Halifax Analysis - Case Study Example

PART A Halifax Analysis Halifax is an UK originating online banking service. Financial services are the backbone of our economy and will continue tobe for years to come (Davies 1992). Because diversified financials offer such a wide range of products, they are able position their companies to tap changing demand for different products (Davies 1992). Therefore, because of the diversified personal and business related services offered by Halifax, which include loans for homes, education, personal use, savings and investments, and credit cards, Halifax must be examined as a professional service. The company provides a vast number of services to multiple consumer demographics. Service Delivery Method The service delivery method deployed by Halifax is strongly related to the company's ability to promote and execute to customer needs through professional E-business at http://www.halifax.co.uk/home/index.shtml. This allows the bank to run literally twenty-four hours per day year round. The benefits of this service delivery are the continuity of service, however the detriment may be found in genuine customer service and person to person contact. Nature of Demand The professional service deliver for online banking is in high demand. In the long run, there will always be demand for credit cards, mortgages business loans or insurance in one form or another. Financial services are the backbone of our economy and will continue to be for years to come (Davies 1992). Because diversified financials offer such a wide range of products, they are able position their companies to tap changing demand for different products (Davies 1992). World population is continuing to expand at an exponential rate. It is important for companies within the industry position themselves in developing countries to take advantage of exploding populations, especially in emerging countries (Davies 1992). Degree of Customer Interaction The degree of customer interaction for online banking is low. This is not the same as walking into a bank and dealing face to face with a personal banker, which removes the personalised services one would expect in a highly professional bank-consulting environment. Also, upon reviewing Halifax's Web site, it was very hard to find an 'About Us' section that gives detailed customer satisfaction and commitments to service. Several online banks also offer 'click to chat' options which allow an online customer to 'chat' with a professional banker. This is not an option available with Halifax. ). Technological innovation has allowed financial companies to automate time and labour intensive processes and enhance their ability to match up borrowers and lenders, regardless of geographic location (Gardener 1988). While Halifax has reached several components of innovative technology by the development of 24-7 online banking, they are severely lacking in the degree of viable customer interactions. Degree of Service Customisation The degree of service customisation is relatively high. Halifax has developed specialised services through online banking for the purpose of gaining new customers and retaining current customers (McDonald 2002). In the degree of customised services, Halifax offers diverse and multiple professional banking services. Expectations are commonly defined as "beliefs about a product that serve as standards or reference points against which product [or service] performance is judged" (Zeithaml et al. 1993, p. 1). To this, Halifax responds by offering direct and easy to navigate professional services. There are icons for nearly all-banking needs that the customer can easily navigate based on their requirements. Halifax also boasts that it will assist the customer in 'switching' banks, which customises the professional service towards new customers. Nature of Service Act The nature of the professional service is strongly E-business The service side concentrates mainly on providing services to the customer. Halifax's customer care section plays an important role on deciding if the company and should be taken seriously at all times. While Halifax's online banking segment offers a 'contact us' section, they do not offer quick and easy to access 'Customer Service' section. This is an immediate turn off to customers who use online methods for shopping and banking. It is hard to take an online professional service seriously if they do not offer solutions to common customer service concerns. Degree of Judgement This also relates directly to the degree of judgement exercised by contact personnel to meet individual customer needs. While there is a wide range of service, there is not a degree of personal customer service to respond to individuals. Degree of Relationship with Customer The relationship with the customer therefore lacks some very important components of service quality. Parasuraman et al. (1988) claims that perceptions of quality of service are a result of evaluating service delivery in relation to pre-consumption expectations known as the "disconfirmation" model. Quality is therefore defined as the gap between consumer's expectations and perceptions, and a customer will perceive quality positively only when a service provider meets or exceeds his expectations. It can be expected that the measures of service would be easy to access and individualised to 'my' personal banking needs, it can also be stated that Halifax is severely lacking in their degree of judgement which in turn creates 'disconformity' between the customer and firm relationship. Level of Labour Intensity Halifax is not labouring intense, but the company is service intense. This is because the main focus is the online professional banking sector. This can be a detriment to the company's sustainability because the company does not involve others in the development of values, mission, goals, and other statements of common direction to a point that can be easily seen and accessed by the public. Proposed Mystery Customer Checklist In