customer experience management at the royal bank of
TRANSCRIPT
Customer Experience Management at the
Royal Bank of Scotland RBS: Delivering Helpful Banking
This case was prepared by Dr Stan Maklan Cranfield School of Management), Dr Paolo Antonetti (Warwick Business School) and contributors from The Royal Bank of Scotland in 2013. The case is intended as a basis for class discussion rather than to illustrate either effective or ineffective handling of management situations. The case is compiled from the authors’ interviews, material provided by RBS and material in the public domain. © Copyright Cranfield School of Management, March 2013. All rights reserved. No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.
Introduction
As Steve Whitty, Head of Customer Experience & SDMC at
The Royal Bank of Scotland Group (RBS) prepares for his
next meeting with the Group’s CEO Stephen Hester, he
realises that this meeting will be crucial for the customer
experience improvement programme whose development he
led for the past two years. This presentation must highlight its
successes, but more importantly, it must ensure its future
within RBS. Should his central group continue to lead it?
Should the project be transferred to the Division Channel or
Product Management teams? If so, how will RBS ensure its
continued development? A failure to establish proper
governance of customer experience could set the clock back
for the Bank and over time could undo the accomplishments
that the team has achieved over the last two years.
DCM/03.13 /SM
Demand Chain Management
Distributed by The Case Centre North America Rest of the worldwww.thecasecentre.org t +1 781 239 5884 t +44 (0)1234 750903All rights reserved f +1 781 239 5885 f +44 (0)1234 751125
e [email protected] e [email protected] centre
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Customer Experience Management at the Royal Bank of Scotland (RBS):
delivering Helpful Banking
Introduction
As Steve Whitty, Head of Customer Experience & SDMC at The Royal Bank of
Scotland Group (RBS) prepares for his next meeting with the Group’s CEO Stephen
Hester, he realises that this meeting will be crucial for the customer experience
improvement programme that he has led in development for the past two years. This
presentation must highlight its successes against a backdrop of customer centricity,
but more importantly, it must ensure its future within RBS. Should his central group
continue to lead it? Should the project be transferred to the Division Product or
Channel Management teams? If so, how will RBS ensure its continued development?
A failure to establish proper governance of customer experience could set the clock
back for the Bank and over time could undo the accomplishments that the 13-strong
team has achieved over the last two years.
RBS and the financial crisis of 2008
RBS has operations in Europe, the USA and Asia, serving more than 30 million
customers worldwide and employing more than 140,000 people1. As of 2012 the Bank
has seven different divisions: UK Retail under the Nat West and RBS brands, UK
Corporate Banking, US Retail and Commercial Banking, Ulster Bank, International
Investment Banking and Wealth Management services. The UK Retail Division
serves 15 million retail customers including both individuals and small-and-medium-
sized enterprises. In the US, RBS owns Citizens Financial Group, America’s 8th
largest bank.
RBS grew during the financial services boom through large acquisitions, notably the
NatWest Bank (£22 billion in 2000), and much of the Dutch Bank ABN-AMRO in
2007 (for a record figure of £49 billion). At its peak, the Bank had a balance sheet
valued at more than £2 trillion, surpassing the UK’s annual GDP (BBC News, 2012).
1 Information available at www.rbs.com
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The global financial upheaval of 2007-2008 engulfed the Bank in a crisis, and
bankruptcy was averted only with a £45 billion injection of British taxpayers’ funds
(Wilson, 2012) in one of the most dramatic 24 hours of British financial history,
culminating in the announcement of a rescue plan by the then British Prime Minister
Gordon Brown on 13th October 2008. The UK Government now controls 82% of
RBS’s shares (Peston, 2012).
With the injection of tax payers’ money, the Bank was forced to replace its
discredited leader and appointed Stephen Hester as its new CEO. The first immediate
goal for the new leader was to restore the balance sheet of the business and make the
Bank safer. Despite the difficult economic environment, RBS improved its position
by focusing on core businesses and divesting over £700 billion in assets. Despite signs
of good progress over the last three years “there is plenty more to do” (RBS Group
Annual Report 2011, p. 2). With acquisition no longer a possibility, and growth
imperative to generate profit with which to repay taxpayers, the Bank has determined
that “the new RBS will be known for its unswerving focus on customers” (RBS
Group Annual Report 2011, p. 4).
Our future is not about us, it is about our customers. Serving them well is the key to being successful ourselves[…] It means obsessing about what is right for the customer in everything we do. Done well, it will mean asking some hard questions that may have even harder answers. But it will be worth it.
Stephen Hester, RBS Group Chief Executive, April 2013
This is especially important for UK Retail, considered as a ‘core’ division in the new
RBS and one of the few to remain profitable through the crisis (RBS Annual Reports
2009, 2010 and 2011).
Helpful banking and the ‘Customer Charter’
In 2010 Brian Hartzer, CEO Natwest and RBS retail, surprised even his own
management team by making a very public commitment to a bold new Customer
Charter (Whitehead, 2010) before a fully developed delivery plan was signed off. The
announcement of the Charter represented a highly visible commitment to customers to
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be the UK’s “helpful bank2” designed to force a complete transformation of the
customers’ experience of the Retail Bank3. The Charter promises increased
accessibility to services, improved ease of use and a higher level of transparency in all
the relevant interactions between the bank and its customers (Appendix A for more
details). Figure 1 shows some of the achievements of the Customer Charter in 2011.
Figure 1: The highlights of the 2011 Customer Charter report4
To operationalize this strategy, RBS needed to understand how customers interpret
and recognise “helpful banking” and reengineer almost all its core service processes
to deliver it. As of 2010 however, despite collecting information in various ways
through market research studies conducted throughout the Bank at different levels,
there was no unified, consistent and replicable research approach to understanding
customer experience, let alone improving it. Moreover, Marketing’s efforts to
improve customer service were often disconnected from the service delivery
processes of the Bank, so that those creating the customer promise were not
influencing those in charge of delivering it effectively.
