customer management report

Mark 3014 Individual Customer Management Report

Report prepared for Newbank

Ningfei Lei P13219249

Word count 2146 words

Mark 3014 Customer Management Report 2013 - 2014

Table of Contents

1 Introduction..................................................................................................5

2 Recommend, giving full reasons, a customer management model that they should use to help them become customer focussed (tutorial 2). You may use either the QCi or Payne model...............................................................6

3 Develop an appropriate value propositions for credit card customers and SME businesses.............................................................................................7

3.1 credit card customers...............................................................................................73.2 SME businesses........................................................................................................7

4 Creating value from the customer base for credit card customers and SME businesses.....................................................................................................8

4.1 Why Newbank need to create value form the customer base in an ethical way......84.2 Credit Card customers..............................................................................................84.3 SME businesses........................................................................................................8

5 Why and how Newbank should adopt a “systems thinking” approach to organising their business...............................................................................9

5.1 Reasons for adopting a systems thinking approach..................................................95.2 how Newbank should adopt a “systems thinking” approach to organising their business............................................................................................................................9

6 How Newbank can work towards providing an outstanding customer experience..................................................................................................10

7 Developing a social media strategy for Newbank.......................................11

8 Conclusions.................................................................................................11

9 References..................................................................................................12


1 Introduction

The aim of this report is to help Newbank for its further development in terms of following sections.

First, the author will recommend QCi model for Newbank to become more customer focussed. With an appropriate value proposition provided for credit card customers and SME businesses, the report will offer suggestion on how to create value from credit card customers and SME businesses in an ethical way. To enhance business organization, the report emphasizes on systems thinking approach. Moreover, advice on providing outstanding customer experience will also be given. Finally, the report ends with developing a social media strategy for Newbank.

2 Why Newbank should use the QCi model to help them become more customer focussed

2.1 QCi Model


The QCi CM model is a customer management assessment tool, which covers interrelated elements including analysis and planning, the proposition, the customer life cycle, competitors, the customer experience, processes, people, technology and measuring the effect. Particularly, at the heart of the QCi CM model is the customer life cycle. Integration of all the elements is essential in order to achieve excellent performance (Woodcock, Stone, & Starkey, 2001).

2.2 Why Newbank should become more customer focussed

Roger Martin (2010) believes that companies can improve the quality of corporate decision making by making customers the top priority, because by taking customers into account, companies are forced to focus on improving the operations and the products and services instead of spinning lines to shareholders. He also maintains that determining what customers value and focusing on pleasing them all the way is an optimization formula.

2.3 The application of QCi Model and the benefits

According to the QCi Model, before planning on the basis of cost-effective acquisition, retention and penetration of the customer base, Newbank should first analyse the value, behaviour and attitudes of various customers and customer groups. After making a plan with clear direction and guidance, the proposition should be defined in terms of product, price, service, relationship, and the like, to identify how the commitment made by Newbank should be delivered. Particularly, Newbank should communicate the proposition effectively to both customers and to the staff. Most importantly, Newbank needs to identify at which stage customers currently are in customer life cycle, while within each stage, which issues Newbank should focus on to efficiently deliver services. Processes, people and organisation should be set up to improve customer management activities, throughout which the customer satisfaction should be examined and how Newbank can be competitive should be considered. The final step is measuring the retention, efficiency, acquisition and penetration for further development. Lastly, advanced technology will facilitate customer management of Newbank. Generally, QCi Model clearly indicates the steps of customer management and the aspects Newbank should address, which is beneficial to enhance the effectiveness and efficiency.


3 Develop an appropriate value propositions for credit card customers and SME businesses

3.1 Credit card customers

The core proposition elements of the value propositions for credit card customers include safety, low transaction cost, convenience and credit-card enhancements. As Khurana and Singh (2011) state, everyone carries credit card for its convenience, safety, easiness and even style. Stavins (1996) argues that consumers are also sensitive to the value of credit-card enhancements such as frequent-use awards and extended warranties.

Given the value proposition mirror, Newbank is supposed to meet customers’ needs at different levels. The safety of credit card is of vital significance. Under insecure condition, the customer may suffer huge loss with no clue. Besides, credit cards should be convenient enough for the customers. If customers can not consume with credit card at some shopping malls or restaurants, holding a credit card can be less convenient than paying by cash. Therefore, the safety and convenience are must haves, which should be strength area of Newbank. While most of the consumers are cost sensitive, low transaction cost, which is considered to be nice to fulfill, will make them more willing to use credit card, thus Newbank should be quite strong in preventing transaction cost as possible. However, credit card enhancements are of least importance.

