Client Story: Marks & Spencer Money

Marks & Spencer Profile:

M&S Money provides financial services for the well known UK retailer, Marks & Spencer, and is now part of HSBC Bank plc. Originally started to provide a store card for shoppers at Marks & Spencer stores, M&S Money (MSM) has expanded over the years to offer a broad range of financial products including loans, insurance and investments.



With the challenges of achieving accelerated growth in the highly competitive financial service sector, M&S Money’s leaders wanted to streamline operations while maintaining—and enhancing—customer service. In 2003, as it prepared to offer a brand new credit card to replace its traditional store card, M&S Money decided to explore use of Six Sigma methods to execute critical operational and service improvements.

With the new &MORE Credit Card on the horizon, MSM realized that its existing approach to handling new card applications was likely to create a bottleneck that could squelch success of the new strategy. Using Six Sigma methods, an application redesign team explored all aspects of the process: handling of incoming applications, review and approval, new card delivery—even the design of the application form itself. To create an optimal form, MSM used a “Design of Experiments” approach to test various combinations and arrive at an application that was easy to process and still “user friendly” for customers. This first effort helped make &MORE Credit Card a success, and demonstrated the value of Six Sigma in supporting MSM’s strategy.

The challenges for MSM increased when its retail parent sold the financial services operation to global bank HSBC (via a joint venture with Marks & Spencer). Now needing to serve two partners, provide outstanding service to its customers, and drive further growth, MSM developed plans to transform the business. Senior executives agreed to a list of strategic priorities, ultimately deciding that Six Sigma would provide a foundation for the change initiatives.

Over the following months and years, MSM was able to achieve significant operational and profit improvements through its Six Sigma-fueled initiatives.

Among the activities and accomplishments to-date:

  • Several extensive improvement initiatives have been executed, including in Collections operation (see sidebar), in-store sales (which cut costs and boosted applications in store), Bureaux de Changes process improvement (enabling stores to serve 20% more customers in 2007 than 2006, with no more staff and with dramatically reduced complaint levels in relation to queuing) and purchasing.
  • Enhanced “Voice of the Customer” requirements definition and data gathering, helping MSM stay better tuned to customer perceptions and changing needs.
  • Established a central “Dashboard” of measures covering all aspects of the business, from sales through customer service, providing ongoing information on performance and early alerts to changes and issues—so management can respond promptly.

Though by no means fully ingrained into everyone’s “thought processes,” the learning and project successes at MSM have enabled the organization to handle issues with more effective teamwork and to develop solutions that work.

To date, M&S Money’s transformational and improvement efforts have achieved more than £25, 000, 000 ($50,000,000) in added revenue and cost reductions. For MSM executives and staff, these results pave the way to further refinement of its operations and—more importantly—to enabling the company to adapt to the changing needs of its customers and fuel its continued growth. “Pivotal have been a pleasure to work with and have provided first class training and advice throughout the deployment’ concluded Helen Baker, Head of Process Improvement.


M&S Money Collections Initiative

M&S Money leadership recognized that significant potential existed in improving the efficiency and effectiveness of its Collections operation. Like many long-standing financial service companies, collections had been done almost informally, but as the organization grew, the existing practices needed to be updated and refined.

Chief Operating Officer Eddie Nott championed a multi-faceted initiative to overhaul collections processes. It began with a simple goal: “We focused on the amount of money each collections agent was able to recover per hour,” explains Mark Delahunty, M&SM Manager of Credit Services. Delahunty and the collections team set out with the aim of a 50% increase in money collected each hour—which was viewed as a significant stretch goal.

Looking at the existing practices in the collections process, and benchmarking against other financial service firms, M&S Money’s discovered that agents’ were saddled with a variety of administrative tasks and other responsibilities that limited their time to make calls. So a key first step was to refocus the agents’ efforts and boost the total time devoted to outbound calls from 200 hours to over 1000 hours per week. That kind of increase required some big changes in operating approach and people management, including:

  • Separating the collections team into distinct inbound and outbound groups
  • Reviewing and improve shift and dialer patterns
  • Implementing robust agent scorecards to support performance management
  • Linking financial incentives to recovery income
  • Accessing the Management Information to enable prioritization of all administrative tasks

These steps, implemented with guidance from M&S Money’s Six Sigma “Master Black Belts,” actually led to a 65% increase in collections per agent hour. Of these first projects and improvements, Delahunty praised the guiding hand of Six Sigma stating that it had, “ensured that quality decisions have been taken in driving the department forward.”

While greater efficiency and focus was part of the answer to improving collections, it was also important to refine how agents dealt with customers—who, after all, are the subjects of the effort and who’s loyalty to Marks & Spencer is important to maintain.

Having addressed the “core” part of the collections effort from a customer, process and people perspective, the effort continued by looking “upstream”, focused on 3 specific areas:

  1. Reschedules – offering longer term solutions to our customers to help them rehabilitate. This had a direct impact on the P&L as well as helping customers to resolve their debt problems, as accounts on a rescheduled loan are taken out of delinquency.
  2. Late debt management – all accounts 90 days past due and greater were previously sent out to debt collection agencies who charged fees of 11%. A DMADV approach was taken to set up an internal team to start handling this late debt. A ‘champion challenger’ was used to compare performance of the newly formed internal team to the agencies. Results showed that the internal team performed 30% better than agencies at the same time as cutting costs. Full roll out was completed after 3 months.
  3. Account support – all back office processes are being assessed based on i) potential for recovery ii) potential for reducing costs of operation. Workloads have been prioritized and re-assigned leading to a 75% decrease in backlogs.

This has turned out to be only one of many successful initiatives at Marks and Spencer Money.

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