2 An example of TV advert on Helpful Banking can be seen at the following link: http://www.youtube.com/watch?v=u41g7YtWCV8 3 Details are available at: http://www.natwest.com/global/customer-charter.ashx 4 See the full report at: http://www.natwest.com/Downloads/global_options/charter/NatWest_Our_Charter_2011_full_report.pdf
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Customer Experience within Strategy and Architecture
RBS’s board decided to take action to improve the system of service experience
monitoring and the bank’s service delivery. The overall task was assigned to the
Strategy & Architecture department (S&A), headed by Chief Architect Kevin Hanley.
S&A is a group function which operates like an internal consultancy to help the
businesses within the bank make better and more informed decisions. At the board, it
was agreed that S&A would develop a programme to monitor customer experience
and improve service management. Steve Whitty was chosen to head this new
programme which was called Customer Experience & Service Definition
Measurement and Costing (SDMC). Figure 2 shows RBS’s organisational chart to
illustrate where S&A is located within the Bank.
Figure 2: RBS’ organisational chart
The decision to recruit Steve, rather than using existing resources within RBS’s
Marketing division, had specific motivations. Steve’s background is not in marketing:
he is a chartered engineer and 6 sigma Master Black-belt who had designed and built
aircraft wings prior to joining the Bank. His background was in “lean”, project
Group board: CEO Stephen
Hester Executive & management committees
Business Services
Strategy & Architecture
UK Personal Banking
Products & Marketing
Credit cards & current accounts
Mortgages
Savings and investments
Marketing
Customer analytics
Operations
Communications
Change and business services
Consumer Distribution
Finance
HR
UK Corporate Banking
US Retail and Commercial
Banking
Direct Line Group
Ulster Bank
Investment Banking
Wealth management
CE & SDMC
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management and business processes re-engineering. SDMC required integrating
customer insight with an understanding of lean service delivery – cost, operation and
change management.
We realised that the language of the industry and the language of the
organisation is increasingly talking a good story about being customer
centric […] I believe there are very few organisations that are doing
something about it and can point to programmes and work in this area.
Kevin Hanley, Chief Architect, October 2012
S&A quickly saw the link between the Charter and the notion of customer experience.
If you don’t understand the customer experience and how the different
moments of truth are perceived by consumers, you cannot really become
a ‘helpful’ bank. If you want to help customers you need to understand
their customer journey.
Stephen Whitty, Head of Customer Experience & SDMC, October 2012
However when the Customer Charter was announced, the Bank realised that it needed
to understand better how customers experienced its services and develop a systematic
framework for their improvement.
As part of our lean work in operations – things like customer centres
operations, payment processing and similar – we saw that the group was
actually underinvested in terms of its understanding of the customer and
customer experience. Quality of our research was poor, dissemination to
frontline departments, so that staff could understand the key indicators
from the perspective of the customer, was negligible. This is where
Steve’s work started to try and give a better understanding of the
customer experience to the group.
Peter Norris, Director Group Lean and Service Management, October
2012
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Customer Experience and SDMC
Matching an understanding of how the customer appreciates each service (e.g.
opening a current account, making a complaint and finding a solution, using the
account for bank transfers, etc.) with the full costs to deliver it, would help allocate
the Bank’s resources to critical services.
If you don’t know how much it costs to serve your customers you cannot
assess the return on any potential investment and so you are less willing
to make any improvement. So, being able to determine the cost is really
important. The project started with the desire to measure jointly what
matters for the customer, how good we are and how much it costs.
Customers might think we are good at something but it doesn’t matter if
we are spending too much on it […] so you need to look at these
together.
Peter Norris
Customer experience management kicked off in collaboration with the UK Retail
Division, starting with customers’ experience of RBS’ personal current accounts
across all channels and end-to-end services and then extended to the other products:
mortgages, saving, credit cards and then loans. To date the process has been
implemented on the whole division (revenue in 2011 approximately £6,666 million).
Each set of experiences was addressed in a four-step programme lasting
approximately six months from start to final recommendations.
The four pillars of the process are summarised in Figure 3. The SDMC project
comprised 1) the development of a service definition from the point of view of the
consumer; 2) a service-based costing analysis that would allow the identification of
cost-to-serve across the different processes; 3) the analysis of the customer journey to
detect the critical touchpoints in customer interactions; 4) the review of the original
commitments (RBS’s customer promise) in order to address potential gaps between
what the Bank promises and customers expect.
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Figure 3: Key components of the SDMC project
Once the four analytical phases are completed, RBS will be able to implement
interventions in three specific areas that include 1) a more effective allocation of
funds, 2) plan changes in the delivery of the service to address unmet customer needs,
3) review the customer commitments to improve performance in areas that are most
important for customers. A detailed illustration of this process is presented below,
summarising the implementation of SDMC for an example product.
STEP 1: SERVICE DEFINITION The first step, service definition, maps the customers’ experience end to end: from
searching for alternative offers, applying for and receiving the card, using the service,
handling enquiries or complaints to the closure of the service. Traditionally each
service delivery group addressed its areas of competence and the customers’
experience reflected the independent service policies of various RBS product groups
and business process owners. SDMC initiated the first definition of service as
experienced by customers across all customer touchpoints with the Bank, through a
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series of workshops with UK Retail product managers and RBS’ internal service
providers.
The relatively small central experience team becomes a larger team
working on the SDMC project – They will all meet together, Marketing,
Operations, etc., and agree the list of services starting from the
perspective of the customer and how the customer sees them. This is an
exercise to break internal departmental barriers and adopt the
perspective of the customer.
