Royal Bank of Canada is Canada's largest company by market share from a shareholders' standpoint, with more than 14 million consumer and B2B clients. It's been cited as a "most respected corporation" by a variety of banking industry organizations. And it boasts a top decile ranking of employee engagement. So even at 143 years old, RBC's position doesn't exactly resemble a burning platform for change.
Yet, the Canadian behemoth invested significant dollars and resources to transform its culture into a customer-focused enterprise. Two drivers sparked the investment: the rapidly changing financial services market and the demonstrated proof of the sustainable performance gained from customer loyalty.
For the most part, Canadian banks were serving their customers in an undifferentiated marketplace. Until 2004. Some of the banks started to expand their services, offering online banking. The increased competition caused client loyalty scores among the competition to improve. As a result, at RBC, total shareholder return began to slip and the company's coveted high client loyalty ratings started to fall.
"The rally cry was that we wanted to transform the company to organize ourselves better around the client," says Cathy Honor, head of cards and payment solutions, as well as the executive champion for client loyalty at RBC.
The resulting initiative was a CEO-led transformation called Client First, which the company eventually adopted as its ongoing enterprisewide customer loyalty strategy. It includes three goals developed by a cross-section of senior executives: organize the company around the clients; make it easy for employees to serve the client; and increase client loyalty. The strategy spread like wildfire across the organization, bringing with it rapid results, including jumps in customer satisfaction and loyalty.
Removing the layers Extraordinary leaders help to create a culture that fosters independence, creativity, and resourcefulness. They also find ways to put the customer at the center of the organization.
For RBC CEO Gordon Nixon, the organizational redesign had to start at the top. To prepare employees for success, they needed to know the vision and goals of the company and they needed to understand how their actions impact results.
This was no small feat given that the organizational redesign happened in a matter of months. At headquarters the initiative started by ensuring that everyone's responsibilities, as they relate to the customers, were clearly spelled out. Senior leaders increased their visibility throughout the organization by walking the floors and sending newsletters to employees—both important for promoting employee engagement and creating an approachable culture.
Throughout the rest of the enterprise the company proceeded to bring the organization closer to the customer by "delayering" the staff. For example, prior to the initiative, branch managers reported to an area sales and marketing manager, who reported to the regional vice president, who in turn reported to RBC's president. RBC removed the sales and marketing managers so senior management is closer to the people who deal with the customer. This plan eventually increased the span of control among branch managers. The company also removed some other senior roles and used the extra budget to hire additional client-facing employees in the field.
"We literally went through the organization and decreased the layers so management was closer to the customer, and simplified the rules and mandates to create a collaboration mechanism to [handle customer-related processes] quicker," Honor says.
Selling staff on change While top management blazed through that first stage of RBC's organizational change, most employees asked why they should do things differently when the company's financial performance was superior to its competitors'. The answer was to help them understand the financial reality of the business, says Gaétane Lefebvre, the vice president of client knowledge and insights, who, along with her team, is responsible for conducting the strategic marketing research for the organization and designing comprehensive approaches to measuring client loyalty.
Lefebvre and her team communicated findings to RBC staff across all levels of the organization, from the board level to the client-facing staff, that demonstrated the purchase intention of customer advocates versus those who were not. "We had to show that it's not about the financial performance today; it's about sustainable financial performance," she says.
To encourage employees to become customer centric in how they interact with customers, the group also created Client First stories to share with employees. These are videos of actual, highly loyal B2B and B2C customers. In the videos the customers talk about the importance of RBC tailoring its service to their needs and how making it easy for them to conduct business has turned them into loyal clients. "We wanted to inspire employees," Honor says.
The meetings and videos succeeded in converting employees to customer advocates. Even so, Honor refers to the organizational transformation as a "painful experience" that included implementing change processes, shifting the cultural attitude, and working through the uncertainty of job security. "No job was sacred," she says. "But in the end, the hard work paid off. It was absolutely the right thing to do. We are a better organized company, which is a better win-win for customers and employees. Yes, it's painful when you go through it, but because we did it so fast we got positive gains quickly."
Becoming a loyalty leader Those positive gains came in the way of increased client loyalty sparked by a comprehensive loyalty strategy of rewarding client relationships in addition to building new ones. One example is a new lineup of personal checking and savings accounts that give clients the ability to reduce their monthly account fees. Another is the introduction of Relationship Value Rate Pricing, a customer relationship reward that gives the clients preferred pricing on loans and mortgages based on the combination of products, balances, or terms they hold.
But rather than create a vice president of client services to oversee its loyalty efforts, the company instead mandated that establishing a loyalty strategy should not be the job of one person, but of all members of the senior team. So RBC formed a client-experience council with about 10 executives representing all lines of business and horizontal departments, such as marketing and sales, who met regularly to discuss the strategy. Of course RBC had measured client loyalty in the past, but the council elevated the loyalty discussion to another level. The group declared that customer experience and loyalty was paramount at RBC and they started to embed the loyalty messaging into all parts of the organization through collateral and at meetings. Now executives discuss customer loyalty at quarterly executive planning meetings. This process makes it easier as an executive team to dissect the gaps in loyalty and decide the necessary steps to close them. "It has truly demonstrated the seriousness [of the commitment to customer loyalty] to the organization," Lefebvre says.
