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American Academy of Financial Management ™ Boards of Standards

The American Academy of Financial Management™ Journal

Volume 6 - Summer 2006

International Assigned ISBN(0-9749946-0-X)

Effecient CRM Strategies by: Michael Armstrong, MFP, CWM, CPM (Global Banking Consultant)

In the first of a series on retail banking issues Michael Armstrong examines the old, yet still unfulfilled concept of life event targeting and how it has many advantages over the existing paradigm of ongoing customer campaigns driven by expensive CRM systems.

Selling smart – using key life events to focus your sales effort

Last week my bank sent me a solicitation for car insurance that really showed up the fact that the huge investment of time and money into CRM systems, over the past 20 years, has not achieved very much. The letter inviting me to apply for car insurance, while innocuous, indicated glaring deficiencies in the way banks still talk to their customers. Firstly the timing was all wrong, I was not due to renew my policy for another six months; Secondly there was no recognition that the bank knew anything about me; the form was not pre-filled with any of my information and fulfillment required me to complete a 15 field form; thirdly the onus was on me to do send the information back to the bank.

Essentially the bank was engaging in a totally random turkey shoot of its customer database in an attempt to grow its general insurance business. By using such poor targeting combined with a lack of easy fulfillment for the customer the bank will struggle to make money out of this campaign. For it to work there needs to be a perfect alignment of usually uncontrollable variables. Firstly the timing had to be right - my insurance needed to be up for renewal, secondly I would need to be persuaded to complete the form and then send back to the insurance company, thirdly the price had to be attractive for me to switch. In my case they didn’t even pass go so I through the mailer in the bin.

The promise of CRM still unfulfilled

Much effort has been expended by banks to ensure they know their customers and can therefore anticipate their needs and thereby sell more effectively. While many millions of dollars, and senior management time, has been spent on CRM tools, complex system architecture, and the development of rules to understand customer needs, it is fundamentally a flawed approach resulting in scatter shot direct mail, ill-served customers with the needs unfulfilled.

Why has the investment in the Customer relationship management failed? I believe it is the fundamental failure to understand customer behaviour when buying financial products.

In research conducted by the Council for Financial Competition it was found that the timing of financial product purchases was most likely to be anchored around life stage events with the customer need for financial advice/products being driven by their own needs generated out of a key underlying event such as birth of a child. It was found, on average, consumers purchase many products in a short period followed by periods of low purchase with sales opportunities occurring only once every few years. One of the banks surveyed estimated that over a 5 year period, on average, it had 203 ‘service’ interactions with the typical customer, but only 1.4 ‘sales’ opportunities over the same period. More intriguing is the finding that multiple purchases of products occur at these life event triggers. After an initial purchase of a financial product 45% of customers bought a second product within a year.

Does this mean that CRM activities are not useful? No, it provides the opportunity for banks to refine their strategies, save their money, target better focusing on the key events in a person’s life and then cross-sell the relevant other products that go with that life event.

As an example the classic opportunity for banks is the purchase of property. The readily identifiable cross-sell products include building and contents insurance, term life insurance to ensure the property is paid out in the event of death. However, the real opportunity for the bank is the psychological condition of the customer. Having made such a large purchase and by its nature probably a major shift in their financial situation, they are then open to re-examining their basic financial condition and better prepared to discuss their needs beyond the immediate mortgage transaction. The other discussion could focus around items such as financial planning, investment strategies and ultimately retirement. It is at this stage that the well-equipped financial organization will approach the customer armed with a well thought out proposition.

The problem for many of the existing banks is the silo structure in the way products are developed and the way they are sold. Combined with legacy fulfillment issues there are big impediments in banks’ ability to meet customer’s needs simply when that key moment arrives.

The challenge for banks is to structure their teams around customer key life needs; to offer their customers integrated solutions that cut across traditional product groupings and a sales force that is relationship rather than product based. By doing this they can avoid many wasteful CRM activities and focus on delivering relevant products at the time the customer wants in a way that is easy to fulfill.

Next issue: Relationship banking v Product Push – which is more effective and why most banks still Product Push

Michael Armstrong is an independent Banking consultant based in Singapore. He has worked in retail banking for over 15 years in senior positions for Citibank and HSBC. His experience covers Asia-Pacific and the Middle East.


  • New Peer Reviewed Article on Index Funds: The Performance Measure of U.S. and International Mutual Funds Versus the Standard and Poors 500 Index Fund. By: Randall Valentine of Georgia Southwestern State University; Matt White Independent Consultant & Brian Hayes - University of South Alabama
  • Building a Case for Hedge Funds in India on the Basis of an Empirical Study of the Daily Impact of Foreign Institutional Investors Cas Inflows on the NIFTY. August, 2004, By: Thomas Joseph Priju Faculty Finance - St. Francis Institute of Management & Research- Mt. Poinsur, S.V.P. Road, Borivali (W), Mumbai - 400103 Email: pjthomas@sfimar.ac.in, thomassfimar@yahoo.com & Sangeetha Jose - Faculty – Statistics, and St. Francis Institute of Management and Research, Mumbai. & Prashant A. Lohe, Fellow Student, St. Francis Institute of Management and Research, Mumbai.
  • The Global Journal For International Financial Analysts (JIFAM) is a scholarly, peer refereed finance journal that provides a forum and means for exchanging information on the social impact of information technologies. JIFAM's scope includes the effects of Financial Management on business, family, socialization, entertainment, and education. The Journal publishes original research articles, short experimental reports, review monographs, technical notes, as well as special, thematic issues with commentaries.