3.2 SME businesses

As for SME businesses, the core proposition elements are, loan approval, cash management, lending flexibility and rewards program. However, small and medium enterprises have rather limited access to loans (Boogearts et al., 2000; Barlett et al., 2002), although they play an important role in transitional economies (Bagnasco and Sabel, 1995; Levitsky, 1996; Scase, 1997; Bateman and Lloyd-Reason, 2000). While SME businesses own limited funds, which can seriously constrain their start-up or improvement, unlike large enterprises, loan approval without over rigorous rules is a must to be offered for SME businesses by Newbank. To be successful, banks must develop a product that includes cash management and lending flexibility (Wilson, 2002). For SME businesses, cash flows and the flexibility of borrowing largely concern with efficiency, so Newbank should try to fulfil efficient cash management and high lending flexibility. Similar to credit card customers, rewards program such as airline miles program that allows businesses to accumulate points are of less concern for SME businesses (Wilson, 2002).

The proposition mirror (Credit card customers)

Customer Needs

Ok to fulfil but unimportant: Credit card enhancements Nice to fulfil: Low transaction cost


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Must haves: Safety, convenience

Company strength area: Safety, convenienceCompany quite strong: Avoidance of transaction costCompany not strong: Credit card enhancements

Company OfferThe proposition mirror (SME businesses)

Customer Needs Ok to fulfil but unimportant: Rewards program Nice to fufil: Efficient cash management, high lending flexibility

Must haves: Loan approval

Company strength area: Less rigorous loan approvalCompany quite strong: Efficient cash management, high lending flexibilityCompany not strong: Rewards program

Company Offer

4 Creating value from the customer base for credit card customers and SME businesses

4.1 Why Newbank need to create value from the customer base in an ethical way

Chavez (2003) pointed out that the unethical practices like “fill in the pockets” of the banking decision-makers, say, politicians, lobbyists and executives, have consequently spawned extensive scandals in the banking industry. Royal Bank of Scotland was criticised for executives given shares and staff paid bonuses in spite of its tax-payer bail-out (Croft, 2009). Chavez (2003) also notes that unethical or immoral practices is harmful for banking business and deters future growth. Lloyds has dropped mortgage brokers due to concerns over suspected fraud (Powley, 2011).

Banking is fundamentally a business of trust (C Kendric Fergeson, 2004). To develop a new ethical business model of banking, it is necessary for Newbank to build up responsibility and honesty towards customers, regarding the sources of the funds and how they utilize the money, so that it is able to gain trust and loyalty from the customers. It is worth learning from the Co-operative Bank to only invest in


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businesses with social responsibilities rather than those irresponsibly achieve their prosperity (Harvey, 1995).

4.2 Credit Card customers

Ethical banking can be communicated to the customers with refined brochure at branches or by direct email (Harvey, Brian, 1995). Applying the REAP measures, which refers to Retention, Efficiency, Acquisition and Penetration, Newbank should retain more highly attractive customers with high credits by offering high-quality service to improve retention rate. Processes like returning funds for used credits should be delicately designed for customers’ convenience to appeal to and deliver value from customer. Rather than high cost or low worth prospects, Newbank should attract high worth prospects that use credit cards with high frequency, like the customers who frequently travel abroad or take business trip in other countries, or the consumers who prefer to make consumptions with credit card. Moreover, Newbank can cross sell other financial products or insurance to current customers who may have a propensity to buy.

4.3 SME businesses

Similarly, putting REAP measures into practice of transactions with SME businesses, Newbank should retain more SME businesses with highly potential profitability in the long run. To create value from SME businesses, technology should be designed to enhance the efficiency. To maintain high customer quality, Newbank is supposed to attract SME businesses who have established plan and have potential growth in the future to afford the loan, rather than those who can hardly survive in the market or are even in debt.

