Customer disservice

INSIDE BUSINESS Marketing: clients are equal but some should be more equal than others

WE have all seen the signs in banks telling us that the branch will open a little later tomorrow because of staff training. We have also seen the boxes of leaflets urging us to pass on our comments - good or bad. But we are generally not taken in.

It appears that our cynicism is well placed. According to a survey of financial services, only 37 per cent of companies have a team dedicated to customer service and fewer than half have any budget earmarked for developing long-term customer relationships.

Julian Berry, whose consultancy conducted the study with sponsorship from AT&T, the US-based telecommunications and electronics group, says the findings show that for all the talk of customer service "the reality in UK financial services organisations is that customer focus programmes are immature".

He adds that almost without exception these groups say they are concerned about customers "but when you ask searching questions, you get different answers".

It is, for example, well known that banks think in terms of accounts rather than customers - with the result that they are ill placed to cross- sell products. Indeed, they often annoy otherwise happy customers by seeking to sell them things they already have.

While retailers and other sectors are compiling ever more detailed information about the people with whom they do business, it emerges from the survey that just 9 per cent of the 60 senior marketing managers from Britain's leading banks, insurance companies and other consumer financial services groups had systems to measure the direct contribution of individual customers to profits.

This would perhaps not be so remarkable if it did not sit so oddly with the other professed aims set out in the report Putting the Customer First? A report into customer focus in the consumer financial services industry. For example, 88 per cent said generating more revenue per customer was the vital factor driving customer focus in the consumer financial services industry. Ninety per cent said retaining profitable customers and increasing levels of repeat business were seen as key indicators they planned to use as measures of success for customer focus.

Mr Berry believes the report is the first to examine customer focus in this area and says the response represents about one- third of the UK's consumer financial services industry. "The results show how an organisational structure and information technology structure that focuses on financial product lines rather than customers is highly ineffective in managing customers," he says.

Consequently, there are plenty of opportunities for organisations supplying and operating properly organised databases as well as for financial services groups, such as the telephone-based ones, that are showing signs of getting it right.

Mr Berry predicts banks will speed up their move away from their old image as "socially minded" organisations that treat all customers the same. Cross subsidies will end. In stark contrast with the 1980s when market share was all, they will become increasingly choosy about with whom they want to do business. As a result, a new banking sector may have to grow up to handle the people not wanted by the increasingly commercially minded mainstream suppliers of financial services.

On the bright side, junk mail should diminish as the senders find out more about their existing and would-be customers.

However, Mr Berry is equally confident that progress will be slow. This is because, firstly, moving power and budgets away from product managers to customer service people will involve a "huge cultural change", and, secondly, appraising people on their abilities in the customer service area rather than according to previous criteria will also demand great changes to the reward system.