focuses not on the creation of value for the customer but on the value outcome that can be derived from delivering superior customer value.

Your pursuit of more and more attractive customers at lower cost must be based on a sound understanding of how acquisition costs vary at both the segment and channel levels. Your customer acquisition can be improved through insights drawn from the value proposition and the value assessment

Customer segment lifetime value analysis

To decide the relative amount of emphasis you should place on customer acquisition and retention, it is necessary for you to understand acquisition and retention economics at segment or better yet, individual level. The key metric to use to evaluate customers’ profit potential is customer lifetime value (CLV), which is defined as the net present value of the future profit flow over a customer’s lifetime or the duration of the account.

Phase 3: The Multi-Channel Integration Process

What are the best ways for you to get to customers and for customers to get to you?

What does the “perfect customer experience”, deliverable at an affordable cost, look like?

The multi-channel integration process involves decisions about the most appropriate combination of channels; how to ensure the customer experiences highly positive interactions within those channels and where customers interact with more than one channel, how to create and present a “single unified view” of the customer. To determine the nature of your business’s customer interface, it is necessary to consider

• The key issues underlying channel selection
• The purpose underlying the channel integration
• The channels options available
• The importance of integrated channel management in delivering an outstanding customer experience

Issues in channel selection

Channel suitability: The most appropriate choice of channel or channels for your company will be the one that is most attractive to the end consumers in your target market segment. This will help you create a high level of attraction determined by your company’s ability to create customer value relevant to those customers’ needs.

By identifying which benefits the customer seeks and the relative importance attributed to them, you can evaluate channel suitability and determine which channel option will deliver those benefits to the greatest degree for the lowest costs.

Channel structure:  You will need to organize the channels to influence the success of your multi-channel strategy. This will be primarily achieved by utilizing new technologies that have opened alternative and improved paths to market.

Multi-channel integration

In implementing your eFinance strategy, you will need to integrate the activities in the different channels to produce the most positive customer experience and to create the maximum value, no matter what channel is being used.

The channels need to be seen in the context of the whole interaction over the life cycle of the customer relationship, not just in terms of the specific sales activity.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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