Marketing and

Customer Relationship
Management
 What is Marketing?

Marketing is the management process that

identifies,
anticipates, and
satisfies customer requirements profitably.
Marketing of Financial Services
There are some key differences between marketing physical
products and marketing financial products and services.
There are five main points to consider in marketing financial
services.
Services are intangible
Service marketing involves building relationships and working
together with clients
Service providers must be more selective when choosing clients
Objections can be warnings rather than something to be
overcome
Pricing differs with projections - with products, pricing is fairly
standard and easy to calculate but services are more difficult to
price.
 Characteristics of a Service

Marketing experts acknowledge that marketing a service is more

difficult than marketing a tangible product.
Intangible
Inseparable
Variable (Heterogeneity)
Perishable
No ownership
 Marketing Mix

Product
Price
Place (Distribution Channel)
Promotion
People
Process
Physical Evidence
Strategies for Service Industry
Banks should have well trained employees;
Staff should be satisfied and be loyal to the employer;
There should be excellent internal working
environment in the organization;
There should be very effective communication with
customers; and
Need to give extra care towards the satisfaction of
customers.
Strategic Marketing
Business Mission
External Environment
Internal Scan Assessment

Goal Formation

Strategy Formulation

Action Plan

Implementation and
Execution
Monitor, Evaluate, Review
& Feedback
The strategic marketing planning process involves:
Carrying out marketing research within and outside the
bank;
Looking at the bank’s SWOT Analysis;
Marketing assumptions;
Forecasting;
Setting marketing objectives;
Generating marketing strategies;
Defining marketing programs;
Setting budgets;
Reviewing the results and revising the objectives,
strategies and programs.
 Business Mission

The organization is expected to:

Defining specific mission within the broader corporate
mission.
Define the corporate positioning statement.
Focus on a vision of the future.
Integrate all the above.
What the “core competencies” are?
Where do products/ services make a significant contribution
to the perceived customer benefits?
What can the organization do that is difficult for other
competitors to imitate?
Overall evaluation of Bank’s Strengths, Weaknesses,
Opportunities and Threats ( SWOT Analysis)
Looking around
(Competitive Analysis)

Looking Within
Market
(Evaluating
Intelligence
Resources)
Tools
Looking Ahead
(Environmental
Analysis)
The internal scan and external environment assessment findings
related to the bank, the competitors, and the potential
customers.
Potential customers
Who they are?
Where they are located?
Who the market leaders are?
The bank
Do existing products or services meet customers’ needs?
Is product development necessary?
Are completely new products required?
What would be the potential of a new product?
How is the bank perceived in the market?
The competitors
Who they are?
How are they compared with the bank in term of size?
Where they are located?
Do they operate in the same market sectors as the bank?
What products do they sell?
How is their pricing compared with the bank?
What distribution channels do they use?
Have they recently introduced new products?
 Market Intelligence Tools

Situational analysis is a process that focuses on:

Reviews the economic and business climate;
Considers where the bank stands in its strategic markets and
key sales area;
Look at the strengths and weaknesses of the bank – its
structure, its performance and its key products;
Compares the bank with its competitors;
Identify opportunities and threats.
SWOT Analysis: Look inward, record and analyze capabilities
or resources to spot strengths and weakness. Focus
externally, look around at the competition and
environmental trends to spot opportunities and identify
trends.
CSI: Customer Satisfaction Index. Consistently measuring
customer satisfaction helps you to keep a tab on how your
business is performing.
CPA: Customer Perceptions Audits is a step by step walk
through of all “points of encounters” from the customers
perspective. (Mystery Shoppers/ external Firms)
GAP: Gap Analysis seeks to identify differences between
management’s perspective and customers evaluation on
how business is running.
OPD: Other People’s Data or Secondary Research. Make use
of the research done by third party or external agencies.
Specific
Measurable
Agreed
Realistic
Time Bound

Write them down

 Strategy Formulation
There are different types of strategies depending on the specific
circumstances of a bank:
Defensive – designed to prevent loss of existing customers.
Developing – designed to offer existing customers a wider range of
products and services.
Attacking – designed to generate businesses through new customers.
Michael Porter’s Generic Strategies (Competitive Strategies) focus on:
Differentiation: How my product is better or different from other
products.
Cost Leadership: Achieve lower production and distribution costs and win
a large market share. Low cost high volume.
Focus: Business focuses on one or more narrow market segments. Focus
on niche market and pursue either differentiation or cost leadership in
that segment.
Developing Marketing Action Plans
 Marketing Strategies tailored to each target you need to
influence (Customer Driven Plans).
 Focused on the 7 Ps identified by Philip Kotler.
 Product
 Price
 Place
 Promotion
 Physical Evidence
 People
 Process
 Implementation and Execution

