Customer Relationship Management: Barclays and Halifax - Case Study Example

relationship management: The value proposition for Barclays and Halifax BY YOU YOUR SCHOOL INFO HERE HERE Improving the experience 1.1 Introduction Barclays and Halifax both maintain a diverse set of financial services that include investment, international banking, credit services and account development. When working with a diverse set of services, both banks must have a strong CRM focus to provide perceptions of value to their unique market segments. The key to ensuring a stronger consumer following and building loyalty is through the use of the value proposition that fully expresses the company’s competencies, expertise and communicates to the desired target customer with language that links consumer lifestyle with the benefits of the service (Arussy, 2010). Authenticity is vital to a quality value proposition. “It is continuously signalled through every manifestation of the company’s brand and every interaction with the consumer” (Picoult, 2008, p.41). The value proposition for Barclays and Halifax should be a reinvention of the brand as information services “which provide customers with information worth searching for, paying attention to, and expresses the information as representations of outputs of the operations” (Mitchell, 2010, p.26). Value is expressed with authenticity and should offer some guarantee, especially due to the current consumer trend in risk consideration when seeking services. Companies that do not incorporate guarantees into their value propositions often have a difficult time improving their market share (Alexander, 2009). All of these factors make both Barclays and Halifax need to take a customer-centric approach with a marketing discipline to improve the customer relationship. 1.2 Barclays value proposition Barclays currently has a well-developed proposition that defines its services. However, value propositions based solely on product features, pricing and performance are not sustainable language (Brock, 2002). Barclays requires language that can “break through the clutter” (Konrath, 2007, p.1) of consumer concerns over the global recession to achieve instant and ongoing client attention. The basis of the value proposition is to provide customers with the perception that Barclays is the only business capable of satisfying their needs . This suggests incorporating unique service or product innovations into the proposition, therefore providing something the client cannot receive with their current banking relationships (Linne, 2010). Much to the advantage of Barclays, less than 15 percent of companies in the financial industry are able to provide differentiated value propositions backed with marketing expertise and know-how (Roehm, Giffi & Chaudhuri, 2009). One significant innovation in areas of product is Barclays development of contactless credit cards that do not require traditional swiping, designed to speed payment delivery and transaction time (barclaysannualreport.com, 2009). Barclays should link elements of product innovation with the psychographic profile of this target segment to provide a value proposition that builds on client aspirations and how this product can enhance the customer relationship. This can be accomplished by referencing the customer pyramid, which represents those customers most willing to buy, those that have defected, segments that have a product or service need, and percentages the attribute to revenue creation. (See Figure 1). “Once the pyramid has been created, it must become a living document” (Poulos, 2007, p.4), in this case, part of the value proposition. This model describes the different tiers of customers that should get the most focus based on their individual needs and their level of revenue production per market segment. It segregates prospects from living customer segments so that planning managers can link value with actual contribution to the profit model. The pyramid shows the smallest tiers on top, with only small percentages of revenue contribution, reflecting niche clients. Inactives, on the pyramid, represent those customers that could benefit from more intensive promotion, such as Barclays new credit cards with touchless characteristics. This acts as the foundation for business value and allows managers to develop new strategies designed to meet the needs of each market group. One target customer group at this bank is overburdened corporate decision-makers that value convenience in banking and would appreciate innovative services that simplify the payment and banking service process. Figure 1 – Customer value pyramid Because marketing is a key function for Barclays value proposition, the firm would benefit from the REAP model of creating customer value. REAP is an acronym for retention, marketing effectiveness, acquisition and penetration. (See Figure 1). The value proposition for the company can be improved by using this innovation to acquire new customers, retain existing clients, improve communications efficiency, and penetrate new markets through new segmentation and targeting strategies based on consumer research; psychographics. The REAP model acts as a planning tool that describes how to acquire customers, through retention or promotional efforts. After identifying these potential segments, efficiency of internal processes along with measurement of how much value new strategies can provide is assessed. It acts as a planning model for further penetrating new market environments (or existing ones with new offerings) and acts as a guide for developing strategy to retain currently loyal clients through promotion or new service development. Based on the research provided, Barclays would benefit from a value proposition, designed around this new product innovation, that incorporates service elements with an understanding of lifestyle preferences for their new and existing target groups. The following is an example proposition that incorporates authenticity, service, product, guarantee and can capture market attention: Barclays innovations in contactless credit cards improve transaction and payment times by over 75 percent. Backed with award-winning support teams, innovation in product and service delivery revolutionizes how banking is conducted. At a zero cost to the customer, Barclays diverse innovations bring nothing but reward after reward; we guarantee it. Figure 2 1.3 Halifax Halifax has a less-developed value proposition that does not adequately express the diverse services and competence found at the bank. There is a lack of customer-centricity and it does not seem to understand its target customers. In a customer-centric organisation, the first