UKCSI July ’17 results. Problems, complaints and the elephant in the room

This is our 2nd of 3 posts about the most recent UKCSI results.

This post focuses on the problems and complaints findings from the report and is expanded on, to show the wider impact to organisations which is the real elephant in the room that’s not being addressed. This is less about the report results per say, but more a reflection on organisational behaviour that needs to, but has yet to significantly change.

Let’s start with the numbers first though.

Improved complaints handing has contributed to the improvement in the customer satisfaction index over recent years. However the volume of complaints is back to the level that it was at in 2015 when overall satisfaction was at its lowest.

13.1% of customer experienced a problem as indicated in the July 17 report, compared to only 10.2% of customers who actually made a complaint following a problem, albeit this is the highest percentage it’s ever been.

If this was extrapolated out as a percentage of the working population (based on ONS working population data) then that’s 5 million people complaining in the last 6 months alone.

In addition, the percentage of escalated complaints for non-resolution is also up from 41.4% to 48.6%.

Retail, Public Services and Leisure are the three sectors seeing the highest number of escalated complaints with a year on year average increase of 11%.

Availability of goods/services account for 75.2% of complaint escalations with quality/reliability of goods/services being the most cited reason for a problem.

So what’s changed?

Three main factors have driven the increase in satisfaction with complaints handling;

  1. Faster resolution of complaints
  2. More favourable perceptions of employees’ behaviours during the complaints process
  3. More problems being actively followed up by organisations with customers, to ensure they have been resolved.

However, year on year the increase in customer satisfaction is only up 0.5 to a whopping 5.7 out of 10! This seems like a lot of effort for very little return. I’m not suggesting to not try and improve complaint handling but surely there’s a wider, bigger point to address?

So where’s the elephant then exactly?

From ICS’s own research, they indicate that on average there are 2.8 contacts between a customer and an organisation on a complaint, which rises to 3+ when a complaint isn’t resolved.

70% of these contacts they also state, are by phone, generating an estimated 9.9 million additional telephone calls.

On average the handing of a telephone contact costs £3.55*

An additional 9.9 million calls then costs on average £35,145,000 in unnecessary and probably avoidable cost to organisations and bear in mind this has been increasing year on year, every year for the last 8 years!

In lean six sigma terms this is waste. A lot of waste. Waste that can be identified and eliminated to improve not just the customer experience and their levels of satisfaction, but an increase and optimisation in internal efficiency and effectiveness.

This cost of handling additional contacts doesn’t even take into account the cost of reputational damage to organisations, lack of consumer confidence and trust (transparency and fairness) and business that has gone to competitors that could have stayed in place.

Why waste time and money trying to get better at something, when you could eliminate the need to improve by getting rid of the problem that caused the complaint?

Is it me or am I missing something?

The elephant in the room is that the specific causes and sources of problems aren’t being addressed and fixed. Instead, organisations seem to be getting (marginally) better at handling complaints, rather than eliminating the root causes.

Now you could argue that as customer expectation is constantly on the increase, the customers are more demanding than ever before and so are less tolerant of poor and average performance and that is in part correct.

But at The Customer Experience Coach, born out of our own experience, we see it time and time again. We see it within almost every organisation we work with. We also see it in our design thinking workshops when we get people to the point of clarity on what’s the real problem they’re trying to solve by making a change or driving new innovation.

You can literally see the light bulb moment appear on the faces of the people we share design thinking with who come to the realisation that for years they’ve been throwing solutions at problems that they don’t truly understand. The resulting situations are unnecessary, costly and resource heavy projects that either fail completely, or fail to deliver the solution because nobody took the time to understand what the exact problem was that they were trying to solve in the first place.

And so this is why organisations try to get better at handling complaints because the alternative appears to be too big, too messy to untangle and needs a collaborative approach to solving problems and most organisations aren’t in that space.

Ever heard the phrase “it’s like rearranging deck chairs on the titanic”. Something that’s easy to do but ultimately futile. It makes people look busy and they think they’re making a difference but really?

This isn’t a criticism, more an observation on reality. Organisations aren’t going to make a significant dent on complaints if they’re not prepared to really look at the root causes and fix the real specific problems rather than the imagined ones.

The same goes for design thinking. If you design a solution for a poorly defined problem then you’re not going to solve the problem.

