Client Relationship Management (CRM)

18 Pages   |   4,569 Words
Table of Contents
Introduction. 4
Competitors’ Analysis. 4
HSBC.. 4
Royal Bank of Scotland. 5
Standard Chartered Bank (SCB). 6
Analysis of Barclays’ Customer Relationship Strategy. 7
Mission Statement 7
Goal 7
Values and Behaviours. 7
Respect 7
Integrity. 7
Service. 7
Excellence. 7
Stewardship. 7
Commitment of Time and Resource. 7
Customer Segmentation at Barclays. 8
Distribution Channels. 8
Use of Information in Designing New Products and Services. 8
Dealing with the Customer Feedback. 9
Customer Recovery Strategies and Service Guarantee. 9
Methods of Gathering Customer Feedback. 10
Sharing of Customers’ Feedback with Employees. 10
Role of CRM System in Easement of Business. 10
Methods to Avoid Customer Defection. 11
Reward System.. 12
Relationship Pricing. 12
Co-Branding and Partnership Programs. 12
Referral Marketing Program.. 12
Strategy of Strengthening Relationship with Customers. 13
Cross Selling. 13
Role of Technology in Automating Marketing and Sales Functions. 13
Responsiveness of the CRM System.. 13
Integrated View of Customer. 14
Customer-Centred Approach. 14
Handling the Key Customers. 14
Responsibilities of Key Managers. 15
Conclusion. 15
References. 17
 

Introduction

Barclays PLC, a British multinational bank, headquartered in Canary Wharf, London, United Kingdom. It was formed in 1690 in London. Since then, Barclays has grown into a worldwide recognized brand. It has around 4,750 branches in over 50 countries with employees count reaching up to 139,200 (Barclays, 2013). Majority of Barclays’ resources are utilized at its local region i.e. UK, whereas Africa and Middle East represent the second largest region in terms of the number of employees and branches. It is also the main sponsor of the world’s most watched and followed football league, English Premier League (Barclays, 2013).
During the global economic recession of 2008-2012, Barclays got affected to the point that British Government decided to bail it out. Though, the offer was rejected later by the bank, but the impact was evident. To overcome the recession, Barclays made several structural and technological changes throughout the organization. Teradata CRM system was acquired, in early 2006, to better manage its customers and stay ahead of its competitors, but the system was not made to use until 2007–08. Barclays has been making some desperate attempts during the last couple of years in order to drift away from its tag of poor customer service provider (Barclays, 2013). The following write-up provides a brief analysis over CRM practices adopted at Barclays and its impact on customer service.
 

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Competitors’ Analysis

HSBC

A British multinational bank, headquartered in London, England. It was founded in 1865 and presently it is regarded as one of the biggest banks of the world. In terms of assets, it’s the world largest bank. HSBC started implementing customer relationship management system, in early 2006, in an effort to stay ahead of the competition by targeting its customers and deriving the right value from them in a more efficient manner (HSBC Group, 2013). At HSBC, the CRM system was implemented module wise and up until the global economic recession only a couple of modules had been implemented. During the recession, the need of a full-fledged CRM system was felt more than ever so as to focus all services and products towards right customers. HSBC already had in-placed a system to gather customers’ information, but it lacked tools to analyse that information and use it effectively. First of all, to improve traditional banking and to focus on external needs of customers, it launched anywhere, anytime and anyhow banking. Secondly, the CRM system streamlined the entire data collection process. Now data was gathered from only one contact point from the customer and was used on all fronts. It not only saved the duplication of data, but also allowed an effective segmentation and targeting of potential customers. Now the bank is well aware of the top 20% customers who are responsible for 80% of the business. To cater them, HSBC has launched Premier Banking where a specialized relationship manager will attend to needs of these premier customers. In addition to this, CRM system has allowed HSBC to modify its resource allocation process according to preferences and behaviours of customers (HSBC Bank PLC, 2008). Now all product and services like Day and Night Banking, e-banking, one stop for all financial needs, phone banking etc. are introduced in a response to the need of a customer, which makes them more customer-centred.

