Conny Kalcher with Rory Sutherland on customer loyalty, human connection and building trust at scale

Fans of LEGO, which are the really high spenders, [music] they will spend thousands of pounds on on LEGO. They were helping pulling up other people, which then took LEGO away from being a play toy. >> [music] >> So, of course, I'm delighted here. I will actually follow Alfred's uh policy of asking the guest to introduce herself to a large extent, except to say it's a great honor to welcome uh Chief Marketing Officer of Zurich, Connie Kjeldsen, who uh has an extraordinary um uh coincidence with me in that I think uh you nearly became a teacher and nearly became a journalist. I I also trained as a teacher, nearly became a journalist, and ended up in advertising. So, we've got that we've got that in common. That's cool. >> Fire away with your own introduction. Delighted to have you here.

I'm delighted to be here. Thank you very much for the invitation and the introduction. Yeah, it is it is true. I started out my career as a teacher, but soon uh moved into marketing. Uh I've been working in marketing for almost 40 years. Uh many of the years in the LEGO Group in Denmark and in the UK, all in global roles. And then after that in in Zurich, uh one of the biggest insurance companies in the world. And I'm really a customer person at heart. Yes. >> a lot about the developing things for and delivering to customers. That's what drives me. That's what gets me up in the morning, and that's what I'm excited about.

This is fantastic. So, one of your great focuses, I think you're at LEGO in multiple roles, weren't you? You it wasn't only in the marketing role. You were also in filmmaking, almost an extraordinary plethora of different roles within what is a fantastic marketing organization, obviously, but so much more than that as well. Tell us a bit about that, and particularly the filmmaking. I'm intrigued by that.

Yeah, I was very very lucky to be part of many upstarts at LEGO. The the good thing about the LEGO culture is all about innovation, trying new things, and and and seeing how far you can stretch the brands and the and the products. So, um I was part of developing TV shows. I was part of developing computer games for kids as an initiative. Um just dabbling in the water, finding out how LEGO could be relevant in that space. So, but I was also doing innovation and other things, and even even running HR at a a certain point in time. >> Wow. Wow. >> Yeah. So, I was just trying many different things.

So, I mean, how are you still Presumably, having covered the waterfront, I was an account man briefly in advertising before I became a copywriter. And I think we see less and less of this in an age of specialization. But having done more than one role within an organization, I think helps in multiple ways. It helps in terms of your own perspective. It also helps in terms of your relationships with other people, because you've been their side of the fence as well, I suppose. Do you find the same thing?

I absolutely. I I really enjoyed doing different things within within the group and connecting to different parts of um cust- customer needs or kids' needs, but also understanding the organization on a broader scale. I often had roles which was kind of breaking new ground. So, trying something we hadn't done before. So, the first computer game, as I said, or doing LEGO licensing, or or or doing books and things like that for kids. So, it's all breaking new ground and seeing how far we could stretch the brand. But then at the same time, you get a deeper and deeper knowledge about children, a deeper and deeper knowledge about your colleagues in these spaces, and the industries that are catering for your core customers. And interestingly, I suppose, you also took Is LEGO privately owned, or is it a public company? It's privately owned. >> LEGO is privately owned, yeah.

Which explains partly, I suppose, the the focus on the customer. Cuz one of my one of my complaints is that increasingly, in companies which are shareholder focused, the customer effectively takes a backseat. And what I notice happening is one, a declining innovation and and brand investment generally to meet short-term objectives. But the other thing I tend to see is effectively, where operational efficiencies are introduced at the customer's own expense. So, it's you know, it's a great story to the stock market that you've managed to transition 40% of your customers from human checkouts in a supermarket to self-checkout. It's a wonderful story to the stock market, because it's a plausible story uh with a a cost-saving narrative, but the long-term costs of that are that your customer is paying a price for your own internal efficiencies, which may not be that great a business move. So, that's fascinating. So, it's still effectively family owned, I guess, is it?

Yes, it is. It's the fourth generation, I believe, that's running it. And it it Of course, gives a lot of continuity. It gives a lot of belief in the brand and what the brand stands for. It gets a lot of shared knowledge about what's right for the brand and what's not right for the brand. Um and that that is kind of yeah, a fantastic asset to have. And I guess it still has an underlying mission or purpose, without getting into the whole brand purpose question, which can get a bit tedious. But ultimately, the educational purpose still underpins everything, I guess.

Yeah, it's a combination of education [clears throat] and entertainment, I would say. Because if you go purely didactic, you can easily use the kids and lose the kids. But it's it is uh about being relevant for the kids of today and delivering something to them that they find exciting. You know, some parents would like to say, "Yeah, when I grew up, we only had red bricks and yellow bricks, and we could only build very simple things." But if if uh LEGO had followed that direction, they would have been gone, out of business. So, it's really about understanding what is it that kids of today, what do they want? What do they need? What makes them excited about something? And we we had a period where we were very much seen as a toy company for 6-year-olds. And if you were nine, you wouldn't be seen near LEGO. And that has flipped. That has totally changed.

Yeah, because children are unbelievably ageist, aren't they? If you if you buy a Peppa Pig toy for someone who is 1 year over the the core target audience for Peppa Pig, it's perceived as a massive insult. Yes. And so, children have this weird thing of, if you're not careful, of completely rejecting the things they enjoyed 2 years before. Um and so, you also then, of course, did something extraordinary, which I have to admit, if you proposed it to me, I would have said you were mad, which was the adult market as well. Which was I think one of the bravest and, you know, I'll have to confess, if you'd gone to me as a marketing person, I like to think of myself as fairly adventurous and happy to entertain, you know, slightly outlandish ideas. But the pursuit of the adult market with very high-priced, fantastically sophisticated versions of LEGO, um that was an extraordinary success in a way, wasn't it?