So if this situation resonates with you on any level and you’d like to discuss any of the issues or challenges mentioned then please get in touch.

*Source Contact Babel UK contact centre benchmarking report 2015/16)


State of the Nation: UKCSI Jan 2016 results. New Year New Start?

The latest results are out and make in the main for encouraging reading.

This month, the UKCSI, the national measure of customer satisfaction on the high street has seen an index 2 year high, reversing, for the second consecutive period the previous two year decline we saw between January ‘13 and ‘15.

39,000 customer responses were collated covering 296 organisations, which gave an overall index of 77.0 (out of 100) this month, up 0.8 points compared to July 2015 (76.2) and up one point compared to January 2015 (76.0).

However this is still below the all-time high of 78.2 seen in January 2013 so whilst it’s a positive sign, we’re not there yet in terms of customer recovery.

However of those 296 organisation, 96 saw an increase, whilst only 44 saw a decrease in results.

Other key highlights include;

  • Amazon topping the charts with a score of 86.6, albeit down marginally (0.1) in the Jan16 UKCSI top 19 last 12 months. They displace First Direct who have held the top spot for a while now to 3rd place behind Utility Warehouse
  • Retail (food) and Retail (non-food) still top the sectors
  • Utilities as a sector shows the biggest increase with 1.9 points, albeit 12th from 13 sectors overall. Encouraging gains but not out of the woods just yet as 1 of 5 sectors below the average.
  • Utility Warehouse (top of their Utility sector and straight in at 2nd place), Trailfinders (top of their Tourism sector)and RIAS (over 50’s insurance) all appear in the Top 50 for the first time
  • T-Mobile sees the biggest increase at 9 points over the last twelve month which is a significant shift, a similar performance last seen by Lovefilm in July 2015 with an 8.2 point increase.
  • Banks and Building Societies is the only sector down by over 1 point in the last twelve month
  • Telecomms and Media still languish at the bottom with a sector average of 72.6
  • The 25 and over 65 age groups remain the most satisfied
  • As do the Welsh amongst areas in the UK, compared to the Southwest who saw a decline in satisfaction
  • As are Women who are more satisfied in general than men (apart from in the Automotive sector)
  • For the naysayers who still don’t believe that great experiences and high levels of satisfaction drive (financial) results, Food retailers with a UKCSI at least one point higher than the sector average achieved average sales growth of 7.6% compared to a drop in sales of 0.4% for those with a UKCSI at least a point below the sector average.

Customer preference by channel and method of interaction;

  • In person (46.9%)
  • Website (22.6%)
  • Over the phone (20.2%)

However, when you look at the new channels of contact including apps and social media the results are not as I expected them to be;

Jan16 UKCSI channel preference

  • Out of all 13 sectors, apps only provide the highest levels of customer satisfaction in the Bank and Building Societies sectors although it’s unclear how widespread apps are deployed across the other sectors.
  • Public sector local and national websites provide the least satisfying experiences (think HMRC – ok so maybe that’s not a surprise)
  • Webchat only features in the Telecomms and Media sector and not for the right reasons being below average satisfaction

Channel Hopping

Nothing new here on this but goes to reinforce previous research and patterns of customer behaviour;

  • Most customers (58%) use one channel of communication when they interact with organisations.
  • A sizeable minority say that they use two (34.1%), but then there’s a marked drop off in usage (both overall and across sectors) to three (5.6%) or more than three (2.3%) channels.
  • Customers who used three or more channels were much more likely to say that they had experienced a problem (27.7%) with the organisation in the previous three months and give them a lower customer satisfaction rating. This is 3x higher than those that use 1 channel.

I can personally testify to doing this with a company when I didn’t get the results I wanted by email and phone, before taking to twitter to complain. This is all about customer effort. More effort = less satisfaction.

Customer Priorities

Also at the end of 2015, the UKCSI reviewed the importance of customer priorities which was last reviewed in 2010 and there’s some noticeable changes across the – wait for it, 47 customer priorities.

The top 4 most important all relate to staff attitude with the 5th being complaint handling. In order they are;

  1. Staff competence (in person)
  2. Staff doing what they say they will do
  3. Staff competence (over the phone)
  4. Helpfulness of staff (in person)
  5. Handling of the complaint

Interestingly, value for money only features at 13th with price/cost at 20th.

