I have been studying the 2013 UK report by Nunwood’s Customer Experience Centre and in this post I share with you what shows up for me.
Which are the UK’s Top 10 Customer Experience brands and why?
Comparing to last year I notice that:
1. Amazon has dropped to fourth place. Why? The report suggests that this is due to two factors: reputation damage related to tax avoidance and performance of delivery companies.
2. QVC (TV centred shopping channel) comes in at no 2. It appears that in previous years the responses failed to meet the minimum required and so QVC was excluded.
3. The Co-operative Bank has not just fallen out of the Top 10, it has fallen out of the Top 100. Given it’s much publicised troubles centred on its finances this does not come as a surprise. Above all, it occurs to me, that a bank has to have a reputation for being financially sound.
4. M&S, one of the UK’s traditional and loved brands, has moved into the Top 10.
5. Four out of the Top 10 positions are held by two organisations – The John Lewis Partnership and M&S: organisations that have a reputation for caring about their people, caring about their customers and showing this through the quality-range- vfm of their products, and the quality of their service.
Which industries dominate the Top 100 Customer Experience brands?
Given that Nunwood has not done an analysis by industry, it occurred to me that it would be useful to do one. Here is what shows up:
The retail industry leads in the sense that 44 out of the Top 100 places are filled by retail brands. And 10 of the Top 22 customer experience brands are in retail (as classified by Nunwood). Please note I have not listed all of the retail brands in the Top 100 – too many brands.
The supermarkets take 3 out of the Top 10 places, 7 out of the Top 20 places, and 11 out of the Top 100 places. That is quite some domination given the relatively small number of players in this category. It’s interesting that all of the big names are in the Top 20 except for Tesco (47), Morrisons (29) and Lidl (53).
The food & eatery industry takes 14 out of the Top 100 places. None of the brands in this category is in the Top 50. It is interesting to note that Starbucks is missing from the Top 100. Could this be due to the brand damage that Starbucks has suffered due to the tax avoidance issue that has hit Starbucks much harder than say Amazon? Who says life is fair?
The travel & tourism industry takes 16 out of the Top 100 places. There is only one brand in the Top 10 (Virgin Atlantic) and three in the Top 20 (Virgin Atlantic, Butlins, Emirates). Looks like airline travel experience is not that hard to get right if you are committed to getting it right like Virgin Atlantic and Emirates. The surprise appearance (for me) is Butlins. It looks like Butlins have invested in their staff and their hotels and this is paying off.
The telecoms & media industry only takes 3 out of the Top 100 places. Do you notice who is missing? All the big brands like Vodafone, Sky, EE, BT, O2, TalkTalk, Virgin Media …… yet these are the very brands that do much talking about customer service, customer experience, customer-centricity. Seems to me that all this customer talk could just be ‘marketing talk’.
The financial services industry takes 12 out of the Top 100 places. And like the telecoms industry none of the big brands – Barclays, RBS, Lloyds, Santander – are present. It will be interesting to see how much headway the supermarket brands - M&S Bank (23), Sainsburys Bank (83) – can make in this industry. Given the shift to digital-mobile banking, it would be interesting to see what will happen when the likes of Amazon decide to go into that market.
The energy & utilities industry. Have you noticed that not one of the energy and utility players is in the Top 100? No British Gas, no EDF, no Npower, no E.on, no Thames Water, no Severn Trent ….. If the energy industry proves anything it proves this, you don’t need to pay attention to customers when you have structured the industry into an oligopoly and customers have to come to you to buy an essential product.
What does it take to be a Customer Experience leader?
If there is one thing I am clear on it is this, one cannot become a customer experience leader by bolting on customer experience trinkets to the existing way of being-doing. This is about as effective as taking a frigate, adding bits and piece of a fighter plane (say wings), and expecting the frigate to be a great fighter plane. That is just stupid. Most of us can see this stupidity when it comes to warships and fighter places. When it comes to organisations, it is amazing how few see the stupidity of taking this route. What does the Nunwood report say?
Culture and climate are the foundation stone of great experiences. Experiences are delivered through people, the above companies are focusing on creating a culture and climate that starts with meeting all of the customer’s needs, emotional, rational and transactional and then replicating across channels.