regards to service expectations, the most frequently applied framework in the cross-cultural context is the SERVQUAL framework developed by Parasuraman and his colleagues (Parasuraman et al. 1988, 1991a; Zeithaml et al. 1993). SERVQUAL dimensions, specifically empathy and tangibles (lowest scores) as part of the customer service package. The proposed mystery customer checklist should focus on: The development of quality as a discipline. The complexity of defining quality. The leading approaches to defining quality. The differences between defining quality for manufactured goods and for services. The major contributors to the quality profession. Key quality management terms. Dimension Description Example for Halifax Tangibles Physical facilities, equipment, and appearance of personnel. ATM access; lobby layout; tellers dressed professionally Reliability Ability to perform the promised service dependably and accurately. Promised deadlines met; reassuring problem resolution Responsiveness Willingness to help customers and provide prompt service. Respond quickly to customer requests; willingness to help customers Assurance Knowledge and courtesy of employees and their ability to inspire trust and confidence. Trustworthiness; safe environment/customer information handling; polite tellers/customer phone service Empathy Caring, individualised attention the firm provides its customers Personal attention to customers; convenient and accessible Web site. Service Guarantee Halifax Online Guarantee The Halifax Online Guarantee offers some of the strongest liability and bill payment protection available, including: Zero Liability Protection: You're not responsible for unauthorised online transactions including bill payments, when reported promptly. Bill Payment Promise: Your bill payments will be sent on time. If Halifax fails to process a payment in accordance with your instructions, we will reimburse late charges assessed by your payee. Security Commitment: Halifax uses data encryption to protect you when applying for accounts, banking and paying bills online. Privacy Protection: Your personal information will remain confidential. As an Online Banking customer you automatically benefit from our Online Banking Guarantee. We promise to protect you. In the unlikely event that you innocently suffer Internet fraud on your Halifax bank account(s), we guarantee to cover the loss - no matter what the amount taken from your account, provided: You have not given your security details (including your passcode or memorable word) to someone else. The loss was not caused by your use of an account aggregation service (i.e. a service provided by another company that allows you to view all of your bank details on a single website). You have not sent us incorrect payment instructions. You have used reasonable care when using the Internet banking service (eg logging off at the end of each Internet banking session and not leaving your computer unattended while logged on to the Internet banking service). You have not acted fraudulently. Customer Complaints Handling A complaint is when a customer expresses any of the following: Dissatisfaction with actions taken by Halifax (i.e. we have done something badly or incorrectly). Dissatisfaction with a lack of action by Halifax (i.e. we have failed to do something we should have done). Dissatisfaction with the way staff/contractors have dealt with someone or provided a service (i.e. treated someone unfairly or discourteously). Fraudulent activities. We aim to resolve all complaints effectively within set targets and to customer satisfaction. The following principles will be followed when dealing with complaints: They will all be dealt with promptly, courteously, systematically and fairly. Where appropriate, they will be treated confidentially. If information is to be discussed with staff or external bodies, the customer will be asked for their permission before any information is disclosed. There will be clear communication of the final outcome or of a complaint's progress if a longer timescale of investigation is required. The following steps identify the proper employee response to a customer complaint: Complaints by phone or in person - Identify yourself to the customer - Be professional, polite and courteous - Listen carefully to the complaint - Do not attempt to lay blame or be defensive; just politely provide the customer with your perspective of the issue - Make a record of the query and confirm details with the customer - Explain the courses of action available to address the customer's concerns - Check whether the customer is satisfied with the proposed action and if not, discuss alternatives - Try to give an immediate response: - Let the customer know what you plan to do, but don't create false expectations - Follow up the complaint: contact the customer to check if they are satisfied ask for feedback about your complaint handling procedure within 3 working days of the complaint. Written complaints - Respond promptly - Deal with the complaint in the same way as with verbal complaints - Ensure you send a written response to the customer as well as any other forms of contact. Internal Communication: Document the complaint with the complaint department. Contact supervisor if you have any questions. Do not make promises to the customer that can not be kept. Always report complaint and complaint resolution to management. Customer Complaints Leaflet This leaflet sets out what you can do if you have a complaint about banking products or services. We are committed to providing a high standard of service to you and all our customers. Occasionally we may not live up to our promises. If this happens, we want to hear from you. Letting us know when you are unhappy with the service you experience gives us the opportunity to put matters right for you and to improve our service in the future for everybody. Our staff are the best placed to receive your complaint and to work with you to resolve it. You can share your concerns