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Relationship marketing and CRM: a financial services case study

Sally Dibba; Maureen Meadowsa
a
Warwick Business School, University of Warwick, Coventry CV4 7AL, UK

Online publication date: 17 May 2010

To cite this Article Dibb, Sally and Meadows, Maureen(2004) 'Relationship marketing and CRM: a financial services case
study', Journal of Strategic Marketing, 12: 2, 111 — 125
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 JOURNAL OF STRATEGIC MARKETING 12 111–125 (JUNE 2004)

Relationship marketing and CRM:

a financial services case study
SALLY DIBB AND MAUREEN MEADOWS
Warwick Business School, University of Warwick, Coventry CV4 7AL, UK

This paper considers the shift towards relationship marketing principles and the imple-
mentation of CRM in the retail financial services sector. Many players offering
personal banking and related products have now ‘bought in’ to the concepts behind
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relationship marketing, and are investing heavily (particularly in new information

technology) to enhance customer relationships and improve retention rates. This trend
is considered from the perspective of an organisation that is one of those leading the
change. An in-depth case study reveals the progress made in recent years towards the
company’s goals, focusing especially on the introduction of new systems and moves to
enhance customer data. However, the analysis also suggests that major challenges
remain if the benefits of CRM are to be fully realised. Issues involving the structure of
the organisation and its approach to a range of staff issues such as recruitment and
training are of particular concerns for the implementation of CRM principles.
KEYWORDS: Relationship marketing; services marketing; customer relationship management;
financial services; case study

INTRODUCTION
This paper considers the shift towards relationship marketing principles and the implementation
of CRM in the retail financial services sector. While other industries may have been quicker to
adopt CRM ideas, many players offering personal banking and related products have now
‘bought in’ to the concepts behind relationship marketing and are investing heavily to enhance
customer relationships and improve retention rates. This trend is considered from the perspec-
tive of an organisation that has been one of those leading the change. An in-depth case study
reveals the progress that the organisation has made towards its goals, and the challenges the
business still faces if the benefits of CRM are to be fully realised.
The paper describes the application of relationship marketing in UK financial services by
examining an organisation at the forefront of CRM thinking and implementation. The analysis
is framed around a model of relationship marketing in the financial services sector developed by
Dibb and Meadows in 2001. This model assesses the degree to which businesses are relationship
marketing-oriented, based on a continuous scale from a low to high relationship marketing
focus. In this paper it is suggested that the model can also be used to understand the progress
which financial services companies have made towards CRM. This is achieved by applying
the model using an extended case study to a business that is engaged in an ongoing organisation-
wide exercise to implement CRM principles.
Journal of Strategic Marketing ISSN 0965–254X print/ISSN 1466–4488 online © 2004 Taylor & Francis Ltd
http://www.tandf.co.uk/journals
DOI: 10.1080/0965254042000215177
 112 DIBB AND MEADOWS

The paper begins by reviewing the literature on relationship marketing and CRM. The
methodology for the current research is then described and the results of the case study analysis
are presented and discussed. Finally, conclusions are drawn about the progress made by financial
services institutions towards the implementation of CRM and the difficulties that may lie ahead.

