Commonwealth Bank Marketing Strategies - Case Study Example

Table of Contents Sl. No. Pg. No. 1. Executive Summary 03 2. Introduction 04 3. Current Market Approach 04 4. Customer Relationship Management 05 5. Commonwealth Bank and CRM Strategies 06 6. CRM Development 08 7. Data Warehousing and Mining 08 8. Marketing Campaigns 09 9. Benefits of CRM to Commonwealth Bank 09 10. Conclusion 11 11. References 12 1.0. Executive Summary As the economic globalization has intensified competition and created a climate for constant changes has made the banking sector realise the importance of customer relationship for their success. Winning and retaining customers was never such an important aspect for the banks. Customer relationship management is a strategy that can help them to build long term relationships with their customers and also increase the revenue, profits and business volume. CRM in the banking sector is of great importance in today’s world. The aim of this study is to explore and analyse the strategic implementations of CRM in banks helping in identifying the benefits and problems as well as the success and failure of the implementation of the CRM strategies. 2.0. Introduction The Commonwealth Bank is an Australian bank with business across New Zealand, Fiji, Asia, USA and the United Kingdom. Customer Relation Management (CRM) is a business model that aligns products and sales strategies with customer requirements and preferences. Customers also prefer services which are provided in a timely manner using these channels. The best possible and successful banking strategies are developed by learning about the customers’ behaviour patterns and attitudes. Behaviour analyses what product or services have been purchased in the past and also the current buying pattern. Attitude studies the customer’s thinking and feeling about future buying decisions (Adrian & Frow, 2005). This project explores the traditional approaches to implementing CRM strategies in the banking industry. We make a study of the CRM strategies evolvement and application by the Commonwealth Bank over the years and the benefits generated thereof. 3.0. Current Market Approach The traditional way of approach to marketing is changing with regards to physical distance, time, markets and competition. This has resulted in change in the ways of marketing practices. It has been found that the banking sector has also changed the usual customer approach ways and now placing greater emphasis on managing their marketing relationships. The ways have changed from the transaction process phase towards relationships, networks and interactions Malik & Harper 2009). The marketing approach today has started focussing on the needs of the banking users and customizing the services in the similar manner. With the high use of information technology the banking sector has taken advancement in leaps and bounds. With IT as an underlying force the nature of services, structures, process and communication has changed. The current business has adapted a number of strategies in making the banking industry easier and faster for greater satisfaction to the customers and high end results for the banking institutions. One such bank is the Commonwealth Bank of Australia which has a huge spread out business and ranked amongst the top bankers. The bank has applied the modern day approach of banking in the form of customer relationship management strategies and business practices. 4.0. Customer Relationship Management (CRM) A lot of CRMs are implemented without any fruitful results. Generally a CRM focuses on automating existing process, magnifying existing problems and impeding gains. A good CRM strategy helps in enhancing the profitability from the customers and boosting bottom line. A well set strategy helps to build a strong business and attainment of the set goals in a very systematic manner. There are a few practices which are considered best for the effective implementation and high efficiency of CRM strategies in the banking sector (Coltman, 2007). The banking sector is approximately losing eight percent of its clients every year. The top best practices for the implementation of the CRM strategies are: i. Concentration on strategies and practices: CRM is the implementation of best practices using appropriate tools. Evaluation of the best strategies and then focusing on practicing those strategies has helped in the application of CRM strategies in the banking sector. ii. Collection of accurate report of the customers: The strategies are set around the customer related information collected from previous transactions. It needs to ascertain the factor behind the customer’s satisfaction on previous and current matters acknowledge the current and future requirements. iii. Practice led implementation for CRM solutions: Effective planning and frequent revision of the process is required for better implementation of strategies. Interaction with concerned teams, evolving smart processes in a systematic manner and comprehending the changing banking requirements help s the best possible implementation of the CRM strategies. iv. Learning from failures and success: Not necessarily all CRM strategies find success when applied. The failures and the success curves prove to be a learning experience for the management. The ROI of various initiatives and the effectiveness of the decision making process helps understand the required changes for better application of strategies. v. Adoption by users of the bank: Involving the employees in the bank’s CRM initiatives could take a longer period of time resulting in arguments and hindering their sense of responsibility. Ground level experience with novel initiatives shall result in an effective practice. This requires employee’s feedback on the CRM strategies and gauging the performance of the bank to study the outcome according to the objectives of the bank. 5.1. Commonwealth Bank and CRM strategies The customer relationship management has overtaken the management of Commonwealth in its services and business model. Based upon the information collected from the in-depth interview of the senior people of the bank, the CRM programming and implementation of the bank was studied. The Aim of the bank to achieve stable growth and excellent profitability required attention on international success. Also the attention was not to be paid upon the clients as a group but on the individual clients as well. The bank defines the CRM marketing strategy as something that allows the bank to: Focusing on profitable clients through discriminating segments. Understanding different combination of clients, products and services and volumes. With the help of better information adapt a proactive approach for creating demand. Establish a mix of distribution channels with standardised services as per a client’s importance to the bank. The idea of CRM helped the bank use technology and human resources gain insight into the behaviour of customers and value such customers. it has helped in providing better customer services, making call centres more efficient, cross selling of products more efficient, helped sales staff to close deals faster, simplified marketing and sales processes, discovery of new customers and increased customer revenue (Kumar & Reinartz, 2006). Electronic uses of banking have proved a success in acquiring new customer groups. To support the strategy a number of projects regarding branch organization, processes and information systems have been implemented. 