Yes, but it was also And now it sounds like something we just switched on overnight. Or we made a decision, "Let's be for adults." And then we switched But it wasn't like that. No. There was a lot of resistance within the company, "We're for kids. We're really not for adults. And and how would they see us in the future if we become too adult and not for the kids, etc." So, it was really only when the community numbers became so convincing and the share of the sales was growing and growing and growing that we embraced that new business opportunity. And now it's embraced to the full with also the the the line of the flowers, which is maybe more aimed at a different target group, you know. So, >> That's astounding. I saw that. Is it Botanicals it's called, is it? Is that right?

>> I I saw that. They're things of extraordinary beauty. I mean, that again was a brilliant brilliant lateral move. Yes. >> And again, it's Who is the adult target audience? Because I have to confess, it doesn't include me. It might well include my brother, I suspect. Or >> [laughter] >> if he if he were allowed to, anyway. Um Who Who uh You What happened? You You tentatively started producing, I suppose, brand partnerships was was a great foundation of it.

Yeah, a lot of the the Star Wars fans, Yes. that bought LEGO as kids, they weren't ready to give up Star Wars when they became adults. So, they kept on buying, for example. And and uh other developments was that we we did something called LEGO Ideas, where we allowed the community to come up with ideas of what they would like to buy in a LEGO box, which was a big revolution. So, they came up with um you know, that they wanted to see The Simpsons in a LEGO set. Yes. >> we didn't have to produce a whole line. We could just produce one set. And there were a lot of these fan communities that had overlaps with the LEGO community and some other kind of property, IP property. And by doing that more and more, it became visible that this target group had real buying power and real interest in other types of models, and there were other ways of servicing them, not having 10 SKUs, Yeah. but but having different SKUs that were priced higher, more complicated. And in a in an interesting effect, we we we saw that these uh fans of LEGO, which are the really high spenders, they will spend thousands uh of pounds on on LEGO. They were helping pulling up other people because they they were kind of the community spreading everything on social media, in their networks, in their communities, and other people and kids would see their amazing models of what they could do, and that would inspire them, which then took LEGO away from being a play toy. Of course. >> Into into a creative medium.

So, that also presumably helped with the whole problem of children at the age of 7 or 8 rejecting it because they saw it as So, it was almost the case of going a little bit too far in order to achieve the middle. I always think it is very interesting that the the Indian restaurant Dishoom, in order to get people to come in at lunchtime, opened for breakfast. Which is >> [laughter] >> it's it's it's rather like that very clever form of overshoot. I also remember, by the way, I had one of the one of the most interesting conversations I had a few years ago was with LEGO discussing the question of sustainability and recycling. And I remember saying to them, "Look, to be absolutely candid, if there is one brand I've ever had to talk to which doesn't have a problem with being reused, you know, I can't envisage ever throwing away LEGO. If I own LEGO, I might pass it on to somebody else. I might keep it. I might put it in the cupboard, but it is almost almost infinitely reusable. Obviously, I think the bricks lose a certain degree of, um, uh, they'll lose a certain degree of cohesion after, you know, >> Yeah. 100 uses or something. But, I remember saying that of all the of all the toys of all the things you buy for children which cannot be accused of being environmentally unsustainable, LEGO came at the top. And I I think I think I did the slightly irresponsible thing. My colleagues would probably have shot me for it or saying, "You really don't have much to worry about here." Yeah. there are you you can make it from recycled plastic. You can recycle it if people want to and so on and so forth.

>> Yeah, and elements some of the softer elements are today Yes. done by re- re- reusable material. So, the the problem is the clutch power, you know, in the bricks that they the clutch power is not as strong. So, by doing something that's recyclable, not 100%, but it will move the knowledge of the company more and more in that direction, and then eventually maybe it will be uh, a much higher percentage that's reusable. And then one day

So, you're marketing director of LEGO. You're presumably in Denmark at that point. And you get a call from Zurich, I think, if I'm right. The headhunter first calls you and asks if you're interested in working for Zurich, which is it does seem like quite a flip. And at first, you basically rejected it. Is that right?

That that is true. I actually had left LEGO at that point in time, and I was working in a different company with my with my husband, and I had a very cozy life, um, working with him on on the clients in his business and traveling the world together. So, so we had kind of I had thought no more corporate, uh, for me. I'm I'm done with corporate. I want a different free life more as an entrepreneur. And then I did get a call from a headhunter about this position at Zurich, and I just thought in insurance companies, they're not really customer focused. So, this is not for me, and I pointed to some other people that might be interesting for this headhunter to talk >> Um, maybe it was my own lack of understanding about insurance and what is insurance is all about, but that was how I perceived it seen from the outside. >> [snorts] >> Uh, and and I thought, you know, I've done all my career has been about how to do good things for customers and and really move the needle on that with some of the leading companies in the world that that I I learned together with. >> Yeah. And and just seeing me in a whole different group was was difficult [laughter] for me.

But, then I I have some few months later I got a call from, um, somebody in my network who had been working for Progressive for many years in the US. >> Yes. Yes. >> And and uh, he had been in the same network as me, and he said, "There is this job at Zurich, and it really has your name written all over it. You you should go talk to them. So, Mario would like to talk to you and see if this is something for you." So, actually being invited to talk to the CEO, of course, made me super curious and interested, and I thought that's different. So, I went and had a meeting with, um, the CEO, and I heard his vision for uh, insurance and how to make insurance more customer friendly than than what it is or was at that point in time. And that was very inspiring, and then I was back the week after. We had another conversation, and then I was done. I was hired. You were hooked.

