Download CUSTOMER RELATIONSHIP MANAGEMENT

EXAMINATIONS CRM MAY 2012 SOLUTIONS Section A
2012 MAY CRM SUGGESTED SOLUTIONS
Answer to Question 1
The ultimate goal of customer relationship management is to acquire and retain customers
profitably better than competitors. A business can only achieve growth goals when it is able to
keep the customers it acquires longer. It is five times cheaper to retain customers than to attract
new ones.
Commercial banks in Malawi thrive to achieve this goal through ways such as the following:
a) They calculate the asset value of their customers and make informed decisions regarding
investments in acquisition, retention, and add-on selling.
b) They adjust marketing investment levels as customer relationships move through the
dynamic life cycles;
c) They organise processes and structures around acquisition, retention and add-on selling
to maximise the profitability of each over the customer life cycle;
d) They address the “whole customer” who buys, influences and uses a broad range of
services and products;
e) They use customer interactions to reinforce relationships and acquire new customers.
Answer to Question 2
2a) There are many disruptive changes to banking and business that indeed make customer
management a necessity.
i)
Target marketing approach:
Information-based marketing is becoming more efficient and effective than
blanketed mass marketing;
ii) Competition
Competition is cutthroat. As a result, mass marketing strategies that achieve targeted
profits by counting on more profitable customers to subside less profitable ones will
fail as the more attractive customers are stolen away by competitors’ targeted
acquisition effort;
iii) Near perfect information:
As customers gain near-perfect information on their alternatives, switching barriers
are dropping dramatically;
iv) Companies that use the deluge of available data on customer purchase behaviour are
acquiring customers, retaining existing customers and cross-selling more effectively
than those who do not and can link their insights with cost data to do so efficiently as
well;
v) Companies can no longer depend on orderly vertical channel system to control
customer’s buying behaviours;
pg. 1
2b)
Ways by which banks can enhance long term relations with their customers include:





Lower interest loans
Credit facilities
Joint research sponsorships
Engaging in social responsibility initiatives
Enhancing service levels
ANSWER TO QUESTION 3
CRM should be cross-functional. The programme must include all the organisations that face
customers.
Role of Sales Department in CRM




Selling is and will always be the primary role of sales representatives. Sales interactions
are critical to building positive customer relationships.
The new CRM role of sales is to sell customer solutions.
Sales Department must focus on understanding and meeting the customer’s real needs
even at the expense of commission cuts.
Sales representatives must be true custodians of customer information that is key in
building and maintaining long term relationships.
IT Department
IT department plays a critical role in CRM programme.




The IT function will provide the technology and information components without which
CRM cannot succeed.
IT must understand what the business and customers want since they are part of the
solution and need to be integrated into the team
IT has the responsibility to support the business and solve business issues
As a customer enabler, IT is responsible for implementing the system tools that make it
easier for customers to do business with us.
Marketing Department




