LITERATURE REVIEW
CUSTOMER REALATIONSHIP MANAGEMENT
Customer Relationship Management (CRM) encompasses a series of business strategies aimed at enhancing the connection between a company and its customers The primary objective is to gain deeper insights into each customer, ultimately increasing their value to the business.
In a simple world, CRM is a tool helping an enterprise to set up and manage individual customer relationships
The CRM is also known by other terms such as integrated marketing communication (Don Schultz), one-to-one relationship management (Don
Peppers & Martha Rogers), real time marketing (Regis Mc Kenna), customer intimacy (Michael Treacy & Fred Wiersema)…
“CRM is more than just an outgrowth of direct marketing and the advent of new technology It requires new skills, systems, processed and employee mindsets (Philip Kotler, 2001).”
The central purpose of CRM are setting up and operating us for the enterprise to focus on increasing the value of customer base, whether through cross-
(getting customers to buy more expensive offerings)
1.1.2 IDIC: Four implementation tasks for creating and managing customer relationships
Setting up and managing individual customer relationships can be broken up into four interrelated implementation tasks: identifying, differentiating, interacting with and customizing treatment
To establish a successful relationship, it is crucial for an enterprise to thoroughly identify each party involved This includes recognizing customers when they return, whether in person, via phone, or online.
Customers hold varying levels of value for a business, leading to distinct needs and expectations By segmenting customers based on specific variables, companies can (1) concentrate their resources on the most valuable customer segments and (2) tailor strategies for product and service enhancements to meet the unique demands of each group.
To enhance customer interactions, enterprises should focus on building upon previous communications rather than starting fresh dialogues By referencing prior conversations, companies can create a more personalized and effective engagement with their customers, ultimately improving the overall customer experience.
To meet individual customer needs and values, businesses should tailor their approaches, which may include personalizing newsletters or customizing product bundles.
Treating different customer differently could be very expensive if every interaction and transaction had to be individually adapted Many enterprises are now using a technique of mass customization
“A mass customizer actually does is not customization, but configuration
A mass customizer creates numerous pre-produced modules for products and related services, including delivery options and payment plans By combining these modules according to individual customer needs, the company can generate thousands, or even millions, of unique product configurations.
The biggest obstacle is ensuring that different parts actually work with one another and can be fit together easily
The implementation of the IDIC methodology can be broken down into two categories: analysis and action
Finger 1.1: IDIC: Analysis and Action (Peppers and Rogers, 2004)
CUSTOMER SATISFACTION
Customer satisfaction, a term frequently used in Marketing and product R&D, is a measure of how a product or service meet or surpass customer expectation
Satisfaction is a commonly recognized concept, although it poses challenges in measurement and interpretation Typically, general satisfaction surveys are conducted every few years to monitor changes over time.
There are however, a number of difficulties with the concept of satisfaction (Communities Scotland, 2006):
“It is not static, but changes over time; new experiences and levels of awareness will alter the potential levels of satisfaction that could be achieved
It is likely to be complex and the result of a mix of experiences before, during and after the point at which it is measured
It occurs in social contexts which are varied and changing and may be unpredictable or inexpressible to the service user
It may be difficult to express the reasons for satisfaction; particularly where less tangible aspects of services are being considered
It may be easier to express the reasons for dissatisfaction, particularly if this is the exceptional state.”
To enhance understanding of customer satisfaction, it's essential to examine key factors influencing it When the actual service experience significantly surpasses client expectations, satisfaction levels soar Conversely, if the experience falls short, dissatisfaction arises In the realm of service quality, perceptions of service delivery are evaluated independently from customer expectations The difference between these two elements, represented as P (perceptions) minus E (expectations), serves as a crucial indicator of service quality and directly impacts overall satisfaction levels, as highlighted by Parasuraman, Zeithaml, and Berry (1991).
1.2.2 The role of expectations and perceptions
Customer expectation is the main element influencing customer satisfaction
It is important to understand how they are formed The basic key factors most commonly seen to influence expectation are:
Customers have specific personal needs they expect from services, which can differ between services and individuals Understanding these needs is essential for designing effective and tailored services.
Customer experiences with services significantly shape their future expectations, as prior interactions with similar offerings can heavily influence their perceptions and satisfaction levels.
Expectation of customer may be influenced by other sources other than the service provider itself Family, friends, colleagues, media…also influence in customer expectation shaping
Statements from leaflets or other publicity material can have a direct impact on expectation
This includes factors such as: the physical appearance of the building, well lighted parking lot…which customer may sense only vaguely
The expectation of public services is shaped by various key factors, which can differ significantly among customers and services While these factors are not merely additional determinants, it is essential to recognize their role in comparing public services For certain services, the primary influence on customer expectations may stem from the characteristics of the specific customer group being served.
1.2.2 Service quality and GAP model
As described above, the service quality model starts from the basic gap between P (perception) – E (Expectation)
Service quality gap model has been divided by 2 parts: Customer gap and provider gap
Finger 1.2: GAP Model (Parasuraman, A., Zeithaml, V.A and Berry, L.L,
The customer gap refers to the disparity between customer expectations and their perceptions of service experiences Customer expectations serve as benchmarks that individuals use when evaluating a service, while customer perceptions are their personal evaluations of the actual service received Understanding this gap is crucial for enhancing customer satisfaction and improving service quality.
Gap closed to zero or perception service similar to expectation is perfect thing, but Companies tend to close customer gap to develop
To effectively bridge the crucial customer gap, the gaps model emphasizes the need to address provider gaps within the organization delivering the service These provider gaps consist of four distinct categories that must be closed to enhance overall service quality and customer satisfaction.
Gap 1: Not knowing what customers expect
Gap 3: Not delivering to service designs and standards
Gap 4: Not matching performance to promises
More details of these gaps are provided below:
Gap 1: Not knowing what customers expect
Gap 1 defines the difference between customer expectations of service and company understanding of those expectations
Managers often lack awareness of customer expectations due to limited direct interaction, reluctance to inquire about these expectations, or a failure to address them effectively Additionally, they may mistakenly assume that all customers share their perspectives This disconnect can lead to poor decision-making and misallocation of resources, ultimately resulting in a perception of subpar service quality.
When management or empowered employees fail to gather precise information regarding customer expectations, a significant provider gap arises To bridge this gap, it is essential to implement both formal and informal marketing research methods to effectively capture and understand customer expectations.
