Customer Relationship Management of Lloyds Banking

Customer Relationship Management of Lloyds Banking 1.0 INTRODUCTION This chapter provides the brief introduction of research. Furthermore, it also discusses the aims, objectives of the research questions and scope of the study. 1.1 TOPIC OF THE RESEARCH Customer Relationship Management of Lloyds Banking Group PLC; A Critical Evaluation 1.2 INTRODUCTION TO RESEARCH Peter Drucker said, â€Å"The purpose of a business is to create customers†. Customer Relationship Management can be the single strongest weapon we have as manage to ensure that customers become and remain loyal. Customer Relationship Management, or CRM, is an essential part of modern business management. CRM concerns the relation between the organisation and its customers. Customers are the lifeblood of any company be it a global corporation with thousands of employees and a multi-billion turnover, or a sole trader with a handful of regular customers. CRM is the same in principle for both examples. Globalization and technology improvements have pushed companies into hard competition. In this new era organisations are targeting on managing customer relationships, mainly customer satisfaction, in order to maximize revenues (Constantinos 2003). Today, marketing is not just developing, delivering and selling; it is shifting towards developing and maintaining equally long term relationships with customers (Buttle, 1996). This new business values is called relationship marketing (RM), which has involved significant interest both from marketing academics and practitioners (Gronroos, 1994). The Greek philosopher, Epictetus said that â€Å"what concern me is not the way things are, but rather the way people think things are† (Szwarch, 2005, p.3). The concepts of consumer satisfaction were depending on the thinking of consumer. Research suggests that customer satisfaction, basic concept of relationship marketing, is important in achieving and retaining competitive advantage. Research studies have discovered that retaining current customers is much less expensive than attracting new customers (Desatnick, 1988; Stone et al., 1996; Bitran and Mondschein, 1997; Chattopadhyay, 2001; Massey et al., 2001). The best way to retain customers is to keep them satisfied, a number of studies have shown that customer satisfaction can guide to brand loyalty, repurchases intention and repeat sales (Day, 1984; Swan and Oliver, 1989; Oliver, 1999). Customer retention, in turn, seems to be related to profitability (Oliver, 1999). Relationship marketing is becoming significant in financial services (Zineldin, 1995). If a bank develops and sustains a solid relationship with its customers, its competitors cannot easily replace them and so this relationship provides for a continued competitive advantage (Gilbert, 2003). Moriarty et al. (1983) has suggested relationship concept in the banking sector which states that banks can increase their profits by maximising the profitability of the total customer relationship over time, instead of looking for to get more profit from any single transaction. Perrien et al. (1992) observed severe competitive pressures that forces financial institution to restructure their marketing strategies by developing into long-term relationship with customers. And banking industry purely related to financial services, which needs to create the trust among the people. This research is exploratory in nature and design. The data which is collected is going to be mostly primary data collected from the relevant persons within the bank. The data has gathered from the face to face interviews with the help of structured and semi-structured questionnaire with those persons. The above describe interviews has last 40 (fourty) to 45 (fourty five) minutes (approx). On the other hand the researcher has decided to collect primary data from random interviews of Lloyds Banking Groups customers. Sample size is around 200 customers and of structured questionnaire. But of course this research paper has relied on reviewing the various secondary data available from various researches such as books, magazines, website, previous research and publication etc. The collected data has been analysed by graphs, table and pi chart drawn from Microsoft excel. 1.3 AIM OF THE RESEARCH The aim of the research is to study why CRM is important in bank, how the CRM works in banks and also the effectiveness of Lloyds Banking Group in obtaining long term customer relationship, customer loyalty, and customer satisfaction by the use of CRM. And also suggest feasible recommendations to Lloyds Banking Group to increase the customer satisfaction and market share by the effective use of CRM. 1.4 OBJECTIVES OF THE RESEARCH The followings are the objectives of this research; To study how critically practised in Lloyds Banking Group Analysis the data mining process of Lloyds Banking Group To find out how the bank segments their customers To analysis how the bank retaining their customers To find out how does the bank measure customer Life Time Value To verify the relationship between the customers and the Lloyds Banking Group 1.5 SCOPE OF THE STUDY The scope of the study and research work has limited to Lloyds Banking Group only. This chosen level of aspects has stayed at large in the study so that it can be studied well and analyzed thoroughly to get a deeper understanding. Trying to cover too much ground may lead to a very superficial and confused analysis and may involve long time duration to complete the project work or report. Therefore a specified and narrow down approach with Lloyds Banking Group and an evaluation of its success has comprised with the researc 2.0 LITERATURE REVIEW This chapter contains a review of literature relevant to the research. This literature review deals with, about CRM, the history and goals of an integrated banking CRM, the technological factor of CRM, the process cycle in banks, data warehouse technology, data mining process, how to analysis the data, customer segmentation process, communication strategies of bank to the customers etc. 2.1 CUSTOMER RELATIONSIP MANAGEMENT Existing research states that ‘relationships are the base to the successful development and edition of new business viewpoint, though business have taken care of relationships with their customers for many centuries (Gronroos, 1994). Sheth and Parvathiyar, (1995) said that relationships demand much more than mere transactions. Rather, they symbolize strategic and tactical issues based on a new philosophical move that geared in the direction of long-term organisation survival. According to Storbacka, (1994) relationship marketing got popular in 1990s but it has a long history under different names. In its starting, one-to-one marketing appeared in the mid 1990s, which transformed into Customer Relationship Management. Parvatiyar and Sheth gave a static definition of CRM. â€Å"Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer† (Parvatiyar and Sheth 2000, p.6) â€Å"What criteria determine who â€Å"How can we acquire this customer will be our most profitable in the most efficient and effective customers?† way?† â€Å"How can we increase the â€Å"How can we keep this customer loyalty and the profitability for as long as possible?† Of this customer?† 2.2 THE HISTORY AND GOALS OF AN INTEGRATED BANKING CRM According to Puccinelli (1999) the financial services industry as entering a new era where personal attention is decreasing because the institutions are using technology to replace human contact in many application areas. Sherif, 2002 advocated that, now global changes brought new trends, directions and new ways of doing business, which also brought new challenges and opportunities to financial institutions. In order to complete with newly increasing competitive pressures, financial institutions must recognize the need of balancing their performance by achieving their strategic goals and meeting continues volatile customer needs requirements. Different ways must be analyzed to meet customer needs. Foss said that banks are highly focusing on CRM for the last five years that is expected to continue. According to Peter (1998) and Chablo (1999) the main goals of an effective integrated CRM solution in the banking sector are to enable financial institutes to; a) Widen customer relationship through acquiring new customers, identifying and targeting new segments and expanding in new markets. b) Lengthen the existing relationship developing longer term relationships, increasing perceived value of products and introducing new products and c) Deepen the relationship with customers initiating the cross selling and up selling opportunities, understanding the propensity of different customer segments to purchase and increase sales. The implementation if CRM system in a bank helps the business organisation to obtain a complete picture of their existing customers, design both customer-oriented and market-driven financial products and services, as well as implement extensive and reliable financial marketing research and efficient campaigns, to achieve and enhance customer loyalty and profitability. The above goals can be achieved through the seamless integration of information technology solutions and business objectives at every process of the bank business that affects the customer. 2.3 THE PHASES OF CRM The main phases of CRM are as follows; 1. Customer selection or Segmentation According to Dave Chaffey (2009), customer selection defining the types of customers that a company will market to. It means identifying different groups of customers for which to develop offerings and to target during acquisition, retention and extension. Different ways of segmenting customers by value and by their detailed lifecycle with the customer are reviewed. Many companies are now only proactively marketing to favoured customers. Seth Godin (1999), says â€Å"Focus on share of customer, not market share fire 70 per cent customers and watch your profits go up!† According to Efraim Turban (2008), the most sophisticated segmentation and targeting schemes for extension of customers are often used by banks, which have full customer information and acquire history data as they search for to boost Customer Lifetime Value (CLV) through encouraging increased use of products overtime. The segmentation approach used by banks is based on five main basics which in result are covered on top of each other. The amount of options used, and therefore the complexity of approach, will depend on resources obtainable, opportunities, capabilities and technology afforded by catalog. i. Identify customer lifecycle groups When guests use online services then they basically pass those seven or more stages. The organisations have clear these segments and establish the CRM infrastructure to categories customers in this manner; then they deliver focused messages, whichever by modified web messaging or by e-mails that are triggered routinely because of various rules. First-time guests recognized by a cookie placed on their PC. When guests registered, they are tracked through the residual stages. The customers who have purchased one or more products are one particular important group. The key challenge is for a company to encourage a customer to shift from the first product to the second and then go on. Explicit offers can be try to push customer for further products. In the same way, when customers turn into an inactive then the customer required follow-up. ii. Identify customer profit characteristics This is a conventional segmentation which is based on the nature of customer. For Business 2 Business Companies it includes sex, age and geography. It includes volume of the organisation and the type of sector or application, the organisation operates in. iii. Identify behaviour in response and purchase As shown in 2.2 through analysis of data base when customer progress through the lifecycle, company is capable to build up a detail reaction and buy history which judges the details of frequency, recency, group of product buy and monetary value. This approach is known as ‘RFM (Recency, Frequency, Monetary value) analysis. iv. Identify multi-channel behaviour In spite of of the eagerness of the company for online channels, various customers are chosen for using online channels and others customers are chosen conventional channels. This is, to an extent, be indicated by RFM and response examination since customers with a preference for an online channel is more reactive and make more use online. Customer who likes online channels is focused mostly by online communications such as e-mail, but when customer like conventional channels is focused by conventional communications such as direct mail or phone. This is known as ‘right-channelling. v. Tone and style preference In a same way to channel liking, customers are respond in their own way to various types of message. Some customers like rational application, in that time a detailed e-mail may work best. On the other hand some customers are preferred an emotional appeal. Companies are test for this in customers or conclude it using profit description and response performance and then expand various inventive treatments consequently. 