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MMOODDEELLSS UUSSEEDD IINN BBAANNKKIINNGG SSEERRVVIICCEESS

Cetina Iuliana

Academy of Economic Studies, Bucharest, 6, Piata Romana, ,phone: 0722-430482,

email:[email protected] Nora

Academy of Economic Studies, 6, Piata Romana, Bucharest, phone: 0722/369467

Usually, the marketing policy developed by companies goods has been directed towards attracting newconsumers. In oppositions to such companies, service companies are first of all preoccupied with preservingtheir current customers. A frequent example, as an average, is that the cost incurred for attracting newconsumers is five to six times higher that the one incurred for maintaining current ones

1. Moreover, the loss of a

consumer reduces the profit by approximately 118 USD, while its preservation costs only 20 USD2. Building

customer relationships involve activities leading to a long term development of the relationship between thecompany and the customer, for both parties benefit.

Key words: banking services, SERVQUAL Model and banking customer satisfaction, relationship marketing.

Within the domain of banking services, the service process involves a multitude of relationships between the

performer and the consumer. Especially, the product is the main instrument for creating and offering a qualityservice and, implicitly, for the company to prove its care for and interest in the customers problems. Theconcept of care for and interest in the customers problems is tightly related to that of providing satisfaction tothe customer.

In order to establish and develop a long term marketing relationship with customers, banking establishmentselaborate services, so that customers benefit from effective and very accessible services, complying at the sametime with the quality standards, as well. This process involves the combination of the efforts made by marketingspecialists, by human resources specialists and by the companys management.

The necessity to build such relationships is given by the consumer, staff and social-economic environmentsdesires, which are continuously changing. Consumers, both natural and juridical persons, are in a permanentprocess of searching for products and services, for relationships with financial establishments, which need to bemore and more satisfactory and for an increasing quality of services. Companies realize that investing in longterm marketing relationships with their customers is not an expenditure, but a long term profit.

The care for the staffs problems is also an opportunity for the company. The larger the number in thecompanys employees, the more bureaucratic and anonymous it gets. Communication deteriorates and thestaff-customer, staff-company administration relationships degenerate. Moreover, the companys reorganizationon the grounds of decreasing costs has a negative impact over the employees motivation and performances.

Generally, services consumers dissatisfactions are caused by the following gaps3:

The gap between the consumers expectations and the managements perception of such expectations.There are cases when the management does not understand what is that their customers want (both theinternal and the external ones). If managers perceive consumers expectations at a level lower than thereal one, the result is constituted by the lower level of the rendered service. This lack may be remediedby elaborating certain marketing researches and by a better communication between the companysmanagement and personnel;

The gap between the consumers necessities and the specification of the services quality.Even if theconsumers necessities are known, it may arise that they are not translated according to thecustomers requirements and expectations, from various reasons: lack of financial, material or human

resources, faulty management, organizational constraints, etc. In this case, the manager should engageinto creating the conditions for rendering high quality services.

The gap between the quality standards and the rendering process (service specification). Thisincongruity refers to cases in which the actual service rendering differs materially form the qualitystandards and it is mostly due to the degree of variability in service rendering. Rendering services at aqualitative level which is lower than the specification made by the companys norms is the result of thepersonnels activity, who do not know or do not wish to render the service at the required level.

The gap between the service rendering process and the external communications. There are cases whenthe message sent via an inadequate external communication differs from the service rendered by thecompany, which creates confusion among consumers expectations and perceptions. It is recommendedthat mentioning certain promises which may not be fulfilled, or presenting certain irrelevantinformation for target consumers, be avoided. The most notorious model for assessing the consumers

1 Reuder Paul S. Design and Operation of Customer Service Systems, New York, AMACOM, 19762 Berry Leonard L., Parasuraman A., Marketing Services, The Free Press3 Parasuraman A., Berry L., Zeithaml V., Understanding Customer Expectations of service, Sloan Management Review,Winter 1991, pg 420-450.


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satisfaction level is the SERVQUAL model, elaborated by a team of American specialists4.SERVQUAL consists of two sets, each of 22 questions, which use the LIKERT scale. The first set ismade of 22 questions referring to the assessment of consumers expectations regarding a certainservices sector. The second set measures the level of the service perceivedby the consumer.

Example for the 1st SET the expected level:

Consumers should trust the banks employees. Consumers should not queue in front of the banks counter. The bank should customize loans for each consumer.