Royal Bank of Scotland

Royal Bank of Scotland is currently headquartered in Edinburg, Scotland and was founded in 1727. In an attempt to provide a better service to its seven million customers worldwide via its hundred and fifty thousand employees, RBS implemented CRM system throughout its entire group. RBS deployed a custom designed CRM solution from HP and Prime Response in order to streamline its marketing activities. Now it has a UNIX based, HP mid-ranged, and K class servers with an Oracle database with Prime Vantage Customer Relationship Management System installed on it (Royal Bank of Scotland, 2013). This investment has not only allowed RBS to increase its number of marketing campaigns over a time period, but has also reduced cost of those campaigns. Now campaigns are pre-tested and event-driven automatically, which has resulted in higher efficiency of these campaigns. One major adjustment that the RBS management made was to transfer the ownership of data from the IT department to the Marketing department. This allowed the marketing team to collect data for relevant fields only rather than all the information, which resulted in a decrease, in information overload. The new CRM solution has increased the financial activity of the bank by identifying the most loyal segment of customers (The Royal Bank of Scotland Improves Marketing Services with CRM Solution, 2008). Now bank can target these customers from a single contact point. Despite the installation of new CRM solution, the bank has not been able to derive greater value from its system, which was apparent from the recent 10 days system failure, but the bank continues to aim at improving its internal operations so that it can align itself with evolving customer needs.

Standard Chartered Bank (SCB)

The most recent of the three banks, Standard Chartered was founded in 1969 in London, England. Nearly 90,000 employees worldwide are operating its 1700 branch network across the world. The bank has mainly been generating its revenue from the Asian and African regions, despite it being of UK origin. Before and during the global economic recession period, SCB saw a considerable increase in its customer base, in the Asian region, yet the bank failed to produce reasonable financial results (Standard Chartered, 2013). The issue identified was the wastage of bank’s resources on non-profitable customers. With the old system, the data collection process of customers was highly inefficient owing to data duplication. Previously, all services and products were designed from the financial perspective by the help of its business intelligence software known as Online Transaction Processing System (OLTP). There was absolutely no input or scope of adjusting customers’ side.
The new customer relationship management system has allowed the bank to make use of the available information in a right way by targeting profitable customers and gracefully letting go non-profitable ones. The new system allows optimization of the customer life time value by exploiting changing and evolving trends of the market. It has also allowed SCB to decrease its customer management cost by effectively managing relationships. The use of SAS product with AIX operating system has enabled SCB in running targeted campaigns. Tools like profit modelling and pre-testing allows the bank to derive higher returns on its investment by testing its new products and services from various perspectives. For example, the bank already has an idea of what percentage of its card customers will obtain an auto-loan. This intelligence not only decreases the marketing cost significantly, but also reduces the risk involved in the launch of new products and services (SAS Institute Inc., 2010). So in a nut shell, the new SAS system has shifted Standard Chartered Bank’s focus from acquiring new customers to retain profitable ones and deriving higher value from them.

Analysis of Barclays’ Customer Relationship Strategy

Mission Statement

“Our Purpose is to help people achieve their ambitions in the right way” (Barclays, 2013).

Goal

“To become the Go-To bank for our stakeholders – customers, and clients, colleagues, investors and wider society” (Barclays Bank PLC, 2013).

Values and Behaviours

Barclays aims to achieve its mission by enforcing following values among its employees.
Respect: To respect and value the contribution and perspective of all employees.
Integrity: To carry out all operations in a fair and ethical manner and to make employees responsible for all of their actions.
Service:  To keep clients at the centre of all activities by better understanding their needs.
Excellence: To aim at delivering best and sustainable results by learning from past mistakes.
Stewardship: To build on the present situation by positively contributing towards the Community (Barclays Bank PLC, 2013).

Commitment of Time and Resource

Barclays’ long term aim is to become the Go-To bank and it is making huge strides in this regard. It recently hired 150 new managers and its current business bank managers’ count stands at 689. These bank managers are spread out across 54 business centres and each manager is responsible for managing between 60 and 80 customers. Each of these managers receives an annual training of minimum fifty hours so as to be in a better position to understand customers and their respective sectors (The Telegraph, 2006). In addition to this, managers are judged based on the value they create for both present and prospective customers.

Customer Segmentation at Barclays

There was no evidence found of any kind regarding Barclays’ customer segmentation policy based on their life time value. From Barclays’ online reports and company strategy, it can be safely said that their segmentation strategy is usually based on the occupation of the customer. Barclays offers four types of banking; personal banking for ordinary customers, premier banking for VIP customers, investment banking, and corporate banking for dealing with corporate clients (Barclays Bank PLC, 2013).

