What other services marketing strategies that First Direct Bank can use other than the SWOT analysis.

An analysis of strengths and Weaknesses of First Direct bank.

Strengths:

1)       Innovation

·         The bank was the first to introduce telephone banking, and it managed to operate for seven years, and being a success.

2)      Research and Development

·          A thorough research was carried out by Midland Bank which led to the formation of First Direct Bank.

·         In this research , results indicated that 20% of account holders had not visited their branch in the last month, 51% said they would rather visit their branch as little as possible, 48% had never met their branch manager, 38% said banking hours were inconvenient, while 27% wished they were able to conduct more business with the bank over the phone.

·         All in all , the bank’s foundation was bases on research and development , and thus it owed its success there.

3)      Marketing

·         Customer service- the heart of the bank was the call centre, regular customers could call at any time of the day or night at a special telephone number charged at local rates, regardless of where the call originated in the UK, or even overseas.

·         Customer loyalty schemes- the bank offered an automatic fee-free cheque overdraft facility, there were also no transactional charges for any of the bank’s basic services.

·          Advertising and promotion- the bank carried put an extensive advertising campaign soon before its launch in Britain, and it did not stop there ,in 1996 it turned to WCRS a major international advertising network, it also mailed out brochures explaining the mechanics of telephone banking, and combined mailing with press ads. All this together generated an overwhelming number of customer enquiries.

·         Sales force motivation- the bank’s facilities reflected the needs of a 24 hour banking, the company restaurant served breakfast , lunch and supper for free, there was all night security to the car parks and reception areas, and vending machines made hot and cold drinks available free of charge around the clock.

·         Compensation and motivation- the level of basic pay related to the market and to individual acquisition and development of skills rather than to the pay and grading structures of traditional banks. It provided a benefits strategy which included a mortgage subsidy, a pension scheme and 27 vacation days.

·         Training and motivation- First Direct bank had a reputation for providing comprehensive training , recruited from a non-banking bank ground did not come into contact with customers until they had successful completed a seven week training course , and to become a full fledged bank representative required 54 internal accreditation tests over the first nine months of employment.

·         Customer orientation- the management information database software combined transactional information with behavioral data to predict the next product a customer was likely to purchase, and the data base helped to personalize conversations with customers. If callers were put on hold for more than two minutes, bank representatives apologized and organized a call back.

·         Customer relationship- the commercial department‘s principal function was data management geared at building a one to one customer relationship.

·         Customer retention- when things went wrong, bank representatives went overboard to recover customers.

·         Product reputation- in only seven years, First Direct had made a significant impact on industry and had become a worldwide reference for telephone banking.

4)      Management

·         Organisational culture- the corporation mission statement greeted all employees as they entered the lobby at each site. It had five core business values which are responsiveness, openness, right first time, respect and contribution and this was widely shared by employees. In 1996 a sixth core value ‘kaizen’, or continuous improvement. Everyone ate on the same cafeteria.

·         Quality of top and middle management- known for its leading edge management practices, First Direct attracted top quality managers. Most managers worked on the floor where they could get first hand feedback from the employees and a feel for service levels.

·         Organisation –in February 1996, the bank’s CEO, Newman restructured the business into five units that operated as profit centers, and with this structure each business could eventually acquire customers directly - including the call centre, the new customer team, customer service relations and enquiries, customer service support and business planning.

·         Knowledge of business

·         Loyalty.

5)      Customer Base

·         Size and loyalty- by April of 1996, the company had acquired 641,000 customers, it served a customer base equivalent to 200 branches by early that year, and the total number of accounts were 1,100,000 yet it had only one branch.

·         Market share.

6)      Operating costs

·         The bank’s staffing costs were about half those of a typical retail oriented commercial branch; the telephone bank employed only 2400 individuals, while a branch network would require a staff of 4000.

Weaknesses

1.      Innovation

·         The  bank was slow to innovation, although it was the first to successfully operate  telephone banking, critics charged that First Direct had not kept up with banking technology as it did not an on line home banking service. There was also a significant minority of its customers who had requested PC access to their accounts. Although the HSBC Group signed a deal with Microsoft in late 1995, First Direct did not except to offer an online banking service until 1997.

2.      Research and development

·         The bank’s inability to carry out continuous research and development, restricted it from being innovative, and it opened way to stiff competition, as financial services were not only limited to the banking industry, by 1996 .

Opportunities

·         Skeptics doubted that the concept of telephone banking would ever catch on, or that it would ever be profitable.

·         Existing banks never feared that it would gain significant market share, because it targeted individuals with relatively high disposable incomes.

·         The media reported that the bank was a flop, when it failed to acquire new customers, soon after its launch.

·         All together all these criticisms created an opportunity to First Direct bank, to prove itself and design strategies that would take the banking industry by a storm overnight, while the rest of the stakeholders were not anticipating anything outstanding and extraordinary from the bank.

·        It became the most profitable bank, even more profitable than Midland bank because, Midland Bank saw an opportunity in understanding consumer needs, taste and preferences. Threats

·         There was anticipation that another bank would introduce a similar telephone service.

·        Failure to be constantly innovative was a threat which could result in loss of market share due to new entrants in the market. It opens the gap for threat of new entrants and barriers to entry.

·        Its management styles was a threat in the near future, the bank feared that its management methods would not be appropriate in the future.

·        There was a threat that the company could be faced with retrenchment in the near future, its employees was estimated to grow to 10,000 in five years. If it had to continue applying its existing operating methods, it faced was due to cripple and its future was shaky.

Other services marketing strategies that the company could employ.

1)      Service quality

·         The company could improve on service quality, its credibility, trustworthiness and believability was now in question, it is said that there are some customers who complained that the bank had grown too quickly, so it had to remove doubt in customers’ minds, otherwise queries lead to customer dissatisfaction, and this is likely to result in defection.

·         Though the company had relationship approach with customers, lack of direct contact with customers, can lead to the creation of service gaps. Services require face to face direct contact with the service provider because banking is high risk.

2)      Customer loyalty programs

·         The bank could increase on its customer loyalty programs, since by the end of 1996, more and more companies were now offering financial services. The company needed to maintain its competitive edge, and to hold on to its existing customers to reduce customer defection.

3)      Service failure and recovery strategies

·         The firm can employ service recovery strategies such as measuring recovery costs, encourage complaint behavior- listen and learn customer complains, respond to customers quickly, and employ front line staff who can relate and emphasise with customers.

4)      Service blue printing

·         This is simply a flow chart of the service process in which all the activities, their sequence and interaction are shown. This could be an important strategy because the bank’s core business is to provide services.

5)      Service design strategies

·         Services need to be designed in order to allow for efficiency and ‘do it right the first time’.