Peter Norris
Table 1 offers an illustrative summary of the workshop output where the
customer journey is mapped with three levels down to 59 specific “services”.
At the highest level, the Bank identified three distinct phases: purchase the
product, administer the account and close the account. At a more detailed level
it is possible to differentiate, for example, between services that are initiated by
the bank and services that are initiated by the customer. SDMC reasoned that
customers’ expectations would be very different in these two cases. Finally, the
level of detailed services includes the individual activities that a function
within RBS will perform. For each product (saving accounts, mortgages, etc.)
SDMC developed, working closely with partners within the UK Retail
division, a process map with similar characteristics to that illustrated in Table 1
for loans.
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Table 1:An Excerpt from the output of the service definition phase for the
credit cards business
The service profile allows these various and hitherto loosely connected internal
service providers to see how their activity fits within an overall customer experience.
The exercise heightened awareness of complexity of managing customer experience
and how this concept includes almost any interaction between the customer and the
company.
We define customer experience pretty broadly. The expectations of our
customers are created before they interact with us so we start with our
reputation and advertising […] anything that influences customers’
behaviour towards or away from us. It obviously includes what we say,
what we promise … our brand, values, the product offerings, the
channels we invest in and the experience of dealing with us in general.
From becoming a customer all the way through to how we encourage or
allow or make easy for them to stay with us or making changes to their
activities.
Moray McDonald, Head of Mortgages
9 Grouped Services
Queries & Complaints (Cost of non-conformance)
Purchase Credit Card Administer My Account Close my account
Research Credit Card
Options
Open Account
Assess Customer
Needs
1.Review product
marketing /
xxxxx
xxxxx
xxxxx
xxxxx
6.Request / receive
Upgrade to
7.Complete application
xxxxx
xxxxx
Estate Management
Close account
Make transactions
Bank Initiated Service Customer Initiated Service Fraud &
Debt Management
18.Request balance transfer
19.Make purchase with
card
xxxxx
xxxxx
22.Make one-off payment to
account
xxxxx
24.Check balance
25.Check interest rate
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
40.Enrol/ re-enrol in a new
channel
41.Request statement
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx)
xxxxx
xxxxx
xxxxx
48.Make a complaint
49.Receive marketing
communication
xxxxx
xxxxx
xxxxx
53.Receive payment
reminder (non
xxxxx
xxxxx
56.Receive replacement
Card (on
xxxxx
xxxxx
xxxxx
xxxxx
61.Receive response to complaint
xxxxx
63.Raise concerns
about making
64.Receive support on debt
xxxxx
xxxxx
67.Receive contact
for suspected
xxxxx
xxxxx
70.Report theft of
Card
xxxxx
72.Account closure
73.Receive retention
communication
xxxxx
75.Notify Bank of
deceased
xxxxx
10.Receive confirmation of application
11.Receive Credit Card
12. Receive PIN
xxxxx
xxxxx
xxxxx
xxxxx
17.Sign up for text alerts
xxxxx
27.Change Address
xxxxx
Detailed Services
I Want it Now
I want to use my account
My circumstances have changed
Close my account
Make a complaint
3 High-Level
services
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When SDMC, for the first time, gathered all the customer related data the Bank had from its operational systems and customer research, it found that its data focused on product sales rather than in life customer experience.
We really did not have a real end-to-end picture of the customer
experience. The data was high level and all about sales, customer
acquisition and products. Our measurement models were fragmented
hence we were looking at experience inconsistently across our products
and services. In mortgages alone, we looked at 27 different customers
surveys that cost us a lot to maintain. Our methodology ends the
fragmentation and we gather a much more complete picture of the
customer experience at about 5% of the cost.
Steve Whitty Head of Customer Experience & SDMC
STEP 2: SERVICE-BASED COSTING
Identifying all the costs associated with delivering each of the 90 credit card detailed
services represented a significant challenge because the Bank’s accounting systems do
not accumulate costs by customer-defined service. A full 50% of the team’s resources
were allocated to working with cost data to make the necessary calculations. This
exercise made visible large costs hidden from those making decisions about customer
management. Most discussions of customer experience management in journals fail to
address the issue of cost-to-serve thoroughly. Table 2 presents an example of cost-to-
serve analysis in the case of credit cards. This phase assigns a cost to each service
activity that had been identified in the service definition process. The analysis reveals
that administering an account generates almost all of the costs associated with the
credit card business. At a more detailed level, managing transactions and dealing with
customer initiated services are the two most expensive activities requiring around a
quarter and a fifth respectively of the credit card budget for 2011.
Table 2: The output of the cost-to-serve analysis with fictitious data
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At the same time, analysing the data at a macro level, shows that the credit card
market is relatively inexpensive to manage compared to other areas of the division. In
fact, it requires just above a tenth of the costs of the whole division.
STEP 3: CUSTOMER JOURNEY
The third step uses research to map the customer journey with RBS to identify the
interactions that have a significant impact on customer experience (i.e. Moments of
Truth - MOTs). Rather than relying on one single measure, RBS adopted a nuanced
approach based on a range of measures and a number of different research techniques.
In addition to the widely-used indicators of Customer Satisfaction and the Net
Promoter Score5 (NPS), RBS measures customers’ perceived effort (emotional,
physical, mental) as a proxy for the customer’s cost of complying with each RBS
service. This generates a view of where the customer expends most effort and the
degree to which he or she is satisfied with the service. Whilst the data gathering is
conducted by external market research agencies, all the analysis is conducted
internally by SDMC staff within the S&A division.
We felt that analysing all the data internally was the best solution. It
allowed us to develop analytical skills that could be replicated across the
business. It would also make sure that customer experience is analysed
within the broader business context and the understanding of cost-to-
serve and service provision. External providers cannot offer this type of
analysis.
