In a hurry? We?ve highlighted the main points for you.
(Editor?s note: take your time over this one, though. Trust me. It?s worth it. This organization can see the future, and this article is the most compelling description of a customer-centred business model to have landed on my desk in years. So, press DND on the phone, grab a cup of coffee, lock the door and learn from the best...)

Putting Customers In Control
11 years on, how is the world?s most customer-centred bank changing? David Mead, Chief Operating Officer of the pioneering UK bank First Direct, recently provided a unique insight into how the best telephone bank in the world is changing to become ?the best direct bank in the world?, adapting its business model to fit the needs of the new e-conomy. He was presenting to board directors of major companies as part of the London-based Inspiration Group/Inspired Leaders Network Leadership 2.0 programme. eCustomerServiceWorld listened in on your behalf...


KEY QUOTE FROM THIS PAPER
"From our research we can see that there has been an explosion in diversity and choice, across every part of our lives. We are positioning First Direct as the editor of choice. There is a new currency for customers - time. Marketers have traditionally talked about two positions: low cost producer or ?added value?. This assumes that there is only one currency - money. But consumers in fact have a second dimension - time. Time pressure means many low-involvement categories will be dominated by products that are easy-to-buy, not just Value- For-Money. This becomes more important as time gets more valuable, and products become less differentiated. Meanwhile, for high-involvement categories, some consumers will want to invest time with providers who share their passion."

First Direct was conceived by Midland Bank in 1988 as an inspired and bold move to launch telephone banking. We opened in October 89 and just celebrated our 10th birthday last year. We?ve got one million customers and it is safe to say that it is one of the most coveted customer bases of any bank in the UK. Our ambition is to increase our customer base to two million in next three years and we actively acquire around 11,000 new customers every month. We have 4,000 people in three sites taking 57,000 calls per day. Around 200,000 of our customers now use our PC banking service.

We are the UK?s best telephone bank with the highest satisfaction and recommendation levels and have won numerous awards over the years.

When we look at customer satisfaction levels in conjunction with the likelihood to recommend, First Direct tops the chart at over 70% with the majority of the high street banks at around 50% or below. Three or four years ago we were at 90% but this has declined as customer expectation has increased and the competition has improved their offering.

The key with any business is to convert satisfaction to recommendation, which keeps cost of acquisition down and makes a significant contribution to growth of the business. At First Direct, we have a number of guiding principles, to which we have stuck doggedly over the years:

Building a brand differentiated by attitude and personality - the brand was very chic in the early days and our customers still have a remarkable fondness for the brand.

A proposition designed for the customer - we decided to build a bank for the customers and not for the bank. We didn?t and still don?t talk about the process but rather the customers.

Customer centric IT architecture - this was very unusual in the early days. It is less so now with all the competition around but it is still key. Being able to see the whole customer relationship is vital to CRM.

An internal culture founded on clear core values, constant mining of customer information and the relentless pursuit of alignment - unless the organisation?s core values are aligned with brand values, how can it convey that to the customer?

We have to make sure internally that our values and behaviours are consistent with the way we want the brand to manifest itself to the customer. We have six core values:

First Direct?s Six Core Values
responsiveness

openness

right first time

respect

contribution and

kaizen (continuous improvement).We?ve had these for over 5 years. However, some of them might change in the next two years. In addition we have six core brand values: extraordinary service, trust, efficiency, adult to adult, value and pioneering.

We are there for the customer?s convenience not ours. We don?t designate any hours as premium - no hours are more important than others. If you work night shift you get paid the same as day shift. This is important to help maintain our cultural integrity, to prove that every hour is important and that it is the customer that matters.

When it comes to the customer, they seem to define value in several ways: control, long term value, intelligent dialogue, quality of action and relationship with brand.

We don?t strive to always offer the best rate at a particular point in time but rather to offer the best value over a period of time. The brand has integrity because we offer consistent long-term value.

From our research, we find that our customers have six reasons for recommending us:
open 24 hours

telephone banking

efficient service

no bank charges

friendly service and

innovative banking.The first three are slipping away as reasons for recommendation as other people offer similar services in the market. The last two are rising rapidly, particularly with the launch of internet banking.

We have broken down our time in business into distinct eras of service:

functional superiority
- direct
- open
1989-92

the secret smile
1993-95

intelligent dialogue
1996-97

extraordinary customer service
1998

customer experience
1999

emphatically multi-channel
2000
The ?secret smile? was a phrase christened by our customers when they were talking about having better relationships with First Direct over the phone than with many banks face-to-face.

It never fails to amaze me how unintelligent some customer interaction can be but we strive to ensure that every customer conversation is intelligent. There is no scripting in First Direct - only in the initial security checks. It is important for the dialogue to be spontaneous and for it to have individuality. We want our people to have fun, have lively conversations, and look to match the customer?s expectations.

By 1998, our key questions internally were: How do you create raving fans? How do you delight the customers? And then in 1999, we were asking fundamental questions about the overall customer experience delivered by First Direct.

We do many things you?d expect when running our business: strong focus on understanding and responding to customer needs; operational excellence; progressive people management; clear statements of values and direction; good change management skills.

I?ve never been in a conversation or meeting in First Direct where somebody doesn?t say ?how does it feel for the customer??. When people stop asking that question, they have become too internally focussed and have lost sight of what First Direct is about; i.e. being aligned with the customer and in tune with the customer.

