Creating value for customers to earn their lifetime loyalty…. By treating them fairly Andy Glazier Head of Consensus Research +44 (0)20 7627 7840 email@example.com Roger Ashworth Head of Customer Insight – Brand & Customer Strategy Tesco Bank +44 (0)131 479 1040 Roger.Ashworth@tescobank.comThe focus of our Paper today is Treating Customers Fairly, specificallythe holistic approach taken by Tesco Bank in integrating TCF into anorganisation with tremendously strong customer values already inplace. We’ll remind you of these principles – of TCF and of the TescoValues - as we go.
The issues facing Tesco Bank In December 2008 Tesco Bank began emerging out of a very successful JV with RBS launched back in 1991 The JV had a good customer ethos borne of Tesco’s putting customers at the heart of their business Treating Customers Fairly agenda rapidly shot up the new Management’s priority list Developing an ongoing means of tracking customer feedback on TCF was an FSA requirement of Tesco Bank Page 2 As a joint venture, where RBS provided most of the operational support , TPF as was had relied on RBS to provide evidence of how the JV treated customers fairly. Having lived with the Tesco values for many years in spirit the business has always been very customer focussed. With Tesco’s 100% acquisition the new Executive quickly recognised the need to control our own TCF MI and manage any risks, and hence TCF moved rapidly up the new businesses agenda. The FSAs approach to TCF requires companies to have detailed granular evidence that customers are being treated fairly, and so much of the task was to garner internal MI. External customer research on an ongoing basis is deemed an essential component of tracking customer feedback.
Project Objectives Deliver a robust TCF customer tracking programme which offers actionable insight Evidence Tesco Bank is embedding TCF in the corporate culture & can monitor progress Complete the research in under 3 months to a tight budget Not a small challenge then! Page 3 Our Executive sponsor was very clear giving a strong desire to evidence we were acting - not just measuring – and that we needed to develop customer feedback that was quite specific. To build an organisational culture where TCF is at the heart of what the firm does, TCF has to be embedded with the staff. Hence we also need to get an internal fix on staff views. As a newly formed Bank the FSA was keen to visit and gave notice of an early evaluation – timescales became tight.
Treating Customers Fairly – the 6 Outcomes 1. Culture 2. Product design 3. Information needs 4. Suitable advice 5. Delivery 6. Post-sale barriers Page 4Culture We live the Tesco Values. No one tries harder for Customers. We endeavour to keep their best interests at the heart of our businessProduct design We will design our products and services around our customers’ needs and tell them about the products and services that are most appropriate & relevant to themInformation needs We will keep our customers informed in a clear and timely way We will provide simple forms, clear terms and conditions and we will keep jargon to a minimumSuitable advice We do not currently give our customers advice or make recommendations. All our communication is designed to give customers the information they need to allow them to make a decision about which product or service meets their need.Delivery We will be easy to do business with. We will make clear commitments and endeavour to keep our promises We will provide the level of service that our customer would expectPost-sale barriers We will make it simple for customers to contact us to change products, exercise a product option, bring a claim or a complaint or to move their business We will treat them fairly in all circumstances.
What have we learnt about TCF research? APPROACH STRATEGIC NEEDS-MUST Page 5 So when Tesco Bank came to us with this challenge, what had we already learned about TCF and the role research played in providing excellent MI? More than anything, we had learned that all organisations were dealing with it differently – there was no text book or set of rules to follow. Some were taking the strategic view that TCF must be a fully integrated part of their customer retention programme, others saw TCF as little more than ‘needs-must’, a box-ticking exercise. What we were also beginning to see was that a successful TCF programme was about much more than the MI itself - it was about implementation across the business.
Creating value for customers to earn their lifetime loyalty…by treating them fairly No one tries harder Understand customers for customers better than anyone Be energetic, be Use our strengths to innovative and be deliver unbeatable first for customers value to our customers Look after our people so they can look after our customers Treat people how we like to be treated Page 6So how were we going to approach the programme for Tesco Bank?From the outset it was clear to us that the only way it was to besuccessful was to take a strategic view, that bolting-on a TCF exerciseto an organisation with their own customer values in place for so longwould not work.We needed to take a holistic view of Tesco Bank’s customers, it’s staffand it’s ethos.
Scoping the Tesco Bank TCF research CUSTOMER STAFF DIMENSION DIMENSION Stage of journey Role within organisation Product holding Department Segmentation Seniority Delivery channel RESEARCH DESIGN Page 7What this presented us with in practice was a vast range ofconsiderations to build into our research programme.From the customer side: What stage in the customer journey were they at? Were they in the honeymoon period still? Had they complained or made a claim, each critical touch-points; What product did they hold? We covered Pet, Motor and Home insurance as well as Savings, Credit Cards and Loans; How do we align the research with any segmentation scheme in place? How does the customer interact with Tesco Bank? Telephone? Online? Or even through one of the new in-store Tesco bank centres?All of these potentially impact on what customers perceive to be‘fair’.From the staff side: Do staff in all departments see themselves as having a role to play in TCF? Do all levels of staff feel involved and take on responsibility?
