JOURNAL OF STRATEGIC MARKETING 12 111–125 (JUNE 2004)

Relationship marketing and CRM: a financial services case study

SALLY DIBB AND MAUREEN MEADOWS
Warwick Business School, University of Warwick, Coventry CV4 7AL, UK

Dibb and Meadows’ (2001) examination of the state of relationship marketing in retail financial
services emphasised the need for relationship marketing models specific to the sector. They argued
that generic models fail to reflect the diversity of relationship marketing sophistication exhibited by UK
financial services companies or the routes taken to achieve it. Instead, Dibb and Meadows (2001)
group companies according to whether they exhibit low or high RM focus in four areas: company,
customers, technology and staff (see Table 2). In this research, two of these areas have been
described as ‘softer’ (the company and its staff), while the other two are described as ‘harder’ areas
(technology, and the customer perspective). This terminology is reflected in the analysis and
discussion of the case material. According to the scheme, ‘Type A’ businesses tend to offer typical
service interactions while ‘Type B’ businesses have a more strategic commitment to relationship
marketing. ‘Type B’ businesses are further divided into three sub-categories, according to their
progress along a continuous scale towards a high relationship marketing focus. The first sub-category
is quick fix, where businesses attempt to realign existing practices to place more emphasis on
relationship marketing. The second is radical fix, where more substantive changes are made to
existing practices, often linked with significant investment in staff and/or technology. The third and final
sub-category is strategic set-up, which applies primarily to new operations with a belief in the one-to-
one future. This framework is used as the basis for the case study reviewed in this paper. The semi-
structured interviews used to collect the data were structured around the issues described in Table 2.

Research framework: characteristics of a high and low relationship marketing focus

Low RM focus High RM focus

Company: Company:

 More likely to use traditional distribution channels
 No stated desire for RM
 Not convinced about one-to-one future
 Focus on customer groups rather than the individual
 Transaction driven marketing
Staff:
 More likely to use new distribution channels
 Stated desire for RM
 Believe in one-to-one future
 Develop high relationship products
 Believe better relationships lead to competitive
advantage
 Customer-driven and event-led marketing
Staff:

 Rewards for new accounts  Emphasis is on excellent communication with

 Most decision-making authority does not rest with customers to ‘connect’ and spot opportunities
front-line staff  Empowered, self-managed staff who can make quick
 Pay structures may lack incentives or be transaction decisions for customers
based  Reward customer retention, not just new accounts

Technology: Technology:

 Primary role of information is to record transactions
 Systems often not very well integrated
 Account driven rather than customer driven systems
 Front-line staff only have access to simple profile of
customers with little attitudinal data
 Some are starting to think about customer emphasis in
their systems
 Systems may not have ability to identify ‘life events’
Information used to mail customers with literature
Direct mail often handled remotely from front-line staff
with little co-ordination
 Information is powerful and vital to strategy
 Highly integrated systems and processes
 Computer screens shared with customers
 Full access to customer information when dealing with
enquiries
 Focus on rich attitudinal/buying behaviour data used to
identify ‘life events’
 Databases used for contact management purposes
 All dealings with customer logged allowing continuity
between each transaction
 Customer contacts used as market research opportunity

Customers: Customers:

 Emphasis on the value to be achieved from customers
today through the sale of an additional product
 Contact with company instigated by the customer
 Use contact to conduct transactions and sell additional
products
 Collection of customer information often carried out
remotely
 Emphasis on current and potential value of customers,
with lifetime value focus
 Relationship achieved through integrating technology
and the human face
 Focus on easy, regular contacts with customers
 Use contact to regularly update systems
 Anticipate needs through events-based marketing

Adapted from Dibb and Meadows, 2001.

BSOC: CASE STUDY

Company
Bsoc has an energetic Customer Relationship Management (CRM) team which sits between
the Corporate Planning team and the Marketing team. The CRM team has responsibility for
the customer databases (see below) and carries out customer data analysis. This analysis
leads to an increased understanding of customer profitability, segmentation of the customer
base and other important issues. The result is that the CRM team is involved in Bsoc’s
marketing planning and targeting and has substantial inputs to the corporate plan and
strategic issues. It is clear that this organisational structure could create practical day-to-day
problems if effective co-ordination between the teams is not a priority. For example, sharing
of data is needed with the Marketing team which retains control of advertising, branding and
product design. Strong linkages with the Corporate Planning team and the Marketing team
are therefore crucial if Bsoc is to pursue its strategic goals in a well co-ordinated manner.
Bsoc is currently broadening the range of distribution channels that it offers to its customers.
For instance, significant investment has been made in telesales. Web-based projects are
also under development, but it seems that Bsoc has been slower than many other players in
the industry to establish itself on the Internet.

