CRM and the Customer LifeCycle

The addition of the Internet as a commerce and communications channel has

forced many companies into direct contact with their customers for the first
time, and kicked off the accumulation of transactional information companies
have never had access to before.  

This situation spawned a tremendous amount of demand in the marketplace

for “solutions”, including analytical CRM, the newer CLM (Customer
LifeCycle Management), CRP (Customer Relationship Planning), and all the
related approaches for implementing data-based marketing programs such as
1-to-1 Marketing, Relationship Marketing, Customer Retention, and Customer
Loyalty Marketing.

What's Really Going On

This is a very confusing situation for most people, because they generally lack
experience using customer data for anything but personalizing mailings, and
have been led down the wrong path before.  For example, the rush to capture
demographic data completely ignored what experienced database marketing
people know - behavioral data is much more powerful as a marketing tool
than demographics ever will be.  If you want to know the answer to
behavioral questions like "will they buy or visit again?," demographic
information won't help you much.

This fact may make things clearer for you: if you strip away all the black
boxes, marketing dreams, and data analysis acronyms, most of the
opportunity to create high ROI customer marketing programs comes from one
basic concept -  tracking, understanding, and  profiting from the customer
LifeCycle.  

If you can understand this root LifeCycle idea, you can mold it to your needs
and available resources and leave the marketplace noise (and costs) behind.  If
your company has not been actively involved in profiling customer behavior
before, taking a gradual approach to learning the basics of how your
customers behave with some simple tools will end up saving a tremendous
amount of time and money down the line for all concerned.  

The better you understand customer behaviorbefore you jump into full-
blown CRM, the more likely it is your final CRM solution will have the right
functionality - build or buy.

And that is what this site and the book are all about - showing you how to get
the biggest marketing benefit out of your customer data for the least
cost.  Simple CRM.

Customer LifeCycles

What is a customer LifeCycle?  It is simply the behavior of a customer with

your company over time.  Customers begin a relationship with you, and over
time, either decide to continue this relationship, or end it.  At any point in this
LifeCycle, the customer is either becoming more or less likely to continue
doing business with you, and demonstrates this likelihood through their
interactions with you.  

If you collect data from these interactions (purchases for commerce, page
views or log-ins for publishing, contacts for service) you can use this data to
predict where the customer is in their LifeCycle - is the customer becoming
more or less likely to do business with you?  If you can predict where
customers are in the LifeCycle, you can maximize your marketing ROI
by targeting customers most likely to buy, trying to “save” customers who
have declining interest, and not wasting money on customers unlikely to
continue doing business with you.

Remote selling companies like TV Shopping channels and catalogs have been
using a LifeCycle approach for years, and have developed methods for using
LifeCycle information to increase profitability by driving customer sales
higher while reducing marketing costs.  It’s a proven method, and it works
with interactive customers very well.  I should know; as VP of Marketing and
Programming for Home Shopping Network, it was myresponsibility to
maximize the value of TV, Internet, and Catalog customers while minimizing
marketing costs.  If you understand and can predict the LifeCycle of a
customer, you can answer a lot of other important questions, including:

 How can we compare the long-term effects on customer value of our

different advertising approaches and product selections / pricing?
 When will a customer stop buying or visiting and how can we most cost
effectively delay this event?
 How can we measure the impact on customer value of operationally
oriented changes such as the implementation of CRM or changes in web
site design?
 What is the Lifetime Value of a customer compared with other
customers and how do we increase it cost effectively?

The Customer Life Cycle (CLC) has obvious similarities with the Product Life
Cycle (PLC). However, CLC focuses upon the creation of and delivery of
lifetime value to the customer i.e. looks at the products or services that
customers NEED throughout their lives. It is marketing orientated rather than
product orientated, and embodies the marketing concept. Essentially, CLC is a
summary of the key stages in a customer's relationship with an organisation.
The problem here is that every organisation's product offering is different,
which makes it impossible to draw out a single Life Cycle that is the same for
every organisation.
Let's consider an example from the Banking sector. HSBC has a number of
products that it aims at its customers throughout their lifetime relationship
with the company. Here we apply a CLC. You can start young when you want
to save money. 11-15 year olds are targeted with the Livecash Account, and
16-17 year olds with the Right Track Account. Then when (or if) you begin
College or University there are Student Loans, and when you qualify there are
Recent Graduate Accounts.