• The best strategies, if poorly implemented,

are of little value.
• A flawed strategy - no matter how brilliant
the leadership, no matter how effective the
implementation, is doomed to failure.
• A sound strategy, implemented without
error, wins every time.
  Product
Strategic Direction
 Market
(PURPOSE)  Competition
 Customer

PEOPLE Competence Organizational Competen

 Competence
(PROCESS)
 Roles
 Commitment  Structure
 Team Working  Processes
 Leadership  Communication
 Structur
Strategy e
System
Shared
values

Style
Staff
Skills
 Lessons Learned
Strategic marketing is bank’s vital instrument in attaining business
objectives. It basically starts with defining the business mission. It also
incorporates internal and external environmental assessments. Goal
formation, devising the strategy and implementing, and monitoring and
evaluation are the main pillars.
Allotting proportional time/reasonable focus for developing people, setting
strategic directions-purpose and enhancing organizational competence-
process and hence creating the alignment are central for an effective leader.
No matter how brilliant the leadership is and no matter how excellent the
implementation goes, if it is with flawed strategy, it is deemed to failure.
Exercising market intelligence tools such as SWOT, Customer Satisfaction
Index (CSI) and Customer Perceptions Audits (CPA) etc helps the bank to
determine where it stands in the industry with regard to its performance
and its key products and sales with close follow up of the level of customer
satisfaction.
 What is Customer Orientation?
“The ability of an organization to consistently meet the customers’
needs/wishes at a profit”
In service industry, the behavior of employees plays a central role with
regard to customer’s perceptions of satisfaction and quality of service.
Each moment of contact should be converted into positive moment of truth
giving the customer the impression that the bank cares about its
customers.
Frontline people - are customer touch point, who interact, understand
and meet the needs and satisfy the customer.
Middle management - support the frontline staff so that they can serve
the customer well.
Top management - at the base of the pyramid, supposed to frame/make
policies/structures for implementation keeping in mind the customers’
needs.
 Customers

Frontline
People

C C
U U
S Middle
Management
S
T T
O O
M M
E E
R
Top Management

R
S S
 Customer Perceptions

 Customer perception is the reality!

It is not only what is said but what is ‘heard ’.
It is not only what is shown but what is ‘seen ’.
It is not only what is meant but what is ‘understood ’

The customer’s perception is the reality!

 Therefore, the customer’s perception is the reality that indeed
requires the under mentioned customers’ orientation skills.
Technical Skills – doing right things
Social Skills – doing things right
Perspective Taking Skill – able to take customer perspective
and understand the need/issue/problem
Customer Perceived Value (CPV) can be represented in the
following manner.
Total Customer Benefit
Product benefit
Service benefit
Personnel benefit
Image benefit  
Total Customer Cost
Price
Time
Energy
Psychic
 Codes of Quality Service

Greet the Customer Immediately

Give the Customer your Undivided Attention
Make the first 30 Seconds Count
Be Natural, Not phony or Mechanical
Be Energetic and Cordial
Be the Customer’s Agent
Think! Use your Common Sense
Bend the Rules Sometimes
Make the Last 30 Seconds count
Stay up. Take Good care of yourself
 Basic Personality factors

Extraversion
 Need for attention and social interaction
 More active and communicative

Agreeableness
 Need for pleasant and harmonious relations
 Enables the employee to engage in a friendly, rather
confrontational conversation with the customer –which is
valued by the customers
Customer Service Standards
 The standards of customer service always need to be on an
upward curve and should aim to delight customers with
every contact, not just by meeting their expectations, but
by exceeding them. 
 From the bank’s perspective, providing excellent customer
service matters for a number of reasons:
Reputation
Sustainable Competitive Advantage
Productive Stress-free Work Environment
Cost-efficiency
Profitability
Service delivery is like a river just follows the
customer.
At each step of customer interaction ask questions
such as what the customer really wants, and what
the potential failure of this step is.
Identify core processes/ Key customer segments
Define the process
Create products or services – meet the need
Differentiate process for each customer segment
Complaint management system
Complaint Management System
 Suggested Strategy
Set up a 24 hour ‘toll free’ online complaint resolution
system;
Contact the customer quickly;
Accept responsibility for customer inconvenience, do not
ever blame the customer;
Use customer service personnel who are empathic;
Resolve it quickly;
Provide compensation, empower the middle management
or even the frontline staff to compensate the customer
without being asked by the customer.
Convert Complaints into Opportunities

