First Direct: Six experience lessons from the bank that bucks the trend

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First Direct CEO Mark Mullen explains why the bank is mentioned in the same breath as customer champions like Zappos.

The banking sector is hardly rich pickings for lessons in customer-centricity. This is the sector that was roundly criticised for its inability to resolve customer complaints quickly and effectively in a recent Which? report. It’s an industry which is lagging behind when it comes to delivering service, according to the Institute of Customer Service. And, lest we forget, with the general public laying the blame for the global economic crisis at its doorstep, this is the sector that has some of the lowest levels of consumer trust.

So it is truly extraordinary that First Direct is regularly mentioned in the same breath as customer-centric legends such as Virgin, Apple and Zappos. But then First Direct is indeed extraordinary.

“When you look at how many banks have been created in the last 30 years in the UK, the answer is pretty much zero to none,” says Mark Mullen, the bank’s CEO. “Some that were created have essentially gone into hibernation – I’m thinking of ING, Cahoot and Smile – some have only just been created so it’s too early to be declaring victory – like Metro – and the demutualised building societies were all bought by incumbents. HSBC bought Midland, so hardly what you’d call a new business. Santander bought Abby and Alliance & Leicester. But First Direct has been created from scratch.”

Created in 1989, First Direct has subsequently made a business out of bucking the trend. Named Best Financial Services Provider by Which? for the last three years, it has also been voted one of the UK’s coolest brands for several years, while customer experience gurus such as Shaun Smith regularly cite the bank as a case study in customer experience excellence.

“First direct was conceived to be different from day one,” insists Mullen. “It was born into an industry that almost was run for its own convenience in the sense that branches opened late, closed for lunch, closed early, didn’t open at the weekends, and were very formal and very focused on the importance of the branch manager and the bank and not necessarily on the importance of the customer. So First Direct breaks that paradigm by pretty much opening service lenders to a 24/7/365 proposition. And that’s what it was created to do.”

Here, Mark Mullen shares some lessons in customer experience excellence that we can learn from First Direct.

1. See the world from your customer’s point of view

“Dyson is an example of a brand that sees the world from their customer’s point of view. They are inventing to solve problems that they don’t like to have to experience. You become an innovative inventor like Richard Dyson, because you see a problem. And it might be ingenuity that gets you to the solution, but the problem you see is seen from a consumer’s point of view – which is essentially the pain in the arse of changing dust bags. When you look at the industry that creates that model, in whose interest is it to change it? Well not necessarily in the industry’s, because when you change it and get rid of bags, you end up taking a revenue stream out of the industry.

“Now, where in banking in the last 30 to 40 years have you had people who have genuinely radically reinvented the model itself? First Direct is the only one. If you look at Metro Bank, I see a bank that is trying to improve the way that branch banking works, whereas we completely dismissed branch banking and invented a new model of banking. And that is because we didn’t like a very simple fact – that as a customer you have to queue. Nobody likes to queue. Psychologically it devalues you. So if you see the world from the point of view of the person who is queuing and waiting, you get to First Direct. But most of the people in my industry don’t.  They see the world from the point of view of banking. But I genuinely believe it has nothing to do with your industry and everything to do with your mindset.”

2. Culture is critical – so recruit staff based on character and values

“Culture is everything – especially as a bank that doesn’t see its customers. The fact of the matter is that you probably won’t speak to the same person twice if you speak to First Direct. So how do you manage to create a level of consistency and reliability throughout the relationship? You can’t do that if you haven’t got really well-defined processes, really simple products and really consistently well-recruited and well-trained people. Because it wouldn’t work if you had to reinvent yourself every time you called us.

