articles by xbridgers
Business Money, June 2006
The Internet is now entering a new phase in its development. Labelled "Web 2.0" by pundits, it will transform the way your customers choose business partners, suppliers and lenders.
In the past, your customers used the Internet to gain transparency in pricing between various lenders. Web 2.0 harnesses the social networking capabilities of the Internet to enable your potential customers to understand how existing and former customers feel about the service they receive from your organisation. This will have an enormous impact on your ability to compete for new business.
Your customers will soon be able to go online to websites that aggregate customer reviews (such as Google and Yahoo) and read reviews written by your customers and former customers. No longer will an aggravated customer be left to vent frustration only to friends and family. Soon aggrieved customers and former customers will have an outlet to efficiently share their issues with your service to the entire world. The implications of this development will be particularly important for service-intensive industries such as invoice finance.
Factors who diligently focus on fair, transparent pricing and customer service will garner an enormous competitive advantage as loyal customers post positive online reviews of service. BDMs will in turn prompt potential customers to go online and read the glowing customer feedback. Potential customers will be comforted that they are making the right choice in selecting the factor that has demonstrably cultivated loyal customers.
On the other hand, factors who focus on optimising revenues at the expense of their customers will find an increasing and considerable lack of interest from prospective customers. Such potential customers will read the horror stories of clients who were forced to live with 36 month contracts or who paid an egregiously high termination fee.
In June, a phone conversation recorded by a frustrated AOL customer trying to cancel his service was posted to such a website in the US. Within days, the recording was downloaded by millions, featured on CNN and CNBC, and parodied by late night comedians. The damage to AOL's reputation was swift and irreparable.
The invoice finance industry has a long way to go toward improving customer service. Joint research conducted by Xbridge and the Factors and Discounters Association indicates that 70 percent of invoice finance customers are ambivalent about the service provided by their factor. Twenty percent are aggravated, and only about 10 percent are satisfied enough to proactively recommend the factor to others.
At Business Money's Small Factors Conference, many were surprised when I announced that Xbridge had reduced the panel of factors on our marketplaces from 22 to 17 because five factors were unable to deliver adequate levels of service. Such paring is likely to continue. The industry must focus on service quality and delivery if it is to grow to its full potential.
Over time, service levels will prove to be the ultimate differentiator between lenders. And your customers will become your marketing department. Far-sighted lenders will focus now in influencing the message their customers will deliver.