Finger 1.3: Provider Gap 1 (Parasuraman, A., Zeithaml, V.A and Berry,
Gap 2: Not having the right service quality designs and standards
Gap 2 focuses on difference between company understanding of customer
Research not focused on service quality
Inadequate use of market research
Lack of interaction between management and customers
Insufficient communication between contact employees and managers
Too many layers between contact personnel and top management
Focus on transactions rather than relationships
Focus on new customers rather than relationship customers
Lack of encouragement to listen to customer complaints
Failure to make amends when things go wrong
No appropriate recovery mechanisms in place for service failures
Company perception of customer expectation
Finger 1.4: Provider Gap 2 (Parasuraman, A., Zeithaml, V.A and Berry,
Because services are intangible, they are difficult to describe and communicate This difficulty becomes especially evident when new services
Customer-Driven Service Designs and Standards
Unsystematic new service development process
Failure to connect service design to service positioning
Absence of customer-driven standards
Lack of customer-driven service standards
Absence of process management to focus on customer requirements
Absence of formal process for setting service quality goals
Inappropriate physical evidence and services cape
Failure to develop tangibles in line with customer expectations
Servicescape design that does not meet customer and employee needs
Inadequate maintenance and updating of the servicescape
Management Perceptions of Customer Expectations
To enhance existing services effectively, it is crucial for all team members, including officers and back-office staff, to align on the same vision and understanding of customer needs and expectations Without a unified approach, efforts to improve services may falter, highlighting the importance of cohesive collaboration in achieving service excellence.
To effectively prevent gap 2, it is crucial to design services with clarity, avoiding oversimplification, incompleteness, subjectivity, and bias Utilizing appropriate tools is essential to ensure that both new and existing services are developed and refined with the utmost care.
The quality of customer service is significantly affected by the evaluation and compensation standards set for contact personnel These standards communicate management priorities and highlight the performance metrics that truly matter When service standards are lacking or misaligned with customer expectations, the quality of service can suffer However, well-developed service standards can effectively bridge performance gaps and enhance customer satisfaction.
Gap 3: Not delivering to service designs and standards
Gap 3 is discrepancy between development of customer-driven service standards and actual service performance by company employees
Finger 1.5: Provider Gap 3 (Parasuraman, A., Zeithaml, V.A and Berry,
High-quality service performance cannot be guaranteed solely by established guidelines; it requires the support of adequate resources, including skilled personnel, efficient systems, and advanced technology Additionally, for these standards to be effective, they must be properly enforced among employees.
Customer-Driven Service Designs and Standards
Deficiencies in human resource policies
Role ambiguity and role conflict
Inappropriate evaluation and compensation systems
Lack of empowerment, perceived control, and teamwork
Customers who do not fulfill roles
Customers who lack knowledge of their roles and responsibilities
Customers who negatively impact each other
Channel conflict over objectives and performance
Difficulty controlling quality and consistency
Tension between empowerment and control
Failure to match supply and demand
Failure to smooth peaks and valleys of demand
Overreliance on price to smooth demand
To ensure effective performance measurement, companies must establish standards that align with customer expectations and actively support their achievement Without proper facilitation and encouragement, these standards become ineffective Consequently, when service delivery does not meet established standards, it ultimately fails to satisfy customer expectations.
Gap 4: Not matching performance to promises
Provider gap 4 highlights the disparity between the actual service delivered and the external communications made by the service provider When a company makes promises through advertising, sales teams, and other channels, it can elevate customer expectations, which serve as benchmarks for assessing service quality Consequently, any mismatch between the actual service received and the promised service negatively impacts customer satisfaction and creates a significant service gap.
Finger 1.6: Provider Gap 4 (Parasuraman, A., Zeithaml, V.A and Berry,
Broken promises can occur for many reasons: overpromising in advertising or personal selling, inadequate coordination between operation and marketing, and differences in policies and procedures across service outlets
One of the major difficulties associated with provider gap 4 is that
Lack of integrated services marketing communications
Tendency to view each external communication as independent
Absence of strong internal marketing program
Ineffective management of customer expectations
Absence of customer expectation management through all forms of communication
Lack of adequate education for customers
Overpromising through physical evidence cues
Insufficient communication between sales and operations
Insufficient communication between advertising and operations
Differences in policies and procedures across branches or units
TECHCOMBANK CASE STUDY
TECHCOMBANK AND CURRENT ACCOUNT SERVICES
Established on September 27, 1993, Vietnam Technological and Commercial Joint-stock Bank, commonly known as Techcombank, began with an initial registered capital of VND 20 billion Its primary goal is to serve as an effective financial intermediary, connecting savers with investors seeking capital for business and economic development in Vietnam's open-door era The bank's head office is located at 24 Ly Thuong Kiet, Hanoi.
Techcombank has increased its registered capital to VND 51.495 billion, coinciding with the establishment of a new branch in Ho Chi Minh City, marking the beginning of a rapid expansion into key urban areas.
The Thang Long branch and Nguyen Chi Thanh sub-branch have been established in Hanoi, alongside the Thang Loi sub-branch in Ho Chi Minh City As a result, the bank's registered capital has now increased to VND 70 billion.
The head office has relocated to the Techcombank building located at 15 Dao Duy Tu Street, Hanoi, Vietnam In the same year, the establishment of the Da Nang branch expanded the branch network, ensuring coverage across all three key regions: the North, Central provinces, and the South.
Techcombank increased the registered capital to VND 80.020 Billion The Sub-branch No 3 at Kham Thien str was founded
Techcombank has increased its registered capital to VND 102.345 billion and signed a contract with the prominent software provider Temenos Holding NV to implement the GLOBUS banking software across its network, addressing the increasing demands of its customers.
Branches have been established in key locations across Vietnam, including Chuong Duong and Hoan Kiem in Hanoi, Hai Phong branch in Hai Phong City, Thanh Khe in Da Nang, and Tan Binh in Ho Chi Minh City.
Techcombank becomes the joint stock bank with the largest network in Hanoi The network involves the Head Office, 8 branches and 4 sub-branches at the larges cities in Vietnam
Techcombank has increased its registered capital to VND 104.435 billion and is preparing for a further increase to VND 202 billion, reinforcing its position as a leading joint stock commercial bank in Vietnam.