And finally a word about the most important features of delivering a great customer experience; employees.

Employees’ friendliness, helpfulness and competence have become relatively more important in the eyes of customers over the last 5 years, as well as speed of service, especially when dealing with employees in person. Ease of doing business has also increased in importance along the theme of reduced customer effort we’ve discussed over the last 12 months.

All in all interesting times and a continuingly changing customer and business landscape where the agile, fleet of foot excel and the legacy industrial monoliths creak and groan. Here’s to a continued improvement and let’s see what the next 6 months brings.

You can download the report in full here

Source: UKCSI Executive Summary Results January 2016.


npower’s toxic customer satisfaction has got worse – no really it has.

It’s that time of year again – the Which? customer satisfaction reviews on utilities are out and it makes for predictable reading.

The full results and reviews can be found here, although I’ll give you the highlights here.

The reviews are based on scoring from 9,400 consumers at the back end of 2014 across UK utility providers and their customer satisfaction performance across a number of categories;   Which best buy

  • Customer Service
  • Value for Money
  • Accuracy and clarity of bills
  • Complaints
  • Helping you to save money


Performance in these areas gets combined to give a percentage score overall.

Top 3 performers are;

  1. ecotricity – 84%
  2. goodenergy – 82%
  3. Ebico – 81%

Bottom 3 are (ex Northern Ireland);

  • EDF – 49%
  • Scottish Power – 41%
  • npower – 35%

It probably comes as no surprise that the ‘big 6’ all feature in the bottom half of the table with two of the bottom 3 companies – npower and Scottish Power all current under investigation and sanction from Ofgem.

npower are currently under investigation for potential breaches to their licence on meter installs for larger non domestic clients and potential breeches in standards on final bills and complaint handling standards for consumers. Details are here.

Scottish Power for a regulator imposed financial penalty and investigation into standards around final bills. Again, details are here.

So not great all in all for these companies.

The Utility sector also scores lowest in the UKCSI out this month with an index of 70.9 versus the top performing Retail (non food) sector scoring 81.4. A gap that barely seems to be closing.


More interesting is where npower are now compared to exactly two years ago when their new incoming MD, Paul Massara ‘committed to make his company the industry’s number one for customer experience by 2015’ – as reported in Utility week here. More interestingly, their score then was 39%, 4% better than it is now so rather than get better, they’ve actually got worse.


I blogged about it last year and whether in practical terms getting to number one in two years could actually be done. If you want to read the original blog post it’s here, but the Which survey says it all really.

As an aside, while I was researching this blog, I came across an online petition, branded by Which? which calls for a ‘Fix the big 6’ campaign in a ‘broken energy market’. It’s currently got just short of 60,000 signatures…


no-image really do make you cry..

I’m not a fan of just blogging about companies that get things wrong about customer experience.

To be honest, it’s too easy a target (given how many examples there are) and I know how difficult it is to create seamless and consistent experiences. Having said that, this story is a good example, for lots of reasons, but especially because it highlights the need to be consistent with both customer experience, business processes and social media presence.

Responding to a tweet in 20 seconds can create a good impression which can be quickly destroyed if you don’t do what you say you’re going to do.

Let me begin..

Recently, my partner bought some items from the online clothing retailer The website user experience was good, the items we’re chosen and bought and then delivered fairly quickly.

Boo hoo logoAs with buying clothes online, especially for fickle teenage girls, a number of the items needed to be returned which we duly did and the free returns process was relatively straight forward. The credit terms from memory was something like 2 weeks from boo hoo confirming receipt of the goods back which they did several days later by email. All good so far which is where the fun and games started.

Four weeks later we were still waiting for the credit so we decided to chase them to see where the credit was up to.

Trying to find a telephone number on the website was the first frustration. One didn’t exist that we could find which, arguably is the point of being an online retailer.

The customer service tab however did have lots of advice on return, order tracking, general queries section etc but still no phone number. We did however, find an email address so we fired off a quick note asking for an update.

Multi channel

The almost instant reply that came back said that ‘the Customer Service team are currently experiencing high volumes of enquiries and so are unable to respond at this time.’

No expectation management as to when they might be able to help, just that they were busy.

