Hagen / Schürenkrämer Client Centricity

Relationship Management in Banking
1. eBook Auflage 2015
ISBN: 978-3-86774-483-6
Verlag: Murmann Publishers
Format: EPUB
Kopierschutz: 6 - ePub Watermark

E-Book, Englisch, 264 Seiten

The financial market crisis has brought the very business models of many banks into question. What lessons should banks take from these events? What consequences will the industry have to face when dealing with clients? These questions are at the center of this book, with contributions from renowned experts and examples from theory and practice. Client commitment – the pursuit of pure customer focus – has become a success factor in many areas of the banking industry. This book sheds light on the theoretical aspects of client commitment and shows how its various facets are being put into practice.

Autoren/Hrsg.

Hagen, Jan U.

Schürenkrämer, Ulrich

Leseproben

Strategic Customer Orientation
Martin Kupp Many banks are trying to intensify their focus on the customer. They are keen to find out as directly as possible from customers how they can improve their products and services and gain their customers’ trust. Whether Deutsche Bank, Commerzbank, or HypoVereinsbank, banks are making an effort to integrate customers early on in the product development process, get to know them better, and find out what they expect of bank products and services. In response, Commerzbank set up a 40-member-strong Customer Advisory Council in 2009, elected for three years. It is the job of this council to integrate customers’ ideas and suggestions into the services offered by Commerzbank. This move generated a good response, with around 5,400 customers applying to be on the council in 2008. The council members report that their suggestions for possible new products or ways to resolve existing problems are very much welcomed. The Customer Advisory Council consists of private and business customers. The members were selected to ensure that the council represents a range of ages, professions, and regions. However, customer councils are by no means a new idea in banks or, indeed, commercial and service companies. Deutsche Bahn, the supermarket chain Penny, and the airport operator Fraport all have such councils. For around 20 years, Volksbank Freiburg has been using customer councils for market research and gathering feedback about new products and services. Postbank set up its customer council “60plus” back in 2005 to give greater weight to the needs of older customers. In addition, the Easy Credit customer council was launched at the end of July to make consumer credit even more user-friendly for customers. Before any targeted discussion on strategic customer orientation, we must first clarify what we understand by customer orientation, what it is to achieve, and which operative and strategic measures can be used to encourage it. Mechanisms of customer orientation Companies can apply measures for boosting customer orientation to try and achieve a whole range of goals. Put into rough categories, we can identify three separate areas associated with this: •Developing new products and services that are relevant to customers. •Increasing resale rates and stabilizing and expanding business with existing customers. •Driving internal change in which customer requirements play a greater role in shaping corporate culture. This all revolves around the idea that increased customer orientation can also increase customer satisfaction and loyalty. Since the mid-1990s, numerous analyses, including those by Manfred Bruhn, University of Basel, and Christian Homburg, University of Mannheim, have shown that customer satisfaction and loyalty play a central role in a company’s success. At the heart of these studies lies the confirmation/disconfirmation paradigm (C/D), which states that customer satisfaction results from a comparison between the actual experience of using a service and a specific standard. If the service meets expectations, we talk about confirmation. If the service exceeds expectations, the customer experiences positive disconfirmation and his satisfaction levels are higher than with confirmation. If the service does not meet expectations, however, we talk about negative disconfirmation, which goes hand in hand with lower levels of satisfaction. It is important to note here that the comparison is based on the customer’s perception of the service, not on an objective assessment. This can cover various dimensions of the product or service, such as functionality, form, services accompanying a product, interaction between customer and provider, delivery process, or direct customer contact during the purchasing process. While customer satisfaction puts a bank on the road toward profitability, it is not enough in itself. Customer satisfaction is simply an appropriate means of increasing customer loyalty and influencing customers’ price behavior. It has a positive effect on customer loyalty, which is then reflected in repurchases, additional purchases, and positive word-of-mouth advertising. There are three main ways to explain the loyalty of satisfied customers: •Satisfied customers remain loyal to their provider because this minimizes the risk of receiving poorer products or services from a different provider. •In addition, satisfied buyers tend to make repurchases because this allows them to validate their own behavior and thus avoid any potential dissonance involved in buying from other providers. •Last, but not least, satisfied customers are more loyal because