5 Why and how Newbank should adopt a “systems thinking” approach to organising their business

5.1 Reasons for adopting a systems thinking approach

Systems thinking includes several merit characteristics, such as a focus on relationships and connections, explicit questioning of boundaries as well as expectations of emergent properties and change. Particularly, the main virtue of the systems thinking approach is a capacity to enable the integration across the dimensions of sustainability (Smith, 2011). The comprehensive application of systems thinking encompasses its use as a means for facilitating concrete action, according to Bosch et al. (2007), and its uses as a method to transform one’s way of viewing and acting in the world (Bawden and Packham, 1998). In the light of Cabrera et al. (2008), systems thinking is “interdisciplinary” and may act as a bridge between the physical, natural, and social sciences.


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5.2 How Newbank should adopt a “systems thinking” approach to organising their business

In the light of the statements above, it is significant for Newbank to adopt a “systems thinking” approach to organising their business. As the MoSO model shows, the daily work processes of Newbank including income generation, support and regulatory activities should be based on customer needs. Viewpoints from the customer should be valued to redesign the whole system for further improvement to best satisfy customers with the resources that Newbank owns. During this process, the various cultures of customers, societal influences and the environment should be taken into account.

6 How Newbank can work towards providing an outstanding customer experience

In order to set itself apart from the competitors including RBS, Lloyds, which have presented awful customer experience, Newbank should try to provide outstanding customer experience.


Banks are able to gain competitive edge with the ability to optimize profits by reducing risks, improved information flows, high level of customer satisfaction and loyalty (Binks and Ennew, 1997; Ennew and Binks, 1999; Petersen and Raj an, 1994; Sharpe, 1990; Tyler and Stanley 1999b; Zeithaml et al., 1996). Customers of financial services can be benefited from greater access to finance, favorable rates on loans, higher perception of service quality, low-level stress, avoidance of switching cost and enhanced convenience (Binks et al., 1992; Binks and Ennew, 1997; Bitner, 1995; Ennew and Binks, 1996; 1999; Petersen and Rajan, 1994).

Given the survey conducted by a customer experience company [24]7 suggested that 50 percent of customers start their interactions with a credit card provider on the phone, credit card providers should lay more stress on the phone channel solution to increase customer loyalty, satisfaction and their overall experience ([24]7 Customer Service Experience Survey, 2014). Thus, hot line staff of Newbank should be trained professionally to provide superior service by offering practical suggestion and guidance for customers. Moreover, Newbank can learn from China Guangfa Bank to improve SME businesses process and risk control technology and make a SME financing solution to gain popularity in the market (The Banker, 2011), and to enhance the efficiency of creating value from key customer groups.

This report adopts Kano Model to analyze the outstanding customer experience factors concerning the core value proposition elements mentioned above. As the graph shows, the successful customer experience factors of customers and SME businesses are slightly different. For credit card customers, “must be” includes safety, convenience, efficient phone service, high-quality on-site service; “more is better” consists of improved information flows, low transaction cost, low-level stress since most of the customers are cost sensitive; credit card enhancements are not necessary while can create delightful experience in certain cases. As for SME businesses, they emphasize most on information flows, greater access to finance since these are the fundamental to get businesses started; “more is better” includes favorable rates on loans, higher perception of service quality, reducing risk; “delighter” is rewards program.


DelighterCredit card enhancements

Kano Model for Credit Card Customers


More is BetterImproved information flowsLow transaction cost Low-level stress

Must BeSafety ConvenienceEfficient phone serviceHigh-quality on-site service

Delight

Neutral

Dissatisfaction

Absent Fulfilled

DelighterRewards program

7 Kano Model for SME Businesses

8 Developing a social media strategy for Newbank

Social media has been witnessed a tremendous growth in popularity around the world because it satisfies users’ desire to express themselves and to “peep” by seeing the activities of the people they care. Most of the top companies in the world make good use of its four key values, which includes time, audience, cost and relations, for internal communications (Dong-Hun, 2010).

Newbank should also make full use of the social media. Firstly, the most basic way is constantly sending direct e-mail to customers to inform the latest information of the bank to keep close relationship with customers. Secondly, Newbank can use Facebook to deal with customers’ complaint and queries promptly, which helps to create a friendly and accessible image. To enhance accessibility, there should always be staff online to assist customers, so that problems can be solved efficiently, which will contribute to the responsible and reliable image of Newbank. Moreover, positive word-of-mouth will get customers like its page and even encourage their friends like its page, helping Newbank to attract more potential customers.


