An effective Customer Relationship Management could be able to help a company to compete in the market, acquire potential customers, retain profitable customers, lower operational costs, and finally bring in a profit. As the largest domestic bank in Hong Kong, HSBC adopted the Customer Relationship Management system in order to maximize customer convenience and provide anytime, anywhere and anyhow banking. Moreover, it is revolutionizing customer empowerment and beating its competitors in the market place.
Company Background The HSBC Group, one of the world’s largest banking and financial services rganizations, had Its beginnings In Hong Kong more than 130 years ago. Today, the HSBC Group has some 10,000 offices in 76 countries and territories in Europe, the AsiaPacific region, the Americas, the Middle East, and Africa. Globally speaking, at the Group’s core lies domestic commercial banking and financial services, which fund themselves locally and do business locally.
Highly efficient technology links these operations to deliver a wide range of international products and services, adapted to local customers’ needs. Input keywords Input your email 117 7/29/13 CRM lmplementanon HSBC I G-CEM The Hong Kong and Shanghai Banking Corporation (HSBC) is the founding member of the HSBC Group. It is the Group’s flagship in the AsiaPacific region and the largest bank incorporated in Hong Kong. Known in Chinese as Wayfoong (which translates as “focus of wealth” or “abundance of remittances”), the bank is also one of the SAR’s three noteissuing banks, accounting for more than 63. % of its banknotes. HSBC provides a full range of personal financial and wealth management services in Hong Kong. These include HKD/USD currency and RMB/ multicurrency savings accounts, integrated accounts, mortgage finance, ersonal credit services, hire purchase and leasing for motor vehicles, term deposits and credit/debit cards, financial planning, investment services such as unit trusts, bonds and certificates of deposit, local and overseas securities, broking services, Mandatory Provident Fund investment options, and insurance.
Services are distributed through channels such as HSBC’s ATM network, internet banking service, 24hour phone banking centre, more than 20 Mortgage Advice Centers providing customized advice seven days a week, and a network of over 180 branches and offices. At the end of April 2004, [email protected], HSBC’s internet banking service, was being used by over 700,000 customers. Define The Best Customer By performing customer segmentation, the company can make resource planning effectively and efficiently. Precise customer segmentation requires a huge amount of customer information and sales fgures for analysis.
To perform this, the company has to categorize its existing customers into active or inactive accounts. In addition, company should capture both the Prospectives whom the company’s sales team has information on and communications with and the Possible customers with whom the company does ot have direct communications. The customer pyramid model is one of the helpful tools for performing customer segmentation. It is the foundation of the 3C method. Below is the typical Customer pyramid which contains customer groups of Top, Big, Medium, Small, Inactives, Prospects and Suspects. ww. g-cem. org/eng/content_details. Jsp? contentid=2001 HSBC Personal Banking categorized customers by their “Total Relationship Balance”. To make it simple, it is the total amount of money flowing between the bank and the customer, including money deposits, investments, insurance, etc. From the above Customer Pyramid, the customer categories of HSBC Personal Banking are as follow: 1 . Top this is the customer segment the customers of which are those who have a total relationship balance of over one billion Hong Kong Dollars.
They are HSBC’s Premier Customers, and are the top 5% of highly valuable customers of HSBC Personal Banking. 2. Big this is the customer segment of those who have a total relationship balance of over one million Hong Kong Dollars. They are HSBC’s Premier Customers as well and are in the next 15% of highly valuable customers 3. Medium his is the customer segment of those who have a total relationship balance of over twenty thousand Hong Kong Dollars. They are the PowerVantage Customers of HSBC. They are the largest group amongst the customer segments, and make up 60% of HSBC’s Personal Banking customers. . Small this is the customer segment of those who have a total relationship balance below twenty thousand Hong Kong Dollars. They are the normal customers of HSBC Personal Banking. 20% of HSBC Personal Banking customers fall into this segment. 5. Inactives those customers whose account status is “Dormant” or “Closed”. Accounts with a dormant status are those accounts that have not been in operation for a long period of time, say 2 years. Accounts with a closed status are those that have been formally closed by the customers. 6.
Prospects those customers who are using HSBC products other than Personal Banking, such as Corporate Banking. The bank has some data about them, and has already established communications with him/her through their use of that product. 7. Suspects the customers of other banks. HSBC has collected some data about them, but has not yet established communications with them. As is the case in this fast changing and dynamic financial world, changes will occur due both to local and global factors, and the above fgure of “Total Relationship Balance” in defining the customer segments should be changed accordingly.
Therefore, it is suggested that the above segmentations should be done on a regular basis. Customer segmentation can also allow for more in depth analysis of customer performance to point out where those 20% of profitable customers are located. According to the customer pyramid of HSBC Personal Banking, the customer groups for Top, Big, Medium and Small have been fgured out. However, in order to find out their profitability, there are some more customer value parameters that have to be looked into. . High profitability, multi product packages usage There are many personal banking products at HSBC.
Investment and insurance are classified as high profitability so that HSBC will try its best to cross sell and up sell for its customers to buy more. On the other hand, money deposits are one of the low profit products. . Transaction amount per transaction Transaction amount per transaction is the amount of money involved in every single transaction. If a customer lways has a high transaction amount per transaction, the relative operational cost for serving that particular customer will be small, which means he or she is more profitable. Relationship over time Relationship over time can show the levels of customer loyalty. The longer a customer stays with HSBC, the higher the level of customer loyalty that can be attributed to them. . Referral record Referral record is concerned with the number of customers that are brought in by an existing customer. It also pertains to the willingness of the customer to refer HSBC products to his/her friends. Now, we can derive the customer profitability grouping as follow: 1. High profitability customers they are the customers in the Top and Big categories.
They use the high profitability, multiproduct packages. They have a high transaction amount per transaction. They have a long relationship over time with HSBC. They have plenty of referral records. 2. Sustainable profitability customers they are the customers in the Medium category. They use the medium profitability, multiproduct packages. They have the medium transaction amount per transaction. They have a relationship over time with HSBC but not for very long. They have some referral records. 3. Negative profitability customers they are the customers in the Small category.