When you begin work there are many types of current and savings account,
and you may wish to buy property, and so take out a mortgage. You could
take out a car loan, to buy a vehicle to get you to work. It would also be
advisable to take out a pension. As you progress through your career you
begin your own family, and save for your own children's education. You
embark upon a number of savings plans and schemes, and ultimately HSBC
offer you pension planning (you may want to insure yourself for funeral
expenses - although HSBC may not offer this!).

This is how an organization such as HSBC, which is marketing orientated, can

recruit and retain customers, and then extend additional products and
services to them - throughout the individual's life. This is an example of a
Customer Life Cycle (CLC).

Another important point is that a lifetime CLC is made up many shorter

CLC's. So, for example, Volkswagen Cars retains a customer for many years
and one can predict the products that meet a customers needs throughout his
or her family lifetime. However the purchase of each car, will in itself be a
CLC with many Customer Touch Points. The consumer may need a bigger
vehicle as his or her family expands - so they visit VW's website and register.

The customer reviews models and books a test-drive with her or his local
dealer. He or she decides to buy the car and arranges finance. The car is then
 delivered from the factory, and returns every year for its annual service. Then
after three years, the customer decides to trade in his or her car, and the cycle
begins again. The longer-term life cycle is simply the shorter-term life cycles
viewed consecutively.

CRM is a term that is often referred to in marketing. However, there is no

complete agreement upon a single definition. This is because CRM can be
considered from a number of perspectives. In summary, the three
perspectives are:

 Information Technology (IT) perspective

 The Customer Life Cycle (CLC) perspective
 Business Strategy perspective

Money Life cycle:

Life Cycle of Money, a cycle that has played out time and time again
throughout most of the history of man walking the earth.

Stage 1) A Free Market naturally develops as men and women apply their
labour to the natural resources around them.

Stage 2) Next, money that represents fairly the stored value of man’s past
labour naturally develops in the free market, what we like to call ‘Free Market
Money’.

Stage 3) Soon governments and rulers emerge and eventually become deeply
involved in the free market, regulating trade and imposing taxes.

Stage 4) In our last Daily Dig on this theme, we observed that the cycle moves
quickly to the next stage where government monopolizes money supply.  In
history, they have achieved this by taking control of the sources of issuance,
the mints and private treasuries of the goldsmiths.
They begin to dictate what is now to be acceptable as money in the market
place, its weight and measures, and appearance and look (emperors and kings
have always enjoyed seeing their faces appear on the money of the realm)
Product life cycle management (or PLCM) is the succession of strategies used
by business management as a product goes through its life cycle. The
conditions in which a product is sold (advertising, saturation) changes over
time and must be managed as it moves through its succession of stages.
Product life cycle (PLC)

Like human beings, products also have their own life-cycle. From birth to
death human beings pass through various stages e.g. birth, growth, maturity,
decline and death. A similar life-cycle is seen in the case of products. The
product life cycle goes through multiple phases, involves many professional
disciplines, and requires many skills, tools and processes. Product life cycle
(PLC) has to do with the life of a product in the market with respect to
business/commercial costs and sales measures. To say that a product has a
life cycle is to assert four things:

 that products have a limited life,

 product sales pass through distinct stages, each posing different
challenges, opportunities, and problems to the seller,
 profits rise and fall at different stages of product life cycle, and
 products require different marketing, financial, manufacturing,
purchasing, and human resource strategies in each life cycle stage.