The council also gave branch managers the autonomy and authority to develop client strategies tailored to their individual markets. For example, a branch in a rural area may ask customers to bring in photos of their pets to post. A branch whose customer base includes a large number of senior citizens may have benches in the waiting area. "Having the autonomy to make decisions brings them closer to the customer," Honor says. Lefebvre is responsible for all the analytics that fuel the program and deploys customer satisfaction and loyalty surveys for all the lines of business and channels. Her group identifies the customer trends for the organization, develops surveys, tracks the information, and then communicates the results to the rest of the organization.
When the branches implemented the tailored customer strategies, Lefebvre and her team measured the results through customer field quality assessment surveys. The council then crafted a plan to tie the results to employees' performance plans to encourage customer-focused behavior. "No one person can have a big impact on the total bottom line…everyone had to have skin in the game," Honor says.
Some banks received perfect scores on their assessments, so Lefebvre's team visited them to learn what they were doing and then share the information with other branches. If a branch didn't receive a perfect score, RBC asked its customers why the bank didn't deserve the top rating. RBC passed these comments to the branch network so branch managers could make changes or follow up with clients. Clients' comments provide the field offices with the necessary context for understanding the rating.
This process prompted RBC to start identifying loyalty drivers and detractors regularly, and for each line of business. Lefebvre created specific questionnaires to do so. For example, a detractor is long hold times in the contact center and a driver is giving someone financial advice. "Not only is it important to measure client loyalty, but it's more important to understand the drivers of loyalty," she says. RBC calls detractors "irritants" and decided to eradicate them. Now, tracking and removing these irritants is a declared strategy for every line of business.
The contact center takes priority These changes have demonstrated to RBC's employees the importance of customer retention. The result is a shift in their attitudes to become more than just a sales organization, Lefebvre says. This is especially true in the contact centers, according to Francine Dyksterhuis, senior vice president of RBC's contact centers. The company's recognition of the contact center's successful execution of the Client First strategy has turned the culture into a service organization.
Dyksterhuis says over the past year and a half, the contact center organization, consisting of 5,000 employees across five large centers and multiple smaller ones, has significantly elevated its service levels because of agent empowerment, listening to customers, and agent monitoring techniques.
RBC has empowered its agents by giving them the ability to manage and reverse service charges. And through a program called I Make It Right, if an agent feels a customer was mistreated, he has the ability to send a gift card or fruit basket to the client. RBC is also supporting its agents by exposing all senior executives to the contact center experience by having them periodically listen to calls.
The company also helps customer service reps improve their first-call and problem resolution by investing in front-line resources like training, coaching, and by monitoring processes and technologies. "We're focused heavily on creating a culture that really is 'employee first,'" Dyksterhuis says. "Our agents make or break customer loyalty and the likelihood to recommend."
One of the contact center's main goals in supporting its agents is actually to try to make it easy for customers to conduct business with RBC. "We're a relationship organization so if our customers believe we value them...that will ultimately translate into more business and referrals," Dyksterhuis says. She says RBC achieves this by agents listening closely to customers to understand their needs and then connect them in a way that brings their experience to life. "It's not about a mortgage; it's about how they just purchased a home," she says. "When they call to ask about a credit card, it's not about travel benefits. We talk about the trips they're going to take. It's often not what they called in for, but it's helping to understand the real need and to do it again in an emotionally connected way."
The journey isn't over The benefits of an empowered contact center are ringing loud and clear at RBC. Service levels improved by more than 50 percent between 2005 and 2006 and feedback from internal partners has increased. Also, Dyksterhuis says the revenue from sales has risen dramatically, but she declined to give specific numbers. In addition, the company has seen consistent improvements on all key loyalty drivers, such as overall customer satisfaction, first-call resolution, the quality of financial advice, ease of conducting business, and the likelihood to recommend products or services. Such improvements have caused Dyksterhuis to stay the course with a plan to invest heavily in coaching as it pertains to developing meaningful relationships with clients, problem resolution, and taking customer care to a new level, which includes eventually adopting a multichannel targeted customer service approach. "It's about understanding our clients," she says. "It's about how do we take a lot of data and mine it for information to help us create client strategies for the organization."
Lefebvre says that the Client First strategy has definitely changed the way consumers perceive RBC. "It has absolutely changed in terms of the way clients feel that we are there for them and demonstrating that we're caring," she says. Survey respondents say that RBC's service has improved, and as a result loyalty is on the rise.
In addition, Lefebvre says, the company has measured the percentage increase in profitability per client and tracks the increase in profitability for the company's lines of business, and so far has seen a "significant improvement." She says that the Client First journey is just that—a course that the company will continue to take to drive growth and innovation. "Are we satisfied with where we're at? We need to drive harder to have differentiation," Honor says. "I think the financials speak for themselves, but in terms of client loyalty, we're proud of the progress."