LITERATURE REVIEW
This review examines the theoretical basis for the shift towards a relationship marketing perspec-
tive in the financial services industry (Buttle, 1996). The underlying principles of relationship
marketing are explored and its linkages with CRM considered. Pivotal questions about the
extent to which financial services companies have progressed towards a relationship marketing
approach and whether the purported benefits are being achieved are raised.
Building relationships with customers helps marketers to better understand and satisfy custom-
ers, objectives which are central to the marketing concept (Kotler, 2000; Reichheld and Sasser,
1990; Reichheld, 1993). The recent shift away from the transaction-based view of marketing has
focused attention on the beneficial effects of managing customer relationships (Gronroos, 1989;
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Howcroft and Durkin, 2000). Many businesses now believe that long-term success is contingent
upon customer retention as well as customer acquisition. By developing customer loyalty it
seems that a steady stream of sales can be achieved from existing customers over the lifetime of
their relationships with the company. This notion is especially pertinent in financial services,
where the combination of product complexity and intangibility has tended to emphasise the
importance of the relationship with the service provider (Berry, 1996; Meadows and Dibb,
1998; Spekman, 1988).
These principles are central to relationship marketing (RM) theory which focuses on buyer-
seller interaction (Berry, 1995) and assumes that relationship longevity and business profitability
are linked (Reichheld, 1993). The objective is to use the buyer-seller interaction to develop
a marketing and service offer that assists customer acquisition and retention (Berry, 1983;
Gronroos, 1994; Storbacka, 1997).
The roots of relationship marketing have been traced to services marketing, quality manage-
ment and the network approach to business marketing (Gummesson, 1999; Edvardsson,
Thomasson and Ovretveit, 1994; Hakansson, 1982). Moller and Halinen (2000), for example,
identify inputs from four distinct theoretical areas: business marketing, services marketing,
marketing channels, and direct/database marketing (see Table 1).
The underlying reasons for the current interest in relationship marketing are especially
relevant to the financial services context. First, services marketing has matured and continues to
grow in importance (Berry, 1995; Gummesson, 1999). The relative intangibility of the products
has emphasised the need to build differential advantage through improved service quality
(Perrien and Ricard, 1995). Second, as deregulation has heightened competitiveness in the
financial services sector, relationship marketing’s ability to protect the customer base has come to
the fore (Reichheld and Sasser, 1990; Turnbull and Valla, 1990). Third, there are clear customer
benefits linked to a relationship marketing approach. By engaging with suppliers in a kind of
‘learning relationship’ (Peppers and Rogers, 1993, 1999), customers are more likely to be able to
achieve suitable service delivery. This is a key consideration in a sector which is increasingly
orientated to the life-time value of the customer. Finally, rapid and far-reaching technological
change is improving businesses’ understanding of customers’ needs and buying behaviour. For
financial services companies which have been at the forefront of implementing data capture and
management systems, these insights enable the delivery of more tailored product and service
offerings (Zielinski, 1994).
 RELATIONSHIP MARKETING AND CRM 113

TABLE 1. The theoretical origins of relationship marketing

1. Business marketing—the interaction and network approach (Ford, 1997; Hakansson and
Snehota, 1995; Moller and Wilson, 1995). The approach examines the relationships built
and resources exchanged between different actors (e.g., organisations and individuals). The
evolution and functioning of relationships at the individual, dyadic and network level are of
interest. A particular concern is the role of transactions as episodes in long-term relationships.
2. Services marketing (Bateson, 1995; Berry and Parasuraman, 1993; Gronroos, 1994; Parasuraman,
Zeithaml and Berry, 1985). This area is concerned with explaining, understanding and improving
the efficiency of services management and services marketing relationships. Pertinent issues
relate to the provision of service quality and customer value.
3. Marketing channels (Bogelund and Skytte, 1997; Moller, 1994; Joshi, 1995). The theoretical
objective is to explain governance, relationships and balance of power between parties within
the context of the channel. The normative objective is to identify more efficient relationships
between parties, with a focus on structure rather than process.
4. Direct/database marketing (Peppers and Rogers, 1997; Shepard, 1995; Shaw and Stone, 1988).
The approach is concerned with improving efficiency by targeting marketing activities more
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efficiently. Particular areas of concern relate to customer retention and loyalty, providing
customer value and maximising customer lifetime value.

Developments in IT have also driven the adoption of customer relationship management

(CRM). Despite the new terminology which is widely adopted across different sectors, CRM
is simply a fresh perspective on relationship marketing ideas. Like relationship marketing, the
costs of customer acquisition and desirability of customer retention are key features of CRM
(Roberts, 2000; Zeithaml, 2000). However, the CRM perspective is particularly concerned
with the impact of direct and database marketing on an organisation’s ability to create and build
linkages with its customer base. CRM exponents explain that combining superior customer
information and commitment to long-term relationships allows businesses to provide more
tailored offerings. As a result, the concepts of the segment of one (or one-to-one) and mass
customisation have come to the fore. As Chaffey et al., (2000, pp. 290–91) explain:
Relationship marketing theory provides the conceptual underpinning of one-to-one marketing since
it emphasises enhanced customer service through knowledge of the customer, and deals with markets
segmented to the level of the individual. Direct marketing provides the tactics that deliver the
marketing communications and sometimes the product itself to the individual customers. Database
marketing provides the technological enabler, allowing vast quantities of customer-related data to be
stored and accessed in ways that create strategic and tactical marketing opportunities.
CRM is therefore a ‘new-old’ concept that is inextricably connected with more traditional
relationship marketing principles. One implication of this connection is that it ought to be
possible to adapt theoretical frameworks developed to explain different levels of relationship
marketing as tools for measuring progress in CRM. This is the approach adopted in this
paper, where a framework designed initially to assess relationship marketing is modified for
CRM.
In the financial services sector the use of technology to implement CRM and enhance
customer relationships has never been greater (Thurston, 2000; Sievewright, 2001). The
connection between relationship marketing and business performance in the sector has already
been demonstrated (Speed and Smith, 1993). The importance of investing in the ‘life time
 114 DIBB AND MEADOWS