2. Customer acquisition Processes used to add new customer. According to Turban (2008), customer acquisition refers to marketing activities intended to form relationship with new customers while reducing acquisition cost and targeting high-value customers. Service value and selecting the right path for various customers are essential at this stage and during the lifecycle. The conventional manner to customer acquisition include a marketing manager developing a blend of mass marketing (billboards, magazine advertisements etc.) and direct marketing (mail, telephone, etc.) campaigns based on their knowledge of the particular customer base that was being focussed. Marketing campaign trying to pressure new customers to buy a particular type of diapers, the mass marketing ads might be determined in parenting magazines. The advertisements could also be positioned in more conventional publications whose readership demographics were alike to those of new parents. Customer acquisition is comparatively similar to mass marketing. A marketing manager selects the demographics that they are involved in and after that works with a data vendor to obtain lists of buyers who meet those features. The data vendors have large database holding millions of eventual customers that can be segment based on explicit demographic criteria. The idea of â€Å"similar demographics† has conventionally been an art rather than a science. Usually there are not hard-and-fast systems about whether two groups of buyers share the similar features. Most of the segmentation that took place in conventional direct marketing involves hunches on the division of the marketing professional. 3. Customer retention Dafe Chaffey 2009 said that customer retention refers to the marketing actions taken by a company to keep its current customers. Identifying applicable offerings based on their personal needs and complete position in the customer lifecycle (e.g. purchase value or number) is key. Customer retention strategy aims to keep a high percentage of valuable customers and a customer development strategy aims to boost the value of those retained customer to the organisation. Customer retention is based on customer loyalty. And customer loyalty is the point to which a customer will continue with a specific brand or vendor. Customer acquisition to retain and extend create long-term customer relationship. We need to calculate customer satisfaction, as satisfaction drives loyalty and loyalty drives profitability. This relationship is exposed below; The marketers aim is to push customers up the curve towards the affection zone. But the majority are not in that zone. Marketers must understand to achieve retention,why customers defers or are indifferent. 4. Customer extension This technique is encouraging customers to increase their involvement with a company. According to Turban 2008, customer extension is increasing the range of products that a customer buys from an organisation. Sometime it is referred ‘customer development. Increasing the lifetime value (CLV) of a customer is the main objective of customer extension by encouraging cross-sell. For example a customer of Egg credit card may be offered the loan or a deposit account. There are many of customer extension technique for CRM as follows; Re-sell: same type of products to existing customers-particular vital in some Business 2 Business background as re-buys or modified re-buys. Cross-sell: sell extra products which may be closely related to the original buy. Up-sell: this is mean, selling more expensive products. Reactivation: Customers who have purchased for some time or have lapsed can be encouraged to buy again. Referrals: generating sells from recommendation from existing customers. 2.4 CUSTOMER LIFETIME VALUE MODELLING Customer Lifetime Value (CLV) is also an important theory and practise of CRM. But the calculation of CLV is not straightforward. There are so many company, they do not calculate it. According to Dave Chaffey (2009) â€Å"Lifetime value is the total net benefits that a customer or group of customers will provide a company over their total relationship with the company†. CLV is based on estimating the income and costs related with each customer over a phase of time and then calculating the net present value in present monetary terms using a discount rate value applied over the stage. Efraim Turban (2006) said there is various scale of complexity in calculating LTC. Those are exposed in 2.6. Option 1 is a realistic way or estimated proxy for future LTV, but the true LTV is the future value of the customer at individual level. CLV modelling at a segment level 4 is crucial within marketing since it answers the question; How much can I afford to invest in acquiring a new customer? Lifetime value analysis helps marketers to: Create the true value of a companys customer base Recognize and compare crucial target segment Calculate the effectiveness of another customer retention strategy Plan and calculate investment in customer acquisition programmes Make decisions about product and offers 2.7 gives an example of how LTV can be used to develop a CRM strategy for different customer groups. There are 4 (four) main types of customers are indicated by their present and future value as bronze, silver, gold and platinum. Separate customers groupings (circles) are recognized according to their current value (as indicated by current profitability) and future value as indicated by CLV calculation. Every group will have a customer segmentation based on their demographics. Therefore this is used for customer selection. Within the four main value groupings, there are various strategies are developed for various customer groups. Few bronze customers such as group A and B practically do not have development potential and are usually unprofitable, therefore the objective is to reduce costs in communications and if they do not stay as customers this is acceptable. Some bronze customers like group C may have potential for growth; therefore for group C the strategy is to extend their purchases. Silver customers are focused with customer extension offer and gold customers are extended. Platinum customers are the best customers; therefore the communication is very important with these customers. 2.5 THE TECHNOLOGICAL FACTORS OF CRM According to Davenport and Short, (1990); Porter, (1987) ‘information technology is an enabler to thoroughly redesign business process to achieve improvements in organisational performance. ‘Information Technology help helps a business process by facilitating changes to job practices and establishing new techniques to link a customer with organisations, suppliers and stakeholders (Hammer and Champy, 1993). Eckerson and Watson (2000) advocated that ‘CRM take full advantage of technology to collect and analyze data on customer patters, expand predictive models, interpret customer behaviour, proper respond with communications, and deliver product and service to individual customers. By using technology a company can create a 360 degree view of customers to find out from past interactions to optimize future ones. Peppard (2000) said that ‘the leading factors in CRM development is improvement in network infrastructure, client/server computing, and business intelligence applications. CRM collect, store, maintain and distribute customer knowledge all over the organisation. The effectual management of information has a vital role to play in CRM. In the case of calculating customer lifetime value, consolidated view, product tailoring and service innovation, the information is essential. Along with data warehouses, enterprise resource planning (ERP) system and the internet are the central infrastructures to CRM applications. Fickel (1999) said ‘CRM applications link front office (e.g. marketing, sales and customer service) and back office (e.g. financial, logistics, operations and human resources) functions with the companys customer touch point. A companys touch point is â€Å"all of the communication, human and physical interactions your customers experience during their relationship lifecycle with your organisation. Whether an ad, Web site, sales person, store or office, touch points are important because customers from perceptions of your organisation and brand based on their cumulative experiences† (Source; http://www.imediaconnection.com/content/4508.imc at 16/10/2009 on 15:25) According to Eckerson and Watson (2000), ‘CRM integrated touch points is something like a common view of the customer. A separate information systems controlled these touch points. 2.8 demonstrates the relationship between customer touch point with back and front office operations Peppers and Rogres, (1999) said ‘In many companies, CRM is just a technology solution that extends divide databases and sales force automation tools to link sales and marketing functions in order to develop targeting efforts. On the other hand some organisations consider CRM as a tool that is exclusively designed for one-to-one relationship. According to Goldenberg (2000) ‘CRM is not just a technology applications for sales, marketing and service, but when CRM fully and successfully implemented, customer-driven, a cross-functional, technology-integrated business process management strategy that improves relationships and encompasses the whole organisation. 2.6 DATA WAREHOUSE TECHNOLOGY According to Watson (2000) ‘data warehouse is a tools of information technology management that helps business decision makers to instant access of information of customer data throughout the organisation by combining all database and operational systems like sales and transaction, human resource, inventory, purchasing, financial and marketing system. Data warehouse pull out, clean, convert and manage large volumes of data from various systems and creating a historical record of all customer. Data warehousing technology is the most crucial part of CRM because it makes CRM possible. Shepard et al. (1998) said ‘a better understanding of customer behaviour is possible because data warehousing technology consolidates correlates and convert customer data into customer intelligence. Understanding of customers and their purchase patterns can improve information related to customer service interactions, billing and account status, back orders, product returns, product shipment, and internal operating cost. The capacity of a data warehouse to store hundreds and thousands of gigabytes of data make an analysis feasible as well as immediate. Organisational benefits with a data warehouse are as follows; exact and faster access of information bad and duplicate data eliminate by quality data and filtering customer profiling and retention modelling it calculate total present value and estimate future value of every customer it gives detail report 2.7 DATA MINING TECHNOLOGY Peppers and Rogres, (1999) said that ‘the first analytical step of data mining is to describe the data. Data mining summarize its statistical attributes like standard deviations and means, visually review it by use of charts and graphs and distributes the value of the field in our data. But alone data description can not provide an action plan. We have to build a predictive model based on patterns determined from known results and after that we have to test the model on result outside the original sample. An ideal model should never be confused with reality, but it is useful guide to understanding our businesses. According to Eckerson and Watson (2000) ‘we can use data mining for both classification and regression problems. In first problem we can predict what type something will fall into. In second problems we are predicting a number like probability that a person will respond to an offer. In CRM process, data mining is often used to allocate a score to a particular customer. Data mining is also often using to recognize a set of characteristics, which is called profile. Data mining segments customers in to groups with similar behaviour like purchasing a particular product. 