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Measuring performance management

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					Measuring performance management




One of the greatest challenges for a service-oriented organization is the effective and
accurate measurement of customer loyalty. The customer is always right, so it is crucial
for the today's service focused financial institution to understand the needs and wants that
drive long-term customers. We have all read the statistics on how much it costs to attract
a new customer compared with the costs of retaining an existing one. Companies
therefore spend three to four times more money attracting new customers than they do
retaining those they already have. Yet, given that higher profits come from the retention
of existing accounts, the time to switch focus from attraction to retention is now.

In financial services firms, it requires less effort to retain an existing customer than in
most other industries. This is true in part because in the financial services industry there
tends to be greater loyalty than in, for example, the airline or car industry is first of all
harder to differentiate one bank, insurance company or stockbroker from another. A sexy
new car model, on the other hand, may sway a long-time Lexus owner to Jaguar or
another brand. Second, it is not only easy to purchase a ticket from a different airline, or
stay in another hotel, but these are also decisions that customers are faced with again and
again. Switching all of your financial portfolio or insurance policies tends to be a major
hassle that is perceived as unnecessary for its customers.

Consequently, financial services firms tend to have much higher levels of customer
loyalty. However, these higher loyalty levels are not often due to wonderful service, but
rather to the amount of effort needed to take business elsewhere. In short, while the
tolerance for mistakes tends to be higher for financial organizations, today's customers
demand courtesy, variety and value. Customers are growing less tolerant of poor service.

In the highly competitive financial services industry we are facing today, banks must take
steps to not only attract and retain new customers, but to keep them fully satisfied with
the services provided. And, since loyalty is the key to profitability, your organization will
be driving blindly without comprehensive knowledge of your client base. Effective
measurement practices can be a critical process in evaluating whether your customers are
loyal out of obligation, or if they are truly happy.


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Description: Measuring performance management