| Introduction | | | | The organization normally calculates this amount by |
| The Company to be examined is Citigroup. This is an | | | | getting the ratio of clients who stuck with the firm after |
| internationally recognized banking institution. It was listed | | | | one year to the ones that started with the Company |
| among the top ten banking Companies in the world in | | | | at the beginning of the year. The percentage is then |
| 2006. The Company provides banking services to 200 | | | | calculated. What normally occurs is that the bank uses |
| million clients coming from all corners of the world. Its | | | | the values of their retention rates to determine which |
| 300 branches are located throughout South and North | | | | services are the most valuable among them. This also |
| America, Asia, Europe and even Africa. Citigroup was | | | | forms the basis of market segments. Such a strategy |
| started in the year 1817 and has continued to grow | | | | was implemented under the leadership of John Wheat; |
| since then. It formed the Bank Hand Lowy in 1870 and | | | | a relationship marketing director of the firm. Market |
| Salomon Brothers in 1910. Today, there are plenty of | | | | segmentation on this basis has become one of the |
| brands that are synonymous with this banking | | | | cornerstones of conducting business on Citibank. |
| institution. Some of them include; The Citi-Capital, | | | | Citigroup chose to offer credit card services in certain |
| Citigroup Private Bank, Diners Club, Primerica, | | | | branches after conducting a thorough analysis of |
| Citi-Insurance, Citi-Mortgage, Citi Financial, Citi Cards and | | | | customer preferences. In a country such as Malaysia, |
| many others. Most B2B Companies fall under the | | | | Citibank examined the population's capability both |
| Information technology sector. However, there are a | | | | financially and socially to take up the use of credit |
| few exceptions; Citibank is one such company. | | | | cards. After the bank realized that its market was |
| Although it belongs to the banking sector, it is backed | | | | ready for change, it introduced credit cards to the |
| up by B2B. It did this with the hope of integrating more | | | | market. Analysis of underlying issues also helps in the |
| technology into their business ventures. Their strategy | | | | process of determining whether or not to expand. For |
| was to engage in more e-commerce and reap the | | | | example, Citigroup established five branches in |
| benefits of this approach. (Butterworth-Heinemann, | | | | Malaysia after it realized that customers there were |
| 1991) | | | | ready for them. The bank was only aware of these |
| The report will examine some of the relationship | | | | issues after determining the underlying issues within the |
| marketing tools used by the Company in its operations. | | | | consumer markets- an exercise that is only possible |
| In this case, relationship marketing can be defined as | | | | through relationship marketing. Overly, analysis of |
| the use of marketing techniques to retain pre existing | | | | underlying issues has helped Citigroup determine what |
| clients. This form of marketing gained a lot of interest in | | | | customer's root problems are and what to do about |
| the corporate world (including Citigroup) because they | | | | those problems. |
| realized that traditional marketing had some loopholes. | | | | The bank has implemented the relationship marketing |
| The latter type of marketing focused on acquisition of | | | | strategy by ensuring that staff members are treated |
| new clients and did not have a strategy to retain them. | | | | well. It has put in place good employment practices and |
| Relationship marketing shifts from individual | | | | has also ensured that most of the employees have a |
| transactions with clients and instead deals with a | | | | favorable working environment. This implies that when |
| customer's cycle. Most efforts are directed towards | | | | those employees are communicating with clients about |
| satisfaction of customer's needs such that they may | | | | relationship marketing, they can do this thoroughly since |
| keep coming back for more business. | | | | there are no underlying issues to prevent them form |
| Application of Relationship marketing at Citigroup | | | | working well. Staff members have access to special |
| Three elements are necessary for the successful | | | | holiday packages, insurance offers, pension schemes |
| implementation of relationship marketing. These are; | | | | and others. These offers have boosted employee |
| - when consumer demand for a product is continuous | | | | morale and have contributed towards better service |
| - when consumers make the choice of one | | | | provision. Consequently, customer satisfaction has |
| commodity | | | | increased. (Gale & Chapman, 1994) |
| - when the customer has a wide range of products | | | | Citigroup has also implemented corrective measures |
| and services to choose from | | | | during relationship marketing. After the bank has |
| Citigroup's relationship managers have realized that the | | | | analyzed the underlying issues behind a consumer's |
| Company met all these three aspects. First of all, the | | | | preference, it normally undertakes a plan of action. |
| Company offers both investment and commercial | | | | Some of the activities that the Company has used to |
| services which means that clients have a lot of | | | | implement some of its action plans are; |
| services at their disposal. Some of them include; | | | | - enhancing employee practices |
| Mortgages, priority banking for high net worth clients, | | | | - enhancing reward systems |