Traditionally marketing department has the responsibility for communications and
branding.
Marketing plays the role of customer advocate.
Marketing leads the overall CRM programme and keeping it focused on the customer.
Marketing manages and monitors the overall plan that governs how the various touch
points work together to influence the total customer experience.
ANSWER TO QUESTION 4
pg. 2
5a)
A customer profile is an outline of the type of customer likely to purchase your product. It
is a description of a customer or set of customers that includes demographic, geographic,
and psychographic characteristics, as well as buying patterns, creditworthiness, and
purchase history. These must be updated regularly.
A customer profile may vary from one product to another and developing a customer
profile will help you target your advertising and marketing and is an essential analysis tool.
This will cut your advertising costs and allow you to concentrate on real potential
customers rather than too wide a range of people. Concentrating on potential customers
will save you time and money.
5b)
Benefits of building customer profiles
Why do you need customer profiles?
It takes out the guesswork of marketing your business. It helps you focus activities and programs
with those customers who will buy from you on a regular basis so you can grow you business. A
profile of your key customers, includes information that helps you understand what is important
to them, their buying behaviour, their interests, how engaged they are with your brand etc.
The key business benefits of building customer profiles are:
1-
Better Communication
If you think about your communication with long-time friends, versus those you don’t
know very well, you quickly realise how much easier it is because you know more about
them. With customers the same is true and if you have a profile you are in a better
position to know what to communicate, when to communicate and by what method.
2- Greater Opportunities
It is far easier to develop opportunities for your brand because you will find they will
provide feedback and suggestions. You will be able to refine your product or service
offerings to better meet their needs and new opportunities to develop other products
and services that are important to them.
3- Reduces Competition
If you have a profile you will know the key elements of how to maintain strong
relationships so they are not vulnerable to competitive offers. A profile helps you refine
pg. 3
what you do in customer service, pricing, offers, staying in touch etc so they do not
become dissatisfied.
4- Increases Profit
Once you have a profile of your key customers, then it becomes a lot less expensive in
time and money spent developing the relationship. You will be able to plan ahead instead
of marketing on the run and have a higher return on your efforts.
5- Brings in More Customers
It is much easier to attract more customers when you actually know about your current
customers. You will be able to build a target list of potential customers who are more
likely to be attracted to your products and services. You will also find that you receive
more referrals and recommendations from your current customers to others similar in
profile.
Section B
ANSWER TO QUESTION 5
With the ever-increasing competition, banks have come to accept that they need to be both
customer- as well as competitor-oriented in order to excel in business. A bank that ignores the
power of customers and competitors does so at its peril.
Whether a company is a market leader, challenger, follower or nicher, it must watch closely what
its competitors are doing and find a position that can guarantee its survival both in the short- and
long-term future.
Being competitor-oriented means that you spend most of the time tracking competitor moves
and market shares and try to develop strategies to counter them. This approach obviously has its
pros and cons. A competitor-oriented company develops a fighter orientation and trains its
marketers to be on a constant alert to find answers to such gut questions as the following:
Who is the competitor? What objectives are they pursuing? What are their strategies? Answers to
such questions should help in the development of strategies for doing better in the industry.
Being competitor oriented also has disadvantages. For example, in being so obsessed with what
your rivals are doing, you end up following their strategies and stifle your own creativity in
pg. 4
serving your customers and dealing with competition. If companies must develop innovative
customer solutions, they must think outside the box and not necessarily base their strategies and
or tactical plans on the competition.
Being customer oriented means that you focus more on customer development. You stay close
to your customers to better understand them and their buying criteria. To do that, they engage in
customer analysis, attempting to figure out the needs and wants of customer both actual and
potential. Customer analysis, seeks to answer questions such as who is customer or who buys?
What are their choice criteria? When does the customer buy from? When does the customer buy?
How frequently does he buy? Who else influences the buying decision?
Clearly, a customer-oriented customer is in a better position to identify new opportunities and set
long-run strategies that make sense. By watching how customer needs evolve, this company can
decide what customer groups and what emerging are the most important to serve and use its
resources to deliver customer value profitably.
ANSWER TO QUESTION 6
The service sector constitutes over 70% of most modern economies and thus a very
important component of business today. Services are activities whose benefits when
transferred to clients do not result in the ownership of anything. They are intangible,
heterogeneous/variable, perishable, and often consumed the time they are produced or
provided.
Each of these characteristics has significant implications for customer satisfaction or
delight.
Quality has generally been described as a major factor in services marketing and
comprises many dimensions. These are the popular ones as cited by experts:
a) Reliability: The ability to perform the promised service dependably and accurately.
It also means accuracy in billing, account statements and keeping records
correctly.
pg. 5
b) Responsiveness: The willingness to help customers and provide prompt service.
For example, giving prompt service, mailing a transaction slip immediately to the
customer on request
c) Competence: It means possessing the required skills and knowledge to perform
the service, knowledge and skills of the contact personnel and support staff
d) Courtesy: This entails politeness, respect, consideration and friendliness of contact
personnel such as tellers, receptionists, etc
e) Access: This entails approachability and ease of contact with bank’s personnel.
The service should be easily accessible by telephone, email, etc. Convenient
locations of service facilities such as ATMS
f) Communication: This means keeping customers informed in a language they can
understand and listening to them
g) Credibility: This is as a result of exhibiting trustworthiness, believability, honesty.
The bank’s should have the interests of its customers at heart.
h) Security: Security of customers, and their finances and the confidentiality of their
information are key.
i) Assurance: employees' knowledge and courtesy and their ability to inspire trust
and confidence.
j) Empathy: caring, individualized attention given to customers.
k) Tangibles: appearance of physical facilities, equipment, personnel, and written
materials
ANSWER TO QUESTION 7
9a)
Business travellers have high time demands and expect efficiency from the bank. The
practical approaches the bank could undertake to improve customer care are as follows:
i)
Improved communications
Customers need to be kept informed about the delays
ii)
Regular updates on the Internet
iii)
Personal communications
The bank needs to have a proactive help desk which customers can easily access
for information. If delays occur, people usually want an explanation. This helps
them to re-plan their day.
iv)
Smoothing delays
pg. 6
Banks should provide newspapers or food and drink coupons in order to make
wait more bearable to the customers
9b)
v)
Proactive approach
Banks should not wait for customers to complain. Good customer care anticipates
customers’ needs and wants. If there is a dip in service levels, management
should immediately focus on how to address it. This is how organisations retain
loyal customers and improve their reputation.
vi)
Customer questionnaires
These could be sent out asking how the service could be improved in these
circumstances
Practical steps in establishing an effective customer care programme.
It is important that a customer care programme is managed effectively and that there is
an understanding of total quality management.
This should impact on the quality of service, availability, service, support and reliability. In
essence the following issues should be considered









Identify customer needs and perceptions
Establish a strategic vision and mission and communicate to staff
Specify service level standards and specifications
Establish management processes and communicate this to all staff
Define tasks to time factors
Establish a basic minimum level
Ensure effective response to complaints
Management commitment
Effective and continuous measurement of the programme
ANSWER TO QUESTION 8
10a)
E-banking is the use of electronic technologies and systems to facilitate and enhance
transactions between a bank and its customers located in different parts of the world. It
presents many advantages to banks such as the following:
i-
Access. E-banking has provided unprecedented ability to deliver information,
goods and services to business and consumers at any time that is convenient
to the customer. It’s available 24/7
ii- Control. Customers have total control in terms of what information and services
to select when they visit the bank’s website.
iii- Speed. E-banking is fast
iv- Automation. One can choose to deal with their bank from home or office or
indeed from any point in the world.
pg. 7
v- Globalisation. E-banking has effectively eliminated country/geographical barriers,
offering an opportunity to deal with global customers.
vi- E-banking is extremely cost-effective.
10b)
The Internet connects the company with outside world. Extranets connect mostly
members of the firm’s value chain such as customer, suppliers, distributors and agents.
Intranets are for in-house connectivity. The use of these can improve customer
relationships in the following ways:





Speedy sharing of information with strategic partners
Prompt response to queries
Low expenditure on connecting with stakeholder to both company and external
stakeholders
Speedy decision making ensures that customers are served promptly
Cost-effective ways to create databases
pg. 8