The difficulty of delivering a high and uniform standard of customer service across an organisation as large as Lloyds TSB is mind-boggling.
The retail banking wing of Lloyds TSB offers more than 350 different banking and financial services to 16 million customers through a network of 3,000 branches and offices staffed by 35,000 employees. Only what head of branch services Colin Fisher describes as 'an obsession with customer service' can ensure that customers really come first.
A shortlisted finalist in last year's awards, Lloyds TSB again caught the judges' eyes for the sheer quality of its service excellence programme and some striking customer care initiatives. Seven years ago Lloyds had a very poor reputation for customer service. Today Lloyds TSB is confident that it can be 'first choice for customers by understanding and meeting their needs better than any other competitor'. To leap from customer disgust to customer delight is a remarkable feat. Moreover, the results, says service quality manager Andreas Wasmuht, are far from immediate. 'In the first instance the quest for service quality is an act of faith. It takes some time before the effort which is required feeds through to customers.'
Over the past seven years, Lloyds TSB has built a business model which encompasses all aspects of the customer service challenge. Vision, performance and feedback are the three stages of a continuous improvement loop which Lloyds TSB has applied to all aspects of customer service delivery. Understanding customer needs was the starting point of Lloyds' service excellence journey and the bank now boasts impressive capabilities in segmenting its customers, anticipating their needs and tracking customer perceptions.
Lloyds TSB retail banking customers fall into two specific groups: business and personal. The business category is further segmented into small business and commercial corporate, the personal group into youth and adult. Individual details are stored on Lloyds TSB's extensive database, which enables the overall customer base and individual customer segments to be analysed against a series of variables. These include propensity to purchase, attrition rates (ie taking custom elsewhere), satisfaction levels, key customer service priorities and customer characteristics. The integrated IT network means that staff can access details of any customer wherever they are. This database includes both transactional customer data and relationship details, including correspondence and complaints.
There are specific customer management programmes for key groups of customers: those requiring personal/private banking or asset management as well as new customers and students. There are customer focus groups, informal meetings between staff and customers to discuss local branch issues, a free customer relations phone line, managerial call backs, customer suggestion forms, and market research, including mystery shopping.
Information gathered from more than 2.5 million customer questionnaires sent out over the year is used to identify key customer priorities and provide satisfaction ratings. Specific customer segments, including new customers, former customers and holders of specific products, are surveyed monthly. Feedback is gained by measuring customer satisfaction with specific events in their banking experience: for example, the opening or closing of an account, or an enquiry concerning a new product.
More than 60% of comments from customer questionnaires are compliments.
These most frequently pinpoint the efficiency of staff and their helpfulness in sorting out problems. Recent actions taken in response to customer comments include the introduction of mini-statements through cashpoint machines, changes in opening hours and the provision of a full Saturday banking service. In addition, more than 3,000 customer service meetings between customers and branch staff have been held to date, resulting in improvements such as formal queueing systems and better lighting in ATM lobbies.
Lloyds TSB defines complaints as 'anything customers are uncertain about and have cause to query'. They are tracked through a variety of means, including customer service forms, customer comment cards in all branches, internal customer comment cards in all departments and branches, a free central customer relations telephone line and inserts sent with bank statements.
As part of a Lloyds TSB modular training programme, Delivering Service Excellence, staff are encouraged to find ways of resolving complaints as they arise. They have the authority to make ex-gratia payments of up to £250 or to refund charges. All customers receive a reply to their complaint within 48 hours. Complaints are measured at regional and national levels and monthly reports sent to branches. An operational standards programme provides ongoing measures of around 20 important branch processes. The objective is to reduce the cost of errors and subsequent rework and help staff get it right first time.
Monitoring customer satisfaction and acting on suggestions is key to the bank's aim of encouraging long-term relationships with its chosen customers. Attrition is actively monitored and Lloyds TSB has developed models to allow it to identify changes in customer behaviour which signal an early warning of dissatisfaction. Those customers are then contacted in an attempt to save the relationship.
The bank has also introduced specific programmes aimed at nurturing relationships.
One of these is Aftercare, which builds relationships with new customers through formal reviews and telephone calls, following the opening of a new account. Cross-branch banking ensures that the bank's ever more mobile customers can conduct transactions at any branch.
Ultimately, however, Lloyds TSB believes that satisfying customers is impossible without skilled and satisfied staff. To that end, the bank has embarked on an integrated approach to customer and staff satisfaction needs, based on a programme of communication, training, personal development, appraisal, recognition and measurement. A move towards IIP accreditation is spearheaded by regional executive director Phil Nunnerly. Quarterly reviews and personal development plans link performance feedback to training needs. Rewards at all levels are linked in part to a satisfaction index derived from genuine customer and mystery shopper perception against a number of key service criteria. Up to 15% of staff bonuses is linked to customer satisfaction ratings within individual branches.
When an organisation handles billions of transactions a month, excellence becomes an extraordinary challenge.
Key Business Lessons
- Design questionnaires to gain feedback on specific events: for example, customer experience of opening an account. These supplement feedback gained from more general satisfaction surveys
- Develop monitoring systems to identify changes in behaviour of long-term customers which might signal an early warning of dissatisfaction
- Train staff in complaint-handling procedures and empower them to resolve complaints as they arise
- Link employee reward system to customer satisfaction measures.