Channel hoping is a customer tactic that is increasingly utilised to get a response but one that companies find hard to manage well, so we deliberately switched from email to twitter to see if we could progress our issue. We quickly found their twitter customer service account and after a quick (sarcastic) tweet to provoke a response, we got a tweet back with an invite to send a direct message with our query within about 20 seconds. Wow – what a fantastically quick response and a result so we thought, and so we sent the message with our order details.

Quite quickly we were assured that the credit would be processed and the money would be refunded within a week. Perfect.

Two weeks later, the credit was still outstanding, so once again we took to twitter. We passed all the order details yet again, and again we were assured that the credit would be refunded. I tried to articulate that we’d been here before and had had all the same assurances previously and so I questioned given that this had been promised before, what would be different this time. No real additional assurance was given to me only that the credit would be actioned.  Promises

However, true to their word, albeit second time round the credit arrived about a week later.

So what can we observe from this?

Well firstly, as a customer I still want to talk to someone when I have a problem – online retailer or not. The only get out here to not having phone agents to talk to customers is for businesses to have bomb proof process behind the scenes that enable right first time delivery on customer needs.

Secondly, if you say you’re going to do something, then you have to do it. You could say I’m stating the obvious with this one, but this is one of the holy ten commandments of customer experience in my book.

Third, it’s no good being super fast and responsive on social media, raising customer expectations if you can’t deliver behind the scenes. It’s incongruent and does nothing for the customer experience, in fact it just erodes it.

Consistency across multiple channels is an area where many businesses are struggling. However this multi channel approach to contact is being driven harder and faster by customers from both the home and mobile with the need for immediate and responsive service and with little tolerance for those that can’t deliver quickly and seamlessly to meet customers needs.

This is definitely a theme that will remain the focus into 2015 for both businesses and customers so I’m sure we won’t hear that last of challenges like this.





Honesty, expectations and reality

Amongst Richard Branson’s many quotes that have been published over the years, my most favourite has always been this one; “Customer service is about attention to detail and communication. Neither of which are difficult so naturally they’re the first things we forget!”

It’s my favourite because he’s right.    usain-bolt-richard-branson-944438633

I worked with a bank a while ago who measured customer satisfaction every year with their business customers who were mainly small and medium size enterprises. The previous year’s survey had highlighted a very painful customer issue which the bank was already aware of. It was their online customer banking portal that business customers used to transact on their accounts.

And when I mean painful, it was excruciatingly painful for customers. If they were able to log on, which at peak times during the day, they mostly couldn’t, the portal often crashed, was very slow to use and overall wasn’t a great customer experience. You could sense the frustration in the customer feedback that came with the survey.

I specifically remember one comment from a customer who used the portal to pay employee wages. The lady indicated how she had to wait until midnight each month to pay the wages, to ensure she could get onto the portal when very few others were trying to use it and to minimise the risk of it crashing and her having to start all over again!

Online banking

When we measured customer satisfaction the following year, the same issue came up again and not surprisingly. The IT project that was running behind the scenes to build a new online customer portal had yet to be delivered and had faced delays to the original deadline due to a change in provider. It was running about 12 months behind and was already over budget.

Apart from these obvious issues, it was clear from the customer feedback in the second year that the bank hadn’t kept them informed of the project progress (or lack of) or even attempted to manage customer expectation as to when the solution would be delivered.

Again a memorable comment from a customer went along the lines of “we told you about this last year and you’ve done nothing about it. So you are either just ignoring us or you just don’t care!” Either way a scathing observation.

However in reality, the bank was doing something about it based on customer feedback. What it wasn’t doing though, was managing customer expectation by communicating with them at all. Not even irregularly.


Now arguably, it could be said that the bank didn’t want this embarrassing situation made public knowledge, but by not doing so, it wasn’t exactly putting customers first and setting the right expectation. The bank were dammed either way in reality and it was more about damage limitation. Say nothing – customers become frustrated and leave, which was already a real possibility. Say something, and be potentially ridiculed by competitors and customers may still also leave.

However, I personally think they missed a massive opportunity to engage with customers, in addition to failing to effectively manage customer expectation. Even the Bank staff were fed up with hearing the same complaints from customers, but instead the Bank simply said nothing.  A frustrating situation for all concerned, but an entirely preventable one if they’d just talked to their customers and explained.

Sound simple? It should be.

I bet they’d have got more ‘brownie points’ and goodwill back, if they had communicated with customers despite the project being delayed. Don’t you?


npower: Customer experience Titanic or Titan in the making?

