The key to success in business lies in determining what customers want and cost-effectively delivering products and services that satisfy and delight them. The determination of what customers need or want is the first step in identifying a business opportunity, followed by identifying the potential market for a product or service. Basically, the data about the product and the service is collected from the customers and from the marketplace. Collectively, this information is used to define an opportunity for offering products and services and then to develop a strategy and plan to reach the customers. Normally, success depends on listening to the voices of the customers, being responsive to their needs, and cost-effectively delivering the ordered products and services on schedule at a competitive price (Jackson and Frigon, p. 20). The banking and financial services sector is one of the most dynamic and competitive business sectors in the world, and is also a highly regulated industry. Indeed, these are just some of the many factors that present a real challenge to those who sell and market financial products and services.
Traditional marketing has become a semi-science of trying to translate demographics and psychographics into a basic understanding of a target audience. Traditional marketers measure dimensions such as awareness and relevance and assess how they influence customers’ choices of a product or service. But awareness and relevance are the only two of the many factors that might motivate a particular customer to purchase a product or service, or to buy it repeatedly.
Customer needs basically refer to why the customer buys, but not what the customer buys. It is very important for a company to understand why a customer buys what he or she buys as this will help it to understand the needs of its customers and focus on satisfying them. The motivation to purchase may be different even for customers who are buying the same product, and due to this effect, it is important to use the customers’ needs to highlight the distinction between purchase motivation and purchase behaviour to drive customized treatment. Given that customers’ needs are the motivating factors, a framework needs to be adopted which will be applied to understand the needs and act as a continuum. In the beginning of the continuum, customer needs are not understood and a company ignores differences among its customers. On the other hand, the true customer-focused treatment continuum, the needs of each customer are known. Customer needs occurs between these two extremes.
The organization should be aware that customers’ needs can be adequately met through segmentation such that products and services are delivered depending on the various classes of the customers. Therefore, it is vital to combine the motivating factors that different customers might have in common; this commonality helps the company to put customers into groups or portfolios that can be managed by the company. The portfolios become the foundation for a company’s decisions to customize treatment; indeed, companies can only cost-effectively design different strategies and treatments for different customers by categorizing and grouping customer into portfolios of customers with roughly similar needs (Peppers and Rogers 149).
Keeping and growing customers base
To retain its most valuable customers, an organization must know those customers’ needs and act on them. Naturally, banks spend a lot of money to replace one customer that defects, for instance, if a bank has a clientele of 50,000 customers and loses 5% of those customers every year, then it may need to spend $500,000 or more every year to maintain its customers. The only way that banks can approach this problem is by building customer needs into their retention strategies. Banks are able to track the typical behaviour patterns of individual customers, thus they can quickly understand the normal level of interactions a customer requires from a bank. If a customer’s behaviour deviates from this norm, it is often a signal that either the customer is dissatisfied or his/ her needs have changed. Moreover, banks can build business rules into their customer interaction strategies that mandate contacting the customer at the first sign of trouble. Having this information, a bank can intervene early whenever a possibility of customer defection exists, and increase the probability of retention with relevant incentives and offerings (Peppers and Rogers p. 152).
The customer-focused enterprise also attempts to maximize a customers’ profitability by increasing its share of customers, thus, by recognizing a customer’s needs, the organization is in the unique position to create customized products and services to meet those needs. The result is increased loyalty and sales from the customer. Enterprises can use needs-based differentiation as part of an overall customer-focused strategy to build customer loyalty and as a result, customer profitability. Need-based differentiation is a project that requires a lot of time. As the relationship between customer and enterprise grows, the ability of an enterprise to understand and act on each customer’s needs improves. The key is to have the right kind of relationship, one that is founded on a dialogue between the enterprise and the customer, in which all the customer information is shared internally and understood so that the enterprise can customize its offerings to the customer’s individual needs. The enterprises that begin to use needs-based differentiation can have a distinct advantage over their competitors: building, understanding and using individual customer knowledge to increase customer loyalty and profitability, one customer at a time.
Business-level strategies and customers
Strategic competitiveness results only when the firm is able to satisfy a group of customers by using its competitive advantages as the basis for competing in individual markets. The main reason as to why corporations must satisfy their customers with their business level strategy is because returns earned from relationships with customers are the lifeblood of all organizations. For companies to be successful now and in future, they must try to find new ways to satisfy current customers and meet the needs of new customers (Hitt, Ireland and Hoskisson 99).
Customer Service Standards
Products and services are normally described in terms of attributes of performance. Customers, on the other hand assess the quality of a product or service in terms of their reaction to their experience with that product or service. The whole customer experience, which includes presales, sales, delivery operation, and post sales support, must be evaluated in defining a product or service. Customer’s voice helps an organization to focus on learning about the attributes of the entire customer experience. This in turn will assist the organization to determine what to do to achieve customer satisfaction. Customer satisfaction is attained through a combination of performance, schedule, and price. There are four attributes that contribute to the customer satisfaction: expectors, spoken, unspoken, exciters. Expectors include those features the customer takes for granted. If these features are omitted, extreme customer dissatisfaction will result, even if the customer did not ask about them. These attributes may not satisfy the customer if they are present, but their omission produces significant dissatisfaction where the customers will not buy the company’s product or service if the expectors are omitted or poorly done. The spoken attribute entails the characteristics the customer specifies. They appear in written descriptions expressing performance characteristics demanded by the customers. In some companies they are requirements specified in a Request for Proposal, a contract, a product or service specification sheet or even a purchase order. They are the requirements that the customer consciously wants and believes it necessary to tell you what they are. The unspoken attributes are the features of products and services that a customer forgot about, did not know about or did not want to talk about. They are high risk necessities because even if customer does not discuss them, if you fail to provide them you will loose sales. The last features are called exciters and they excite the customers. The customers rarely talk or think about them and do not even consider their existence. As a result, these features will be satisfiers and not dissatisfiers because customers do not expect them. However, these feature gradually become expectors. For instance, a radio in an automobile was an option but now is an expectation (Jackson and Frigon, p. 22).