| loans, investment banking, telephone banking and card | | | | - benchmarking |
| products. Secondly, clients in the banking sector are in | | | | - utilizing recovery teams |
| continuous need of these services. Lastly, those | | | | Most of the time, the bank normally benchmarks. It |
| customers who decide to do business with the | | | | determines what customer preferences and then uses |
| Company normally select one service or product. In | | | | those preferences as standards in performance |
| the case of Citigroup, some customers strictly come | | | | improvement. In addition to this, the bank has also used |
| to obtain loans, some would like to save their money | | | | the issue of recovery teams. For example, after |
| there but access it conveniently when need arises | | | | Citibank begun recording sub prime losses in its |
| (commercial services and card facilities). (Jackson, | | | | mortgage sector, the Company realized that |
| 1985) | | | | something drastic needed to be done in order to put |
| The organization has implemented relationship | | | | the financial giant back in business. It did this through |
| marketing through consumer tracking. Since Citigroup is | | | | the implementation of a recovery team. This has |
| B2B backed, then it was able to use a comprehensive | | | | helped the Company to get back on track because |
| data base to analyze what consumer tastes and | | | | there is more focus during problem solving. Normally |
| preferences are. It has been a leader in business | | | | when tasks are assigned without specificity then |
| communication with the client. Citigroup has been | | | | chances are they will not get completed. This is |
| asking its clients about their thoughts on the institution. It | | | | because members of an organization need to be |
| found that certain services were preferred over | | | | given specific responsibilities in order to concentrate on |
| others. It also realized that consumer kept coming back | | | | them. Generalization causes members of the |
| for certain products during definite seasons. It was able | | | | organization to become complacent. Citigroup saw this |
| to establish a pattern and focused its energies on | | | | and prevented it by using recovery teams. (Reichheld |
| products that gave them maximum returns. This was | | | | & Sasser, 1990) |
| also topped up by improving services that clients were | | | | The Company has used product bundling as an action |
| dissatisfied with. One such service was provision of | | | | plan in its operations. Product bundling occurs when a |
| housing loans. The Company found out that many | | | | given organization lumps up some the services they |
| clients were happy with their rate of loan processing. | | | | offer into one package which aims at improving |
| This made the organization very keen on this service. | | | | performance of some of them. By doing this, |
| Clients who came for this type of service received | | | | customers will feel as though they have obtained a |
| special attention, consequently, the product kept selling | | | | huge bargain and will be tempted to come back for |
| and more customers were retained. (Fornell & | | | | more. Citigroup did this through the use of a basic bank |
| Wernerfelt, 1987) | | | | offer to be included in service improvement strategy. |
| Personalized marketing is one of the cornerstones of | | | | Another action plan that has been taken up by this |
| relationship marketing and Citigroup was quick to notice | | | | bank is cross selling. After analyzing consumer |
| this. It involved the use of customer profiling techniques | | | | preferences, the bank has sold some services that |
| to market the organization's products. Here, a | | | | seem related to certain clients. For example, when a |
| customer's details are noted down by the organization | | | | customer has come to apply for a credit card facility, |
| of interest including what type of items they prefer | | | | the bank informs them about telephone banking and |
| buying. The organization can then establish a trend and | | | | some of them may be convinced to take up this offer |
| recommend certain commodities to them based on | | | | too. |
| the pattern. Besides this, organizations can be able to | | | | Similarly, the Company has also engaged in some |
| identify what types of customers are responsive and | | | | cross promotional strategies as a reaction to |
| focus on providing them better services. By doing this, | | | | relationship marketing. Here, the bank has offered a |
| companies will be improving their performance rate | | | | similar service to one that a client may be purchasing |
| and solidifying their market performance. Citigroup did | | | | but this is done through a discount. |
| this effectively through the use of its ‘First 30 days' | | | | The Company has also improved its computer |
| relationship marketing strategy. This was an idea | | | | systems through networking. All the branches located |
| pioneered by its relationship marketing manger in the | | | | throughout the world are interlinked and they can share |
| year 1987. The basis behind this consumer strategy is | | | | information. The purpose of such an approach is that |
| that new customers are followed up through | | | | the Company can very easily be able to assess |
| personalized marketing. This is done for a period of | | | | consumer tastes and preferences in other parts of the |
| one month such that the bank can obtain useful data | | | | world and use that knowledge to their advantage. This |
| about their new consumers. After that period, they | | | | is also related to relationship marketing because the |