5.1. CRM Development As per the changing economic conditions and the fluctuation of the international markets the Commonwealth Bank had timely started focusing on the development of CRM strategies for carrying out its business. With a view and target to increase the number of existing customers to a larger number a crucial use of technology has been had been identified and a focus was made on the routinely collection and cleansing of the customer data. This move promoted a massive involvement of the branches, mainly portfolio managers and many campaigns were held for popularising the strategy amongst the bank staff and understanding the importance of collecting and maintaining reliable customer data. Also the application of services such as automatic teller machines and call centres had improved the database (Peppard, 2000). 5.2. Data Warehousing and Mining Data warehousing is the core of any decision supporting system, so was the same in care of developing CRM strategies. The data thus collected through the different operating units and bank staffs are sorted out with the help of information technology, advanced computer programs, and are converted into analytical data through raw data processing and data modelling (Uppal, 2010). The analytical data is the refined and useful customer details containing the following: Demographic details like age, culture, marital status, etc. Ownership of bank’s products and services. Service usage like balance, transactions, etc. Global variable like profits, cost, risk, assets, liabilities. Relationship with bank. Data mining is carried out on the generated analytical data. The data are electronically transferred to different call centre and service help desks to help assist the clients and also present the best available products to them. 5.3. Marketing Campaigns After the collection and analysis of data CRM concentrates on important operational aspects. Marketing experimental campaigns were designed and carried out to study the relevance and benefits of the developed strategies and process. The bank branches used promotions through sales person in the branches and the call centres. The campaign was carried out on different banking products and services with the use of the data mined. The campaigns were successful to a great extent and provided the bank with an added number of customers and also upgraded the services used by the existing number of customers (Gilbert & Choi, 2003). 6.0. Benefits of CRM to Commonwealth Bank The CRM strategies have helped the Commonwealth Bank benefit in a lot of ways. The overall profitability and the customer base has increased to a larger extent and outgrown many other international banks in terms of efficient banking operations. A few of them are: 6.1. Build Brand Image It has helped the banks to adapt an extroverted culture to build a strong brand image. With the application of such strategies the bank has been successful in providing excellent customer services and satisfying their needs and making a good advertisement through word of mouth. It has helped bank employees equip with necessary mindset to act as ambassadors to promote the bank’s brand equity. Proper advertisements and customer benefits with the use of new and existing products and services through newspapers, advertising media and the internet have helped the private bank to develop a better and bigger brand image Kubi & Doku, 2010). 6.2. Re-integration of Operational Analytical and Collaborative CRM Many banks have high analytical CRM capabilities but have deficiencies in operational and collaborative CRM. With the use of integrated CRM strategies and channel management Commonwealth Bank too came over the problem of operational and collaborative CRM. With the introduction of services like online banking the customers are at much ease to operate and complete secured transactions at their disposal. It has reduces costs and increased speed for both the parties. Web chat and call back services has also added to the value of CRM. 6.3. Effective use of ATMs ATMs have become very important for the bank choice of people in this fast running business world. The strategies have helped the bank locate its outlets in large numbers in convenient and strategic locations where it can reach maximum people. Introductory broachers and step by step demonstration of the use of the ATMs on the net was a part of the strategy development for training the people using the ATM cards for the first time. These steps were very successful and distributed the work load of the bank over the large number of outlets and also made it easier and faster for the banks. 6.4. Focus on Priority Banking The ultimate aim of the CRM strategies is to retain and acquire most profitable customers of the bank to affect the overall profitability of the bank. To attract more private customers, the CRM helped the bank to offer more individualised and attractive services and products to the customers (Soch, & Sandhu, 2008). It has helped Commonwealth Bank start facilities like cash back and pay-back points on certain transactions. Thus, CRM as a whole has helped the bank to secure itself in the fast moving economies with a growing profit every year. Conclusion Results obtained by the extensive use of obtained customer data and relationship with the customers has helped Commonwealth Bank to convince and win over a large number of customers. The CRM has helped the bank improve revenue and master costs, focus on the right and best customers, increase the efficiency and effectiveness of the sales and apply multiple channel approach. Commonwealth Bank has evolved in learning about the customer needs and retain its client and furthermore increase the business with the development of new strategies (Buttle, 2009). The project has brought forward a clear picture of the change in the traditional strategies to CRM strategies and its optimum application in the banking industry. (Word Count: 2007) References Adrian, P., & Frow, P. (2005). A Strategic Framework for Customer Relationship Management. Journal of Marketing, 69, 167-176. Buttle, F. A. (2009). Customer Relationship Management: Concepts and Technologies. Elsvier Limited. Coltman, T. (2007). Can Superior CRM Capabilities Improve Performance in Banking. Journal of Financial Services Marketing, 12(2), 102-114. Gilbert, D.C., & Choi, K.C. (2003). Relationship Marketing Practice in Relation to Different Bank Ownerships: A Study of Banks in Hong Kong. International Journal of Bank Marketing, 21(3), 137-146. Kumar, V., & Reinartz, W.J. (2006). Customer Relationship Management. Hobroken, NJ: John Willey & Sons, Incorporation. Kubi, B.A., & Doku, A.K. (2010). Towards a successful customer relationship management: A conceptual framework. African Journal of Marketing Management, 2(3), 37-43. Malik, S.A., & Harper, T.W. (2009). Customer Relationship Management (CRM) in the Banking Sector of Pakistan: Problems and Challenges. Business Information Management Association, 312-320. Peppard, J., 2000, Customer Relationship Management (CRM) in Financial Services, European Management Journal, Vol. 18, No. 3. Soch, H., & Sandhu, H.S. (2008). Does Customer Relationship Management Activity Affect Firm Performance?. Global Business Review, 9, 189. Uppal, R.K. (2010). Marketing of Bank Products – Emerging Challenges & New Strategies. International Journal of Management Research, 35-42. Read More