To: The BA 310 Course
Team

From: Lara Nowak

Date: February 4, 2018

RE: USAA’s Battle Plan

 

            The USAA’s Battle Plan case
summarizes USAA’s background and history as a leader in the financial services
and insurance industry. The case discusses its plans for expansion, along with
potential implications of enlarging and diversifying its customer base. To give
some background, from its beginning in 1922, the USAA has established itself as
a leading bank and insurance company distinguished by strong use of technology
and customer engagement. It currently employs over 32,000 people worldwide,
serving over 12 million members (Carollo, 2017). USAA is regarded as one of the
most highly-regarded financial services companies in the nation, and has
managed “year-over-year revenue growth in a static market by developing an
intense relationship with its customer base.” (Gertz & Baptista, 2007). It
has a long-standing reputation as a company that leverages technology to
improve its user experience. As the first bank to allow iPhone deposits, along
with its many additional plans to improve the efficiency of claim reporting and
mobile car-buying, USAA shows its dedication to using modern technology to
improve efficiency and create a pleasant user experience. As noted by CX
Solutions, USAA is known for its exceptional use of technology, which continues
to successfully drive high rates of customer engagement and retention (Carollo,
2017). USAA recently earned the highest possible score in the renowned Temkin
Customer Service ratings for the fifth consecutive year, demonstrating its
dedication to creating an outstanding user experience. (Temkin Ratings, 2017). Its insurance and credit card
businesses tied with Mercedes-Benz for the second highest rating, while its
banking business earned the only excellent rating (Temkin
Ratings, 2017). Not only are USAA’s customers known to be pleased with
their services, but also their employees. USAA continually ranks amongst the
top of the FORTUNE magazine’s list of the 100 best companies to work for, as
rated by employees (USAA). USAA is known for encouraging employees to take time
to offer quality service, not rushing them through service inquiries with
customers (McGregor, 2010). Founded in 1922 with 25 members, USAA’s customer
base has continually grown over the years, insuring five out of every six
military officers nationwide by 1972 (McGregor, 2010). The economic impact of
USAA’s operations is astounding. As discussed in a
2017 article released by the Tampa Bay Times, USAA’s plans to expand at Tampa’s
Crosstown Center by early 2019 is predicted to bring Hillsborough County over
1,000 new jobs, where over 73,000 military retirees and families currently live
(Carollo, 2017). As discussed in the USAA case, more recently in
November, USAA’s insurance business significantly lessened its eligibility
requirements. This change could potentially lead USAA’s customer base to be
over double what it was prior to the change in requirements, increasing from
about 26 million to 61 million (McGregor, 2010). There are many potential risks
associated with USAA’s plans to further expand its customer base. To name a
couple, taking on riskier customers as a result of less strict eligibility
requirements could diminish both the quality of customer service and
exceptionally low rates offered by USAA. As a company that has always been
known to serve its customers’ needs and achieve exceptionally high rates of
customer engagement, this poses a major threat to USAA. These potential
challenges are vital to its reputation and essential to consider when weighing
the pros and cons of expanding its customer base.

            The
core issue discussed in this case is USAA’s plan to expand its customer base.

The basic problem addressed in this case is the potential risks that could
result from the expansion of USAA’s customer base. These risks include a
possible decrease in quality of customer service, and taking on a greater
number of “high-risk” customers. As noted by Brian Sullivan of Auto Insurance
Report, “a broader membership could lead to more consumers who present a
greater insurance risk, which may mean service reps will need to be more
skeptical about claims” (McGregor, 2010). Therefore, a less limited pool of
customers could pose challenges to both existing and potential USAA customers,
and detract from the overall level of satisfaction with USAA’s customer
services. The USAA case relates a great deal to the material discussed in this
course, most notably the expectancy theory and the concept of learning. These
theories both describe ways in which an expansion of USAA’s consumer base could
potentially impact its employees and their level of motivation. First, the
expectancy theory–which explains that motivation is at its highest when
employees believe that high performance results in desired outcomes–suggests
that expanding the customer base may lead to a decrease in USAA employee
motivation. This is because the expansion of the customer base may lead to an
increased number of “high-risk” customers, and thus a decrease in customer
service satisfaction. As a result, USAA employees–known for their overall
outstanding levels of employee satisfaction–would not be achieving their
typical standard of high performance and the results that they are used to
(high customer service ratings), and thus their motivation would likely
decrease. It is also likely that employees would feel less instrumentality; in
other words, feel less strongly that their performance results in achieving
their desired outcome of high performance ratings. Additionally, the concept of
learning is closely related to the USAA case. Training of employees, which is a
crucial aspect of proper management, would be highly relevant if USAA were to
expand its customer base, since employees would need to be prepared to deal
with a different pool of customer. For example, the employees would receive
different inquiries and claims than they would have before, and would need to
be equipped (following an expansion of the customer pool) to handle a greater
range of inquiries and issues.

            Finally,
the questions for discussion at the end of the article highlight important factors
to consider when evaluating USAA’s plans for expansion. The USAA motivates its
employees quite effectively using benefits and substantial financial bonuses.

As described in the case, USAA employees enjoy a concierge service, bonuses up
to 19% of each paycheck, and a paid relocation package that 50% have already
chosen to take advantage of (McGregor, 2010). These benefits and services are
difficult to refuse, and highlight the perks of continued employment at USAA.

Potential sources of intrinsic motivation for USAA employees include the
internal sense of fulfillment that they are able to achieve in providing
quality customer service. As previously mentioned, USAA is known to not rush
their customer service representatives in addressing customer inquiries and
issues. They are therefore able to feel a sense of both gratification and
continual motivation to provide an exceptional experience for customers.

Through developing a sense of empathy and understanding through literally being
placed in the shoes of their customer, USAA employees are already a step ahead
in gaining prosocial motivation. USAA employees eat the food, wear the gear,
and read the letters that their consumers do, in order to think like their
customers and get to know them on a deeper emotional level. They are therefore
prosocially motivated in “becoming” their customer to better empathize with
them and understand their needs. Potential sources of extrinsic motivation for
USAA employees include the positive publicity that they receive for being
exceptionally aware of their customers’ situations and needs. Being regularly
awarded outstanding customer service ratings is one way in which USAA employees
are extrinsically motivated to continue delivering quality service.

Additionally, the monetary benefits that they are offered through paycheck
bonuses and relocation packages incentivize them to continue working to deliver
quality assistance and care in working with their customers. Managers at USAA
are able to boost levels of expectancy by making the connection between their
employees’ work and the achievement of the company as clear as possible.

Employees will be motivated to fulfill their managers’ expectations only if
they believe that it is possible for them to do so. Therefore, if the employees
at USAA are consistently made aware of the direct impact that their high
performance has on the desired outcomes for USAA as a whole, managers will be
effective in boosting motivation and delivering the desired results to fulfill
company objectives.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Works Cited

 

Carollo, M. (2017, August 17). USAA
expansion at Crosstown Center may bring Hillsborough 1,000 more jobs. Tampa Bay
Times.

 

Gertz, D. L., & Baptista, J. P.

(2007). Grow to be great: breaking the
downsizing cycle. New York: Free Pr.

 

J. McGregor (2010). Customer Service
Champs: USAA’s Battle Plan. Bloomberg BusinessWeek.

 

Temkin Ratings. (2017, June).

Dataset: 2017 Temkin Customer Service Ratings (U.S.).

 

USAA. (2014, January 17). FORTUNE
Ranks USAA No. 17 Best Employer in U.S.