BA managed to make its customers feel they were flying the 'world's favourite airline', but it seems insurers couldn't care whether they have any customers, says Anthony Hilton
At a seminar on pensions last week Andy Street, the human resources director of the John Lewis Partnership, explained why his company still had a non-contributory defined benefit pension scheme that was open to all its employees. There were two reasons he said. The first was out of principle, in that providing such a scheme is what a good employer should do. The second was out of self-interest.
What distinguishes John Lewis stores and the parallel Waitrose supermarkets business was not the quality of the goods but the quality of the service. The pensions promise was part of the overall corporate strategy of always trying to get the very best from its staff, because otherwise how could it differentiate itself from all the other stores and supermarkets, most of which sold essentially the same products. "The customer has to be able to see the difference the moment he or she walks in the store," he said.
I recall Maurice Saatchi saying something similar to me in the heyday of his advertising for British Airways, when "the world's favourite airline" was the slogan and people loved it in spite of British Airways' prices being significantly higher than the competition.
The advertising campaign captured the perception that British Airways' customer care was noticeably better than the competition. Saatchi said, however, that the real insight was in relation to the business model, which proved that you could charge significantly more for a commoditised product - all the airlines flying the same planes to the same places - provided people felt it was worth paying more because the customer experience was so much better.
In those days the passengers had to notice the difference the moment they stepped on to the plane. More realistically today they must feel it when they log on to the website to buy the ticket - which is much harder to do.
All this is a long way from insurance but it should not be. Insurance is certainly a commodity over a major swathe of its activity, but the industry has never really understood customer service and has never begun to approach the dedication to the concept shown by John Lewis. Executives still don't see it as fundamental, that which should come before all else.
Indeed, in big companies even now employees are seen more often as a cost to be cut than as an asset to secure repeat business and premium pricing.
The 4,000 job cuts announced last week at Norwich Union/Aviva are a case in point. We are told that most of the jobs will disappear rather than simply transfer to a call centre in India, but the point must still be made that whatever the cost savings all the insurance companies have made from outsourcing, the result has been to make it impossible for a customer to resolve a problem of any complexity without first being reduced to impotent apoplexy.
Provided the customer has a bog-standard purchase or claim then the call processing works - the moment there is anything out of the ordinary the ordeal the customer is put through to get resolution is something you would not wish on a dog.
Where the industry goes even further wrong is in dealing with the bit that is not commoditised. Arguably, every individual customer and every circumstance is different and the insurance company or the intermediary ought to be rewarded for recognising this and dealing with it appropriately through advice and guidance. But so much of insurance selling is geared to price, as if nothing else matters. And if that is the signal the companies transmit, they should not be surprised if that is the way the customer makes his choice. IT
