Academie du Service, the leading French and UK customer service consultancy, dropped into a Virgin Money Lounge recently as part of its Retail Safari Day. Delegates were impressed by a new concept in banking that puts Virgin Money firmly in credit with its customers
Banks are dull places, aren’t they? Stuffy, quiet and, dare one say it, rather beige.
Well, not if they’re Virgin Money Lounges, they’re not.
Perhaps you’ve yet to come across one – that’s understandable, there are only seven in the country. But if you get a chance to pop in, you’ll be amazed – and you’ll wonder where the banking hall has gone and why everything looks so groovy.
That, of course, is the point. Virgin Money – set up by Sir Richard Branson in 1995 – had long realised banks had a serious image problem. Partly for the characterless, anodyne reasons mentioned above, but also because too often they seemed more concerned with pleasing shareholders than customers.
The banking – and global – crisis that hit in 2008 widened the gap between customers and banking chiefs to unprecedented levels. Bankers, to put it mildly, were not going to win any popularity competitions.
So when Virgin bought the infamous Northern Rock in 2012, it saw a chance to reinvent traditional banking and bring it into line with modern retailing. Working with design agency Allen International, it came up with the concept of Virgin Money Lounges, where customers could relax in stylish venues, with free tea and coffee and unrestricted access to WiFi, iPads, TVs, daily newspapers and magazines, and even a piano. “Why bank when you can lounge?” is one of the marketing straplines.
If customers want to do any banking, they discuss their financial affairs with an in-Lounge concierge across a desk (no glass security screens here), or manage their money on dedicated phones, computers and video-booths linked to the Newcastle head-office, seven days a week.
Lounge membership is completely free to customers, whether there’s £1 in their account or £1m. And they’re encouraged to bring a friend or family member with them.
Each Money Lounge is designed to be unique. Perhaps the most dramatic looking is the London Haymarket site: its downstairs section is the reconditioned first-class cabin area of a Virgin Atlantic Boeing 747 where customers can recline while enjoying “in-flight” entertainment. At Sheffield, one of the stand-out features is a 10-pin bowling alley. You might also find digital fish tanks in some Lounges as well as large-size reproductions of famous album covers from punk bands and other anti-Establishment rock groups who’ve recorded for Virgin’s record label.
Staff at the Money Lounges are not recruited from traditional banking backgrounds. “It’s more important to have personality and human skills,” says Emma Perry, Manager, the Haymarket Lounge.
In an interview with the Financial Times in 2014, Virgin Money Chief Executive Jayne-Anne Gadhia explained that the Lounges “will drive customer advocacy -and drive down the cost of marketing to attract new customers.”
It needs to, as the concept, unsurprisingly, is not cheap. Each Lounge costs about £750,000 to create and running costs are reported as about half of that. But it seems to be achieiving what Virgin Money wanted. Since the first Virgin Money Lounge appeared in 2011, there’s been a 30% uplift in online banking that Virgin Money attributes directly to the Lounges.
Certainly, customer feedback has been overwhelmingly positive. Comments on the Virgin Money website includes these two Edinburgh customers’ reactions:
‘Thanks to the management and staff for their expert organisation in operating the Virgin Money Lounge. The Lounge is a model of efficiency, friendliness and smart appearance. Physical comfort and refreshment offered by this example of commercial altruism could be copied by other organisations to their advantage.’
‘The Lounge is a lovely amenity, we really appreciate the fact that something is being given back to investors in this way. You are doing everything right. I am very impressed and have already recommended Virgin Money to family and friends.’
It will be fascinating to see how other banks respond.