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1 IntroductionLooking at customer relationship management at the Halifax bank as a whole would be a big job for anybody, which is why this paper hopes to gain an insight in to how customer relationship management at the bank is really put in to place at the retail level.This part of the organisation is the part that genuinely has contact with the consumers, physical/verbal contact; which is why it is an interesting part of the organisation to focus on. The research conducted will be the interviewing of 4 sales staff, 2 branch managers, 2 ex-employees and surveying approximately 20 consumers. This research will be the main basis for the knowledge built in order to construct this paper.

The paper will research current Customer Relationship Management (CRM) systems in place at the moment and weaknesses that affect the efficiency and effectiveness, more specifically looking at cross selling and the overall objective of customer relationship management and recommending ways that it could be improved.2.1 Background Information – The OrganisationOn the 19th January 2009 Lloyds TSB Group plc completed the acquisition of HBOS plc and became Lloyds Banking Group plc, making Halifax part of the largest banking group in the UK; a group by where 1 in 3 of people in the UK bank (Lloyds Banking Group, 2009).On the basis of “reputation and recommendation” the Lloyds Banking Group aims to be the best financial services provider in the UK (Lloyds Banking Group, 2009). Despite this, both Lloyds TSB and HBOS will continue to operate as separate entities for the time being.In 1997 Halifax was its own brand and operated as the UKs biggest building society. Halifax then demutualised and became a bank, before merging with Bank of Scotland in 2007 to become a brand name in the HBOS group (Lloyds Banking Group, 2009).

Halifax as a brand is still the UKs biggest provider of residential mortgages and savings, which is probably because they have maintained a good reputation as a specialist in these areas from their times as a building society (Lloyds Banking Group, 2009).2.2 The MarketMany blogs and Medias suggest that the public do not trust banks to fulfil their promises and in the current economic crisis there is a general fear of bank failure and as a result a loss of consumer funds.In response to this the highly regarded ‘Which?’ magazine has been advising savers to spread funds over a number of different banks (Telegraph, 2009).

The reasoning behind this will be because at the time the FSA (Financial Services Authority) rules stated that only £35,000 of consumers’ money will be protected in each bank. This £35,000 is protected in the following way, the first £2,000 will be 100% protected, whilst the following £33,000 will be 90% protected. Therefore assuming you have £35,000 invested, you will receive £31,700 back, if the bank was to go bust.

2.3 What is Customer Relationship Management?According to Jobber (2004) CRM is the methodologies, technologies and e-commerce capabilities used by firms to manage customer relationships.3.1 What is in place at the moment?At the Halifax, departments run independently for each product area. For example, there is an area for bank accounts, credit cards, insurance, mortgages, investments, etc, and each department does not have access to real time information about the other.When the marketing department takes an individual snap shot of each customer they can collect information from each department and from external sources such as Experian or Equifax (external credit reference agencies that gather information about people’s financial behaviour from all banks). This allows the bank to segment each customer by risk, which is sensible, the less risky you are as a customer the cheaper it is to borrow money and the more products are made available to that customer.

However, at branch level all of this information is not available and operations are run differently. By referring to Appendix 1 you can get an insight in to the way each branch in the retail banking environment is set out, which offers understanding as to why the CRM operates in the way that is does. Each branch runs as an independent small business in competition with the others and a Single Customer View is not available.3.2 Using CRM for Sales in the BranchThe CRM operated by Halifax is supported very well by the infrastructure of their database and I.T. systems used. Figure 1, below, shows how data is collected and processed in to a useful source of information that is used to target customers for potential sales.

Cross sales are then converted in the appointments/reviews conducted by the advisers, which will be discussed next.Figure 1 demonstrates how data is collected during counter transactions and in banking reviews, the data about customers is collected and stored in the ‘Customer’ application. The data collected is analysed and processed at a central location/level and not by branch employees. Once processed, the information extracted in fed back to the branches in useful formats.One way the information is fed back in using the ‘Leads’ application. Advisers can enter the leads application, which is updated once a month for each folder.

In the leads application there are many folders that are named after products (i.e. credit cards, personal loans) and inside these folders there are lists of customers that have credentials that make them potential customer for that specific product.The advisers can use the application to find potential customers for products that they need to sell in order to hit their sales target; these targets are shown in appendix 2. The contact with the customer is normally made via telephone; however, if it is not possible to contact the customer the adviser will then send a letter.The other way that useful information is fed back to branch employees is in the form of pop-ups about customers on the transaction screen at the counter, an example of this is shown in appendix 3.These ‘pop-ups’ would not be on every customers screen, but attached to a customer that has been identified by the marketing department as good potential for a specific product. The information provided is enough to identify that the customer being served is the correct customer and give a basis for the conversation that the cashier may have with that customer in order to book that customer in for a review with the required adviser.

Approximately 20% of customers served at the counter with have a pop-up attached.Of the customers that have a pop-up on their screen, therefore they will be informed at the time of the transaction that the bank can either save or make them more money only a small proportion of those customers agreed to be booked in to see an adviser. When talking to managers and employees they felt that the customer felt like they were being “sold” to or had a “pre-prepared excuse” for not wanting to attend. This obviously goes back to the trust people have in banks and being more marketing savvy.3.2 Building a “Relationship” with customers in the branchHaving knowledge about the systems surrounding and supporting CRM at the Halifax it is also important to know how the relationships are actually formed. In the branch environment Halifax has the opportunity to communicate with customers on a personal level and build a relationship.