 The customer wants …

To inspire confidence;
To make it easy to do business with us;
To keep our promises
The customer will forgive mistakes if there is an effective
system for resolving problems.
 When things go wrong ….
We need to know why?
A dissatisfied customer will tell around 12 people while a
satisfied customer tells only 3 people.
90 per cent of the dissatisfied customers do not complain …
they simply go to another bank.
A threat can be converted into an opportunity.
How to handle a customer who has a complaint?
Listen;
Sympathize;
Do not justify, argue or make excuses;
Ask questions;
Agree on a course of action;
Check the course of action is carried out.
The Role of the leader/manager
 Educate
 Facilitate
 Empower
 Incentives
 Disincentives
What is Quality?
Quality is the value-added offering that provides a more satisfying
experience, which makes the customer come back for more of the
same pleasurable experience.
Quality is what the customer says it is. It is not what the provider
says it is.
Why Quality?
In a highly competitive atmosphere quality will be the only
differentiator.
It is a neglected area in banking services
It improves the brand image
The personal touch of the service provider makes or marks the
attitude of the customer towards the bank.
 Achieving quality may be expensive; but bad quality could be more
expensive
Service Quality Gap Model
Understanding the Customer (Gap 1) – is the distance between what customers
expect and what managers think customers expect. Clearly market research is a key
way to narrow this gap.
Service Design (Gap 2) – is between management perception and the actual
specification of the customer experience. Managers need to make sure that the bank
is defining the level of service they believe is needed (management commitment).
Conformance (Gap 3) - is from the experience specification to the delivery of the
experience. Managers need to audit the customer experience that their bank
currently delivers in order to make sure it lives up to the specification.
Communication (Gap 4) - is the gap between the delivery of the customer
experience and what is communicated to customers. All too often, banks exaggerate
what will be provided to customers, or discuss the best case rather than the likely
case, raising customer expectations and harming customer perceptions.
Customer Satisfaction (Gap 5) - is the gap between a customer's perception of the
experience and the customer's expectation of the service. Customers' expectations
have been shaped by word of mouth, their personal needs and their own past
experiences. Routine transactional surveys after delivering the customer
experience are important for a bank to measure customer perceptions of service.
 Determinants of service quality
Reliability - Make sure customer needs are correctly
identified, promise only what can be delivered and follow
through.
Assurance - Take time to serve customers one at a time.
Provide service assertively through positive communication.
Tangibility - Maintain the workspaces in a neat, orderly
manner, dress professionally, and maintain excellent grooming
and hygiene standards.
Empathy - Listen for emotions in the customers’ messages.
Put yourself in their place to respond compassionately by
offering service to address their needs and concerns.
Responsiveness - Project a positive, can-do attitude. Take
immediate steps to help customers to satisfy their needs.
 Moments of Truth

Expectations must be meet

Never blame the customer
Clear communication with customers
Organize to reduce waiting time
Undo what the customer has done to himself or herself
Never use business jargon
Trade-off time management
Employee job performance criteria
Reduce service time
Sincere appreciation
 Lessons Learned

The required skill of customers’ orientation, technical,

social and prospective taking should be developed to
understand the perception of customers, the only quality
measurement and develop way forward to meet customers’
expectations.
Well organized customers’ complaint management system
will help banks to trace organizational weakness based on
the perception of their customers and deal with it properly.
Customer Relationship Management
 CRM helps
 To identify and target the best customers, generate quality
sales leads
 To plan and implement marketing programs with clear goals
and objectives
 To improve customer satisfaction and provide highest level of
customer service to the most profitable customers
 To provide employees with the information and skills to know
their customers’ needs and build bonding between the bank
and its customers
 Importance of CRM
The banking sector has witnessed major changes – moving
from mass banking to personalized banking,
Competition has intensified,
Various distribution channels have emerged and expanded,
Rising customer expectation in response to the revolution in
technology.
 Objectives of CRM
Customer centric business strategy – Organization philosophy.
Business success depends on getting, keeping and growing
with customers.
Value creation.
Learning about customer and customization of products and
processes.
Up selling and Cross Selling.
Three Tactical Elements of CRM Strategy
To seek direct contact with customers
To build a customer database
To develop customer oriented service processes

