IBA Bulletin,Volume 25(5),2003
Background:
Gone are the days when Banking Industry used to operate in a protected environment. Libralisation, Privatisation and Globalisation have opened floodgates of competition. Opening of private banks has also given banking industry new taste in competition. Bankers can no more bank on walk-in-business and relax in cozy offices. Information technology has not only enhanced customer’s awareness level but has made them demanding. Their expectation level is galloping. Demands and priorities are changing every day. The influence of the Internet upon the choice and delivery of products and services has made the situation acerbic. Customers no more want age-old banking products they cannot be fooled and taken for a ride by changing the wrapper of the product. Never in the history of banking the power has so firmly been in the hands of customers as it is today. The customer will continue to dictate and this situation is not going to change. The struggle for survival in the cutthroat competitive market is the biggest challenge of the time. For facing competition there has to be determination and skill of innovation.
In the changing environment many established organisations with Un-parallel track records are facing problems as these organisations continue to remain in hypnotized state of their past achievements. This has made them incapable of inventing new vision and planned direction for progression. It has to be understood that change is a continuous process and natural phenomenon. Change in the environment produces constantly changing landscape. It is nature’s law, the way of life and cannot be avoided. However, under the transforming scenario the speed of change has fastened. Bankers have therefore to perceive customer’s requirement well in advance and design and market products to suit their needs. Banks have therefore to adopt a systematic approach for marketing their services to withstand competition.
The New Mantra:
For facing and managing competition, the main mantra is “Marketing” and improvement in “Customer Service’. Both are complementary and supplementary to each other. The Competition is no longer on price alone but also on quality and delivery. Banks have to adopt innovative measures to remain in business and this has to take place before need is felt.
Those banks which foresighted the changed situation modified their operations well in advance, reengineered their existing products by adding flavor, reassessed their products from acceptability and profit angle. Those products, which were parasite on profits and outdated, were shredded and new products and activities cloned and launched to match the increasing demand of customers.
As bankers operate in a dynamic environment, understanding customer is necessary for getting larger share in the market. They need to adjust their output to meet the changing needs. The competitive environment is forcing banks not only to continuously keep on improving services but also innovating and designing new services. They have to identify different types of customers, make in-depth study of their needs and then draw up suitable schemes to satisfy those needs keeping in mind that their awareness is high.
Customers' Psychology:
We should understand that positive relationship with customer has lasting impact on their attitudes. Customers’ loyalty is influenced by their attitudes and changing needs. If we want our customers to be loyal, we have to be loyal to them first. Loyalty is nothing but creating a strong bondage of relationship. It is developing trust and understanding. For proper understanding banker has to know wants and needs of customers and make them feel that they are needed, are valuable, special to bank and much more. This creates value.
Background:
Gone are the days when Banking Industry used to operate in a protected environment. Libralisation, Privatisation and Globalisation have opened floodgates of competition. Opening of private banks has also given banking industry new taste in competition. Bankers can no more bank on walk-in-business and relax in cozy offices. Information technology has not only enhanced customer’s awareness level but has made them demanding. Their expectation level is galloping. Demands and priorities are changing every day. The influence of the Internet upon the choice and delivery of products and services has made the situation acerbic. Customers no more want age-old banking products they cannot be fooled and taken for a ride by changing the wrapper of the product. Never in the history of banking the power has so firmly been in the hands of customers as it is today. The customer will continue to dictate and this situation is not going to change. The struggle for survival in the cutthroat competitive market is the biggest challenge of the time. For facing competition there has to be determination and skill of innovation.
In the changing environment many established organisations with Un-parallel track records are facing problems as these organisations continue to remain in hypnotized state of their past achievements. This has made them incapable of inventing new vision and planned direction for progression. It has to be understood that change is a continuous process and natural phenomenon. Change in the environment produces constantly changing landscape. It is nature’s law, the way of life and cannot be avoided. However, under the transforming scenario the speed of change has fastened. Bankers have therefore to perceive customer’s requirement well in advance and design and market products to suit their needs. Banks have therefore to adopt a systematic approach for marketing their services to withstand competition.
The New Mantra:
For facing and managing competition, the main mantra is “Marketing” and improvement in “Customer Service’. Both are complementary and supplementary to each other. The Competition is no longer on price alone but also on quality and delivery. Banks have to adopt innovative measures to remain in business and this has to take place before need is felt.
Those banks which foresighted the changed situation modified their operations well in advance, reengineered their existing products by adding flavor, reassessed their products from acceptability and profit angle. Those products, which were parasite on profits and outdated, were shredded and new products and activities cloned and launched to match the increasing demand of customers.
