Treating Customers Fairly, specifically the holistic approach taken by Tesco Bank in integrating TCF into an organisation with tremendously strong customer values already in place.

1. Creating value for customers
to earn their lifetime loyalty….
By treating them fairly
Andy Glazier
Head of Consensus Research
+44 (0)20 7627 7840
aglazier@consensus-research.com
Roger Ashworth
Head of Customer Insight – Brand & Customer Strategy
Tesco Bank
+44 (0)131 479 1040
Roger.Ashworth@tescobank.com
The focus of our Paper today is Treating Customers Fairly, specifically
the holistic approach taken by Tesco Bank in integrating TCF into an
organisation with tremendously strong customer values already in
place. We’ll remind you of these principles – of TCF and of the Tesco
Values - as we go.

2. 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.

3. 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!
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 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.

4. Treating Customers Fairly – the 6 Outcomes
1. Culture
2. Product design
3. Information needs
4. Suitable advice
5. Delivery
6. Post-sale barriers
Page 4
Culture We live the Tesco Values. No one tries harder for Customers.
We endeavour to keep their best interests at the heart of our business
Product 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 them
Information 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 minimum
Suitable 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 expect
Post-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.

5. 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.

6. 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 6
So 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 be
successful was to take a strategic view, that bolting-on a TCF exercise
to an organisation with their own customer values in place for so long
would not work.
We needed to take a holistic view of Tesco Bank’s customers, it’s staff
and it’s ethos.

7. 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 7
What this presented us with in practice was a vast range of
considerations 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?

8. 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 8
The 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.

9. 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?

10. 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.

11. On-going measurement
Page 11
The qual stage reinforced the view we already had that the
quantitative benchmarking and future tracking had to be carefully
structured according to the customer dimensions mentioned if we
were to capture the essence of ‘fairness’.
We therefore conducted a substantial telephone survey of Tesco
Bank 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.

12. 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 12
What this gives us, using dummy data of course, is a range of
possible 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;

13. 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.

14. Staff research
Page 14
However, if TCF is to be truly embedded in any organisation, MI
and the research behind it must be inward as well as outward
looking. Basic understanding of TCF needs to be measured, TCF
training rated, any barriers to its implementation identified and
acted on.
We also need to understand how staff see TCF fitting with the
customer ethos of the parent Tesco brand. Is their a risk that TCF
is just seen as ‘business as usual’ for a brand with such a
strong 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.

15. Event-driven modules
Tesco Pe
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Finance re onal
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plannin
g as Tesco rands
Tesco Bank
ncia l push
big fina
Tesco Personal
Finance wins
30,0000 new
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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.

16. 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 everyone's 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.

17. 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.

18. 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

19. 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

20. 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 20
So across our customers journeys whatever the product we are looking
to better understand how we perform and what they expect.
And in shaping that proposition we always check that it TCF.

21. Creating value for customers
to earn their lifetime loyalty….
By treating them fairly
Andy Glazier
Head of Consensus Research
+44 (0)20 7627 7840
aglazier@consensus-research.com
Roger Ashworth
Head of Customer Insight – Brand & Customer Strategy
Tesco Bank
+44 (0)131 479 1040
Roger.Ashworth@tescobank.com