Traditional marketing strategies focused on attracting

consumers. The goal was to identify prospects, convert them
to customers, and complete sales transactions.
Relationship marketing refers to the development, growth, and
maintenance of long-term, cost-effective exchange
relationships with individual customers, suppliers, employees,
and other partners for mutual benefits.
Relationship marketing gives a bank new opportunities to gain a
competitive edge by moving customers up a loyalty hierarchy
from new customers to regular purchasers.
 Principles of Customer Relationship
Management
Customer lifetime value
Customer satisfaction
Customer loyalty
Cross selling and Up selling
Customer wallet share
Customer profitability
There are three key elements to consider:
TRUST : Generalized trust, System trust, Personality based trust,
Process based trust
COMMITMENT : Enduring desire to maintain a valued
relationship
ATTRACTION : based on financial, technical or social factors
 Key Accounts Management (KAM)

Client identified as of strategic importance.

Interchangeably used with terms such as major account or
critical account.
Generally segmented on
Geographical spread

Type and size of business offered

Sales turnover

Value of the customer to the bank

Future growth prospects of the customer or industry

(Engaged in)
Risk perception

Help the bank to evaluate the business prospects and

develop new customized products/processes and expertise.
KAM Activities
Special pricing;
Customization of product and services to this specific needs;
Development of special product or services;
Joint coordination of workflow;
Information sharing;
Taking over the customer’s business processes.
Benefits of KAM
Bank
Increased business
Cost economics
Increased profitability
Tie ups
Mutual
Risk reduction
Shared resources
Innovation and learning 
 Customer
Customized product and services
Concessions

 Identifying Key Accounts Criteria

Relationship history
Potential
Volume
Profitability
Status
Resources synergies
Strategic compatibility
 The Role of Relationship Manager
1. Maintaining the sales / profitability of key accounts.
2. Customizing the bank’s total offering to key accounts.
3. Facilitating inter-level or inter-functional processes that add value to the
total offering.
4. Promoting the KAM concept in the bank.
5. Promoting the interest of the account within the bank.

The Skills of the Relationship Manager

6. Communication
7. Attitude - ‘Can do’
8. Being a solutions manager to client
9. Product / process knowledge
10. Understanding the customer’s business and business environment
11. Selling and negotiating skills
12. Ability to diagnose / analyze complex commercial and technical situations
13. Energetic, dynamic – willing to take decisions
 Stages in Customer Orientation and
Customer Relationship Management

1. Building a customer database

2. Integrating information from all customer touch points
3. Segmenting the customer database
4. Build customer orientation in employees
5. Developing a loyalty scheme
6. Personalized treatment of the most valuable customers
 Corporate Image
To obtain competitive advantage Companies must
1. Identify specific ways to differentiate their products
and services

2. Develop a positioning strategy including how many

differences to promote and which differences to
promote and

3. Effectively communicate the positioning using

various marketing elements (marketing mix)
Differentiation dimensions can be
1. Product,
2. Services,
3. Personnel,
4. Channel or
5. Image
Main focus of this topic is Corporate Image
In this chapter we will discuss all the phases in
building Corporate reputation
Three Phases
Positioning – the act of designing a company’s
offering and image so that they occupy a meaningful
distinct competitive position in the target customers’
minds

Illustrated in the following Diagram

Can be achieved through

POSITIONING
Cultural
Symbol

Benefit Attribute

Product
Competitors
Class

Product Application/
User Use
Price-Quality
Relationship
 Corporate Identity
Refers to the external “personality” projected by a company
It integrates
1. The look and feel of designs and communications, &
2. The Company’s behavior

Aspects of Corporate Identity includes

3. Branding – consisting of Logo, Color Scheme and a general
look and feel across a product family
4. Communications – consisting of advertisements, press
releases, news features, and phone service
5. Corporate behavior and ethics are also crucial component of
corporate identity
Brand and Reputation
What is the difference between brand and reputation – are
they the same?
Brand = promise
Reputation = delivery on the promise

Brand equity - has been defined as:

The component of overall preference not explained by
objectively measured attributes; and
The set of consumer associations and behaviours that
permits the brand to earn greater volume or margins than
it could without the brand name.
 Co-Branding Opportunities
Ingredient branding
Intel inside compaq
Cooperative branding
Joint venture e.g.: Citbank, Mastercard and American
Airlines points card
Complementary branding
Encourage co-consumption of more than one brand
such as Oreo shakes in Dairy Queen
 Corporate Image
Is the way the public perceives the company or its products.

