Customers, process and people


Customer service describes the activity of identifying and satisfying customer needs and, over time, exceeding customer expectations. This case study focuses on how Standard Life has extended its marketing mix beyond the traditional four Ps, Product, Price, Promotion and Place to create a modern focus on Customers, Process and People. This extended marketing mix involves:

  1. listening to and understanding customer requirements
  2. designing processes to meet these requirements
  3. training and developing Standard Life’s people to operate the processes.

Service lies at the heart of the modern service organisation and increasingly dominates the economy. There are two main reasons why customer service has become so important. In every market the customer is now more demanding and more sophisticated. With changing customer expectations, competitors are seeing customer service as a competitive weapon with which to differentiate their sales.

The need for a relationship strategy

In order to attract new customers and keep the existing customers satisfied it is necessary to create value. Value is created by getting the balance correct between what the customer receives and how much it will cost. Investing in an organisation requires a relationship based on trust and confidence - the rewards for the customer are:

  1. confidence in the organisation
  2. quality product
  3. quality service.

In the early 1990s Standard Life had a very different image to the one it has today. Customers saw Standard Life as arrogant, remote, difficult to deal with and above all failing to deliver a quality of service that met their expectations. Clearly this was not promoting a positive image for Standard Life, or encouraging customers to invest in the company. Customers were becoming reluctant to buy from Standard Life due to the poor level of service it provided and would do so only because there were limited options due to poor competition.

People working in the organisation felt frustrated and constrained by the ‘command
control’ style of management. A blame culture existed which concentrated on ‘who?’ rather than ‘why?’ The working practices and procedures at Standard Life suited the company, but did not meet the requirements of its customers. Having received this feedback - and with new players to the financial market keen to take Standard Life’s market share - it was clear to the company that it needed to take action.

Standard Life wanted to differentiate itself against its competition in terms of the quality of service it provided, how existing customers felt about the organisation and what they associated with the name “Standard Life”. However, in order to achieve this, the company needed to completely redefine its management process in order to provide an explicit framework to describe how its operations should be run. The writing was on the wall - improve now or fail in the future.

Standard Life, like many traditional British organisations, was based on a top down hierarchical approach. Managers relayed instructions down through the chain of command. Today, this is no longer appropriate. Modern service workers deal directly with customers and they require confident interpersonal skills to develop one-to one relationships with customers. People who are well trained, supported by a range of processes and quality
information technology systems, are now considered an organisation’s most valuable asset.

Standard Life operates within an increasingly competitive market where customers are becoming more discerning and demanding. In a service economy, a company must be customer focused. By satisfying customers, strong financial performance will follow. To do so, the people within the organisation must be committed to meeting customers’ expectations and - over time - exceeding them.

Total Customer Satisfaction

Total Customer Satisfaction was the name given to the management process created by the Senior Executive team. It defined how the operations of the company should be run to achieve the goal of customer satisfaction. The following objectives underpinned the framework and content of the management process:

  1. focus on and be driven by customer needs
  2. introduce a culture of continuous improvement
  3. create a new management philosophy.

Three segments run throughout this framework. Standard Life’s new management process aims to focus simultaneously on customers, processes and people. It is based on continuous improvement with the aim of achieving fully and exceeding the expectations of customers. The way in which the initiative has been designed – regardless of being termed a ‘management process’ - ensures involvement of people at all levels of the organisation and promotes the commitment necessary to create effective organisational change. Some of the immediate changes implemented as a result of applying the management process in practice follow.

To enable Standard Life to better understand its external customers’ needs, it needed to undertake more research amongst the staff who had contact with them. It set up a marketing division to carry out much more rigorous market research to help the organisation look ahead and keep its product ranges in line with changing customer expectations. The research also facilitated the construction of customer satisfaction indices, so that satisfaction with Standard Life’s current products and services was measured. These highlight Standard Life’s performance against issues which were important to its customers and assist the organisation to set priorities and targets for change.

Most changes were considered an enhancement of the existing process. Process enhancement teams were established and operated in an environment designed to combine minimum bureaucracy with maximum freedom, allowing the teams to implement agreed changes. Large and complex developments had a more formal structure and were handled as projects. The performance of processes was measured at various levels, the focus being on the way in which the work was done and the scope of further improvement.