“We are very selective about who we recruit – about one in a hundred who start the process finish it. It is absolutely character and values based. It is much less focused on technical capabilities. It is then carried through the way that we onboard, and welcome people who join the business and the way that we provide buddies and coaching support for them and it infuses our work, culture and our philosophy and it infuses our behaviour towards one another. A lot of people who have come to First Direct think that we treat our own people with kid gloves and we mollycoddle them and that we have a higher tolerance for the niceties of human relationships - and that’s because we do! We have a very simple belief that if you’re not that way to each other, it is impossible to expect people to be that way to customers.

3. You get the behaviours you encourage and reward

“You are going to get the behaviours that you encourage and reward. There’s no doubt about it. The people are very different from one to the other – as people tend to be – but their attitude unites them. And the way that they are led unites them and the way that we recognise and reward and celebrate excellent customer service.

“We have got an online thankyou system through our intranet where anybody in this business can just send a thankyou to anybody for anything. So I sent five or six to different members of the team this morning because their mangers or team leaders have told me that customers have provided positive customer feedback. So at every opportunity to catch people doing something right and celebrate it, we’ll take that opportunity thanks you very much. And that’s not about selling stuff - I couldn’t care less about that, that’ll look after itself. It’s that the attitude of the bank is to delight customers, and if a customer takes time to tell you that you have done that, it is a big moment. It infuses our entire organisation.”

4. Use a broad range of data sources to create a complex picture of your company’s performance

“One of the beauties of a direct model is that it is infused with data and there are fewer grey areas in the customer journey. In branch banking, the branch is one of the great mysteries in terms of identifying how customers behave and what happens in branches and how conversations are recorded. Whereas in a centralised remote environment it is more possible to gather data, whether it be via phone or online, etc. and then to reconcile that data at customer level. And that is a huge advantage. So customer contact histories and customer interaction metrics are abundant, which means that we technically can tell whether we have done a good job irrespective of whether the customer has provided us with feedback about that or not – and that includes are we achieving our service levels on the phone, are we achieving our internet banking or mobile banking or SMS response SLAs. Because we know that we have done our homework and we know how good they have to be to drive the outcomes that we seek by way of satisfaction metrics.

“To some extent it is a bit like running an airline – you can tell there is a problem before anyone else has realised. But we then augment that with our complaints data, as you’d expect any company to, to understand what people are complaining about, and we augment it with post purchase contact surveys and point of contact surveys. So what I’m describing is that we’re building up a mosaic picture of how customers are interacting with your brand and how your brand is performing against its own internal metrics and measures. We have feedback from industry bodies, and we get feedback from regulators, and so that is a highly complex and nuanced picture that you’re building about the brand and the business.”

5. Watching customers is more informative than talking to them

“I would encourage anyone who is leading a business, or anyone who has any involvement in business, to watch customers/ People over-rationalise when you ask them questions. But when you watch how they actually behave as opposed to how they think they behave you get two very different answers. People are vastly more emotional about money, if not about banking, than they might admit to being in a rational post-purchase survey or any questionnaire or feedback group. Watching people is in my experience vastly more informative than questioning them.”

6. Open the door to customer opinions

“It’s not original in any way, but I think it is peculiar in banking to believe that your customers should have a say in the shape and behaviour of your business. There’s no barrier in the traditional sense between First Direct and its customers. There’s no line that is nice and clearly defined. We think that they are part of us and we’re a part of their lives. And we want that to be the case. The First Direct Lab is an opportunity for us to open the door to customers.

“We used to have something called the Little Black Book which was a recommendation site, we had an initiative called Talking Point, we have our social media newsroom, we have our Facebook pages, our YouTube channel… we have got any number of different ways that we can hear from customers and engage with them in an interactive way. Because it is their business. My salary is paid for by customers, it’s not paid for by anyone else. And I think the industry that I’m working in forgets far too frequently that 90% of all the money in it came from customers not investors. So the reason that the reason that the Lab is interesting to us is that it is your opportunity to express an opinion. But we’re not a democracy. We may not listen. We may not do what you want. But we’ll still give you the opportunity to express your point of view and be honest about it. We’re not afraid of what you might not like.”

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