value’ of the customer has also been shown through studies examining the economic case for
customer retention. Reichheld and Kenny (1990), for example, show that a small improvement
in customer retention rates leads to higher margins, while Mitchell (1995) indicates that a 300%
increase in customer profits can be achieved through a five-year extension to customer life
cycles.
Despite these encouraging statistics, businesses seeking the benefits of a relationship approach
face considerable challenges (Dibb and Meadows, 2001; Perrien and Ricard, 1995). The
organisation’s structure may be insufficiently decentralised to encourage a relationship approach
and too inflexible to adapt. The firm’s understanding of the customer base and/or technological
resource for managing the information may be inadequate. Policies for managing human
resources may impede the recruitment and training of suitable staff. The implication of these
difficulties is that different organisations are implementing a relationship approach to varying
degrees and with differing effectiveness.
Various frameworks have been developed to represent the different levels of relationship
marketing which businesses have achieved. Some of these classification schemes compare
traditional and interactive marketing approaches, relating marketing changes to developments in
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technology (Coviello, Brodie and Munro, 1997; Coviello, Milley and Marcolin, 2001; Day,
1998; and Iacoabucci and Hibbard, 1999). Dwyer, Schurr and Oh’s (1987) stepwise approach
has five stages: awareness, exploration, expansion, commitment and dissolution. Kotler’s
(1992) model, which proposes five levels of relationship marketing, is similar: basic, reactive,
accountability, proactive and partnership. This latter model was adapted for the financial services
sector by Dibb and Meadows (2001), who used it to review UK high street banks’ progress
towards the relationship approach. Kotler’s (1992) model was chosen by Dibb and Meadows
because it facilitated a detailed review of the seller and customer relationships at the heart of RM
and CRM.
Dibb and Meadows’ (2001) examination of the state of relationship marketing in retail finan-
cial services emphasised the need for relationship marketing models specific to the sector. They
argued that generic models fail to reflect the diversity of relationship marketing sophistication
exhibited by UK financial services companies or the routes taken to achieve it. Instead, Dibb
and Meadows (2001) group companies according to whether they exhibit low or high RM
focus in four areas: company, customers, technology and staff (see Table 2). In this research,
two of these areas have been described as ‘softer’ (the company and its staff), while the other two
are described as ‘harder’ areas (technology, and the customer perspective). This terminology is
reflected in the analysis and discussion of the case material.
According to the scheme, ‘Type A’ businesses tend to offer typical service interactions while
‘Type B’ businesses have a more strategic commitment to relationship marketing. ‘Type B’
businesses are further divided into three sub-categories, according to their progress along a
continuous scale towards a high relationship marketing focus. The first sub-category is quick fix,
where businesses attempt to realign existing practices to place more emphasis on relationship
marketing. The second is radical fix, where more substantive changes are made to existing
practices, often linked with significant investment in staff and/or technology. The third and final
sub-category is strategic set-up, which applies primarily to new operations with a belief in the
one-to-one future.
This framework is used as the basis for the case study reviewed in this paper. The
semi-structured interviews used to collect the data were structured around the issues described
in Table 2.
 RELATIONSHIP MARKETING AND CRM
TABLE 2. Research framework: characteristics of a high and low relationship marketing
focus
Low RM focus High RM focus
Company:
• More likely to use traditional distribution channels
• No stated desire for RM
• Not convinced about one-to-one future
• Focus on customer groups rather than the individual
• Transaction driven marketing
Staff:
• Rewards for new accounts
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• Most decision-making authority does not rest
with front-line staff
• Pay structures may lack incentives or be
transaction based
Technology:
• Primary role of information is to record transactions
• Systems often not very well integrated
• Account driven rather than customer driven systems
• Front-line staff only have access to simple profile of
customers with little attitudinal data
• Some are starting to think about customer emphasis
in their systems
• Systems may not have ability to identify ‘life events’
• Information used to mail customers with literature
• Direct mail often handled remotely from front-line
staff with little co-ordination
Customers:
• Emphasis on the value to be achieved from
customers today through the sale of an additional
product
• Contact with company instigated by the customer
• Use contact to conduct transactions and sell
additional products
• Collection of customer information often carried
out remotely
Adapted from Dibb and Meadows, 2001.
115
Company:
• More likely to use new distribution
channels
• Stated desire for RM
• Believe in one-to-one future
• Develop high relationship products
• Believe better relationships lead to
competitive advantage
• Customer-driven and event-led marketing
Staff:
• Emphasis is on excellent communication
with customers to ‘connect’ and spot
opportunities
• Empowered, self-managed staff who can
make quick decisions for customers
• Reward customer retention, not just new
accounts
Technology:
• Information is powerful and vital to
strategy
• Highly integrated systems and processes
• Computer screens shared with customers
• Full access to customer information when
dealing with enquiries
• Focus on rich attitudinal/buying behaviour
data used to identify ‘life events’
• Databases used for contact management
purposes
• All dealings with customer logged
allowing continuity between each
transaction
• Customer contacts used as market
research opportunity
Customers:
• Emphasis on current and potential value
of customers, with lifetime value focus
• Relationship achieved through integrating
technology and the human face
• Focus on easy, regular contacts with
customers
• Use contact to regularly update systems
• Anticipate needs through events-based
marketing
 116 DIBB AND MEADOWS