with them in person, by phone, by letter or email. Contact us To find out more about what we offer, to apply for an account or to manage your accounts once they're up and running, just get in touch - we've got plenty of easy ways. By phone - you call us By phone - we can call you Our commitment to you: We will take your complaint seriously and try wherever possible to resolve this We will treat you fairly and with respect We will acknowledge your complaint within 3 working days and give you a full response within 10 working days of us receiving this form. Where possible we try to respond sooner. If there is a delay we will keep you informed. We aim to provide you with a response that is clear and easy to understand. We will be open and honest with you. Where necessary we will provide you with explanations for our decisions. Any information you give us on or with this form will be treated in confidence and only used in connection with your complaint. Alternatively you can contact our Customer Relation Team at: Customer Relations Contact Information. (for confidentiality reasons, please do not send your account details if submitting your complaint via e-mail). We usually reply to your email address but there may be occasions when we need to do so by post, for example when we need to refer to confidential information or enclose copies of important documents. To help us investigate and resolve your complaint as quickly as possible, please provide the following information: * Your name and address * Your account number and sort code (for confidentiality reasons, please do not send these details if submitting via email.) * A daytime telephone number where we can contact you * A clear description of your concern or complaint * Details of what you would like us to do to put it right. Where applicable please also provide: * Copies of any relevant documents, such as letters or policies * The policy number or other appropriate reference. How will we respond We will do our best to resolve your complaint immediately and with the minimum of inconvenience to you. Our first step is to understand what the problem is and to find out what we can do to put the matter right. Sometimes we may not be able to sort it out straight away. Where we cannot resolve it by the following day, this is what you can expect from us: A written acknowledgement of your complaint within five working days. Details of who is handling your complaint and how to contact them. Sometimes this may not be the person who received your complaint but the individual best placed to deal with it. If your complaint will take longer to investigate, we will keep you informed of progress. We aim to resolve your complaint within four weeks. If we are unable to do so, we will write explaining what's happening and let you know when we expect to do so. After eight weeks we will send you a final response or a further progress report on our investigations. If you are still not happy Our aim is to resolve your complaint as quickly as possible and to your complete satisfaction. If, for whatever reason, you are unhappy with the response you receive from us please get in touch directly with the person or department who handled your complaint. They will then agree with you what the next steps are. If you are still dissatisfied , you can request a review from the Financial Ombudsman Service, which was set up by the Financial Services Authority to review unresolved complaints from: The Financial Ombudsman Service South Quay Plaza 183 Marsh Wall London E14 9SR Telephone: 0845 080 1800 Email: Enquiries@financial-ombudsman.org.uk Website: www.financial-ombudsman.org.uk HALIFAX - CUSTOMER COMPLAINTS FORM Reference No. - office use only [ ] 1. YOUR DETAILS Name : _____________________________________ Address : _____________________________________ Postcode : _____________________________________ Home Telephone Number : _____________________________________ Work Telephone Number : _____________________________________ Mobile Telephone Number : _____________________________________ Email address : _____________________________________ 2. YOUR COMPLAINT Please tell us details of your complaint. You can use the continuation sheet if necessary. 3. HAVE YOU ALREADY REPORTED THIS COMPLAINT (please tick one box) YES [ ] NO [ ] If you have ticked "No", we may refer this complaint to the person or team dealing with this matter first. If you do not want us to do this, please tell us why and we can consider who is best to review your complaint. If you have ticked "Yes", please provide us with details. Who have you reported it to What was their response (use continuation sheet if necessary) If applicable, please tell us why you are unhappy with the response you have received from us so far. 4. HOW DO YOU WANT YOUR COMPLAINT RESOLVED Please tell us what action you would like us to take now. (use continuation sheet if necessary) SIGNED .. DATED . CONTINUATION SHEET Please use this sheet to provide additional information. If this is a continuation of sections 2, 3 or 4 please tell us to which question the information relates. WHAT NEXT * Please send this form along with any other information you would like us to see to the address given on the front. * If you would like a copy of this completed form, please tick this box and we will send you a copy along with the acknowledgement of your complaint. [ ] * Please also complete and return the equal opportunities form. This is used for monitoring purposes only and is confidential. It will be removed from your complaint form as soon as it is received. The information you provide will in no way affect the way your complaint is handled. EQUAL OPPORTUNITIES FORM - customer complaints Please help us to check whether our equal opportunities and our customer complaint policy are working by completing and returning this form. The information given is strictly confidential and is only used for monitoring purposes. This form will be removed from your complaint as soon as we receive it. We