Deep understanding of customers' needs helps reduce risks

Satyasuryawan, Contributor, Jakarta

Probably quite a number of marketing people still believe in the credo "The Customer is King". However, adhering too strictly to this principle can lead to skyrocketing costs of production and services in a company's efforts to satisfy its customers to the hilt as their various requirements have to be fulfilled with a vast array of products/services.

In the case of banks providing royal treatment to customers, which was one of the marketing strategies way back in the 1970s and 1980s, their preferred customers received priority banking services which comprised things such as private luxury offices where they were served and, of course, they were accorded special interest rates.

Those golden days are almost gone now. It is not that banks do not highly regard their customers, but showering the prioritized customers with plush facilities is no longer on the banking industry's menu.

"A bank's basic function is back to managing its clients' funds," said Th. Wiryawan, Citibank's marketing communications director. It all boils down to channeling the customer's money in the most effective and efficient way, which leads to creating products and services which are really required by or are beneficial for them.

To be an effective manager of the customers' funds, a bank has to have a deep knowledge of its current or prospective customers, covering a lot of personal aspects such as their profession, holidays, hobbies, leisure interests, children's education, pension plans, future residential plans and so forth.

All this and much more is needed to complete the customer's financial check-up. "Similar to a doctor who needs the patient's medical check-up report in better diagnosing the patient's condition, a bank also conducts the customer's financial check-up to compile a customer profile," Wiryawan said.

A customer profile makes it much easier for the bank to pinpoint its customers' needs and provide them with matching products. Customers in the aggressive category, for example, can be offered high-risk financial products such as mutual funds, while the conservative type would be satisfied with the bank's specially packaged time deposit. By serving the customers efficiently, the bank itself certainly retains a better rate of profit.

To compile a customer profile, obviously the bank has to carry out comprehensive research on its customers, the result of which will be used as the bank's marketing database.

A giant corporation like Citibank most certainly has such comprehensive customer profiles, which contain not only demographic data but psychographic as well.

Apart from the customer's lifestyle and social activities, the bank also goes all out for other information concerning his or her daily life, which also to a certain extent includes the neighbors and their professional and lifestyle data.

By having both demographic and psychographic data, the bank can easily and far more effectively serve its customers based on their hobbies or interests and not merely on residential location. For example, reaching out to a group of customers who love playing golf or enjoy karaoke, rather than those living in a similar area, makes it easier for the bank to introduce its new products or services.

This approach -- called "Wealth management banking" -- has been proven a success by Citibank Hong Kong for four years, while in Indonesia it has been applied by the bank for about two years. Wealth management banking consists of a fully integrated financial check-ups and top quality service and products that match customers' needs.

By clearly identifying the customers' needs, the bank can rid itself of unnecessary frills -- again thereby reducing costs -- but still provide them with the most efficient and effective service and high quality products.

While "Priority banking" consisted of serving all preferred customers with the entire range of the bank's products without a clear cut distinction, "Wealth management banking" is much more focused in targeting and segmenting to the most minute detail. This way the bank creates or launches products only when there is a specific need by a certain customer or group of customers.

This only goes to show that Citibank has a deep understanding of its community marketing on both the demographic and psychographic aspects, which greatly helps in product development and launches with minimum risks of failure. In the area of efficiency and simultaneously reducing the redundant customer data, Citibank proves it knows how to stay one step ahead.