Customer strategy/customer service in Lloyd's TSB : A case study
Category : Case Studies Samples, Company Case Studies, Research Methodology, SWOT Analysis Examples, Wholesalers
Customer Service in Lloyds TSB
In order to provide a foundation for the paper, let us first differentiate the qualitative research with the quantitative research. The quantitative paradigm is based on positivism which takes scientific explanation to be nomethetic (i.e. based on universal laws). Its main aims are to measure the social world. To test hypotheses and to predict and control human behavior (Newman and Benz 1998). Quantitative research is based on the assumption that the world can be investigated using scientific method and that there is an independent reality. Quantitative research is based on the belief that measurable influences (independent variables) affect measurable outcomes (dependent variables) in a cause-effect manner. Quantitative research is generally conducted in a controlled environment, such as laboratories, or using anonymous data such as statistics collected through surveys, questionnaires, structured interviews or tests. Quantitative studies are studies in which the data can be analyzed using conventional statistical methods (Peat 2001). As its name implies, quantitative research is concerned with quantities – how to measure phenomena and how to express those measurement. A researcher who takes a quantitative approach to investigating a topic aims to learn more about it. Taking a quantitative approach to research implies asking questions about the phenomena that can be counted. Researchers who take a quantitative approach often work within positivism, as this paradigm frames the world as a collection of apparently independent phenomena to be counted, measured and otherwise catalogued as the prelude to deducing the rules or laws underlying them and giving them coherence (MacNaughton et al 2001).
On the other hand, the qualitative paradigm stems from antipositivistic, interpretative approach, is idiographic, thus holistic in nature, and the main aim is to understand social life and the meaning that people attach to everyday life (Peat 2001; Darlington and Scott 2002; Hansen 2006). According to Newman and Benz (1998) a qualitative research involves an interpretative, naturalistic approach of the subject matter. Qualitative research is about studying things in their natural settings. A researcher conducting qualitative research attempts to make sense of, or interpret, phenomena in terms of the meaning people bring to them. Qualitative research involves different methods of gathering and collecting of empirical materials such as case study personal experience, introspective, life story, interview, observational, historical, interactions, and visual texts. Qualitative research methods allow researchers to explore issues from the perspectives of the individuals directly involved in the experiences. In qualitative research, behaviors, understandings, actions and experiences are not measured using statistical analysis as in quantitative research (Devers 1999; Sofaer 1999). Instead, detailed written descriptions and explanations of the phenomena under investigation are produced. Qualitative methods are those that collect data in the form of talk, words, observations, visual images and documents.
Case study is a form of qualitative research. The case study approach, as an academic research, is widely used. The strength of a case study approach is that it is possible to handle several types of empirical material like documents, artifacts, interviews and observations. A case study is a specific instance that is frequently designed to illustrate a more general principle. The single instance is of a bounded system such as a class, a school, a community or an individual. It provides a unique example of real people in real situations, enabling readers to understand ideas more clearly than simply presenting them with abstract theories or principles. A case study can enable readers to understand how ideas and abstract principles can fit together. Case studies can penetrate situation in ways that are not always susceptible to numerical analysis. Case studies can establish cause and effect. One of their strengths is that they observe effects on real contexts, recognizing that context is a powerful determinant of both causes and effects. Contexts are unique and dynamic, hence case studies investigate and report the complex dynamic and unfolding integration of events, human relationships and other factors in a unique (Cohen et al., 2000, p. 181).
In archetypal form, the case-study strategy seeks to examine a single instance of some broader class of phenomena in order to generate a rich and complex understanding of it. Cases may be defined at any level of analysis from the individual and group to the organization, industry, economy, society and so on. By virtue of its aims, using this strategy often means engaging in a wide range of research methods such as interviews, questionnaires, observation, and the analysis of documentary records (Thomas 2004).
Advantages of the Case Study Approach
The case study is an excellent vehicle for research. It is a vehicle that is especially suited to small-scale research and may well appeal to a researcher carrying out an in-house research. Some advantages are the following:
1. It can be carried out by a single researcher.
2. It is relatively cheap and not dependent on expensive technology.
3. A case study will always generate empirical data and information.
4. It takes place in a natural setting within an actual organization (White 2002).
5. The results are more easily understood by a wide audience as they are frequently written in everyday, non-professional language.