2.8 THE CRM PROCESS CYCLE IN BANKS Pound (2000) said that exploration and alteration process should be done by the banks on basis of customer information captured; this shows the full value of CRM initiatives. Banks set up a closed CRM cycle with the help of an integrated CRM solution, which composed of a set of continuous iterative process. It manages the whole customer related process for bank, analysing customer profile, customer data and life time value, which is helping to making marketing decision and optimizing the execution of marketing campaigns, customer service strategies and sales strategies across various channels during the bank. According to Professor Constantin Zopounidis (2002) CRM process cycle is based on a generic business view. It presents a continuous improvement of value between customers and banks across touch points. The main stages are as follows; Customer data collection Customer data analysis Marketing strategy and action programs Back-office Data External Data Touch-Point Data Pound 2000 said that ‘recent banking data sources are extremely heterogeneous. Geographic information is dispersed due to continual acquisitions, mergers and reorganizations. For example a bank might use web site, ATMs, e-mail, sales, call centres and marketing automation applications that must be integrated in a unified environment of CRM banking. An effective multi-channels customer interface will not be possible without a centrally integrated warehouse driving the entire CRM process cycle. This should be update real time. The historical data should be recorded by it, which is used to create propensity models and customer life time value models to recognize past behaviour and action in order to take future marketing strategy. 2.9 CUSTOMER DATA COLLECTION Kristin Anderson Carol Kerr (2002), said that in banking transaction system data such as (e.g. Checking, Credit, Savings) are frequently organised around accounts, channels, products and other alike transactional concepts. This limits the bank ability on identifying the total relationship and unique customers. An Integrated CRM is a major goal it consolidates these â€Å"information islands† and separate solution, which forms an open cross-bank system from all executives, business area department officers and branch employees, shares the identical customer information. Integrated banking CRM structure can be obtained from this necessary basis of data supply. Operation (contact) sources: Chou, Chou 2000, said the customer communication touch-point (ATM, Branch, Call-Centre, Internet-Banking, Mobile banking, personal contact, etc.) Internal sources: Professor Constantion Zopounidis (2000) said internal sources that are the available information island, data bases and product oriented systems from other banks such as (Cards, Deposits, Investments, and loans etc.), Marketing campaign response, meta-data analysis and reliable data mining results. External Sources: Professor Constanin Zopounidis 2002, said marketing researches that of external sources, infomediaries etc. Providing geo-demographic, psycho-graphic data and lifestyle, these can help to improve customer images 2.11 CUSTOMER DATA ANALYSIS Heygate (1998), said Simple and sophisticated data analysis techniques are required for deriving the valuable customer insight from the data collected in a central customer warehouse. More advance data analytics includes OLAP (Online Analytical Processing) mining techniques and tools, these extracts applicable patterns or trends in the data. According to Lawer (2000), key incorporated customer management insights provided by customer data analysis are customer segmentation/differentiation, concentration and distribution of customers value; share of purchases/profits, analysis of strategies that widen/lengthen/deepen customer relationship. Hawkes 2000, advocated customer data analysis enables the recognition of customers profit and customers preferences for definite bank product and services, indicates the most suitable channels to reach the customers, and assesses the profitability and life time value of every personality. Additionally, Delto 1998 said that the future manners of the consumers can be predicted by analysing their past behaviour. Customer statistics, profit and segmentation are the main amount produced of the analysis stage feeding the marketing strategy planning and completing process. Having easily accessible information to marketing makes the difference between a winning campaign and a failure. 2.12 MARKETING STRATEGY AND PROGRAMES Kristin Anderson and Carol Kerr 2002 advocated captured results and data of customer analysis support marketers to route marketing messages, processes and strategies. True values of data of Lloyd TSB are discovered by tools and process for marketing decision making, marketing decision making and CRM initiatives and campaign are deployed from converted information to customer knowledge. Goal of marketing automation within CRM are which personalise and optimizes each customer contact from planning, execution, monitoring marketing strategies and action programmes. Bryan Foss 2003 said it is critical for bank CRM not only to extract their data source to uncover patterns and insight but also to operationalise the system through the bank performance to turn the customer knowledge into importance creating achievement. Merlin Stone 2003 advocated the grades from advertising and CRM activities and strategies continue the process knowledge acquisition enhancing the on-going assessment of marketing data intelligence, closing the feed-back loop. Hence, the final element of CRM process cycle is the valuation of the results of campaign driven by marketing data intelligence. It is crucial to measure performance and feed result back into the centre customer data warehouse, in order to convey Customer Relationship Management of Lloyds Banking Customer Relationship Management of Lloyds Banking 1.0 INTRODUCTION This chapter provides the brief introduction of research. Furthermore, it also discusses the aims, objectives of the research questions and scope of the study. 1.1 TOPIC OF THE RESEARCH Customer Relationship Management of Lloyds Banking Group PLC; A Critical Evaluation 1.2 INTRODUCTION TO RESEARCH Peter Drucker said, â€Å"The purpose of a business is to create customers†. Customer Relationship Management can be the single strongest weapon we have as manage to ensure that customers become and remain loyal. Customer Relationship Management, or CRM, is an essential part of modern business management. CRM concerns the relation between the organisation and its customers. Customers are the lifeblood of any company be it a global corporation with thousands of employees and a multi-billion turnover, or a sole trader with a handful of regular customers. CRM is the same in principle for both examples. Globalization and technology improvements have pushed companies into hard competition. In this new era organisations are targeting on managing customer relationships, mainly customer satisfaction, in order to maximize revenues (Constantinos 2003). Today, marketing is not just developing, delivering and selling; it is shifting towards developing and maintaining equally long term relationships with customers (Buttle, 1996). This new business values is called relationship marketing (RM), which has involved significant interest both from marketing academics and practitioners (Gronroos, 1994). The Greek philosopher, Epictetus said that â€Å"what concern me is not the way things are, but rather the way people think things are† (Szwarch, 2005, p.3). The concepts of consumer satisfaction were depending on the thinking of consumer. Research suggests that customer satisfaction, basic concept of relationship marketing, is important in achieving and retaining competitive advantage. Research studies have discovered that retaining current customers is much less expensive than attracting new customers (Desatnick, 1988; Stone et al., 1996; Bitran and Mondschein, 1997; Chattopadhyay, 2001; Massey et al., 2001). The best way to retain customers is to keep them satisfied, a number of studies have shown that customer satisfaction can guide to brand loyalty, repurchases intention and repeat sales (Day, 1984; Swan and Oliver, 1989; Oliver, 1999). Customer retention, in turn, seems to be related to profitability (Oliver, 1999). Relationship marketing is becoming significant in financial services (Zineldin, 1995). If a bank develops and sustains a solid relationship with its customers, its competitors cannot easily replace them and so this relationship provides for a continued competitive advantage (Gilbert, 2003). Moriarty et al. (1983) has suggested relationship concept in the banking sector which states that banks can increase their profits by maximising the profitability of the total customer relationship over time, instead of looking for to get more profit from any single transaction. Perrien et al. (1992) observed severe competitive pressures that forces financial institution to restructure their marketing strategies by developing into long-term relationship with customers. And banking industry purely related to financial services, which needs to create the trust among the people. This research is exploratory in nature and design. The data which is collected is going to be mostly primary data collected from the relevant persons within the bank. The data has gathered from the face to face interviews with the help of structured and semi-structured questionnaire with those persons. The above describe interviews has last 40 (fourty) to 45 (fourty five) minutes (approx). On the other hand the researcher has decided to collect primary data from random interviews of Lloyds Banking Groups customers. Sample size is around 200 customers and of structured questionnaire. But of course this research paper has relied on reviewing the various secondary data available from various researches such as books, magazines, website, previous research and publication etc. The collected data has been analysed by graphs, table and pi chart drawn from Microsoft excel. 1.3 AIM OF THE RESEARCH The aim of the research is to study why CRM is important in bank, how the CRM works in banks and also the effectiveness of Lloyds Banking Group in obtaining long term customer relationship, customer loyalty, and customer satisfaction by the use of CRM. And also suggest feasible recommendations to Lloyds Banking Group to increase the customer satisfaction and market share by the effective use of CRM. 1.4 OBJECTIVES OF THE RESEARCH The followings are the objectives of this research; To study how critically practised in Lloyds Banking Group Analysis the data mining process of Lloyds Banking Group To find out how the bank segments their customers To analysis how the bank retaining their customers To find out how does the bank measure customer Life Time Value To verify the relationship between the customers and the Lloyds Banking Group 1.5 SCOPE OF THE STUDY The scope of the study and research work has limited to Lloyds Banking Group only. This chosen level of aspects has stayed at large in the study so that it can be studied well and analyzed thoroughly to get a deeper understanding. Trying to cover too much ground may lead to a very superficial and confused analysis and may involve long time duration to complete the project work or report. Therefore a specified and narrow down approach with Lloyds Banking Group and an evaluation of its success has comprised with the researc 2.0 LITERATURE REVIEW This chapter contains a review of literature relevant to the research. This literature review deals with, about CRM, the history and goals of an integrated banking CRM, the technological factor of CRM, the process cycle in banks, data warehouse technology, data mining process, how to analysis the data, customer segmentation process, communication strategies of bank to the customers etc. 2.1 CUSTOMER RELATIONSIP MANAGEMENT Existing research states that ‘relationships are the base to the successful development and edition of new business viewpoint, though business have taken care of relationships with their customers for many centuries (Gronroos, 1994). Sheth and Parvathiyar, (1995) said that relationships demand much more than mere transactions. Rather, they symbolize strategic and tactical issues based on a new philosophical move that geared in the direction of long-term organisation survival. According to Storbacka, (1994) relationship marketing got popular in 1990s but it has a long history under different names. In its starting, one-to-one marketing appeared in the mid 1990s, which transformed into Customer Relationship Management. Parvatiyar and Sheth gave a static definition of CRM. â€Å"Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer† (Parvatiyar and Sheth 2000, p.6) â€Å"What criteria determine who â€Å"How can we acquire this customer will be our most profitable in the most efficient and effective customers?† way?† â€Å"How can we increase the â€Å"How can we keep this customer loyalty and the profitability for as long as possible?† Of this customer?