One of the main issues with Barclays Bank PLC is that different departments of the bank have different IT systems, and there is very little coordination among these departments, which is often delayed because of lower level of interaction among them. The top management is still not concerned about not having a single customer profile, and they are giving approvals for procurement of new systems. For example, customer service team had a system called Dynamics, which was designed by Microsoft; whereas, marketing department had a CRM system, Teradata (The Nation, 2008). Yet the sales force team recently, in 2012, adopted a Salesforce’s Enterprise Social Networking Tool, which will connect over 4,000 sales force employees globally so as to provide a better service at social media channels (Computer Weekly, 2012). Having three different systems for different wings of a single marketing department does not make sense. This not only creates duplication of customer profiles, but also increases the cost of managing the customer.
Barclays should reassess its strategy and should adopt a proper enterprise resource planning system with an integrated customer relationship management module which should be used by all wings of the marketing department irrespective of their responsibility. If customer service team, sales force team, and the backend marketing team will all have the same system, then they will be in a better position to deliver a better service to their customers.
Barclays already has a customer service, and a social media teams in place who are responsible for providing support and taking follow ups with customers in case of queries or complaints. Often customers have found representatives of these teams helpless because of their lack of authority in making modifications to the CRM systems, or delivering requests of customers. This issue has not only delayed the problem resolution for customers, but has also irritated them as effectively these representatives are of no use except for providing basic information or guidance (Mirror, 2012).
Barclays should reassess its customer service strategy and provide the necessary authority to its customer service representatives and social media team, Barclays online, so as to improve the query resolution process. This strategy will not only allow Barclays to achieve higher customer satisfaction, but will enable it to make proper use of its customer service staff.
Barclays is one of those firms that has made huge investments in developing its customer relationship management systems, but has failed to derive the right value from it. Many companies have invested heavily in this system without realizing that the whole idea is to reduce the cost and increase the effectiveness of managing a customer. A basic use of the CRM system is to automate the process of identification, attraction, and retention of profitable customers so that more accuracy can be brought in by replacing human instinct and judgment with artificial business intelligence.
At Barclays, usually a product design and development is the responsibility of the product development department only. Product development team considers the financial aspect of every product before rolling it out and ignores the customer’s perspective mostly. Then, they ask for the support of sales force and customer service agents from the marketing team for the promotion of the new product. Often, sales staff finds it hard to generate revenue from new products as they are trying to sell a product of which the customer has little or no need (Professional Planning Forum, 2011).
New products should be developed by the coordination of marketing and product development departments so that customer service and sales force team can provide their first-hand knowledge of customers’ requirements and needs. This input from the marketing department would add the customer’s perspective in new product development, which will ultimately make it easier for sales staff to generate sales as they will be offering better products to customers that are more in-line with their needs.
Apparently it seems that after the global economic recession, Barclays has focused all its activities towards effectively managing social CRM aspect, and in this process it has unconsciously ignored the traditional CRM aspect. Though, social CRM is rightly on the boom and customers are interested in engagement and interaction than direct marketing, but it should be kept in mind that more than three-quarters of the global population is still not using the World Wide Web and social sites for their activities. In addition to this, a recent study by the Institute of Asian Consumer Insight (ACI) at Nanyang Technological University (NTU) reported that Asian consumers still prefer traditional marketing and customer relationship methods over emerging social media modes. This study covered 10 regions including China, Japan, Thailand, and Malaysia, which are one of the fastest growing economies of the world. Barclays bank, after the economic recession, has increased its focus on Asian and African regions and has also increased its investment in these regions eyeing long term growth and profitability.
So by ignoring the traditional use of CRM, Barclays is losing a big chunk of its potential business. The top management should refocus its strategy for traditional CRM, which can be done by aligning it with a social aspect. Another benefit of this change in strategy would be that customers will get targeted from various angles, which will increase the potential of buying Barclays’ products and services.
Though, many people believe managing relationship is the key business of a bank, but the actual business is managing transactions. The main focus of a bank should be managing the customer’s transaction in a cost effective manner. By providing new value added services like ATMs, telephone banking, internet banking, etc., it has become difficult for banks to manage their resources effectively and derive profits from the operation (Foss and Stone, 2002). New CRM systems have the capability of estimating the customer life time value and customer risks, which has been used effectively by many industries, but not the banking sector. Barclays should focus on assessing the customer’s life time value and then target its customer accordingly. Usually a customer has reasonably straightforward requirements during different stages of life; therefore, his/her life time worth can be calculated to a certain extent. Currently, Barclays is using the same customer service and resources for all its clients except Premium customers. Ideally different services should be provided to low value and high value customers and also different strategies should be used to retain them. Barclays should use this strategy to not only target new customers, but also to allot resources for current ones so as to carry out the business in a cost effective manner. Wasting resources on non-profitable customers doesn’t make sense especially in times of financial distress for the banking sector.