6. They are immediately intelligible; they speak for themselves.
7. They catch unique features that may otherwise be lost in larger scale data; these unique features might hold the key to understanding the situation.
8. They are strong on reality.
9. They provide insights into other, similar situations and cases, thereby assisting interpretation of other similar cases.
10. They can be undertaken by a single researcher without needing a full research team.
11. They can embrace and build in unanticipated events and uncontrolled variables (Cohen et al., 2000, p. 184).
Disadvantages of the Case Study Approach
With a case study approach there are a number of limitations as follows:
1. The results may not be generalizable except where other readers/researchers see their application.
2. They are not easily open to cross-checking, hence they may be selective, biased, personal and subjective.
3. They are prone to problems of observer bias, despite attempts made to address reflexivity (Cohen et al., 2000, p. 184).
4. With a single atypical case study, it is often difficult to separate out what is unique to the organization involved and what is common to similar organizations
5. Case studies can generate a lot of information, since each different method used produces its own findings (White 2002).
The paper will tackle customer service at Lloyds TSB, United Kingdom’s leading financial services providers. In this research, the researcher will be using secondary data in analyzing customer service at Lloyds TSB. Secondary data are data that have been collected for some other purpose. Secondary data can provide a useful source from which to answer the research question(s). Punch (1998) mentions several advantages of using existing data. Expenditure on obtaining data can be significantly reduced and data analysis can begin immediately, so saving time. Also, the quality of some data may be superior to anything the researcher could have created alone (Thomas, 2004, p. 191). On the other hand, the chosen research method also has several disadvantages. Data that have been gathered by others for their own purposes can be difficult to interpret when they are taken out of their original context. It is also much more difficult to appreciate the weak points in data that have been obtained by others. The data may be only partially relevant to the current research question (Thomas, 2004, p. 191).
Lloyds TSB is a financial organization that offers different financial services. As such, the organization is considered as a member of the service sector. Quality in services is completely different from quality in manufacturing. Quality in manufacturing rested on the resolution of tangible, visible, persistent issues while quality in service is directly measurable only in relation to the tangible aspects of the transaction. Service quality is intangible and instantaneous. It perishes with the completion of the transaction and cannot subsequently be verified or audited. It depends not on what actually happened but on how the parties to the transaction feel about what happened. The manufacturing models of quality cannot deal with the problem of service quality because they focus on the tangible, not the intangible, and quality is verified and audited after the event. Service quality cannot be verified after the event; it must be assured before hand (Beckford 2002).
By definition, services are intangible. The product that is a service or that component of the product that is a service cannot be seen, touched, or felt. As a deed, performance or action, a service is consumed as it is produced, such that the acts of production and consumption are inseparable. Services are perishable, in that they cannot be inventoried or produced and stored for later use. Nor can they be produced without some level of customer interaction. Since services are produced and consumed in real time, they are inherently variable – from customer to customer, from provider to provider and from time to time for the same customer and/or the same provider (John 2003).
Characteristics of Services
Services as Intangible
Services are performances. Services cannot be seen but they can be experienced. The product is a process. Services are the result of value creating activities. The product being purchased is an experience and not a physical good (John 2003). In the hospitality industry for example, hotels provide the service of overnight stay as their core product. The customer does not take title to the room that is being rented. The hotel provides the use of the room for the duration of the time that the customer has paid for.
Services are Consumed and Produced Simultaneously
The acts of production and consumption occur simultaneously in services. Services are produced and consumed in real time. There is a great deal of interaction before, during, and/or after the service between provider and customer. In services, the provider is part o the product. The personnel that the customer interacts with are a part of the product (John 2003). For example in a bank, the quality of service provided by the bank teller is a factor in customer satisfaction. The bank teller is part of the product.
Services are Perishable
Since services cannot be produced and stored for later use, as physical products can, services are said to be perishable products (John 2003). For example in a restaurant setting, a waiter’s time or unproductive when he is not serving a customer. A bank’s customer service staff ready to handle customer enquiries is not producing a service unless there is a customer to serve. A vacant room perishes when a guest does not check-in within a given day. The factors of production such as labor, facilities, equipment, and billable time are the value-creating assets for the service provider.
