Most suppliers of financial services concentrate on competitive pricing; the Woolwich puts the emphasis on quality of service.
Competition for mortgage customers, particularly in today's severely depressed housing market, remains fierce, with an over-supply of mortgage finance. In the savings market the past couple of years in particular have been challenging - to say the least. Building societies are not only competing against each other but also against the Government with its National Savings products and privatisations - as well as Unit Trusts and PEPs.
There is a tendency within the financial services market for organisations to compete with one another on price. Offering the highest investment rates and the lowest mortgage rates has become the order of the day and yet such a strategy has a number of very serious drawbacks. First, price competition serves only to drive down margins, benefitting no one. Second, financial services products differentiated solely on price, provide only short-lived competitive advantages until another competitor in the market is prepared to offer a savings product paying higher rates or a mortgage product with an even larger discount. Price can be easily copied, provided that other costs are effectively minimised, and therefore cannot bring sustainable competitive advantage.
The Woolwich Building Society recognises the basic requirement of offering a competitive range of products and services to its customers. However, the Society believes that in the long term, the only sustainable market advantage will come through differentiation by quality and standard of service. The Woolwich has a reputation for unquestionable financial strength, trust and fair dealing with its customers, which has grown with achievements over its long history.
As it increases in size and diversifies, the task of protecting and enhancing the Society's reputation through quality of service becomes both more difficult but more important. It is for this reason that the Society decided to launch its Values programme a couple of years ago.
Woolwich Values are the guiding beliefs which the Society uses to achieve its corporate goals. The Values are not new. Indeed, they are the principles which have governed the development of the Society since its foundation in 1847. What is new is that these principles have been defined and a programme developed to focus efforts on achieving three corporate goals: quality of service, innovation and organisational effectiveness.
The programme follows a number of employee communications and training initiatives. Any successful organisation does not and cannot work by coercion. It has to achieve its objectives through a group of individuals working together within a framework of shared values, each committed to a central core of beliefs about work, the organisation and its customers. These beliefs and principles have been distilled into a single vision statement: "The Woolwich will be the best there is for quality of service, for innovation in service and for organisational effectiveness."
In addition to summarising these values and beliefs in a single vision statement, the Society has set itself three major objectives.
First, it aims to be the best by reputation in the financial services sector through quality of service. This means consistently exceeding customer expectations and concentrating efforts on making improvements in areas where a real impact can be made on customers. Customer service standards have been introduced in branches, which are designed to meet customers' real needs and make customer contact a beneficial experience.
Second, it aims to be the pacesetter in introducing new products and services. This does not necessarily mean being consistently first into the market with a new product but it does mean being constantly in touch with customers, providing products which are in line with their needs.
Third, the aim is to be a leaner, fitter organisation with highly skilled and motivated management and staff. Being organisationally effective is essential for the Society.
It is vitally important for the future of the Woolwich that every single member of staff is committed to these values and converts them into day-to-day reality. Staff are aware that they have control over their work and are encouraged to adapt things if they are not working correctly, tackling the issues themselves and changing the processes.
So far, there are numerous examples of staff working under the Values umbrella and changing working practices to improve quality of service through innovation and organisational effectiveness. In isolation, none of the changes that are being brought about are huge. It could be as simple as a member of staff questioning why a piece of paper is sent from one part of the organisation to another. What is clear, though, is that all of the small changes that are coming about are helping to streamline processes, minimise costs, manage change and above all, improve service.
The Values programme has now been running for two years and the benefits are becoming apparent. Regular surveys carried out by the Society show that customers see the quality of service improving and crucially the Woolwich is exceeding its market share of business during these particularly tough times without overly-aggressive pricing. The challenge now is to continue to find practical ways which turn these goals from laudable statements into reality and thus continue towards the objective of getting more customers.