Yeah. >> And in particular, it was because it allowed you to focus as much on customer experience and retention as simple acquisition. Is that right?

Ex- exactly. That was part of it, but it was what really made me interested was the transformation. It was trying to do something in a business that's not known for this. And I I should caveat with that that we have two lines of business. We have commercial insurance where we're one of the leading in the world, and we're top top tuned to be customer focused. But, in our retail business, which was much closer to my world, where we serve individual customers, we were less advanced. And and compared to LEGO, really not on the in the same league. So, for me, it was really the challenge. What do you do in a company like that that has the intent? Yes. >> but it's an old supertanker. It's been around for 150 years. What can we do to make that change? And that I was super interested in. And then with his his vision and bagging back backing, um, I found it very attractive.

And the interesting thing is, of course, it's seen traditionally as a distressed purchase or as a grudge purchase. Yeah. I think 50% of people or more don't claim in any given year. So, they're always inclined to increasingly doubt the value of what they're spending. Yes. Um, uh, and so part of the aim of this was to take the existing customers, the existing retail customers of Zurich, and get them effectively to sort of reframe how they thought about insurance. Is that right?

Yes. By actually also delivering differently to them. So, one of the challenges is exactly what you're saying that 50% of the customers we don't talk to through the year, and we know from our data the customers we engage with more often, they have a claim or they have more products, they're much more happy. Yes. >> So, so what part of the things we were doing is reframing who we are. So, we're not just about protection. We're about prevention, protection, and service. And that gives you more space to deliver value. You know, so you will kind of do more things for your customers in order for them to feel the relevance, uh, in a different way. That's that's the whole industry is moving in that direction, but it's a a different framing

Prevention, of course, is a is a brilliant conversation because it benefits both parties, doesn't it?

>> Exactly. You don't want your customers to have an unfortunate accident. Uh, you know, they don't want to have well, you know, they don't want to have an unfortunate accident. And as you said, it actually reframes the whole conversation. Uh, effectively away from what you might call just being an emergency service towards some sort of partnership. Yes. >> It's very very interesting. So, we can play a different role. So, for example, we in some countries we send out hail alerts, you know, in your area there's predicted to be a hail alert, maybe you should park your car in the garage. And it's not just to save money, but it actually is also for the customer to be able to take action. They don't want the hassle with the having to repair their cars, either. So, finding more of these things or when you've had an accident, we have service desk, we have concierge services, we book the car in for for service, all all of these things around the situations that's normally hassle situation for for a customer. What what can we do to make that easier? How can we be playing a better role in that situation?

This is actually fascinating because in a sense, it's also gloriously meaningful precisely because it's so unexpected. And you do have one advantage, I think, in insurance, which is that generally customer expectations are quite low. They assume, I mean, one of my assumptions with insurance, which has pleasantly surprised me on a few occasions, is you assume that the claim is going to be paid with great reluctance. And when the people are actually perfectly helpful and positive, it comes as a delightful surprise. Which is I think I think in a sense, you have an interesting relationship because people until they claim, at the very least, start the relationship from a position of default mistrust. They're not really, you know, they're always paranoid that you're going to find a loophole or find some, you know, objection or reason not to pay.

Yeah, and there is something with the narrative that insurance industry hasn't been good at telling. So, like in every other industry, there would be players that are the decent players, they will do the right thing. You pay maybe a bit more, but you get better service, it's more reliable. Yes. >> think we haven't been good at telling that story. So, for example, in the UK, we have a claims ratio of paying out 97% of claims. You know, but in the perception of a mind of a customer, it's maybe 50%. So, as an industry, we also need to get over ourselves and communicate these things more. Yeah, maybe some some companies cannot uh, put that number as high as we can put it in our case, but we should do because we are a a premium provider. So, we provide premium service and people should know. Which is something that becomes even more important now that people are using AI [snorts] search um to find out which insurance they should use, those criteria suddenly become important and we can't be shy or or not wanting to brag about these things. We need to state yes, but if you take out an insurance with us, guess what? In this case, we pay out this amount of of claims. That should build trust. And I know trust is also an important concept for you. You know, the more that we Yes. If we don't say anything, we are prone to be perceived as anybody else. But if we say, but this is who we are, this is what we do, and then you know, be proud of when we serve people well.

So, in a sense, the very act of marketing is a form of differentiation. Because I my guess is that half the people simply rely on, you know, comparison websites for a large amount of their you know, their new customers. Um they compete purely on price. And the problem when anything turns into a pure price competition is in a sense uh the company with the worst levels of customer service or indeed the the lower level of claim satisfaction >> Yes. is going to win. It's a race to the bottom.

Yes, exactly. And also, you know that it's we're so technical that it >> Yes. comparing one policy to the other policy of what benefits and what payout rates is totally difficult to do as an individual. It takes hours. I did it myself when I moved to Switzerland just trying to compare. Being in the industry myself, I thought I should try to understand these different providers. It's a nightmare. But it's not a nightmare anymore because you just use chat GPT which is much more refined than a compare price comparison side. And then you say, these are my criteria. This is what I'm looking for. For me, it's >> Yes. important that there is a high claims payout. Or for me, it's important I get service. I get access to personal advice. And of course, it's not the same for everyone, but it's our job to understand what is important to what consumer a group and how do we then service them so they will be happy.

