Winning CRM Strategies

...and how community banks can implement them Every bank I have known, regardless of size, prides itself on providing good-quality customer service. In response to the question, What's your greatest strength? the answer is either Good-quality customer service, or know our The challenge is that the benchmarks for good-quality customer service and knowing your customer are changing dramatically, and yesterday's standards just won't enable a bank to win tomorrow. Banks will require new tools and strategies in the future in order to maintain this reputation, and that will likely involve CRM. The customer moves front and center A longtime friend recently reminded me that sometimes the simplest of concepts are the most difficult to grab hold of. Customer relationship management--or CRM--is one of them. On one level, CRM simply refers to organizing your bank around the needs of your most valuable (read profitable) customers. That's a straightforward concept, and just about everyone would agree it is a sound business strategy for any bank to follow. But once you begin looking at how to manage the customer relationship, you realize that CRM represents a new way of doing business for banks. It incorporates such seminal concepts as the sales culture, one-to-one marketing, data warehousing, data mining, customer segmentation, loyalty programs, and cross-selling. To the large banks and other financial services firms spending tens of millions to perfect these strategies, CRM is a state of mind, a behavior, an amalgam of strategies. Quite simply, it puts the customer at the center of the universe. It emphasizes profitability. And it's technology enabled. But what does all this mean for the community bank? In the community banking world, CRM must become a rallying call around which the bank organizes a customer-centric business strategy that harnesses information technology to discover and anticipate customers' financial needs and engages all the business lines in the bank in satisfying those needs. CRM uses both internal and external data to identify the bank's most profitable customers and prospects, and devotes time and attention to expanding account relationships with those customers through individualized marketing, repricing, discretionary decisionmaking, and customized service--all delivered through the various sales channels that the bank uses. Ironically, the definition evokes memories of an earlier time when community bank presidents knew all their customers and their families and negotiated loans and interest rates were based on how valuable the customer was to the bank. With CRM, such personalized business dealings are again possible. We are clearly coming full circle. CRM will enable large financial institutions to look, feel and act like a community bank--effectively managing hundreds of thousands of customer relationships through the use of technology-driven sales and marketing. Why CRM makes sense now Bankers' traditional strategy has been to attract large numbers of customers, one product at a time. They use the branch system and mass marketing techniques to attract deposit accounts and sell loans, and they treat everyone more or less equally, regardless of balances and numbers of accounts. At least three things have happened, however, to make this volume-based business strategy less viable and to demonstrate the need for CRM: 1. Competing financial services providers are arriving on the scene. They bring with them sophisticated marketing applications that are focused on attracting some of your bank's best customers. 2. New technologies are a relatively egalitarian tool. The very largest banks with their supercomputers and their tens of terabytes of capacity can manipulate their customer information in dazzling ways and at blinding speeds. …