This document provides an overview of customer relationship management (CRM) strategies in the financial services industry. It discusses the benefits of relationship marketing over transactional marketing and the importance of customer retention. The document examines how to identify profitable customers and reduce customer defections through effective CRM strategies. These include segmentation techniques to target the most valuable customers and implementing rescue plans to retain customers considering switching providers. The document also discusses achieving high customer satisfaction through quality service and the implications of e-commerce for CRM strategies in financial services.

1. BUSINESS INSIGHTS
Customer Relationship Management
Strategies in Financial Services
Achieving high performance and profiting from innovations in CRM
Financial Services Management Report
The contrasts between
transaction and relationship marketing
Transaction marketing Relationship marketing
Focus on single sales Focus on customer retention and customer
loyalty
Emphasis on product features Emphasis upon product benefits that are
meaningful to the customer
Short timescales Long timescales that recognize short-term
costs may be higher but so will long term
profits
Little emphasis on customer retention Emphasis upon higher levels of service that
are possibly tailored to the individual
customer
Limited customer commitment High customer commitment
Moderate customer contact High customer contact with each contact
being used to gain information to build the
relationship
Quality is the concern of production and The entire organization shares a
no-one else commitment to
Source: CRM Strategies in Financial Services
“There are sound financial reasons for the growing
popularity of relationship marketing: research has shown
that the cost of attracting a new customer is estimated to
be five times the cost of keeping a current customer
happy...”
Create successful CRM strategies to improve customer satisfaction and loyalty
using this report’s examination of effective techniques for identification of potential switchers, the
key causal factors of defection and which customers are most profitably retained...

2. Business Intelligence for the Financial Services Industry
Business Insights’ portfolio of financial services management reports are designed to help you make well
informed, timely business decisions. We understand the problems facing today’s financial services executives when
trying to drive your business forward, and appreciate the importance of accurate, up-to-date, incisive product,
market and company analysis. We help you to crystallize your business decisions.
The strength of our financial services research and analysis is derived from access to unparalleled databases
and libraries of information and the use of proprietary analytic techniques. Business Insights reports are authored
by independent experts and contain findings garnered from dedicated primary research. Our authors’ leading
positions secure them access to interview key executives and to establish which issues will be of greatest strategic
significance for the industry.
Our financial services portfolio of reports can be used across a wide range of business functions to assess market
conditions and devise future strategies. The order form on the back of this brochure lists titles available within the
following categories: Banking, Finance, Insurance, Wealth Management, Investment and Strategy. .
Examining the Key Issues
• Price competition. Low rate deals are driving switching
Reasons for customer preference
for face-to-face contact contributing to reduced profits for mortgage lenders. This report
suggests to how lenders can offer incentives for customer retention
Personal/one-to-one contact
Know who I am dealing with
whilst avoiding price discounts.
Like to see things in black and white
Need advice
• CRM IT solutions. Many analysts believe that often investment is
Trust/advice wasted without adequate expenditure on staff training. In addition
Good relationship with current provider
Not treated like a number
many are yet to identify their most profitable customers, those most
Don't like the phone likely to switch and the key factors driving satisfaction
0% 10% 20% 30% 40% 50% 60% 70% 80%
• Customer ownership. Traditional organization around business
Source: CRM Strategies in Financial Services lines can prevent an holistic view of customers needs. This report
“Commentators have argued that in the new Internet
considers a variety of organisational structures and evaluates how
age, companies can no longer rely on the traditional they relate to customer satisfaction.
bricks and mortar mode, and managers need to
rethink and reshape their business strategies. This • Distribution strategies. This report examines the changing role of
notion may be premature. Data from MORI shows that
many customers prefer face-to-face contact with routes such as branch networks for banks and intermediaries for
staff...” insurance companies in the context of the growth of eCRM.
Source: Customer Relationship Management
Strategies in Financial Services: Achieving high
performance and profiting from innovations in CRM

