The bank* has operated successfully in the Swiss market so far. Increasing competition, the convergence of offerings and customers' growing price focus when choosing offerings forced the bank to revise its existing price model. Against the backdrop of the interest-rate situation, pricing for banks is gaining importance generally.
In collaboration with CustomersX®, the potential of a new price model was to be determined and a new model introduced.
Customer Value-based Decision Making
Customer-centric Transformation
Co-Creation
Customer Management
The bank had decided not to use the Customer Centricity Canvas. As a result, it was not clear at the start of the project what potential and challenges existed. This led to extremely inefficient project management, with many loops due to unclear priorities. Moreover, the project team could not be persuaded to take Customer Value-based Decision Making, Customer-centric Transformation and Co-Creation into account. The organisation understood customer centricity only as improving customer management, which significantly increases the chances of failure.
Based on our DTC approach, the recommendation at the start was to test the new price model together with customers. Here, there was much resistance within the organisation to involving customers in such decisions. What was overlooked was that sales in particular must be convinced if a new bank price model is to be introduced successfully. Acquiring valuable customer insights is a central success factor for this.
As the project progressed, the focus was mainly on the competition. Customer needs and customer value played hardly any role in the further considerations. It's worth noting that most banks don't charge customers fees for numerous services. Changing pricing in banking can therefore very easily lead to resistance among customers.
On behalf of the client, CustomersX conducted an international study to compare the existing price models and to identify best practices from other banks. It emerged that the successful banks had established complex service bundling. This form of price differentiation offers customers great convenience and gives the bank the opportunity to charge higher prices for its services.
The subsequent profitability assessment of the newly developed price model for the bank, carried out by CustomersX, concluded that the technical changeover and the effort for the necessary organisational transformation would not lead to added value for the bank — also because there were too many fears about implementing the price model in all its possible consequences.
The bank's lack of customer centricity, and the lack of understanding among those responsible regarding the high importance of considering customer value when adapting price models, led to CustomersX withdrawing from the project. Because customer centricity was not taken into account, the project team was subsequently unable to obtain the necessary internal buy-in from management. As a result, the bank's price model was not changed.
In summary
Considering the improvement of customer centricity helps projects gain internal acceptance and increases their chances of success. This cannot be stressed often enough and is offered as a recommendation to those responsible.
*We take confidentiality towards our clients seriously. The name has been changed; the results are real.
