Customer value exchange
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Tyrone W. Jackson is an associate professor in Marketing at California State University, Los Angeles. He has more than 17 years industry experience working with Global 500 companies. He has held senior management positions for global management consulting firms, Accenture and KPMG Consulting (Bearing-Point). His areas of expertise are in direct marketing, data mining, analytics, CRM, and business intelligence. He earned his MA from Yale University in Economics; MS and PhD in Marketing Science; and Econometrics at the University of California at Berkeley.
Abstract This paper discusses the state of the US banking industry — its challenges and some of the common shortcomings of their current strategies — and presents compelling reasons why banks must re-formulate new strategies for growth and profitability focused on the customer. It proposes a framework, called the customer value exchange (CVE), as a potential solution that would enable banks to develop effective strategies tailored to their customers’ specific needs and perceptions of value, which are the drivers for profitability. This framework is organised into capabilities, which are explained in this paper. A sample process for how these capabilities are applied is provided with an emphasis on an iterative, dynamic refinement process. The iterative approach includes strategy, people, process, analyses and information that companies can integrate to yield higher value and exchange with the banks’ customers. The paper also presents a real company case study. This framework can be utilised by academics and industry practitioners of customer relationship programmes alike. Journal of Financial Services Marketing (2007) 11, 314–332. doi:10.1057/palgrave.fsm.4760045 Keywords Banking, customer value exchange, data warehousing, modelling, profitability, strategy
INTRODUCTION Today, the banking industry is consumed with mergers and acquisitions, joint ventures, fragmented competition, outsourcing, and business process re-engineering. Banks and non-banks alike operate in this marketplace. They are faced with consumers who are becoming more informed about technology and the internet with experience obtaining products and services from a multitude of companies through multiple channels across a global marketplace. As a result, the pure banking industry is facing erosion in the percentage of financial assets held by households and experiencing stagnant growth in penetrating consumers’ ownership of their Correspondence: School of Business and Economics, California State University, Los Angeles, USA Tel: + 1 323 343 2970; Fax: +1 323 343 5462; e-mail: [email protected]
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Journal of Financial Services Marketing
products and services. The challenge for companies in this rapidly changing global competitive environment is to maintain a clear understanding of how to create value for customers relative to the competition. Given these factors, there is not a clear consensus within the banking industry on what actions should be taken to address these challenges. Many industry e
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