The Change Journey Toward Customer Centricity

Abstract

As a continuation to the case on a commercial bank presented earlier in Chap. 4, a top management team was assembled to put together a new business plan for the board’s approval. The team realized that the bank’s CCID (Current Customer Identification) had grown to more than one million customers. But its customer base was highly concentrated—out of the one million CCIDs, auto loans, savings and deposit customers accounted for more than 90%. Consequently, focusing on segmenting hire-purchase, savings and deposit customers should capture the bulk of the bank’s customers. The team had no time to conduct market surveys on customer buying value because of a tight deadline. It was assumed that the frontline staff (especially sales staff) had the bulk of customer information and their knowledge should be leveraged. The team then brainstormed to come up with a few alternatives to segmenting the existing customers. These alternatives were put forward to a select group of sales staff for their feedbacks. The team concluded that, at least for now, the bank could segment its customers based on their business interactions, which are driven by their financial maturity. Seven segments were proposed:

• Youth: Represents the least financially mature customer segment. They are mainly college students aged between 18–22 years old. They generally open a savings account and ATMs are their primarily means for interacting with the bank.

• Starter: This segment is the least knowledgeable and perhaps the least educated. They generally have low-paid jobs and have a negative cash flow balance. They commonly use savings accounts and personal loans.

• Mainstreamer: This third segment represents the typical white-collar population. Aged 28–40 years, this segment is educated, with most having four-year college degrees. These customers are beginning to build their careers and assets. Most have savings accounts, car loans, house loans and personal loans. They are prime targets for more sophisticated financial products such as life insurance, retirement planning, and mutual-fund investment.

• Junior entrepreneur: These are customers who have just started their own businesses. They are self-employed or freelancers with moderate incomes, but they have acquired substantial financial knowledge and are interested in further enhancing their ability to leverage the bank’s other commercial products.

• Achiever: These are upper-middle-class Thais that are excelling in their careers. If they are business owners, they are well-established small business owners. They are quite knowledgeable about financial dealings with the bank and perhaps, represent its most sophisticated customers.

• Wealthy: This segment comprises wealthy, financially independent Thais. As a group, they are the bank’s premier, high net-worth customers. Most customers in this category maintain large cash balances in their savings and deposit accounts. They are conservative investors but have the tendency to shop around for the highest rates. Some are much more sophisticated than others and are willing to spread their investments beyond savings and deposit accounts.

• Retiree: This final group of customers is the most risk-averse. They live on their retirement incomes and maintain minimal-to-moderate cash balances. They are the most passive customers.