Leaders Do Things Differently

AT&T Universal Card Services entered the credit card market at a time when the market was mature and there were numerous retail banking companies dealing with credit cards. In such a situation, the company chose to introduce their credit card with a competitive edge over competition. Against a market where in customers were paying huge annual fees, high rates of interest coupled with higher service charges, UCS introduced their product with a very clear cut message that their product was ‘Free For Life’. As against higher interest rates being charged by others, UCS reviewed their rate of interest based on the change in prime lending rate and passed on advantage to its customers. On top of it all, the company engaged with the customers and provided unbelievable customer service.

On the face of it, one will naturally wonder as to how UCS could have booked profits when it did not charge any annual fee and kept other charges lower than the market rates and invested into technology to drive their efficient customer service process. Still it is to be noted that the Company achieved their breakeven within a record 27 months and bagged over 20 million customers within 2 years and went on to become one of the brand leaders in the market within a short time.

The success of the business came from two factors that were pursued by the management relentlessly to drive their business to the top. One was to focus and continually work on internal operational efficiencies and the second factor was to go all out to provide value through unmatched customer service.

Given the fact that the Company was not charging annual fee and the other charges too were lower than competition, the profits had to come from other sources. The management was smart enough to realize that they needed to work on lowering their costs by eliminating wastage and errors in their operational processes. Internally the company focused intensely on training and standardizing their operational processes to make them error free. With the reduction of mistakes and errors, they could manage to save over 15-20% of the costs.

On the customer service front, the company treated extraordinary service to be the ordinary standard. By their superior customer service, they could manage to bring down the attrition rate of customers to 2% as against the industry average of over 15%. Every customer retention added to the bottom line of operations.

UCS strived to provide real value services to the customers. There are several cases where the customer service executives and managers of the company proactively helped customers in times of need. In one incidence when the company faced a computer breakdown at a vendor’s premise resulting in inconvenience to over 40,000 customers in the area, the company is reported to have called each and every customer to help them with transactions, called the merchant to authorize transactions over phone and even sent these customers a ten dollar gift cheque apologizing for the inconvenience.

The company could enviably boast of the fact that it received more number of complimentary letters as compared to complaint letters. With unmatched customer service, it built solid relationship with customers on long term basis.

Clearly, the company had gained from its strategy of building product leadership by providing superior value proposition to the customer and by pursuing operational excellence and discipline.

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