Stephen Whitty, Head of Customer Experience, October 2012
There are three key dimensions in the consumer research implemented by the Bank.
First, SDMC determines all customer journeys that relate to the different products.
These customer journeys are standardised across each product as open, close,
administration, transaction, renewal and represent a set of interactions between the
company and the customer focused on a specific customer need or requirement.
Customer journeys and the MOTs were identified through qualitative and quantitative
5 For more details on the Net Promoter Score see Reichheld, 2003.
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studies conducted for each product category within the UK Retail division. MOTs are
judged to have the strongest impact on customer experience. The research allowed
SDMC to create a list of Customer Journeys and the related MOTs. For each customer
journey the Bank can also identify the most relevant channel. An generic example of
this analysis in the case of a credit card is presented below.
Table 3: Generic Customer journeys and MOTs
Building on the service process map (step one), SDMC created clear diagnostics for
each product based upon the integration of 1) customer journeys, 2) the service
profile, and 3) how the Bank performs at each MOT. The result is a diagnostic tool
indicating whether consumers are satisfied with current service delivery and which
areas are improvement priorities. Table 4 below illustrates one such example in the
case of credit cards. A green coloured box indicates that at least 80% of customers are
very satisfied with the service. RBS’s research suggests that this benchmark
represents good performance within retail banking. Results show that, at the level of
detailed service, customers are satisfied with their ability to make a purchase,
withdraw cash (in the ‘make transaction’ category) and change their details (within
the ‘customer initiated service’ category). A red box indicates poor performance (60%
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or less of customers are satisfied). Many customer initiated services, especially
customer enquiries, are not meeting customers’ expectations. Orange boxes represent
61% to 80% of customers are satisfied. The blue boxes have not been assessed
because they appear not critical for customers (i.e. they are not included within
MOTs).
Table 4: Outcome of customer experience research
For each business, SDMC helped Product Category directors build a table similar to
the one above, with detailed information on the performance of each service
determined at the first phase of process mapping.
With a complete picture of services delivered (as perceived by customers), their cost
and customers’ appreciation of each, RBS has the data it needs to determine its
overall performance. Such analysis is based on the ability of pulling together all the
information produced at the three steps discussed above and produce very powerful
diagnostic tables (Table 5). The product performed poorly against the Banks three
9 Grouped Services
Queries & Complaints (Cost of non-conformance)
Purchase Credit Card Administer My Account Close my account
Research Credit Card
Options
Open Account
Assess Customer
Needs
1.Review product
marketing /
xxxxx
xxxxx
xxxxx
xxxxx
6.Request / receive
Upgrade to
7.Complete application
xxxxx
xxxxx
Estate Management
Close account
Make transactions
Bank Initiated Service Customer Initiated Service Fraud &
Debt Management
18.Request balance transfer
19.Make purchase with
card
xxxxx
xxxxx
22.Make one-off payment to
account
xxxxx
24.Check balance
25.Check interest rate
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx
40.Enrol/ re-enrol in a new
channel
41.Request statement
xxxxx
xxxxx
xxxxx
xxxxx
xxxxx)
xxxxx
xxxxx
xxxxx
48.Make a complaint
49.Receive marketing
communication
xxxxx
xxxxx
xxxxx
53.Receive payment
reminder (non
xxxxx
xxxxx
56.Receive replacement
Card (on
xxxxx
xxxxx
xxxxx
xxxxx
61.Receive response to complaint
xxxxx
63.Raise concerns
about making
64.Receive support on debt
xxxxx
xxxxx
67.Receive contact
for suspected
xxxxx
xxxxx
70.Report theft of
Card
xxxxx
72.Account closure
73.Receive retention
communication
xxxxx
75.Notify Bank of
deceased
xxxxx
10.Receive confirmation of application
11.Receive Credit Card
12. Receive PIN
xxxxx
xxxxx
xxxxx
xxxxx
17.Sign up for text alerts
xxxxx
27.Change Address
xxxxx
Detailed Services
I Want it Now
I want to use my account
My circumstances have changed
Close my account
Make a complaint
3 High-Level
services
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customer-based indicators in many services: satisfaction, NPS and customer perceived
effort. Analysing customers’ feedback together with the cost-to-serve analysis, can
offer more interesting insights. MoT 6 is a particularly weak area of the service
delivery with only around half of the customers satisfied and a high level of perceived
effort. However this might be partially due to an underinvestment in this area. Less
than 5% of the budget is focused in this area, a relatively small amount of funds when
compared with other areas of the customer journey.
Table 5: Illustrative summary of customer experience analysis using fictitious data
These tables have been produced for all the products within the UK Retail Division
and they have been welcomed by the Category directors for the simplicity of its
presentation and the granularity of the analysis, allowing managers to focus
immediately on rectifying problems. The diagnostic tool does not simply
communicate that a customer need is not satisfied; it locates the function responsible
for the service provision. The table above condenses a lot of information in a
straightforward format.
75 74 86 76 56 40
20 12 10 ‐5 4 ‐25
20 68 64 11 35 65
Cost £x m £75 m £60 m £180 m £11 m £0.5m
CSAT
NPS
Effort
I Wantit Now
I WantTo use my card
I Want toUnderstand Something
My Circumstances have Changed
Make a Complaint
I Want toClose my Account
75 74 86 76 56 40
20 12 10 ‐5 4 ‐25
20 68 64 11 35 65
Cost £x m £75 m £60 m £180 m £11 m £0.5m
CSAT
NPS
Effort
I Wantit Now
I WantTo use my card
I Want toUnderstand Something
My Circumstances have Changed
Make a Complaint
I Want toClose my Account
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STEP 4: CUSTOMER COMMITMENTS GAP ANALYSIS
Once all the insights from SDMC are gathered, the Bank can compare its performance
in relation to the commitments made to customers publicly. The research team often
found a misalignment between what customers consider important and what RBS is
promising. The identification of gaps in how the commitments are designed can be in
itself a tool to improve the customer experience. For example, in the credit card
market, RBS did not make any commitment in two areas that are very important for
customer experience. These are the possibility to ask information about fees and the
ability to reply quickly and effectively to complaints. At the same time, on the
dimensions of the customer experience that are covered by existing public
commitments, the Bank performs well. A comparison between the current
commitments and the results of the customer experience study aligns RBS’s offer to
what really matters for its customers. For example, rather than investing more in
complaint handling, performance could be improved by simply making explicit
commitments on this dimension of the customer journey which, as Table 5 shows, is
critical.
ANALYSIS OF CUSTOMER EXPERIENCE AND CHANGE INTERVENTIONS
Once all the information on customer experience has been collected, RBS can allocate
resources more effectively by seeking efficiencies in areas that are not important to
customers whilst investing more on key MOTs where it underperforms. For example
in the case of credit cards RBS is spending less than 10% of the total budget for this
business on dimensions of service such as ‘Research credit card options’ and ‘Assess
customer needs’ which are not important to the customer experience. At the same
time the Bank spends a tiny amount of its budget on complaint handling which is both
critical and underperforming according to customer research. Service specifications
and other elements of the delivery can also be changed to meet customer needs. Table
4 shows that there are areas of dissatisfaction both in relation to the opening and
closing of the account. More detailed analysis can suggest specific procedural changes
that will address customers’ concerns in this area. Finally the Bank can constantly
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review its commitments to ensure that they are designed to drive a better customer
experience.
In the past marketing decisions would have been based on a more casual approach and
sometimes left to individual managers’ feelings or beliefs about what was needed.
Now the bank has a structured tool that it is applying across its Retail business and
ready to extend further.
Strategic Findings Generated by the SDMC Programme
Once this process was implemented across the whole division, a number of key
findings common across multiple products emerged which presented a true customer
centric perspective. The most important conclusion reached was that RBS was not yet
delivering fully against its promise of being a ‘helpful bank’. Two issues appeared as
critical. The first was the observation made by SDMC the Bank deals with customer
inconsistently and focusing on its own sales pipeline rather than the customer’s
experience of the Bank end-to-end. NPS deteriorates over time, becoming negative
for customers that have stayed with the Bank for more than two years and NPS
deteriorates with increased product portfolio (see Figure 2). SDMC speculates that the
longer a customer stays with any service provider, or accesses a broader range of
services, it creates more chances for something to go wrong. However this
counterintuitive insight remains alarming, especially for a company that bases its
growth strategy on customer retention and development.
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Figure 4: The NPS for RBS’s product A over time using fictitious data
Another important strategic theme emerges from the SDMC. Findings demonstrate
that in certain cases customers are dissatisfied with the service provided even though
the quality of the experience is broadly satisfactory. This is because sometimes the
problem in the service delivery is with the outcome obtained rather than the quality of
the interaction. The customer experience literature suggests different interpretations of
the relationship between outcomes and experience. Some argue that the outcomes
obtained through a service exchange are an integral part of the evaluation of the
experience (Klaus and Maklan, 2012). Others maintain that the outcome is part of the
value-in-use customers obtain from the interaction with a service provider
(Macdonald et al., 2011). RBS adopts a different view and considers the outcome of a
service as the objective element of service provision that relates to the achievement of
consumers’ goals. On the other hand the experience is the softer side of the interaction
and the quality of support shown by RBS’s staff6. For example, if the customer wants
to open a new account, the outcome will be the ability to complete the relevant
processes to make the account operational and the experience will relate to the
feelings experienced in the process and the effort required to obtain the desired goal.
6 RBS’s differentiation between outcomes and experience is inspired by the work of Johnston et al., 2012.
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Research shows that staff are perceived as helpful and friendly but the basics of the
service are not always up to the standards customers expect. In several areas of
banking customers are not satisfied with the ability of the Bank to answer quickly to
complaints and getting things right first time. Even though scores on trust and
friendliness are high, analyses show that these are less important in driving the overall
satisfaction and NPS scores.
SDMC now has the ability to identify the real cost of acquiring a new personal current
account customer rather than rely on homilies from management journals. For RBS, it
is several times higher than the cost of servicing an existing customer. Applying
similar insights across the whole division, the Bank found potential savings for more
than £100 million that can be generated by a reduction in attrition.
“We looked at best in class companies in terms of attrition and the impact if
RBS could retain more customers. By focussing on customer journeys and
MoT performance we were able to understand income uplift by moving
detractors back to neutral and retaining more customers
By focusing on these key service interactions, there was scope for a
substantial reduction in customer attrition which we estimated would
generate £170 m incremental revenue per annum across all products”
Stephen Whitty Head of Customer Experience & SDMC October 2012
The programme is also contributing to the Bank’s channel and pricing strategies:
experience research illustrates that improvements in this domain are certainly
demanded by customers. The level of effort required to open and manage an account
online is too high and most customers need to use three different log-in details if they
access the service in different ways. Sometimes customers are directed to the online
channels that are both low cost and create higher satisfaction; however few existing
processes promote this channel. Even in terms of customer acquisition, the analysis
illustrates that activities are run simultaneously on many different websites, without a
clear underlining strategy. S&A is now advocating, on the basis of SDMC work, the
development of a more systematic channel management strategy aimed at maximising
potential reductions in cost and reaping important benefits in terms of customer
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satisfaction and reduced effort for users. Equally, Finance is using the data on
customer experience to price channel costs more accurately. The loan cost models
have been appropriately updated and this has driven changes to loan pricing that
reflects more accurately the cost to serve in various channel combinations.