So, one very interesting point about which I I have to say this is the first time I've heard it happen, but one of the great advantages of AI-based search is that it makes possible much more nuanced decision-making. Yes. With because one of the things that's always concerned me, for example, with uh the classic intermediary case um you know, online travel agents. Which is I've literally found myself so fixated on price that in order to save £17.50, I book a flight that leaves Gatwick at like 5:30 in the morning. And then, 2 days before I fly, I realize there's no way I'm going to get my kids out of bed that early. And we end up staying in a hotel overnight which cost £200. And you realize it's a completely false economy because effectively what you've done is for ease of comparison, you fixated on the price. Um all the other stuff that matters gets effectively sidelined.

Yeah, and I think the future will be much more us prompting on things that are important to us. What are the factors in what category and what business that's important to you when you travel or or when you you buy a new suitcase or whatever it is. And then as brands, we have to be much more responsive to that individual need and make sure that we can service that rather than communicating blanket the same thing to every everyone. And and we will learn over time how people are prompting and what's important to them.

So, to intriguingly, one of the things given your search criteria, one of your criteria was you want to be able to talk to a human being, I think, wasn't it? That in other words, is the customer service reasonably good? Because one of the cheapest ways in which you can cut costs is effectively to force the entire claims process online. The problem with that is that every claim is subtly different in some shape or form. And consequently the price the consumer has to pay for navigating your own internal bureaucracy isn't really worth paying. And there are there are certain questions I've always said where actually this has to be well, it might be in three or four years' time a very very sophisticated automatic agent for some part of the call. But there will always be an element of complexity or the outlier that requires you to talk to a human being.

Yes. >> think it should be choice though. Yes. the group brands will give the choice to the [clears throat] customer because you will still find the customer who wants to do it everything automatic at 1:00 in the morning. I know. Yeah, and they should be able to do that. And then you find other people with more complicated cases who who would want to talk to a human being or at this stage in the process, I want to talk to somebody. And the the winners in the future will be the ones who understand that and give them options. And if we go straight into this efficiency uh run that you talked about before, it's just about cutting cost out, cutting cost out. But it's also also cutting relationship out. Yes. >> It's also cutting any emotional connection out with the brand. So, so that's not going to that's not going to win in the long run if you want to be at least a meaningful brand to your customers.

I I've always wondered because I know you're absolutely and I think quite rightly fixated on customer retention. Yes. I've always wondered what very good call center staff would actually be paid if they could lay claim to the real value they create in terms of retention. In that sales people obviously can lay claim whether rightly or wrongly to quite a lot of value by claiming that this sale would not have happened in less for me. Whether that's true or not, of course, is a bit debatable. But they can nonetheless make that claim that I brought in X million in revenue which is worth this. If you're contributing to to customer retention, which I think can be just as decisive, by the way, with a good phone call as it can be in acquisition.

You Well, you could acquire that data, but it would take three or four years to actually prove your case. We don't have that We don't have that data. Yeah. Not in all countries, but we do have it in Spain, for example, where we where we have this retention center, which is part of the contact center where their job is is to to uh be the voice and the dialogue be masters of that dialogue with the customers when when we have renewals or when we haven't talked to somebody for a long time, just reach out to them, hear how they're doing, if there's anything we can help them with. So, we're we're really exploring retention quite a lot. And also, it actually is meaningful to a customer service center to be both doing service calls, but also retention calls or or sales calls. So, I I think it's a very good perspective of of valuing that in the same way as you value the sales people.

Yes, I've always thought I've always thought also, of course, the call center is incredibly valuable as a feedback mechanism because it's there where you discover what people can't do online. Yes. >> So, you know, in other in other words, if you don't have some sort of human feedback mechanism for people who've tried to self-serve and failed, you'll never learn what you what it is you're doing wrong because all you'll have is a lot of people leaving you without knowing the reason why.

Yeah, Exactly. And I think we what what we could be better at is really using that data. Yes. Which is also something that we we are working on, you know, that it's it's another way of also valuing the people who work in service more by making sure that they are the carrier of that voice of the customer and that voice is being fed back into the business and makes changes in the business so we serve our customers better. It doesn't happen everywhere though. But but it it's the the right way to go, I think, because the value is unbelievably strong.

Yes, and of course, relational value is slower to emerge than transactional value. And so, the temptation is always to over-invest in transactions and under-invest in relationships. Yeah. Which I think is interesting. I I had a very mischievous phrase where I said in many cases the customer wants a marriage and the chief financial officer thinks they're running an escort agency. You know, >> [laughter] >> but you know, in other words, one person effectively wants this long-term relationship of ever-deepening trust and understanding. And the person who's actually on the other side of the relationship effectively wants it to be transactional where every transaction is a stand-alone event.

Yeah. But that's where we need the data so we can prove that this is this this is not just a costly exercise to be servicing customers well and relating to them. Is this actually a meaningful business strategy because it makes creates loyal customers in a different way. And and you've actually developed a model, haven't you, which shows with the I think with the chief operating officer or the chief financial officer, you developed a whole model which effectively shows how a 1% increase in retention translates into revenue and profit. Is that right?

