2009: More Th>n, Creating Loyal Relationships - Case Study

More Th>n enjoyed a resurgence in loyalty when it offered customers their own personal contact manager.

Key insights

• In a commoditised market More Th>n decided to buck the industry trend by putting a personalised service at the heart of its customer relationship management as a source of competitive edge.
• Once a pilot programme proved the worth of creating customer managers, the programme was rolled out across the company and saw satisfaction, retention and cross-selling rates rise markedly.
• It had the added benefit of enhancing staff motivation by empowering front-line employees to take ownership of customer relationships.

Summary

More Th>n is the direct arm of RSA, one of the world’s leading insurance groups. It launched in June 2001, offering financial services via the internet and telephone. It provides over two million customers with access to an extensive product range including home, motor, pet and travel insurance.

The company wanted a customer relationship programme that would maintain a two-way dialogue with its customers. The result was an initiative which offered every one of them the opportunity to have a personal contact manager within the customer service team who could deal with their queries and requirements. Each manager would have a direct line and personal email address which they supplied to their customer contacts.

It proved to be a huge challenge and demanded great commitment from stakeholders across the business. But the effort paid off in full: a pilot programme delivered double-figure improvements in retention rates and led to the programme becoming part of the core offering in the marketing mix to key segments. Rising retention rates and sales, as well as a boost in staff motivation, have reflected its continuing success.

A cluttered and commoditised market

Over the last few years the insurance market has become hugely competitive, with consumers able to choose between nearly 400 providers and an explosion of the aggregators. This has led to heightened promiscuity among customers who are savvy enough to know they get the cheapest deals by moving policy every year.

Because there is a perception of very limited product differentiation and with low customer engagement (even during the purchase process) price often dictates who people insure with. That’s why the sector spends over £200 million a year on media, battling it out to create switchers in order to acquire new customers. It then relies on retention and cross-selling to drive profitability.

From its very conception in 2001 the More Th>n brand set out to give a better offering in the insurance market (Figure 1). The development of a ‘price plus’ strategy had seen it grow into one of the top providers in the country. However, in a market that adapts very quickly, it couldn’t afford to be complacent. So it had to be continuously striving to keep ahead of the pack by creating new sources of competitive advantage based on its brand philosophy that ‘We do more’.

A framework for encouraging dialogue

The company’s qualitative research had given it two very powerful insights:

• Customers hated ‘call-centres’. A quarter of respondents found dealing with people in call centres one of the most infuriating aspects of their day-to-day lives. Long waiting times, slow callbacks and the frustration of having to repeat their problem to numerous call handlers who were based in foreign countries were often cited by consumers as reasons why they disliked dealing with large organisations in this way.
• They wanted to be treated differently as existing customers. Many of them mentioned their annoyance that they didn’t feel they benefited or were rewarded for their custom, often feeling that new sales were given priority over servicing existing customers. Some canny individuals would even resort to calling sales lines to be transferred to customer services as they knew it would be quicker.

The company decided to tackle these insights head on. It developed a pioneering and ambitious new customer service initiative whereby every customer would have the opportunity to have a named contact within the customer service team who could deal with their queries and requirements. This would encourage a two-way dialogue with customers, with an emphasis on service and satisfaction to increase profitability, rather than purely pushing products outwards.

The key objectives were:

• To create competitive advantage by building a strong service ethos in an otherwise commoditised market.
• To increase customer satisfaction and thus loyalty.
• To increase value by customer.
• To increase motivation levels among sates staff.

Making the commitment

The programme began with a pilot scheme at the end of 2006/beginning of 2007, where 60,000 motor and home insurance customers were contacted by email and offered a personal named contact in More Th>n, known as their ‘personal customer manager’ (PCM).  It was so successful that the programme was eventually rolled out to the entire customer base.

But the scale of the task was huge and demanded great commitment from stakeholders across the business because:

• PCM’s needed to be selected, trained and monitored.
• The company had to undertake the biggest single communication campaign since brand launch.
• It had to re-engineer its customer communications plan and service delivery model to incorporate one-to-one interaction with the PCM.

The PCMs were specially selected to be able to handle customer enquiries on the full range of More Th>n products and services. Customers could contact their PCM via a direct telephone line or email with any insurance query from a simple policy change to checking on the progress of a claim.

Each PCM was empowered to build personal customer relationships through this new contact approach. Where a PCM was personally unable to handle a particular issue — for example, an accounting error — they would still ‘own’ that customer experience from beginning to end to ensure timely and appropriate resolution for the customer and provide regular communications.

In providing this closer, more personal, relationship More Th>n found that customers were more likely to purchase additional services as well as increasing the likelihood of them remaining with More Th>n across each renewal cycle.