“The C&CI e2e cost information is the best we have to inform our product
profitability model and could have significant impact on our product propositions in
future”
Fiona Davis CFO UK Retail & Wealth
An even more complex challenge is to change the internal structure of the division
UK Retail so that the roles and objectives that have a common impact on the customer
experience are aligned. At the moment, although there are managers formally
responsible for customer experience, the internal structure makes for complex and
distributed ownership where systematic intervention is more difficult to design,
implement and monitor.
I think we have an organizational design that would say that I own it
[customer experience] but I don’t think that we have the structures that
allow people to be accountable for that ownership. I think we have
lacked the ability to create a unified vision and this is where the SDMC
work has been useful […] there has been a lot of ad hockery in the past
to try and fix specific problems with a brand or some aspects of the
customer experience. We have lacked a way to give ourselves a set of
guiding priorities that would inform people on what is important and
what is not important.
Moray McDonald, Head of Mortgages
The decision of the board is now to keep driving forward the process by maintaining
the attention on customer experience across the retail banking businesses. For this
reason Steve has been more recently working with the American Retail operations of
RBS to ensure the implementation of a similar process in the US market. In general
the board believes that this process will be able to show the benefits of a focus on
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customer experience by bringing increases in revenue and profits much needed to the
Bank.
Outcomes of the SDMC work
After two years of working with SDMC, UK Retail has identified several
opportunities to both save money whilst improving customer experience. Like most
banks, RBS offered new current account customers a welcome pack: a weighty 0.6
Kg tome containing all relevant information about the Bank and its services. RBS
found that the welcome pack was not seen as “welcoming” by customers and that
those who received it had a worse reaction (in terms of Customer Satisfaction) than
those who were rejected for an account altogether. This insight led to the simple
decision of replacing the weighty paper welcome pack (with savings worth several
million pounds) in favour of digitally available terms and conditions that could be
accessed on demand and searched electronically.
In the case of mortgages, SDMC found that half of the calls from customers were
checking the status of an application. Customers can now track their mortgage
through an application tracking system and this increased customer satisfaction
without any cost increase for the Bank. Overall, the new streamlined “on boarding”
customer journey has generated an incremental £50 Million in new business and
increased RBS market share commensurately by looking at re-engineering Moments
of Truth.
The SDMC initiated experience improvement project has identified significant cost
savings through efficiencies and improvements in process design. These are savings
exclusively due to the elimination of inefficiencies in the process or through the
elimination of activities that were not required (and sometimes even disliked) by
customers. Even more can be generated by improvements in customer satisfaction.
Increasing customer experience on specific MOTs, the bank can expect to improve its
performance on the NPS. Internal estimates predict that by focussing on the 50 critical
moments of truth across products and channels will lead to an increase in revenue of
almost £200 million. The table below offers a summary of the actions planned by the
Bank across different divisions. It also shows which services are being targeted to
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obtain an improvement in Customer Satisfaction and NPS that is expected to translate
into higher revenue.
“SDMC is at the heart of a customer centric business services and it has the power to
change the bank”
Ron Teerlink, Group Chief Administrative Officer
Table 6: Illustrative outcomes of benefits identified by SDMC to date –
Personal current accounts
Credit cards Saving accounts Mortgages
Cost saving opportunities
£10 - 20 m £20 - 30 m >£5 m -
Revenue increase from NPS improvement
£50-70 m >£40 m <£10 m £40-65 m
Customer Experience Management Lessons Learnt at RBS and Future Direction
Experience tracking and management is now an established practice within the Retail
Division and ready for introduction to the Corporate, International Banking Divisions
and the US bank. One of the issues open for the debate within the organization is how
the governance of customer experience should be arranged. SDMC started as a
relatively small central programme with a bespoke team built for purpose. How to
ensure that the tools and approaches embed in marketing practice throughout the
Bank? Does it still require a central group to act as a catalyst of change and source of
expertise, or are the practices sufficiently evolved to be embedded in each business
unit? How can the Bank ensure best practice continues to be shared and enhanced?
What is the extent of experience management’s remit? Is it merely a consumer
marketing phenomenon or might it improve the performance of commercial banking
divisions? How do the lessons learnt from the programme inform this discussion?
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LESSON ONE: BUILDING SUPPORT FOR EXPERIENCE MANAGEMENT
Despite common wisdom that changes of this magnitude must come from the top with
an activist CEO pushing the agenda, RBS’s customer experience management
programme was the result largely of middle management initiatives focused around
the central Strategy & Architecture group. Undoubtedly the Customer Charter created
momentum and an immediate requirement for a systematic response by UK Retail
managers, however, the design and implementation of SDMC was led by a team of
experts in operations and research working with product marketing teams. When
marketers had made similar initiatives in the past, they failed to engage the service
providers or embrace the detailed cost analysis generated by accountants and
operations experts. There are many at RBS that feel SDMC team has provided a
necessary framework for assuring ‘helpful banking’. Initially, UK Retail looked at the
central business team with suspicion.
From the people that got involved in the project we got consistently
positive feedback […] when people actually realised that we were
working on a project that was about customers and service and
collaboration across departments to come collectively around a common
goal; it was positive and people got involved and stayed engaged.
Peter Norris
The two key areas that created internal tensions were the decision to develop a service
costing model and the centralisation of customer insight within the SDMC team. It
proved difficult to access all the relevant information for service costing model in
such a large, complex organisation. For example, the SDMC team had to allocate all
property and technology costs shared by the RBS divisions into specific products and
services at the point of consumption. This had not been done before and there was no
rule book or even heuristics (rules of thumbs) as to how to embark on such an
exercise. One option would have been to use a third party experienced at such
activity-based-costing, but the business decided that it wished to develop the
capabilities internally, nor was the SDMC team given the type of budget it would
require to engage a large team of consultants for a couple of years. The task was
challenging and the organisation had not been prepared to this level of scrutiny.
