Executive summary
This report is basically an exploration of Andy Wood concern regarding targeted marketing in financial service companies. The paper gives examples from freedom finance, one of the leading financial service organizations in the United Kingdom. Andy Wood argues that financial service sector has greatly lagged behind as far as customer relation is concerned.
The reason for the decline in customer retention in financial sector is due to poor Customer Relation Management and over concentration on young customers, without paying attention to older customers. The paper focuses on how Freedom Finance stresses the issue of communication and how it is relevant and targeted to its chosen customer base.
Freedom finance values communication with the customers and uses difference methods in order to keep in touch with its customers. For instance, the company uses telephone contacts, physical address and fax as a war of communicating with the customers.
The company also makes relevant information available to its customers in the company website. This is information entails the product description, terms of service, loan interest rates, maximum and minimum amount to be offered. The company also uses various strategies in ensuring customer retention which are discussed in this report.
Introduction
Marketing is a very vital role in success of any business. This is so because it brings the awareness of a certain product to the customer especially targeted marketing. Communication, being of passing information, helps to improve the interaction between the seller and the customer.
Information communication is very necessary as it will help in making strategic decision in marketing which can only be obtained from external sources. Communication has emerged as one of the key strategy in attracting and retaining customers in financial services organizations.
According to Wood (2008, p.1), most financial service providers face a challenge of retaining their customers due to poor communication. Customer satisfaction is directly correlated and when customers are satisfied, they stay and spend more in favor on the organization. This is termed as customer retention.
The objective of this paper is to address how targeted marketing standards could be improved in order to increase customer retention in the financial services sector. The paper focuses on analyzing how freedom finance, one of the leading financial services provider in the United Kingdom, addresses the need to make its communications more relevant and targeted to its chosen customer base and its customer retention strategies.
How freedom finance uses communication to its chosen customer base
Freedom finance group has been in operation in the United Kingdom for more than 25 years in providing financial services. It is one of the leading financial providers in the United Kingdom. It appears in the top list of the finance brokers in the UK and is currently operating in several countries including Spain, Sweden, and Ireland (Gantenbein, 2010, p. 1).
The company values its customers and customer relations management is its key strategy in maintaining its customers active in business. The company believes in treating their customers fairly in order to improve their retention.
Wood argues that financial service sectors are worsening in customer retention because of “over-concentrating on the younger consumer to the neglect of high-potential, wealthier, and possibly more appreciative older customers” (Wood, 2008, p.1). Freedom finance invests much in providing information to its existing customers and working hard to retain them. The information regarding the services offered by the company is well communicated to its customers.
One of the factors that keep customers in the business is effective feedback from the company. Clients may need answers to questions they have regarding the company and the products or services offered and it is the responsibility of the company to make answers available or accessible.
This improves customer satisfaction and makes them royal customers of the bank (Lancaster & Reynolds, 2005, p. 29). Freedom finance has a system that allows its clients to get feedback to their questions. According to Gantenbein, commenting on the reviews from the company customers stated that, “…if the clients follow the company’s protocol, they will get their questions answered in a timely manner” (Gantenbein, 2010, p. 1).
To retain customers in the business, the terms of service of the business must be clearly communicated to the customers. This will involve informing the customers of the benefits, costs and risks that may be incurred in the course of procuring a product or a service. In financial sector, such terms as loan interest rate, duration of repayment, default risks, installments, and any other related terms as they may apply to any given category of loanees.
Such information will help the clients of the product they are purchasing. According to Freedom Finance, freedom finance provides the terms of service in their website where they state that, “loans may be secured on your home…think carefully before securing other debts against your home…your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it…” (Freedom Finance, 2010, p. 1).
This information communicates relevant information to the clients regarding the risks they may be involved in as they use the company’s products and when they can incur such risks.
Communicating to the customers of any new product that the company develops also improves customer retention. Freedom finance has a website that is updated on regular basis in order to communicate to its clients and others of any development in the company. This enables the company to ensure that the clients get the best products or services that best meets their needs. This helps keep the customers develop as royal members of the company.