Brand loyalty
Brand loyalty, in marketing, consists of a consumer's commitment to
repurchase or otherwise continue using the brand and can be demonstrated
by repeated buying of a product or service or other positive behaviors such as
word of mouth advocacy.[1]
Brand loyalty is more than simple repurchasing, however. Customers may
repurchase a brand due to situational constraints (such as vendor lock-in), a
lack of viable alternatives, or out of convenience.[2] Such loyalty is referred to
as "spurious loyalty". True brand loyalty exists when customers have a high
relative attitude toward the brand which is then exhibited through repurchase
behavior.[1] This type of loyalty can be a great asset to the firm: customers are
willing to pay higher prices, they may cost less to serve, and can bring new
customers to the firm.[3][4] For example, if Joe has brand loyalty to Company A
he will purchase Company A's products even if Company B's are cheaper
and/or of a higher quality.
Brand loyalty  is the ultimate goal a company sets for a branded product.
Brand loyalty is a consumer’s preference to buy a particular brand in
a product category. It occurs because consumers perceive that the brand offers
the right product features, images, or level of quality at the right price. This
perception becomes the foundation for a new buying habit. Basically,
consumers initially will make a trial purchase of the brand and, after
satisfaction, tend to form habits and continue purchasing the same brand
because the product is safe and familiar.
Brand loyalty is the strongest measure of a brand’s value, it can be
demonstrated not only by repeated buying of a product or servic but also by a
good word of mouth and advocation of a product or service. Even with the
availability of other alternatives.

There are three main reasons why brand loyalty is important:

Higher Sales Volume – The average US company loses half of its customers
every five years, equating to a 13% annual loss of customers. This statistic
illustrates the challenges companies face when trying to grow in competitive
environments. Achieving even 1% annual growth requires increasing sales to
customers, both existing and new, by 14%. Reducing customer loss can
dramatically improve business growth and brand loyalty, which leads to
consistent and even greater sales since the same brand is purchased
repeatedly.
Premium Pricing Ability – Studies show that as brand loyalty increases,
consumers are less sensitive to price changes. Generally, they are willing to
pay more for their preferred brand because they perceive some unique value
in the brand that other alternatives do not provide. Additionally, brand
loyalists buy less frequently on cents-off deals – these promotions only
subsidize planned purchases.
Retain Rather than Seek – Brand loyalists are willing to search for their
favorite brand and are less sensitive to competitive promotions. The result is
lower costs for advertising, marketing and distribution. Specifically, it costs
four to six times as much to attract a new customer as it does to retain an old
one.
Unfortunately, the most commonly used approaches tend to equate loyalty
with a frequency of repeat purchases. This type of quantitative tactic does not
take into account customer motivations, which should not be overlooked.
Without knowing why a customer makes multiple purchases, management is
missing the critical key behind the actions and cannot adapt the product or
marketing to respond to customer preferences. An opportunity to maximize
sales is simply lost. The challenge becomes:

 How to focus a marketing campaign on existing customers who are

most likely to generate repeat business.
 How to anticipate what goods and services these customers will want.
 How to communicate with these premium customers cost-effectively.
The first step in maximizing sales and profits from your existing customer
base is to identify which are your core brand-loyal customers and which are the
price-sensitive, bargain-hunting, convenience customers. The distinction is
important because different customer/loyalty types respond better to
promotions targeted to their respective purchase motivations: e.g., coupons
and discounts are far more effective in stimulating sales to
the communication customers than the brand loyals.
In general, it is more cost-effective to focus major marketing efforts on the core
brand-loyal customers for whom the products is filling a need or preference,
because this group has the highest value and will be a more profitable source
of repeat business. The bargain-hunters, in contrast, are more fickle and less
likely to be profitable since their major draw is based on low price or
convenience.

After identifying your brand loyals, the next step is to develop a long-term,
ongoing relationship with them. Profits will naturally follow.

It is easier to reinforce behaviors than to change them and the sale is just the
beginning of an opportunity to turn the purchaser into a loyalist.

 Develop an unbeatable product – if you want to keep customers, make

sure they can get what they want from your product.
 Stand behind your product – if customers don’t trust the product, they
won’t purchase it again.
 Know your trophy customers and treat them best of all – remember
the rule that 80% of sales will come from the top 20% of customers.
 Become a customer service champion – seek to serve the customer and
they will repeat-purchase…again and again!