| have full information about a customer's | | | | latter concept requires increased contacts and |
| responsiveness and can therefore deal with | | | | communication between an organization and the client. |
| customers who will give them adequate return rates. | | | | Some clients may be located outside the country but |
| Relationship marketing is something that cannot be | | | | can still benefit from the services offered by the bank |
| dealt with alone. It is a marketing strategy that involves | | | | through network interlink. Consequently, customers will |
| the use of all departments in the sale of products or | | | | derive satisfaction from services offered no matter |
| services. Good marketers know that one must | | | | where they are located. (Kotler et al, 1999) |
| integrate marketing functions into all aspects of the | | | | It should be noted that the reason why this strategy |
| business. It should not simply be left to certain | | | | was adopted by the Company was that switching |
| departments or groups. Citigroup has been very astute | | | | costs are rather high in the banking sector. One has to |
| in the implementation of this. They have included | | | | close their account before they move on to another |
| relationship marketing in the investment banking sector. | | | | bank. Relationship marketing is ideal for such a |
| They have also included it in consumer loans and | | | | scenario. However, if the switching costs were low, |
| mortgagees. The latter two services are particularly | | | | then it would have been more suitable to use direct |
| sensitive because lending to clients with bad credit | | | | marketing rather than relationship marketing. It should |
| history spells doom for any bank. Citigroup realized this | | | | also be remembered that relationship marketing works |
| and was quick to establish trends in these | | | | best when the making of a certain service involves its |
| departments. Although functions within the bank differ | | | | customers. This is quite applicable to Citigroup because |
| from others in one way or another, The Company | | | | most of their services are like that. For example, the |
| was bale to interlink all these elements through | | | | issue of priority banking for high net worth individuals |
| relationship marketing. (Gordon, 1999) | | | | involves clients, therefore using relationship marketing is |
| How Citigroup used the different approaches to | | | | quite appropriate in this scenario. |
| relationship marketing and benefits obtained | | | | Ways in which relationship marketing can be applied |
| During interactions with their clients, Citigroup normally | | | | Relationship marketing can be applied through a |
| asks clients through email whether they would like to | | | | number of methods. Some of them include; |
| participate in a survey. If the client accepts to take | | | | -internal markets |
| part, they ask them what services they prefer within | | | | -supplier markets |
| the Company and what services they would like to | | | | -recruitment markets |
| see improved. A survey is also done on prices of | | | | -referral markets |
| services on offer and suggestions noted. The bank is | | | | -influence markets |
| then able to determine what consumer preferences | | | | -customer markets |
| are and therefore acts accordingly. Clients were | | | | Relationship marking is not applied to the typical |
| content with the level of service provision compared | | | | consumer alone. It should be incorporated in dealings |
| to other banks. This meant that the Company now | | | | with all the above mentioned markets. (Buchanan |
| solidified the relationship between consumers and the | | | | & Gilles, 1990) |
| bank. Such a strategy put Citigroup ahead of the | | | | Referral markets refer to relationship marketing |
| competition because it had already determined exactly | | | | tailored to provide such intense satisfaction to the |
| what consumers are looking for through relationship | | | | consumer to the point of making an advocate of the |
| marketing. Other banks that may not have a very | | | | Company. When considering this type of marketing, |
| stable relationship with their clients do not have the | | | | Citigroup gave very efficient and comprehensive |
| ability to determine specific details that consumers | | | | services to its customers to the point that they started |
| require in their services. Such banks are subject to the | | | | talking about it to other clients. This meant that more |
| theory of economics called ‘the leaking bucket'. | | | | customers were recruited by the Company even |
| Here such banks spend most of their time and efforts | | | | without any investment into it. |
| in the acquisition of new clients and very little in the | | | | Supplier markets need relationship marketing too. Here, |
| retention of existing ones. Consequently, newer clients | | | | Citigroup forged a good relationship with its suppliers |
| only purchase items/ services once and never come | | | | who happen to be internet service providers. By doing |
| back. This means that the firm may get increased | | | | this, the Company became more efficient; the IT |
| profits as it gets new clients, on the other hand, it | | | | Companies always delivered their services on time |
| keeps loosing profits from the departure of old clients. | | | | and in good quality. For example, they coordinated |
| In the end, minimal profits are made. This sort of | | | | automated card services very well. Relationship |
| behavior is synonymous to a leaking bucket that never | | | | marketing in this area also boosted the way the |
| actually holds much content. Citigroup did not ignore | | | | Company dealt with its clients because the good |