Customer experience has many moving parts the key is an integrated approach across a business. It demands an intense focus over the long term. It has to be kept on everyone’s daily agenda.
This requires customer experience to be woven into the fabric of the company, reward, performance management and planning.
Enough for today. In the next post, I will take a more detailed look at some of the more interesting brands in the Top 100. Until then I wish you the very best.
Amidst the slavish devotion to customer experience and the ideology of customer-centricity I find Ryanair refreshing and instructive – including its recent change in stance towards how the organisation treats its customers. What can we learn from Ryanair and this change in stance?
Financial fortunes (not customer needs) shape management decisions
I find it instructive that trigger for this change of stance is due to a change in its financial fortunes:
- profits may miss or be at the lower end of its range of 570m euros to 600m euros (£480m to £508m);
- a dip in ticket prices and booking levels for September, October and November;
- the continued success of its competitor (Easyjet);
- shareholder concerns that customer service issues were hitting sales.
It occurs to me that what is refreshing about Ryanair’s management team is the refreshing honesty about what motivates-drives their actions. According to this article, Ryanair’s COO and deputy CEO ‘has dismissed the idea of “wholesale changes” at the carrier as it attempts to improve customer service’. Why is that? In the words of the COO
“Our model is to satisfy shareholders. There are other models to satisfy passengers.”
I say that a safe assumption, for any publicly listed company, is that the focus on the management team is no meeting the financial numbers. And any talk of customer-centricity has to be interpreting within this context.
The critical importance of the business model and how it shapes organisational actions
In order for there to be a viable business there has to be a viable business model. Using the business model canvas this means that the following business model elements have to fit together effectively: revenue streams, customer segments, customer relationships, distribution channels, value proposition, cost structure, key activities, key resources, and key partners.
If you take a deeper look at the business model canvas you cannot help but notice that right in the centre sits the Value Proposition. The organisation has to engage in specific activities to create the value proposition. These activities and the way they are carried out determine the cost structure of the business. Therefore, it is essential that the choice of customer segments, customer relationships, distribution channels and revenue streams deliver revenues that exceed the cost base and deliver a suitable return on investment.
It occurs to me that Ryanair’s COO understands the implication of the no frills airline model a lot better than the media which has been implying that the Ryanair management team have seen the light and will be making significant changes. This is what the Ryanair COO is reported as saying:
There is a balance and maybe we have gone too far one way. But the idea there is going to be wholesale changes is wrong.
We need to be better at communicating with customers, but that is no big deal.
When we take €70 from someone for having the wrong size bag we should do it with sympathy rather than glee.
Great advice for all businesses: don’t unnecessarily annoy your customers
I notice that Michael O’Leary (CEO, Ryanair) has woken up to the fact that it is not wise to unnecessarily annoy customers. He is reported as saying:
We should try to eliminate things that unnecessarily annoy customers.
It occurs to me that this does not go far enough. If you are in a management position where you have the power to shape organisational behaviour then I encourage you to end policies and practices that unnecessarily annoy:
- your customers;
- the people that work in your business and create value for your customers;
- your distribution partners;
- your suppliers.
Why? Because that which is unnecessary should not be done. Doing that which is unnecessary and annoys key stakeholders is stupid: self defeating in the longer term.
It does not pay to steal in the longer term
It occurs to me that it is worth bearing the long term in mind. Whilst it is possible to escape the consequences of your actions in the short term, this is rarely the case in the long term. In the long term your history catches up with you. When I was a child my father used to tell me stories to do with human nature. One story, I have remembered vividly, it’s moral was ‘If you steal expect to get caught, sooner or later. The only way not to get caught is not to steal.”
Looking at the Ryanair situation, it occurs to me that Ryanair has been stealing from its customers for many years and this is the year when Ryanair’s management has got caught. And so is having to do something about it.
What did Ryanair steal from its customers? The humanity that one human being expects and counts on another human being to deliver: human dignity.
Does strategy matter?
If you do not think that it matters then you are in good company. There are many who question the value of strategy. And I see many companies where there is no formal strategy; the informal strategy is to keep doing what has worked in the past or to chase what is fashionable today.
