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This report seeks to examine the aspect of customer relationship management within the banking sector. Over the recent past, the High Street Banks have received high criticisms for the poor customer service ratings. This has resulted in a general negative perception about the banking sector with regard to customer relationship management. However, business analysts postulate that in the contemporary business world where there is increasing choice for about every kind of product or service, acquiring and retaining the best customers within the business is vital to the success of any kind of business. It is therefore important that businesses incorporate the aspect of Customer Relationship Management, in that the organization becomes customer-focused and fulfils the expectations of its customers. This report will examine the customer relationship management of Barclays bank, in the light of the contemporary customer relationship management as documented in the previous studies. The report will also provide carefully argued recommendations with regard to how this bank can improve on its customer relationships.
Barclays Bank Background
Barclays is a global financial services and banking company with its headquarters in London, United Kingdom. Founded back in the seventeenth century, the bank has today grown and has become a member of the global banking alliance with operations widely spread across Europe, the Middle as well as the Far East, North and South America among other regions (Margaret and Leslie, 2001). Barclays bank is alleged to have instituted its initial operations in 1690, when Thomas Gould and John Freame, the two founding partners first started the company in London. They successfully traded for over thirty years, before they were joined by another partner, John Barclay in 1736. It continued to operate and at the end of the nineteenth century, the bank joined with other nineteen privately owned banking operations to form an association known as Barclay and Company Ltd (Margaret and Leslie, 2001). The bank started to exit London and expand through acquisition and opening of new branches. After the First World War, Barclays bank pronounced its union with the Provincial and South Western Bank in London, making it one of the leading banking groups in the United Kingdom. The bank continued to experience gradual growth and consolidation, accompanied by significant innovations, for instance, the famous Barclaycard that was introduced in the 1960s and the automatic teller machine that enabled people too withdraw cash from the wall. At present, Barclays bank is considered as one of the global financial and banking institutions with its operations spread across different countries around the world. As per the 2010 financial services and banking rankings, Barclays company was rated as the 10th largest and the 21st with regard to the composite measure. It has so far managed to spread its operations in more than 50 nations and territories, attracting about 48 million customers. A survey of the company’s total assets conducted in June 2010 illustrated that its total assets were approximately 1.9 trillion, making it the third largest global bank in terms of the total assets. As a universal bank, Barclays is categorized under two business groups, global retail banking and corporate and investment banking and wealth management. The global retail banking group has four business units, the United Kingdom retail banking, Barclays Africa, Western Europe retail banking and the Barclaycard. The corporate and Investment banking and wealth management group has three business units: Barclays wealth, which deals with wealth management; Barclays corporate concerned with commercial banking; and Barclays capital that deals with investment banking. Its execution priorities are income growth, returns, capital and citizenship (Margaret and Leslie, 2001). The bank recognizes the fact that the outlined four priorities are key to the company’s success and achievements.
The report will basically look at the documented literature in relation to the topic of study. Some of the key aspects that will be considered include customer relationship management, promotions and marketing planning. The report will also identify documented case studies in order to provide a deeper understanding of the whole concept of customer relationship management.