Yeah, I think it was very important to us and I think it's something we've struggled with in marketing for years is to actually say, how do we quantify the value we are creating? Um and the especially if you're in financial industry, the more you can quantify the impact of what you do, the better. So, we teamed up with we teamed up with our CFO after having actually cleaned our data and made sure we had a global database of our customer data. And then we kind of combined that with the financial data so that we today have a view of our customers, how many we have, what they spend on what, how long they stay with us, what's the customer lifetime value, etc. So, we can we can now measure what we call net revenue retention. And this is a measure It's a metric that Fred Reicheld kind of introduced. And because he was unhappy with NPS not being so quantifiable. Um So, moving to NRR where we can see here we can see on our customer base um how much revenue we got from our customer base in the previous year, then we look at how much revenue we lost by losing customers, how much revenue we are losing by losing products from customers, this another bucket, how much uh income we have by renewals, and then how much income we have with upselling cross-sell, so servicing more needs. And then that comes then to a total number. We look at that number over the previous year. And then if we are if [snorts] we are above 100, we have created loyalty. We have more customer value with us from that customer base. If we are below, we have lost loyalty. So, it gives us a number to have a discussion with our our financial people on, but also with the markets. And it moves away from we just need to acquire some new customers. It's it's we need to acquire new customers, but we also need to loyalize the ones we have and make sure that they stay with us because if they're if they are fleeing us in drones, it's we're not doing everything right. So, so we need to learn from that on an ongoing basis.

And the model presumably accounts for the fact that to acquire a new customer to replace one that you've lost is is now I would argue increasingly becoming more expensive, isn't it?

Yeah, exactly. >> Yeah. So, once you actually put that comparison in, how much Yes, okay, we are spending some money on existing customers, but how much would it cost to actually acquire a new customer to replace any of these customers we lose? Yes. You also know that you know, any customer who's been with you for two or three years is probably disproportionately valuable because they're capable of being loyal. Which some people aren't. I mean, there are there are simple price chases in the market. Yes. But we also learned for example when we look at the data that if a customer has a life insurance with us and they also have a car insurance with us, they stay longer. That's logic. But they stay longer for both. Actually a and car insurance is a commodity product. It's a price game. You go with the cheapest. But if we have a deeper relationship with our customers, price is no longer so important for them. They know what we're delivering. They know their value is worth something for them. So, it's like I came from LEGO where we had many customers would buy eight boxes a year or 10 boxes [clears throat] a year to [snorts] an industry where they where the where we may be selling 1.3 products a year to a customer. So, it's a very different world. And there's not really anyone in the insurance industry who had who has solved that riddle of how we get customers to understand or how we demonstrate to customers what value we can deliver to them. There's there's still something in that we need to find out.

What you've also done I think is you've done some really interesting sort of experimental behavior in creating a customer focus. And you you you use the analogy of a supertanker. You have 60,000 employees. How on earth do you effectively move that supertanker around so that it's facing towards the customer more and perhaps towards the spreadsheet a bit less?

Yeah. And um it's also by the way, I think you also have an interesting issue of differentiation in that I think the default position of the customer is probably some degree of mistrust. And it's also worth remembering I think that in a lot of categories which have been obsessed with cost-cutting and excessive automation, a lot of your customers are probably going to be once bitten, twice shy. So, they've had one bad experience and effectively as a result, they kind of mistrust the category. So, so as you said, making yourself significantly different in the category, and that basically requires I think a cultural change. It's not just a it's not just a small process or an investment in the call center, though it will undoubtedly entail that. Um so, you've actually brought in kind of you've actually brought in empathy training. Is that right?

Yeah, that's that's true. Yeah. And and that's because they it was very obvious to me after having worked in a in an industry in toys that's a lot about empathy. It's a lot about emotions and connecting on an emotional level with the children and and excite them. And then coming into an industry that's very factual, very finance driven, and very inward focused and not focused on the customer. That that it often and then from listening to calls and and being in customer meetings, etc., etc., it's we are extremely professional. We're very very good at what we do technically. Yeah. But but it that's not enough, you know. You need to go from not just talking to the head of people, but also talking to the heart and connecting with them. So, we [snorts] we started to set out with a CX vision, so a customer experience vision that is every interaction should be about building a meaningful relationship. Because if you only talk to your customers very few times, Yes. you need to make that connection. So, it's not when somebody call in and they've had an accident, your first question should not be what's your policy number. Right. >> be I hope you're well I hope you're good and what happened what can I help you with. So, and and in in reality, people want to do the right thing. If you're on the phone, you want to do the right thing. But if you for years have learned that it's more about the technical skills and being technical correct, how do we then move that to still being technically strong and technically correct, but then actually bringing your whole self into that conversation and and building that relationship. So, we we started looking at training for that.

Because Mark Evans I remember he had someone on secondment at Direct Line from you know, some actuarial part of the business and they said, "I don't know why on earth they've seconded me to marketing because I'm rubbish at drawing." And you always have you always have that terrible problem in an organization which I suppose the dominant cultures are both legal and mathematical. Yes. That marketing, you know, is a slightly uneasy bedfellow. Yes. And so, carrying I know that I'm pretty sure that Cheryl um who's the marketing director of Aviva holds for the whole board of the organization a customer day every year. And it's effectively getting the entire board to spend one day of their year entirely focused on the idea of customer value and psychological value. Yes. That's a brilliant thing to do and I I think it is important that it's on their agenda as well. You know, we also have the same strategy day every year with our with our board which is also about the customer, but it didn't used to be like that. And and it's it's it's not only on that level. You need to do it on that level, but it needs to be in all across all levels in the organization. And then it it's it's about bringing it home to the organization so they want to do it. It's not like, "Okay, headquarter has asked me to do empathy and I will be nice and feely touchy-feely from now on." It's it's really a different way of doing business, but bringing bringing your human side to work.

