Another way to win the hearts of particular customers

Syafruddin Chan, Contributor, Jakarta

For several years now, major banks here have made available premium products and services specially created for their privileged customers.

Using a variety of names like BCA Prioritas, Mandiri Prioritas, Niaga Premium Banking, HSBC Premier and so on, banks intend essentially to provide their large-revenue contributors with only the best.

Marketers of any business, bankers included, have for some time now realized that most of their revenue, and naturally, profits, come from only a small portion of their customers -- about 20 percent.

Again, it is only natural that banks have to go all out to retain and maintain their loyalty as they contribute some 80 percent of the revenue. However, the "20/80" category, as it is referred to in marketing lingo, must deposit a minimum Rp 500 million (about US$58,825) to be eligible for the bank's red- carpet treatment. Each bank has a set of different regulations applicable to the customer when the deposit is partially withdrawn. Some charge a certain amount as fee.

Among the long list of special benefits for privileged customers are a customer relationship manager (at some banks the manager is referred to as "dedicated relationship manager"), a private room at head office and certain large branches, exemption from certain charges or fees, VIP lounges at major airports and a variety of financial and investment programs tailored to match customers' needs.

Some banks even include free membership of exclusive clubs for their premium customers. They are also further pampered with special prices or other specially packaged offers from exclusive establishments, like top-notch golf clubs, fitness centers, spas and so on.

Regular monitoring -- preferably monthly -- of account performance is necessary so that the bank does not overtreat a client with a dormant deposit of Rp 500 million while at the same time undertreat another customer with an active account, which means revenue and profits. Though having no regular deposits, the performance of this type of customer has to monitored and evaluated carefully. In many cases, he or she is likely to be eligible to be promoted to the ranks of the big fish. In the long run, it is not only being fair on the part of the bank, but the customer may prove to be the real profit-maker.

Based on the principle of progressive rewards, banks divide their customers into several categories: gold, silver and bronze. Some banks add another tier -- platinum for top performers. Gold customers enjoy more perks than silver ones, and so on.

Every marketing effort and budget priority should focus on retaining the most profitable customers, while simultaneously persuading lower-tier ones to go up the ladder. More customers entering the "20/80" category can only mean larger profits for the bank. Ideally, after clearly identifying each level of customer category, the bank should be able to offer the right kind of superior products and services rather than give all of them a look-alike or uniform set of privileges. It is all about winning their hearts not only for today or this year, but for many years to come.

The hardest part is not only in acknowledging the presence of unprofitable customers, but to get rid of "the losers" if they have for years represented a cost element. Some banks resort to imposing higher interest rates or fees on small or inactive accounts of this type of customer, effectively saying, "sorry, you are welcome to leave."

To provide the highest level of satisfaction for privileged customers, the customer service officer provides a personalized service. When a customer calls, the officer not only knows his or her name -- thanks to the caller ID feature of today's telecommunications -- the customer's entire data pops up on the computer screen. The data also includes previous problems, if any, the customer had and how they were settled. Knowing each customer well will result in a positive relationship, because the customer will feel he or she is being treated not only very personally but as a special person.

Customer gatherings or other similar events are also regularly held by banks to enhance the relationship. Apart from new programs for the benefit of customers, they also receive reward points or special gifts based on the level of activity of accounts or account performance appraisal.

Prevention is better than cure, so goes the saying. However, should a premium customer suddenly decide to switch to your competitor, it should not damage your pride to keep in contact and find out the reasons behind the shift. The probability may be slim, but by doing so you may get him back once you immediately remedy the deficiencies on your side. Pasaraya department store, for example, solved its problem quickly. It found out that customers loved shopping at Pasaraya, but its parking facilities were the hitch, which prompted them to shop at another store not too far away, Metro at Plaza Senayan. Once it quickly made ample parking space available, its faithful clientele -- plus new customers -- crowded the whole store again.

Check the customers' repurchase rate. That is another important element to find out how loyal customers are. Strangely, surveys on level of customer satisfaction are not clear indicators and are often unrelated to frequency of purchase or transaction, so how frequently a customer comes back and makes a purchase or transaction will better reflect customer loyalty. One car manufacturer in the United States, for example, has a 90 percent rate for customer satisfaction, but its repurchase rate hovers at around 30 percent to 40 percent. Surprisingly, a number of companies, even the major ones, tend to overlook this critical aspect. In fact, it is a benchmark that every company should maintain in order not to lose out to competitors, which may well be smaller companies.

In short, even the most excellent products and services are no guarantee for retaining customers or their loyalty, especially privileged ones. These first-class clients need more than short- term pampering. Each principle of relationship marketing must be adhered to continuously and put into real action for long-term results. Only then will these highly demanding customers think more than twice before knocking on a competitor's door.

The writer is the author of Relationship marketing: Marketing innovations that win customers' hearts.