Answer 1(a):
CREDIT CARD MARKET STRUCTURE
The functionality of a credit card revolves around a well managed system. It is a mode of payment based on a promise between the bank and the holder of the card that he / she will make the payment in the future.
In the highly competitive market of today the bank intends to maximize its customer share by promoting the use of credit cards more and more. They do this by minimizing the limits off the card to ensure maximum usage. The more customers purchase using credit cards the more beneficial it is for the Bank (Stango, 2000).
MAXIMIZE MARKET SHARE AND KEEP CUSTOMERS
The best technique which the sales force of a bank uses to sell its credit card is to offer maximum credit limit on the card. They insure to the buyers that their card has maximum benefits and that a huge credit could be offered to customers with a good payment record. The functionality of a credit card relies on the promise between the Bank and the customer to pay the debt in time. The bank charges interest to the customers when they breach their promise of timely payment. This is how the credit card issuance structure works (Calem, Gordy, & Mester, 2006).
Answer 1(b):
MAINTAINING A LEARNING RELATIONSHIP WITH CUSTOMERS
It is very important that the Customer Relationship Management (CRM) strategy of the Bank is focused towards offering maximum satisfaction to its customers. This can only be insured if the Bank intends to maintain a learning relationship with its customers. The Bank must understand the needs of its customers and the issues which a customer might face if the credit limit of the card exceeds way beyond the limits which a customer can afford to pay. The experience which the Bank and its customers encounter with each other is an experience for both the parties. The bank can learn from the present scenarios and implement it in the future with other customers (Ryals & Knox, 2001).
The essence of maintaining a learning relationship between both the parties is to become smarter and smarter with each successive interaction. The learning relationship with a customer initiates with one-to-one communication. Learning relationship is also considered as the most distinct and prominent characteristic of the CRM strategy. The goal of a relationship manager is to increase the customer satisfaction and to increase the long term value of the relationship (Selnes & Sallis, 2003).
EFFECTIVE IMPLEMENTATION OF CRM STRATEGY
In order to provide an effective CRM strategy the bank must give its customers a delightful experience. The experience of such a nature would ensure maximum satisfaction of the customer. The learning of customer’s requirements ensures that the Bank is concerned about customer satisfaction. This is the prime goal for the CRM strategy. A satisfied customer turns to be an asset for the company. Satisfying customer needs is all about ensuring the organizations benefit in the future (Peppard, 2000).
Answer 4(a):
DBS Bank has always cherished customer satisfaction. It has a wide range of banking branches and ATM’s located all over the region. It also takes pride in the fact that it has various branches all around the globe. It offers to its customers various facilities to improve their banking experience. DBS bank has a catch line that privilege on the go, convenience at your fingertips.
DBS Bank has a wide product range of credit cards listed on its website (DBS, 2013). The differentiating factors which all these cards have is that they are broken down into several segments of the society. This is actually a card for all. Everyone can use this card and can find a specific use for them. As mentioned earlier a learning relationship is built when the organization does not focus on increasing its customer base but it plans to increase its product line so that it can improve its customer satisfaction rate. A satisfied customer is an asset for the company.
Other Banks also offer credit cards but there are very few examples of banks which go to such an extent to satisfy their customers like DBS bank does. This is the worthiness of the bank that it takes great pride in its customers. Its various product or cards offer to its customers with several payment plans. Apart from that it offers to its customer’s annual payment schemes and it also offers to its customers shopping limits on the cards. The company offers its customer’s exclusive card rewards. These are offered to the customers in several different forms. Some are offered points and some get shopping benefits in the form of voucher and tickets etc (DBS, 2013).
These are the differentiation factors which determine that whether a customer would be attracted to the product or not. If a bank fails to offer facilities which are less beneficial than that of it competitors the customer will jump to another relevant brand which is a competitor.
Answer 4(b):
In the banking industry when credit cards are debated, achieving the loyalty of a customer is the prime objective of the bank. The products which most of the banks offer are almost the same. The only factor which stops the customer from going to a competitor is satisfaction. If the customer has stayed with the bank from a very long period they should be given rewards for their loyalty. This will enhance the relationship and will result in ultimate satisfaction (Ryals & Payne, 2001).
IMPROVEMENT OF THE LOYALTY REWARDS PROGRAMME
The bank offers loyalty rewards to its valued customers or to those customers who have been with the company for quite a long period. The loyalty reward scheme as a name sounds more to be offensive for the customers. The loyalty rewards scheme can be improved by knowing more about the customer preferences. This scheme is good for the customers who have been with the bank from a long time. This is a bit de-motivating for the customers who have been with the company but have not been with the company for a very long time. These people cannot benefit from this policy. The loyal customers of the card are offered many facilities. This is because the bank focuses on maximizing the loyalty of its valued customers in such a way that they may not even think about leaving the bank (Yong, 2010).
The loyalty and the reward program can be made more and more fruitful for the customers by offering maximum benefits and appreciation to the valued customers. New plans can be initiated by giving old customers incentive with which they could score more point. Offer value added gift packages to the customers. It is important for the Banks to show to the customers that the Bank cares. Give them additional benefits like offer a vacation package on additional spending or attaining targets of the company. The value of the interest to be charged can be offered at a lower rate to its customers (Uncles, Dowling, & Hammond, 2003). The customers of the bank which have maintain a record for timely payment and a clean and timely payment structure can ensure an excellent and rewarding gift schemes by the bank. This will prove quiet motivating for the customers and will also ensure the loyalty to extend with time. The customers must be offered shopping points and discount offers on certain brands of the industry. This will increase a two way channel of collaboration between the bank and other businesses and it will also increase the customer base (Gómez, Arranz, & Cillan, 2006).
The current benefits associated with holding a DBS Bank credit card are that the users can avail instant benefits of electronic statements, transfer of balance, advance cash, payment of installments, the structuring of the payment plans, consolidation of bills, and many others (DBS, 2013).
The above mentioned facilities are essential for the customers. These are for the facilitation of the customers. The more a customer is satisfied the more benefits he can avail. In the end it can be concluded by the bank that by providing its customers with the above mentioned facilities the Bank can in the end attain all the desired tasks. The bank should believe in its customers and their end objective should be to strive in the business by creating new products for the customers and offering them value which they are seeking for. The easier availability of a product in the product line will ensure that all customers get what they want or at least they could find a product which is close to what they want. This will increase the loyalty of the customers and help the bank to increase its customer base (Foo, Douglas, & Jack, 2008).
REFERENCES:
Calem, P. S., Gordy, M. B., & Mester, L. J. (2006). Switching costs and adverse selection in the market for credit cards: New evidence. Journal of Banking & Finance, vol. 30, no. 6, pp. 1653-1685.
DBS. (2013). Credit Cards. Available from http://www.dbs.com.sg/personal/cards/credit-card/view-all-cards.page [Accessed 8 April 2013]
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Stango, V. (2000). Competition and pricing in the credit card market. Review of Economics and Statistics, vol. 82, no. 3, pp. 499-508.
Stango, V. (2002). Pricing with consumer switching costs: Evidence from the credit card market. The Journal of Industrial Economics, vol. 50, no. 4, pp. 475-492.
Uncles, M. D., Dowling, G. R., & Hammond, K. (2003). Customer loyalty and customer loyalty programs. Journal of Consumer Marketing, vol. 20, no. 4, pp. 294-316.
Yong, L. (2010, May). The Research of Personal Customer Relationship Management for Commercial Banks Based on Multidimensional Model of Customer Loyalty. In E-Business and E-Government (ICEE), 2010 International Conference on (pp. 3168-3171). IEEE.
