Happy customers are good for business

The Business Secretary talks about the importance of good customer service, because without happy customers, there is no business.

AG Swearing in cereomony

Thank you Pete for that kind introduction, and congratulations to everyone who has won an award so far. I think there are still a few more to come!

When I stopped being Culture Secretary, most of my kids decided that my brief period of being “Cool Dad” was over.

They liked it when I was working with music, film, TV and sport… Just think of the invites I got, which the kids sometimes thought were invites for them, too!

For some reason they don’t find things like local enterprise partnerships and the Enterprise Bill so exciting. And they don’t seem to want a behind the scenes tour of the Department for Business, Innovation and Skills.

The exception is my 14-year-old son, Suli. Because and I promise you this is true, I’m not making it up, for years now his favourite magazine has been Which?.

I’m not quite sure how this came about!

Just last week he was revising for his exams. And when my wife and I said he’d done enough to earn a break, he rushed downstairs and – for fun – started devouring the latest edition.

And people say I’m a bit of a geek!

So I want to start today by saying a really big “thank you” to Peter and everyone at Which?. Firstly for giving Suli such a happy childhood! But also because, for almost 60 years now, you have been helping the British do something that really doesn’t come naturally to us. Complaining.

Let’s face it, British people are terrible at asserting their rights as customers. I think we just find it unbecoming.

So many of us will ‘tut-tut’ and maybe mutter under our breath and even tell our friends how awful our experience was. But we’ll say nothing to the people who are actually responsible, the people in charge.

I only really noticed this when I moved to New York straight after university. I was sat in a diner there, and discovered that even a minor delay in getting your complimentary glass of iced water refilled would prompt a level of outrage that you’d only see in the UK if somebody jumped the bus stop queue, or something.

This isn’t just anecdotal.

A recent survey by U-Switch found that 65% of us regularly experience poor customer service, but only a quarter ever actually raise concerns about it.

Of course, that doesn’t mean they won’t do anything in response. The 21st century high street is a very competitive place, there’s no shortage of options for disgruntled customers.

Growing up in my parents’ shop, Kaiza Fashions, I learned from an early age that if we couldn’t give a customer what they wanted when they wanted it they would quite happily walk down the road and go into a rival business. And one more customer for our rivals meant one less customer for Kaiza – something that has a real impact on a small business.

Even the largest employers can’t afford to lose business because of poor service. As Wal-Mart founder Sam Walton put it: “There is only one boss – the customer. And he can fire everyone in the company from the chairman on down simply by taking his business elsewhere.”

In fact when I was a minister at the Treasury I took great pride in helping customers do exactly that, working with banks to create the seven-day switch guarantee. By making it easier for disgruntled customers to leave, the guarantee forced the banks to raise their game.

It’s a lesson that all businesses of any size should learn from. Because the simple truth is that without happy customers there are no businesses. Without customers there are no profits, no exports, no growth.

That’s why the Department for Business could just as easily be called the Department for Customers.

Now Nick Boles is doing a great job on the consumer protection portfolio. But I don’t want you think that our commitment to customer service begins and ends there.

Helping businesses deliver for their customers is at the heart of everything we do in my department, whether it’s helping companies develop novel and new products customers demand, giving employees the skills they need to serve customers better, or tearing up the red tape that all too often makes it harder for customers to do business with you.

Recently I heard about a 9-year-old girl who had gone along to her local bank to open a savings account.

She wanted somewhere to keep her pocket money safe, and her parents wanted her to learn the virtue of saving money rather than spending it. Responsible behaviour that I’m sure we’d all like to encourage.

But before she could open her account, the bank insisted that she watch a video, designed for adults explaining the concept of variable interest rates. She started to fidget when she had to listen to her first-ever initial disclosure statement. And then the bank carefully explained her right to shop elsewhere for buildings and contents insurance, presumably for her wendy house.

Finally the girl who, remember, is only 9 years old – was asked to sign a disclaimer to say she understood that her personal information would be managed in line with the Data Protection Act, that the bank reserved the right to run a credit check on her, and that her savings were protected by the Financial Services Compensation Scheme. But only up to the first £85,000.