As bankers operate in a dynamic environment, understanding customer is necessary for getting larger share in the market. They need to adjust their output to meet the changing needs. The competitive environment is forcing banks not only to continuously keep on improving services but also innovating and designing new services. They have to identify different types of customers, make in-depth study of their needs and then draw up suitable schemes to satisfy those needs keeping in mind that their awareness is high.
Customers' Psychology:
We should understand that positive relationship with customer has lasting impact on their attitudes. Customers’ loyalty is influenced by their attitudes and changing needs. If we want our customers to be loyal, we have to be loyal to them first. Loyalty is nothing but creating a strong bondage of relationship. It is developing trust and understanding. For proper understanding banker has to know wants and needs of customers and make them feel that they are needed, are valuable, special to bank and much more. This creates value.
Customers are not interested in the range of services offered by bank. Their interest stem from what the service is likely to do to them. Hence bankers have to know the factors which motivate customer to buy the product. The human psychology is that people pay attention to what interests them. Interest once aroused does not sustain long unless there is some immediate reference to the benefit. Therefore, the customer is to be given the correct facts he needs .He has also to be given supportive and convincing reasons for going for a service product. He has also to be told how the services being offered differs from that of the competitors and what makes it special or different compared to them.
Customers are attracted towards the bank on the belief that the bank to which they are going has a “cutting edge”. Since today’s customer is demanding there has to be cutting edge in all the spheres. This aspect needs to be focused and exploited. Customers are sensitive and respond emotionally to the passion and commitment of employee’s .The emotionally driven reaction builds a bridge between customers and employees and act as a magnetic field, which helps in developing long lasting relationship resulting into sustainable growth of bank’s business a route to reputation and profit. The communication with the customer has to be simple and not technical. Once the customer is satisfied and convinced he plays the role of opinion leader in the market landscape.
Marketing and selling:
Like any other business, marketing is an essential ingredient for bank’s progression. For facing challenges in the market arena bank has to penetrate the market, explore new markets and launch new products. It has to create ever-increasing demand for its products, and has to do aggressive marketing. According to Peter Drucker “The business enterprise has two, and two, basic functions; marketing and innovation. It is not necessary for a business to grow bigger; but is necessary that it constantly grow better.”
Marketing and Selling are two different things. They are not synonyms. Under selling, goods are first produced and thereafter customers are approached with different techniques and persuaded to buy the product. The seller influences customers need to match with his product convince and motivate him to purchase.
Marketing is bundle of complicated activities in which a desire for requirement of the product is created .In marketing the product is tailored to meet individual’s demand. It is not like selling where product is produced first and marketed later. Marketing is about people .It is about satisfying existing and prospective customer’s real needs and expectations .It is optimising outcomes measured in terms of growth in the market share. The success depends on letting people know what bank can do for them and its sensitivity to their concerns and demands. The more people trust you, the more they bank on you. Therefore the best way is to create a bond of trust through efficient service and product delivery.
Product designing and Marketing:
Marketing is a systematic, organized approach to the selling and constant monitoring. It involves directing and auditing of efforts .It demands commitment and turning new ideas into practicality. For marketing product / services banks have to visualise the needs / requirements of customers and trends in market. They have scientifically to do need identification, maintain customers’ profile, their social / family details, consumption and income pattern. On the basis of above mentioned details product has to be conceived and innovated which should be hassle free and blatantly apparent to the customer. Before launching a product following steps are must.
· Market research: It is must for identification of current and potential needs of the customers. It helps in planning and designing the architecture of the product.
· Product Development: Once identification of need has been done, market trends studied and analysed, competitors product studied and dissected from marketing angles the product is to be developed with self attracting unique features.
· Pricing: Deciding a realistic competitive price tag acceptable to the customer and profitable to the bank.
· Branding the product: The product is to be christened and given a unique attractive generic name.
· Channels of distribution: Identification of branches catering to the product.
· Advertising: The product to be advertised through print and electronic media for generating public interest.
· Contacting existing customers: All the existing customers are to be advised about the new product.
· E-mail marketing: All the customers of the bank to be advised about the new products through e-mail. All the amendments in the existing products need to be communicated over e-mail, which is cheap and fast interactive communication mechanism. Banks should also send their product updates to their all constituents through e-mail and keep in regular touch with them .Of course bank has to have proper record of e-mail addresses in addition to the office / residential addresses.
· Product roll out: After all the above preparations are done the product is to be launched.