† 2.2 THE HISTORY AND GOALS OF AN INTEGRATED BANKING CRM According to Puccinelli (1999) the financial services industry as entering a new era where personal attention is decreasing because the institutions are using technology to replace human contact in many application areas. Sherif, 2002 advocated that, now global changes brought new trends, directions and new ways of doing business, which also brought new challenges and opportunities to financial institutions. In order to complete with newly increasing competitive pressures, financial institutions must recognize the need of balancing their performance by achieving their strategic goals and meeting continues volatile customer needs requirements. Different ways must be analyzed to meet customer needs. Foss said that banks are highly focusing on CRM for the last five years that is expected to continue. According to Peter (1998) and Chablo (1999) the main goals of an effective integrated CRM solution in the banking sector are to enable financial institutes to; a) Widen customer relationship through acquiring new customers, identifying and targeting new segments and expanding in new markets. b) Lengthen the existing relationship developing longer term relationships, increasing perceived value of products and introducing new products and c) Deepen the relationship with customers initiating the cross selling and up selling opportunities, understanding the propensity of different customer segments to purchase and increase sales. The implementation if CRM system in a bank helps the business organisation to obtain a complete picture of their existing customers, design both customer-oriented and market-driven financial products and services, as well as implement extensive and reliable financial marketing research and efficient campaigns, to achieve and enhance customer loyalty and profitability. The above goals can be achieved through the seamless integration of information technology solutions and business objectives at every process of the bank business that affects the customer. 2.3 THE PHASES OF CRM The main phases of CRM are as follows; 1. Customer selection or Segmentation According to Dave Chaffey (2009), customer selection defining the types of customers that a company will market to. It means identifying different groups of customers for which to develop offerings and to target during acquisition, retention and extension. Different ways of segmenting customers by value and by their detailed lifecycle with the customer are reviewed. Many companies are now only proactively marketing to favoured customers. Seth Godin (1999), says â€Å"Focus on share of customer, not market share fire 70 per cent customers and watch your profits go up!† According to Efraim Turban (2008), the most sophisticated segmentation and targeting schemes for extension of customers are often used by banks, which have full customer information and acquire history data as they search for to boost Customer Lifetime Value (CLV) through encouraging increased use of products overtime. The segmentation approach used by banks is based on five main basics which in result are covered on top of each other. The amount of options used, and therefore the complexity of approach, will depend on resources obtainable, opportunities, capabilities and technology afforded by catalog. i. Identify customer lifecycle groups When guests use online services then they basically pass those seven or more stages. The organisations have clear these segments and establish the CRM infrastructure to categories customers in this manner; then they deliver focused messages, whichever by modified web messaging or by e-mails that are triggered routinely because of various rules. First-time guests recognized by a cookie placed on their PC. When guests registered, they are tracked through the residual stages. The customers who have purchased one or more products are one particular important group. The key challenge is for a company to encourage a customer to shift from the first product to the second and then go on. Explicit offers can be try to push customer for further products. In the same way, when customers turn into an inactive then the customer required follow-up. ii. Identify customer profit characteristics This is a conventional segmentation which is based on the nature of customer. For Business 2 Business Companies it includes sex, age and geography. It includes volume of the organisation and the type of sector or application, the organisation operates in. iii. Identify behaviour in response and purchase As shown in 2.2 through analysis of data base when customer progress through the lifecycle, company is capable to build up a detail reaction and buy history which judges the details of frequency, recency, group of product buy and monetary value. This approach is known as ‘RFM (Recency, Frequency, Monetary value) analysis. iv. Identify multi-channel behaviour In spite of of the eagerness of the company for online channels, various customers are chosen for using online channels and others customers are chosen conventional channels. This is, to an extent, be indicated by RFM and response examination since customers with a preference for an online channel is more reactive and make more use online. Customer who likes online channels is focused mostly by online communications such as e-mail, but when customer like conventional channels is focused by conventional communications such as direct mail or phone. This is known as ‘right-channelling. v. Tone and style preference In a same way to channel liking, customers are respond in their own way to various types of message. Some customers like rational application, in that time a detailed e-mail may work best. On the other hand some customers are preferred an emotional appeal. Companies are test for this in customers or conclude it using profit description and response performance and then expand various inventive treatments consequently. 2. Customer acquisition Processes used to add new customer. According to Turban (2008), customer acquisition refers to marketing activities intended to form relationship with new customers while reducing acquisition cost and targeting high-value customers. Service value and selecting the right path for various customers are essential at this stage and during the lifecycle. The conventional manner to customer acquisition include a marketing manager developing a blend of mass marketing (billboards, magazine advertisements etc.) and direct marketing (mail, telephone, etc.) campaigns based on their knowledge of the particular customer base that was being focussed. Marketing campaign trying to pressure new customers to buy a particular type of diapers, the mass marketing ads might be determined in parenting magazines. The advertisements could also be positioned in more conventional publications whose readership demographics were alike to those of new parents. Customer acquisition is comparatively similar to mass marketing. A marketing manager selects the demographics that they are involved in and after that works with a data vendor to obtain lists of buyers who meet those features. The data vendors have large database holding millions of eventual customers that can be segment based on explicit demographic criteria. The idea of â€Å"similar demographics† has conventionally been an art rather than a science. Usually there are not hard-and-fast systems about whether two groups of buyers share the similar features. Most of the segmentation that took place in conventional direct marketing involves hunches on the division of the marketing professional. 3. Customer retention Dafe Chaffey 2009 said that customer retention refers to the marketing actions taken by a company to keep its current customers. Identifying applicable offerings based on their personal needs and complete position in the customer lifecycle (e.g. purchase value or number) is key. Customer retention strategy aims to keep a high percentage of valuable customers and a customer development strategy aims to boost the value of those retained customer to the organisation. Customer retention is based on customer loyalty. And customer loyalty is the point to which a customer will continue with a specific brand or vendor. Customer acquisition to retain and extend create long-term customer relationship. We need to calculate customer satisfaction, as satisfaction drives loyalty and loyalty drives profitability. This relationship is exposed below; The marketers aim is to push customers up the curve towards the affection zone. But the majority are not in that zone. Marketers must understand to achieve retention,why customers defers or are indifferent. 4. Customer extension This technique is encouraging customers to increase their involvement with a company. According to Turban 2008, customer extension is increasing the range of products that a customer buys from an organisation. Sometime it is referred ‘customer development. Increasing the lifetime value (CLV) of a customer is the main objective of customer extension by encouraging cross-sell. For example a customer of Egg credit card may be offered the loan or a deposit account. There are many of customer extension technique for CRM as follows; Re-sell: same type of products to existing customers-particular vital in some Business 2 Business background as re-buys or modified re-buys. Cross-sell: sell extra products which may be closely related to the original buy. Up-sell: this is mean, selling more expensive products. Reactivation: Customers who have purchased for some time or have lapsed can be encouraged to buy again. Referrals: generating sells from recommendation from existing customers. 2.4 CUSTOMER LIFETIME VALUE MODELLING Customer Lifetime Value (CLV) is also an important theory and practise of CRM. But the calculation of CLV is not straightforward. There are so many company, they do not calculate it. According to Dave Chaffey (2009) â€Å"Lifetime value is the total net benefits that a customer or group of customers will provide a company over their total relationship with the company†. CLV is based on estimating the income and costs related with each customer over a phase of time and then calculating the net present value in present monetary terms using a discount rate value applied over the stage. Efraim Turban (2006) said there is various scale of complexity in calculating LTC. Those are exposed in 2.6. Option 1 is a realistic way or estimated proxy for future LTV, but the true LTV is the future value of the customer at individual level. CLV modelling at a segment level 4 is crucial within marketing since it answers the question; How much can I afford to invest in acquiring a new customer? Lifetime value analysis helps marketers to: Create the true value of a companys customer base Recognize and compare crucial target segment Calculate the effectiveness of another customer retention strategy Plan and calculate investment in customer acquisition programmes Make decisions about product and offers 2.7 gives an example of how LTV can be used to develop a CRM strategy for different customer groups. There are 4 (four) main types of customers are indicated by their present and future value as bronze, silver, gold and platinum. Separate customers groupings (circles) are recognized according to their current value (as indicated by current profitability) and future value as indicated by CLV calculation. Every group will have a customer segmentation based on their demographics. Therefore this is used for customer selection. Within the four main value groupings, there are various strategies are developed for various customer groups. Few bronze customers such as group A and B practically do not have development potential and are usually unprofitable, therefore the objective is to reduce costs in communications and if they do not stay as customers this is acceptable. Some bronze customers like group C may have potential for growth; therefore for group C the strategy is to extend their purchases. Silver customers are focused with customer extension offer and gold customers are extended. Platinum customers are the best customers; therefore the communication is very important with these customers. 