Loyalty

A second dimension, however, is whether the customer is committed to the

brand. Philip Kotler, again, defines four patterns of behaviour:

1. Hard-core Loyals - who buy the brand all the time.

2. Split Loyals - loyal to two or three brands.
3. Shifting Loyals - moving from one brand to another.
4. Switchers - with no loyalty (possibly 'deal-prone', constantly looking
for bargains or 'vanity prone', looking for something different).
[edit]Factors influencing brand loyalty

It has been suggested that loyalty includes some degree of pre-dispositional

commitment toward a brand. Brand loyalty is viewed as multidimensional
construct. It is determined by several distinct psychological processes and it
entails multivariate measurements. Customers' perceived value, brand trust,
customers' satisfaction, repeat purchase behaviour, and commitment are
found to be the key influencing factors of brand loyalty. Commitment and
repeated purchase behaviour are considered as necessary conditions for brand
loyalty followed by perceived value, satisfaction, and brand trust. [5]Fred
Reichheld,[6] one of the most influential writers on brand loyalty, claimed that
enhancing customer loyalty could have dramatic effects on profitability.
Among the benefits from brand loyalty — specifically, longer tenure or
staying as a customer for longer — was said to be lower sensitivity to price.
This claim had not been empirically tested until recently. Recent
research[7] found evidence that longer-term customers were indeed less
sensitive to price increases.
[edit]Industrial markets

In industrial markets, organizations regard the 'heavy users' as 'major

accounts' to be handled by senior sales personnel and even managers;
whereas the 'light users' may be handled by the general salesforce or by a
dealer.
Loyalty programs are structured marketing efforts that reward, and therefore
encourage, loyal buying behavior — behavior which is potentially of benefit
to the firm.[1]
In marketing generally and in retailing more specifically, a loyalty card,
rewards card, points card, advantage card, or club card is a plastic or paper
card, visually similar to a credit card or debit card, that identifies the card
holder as a member in a loyalty program. Loyalty cards are a system of
the loyalty business model. In the United Kingdom it is typically called a
loyalty card, in Canada a rewards card or a points card, and in the United
States either a discount card, a club card or a rewards card. Cards typically
have a barcode or magstripe that can be easily scanned, and some are
even chip cards. Smallkeyring cards (also known as keytags) which serve
as key fobs are often used for convenience in carrying and ease of access.
 retail establishment or a retail group may issue a loyalty card to
a consumer who can then use it as a form of identification when dealing with
 that retailer. By presenting the card, the purchaser is typically entitled to
either a discount on the current purchase, or an allotment of points that can be
used for future purchases. Hence, the card is the visible means of
implementing a type of what economists call a two-part tariff.
The card issuer requests or requires customers seeking the issuance of a
loyalty card to provide a usually minimal amount of identifying
or demographic data, such as name and address. Application forms usually
entail agreements by the store concerning customer privacy, typically non-
disclosure (by the store) of non-aggregate data about customers. The store —
one might expect — uses aggregate data internally (and sometimes externally)
as part of its marketing research. These cards can be used to determine, for
example, a given customer's favorite brand of beer, or whether he or she is a
vegetarian.
Where a customer has provided sufficient identifying information, the loyalty
card may also be used to access such information to expedite verification
during receipt of cheques or dispensing of medical prescription preparations,
or for other membership privileges (e.g., access to a club lounge in airports,
using afrequent flyer card).
A frequent flyer program (FFP) is a loyalty program offered by many airlines.
Typically, airline customers enrolled in the program accumulate frequent flyer
miles (kilometers, points, segments) corresponding to the distance flown on
that airline or its partners. There are other ways to accumulate miles. In recent
years, more miles were awarded for using co-branded credit and debit cards
than for air travel. Acquired miles can be redeemed for free air travel; for
other goods or services; or for increased benefits, such as travel class
upgrades, airport lounge access or priority bookings.

Successful Loyalty Program Design

Having helped companies design and implement loyalty programs in the

communications industry, Accenture and Emagine International have defined
some crucial cornerstones of successful program design. 

 Design the loyalty program as a customer-insight engine. Companies

planning loyalty programs need to identify and then consequently leverage
industry-specific “value levers” in order to achieve maximum program
attractiveness combined with cost control and a solid business case. For the
airline industry, two of these value levers are the significant spread
between the relatively low internal cost of flights and the perceived high
 value proposition of flight rewards.