Strategy v Execution
When it comes to questioning strategy there are two schools that are particularly prominent. First, there is the school of execution. The execution school which says that strategy is waste of time. Why? Because strategies are generic-obvious and what matters is execution. The ability to turn strategy into the daily live of the organisation. Clearly, there is some truth in this school. Strategy which cannot be operationalised is waste of time-resource.
Strategy v Culture
Then there is the school that says “culture eats strategy for breakfast”. Yes, culture is powerful. Culture determines what gets done and how it gets done. A strategy that does not take into account the fit with culture will meet lots of resistance. Getting people to enact such a strategy will be like fighting a guerilla war with an enemy who is patient and cunning. What is forgotten is that culture can be and is influenced-shaped-shifted through strategy.
To see strategy and culture as being separate and distinct is a gross misunderstanding. This misunderstanding arises due to our reductionist-analytical thinking. Strategy and culture are interlinked. Put differently, if you change strategy, you will take actions that will influence the culture. And if you change culture it will eventually influence the strategy.
HBOS: strategy shapes culture and leads to downfall?
If you still have doubts over the importance/significance of strategy then I say let’s consider the case of HBOS bank and the latest report on how this bank was brought to its knees. The HBOS bank was rescued, after significant arm twisting and sweeteners by the UK Govt, in 2008 by Lloyds bank. Why did a bank that was valued at £30bn when it was created in 2001 need to be rescued? Because it racked up £47bn of losses on bad loans.
Who were the architects of the HBOS downfall?
Three Tops have been singled out in the report published by the parliamentary commission:
The primary responsibility for the downfall of HBOS should rest with the Sir James Crosby, architect of the strategy that set the course for disaster, with Andy Hornby, who proved unable or unwilling to change course, and Lord Stevenson, who presided over the bank’s board from it’s birth to its death.
How was strategy responsible for the downfall of HBOS?
Here is what the parliamentary report says:
The strategy set by the Board from the creation of the new Group sowed the seeds of its destruction. HBOS set a strategy for aggressive, asset-led growth across divisions over a sustained period. This involved accepting more risk across all divisions of the Group. Although many of the strengths of the two brands within HBOS largely persisted at branch level, the strategy created a new culture in the higher echelons of the bank. This culture was brash, underpinned by a belief that the growing market share was due to a special set of skills which HBOS possessed and which its competitors lacked. The effects of the culture were all the more corrosive when coupled with a lack of corporate self-knowledge at the top of the organisation, enabling the bank’s leaders to persist in the belief, in some cases to this day, that HBOS was a conservative institution when in fact it was the very opposite. :
The growth of HBOS’s Corporate Division was not the result of superior performance but of its high-risk strategy. The nature of its activities did not alter after the creation of HBOS, although the pace of growth accelerated and the scale significantly increased. When the Division later incurred huge losses, these too were due to the particular nature of its business and resulted directly from its high-risk strategy. Its losses were on a larger proportionate scale than those incurred by any other major UK bank. This was caused specifically by its distinctive loan book, including concentration in commercial real estate and leveraged loans, high exposure to single names, a high proportion of non-investment grade or unrated credit and holdings of equity and junior debt instruments. The loan book was therefore significantly more exposed to the domestic downturn than that of any other large UK corporate banking businesses.
The acceleration in loan growth, in part caused by the Division’s neglect of the storm signals of 2007 and 2008, is likely to have exacerbated the scale of the subsequent losses. However, even without this acceleration, the Division would still have incurred disastrous losses. The roots of all these mistakes can be traced to a culture of perilously high risk lending. The picture that emerges is of a corporate bank that found it hard to say ‘no’.
In view of the reckless lending policies pursued by HBOS Corporate Division, we are extremely disappointed by the attempts of the most senior leaders of HBOS at the time to attribute the scale of the consequent losses principally, or in significant measure, to the temporary closure of wholesale markets. The lending approach of the Corporate Division would have been bad lending in any market. The crisis in financial markets was merely the catalyst to expose it. Losses in the Corporate Division did not prove temporary. Indeed, we estimate that the HBOS Corporate loan book has continued to incur significant impairments in every year since 2008, demonstrating that the losses were the result of incompetent lending and not caused solely by the events of 2008. Furthermore, HBOS’s Corporate Division was significantly more exposed than other banks to the downturn in the economy due to the nature of its loan book.