2.5 THE TECHNOLOGICAL FACTORS OF CRM According to Davenport and Short, (1990); Porter, (1987) ‘information technology is an enabler to thoroughly redesign business process to achieve improvements in organisational performance. ‘Information Technology help helps a business process by facilitating changes to job practices and establishing new techniques to link a customer with organisations, suppliers and stakeholders (Hammer and Champy, 1993). Eckerson and Watson (2000) advocated that ‘CRM take full advantage of technology to collect and analyze data on customer patters, expand predictive models, interpret customer behaviour, proper respond with communications, and deliver product and service to individual customers. By using technology a company can create a 360 degree view of customers to find out from past interactions to optimize future ones. Peppard (2000) said that ‘the leading factors in CRM development is improvement in network infrastructure, client/server computing, and business intelligence applications. CRM collect, store, maintain and distribute customer knowledge all over the organisation. The effectual management of information has a vital role to play in CRM. In the case of calculating customer lifetime value, consolidated view, product tailoring and service innovation, the information is essential. Along with data warehouses, enterprise resource planning (ERP) system and the internet are the central infrastructures to CRM applications. Fickel (1999) said ‘CRM applications link front office (e.g. marketing, sales and customer service) and back office (e.g. financial, logistics, operations and human resources) functions with the companys customer touch point. A companys touch point is â€Å"all of the communication, human and physical interactions your customers experience during their relationship lifecycle with your organisation. Whether an ad, Web site, sales person, store or office, touch points are important because customers from perceptions of your organisation and brand based on their cumulative experiences† (Source; http://www.imediaconnection.com/content/4508.imc at 16/10/2009 on 15:25) According to Eckerson and Watson (2000), ‘CRM integrated touch points is something like a common view of the customer. A separate information systems controlled these touch points. 2.8 demonstrates the relationship between customer touch point with back and front office operations Peppers and Rogres, (1999) said ‘In many companies, CRM is just a technology solution that extends divide databases and sales force automation tools to link sales and marketing functions in order to develop targeting efforts. On the other hand some organisations consider CRM as a tool that is exclusively designed for one-to-one relationship. According to Goldenberg (2000) ‘CRM is not just a technology applications for sales, marketing and service, but when CRM fully and successfully implemented, customer-driven, a cross-functional, technology-integrated business process management strategy that improves relationships and encompasses the whole organisation. 2.6 DATA WAREHOUSE TECHNOLOGY According to Watson (2000) ‘data warehouse is a tools of information technology management that helps business decision makers to instant access of information of customer data throughout the organisation by combining all database and operational systems like sales and transaction, human resource, inventory, purchasing, financial and marketing system. Data warehouse pull out, clean, convert and manage large volumes of data from various systems and creating a historical record of all customer. Data warehousing technology is the most crucial part of CRM because it makes CRM possible. Shepard et al. (1998) said ‘a better understanding of customer behaviour is possible because data warehousing technology consolidates correlates and convert customer data into customer intelligence. Understanding of customers and their purchase patterns can improve information related to customer service interactions, billing and account status, back orders, product returns, product shipment, and internal operating cost. The capacity of a data warehouse to store hundreds and thousands of gigabytes of data make an analysis feasible as well as immediate. Organisational benefits with a data warehouse are as follows; exact and faster access of information bad and duplicate data eliminate by quality data and filtering customer profiling and retention modelling it calculate total present value and estimate future value of every customer it gives detail report 2.7 DATA MINING TECHNOLOGY Peppers and Rogres, (1999) said that ‘the first analytical step of data mining is to describe the data. Data mining summarize its statistical attributes like standard deviations and means, visually review it by use of charts and graphs and distributes the value of the field in our data. But alone data description can not provide an action plan. We have to build a predictive model based on patterns determined from known results and after that we have to test the model on result outside the original sample. An ideal model should never be confused with reality, but it is useful guide to understanding our businesses. According to Eckerson and Watson (2000) ‘we can use data mining for both classification and regression problems. In first problem we can predict what type something will fall into. In second problems we are predicting a number like probability that a person will respond to an offer. In CRM process, data mining is often used to allocate a score to a particular customer. Data mining is also often using to recognize a set of characteristics, which is called profile. Data mining segments customers in to groups with similar behaviour like purchasing a particular product. 2.8 THE CRM PROCESS CYCLE IN BANKS Pound (2000) said that exploration and alteration process should be done by the banks on basis of customer information captured; this shows the full value of CRM initiatives. Banks set up a closed CRM cycle with the help of an integrated CRM solution, which composed of a set of continuous iterative process. It manages the whole customer related process for bank, analysing customer profile, customer data and life time value, which is helping to making marketing decision and optimizing the execution of marketing campaigns, customer service strategies and sales strategies across various channels during the bank. According to Professor Constantin Zopounidis (2002) CRM process cycle is based on a generic business view. It presents a continuous improvement of value between customers and banks across touch points. The main stages are as follows; Customer data collection Customer data analysis Marketing strategy and action programs Back-office Data External Data Touch-Point Data Pound 2000 said that ‘recent banking data sources are extremely heterogeneous. Geographic information is dispersed due to continual acquisitions, mergers and reorganizations. For example a bank might use web site, ATMs, e-mail, sales, call centres and marketing automation applications that must be integrated in a unified environment of CRM banking. An effective multi-channels customer interface will not be possible without a centrally integrated warehouse driving the entire CRM process cycle. This should be update real time. The historical data should be recorded by it, which is used to create propensity models and customer life time value models to recognize past behaviour and action in order to take future marketing strategy. 2.9 CUSTOMER DATA COLLECTION Kristin Anderson Carol Kerr (2002), said that in banking transaction system data such as (e.g. Checking, Credit, Savings) are frequently organised around accounts, channels, products and other alike transactional concepts. This limits the bank ability on identifying the total relationship and unique customers. An Integrated CRM is a major goal it consolidates these â€Å"information islands† and separate solution, which forms an open cross-bank system from all executives, business area department officers and branch employees, shares the identical customer information. Integrated banking CRM structure can be obtained from this necessary basis of data supply. Operation (contact) sources: Chou, Chou 2000, said the customer communication touch-point (ATM, Branch, Call-Centre, Internet-Banking, Mobile banking, personal contact, etc.) Internal sources: Professor Constantion Zopounidis (2000) said internal sources that are the available information island, data bases and product oriented systems from other banks such as (Cards, Deposits, Investments, and loans etc.), Marketing campaign response, meta-data analysis and reliable data mining results. External Sources: Professor Constanin Zopounidis 2002, said marketing researches that of external sources, infomediaries etc. Providing geo-demographic, psycho-graphic data and lifestyle, these can help to improve customer images 2.11 CUSTOMER DATA ANALYSIS Heygate (1998), said Simple and sophisticated data analysis techniques are required for deriving the valuable customer insight from the data collected in a central customer warehouse. More advance data analytics includes OLAP (Online Analytical Processing) mining techniques and tools, these extracts applicable patterns or trends in the data. According to Lawer (2000), key incorporated customer management insights provided by customer data analysis are customer segmentation/differentiation, concentration and distribution of customers value; share of purchases/profits, analysis of strategies that widen/lengthen/deepen customer relationship. Hawkes 2000, advocated customer data analysis enables the recognition of customers profit and customers preferences for definite bank product and services, indicates the most suitable channels to reach the customers, and assesses the profitability and life time value of every personality. Additionally, Delto 1998 said that the future manners of the consumers can be predicted by analysing their past behaviour. Customer statistics, profit and segmentation are the main amount produced of the analysis stage feeding the marketing strategy planning and completing process. Having easily accessible information to marketing makes the difference between a winning campaign and a failure. 2.12 MARKETING STRATEGY AND PROGRAMES Kristin Anderson and Carol Kerr 2002 advocated captured results and data of customer analysis support marketers to route marketing messages, processes and strategies. True values of data of Lloyd TSB are discovered by tools and process for marketing decision making, marketing decision making and CRM initiatives and campaign are deployed from converted information to customer knowledge. Goal of marketing automation within CRM are which personalise and optimizes each customer contact from planning, execution, monitoring marketing strategies and action programmes. Bryan Foss 2003 said it is critical for bank CRM not only to extract their data source to uncover patterns and insight but also to operationalise the system through the bank performance to turn the customer knowledge into importance creating achievement. Merlin Stone 2003 advocated the grades from advertising and CRM activities and strategies continue the process knowledge acquisition enhancing the on-going assessment of marketing data intelligence, closing the feed-back loop. Hence, the final element of CRM process cycle is the valuation of the results of campaign driven by marketing data intelligence. It is crucial to measure performance and feed result back into the centre customer data warehouse, in order to convey

A case study of NPower, a leading energy supplier in United Kingdom

