Silver servants

Despite its name, the UK service economy does not have a history of looking after customers well. To remedy this, many companies are recruiting marketers from packaged goods companies. But do these executives have the requisite skills to turn

Companies in consumer-facing service industries are recruiting packaged goods marketers as they try to bring about a revolution in their businesses, refocusing them on customer service. Abbey National’s announcement last week that it was hiring BT Retail consumer division managing director Angus Porter – who spent 14 years at Mars Confectionery – as “customer propositions director” is part of chief executive Luqman Arnold’s strategy to push the bank “much closer to customers and give them better service, advice and choice” (MW last week). According to the company, Porter has the job of improving significantly “the company’s understanding of its customers” and designing “better propositions, products and services for them”.

Porter clams that at BT Retail he was instrumental in enacting chief executive Pierre Danon’s aim of putting customer service at the heart of the telecoms giant’s offer. Porter says he was responsible for simplifying BT’s tariff structure and improving customer service, though one insider suggests his moves have been “all sizzle and no bacon” – that he has been good at projecting an image of customer focus but the delivery has been lacking.

Customer service has risen up the corporate agenda in recent years as service companies look for new ways to differentiate themselves from their rivals. But for all the talk about focusing on customers, many people believe that, in practice, companies remain mesmerised by the goal of increasing their share of customers’ spending, while the broader considerations of customer relationships are relegated to second place.

Service businesses have been hiring marketers from packaged goods backgrounds for some years now, as they seek to build customer service into their brand offers. But some critics say that a training in strategy and making brand promises may not be the best preparation for the tough business of fulfilling those promises in a service environment. Creating stunning ad campaigns and attractive packaging for products may put a sheen on a company’s customer service offer, but this does not guarantee that the operational side is getting the attention it needs.

“You need marketing people in charge to make sure the brand promise is delivered. But marketers struggle with the operational aspects of the business,” says Jon Kinsey, former managing director of Virgin Energy and British Gas marketing director. He is one of many marketers who have switched from packaged goods marketing – at National Lottery operator Camelot and before that Hasbro – to the service sector. “It is about making something happen as opposed to merely making the packaging work. The individuals capable of that job are relatively rare,” he says.

Covering the court

However, current British Gas marketing director Nick Smith says that marketers need to be both operational and strategic in outlook. “I object to the idea that marketers aren’t operational people – we have a commercial focus on delivering customer returns,” he maintains. “In any organisation or brand that is service-based, every customer contact is make-or-break. Marketing and customer service are two sides of the same coin.” But he says executing this goes far beyond the role of the marketing department, it needs to permeate the whole company. There should be no separation between the product department and customer service delivery – the whole offer needs to be joined up.

According to Neil Woodcock, chairman of customer management consultancy QCi, there are few signs of improvements in the way UK companies treat their customers. On the bright side, he adds: “I do think the customer management that leads to good customer service is beginning to improve. BT and Abbey National are taking the management of customer service seriously and are trying to understand how they can break down the barriers that build up in big organisations.”

He thinks the situation has improved vastly over the past ten years, and that chief executives are taking a hard look at ways to change corporate cultures and improve the focus on the customer.

Advantage no one

While most observers praise Arnold for his plans to increase the Abbey’s focus on customers, they are sceptical as to whether this will really differentiate the bank from its rivals. Many of the Abbey’s high street competitors have recently relaunched with service top of the agenda. Royal Bank of Scotland’s takeover of NatWest has bred a strategy of keeping open and even adding branches and offering customers the opportunity of telephoning either a call centre or their local branch. Lloyds TSB is said finally to be taking the issue of customer service seriously, as is the relaunched Halifax under former Asda executive Andy Hornby. And government regulators are making noises to the effect that treating customers fairly is something financial services companies must concentrate upon.

“Everybody is saying: ‘We are putting the customers at the centre of what we do.’,” says Phil Middleton, head of retail banking at Ernst & Young. “The problem Abbey National faces with this strategy is that all the banks are doing it.”

Research recently undertaken by Ernst & Young shows that 84 per cent of customers are not unhappy with the service they get from their banks. But even those people who are unhappy tend not to complain and do not close their accounts. They often keep their accounts live, but open other accounts at different banks and gradually migrate their custom without their original provider realising until it is too late. Middleton believes Abbey’s strategy is the right one, however, as it should increase the number of the bank’s products each customer buys – though by how much will be down to the execution.

Second service – double fault?

This is not the first time the Abbey has hired a former Mars executive to improve its standing with customers. Sara Weller, who has gone on to become deputy chief executive of Sainsbury’s, spent three years at Abbey as customer marketing director. She, like Porter, was in charge of focusing the bank on customer service. “We are introducing more focus on customer service through all aspects of our operations, including branches, advertising and increased contact with consumers through direct mail,” she said shortly after joining in 1997. She left not long after it became known that the Abbey was considering imposing a charge of &£5 on customers seeking to pay bills through branches.

Companies talk a lot about customer service being at the centre of their offer, though in a lot of cases this is a convenient “positioning” story to tell City investors. Many observers, however, see customer service as a prerequisite in any consumer-facing business – not as something to shout about.

The success of Abbey National in improving its relationships with its customers will be a measure of how far service companies – and in particular the banks – have come in breaking down the barriers between different departments in their organisations. Consumers are waiting for companies to demonstrate that they are paying more than lip-service to customer service.

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