Paul Massara took over as the chief executive of npower in January 2013. Arguably a difficult job to take on, not least because of the poor customer service reputation and previous mis selling practices conducted between 2009 and 2012, allegedly while they were ‘making changes to their sales practices’. Ofgem found them guilty in December 2013 and ordered them to pay £3.5 million back to vulnerable customers. So not a great back stop or foundation from which to make the announcement at the beginning of his tenure that his company would be “number one in the industry for customer experience by 2015”.

Bold words indeed. Not least because of the very challenging timeframe he’s committed to delivering on, added to the very low starting point npower are trying to build from.

Looking at the UK Customer Satisfaction Index results from January 2014, the utilities sector as a whole is the lowest performing of 13 sectors with an average index of 69 from 100. This has dropped by 2 points in the six months from the previous measure in July 13. Whilst all bar one sector saw decreases over the same period, utilities was the largest decrease. In comparison, from the January results, the highest performing sector is Retail (non-food) at 83.1.

To further compound matters, January saw Which? publish their Which? Switch customer satisfaction survey, covering 20 energy providers (17 from England, Scotland, Wales and 3 from Northern Ireland).

As shown in the table below, npower came 20th out of 20 based on each energy supplier receiving a customer score based on their overall satisfaction and the likelihood they would recommend it to a friend. nPower had 892 customers respond in the survey. To further add to npower’s woes, this isn’t the first time they’ve featured bottom in the Which? survey. It’s the third year running.


2014 energy companies satisfaction survey

Customer service

Value for money

Bills (accuracy and clarity)


Helping you save energy

Customer score

England, Scotland and Wales
1. Good Energy


= Ecotricity


3. Utility Warehouse


4. Ebico


5. Ovo Energy


6. The Co-operative Energy


7. Utilita





8. First Utility


9. Marks and Spencer Energy


10. Spark Energy


11. Sainsbury’s Energy



= Eon


13. EDF Energy


14. Scottish Power




16. British Gas


17. Npower


Northern Ireland
1. Budget Energy



2. Airtricity



3. Power NI



Reflecting back on Mr Massara’s statement and intention given npower are already 12 months in to their 24 month improvement target timescale, a number of questions arise that I wanted to discuss;