Distribution Channels

In an effort to keep up with the competition, Barclays offers almost all international banking services including mobile banking, internet banking, online statements, text alert, Barclays Pingit, Barclays Personalized card etc.
Mobile Banking service not only protects customers in an event of fraud, but also provides easy access to account balance service, mini-statements, transfer and payment service, and ATM locator service (Barclays Bank PLC, 2013).
Barclays Pingit allows Barclays customers to send and receive payment to and from anyone irrespective of them being Barclays’ customers. The payment can be sent in a secure manner. This service can be availed in many countries for free; whereas, in other countries; it comes with minimal service charges. Pungit also offers an option of personalizing the transfer by an addition of a picture (Barclays Bank PLC, 2013).

Use of Information in Designing New Products and Services

Initially, Barclays was in a practice of introducing new products and services based on the financial outcome of those services. It used push approach for marketing those products and services, which resulted in customers buying products that, had no use to them. This strategy failed during the global economic recession period, and Barclays came up with a new customer focused strategy. Since then, focus groups are conducted regularly data is fetched from enterprise resource planning (ERP) and customer relationship management systems in order to design the right product based on the need and behaviour of the customer. Now, Barclay’s uses pull approach to attract new customers and retain present ones (Barclays Bank PLC, 2013). A prime example of this strategy is the recent launch of Barclays Pungit, which resolves all fund transfer problems of customers. Another example is the change in fraud identification process; now customers have to go through a lesser hassle for the resolution of the fraud issue.

Dealing with the Customer Feedback

From the company practice and on-going news in the market, it is apparent that the Barclays bank does not deal with customer complaints in an efficient manner. During the first six months of 2012, there were more than 23,000 complaints, a spike of 27% since the last period. Though, majority of these complaints were related to miss-sell PPIs, but from responses of the bank employees, it was evident that the bank lacks any clear cut strategy to deal with this issue. The bank’s website has a half page apology-cum-informative article regarding the on-going PPI issue, which promises an initial response time of five days and claim resolution time of 8 weeks (Barclays Bank PLC, 2013). This poor complaint management strategy has resulted in Barclays being named as the ‘worst UK bank for handling complaints’, in 2012 (Mirror, 2012).

Customer Recovery Strategies and Service Guarantee

Barclays has a robust business continuity management program designed to minimize the disruption caused by any technical or natural reason. In a course of significant business disruption (SBD), Barclays has adequate resources to continue its operations, which include dedicated technical recovery facilities, internal and third party reciprocal seating arrangements, dedicated, and shared work area recovery facilities, crisis management framework and teams. Barclays also has liquidity management service for its premier customers in an event of significant business disruption (Barclays, 2012).
Barclays also offers payment protection insurance (PPI), an optional insurance policy, which is usually taken with credit cards, overdrafts, mortgages and loans. This insurance policy provides protection in case the customer fails to repay the debt or bank amount because of any unforeseeable circumstances like involuntary unemployment, disability, accident, or illness (Barclays Bank PLC, 2013).

Methods of Gathering Customer Feedback

Barclays values the feedback earned from both customers and its employees. At every branch of Barclays, there is a specialized helpdesk for the purpose of providing assistance and leaving complaints. All complaints are addressed by the complaint management department, which tries its best to reply with-in five days of receipt. In addition to this, Barclays also acquires the facility of third party contractors for carrying out the survey of both its employees and customers. In 2012, over 20,000 clients were surveyed by ClickTools. The purpose of this survey was to enquire about the client satisfaction level and to provide top management with an analytical tool to measure employees’ performance. This survey was particularly used within the sales function and assets & sales finance function for measuring the effectiveness of various events (ClickTools, 2012).

Sharing of Customers’ Feedback with Employees

Based on the feedback from customers, specialized trainings are designed for the purpose of developing skills of employees. On an average, every front-end employee attends a minimum of fifty hours of training. Some key employees even attend as high as 100 hours of training solely for the better understanding of customers. In addition to this, based on the recording and quality check standards, regular feedback to personal bankers is also provided. These feedbacks are based on ground realities as managers have primary data of phone calls. Moreover, complaint management department forwards the feedback to the respective department via emails for the purpose of continuous learning and improvement (Barclays Bank PLC, 2013).