can assure you that your complaint will not be treated differently due to any information provided. Please tick the appropriate box: SEX Female [ ] Male [ ] AGE Under 25 years [ ] 41 - 65 years [ ] 25 - 40 years [ ] 65 years & above [ ] Are you happy with the complaint form and the information we have provided you with YES [ ] NO [ ] If you have answered "NO" please tell us why and what you would like us to do differently. PART B A Satisfied Customer Is A Loyal Customer Increased competition, media and political attention and more demanding customers have enhances the pressure in the UK banking industry to manage the business more efficiently and ethically. Technology has opened new opportunities for delivering efficient customer service. Consumers are increasingly careful about their time and their money, especially regarding their personal finance issues. They are spending more time working than ever before, and are placing a higher premium on their leisure time. In retail banking, every one of the products or services in the bank, a home mortgage, an auto loan, has customer information in it (Gardener 1988). But if the bank wants to treat its customer holistically to know who that customer is and all the relationships it has, it needs to extract customer information from each of those operational systems and integrate the customer information and then deliver that information back as a service to any business process, application or group of people who need to use it (Aldlaigan A and Buttle F 2005; Watkins 2000). Therefore by creating, understanding the information sources, the relationships and the business context, the retail banking facility can create a reusable high-value service first (Askin and Harker 1997). Over time the business may expand the number and scope of information services that are available across internal and external processes (Aldlaigan A and Buttle F 2005; Watkins 2000). Therefore, customers are becoming a very receptive audience for timesaving products and excellence in services. Accordingly, growth will be slowing down as consumers and mortgage growth comes down from historically high levels. This is primarily due to an increased awareness of monetary status and financial accountability, as well as fluctuations in national income and investments. The stock market will also remain challenging as companies have to live with lower levels of economic growth and with many unable to raise prices materially and therefore less willing to invest while rising the related necessary funding. This implies that much more effort will have to go into customer service, with different levels of service available to different customer groups. Nor will the sales effort be merely volume driven, but instead we should try to optimise customer service by making it more focused, more efficient, less bureaucratic and with customer satisfaction becoming prime measures of success (Datamonitor 2005; Craig and Ramaseshan 1994). This means in particular better motivated and trained staff, management spending more time and effort to ensure that the bank is seen to produce and also greater effort to focus on satisfying customer needs where the ultimate failure relates to the complex issue of poor customer service and employee engagement (Datamonitor 2005; Craig and Ramaseshan 1994). Therefore, it becomes necessary to understand excellence in customer service and loyalty (Datamonitor 2005). Customer loyalty is a measurable tendency in customers that keeps them bound to a service, product, brand or company and finds expression in their continuous patronage and repeat repurchases of the choice they have made. This bondness creates in them a disposition to give preference to a particular service, product or brand over that of others. Loyal following of customers therefore prolongs their relationships with companies than would normally have been the case. This tendency gives several benefits to companies. Reichheld (1993) has enumerated some of them as increased revenue and profits, reduced customer acquisition costs and reduced cost of service provision. Duffy (2003) on the other hand, described loyalty programs as a strategic objective for companies. In the bid to appropriate these benefits, several companies have instituted customer loyalty programs. Most of these programs take the form of relationship building, in which certain privileges and benefits are bestow on customers that show a tendency to give preference to the company and its products and services. The success of such programs are periodically measured using analytical tools and or in formal surveys. Soderland (2006) has outlined the principal dimensions used in measuring such programs as re-patronage intentions and word-of-mouth intentions. In recent years however, the merits of customer loyalty programs have come under increasing scrutiny, which has led to greater application of metrics (Dowling and Uncles, 2006). The augment put forward is that if every company in a given sector or industry set up a customer loyalty program, would such programs continue to create additional loyal following over and above that provided by the differentials in service provision. In other words, does commoditization of a concept prunes down its advantages Some workers (Mittal and Lasser, 1998; O'Malley and Tynan, 2000) have expressed misgivings about the concept of customer loyalty programs. Mittal and Lasser (1998) for example, have pointed out that even if companies understood the value of customer loyalty, it shall be difficult for them to change it. It needs to be added that whilst customer loyalty programs cannot 'force' customer to opt for a particular brand or product or company, they can 'influence' decisively the choice behaviour of customers. To a large extent, this is the principal premise upon which most of these programs are built. Some researchers have outlined the steps involved in the conversion of a consumer of quality service or product into a loyal follower. In that