  1. Was it all hot air and bravado in the first place that npower wanted to be No.1?
  2. Can it actually be done?
  3. Can it be done in 2 years?
  4. Has anyone ever done it?
  5. What would it take for it to be achieved?
  1. Was it all hot air and bravado in the first place that nPower wanted to be No.1?Whilst I’ve not spoken to npower directly, I’m assuming it wasn’t all hot air and bravado. The consequences and ramifications of making a statement like that without the necessary intent would be a further nail in npower’s customer service coffin. So, if we assume the intention was a serious one, it’s still a very brave statement not least because people will hold him accountable for delivering on his promise. People being customers, npower’s owners (RWE), industry watchers and the regulator Ofgem. Also by putting a statement and a commitment like this out in the public domain, in a reverse psychological sort of way, npower may actually commit to taking the significant steps and making the changes to achieve what they intend. Top down commitment and leadership, not just in creating a truly customer centric culture but in any business change is essential so Paul Massar’s message sends out clear signals into the business.
  2. Can it actually be done?In theory yes. In practice it’s a lot more difficult which is where the fun starts.
  3. Can it be done in 2 years?No. And it’s this timescale that casts doubt on the seriousness of npower’s intent, or at least their understanding of the task involved; the systems and process changes, the culture change and the process of becoming a world class customer experience organisation which isn’t achieved in two years especially starting from the position that npower are in. Not to mention the significant amount of customer trust they’ll need to win back and the vast amount of perceptions they’ll need to change along the way. 5 to 6 years might see them up to mid-way in the table or at least top of the big 6 and only if they deliver on everything they need to. I’ve just read a case study about the UK hotel chain, Best Western who successfully implemented a customer engagement strategy and it took 4-5 years before they realised the benefits. Having worked with organisations trying to improve the customer experience, it can take them 12 months to work out exactly what it is they need to do, so 24 months just isn’t achievable.
  4. Has anyone ever done it?Improve –yes. Improve radically and in this timeframe– very unlikely. I must confess, I’ve not trawled all the records and data, and there are many case studies of companies that have made significant improvements, but much more incremental change over a longer period of time. Invariably, large businesses like npower don’t or can’t ‘do’ radical change quickly. There’s too many processes not to mention the behavioural changes required which don’t happen overnight. It’s the old analogy of trying to turn the Titanic –trying to change the direction of something so large that you have to start turning (or changing) long before you want to see the change. What they’ll be likely to achieve in the 2 year period you could liken to rearranging the deck chairs on the Titanic. It might look tidier in the end but the ship is still going to sink.Another factor at play here is that the satisfaction improvement curve is exponential. Initially when organisations start working to improve, especially from such a low starting point, it is possible to make significant advances. However, as levels of customer satisfaction improve, further gains become more marginal and harder to achieve and so progress slows. At really high levels of satisfaction performance, incremental gains are very slight and barely change year on year. At this point it’s more about maintaining levels of satisfaction. In addition, none of nPower’s competitors are going to stand still for fear of losing market share. So in order to improve in relative terms, they’ve got to move faster than everyone else. On current data, they’ve not even started the momentum.
  5. What would take for it to be achieved?In some respects, npower should just scrap everything they do and start again, including the brand. Whilst not always practical, it would give them a psychological clean start and an opportunity to disassociate themselves from their previous mis demeanours. However as recent as February 2014, an article reported by The Telegraph carried the story of a customer who had been overcharged on her gas and electricity bill by over £1,600 for which npower cited ‘internal billing errors’ as the cause. Whilst it’s possible that that this could be an isolated incident, it’s unlikely but it’s these sort of significant process changes that need to occur in order to be at the top of any customer ranking.Assuming they’re not scrapping everything, then they need to go through and implement the usual suspects;
  • Top down visible commitment and actions
  • A significant budget and a serious appetite for change
  • Customer focussed outcomes clearly linked to business benefits.
  • Processes designed with the customer in mind and convenient to them rather than the business.
  • For everyone in the organisation to own the customer experience, not just the frontline staff
  • Effective metrics that both drive and encourage the desired behaviours
  • A willingness to listen to and engage with the customer

It’s an interesting position and a real challenge of a journey and one that a lot of people will be keen to watch, not least npower’s customers. If they pull it off – there’s a book to be written. Watch this space.



Customer loyalty or a marriage of convenience?

Customer loyalty. The end game in delivering a great customer experience. Companies strive for it and it’s often the discussion at many boardroom meetings mentioned in the same breath as profit, sales and shareholder value. But there’s an issue of congruence here. Saying one thing yet doing something different and you don’t need to look far to see this playing out. Take the insurance industry for example. Loyalty sign

The debate over the practice of the automatic renewal of insurance policies for customers has risen its head again this year as it did in 2012.

The BBC Radio 4 programme Money Box revealed back in March this year that some customers were being overcharged as a result of auto renewal policies.

In July, the new incarnation of the FSA, the FCA (Financial Conduct Authority) said that “automatic renewal can lead to customers being treated unfairly.” A term introduced initially back in 2008 by the then FSA, who launched their project around ‘Treating Customers Fairly (TCF)’ as part of their ongoing strategy from the early 2000’s to address mis-selling and the fair treatment of customers.

More recently in October, the Money Box programme re addressed the issue amidst concerns about ‘sharp practices’ from insurers and the impact on customers. A representative from the Insurance industry argued that the benefit of automatic renewals are that they ensure that no one accidentally forgets to take out insurance, for which the consequences could be a breach of law or loss of cover in the event of an accident or event. Fair point indeed and a useful mechanism deployed in the right way but I would argue that it’s the way that auto renewals are conducted that is the issue here which also calls into question the value of customer loyalty.

Recently a business contact of mine had their auto renewal notice through for their house insurance policy. £253 for the year was the new price and on the back of no claims in the previous 12 months. The letter made no reference to a price increase and contained the usual text around not needing to take action for the policy to roll over giving piece of mind etc. etc. Hands over house image

Out of curiosity, my contact decided to check a well know comparison website and was able to get a comparable policy for £180. Not content with saving £73, she checked the insurers own website posing as a new customer and was able to get the same policy for £121, over half the cost of the original renewal quote.

On the face of it, this potentially ‘sharp practice’ whilst not illegal as such, seems counter intuitive to delivering a good outcome for some customers and does little to create an environment that fosters customer loyalty in an industry where customer churn is rife and consumer perception is far from positive.