Customer Relationship Management
Customer relationship management is one of the widely implemented strategies in the modern business world, as it helps company’s manage their interactions with their clients, sales prospects and customers (Joachim, 2002). It is a concept that is used to refer to the tools and methodologies that enable businesses manage their customers’ relationships in a more structured manner. It incorporates the application of technology to automate, synchronize and organize the activities of the organization, specifically the sales activities, although can also be applied in customer service, marketing and technical support. According to Joachim (2002), customer relationship management aims at identifying, attracting and winning new customers, raising and retaining the already existing customers, luring the former customers back into the customer base, and trimming down the marketing costs and customer service. Some of the benefits organizations can attain by implementing customer relationship management systems include enterprise agility, support in decision making, quality and efficiency, customer attention and a decrease in the general costs (Joachim, 2002). Indeed, business analysts highlight that successful development, execution, utilization and maintenance of customer relationship management system has the capacity to generate a significant benefit to the organization (Rajagopal, 2007). However, there are various challenges that can impede the organization from exploring the system to its complete potential. For instance, when a chosen customer relationship management system contains a bulky, complex group of data hence becomes difficult and cumbersome to understand, particularly for the ill-trainer user. Moreover, a system that is complicated can hinder its effectiveness, making users to decide on which sections of the system to be used, while some may have to be put aside (Pennington, 2007). This can result in inherent problems since certain parts of the system are the only ones implemented while other are ignored hence impeding the full functionality of the system. There has been some security concerns associated with the implementation of some of the customer relationship management systems within the organization. Developers and users remain with a huge challenge of striking a balance between a user friendly and an acceptable and suitable customer relationship system with regard to matters of security features and measures (Pennington, 2007). Most organizations prefer to use a system that is easier to understand while ensuring that customer information as well as other sensitive data within the organization remains secure. Some of the common types or variations of customer relationship management systems includes the sales force automation that is applied to rationalize all stages contained in the sales process. The customer relationship management system for marketing makes it possible for the organization to identify and target its potential customers, hence generating good returns for the sales team. Basically, when it comes to incorporating the aspect of customer relationship management, it is important that the organization identifies and picks on the best systems that it understands well in order to make the most out of it (Kurtz, 2010).
Promotion is a marketing concept that incorporates the aspect of customer relationship management. It is one of the four elements contained within the marketing mix, and described as a communication linkage between the sellers and the buyers, with the aim of persuading and/or informing the potential buyers (Kurtz, 2010). A promotional plan is comprised of five elements, personal selling, direct marketing, advertising, publicity and sales promotion. It can contain a wide range of goals, such as competitive retaliations, sales increases, creation of corporate image, positioning and new product acceptance. Basically, the three main objectives of promotion are to increase demand, differentiate a product and present information to customers and the general public. However, in the light of customer relationship management, promotion can be considered as one of the fundamental undertakings a company can initiate to reach its customers (Rajagopal, 2007). It offers the organization a chance to interact with its customers with the aim of identifying, nurturing, retaining and attracting the company’s customers. It is therefore one of the processes an organization can initiate to reach its customers.
This is an organizational process that generates decisions with regard to how the organization can best compete in the markets it serves (Kurtz, 2010). It determines what the organization should become and how it intends to attain this. Every organization or company has the main goal of becoming the leader in its industry not only in its country but globally. This means therefore that the company initiate processes that will make it attain a competitive advantage over other company’s within its industry. However, business analysts document that to be competitive in the current business world, it is important that the organization or company establishes good relations with its customers (Rajagopal, 2007). This is basically aimed at ensuring it retains its current customers. In addition, the organization has to come up with processes that will identify and target new customers, considering the fact that the contemporary markets offer a wide range of products hence customers have a choice to make. It is necessary that the organization takes a study of the market situation before making a decision. Business research indicates that the best approach is to conduct an annual comprehensive analysis of the prevailing marketing conditions and opportunities before coming up with marketing plans (Rajagopal, 2007). However, the overall decision should focus on the customer situations.
PESTEL Analysis of Barclays bank
Hutt & Hayes (2010) indicates that for any give company, such as Barclays bank, marketing has been traditionally referred as an aspect of advertising and selling. However, in the modern times, marketing is considered as means of satisfying the needs of customers among other important aspects. Formally, it is referred as a managerial and social process where groups and individuals obtain their needs and want through creation as well as exchange of values and products with the other individuals. In this regard, PESTEL (Political, Economic, Social, Technological, Environmental, and Legal) analysis is vital in offering the much-needed assistance for the business owners to make informed decisions, thus ensuring the short and long-term profitability of their firms. PESTEL analysis is a vital aspect considered the environment before venturing in any marketing activity. The evaluation of the environment should be continuous to feed every aspect of planning. The aspect of environment consists of internal environment such as the staffs, microenvironment such as suppliers, agents, competitors among others and macro environment, which are the economic and political forces.