METHODOLOGY
This paper applies the model outlined to a case study of a financial services company with a
publicly stated commitment to relationship marketing and to implementing CRM. Adopting
a case study approach allowed a detailed understanding of the organisation and the issues facing
it to be achieved. The case study approach has been widely used by researchers seeking such an
understanding of complex phenomena (Yin, 2003). For example, Crittenden and Wilson (2002)
have used a qualitative case-based methodology based on personal interviews and archive data to
explore success factors in non-store retailing.
The case study in this paper, which is based on a UK building society, uses a combination
of personal observation, interviews and secondary data (Blaxter, Hughes and Tight, 1996). A
case study approach was particularly appropriate here because a detailed understanding of the
application of relationship marketing was needed. In addition, Yin (2003, p. 5) argues that the
case study method is suitable when the following conditions are met:
1. The form of the research question is ‘how?’ and/or ‘why?’ This condition is clearly met
in the research described here, as the issues of concern are around how and why the
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approaches of relationship marketing and CRM are being applied in financial services
organisations, why barriers to progress are being encountered, how these are being
overcome, and so on.
2. Behavioural control of events is not required. The current research meets this criterion, as
the researchers were not part of the decision-making process within the organisation
being studied.
3. The research focuses on contemporary events. Again, there is a good fit with the study
described here, as the decisions and actions under discussion had either occurred very
shortly before the research intervention or, in some areas, were still unfolding at the time
of the research.
The rationale for a single case design is similarly well supported in this context. First, the
company was chosen because of its publicly stated commitment to RM, and its aim to position
itself ‘at the cutting edge’ of CRM. Yin (2003, pp. 40–2) describes critical cases, extreme or unique
cases, and revelatory cases as worthy of documentation and analysis in their own right, as provid-
ing opportunities crucial for testing theories and models under development, and as situations
for observing and analysing phenomena that are normally inaccessible. In addition, this analysis
is one element of a longitudinal case (Yin, 2003, p. 42), with the researchers gaining access to the
case company, and observing its ‘journey’ towards CRM, over an extended time period.
The data used in the case study were obtained from a combination of secondary and primary
sources. The secondary data included internal documentation from the case company and a
selection of general reports on the financial services industry. Primary data gathering followed,
involving semi-structured interviews with senior managers from the case organisation. The
interviewees were selected on the basis of their experience and involvement in relationship
marketing and related issues. Table 2 was used as a checklist to guide the semi-structured
interviews. Interviewees were invited to discuss the position of the case company on each of
the dimensions shown. Precise measurements on a quantitative scale were not deemed to be
appropriate at this stage of the research programme. Instead, the aim was to use the notion of
low to high RM focus proposed by Dibb and Meadows (2001).
The case study analysis is organised around the four areas described in Table 2 in the
following order: company, staff, technology and customers. This approach means that the
 RELATIONSHIP MARKETING AND CRM 117