quality service to customer loyalty continuum, it is posited that quality service leads to customer satisfaction, which in turn leads to customer loyalty and increased profitability for the company or brand. Storbacka et. al(1994) have expounded further on the customer satisfaction component of this theory. According to these workers, a satisfaction index formed by a customer initially depends on his recent experience with the product or service. When prior expectations are exceeded by recent experience, the customer is most likely to maintain or adjust upwards this index for that service. These authors further maintained that a customer's satisfaction can remain high, even after receiving a mediocre performance, if his initial expectations were low. From this theory, whether customers become loyal followers in future largely depends on their expectations and perceptions. These attributes are all changeable through effective and consistent marketing communication. Degado-Ballester and Manuera-Aleman (2005) have reported similar results at the brand level. These workers observed that brand trust was rooted in past experiences with the brand, which in turn is associated with loyalty and future relationships. It is sensible to assume that a customer who has had excellent associations with a particular brand would grow in his commitment to that brand and remain a faithful and loyal follower of the brand in future. Several variables impinge on whether customers maintain their relationships with a brand or company. Attention giving expressed in excellent in customer relationship management is but one of them. Providing one's business customers with attention can pay off in their loyal following but outcomes of such endeavours cannot always be guaranteed. If the company enamoured its customers with attention but no satisfactory value emanates from the company-customer relationship, it is not likely that the customer would stick with the company. Of course, attention giving can mitigate the negative effects lack of satisfactory value can create in the customer. In a customer focused selling strategy, efforts should be expended in giving customer value that the company can profitably provide. Storbacka, Strandvik and Gronroos (1994) have examined the linkage between relationships between a company and its customers and customer loyalty. They identified three factors that influence the process as (I) relationship strength (ii) perceived alternatives and (iii) critical episodes. The findings of Mittal (2001) that more than 30 percent of happy customers expressed willingness to change service providers is consistent with available literature. Dowling and Uncles (2006) have pointed out from an empirical studies on a wide range of products and services that most heavy users of a product or service are also multi-brand loyal. Bloemer and co-workers (1998) investigated the extent to which image, perceived service quality and satisfaction of customers affect their loyalty in the banking sector. They found that image was indirectly related to bank loyalty via perceived quality. They also noted that service quality bears both direct and indirect relationship to their loyalty to the bank via satisfaction. Different weights were not given to these factors to determine their relative importance to loyalty. However, it would appear that perceived service quality was more important than the other variables, as its influence impinged on all of them. The studies of Hellier et al (2003) on the other hand, established that perceived value was the principal factor that influences customer re-purchases intention in the insurance sector. Service quality was one of the variables studied. The effects of specific sector differences cannot be discounted in the disparities recorded (Bloemer, Ruyter and Wetzels, 1999). Andreessen and Lindestad (1998) have also studied the effect of corporate image and customer satisfaction on customer loyalty. They noted that for complex services, corporate image impacts customer loyalty directly whereas customer satisfaction does not. These findings are contrary to highly viewpoint that customer satisfaction is the primary driver of customer loyalty. These findings however raise a fundamental question as to whether customers shall continue in an unsatisfactory relationship when the best of corporate images are projected to them Favourable corporate images need to be felt at the customer end of the business otherwise they would appear as allusions to them. The studies carried out by Nguyen and LeBlanc (2001) clearly supports this viewpoint. These research workers reported that the degree of customer loyalty has a tendency to be higher when perception of both institutional reputation and image were favourable. Helliel et al. (2002) have enumerated factors that affect the buying intentions of customers as quality of services, equity, perceived value, satisfaction, past loyalty, perceived cost of changing supplier and brand perception. Most of them variables are inter-related and they impinge upon customer loyalty cumulatively. Many researchers have alleged the quality of is less important than the brand image as it is hard for consumers to evaluate quality of service. Special characteristics of services initiate consumers to be more loyal. Internet, price sensitivity and globalisation help consumers to be less loyal. Based on this review we can assume that there is a positive link between quality perceptions, brand perceptions and loyalty. References Aldlaigan A., Buttle F. (2005), "Beyond satisfaction: customer attachment to retail banks". International Journal of Bank Marketing; Vol. 23 Issue 4, p349-359, 11p Andreassen T.W., Lindestad, B.,(1998). "Customer loyalty and complex services: The Impact of corporate image on quality, customer satisfaction and loyalty for customers with varying degrees of service expertise." International Journal of Service Industry Management, 9(1): 7-23. 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