PESTEL Analysis for Barclays Plc
It is worth noting that Barclays bank has identified sustainability as one of the ways of recognizing as well as managing the social, economical and environmental issues in all its branches across the globe. As a result of this, the bank has regularly incorporates the aspect of PESTEL analysis to improve its performances, hence better customer care.
Political factors indicate the ways and extents in which the government has influenced the economy among other notable aspects. Political factors are normally affected by factors like tax policy, labour laws, trade restrictions, and environment laws. It is clear that the sustainability of the agendas of Barclays Plc across the globe has rapidly expanded in the last decade. This reflects the firms raised level of focus on wider nature of carrying out its businesses, as well as involving its stakeholders to participate in the competitive business environment. Since 2005, the company has strategically placed its self to deal with emerging issues like climate change, scarcity of resources, poverty, and demographic shift among other aspects touching on human lives. In the Africa region, the bank working together with the respective governments and non-governmental organisations, has offered the much-needed help to eliminate cases of drought, fight against climate change among other notable forms of CRS (Company Social Responsibilities).
The economical factor refers to the unique areas influencing the company. Some of the areas include interest and inflation rates, exchange rates and economic growth. Ledingham (1998) argues that the approach of sustainability program is important in encouraging an organisation to be transparent and on to issues like the initiative to raised research, development, dialogue with government, and other organisations. Despite the hard economic times in which the Barclays Plc has been operating in since the start of global financial crises in 2007, the firm has broadened their focus on the corporate responsibility. This has helped them to prove them fact that they play important role in establishment of economic advantages in the country’s they operates.
Hutt & Hayes (2010) argues that the social factors refers to the demographic factors that comprise of factors, such as cultural aspects, growth rate, health consciousness, population growth rate, cultural aspects among others. It is notable that the sustainability strategy that has been adopted by Barclays focuses their objectives in improving the value of the firm and stakeholders. Through the firm’s cultural aspects, Barclays plc has been able to attract and retain high quality employees in all its branches, develop innovative solutions and raising performances in all their branches.
Ledingham (1998) indicates that technological factors include areas like automation, incentive, research and development, rate of technological changes among other notable aspects. These factors highly influence on other areas including profitability, outsourcing decisions, quality and operation overheads. The Barclays uses modern forms of technology in all its branches across the globe. This helps the firm to improve on the livelihood of people it serves, such as fighting against poverty through the firm’s financial systems. For instance, by using the modern forms of marketing through social media like Facebook, Twitter, MySpace among others, it ahs been able to receive customers complains and suggestions in time, thus being able to come up with new products that address the current needs of customers.
This refers to the laws that are directly connected to a company and its activities like antitrust law, consumer law, discrimination law, safety law among others. The legal factors have highly affected the expansion of Barclays Plc, especially in countries where higher governmental regulation on players in the financial sectors exits.
Goldstein (2007) indicates that environmental factors are all areas determined or influenced by surrounding environments. This factor includes aspects like climate change, geographical position, weather, insurance among others. To fight against climate change in areas like U.S.A., Asia, Europe and Africa Barclays Plc has adopted various strategies to complement the government’s effort. These include planting trees, funding projects aimed at fighting climate change, automating the firm’s branches, educating its customers on the need to conserve the environment among others.
One of the most important strategy formulations for any given firm is to cope up with the current high level of competition. However, most firms have a pessimistic and a narrow view to the area of competition, hence low performances, both in the short and long run. It is worth noting that competition in all the industries are rooted in their underlying economics and the prevailing competitive forces. Customers, substitute products, and potential entrants are all competitors, which may be less or more active or prominent depending on the type of industry. In the banking sector, the forces are important as it determines the level of competition, profitability, customer satisfaction among other important factors. For Barclays PLC, the firm is constantly expanding its business and services to discover potential and the emerging markets. Through investigation of competition and entry in the given markets, the sustainability of Barclays Plc has been identified. In this regard, the Porters Five Forces can be employed to measure the firm’s ability to perform in foreign country.
For Barclays Plc the barriers to entry are high due to emerging markets like Asia and Africa that are highly regulated by their central banks and government’s. Some of the regulation includes that of money supply and interests on loans, exchange rates among others. Further, Barclays Plc is not famous in some of these regions because people invest in public or governmental sector banks. However, it is worth noting that the Barclays Plc can employ its efficient and quick services, high quality customer care to attract and retain customers in these countries.