Services vary from Production to Production
Service products as experiences vary form one experience to the next, form customer to customer, as well as for the same customer from one occasion to the next. When there are several steps in the service process where the customer interacts with several different personnel of the service provider, there could be variation from one interaction to another (John 2003).
Lloyds TSB is one of UK’s leading financial services providers. The operations of Lloyds TSB Group in the UK were conducted through over 2,000 branches of Lloyds TSB Bank, Lloyds TSB Scotland plc and Cheltenham and Gloucester plc at the end of December 2006. International business is conducted mainly in the US and continental Europe. Lloyds TSB Group’s services in these countries are offered largely through branches of Lloyds TSB Bank. Lloyds TSB Group also offers offshore banking facilities in a number of countries. Lloyds TSB Group’s activities are organized into three divisions: UK Retail Banking, Insurance and Investments and Wholesale and International Banking. Services provided by UK Retail Banking include the provision of banking and other financial services to personal customers, private banking and mortgages. Insurance and Investments offers life assurance, pensions and investment products, general insurance and fund management services. Wholesale and International Banking provides banking and related services for major UK and multinational companies, banks and financial institutions, and small and medium-sized UK businesses. It also provides asset finance and share registration services to personal and corporate customers, manages Lloyds TSB Group’s activities in financial markets through its treasury function and provides banking and financial services overseas (Lloyds TSB Annual Report 2006).
UK Retail Banking
UK Retail Banking provides a wide range of banking and financial services through its diversified, propriety distribution network and highly recognized and well-regarded brands to some 16 million personal customers through 2,000 branches across the UK. UK Retail Banking is the largest personal current account bank with over 12 million current account customers, have the largest number of internet banking customers in the UK and operate 11 call centers, all in the UK. UK Retail Banking’s strategic priorities are to grow revenue from its existing customer base; expand its customer franchise; and continuously improve productivity and efficiency. UK Retail Banking’s strategy is customer centric with its vision being to help its customers succeed financially so that they reward the company with more of their business, stay with the company longer and recommend the company to others.
Insurance and Investments
Insurance and Investments offers life assurance, pensions and investments products, general insurance and fund management services. The Scottish Widows brand is the main brand for new sales at Lloyds TSB group’s life, pensions, Open Ended Investment Companies and other long-term saving products. Lloyds TSB General Insurance is targeting growing share in chosen customer segments, developing key insurance partnerships, improving margins by better customer management and improving service and efficiency.
Wholesale and International Banking
Lloyds TSB’s business within the Wholesale and International Banking area cover a broad scope, serving thousands of customers, ranging from start-ups and small enterprises to large organization and global corporations. Combining the respective strengths of some 3,000 people in Corporate Banking and Products and Markets, Corporate Markets plays an integral role in leveraging and expanding the customer franchise and building deep, long-lasting relationships with around 17,000 corporate customers. Making Wholesale and International Banking a great place for the company’s customers to bank is its number one priority. As a relationship bank, Lloyds TSB places its customers at the forefront of its vision and it strives with passion to meet the customers’ needs.
Products and Services
The company offers a wide range of products and services for different types of customers. The products offered by the bank can include the following features: debit card, cheque guarantee, ATM functionality, overdraft, access cash machines, access to the account through telephone and internet banking, access to branch network etc.
Lloyds TSB focuses on building competitive advantage in its competitor markets by seeking opportunities to consolidate its position in business where it is already strong, through a combination of organic growth and acquisitions, and by divesting businesses in markets where it is not a leader. Products and services are managed and coordinated from the main office. The sales force is consist of bank advisors, colleagues, and customer service representatives.
One of the strengths of Lloyds TSB is its quality customer service. The company has a relationship focused strategy that serves as its greatest strength and a source of sustainable competitive advantage. Through the high quality service that the staff renders to the customers, the company achieved high customer satisfaction and advocacy. The company is notable for its ability to build long-term relationships with its customers. The company has a strong customer focus and it continues to enhance product capabilities and to improve processing efficiency. Another strength is the company’s employees who are the source of competitive advantage for the company. The company through its investments on the training, development and rewards of the employees have high employee engagement scores and strong sales performance.
