20/08/2008 - 22:00

Advocacy opportunities drive RAC’s service ethos

20/08/2008 - 22:00


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Trying to place the RAC neatly in a box is a tricky exercise.

Trying to place the RAC neatly in a box is a tricky exercise.

On the face of it, the club's best known for its ubiquitous yellow vans that circulate on our road system to recharge flat batteries or retrieve keys locked in cars.

It would be so easy to tick the square marked 'roadside assistance' and be done with it.

But the RAC has spent millions of dollars on advertising to remind us it is a lot more than that. Its success in providing insurance products has turned the West Perth-based organisation into a local business giant, employing more than 1,000 people and boasting net assets of more than $600 million.

Mark it off as a major financial services player, then? For many in business, this would appear an easy solution.

Then again, the RAC might be financially successful but it's also a not for profit.

From the RAC perspective, that probably wouldn't work either. RAC chief executive officer Terry Agnew, who celebrates 10 years in the role this month, sees his organisation's role firmly rooted in a field it started in more than a century ago - advocacy.

"The RAC started as an advocate for road users 20 years before it offered any [roadside] service," Mr Agnew said.

So there you have it, how about lobby group?

This description may not seem all that appropriate, especially with the connotations it carries in Western Australia right now, but it's clearly an area Mr Agnew believes is important for the future, with both his membership and employee base in mind.

And just in case that might appear to make the box ticking easier, it's worth noting that the RAC doesn't necessarily see its future advocacy to be limited to road users - arguably RAC's bread and butter, both from a membership point of view and its big share of the car insurance market.

Instead it sees itself focusing on the wider field of mobility, including public transport, as fuel prices and climate change look like cutting car usage and forcing people to use alternatives.

"Our view is that, whether it's the cost of energy or fuel, or climate change, there will be a move for people to absolutely maintain their mobility, but they may not be doing it by using their vehicles," Mr Agnew told WA Business News.

"You have to take a longer term view: there may be opportunities in this space.

"People will still have cars and still use them but they will moderate how they use them.

"If fuel costs are going up substantially then who better to talk to members and advise members than the RAC?

"We see we have a big role on influencing members and WA on how to use their motor vehicles, not just to be responsible but because it will save them money."

This is an interesting tack for any organisation and marks a big differentiation from any standard business, where the focus would typically be on growing transactional customers.

Organisations in WA that inhabit this space are few and far between. However, some of the more successful look a lot more like RAC under the microscope than at first glance.

The Chamber of Commerce and Industry WA is a well-known advocate on business and economic issues. In the past 10 years it has broadened its voice from a narrow range of business subjects, such as industrial relations, to become a big critic of perceived cultural failings here.

Like RAC, CCIWA is also an enormous business, offering services that may not make it a household name but certainly turn over millions annually and fund its lobbying efforts.

The Australian Medical Association (WA) is somewhat similar. While it's key role is as a union for almost 4,000 WA doctors, it plays a big part in the wider health debate, notably so at present with locally-based Dr Rosanna Capolingua's role as national president.

Underneath this is a big business, turning over an estimated $20 million a year, through equipment and services, especially training which extends to many areas beyond basic medicine.

The RAC has been extending its business reach in the past year or so.

While its foray into mortgage broking failed to hit the mark with members, the organisation has sought to extend its reach into fields where it fits with the demographics of its membership needs and the RAC brand.

That explains its natural move into mechanical repairs and maintenance, already a thriving business unit turning over as much as $13 million a year, and its more unexpected purchase of a 49.9 per cent stake in retirement and aged-care business St Ives Group.

Most recently it has bought back Suncorp-Metway Ltd's 50 per cent stake in RAC Insurance, which it originally sold for almost $100 million in 2001.

Mr Agnew said all these decisions fitted within RAC's focus, which was all about its people and its brand.

"We don't have a business unless we are strategically differentiated, at the same time we don't have a business unless we can deliver all that in a financially sustainable way."

To manage this is a fine balance. In a big organisation with entwined business and membership objectives, it would be easy for the tail to wag the dog.

Mr Agnew believes he has built a strong management team, with both internal promotions and external recruits, to maintain that balance going into the future.

While many organisations in WA have realised that investing in staff is critical in the prevailing boom conditions, the RAC takes this a step further by believing its employees' high level of interaction with customers enmeshes them into the brand.

That would be logical for an organisation whose consumers in key areas such as insurance and roadside assistance demand a high level of reliability and trust.

That logic can be turned on its head in the advocacy field, where those who are reliable and trustworthy may be listened to as a voice of reason in debates affecting transport.

"There are potential snake oil salesmen offering views on climate change," Mr Agnew said, pointing out that his organisation's stance is to "hasten slowly" when it comes to dealing with the much-anticipated impact of global carbon emissions.

"We are comfortable with the fact that being an advocate is good for our members and good for the community. It fits with what is good for the community."

Community organisation? That's another box that could be ticked.


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