customers interpret their own satisfaction as a reward for their choice of provider and are keen to maximize these rewards. While we can assume a fundamentally positive correlation between customer satisfaction and customer loyalty, there is also evidence that the effect satisfaction has on loyalty varies with different customers, products, and markets. There are certain products and customer segments where we can see a progressive relationship between customer satisfaction and customer loyalty. This is often true of products with a high level of customer participation. For example, we can assume that additional services offered in the private wealth management sector lead to greater customer satisfaction and also greater customer loyalty. Figure 1: Relationship between customer satisfaction and customer loyalty (Source: based on Homburg/Giering/Hentschel 1999, p. 185) Figure 2: Relationship between customer satisfaction and customer loyalty (Source: based on Homburg/Giering/Hentschel 1999, p. 185) With other products (often commodities, or products that can be compared easily), there is a zone of indifference within which an increase in customer satisfaction has no – or only very little effect – on customer loyalty. It has been shown that additional services, such as discounts when paying for gas with a debit card issued by a specific provider, do increase customer satisfaction. Yet they actually have very little influence on customer loyalty. Outside this zone of indifference, customers react more strongly to efforts to increase customer satisfaction. In this situation, we talk about a saddle-type curve between customer satisfaction and customer loyalty. Figures 1 and 2 show examples of these two relationships between customer satisfaction and customer loyalty. Customer orientation in developing new products and services For some years now there have been claims that companies should orient their innovations more strongly to customers. In 2002, the INSEAD business school in France evaluated 100 new product innovations from 30 international companies. Three types of innovation were identified: •The first were straightforward copies (me-too product); •The second involved only marginal improvements to the existing product; •The third featured a real innovation that significantly increased the value of the item for customers. While 86 percent of the innovations fell into the “me too” and “marginal improvement” categories, the “real innovations” generated 38 percent of the additional sales achieved and as much as 61 percent of the profits gained from all innovations. These innovations stood out due to their high degree of customer participation. They were able to pick up on real or latent customer needs and transform these into new products and services. The important thing here is to identify customer needs and communicate these within the company. One company that is regarded as highly innovative because of its focus on customer orientation is 3M. Founded in 1902 in Two Harbors on Lake Superior as the Minnesota Mining & Manufacturing Company (3M), it initially focused on manufacturing sandpaper. After a fairly modest start, the company underwent rapid growth thanks to two customer oriented innovations for the automotive industry – waterproof sandpaper (1921) and masking tape (1925). Following the Second World War, 3M opened a series of production facilities in the U.S. before expanding into Canada, Mexico, France, Germany, Australia, and the U.K. in the 1950s. In 1951, the American Institute of Management named 3M “one of the five best-managed companies in the United States.” Nowadays, the company employs more than 7,000 technicians and engineers worldwide, working on 45 different basic technologies for six business sectors. 3M holds over 25,000 patents. Over 30 percent of its global sales come from products developed in the last four years. In a bid to create new products based on customer requirements, the research and development department of 3M focuses on customer needs instead of working mainly on research into new materials, technologies, or processes. The company systematically identifies and utilizes lead users in its development of “breakthrough” innovations. Lead users are those individuals whose needs exceed the requirements of the mass market. These users expect an innovative solution to deliver particularly high benefits, no matter what form these come in. They also tend to be discerning potential purchasers interested in the technical aspects of the solution. 3M worked closely with the Massachusetts Institute of Technology (MIT) to...

Über Autor(innen)

JAN U. HAGEN is an associate professor at ESMT European School of Management and Technology. His research and teaching focus is on leadership and organizational behavior, error management, in particular.
In addition to his academic work, he has more than 15 years of management experience in the European financial service industry. He is the author of Confronting Mistakes.

ULRICH SCHÜRENKRÄMER is a member of the Management Committee Germany and Regional Head South (Germany) at Deutsche Bank. Prior to joining Deutsche Bank, he worked for Bayerische Hypotheken- und Wechsel-Bank. With over 30 years of management experience in corporate banking he worked in London, New York, and various locations in Germany. In addition to his professional
responsibilities and board memberships in the financial sector, he is a board member of several organizations focusing on educational and cultural concerns.