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The role of Customer Loyalty
In Public Sector Service Delivery
Mr. Simon Daisley,
Managing Director, Future-Proof Consulting
G-CEM Inernational Partner (UK)
www.profusioninternational.com
This article is exclusively written for G-CEM.
With unprecedented pressure on public finances in the United Kingdom, government agencies are having to work harder than ever to make less go further. For many organisations, sadly, the only practical approach is to do less; cut spending on service delivery and stop providing the full range of services they have done in the past.
The more forward thinking organisations are starting to explore how they can engage communities and the third (voluntary) sector to provide some of the discretionary services that it can longer afford or justify to do itself.
"So what does all this have to do with customer loyalty?" you may ask. The answer is simple. Frederick Reicheld, the world's leading expert on customer loyalty states: "Loyalty is a matter of sacrifice. If you are loyal to something, you are prepared to invest in it". That investment may manifest itself as time, money or energy. If this can be harnessed it represents a colossal pool of untapped potential.
Experience and research have shown that the idea of building loyalty to a local authority is meaningless. By and large the tax-paying public wants local government to be invisible; to do the basic things well. If the local authority does what it says it will do, there should be no reason for a member of the public to contact them.
A leading English County Council has established that there are three levels of service that a local authority provides:
Universal - service in the county
These are services available to or used by anyone in the county, whether they are residents, businesses or visitors
Examples:
- Maintenance of the highways network
- Access to books and information through a library service
- Safeguarding vulnerable adults or children
- Education
Needs based - service in the home
Where customers' needs are assessed and services designed according to those needs.
Examples:
- A dropped kerb for wheelchair access to the home
- Large print books for the visually impaired
- Accommodation for the homeless
- Special Educational Needs
Demand based - service in the community or by individual request
These services may be provided based on the demands of a community, where that community can influence spending at a local level. Alternatively, individuals may buy services or products of their choice.
Examples:
- A pedestrian crossing outside a local school
- Audio books for downloading to MP3 players or equivalent
- Daycare activities for the elderly
- Out of school learning opportunities
Historically, the government has been responsible for delivering all three levels of service. It is self-evident that this will need to change.
This same English local authority has determined that what it needs to do is to reduce the proportion of expenditure on universal services and to engage partners and customers collectively to deliver more needs based and demand based services. To do this it is working to understand people's motivations, aspirations and expectations in regard to each service element.
Universal services are the basic hygiene factors in service provision. Performance can be measured in terms of customer satisfaction that the authority is setting and meeting basic standards.
The distinction between needs based and demand based services is where the change must come.
Needs based services are expensive. They are also avoidable. The need to take a child into expensive long-term residential care can be avoided. Rather than waiting for a family to fall into crisis, early or timely intervention can help to identify causal triggers and put support processes in place to diagnose and fix problems before the inevitable consequences arise. Performance in delivery of needs based services can be measured in terms of successful outcomes - a reduction in children in care in this example.
Demand based services introduce an element of choice. There is however a fundamental difference between giving a customer 'choice' and abdicating responsibility for making a decision. Local councillors are elected to make decisions, sometimes difficult or unpopular ones, on behalf of their constituency. Introducing greater choice at a local level, through consultation and options appraisals is a way of making local government more accountable, more transparent and more effective.
Achieving a balance between these three elements will deliver customer loyalty. Not to the authority, or the local Councillor, but to the community in which the customer lives. And this is the key to unlocking the colossal pool of untapped potential. People are loyal to their families and their community. They will consequently invest in sustaining them.
Case Study - Southwark Circle
Southwark Circle is a recently established social enterprise, a not for profit company setup in 2007 in central London and brokered by Southwark Council, Sky Media, The Department for Work and Pensions and social innovations company Particle.
The basic premise behind Southwark Circle is that community support is best delivered within a connected, commited, loyal and vibrant community, not by a series of sterile interventions from central or local government.
Its vision is based on the principles of:
Moving from a system focused on 'needs' to one concerned with developing and maintaining 'capabilities';
- Moving from services that are 'targeted' to a preventative model 'open to all';
- Relaxing the absolute focus on the 'individual' including more of a focus on 'social networks';
- Moving from a narrow financial focus to a broader resource focus, enabling a sustainable business case.
The Problem
Britain's population is ageing. People are living longer and having fewer children. As a result, older age groups are growing much faster than the rest of the population. Over the next 25 years, the number of children will increase by 11%, working-age adults by 15%, and older people by 32%. The number of people aged 75 and over will increase by 76%.
Ageing presents great opportunities for the country to build on the enormous contributions that older people already make to the economy and to society: 230 billion, or nearly a quarter of the total economy, as paid workers; 15 billion as unpaid carers; 5 billion as volunteers and 4 billion as grandparents. Older people hold 80% of the nation's wealth and account for 239 billion in consumer spending each year.