The research framework Customer - Understanding ‘fairness’ Qual research to devise metrics that work in everyday language Event-driven modules Customer - Ongoing measurement Triggered by specific Quant research to track metrics across the activity – changes, customer journey launches and new initiatives Staff Qual research (executive and management) Quant research (across whole business) Page 8The end result was a modular yet fully integrated programme: Qualitative research amongst Tesco Bank customers, structured according to the key dimensions of stage of journey, product held and channel used, to understand what ‘fairness’ means across the Tesco Bank customer base; Driven by the qual, quantitative customer research, again structured by key customer dimensions, to benchmark Tesco Bank’s current TCF performance and to prioritise areas for improvement; Qualitative and quantitative staff research across all Tesco Bank staff to test awareness and understanding of TCF and to identify perceived barriers to its successful implementation; Alongside these, exit research outside Tesco Bank’s first 6 Banking and Insurance Centres.
Understanding ‘fairness’ Page 9 So what does ‘fairness’ mean to Tesco Bank customers? Does it mean anything at all in the context of pet insurance, say? What about the 6 outcomes? Even when we work through the outcomes to couch them in the customers’ own language, can they be applied to financial services? Do the outcomes fully encapsulate ‘fairness’ or is there more to it?
What is fairness? Good service Trust Keeping ? ? promises Fairness Price ? ? Only makes sense Courtesy when contrasted with “unfair” Page 10 The answer to all of these, in true qualitative fashion, is ‘yes and no’. For many, the concept of ‘fairness’ was abstract – it only made sense when contrasted with ‘unfair’. For some it was simply not having any cause to complain, for others it was the product ‘doing what it says on the tin’. The terms used to describe ‘fairness’ were many, and varied it seems by every possible dimension – product held, stage of journey and so on. What we had to do was distil this wealth of information into a structured quantitative programme for Tesco Bank, giving them clear and realistic priorities for improvement.
On-going measurement Page 11The qual stage reinforced the view we already had that thequantitative benchmarking and future tracking had to be carefullystructured according to the customer dimensions mentioned if wewere to capture the essence of ‘fairness’.We therefore conducted a substantial telephone survey of TescoBank customers, structured according to: Each of the 6 products held, sub-structured as relevant e.g. building .V. contents home insurance; Stage of the journey, with boosts for critical events such as claiming and complaining; Channel preference.The questionnaire itself covered: Ratings of Tesco Bank on a range of overarching fairness metrics devised from the qual; Importance and performance ratings of detailed product/service aspects, again driven by the qual; Verbatim case studies for any low Tesco Bank ratings.
Output - TCF fairness metrics Customers’ best interests Help customer get Keeping promises most from product 8.2 7.1 6.8 Car Home Pet 6.7 7.6 8.9 * Note: dummy data used to demonstrate analysis technique Page 12What this gives us, using dummy data of course, is a range ofpossible outputs: We can look at the overarching fairness metrics e.g. ‘keeping promises’, cut any way we want; We can look at aggregate scores on a product by product basis e.g. for the 3 insurance products of motor, home and pet;
TCF diagnostics – mapping priorities for improvement and the TCF Outcomes Credit Card Matrix Outcome 1 Outcome 2 Outcome 3 Outcome 4 Outcome 5 Outcome 6 0.3 Priorities for Fine-tuning Improvement Product documentation is clear and easy to 0.25 understand Call back when they say they will 0.2 Driver strength Given clear understanding of how claim will be dealt with 0.15 Able to call outside office hours Fully took on board my 0.1 personal circumstances 0.05 Transfers between people on phone Less Urgent kept to a minimum Priorities Maintenance 0 60 65 70 75 80 85 90 Satisfaction score * Note: dummy data used to demonstrate analysis technique Page 13 Which is all well and good, but where are the priorities for improvement? Using the detailed product and service aspects, we created classic performance matrices, plotting importance – stated or derived – against performance. Again using dummy data, this is how the matrix might look for the credit card product team. This can be taken one step further by mapping the outcomes on to the aspects to highlight those outcomes where performance is consistently strong or where improvements need to be made. The verbatim responses, and of course the customer qual, give the product teams great case study diagnostics to work with.
Staff research Page 14However, if TCF is to be truly embedded in any organisation, MIand the research behind it must be inward as well as outwardlooking. Basic understanding of TCF needs to be measured, TCFtraining rated, any barriers to its implementation identified andacted on.We also need to understand how staff see TCF fitting with thecustomer ethos of the parent Tesco brand. Is their a risk that TCFis just seen as ‘business as usual’ for a brand with such astrong customer focus as Tesco?We conducted: Depth interviews with the Tesco Bank senior executive, from CEO Benny Higgins downwards; Group discussions with Tesco Bank middle management; An online survey across all Tesco Bank staff.