Leveraging on the Globus system and the Bank’s alliance with Vietcombank, Techcombank commenced issuing F@stAccess card on 05 December 2003
The Bank inaugurates the completion of deployment of the Globus system on the whole network on 16 December 2003
The Bank started the process of developing a new corporate identity
Techcombank Cho lon was established Registered capital has increased to VND 180 billion at 31 December 2004
Inaugurate the new identity of the Bank on 09 June 2004
Registered capital has increased to VND 234 billion at 30 June 2004; VND 252.2 billion on 2 August 2004; VND 262 billion on 20 September 2004 and VND 412.7 billion on 30 November 2004
The number of branches increased from 15 branches to 25 by December
Six new branches were established in Lao Cai, Hung Yen, Vinh Phuc and Bac Ninh, Nha Trang, Vung Tau in the first half of this year
Recently, Techcombank expanded its presence by opening several new transaction offices across Vietnam, including locations in Da Nang (Phan Chu Trinh), Lao Cai (Cau Kieu), Ho Chi Minh City (Truong Chinh and Quang Trung), and Hanoi (Hang Dau, Kim Lien, and others) This strategic move aims to enhance customer accessibility and service efficiency throughout the country.
21/07/2005, 28/09/2005, 28/10/2005: Raised registered capital to 453 billions dong, 498 billions dong and 555 billions dong, respectively
29/09/2005: Launched the new Switching and Card Management System of Compass Plus
03/12/2005: Upgraded the corebanking system to the latest version of Temenos T24 R5
Receiving the award for international payment from the bank of NewYorks, Citibank, Wachovia
In August 2006: Issuing Loc Xuan Saving Certificate
In May 2006: Receiving golden cup for “a better society and stable development” given by Viet Nam General federation of labor
In June 2006: Call Centre & Hot line 04 9427444 officially operated ( 24/7)
In August 2006: Moody’s, the world top ranking reputed organization has declared reputed ranking for Techcombank, the first joint stock bank of Viet Nam ranked by Moody’s
In August 2006: the annual shareholders meeting approved the plan for 2006- 2010; Techcombank and Bao Viet Insurance corporately proving Ban cassurance
In September 2006: Completing the account system with new products: multifunctional savings, period interests paying savings
On 24th November 2006: Raising the chattered capital to 1.500 billion dong
On 15th December 2006: launching the international Techcombank Visa card
Techcombank total asset up to 2.5 billion USD
Becoming the joint stock bank with the second largest transaction network including 130 branches, TSO at the end of 2007
HSBC increases the sharing capital to 15 %, directly and sufficiently support Techcombank’s operation
Profoundly transforming in structures with the establishment of corporate service department, department of credit and risk management, completing structure of banking service and individual finance
Upgrading the core banking system to T24R06
Is the blossoming year of card services with the total issued card number up to more than 200.000 cards for all kinds?
The first and only bank approved the achievement in technological application and leading in market developing measures
Implementing the “secret customers” program, in order to access the service quality and attitude to customers of front-line staffs at Techcombank TSO
Techcombank is excited to announce the launch of several innovative financial products, including the "Savings Lucky Draw" offering customers a chance to win a Mercedes, as well as regular savings accounts and loans for assumptions Additionally, the bank is introducing solutions tailored for businesses, such as supplier support programs and high-tech F@st I-bank products Investors can benefit from the F@st S-bank account management services, while e-commerce websites can enhance their payment processes with the F@stVietpay electronic payment gateway.
Receiving award “Top Trade services 2007”- award given by Ministry of industry and Commerce for typical enterprises, operating in trade services that Viet Nam committed to implement as joining WTO
Receiving award of “the most satisfied service in 2008” voted by readers of Sai Gon Tiep Thi magazines in February 2008
In March 2008: Launching Techcombank Visa Credit card
In May 2008: Launching Cash Deposit machine (ADM)
The organization is focused on technological modernization by upgrading its core banking system to T24 and joining two cooperative card networks, Smart Link and Bank Net Additionally, it is enhancing its ATM connectivity through a strategic partnership with HSBC and has launched a free 24/7 Call Centre at 1800 588 822 to improve customer support.
The unique sponsor for “Sao Mai Diem Hen 2008” in June 2008
Opening Techcombank AMC (asset management company) in 8th August
Receiving Golden Star Award 2008 given by young enterprises association in September 2008
Increasing the property rate of HSBC to 20 % and raising chattered capital to 3.165 billion dong in September 2008
In September 2008: Launching Techcombank Co-brand Visa card with Vietnam Airlines
On 19th October 2008: Receiving award “reputed securities trademarks and the top Joint stock company of Vietnam” given by securities committee
July 2009: The registered capital was increased to VND 4.337 billions
- The registered capital was increased to VND 5.400 billions Fund sponsoring contract for purchasing 16 A321 aircrafts with Vietnam Airlines was signed
- Online saving products were introduced
- Reception of the “top 500 largest enterprises in Vietnam 2009” title, awarded by Vietnam report
- Reception of the “Global payment Excellence” Award, given by Citi Bank, Wachovia Bank and The Bank of New York
- Initiated the transformation strategy with the support from the world’s leading strategic consulting firm McKinsey & Co
Deployed a number of transformation initiatives in general, announced the bank’s Mission, Vision and Core Values Simultaneously, the bank implemented its business and management model restructuring and transforming corporate culture
April/2010: Achieved the “International star for Leadership in Quality” award, given by Business Initiative Directions
May/2010: Received “The Vietnam values 2010” title
2009&2010” Award, given by the IFC – International finance corporation June/2010: Received the “Global payment Excellence” Award, given by Citi Bank
June/2010: Increased the registered capital to VND 6932 Billions
July/2010: Received the “Best Bank in Vietnam 2010” award, given by Euro Money magazine
August/2010: Received the “Vietnam Gold Star” award, given by the Young Entrepreneur Association
March/2011: Received the “Straight-through-processing” award from the Bank of New York
April/2011: Ranked in the “500 largest Vietnamese Enterprises in 2011” by the VNR 500 & received the “Credit product award of the year” from the Vietnamese Financial Times
May/2011: Received the “Inspirational Company” award from the Confederation of businesses
From June/2011 to August/2011: Received 8 prestigious awards from a number of trusted international organizations, including:
- “The Best Bank in Vietnam”; “The Best Cash Management Bank in Vietnam” and “The Best Trade Bank in Vietnam” awarded by Finance Asia magazine
- “The Best Bank in Vietnam”; “The Best Cash Management Bank in Vietnam” and “The Best Trade Bank in Vietnam” awarded by Alpha South East Asia magazine
- “The Best FX provider in Vietnam” awarded by Asia money magazine
Upgrading the core banking system to T24R10
The head office was moved to Techcombank Tower at 191Ba Trieu str., Hanoi, Vietnam
2.1.2 Techcombank current account strategy and ambitious plan to 2014
Vietcombank, Agribank, and Dong A Bank collectively hold over 60% of the account market share in Vietnam In Hanoi, the concentration of accounts is significant, with Vietcombank, Agribank, Vietinbank, and TCB representing nearly 80% of all accounts Meanwhile, in Ho Chi Minh City, the banking landscape is led by Vietcombank, Dong A, Agribank, and ACB.