More is BetterFavourable rates on loansHigher-perception of service qualityReducing risks

Must BeImproved information flowsGreater access to finance

Delight

Neutral

Dissatisfaction Absent Fulfilled

9 Conclusions

This report has been well prepared for Newbank to help its development with all-round aspects composed of customer focus, value proposition, value creation, systems thinking approach, customer experience and social media strategy, with combination of several classic models including QCi Model, Kano Model and MoSO Model. With massive research and valid theoretical support, practical proposal for Newbank has been elaborately designed, which is highly thought to be beneficial for Newbank in the long run.


10 References

[24]7 Customer Service Experience Survey Finds the Phone Continues to Be an Important Channel for Credit Card Customers", 2014, Entertainment Close - Up, .

Bagnasco, A. and C. Sabel (eds.), 1995, Small and Medium-Size Enterprises, London: Pinter.

Bartlett, W., M. Bateman and M. Vehovec (eds.), 2002, Small Enterprise Development in South-East Europe: Policies for Sustainable Growth, Boston: Kluwer Academic Publishers.

Bateman, M. and L. Lloyd-Reason, 2000, ‘Small firms inCentral and Eastern Europe’, in D. Jones-Evans and S. Carter (eds.), Enterprise and Small Business: Principles, Practice and Policy, London: Prentice-Hall, pp. 259–279.

Bawden, R. J., & Packham, R. G. (1998). Systemic praxis in the education of the agricultural systems practitioner. Systems Research and Behavioral Science, 15(5), 403–412.

Binks, M.R., Ennew, C.T. and Reed, G.V. (1992), "Information asymmetries and the provision of finance to small firms", International Small Business Journal, Vol. 11 No. 1, pp. 35-46.

Binks, M.R. and Ennew, C.T. (1997), "The relationship between UK banks and their small business customers", Small Business Economics, Vol. 9, pp. 167-78.

Bitner, M.J. (1995), "Building service relationships: it's all about promises", Journal of the Academy of Marketing Science, Vol. 23, pp. 246-51.

Boogearts, M., S. P. Ciarli, D. Czira´ ky, E. Peterlini and S. Tisˇma, 2000, Analysis Report: SME Development in Croatia, Bruxelles: ECODES Consortium.

Bosch, O. J. H., King, C. A., Herbohn, J. L., Russell, I. W., & Smith, C. S. (2007). Getting the big picture in natural resource management-systems thinking as ‘method’ for scientists, policy makers and other stakeholders. Systems Research and Behavioral Science, 24(2), 217–232.

Cabrera, D., Colosi, L., & Lobdell, C. (2008). Systems thinking. Evaluation and Program Planning, 31(3), 299–310.

Chavez, J. 2003, Morality and moral reasoning in the banking industry: An ethical and cognitive moral development examination, Nova Southeastern University.C, K.F. 2004, "Ethical banking", American Bankers Association.ABA Banking Journal, vol. 96, no. 6, pp. 14.

"China Guangfa Bank: Corporate statement - SME business leads to success", 2011, The Banker, .


Croft, J. 2009, RBS executives given pound(s)5m turnround incentive, London (UK).

Dong-Hun, L. 2010, "Korean Consumer & Society: Growing Popularity of Social Media and Business Strategy", SERI Quarterly, vol. 3, no. 4, pp. 112-117,9.

Ennew, C.T. and Binks, M.R. (1996), "Good and bad customers: the benefits of participating in the banking relationship", International Journal of Bank Marketing, Vol. 14 No. 2, pp. 5-13.

Ennew, C.T. and Binks, M.R. (1999), "Impact of participative service relationships on quality, satisfaction and retention: an exploratory study", Journal of Business Research, Vol. 46, pp. 121-32.

Harvey, B. 1995, "Ethical Banking: The case of the Co-operative bank", Journal of Business Ethics, vol. 14, no. 12, pp. 1005.

Khurana, S. & Singh, S.P. 2011, "An Analytical Study of Customer's Preferences and Satisfaction in Credit Card Industry", IUP Journal of Bank Management, vol. 10, no. 1, pp. 71-87.

Levitsky, J. (ed.), 1996, Small Business in Transition Economies: Promoting Enterprise in Central and Eastern Europe and the Former Soviet Union, London: Intermediate Technology Publications.

