Crisis of Trust in Bank of America Corporation - Assignment Example

? A CRISIS OF TRUST PART ONE: The crisis of trust has become a major issue in the relationship among business organizations and their customers. The trust crisis in Customer Service Excellence entails that customers are loosing the trust they have on the various business organizations they patronize. It also means that organizations are not meeting customer’s expectation both in production and delivery. Because of the crisis of trust, some customers ‘’fire’’ the business organizations they patronize and also look for other business with more credibility. The lost of credibility is central in the crisis of trust. The crisis of trust can be understood from two major perspectives; First, business to business and second business to individual customers. A business organization is a customer to another business organization when one buys goods and services from the other. This could be in the form of buying raw materials from a business for the purpose of producing it to a finished products or when a business rent the equipments of another business in order to further its business operation. There is a business to an individual customer relationship when the individual buys goods and services from a business organization. Whichever way one chooses to look at the issue, crisis of trust can emanate if proper management techniques was not ensured. Few examples will help us to understand the point. To buttress the point more succinctly, Crisis of trust in Bank of America Corporation (BAC): Bank of America Corporation is the one of the largest financial institutions in America. It is a multinational bank with headquarters in Charlotte, North Carolina. According to the BMO capital market result, the bank is ranked as the highest financial institution in America by assets. In 2010, it was ranked as the fifth largest corporation in the generation of revenues and also the third largest company in America that does not deal in oil. The Forbes magazine listed the financial institution as the third biggest corporation in the world. In 2008, the bank acquired the famous Merrill Lynch, a move that made it to be the largest corporation in wealth management. The bank has about 57 million customers, 5,600 branches throughout USA and then 16,200 ATMS. This enviable record helped in no small measure in building the public trust which the bank has. Regrettably, in 2010, the bank was accused by the USA government for defrauding organizations and institutions especially schools, hospitals, and government institutions through investing the revenues from the municipal bond sales. The bank however agreed to have defrauded the institutions and accepted to pay damages at the tune of $137.7 million, including the payment of $25 million to the coffer of the Internal Revenue Service, as well as $4.5 million to the attorney general of the state. Hence, it was reported that the former Bank Executive of the famous Bank of America, Douglas Campbell pleaded guilty to the charges of distrust, wire transfer, and conspiracy to defraud the bank1 Because of this development, the famous bank started loosing customers; people started withdrawing their money because of distrust. Crisis of trust in the UK media: In the recent times, majority of the Europeans are displeased with the manner in which the media reports issues. The media was alleged to hide certain information from the public. It was alleged that the media is more interested in getting story than telling the truth. This development has eroded the trust which people have on the media. The role of the media as a watchdog in the democratic process is no longer feasible, as some people argued. In the United Kingdom, people see the media from the point of carrying social stories rather than conveying the latest political development in the nation. Example, the tabloids are always inundated by stories about celebrities and campaigns, rather than reporting the latest political development in the country. This is certainly not healthy in a country like the United Kingdom where more than 80% of the population, both old and young is more prefer political news to social news. Because of this development, people always look elsewhere for news feed. Commenting on the negative impact of this media attitude on the people, Stephen Tall (2012) remarks that the wrong media attitude is the major reason why people always turn to other media sources for information because they distrust the various media organizations, a situation that has diminished people’s confidence on the media2 Many electronic media, especially BBC was accused to be relying on print media for news instead of sending out independent reporters to cover the story solely for BBC. This has equally reduced the confidence which people have on the BBC. It is even more bizarre for a big media organization like the BBC to be relying on local tabloids for news. In addition to the already crisis of trust which BBC has suffered is the pedophile committed by jimmy saville, the former host of the BBC children program. Upon this, Andrew Graystone (2012) writes that the most challenging part of the BBC as a news agency is the recent sexual abuse of a minor by Jimmy Saville. He accepted the fact that the matter has affected the confidence which people have on BBC3 PART TWO: Introduction: In the business world, the customer is truly a king. This notion was generally accepted as a very important maxim in Customer Relationship Management. The issue of customer satisfaction and what the customer wants has been central in production. Hence, what to produce and how to produce is very crucial for the success of every business. This is because of the fragile possibility of customers rejecting the products. This can be very much detrimental to an organization because when the customers reject products, it is either that the products remain wastes or more