In order to prepare for the changes at work that the company had envisaged, it needed to ensure its people possessed the awareness, understanding and skills required for all levels of involvement. A programme of workshops were held to cover the first stages and specifically addressed:

  • the leadership skills required to lead and promote change
  • the need to develop an understanding of teamwork and its increasing relevance to the way people work, as the company focuses on the enhancement of its processes
  • training in some of the skills required for solving problems
  • increasing awareness of its customers and learning to understand how it can better meet their expectations.

As its starting point, the TCS management process sets out the overall direction the company wants to take and the working environment it wants to create. Five key elements serve to provide people within the company with this clear sense of direction and define the culture it wants to establish.

Mission, values and vision

A mission describes the purpose of a business, outlines its reasons for being and answers the following questions:

  • What business are we in?
  • Where will we conduct our business?
  • How will we conduct our business?
  • Who do we do it for?
  • What products will be provided?

Values are the things that are important to an organisation, what it believes in and always adheres to. A clear set of values provides a sense of what is important to the organisation and the approach that should be adopted towards day to day work.

A vision gives a clear and ambitious description of the desired future state of an organisation, setting out what it stands for and how success will affect it.

Operating principles and key competencies

Operating principles are key reference points on how to run an organisation and provide a focus for making improvements and measuring progress. Key competencies are everyone’s responsibility within the organisation and set out how the organisation will behave and how principles will be effective.

Strategy is the organisation’s overall, long term plan. Strategies have clearly defined objectives that provide direction and assists decision making within the organisation and help it to achieve its long term strategic intent. To manage the overall change process of defining and implementing the new TCS management process and the significant change in culture it represented for the company, three phases of activity were undertaken:

Phase 1 - Preparing the foundations
The aim of Phase 1 was to create a sense of urgency through facts and data and building commitment to the future state throughout the organisation. This involved:

  • assessing the company’s current position with customers and competitors
  • increasing knowledge of managers (e.g. site visits and reading)
  • setting direction (mission, values, vision, operating principles and strategy)
  • agreeing to a move ahead plan
  • starting improvement initiatives.

Phase 2 - Building capability and ownership
The overall aim of Phase 2 was to cascade education downwards through the organisation to engage people about the future state and improve the capabilities of the organisation to achieve the new direction. This involved:

  • developing leadership and management capability
  • improvement from the bottom up through employee involvement
  • managing through customer facts and data.

Phase 3 - Sustaining continuous improvement
This phase aims to sustain the degree of continuous improvement started under Phase 2. This involves:

  • communicating customers’ needs and expectations throughout the organisation
  • new product development
  • widespread cross-functional improvements
  • keeping the organisation energised

Having discussed the change strategy Standard Life pursued, it is necessary to examine the measures required to assess and evaluate the performance of the management process. Traditionally success is measured in financial terms. Although these are important to any business, they are no longer sufficient on their own and should be supplemented by other measures. A balanced approach has been taken to measuring the success of Total Customer Satisfaction at Standard Life. Measures have been split into four groups, each with a number of its own measures as follows:


  • Customer satisfaction
  • Policies per customer
  • Complaints
  • Persistency


  • Error rates
  • Cycle time
  • Costs
  • Productivity


  • Staff morale index
  • Absenteeism
  • Turnover
  • Competencies

Business results

  • Financial strength
  • Expenses
  • Investment returns
  • Market share
  • Return on capital.

Standard Life does not examine one group of measures in isolation, but all the groups together as they are mutually dependent.

Continuous improvement

The Total Customer Satisfaction management process is under continuous review in order to identify ways in which the process can be improved. This is achieved through:

  • benchmarking against the best practices of other leading organisations
  • customer feedback and research into their requirements
  • process performance
  • staff opinion surveys
  • changes to strategy and the planning process
  • assessing the actions of competitors and developments in the external environment
  • self-assessment against the EFQM excellence model.

Not only does Standard Life use the European Foundation for Quality Management (EFQM) excellence model to identify strengths and areas for improvement in a structured and disciplined manner, it also serves to inform the planning process. The EFQM model additionally enables Standard Life to score its progress towards Total Customer Satisfaction, providing a framework for developing its management process. The model defines business
practices under five key enablers (i.e. what the company needs to do):

  • leadership
  • policy and strategy
  • people
  • partnerships and resources
  • processes.

The model also identifies four key results areas - i.e. what the company achieves – to monitor measure and check on performance. Three of these include: people results, customer results and society results. For example, what the organisation achieves in terms of the needs and expectations of the community at large. The model also identifies key performance results which are financial and non financial.