So, we're training it in two ways. We're training it with with online training where you can do it in your own time and get the basic understanding of not customers are not all the same and this is how you could address them and this is how you can do things in a in a nicer kind of more empathetic way. The other thing we're doing is deeper and that's where we go into a department, say a claims department, and we do kind of a diagnostic first. So, what's happening in this department? How do they answer the phones? How do they talk in emails? What are the issues they are having? What are they being measured on? Um how how do they find their day-to-day stressful? So, we do that diagnostics and then takes four days. We talk to the leadership team about that. And then we bring the whole team together for a couple of days where we bring in actors that professional actors who will act out some of these most prevalent scenarios. And then they will show them variations of how these situations could be tackled in a more empathetic way. And then it's interactive with the participants there and then they try it out themselves, but they're not criticizing their colleagues. They're looking at situations that they can recognize from their everyday life because it's based on the audit. And then they get it under their skin and then then it's like a penny drops and they get it. This can be a better different way of working. And what we're seeing after this training is that in some instances the NPS score and the friendliness of the advisor goes up 20 plus points. And it doesn't it doesn't drop again. It stays up there. So it makes a difference. So they get >> well well well okay cuz that would always be my fear that you could bring in some improv actors and you would see a short-term change. But presumably because they notice the change it has in the person they're talking to on the phone, they actually stick with the new behavior.

Yes, they because they you know, I think they generally wants to do the right thing but also they can see the impact on happier customers. It makes their life easier and they even see a strong impact on how they collaborate because empathy also goes towards your colleagues. So you bring these tools into play also with your colleagues. So they it becomes a more empathetic organization. So I think that's the that's the real trick is to to go to that deeper level where people can see the difference and feel the difference. It's not 20% percentage points everywhere because if the level is already high already quite high Yeah. It won't go up that much but it it is significant and we measure over time and it is a it is a step change that continues. So we have numbers now two years back. It's the same level. Yeah.

And what's >> [snorts] >> in terms of the metrics you or rather you know, the bonus structure metrics you use to incentivize this behavior? Presumably you had to bring in slightly new scoring system to acknowledge this cuz what what you know, one of my great beefs is the extent to which call centers are in many ways brilliant brilliant entities but they're often judged on completely the wrong thing. Like you know, how brief you can make a call seems to be a terrible terrible terrible measure. Yes. What how did you change the sort of bonus structure?

Well we're we're measuring them on help helpfulness and friendliness and and satisfaction so T and TNPS. And then we also look at some of these more operational standards. You know, that is so ideally in my world I wouldn't measure how many calls you have by by hour because that's a very negative uh but that takes a longer time to change some of these more operational measures because again it's this is how contact centers have been driven for years and and it's it's a bit of a journey also for the leadership team to go to okay. So once we change how friendly we are how empathetic we are, we also need to change how we're measuring this. So I we we haven't done a total overhaul across all customer service but that's what we're standing in front of to look at as well.

Do you know SAP? Yes. I I knew I knew a few people who worked there. That had an extreme I think they they one stage they had a customer service call that lasted six hours or something. It was a it was a point of absolute sort of principle with them that you didn't get off the phone until the problem was solved. Yes. And I think they had a lot of influence on the on everybody also on me. I went there a couple of times and and visited them and and and try to under stand their philosophy and I I thought that was a a great break with tradition. It's not about a factory that needs to churn out as much as possible. It's really about this connection. They would also send out 10 pairs of shoes if that's what you wanted. >> If that's what you want there. And I I also remember a story about Dyson which does this very well where someone was presenting the call center operational statistics James Dyson and he kind of interrupted them halfway through and said as far as I'm concerned if one of our customers chooses to get in touch with us, we should treat it as an honor and respond accordingly. Yes. And And that's what we do as well because we we kind of as part of this whole transformation, we also defined 33 standards customer experience standards where we looked at all our data what customers were not happy with and what we should be doing better across the world and then out of that we created 33 standards of what good looks like. What is it the customer experience they are expecting and how should we be developing that? So what we we defined the standards in in the global organization and then each markets are being tracked on how they improve these standards and then they are finding their own way to deliver on them. So >> [snorts] >> so a standard could be the the conversation needs to take place any conversation with a customer needs to start where the last one ended. That's a brilliant. Yes. So in other words, you don't have to effectively go through the long litany of explanation more than once. Yeah. It's what you said before. You shouldn't push your inefficiency over to the customer. Absolutely. You need to make sure that if you've asked this question before that's captured and you know it when you have a new conversation. And that's it's a stretch goal. It takes a while to get there but but it's a this is the ambition. So we did 33 of them. Another one was >> [snorts] >> it should always be easy to find the contact details. So if you want to talk to a human being, it should be easy for you to find out how to do that. We're not hiding that on on the back of a a brochure or somewhere or >> The the number of websites which make it impossible to find a telephone number or any other form of contact other than the website itself. I mean I think that's partly the fault of the people who design websites who of course are probably disproportionately telephobic and webophilic. So they are they are the the kind of person who designs a website is the kind of person who thinks that all interaction should take place via a screen. That could be that could be but there are

Also, people who are hiding behind. There are also people who are deliberately hiding behind it. There was a very brilliant management consultant I spoke to once in the field of customer retention who said there was a single heuristic rule which divided customer-focused companies from customer-avoiding companies, which he said was whether the call center was allowed to call out. Yeah.