Staff
Bsoc has a number of staff related issues to consider including training, recruitment and
incentive schemes. The CRM programme has involved the company in a range of
CRMrelated training initiatives involving all staff with direct customer contact roles. Levels of
training for branch and call centre staff have been increased so that new working practices
associated with the new computer systems can be established. Bsoc sees this as a sizeable
and difficult challenge to implement which will be ongoing for some time.
Bsoc does not have a centrally directed staff employment programme. The traditional
approach to recruitment has allowed branch managers considerable freedom over who is
recruited. The view is that these managers are able to use their local knowledge to tailor
recruitment and how jobs are advertised to suit local media and the needs of their branch.
This empowerment of branch managers also extends to some locally targeted marketing
activity, with managers given access to customer data and discretionary budgets.

Staff targets and incentives have historically been based on product-based sales targets and
on customer retention. Interviewees expressed two concerns about the schemes which are
currently in place. The first relates to whether the levels of bonuses are sufficient to change
staff behaviour. The second concerns whether the schemes need to be reviewed to reflect
the Bsoc’s CRM initiatives. In other words there is a view that the current schemes may not
be the most appropriate given Bsoc’s interest in customer lifetime value.

Technology
The CRM team sponsors a range of new technology projects. A major exercise was recently
undertaken to clean up Bsoc’s customer data and set up a new database. The new systems
allow Bsoc to merge data across their product range and create a detailed overview of each
customer relationship. Significant efforts invested in data modelling are also increasing
Bsoc’s understanding of its customers. Individuals with certain profiles on the database can
now be pinpointed and targeted with relevant direct marketing.
In branches, screen prompts have been created that encourage staff to cross-sell new
products to existing customers. The same mechanism informs staff about any direct mail
which customers have recently received. Branch staff now have access to a complete, up-to-
date picture of each customer’s business. Staff performance (for instance, in cross-selling in
response to screen prompts) can also be monitored through the system. Cross-sales of new
products to existing customers have doubled since the introduction of the new systems.
Maintaining this progress in an Internet banking environment is a challenge which Bsoc
might face in the future.
Customers
A loyalty scheme is in place to reward customers according to the length of their relationship
with Bsoc, the number of products held and the monetary sums involved. The scheme, which
is believed to be unique among Bsoc’s competitors, helps the business to retain and build in-
depth relationships with customers. It may also help Bsoc to retain its mutual status as it
gives customers a greater sense of involvement and demonstrates the tangible benefits of
mutuality. Bsoc operates a customer segmentation approach which is critical to its medium
and long term planning. The segmentation is based on the estimated present and future
value of customers, as well as the length and depth of the customer relationship. Profitability
data helps Bsoc to decide where future resources should be focused. It also highlights
customer behaviour, such as movements between segments.

Picture portraits of each segment have been developed to help staff more easily relate to the
segmentation. The CRM team is aware that the segmentation may need updating as
customers make greater use of new delivery channels. Although Bsoc has not regarded
Internet banking as a strategic priority, a fresh look at customer segmentation will be required
if its pilot projects in this area are rolled out.

ZADATAK:

1. U Tablicu (prema podacima iz studije slučaja) upisati po ključnim područjima (soft:

firma i zaposlenici; i hard: tehnologija i kupci) osnovne karakteristike i poziciju
BSOC-a (čimbenici visokog RM fokusa) !

2. Opisati na primjeru BSOC-a 4 koraka razvoja CRM Strategije!

3. Navesti ključne prednosti i nedostatke uvođenja CRM strategije u BSOC!

 1. Tablica:

KLJUČNI ČIMBENICI VISOKOG RM BSOC osnovne karakteristike i pozicija

FOKUSA
Company: Company:
 Use of distribution channels
 Stated desire for RM
 Belief in one-to-one future

 Belief that better relationships lead to

competitive advantage

 Customer driven and event led marketing

Staff: Staff:
 Emphasis on excellent communication
with
 customers to ‘connect’ and spot
opportunities
 Empowered, self-managed staff who
can make quick decisions for customers
 Reward customer retention, not just new
accounts

Technology: Technology:
 Information is powerful and vital to
strategy
 High levels of integration of systems and
processes, also customer driven rather
than account driven systems
 Giving staff full access to customer
information when dealing with enquiries
Databases used for contact
management purposes
 All dealings with customers logged,
allowing continuity between transactions
 Customer contacts used as a market
research opportunity
Customers: Customers:
 Emphasis on current and potential value
of customers, with lifetime value focus
 Relationship achieved through
integrating technology and the human
face
 Focus on easy, regular contacts with the
customer, and use these to update
systems
 Anticipate needs through events-based
marketing