This opportunity is maximised by getting employees to adhere to the mystery shopper criteria when communicating with customers (Appendix 6).The Mystery Shopper is a person supplied by a third party organisation that enters the branch on a monthly basis, acting as a normal customer and quantifies the standard of service that they receive in the branch.Each employee is taught a structure in which to interact with customers on a day to day basis and to ensure that each branch sticks to this structure they are tested once a month by a Mystery Shopper and then the results are sent to the branch the following month.3.

3 Using CRM to tailor products according to customer valueThe research with managers suggested and from looking at the percentages of customers that are targeted using pop-ups, it is obvious to see that a small proportion of the total customers at the bank are responsible for the majority of the profit and a great deal of customers are not profitable at all. The managers estimated that up to 30% of customers generate no profit at all.At the Halifax they have put in place a system by where their ‘Easy Cash’ customers have had certain facilities taken away from them, such as counter service (appendix 5).

The Easy Cash account is an account available to those who cannot qualify for a full facilities account due to bad credit, therefore assuming that they will be unprofitable because of this. However, these customers only account for less than 5% of customers, therefore they do not account for all unprofitable customers.4.1 AnalysisSales – Acquisition v RetentionAt branch level the CRM that the research from Advisers and Managers showed was focused on the retention of existing customers. At Halifax there is a clear divide between Customer Acquisition and Customer Retention as spoken about by Bruhn (2003).

The research demonstrated that at branch level the expectation was to sell to existing customers. The employees felt that this could be controlled at branch level as they had sources of contact with these customers and information about the customers that they could use as a basis for a strong argument for having additional products (manage the relationship), whereas the acquisition of new customers was left to the mass marketing and then sold to in branch on demand.Figure 2, below, shows how communication with consumers changes over time, which is fitting with the Halifax case. To begin with the marketing department uses mass communication to tell potential customers about the Halifax brand and products in order to acquire new customers. Then in time communication changes and the branch will take the reins at the local level and talk directly with its own customers.The customer Application that has been mention previously is a good demonstration of what has been discussed by Foss (2002). The data collected creates a record for each customer, by where the bank can extract and analyse in order to target them for different products; segments.

4.2 Building ‘Relationships’ with customers4.2.1 My Mystery ShopAs discussed in section 3.2, Halifax has a rigid structure on communications with customers in branches and measures its effectiveness quantifiably, by using a “Mystery Shopper”. The purpose of this is to achieve a high level of customer service on a consistent basis.Taking this into mind further research was conducted by where a visit to an alternative branch took place and carried out a ‘Mystery Shop’.

Based on this they would have scored 92%, a score that in any walk of life would be a great achievement and based on how easy the staff rolled out the expectations it would suggest that they probably achieved this on a consistent basis. However, from a customer perspective it was not the best level of customer service. The member of staff was wearing her badge, thanked me for waiting, used the name and asked if anything else was required after the transaction. However, the entire script was said in a monotone voice and she yawned at least twice during the transaction and generally acted as though her knap had been interrupted.4.2.2 What Customers SaidCustomers have been surveyed in order to gain an insight as to whether Halifax was achieving its objective to offer a high level of customer service and ultimately build a true relationship with its customers.

The word relationship did not make too much sense to customers when referring to their bank; therefore they were asked if they trusted Halifax and if they were satisfied with the service they received.The service that Halifax offers is very regimented and transactional, which puts a wedge between them forming an actual relationship with their customers. The results of the survey are common with the sense of society about banks in general. More customers were satisfied with the bank than those that trusted them. This fitted with a number of blogs and what is in the media (Telegraph, Money Saving Expert, Datanomic, Finextra, 2009), there is a general consensus that banks cannot be trusted and that is what stops a relationship being built, but at the same time customers can still be satisfied with the products and service.

4.2.3 Moving from Transaction to RelationshipLittle and Marandi (2003) produced a framework that helps to understand relationships (Figure 4). The model shows how the satisfaction of a customer can change something that is transactional in to a relationship and furthermore, if the customer can learn to trust you, you will then receive commitment and loyalty in return.The expectations of a customer will influence their level of satisfaction, meaning that the higher the expectations of a customer the harder they will be to satisfy. As a result Halifax are making their objective more difficult to achieve by promising their customers to “Give You Extra” (Archer-Brown, 2009).4.

3 Customer ValueAs spoken about previously in section 3.3 the managers at Halifax recognise that there are a large proportion of customers that are totally unprofitable and therefore some customers are in receipt of a lower level of service.This is fitting with the “Whale Curve” as spoken about by Murphy (2006); Murphy recognises that a large proportion of the profit is accountable from a small proportion of customers. The whole point of recognising figures like these is to adapt the organisation with the aid of this information to make it run as efficiently and effectively as possible. The most profitable customers deserve the best service because they pay for it and the unprofitable customer do not; it is as simple as that.

A case study about British Telecom explained how they dealt with similar circumstances. For services such as their telephone enquires they would simply fast track the calls of their most valuable customers (Bruhn, 2003).British Telecom responded to this information in a more positive manner than Halifax. BT offered a better level of service to those customers of value, whereas Halifax offer a lower level of service to their less valuable customers.