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Friday, March 15, 2013

Relationship management

The process of deregulation, liberalization and privatization of economy that was set in motion during 1990s has released the competitive forces that have for the first time made the nationalized banks run for their bread and butter.

In their search for a solution to swim across the new wave of financial reforms, banks have ended up with a new strategy called ‘Relationship Management’. Relationship literally means: 
  • the state of being connected,
  • mutual dealings, connections or feelings that exist between two parties,
  • However, in the case of a bank it may be defined as "access to a bank" on the credibility of a bank leading to a relationship between customer and a bank, more as a quid pro quo.
Against this background, bank’s marketing efforts are aimed at establishing relationship between a bank and its customers, focusing customer service and quality as key linkages of such relationships.  In short, customer relationship is now being focused on— 
  • customer retention
  • long time scale
  • high customer emphasis
  • high customer commitment
  • high customer contact
  • quality
The entire approach is now repositioned on the philosophy that a customer merely do not buy banking products or services but buy solutions to their problems and this has become the pivotal point in ‘Relationship Management’.

Marketing pundits have observed that a customer derives the basic satisfaction from the core of the product, while it is the other attributes accompanying the core that enables the customer to differentiate the products.

Theodore Levitt had identified four different components (that contribute towards the customer satisfaction) that are often packed together into a product and offered to the customers.  They found to play a critical role in attracting and retaining the customers and hence merit critical examination:

Core or Generic: For a banking service like say credit, the core element is  obviously its guaranteed availability on demand at an affordable/competitive price; 

Expected: Customer expects that the formalities must be completed fast; a neat statement of account must be made available at regular intervals accompanied by a smart service across the counter; 

Augmented: The banker by himself offers additional services like collection of funds from outstation on fast track, net-banking services, counseling on capital market behavior, etc.; 

Potential: Adds all the potential additional features that a banker can compress into the final product/package and delivers to a customer along with, most importantly, personal rapport.  With the addition of this outer core of the product, the banker gets transformed into a friend, philosopher and perhaps even guide to a customer. 

Having established relationship with a customer through products with above-quoted features, the bank has to now focus on management of retaining/sustaining the relationship.  Although, the core content of the product caters to the need of a customer, it is the additives that delight the customer and sustain the relationship.

A survey conducted amongst the elite customers of the western society revealed that it is the quality of services that retains customer loyalty. Following have been identified as the most determining/critical elements of quality service—
  • Reliability:  According to them, reliability means “ability to perform the promised service dependably    and accurately”. About 32% of respondents have ranked this attribute as the most critical determinant of quality service. 
  • Assurance:   Knowledge and courtesy of the employees and their ability to inspire trust and confidence in the minds of the customers (22%);
  • Responsiveness:  Willingness to help customers and provide prompt service (19%);
  • Empathy: Caring, individualized attention (19%);
  • Tangibles: Physical facilities, equipments, persons and communication facilities (11%).

The said survey had interestingly generated the following comments from the respondents and they appear to be quite relevant even today to use as management tools for relationship maintenance: 
  • Being called back when promised; 
  •  Receiving an explanation of how a problem happened; 
  • Being contacted when the problem is resolved; 
  • Being allowed to talk to someone in authority; 
  • Being told how long it will take to solve a problem; 
  • Being given useful alternatives if a problem cannot be solved; 
  • Treated like “I am person” not an a/c number; 
  • Told about ways to prevent the future problems; 
  • Given progress reports if a problem cannot be solved immediately.

The said survey had also identified “waiting” as the single most irritant between the customer and the banker.  In fact, one respondent had commented on “waiting” as frustrating, demoralizing, agonizing, aggravating, annoying, time consuming and incredibly expensive.  We are, perhaps, more prone for such wrath since we are quite used to make people wait indefinitely.

Since “waiting” has got such an influence on customers’ perception about quality service, let us now have a look at principles of waiting from the management perspective—

  • unoccupied time feels longer than occupied time;
  • pre-process waits feel longer than in-process waits;
  • anxiety makes waits seem longer;
  • uncertain waits are longer than known finite waits;
  • unfair waits are longer than equitable waits;
  • the more valuable the service, the longer the customer will wait;
  • solo waits feel longer than group waits.

To summarize, customer relationships need to be constantly managed through elimination of irritants and addition of quality and quality alone, to the services that are offered to the customers.  An apt conclusion to ‘Relationship Management’ would perhaps be -

            “It takes all the running you can do, to keep in the same place, if you want to go somewhere else, you must run at least twice as fast”.


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