At a time when the world banking system is still fragile and most global companies are cutting costs in customer service, one UK company is investing seriously in its customers.

In an article that appeared in the Times on Jan. 16, in London, Andrew Higgins, CEO of Tesco Personal Finance, sent a £500 shopping voucher to every one of the bank’s customers who lost their home in the Cumbrian floods in November 2009 and a £100 voucher to those whose homes were damaged. The action may have cost Tesco money, but Higgins hopes that it will boost the Tesco Bank brand and cement customer loyalty. Tesco plc is a UK-based international grocery and general merchandising retail chain that has been making a foray into the financial industry since 1997.

“I don’t think that receiving a letter like that constituted success in itself. We genuinely did it because they were loyal Tesco customers who had suffered hardship. But it is clear that it was a gesture of a magnitude that people could recognize,” says Higgins.

The vouchers are a good illustration of how Tesco is seeking to capitalize on the backlash against high-street banks by trying to offer a different, more positive banking and insurance experience.

“Traditional banks have tended to treat loyalty not as something to be rewarded but essentially as something that can be exploited. They trade on inertia,” adds Higgins. “Every business talks about putting customers first, but this really is at the heart of everything Tesco does.”

Realizing it can use its expertise in customer service, Tesco is now growing its banking division at a time when nobody trusts financial institutions. Tesco maintains a relationship with its customers through its loyalty campaign; it searched for those who suffered in the floods, and offered them a voucher through its bank to help them through the difficult times—no strings attached.

Perfect strategy: Use customer service expertise in one sector to build strength in another.

In a short time Tesco has attracted more than six million customers to their financial services, expanded through 8 percent of the credit card market, and become the United Kingdom’s sixth biggest provider of car insurance. In the past year, customers’ deposits have increased by 28 percent to about £4.5 billion.

Does this scenario offer parallels for you? How do you identify and reward your loyal customers? How do you assess the level of your customer satisfaction? Do you understand them and relate back to them on their terms by identifying their unmet needs and offering additional products/services that fully satisfy those needs?

Organizations use various tools to capture customer satisfaction data. They conduct satisfaction surveys, focus groups, perform root cause analysis, conduct quality function deployment analysis, etc. But what are they doing to build trust in today’s uncertain times? What are they doing to build loyal customers?

Do you have a strategy to attract and move customers from making a purchase to converting them to long-term loyalty?

We would love to hear your comments. Write to us at gulati@pivotmc.com or better still, give us a call, toll free, at (877) 748-6862.