So for me, this scenario raises a number of questions;

1. If the annual price increase is legitimate, why not bring it to the attention of the policy holder at point of renewal and explain the reason?

From the insurer’s perspective, they may not like communicating bad news to customers about price increases and so they might hope that customers either don’t notice or don’t check. By not doing so the insurer potentially ‘gets away with’ the annual price rise balanced against the risk of ‘getting caught’ and the customer leaving. Also, there is an element of ‘caveat emptor’ here or buyer beware and a responsibility of the customer to check – assuming they have the capability to do so, which is the complaint that the FCA are currently investigating. However in the interests of a genuine long term customer relationship, surely you’d mention something as important as a price rise wouldn’t you?

Alternatively, as in the case of my contact, having checked the price elsewhere, they have now switched insurers and avoided the price rise. In addition though, the way this auto renew was handled created a feeling of mis-trust about this particular insurer and their price rise motives and a heightened perception that insurers in general are untrustworthy and that price rises are illegitimate. Not a great outcome for anyone concerned.

2. By treating customers in this way, do (insurance) companies actually value customer loyalty?

The short answer appears to be no based simply on a view of their actions. Maybe the company perception is that because the market is transactional and that customer loyalty doesn’t exist anyway and so why try and keep customers by continually giving them the best price every time.

Maybe companies count on the fact that customers are mostly apathetic about insurance seeing it as a necessary evil in some instances and so they won’t spend the time each year searching comparison sites to get a better deal. Time that customers could spend on something much more entertaining than insurance.

Maybe companies also count on customer inertia against comparing and swapping policies that they’ll let the policy automatically renew in order to take path of least resistance.

Seth Godin talked about ‘Two kinds of loyalty’ in a recent blog here; ‘the loyalty of convenience’ and the loyalty of ‘I’m not even looking’. I’d suggest that insurance is a loyalty of convenience which is only as good as it is just that – convenient. Significant price rises aren’t convenient.

3. Is it all about new customers? New customers only sign

They’re like shiny new things aren’t they?  I’ve heard it many a time; “How many new customers have we gained this quarter?” “How’s our market share increased?” In the same breath though are companies also asking “What’s our customer attrition like and “why are customers leaving?”

It probably follows the 80/20 rule in that 20% of customers will probably always shop around based on price. Just because the 80% don’t, it doesn’t necessarily mean that they’re hugely loyal or brand advocates. Maybe it’s just currently convenient.

4. How much is a new customer worth?

What’s the lifetime value of an insurance customer over say 10 years versus 12 months? I’d wager that it’s significantly higher for a customer that stays 10 years if managed properly. Would you even breakeven on a customer over a 12 month period given the acquisition cost per head? It feels unlikely and yet insurance company behaviour is actively driving the market towards transactional rather than value based behaviour and away from cultivating real customer loyalty. It could be argued that the only way you demonstrate value on insurance is when you make a claim. That’s when you know it works. Otherwise it just sits in the background and you never realise the true value of it.

Technology makes it increasingly easier for most of us to shop around and make comparisons and social media makes it quicker and easier to highlight and publicise poor customer experiences or companies that deploy ‘sharp practices’. Companies however can keep customers loyal as long as they follow the basic rules of cultivating any relationship which include fairness, openness and transparency.  Congruency is also hugely important. If you say you value customers, you have to act in a way that demonstrates that and I’m not convinced that the way auto renewals are currently handled represent the best outcome for customers. Loyalty is increasingly a two way street and needs to be viewed as such by both parties. As long as companies don’t give customers a reason to change, most will remain loyal as long as it remains convenient.


NRAM – ‘not right about much’…

Many years ago, I took out a Northern Rock mortgage, probably at the time when the company was at the height of it’s success and a good few years prior to it’s bail out by the Bank of England in 2007.There’s a brief history of events here if you want a reminder and I’m sure you remember the televisions images of the many people queuing outside branches to withdraw their money, worried by the thought of losing some or all of their savings.

NRAM (Northern Rock Asset Management) was created after the company was restructured in 2010 and remains in public ownership and managed by the Government. Northern Rock plc was sold to Virgin Money in 2012.