He said that was a complete, it was almost a complete sort of watershed between the two, you know, between the two philosophies, if you like. And one of the strangest things which is I've always ranted about, which is almost certainly one of your 30 or so measures, is that if the company never willingly contacts you to help, your natural assumption is that they're trying to hide. Yeah, probably. Or that they're trying to avoid you. And so when someone does call you and say, "Did that experience go well?" or "Are you happy?" or whatever it may be, it's extraordinary in terms of the potency it has because it suddenly creates enormous trust that this is an organization which wants to solve my problem rather than avoid it. Yes.

Yeah. Exactly. And that's a clear demonstration that you didn't consider the cost of making that call. The contact was more important to you. But if we go back to empathy, I think there's we also did a study on empathy and there's a clear gap between what customers are expecting from companies on empathy and what companies are delivering. And I think that was a big eye-opener for us that it's the customers wanted more. So, for example, in financial services, 88% of customers say they expect empathy when they have an interaction, but only 63% feel they get it. You know, so there is a gap between what are people expecting from companies and how are they delivering on it. And I bet you it's only going to get worse with more AI coming into the picture.

Ah, interesting, because AI could be used to make things better. It will almost certainly, at first, be used to make things cheaper. Yes. Which is my great terror. It's not I'm not actually, well, I am frightened of AI in the sense of, you know, killer drones. That does frighten me. But I'm at a purely kind of marketing level, what frightens me isn't AI itself, but the uses to which it will be put. Now, in fairness, you have made a very good use of AI in rewriting documentation, haven't you? Yes.

So, you, so this, I'd love to know more about that. So you had sort of 60,000 documents or whatever that effectively needed to be rewritten. Yes. So we went through this transition where we kind of redefined the brand. We defined our visual identity to be more humanly, humanly engaging and warm and realistic in how we communicate. Um, but then we send out these letters or policies that nobody can understand.

So, then there was a disconnect between how we were presenting the brand in advertising and how we were then interacting directly with our customers on an email or on WhatsApp or in a policy. So, in order to create a new way of communicating, we created a new comms strategy. We called it "Tone of Voice" and that had 10 principles for, you know, avoid jargon, you know, tell it as it is, highlight what's in it for the customer, use bullet points, simple, simple, simple rules and direction-giving. And then we created this AI tool where you could take your existing document, letter, or whatever it was, put it into the AI tool, and it would come up with a new version based on these principles.

So, if you think about you have to rewrite all the documents you have that are customer-facing, it'll take years. It'll take tens and tens of years. But by this document, by this AI tool, because this was not work that we hired new people for. This was just a big workload people being put on top of people's day-to-day work. And then in order to make that easier, we created this tool so they could quicker get to bigger solutions. And the transformation is extraordinary from where we were. And you kind of needed a PhD to understand the first three sentences in a letter. Today, where it's easy to, it's engaging, it's. And there's still a human in the picture because the system would come up with a new version and you could say, "Make it shorter," "Make it more friendly," "Use more bullet points," or edit it yourself. So, it was not without human oversight, but it just helped the process.

Did it still need legal approval at the end? I was just wondering. Some documents. Not all. Not all, but some of the documents did. That's true. Because you wouldn't, I suppose, you couldn't quite trust an AI. If you tell the AI to be helpful, you couldn't quite trust the AI not to promise something that it wasn't actually legally entitled to promise. So, but but that, that actually, when I think about it, isn't it? Because nearly every company of that size, particularly in financial services, has this 10-year-old accretion of communications, which no one's really looked at. Funnily enough, you know, this is before AI. You know, one of the projects, a friend of mine wanted to start a business which was simply, I'm glad we didn't because AI would have killed the business, which was simply, we get good retired copywriters once a day. I think, you know, you'd find retired copywriters from the advertising industry and you'd say, "Okay, we'll pay you a few, you know, few hundred pounds a day or a hundred, you know, in your retirement, just to rewrite a single piece." Yeah. That's quite meaningful as well, you know.

Before before we had AI, that would have been a very meaningful process as well because if you would just put your people to do that, they're not necessarily good writers or good communicators, the people who are in a normal department. But the copywriters would be understanding how to see it from the reader's perspective and making it understandable, engaging, etc. So.

And lawyers, of course, are terrible copywriters generally because the entire focus is covering every possible eventuality with the natural consequence that you sound massively evasive. Yes. You know, you sound massively noncommittal. You know, it's rather like, you know, when you get married, you know, you say, "Do you, so-and-so, promise to?" Now, most people answer, "I do." A lawyer would always want to answer, "It depends." Or to add some caveats or some qualifications. Yeah.

I think that's I think that's really. This is a fantastic project. I mean, it sounds. And by the way, I mean, you could significantly, I think you could put 1% on GDP if every single business of this kind went through that same exercise of just making communications seem non-evasive, non-terrifying, comprehensible, helpful, friendly. Yeah.

Do you, do you think? One of the things I'd love to do, and it's not for me to do, but somebody could do it, whether it's the Consumers' Association or some other body, is to have a kind of kite mark for customer service. So that organizations, just as you had the Plain English Campaign, which was a very good thing in the UK where all your communications could be certified by the Plain English Campaign, if you actually took your 30 principles of customer service and effectively said, "If you match up to these criteria, you can display a particular logo." Mm.

Because my terror with something like insurance, where of course you don't really understand the proof of the pudding until 18 months after you've bought it, if the natural assumption of the consumer is that customer service is going to be terrible, if you particularly if you interact online, then what we're seeing is an enormous, effectively an invisible lost opportunity in lots and lots of people being unwilling to buy very worthwhile things like insurance simply for fear of the customer service nightmare that would result. Yeah, I think there is a place for a standard of some kind of what good looks like, almost like like which, you know, the which guy.