analysis begins by explaining the context of the company as whole before addressing its staff (the
two ‘soft’ areas), then moving on to consider the two ‘harder’ areas of technology and customer
data.
In order to protect the identity of the organisation, the company’s name and certain other
details have been changed. The aim of the case study is to describe the strategies and plans that
are being adopted by the business from the perspective of the personnel involved. The opinions
of these interviewees are expressed in the ‘Case Study Analysis’ section of the paper. These
views are then synthesised and discussed in relation to the Dibb and Meadows (2001) model.

CASE STUDY ANALYSIS

Bsoc is one of the largest mutual building societies in the UK with a history stretching back
around 150 years. With assets totalling £15 billion and more than two million members, Bsoc
has around 200 branches spread widely across the UK.
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Company
Bsoc has an energetic Customer Relationship Management (CRM) team which sits between the
Corporate Planning team and the Marketing team. The CRM team has responsibility for the
customer databases (see below) and carries out customer data analysis. This analysis leads to an
increased understanding of customer profitability, segmentation of the customer base and other
important issues. The result is that the CRM team is involved in Bsoc’s marketing planning and
targeting and has substantial inputs to the corporate plan and strategic issues. It is clear that this
organisational structure could create practical day-to-day problems if effective co-ordination
between the teams is not a priority. For example, sharing of data is needed with the Marketing
team which retains control of advertising, branding and product design. Strong linkages with the
Corporate Planning team and the Marketing team are therefore crucial if Bsoc is to pursue its
strategic goals in a well co-ordinated manner.
Bsoc is currently broadening the range of distribution channels that it offers to its customers.
For instance, significant investment has been made in telesales. Web-based projects are also
under development, but it seems that Bsoc has been slower than many other players in the
industry to establish itself on the Internet.

Staff
Bsoc has a number of staff related issues to consider including training, recruitment and
incentive schemes. The CRM programme has involved the company in a range of CRM-
related training initiatives involving all staff with direct customer contact roles. Levels of training
for branch and call centre staff have been increased so that new working practices associated
with the new computer systems can be established. Bsoc sees this as a sizeable and difficult
challenge to implement which will be ongoing for some time.
Bsoc does not have a centrally directed staff employment programme. The traditional
approach to recruitment has allowed branch managers considerable freedom over who is
recruited. The view is that these managers are able to use their local knowledge to tailor recruit-
ment and how jobs are advertised to suit local media and the needs of their branch. This
empowerment of branch managers also extends to some locally targeted marketing activity, with
managers given access to customer data and discretionary budgets.
 118 DIBB AND MEADOWS

Staff targets and incentives have historically been based on product-based sales targets and on
customer retention. Interviewees expressed two concerns about the schemes which are currently
in place. The first relates to whether the levels of bonuses are sufficient to change staff
behaviour. The second concerns whether the schemes need to be reviewed to reflect the Bsoc’s
CRM initiatives. In other words there is a view that the current schemes may not be the most
appropriate given Bsoc’s interest in customer lifetime value.

Technology
The CRM team sponsors a range of new technology projects. A major exercise was recently
undertaken to clean up Bsoc’s customer data and set up a new database. The new systems allow
Bsoc to merge data across their product range and create a detailed overview of each customer
relationship. Significant efforts invested in data modelling are also increasing Bsoc’s understand-
ing of its customers. Individuals with certain profiles on the database can now be pinpointed and
targeted with relevant direct marketing.
In branches, screen prompts have been created that encourage staff to cross-sell new products
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to existing customers. The same mechanism informs staff about any direct mail which customers
have recently received. Branch staff now have access to a complete, up-to-date picture of each
customer’s business. Staff performance (for instance, in cross-selling in response to screen
prompts) can also be monitored through the system. Cross-sales of new products to existing
customers have doubled since the introduction of the new systems. Maintaining this progress in
an Internet banking environment is a challenge which Bsoc might face in the future.