Selling New Products:
Selling of new product is different than selling a known existing product .It is not simple to market a new product. Before crafting effective marketing plan bank has to know potential markets. We have to stay in touch with our clients and keep on telling them about new products or modifications in the product. We have to be true and accurate to them. Knowledge of customer’s behaviour is necessary for getting larger share in the market. Before launching a new product following has to be kept in mind:
Who will be the target group?
Needs and preferences of potential customers
Financial service products currently used or not used
Who are the competitors and what are their strengths and weakness
Product differentiation with other market players.
Proper training has been imparted to the staff and the staff at the branch is well versed
with the new product/services being offered / launched.
Necessary steps have been taken at the branches to facilitate the actual sale
Proper systems and procedures have been laid down and pilot testing done to
Necessary steps have been taken at the branches to facilitate the actual sale
Proper systems and procedures have been laid down and pilot testing done to
understand operational glitches.
Proper system for receiving, analaysing and monitoring the feedback has been
Proper system for receiving, analaysing and monitoring the feedback has been
devised and introduced.
People involved in selling financial products /services need larger element of empathy and a smaller element of ego drive in their make up than the salesman of consumer or industrial products. For banking products a surrogate relationship needs to be built between the customer and bank .It is also to be ensured that every single employee is germinated for efficiency
Role of Customer Service In competition:
The competitive environment always forces continuous improvement in services .For facing challenges, quality service has to be made part and parcel of the entire business organization. Consumers are looking more for quality services and real differentiation in what they are buying. For every organization customer is important. Service is not like other products, which are tangible, services are intangible. They can be felt and experienced. Feeling and sensitivity parameters differ from individual to individual. Hence the chemistry of satisfaction cannot be standardized, but a standard protocol for services and customer satisfaction has to be maintained. As the customers are looking more and more for quality services and real differentiation in what they are buying constant inter-action with them is required to understand their reaction / response to product and service.
Efficient customer service is the key to face competition. As a satisfied customer is publicity in himself true customer service goes beyond polite, personal and friendly ads and reward programmes. Customer can be acquired from the word of mouth from satisfied customer. It should not be presumed that once a customer is acquired he would be retained due to intrinsic quality of the product and that services will take care of satisfaction. The quote of an unknown author amply explains this
People involved in selling financial products /services need larger element of empathy and a smaller element of ego drive in their make up than the salesman of consumer or industrial products. For banking products a surrogate relationship needs to be built between the customer and bank .It is also to be ensured that every single employee is germinated for efficiency
Role of Customer Service In competition:
The competitive environment always forces continuous improvement in services .For facing challenges, quality service has to be made part and parcel of the entire business organization. Consumers are looking more for quality services and real differentiation in what they are buying. For every organization customer is important. Service is not like other products, which are tangible, services are intangible. They can be felt and experienced. Feeling and sensitivity parameters differ from individual to individual. Hence the chemistry of satisfaction cannot be standardized, but a standard protocol for services and customer satisfaction has to be maintained. As the customers are looking more and more for quality services and real differentiation in what they are buying constant inter-action with them is required to understand their reaction / response to product and service.
Efficient customer service is the key to face competition. As a satisfied customer is publicity in himself true customer service goes beyond polite, personal and friendly ads and reward programmes. Customer can be acquired from the word of mouth from satisfied customer. It should not be presumed that once a customer is acquired he would be retained due to intrinsic quality of the product and that services will take care of satisfaction. The quote of an unknown author amply explains this
“Providing excellent service is lot like dieting. It is not complex. It is just hard to do consistently”.
The rules of the game have changed. It can not be assumed that customers will deal solely because the services provided by their existing financial service providers are not up to mark. It should not be forgotten that between obligation and commitment other factors also play. It is not the customer acquisition, which is important, but retention of customer is important. In the technological age customer wants a reinforcement of personal and not commercial values .He does not want to be reduced to be a PIN (Personal Identification Number). Thus for maintaing customers loyalty and profits positive relationship is necessary.
Earlier the measuring rod for organisational prosperity and efficiency was customer satisfaction but now to know the reputation and quality of service the criteria is to measure customer’s rate of defection. For taking corrective measures banks have to investigate the root causes. Banks have to focus on customers and prevent them from defecting, migrating. Banks must realise that migration is worst than defection. In migration a person severs connection permanently and in defection the person sits on fence and moves from one position to other which ever suits him. Defection is bad and migration worst. Banks have to improve management of customer migration by introspection. It should not be forgotten that
Quote
"Excellence is more than a wish: it is a pursuit that never stops "
Unquote
No comments:
Post a Comment