step is to recognise that customers “are not homogenous, faceless blocks of people who drift in and out of (the bank), but individuals with stores to tell, hopes and worries” (Moorehead & McGrory, 2009, p.28). They need reaching out. Halifax requires active knowledge of who they are selling their products and services to, which can only be accomplished effectively through ongoing market research and demographic studies. Arussy (2010) again identifies that institutions fitting Halifax’s profile should include what consequences might arise in the event of inferior service and what dreams and aspirations can be filled through Halifax service and product. Halifax’s customers include mass market groups, generic consumers looking for ongoing banking services to include checking, savings and personal, household investments. This group faces minimised investment portfolios because of current economic conditions and are often risk-averse because of certain highly-publicised banking and corporate scandals. At the same time, providing value involves the satisfaction and loyalty model, building on strategies to create linkages between service and repetitive use of a product or service. This can be accomplished through promotion, enhanced service variety, or innovation in the service concept. Mass groups of consumers tend to have a disconnect between loyalty and satisfaction based on a phenomenon known as repetitive brand use. This concept identifies that use of the same brand can lead to boredom at the consumer level or that the initial euphoria that comes with experience with a new company brand tends to decrease over time and they are more prone to defect (Pleshko & Baqer, 2008). When trying to create a value proposition that works for large, mass groups of consumers looking for personal investment and deposit needs, this is a genuine concern and should be incorporated into the value proposition to ensure retention of existing customers who might be experiencing less brand euphoria and demand a certain level of customer satisfaction. The customer centricity indicator model identifies the four different categories of companies, based on their level of dedication to providing excellence in satisfaction and improving customer loyalty. (See Figure 2). Halifax fits the profile of the 4th base company classification that is very customer-centric and builds strong bonds with clients, improving relationship and efficiency as described by the model (round.co.uk, 2010). This is supported by the development of a support services hotline that is manned by active real-time personnel in order to provide financial counselling for mass market clients that are experiencing difficulty or the diminished portfolio in a tough economic climate (lloydsbankinggroup.com, 2009). This support staff is trained to counsel or offer referral services in the event that their client needs cannot be supported efficiently. This model describes other types of companies to help identify where the business is best positioned to provide value based on client needs or strategic goals. The first base company is a functional design based mostly around the product. Efficiency is usually the key output goal in this type of business. The second base company ensures process efficiency and customer focus with a strong emphasis, still, on efficiency. A third base company profile builds customer value as the key focus but with less emphasis on the relationship and more support for effectiveness in process. Halifax is a fourth base, relationship-focused company. Because of this strong customer-centric business model and support services development, a better value proposition for Halifax follows: Halifax works consistently to develop new support services and technologies that make the customer experience more rewarding. World-class, real-time representatives are available to manage your financial portfolio every step of the way. The bonds created through service experience are unlike any in the industry and we guarantee our customer focus with the assurance of quality. If it’s broken, we’ll fix it. Figure 3 2. Conclusion Barclays and Halifax must have authentic, market-focused language in their value propositions that speak directly to the lifestyle needs of their desired segments. The proposed value proposition for Barclays was designed to offer a more professional view of the company by linking service with product, convenience, and the guarantee of limited risk for the sceptical customer. It offered the unique innovation needed to gain attention or promote retention, through marketing effectiveness strategies and promoted a consumer behaviour response with promise of reward. Halifax’s new value proposition was much more customer-focused to the mass audiences that use generic services and products for household investment and deposit. Making the company appear more customer-centric is a marketing function that took advantage of new support systems designed to offer a new type of customer experience that was relationship-based. The proposition used language that appealed to buyer groups that value minimal risks to their investment, but also managed to show Halifax’s competence in areas of service and dedication to meeting client needs. The language used was designed to promote retention through satisfaction and loyalty in the CRM model to capture mass segment attention as an evolution of the company’s brand image as moving toward service focus. Shortcomings from both companies’ original value propositions could lead to eroded market share, lost customers, or lost revenue for failing to make an impression with buyer groups that have similar values as the banking organisations. References Alexander, J. (2009). It’s still all about guarantees, National Underwriter Life & Health, 113(19), p.17. Arussy, L. (2010). Customers don’t buy what you sell, Customer Relationship Management, Medford. 14(2), p.12. Barclaysannualreport.com. (2009). 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How Barclays’ employees keep the customer promise, Strategic Communication Management. 13(3), pp.28-32. Picoult, J. (2008). Flight to quality might be bumpy ride for buyers, National Underwriter P&C, 113(15), p.41. Poulos, Nick. (2007). A few thoughts on customer equity. http://cyber.im.fju.edu.tw/course/10985/Customer%20Equity%20Management-%20A%20Few%20Thoughts.pdf (accessed March 28, 2010). Roehm, H., Giffi, G., Chaudhuri, A. (2009). Transforming the enterprise through finance, Corporate Finance Review, 13(6), pp.20-27. Round.co.uk. (2010). Round customer centricity indicator. http://www.round.co.uk/cci_fb/default.cfm?fuseaction=survey.surveyHome (accessed March 28, 2010). Read More