Integrating the Activities Required to Recruit and Retain Profitable Customers in Contemporary Retail Banking

Today’s high street retail bank faces a major challenge in integrating the marketing activities required both to recruit new customers and to retain existing profitable ones. The challenge involves a judicious mix of “transaction marketing” – mainly aimed at winning new clients – and of “relationship marketing”- largely aimed at retaining present ones. Evidence from a detailed qualitative study of marketing practice in a UK high street bank, a subsidiary of an Irish headquartered bank, demonstrates just how problematic achieving this balance can be. The date indicates that this bank underinvested in a number of activities that are of primary importance in transaction marketing. For example, much product development had flaws and delivery systems often lacked efficiency/cost effectiveness. At the same time, the bank under-resourced the core activities in relationship marketing. For example, there was evidence of inadequate training for staff in relationship roles and some data management processes were underdeveloped. On the other hand, there was apparent overinvestment in what are generally known as promotional marketing activities. For instance, considerable monies were spent on advertising, merchandising and sponsorship, and a robust selling culture pervaded the organisation. The outcome in the bank under investigation was an intensive, time consuming engagement with the promotional side of marketing- made manifest, for instance, by an overly active cross selling of inadequately developed products to an existing customer base. In sum, neither good relationship nor good transaction marketing was executed. Instead the bank steered a questionable third way. These findings cast a shadow over the future of the high street bank as it is constituted currently.