Rivalry among Existing Competitors
As a result of fierce competition from emerging markets, there exists high degree of rivalry among the microfinance and public institutions. However, Barclays can acquire major stakes in markets that offers them with easy entry, thus create brand visibility.
Bargaining power of the suppliers
There exists medium power between supplier of banks, majority of who are the individuals from whom the bank raises its resources. For instance, the main source of funds of the Barclays is obtained from depositors or customers, who are the transformed to become the suppliers. To attract large amount of funds private banks offers increased interest rates that are crucial for the enhanced sustainability of their banks. In additional to this, the Barclay Card has been introduced to attract and retain higher number of clients as awe as increase volume of funds.
Bargaining Power of Customers
Quester & Hawkins, (2009) indicates that, there has been an increased power among the customers with regard to utilization of products like loans, cards, among other services. High powers of customers are obtained based on the fact that the number of customers operating in the industry is increasing on daily basis. However, Barclays Plc is in an advantage, due to the fact that it has employed modern forms of banking like e-banking, insurance services among others.
Threats from Substitutes
The number of substitutes to banking services has drastically increased. As a result of this, Barclays is looking forward to compete from unconventional firms that can those rates of return. In some of are to recognized to possesses high propensity toward switching to substitutes in case of the private banking.
Changes in Consumer Behaviours
In the last decade, critical study of consumer behaviours has become a vital aspect to most of the marketers. Consumer behaviour is the selection, purchase and consumption of goods and services to satisfy ones wants. Consumers locate the commodities to be done and they select the commodities to gain high level of utility. By studying the consumer behaviours aspects like consumer retention, consumer rational management, direct marketing, and personalization among other notable factors are clearly understood. To improve on consumer behaviours, it is important for managers to develop strategic plans, which raise their customer base by creating reliable market niches. Due to the recent global economic downturn, which was started by the developed nations like US in 2008, the consumers behaviours has drastically changed. Many of the customers have embarked on cost cutting measures all in an aim of pulling through the economic crisis. This has forced many marketers to re-evaluate their understanding of customer’s behaviours failure to which their businesses will not meet their targets.
As stipulated by Quester & Hawkins, (2009) pricing strategies has been one vital factor that has affected consumer behaviours in the recent past. Food prices have skyrocketed especially after the start of global financial crises. In 2011, the situation has been made worse by the ongoing war in Middle East countries such as Libya, Egypt, and Bahrain among others notable countries. Some of the products and services include reduced interest rates on loans and Barclay Card. This way, Barclays Plc has been able to retain their royal customers thus benefiting from 80/20 rule stating that 20% of company’s revenues originate from 80% of its loyal customers (Ledingham, 1998).
Recommendations on Ways to Improve Barclays Plc CRM
As noted above, the need of high quality customer relations cannot be underrated by any business regardless of the industry in which it operates. Based on this, it is essential for Barclays Plc. to come up with notable approaches to improve on its short and long term performances (Gupta, 2005).
Setting High Standard Customer Experience Strategies
To a achieve this, Barclays should understand the overall mission and vision of the organisation, define customer service directions, values and slogan. Further, the firm can ensure that employees share customers experience strategies through a comprehensive communication programs.
Selecting the Right People
When selecting employees to offer customer service, the selection process should not be more concentrated on the technical knowledge, competences and functional expertise rather it should highly focus on interpersonal skills. To increase its effectiveness in customers care and management Barclays should multiple team members in hiring process; ensure that evaluation is based on objectivity among other important values (Goldstein, 2007).
From the above case study, one can clearly see that Barclays Plc has made recommendable strides towards attaining high quality customer satisfaction. This has been successful because of the effective approaches to CRM (Customer Relationship Management), studying and analysing market forces, high level of investment in research and development among other notable factors affecting the market. Consequently the firm has remained profitable, despite the prevailing hard economic times facing financial sector across the globe (Gupta, 2005).