3. Customer Relationship Management Strategies in Financial Services
Achieving high performance and profiting from innovations in CRM
Consumer loyalty is a major concern throughout the financial services
Market Maps
sector, particularly in the mortgage market. However, like many other
services, financial services have characteristics that pose a number of
problems for those seeking to create successful customer relationships.
Customer Relationship Management Strategies in Financial Services:
Achieving high performance and profiting from innovations in CRM
is a management report that provides a step-by-step guide to customer
retention planning and segmentation techniques. This report will
provide you with:
Source: CRM Strategies in Financial Services • A research method for monitoring and developing CRM strategies
“Once the company understands the market structure • Case study analysis of switching signals and rescue plans
it can then take the appropriate steps for each channel
and make strategic decisions about channel mix, • Segmentation techniques to identify the most profitable customers to
re-channelling. It needs to develop detailed metrics of target with retention strategies.
market share, sales volume and profitability throughout
the market map...” Ensure you acquire and retain the most profitable customers using
Source: Customer Relationship Management
the most cost effective methods.
Strategies in Financial Services: Achieving high
performance and profiting from innovations in CRM
The Answers to Your Questions
• How can potential defectors be identified, when should they be
contacted and what returns can be expected from win-back
programmes?
• What are the key benefits associated with the retention of existing
customers and the development of long-term satisfying relationships?
• Which factors cause customers to switch suppliers?
• What are the managerial requirements for CRM implementation?
• How do customers evaluate service, and how can satisfactory levels of
Source: CRM Strategies in Financial Services
service quality be achieved both online and offline?
“Service performance charts can be used to depict • What are the key benefits of moving online for those marketing
comparisons visually. These comparison charts appear
financial services?
to be much more widely used in logistics and customer
services than in general marketing, but have
considerable potential for helping companies develop
a segmented service strategy...”
Source: Customer Relationship Management
Strategies in Financial Services: Achieving high
performance and profiting from innovations in CRM

4. Key findings from this report
• Almost half of all mortgagees are looking to change lender
First Direct customer
communication preferences because they are unhappy with their existing supplier.
180,000
4,300 • Customers switching banks cite pricing, service failures and
Electronic banking
inconvenience as the key factors (90% in a recent survey).
customers
Internet banking
customers • Many customers prefer face-to-face contact with staff which has
600,000 Mobile phone banking
customers
WAP banking
implications for those moving towards an online delivery model.
420,000 customers
• Relationship marketing requires structures supporting both
customers and front-line staff. New research reveals that financial
service retailers may not have structures that are supportive in
Source: CRM Strategies in Financial Services
retaining customers and adapting to changes in the marketplace.
“First Direct's service excellence is based on the
simple premise of listening to what its customers want
• Barclays Platinum banking launch to increase loyalty succeeded
and reacting accordingly. First Direct's staff are with a 70% increase in customer income, 11% increase in customer
recruited for their listening skills and take part in five
weeks of training and 18 months of coaching so that
satisfaction and 80% of customers stating they would strongly
they understand the business inside out...” endorse Barclays.
Source: Customer Relationship Management
Strategies in Financial Services: Achieving high
performance and profiting from innovations in CRM
The Value Proposition
Benefit from over 152 pages of expert insight and analysis, enabling
Consumers are more demanding than ever you to:
• Implement best practices in CRM, replicate the successes of ANZ,
Trust/advice
Barclays, First Direct and Fidelity Investments and avoid the pitfalls.
Good relationship
with current provider
• Improve customer retention by identifying the factors that lead to
Not treated like a
number attrition and actioning effective rescue strategies.
Don't like the phone
• Develop new acquisition and retention techniques beyond short
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
term promotions, price discounts and gimmicky advertisements.
• Target and retain the most profitable customers with the help of
Source: CRM Strategies in Financial Services
this report’s explanation of transaction and relationship buyers.
“Recent research from Henley management centre
confirms that customers are more demanding than • Enhance your CRM strategy using eBusiness using the critical
ever. The rise of customer complaints has been
success factors detailed in this report.
accompanied by a rise in the numbers who switch their
service providers...”
Source: Customer Relationship Management
Strategies in Financial Services: Achieving high
performance and profiting from innovations in CRM

5. Sample information from the report
Chapter 2: Creating Value for the Organisation
Introduction
Understanding the economics of customer acquisition and retention and their
The customer profitability matrix
relationship with lifetime value is fundamental to the concept of customer
value in this context, as is identifying opportunities for cross-selling and
building customer advocacy. It is particularly important to address value from
a customer segment point of view rather than taking an aggregated approach.
Segmentation is perhaps the most important aspect of value creation from a
relationship marketing perspective, as it provides the opportunity to tailor the
offer to the need of specific segments. Carefully segmenting the market and
developing an approach that maximises the value of your most desirable
customer segments and the corresponding life-time value that these customer Source: CRM Strategies in Financial Services
groups provide for your company lies at the heart of the value creation
“The customer profitability matrix illustrated
process.
above provides some generalised guidance for
strategic direction.”
The strategies for each quadrant of the matrix are discussed below.
Build: these customers are relatively cheap to service but their net value is low. Can you increase volume without increasing
the costs of service? Can you direct the sales team to influence these customers' purchases towards a more profitable sales
mix?
Danger zone: these customers should be looked at very carefully. Is there medium to long-term prospect of a strategic reason
for keeping them? Do you need them for their volume even if their profit margin is low?
Cost engineer: these customers could be more profitable if the costs of serving them could be reduced. Is there any scope
for encouraging this group to use cheaper online or telephone services?
Protect: high net sales value customers who are relatively cheap to service are worth their weight in gold. You should seek
relationships with these customers, which will make them less likely to turn to alternative suppliers. At the same time you should
constantly seek opportunities to develop the volume of business that you do with these customers, while keeping strict control
of costs.
Order this report today to find out more...