| their old clients and this was the reason why they | | | | relationship with its suppliers increased efficiency of the |
| have been identified as one of the most profitable | | | | banks service delivery. Consequently, the customer |
| financial institutions in the world. | | | | was satisfied. For example, customers are able to |
| Citigroup has been able to benefit from relationship | | | | withdraw cash for automated machines efficiently. |
| marketing because of the following reasons. It has had | | | | Relationship marketing can also be injected into |
| to invest less in conducting the business. This is | | | | influence markets. Here, influence markets involve all |
| because very little amounts of money are required to | | | | the people who affect service provision within the |
| convince a long term buyer to purchase a certain | | | | organization in one way or another. Some of them |
| product. On the other hand getting a consumer to | | | | include; government regulators, standard bodies, |
| change their minds about conducting business with | | | | lobbyists, stockholders, venture capitalist, financial |
| another bank and choosing Citigroup can prove to be | | | | analysts, consumer associations, environmental |
| very costly because the Company has to be very | | | | associations and labor associations. All these groups |
| convincing. By retaining old clients, the bank was able | | | | are instrumental in the operations of Citigroup. By |
| to save up on some of its losses and maximize profits. | | | | establishing a clean reputation with them, the Company |
| Citigroup's relationship marketing has also worked | | | | has enhanced efficiency and exceeded customer |
| wonders for the Company because the bank can | | | | expectations most of the time. |
| convince long term customers about certain | | | | Lastly, relationship marketing is applied to consumer |
| complementary services on offer. For example, it is | | | | markets. These markets are the most crucial ones in |
| possible to inform a customer using the Bank's fixed | | | | the running of the Company. Citigroup has divided |
| trading services about some of the mortgage loans on | | | | consumer markets into two groups; the ones that are |
| offer. Old clients are more responsive than new clients | | | | yet to buy services from them and the ones who |
| because most of the time, new clients will only be | | | | have. The methods used to deal with these two types |
| looking for one particular service. They may not know | | | | of customers are quite different. New clients are not |
| the bank well enough to trust them for other | | | | familiar with Citigroup's product offerings, processes |
| complementary services. New clients are more | | | | and the way they conduct business. Old clients are |
| cautious that long term ones hence less likely to bring | | | | aware of what must be done to access certain |
| in more profits. (Prahalad et al, 1998) | | | | services. Therefore, minimal efforts are directed to |
| Old clients obtained through relationship marketing have | | | | thee types of clients. (Carrol & Reichheld, 1992) |
| themselves become marketers for Citigroup. This is | | | | It should be noted that relationship marketing is best |
| because the bank has already met all their needs and | | | | achieved hen there is adequate communication |
| they are satisfied with the services on offer. They | | | | between a give Company and the respective client. |
| have voiced their contentment to other new clients | | | | Clients need to feel appreciated by the Company. |
| and this increased Citigroup's client base indirectly. | | | | Companies should not show them that they are using |
| Citigroup has benefited greatly from relationship | | | | them to boost their sales. This aspect has been |
| marketing because of the level of predictability of long | | | | incorporated in Citigroup through its effective customer |
| term customers. The bank can know before hand | | | | service section where clients can air out their likes and |
| what kind of services a particular consumer will require | | | | dislikes of the services provided by the Company. It |
| and when this will occur. Consequently, it has become | | | | has also achieved this through the feedback channels |
| very convenient for the bank because they can plan | | | | it has on its websites. Here clients who give their |
| ahead or increase efficiency. On top of that, the | | | | comments on issues relating to the bank's operation |
| Company has to invest minimal amounts in the | | | | get a chance to receive feedback from their clients. |
| education of clients about the goings on in the | | | | Companies need to incorporate ideas generated by |
| Company. Most of them are familiar with all the | | | | customers on the design of their products and |
| processes required before consumption of a service | | | | services. This will go a long way in ensuring that |
| and little time is wasted. For example, long term | | | | customers are satisfied. It will also increase their sense |
| customers who may have been engaging in capital | | | | of loyalty of the organization after seeing that their |
| market trading with the Company may also be familiar | | | | suggestions are now part of the products on offer. |
| with the procedures required to obtain a consumer | | | | Citigroup did this during provision of consumer loans. |
| loan from the Company. This comes by virtue of the | | | | The Company received suggestions that during the |
| fact that interactions with the Company allow | | | | summer, there was assort of melt down in the credit |
| consumers to know much about the Company's | | | | markets. It noted this and changed the way it offered |