AT DT

7 6 5 4 3 2 1

Example for the 2nd

SET the perceived level:

I trust the banks employees. I do not queue in front of the banks counter. The bank complies with my requirements regarding the requested loan.

AT DT

7 6 5 4 3 2 1

The SERVQUAL model allows the comparison of the renderings results (or of the consumers perceptionregarding the rendering) and it offers to the management an instrument for improving their performances.

The assessment of the services parameters involves problems regarding their features, differences in theconsumers expectations and the nature of the assessed instruments.

Companies must be notified that certain elements involved by services are easier to assess than others.For example, physical evidence and credibility may be known prior to rendering, but the rest may beassessed only during the experimentation of the service, namely during and after the completion of therendering process. Eventually, there are parameters, such as confidentiality, in case of financialservices, which are difficult to assess even after such service has been rendered.

Consumers expectations usually range within reasonable limits; consumers expect that ATMs haveenough cash when they use them; they expect to be treated with responsibility and kindness by a bankspersonnel. Anyway, expectations differ depending on the circumstances and on the consumersprevious experience. Usually, an experience with a prior service provider influences expectations fromother service providers.

The SERVQUAL model has its limits recognized even by its designers, among which: the use of twolists for the same attributes, the number and relevance of the limits of the proposed service, theassessment time before, during or after the service has been rendered. Even the use of scales maydisplay certain deficiencies. Eventually, companies must consider cultural and behaviour differences,both of internal and of external consumers.

Besides the offer for services, a consumer benefits from certain special relationships with the company.Sometimes, even such preferential relationships lead to a consumers decision to keep on requiring thecompanys services. For example, a consumer may choose a bank, although it has been notified about better

offers on the market, for the following reasons: it has good relationships with the banks personnel; it is certainthat in case certain unexpected problems occur, they will be operatively solved.

The experience of long term relationships with a company includes the following benefits for consumers:

Confidentiality benefits, resulting from the trust manifested towards the company; Social benefits; Benefits due to special situations;

Confidentiality benefits express the feeling of trust towards the service provider, together with the lack of (ordecrease) in the anxiety caused by the unfamiliarity with the person working within the bank, and who is incharge with the required service. Among the three categories mentioned above, trust benefits are the mostimportant for the consumer.

Most persons prefer not to change the service provider, especially if they have (financially and socially) investedin such relationship. If the respective employee knows the consumer, its preferences and if it has adapted theservices so as to correspond to its needs, the change in the service provider supposes extra efforts to educate the

4 Zeithaml Valarie, Parasuraman A., Berry Leonard, Delivering Quality Service, Free Press, New York, 1990


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new one. The costs incurred with the transfer towards a new company are high enough (both the financial andthe psychological ones).

Social benefits. In time, consumers develop a certain type of social relationships with service providers. On longterm, a service provider may become part of the consumers social system. The benefits gained from suchrelationships are more important for the quality of the consumers way of life (personal or professional) thantechnical benefits gained from the rendering of such service.

Benefits due to special situations refer to price decreases, preferential treatments for certain consumers.Although such benefits may be decisive in certain cases, it seems they are the least important.

From the point of view of the services company, benefits gained further to the formation of a preferentialmarketing relationship are numerous. They concern the increase in shopping, lower costs, free advertising byoral communication, the decrease in the personnel fluctuation, etc.

It has been noticed that within the services domain, consumers loyal to a certain company tend to spend more,by purchasing more services than in the previous year. The more a consumer grows more mature (from the pointof view of its age, of its income increase, etc.), the more frequent it requests services. Moreover, there are manycosts incurred with attracting new consumers (costs incurred with advertising, with opening new accounts andcosts which require a lot of time to know a new consumer). Many times such costs exceed the short termestimated profit. A graphic example is provided by the insurances industry, where, in most cases, the insurancecompany does not cover its costs until the third or the fourth year dedicated to a relationship with a customer.

Moreover, as mentioned in the first part of the book, when a service is complex and difficult to assess,

consumers consider the advice or opinion of close relatives. Loyal consumers, who are satisfied with theservices rendered by the company, will be a source for promoting the companys services.