Customer service representative
Knowing why customers buy and what influences them when they make their purchase decisions is crucial to business success. In addition to understanding customer needs and providing products and services that meet those needs, those who market and sell on behalf of financial services organizations must also be familiar with the various stages of the customer buying process. A knowledge and understanding of the customer buying process allows financial services organizations to maximize the eﬀect of their sales and marketing eﬀorts at each stage, thereby increasing the chances of a prospect being converted into a customer. Undertaking the relevant actions at the right time during the various stages of the customer buying process also helps to establish the buyer–seller relationship early on in the sales process. It can also reduce the chances that the prospect will approach or migrate to the competition.
A company should engage customer service representatives whose responsibility would be to make sure that customers are satisfied at all times through effective service level agreement. As they gather vital information from the market, “customer service representatives help people decide what types of products and services would best suit their needs” (U. S. Department of Labor, p. 563).
It is very important to have the right relationship with the customers to build loyalty with them. Having the right relationship depends on pre-selling your team. The businessmen may have the idea as to what the customers need and value. However, customers will be the ones doing the actual buying, and it is the customers’ perceptions of their needs that matter. Consequently, the enterprises should develop good relationships with their customers to build loyalty (Bund, p. 67).
Marketing and its importance
Marketing is important because it brings together a range of elements that, when viewed collectively, can turn prospects into customers and subsequently customers into advocates and even partners. It can also help to bring financial services organizations closer to their other important stakeholders in a mutually beneficial way. Essentially, marketing focuses the attention of the seller on the needs of the market and provides those who promote, sell, distribute and deliver financial products and services with both a foundation and a framework that enables them to communicate efficiently and cost effectively with the target market by using relevant marketing communication. It also enables them to develop and position product and service offerings so that the product and any associated services are exactly what the target market requires, needs and anticipates. Customers do not automatically become satisfied. Satisfied customers are the result of the positive eﬀort, activities and actions of a firm’s employees. The eﬃciency and eﬀectiveness of a financial services organization’s systems especially contact and communications systems, can also contribute to the level of satisfaction derived by customers.
Customer satisfaction results from selecting, recruiting, training, informing and motivating the right people, as they play a major role in service quality and delivery. Ensuring that all relevant processes and systems are well designed and eﬀective also has an eﬀect on customer satisfaction because even the best products and services can fail if they are not supported by systems that run smoothly.
Internal marketing is an important component in customer satisfaction because its aim is to ensure that everyone in the organization embraces the concepts and principles of marketing. Internal marketing starts with the recruitment and selection of able employees with the appropriate personality and skills and continues with the training and motivation of staﬀ (Sims, p.101).
Marketing orientation is about focusing on the needs and wants of customers and aiming to provide products and services that meet the needs of the target market at a profit. Marketing-led organizations make it easier for the customer to buy because their products or services have been developed to meet the needs of the customer, rather than the needs of the organization itself. A bank or any other financial services provider can demonstrate a degree of customer focus by undertaking activities such as marketing research to identify the needs, preferences and habits of its target market (Sims, p. 101).
If sufficient attention is not given to customer care and maintaining service quality, financial services organizations may face problems and complaints from dissatisfied customers and employees. While dissatisfied customers can be costly, satisfied customers can be profitable (because they may transact repeat business and also bring in new customers). Profitability and the need to focus on profitable segments are key issues in marketing because ultimately marketing activities must be cost-eﬀective and they need to generate an acceptable return on investment.
Marketing can help a financial services organization to connect with customers and the creation of the relationship manager role is an acknowledgement of the importance of developing relationships in banking and financial services. The importance of profitable customers must never be forgotten. A financial services organization must therefore assess and appreciate the lifetime value of its customers. This is because a ‘typical’ customer is a major asset to the organization and can generate a considerable amount of revenue and also profit for the business over time.
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- Hitt, Michael A., Ireland, Duane and Hoskisson, Robert E. Strategic management: competitiveness and globalization: concepts & cases. London, Cengage Learning, 2008. Web.
- Jackson, Harry K. and Frigon, Normand L. Fulfilling customer needs: a practical guide to capacity management. NJ, John Wiley and Sons, 1998. Web.
- Peppers, Don and Rogers, Martha. Managing customer relationships: a strategic framework. NJ, John Wiley and Sons, 2004. Web.
- Sims, Ronald R. Accountability and radical change in public organizations. CT, Greenwood Publishing Group. 1998. Web.
- U. S. Department of Labor. Occupational Outlook Handbook, 2009 NY, Skyhorse Publishing Inc. 2008. Web.