1. Strong Customer Franchises – across its main businesses, Lloyds TSB Group has strong core banking franchises, but smaller market shares in associated product areas. Lloyds focuses on being differentiated in the creation of customer value to win a bigger share of its customers’ total financial services spend. Strong franchises depend on having highly motivated employees. Motivated employees, combined with investments in improving service, help to build customer satisfaction (Lloyds TSB Annual Report 2006).
2. Continuous Productivity Improvement – in recent years, the Lloyds TSB Group has been building a set of capabilities in ‘six sigma’ (error reduction), ‘lean manufacturing’ (operations efficiency) and procurement. Alongside those capabilities, the Lloyds TSB Group applies an ‘income growth must exceed cost growth’ discipline in setting goals for each business, requiring a wider gap between income growth and cost growth for lower growth/return businesses than for higher growth/return businesses. Finally, the Lloyds TSB Group has been simplifying management structures, aiming to reduce layers of management and increase spans of control (Lloyds TSB Annual Report 2006).
3. Capita Efficiency – Lloyds has developed a framework to be able to measure economic equity requirements across all its businesses, taking into account market, credit, insurance, business and operational risk. Using economic profit as a key performance measure enables the Lloyds TSB Group to understand which strategies, products, channels and customer segments are destroying value and which are creating the most value and to make better capital allocation decisions as a result (Lloyds TSB Annual Report 2006).
Lloyds TSB is a leading financial services provider in the United Kingdom with worldwide presence. The group focuses on quality customer services as a tool for attracting and retaining customers as well as encouraging customer loyalty. In order to achieve superior customer service capabilities, the group invests on technology as well as training its staff to be service-oriented (Lloyds TSB Annual Report 2008).
Customer service is often dependent on backroom operations, processing individual transactions and monthly statements, and the hardware and software necessary for these transactions. While rarely seen by the customer, such operating systems provide employees access to customer information and affect the accuracy and timeliness of processing. Competitive operating systems form a base for all customer service activities. Effective customer service starts with managements' commitment to invest in competitive systems that give employees an edge when dealing directly with customers (Reynierse and Harker 1992). Examples of the different systems that the group is using in order to provide quality customer service are discussed below:
1. Pegasystems – Lloyds has invested in business process management software to improve process efficiencies and customer service in its payments exceptions handling function.
2. ACI – Lloyds TSB has implemented a gateway which will link to the Faster Payments Service infrastructure.
3. E-Procurement – Lloyds TSB has rolled out a new e-procurement system which it hopes will reduce costs and make its overall procurement process more efficient.
4. Web Camera System – Lloyds TSB is able to make a daily analysis of customer wait times, teller usage , and teller productivity by installing a new Web Camera system.
Technology is used in understanding customers and identifying their needs. One process that aims to understand customers is Customer Relationship Management (CRM). Customer Relationship Management (CRM) can be defined as the development and maintenance of mutually beneficial long-term relationships with strategically significant customers (Buttle 2000). CRM according to Plakoyiannaki and Tzokas (2001) is an IT enhanced value process, which identifies, develops, integrates and focuses the various competencies of the firm to the ‘voice’ of the customer in order to deliver long-term superior customer value, at a profit to well identified existing and potential customers.
Customer relationship management focuses on strengthening the bond between customers and the firm by maximizing the value of the relationship for the benefit of both the customer and the firm. As a business philosophy, CRM is based upon individual customers and customized products and services supported by open lines of communication and feedback form the participating firms that mutually benefits both by buying and selling organizations.
Customer Relationship Management has emerged as one of top priorities of many companies. When applied correctly, CRM uses technology that can help a company leverage increased customer knowledge to build profitable relationships. The focus is on learning more about customers and using that knowledge to refine every interaction with them. At a time when most products and services have become commodities, knowing the customer and treating each as an individual is the most effective way to win allegiance.