Customers
A loyalty scheme is in place to reward customers according to the length of their relationship
with Bsoc, the number of products held and the monetary sums involved. The scheme, which
is believed to be unique among Bsoc’s competitors, helps the business to retain and build
in-depth relationships with customers. It may also help Bsoc to retain its mutual status as it gives
customers a greater sense of involvement and demonstrates the tangible benefits of mutuality.
Bsoc operates a customer segmentation approach which is critical to its medium and long
term planning. The segmentation is based on the estimated present and future value of custom-
ers, as well as the length and depth of the customer relationship. Profitability data helps Bsoc to
decide where future resources should be focused. It also highlights customer behaviour, such as
movements between segments.
Picture portraits of each segment have been developed to help staff more easily relate
to the segmentation. The CRM team is aware that the segmentation may need updating as
customers make greater use of new delivery channels. Although Bsoc has not regarded Internet
banking as a strategic priority, a fresh look at customer segmentation will be required if its pilot
projects in this area are rolled out.

DISCUSSION
This section reviews the company, staff, technology and customer evidence for Bsoc and con-
siders the organisation’s progress towards a relationship marketing focus. As the literature review
has established, a number of barriers can impede the process (Dibb and Meadows, 2001; Perrien
and Ricard, 1995). These relate to the organisation’s structure, its understanding of the customer
 RELATIONSHIP MARKETING AND CRM 119

base, the technological resource at its disposal and human resource policies for recruitment and
training.
Like other organisations striving to implement relationship marketing, Bsoc must deal
effectively with these issues if progress is to be made. Overall, the company has been helped by
the fact that it is large enough to devote the required technological resource but small enough
to ensure that implementation is manageable. Bsoc is also aided by its mutual status which
drives members’ loyalty and encourages ‘closeness’ between both parties. However, some
aspects of implementation, particularly those associated with ‘softer’ issues such as people and
organisational structure, have been more difficult to handle. The progress that Bsoc has made is
therefore not consistent across each of the company, staff, technology and customer areas.
Judging Bsoc’s overall progress involves reviewing the discrepancies in progress across the
‘softer’ and ‘harder’ areas. The discussion therefore commences by considering the ‘softer’ issues
relating to the company and its staff where some serious implementation problems remain. As will
become apparent, greater steps have so far been taken with the ‘harder’ areas of technology and
customer data. In order to progress its relationship marketing and CRM goals Bsoc must continue
to address concerns in the ‘softer’ areas.
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‘Softer’ areas: the company and its staff

The importance that Bsoc attaches to relationship marketing is reflected by the powerful role of
CRM within the business. The CRM function uses its rich data sources to drive marketing
strategy and planning. However, it is less clear to what extent the belief in one-to-one and
relationship marketing prevails at all levels in the organisation. For the underlying principles
to permeate the entire company it will be necessary for all departments to adopt a consistent
approach. Yet there is evidence that a lack of interfunctional co-ordination, primarily between
CRM and marketing, is causing problems. The relationship between these functions is crucial if
the one-to-one future is to be reflected in the brand. However, at the present time the market-
ing programmes being devised by the marketing function do not always reflect the relationship
marketing message and may be a poor fit with the company’s stated strategy.
In the staff area, Bsoc has been considering a range of recruitment and training issues. A
particular focus has been the training of branch staff to use the new computer systems. Although
this initiative is ongoing and its success cannot yet be judged, an outcome is that training levels
are receiving greater emphasis. Once finalised, the new systems will allow the performance of
individual staff to be tracked so that further training needs can be assessed. The implementation
of the CRM initiative may have implications for staff recruitment, which currently is primarily
handled by branch managers. The absence of a centrally driven recruitment policy may become
problematic if decisions are made to empower staff further. In such circumstances Bsoc would
need to ensure that new recruits have the appropriate personal skills to cope.
Staff incentive schemes have not yet been modified to reflect relationship marketing prin-
ciples. Current reward schemes are based on product targets rather than on customer lifetime
value. If Bsoc is serious about relationship marketing and the one-to-one future, it must press
ahead with its review of incentive packages so that customer lifetime value becomes the focus.

