Abstract
This paper argues that retail banks need to focus more strongly on components of their Customer Relationship Management (CRM) strategy that will generate customer affective commitment and lead to an increase in customer retention, share of wallet, and advocacy. It is suggested that affective commitment is generated during ‘moments of truth’ or episodes of interpersonal interaction between customers and bankers. As shown in social psychology, effective interpersonal interactions are a function of the assertiveness and affiliation demonstrated during the interaction. Applying this to retail banking, bankers should mine their databases to identify customers in terms of their levels of profitability and longevity, and should deliver levels of assertiveness and affiliation appropriate to each customer. Testable research propositions are developed regarding how affective commitment might evolve during a customer's tenure with a retail bank, when bankers should deliver assertiveness and/or affiliation to customers of differing longevity and profitability, and how these strategies to increase affective commitment will impact retention, share development, and advocacy. Overall, the call is to complement the emphasis on the use of high-tech CRM strategies that generate huge databases with a more high-touch strategy that will indicate to bankers how to interact with each individual customer.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Boulding, W., Staelin, R., Ehret, M. and Johnston, W. (2005) ‘A customer relationship management roadmap: What is known, potential pitfalls, and where to go’, Journal of Marketing, Vol. 69, No. 4, pp. 155–166.
Fullerton, G. (2003) ‘When does commitment lead to loyalty?’, Journal of Service Research, Vol. 5, No. 4, pp. 333–344.
Verhoef, P. (2003) ‘Understanding the effect of customer relationship management efforts on customer retention and customer share development’, Journal of Marketing, Vol. 67 (October), pp. 30–45.
Gustafsson, A., Johnson, M. and Roos, I. (2005) ‘The effects of customer satisfaction, relationship commitment dimensions, and triggers on customer retention’, Journal of Marketing, Vol. 69, No. 4, pp. 210–218.
Bank for International Settlements. (2004) Annual Report.
Industry Canada, Office of Consumer Affairs. (2002) The Cost of Banking, Annual Report, p. 8.
HM Treasury. (2000) Competition in UK Banking, Charts 4.19 and 4.20, pp. 108–109.
Jones, T. and Sasser, W. E. (1995) ‘Why satisfied customers defect’, Harvard Business Review, November–December, pp. 88–99.
Gruen, T., Summers, J. and Acito, F. (2000) ‘Relationship marketing activities, commitment and membership behaviors in professional associations’, Journal of Marketing, Vol. 64, No. 3, pp. 34–49.
Reinartz, W. and Kumar, V. (2002) ‘The mismanagement of customer loyalty’, Harvard Business Review, July, pp. 86–94.
Dubé, L. and Morgan, M. (1996) ‘Trend effects and gender differences in retrospective judgments of consumption emotions’, Journal of Consumer Research, Vol. 23, No. 2, pp. 156–163.
Boulding, W., Kalra, A., Staelin, R. and Zeithaml, V. (1993) ‘A dynamic process model of service quality: From expectations to behavioral intentions’, Journal of Marketing Research, Vol. 30, pp. 7–27.
Anderson, E. and Mittal, V. (2000) ‘Strengthening the satisfaction–profit chain’, Journal of Service Research, Vol. 3, No. 2, pp. 107–120.
Herr, P., Kardes, F. and Kim, J. (1991) ‘Effects of word-of-mouth and product-attribute information on persuasion: An accessibility-diagnosticity perspective’, Journal of Consumer Research, Vol. 17 (March), pp. 454–462.
Bitner, M. J., Booms, B. H. and Tetreault, M. S. (1990) ‘The service encounter: Diagnosing favorable and unfavorable incidents’, Journal of Marketing, Vol. 54, pp. 71–84.
Menon, K. and Dubé, L. (2000) ‘Ensuring greater satisfaction by engineering salesperson response to customer emotions’, Journal of Retailing, Vol. 76, No. 3, pp. 285–307.
Tracey, T. (1994) ‘An examination of the complementarity of interpersonal behavior’, Journal of Personality and Social Psychology, Vol. 67, No. 5, pp. 864.
Fournier, S., Dobscha, S. and Mick, D. (1998) ‘Preventing the premature death of relationship marketing’, Harvard Business Review, January–February, pp. 415–420.
Garbarino, E. and Johnson, M. (1999) ‘The different roles of satisfaction, trust and commitment in customer relationships’, Journal of Marketing, Vol. 63, No. 2, pp. 70–98.
Bendapudi, N. and Berry, L. (1997) ‘Customers’ motivation for maintaining relationships with service providers’, Journal of Retailing, Vol. 73, No. 1, pp. 15–37.
O’Connor, Aidan (2005) ‘Trade, Investment and Competition in International Banking’, Palgrave Macmillan, Basingstoke.
CRM: Barclays banks on CRM software. (2006). European Banker, May, p. 13.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Menon, K., O'Connor, A. Building customers' affective commitment towards retail banks: The role of CRM in each ‘moment of truth’. J Financ Serv Mark 12, 157–168 (2007). https://doi.org/10.1057/palgrave.fsm.4760068
Received:
Revised:
Published:
Issue Date:
DOI: https://doi.org/10.1057/palgrave.fsm.4760068