Covering every base

A key consideration for the company was its ability to deliver this initiative without affecting either the profitability of its products or the premium paid by the customer. So the goal was to make this a no-cost option while still meeting the brand promise — and to do so without any negative impact on service delivery to other areas of the business.

An audit of UK call centre capabilities was carried out, followed by the creation of teams of high-performing consultants who could become PCMs. Workshops were run with the teams to explain the strategy and further training was provided so that they were fully committed to
their roles and responsibilities.

It was notable that motivation levels within these teams increased dramatically as a sense of ownership of the customers developed. This resulted in a pronounced reduction in sickness and absenteeism and saw sales success by individuals increase. It also created a new performance level with the customer services teams which other employees could aspire to achieve.

The key element was that customers always had a contact they could approach directly. So the company emailed or wrote to customers to notify them of any changes to the person responsible for their account.

Since generating sales was integral to the programme, the company designed the marketing communications to come from the PCM personally wherever possible. This included news on the latest offers and product enhancements, to softer messages such as a card at Christmas or the offer a free winter health check for their car.

A more than positive outcome

Measurability was a critical factor. The company needed to prove to its sponsors within the business that this new approach would have a positive impact on the bottom line. All customer activity was thus tracked in two groups: customers who had opted in to the service either actively or through automatic allocation, and those who hadn’t.

The results showed a significant uplift in renewal rates among those registered for the service indexed against those who had not, as Table 1 shows. It also proved that cross-selling was at much higher levels through the PCM relationships than those with the control group (Table 2). These were primary objectives for the scheme, adding millions to the balance sheet in premium income.

Table 1 Renewal rate comparison

Table 2 Cross-sell rate comparison

The analysis also revealed that the service had a positive effect on mid-term cancellation rates. For these purposes this was defined as a cancellation that took place more than 15 days before or after the renewal date. Table 3 compares cancellation rates between those customers who had registered for the service and those who had not.

Table 3 Mid-term cancellation comparison

Strengthening the customer bonds

Research following the pilot also showed that users of the PCM service were significantly more likely to say that the initiative had raised their opinion of More Th>n’s customer service in general. They were also significantly more likely to be completely satisfied with More Th>n’s customer service.

Other key findings from the research included:

• 57% of the pilot customers researched said that having a PCM would make them more likely to take out other More Th>n policies.
• 71% said they were now more likely to recommend More Th>n than before.
• 61% said that having a PCM would encourage them to remain as a More Th>n customer for longer.
• 65% said they would use the service again.

An added bonus was that the introduction of the PCM service brought More Th>n unprecedented amounts of media coverage in consumer titles and the national press. While it is very difficult to quantify the value of this, positive endorsement in influential media delivered great benefit in terms of new business generation, customer retention rates and staff satisfaction.

Continually refining the offer

PCM has now became a core part of the offering in More Th>n’s value-based segmentation programme. The segmentation model was built on a multitude of variables and was able to classify groups by their value based on their likelihood of buying other products as well as their premium, claims and loyalty ratings.

Findings from research found that the company’s most profitable segments (‘prudent and proud’ and ‘discerning discoverers’) were also the very same people who placed an increased importance in customer service relationships. Because of this, the company could prioritise the automatic allocation of PCMs to these two segments while less valuable and price-focused segments could be offered the service on an opt-in basis. This enabled the company to be operationally adept with its resources to ensure those that benefited from the service were those that offered most commercial return to More Th>n.

In 2008 in the biggest single campaign since the launch of the brand, over 1.3 million More Th>n customers were mailed or emailed to invite them to register for a PCM (Figure 2). Customers who were mailed could complete and return a coupon to register for the service or, like email customers, could choose to register themselves for the service online using a dedicated page on the More Th>n website.

The customers were then allocated to their named contact and a letter or email sent from the personal customer manager introducing themselves and providing their direct contact details.

After launching to existing customers, More Th>n then placed the PCM service at the heart of it’s ‘MORE is…’ brand campaign by advertising the service to new customers on television, within mailing packs, online and in fulfilment literature (Figure 3).

Going the extra mile
One of More Th>n’s customers wanted to give his wife a Christmas to remember with a brand new car. The only problem was that he needed an insurance certificate to drive it off the forecourt at a time of year when everything slowed down.

His personal customer manager liaised with the office nearest to the customer’s home and arranged for the documentation to be printed locally. The manager then sent the customer a route planner to show him the way to the office. The Tuesday after Christmas, the company received a phone call saying thank-you from his grateful wife. They subsequently took out home, pet and travel insurance with the company.

The company’s decision to concentrate on offering customers a highly-improved value proposition thus not only paid off in higher levels of customer satisfaction and ultimately the bottom line, but it also motivated front-line staff by empowering them to take greater ownership of and accountability for their customers.

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