Types of manuscripts:
The Finance Journal considers for publication full-length articles and short-length articles of 1000 to 2000 words. Short-length articles can generally be published sooner than full length articles. All material submitted will be acknowledged on receipt. Full-length articles are subject to peer review. Copies of the referees' comments will be forwarded electronically to the author along with the editor's decision.


No finance journal article can be published unless accompanied by a signed publication agreement, which serves as a transfer of copyright from author to the JIFAM Journal. A publication agreement may be obtained here. Only original papers will be accepted and copyright in published papers will be vested in the publisher. It is the author's responsibility to obtain written permission to reproduce material that has appeared in another publication.

Format of submitted material:

All manuscripts must be submitted electronically in one of the following formats: Html, ASCII, RTF Microsoft Word, Wordperfect. The beginning of the manuscript must bear the title of the paper and the full names of the authors as well as their affiliations, full postal and e-mail addresses. In the case of multiple authors, please indicate which author is to receive correspondence. Financial support may be acknowledged within the article to avoid footnotes. A list of keywords along with an informative abstract of 200 words or less is required for full-length articles.


In general, the style should follow the forms given in the Publication Manual of the American Psychological Association (Washington, DC: 1994).


In general, the background and purpose of the article should be stated first, followed by details of the methods, materials, procedures, and equipment used. Findings, discussion and conclusions should follow in that order. Appendices are not encouraged. The APA Publication Manual should be consulted for details as needed.


Figures should be kept to a minimum and be used only when absolutely necessary. They should be prepared and submitted in one of the following forms: JPEG File Interchange (jpg), Compuserve GIF (gif), Windows Bitmaps (bmp), Tagged Image File (tif), PC Paintbrush (pcx). In any case images should not exceed width of 450 pixels.


The accuracy and completeness of the references is the responsibility of the author. References to personal letters, paper presented at meetings, and other unpublished material may be included. If such material may be of help in the evaluation of the paper, copies should be made available to the Editor. Papers which are part of a series should include a citation of the previous paper. Explanatory material may be appended to the end of a citation to avoid footnotes in text. The format for citations in text for bibliographic references follows the Publication Manual of the American Psychological Association (4th ed., 1994). Citation of an author's work in the text should follow the author-date method of citation; the surname of the author(s) and the year of publication should appear in text. For example,

Paisley (1993) found that...
Recent research has shown that...(Schauder, 1994)
In other work (Gordon & Lenk, 1992; Harman, 1991)...

Examples of citations to a journal article, a book, a chapter in a book, and published proceedings of a meeting follow:
Buckland, M., & Gey, F. (1994). The relationship
between recall and precision. Journal of the
American Society for Information Science, 45, 12-19.

Borgman, C.L. (Ed.). (1990). Scholarly
communication and bibliometrics. London: Sage.

Bauin, S., & Rothman, H. (1992). "Impact" of
journals as proxies for citation counts. In P.
Weingart, R. Sehringer, & M. Winterhager (Eds.),
Representations of science and technology (pp.
225-239). Leiden: DSWO Press.

In case of any question about bibliographic forms, refer to the Publication Manual of the American Psychological Association, 4th edition, Washington, DC, 1994. Copies may be ordered from: APA Order Department, P.O. Box 92984, Washington, DC 20090-2984, USA.

* The Global Journal of International Financial Analysts (JIFA) *
* 0-9749946-0-X * 2004
* *

The Global Journal of International Financial Analysts (JIFAM) is a scholarly, peer refereed journal that provides a forum and means for exchanging information on the social impact of information technologies. JIFAM's scope includes the effects of information technology on business, socialization, entertainment, and education. The Journal publishes
original research articles, short experimental reports, review mono- graphs, technical notes, as well as special, thematic issues with commentaries.

The Global Journal of International Financial Analysts (JIFAM) is unique in providing a diverse forum for those interested in the effects of theories or implementation of information technology. It, therefore, promotes an exchange of information between groups
not always thought to share a common interest. In general, JIFAM is designed for the following audiences: researchers, developers, and practitioners in schools, industry, and government; administrators, policy decision-makers, and other specialists in computer information systems.

Authors are invited to submit high quality papers that match the Journal's scope. The Journal considers for publication full-length articles and short-length articles of 1000 words or less. Short-length articles can generally be published sooner than full length articles. All manuscripts must be submitted electronically. Authors should simply submit their articles in their standard culturally accepted form.