Can be solely created by the Company or by others like Media,

Journalists, labor unions, etc

Coveys a singular message that establishes the product’s

character and value proposition

Conveys this message in a distinctive way so that it is not

confused with similar messages from competitors

Delivers emotional power so that it stirs the hearts as well as

the minds of buyers
An effective image
 Coveys a singularmessage that establishes the
product’s character and value proposition

 Conveys this message in a distinctive way so that it is

not confused with similar messages from competitors

 Delivers emotional power so that it stirs the hearts as

well as the minds of buyers
Components of a Corporate Image
Tangibles
Goods and services
Retail outlets (sale)
Factories/processing centres
(produce)
Communication media: ads,
promos, literature, docs…
Name/Logo
Pricing & Labeling
Employees
Intangibles
Corporate, personnel, and
environmental policies
Ideals and beliefs of corporate
personnel
Culture of country and
location of company
Media reports
Corp. Image Role - consumer’s view
Assurance of familiar products (e.g. Coke)
Assurance of familiar company (e.g. IBM)
Reduction of purchase research time
Psychological reinforcement and social acceptance
Extends +ve consumer feelings to new products
Enables higher pricing
Enables increased repeat buying
Endorses +ve W.O.M.
Attracts quality employees
Increased financial viability as ranked by analysts and
corp. raters
 Promoting Desired Image
1. Image must accurately portray firm and coincide with
products and services sold.
2. Easier to re-enforce or rejuvenate than it is to change
well-established (e.g. New Coke vs. Coke Classic)

3. Difficult to “next to impossible” to develop new image

(sometimes divorce and/or new company is easier)

4. Recovering from –ve or “bad press” happens fast

(overnight) …building/rebuilding can take years!
 Corporate Reputation
The overall estimation in which an organization is held by its
internal and external stakeholders based on its past actions
and probability of its future behavior.
The main benefits of a good corporate reputation can be
found in:
Customer preference in doing business with you when
other companies’ products and services are available at a
similar cost and quality;
The ability to charge a premium for products and services;
Stakeholder support for the company in times of
controversy;
The company’s value in the financial marketplace.
Even though it is believed that corporate reputation plays a very
important role in the achievement of business objectives, few
companies have a formal system in place to measure the value of their
corporate reputation.
Possible reasons include:
Reputation is an intangible and complex concept, which takes time
to change.
The dollar value of improvements to a growing reputation is difficult
to quantify.
Senior managers are obliged to deal with more immediate and
demanding operational priorities – reputation is a long-term
concept.
Reputation ranges over such a broad area of the organization’s
activities that it is difficult to allocate specific responsibility for work
on enhancing the corporate reputation to individual functional
areas.
Cost
There are two main sources of a Corporate Reputation

Experience - a person’s past dealings with the company

and

Information – the extent and nature of their direct and

indirect communication with the company.
Sources of information about the company that enabled
business ‘influentials’ to form a view on Its reputation were:
Source of information Proportion
Personal Experience 64%
Major Business Magazines 37%
Articles in National Newspapers 35%
Word of Mouth 31%
Articles in Trade Journals 30%
Television News 14%
Articles in Local Newspapers 24%
Television Current Affairs Programs 13%
 Main Components of Corporate
Reputation
Ethical: the organization behaves ethically, is admirable, is
worthy of respect, is trustworthy.
Employees/workplace: the organization has talented
employees, treats its people well, and is an appealing
workplace.
Financial performance: the organization is financially
strong, has a record of profitability, and has growth
prospects.
Leadership: the organization is a leader rather than a
follower, is innovative.
Management: the organization is well managed, has high
quality management, and has a clear vision for the future.
Social responsibility: the organization recognizes social
responsibilities, supports good causes.
Customer focus: the organization cares about customers,
is strongly committed to customers.
Quality: the organization offers high quality products and
services.
Reliability: the organization stands behind its products &
services, provides consistent service.
Emotional appeal: (it is an organization I feel good about,
is kind, and is fun.