Loyalty Driver

Meet May. She’s a customer service avatar—and one of the many ways Royal Bank of Canada’s Client First strategy is creating customer advocacy and engagement.

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.

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.