We don?t focus on project management but on change management. We?ve started using questionnaires to help set the level of change according to the level of our people?s resilience to cope with change.

Recruiting the right people is vital. We don?t look for high level of systems knowledge and 80% of our recruitment is NOT from banking. The ability to speak their minds, project their personality and high levels of resilience are much more important. We took the decision to do our major recruitment with Reed and created special tests just for that purpose.

We invest heavily in training and development. All new representatives go through six weeks initial training and then 18 months for ongoing coaching and accreditation. We effectively give them permission to be themselves and take pride in what they do. It tells our people that we trust them from the start. We aspire to wanting to trust everybody and are very rarely let down.

Every month reps have a one-to-one with their team leader and have an hour to review their previous month?s work. The team leader spends time with people listening to calls and uses this in the review. We are working hard to ensure that coaching is centre stage at all levels of the company.

Unlike most call centres, at First Direct call handling times are for budgeting and resourcing purposes only. We do measure wrap time and time spent facing the customer. But I just love our people talking to our customers as much as they want to talk. The vast majority of calls are handled at front end. We don?t want to waste customers? time passing them around unless it is absolutely necessary.

Most call centres have sales targets but we have concentrated on the following:
Discover - what the customer wants

Fulfil - the customer needs

Exceed - by ?wowing? the customer.The most fundamental difference in our approach lies in our culture. It is the most difficult thing to replicate and probably our greatest strength. Many people think it enables us to engage our people, leading to a genuine desire to give a better service to customers. They are absolutely right, but it does a lot more than simply motivating our people.

Our culture can be broken down as follows: Service + price = value; Culture + people = values; Value + values = brand. We have a constant struggle to keep these things properly aligned. It may sound like double Dutch to some of you but I spend a large proportion of my day keeping these aligned.

We fundamentally believe that every customer is an individual and must be treated as such. But we also believe that every person in our company is also an individual and we find that this downplays the team environment. We recognise individual contribution statements, using things like PLUS POINTS, which enable our people to receive personally tailored benefits, such as individual health care schemes, cinema tickets, company crñÔe, etc.

We changed dress code two years ago so it doesn?t specify what you can or can?t wear, but there are a number of objectives: please dress smartly; please don?t offend your colleagues; wear what makes you comfortable as an individual. In an empowered organisation, if you are offended by what someone is wearing you go direct to the person concerned to discuss it with them rather than going to a manager to complain. We encourage direct ?live? dialogue between people.

People genuinely want to do a good job - we are both constantly surprised and constantly delighted by this.

Our culture is deliberately low on status, hierarchy and politics. There is nowhere to hide. We all wear first name badges, which encourages dialogue at all levels.

We have lots of different ways of getting people involved. There are communications groups where people from around the company get together to discuss issues and thoughts. Then there is the ?people forum?, where representatives are elected from around the business to talk about issues of concern to everyone. Every year we have ?question time? where we put the board on a panel and get 100 people in at a time to ask the board whatever they want to know. The quality of the discussions in these forums is higher and more business-focused than some management meetings I go to - our people simply care.

There is a distinctive buzz, level of energy and level of passion that you can feel as you walk around the business.

Anyone who is a leader of people must get to know their people and put their needs first. We never talk about our people as staff or employees. These are individuals who really matter and deserve respect and I wouldn?t demean them by calling them staff or employees. We work tirelessly to remove status symbols. There are no offices at all and no privileges attached to rank. We are precious and protective about our culture.

People are always watching for inconsistencies in the application of our culture. Company cars are a classic example of reinforcing status so we took them out. The kind of culture we have at First Direct is difficult to achieve and very easy to destroy. You need to be sure that it is right for your business.

Trends
I think it would be reasonable for you to ask why First Direct has not yet offered mainstream Internet banking. In the beginning, all the feedback from our customers showed that they didn?t yet trust internet banking, but that situation changed more rapidly than we anticipated and we have, therefore, been a bit slow to respond to the change in mood of our customer.

From our research we can see that there has been an explosion in diversity and choice, across every part of our lives. We are positioning First Direct as the editor of choice.

There is a new currency for customers - time. Marketers have traditionally talked about two positions: low cost producer or ?added value?. This assumes that there is only one currency - money. But consumers in fact have a second dimension - time. Time pressure means many low-involvement categories will be dominated by products that are easy-to-buy, not just Value For Money. This becomes more important as time gets more valuable, and products become less differentiated. Meanwhile, for high-involvement categories, some consumers will want to invest time with providers who share their passion.

Consumers are becoming more discerning, more demanding and we have to respond to that in the appropriate way. Our business is very much about maximising people?s time and taking the hassle out of their lives.

First Direct?s strategy is to be the Internet bank you can talk to, with the proposition that the First Direct experience enables you to get on with what?s next...

We will have a proposition for people who want to deal electronically only. But we will be delighted if people want to call. We will not charge for the phone and it will be on a level with the other channels. We are and have been the best telephone bank in the world and now we will be the best direct bank in the world.

Going forward, First Direct will:
continue its emphasis on people and culture;
make greater use of systems thinking;
Increase choice via electronic channels;
redesign operations for a changing world;
concentrate on lean thinking and elimination of waste;
improve CRM systems;
reposition the brand; and
listen to customers and people.