How did Amazon disrupt a long-established bookselling model and go on to achieve its dominant position in online retail globally?
Jeff Bezos put it like this: “We’re customer obsessed. We start with what the customer needs and work backwards.”
That laser focus on the customer has resulted in an estimated 200mn Prime members around the world: people who are incentivised to get everything from entertainment to groceries from the company.
In contrast, the financial planning industry was wired the other way round. At its roots, its raison d’être was to shift products. Like the fund adverts that papered London Underground stations in the 1980s and 1990s, financial advice was about getting people to invest, often in products that were riskier than they could afford.
Many clients lost a lot of money, while many were put off investing for life.
Put customer needs first
Of course, we have come a long way from those days. The Financial Conduct Authority has spent more than a decade unpicking the product sales mentality, from the Retail Distribution Review onwards. Today, consumer duty requires companies to put customer needs first.
But we are still only at the start of understanding what that means. February’s regulatory shot across the bows has prompted companies to start reviewing their ongoing service provision, if they were not already.
It is clear that if you are not checking in against your customer’s objectives each year, you are not running a customer-centric business, you are not delivering a personal customer plan, and you are not meeting the regulation.
We already know the regulator does not like sludge, and wants customers to opt in rather than opting out. It is not difficult to draw a line from here to an Australia-like approach, where the ongoing advice fee can only be charged if the customer periodically resubscribes.
At the same time as the regulatory shift, another, broader shift has occurred: we all, as consumers, have got used to Amazon-style service. We are accustomed to convenience: what we want, when we want it.
We expect personalisation: businesses that know us and can anticipate our needs. We want a seamless, intuitive digital experience. We want instant access.
And, increasingly, we bring those expectations to every area of life, from ordering a takeaway to booking a holiday to banking. So, whether because of consumer duty or because the client expects it, the customer has absolutely got to be at the heart of your business.
Is this a huge change in mindset? Not for everyone, certainly. I speak to people at many companies who see the customer as their top priority and genuinely care about delivering client value. But I also know there are many who are just focused on meeting the regulation and ticking the boxes.
