What Do You Do When Customer Experience Clashes With Company Profitability?

I was chatting with a banking executive today, recently promoted as a VP customer experience and engagement, who is facing  a conundrum. He has just completed a national survey of his consumer base (which includes both consumer consumers and small businesses). 

Uniquely it is the first time his finance department sponsored by his CFO. His marketing organization and his independent survey organization have “ganged up on him (in his words).

The results he is trying to balance:

• 81% of customers are extremely happy with his retail banking services.
• 37% believe that experience is more important than fees.
• 62% of customers who have switched TO his institution from competitors named fees as one of the top 3 reasons they switched, 30% of this 62% are perceived as difficult to manage, high churn customer. .
• 29% of bank net income now comes from additional fees that many customers consider as penalties.
• 72% of customers say one of the top 3 things their financial institution could do to help them guarantee their loyalty is to help avoid fees.
• 5% of customers are estimated to be at high risk of switching and comprise $280m in revenues, 42% or $117m of which are avoidable punitive fees.  
• The company made $237m in revenue in 2012 from what are perceived as ”punitive”” fees in 2012.
• Executing a messaging plan to proactively help customer avoid fees they perceive as unfair would cost ” $12m but help customers avoid most of the $117m in avoidable fees.
• The Long Term Value of the at 5% risk customers over a 25 year relationship model is $4.2b

His question is what do I do when i have this conflict betwee customer experience and short term proftability ? It is a lot of revenue ? How do I persuade my leadership to forego $117m in today revenue in exchange for a long term value (LTV) return of $4.2b when they won’t necessarily be here to get paid on the LTV return

8 questions about what would you do ?

1. What is your cost of customer experience maximization?
2. What is your business case for experience maximization versus immediate revenue?
3. What are the top 5 of these conflicts in your business model?
4. Who in your company cares?
5. Do your customers really care enough ?
6. How much does a policy of openness and honesty in communications benefit you ?
7. How well do you manage messaging to execute this openness correctly?
8. What is your long-term competitive exposure and can you afford not to do this?