6. Table of Contents
EXECUTIVE SUMMARY • Delivering superior value and engaging entire
• Executive Summary organisation
• The origins and rationale of relationship marketing - Implications for practice
• Creating value for the organisation • Demonstrating trustworthiness
• How to tackle customer defections - Generalised trust
• Achieving customer satisfaction through service - System trust
quality - Personality based trust
• The implications of eCommerce for CRM - Process based trust
• Avoiding the pitfalls of CRM • Who owns the customer?
- Effects of merger activity
CHAPTER 1: THE ORIGINS AND RATIONALE OF - The "customer is king"
CUSTOMER RELATIONSHIP MANAGEMENT - "Everyone owns the customer"
• Summary - Sharing information company wide is crucial to
• Introduction widening customer ownership
- 21st century attitudes towards banks • “Everyone owns the customer"
- How marketing oriented is your company?
- Benefits of developing relationships CHAPTER 2: CREATING VALUE FOR THE
- Relationship marketing Vs transactional marketing ORGANISATION
- Eight major benefits of developing relationships • Summary
- Long-term profitability • Introduction
- Lower costs - Developing a segmented service strategy that aims
- Repeat customers often cost less to service to deliver increased value to the customer and the
- Opportunities for cross-selling organisation
- Defection less likely - Step 2: Segment the customer base and determine
- Employee retention segment value
- Family influence - Step 3: Identify segments' service needs
- Satisfied customers provide referrals and may be - Step 4: Implement segmented service strategy
willing to pay a price premium - Finalise segment service strategy
• A customer retention plan: reducing defectors and
boosting retention rates CHAPTER 3: HOW TO TACKLE CUSTOMER
- Measure customer retention DEFECTIONS
- The crude retention rate • Summary
- The weighted retention rate • Introduction
• Ascertain defection motives • Case study: Abbey
- Price defectors - Defection can be remedied
- Market defectors - Possible reasons for customer defection
• Are all customers the right customer? • What are the factors that force customers to switch?
- Identifying profitable customers for CRM • Retaining customers in a competitive business
- First group of customers to target • Loyalty must start to count for something
- The middle group of buyers
- The final, less profitable, group of customers
• Implementing relationship marketing
- Defining the value proposition
- Case study: First Direct
- Meeting consumers diverse requirements

7. Table of Contents
CHAPTER 4: ACHIEVING CUSTOMER SATISFACTION • The focus for change in an international insurance
THROUGH SERVICE QUALITY company
• Summary - The stand-alone Internet bank
• Introduction • Key factors in developing effective strategies for
- Financial services characteristics and implications for eCommerce
branding & relationship management - The role of senior management
- Intangibility - Capabilities required in a changing environment
- Implications for branding - Critical success factors
- Inseparability - The threat of criminal activity on eCommerce
- Implications - Ways to help customers protect themselves against
- Heterogeneity fraud
- Implications
- Perishability CHAPTER 6: AVOIDING THE PITFALLS IN CRM
- Implications for branding • Summary
- Fiduciary responsibility • Introduction
- Two-way information flows - Peril 1: Implementing CRM before creating a
- Implications customer strategy
- Impact of online delivery for service concepts - Example: Fidelity Investments
- Consumer empowerment - Peril 2: Rolling out CRm before changing your
- Effective separation of production and consumption organisation to match
• Service quality - Peril 3: Assuming that more CRM technology is
• Example: customer care at the ANZ bank better
- ANZ's 'Customer Service Charter' - Peril 4: Stalking not wooing customers
- Researching service quality
CHAPTER 7: APPENDIX
• Research objectives
- The most common research objectives in financial
TABLES
services
• Contrasts between transaction and relationship
- Research methods
marketing
- Regular customer surveys
• Customer satisfaction exercise
- Customer panels
• Customer management stage analysis, problems and
- Transaction analysis
opportunities (2 parts)
- Mystery customers
• Comparison of online metric collection methods
- The SERVQUAL methodology
• Dimensions of Internet banking service quality
- What to measure
• Expectations of an excellent online bank,
- How to measure
- Table A (4 parts)
- Internet customer questionnaire
- Table B (6 parts)
CHAPTER 5: THE IMPLICATIONS OF ECOMMERCE
FOR CRM
• Summary
• Introduction
- How should financial firms respond?
- Example: internal marketing at Barclays
• How different companies are approaching eBusiness
- The reluctant approach of a life insurance company
- The integrated approach of a national retail
banking operation

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