Event-driven modules Tesco Pe rs Finance re onal b plannin g as Tesco rands Tesco Bank ncia l push big fina Tesco Personal Finance wins 30,0000 new customers in six months Page 15 The customer and staff streams are the core of the programme if you like, but we mustn’t forget that Tesco Bank is a rapidly growing force in retail banking and that each initiative must have TCF at it’s heart. For example, we conducted quantitative research across the first 6 Tesco Bank ‘Banking and Insurance Centres’, more and more of which are to be opened. And as Tesco Bank enter new product areas, all documentation, delivery channels, service propositions and so on, must have TCF central to them. Now of course all of this research, and the MMI it feeds into, is all well and good, but as we alluded to earlier, it means nothing without implementation.
Implementation of TCF within Tesco Bank FSA Focus on TCF in 2009 & beyond: “We will continue to challenge firms rigorously where there are issues and take hard, fast and decisive action where necessary. The standard against which firms will be judged remains high and where we find failings, we will continue to use our full range of regulatory powers to take tough and visible action.” Tesco Bank Response Leadership Strategy Decision making Management Information Page 16 Leadership - clear & consistent priority, strong governance structure, central TCF manager to sustain momentum of our programme Strategy - rapid and deep embedment into everyones job, with very clear owners, part of reward package, focus on MI evidence Decision making - all key decisions checked against TCF criteria, increasingly part of the language of the business Management Information - rigorous pursuit of detailed and specific facts to demonstrate fairness e.g. reasons for repudiated insurance claims Each of our product teams evolved their customer MI into detailed TCF packs which measure how we are performing and surface to the Exec monthly any key risks and progress on addressing them. Its probably neither of much interest or relevant to go into details – but suffice to say – we have changes to literature, websites, pricing decisions, to name but a few steps we have taken.
Where we are Good governance structure to manage TCF risks All staff fully versed in TCF outcomes Well embedded TCF processes Tackling identified TCF risks Tackling TCF getting us fitter TCF customer & staff research to identify “where we are” completed Page 17 Getting the structure right – putting real onus on the product owners to have full day-to-day responsibility has brought big benefits and seen a growing appetite for research outputs Regular review meetings of detailed MI Staff not only can trot out the outcome themes they understand why this benefits both the customer and Tesco in the longer run By digging deeper in the early part of the year we did identify simple things to improve – its often the simple things which can help customers Both the internal work, plus the staff research programmes, and collaboration around the customer research has brought broader changes with more cross functional working and sharing of MI. Consensus’ research findings have clearly identified steps we are now taking, and several of the key points highlighted by customers echoed our own internal MI, gving us greater confidence we were tackling the right things.
Way forward for Tesco Bank Structure driving more proactive agenda TCF is part of our DNA Richer Management Information to identify and help manage TCF issues TCF built into all new products & services from outset TCF customer & staff research help identify “where we go” Page 18 Structure drives strategy, I remember reading in an MBA text book – well for TCF that has been and is true for our TCF programme As we further embed TCF the outcomes and use of the FSA model for sucessfully implementing TCF are becoming a central part of decision making. As a new growing bank Tesco is planning a number of new products and here TCF principals are built in from the outset, making TCF data gathering for one much easier We are now looking to the many TCF experts around the business to shape both training, and the development of our evidence gathering so we can benefit from the customer feedback to ensure Fairness remains core to our proposition
Challenge ahead for Tesco Bank Tesco values No one tries harder for customers Understand customer needs better than anyone else Be first to meet their needs Tesco been on an intense TCF journey these past months FSA outcomes given renewed intensity to our focus on customers Our research processes have played a valuable part in taking us on this journey… TCF is not an end in itself Embedding TCF has helped deepen our customer understanding & can help us win & keep customers Page 19 Tesco has built a very successful business by listening to customers The values are there for a reason and as the JV transforms into truly Tesco business these values are a central guide TCF has helped move us forward on that journey But Tesco’s approach aims to go beyond meeting FSA outcomes to deliver a customer experience based on their needs
Providing for our customers’ needs across the customer journey Health Pet Motorbike Home Savings Car Travel Credit Dental card Breakdown Mortgages Life Loans Travel money Page 20So across our customers journeys whatever the product we are lookingto better understand how we perform and what they expect.And in shaping that proposition we always check that it TCF.
Creating value for customersto earn their lifetime loyalty….By treating them fairlyAndy GlazierHead of Consensus Research+44 (0)20 7627 firstname.lastname@example.orgRoger AshworthHead of Customer Insight – Brand & Customer StrategyTesco Bank+44 (0)131 479 1040Roger.Ashworth@tescobank.com