Wednesday, November 23, 2011

RACV misses second chance, will there be a third?

In a recent post If you treat me like a number I'll behave like a human I shared a story regarding the RACV being 'happy' for me, a long term customer, to 'try out' their competitors for $70. For many years I have spent thousands each year being insured through the RACV, for both personal and business purposes.

Having discovered the their competition's 'normal' price was 25% better than the RACV's 'discounted price' on vehicle insurance, and the RACV's reluctance to see me as a human being with whom it has a long term relationship, I sought the assistance of an insurance broker to help me find a business insurance policy to replace one that was due to expire with the RACV. The one I have now purchased was just under 10% cheaper than the RACV policy.

My assumption is that RACV uses a sophisticated Customer Relationship Management System (CRMS). Such a system would have a significant amount of information about me including my entire history of insurances with the RACV.

As a result of recent events this system should include two critical pieces of information

1. I received a quote for a new vehicle insurance through my business that was not activated
2. One of my business insurance policies expired and was not renewed

I have been waiting (and wondering) if the RACV would contact me to discuss our business relationship. My assumption was that these two pieces of information would cause some sort of a 'warning' within their CRMS that something had gone wrong with our relationship.

Yesterday I received a courtesy call regarding the business insurance renewal. I explained that I had gone with another provider. To my surprise the RACV representative could not end the call quickly enough. There was no request to know why I had chosen to leave, just a polite "Thank you, good-bye". Should I have been asked I would have been happy to politely share my story, to off the RACV the gift of my feedback.

I couldn't help but think that the RACV is losing a long term customer and it either doesn't know, can't see the signs or simply doesn't care.

As each of my insurances fall due I will continue to see what the market has to offer. Already I have saved multiple hundreds of dollars through moving two policies.

Prior to my recent experience the last time I had investigated what the 'opposition' had to offer (as far as my insurances are concerned) was in 1993. Since then I had been paying my renewal notices under the illusion that I was a valued customer of the RACV. I was the classic 'loyal customer'.

The $70 improved rate that the RACV refused to provide me on the new car insurance has already cost it two policies worth several thousand dollars. Does that make any business sense at all? If the RACV had provided that $70 differential, which is clearly within its profit range because it does provide that extra 5% discount to people, then I would have continued to be a loyal customer and not researched what the opposition was offering. When I discovered the huge differential I could not help but wonder whether I had been lulled into a sense of getting a good deal through my loyalty, when in fact my discounts were being applied to uncompetitive rates. In a strange way the RACV has done me a favour through its poor service as I am now saving money by going to their competitors.

How is the RACV using its CRMS to help maintain strong relationships with its clients?
In the long term can they afford to treat loyal customers in similar ways that I have experienced?

I wonder if I will be contacted at any time to discuss our relationship?
Will the RACV do anything to try to recover this situation?

If you have a CRMS how do you use it? Does it help you to maintain healthy relationships with your customers? What would you do in this situation if you were the RACV?


  1. Great post Gary. Proves the point that having a robust systems and procedures in place is only a small part of the challenge. Service is all about People and creating service moments of truth. Just got off the from with Qantas....spoke to someone off-shore and one again....system is in place..."my call was even logged for training purposes" but my query remains unresolved.

  2. Lawrence yes this is a huge challenge for organisations. Being easy to provide feedback to is one thing - doing something with that feedback at the 'moment of truth' is another.
    I hope that you receive a constructive response.

  3. There are doubtless those in the RACV management who would see this as destructively critical. Sadly, it's endemic in larger enterprises.

    There are a few notable exceptions where individual leadership is displayed (Apple and Virgin come to mind) but mostly there is total disconnect between the marketing departments' spin, the board/management and the frontline workers. I have had similar experiences with Vodafone, NRMA, AAMI, Qantas and others where the concept of the lifetime value of a customer is totally foreign.

    The challenge is not the CRM (most already have the systems) but the absence of a culture that encourages frontline workers to use initiative and common sense.

  4. David,
    Thanks for your comment. I couldn't agree with you more.
    While these organisations have the systems they do not enable their frontline team members to exercise relationship management principles.
    My theory is that the risk averse nature of many large companies has resulted in them striving to control their employees to the point where they can't make frontline decisions.
    As you highlight this places their marketing and their customer's experience of their company at complete odds. No company is immune from death, not even a large membership organisation like the RACV. Controlling people too far and treating them like cogs in a machine and not like humans is the polar opposite to the principles of service excellence.