Petersen, M.A. and Rajan, R.G. (1994), "The benefits of lending relationships: evidence from small business data", Journal of Finance, Vol. 49 No. 1, pp. 3-37.

Powley, T. 2011, Lloyds drops mortgage brokers after uncovering suspected fraud, London (UK).

Roger Martin. (2010). The Age of Customer Capitalism. Harvard Business Review. 3 (3), p2-5.

Scase, R., 1997, ‘The Role of Small Businesses in the Economic Transformation of Eastern Europe: Real but Relatively Unimportant?’ International Small BusinessJournal 16(1), 13–21.

Sharpe, S.A. (1990), "Asymmetric information, bank lending, and implicit contracts: a stylized model of customer relationships", The Journal of Finance, Vol. XLV No. 4, pp. 1069-87.

Smith, T. 2011, "Using critical systems thinking to foster an integrated approach to sustainability: a proposal for development practitioners", Environment, Development and Sustainability, vol. 13, no. 1, pp. 1-17.

Stavins and Joanna (1996), "Can Demand Elasticities Explain Sticky Credit Card Rates", New England Economic Review, July/August, pp. 43-54, Federal Reserve Bank of Boston, Massachusetts.


Tyler, K. and Stanley, E. (1999b), "UK bankcorporate relationships: large corporate expectations of service", International Journal of Bank Marketing, Vol. 17 No. 4, pp. 158-70.

Wilson, C. 2002, "Corporate credit cards for small businesses: The new emerging market?", Community Banker, vol. 11, no. 5, pp. 32-35.

Woodcock, N., Stone, M., and M.W. Starkey, State of the Nation I (2001)

Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), "The behavioral consequences of service quality", Journal of Marketing, Vol. 60, April, pp. 31-46.


Marking sheetName Ningfei Lei mark

Please also note any feedback comments on your report.

Please note the ticks in each row are an indication only of your performance and should not be used as a basis for justifying your mark with the one given

Outstanding80+

Excellent 70-79

Good60-69

Satisfactory50-59

Borderline40-49

Fail0-39

1) Introduction – explanation of

a) Context, (explain report is being prepared for Newbank) and the

b) Outline the structure/content of the report

2) customer management model

a) Brief Explanation of QCi or Payne model

b) Benefits of model

c) Benefits of being customer centric 3) Value Proposition

appropriate value propositions for a) credit card customers and

b) SME businesses

c) VP mirror diagram aligned and text adapted to Newbank

4) Creating increased value from the Newbank customer base

How Newbank can create value from the customer base fora) credit card customers and

b) SME businesses in an ethical way

5) Adopting a “systems thinking” approach

a) Why Newbank should adopt a “systems thinking” approach to organising their business

b) how Newbank should adopt a “systems thinking” approach to


organising their business

6) Working towards providing an outstanding CX

a) ensure high customer retention rate for appropriate customers and

b) attract more good ones for credit card customers and SME businesses.

7) Developing a social media strategy using either or both

a) Make appropriate use of social media with particular emphasis on

b) rebuilding trust with the customer base.

8) Conclusion

Range and quality of referencesCorrect citation of references Presentation

MARK3014 Customer Management - MARKING GUIDE FEEDBACK & MARK SHEET -2014

Abbreviations of most common occurring errors General

TI- Template IncorrectMDM- Model Diagram MissingTMBI – too much background informationIRR – irrelevant discussion not focused on task, CM – citation missing, i.e. no author name/date for supporting evidenceCDM - citation date missing, author name but no dateCE - Citation error, i.e. poor citation by either including author’s initials (or first names) e.g or confusing author’s first name and surname Starkey, M. (2012) or Starkey, Michael (2012) or Michael (2012). Correct citation would be Starkey (2012). T – Typographical or spelling errors PG – poor grammar/sentence constructionNS - Text is nonsense and has clearly not been checked to make sure that it is comprehensible. SEM – theoretical supporting evidence missing to support the discussionTD – too descriptive.

Tables and charts

FFS – Formatting font size too small/large


BFF – badly formatted figure or table FTNM – Figure/table number missingTM – chart or table title missing , eg should read ‘Figure 1 section level score for PLC 1’ etcPR –Poor resolution, copying and pasting of low resolution graphics instead of redrawing.


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