Financial service companies need to improve their closeness with their clients through providing valid contacts. Clients being the most important asset of the business require keeping in touch all the times especially during the normal working hours. In addition, there should be an established customer care centre where all types of enquires are addressed.
This goes a far way in ensuring that even the clients who are at a distance are kept in touch with any changes within the management. This helps a customer who might be in danger or in dire need to consult anything from the management to acquire the necessary feedback in good time.
By providing physical address to the clients, it makes them feel comfortable and secure to make calls at any time during the working hours and therefore they have no room to give chance to another company since their needs are met with. The working hours should be convenient to most of the clients as far as the security if the client is concerned.
Confidentiality of any information given to the financial institution should be regarded with a lot of care as this goes a long way in ensuring the security of the client’s details.
Personal information of the customer should not be leaked to other people without the authorization of the client as they are private and confidential. Freedom finance assures its customers the confidentiality of their information and this makes them gain confidence in the company. This assurance is clearly communicated to the clients via the company’s website.
Freedom finance marketing methods
A business that is already running means that there are royal customers that make the company going. Therefore, retaining the customer is one of the most important aspects in running of the business since it more expensive to acquire a new customer as compared to maintain the current ones in the business.
Freedom finance has applied a lot of strategies which could be effective in retaining its existing customers. One of the strategies that are clear from the company website is the long service hours. The company serves its customers throughout the week, from Monday to Saturday.
From Monday to Friday, the company serves its customers from 8 am to 9 pm and 8 am to 6 pm on Saturdays. This strategy will keep the existing customers in business because they enjoy long working hours from Monday to Friday. This is also capable of increasing customer royalty in the organization. The existing customers and those joining the company will enjoy such benefits.
The second strategy that is applied by the company is having an extended loan repayment period. Freedom finance loan repayment period ranges from 5 to 30 years with the loan amount ranging from 5 000 to 100000 pounds. This enables the customers to enjoy the loan facility benefits because they are able to get huge amount of money and repay within an extended period of time. This information is clearly communicated in the company’s website. All the company’s existing and the new clients have access to that information.
The loan interest rates are also low and affordable to the clients. This will mean that the loan monthly repayment is also low. The clients acquiring loans will have a small amount of money deducted from their monthly salary such that their budgets are not adversely affected by the loan.
The rates are as low as 8.9% depending on the facility that a particular customer acquires. It is stated in the company website that most of the clients pay 16% or less interest rates for the loan acquired. Less loan interest rate maintain long term relationship with the customers.
They stay in the business and consume the products of the company for a long period of time. Most of the financial service companies concentrate on getting new customers instead of retaining the existing ones. This is detrimental to their performance because the new customers will also soon leave the organization (Mohan, 2005, p. 8). Freedom finance values its clients and works hard to retain them.
The company also offers a variety of products that meet the needs of the customers. There products include personal and unsecured loans, mortgages and re-mortgages among others. This is a strong strategy for maintaining customer retention since the customers will get any facility that they need from the company (Kotelnikov, 2010, p. 1). The clients may not need to move to other banks in order to get loans or mortgages because they are all available at an affordable price from their bank. The clients therefore remain royal companies for the bank.
The other clear marketing strategy used by the freedom finance to retain its customers is online loan application process. The clients do not have to move to the bank premises in order to apply for the loan.
They apply online through the company’s website. This method caters for the busy clients who works throughout the week and may not have time to go to bank and apply for the loan. The clients are also able to apply for the loan even when away from the company premises. This saves them time and resources like money that they could otherwise spend while visiting the banks.
The dissemination of information by the company to its customer is also an effective marketing method (Fields, 2010, p. 1). The company avails a lot of information to the clients through posting in their website. There also contact details that the company provides to its clients. There is telephone number, physical address details, fax and a map. These contact details allow the clients too keep contact with the company and therefore they are able to contact in case of any need.