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“The key to SDMC is how the team have engaged UK Retail with difficult messages
sometime contrary to direction of travel and assumptions. With powerful data and a
rigorous methodology they have influenced senior execs into action”
Kevin Hanley, Chief Architect
As the project unfolded and the data was collected and analysed, much of the
feedback to UK Retail was sensitive. SDMC was aware of the fact that their
colleagues could perceive negative results as an attack on their work and this would
damage their commitment to participate in the SDMC project. The negotiation of a
shared understanding of the data occupied a considerable amount of Steve’s energy.
Fortunately, a number of key stakeholders within UK Retail supported the project
through the difficult periods: the directors of the different products (e.g. Head of
Mortgages, Head of Credit Cards, etc.) saw benefits from the clear and actionable
insights on customer experience. Even more importantly, they appreciated the ability
to match the Bank’s performance with a service costing model. This would allow the
identification of savings and give a better idea of the potential return associated with
any further investment in customer experience.
Even those who started sceptical now can see that it is very useful…they
say: ‘Wow! I can see the changes I need to do…I can see how I can drive
this forward’.
Peter Norris
“You have provided a better answer to a better question than the one we
were asking”
Les Matheson MD Products & Marketing
Interestingly, most of the published literature on change management highlights the
need for the active engagement of the most senior levels of the organisation to counter
the inertia of middle management. At RBS, it was middle management that picked up
the initiative and drove it forward.
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The SDMC team clearly noted an improvement in their internal support and
credibility as the process started to deliver and people began inviting it to engage with
their businesses. The team had a track record of success that gave to the SDMC
project high internal credibility. The internal recognition was complete when the
newly appointed CEO for UK Retail Ross McEwan (replacing Brian Hartzer) stated
his intention to improve further the customer experience and recognised the important
role of SDMC in achieving this goal. Nonetheless it had taken a long time to
overcome the initial resistance and the acknowledgement that SDMC now enjoyed
was just the natural outcome of the improvements it had contributed to achieve.
LESSON 2: ESTABLISHING EXPERIENCE MANAGEMENT PRACTICE
AND TOOLS
Much of the success of SDMC has been creating a set of rigorous tools and
techniques aligned to a single purpose to help improve how the business works. The
tools within the framework are designed around the concepts of Service Management
looking at the outcome and experiences of services the bank provides to the customer
base. The SDMC toolkit is also grounded in lean principles such as “go and see” don’t
rely on secondary data, “show respect” but be bold to move the business on and “ask
questions” to understand the business. The relative specialism’s of cost management,
customer experience design and lean six sigma have been brought together to provide
granular insights to make actionable recommendations.
Our work is unique as it finds the balance between delivering the right
customer experience at the right cost to serve. Understanding where to
invest and more importantly where not to is the key to RBS recovery”
“In a market with commodity products, low interested rates, low growth,
aggressive new entrants the key for RBS is not focussing on price,
product and brand. The key is differentiating on service. That's what
SDMC helps to do”
Steve Whitty, Head of CE & SDMC
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LESSON 3: IMPLEMENTING CHANGE
The SDMC led project was conceived and managed as a learning activity. Whereas
many customer management initiatives, e.g. CRM systems implementation, are
designed as top-down, enterprise solutions, experience management built from a
single product and expanded horizontally across the product portfolio and vertically,
deep into the core service delivery processes of the Bank. Such an approach to change
is inherently risky because it is to an extent a hostage to events beyond its control.
The length of time means that top management priorities might change, key
individuals may leave the project, key sponsors may move on from their current post
and stubborn opponents to change are hard to won over. Whilst these factors affect
any programme, the lack of a top down imperative accentuates them. Is this approach
just too slow and dependent on good will? However, the Bank was not in a place for
another top down change initiative. In the financial crisis at the time, the top teams
focus was on survival, repairing the balance sheet and dealing with powerful new
stakeholders: Government and an angry public. Moreover, there was no established
and credible plan for experience tracking and management to which a top team could
sign up for and “make happen”. The field is emerging, lacking a clear definition and
widely accepted practices (Maklan and Klaus, 2011). Experience, unlike CRM, lacks
a unifying set of processes amenable to technology led change. So whilst CRM
programmes often coalesce around a software vendor’s robust solutions and attendant
business processes, experience management appears to be more contextually specific
and firms need to develop their own paths and competencies (Maklan, Peppard, Knox
2010). SDMC merely provided the data, management still needed the courage to
change and force integration across marketing, operations and service to respond to
the insight generated by the data. The analysis generated by SDMC was merely an
enabler to this process but, customer experience is still generated by conscious, goal
directed activities of the business leaders.
The Future Development and Management of Customer Experience at RBS
With the end of the SDMC work on the UK Retail division, customer experience
management at RBS is in a key transition phase. The UK Retail division is now
starting to implement changes on the basis of the insights gained so far. As managers
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within the division become more familiar with the methodology, S&A must
recommend how to embed the tools and processes with the division. Steve is
preparing for the meeting with the group CEO and reflects on which solution might be
best for the company. The main point of his presentation is to suggest a solution for
the governance of customer experience. The SDMC process has clearly outlined the
need and opportunities for improved customer experience at RBS, but it has also
surfaced the importance of adopting and identifying clear leadership and transparent
management processes. If SDMC remains a one-off and responsibility for customer
experience management is not clearly allocated, there is the risk that standards of
service delivery might slip back. However at the moment it is not clear what systemic
customer experience management processes the Bank plans to introduce. Steve
believes that there are three basic alternatives.
