Another way to win the hearts of particular customers

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withdrawn.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.