In Hanoi, Vietcombank, Vietinbank, and TCB are the most preferred banks among consumers, while in Ho Chi Minh City, ACB faces significant competition from Dong A Bank Although TCB is beginning to gain attention in Ho Chi Minh City, it has not yet reached a level of strong conviction among customers [Cimigo, Q1, 2012]
Base on current portfolio annalistic, internal capacity and market research of customer behaviour, Techcombank has decided that “service” and
“convenience” to be the differentiated proposition to serve customers at different demand and lifecycle to achieve 10% penetration in affluent and mass affluent segment
Finger 2.1: Current account key proposition [TCB, 2011-2014 strategy]
CASA mix to be 10% by 2014 from 6% at present, 6% of which will come from current accounts and remain 4% from saving accounts
Table 2.1: Techcombank current account portfolio to 2014
NIM – CAs was 12.51% for the 1 st 6 months of 2012, which was the highest margin of all other deposits and lending products
Following table is the comparisons of NIM – CAs to other products:
Table 2.2 : Techcombank CA NIM performance
Source: TCB, 1st half of 2012 retail report
CA’s margins were 26 times of time deposits’ - the biggest contribution to PFS portfolio
CA’s margins were almost 3 times of mortgages - the biggest contribution to PFS lending portfolio
91% of CA customers are single service customers with lower balance and active rate, stressing the importance of cross-sell
Multi-service customers have significantly higher balance and active rate, highlighting that highly engaged product drives higher balance and thus profitability
Table 2.3 : Techcombank CA multiple-service Customer ratio
Source: TCB, 1st half of 2012 retail report
Techcombank currently offers four main types of current accounts: the standard account, payroll account, Dynamic account, and F@st Easy account Additionally, two accounts, the Invest account and household account, are in pilot testing at select branches.
Walk-in customers often choose normal account, as it’s simple with litter fee
Payroll, sold to whom receive salary through Techcombank current accounts, is a primary acquisition channel: 63% of new account acquire through payroll
Dynamic account aims to customers who are active, ready to enjoy new technologies and services
F@st Easy is designed for customers with high daily transaction volumes, offering essential support from the bank to ensure seamless and convenient transactions This package caters to those who require reliable assistance to manage their financial needs efficiently.
Table 2.4 : Techcombank CA’s balance portfolio by products
Source: TCB, 1st half of 2012 retail report
The distribution of account balances reveals that 68% originates from standard accounts, while 29% is attributed to payroll accounts In contrast, bundled products aimed at high-end customers, such as Dynamic and F@st Easy, appear to be facing challenges.
A REVIEW OF TECHCOMBANK’S CUSTOMER RELATIONSHIP MANAGEMENT
From 2009, PFS (personal financial service) division was set up to centralized and specialized manage and serve individual customers
Customers are recognized by ID which is unique for each customer
From 2010, ACI center (Analytics & Customer Intelligence) of PFS has taken over all tasks of business analyst base on looking deeply inside customer banking activities
In June 2011, a team from ACI was integrated into the CRM department, where their primary responsibility was to collaborate with partners to develop a professional system This initiative aimed to create an up-to-date data warehouse that would support the bank's transition to a more efficient operational framework.
“Analysis” to “Action” to better serve customers
Break into 4 steps, Techcombank is now at the 1 st stage, including:
- Validate strategic intent (vision) o Understand the direction for where TCB wants to be in 3-5 years o Set vision and financial gold
- Diagnose current operating model o Understand the current business environment o Understand the current technological capacity o Best practice sharing and benchmarking
To create an effective target operating model, it is essential to define key capabilities that enhance customer experience, streamline processes, optimize organizational structure, and establish a robust technology infrastructure Integrating best practices from customer-centric operating models will further ensure that the design meets the evolving needs of customers while driving operational efficiency.
To successfully implement a CRM transformation plan, it is essential to develop a comprehensive roadmap that outlines an integrated set of initiatives This roadmap should include a detailed description of the operating model components, supported by well-defined business cases Additionally, crafting a Request for Proposal (RFP) for CRM implementation will ensure that the project is aligned with organizational goals and objectives.
A REVIEW OF TECHCOMBANK’S SURVEY ON CURRENT
2.3.1 Survey objective become one of the TOP banks in Vietnam, with high brand awareness both in Hanoi and HCMC, and a wide range of products and services offered
PFS plays a crucial role in driving total TCB revenue, with the current account being its standout product Additionally, the savings service is recognized as an essential offering for existing TCB customers.
Seeing tremendous potential from PFS business in Vietnam with only about 18% of population using banking services, TCB would like to grow this business at its best
In 2012, TCB aimed to boost its customer base by 40% To achieve this goal, it is essential for TCB to create a robust long-term strategy for its PFS business, alongside a targeted marketing plan This requires a comprehensive understanding of the market dynamics, competitor landscape, and, most importantly, the needs and preferences of its target customers.
A segmentation and usage & attitude (U&A) research study is essential to inform the bank's strategy The insights gained will guide the development of suitable banking products and services, aligning with the bank's comprehensive growth and expansion plans.