In the communication industry it is harder to identify such levers. Here a

loyalty program can only be financially attractive in the long run, if the
program is used as a platform to systematically build and exploit rich
customer insight. Such a customer-insight engine at the core of a successful
loyalty program enables customer identification, customer retention and
customer development by the wayof targeted behavior-control
mechanisms.

For example, mobile operators face the challenge of shifting their revenue
streams from simple voice-based products to more complex data products.
Limited customer insight may be sufficient to develop competitive voice-
based offerings. Data products, however, require substantial
personalization and thus much richer—or more qualified—customer
insight.

 Develop an attractive value proposition.There are three basic rules to

remember if you are to achieve the most effective value proposition for
your loyalty program. 

1. Rewards must be relevant. Start by researching your

customers. Customers must believe that any reward or incentive
provided as part of a loyalty program is relevant

 To the core service of communications offered by the

operator.

 To the brand values of the operator.

 To the customer and his or her relationship with the

operator.

2. Rewards must be realistic and attainable. Any incentive

offered within the bounds of a customer loyalty program must be
realistically attainable within a reasonable time period. By design, a
loyalty program is a balancing act between offering some low-cost,
easily attained rewards that can be redeemed early in the program
with more highly valued (and more costly) rewards that can be
redeemed only much later in the program.

In a mobile market with handset subsidies, for example, a good

benchmark for the “maximum attainable reward” is the value of
the acquisition subsidy. Accenture’s experience shows that good
 customers in the program should be able to achieve this reward 6
to 12 months before the end of their contracts.

3. Rewards must balance emotional and economic elements.

Loyalty programs must reach a balance between the emotive
elements of recognition and status, and the rational or economic
elements of the reward proposition. It should not be surprising that
research indicates that customer loyalty in telecommunications
skews toward the rational, economic benefits of loyalty rather than
toward any sense of emotional loyalty. 

 Involve customers early and monitor the program’s attractiveness

and economic viability. Program features must be tested through market
research and the early involvement of targeted consumers, whose feedback
can help shape program design. Continuous feasibility analysis is essential. 

In addition to the ultimate test of return on investment through additional

revenues, key performance indicators for program success must include
expansion of the partner portfolio, increased customer insight, penetration
rate, churn reduction and new customer acquisition.

 Plan an exit in advance. An exit strategy must be worked out in

advance as shifts in the market or mergers and acquisitions can necessitate
discontinuing a program. Unless companies plan an exit in advance, a
merciless press and long customer memories will make management wish
it had never started the loyalty program in the first place. 

There are four key steps to preparing for a graceful exit:

1. Set limits on program life span, life span of points, and

activity and reactivation thresholds. 

2. Announce intentions with considerable lead time, allowing

time for earning and burning.

3. Communicate clearly. 

4. Display targeted generosity by recognizing best customers

—for example, by rounding up points to the next award level. 

A successful loyalty program aimed at generating customer insight will

ultimately become the engine driving an enterprise-wide customer
relationship management strategy. Companies can then exploit the improved
customer knowledge to develop new revenue-generating products and
services.
Customer status

Many frequent flyer programs identify travelers who fly more than a few
times per year by awarding them different status levels, which in turn give a
number of benefits. Status levels vary from scheme to scheme, but benefits can
include:

 Access to business and first class lounges with an economy ticket

 Access to other airlines' lounges
 Increased mileage accumulation (such as doubling or tripling)
 Reserving an unoccupied adjacent seat
 The ability to reserve specific seats, such as exit row seats with more leg
room
 Free or discounted upgrades to a higher travel class
 Priority in waitlisting or flying standby
 Preference in not being bumped if a flight is oversold
 Priority of luggage (to be prioritized on transfer and to be displayed on
the belt first)
 Waived or reduced fees (e.g. baggage fees, service charges)
 Ability to grant status to another person
 Eliminating of program's miles expiration rules

Customer relationship management (CRM)

CRM is a widely-implemented strategy for managing a company’s
interactions with customers, clients and sales prospects. It involves using
technology to organize, automate, and synchronize business processes—
principally sales activities, but also those for marketing, customer service,
and technical support. The overall goals are to find, attract, and win new
clients, nurture and retain those the company already has, entice former
clients back into the fold, and reduce the costs of marketing and client service.
[1]
 Customer relationship management describes a company-wide business
strategy including customer-interface departments as well as other
departments.
Phases

The three phases in which CRM support the relationship between a business
and its customers are to:

 Acquire: CRM can help a business acquire new customers through

contact management, selling, and fulfillment.[3]
 Enhance: web-enabled CRM combined with customer service tools
offers customers service from a team of sales and service specialists, which
offers customers the convenience of one-stop shopping.[3]
 Retain: CRM software and databases enable a business to identify and
reward its loyal customers and further develop its targeted marketing
and relationship marketing initiatives.
Marketing
CRM systems for marketing help the enterprise identify and target potential
clients and generate leads for the sales team. A key marketing capability is
tracking and measuring multichannel campaigns, including email, search,
social media, telephone and direct mail. Metrics monitored include clicks,
responses, leads, deals, and revenue. This has been superseded by marketing
automation and Prospect Relationship Management (PRM) solutions which
track customer behaviour and nurture them from first contact to sale, often
cutting out the active sales process altogether.
[edit]Customer service and support
Recognizing that service is an important factor in attracting and retaining
customers, organizations are increasingly turning to technology to help them
improve their clients’ experience while aiming to increase efficiency and
minimize costs.[6] Even so, a 2009 study revealed that only 39% of corporate
executives believe their employees have the right tools and authority to solve
client problems.“.[7]The core for these applications has been and still is
comprehensive call center solutions, including such features as intelligent call
routing, computer telephone integration (CTI), and escalation capabilities.

Let's take a look at the advantages that a CRM or Customer Relationship

Management system can bring.

1. Shared or distributed data

As companies realize that customer relationships are happening on
many levels (not just through customer service or a web presence), they
 start to understand the need for sharing all available data throughout
the organization. A CRM system is an enabler for
making informeddecisions and follow-up, on all the different levels.
2. Cost reduction
A strong point in Customer Relationship Management is that it is
making the customer a partner in your business, not just a subject. As
customers are doing their own order entry, and are empowered to find
the info they need to come to a buy decision, less order entry and
customer support staff is needed.
3. Better Customer Service
All data concerning interactions with customers is centralized. The
customer service department can greatly benefit from this, because they
have all the information they need at their fingertips. No need to guess,
no need to ask the customer for the n-th time. And through the use of
push-technology, customer service reps can lead the customer towards
the information they need. And, most of the time, the customer can do
this on their own, as the CRM system (remember, the 3 P's) is more and
more able to anticipate the need of the customer. The customer
experience is greatly enhanced.
4. Increased Customer Satisfaction
The customer feels that he is more "part of the team" instead of just a
subject for sales and marketing (the proverbial number), customer
service is better, his needs are anticipated. There is no doubt that
customer satisfaction will go up. If the products sold exceed the
customers expectation, of course, no CRM system can help you with
shoddy products. In my opinion, the term statisfaction is a
contaminated. Many companies think that if customers
are satisfied that this is a good predictor for repeat business. However,
this is not the case. Onlydelighted customers have a great level of
loyalty.
5. Better Customer Retention
If a CRM system can help to enchant customers, this will increase
customer loyalty, and they will keep coming back to buy again and
again, hence customer retention.
6. Loyal customers
Need I say more? Q.E.D.
7. More repeat business
The repeat business is coming from the delighted customers, who are
turned from doubting clients into loyal advocates.
8. More new business
If you are delivering the ultimate customer experience, this will seed the
word-of-mouth buzz, which will spawn more new business.
9. More Profit!
More business at lower cost equals more profit.
 

CRM's benefits to the Financial Services Industry in a nutshell are:

 Identification of potential customers

 Provision of data regarding history and preferences of investors
 Increase of customer knowledge of employees
 Provision of an excellent view of customer relationships
 Encouraging customer relationships
 Increasing and improving financial productivity
 Storage and provision of financial data of customers
 Easy assess to collated financial data
 Managing financial deals
 Evaluation of a potential investment
 Aiding client acquisition
 Investment selling
 Tracking and monitoring financial deals
 Aiding the sales team in the provision of customers needs
 Encouraging and assisting the increase of cross selling and upselling
 Enabling the building of trust for brokers, agents and financial planners
etc

Guidelines for Financial Firms opting for CRM:

 It is imperative to pay additional attention to what other means the

organization can adopt in order to maintain and build customer
relationships. Every possible means by which this can be achieved
should be scrutinized and indulged in.
 Financial institutions implementing CRM need to realize the
importance of online banking and indulge in it. Since almost 55 million
is being spent on it firms opting for CRM need to focus more on online
banking and understand that it benefits the customer enormously ,
indirectly giving a hand to customer management.
 It is highly important for financial institutions to analyze and
understand the needs and preferences of their customers. The data that
 CRM provides should be scrutinized and studied sufficiently so as to
really know the customer.
 Segmentation should be undertaken with sufficient focus being made
on each segment and the right communication within the segment .The
right marketing efforts should be made as well so that the adequate
balance between customer focus and profitability is achieved.
 Firms need to focus their marketing efforts far more on the customer
than on the product itself.
 It is imperative that sufficient and frequent customer retention
programs are initiated.
 Technology should always be incorporated in all business efforts to
ensure the right implementation of CRM.
 Focusing more on the hottest trend - relationship banking will go a long
way in the successful implementation of CRM.
 Sales and service should be carried out only after sufficient customer
knowledge is obtained and scrutinized.
 Holding onto traditional practices is something most banks do. This
should be avoided as much as possible.

Pitfalls of CRM for the Financial Sector

 The complexity and magnanimity of this particular industry makes it

harder to adopt a holistic and integrated customer approach.
 Financial firms tend to focus more on the product than on the customer.
In this respect they are almost oblivious to them.
 Since most financial organizations are considerably big in size, the cost
involved is considerably higher.
 There are various challenges facing the industry and these all need to be
overcome in order to actually succeed at the implementation of CRM.

The Bottom Line?

Is CRM for financial services actually benefiting the financial services sector?
The answer is yes. Obtaining, maintaining and basically utilizing a customer
database in an effort to maximize or improve customer relationships will go a
long way in increasing overall productivity. A failure to focus on these
relationships can prove detrimental while knowing and indulging your
customer preferences can go a long way in securing and raising profitability.
Sustainable banking

This section focuses on the role of commercial and investment banks in

sustainable development. It examines recent trends in banking and
sustainable development, innovative banking practices, and events that have
shaped the role of the banking sector in sustainable development.

The integration of sustainability into the banking sector has taken two key
directions:

 The pursuit of environmental and social responsibility in a bank's

operations through environmental initiatives (such as recycling
programs or improvements in energy efficiency) and socially
responsible initiatives (such as support for cultural events, improved
human resource practices and charitable donations);
 The integration of sustainability into a bank's core businesses through
the integration of environmental and social considerations into product
design, mission policy and strategies. Examples include the integration
of environmental criteria into lending and investment strategy, and the
development of new products that provide environmental businesses
with easier access to capital.

The second of these categories has the potential to influence business on a

larger scale. By integrating sustainability into a bank's business strategy and
decision-making processes, institutions can support environmentally or
socially responsible projects, innovative technologies and sustainable
enterprises.

While banks play a crucial role in promoting sustainable development, the

industry got off to a late start in acknowledging sustainability as an item on its
agenda. In the 1990s, however, it started to play a more active role in
sustainable development. The major shift happened when bankers realized
poor environmental performance on the part of their clients represented a
threat to their business success.

The interdependency between a bank's profitability and the environmental

record of its clients has influenced the business strategy of both banks and
their corporate clients. This has happened in several ways. In particular:

 To decrease their exposure to environmental liability and to improve

risk management, bankers started to look more closely at the
environmental performance of their clients. They developed
mechanisms to assess the environmental risk exposure of their
customers, and to protect themselves from potential losses.
 This growing concern about clients' environmental performance,
manifested in lending and investments decisions, began to act as an
additional driver of sustainability in the private sector. Companies were
given one more reason to pursue environmentally and socially sound
solutions.