According to the report published by Global Business Insights, the cost of attracting a new customer is nearly five times than the cost of retaining a current one for a bank (Business Insights, 2008). Considering the increasing competition among banks, the process of attracting a new customer and then making him loyal has become increasingly difficult. Therefore, it is advisable for Barclays to focus its activities more on retaining profitable customers by analyzing factors that usually become the reason for customer defection. Key findings of the report state that nearly half of all customers change their banks because of high pricing, service failure and inconvenience. Barclays is in practice of carrying out customer surveys and interviews for all former customers, but there is little known regarding what actions takes place after the insight is received. By carefully analyzing those insights and making modifications in new products and services accordingly, the bank would be in a better position decrease the rate of customer defection.
Many banks, around the world, have start diverting more resources towards corporate banking as it has become more profitable as compared to commercial banking. But this profit comes at a high cost as nearly in all countries and industries clients are considerably larger than their banks, which gives them an upper hand in negotiations and product delivery. Banks, under these circumstances, cannot rely on information only as usually their clients have more sophisticated CRM systems, which allows them to select their suppliers effectively. In this scenario, Barclays should rely on dedicated relationship managers for managing corporate clients along with using its CRM system to its advantage (Foss and Stone, 2002). One thing that Barclays’ top management has to consider is to covert non-profitable customers into profitable ones by effectively offering them right products and withdrawing from services, which are using up resources, but not providing right revenue. In addition to this, Barclays should also focus on becoming the key suppliers of corporate clients so as to earn higher business from them. This can be done by offering value added services based upon the needs of that corporate client.
Another aspect of managing corporate clients is to shift away from managing on a goodwill basis towards wallet share basis. This approach has worked for many years as top managers used to provide favours to their business friends or old clients instead of assessing them on risk estimations basis. This change in mentality will assist in stabilizing the profit share. The idea here is to transform towards broader institutional relationships from individual relationships.
At Barclays, currently, employees are informed of the client’s feedback via informal meetings or customer complaint handling department forwards complaints to respective employee, both of which are a traditional and laid-back method (Business Insights, 2008). So it is assumed that none of the IT systems are connected with the employee E-mail systems directly resulting in no formal method of forwarding clients queries and feedback to employees directly. Ideally, connecting both systems would result in more effective and prompt action on queries and feedback from employees. It is recommended for Barclays to use this option as it is usually available in all leading CRM systems.
CRM systems work on the rationale of feeding information on employees. If employees don’t own this customer relationship management system and don’t feed information to the system, then system fails to perform at its effective level. Sales and customer service staff should feed in all their insights into the system including the prospective lead information so that CRM system provides analysis on as much information as possible (The Telegraph, 2006). In addition to this, it is also necessary for top management to understand and buy the idea of implementing a CRM system as at the end of the day they are ones who will be responsible for generating reports and measuring accountability of customer satisfaction and employees’ activities. A 360 degree ownership would take the effectiveness of the CRM to a whole new level.
One last aspect for Barclays is to consider a single global CRM system for operation in all of its regions. Often it has been noticed that a single bank performs outstandingly well in one country; whereas, fails to meet customer expectations in another country because of different systems and different people managing those systems. If Barclays can have the confidence of all its Global Heads and can implement a uniform strategy in all countries for consistent performance all across the globe then not only the financial performance will improve, but also multinational corporate clients will receive consistent banking experience, in all countries.
It should be noted that the loan approval system used at Barclays does not approves or reject a loan, rather it only provides the risk estimation for that particular person who has applied for loan. Earlier this risk estimation was carried out manually by bank employees, which not only made the process longer, but also less reliable. Despite the use of this system, there is absolutely no evidence that suggests decrease in the ratio of non-performing loans. The existing loan evaluation model has not improved the process in terms of decreasing the riskiness; too many loans were approved, and many people were denied who should have been approved.
A new loan evaluation model should be used where employees of loan approval committee have more discreet than in the current system. In addition to this, the bank can inquire about the possible pattern of bias in loan approval decisions. This can be done by assessing common factors involved in all those loan requests, which were denied during the last couple of years. Furthermore, Barclays should use provide detailed explanations to clients for the approval and rejection of loans so that a rejection doesn’t end up in customer defection.
Barclays has become a prime example of a multinational organization falling for CRM benefits, but failing to achieve them. The main reasons were implementing a CRM system before making a customer relationship strategy, rolling out a CRM system before aligning organizational processes to it, assuming that more expensive the system the more benefits it will offer, and not realizing customer’s need. The consequences of all these steps have been well visible to Barclays and its stakeholders as despite being among the top two banks with most valued assets, its market value and financial performance has been below par as compared to its competitors.
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