strategy will be adopted in the marketing of such product. Such is the bane of business organizations in terms of what to produce and how to produce. In the 1970s and 1980s, much emphasis were laid on what the producer thinks is good for the customer. Hence, the producers of the time determine what to produce without consultation with customers through various strategies. During this era, marketing is all about convincing the customers to buy the products. Organizations spend huge resources in marketing because they need to convince the customers on the reason why they should choose their products. In the 1990s down to our present generation, there is a total paradigm shift in Customer Relationship Management. The emphasis has been shifted from what the producer thinks is good to what the customer truly wants. Hence, marketing in the 21st century is totally centered on the customer. Organizations do this through various methods. First, they gather data from customers asking them their perception about the product as well as their general perception and how they think the organization can improve. The feedbacks from such data collection are of help to the organizations in determining what to produce and how to produce it. Customer service excellence strategies are quite enormous. Companies and organizations will not find it very difficult to win customer loyalty when they apply the necessary strategies in winning customer loyalty. It is very necessary to understand that customer satisfaction is central in the success of every business. it is very imperative if one wishes to succeed in any business undertaking. If a business organization wants to win customer trust, deploying excellence in customer service must be the keyword. Hence, there are various ways of achieving this. Effective branding marketing: One of the excellent ways of achieving customer trust in an organization is through branding. The American Marketing Association gave a definition of brand as any symbol, name, tag, or sign that distinguishes a business from another, and makes it to stand out. Branding is when a business idea is marketed using extensively external images in order to focus the brand on the minds of the customers.4 This simply entails that brand is all about the way customers perceive a business. The implication is that branding is not a struggle to get market target to select a business over other competitors, but also, it is about making the organization to stand out as the only organization that is capable of solving all the problems of consumers. If a business is successful in branding, it will certainly win customer trust. In branding for the purpose of winning customer trust, the organization must make the message to be very clear. This is to avoid confusion, vagueness, and ambiguity. It is very necessary to state clearly what the business does so that the customers will have a clear mind. After a successful branding, an organization will have its credibility confirmed by the customers. The customers will be convinced that such is the right organization for them. This will result in the buyer being motivated to buy the products. Branding must be focused on the needs of the customers. Hence, what customers need should be central in business branding. This is because the customer’s needs remain central in the formation and execution of any business project. Any brand that does not reflect the needs and desires of the customers is doomed to fail. Such is an exercise in futility. Since branding is all abut the perception which customers have about a business, it logically entails that the brand of a business will always reside in the mind of the customers. Internal marketing: This is about the management of the workforce or staffs in an organization. Staff performance has a very great contribution in winning customer trust. This is because the staffs are the main agents of interacting with customers. Hence, if the management of an organization is always rude to a staff, they will always transfer the aggression to the customers, evidenced in the staff – customer relationship. Hence, Steve Yastrow (2010) comments that companies who have excelled in marketing are those that recognize the importance of the people working in the company as the greatest brand marketing media5 What do we expect when staffs whose salaries are owed for several months? How do we expect such customers to be friendly with the customers? Certainly, this is not possible. The staffs will always be rude to customers if they are receiving hash treatment in their workplace. If the working condition is not very favorable, the staffs are bound to react negatively to the customers. This particular customer experience can bring about crisis of trust. A lot of customers can change business partners in the face of such experiences. Managing customer expectations: Managing the expectations o customers is a very wonderful strategy of gaining their trust. It is very much certain that customers expect very much from an organization. Jason Compton (2004) submits that having the customer in your business net is not enough; rather a business should spell out the principle of give and take in customer relationship6 As a result, there is always massive customer brain drain whenever a brand fails to meet the expectations of the customers. A brand that does not work hard to meet the expectations of the customers will not do very well in upholding customer trust. Experts in Customer Expectation Management opines that a good business should not wait for a customer to bring his complaint, but rather, should know exactly what the customer wants through various communication strategies7 Expectation management unit in the customer service department is very necessary. This is a departmental unit where the needs of the expectations of the customers are managed. In this unit, what customers expect from the organization is carefully analyzed