The customer should always come first

The service sector needs to alter its priorities, writes Roger Trapp

Given the wide acceptance that Britain's service industries are in better shape than the "manufacturing base", it comes as a surprise to hear it suggested that factories could have something to teach the likes of banks and insurers.

And yet Steve Smith, chairman of the consultancy Quest Worldwide, is adamant that efforts made by the car industry, in particular, to bring itself up to the production standards set by Toyota leave much of the financial services industry standing.

Dr Smith argues that car companies are much more efficient and customer- focused than a lot of banks and other operators in the financial sector.

The combination of efficiency and customer service is deliberate, and Dr Smith believes that the continuing difficulties experienced by companies in a range of sectors have a lot to do with the tendency to concentrate on one aspect at the expense of others.

Banks have recently put a great deal of effort into establishing call centres. But although these are commonly described as "customer service centres", they are actually much more about efficiency. The effect is a short-term boost to profits through the savings made, but in the long term, business suffers because customers are alienated, he says.

In the competitive environment in which most organisations find themselves, strategy, agility and energy are essential for survival, Dr Smith says.

"None of them is enough on its own. There's got to be a holistic blend," he says.

"Business energy is the buzz, the adrenaline, the can-do spirit" that blends strategy and lean service by mobilising people into action. The importance of ensuring that all three elements to the concept are present can be seen in all the failed initiatives introduced by countless companies over the years. As Dr Smith says, such problems arise because even the best efforts can be counter-productive if they are not strategically driven and if it is not obvious to all how they fit in with the general aims of the organisation.

Dr Smith feels that is especially challenging at a time when so much management emphasis is on creating "shareholder value".

"The most important value is customer value," says Dr Smith. "Just looking at it as cost reduction is missing the point - it's a small part of the equation."

It is the traditional financial services industry's continuing inability to refocus itself around the customer that has created the space in which Virgin and other new entrants can thrive, Dr Smith says.

The company builds its database around the individual customer and uses that information to come up with appropriate products rather than the other way around. Indeed, it is this fundamental focus on products that arguably makes many financial organisations less service companies than versions of old-fashioned manufacturers.

In keeping with his policy of abandoning the either/or in favour of a holistic approach, Dr Smith talks of organisations needing to commit themselves to "radical evolution". The idea is that, while revolution can sometimes be too much for an organisation, evolution is not enough to ensure it is doing enough to remain competitive.

Consider the example of the Co-operative Bank, which a decade ago looked in danger of being squeezed between the big high-street clearers and new, mainly American, entrants to the UK market. The bank had comparatively few branches, but was good at serving customers, so it came up with a number of ideas for building on that strength. It pioneered the gold card for life; it was one of the first to follow First Direct into telephone banking; it set up call centres that put a premium on the quality of service; and, famously, it introduced its ethical banking policy.

The last initiative is a classic case of an organisation seeking to appeal strongly to certain customers - in this case, customers increasingly made up of professionals concerned about what banks were doing with their money - rather than seeking to be all things to all people.

The policy is seen as critical to the strong profits the bank has enjoyed in recent years. As Dr Smith says: "Instead of being squeezed out, it's got a niche."

But the problem for the Co-op, as with any other organisation that does well, is sustaining its success in an increasingly competitive environment. After all, it is not so long ago that Sainsbury and Marks & Spencer seemed unable to do no wrong. In the words of Dr Smith: "Success breeds success, but it also breeds complacency."

Hence the need for "radical evolution".

Suggested Topics
people'It can last and it's terrifying'
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
footballStriker has moved on loan for the remainder of the season
footballFeaturing Bart Simpson
New Articles
Olivia Colman topped the list of the 30 most influential females in broadcasting
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
ebooksAn unforgettable anthology of contemporary reportage
news Video - hailed as 'most original' since Benedict Cumberbatch's
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Technical Software Consultant (Excel, VBA, SQL, JAVA, Oracle)

£40000 - £50000 per annum: Harrington Starr: You will not be expected to hav...

SQL DBA/Developer

£500 per day: Harrington Starr: SQL DBA/Developer SQL, C#, VBA, Data Warehousi...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering