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RELATIONSHIP MARKETING & SERVICE QUALITY

Marketing & Service Quality Module

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RELATIONSHIP MARKETING

Focused on building long-term, profitable customer-relationship

Build on premise that important accounts need focused and continuous attention

“Getting to know our customers better so we can meet their wants and needs better.”

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How do we build relationship with clients?

Basic Marketing

Reactive Marketing

Accountable Marketing

Proactive Marketing

Partnership Marketing

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Customer Satisfaction

= fx { PERCEIVED PRODUCT PERFORMANCE} and {CLIENT’S EXPECTATION}

If PP > E, Clients are very satisfied If PP = E, Clients are satisfied If PP < E, Clients are very dissatisfied

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Tools in Tracking and Measuring Customer Satisfaction

Complaint and Suggestion Systems

Customer Satisfaction Surveys

Ghost Shopping

Lost Customer Analysis

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THE COST OF LOST CLIENTS

Define and measure drop-out rate Distinguish the causes of customer reduction Identify those that can be managed better Estimate how much profit the bank loses

when it loses customers Spend to reduce the bank’s drop-out rate LISTEN, LISTEN, LISTEN to Customers

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HOW MUCH IS A CLIENT’S WORTH?

Loan Size Term Revenue Client’s

valueNet Margin

P3,000 3 months P315.00 P1,260.00 P882.00

P5,000 3 months P525.00 P2,100.00 P1,470.00

P10,000 3 months P1,050.00 P4,200.00 P2,940.00

P12,000 3 months P1,260.00 P5,040.00 P3,528.00

P15,000 3 months P1,575.00 P6,300.00 P4,410.00

*Interest=2.5% / mo.; SC=3%; #Yrs. Loyal=1 (4 cycles);Margin=70%

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HOW MUCH IS A CLIENT’S WORTH?

Loan Size Net MarginRevenue if 100% Retention Rate

Dropout Value

(Revenue*15%)

Loss/Month

(Drop-out value/12 months)

P3,000 P882.00 P101,430 P15,215 P1,268

P5,000 P1,470.00 P160,050 P25,358 P2,113

P10,000 P2,940.00 P338,100 P50,715 P4,226

P12,000 P3,528.00 P405,720 P60,858 P5,072

P15,000 P4,410.00 P507,150 P76,073 P6,339

*Ave. portfolio=115 accts; Drop-out rate=15%

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THE NEED TO RETAIN CLIENTS

Acquiring customers can cost five times more than the costs in satisfying and retaining current clients.

An average company loses 10% of its clients every year.

A 5% points reduction in customer drop-out rate can increase profits by 25-85%, depending on the industry.

The customer profit rate tends to increase over the life of the retained customer.

SOURCE: Selling: The Personal Force of Marketing

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The KEY to Customer Retention is Customer Satisfaction

Stays loyal longer (Customer Loyalty) Buys more as the Bank introduces new products

and upgrades existing products Talks favorably about the Bank and its products Pays less attention to competing brands and

advertising and is less sensitive to price Offers product or service ideas to the Bank Cost less to serve repeat clients than new

customers because transaction are routinized

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HIGH SERVICEQUALITY

HIGHCUSTOMER

SATISFACTION

HIGHERREVENUES

LOWER COST

Correlation of Service Quality and Bank Profitability

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SERVICE QUALITY

SERVICE- is any act or performance that one party can offer to another that is essentially intangible and does not result to ownership of anything.

QUALITY – is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

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Dimension of Service Quality

Reliability Assurance Tangibles Empathy Responsiveness

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Questions to ask to check if we are effectively providing service quality to our clients

Do we strive to present a realistic picture of our service to customer?

Is performing the service “right the first time”, a top priority of our Bank?

Do we communicate effectively with customers? Do we surprise customers during the service process? Do our employees regard service problems as

opportunities to impress customers or as annoyances? Do we continuously evaluate and improve our

performance against customers’ expectations?