An indirect advantage of preserving consumers is the preserving of providers. It is easier for a company topreserve its employees when it has a stable basis of satisfied consumers. People like to work for companieswhose consumers are loyal and satisfied with the services they benefit from. Their work is a lot more pleasantwhen they preserve and develop relationships with current consumers than when meeting prospect ones. Foremployees working for a longer period of time within companies, the quality of services rendered by themimproves and the costs incurred with fluctuation decrease, adding to future profits.

Strategies for developing customers relationships

Strategies for preserving and at the same time for forming certain customers as loyal as possible to the companyare based on a high quality of services, on a very rigorous segmentation and on supervising the change ofpreferential relationships in time.

The quality of the basic serviceStrategies for preserving customers will have minimum chances to be successful if they are not built on a highquality service. This does not mean that a company must be the best on the market in terms of quality or ofsatisfying the customer. Anyway, it must be competitive and even more than that. All preserving strategiesrelate on the supposition of a special quality of the rendered services. There is no point in elaborating certainpreserving strategies for rendering inferior quality services. Every employee within a service companycontributes to a lower or higher extent, visibly or not, to the positive or negative perception of quality. Duringservice rendering, a small number of persons may be involved (the first line), but their activity is based on thesupport of the rear line, who are, in their turn, responsible for the quality of the service. One may say that theentire personnel within the company form an activity chain. In case one of the links of the chain is weaker,sooner or later the chain will break from that point and the service will be compromised.

Supervising the preferential relationships

The basis for monitoring certain preferential marketing relationships is represented by the elaboration of certainmarketing researches, namely by surveys amongst consumers. Loyal consumers may also be questioned in order tofind out their perceptions regarding the value, quality, satisfaction for the services received. The organization willperiodically communicate with the best consumers, personally or over the phone. On a competitive market it isdifficult to form loyal consumers in case they do not benefit form a high level of quality. Moreover, it is necessary todesign a consumers data base. Knowing the consumers who frequently request the companys services (surname,address, phone no.), their buying behaviour, their income, the costs incurred for serving them, represent the basis forsuch a data base. Moreover, it is recommended that, if certain consumers give up the companys services, the reasonsfor their preferring another company should be known.

Strategies for preserving consumers

Preserving strategies generally include the following levels:

The financial level; The social level; The customized relationships level; The structural level;


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The financial level is first of all based on financial incentives, such as a lower price for a higher volume ofservices or a lowered price for consumers who have made more transactions with the company.

Notwithstanding the above mentioned, financial relationships do not ensure a long term advantage forcompanies, first of all because competitive companies work with the same strategies. Secondly, such strategiesare not successful unless they are elaborated in such a way so as to lead to the increase in the number ofrenderings for the same consumers, and not to attract new ones. Eventually, such strategies will not have theexpected long term result unless they succeed in forming consumers with the perception of an increased value ofthe rendered service.

The social level attracts consumers by other means besides the financial ones. Although the price is important,the second level builds long term relationships by social and interpersonal relationships. Consumers are treatedas customers and become persons whose desires and wishes the company tries to understand and satisfy. Theirservices are customized in such a way so as to correspond to individual needs and marketing specialists developsocial relationships in order to preserve the continuous and durable relationship between consumers and thecompany.

Such relationships must not be neglected, because they become many times a factor which prevents the choiceof a competitor. Anyway, the social level is much more difficult to imitate by competitors than the financiallevel.

The level of customized relationships. Customized relationships may be approached in two ways: mass andindividual customized relationships. Both modalities suggest the fact that consumers loyalty towards thecompany may be preserved only by knowing their needs and, if possible, by elaborating individual solutions.

The structural level is the most difficult to imitate and it involves both structural and financial, social andcustomized relationships between customers and the company. Structural relationships are designed in such amanner so as to offer the customer services especially designed for it.

Upon presenting strategies for preserving consumers, one must state another aspect, as well: the company mustexpress its appreciation, satisfaction and gratefulness for its relationships with the consumer. By rendering thepromised service and by thanking to the consumer for requesting the companys services, the latter may buildlong term relationships.

References:

1. Cetina I., Odobescu E. Strategii de marketing bancar, Ed. Economica, Bucuresti, 2007;2. Chirita, N. Politici si strategii ale tranzitiei, Analiza modelelor. Ed. Economica, Bucuresti, 2004;3. Zeithaml V., Parasuraman A., Berry L. Delivering Quality Services, The Free Press, 1990;4. Harrison Tina Financial Services Marketing, Prentice Hall, 2000;

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