Some targets set up for survey: the survey was expected to find out some factors below:
- To Identify current retail banking practices and attitudes toward banking providers, products especially current accounts
- To measure the level of satisfaction and identify the gaps and unmet needs or expectation from end users by total level, by geography, by products or segments
- To identify the market segments and the potential/size of each segment
- To understand brand health of TCB and other banks by segment
- To identify "Big idea" or compelling value proposition for communication development
2.3.2 Focus group ẵ males & ẵ females in each group (6 respondents per group)
ABC SECs, living in Hanoi & HCMC
Divided into 06 groups of users
Items chosen to re-check:
- Prompt responses to customers’ requests
- Product structure to fulfill customer needs
- Effective added services and benefit: internet banking, card, loan, loyalty and other promotion program; priority banking services, pre-approved credit allowance …
- Other issues annoy customer using current account
Prompt responses to customers’ requests
Table 2.5 : Prompt responses to customers’ requests
Many customers face challenges with limited point-of-sale fulfillment and inconsistent feedback management Although some have registered for an online account, they are still required to visit a physical branch to complete the sign-in process and obtain essential items such as their card and token key.
Satisfaction level with “Enthusiastic bank staff”
Table 2.6 : Customer satisfaction on Enthusiastic bank staff
The branch is lagging in customer centric elements; staff not proactive in probing for customer needs, and limited waiting area for customers
There is no proactive effort to probe for customer needs at the teller; the staffs proceed directly with customer inquiries
Product structure to fulfill customer needs
Table 2.7 : Product structure to fulfill customer needs
Good internet banking service: stable, safe and a lot of applications
Cards: easy to use, a lot of prefer merchants offer discount to card holders
Actually, not so many customers have a correct mind-set of current account: what the key benefits are, function of current account, what difference from current account to card…
Some customers also complained about the complex fee table: not very clear, changed without notice, so many fees charged…
2.3.3 Quantitative survey on customer satisfaction
Total current customer: about 2 million customers
Investigate methods: through call center, through email, internet banking mail-box and direct interview at 6 cities: Hanoi, Hochiminh, Danang, Haiphong, Cantho, Dongnai
Sample was divided into two big groups: single and multiple product users Single product users are customers just using CA and card (some may use CA only)
Multiple product users are customers who using CA plus added services such as internet banking, credit card, un-secured loan (F2), secured loan (auto, mortgage…)
Each group was, then, divided again into sub-groups base on customer last- three-month-average balance on current account
Reserved batches were used in case 1 st effort can’t get enough feedback from target customers
Table 2.9: Survey Systematic Sampling – Single Product user
< 1mio 1- 10 mio 10-50 mio >50 mio Total
Survey of single product customers’ purpose is trying to discover the reason of customers’ choice and chance of TCB to gain other banking relationship with potential customers
Table 2.10: Survey Systematic Sampling – Multiple-Product users
< 1mio 1- 10 mio 10-50 mio >50 mio Total
Table 2.11: Feedback on customer choice (%)
Open to receive money transfer from friends 4 20 32 55
Table 2.11: Other banking services using (%)
Table 2.12: Which offer will do customers interested in opening ATM card or registering for internet banking with TCB?
Other offers listed include: discount at prefer merchants, convenience payment utilities, insurance…
Results on the CA opening and other related services registered procedure
Some customers have complained that they have to fill in all the long and complicated forms by themselves
Most of customers have complained that it took them at least one week for receiving card as ordered, even two weeks to a month
Queuing is an issue also
Table 2.13: Feedback on CA opening and services registered procedure (%)
Other feedback include: services didn’t work smoothly after registered, online opening procedure didn’t work…
Table 2.14: Feedback on card issuance time (%)
HN HCM HPG DNG CTO DNI
Table 2.15: Feedback on Token key issuance time (%)
HN HCM HPG DNG CTO DNI
Respond to customer’s queries and requests
Table 2.16: Customer’ first Chanel chosen
HN HCM HPG DNG CTO DNI
Others mentioned include: friends, banking officers, internet…
Table 2.17: Prompt responses to customers’ requests
The most dissatisfied factors include: late reply, SLA violation, not-ready equipments…
Satisfaction level with “Enthusiastic bank staff”
Table 2.18: Satisfaction level with “Enthusiastic bank staff”
HN HCM HPG DNG CTO DNI Rate
Product structure to fulfill customer needs
Table 2.19 : Product structure to fulfill customer needs
HN HCM HPG DNG CTO DNI Total %
HN HCM HPG DNG CTO DNI Total %
Table 2.20 : What factor influences customer to start using a CA ?
Wide network of branches/ATM 100 87 80 60 327 25.35%
Table 2.21 : Which factor decide the main bank ?
Banks with other financial relationships
2.3.4 Quantitative survey on customer satisfaction
I have a talk with Ms Phan Thi Hai Yen, director of PFS products center to have a general view on how a product develop in TCB, summary as below
Product brief PFS Base on current portfolio analysis, products center will draw the target customer’s behavior
Research customer MKT To check the potential of market and target customer’s reaction with the product design
Product proposal PFS Base on MKT research to modify
Communication MKT Internal and external include: email, notification, product launch event
Direct communication PFS Set communication show with call- center, branches…
Product review PFS Base on product performance and feedback from branches/ customers Qualitative research is often picked to save cost
For some strategy products, KPIs will be set up to push sales.
FINDINGS
CRM ACTIVITIES
Looking at CRM activities at TCB, we easily found that the bank needs to pay more attention and invest more efficiency to have a real CRM system
About 70% of customer data are not available to enable 360 0 view of customer in TCB
Table 3.1: Data ware-house status
RM and tellers are not able to view recent client transaction
Sales staffs are not equipped with the holistic information and product gaps to know which products to sell
Much useful information are not captured or wrongly captured at the front- end
Some useful data are available in the back-end but not integrated to enable proper business or customer insight generation
Data are available in various systems throughout TCB, some of which are store manually at the branches
CUSTOMER GAP ANALYSIS
The survey results will help us assess how well we are meeting customer demands, allowing us to identify the gap between the value customers receive and their expectations.
Criteria to assess the customers’ satisfaction:
- Prompt responses to customers’ requests
- Product structure to fulfill customer needs
- Effective added services and benefit: internet banking, card, loan, loyalty and other promotion program; priority banking services, pre-approved credit allowance …
- Other issues annoy customer using current account
Assume the level of satisfaction/ expectation of customer are interpreted in line with the following points:
Compare the result of survey and result of focus group, we found some differences in average point of each criterion below:
Prompt responses to customers’ requests 3.72 3.62 (0.10)
Product structure to fulfill customer needs 3.50 3.65 0.15 Effective added services and benefit 3.77 3.71 (0.06)
Look at the table, criterion which has positive differences mean that customer satisfaction index in the quantitative survey is higher than the one in the focus group
The focus group identified customers in Hanoi and Ho Chi Minh City as key areas for TCB's strategy, implementing a priority line to ensure calls are answered within five rings A new branch model has been piloted to enhance service for customers waiting in line, while the direct sales force actively engages potential customers identified by the head office These initiatives contribute to TCB's competitive advantage in customer service.