‘Harder’ areas: technology and customer data

The ‘harder’ areas that must be addressed relate to technology and the handling of customer data.
Bsoc has responded effectively to the need for investment in these areas, with considerable
 120 DIBB AND MEADOWS

resource being ploughed into technology developments. The role of information in planning
and the need for clean data and fully integrated, customer-facing systems are clearly recognised
by the company.
Bsoc’s commitment has ensured that an excellent mix of attitudinal/buying behaviour data is
available and sophisticated data modelling is possible. For those dealing with customers, either
through the branch network or over the telephone, access to data is better than ever. The new
systems have resulted in fuller customer records containing details of all interactions with
customers. This greatly assists the process of cross-selling and also allows customer records to be
updated whenever contact is made.
The implementation of the new systems is still underway. The effectiveness of these improve-
ments in the integration of technology and the human face is dependent upon the success of
the training programme for branch staff. From a customer data perspective there is no doubt
that Bsoc has made substantive inroads towards a relationship marketing approach. The current
and potential value of customers is strongly emphasised and has been used as the basis for the
segmentation approach underlying Bsoc’s strategy. This approach, which involves the company
in anticipating customer needs, is consistent with relationship marketing principles.
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Bsoc’s technological commitment means that customer relationship marketing principles can
be used to implement the tactics associated with this strategy. In other words, Bsoc is using its
high quality customer data to anticipate and respond to needs on a one-to-one basis. Ultimately
the key to success lies in Bsoc’s ability to implement the approach at all levels in the
organisation.
The literature indicates that overly centralised or inflexible organisations may find it difficult
to adapt to a relationship marketing approach. There is no doubting Bsoc’s desire to invest
in relationship marketing. The company believes that better customer relationships lead to
competitive advantage. This is demonstrated by Bsoc’s commitment to its sophisticated and
well-established customer loyalty programme. The company’s belief in the one-to-one future
is being supported by substantial investment devoted to implementing the required technology
and processes. These investments are helping the company move towards a more customer-
driven and event-led marketing approach.

Where is Bsoc now?

As Table 3 illustrates, Bsoc is achieving a high relationship marketing focus in terms of ‘harder’
issues (technology and customers), but still needs to make progress with the ‘softer’ issues (com-
pany and staff). Change management literature notes that these softer areas are often the most
problematic but that they are also crucial to overall project success. For example, Blennerhassett
and Galvin (1993) describe the 1980s IT industry as being focused on technology first and
people second, before recognising that any technological solution must recognise the people
dimension. Similarly, Peppard and Rowland (1995, p. 99) observe that ‘processes can only
perform as well as the people who operate them’. Obeng and Crainer (1994, p. 6) argue that
BPR type projects fail because of their focus on ‘hard’ issues such as processes and systems; ‘the
“soft” issues—people, skills, behaviour, culture and values—are at least as critical, often more so,
but have tended to be relegated in importance’.
In terms of the Dibb and Meadows’ (2001) classification of financial services providers Bsoc
is a ‘Type B’ business, because it is demonstrating a strategic commitment to relationship
marketing. Of the three different ‘Type B’ scenarios Bsoc can be regarded as fitting the radical fix
category because it is effectively ‘re-engineering’ its strategic approach to embrace relationship
 RELATIONSHIP MARKETING AND CRM
TABLE 3. Research results: progress towards a high relationship marketing focus at Bsoc
Key Issues
Company:
• Use of distribution channels
• Stated desire for RM
• Belief in one-to-one future
• Belief that better relationships lead to
competitive advantage
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• Customer driven and event led marketing
Staff:
• Emphasis on excellent communication with
customers to ‘connect’ and spot opportunities
• Empowered, self-managed staff who can make
quick decisions for customers
• Reward customer retention, not just new accounts
Technology:
• Information is powerful and vital to strategy
• High levels of integration of systems and
processes, also customer driven rather than
account driven systems
• Giving staff full access to customer information
when dealing with enquiries
• Databases used for contact management
purposes
• All dealings with customers logged, allowing
continuity between transactions
• Customer contacts used as a market
research opportunity
121
Position of Bsoc on Key Issues
Company:
• Bsoc is interested in new channels,
but slower than some players to look at
the Internet
• Bsoc has shown commitment, and
invested in RM
• Commitment to one-to-one may not be
equally strong throughout the
organisation. Co-ordination between
functions, and consistency of approach,
are key here
• Strong belief, as shown by well
established loyalty programme
• Moving in this direction
Staff:
• Levels of training are improving, and the
new systems will allow the performance
of individual staff to be monitored. The
success of new initiatives relating to the
new systems will require close tracking
• Some empowerment at branch manager
level; more could be done here
• Incentive schemes cover a range of
targets; possibly still too focused on
product sales, but this is under review
Technology:
• This is recognised, and customer
information is used in strategic planning
• This is improving, due to current
initiatives, data cleaning and data
modelling. Also, computer screens have
the potential to be shared with
customers
• Bsoc is moving towards this, also better
availability of a rich mix of attitudinal/
buying behaviour data which could be
used to identify ‘life events’ in future
• Yes; also on-screen prompts introduced
to help with cross-selling
• New systems allow fuller records to be
held, giving details of customer
interactions, and allowing updates to be
made
• When the new systems are fully
operational, more could be done to
maximise this opportunity
 122 DIBB AND MEADOWS