A case study of NPower, a leading energy supplier in United Kingdom In the past the training and development approaches were not followed by many organizations. It was believed that the managers or leaders are born not made. Activities of training the employees were considered the wastage of time and resources. However, with the passage of time it was understood by the theorists and the organizations themselves that training and development is very important for human resource building. Now training and development is one of the important functions of human resource management. Training is not considered as a cost rather it is considered as investment on the employees which ultimately become the assets of an organization (Beardwell, 2004). Different methods and techniques are available to train and develop the human resource and those methods and techniques are modernized with critical analysis and their effect on human behaviors. There is one way to train the employees is to give them theoretical knowledge about the skills and give them an understanding of theories and procedures developed by different big organizations and theorists. This type of training and development comes under cognitive approach which majorly focuses on lectures, discussion, demonstrations etc. However the case company, npower does not follow this approach as they believe more in practical training rather than verbal or written training. Npower train their employees in real time working conditions where they understand the skills and adapt them and implement them on their job in the same time. This allows more sold grasps on the concepts and techniques as bookish knowledge might be different from the practical knowledge. And this also does not allow the generation of any conflict between the bookish knowledge and its practical implementation. This type of training and development comes under behavioral methods. Npower puts the responsibilities on the employees shoulders and delegates the decision making power to their employees which give them a sense that they are the part of the organization. In this way the employees feel more responsibility on their shoulders and this enhances their leadership skills and capabilities. The company involves the employees of all levels in the decision making process as they trust the competencies of their staff. The decision making power is delegated to all levels depending upon the criticality of the decision and the risk associated with it. The strategic decisions which involve high risk are the responsibility of the top management. As designing and implementing the strategies gives a direction to all the organization and it is very important to show a right direction to the organization otherwise the whole venture will be a complete failure. After the strategically decision, comes the tactical decision which is required to be made for the proper implementation of strategies decided by the top level executives. Tactical decision is at the discretion of the managers. This is because it involves fewer risks as compared to the strategic decisions. Managers are in a better position to take such decision because they understand the strengths and weaknesses of their team members. This allows the managers to learn the analytical and managerial skills and furthermore the skill of taking strategy in to implementation phase. The next level of decisions is the operational decisions which are delegated to the low level employees. For instance an employee does not have to wait for the approval of his manager if he finds that a part of a machine is required to be changed. Such type of operational decision is taken by the employees themselves and this increases their operational skill and knowledge. In this way npower delegates the decision making power at different levels and provides a platform of learning and development of the skills of their employees. This enables the organization to build a force of skilled human resource that gives them a competitive advantage over the others in the market. Training and Development Theories and Npower Approach Competitive advantage is referred to that ability of an organization which is not possessed by the other organizations and it is a competitive advantage which leads the organization to the top positions. There are many organizations in the world who are leading the markets by gaining competitive advantage in different fields of their business activities. One of the way in which a firm can attain a competitive advantage over the competitors is by building a force of superior human resource (Beardwell, 2004). Now the question arises that how this force of superior human resource can be build. The answer lies in a very important function of human resource management i.e. training and development. It has been observed that the employees or labor working in a competitive environment of market always welcome the training and development programs which can enhance their skills and knowledge (Davis Bostrom, 1993). Now days every job holder understands that to sustain and grow in the career it is very important to polish their skills. It is not that time where one degree or diploma is sufficient for the whole life. Employees actively participate in several programs which are organized by their organization and it has been observed that in some organization employees demand from their human resource department to arrange such training and development programs. Successful organization of today has built their human resource work force over the passage of time. There is no doubt that this work force is a highly valuable asset for any organization and the only possible way to build this workforce is training and development (Barney, 1986). There are several theories available in literature which emphasize on the importance of training and development in the organization and provides different alternative methods for training and development. A discussion of four major theories of training and development is given below. Theory of reinforcement This theory emphasizes on the learning behavior of a person and suggests that the learner will repeat that behavior which is attached with a positive outcome or result. Skinner an economist of behaviorist school of thought proposed the theory of reinforcement and suggested that the training and development programs should be aligned with the organizational objectives and a positive outcome should be expected with such training and development programs. Further elaborating this concept suggested in reinforcement theory, it can be argued that there are several techniques available in human resource practices which can be associated with the training and development programs and the required suggestion by this theory can be fulfilled. Different types of rewards in the form of bonuses, salary raises, promotion and awarding of certificate after the training program can be associated with the training and development activities and these rewards will definitely gen erate a positive outcome. If this is done by an organization then according to the Skinners theory of reinforcement the trainer i.e. the employee will show more interest in the training and development programs held by the organization. Theory of Learning Types The theory presented by Gagne emphasized on learning of intellectual skills. These are such skills which are found rare among the persons. He suggested by different learning types in his theory and each learning type contains some external and internal conditions. The five categories of learning which Gagne defined in his theory include intellectual skills, verbal information, attitudes, cognitive strategies and motor skills. Theory of Experiential Learning Experiential and cognitive types of learning are differentiated by experiential theory of learning presented by C. Rogers. According to Rogers, the wants and needs of the learner are addressed by this type of learning. Experience gives the person a maturity and increases the learning power along with the knowledge. Due to the personal involvement, the learner is able to conduct a self-evaluation test, which allows him to understand the effect of learning on his/her attitude. The case company npower seems to follow this theory as the company puts an engineer in different working conditions and allows him to understand different fields of work. This helps the employee to gain experience and that person skills grow by gaining experience with the passage of time. Theory of Social Learning Social theory presents a new view of learning i.e. social. According to the presenter of this theory, Albert Bandura, direct reinforcement cannot address all types of learning. Here by direct enforcement means the training and development programs that is organized to enhance the skills. According to this theory such programs are not address all learning types as there are some social elements which cannot be taught. Those elements are learned by the leaner from his/her surroundings. Such type of learning is called observational learning and this learning is associated with the understanding of different human behaviors. The first type of learning defined in this theory is through observation. In an organization the environment and the surroundings plays a very important role. The environment should be very professional and the surroundings should be in such a way that the people (employees) learn from them. This theory also suggests that it is not necessar y that the behavior is changed after learning something. It is expected that a persons behavior changes after learning something, but it is not in all cases. Furthermore the theory also explains about the mental states which play a vital role in learning process. If the mental status of the person is negative regarding any learning activity then he will not take part in that learning process and even if he is forced to do so, he will not gain any positivity from that process. In organizational training programs the mental state can be made positive regarding the training and development programs by associating the rewards and benefits with such programs which will motivate the employees and help to build a positive mental state. The case company also follow this theory as it allows the employees to learn from the surrounding and provides an environment where they can learn from their supervisors/managers and coworkers. Change Management and Human Resource Management For the organizations throughout the world, constant change has become a necessity for the success and growth. Due to the intense competition in the market organization find them in a continuous process of change in order to cope up with the market and customer needs (Chandler, 1992). In this way change management has become a permanent function or activity of any business. Many organizations increase their effectiveness by using change strategically. However, for an effective change in an organization it is required that proper thoughtful planning is done and the employees acceptance is taken by properly communicating the benefits of change to the employees. Human resource department should be involved form the initial phase of change process (Beardwell, 2004). Change in the organization brings the impact on the minds of the employees and the change in employees attitudes cannot be neglected in this process which should be the prime responsibility of HR department to manage and to m ake that impact on the minds of the employees positive (Buchanan Hucczynski, 1991). It has been observed in different organizations where the change has been brought by the management, that many of the people are uncomfortable with the change. So human resource management functions should be facilitating the change management in the organization and should focus on the removal of those discomforts among the employees brought by the change process. Human resource department should ensure that the reasons and benefits of the change process are properly communicated to all the employees and all the employees are clear about the change process. For effective change process implementation it is very important that employee resistance should not be there and employee resistance majorly occurs when they are not clear about the process and the benefit of the change (Buchanan Hucczynski, 1991). Simply imposing the change in the organization will not result in the effective and successful c hange implementation. Furthermore, this will impose a bad impact on the employees mind and will affect the performance of the employees as the employees will have to work in the new changed environment forcefully and it is very much understood that desired outcomes and results cannot be taken by force. Human resource should be actively involved in the change process and this will bring a real change in the organization. The case company npower, engages it employees in all the decision making process. In the case study Strategic Spare Parts Project is discussed, which is an example of the employee involvement in the business decisions and polices. So the company considers the employees thoughts and suggestions which are very important for bringing change in the organization. Npowers HRM PESTEL Analysis To identify and evaluate the external forces that can affect the organization directly or indirectly, PESTEL analysis is sued. This tool helps to examine and providing an in-depth analysis of all those forces under different heads which can potentially or currently affect the organization. PESTEL analysis is not only to evaluate the forces that can affect the whole organization; this analytical tool can also be used to identify the forces which affect the specific business units or functions of an organization. The human resource polices of the case company npower are under discussion and a PESTEL analysis is conducted of those external forces or factors which can affect the human reduce policies , practise and procedures of the company. Political Forces RWE npower is a leading organization in United Kingdome providing the energy services to the UK market. At United Kingdome there are different legislations which protect the consumer and employee rights. Furthermore there are laws which are used to maintain a fair competition in the market. So, the change in any kind of law and procedures will affect the human resource policies and practices directly. Furthermore, RWE npower is not only operating in UK, it is a German based organization and operating in different countries. So the changes in the laws and procedures in any country will affect the internal human resource policy of the organization. For a clearer