The mortgage itself is now long gone so I was quite surprised when I got a letter from NRAM yesterday. What surprised me more as I read down the letter was the fact that there was with a cheque attached to the bottom with the princely sum of £76.62 exactly! Don’t get me wrong, I wish these sort of surprises would happen more often! Interestingly the opening line on the letter read ‘NRAM is committed to providing our current and previous customers with a great level of service ‘ – sounds like a line you’re fed before being told something’s gone wrong – or am I just a cynic? but then we got to the point. The apparent reason for the refund was a result of an administrative error when the account was originally set up. However the letter omitted to explain what the exact error was so naturally I was curious to understand more and to know whether this was the extent of the issue or not. In addition to this, the cheque was made out in joint names, understandably given I was married at the time but I was unsure whether I could now cash the cheque in it’s current form. So I called the ‘UK based call centre’ to ask them a couple of questions – what was the error and how do I cash the cheque. The girl I spoke to was very polite however her first response was ‘we’ve had no communication about any of this and so I can’t tell you anything.’ She then went on to add that I should get a letter shortly explaining everything. ‘but shouldn’t that be the other way round?’ I responded. ‘I quite understand’ she said ‘but I can’t do anything about it!’ ‘But if you’ve sent loads of cheques out without any explanation, then surely loads of people are going to call you with questions which you can’t answer because you’ve not had any communication? And so isn’t that a waste of everyone’s time and money?’ Again, she replied, ‘ I quite understand but there’s nothing I can do but I’m more than happy to pass on your feedback’. ‘No don’t worry I said’ and then to add to the debarcle, it transpires that in order to get the money, I’ve got to return the cheque and ask for a re issue!

This is business basics surely isn’t it? We’re not even into the realms of delivering great customer experience yet not to mention wowing the customer. It’s what Tom Peter’s would call ‘sticking to the knitting – being great at the core business and getting process steps in the right order, whether they be short term ones like this around a refund project, or the day to day core operational processes that service delivery is built on. Get a step in the wrong place or out of order and everybody looses. Customer effort increases as do levels of frustration for both customers and employees and overall levels of dissatisfaction. In the cold light of day, this is borderline madness whether a genuine mistake or an ill thought out and mismanaged project – the impact is the same.


A quick look at the NRAM website uncovered this gem of a statement ‘We are making a positive impact on the lives of our customers, whilst maximising value for the UK taxpaying public’ Really?? and this one … ‘Government owned. Mortgages in expert hands’. So where’s the value in having to field a number of excessive telephone calls, hundreds, or even maybe thousands because letters went out in the wrong order?? The girl I spoke to sounded frustrated and it was only 9.30am. I reckon she was in for a long day….

Everybody loves a queue..

queueI’m not a fan of shopping at the best of times, so when I have to do it, I want to be in, out and done with military precision so I can spend time doing something far more favorable. On this particular weekend visit to this national pet store chain, we only wanted one thing so my perception was that this shouldn’t be too onerous or time consuming. However, this  particular branch has previous form for crimes against the customer – notably a distinct lack of till operators which result from personal experience in unnecessary queues. Maybe I’m biased but it’s not rocket science is it? – give customers what they want, quickly, efficiently and without wasting their time or money and then let them get on their way. Excessive queuing contradicts this law of customer experience and ignores the impact of the cognitive ‘recency bias’ (the tendency to weigh recent events more than earlier events). Out of the last 3 times I’ve been to the store, the situation has been exactly the same. One lone person manning the tills, who becomes increasing uneasy at the growing queue of customers. On this visit, they even rang their ‘I need some help’ bell twice and still no one came. It’s frustrating for everyone concerned so why allow it to happen? Interestingly, on the company’s website, the banner strap line says ‘where pets come first’. I’m sure they do, but pets have owners, and it’s the owners that spend the money isn’t it?  Think I’ll wait in the car next time..


The cost of a dissatisfied customer

Here’s the link to a recent article I wrote that featured in the June edition of Customer Experience Magazine. 

The article talks about the cost of customer dissatisfaction and the quandary organisations face between short term actions today and the immediate impact on the bottom line, versus the longer term pay off and benefits of having loyal customers which result in increased sales, positive word of mouth and improved financial results. The issue in part, is that you can’t bank loyalty now, you have to invest in it for the future and that’s a difficult discussion to have if people aren’t willing to take the long term perspective. What do you think?