In the newest TCB strategy, we will also focus on other area, so I will pick the result in the quantitative survey to be compared
Base on the findings, the GAP in comparison with the ideal level (the maximum level of point 5) is as following
Table 3.3 : GAP on customer satisfation
Prompt responses to customers’ requests 3.62 1.38
Product structure to fulfill customer needs 3.65 1.35
Effective added services and benefit 3.71 1.19
TCB currently meets customer satisfaction at a moderate level, indicating the need for greater effort to achieve the status of the No 1 retail bank To identify the underlying causes, we will examine the account opening and service registration processes, as well as the resources employed to implement the bank's strategic objectives The next steps involve assessing how TCB's capabilities can align with its goals while thoroughly analyzing the existing gaps.
PROVIDER GAP ANALYSIS
3.3.1 Not knowing what customers expect and not selecting the right service designs and standards
From 2009 – 2011, TCB tried to acquisition new customer as fast as they can by promotion campaign and sales push-up
Two central sales center were set-up to approach payroll accounts
Branding activities was focused on; TCB has changed their logo and pay more attention to build up their name in the market through some awards and social activities
They got some success while customer database grew quickly from 1 million (in first 2009) to 2 million
Brand awareness got better and better in the south
But, there was more than 50% of inactive account Total portfolio average balance per account is just 1.5 million
A recent survey indicates that while branding awareness, network presence, and promotions can attract customers to a bank, these factors alone are insufficient for fostering loyalty Additionally, inadequate customer information management has resulted in 91% of customers using only a single product, such as a current account or a domestic debit card.
Despite the growing emphasis on up-selling and cross-selling as key business strategies, TCB faces significant challenges due to the fact that many customers are simultaneously utilizing multiple banks.
TCB is focusing on improving "service" and "convenience" for customers, emphasizing the need for the R&D department to develop products that are rooted in a deep understanding of customer needs However, there is a gap in knowledge among the team regarding the core system, as insufficient attention has been given to training new staff effectively.
New employees at TCB undergo a five-week orientation course that covers the bank's history, organizational structure, and departmental functions However, this initial training is too general and does not cater to the specific needs of each trainee More targeted skill development and operational training occur only after employees have been on the job for a while, which may limit their effectiveness in their roles.
The R&D officers, then, were allocated to team leaders to train them directly in daily work
There might be some gap while R&D officers are trying to create a
“convenience” or “out-standing feature” service or product to customer; they forget to stand at the operating position
Some claim occurs from branches that products are too complex, too many step to book into system, lack of sales support tool…
Effective communication with the sales force is essential for delivering exceptional customer service It is crucial to cultivate a positive service-oriented attitude, comprehensive product knowledge, and strong soft skills among team members to enhance customer consultations and improve turnaround times However, the current training procedures for new employees often lead to subpar consultancy quality and inconsistencies in customer service across different units.
Under the pressure of sales KPIs, retail banking officers (RBOs) aggressively promoted current accounts in industrial zones, emphasizing that customers would incur no costs to access these benefits.
Also in most of the promotion campaign, the bank sometimes tried to acquisition customer through “FREE” idea
The introduction of this anchor is likely to hinder the bank's revenue growth efforts through fee-based activities, ultimately impacting its bottom line As a result, Techcombank (TCB) may struggle with customer retention and re-segmentation, as investors become increasingly risk-averse and hesitant to invest in low-yielding assets.
3.3.2 Not delivering to service designs and standards and not matching performance to promises
In regards to the technology of card management system:
With an average of 8,000 new CA registrations each week, the card operation system is expected to process requests within two days However, it appears that only 800 to 1,200 cards can be released daily, creating a backlog in processing.
In 2013, the Personal Financial Services Division (PFS) of TCB aimed to issue 500,000 Debit Cards and 400,000 Credit Cards To support this goal, the Card Center has invested in a new card issuing machine, which has a guaranteed productivity of 6,000 cards per day, with a safe operational target set at 5,200 cards daily.
Technological issues may arise not only during card issuance but also within the server systems and transmission lines associated with core banking, often leading to breakdowns due to TCB overload The updating of card information in the core banking system is hindered by the separation of systems, requiring tellers to contact the card center for credit account debt inquiries This process results in wasted time for both customers and bank staff.
The lack of online input for interbank card transactions, particularly credit transactions, complicates the reconciliation process between interbank payment accounts To facilitate real-time transaction input, banks require specialized equipment that can collect data directly from the switch and transfer it to the core banking system, allowing for immediate transaction recording and daily account balancing When discrepancies arise in intermediary payment accounts, it indicates unsuccessful transactions that must be cleared to restore account balances to zero Currently, TCB must manually process and balance these intermediary payment account transactions, leading to delays in identifying unsuccessful transactions, which can take up to a week during account checks initiated by staff or customer complaints.
In regards to the token key registering procedure
There were more than 100,000 token key sold in 2011 and first half of
All costs will be allocated to the branches, with the head office charging 170,000 VND for each piece of equipment Subsequently, branches will impose an annual fee of approximately 110,000 VND on customers, which will be applicable for a duration of five years.
As the cost is quite high, branches don’t want to stock too much as it will influence their balance sheet
It will lead to lack of ready equipment to serve customers
In regards to the feedback of customers that they can’t use the services after registering
Currently, due to limitation time of serving customer, tellers after receive application form from customer will hold to the day-end to book into system
To register full services for customer, often, tellers need to switch from 3-4 screens in the system to book and wait for the supervisor to commit to finish everything
There is no warning for the branches that some FT hasn’t been authorized or some services have been missed
In regards to the customer feedback collected and reacted
As design, online register procedure will help both customers and bank to save time
Customers have expressed dissatisfaction with the service, stating it did not meet their expectations After registering online, they are required to visit a branch in person to complete the sign-in process, receive their card, and pay the associated fees.
