smith+co on
customer experience
Shaun Smith
  • By Shaun Smith
  • Mar 27 2012

Do you love your bank?

For most of us the answer will be a resounding 'No!' Yet there are a few banks that manage to gain the affection of their customers.

We know that trust and affection are key drivers of brand loyalty, so the million‐dollar question is how can that be achieved in a sector where trust and affection are rare? Let’s look at some topical examples and see what lessons we can learn from them. Last week, a London trader by the name of Greg Smith, publically resigned from his employer Goldman Sachs, by writing a letter to the New York Times. In it, he attacked the “toxic” culture of the firm which he claimed lacked any kind of client‐focus treating customers as “Muppets”. Rolling Stone magazine famously branded the bank a “vampire squid” for its single‐minded focus on extracting money from its clients.

The bank has established an image of looking after its own interests rather than the customer’s. As a result of media comments like these, Goldman Sachs has seen its brand tarnished and its CEO allegedly under some pressure to resign. In the same week Satmetrix published its annual Net Promoter Score rankings. This is a survey that measures the extent to which customers are advocates for a brand based on the excellence of the experience they receive. The company that achieved the highest rating of all is USAA, a bank that focuses on the US military. USAA started life in 1922 when 25 army officers clubbed together to insure each other’s cars and today ranks 59th in the Fortune 500 companies in terms of net assets, has a customer base approaching 9 million and the highest levels of customer advocacy in the market. Its values are Service, Loyalty, Honesty, Integrity and its promise is that USAA ‘Stands ready to serve’. One of the conclusions we reached in our most recent book ‘Bold how to be brave in business and win’ is that we believe that the brands that will win in the future are those that put ‘purpose before profit’. They are highly commercial but believe that profit is a result of having a clear reason for being which creates value for society and customers. Profit can never be the purpose in itself because that leads to an attitude that is self‐serving, short‐term and shareholder‐focused. The general malaise in the banking industry can be traced to this same attitude in our view. But perhaps this is about to change. On March 5th 2010 the Financial Services Authority granted Metro Bank the first full‐service banking licence in the UK for over a 100 years. The bank launched with one ‘store’ (it thinks more like a retailer than a banker) grew to four in the first year, and today has eleven stores located across London. Like USAA, it achieves high levels of customer advocacy. It is still tiny in terms of market share but, more importantly, what it is already achieving is ‘mind‐share’ ‐ a brand that is talked about for positive reasons. I recently had the opportunity to interview Anthony Thomson, Metro Banks Chairman and Co‐Founder, to find out what makes the bank different. “The key to our success is our business model and there are three parts to it: The first is having a differentiated model. The second is having a culture, which aligns to the model, and then the third piece is relentless execution. The UK banks would have you believe that price drives everything, and the great British public and press have pretty much fallen for that line. Of course it’s complete nonsense. If you look at any other aspect of your life, price is not the determining factor, value is. We think of ourselves as a retailer, not as a bank. We just happen to retail money, so for us, the point of differentiation is saying everything we do will be about the customer experience, not about rate. It’s all about customer value; service, convenience, transparency, consistency and all the other things that represent value for customers. So whilst the UK banks are competing on rate or price, we compete on the customer experience. We didn’t do any research because if you say to people; ‘would you like a better banking service?’ they say ‘yes’, but their only terms of reference were the existing, not very good, banking models. Our belief is that if you give people a great service they will come to you, they will spend longer with you, they will deposit more money with you. We absolutely are in business to make a profit, but I believe quite passionately that profit should be the by‐product of doing something well. It’s not the reason you go into business. Of course the thing that we are known for is providing dog bowls in the stores. A journalist once asked me, if our point of differentiation is that we provide dog bowls with water and biscuits? I replied, ‘absolutely, we raised ₤75 million to launch a bank, and our only point of differentiation is plastic dog bowls and dog biscuits!’ Of course, the reality is that the bowls are a very small point, but other banks don’t allow people to bring in dogs. What it says to customers is we don’t mind if your dog pees on the floor, or worse, because we care more about you as a customer than we care about our bank. The second part is the culture. It is absolutely essential that the culture be aligned to the business model. We’ve all seen examples where a company says one thing, but the culture is actually dissonant of that. For example, pretty much every bank in the UK says that they want to give great customer service, yet all of their frontline staff are incentivised on sales targets, so up to a third of their income is derived from sales bonuses. It’s quite clear to me, if you incentivise people to sell things guess what they’re going to do? All of our customer‐facing staff are remunerated on customer satisfaction scores, which we measure religiously. None of the customer‐facing staff get a sales bonus, and nobody has a sales target. Guess what, if you incentivise people to give great service that’s what they do, and that’s why our customer satisfaction ratings are currently 94%. But you can only create a great culture with great people. We interviewed 3,500 people for the first 60 customer facing roles. We can teach you to be a banker. We can’t teach you to want to give great customer service, so we recruit for attitude and train for skills. So far this year, we’ve interviewed over 9,000 people and we’ve taken on 1% of them. We are absolutely clear on this, you either get our culture, you buy in to our service ethos, you’re really committed to giving a great customer experience, or you don’t join us. And if you do join us, and we discover that you’re not really committed to it, you won’t last very long. We don’t want ‘fence sitters’. We say to our people, your job is to amaze a customer, and AMAZE stands for, Attend to every detail. Make every wrong right. If you do something wrong, or if you discover something that’s been done wrong, it’s your responsibility to put it right. The second ‘A’ is Ask if you’re not sure. We have a saying, which is it takes one person to say ‘yes’, but it needs two to say ‘no’, so anybody is empowered to say yes to a customer, but if somebody wants to say no, they have to check with their supervisor first. The ‘Z’ stands for Zest. We’re a very high‐energy organisation. The final ‘E’ is for Exceed expectations. Now, if you’re a fairly junior person in a new environment and you’re not sure what to do, you’ve got a very simple checklist. Am I attending to every detail, am I making every wrong right, am I asking if I’m not sure, am I being enthusiastic, am I exceeding my customer’s expectations? The third part of our model is execution. Doing 1,000 things just that bit better every day. So for example, we say that we’re open from eight till eight, Monday to Friday. Actually we are not. We open at 7.50am, because there’s nothing worse than if you’ve double‐parked somewhere and you waiting for the eight o’clock start, and somebody turns up with a set of keys to unlock the door. We always open ten minutes early, so that if you do come at eight o’clock we’re open and ready to deal with you. One of the questions we’re often asked is, why didn’t we buy the bits of Lloyds Bank or RBS that were being sold to accelerate our rate or pace of growth, but our belief is you can’t acquire your way to a better culture. You have to build it one colleague at a time, one store at a time, one customer at a time; it’s slower, but it’s much, much more powerful” So what can we learn from Metro Bank? There are a number of the BOLD principles that we can see reflected in the Metro Bank example:

  1. ‘Keep the main thing the main thing’. You have to have a crystal clear vision of your purpose and business model and drive this through all of your activities ensuring that everything else is aligned with it.
  2. ‘Demonstrate zealous leadership’ Leaders have to ‘walk the talk’ if you are to instill the culture. For example, when I was interviewing Anthony I asked him what the AMAZE acronym stood for and the extent to which it was part of the culture. His answer was to walk me across the building and into a training class for new service people. He asked them to tell me what AMAZE stood for and congratulated them warmly when they did so.
  3. ‘Dramatise the customer experience’. Metro Bank providing dog bowls in the branches is not the reason that people bank there, but it is a hallmark of the brand and a manifestation of their intention to ‘provide unparalleled levels of service and convenience to our customers’. Putting a human face (or perhaps that should be ‘canine’!) on banking is another.
  4. ‘Be in pursuit of WOW’. This is about innovation that surprises and delights customers. Metro Bank provides a ‘Magic Money Machine’ in each store for the convenience of customers and non‐customers alike. You dump all your odd coins into it and it magically sorts them and converts the value into bank notes or credits your account. You can even play an interactive game to guess the value and win a prize.
  5. ‘Create a cult’. Your people are you brand and so it follows that how you recruit them, how you train them and how you remunerate them all have to be consistent with your business model. As Antony said, ‘… if you incentivise people to give great service that’s what they do’. The stronger and more aligned the culture, the more likely it becomes that you will be able to sustain your business model as you grow.

There is no doubt that financial services have to radically re‐think how it operates and the value that the sector brings to society. Fortunately, there are at least two examples of banks that ‘get it’. We can only hope that brands like USAA and Metro Bank will become the norm in the future rather than the exception.