Technology can destroy your business


Digital technology is good at monitoring, good at measuring performance against targets and good at reducing both customers and employees to data. What it is not so good at is building and maintaining relationships. At least, not yet.


A short-term personal loans provider in the UK was doing brisk business and enjoying steady growth until late 2017. The firm provided personal loans through self-employed agents who worked door-to-door across some of the poorer areas of Scotland and the North of England. The company was low-tech with agents carrying their own notebooks for keeping track of loans and payments. Each agent had their own geographical patch and knew their customers personally. The business was so successful that the CEO was reputedly able to take out tens of millions of pounds in salary, shares and benefits over his decade at the helm.

In 2017, with the intention of increasing efficiency, the company took the step of introducing mobile technology to replace the old paper-based systems. They also introduced automated job allocation and routing software to direct agents to customers. On paper, a much more efficient, trackable and secure modus operandi was promised. To take best advantage of the newly adopted technology the company sought to increase workforce flexibility and, to this end, agents were expected to readily accept salaried contracts to replace the existing self-employed model.

Things soon began to go wrong. Loan renewals declined dramatically. Customers began walking away at the end of their existing loan terms and collectors, also unhappy with the new arrangements, followed suit. By the end of 2017 the company was in financial melt-down – losing 70% of its stock market value. Both the customer experience and the employee experience were broken.

So, what went wrong? Well, in this case a complete failure by senior management to grasp what it was that customers and workforce really valued. What the company had not realized was that their business rested on the success of the personal one-one relationships that the agents built with their customers. What the agents understood, and that the company’s management clearly did not, was that customers were not just buying money, they were buying a series of interconnected experiences. I learned from an ex-employee working for the firm prior to its re-structuring that this relationship, and the customer experience associated with it, was developed over-time through carefully managed face-to-face interactions. Consequently, customers borrowed money, not from a faceless corporation but from a person - ‘let’s call her Alison’ my respondent suggested. One customer, she recounted, continually rolled over her loan, the smallest she could take out, not because she particularly needed the money, but as Alison understood, because it provided regular social contact with another human being and was perhaps her only positive relationship with a ‘formal’ organisation. The loan was a positive link with a world that otherwise had little interest in her. In other words, maintaining a loan gave her a more positive sense of self. For many customers the anticipation of another tranche of money ‘just around the corner’, money they would not otherwise have the discipline to save, was a brief escape from ‘just getting by’. This is no different, in form, of course, from the lure of upgrading your car when your existing car-lease payments are up. What Alison was good at, in other words, was transforming the experience of a debt into a positive series of experiences – which in time evolved into a highly valued trust-based relationship for the customer.

The company’s technological transformation on paper looked an obvious step; in practice it destroyed both employee experience and the customer experience in one fell swoop.

With the tech-driven transformation came the opportunity to rationalise working practices. Doorstep collectors, now as employees, could be dispatched more efficiently to customers using routing software and data captured electronically on tablets. The agents lost their geographical ‘patch’, had to drive longer distances, work longer hours and lost personal contact and the all-important relationships with ‘their’ customers. Customer calls were arranged to maximise efficiency.

From the customer’s perspective, new faces carrying company tablets and recording their conversations (in theory to protect both collector and customer) were an unfamiliar and unwelcome set of experiences. Collectors were overnight subject to stringently monitored performance targets. Where previously they controlled every aspect of their collection plan, they were now subject to inflexible route and time restrictions. Customers quickly figured out these new agents were not their friends.

Whatever we make of the ethics of short-term loans, this particular business was damaged by technology choices that failed to account for what it was that really mattered to their customers and workforce. The leadership team assumed, perhaps, that customers were simply entering into contractual and financial relationships – relationships that could be adequately represented on a spreadsheet. With the introduction of technology, and with it new, more efficient working practices, a crucial component of the service that the company was actually providing - personal contact and a carefully managed customer experience - was lost.

The lesson that must be learnt by any organisation making changes is clear. Before embarking on any technological transformation that will alter working practices and/or the customer experience, however subtly, companies must be clear that they understand, not just ‘what business they are in’, but what it is that they presently deliver that their customer values – particularly if this sets them apart in the market. Digital technology is good at monitoring, good at measuring performance against targets and good at reducing both customers and employees to data. What it is not so good at is building and maintaining relationships. At least, not yet.


Chris Ivory