Either that last bit was a little unnecessary, or pocket money has gone up a lot since I was a kid!

The poor thing was sent away with 3 separate booklets outlining her account’s terms and conditions. Not surprisingly, when she got home she asked “Mummy do I really have to read all this?” To which of course the answer was “No dear. Nobody ever does”.

Now I’m sure that if I was to name the bank involved, they’d say they’re only doing this in the first place because of government regulations. And I think that’s a very fair point – and it’s something I’m determined to change.

When people talk about tearing up regulations they normally just mean ones that cause trouble for businesses. But I want to cut red tape that ties up customers, too. I don’t want anything to get between you and them. When they choose to spend their money with you, they should be able to do so without government rules getting in the way.

The Enterprise Bill is going to get rid of at least £10 billion of needless red tape. Regulations that do not genuinely serve customer needs, which are bad for business and a barrier to growth.

So if you find that your customers are sinking under the weight of bureaucracy, I want to know about it. If your customers tell you that a wall of Whitehall-mandated terms and conditions are getting in their way, I want you to pass that information on to me. How can we focus on the really important stuff that really matters to your customers? In short, how can we get out of your way and help you do business?

That’s why, when I was in charge of the Department for Culture, Media and Sport, I worked with the telecom companies to ensure mobile phone coverage across 90% of the UK.

Now the easy thing for me would have been to force through some new law that simply mandated it. But by sitting down with the operators and letting them take the lead, I was able to negotiate a £5 billion legally binding agreement that delivered for customers without burdening the companies.

Some people believe that I’m completely against regulation and intervention of any kind, that I think businesses should just be left to get on with it. That would not be entirely true.

I’ve always believed that regulation has 2 very simple roles to play. First, it should benefit and protect customers. And second, it should give companies a fair and transparent framework to operate and compete in. And that’s exactly what the new Consumer Rights Act will do.

Developed with help both from businesses and from consumer organisations including Which?, it comes into force in October. And it will require that important terms and conditions are included up front, in plain English. Crucial issues written in legalese and hidden away in the small print won’t be legally binding.

This isn’t about catching businesses out, or creating another set of rules to follow. By guaranteeing plain English and due prominence, the new system will actually help companies. It will focus minds on what really matters and make it easier for you to develop better, clearer terms and conditions.

The new act will also clarify the muddle of statutory rights. It will help employees from the shop floor to the boardroom understand what is expected of them, and it will let customers know the standards they should be demanding and the means by which they can seek redress.

And, bizarre as it sounds, you actually want those individuals to complain when they have a problem. You don’t want them to be terribly British and suffer in silence. If that happens, your service will never improve.

I think it was Bill Gates who said your most unhappy customers are your greatest source of learning. If they tell you what you’re doing wrong, you can do it better.

So we want to get British customers complaining because assertive customers make businesses better. And better businesses grow faster and do more to support the sustainable recovery we’re building in this country.

But I don’t want you to think that building good customer relations begins and ends at the till. Businesses don’t exist in a vacuum. Whether large or small, on the high street or online, businesses are a vital part of the communities they serve. They provide jobs and services, obviously. But they are also uniquely placed to support their communities in many other ways.

Just last week I heard that a company in my Bromsgrove constituency, Hugo Technology, is generously supporting a new local rugby team. But the contribution that business makes doesn’t have to be financial – over the years I’ve seen businesses organising litter patrols, helping with charity fundraising drives, even hosting political hustings.

There’s literally no limit to the ways businesses of all shapes and sizes can give back to their communities. And, as we recover, as a country, from the depths of the record-breaking recession, and the economy continues to grow, your ability to invest in your community grows too.

There’s a moral case for doing this, obviously. But it’s also yet another opportunity to engage with customers, to show that you care about their wider needs. To keep them happy.

That’s what today is all about, and it’s what I’m all about. As Secretary of State, I’ll be doing all I can to help you serve the most important people in any business – the customers. Because happy customers are good for business. And what’s good for business is good for Britain.

Thank you.

Published 17 June 2015