TABLE 3. (Con’t)

Key Issues Position of Bsoc on Key Issues

Customers:
• Emphasis on current and potential value
of customers, with lifetime value focus
• Relationship achieved through integrating
technology and the human face
• Focus on easy, regular contacts with the
customer, and use these to update systems
• Anticipate needs through events-based marketing
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Customers:
• This emphasis is well established, and the
current investment in new information
systems is part of this commitment
• Attempts to improve this integration are
underway, with greater data availability
and a commitment to the required staff
training
• Many different opportunities are used to
improve data quality
• In theory, this in now possible. However,
many implementation issues will need to
be addressed

Adapted from Dibb and Meadows, 2001.

marketing and one-to-one principles. Even so, there is progress to be made in relation to the
‘softer’ issues.
These findings raise interesting questions about how the behaviour of businesses at the high-
end of the framework is changing. Comparing the approach of Bsoc to financial services
organisations at the high-end of the original framework brings the changing nature of relation-
ship marketing into focus. A period of three years has elapsed between the creation of the
framework and the current study. During this time various developments have been noted. First,
the language being used to describe the relationship marketing approach is changing. CRM,
which previously was rarely mentioned, now seems to be a preferred term for financial services
organisations. Second, a wider range of customer channels is generally now being used. Curi-
ously Bsoc, which has been slow to establish an Internet presence, has not been particularly
proactive in this regard. Third, the concept of customer lifetime value is becoming increasingly
entrenched, with considerable coverage in the marketing and financial services literature.
This has been matched by a desire by organisations to upgrade their technological capability to
manage customers at this level.
There is a growing realisation that it is impossible to avoid this kind of technological invest-
ment. Once the infrastructure is in place, the needs and wants of customers naturally come to
the fore. Once again this emphasises that considerable progress has been made in the ‘harder’
areas of technology and customer analysis. However, in some cases (and Bsoc is typical) staff training
may be slow to catch up and there may be difficulties ensuring the smooth implementation of
new approaches at all levels of the business. This is consistent with suggestions that in periods of
change staff and company structure issues may take longer to resolve.

CONCLUSION
The detailed financial services case study outlined in this paper has provided a vehicle for
examining the application of relationship marketing by an industry leader. In particular, the
analysis has pinpointed the recent progress of relationship marketing in retail financial services.
 RELATIONSHIP MARKETING AND CRM 123

The study has used an existing framework of relationship marketing in financial services as the
basis for the analysis.
The findings of the research highlight various barriers which can impede an organisation’s
progress towards a relationship marketing focus. These relate to the organisation’s structure, its
appreciation of its customer base, level of technological resource and human resource policies.
The analysis demonstrates that in practice it may be simpler to manage the ‘harder’ areas of
technology and customer analysis. Dealing with the ‘softer’ aspects of staff and company structure
can take longer and may be more complex. Even though Bsoc can be classified as a ‘Type B’
business with a high relationship marketing focus adopting a radical fix approach to relationship
marketing, human resource policies have been slow to catch up. As a result, the progress of
implementation has been somewhat impeded by certain structural constraints.
An important outcome of this application has been to identify key changes in the behaviour
of businesses at the high-end of the relationship marketing framework. Key differences
have emerged in the use of language, the application of different customer channels and the use
of lifetime value as a basis for assessing the worth of customer relationships. There is also an
acceptance that technology and systems are required that are capable of handling this change.
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Nonetheless, the ultimate success or failure of organisations pursuing a relationship marketing

vision lies in their ability to manage implementation at a much more human level.

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