Role of CRM System in Easement of Business

Before the introduction of customer relationship management system at Barclays, relationship managers and branch managers basically had the authority of approving small to medium sized loans. Now with customer relationship and business intelligence system in place, the authority lies with these systems. Loans are approved based on the riskiness identified by the system. Though, many customers find it unacceptable as earlier it was possible for a customer to get a negotiable size of loan after convincing the relationship manager. Now, based on the credit history and current source of income, CRM system automatically categorizes a customer after which little room is left for negotiation. Some experts argue this in favour of the bank, but there are absolutely no evidences available supporting the fact that the ratio of non-performing loans has decreased with the use of these analytical systems (Farquhrar and Panther, 2008).
Other than this issue, new services like online banking, mobile banking etc. has considerably simplified the business. Increasing number of customers is relying on these services over visiting the bank for carrying out their activities.

Methods to Avoid Customer Defection

All customers with strong profit potential are regularly targeted by the customer relationship management system via direct emails, telephone calls or mails etc. In addition to this, relationship managers are responsible for maintaining a good, positive relationship with such profitable clients. Earlier, relationship managers were given a commission for successfully retaining and deriving business from such clients, now they are paid for adding the right value for customers. In case, any of the profitable customer or high net worth individual decides to terminate the relationship with the bank, the bank manager has the authority to offer him appropriate incentive and services for the purpose of retention (Barclays Bank PLC, 2013). If the client still insists on terminating the relationship, a closure form is to be filled where a client is required to fill in the reason for such action. These forms are periodically reviewed by the quality control department for analyzing the cause. It was through these forms that the top management was able to identify the declining business from high net worth individuals against which they developed a strategy of assigning personalized relationship managers (Barclays Bank PLC, 2013).

Reward System

In 2009, Barclays introduced a Reward Points Program, unique loyalty plan, in an effort to reward its customers. All transactions carried out via mobile banking internet banking debit cards will be rewards through loyalty points (Barclays Bank PLC, 2013).

Relationship Pricing

Barclays has divided its core banking operation into four divisions where the premier and the corporate customers receive maximum benefits (Barclays Bank PLC, 2013).

Co-Branding and Partnership Programs

Barclays believes in providing higher value to its customers. Barclays has time and time again, use partnership programs with other recognized brands and organizations so as to provide increased value and satisfaction to customers. Often Barclays signs a partnership with restaurants or other departmental stores for providing special discounts for customers using Barclays’ credit or debit card or any other service. These partnership programs play a crucial role in establishing a soft image in the mind of consumers. It also denotes that the bank is not interested in promoting its business, but also equally cares about the need and the requirement of clients.

Referral Marketing Program

Word of mouth marketing is the most trustworthy source for customers as they believe in words of other customers rather than the business provider. Though, the bank does not seem to have a structured way of using this particular marketing strategy, but relationship and bank managers often use referral marketing techniques in order to attract new customers. One reason that Barclays has not used this strategy officially is because of its current customer satisfaction level (ClickTools, 2012). Considering recent events and the terrible impact they had on the customer experience, it would not be a wise decision for any organization to pursue referral marketing technique in such circumstances. May be couple of years down the line when customers’ satisfaction level is reasonably higher, and the bank is in a position to fulfil all its promises then it can use this strategy for attracting new customers (ClickTools, 2012).

Strategy of Strengthening Relationship with Customers

Great emphasis is laid in building a strong relationship with Premier customers. All corporate and premier customers are provided first class treatment by all branches of the bank, worldwide. In addition to this, special greeting cards are sent on social occasions for further strengthening of the bond. Moreover, keys customers are also offered new currency notes whenever they are issued from the central bank (Barclays, 2013).

Cross Selling

The new customer relationship management system and business intelligence tool combine to understand and target the customer based on his need and behaviour. Phone bankers often make direct calls to present customers who are a prospect for the bank’s new product or service. Customers are briefed on features and attributes of the new product or service. In addition to this, often customers call for making an enquiry or complain to the bank officials. The CRM system provides Phone bankers with the live data of all services that the customer has been utilizing and list of services and products, which he might be interested in (Barclays, 2013).