Ms Pham Thi Hai, the Call Center Manager, addressed the complaint regarding TCB's pilot procedure, which initially allowed customers to receive services without visiting the branch A telesales team was tasked with approaching customers, confirming their information, issuing cards, and delivering them directly to their addresses However, the low success rate, primarily due to customers' lack of commitment, led TCB to reconsider this approach, opting to apply the procedure only for selected customers moving forward.
Due to limited record and tracking, TCB is unable to effectively and timely address customer complaints
Most of the complaints happen in the branch, but so far it wasn’t recorded properly for right resolutions
A view of overall complaints record will served as critical insights for bank’s continuous improvement efforts - Reduce same problem happen in the future
In regards to sales force
The current SSP Dashboard is not driving the intended sales behavior, but rather used as a sales reporting tool by the sales staff
Provide overall view of sales progress and realization for management at Sales role level, Branch level, and Area level
RM need to input the target and realization manually (considered as additional admin work by RM)
The system doesn’t link to T24 (Stand-alone), unable to retrieve customer data
Incentive Calculator is not fully automated
Sales staff and Branch Directors are occupied by too many manual
Priority customers may experience inconsistent service level, due to uneven RM coverage and customer recognition.
RECOMMENTATION
INTERNAL TRANING AND COMMUNICATION
To gain a comprehensive understanding of the system in practice, employees should spend 1 to 2 months working at various branches This hands-on experience will also provide Research and Development officers with the opportunity to interact with customers, enhancing their insight into customer perspectives and needs.
Feedback between head office and branches will become more transparency
Products or services launched need to meet 2 requirements parallel: simple to implement and easy to sell
Following the product launch, the R&D department should conduct a pilot program at selected branches, collaborating with the direct sales team to promote the product to customers This approach allows for necessary adjustments to be made before implementing the product across the entire system.
Before RBOs and tellers transition into a formal sales force, it is essential that they undergo comprehensive training During this period, they should collaborate with the sales support team to assist front-line sales in completing necessary documentation and obtaining required approvals, allowing them to gain a thorough understanding of the procedures involved.
Product guideline, sales scripts, document check-list… need to ready to deliver to all freshmen with easy to understand introduction from skilled team.
KPIs AND SALES ORIENTATION
The current sales channel indicates that over 2 million customers in Canada will be managed by the system, highlighting the absence of a dedicated position to ensure their efficient care.
Suggested that all active account with positive balance will be allocated to teller-back (teller-front will focus on service only) and CSO (customer service officer)
RBO will focus on “hunting” new customer and receive incentive for will-deal and incremental balance and transaction on customer accounts within 3 months from opening date
Teller-back and CSO will focus on “farming” to encourage customer transfer their financial relationship to TCB and ear incentive base on customer TOI
Finger 4.1: Sales model [R&D department, PFS action 2013 plan]
ENHANCE SERVICE STANDARDZATION
To be consistency in customer serving, TCB need to standardize the service registering and customer serving procedure Some suggest as follow:
All in one procedure apply for over the counter transaction
All in one form for product registering: all term and condition to be move to appendix posted on to website for customer reference
Sufficient and comfortable space for customer
Banking brochures packaged in attractive way
Banking brochures contains key information on how it works for customers
Sales desktop capabilities including system-guided questions and prompts
Mystery shopping to be done more frequently and the result to be shared with relevant people, formal scoring should be applied also
The Business Development Center should take the lead in establishing a formal process for collecting and responding to customer feedback Additionally, it is essential to periodically announce rewards for valuable suggestions from customers and the direct sales team aimed at enhancing services and products.
Finger 4.2: Customer interactions procedure [TCB, 2011-2014 strategy]
IMPROVEMENT PROCEDURE TO REDUCE SERVING TIME
Integrate all in one T24 interface to help front offices in booking and authorizing products and services into the system
Allow auto-file to be booked into T24 so that front offices can save time in dealing with the system to focus on customer services
Auto-printed form for all products available in the T24
Greeters take charge in introducing customer waiting in the line with on- going product, campaign
Deposit/withdraw forms are available next to line so that customer can easily take and prepare before being served
Authorize to branch director to reduce/waive services using fee base on customer TOI.
DEVELOP ALTERNATIVE CHANNEL TO REDUCE OTC WORKLOAD
Instead of implementing hard token only, soft token should also be considered
Soft token is also called one-time-password (OTP) which allows customers to receive password through registered phone number Customer use the OTP to confirm the online transaction
Soft token just take the SMS cost and seem to be more simple to process to customers
Hard token (token key) is remained for customer with more safety sensitive and often travel abroad
Development payment utilities and increase payment limit through internet banking will help to reduce OTC workload
Increase fee for cash transaction below 50 million to encourage customer to do transaction through ATM, FIB
Develop service registering via call center/ ATM/Internet banking: pay for credit card, register for internet banking service; money transfer…
PRODUCT DESIGN
Bundle products and services into package with preferable fee to encourage customer to be multiple- product users
Package designed need to full all customer segment demand:
Simple bundles: Package of complementary products sold together, fulfilling multiple needs and affording the customer convenience
Price bundles offer a collection of products at a discounted overall price, simplifying the fee structure for customers When customers meet the average balance requirements, they can avoid all package usage fees Additionally, a single fee is charged once per month for all products included in the combo package, streamlining costs and enhancing value.
Integrated value bundles: Package of products sold with added non- price benefits across its constituent products, including inter-product features
Lifestyle solution bundles: Package of cross-industry products designed to address a particular overarching customer need
Finger 4.2: Product design [R&D department, PFS action 2013 plan]
100% new loan and credit card holder will be offer with CA package
Sale support tool: summary all guideline into A4 for sales force reference.
PAYROLL FORCUS
Payroll as the key channel for account acquisition
Potential market and oriented career:
Focus on 6 big cities: Ho Chi Minh, Ha Noi, Hai Phong, Da Nang, Can Tho
10 oriented career: stated-own companies, hospital, school, army force, airline, telecom, bank, duty/custom, representative office/ ambassador
Business development center will lead to deliver potential list to super branches to approach with direct support from head office
Suitable package for each customer
Integrate periodically saving into the payroll package: reduce the minimum deposit amount to 50,000 to 100,000 VND to encourage customer having saving relationship with the bank
Offer priority package for BOM, BOD and chief accountant
Standardization customer care policy for company base on TOI
Periodically customer care for decision maker
Utilizing current SME, CB customer data base
Finger 4.3: Cross-sell process [R&D department, PFS action 2013 plan]
IDIC: Analysis and Action (Peppers and Rogers, 2004)
Customer satisfaction, a term frequently used in Marketing and product R&D, is a measure of how a product or service meet or surpass customer expectation
Satisfaction is a commonly recognized concept, though it presents challenges in measurement and interpretation Typically, general satisfaction surveys are conducted every few years to monitor changes over time.