and structured in order to produce the best result. One the ways of achieving this is to encourage customer complaint. In order words, the company welcome ‘’bad news’’ about the organization. Staffs should be encouraged to report any negative report they hear about the organization. This might sound to be very paradoxical. After all, bad news might discourage the strength of the business organization. But the result that could be driven from this customer approach is rather very positive for the company. By encouraging customer complaint, an organization will find it very difficult to know its short-coming. Ignorance of an organization’s short-coming is capable of breeding customer distrust because such an organization will certainly be loosing customers due to poor service delivery unknown to the organization. But, if complaints from customers are encouraged, the organization will easily know where it is erring and set out adequate strategies and policies to correct such mistakes. Going beyond customer expectation is also very necessary in winning customer trust and loyalty. By this, I mean giving the customer more than what he wants. The expectation of a customer does not go beyond the provision of goods and services that are good and desirable. What every customer seeks is to have what is ideal from an organization. It is not completely enough to meet this imperative and necessary expectation of the customer, rather it is commendable that a business organization goes further in offering goods and services which they customer truly does not ‘’expect’’ from the organization. Hence, one of the effective ways of managing customers’ expectation is to provide what they did not expect. This should come as a surprising package to the customers. Example, when a business organization attaches some bonuses to the actual delivery, the organization is surprising the customer. This should come in the form of promo, bonuses, discounts, etc. naturally, a business organization is not entitled to give the customers the above mentioned. But when customers receive such perks unsolicited, it will certainly increase their trust. The customer reasoning will be that such an organization is not only interested in making profits from the customer, but also to satisfy his or her needs in all ramifications. Relationship Management: Relationship management has a subtle resemblance with customer relationship management. This is because in both, managing the customer is involved. But there is a sharp contrast between the two. While customer relationship takes place at the transactional level, relationship management takes place outside the ambience of transaction. Hence, one can logically argue that while customer relationship management is an aspect of relationship management, relationship management is not necessarily part of customer relationship management. This is because of the reason given above. By way of analysis and description, relationship management is how an organization manages the interaction between the business and the audience/customer. It can be seen as the management strategy which an organization uses to maintain a continuous engagement with the audience.8 Furthermore, it is the inquiries which people make and how the organization disseminate such information. It is related to Public Relation. How an organization handles and react to all the relationship management issues will certainly affect the loyalty and trust such an organization will win from the customer. Example, in the Frequently Asked Question, it is very necessary for an organization to be very wary on how it answers questions from the people/audience. Experts in Public Relation should manage the relationship management of an organization for an effective result. Conclusion: It must be noted at the crucial moment that the survival of every organization rests on the amount of trust which people have on it. An organization that wants to maximize customer loyalty must not joke with the trust which the customers have on the business. as Andrew Cohen rightly pointed out, the refusal to compromise will always make an entity, whether business or person to be popular9 Finally, it is important to listen to the advice of Paola Sapienza and Luigi Zingales that short term mistake in an organization is capable of establishing long term distrust by the customers.10 REFERENCES Wikipedia, the free encyclopedia, (online source). Available at >>http://en.wikipedia.org/wiki/Bank_of_America. [Accessed, 8/12/2012] Tall, S., crisis of trust facing the news media, (online source). Available at >>> http://www.libdemvoice.org/the-crisis-of-trust-facing-the-news-media-hansard-society-29527.htm. [Accessed, 8/12/2012] Graystone, A., crisis of trust? (Online source). Available at http://www.themedianet.org/article?article=09bd8d1f-aa52-485b-83e0-a61ae82f7008. [Accessed, 8/12/2012 What is branding? (Online source). Available at http://libweb.anglia.ac.uk/referencing/harvard.htm. [Accessed, 9/12/2012] Yastrow, S., do you focus on internal marketing. Available at http://yastrow.com/nlarchive/2010/internal-marketing-focus-01-12-10.html. [Accessed, 8/12/2012 Compton, J,. How to manage customer expectations. Available at http://www.destinationcrm.com/Articles/Columns-Departments/REAL-ROI/How-to...manage-customer-expectations-42793.aspx. [Accessed, 9/12/2012] Customer focus, expectation and loyalty. Available at http://www.customerexpressions.com/cex/cexweb.nsf/(GetPages)/fb0e21c03e1a1fbb85257011006e6396. [Accessed, 9/12/2012] Relationship management, Available at http://www.investopedia.com/terms/r/relationship-management.asp#axzz2EkZcuoab. [Accessed, 10/12/2012] Cohen, A., a crisis of trust, Available at > http://www.enlightennext.org/magazine/j9/andrew_crisis.asp. [Accessed, 11/12/2012] Paola, S., and Zingales, L., a trust crisis, Available at http://faculty.chicagobooth.edu/brian.barry/igm/atrustcrisis.pdf. [Accessed, 10/12/2012] Read More