According to Freedom Finance (2010, p. 1), the company has a policy of treating its customers fairly, commonly referred to as Treating Customers Fairly (TCF). This policy is aimed at offering quality services to the company and maintaining close relationship with them. One of the components of the policy stares that the company will be transparent with regard to the product it offers and in case of any communication held with the customers.
Transparency is vital in ensuring effective Customer Relations Management (TRM). This is responsible for keeping the customers satisfied in the company and with the product. The company also commits itself to work with the clients in order to guide them on the products they would want to acquire from the bank.
The policy also shows the company commitment in behaving in a manner that will make the clients trust the business and long for having a long term relationship with the company. Through this policy, the company aims at creating a culture of fairness and seeking to know the clients’ needs in the business and meeting them (needs) appropriately.
The company also helps the clients with many debts from different or same financial services company to consolidate them into a single manageable monthly repayment. The company buys the debts that the client may have and the clients pay the company later. These debts may be higher purchases, high interest credit card and other debts that the client may be willing to consolidate.
According to Drummond, & Ensor (2005, p. 15), this may attract many customers with many unmanageable debts. Freedom finance states that, “Consolidation helps make your finances more manageable by switching all your outstanding balances into one easy to manage monthly repayment.” (Freedom Finance, 2010, p. 1). This benefits the clients and retains them as royal clients of the company. The company therefore has many strategies for retaining their customers.
All the above strategies ensures that the organization retaining its customers. Customers remain in the business because they have confidence in the products or services that are offered by the business. The success of the company is purely due to the extent that it satisfies its clients.
Freedom finance has attained the level of being one of the leading financial services providers because of the strategies that it applies in satisfying its clients and retaining them. Wood (2008, p.1) says that most financial services providers emphasize much on attracting new customers instead of retaining the existing ones that are wealthy and experienced in consuming financial products. He argues that customer retention is very important in financial services sector especially in banks, insurance companies et cetera.
Conclusion
Financial services have lagged behind in the retention of their customers. Andy Wood addresses the issue with a lot of concern because of the situation in the financial service sector. Freedom finance achieves customer retention because of the strategies that it applies. For instance, the company stresses much about the issue of communication. Communication has been identified as an effective method of retaining customers in the business (Butler, 2007, 23).
Customer Relations Management is what most of the organizations have failed to implement effectively thus unable to retain customers. CRM ensures that the customers get satisfied with the company products and become royal members to the organization (Lake, 2010, P. 1).
Freedom finance uses a lot of strategies to ensure customer retention and is discussed in the sections above. If every financial service company could devise effective methods of customer retention, then customer retention could be achieved in the financial services sector but only by the competitive company. Company should not only focus on bringing new clients but also retaining the existing ones who may have more potential.
Reference List
Butler, R. S., 2007. Marketing methods. University of Michigan: Alexander Hamilton Institute
Drummond, G. & Ensor, J., 2005. Introduction to Marketing Concepts. Oxford, Boston, MA Elsevier
Fields, B., 2010. Ten Strategies For Client Retention. USA: The Horizons Unlimited Group. Web.
Freedom Finance. 2010. Our experienced loan professionals are here to help you. UK: freedomfinance. Web.
Gantenbein, M., 2010. Freedom Finance: Profile of the Prominent U.K. Financial Group. UK: Suite 101. Web.
Kotelnikov, V., 2010. Customer Retention: Driving Profits through Giving Customers Lots of Reasons to Stay. Web.
Lake, L., 2010. Explore the Value of Customer Retention. New York: about.com, New York times company. Web.
Lancaster, G. & Reynolds, P., 2005. Management of Marketing. Oxford, Burlington, MA Elsevier, 2005
Mohan, J. R., 2005. International Marketing. Delhi and New York: Oxford University Press, New.
Wood, A., 2008. Targeted marketing, Financial World Online, 8th August 2008. Web.