Customer Service Orientation
The group builds a customer-focused environment and trains and educates its workforce to become customer service-oriented. A customer focus according to John (2003) necessitates a deep understanding of customers and their activities, interests, and opinions around the particular value or solution that the firm is providing. It should be an attitude that is pervasive and that permeates throughout the firm such that it becomes ingrained as a culture. At Lloyds TSB people are the most valuable resource. Managing its people effectively is fundamental to the success of the business and achieving the group’s vision of being the best financial services organization in the United Kingdom. Creating a great place to work is a core priority of the people strategy which seeks to enable Lloyds TSB to be recognized, both within the financial service sector, but more generally in the UK employment market as the best company to work for. To achieve these goals Lloyds TSB aims to create a high commitment, high performance organization. The values of each business unit are based on the core group values of:
o Putting customer first
o Acting with integrity and respect
o Taking personal responsibility
o Working as a team
Customer Relationship Marketing
Customer Relationship Marketing is defined by Stone et al (2000) as the use of a wide range of marketing, sales, communication, service and customer care approaches to:
- Identify the company’s named individual customers
- Create a relationship between the company and its customers that stretches over many transactions
- Manage that relationship to the benefit of the customers and the company
Bose (2002) defines customer relationship marketing as involving the integration of technology and business processes in satisfying the needs of the customers. According to Swift (2001), CRM can be defined as an enterprise approach to understanding and influencing customer behavior through meaningful communications in order to improve customer acquisition, customer development and customer loyalty. He added that CRM must be integrated into everything a company does and must involve the entire company.
Primarily the aim of CRM is to build loyal customer relationships, where the organization can anticipate the needs of the customers, use information to personalize relationships, and encourage the customers to further their business relationship with the organization by earning their confidence and trust. CRM emphasizes three essential ingredients of customer relationships.
1. Customer Acquisition – identifying the profitable customers and creating strategies to attract them.
2. Customer Development – delivery of customer needs, wants and requirements when, how and where they want them to optimize profits and revenue.
3. Customer Retention – building and sustaining customer loyalty.
1. Effective Customer Classification – the management and staff analyze the customers (backgrounds, stay history, needs, wants etc.) through the company’s data mining tool and then group them into segments. Through segmentation, the company manages its customers as individuals or small groups and become more knowledgeable in analyzing customer data.
2. Services Segmentation – the company integrates services segmentation in its strategy. Through services segmentation, the company management and staff ranks its customers (according to guests classification) and then render services that are designed for particular segments.
1. Data Capture/Data Warehousing o data warehousing or data mining is being used by the company in collecting information about the customers. The data are gathered through customer-service provider interaction in every part or department of the company. Some of the factors the data that can be collected are customer behavior, customer value (profitability and potential, and customer portfolio.
2. Knowledge Management –Lloyds TSB manages customer knowledge. Customer knowledge management enables the management and staff to capture the customer’s previous and current status, the methods of transaction that they prefer, their future needs and future requirements.
1. One-to-One Marketing –Lloyds TSV gathers high volume of data about the individual and try to adapt its product and service offerings as closely as possible to the individual customer’s needs. Marketing decisions must be based on the knowledge of the customers’ behavior and attitude.
2. Loyalty Program –Lloyds TSB uses a loyalty program to gather information about the customer’s needs, demands, behavior and requirements. It is also an opportunity to stay in touch with the customer in a regular basis. It can also be an opportunity to customize the services that are rendered to the guests.
Dealing with Customer Complaints
In dealing with customer complaints, the company is very careful so as not to push customers to look for other service providers. The company makes sure that it deals with customer complaints in a way that make customers feel valued and appreciated. Here are some of the ways the company deals with customer complaints effectively.
1. Making sure that the customers can easily contact the company when they have complaints. It is important that the company provides information on how customers can reach it when they have complaints. The people who are in-charge with handling customer complaints must promptly respond to the customers.
2. Appreciating the customer’s time and effort in informing about the product’s or/and service’s weaknesses. Let the customer know that the information that he or she has given is valued and will be dealt with.
3. Dealing with the complaint promptly. By dealing with the complaint promptly and by solving the problem quickly, the company makes the customer feel that it is committed to customer satisfaction.
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