understanding lets consider an example of a law in United Kingdome where the minimum wage rate of a labour is 3.59 pounds per hour. If at any time UK government increases it to 4 pounds per hour or more then HR polices of the company will be affected directly and immediately. Economic Forces Economic factors which can affect the HR policies of the case company can involve the change in inflation rate and the global economic condition (Beardwell, 2004). The change in inflation rate will force the company to follow the laws which suggests the organization to increase the salaries and other benefits according to the inflation rate. On the other hand the economic condition of the country as well as the world also affects the businesses (Kelly, 1999). In the recent global economic recession several organizations were forces to reduce their workforce and a downsizing trend was scene in many big multinationals. Due to globalization where the organizations have to expand in different location across the globe the economic forces and their impact also changes (Rioux, Bernthal, Wellins, 2008). For instance the economic condition in Europe will be much different as compared to economic condition in Asia. So, globalization gave birth to the need of managing several economic factors at different geographical locations. Social Forces Several social factors are there which affect the npowers human resource strategies and polices. To provide the employees and labours with a safe and healthy environment is necessary for every organization operating in United Kingdome. There are several legislations that ensure that each employee or labour is fully insured. So, changes in such legislations and laws immediately affect the human resource policies of the organization operating in United Kingdome. In social factors there is also a factor of globalization that affects the organizational HRM policies. As due to globalization the world is becoming a smaller place to operate. Several organizations are operating worldwide which include several cultural and geographical differences. The organization has to manage those cultural and geographical differences. It is not possible for a multinational cooperation such as npower to maintain a static HRM policy for all it business units across the globe. Each geographic al location has its own norms, believes and culture which have to be recognized by the organization. The human resource policies and procedures should support and correspond to the local employees and market needs (Rioux, Bernthal, Wellins, 2008). For the case company which is operating in different geographical locations the human resources management has to be a strategic function rather than simply an administrative function. The company has to consider the local requirements of the labour and employees and haver to focus on utilizing the exiting local talent in order to save the operational and administrative cost of the organization. Technological Forces Technology is changing very fast. It is very important for an organization operating in competitive business world to automate the human resource function (Beardwell, 2004). The manual working and the procedures are now obsolete as it wastes a lot of time and resources. To be quick and dynamic organization must have to automate their processes. Npowers human resource policies and practices will be affected with the change in the technologies. With the introduction of new technology the demand of the employees and the market increase and if the organization does not match up with the new technology then it will face a problem to retain the experienced and skilled workforce. Environmental Forces The health and safety act of United Kingdom puts a binding on the organization to provide healthy and safe environment to the employees. Environmental forces include mostly the weather changes. Human resource polices are indirectly affected by the environmental changes. Due to the change in weather it is quite possible that the employees have to be provided with different protective suits or air-conditioned plants etc. Legislative Forces The government of United Kingdome have passed different laws and regulations and currently there are several laws and regulations which are to be considered by the case company while designing any human resource policy. United Kingdoms Legal Environment Through law the stability and security of the people is ensured and justice is provided according to it to the accused. Just like criminal and social laws there are also the business laws and legislations which are implemented by the state to ensure that the right of different stakeholders are protected. At United Kingdome several laws are there which protect the rights of employees, right of consumers and also there are laws which are to maintain the fair competition in the market and ensure that no organization manipulates the market. A fair and healthy competition is good for the industry as well as for the consumers, but to ensure this atmosphere in the business market the government has taken several steps towards this by implementing certain legislations. As discussed in the PESTEL analysis of npower, the legislative factors also plays and important factor and can affect the human resource policies of the company. Here, different legislation or acts implemented by the government of United Kingdome. For protecting the consumer rights the first legislation under discussion is the consumer Credit Act. It was implemented in 1974 by the UK government and according to this all such business who want to provide credit facility to their customers will have to take approval from Director General of fair trading. For the organization like case company it is not possible to work only on cash, so the organization have to give credit facilities to the corporate clients such as British Telecom, Wembley Stadium and Ford. The enterprise that is found to mislead the customer regarding the price through its promotions can be held accountable under the consumer protection act which was implemented in 1987. Under this act all the organization have to pre sent the actual price of the product or service and if there are any other charges or taxes with the price those should also be presented to the customer in the promotions. The equal pay act which was implemented in 1970, suggests the organization to equally pay the candidates without any discrimination of gender. Another act implemented in 1974 suggests the organization to provide the employees a safe and healthy working environment. The minimum wage act implemented by the UK government in 1998, bound all the enterprises not to pay less than 3.59 pounds per hour. Office of Trading (OFT) is responsible for maintain a healthy competition in the market and to ensure that no organization can create its monopoly. The fair trading act was implemented in 1973 under which Office of Trading can recommend that business to MMC (Monopolies Mergers Commission which is found to be chagrin high prices form the consumer or performing such activities which are against the interest of public. Office of Trading can also set the price ceiling in order to eliminate the monopolistic behaviour of the organizations.

Special Needs in the Classroom :: Education Disabilities Essays

Special Needs in the Classroom Virginia teachers face many challenges when trying to meet the needs of special needs students in their science classrooms. The most difficult task at hand for Virginia teachers is making sure that all students (general education and special education) learn the content outlined by the Virginia Standards of Learning. These standards "set reasonable targets and expectations for what teachers need to teach and students need to learn" (Virginia Standards of Learning, 1995, foreward). These targets and expectations are in the four core subjects, including science, however, no accommodations have been made in the SOLs for special needs students. All students, regardless of ability will need to know the same material in order to pass and graduate. One way that Virginia teachers meet the challenging needs of students is through the use of special strategies. Much research has been conducted which supports the use of special strategies to teach science content to students with special needs. Research has shown that some strategies to help special needs students in science are to prioritize materials in order of importance, pre-teach vocabulary that may be difficult for students, paraphrase passages, provide study guides, graphics, and organizers, or provide audio-taped texts (Munk, Bruckert, & Call). Other research suggests that teachers should, "employ strategies that emulate the principles of inclusive education (for example, outcome-based education, multiple intelligence theory, constructivist learning, cooperative learning, use of technology in the classroom, and peer-mediated instruction)." (Norman, Caseau, and Stegfanich, 1998) Gallas (1995) writes that it is important to build on students’ prior knowledge, so that they can use that knowledge to explore theories and construct other ideas and explanations. Methods of evaluation are also a concern and challenge for educators of special needs students today. Finson & Ormsbee (1998) argue that, "rubrics are effective methods for objectively and individually assessing the achievement of students with learning and behavior problems in inclusive science classrooms†¦." Rubrics are especially useful because they are written as a specific outline of the skills or knowledge that the students are to master after the lesson and points are awarded in a systematic and objective manner. To further explore the realm of special needs students and their education in science classrooms in Virginia today, we interviewed two educators from Central Virginia. "There simply is never enough time in the day to meet the needs of all students. And, when you think about it, they all have special needs†¦" Anne, a fourth grade teacher remarked when asked how she finds time to attend to both her general education students and special education students.

The Techniques of Advertising Essay -- Advertisements Media Essays

The Techniques of Advertising Advertisings are created to make us buy things. All the companies want to sell their products, because they want to make profit. When a company knows that a product that it manufactures is not very good they do not share that with their customers. On the contrary, they make a very impressive advertising for the product, because all they want is to sell it. Everyone knows that advertising a product is not really done because the product is just wonderful and everyone should know about it. Companies sure do care about their customers and they want these customers to come back and buy more. They care about that because they want to make profit, not because they want their customers’ hair to be dandruff free, nor because they want their customers to be slim, nor because they want their customers to smell good. They do it for the profit. You know it. They know it. Everyone knows it. The best way to sell a product is to advertise it and let everyone know how wonderful this product i s and how much better your life will be if you use it. A type of techniques that advertisers use is making us believe that their product is just what we have always wanted, another type is using our fears or weaknesses and another one is using famous people and role models that tell us what they use in order to be so popular and good-looking. How do advertisers know what I want? A Burger King commercial says:†Ã¢â‚¬ ¦chicken, just how you like it†. There is no way that everyone likes their chicken the same way. If one million people are watching this commercial there is no way that this is exactly how everyone likes his chicken. The advertisement says it though, and if you do not pay attention and you do not dig under the surface ... ...rd of before, no matter whether it is the greatest or the worst thing in stores. People have their fears and their weaknesses. No one is perfect. That is why it is so easy to play with people’s minds and intentionally make them think about products and make them want to have and use these products. Advertising has been around for a long time and people that create commercials know a lot about those fears and weaknesses and even desire and dreams that the regular people have. So they use them in order to be profitable and in order to sell their products. Every business is really competitive in current times so the company that manages to attract more customers will be the most profitable and most successful. That is why these companies have to use all the possible methods and all the techniques that they can think of. The more creative and unique they are the better.

