E-Finance Lab
Customer Management in the Financial Service Industry
(Prof. Dr. Bernd Skiera)
For decades, financial institutions have pursued strategies which are product and transaction oriented. Hence, they focused on the profitability of an individual transaction with a customer, rather than the profitability of a long lasting customer relationship. But financial institutions are becoming aware of the value of a customer relationship. This paradigm shift was primarily triggered by the research conducted by Reichheld and Sasser. They have shown that a customer relationship orientation can tremendously improve the overall profitability.
Financial institutions are now trying to derive clear benefits from perationalizing this customer orientation. Customer management has emerged as the marketing practice which aims to implement and to profit from a customer orientation philosophy. Customer management deals therefore with the acquisition and retention of customers with the aim to increase the customer lifetime value and customer equity, an aggregate measure of the life time value of current and potential customers.