| product offerings. | | | | its credit to clients. (Gale & Chapman, 1994) |
| Because Citigroup has established some long term | | | | Needless to say, relationship marketing should only be |
| customers, this has prevented entry of new players in | | | | implemented after consumers have consented to the |
| the market. When clients have firm support for the | | | | activity. Organizations must not do this forcefully. |
| services provided by a particular Company, chances | | | | Citigroup has adhered to this principle through the |
| are very minimal that clients will leave that Company to | | | | requests that it makes to consumers before it asks |
| go and purchase services from another. This means | | | | for feedback from the internet. |
| that new entrants in the market normally have a | | | | Conclusion |
| difficult time and will therefore get discouraged from | | | | Citigroup has implemented relationship marketing |
| participating in the trade. This has been highly beneficial | | | | through a number of pathways. These can be |
| for Citigroup because market saturation has been kept | | | | summarized in four ways. Firstly, the bank has |
| low. | | | | predicted consumer behavior in the future through the |
| Citigroup's relationship marketing strategy has | | | | analysis of present trends. Secondly, relationship |
| contributed to its growth due to the high volume sales | | | | marketing in the bank involves retaining the client by |
| registered by the Company. This was brought about | | | | keeping them active. This can only be achieved by |
| by its long term clients. Whenever a company has | | | | satisfying their needs and by keeping them active. |
| invested in long term clients, the latter party will have a | | | | Thirdly, the bank has created a life cycle for some of |
| strong sense of loyalty towards them. This means that | | | | its services. It starts by asking customers certain |
| even minor changes in service costs are less likely to | | | | questions, when customers respond to those queries; it |
| cause a shift in their purchasing behavior. On the basis | | | | sends them feedback and the cycle goes on and on. |
| of this principle, Citigroup has a stable sales volume | | | | Lastly, Citibank has allocated resources towards |
| since most of its clients are loyal to the Company. | | | | achievement of relationship marketing; where |
| Citigroup has been conducting customer valuation. This | | | | resources in this case apply to the financial and time |
| means that the Company can reap the benefits of | | | | aspects of business operations. The Company has |
| determining what category a client will belong to. Some | | | | had to plan how to obtain information concerning |
| of these categories include the following in order of | | | | customer preferences and has acted on those plans. |
| importance; | | | | By adhering to these four aspects, Citigroup is a front |
| - prospective | | | | runner in the relationship marketing sector. (Fornell |
| - customer | | | | & Wernerfelt, 1987) |
| - client | | | | References |
| - supporter | | | | Prahalad, C. et al (1998): The end of corporate |
| - advocate | | | | imperialism; Harvard Business Review |
| - partner | | | | Berry, L (1983): Relationship Marketing; a journal by |
| Citigroup realizes that their most important customer is | | | | American Marketing Association, Chicago |
| the partner because he has the highest sense of | | | | Jackson, B. (1985): Build customer relationships that last; |
| loyalty. This type of consumer will normally approach | | | | Harvard Business Review |
| the firm and not any other whenever he has a baking | | | | Fornell, C. & Wernerfelt, B. (1987): Defensive |
| need. Such customers engage in all the commercial | | | | marketing strategy by customer complaint |
| and investment services provided by the bank. | | | | management: a theoretical analysis, Journal of |
| Citigroup has made it the main responsibility of its | | | | Marketing Research |
| relationship manager to make sure that most of the | | | | Gale, B. & Chapman, W. (1994): Managing |
| clients in the firm are converted from prospective to | | | | Customer Value: Creating Quality and Service That |
| partner. A prospective client is one that has not made | | | | Customers Can See New York; Free Press |
| up their minds about doing business in the firm. All the | | | | Butterworth-Heinemann (1991): Relationship Marketing, |
| other types of clients are listed in order of priority. | | | | Oxford University Press |
| Customer valuation is done in order to place clients in | | | | Gordon, Ian (1999): Relationship Marketing: New |
| any of the six groups. The bank then knows which | | | | Strategies, Techniques and Technologies to Win the |
| type of customers to take seriously and which ones to | | | | Customers You Want and Keep Them Forever; John |
| neglect. This is quite important in the mortgage sectors | | | | Wiley and Sons Publishers |
| and loan provisions. Placing customers in categories | | | | Reichheld, F. & Sasser, W. (1990): Zero defects: |
| has helped the Company avoid potentially harmful | | | | quality comes to services; Harvard Business Review |
| transactions in their business. Clients who have very | | | | Kotler et al (1999): Principles of Marketing; Prentice Hall |
| little potential will be avoided at all costs and their | | | | Buchanan, R. & Gilles, C. (1990): Value managed |
| contracts terminated. (Berry, 1983) | | | | relationship: The key to customer retention and |
| Citigroup has also placed customers in market | | | | profitability; European Management Journal |
| segments through the use of customer retention rates. | | | | Carrol, P. & Reichheld, F. |