If I used the words “financial services” and “empathy” in the same sentence, what would be your initial reaction? Oxymoron or paradox? Your response may be influenced by where you live. According to the 2015 Edelman Trust Barometer, only 22% of the Spanish general population trust the financial services industry, compared to 36% in the UK, 43% in Australia, 51% in the US and 72% in China, and 48% globally.
And trust matters; 80% chose to buy products and services from companies they trusted in the last year, while 63% chose not to! It’s not a huge leap of faith, given the state of the global economy, to feel that there may be a bit of an empathy shortfall going on.
One company, however, towers over its competitors. USAA (United Services Automobile Association) has built a reputation as the most trusted financial services firm in the US, arguably the world, and is described by KPMG Nunwood as the “epitome of customer experience best practice.”
USAA is a member-owned financial services company providing auto, homeowners and life insurance products, banking, investment and retirement services to people and their families who have served, or currently serve, in the US military. The organisation has 11.2 million members, a net worth of $28.2 billion and total assets worth over $130 billion. It is hailed as one of the pioneers of direct marketing, using employees instead of agents.
USAA has built its customer strategy around empathy and reciprocity. This empathy obsession has driven high trust ratings; Forrester Research found that 81% of USAA customers believe the company works for them rather than for the bottom line, resulting in a 98% customer retention rate.
But what do we mean by empathy? It’s about more than walking a mile in a customer’s shoes. It’s about having the emotional intelligence to choose the right response depending on the situation, and to take ownership of an issue in order to improve things for the customer. Empathy is often seen as an abstract concept with little tangible ROI, a “soft” skill that is the preserve of customer-facing staff only. Yet, it can be a source of competitive advantage and a core organisational capability. Here’s how USAA turned empathy into an asset:
From the CEO down, USAA is constantly and consistently focused on its customers’ needs, and immersed in their real life. This “customer surround sound” is embedded into the company culture. Everyone at the company is held responsible for putting “members’ interests first” and “doing the right thing because it is the right thing to do.”
USAA has a very active program to build empathy between its employees and its customers. Customers are regularly brought into their offices to speak to employees at all levels about the challenges they face and the role USAA can play in improving them. Senior Executives listen to customers’ calls each week to keep grounded in their needs and concerns. Their offices are designed to remind them of who they serve.
USAA measure success by how well their customers are doing in their financial lives, rather than how well they are doing as a company.
Photo by Bob Owen / San Antonio Express-News
There is a strong sense of identification between USAA employees and its customers, in part because around a third are either ex-military or a spouse of someone who has served, but primarily due to a unique and demanding training process designed to help them empathise with their customers.
USAA trains its employees in the culture of its customers. Each new employee attends a 10-week ‘boot camp’ that simulates the challenges that military personnel experience every day through role-playing exercises. Trainees are given stern commands by a drill sergeant, wear a military helmet, 65-pound backpack and flak vest and prepare MRE’s (meals ready to eat) for lunch so they can better identify with military life. They read real deployment letters and actual letters from soldiers in the field to their families back home, learning to empathise with and understand the unique pressures they face whilst on active duty, but still needing to deal with family financial demands back home.
Empathetic customer approach
USAA conducts business almost exclusively over the phone and the internet via 13,000 customer service representatives who are all employees and, unusually, are not paid on commission, and who practice ‘down-selling’ rather than ‘up-selling’.
Additionally, USAA actively encourages its customers to take on more coverage instead of less, despite its customers’ risk profile, and all claims including life claims are to be paid first with questions later. USAA believes that its customers ‘sense of honour’ makes them trustworthy.
After the 1991 Gulf War, USAA proactively refunded several thousand customers, who were posted to the Middle East their premiums for that period, as it was obvious that they hadn’t been driving their cars. Nearly 2,500 returned the cheque, many of them who told the company to just “be there when we need you.” A more recent anecdote involves a young military widow lost her husband in Iraq. Before deploying he had agreed to buy life insurance, but hadn’t sent in the first premium cheque. USAA told the widow that if she sent in the $40 owing, they’d pay her the full claim.
USAA ended a partnership with MasterCard Inc. in October 2015 in order to eliminate foreign transaction fees, partnering instead with Visa Inc. In December 2015, they proactively offered customers no-interest payroll advance loans if a proposed government shutdown disrupted pay.
USAA sponsors a non-profit organisation, The USAA Educational Foundation, who provide non-biased financial education to the military and their local communities. Additionally, USAA provides extensive monetary support to local communities to address hunger and homelessness, promote education, and support safety and disaster response. 8 of the 10 most costly US disasters occurred in the last 20 years, according to the Insurance Information Institute. USAA provides members with mitigation tools and-on-the-ground support if a disaster strikes.