The which best buy. And actually, having because as you said, there are cases where, you know, a 19-year-old buying motor insurance isn't really going to care about the customer service. It's a legal requirement. They can barely afford it. They take the cheapest insurance they can. And to some extent, you know, bad customer service is probably a trade-off that they're willing to make. But, if you look at, I mean, one of the things I notice is if you look at an aging population where the old disproportionately have the disposable wealth, generally, the older you are, for very, very simple reason, which is by the way, the older you are, the more you value your time to an extent. Okay. You know, impending mortality, etc., etc.

Then actually, those are people. Those people who have more money to begin with are willing to pay for the promise of very good service. Yeah, they also may be in some instances more dependent on it or communicating more or kind of have lived longer so they understand what it means and when bad service is being delivered, what that means. So, so I, yeah, you have different backgrounds and and the and and we all all companies have their own focus customer group that they deliver to, for sure. I mean, if anybody ever wants to steal that idea and start a kind of kite mark or verification mark for companies that meet certain criteria in customer service, I'd be absolutely ecstatic if someone stole that idea because I think, you know, as I said, there is the danger that at the time you make a decision, price is very salient, customer service isn't.

Yeah. And consequently, it will be in the interest of many companies to reduce price at the expense of customer service, which is probably what the consumer is looking for at the moment of purchase, but in the defining moment of experience, it's a very false economy. Yeah, exactly. And I and and that's also why we see that customers are very happy even after a claim situation. Yes. Because that's where they get their payback, you know. So, that's where we need to be. That's the moment that matters and we need to live up to our our promises.

So, you've This has been absolutely fantastic. You've forced me to go and actually investigate net revenue retention. I did meet Fred Reichheld once. For those of you who don't know, he was the originator when at Bain, I think, of the Net Promoter Score, which is the idea that recommendation, your willingness to recommend, is a pretty reliable metric to some extent in terms of customer loyalty. Uh, and now I, the net revenue retention thing is his effectively metric to financialize the value of an increase in that score. Is that right? Yes. Yes.

So, his thinking is moving into that space and he even takes it further where you deduct what you've spent on marketing. Um, but we don't use that. We stop at net revenue retention, but we're very inspired by his thinking and and everything he stands for is very much the basis of what we think about loyalization as well and and how to deliver excellence to customers. No, that's fascinating. I, I mean, this is such a welcome finding for me because the discovery that someone is actually trying to rebalance the value of investment in retention and experience relative to acquisition. And I think you then get rid of that quantification bias where you're focused not on the things that matter, but on the things that are easy to measure. Which I think besets a lot of businesses nowadays.

Of course, some are really, it's easy for some. If you are digitally only to have these measures, you have it to hand and it's easy for you to understand, but more traditional businesses don't look at their business in this way. So, so then it becomes a helpful tool to change behavior and I think that's what we are all about in our journey is how can we help the organization change the way they act? Not by telling them you need to be customer-focused, by giving them tools and processes and structures and frameworks and strategies that naturally takes them into a different space that is more focused on the customer and then we do the right thing as a bigger organization collectively.

I mean, the most reliable metric of the health of a business to some extent is customer retention. Mhm. In the sense that, you know, there are businesses that look, I mean, you know, the classic example would be that thing that who was it created, which was a kind of Twitter competitor called Threads, okay? Yeah. You know, you can have a business that grows immensely fast, which gets every more or Clubhouse, okay? There are businesses which grow immensely fast because they have some sort of novelty feature about them, but they're not remotely sticky. Yeah. And actually, you equally have businesses which grow very, very slowly, but are very sticky.

So, I've been spending a lot of time talking to the, you know, the electric car in the car industry about electrification. And the point I make is that my presentation was entitled "Don't Panic" because I said that they'd solved the biggest, you know, the biggest issue, which is, you know, ultimately, if you're looking at the next 5 to 10 years, is simply that people who buy electric cars very rarely go back. It's rather Europeans, for example, resisted having automatic transmission for years and years and years. And they came up with all, you know, "I want the sense of control you have with a manual gearbox" and so on and so forth. Mhm. And it was a very slow migration, but what ultimately happened was nobody who'd driven an automatic ever went back to a manual. And so, you know, that question of how effectively, you know, can you create genuine stickiness and lasting behaviors?

Now, there is an issue, isn't there, which is that I suppose do you have the fact in insurance that you could always save a bit of money by being promiscuous? Or have you managed to overcome that? Because it used to be that in certain forms of insurance, you bought a new customer with a massive discount. And then effectively then the you charged them progressively more and more as time went on. Yeah, I think that that practice has been kind of stamped out more or less.

Of been stamped out, yes. It started very much in the via the regulation in the UK. Yes. Kind of pushing back on that because it was a false economy as well. So, so I think that's that's again a way of the past, but still maybe sticks in some people's minds.

Yeah, I think I think that probably lingers in people's minds because I suppose it's the expectation that matters, not the reality. And that's particularly true in insurance. What all I can say is this has been absolutely fantastic. I'm immensely heartened to discover that people who are taking this seriously and not only taking it seriously in terms of investment, but actually in terms of measurement and quantification. And I think I know who I'll be renewing my insurance with. This sounds incredibly heartening. Well, that's the best compliment you can get. Thank you very much, Connie. Thank you very much. It's wonderful. Connie, thank you ever so much. That's a fantastic. By the way, very similar career journey to my own in a way. Okay, good to talk to you. It's been a huge pleasure. Thank you so very much. Bye. Bye-bye.