At the same time, ageing highlights seemingly intractable problems in the funding and delivery of public services, with demand expected to vastly outstrip supply - particularly worrying with the issue of care - how will the country care for the growing number of older people, and who will pay for it? There is simply not enough resource in the current system to continue delivering the same quantity and quality of care to an increasing number of people with more complex needs. It is estimated that public spending on social care will need to triple over the next 20 years just to keep pace with ageing. Without new sources of funding, there will be a 6 billion shortfall. Councils across the country have already been tightening their eligibility criteria and rationing social services in an attempt to make ends meet. As a result, fewer and fewer people are receiving any help at all. The care system is failing many people at a time when it needs to start providing for more.
This is particularly important given that expectations and demand on the care system are changing, not least as the baby boomers enter old age. State-funded care services are only a small part of what older people might need and want. What older people value is a life based on participation and relationships that sustain their sense of dignity and control. Not having this means that older people are unable to contribute to their fullest extent, and are more likely to become depressed, unwell and ultimately in need of more care, perpetuating a vicious cycle of dependence. This leads to increased costs to individuals, their families, and the state, and represents an inexcusable waste of social, economic and human potential. Existing services and institutions were not designed with participation and relationships in mind as an end goal, and they would struggle to reinvent themselves. Along with many others, Participle has argued that incremental change is no longer appropriate, radical innovation is needed to address the failings of the current system.
The New Approach
Our new approach to care and ageing firstly expands the definition of resources available, to combine public, private and voluntary resources and, secondly, creates a radical change in the way our current services and systems are configured, so that they focus on all the different aspects of quality of life and well-being that are important to older people, particularly participation and relationships.
We have seen the issue as a broader one of social reform challenge, not just a public service reform challenge. The question is not just "What can public services do to improve quality of life and well-being for older people?" but rather "How can a locality mobilise public, private, voluntary and community resources to help all older people define and create quality of life and well-being for themselves?" This requires radical change in the way resources are defined (beyond the formal social care system) and the way services and systems are configured (away from a near exclusive focus on care and towards building relationships and participation).
Southwark Circle
Southwark Circle (SC) helps its over-60?s members sort out practical matters, stay socially connected and lead a purposeful life. It is a ?quality of life? membership society that provides one single destination for a wide range of services and activities such as:
- 'On Demand' help with life?s practical matters through our neighbourhood helpers;
- Meet-ups and other opportunities to meet like-minded people and buildrelationships in the community;
- Opportunities to continue working and learning;
- Reliable recommendations from other members for plumbers, electricians, cleaners, carers and more;
- Expert advice and information on a range of practical issues, from personal finance to technology;
- Opportunities to put experience to good use and help others.
For its members, Southwark Circle is a trusted entry point to a local ecosystem of social and practical resources. The enterprise may leverage its growing membership towards the creation of a number of revenue streams, from a wide array of public and private sector organisations from British Gas and the University of the Third Age to existing council contractors. These revenue streams will help Southwark Circle attain rapid selfsufficiency.
However, by design its success is tied to our proficiency in converting members' needs to demand for services and social interaction. As a social enterprise this is crucial because it aligns Southwark Circle's social mission and its financial sustainability with the members' sense of purpose in life and other critical outcomes.
In practice, what Southwark Circle is doing is drawing discretionary spend from families of the elderly in Southwark who do not live locally. Early projections for Southwark Circle suggest a quite modest direct saving to Southwark Council, but more importantly millions of pounds of additional revenue into sustaining the local community. This is a compelling proposition that makes sense for all: better outcomes for residents, peace of mind for families, cost savings to the local authority, and a loyal, self-sustaining community.
What will ensure Southwark Circle's success will be the quality of experience that customers will have of working with members and helpers in their community. This will build trust. Trust builds loyalty. Loyalty builds advocacy. Advocacy builds growth.
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About the Author
Simon Daisley is founder and Managing Director of Future-Proof Consulting, a provider of interim customer management services, predominantly in UK local government.
Previously, Simon established Profusion International, a business development company that specialises in giving people more to celebrate. In the private sector Profusion helps to build customer loyalty, brand gravity, employee satisfaction and shareholder value. In the public sector, it applies this same experience to increase organisational efficiciency and service quality. Profusion has worked with organisations such as BT, Ferrari, Royal Bank of Scotland, Debenhams, ANZ Bank and a number of leading public sector agencies including the UK's fastest improving local authority!
Before establishing Profusion International Simon was managing consultant with the Customer Contact Company (c3), formerly Europe's largest independent Customer Management consultancy where they helped leading organisations to transform their whole operation around the needs of customers. Simon was Head of Marketing Communications within the business to business division of BT and is a regular contributor to conferences, CRM magazines and industry debates. He has almost 20 years experience of CRM both as a consultant, speaker, author and facilitator and as an active practitioner.
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