Customer Relationship Management in the Financial Services Industry

By | February 9, 2018

Customer relationship management emerged as a response to decreasing customer loyalty in different industries. The reasons for decreasing customer loyalty in the financial services industry are manifold and closely interconnected. Three fundamental factors can be identified (Körner and Zimmermann 2000; Krishnan et al. 1999; Walter 2000):


  • New technological opportunities: The conceptual nature of financial services makes them ideal for distribution through electronic channels, for example, the Internet, which then makes it easier for competitors to enter a market.
  • Increasing competition by new market entrants: Supported by new technological opportuni- ties and deregulation, the market for financial services is being transformed into a globally connected emporium. Non- and near-banks, for example, telecommunication providers and financial consultancies, especially constitute a growing threat to established banks.
  • Customers’ changing behavior: Financial services customers are increasingly self-confident, better informed about products and services, and demanding of services, also as a result of technological possibilities.


These factors have led to the emergence of concepts that focus on the nurturing of customer relationships (Payne and Ryals 2001; Peppard 2000). Customer relationship management emerged as an amalgamation of different management and information system approaches, in particular relationship marketing (Sheth and Parvatiyar, 2000), and technology-oriented approaches such as computer-aided selling (CAS) and sales-force automation (SFA) (Gebert et al. 2003). Follow- ing Shaw and Reed (1999), we define CRM as an interactive approach that achieves an optimum balance between corporate investments and the satisfaction of customer needs in order to gener- ate maximum profits. It entails:

  • acquiring and continuously updating knowledge on customer needs, motivations, and be- havior over the lifetime of the relationship.
  • applying customer knowledge to continuously improve performance through a process of learning from successes and failures.
  • integrating marketing, sales, and service activities to achieve a common goal.
  • implementing appropriate systems to support customer knowledge acquisition, sharing, and the measurement of CRM effectiveness.

To integrate marketing, sales, and service activities, CRM requires business processes that involve customers to be fully integrated. These customer-oriented CRM processes are mostly semistructured, and their performance is predominantly influenced by the underlying supply of

Figure 6.2    CRM Processes in a Business Engineering Context

Source: Based on Gebert et al. (2003). Adapted with permission.

knowledge on products, markets, and customers (Day 2000; Garcia-Murillo and Annabi 2002; Schulze et al. 2001). Gebert et al. (2003) identified six CRM macroprocesses: campaign manage- ment, lead management, offer management, contract management, complaint management, and service management (Figure 6.2).

Campaign management is the planning, realization, control, and monitoring of marketing ac- tivities aimed at known recipients who are either current or prospective customers. The objective of campaign management is to generate valuable opportunities or “leads,” which can be further qualified by lead management.

Lead management is the consolidation, qualification, and prioritization of contacts with pro- spective or current customers. Contacts may be received from campaign management or other sources, for example, the service management process. The objective is to provide sales staff with a qualified and prioritized list of presumably valuable customers to make the offer management process more precise and effective.

The objective of offer management is the consistent creation and delivery of individualized offers. An offer management process may be triggered by a customer inquiry, a qualified lead, or an otherwise discovered opportunity.

Contract management is the creation and maintenance of contracts for the supply of a product or service.

Within the scope of complaint management, customers’ complaints are received, processed, and communicated within the enterprise. The objectives are to improve customer satisfaction in

the short run by directly addressing problems that led to complaints, and to feed a continuous improvement process to avoid complaints in the long run.

Service management is the planning, realization, and control of measures for the provision of services in the after-sales phase.

We used the three levels of business engineering and the six CRM processes as a priori speci- fications to shape the design of our case study research. Our objective was to obtain a more accurate deconstruction of the problem domain (Eisenhardt 1989).


Since the objective of our research was to analyze CRM challenges and opportunities in current financial services alliances, we adopted an exploratory case study approach, which is described in this section. Our approach is based on a case study method by Senger and Österle (2002), which is an adaptation of Yin’s methodology (2002) for business engineering transformation projects.

Case Sites

The research data were collected in a study of five Swiss and German financial services companies (Table 6.1) from April to September 2003. These sites were chosen for theoretical rather than statistical reasons. Selection was based on two criteria: purposeful sampling (different roles in the value chain, see Figure 6.1) and a willingness to cooperate (Yin 2002). Two of the companies are product providers, one is a relationship manager, and two are universal banks that assume both roles. Analyzing the different roles, we discerned different viewpoints and consequently gained a more complete picture of the possible challenges (Eisenhardt 1989). Table 6.1 provides a brief overview of the case sites.

Data Collection

In all five cases, data were collected through semistructured interviews with key informants and a document analysis of annual reports, organizational charts, and system charts. The structure for the central semistructured interviews was provided by Senger and Österle’s case study method (2002). The interview questions were based on the classification of the business engineering levels strategy, process, and system and may be summarized as follows:

  • Strategy: Why and how do you cooperate with partner companies in a financial alliance?
  • Process: How do you cooperate in the CRM processes of marketing, sales, and service, as well as in product development?
  • System: How is this cooperation supported by information systems?
  • CRM challenges: What are the challenges and opportunities in the area of CRM collabora- tion (on the strategy, process, and system levels)? How do you address them?

To clarify and elaborate on the case descriptions, they were reconciled with the interview part- ners, and sometimes required further interviews.

Data Analysis

We used a two-stage strategy for data analysis (Yin, 2002). During the first stage, the within-case

analysis of the data from each case study site was undertaken. The objective was to build an

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