There are however, a number of difficulties with the concept of satisfaction (Communities Scotland, 2006):
“It is not static, but changes over time; new experiences and levels of awareness will alter the potential levels of satisfaction that could be achieved
It is likely to be complex and the result of a mix of experiences before, during and after the point at which it is measured
It occurs in social contexts which are varied and changing and may be unpredictable or inexpressible to the service user
It may be difficult to express the reasons for satisfaction; particularly where less tangible aspects of services are being considered
It may be easier to express the reasons for dissatisfaction, particularly if this is the exceptional state.”
To gain a deeper understanding of customer satisfaction, it's essential to examine key elements that influence it When the service experience significantly surpasses customer expectations, satisfaction levels rise, while the opposite holds true as well In the realm of service quality research, service delivery perceptions are evaluated independently from customer expectations The difference between these two factors, represented as P (perceptions) minus E (expectations), serves as a crucial indicator of service quality and directly impacts overall customer satisfaction (Parasuraman, A., Zeithaml, V.A., and Berry, L.L., 1991).
1.2.2 The role of expectations and perceptions
Customer expectation is the main element influencing customer satisfaction
It is important to understand how they are formed The basic key factors most commonly seen to influence expectation are:
Understanding the unique personal needs of customers is essential for designing effective services, as these needs can differ significantly across both services and individual users.
Customer experiences with services significantly shape their future expectations Previous interactions, especially with similar services, play a crucial role in influencing how customers perceive and anticipate service quality.
Expectation of customer may be influenced by other sources other than the service provider itself Family, friends, colleagues, media…also influence in customer expectation shaping
Statements from leaflets or other publicity material can have a direct impact on expectation
This includes factors such as: the physical appearance of the building, well lighted parking lot…which customer may sense only vaguely
The expectation of public services is influenced by various key factors, which can differ significantly among customer groups and services Understanding these influences is essential for making accurate comparisons between public services Notably, the characteristics of the customer group being served often play a crucial role in shaping their expectations, highlighting the importance of tailoring services to meet diverse needs.
1.2.2 Service quality and GAP model
As described above, the service quality model starts from the basic gap between P (perception) – E (Expectation)
Service quality gap model has been divided by 2 parts: Customer gap and provider gap.
GAP Model (Parasuraman, A., Zeithaml, V.A and Berry, L.L, 1991)
The customer gap refers to the disparity between customer expectations and their perceptions of a service Expectations serve as benchmarks that customers use during their service experience, while perceptions are their personal evaluations of the service received Understanding this gap is crucial for improving customer satisfaction and service delivery.
Gap closed to zero or perception service similar to expectation is perfect thing, but Companies tend to close customer gap to develop
To effectively bridge the crucial customer gap, the gaps model emphasizes the necessity of closing provider gaps within the service organization These provider gaps encompass four distinct areas that must be addressed to enhance service delivery and customer satisfaction.
Gap 1: Not knowing what customers expect
Gap 3: Not delivering to service designs and standards
Gap 4: Not matching performance to promises
More details of these gaps are provided below:
Gap 1: Not knowing what customers expect
Gap 1 defines the difference between customer expectations of service and company understanding of those expectations
Managers often lack awareness of customer expectations due to limited direct interaction, reluctance to inquire, or unpreparedness to address concerns, and may mistakenly assume all customers share their perspectives This disconnect can lead to poor decision-making and misallocation of resources, ultimately resulting in a perceived decline in service quality.
A significant provider gap arises when management or empowered employees fail to obtain accurate insights into customer expectations To bridge this gap, it is essential to establish both formal and informal methods for gathering customer expectation data, which can be achieved through comprehensive marketing research.
Provider Gap 1 (Parasuraman, A., Zeithaml, V.A and Berry, L.L, 1991)
Gap 2: Not having the right service quality designs and standards
Gap 2 focuses on difference between company understanding of customer
Research not focused on service quality
Inadequate use of market research
Lack of interaction between management and customers
Insufficient communication between contact employees and managers
Too many layers between contact personnel and top management
Focus on transactions rather than relationships
Focus on new customers rather than relationship customers
Lack of encouragement to listen to customer complaints
Failure to make amends when things go wrong
No appropriate recovery mechanisms in place for service failures
Company perception of customer expectation
Provider Gap 2 (Parasuraman, A., Zeithaml, V.A and Berry, L.L, 1991)
Because services are intangible, they are difficult to describe and communicate This difficulty becomes especially evident when new services
Customer-Driven Service Designs and Standards
Unsystematic new service development process
Failure to connect service design to service positioning
Absence of customer-driven standards
Lack of customer-driven service standards
Absence of process management to focus on customer requirements
Absence of formal process for setting service quality goals
Inappropriate physical evidence and services cape
Failure to develop tangibles in line with customer expectations
Servicescape design that does not meet customer and employee needs
Inadequate maintenance and updating of the servicescape
Management Perceptions of Customer Expectations
To enhance existing services effectively, all officers must align on the same vision and understanding of customer needs and expectations Without this unified approach, any efforts to improve services are likely to be hindered by inconsistent perspectives on the associated challenges.
To effectively prevent gap 2, it is crucial to meticulously design services while avoiding oversimplification, incompleteness, subjectivity, and bias Utilizing the right tools is essential for the careful development and enhancement of both new and existing services.
The effectiveness of customer contact personnel is significantly shaped by the evaluation and compensation standards set by management Clear service standards communicate management priorities and highlight the performance metrics that truly matter When standards are lacking or misaligned with customer expectations, service quality often suffers Conversely, well-developed service standards can greatly improve service quality and effectively bridge the gaps between management and customer perceptions.
Gap 3: Not delivering to service designs and standards
Gap 3 is discrepancy between development of customer-driven service standards and actual service performance by company employees.