Opinion: MRM v CRM
Valtech Ltd’s John Plumpton, explains why building societies need to adopt a unique form of CRM if they are to survive.
The way to improve customer service and relationships has been successfully demonstrated through the effective deployment of CRM across many industry sectors throughout the world. The secret to CRM success is not a mystic formula, but the result of sensitive assessment of customers needs and the organisation acting as a whole to give customers the communication channels, relationships, services and products that they require.
However, while the concept of CRM applies to most industries, others have more specific requirements.
Mutuals - membership-based organisations that take on savings and investments from their members to loan elsewhere – have a different business model to most publicly owned organisations. So, how should mutuals be interacting with their members?
The building society sector currently supports more than 15 million investors and 2.5 million borrowers; employs 36,000 staff; and engages customers across 2100 branches managing £160 billion of assets.
CRM techniques and solutions have been particularly sophisticated and successful within the financial services sector over the past five years.
However, mutual building societies do not have shareholders to whom they have a responsibility (or pay dividends to!) and so the concept is very different to them, although no less important. These organisations have to adopt Member Relationship Management practices to ensure the longeivity and satisfaction of their members. It is managing the customer not only as a user of its products and services but also an investor in the organisation. In essence, where CRM represents typically sales and services strategies, MRM represents sales, service and investor strategies.
The objective of MRM should be to establish loyalty through delivering appropriate products and services, as well as promoting and proving itself as a solid investment that delivers an understandable dividend to its members.
Few mutual building societies can consider that they are achieving this effectively. While some of the more astute societies have relationship management strategies in place, only a handful of these are close to exploiting their positions effectively to grow and win members. A key element is embracing the concept of the member as the investor; this is achieved through the provision of incentives, like Interest Credit Schemes and Member Discounts, as well as the softer issues of making members feel like they have a level of ownership with the society.
We see the same problems with CRM systems across all sectors and regions time after time. However, the most worrying aspect of the building society sector is that this is the norm, rather than the exception.
Recurring trends began to emerge as we undertook the research for the paper. In particular, we found that the channel strategies in real terms adopted by these organisations has changed little over previous years. Products are promoted through traditional branch and face to face intermediaries and are not being promoted through the medium their members might like, in particular the Internet. The branch is still the dominant channel for Building Societies, but they also need to consider innovative ways of reaching out to their customers.
Our research also showed that they are not building upon and exploiting the valuable information they have on their members to sell them appropriate products (for example, more than 90 per cent of building societies interviewed did not promote retirement packages to members nearing retirement age). Personalisation is also a huge problem, with only 12 per cent of sites investigated offering a degree of personalisation, despite claims of organizations treating customers as individuals
The need for effective MRM solutions has never been greater. Building societies are in a very competitive market place, particularly for mortgages and lending and they are all fighting to retain and win members.
Building societies need to adopt solutions that cover not only practical considerations but also involve softer issues such as perceptions, style and preferences, presenting the human-face attributes of the brand to which customers relate. Customers are beginning to be lured to more exciting alternatives, where products and channels are more personalised and unique to them.
John Plumpton is a Senior Business Consultant within Valtech's Business Consultancy arm. Valtech is a global consulting group that works with clients to deliver optimal solutions that solve business issues. Its integrated approach allows Valtech to help organisations plan technology solutions, build and implement them through managed project delivery and transfer the necessary technology skills to the in-house team via training services. For further information visit www.valtech.co.uk or www.valtech.com.