Role of Technology in Automating Marketing and Sales Functions

The Teradata CRM system for customer management supported by Teradata enterprise data warehouse allows event triggered, highly targeted, multi-channel marketing campaigns. The marketing department with the collaboration of the IT team formed rules so as to automatically identify the financial interests of customers. This system not only allows marketing at the right time, but its multi-channel approach of interacting via web, ATMs, e-mail, letter, SMS, telephone or face-to-face makes the targeting process more efficient (Barclays, 2013).  

Responsiveness of the CRM System

In an effort to improve service for customers, Barclays launched Lives Made Much Easier (LiMME) project. This project was launched at nation-wide call centres so as to check the effectiveness and efficiency of the Personal Bankers. Speech Analytics were used for the purpose of customer identification and verification (ID&V). This decreased the probability of fraud and security breach. In addition to this, Personal Bankers were in a better position to offer appropriate alternatives to customers based on their information and requirements. Moreover, scores of personal bankers in setting the scene increased to 96% from 3%. Ultimately, this entire step helped in improving customer experience and satisfaction (Professional Planning Forum, 2011).

Integrated View of Customer

The CRM Teradata implemented in 2006 was aimed at improving the customer service of the entire organization. Before the rolling out of the new system, as is the case with many other companies, even Barclays was collecting customer data from different contact points and they were not integrated in an extensive manner causing much duplication of data. The new system provides an integrated unified view to all departments. Though, the data is still collected from multiple touch points, but the information is available for all concerned employees. This has eliminated the possibility for the client to provide the same information repeatedly (ClickTools, 2012).

Customer-Centred Approach

Barclays has formed a Treating Customers Fairly (TCF) program, which is responsible for monitoring and supervising all customer related training and complain programs. Role specific trainings for sales advisors, performance monitors, and policy makers are done in order to set a performance standard at all key touch points (Barclays, 2013). In addition to this, the bank has also changed its performance metrics in order to become customer centred. All metrics having hygiene factors or sales targets were removed and new customer centred metrics as net promoter score (NPS) were introduced. This was a major step in shifting away from a target oriented environment towards customer oriented. Moreover, titles of Sales Advisors were changed to Phone Bankers so as to better reflect the change in performance standards.

Handling the Key Customers

At Barclays, the banking operation has been divided into four categories based on the value of business and the mode of earning. These include personal, premier, business and corporate banking. For Premier customers, banks offers dedicated relationship managers, loyalty program, black premier debit card, wealth management/investment options, invitation for tailored events etc. All these services are offered for just £10 a month (Barclays Bank PLC, 2013). 
The top management understands the importance of key customers in the success of a business. All premier customers are invited to occasional events, which are particularly tailored for the pleasure and delight of such customers. These events play a crucial role in strengthening the bond between the bank and the customer. The customer relationship management system allows the bank employees to identify its top 20% of customers who are responsible for the 80% of the business. The bank management is always keen to favour these customers so as to attract higher business from them, in the future (ClickTools, 2012).

Responsibilities of Key Managers

Barclays’ top management believes in practicing its core values for the achievement of its mission. For the same purpose, the new customer relationship management system was deployed, and change in strategy was made. Titles of sales advisor were changed to personal bankers so as to clarify the shift in strategy from target oriented towards customer centred. All employees are trained for the sole purpose of adding value to the customer. In fact, appraisal of employees takes place based on the satisfaction level of the customer rather than fulfilment of the sales target. Surveys are carried out by both internal and external parties so as to measure the employee performance from the customer’s perspective (ClickTools, 2012).

Conclusion

Organizations all around the world have been using customer relationship management system for the better identification of prospective customers and understanding of current customers. Many organizations including banks have failed to keep up with the global pace particularly after the global economic recession. It has become essential for banks to use this system in an effective manner so as to derive the right value from the customer. Often organizations make huge investments in developing or procuring the CRM systems that the whole idea of cutting cost and saving money gets lost in fulfilling the formality. Managers should carry out proper trainings so as to make sure that their employees are capable of operating such sophisticated systems. Last, it should be kept in mind that CRM systems are there to make the business easier rather than complicated. Barclays has made a reasonable effort in implementing and deriving the value from its CRM system, yet it has not been able to use it up to its potential. Much work needs to be done in this regard, and the current business strategy of the Barclays bank is certainly heading in the right direction.
 

References

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