The first one is to build on the role of SDMC and clearly identify this unit as the
department responsible for the development and monitoring of customer experience
policies across the group. This view would have SDMC working as an internal
consultancy for all the different divisions and product management teams across the
organisation offering a type of support in line with the mandate of S&A.
An alternative would be to create a Customer Experience department within each
division that would become responsible for all activities related with the monitoring
of customer experience and the development of new policies in this area. This option
would probably require a certain period of transition to allow the members of the new
group to be trained in the SDMC methodology. There will also be a need to establish
some form of coordination between the different Customer Experience departments
across the different divisions to ensure that the process remains uniform and learning
is shared within the group.
A final option would be to have a Customer Experience director within each Product
Management team. This director would work together with the rest of the team to
ensure the quality of customer experience. For example, the product management
team for mortgages would have a person focused on customer experience working
alongside the members of the team that currently focus on marketing, sales, pricing,
etc. This approach would ensure that the focus on customer experience is embedded
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within product management but would create issues in terms of coordination of the
process across businesses and divisions. Over time, would customer experience
management become fragmented across the business and allow poor practices to
creep in at some businesses?
“SDMC now has an industrialised method which can change the bank a division at a
time”
Kevin Hanley, Chief Architect
Although SDMC has done much to improve customer experience management at
RBS, Steve feels that much is still to be done. He will have to present its
recommendation on the future governance of customer experience and clearly state its
case. Which option should he choose? What are the advantages and disadvantages of
these alternatives? Part of the challenge in identifying the best road ahead is ensuring
that all relevant departments remain focused on customer experience. After all, the
strategy of ‘helpful banking’ rests on the ability to deliver a good experience.
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Sources:
Authors’ interviews with senior management at RBS and RBS’s internal reports
documenting research on customer experience and its dissemination within the
company.
BBC News. (2011). UK financial firms downgraded by Moody's rating agency.
Accessed at: http://www.bbc.co.uk/news/business-15211230 on 9th December
2012.
BBC News. (2012). Profile: Fred Goodwin. Accessed at:
http://www.bbc.co.uk/news/business-16822439 on 9th December 2012.
Goff, S. (2012). Rise and fall of Fred Goodwin. Financial Times. Accessed at:
http://www.ft.com/cms/s/0/347318fc-4c3c-11e1-b1b5-
00144feabdc0.html#axzz2EqkWpwOR on 10th December 2012.
Johnston, R., Clark, G., and Shulver, M. (2012). Service Operations Management:
Improving Service Delivery, Pearson: Harlow, UK.
Klaus, P., and Maklan, S. (2012). EXQ: a multiple-item scale for assessing service
experience. Journal of Service Management, 23(1), 5-33.
Macdonald, E. K., Wilson, H., Martinez, V., & Toossi, A. (2011). Assessing value-in-
use: a conceptual framework and exploratory study. Industrial Marketing
Management, 40(5), 671-682.
Maklan, S., and Klaus, P. (2011). Customer experience: are we measuring the right
things? International Journal of Market Research, 53(6), 771-792.
Marketline. (2012). Company Profile – Royal Bank of Scotland Group plc. Accessed
at www.marketline.com on 10th December 2012.
Peston, R. (2012). No RBS or Lloyds sale till 2014. BBC News. Accessed at:
http://www.bbc.co.uk/news/business-20354133 on 10th December 2012.
RBS. (2009). Annual report and Accounts. Available at:
http://www.investors.rbs.com/download/report/RBS_Annual_Report_and_Account
s_09.pdf on 12th December 2012.
RBS. (2010). Annual report and Accounts. Available at:
http://www.investors.rbs.com/download/report/RBS_Group_Annual_Report_and_
Accounts_10.pdf on 12th December 2012.
RBS. (2011). Annual report and Accounts. Available at:
http://www.investors.rbs.com/download/report/Annual_Report_2011.pdf on 12th
December 2012
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Reichheld, F. (2003). The One Number You Need to Grow. Harvard Business
Review, 81(12), 46-54.
Whitehead, J. (2010). RBS and NatWest push ‘most helpful bank’ promise in ads.
Marketing Week. Accessed at: http://www.marketingweek.co.uk/rbs-and-natwest-
push-most-helpful-bank-promise-in-ads/3014581.article on 10th December 2012.
Wilson, H. (2012). The rise and fall of investment banking at RBS. The Telegraph.
Accessed at:
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9011014/The-
rise-and-fall-of-investment-banking-at-RBS.html on 10th December 2012.
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Appendix A – The Customer Charter The customer charter is based on a number of specific commitments that the company make to its customers: Commitment 1: We will extend our opening hours in our busiest branches Commitment 2: We will serve the majority of customers in our branches Commitment 3: We will provide you with friendly, helpful service whenever you
deal with us Commitment 4: We will help you to make the right choices for you and your
money, providing a clear product range with simply explained features and charges Commitment 5: We will provide a 24/7 telephone banking service from our UK-
based call centres Commitment 6 We will work with you to keep you safe when you bank with us
online or using your mobile phone Commitment 7: We will help you quickly if your debit card is lost or stolen and
you need access to cash Commitment 8: We will continue to be a responsible lender and are committed to
finding new ways to help Commitment 9: We pledge to stay open for business if we are the last bank in
town, and we will consider a range of options to ensure a local banking service is available
Commitment 10: We will provide young people with financial education through our independently accredited MoneySense programme
Commitment 11: We will actively support the local communities in which we live and work
Commitment 12: We will resolve customer complaints fairly, consistently and promptly
Commitment 13: Twice a year we will publish the most common complaints and strive to address the causes
Commitment 14: We will actively seek your thoughts and suggestions on how we can become more helpful
More details on the goals that the bank attach to each commitment and to the monitoring process for the year 2011 are available at: http://www.natwest.com/Downloads/global_options/charter/NatWest_Our_Charter_2011_full_report.pdf.
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