Drugs In The Music Industry Essay -- essays research papers

Drugs in the Music Industry The Music World-glamorous, fast paced, and a world most of us will never be part of. But if we knew what it entailed, would we still want to be? The whole world seems to be building itself around drugs more and more every day, and music industry isn't immune. In fact, music is one of the most influential art forms of today's society, and drugs, especially to today's youth, just add to the attractiveness of it all. In the last two or three years, drugs, especially heroin, have risen in use dramatically. Kurt Cobain was the most high-profile drug-related rock star since the 1970's and was still battling heroin addiction when he committed suicide in 1994. Along with him, his wife Courtney Love made it fashionable to be a "junkie". In the last year, Stone Temple Pilot's singer Scott Weiland and Depeche Mode singer David Gahan, among others, have been arrested for cocaine or heroin possession. The number of top bands that have been linked to heroin through a member's overdose, arrest, admitted use or recovery is staggering: Smashing pumpkins, Everclear, Snoop Doggy Dogg, Dr. Dre, Blind Melon, Red Hot Chili Peppers, The Breeders, Alice in Chains, Sex Pistols, Sublime, Iggy Pop, the list goes on and on. Together, these bands have sold more than 60 million albums(Newsweek pgs 50 & 53). Since kids emulate popular musicians, what is there to keep them from emulating their drug use? Moreover, what's to keep the majority of the population from doing the same? In the 60's and 70's, drug use was never spoken of nor did anyone admit that it was a problem. Nowadays, there is not a person in the world who hasn't heard about the rising drug use. But what are they doing about it? Back in the 80's, higher prices, the fear of contracting AIDS, and lower purity kept drugs out of the mainstream. Now, drugs are cheaper and easier to get then ever, being imported into the country at double the rate it was in the 1980's. Unfortunately, the outsider's view of drug use isn't the harsh reality. Janis Joplin, Billie Holiday, and Charlie Parker are among the many to die from heroin and other drug addictions. Drugs seem to make you a funnier, wiser, cooler person, but what the younger generation fails to realize is that they are fatal. Despite this, drug... ...are easy because they are wealthy, popular, and sublimely happy. Being rich and famous isn't all it's cracked up to be. They lead normal lives, have kids and pay bills just as we do, but this is still no excuse to put your life into your own hands. The music industry may be finally facing up to the truth that drug abuse has become a serious problem, though. The National Academy of Recording Arts and Sciences gathered in 1996 to discuss what could be done about it. The sense of crisis has been growing since Kurt Cobain committed suicide, blamed at least partly on his heroin abuse.(Time p57)Expressions of concern are easy to come by, but the chances for meaningful industry action are less clear. Record executives refuse to be drug police, especially in a society where drug abuse has long been accepted, and even condoned, as part of the creative process. Geffen Records has retained a drug counselor for it's musicians who seek help. (Time p 58). But the industry must recognize that pressure from the label to keep tutoring and recording can blow a drug problem out of proportion. It is a minimal step, but at least a start toward trying to keep musicians healthy, productive, and alive.

A Manager’s Performance and Success

Knowledge about organisational behaviour has become very important to a manager's performance and success. Therefore, it is not surprising that writers often claim to have the information that managers need if they are to excel in their jobs. In Search of Excellence is one of the most well known books of this type. In the book, Peters-and Waterman outlined seven principles that they claimed to be excellent management tactics and a â€Å"7-S Framework.† In Search of Excellence is a book dealing with many different principles of economics and what makes big business' excellent. The first idea that the author discusses is his chart of the 7-S Framework. The graph is very simple but the ideas are fairly complex. In their research, they found that their concepts were too hard to explain and easily forgettable. They made this framework to deal with strategy, structure, style, systems, staff, skills, and shared values. This has 7 S's and a graphical representation to visualize. This shows the businessman that problems can be managed. For example, anyone assuming that a new manager of a Macdonald†s will perform exactly as the old manager did is ridiculous. The workers must adjust and adapt to the new manager's way of business. The first principle is a bias for action. This is basically saying â€Å"Stop talking and do something about it.† When Macdonald†s has a rush of customers and their supplies for making food are low, they (usually) don't say â€Å"You know what, I have no more cheese† or â€Å"Could someone get me some more cheese?† They take action and get the cheese, make it if necessary, and get the problem solved as quickly as possible. The second Principle they deal with is to be close to the customer. This means good service and listening to what the customer has to say. If the producer, Macdonald†s, is not in touch with what the customer wants to eat, then the business will most likely fail. Although it also refers to customer satisfaction; quality food made right and good service, â€Å"Have a nice day and enjoy your meal!† The third basic principle is productivity through people. This deals with the individual as the best means for efficiency improvement rather than capital investment. If Macdonald†s could put everyone in the area of work they most enjoyed (drive-thru, washer,†¦) then they could produce more food and maximize their business. The forth basic principle is hands on, value driven. This is the standard setting and enforcing values in a company. This is keeping the boss in touch with the assembly line worker and projecting the company's original ideas, instead of an image of some suited businessman who confines himself in an office. The fifth and often obvious principle is to stick to the knitting. The basically says that if a company is in the food business, it should not branch off into the computer business unless they have no where else to expand in the industry they are already in. The sixth basic principle is a simple form, lean staff. This means leaving few people up top to manage a company and keep the form of management simple. The seventh and final basic principle is simultaneous loose-tight properties. This is another value-based principle. This could be described as the ability for a worker of Macdonald†s to do his/her job in his/her own way as they incorporate the company's values and concepts into their work. These values demonstrate that they don't just work because they work, but rather because they just make sense. In search of excellence shows that the excellent companies had been based on the basics. The companies had to try to keep things simple. Sometimes, to a big business, it might seem logical that business should be run more complex the larger it is. From research, this is usually not true. Ignoring the seven principles above would be foolish in the business world.

Why Global Warming Isn’t Real

Global climate change has been an issue for decades and so people are trying to stop it by going green and blaming carbon dioxide for the cause because there has been an increase of it. The truth is, it is not real. People get tricked into thinking global warming is real and the media makes a big deal about it and because people rely on the media for what is going on, and they believe what they say. That it is why they want them to get fuel efficient cars and energy star products along with solar and wind power to lessen the reliance on fossil fuels to help stop global warming. A lot of research has been done to show that carbon dioxide does not affect global warming. Scientists believe global warming is real based on the data that has been collected over the years. Tim Pawlenty had two claims on global warming, the first one is that evidence points toward climate change being natural and not a man made phenomenon. The U. N. Intergovernmental Panel on Climate Change (IPCC) said that over the past 50 years, global warming was observed as human induced emissions such as the burning of fossil fuels like gasoline in our cars and clearing forests. The IPCC also claims that between 1995 and 2006, eleven of the twelve years were the warmest years on record. The second claim that Pawlenty made is that science about causes of climate change is dispute. The 2010 survey showed that of 1,372 scientists surveyed, 97-98% of them said that humans are to blame for on climate change. This was published in the Proceedings of the National Academy of Sciences which is the official publication of the US National Academy of Sciences. (Holan, Angie Drobnic, and David G. Taylor) There are a lot of facts and research as well to show why global warming is something that people are overreacting to. The Berkley Earth Surface Temperature (BEST) showed that the worldwide temperatures have increased only by 1degree Celsius since 1950 while also showing that in the past decade, the temperature has been unchanged. Anthony Watts analyzed the US temperature data from the National Oceanic and Atmospheric Administration (NOAA) National Climate Data Center and found some stunning results. He said that the Earth is cooling and not warming and broke down the data into winter, summer and annual temperatures in nine different regions. Every region has shown a drop in temperature for the winter, ranging from -1. 3 to -8. 4 degrees Fahrenheit in the west and east north central regions respectively. for the summer, five of the nine regions have negative temperature trends falling 1. 95 degrees in the northwest region. Only the northeast region has shown positive temperature trends for the annual temperatures. (Tennant, Michael) The IPCC has no creditable evidence that the Earth is warming like t hey claim. In fact, 17,000 scientists signed a petition saying that there is no convincing evidence that global warming exists. Satellite readings from the troposphere show that there is no warming since they started being used for the past 23 years. These are very accurate in taking temperature readings. The only data that shows there is global warming is the land base stations. With the heating and emissions from vehicles, The data collected shows that human error is factored in therefore would have scientists believe it is real. The efforts to reduce the greenhouse emissions s very costly and it would not stop the climate from changing. Reducing the carbon dioxide to the 1990’s levels within the next couple years requires higher energy taxes and regulations. This will cause 2. million jobs lost and $300 million in annual economic output. The household income nationwide will drop almost $3,000 therefore causing the state revenue taxes to fall almost $93 billion due to less taxable earned income and sales along with lower property values. Over 80% of the carbon dioxide increase in the 20th century was after 1940. Most of the temperature increase happened before 1940 and between the 40’s and mid 70’s, the car bon dioxide increased dramatically as the Earth was cooling. Water vapor is considered a major greenhouse gas and accounts for 95% of any greenhouse effect. According to the Journal Science in 1982, termites produce ten times more carbon dioxide than all the factories and vehicles alone. (Edmund Contoski) There are a lot of facts on why global warming is true, but the evidence does not confirm it. The data that was collected from the US government shows that the Earth is cooling and not warming. Carbon dioxide is not to blame for increasing global warming. All the research that was done on monitoring temperatures and carbon dioxide show that the Earth is not warming and humans are not to blame and it is only natural.