All posts by lucnooren93

Banking value creation

The banking business has changed dramatically during the last decade. The development of new IT systems, mobile banking and other electronic banking services via multiple electronic channels has made it possible for the banking industry to create more and more value for their customers. The increasing diffusion of mobile phones and the banking applications is the basis of electronic banking nowadays and banks are competing to create the best value and services for their customers (Pousttchi and Schurig, 2004). Because, let’s be honest, if you want to switch to another bank, besides a couple of administration effort, you could easily do that. So, what’s holding you back?

Banks allow their customers to check the balance and transactions of their accounts, pay invoices and transfer funds between accounts, make buy-and-sell orders for the stock exchange etc. etc. The understanding of service user behaviour is one of the most basic requisites of service development (Laukkanen & Lauronen, 2005). Customers views and needs are changing every day and if you look at service development, banks need to change as well. But the needs are unsure and short-timed and it is necessary for banks to develop knowledge of customer perspective about their online services. To develop this, banks need a deeper insight into aspects of consumer psychology and decision-making.

ING is, nowadays, one of the foreman’s as it comes to mobile banking service in the Netherlands. ‘’We create value by providing products and services that help people to improve their lives and fuel economic growth. ING’s purpose – empowering people to stay a step ahead in life and in business- is reflected in ING’s structure, strategy and in the values and behaviours we embrace’’, is one of their mission statements.  Specifically, ‘’ING creates value by helping our customers secure their financial futures, by supporting people when making life changing decisions, through seamless processing of transactions, and by empowering customers to have greater insight into their financial affairs.’’

Banking is a very personal data and ING needs to make sure that these data is handled with care. To use this data, ING tell us that it is in our best interests that transactions are processed correctly. Next to these transactions, by giving permission to their cookies, they can view our browsing behaviour and, via this way, ING can give us tailored information and special offers.

ING has formulated the following goals for using our data:
1. Improving customer service
2. Countering fraud and cybercrime
3. Operational excellence
4. Diminishing risks (e.g. reducing payment arrears)
5. Creating commercial opportunities.

This brings us back to the question: why would you stay at your bank? Me, as a customer of ING, am not looking at interest percentages or any financial reasons to stay at ING. I am looking at their service and the easiness of using their applications. Via this way, and looking at the efficiency criteria (CDCC,2017) by decreasing my effort and increasing my usage of their apps by all the new add-ons I cannot think of a reason to switch banks. By retaining their customers ING can use their data to keep improving their services and by this joint profitability customers will stay at ING. A good way of using your own consumers to create value.



Do me a Flavor

Companies will need to interact with their customers so closely that they actually “co-create” value with them on an individual basis (Prahalad, C; ‘’The New Age’’, 2008). Frito-Lay, the foods division of PepsiCo, is taking the management guru’s advice quite seriously and used a Facebook contest (Do us a Flavor) where participants created their own flavor of potato chips with a chance to win $1,000,000 and have their flavor become reality. After participants submit a flavor idea, it is instantly applied to a Lay’s package with an appropriate image. They have also launched a similar campaign last year which asked consumers to vote for the flavour of their choice between the new launches. When talking about the efficiency criteria you must say that these social programs can be a valuable way to both gather insights from your customers and to market the brand in a playful way. As Frito-Lays showed these programs provided an abundance of new ideas that can lead to more insights in to their customer preferences.

I think Frito-Lay has executed this program well and other companies should pay attention when developing their own initiatives. Next to that, they provided instant feedback social sharing which results in people using the platform even more because people like collecting likes. In Do us a Flavor, participants can find out how many people like their flavor and from where in the country interest is coming. They can also share their flavor ideas with their Facebook friends to increase their “likes.” Which gives the customers even a bigger encouragement to use the platform and create more ideas. A big win-win created by Frito-Lay.

An increasing number of companies are doing precisely that to drive up engagement levels and interactivity with consumers to create a customer co-creation. Talking about consumer value creation Frito-Lay has done a great job. When looking at the joint-profitability criteria (CDCC, 2017) they used their consumers to create their own products. Lays profits by producing new type of chips that you know for sure your customers like and on the other hand the consumers benefit by have chips with their own flavor and participate in a social platform with the possibility to receive a large amount of money.


Customer-centric in the airline-industry? It’s possible!

Southwest Airlines is one of the most customer centric companies of 2016 per If we look at their mission statement you could tell: “Dedication to highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit.” Southwest Airlines goal is to make every journey an unforgettable one and with this they have achieved a very loyal customer base. I will go through Southwest’s customer centric business model by emphasizing on the efficiency criteria joint profitability discussed in class. So, I will look through Southwest Airlines business model by finding out if the system design is maximizing the joint pay offs of the partners involved (CCDC, 2017).

Southwest Airlines understands that happy employees will guarantee happy customers. “Our people are our single greatest strength and most enduring long-term competitive advantage’’ (  So, it is not surprising that the employees stay with the airline even though they are paid less compared to other airlines. Before you can be customer centric you must be employee centric is what turns out here. Competitive prices, free checked luggage, and friendly employees are what they are also known for but Southwest reputation is at its best when things don’t go well. That’s when their good system is in place. An experience many Southwest Airlines passengers could recall is when the gate-agent of already book tickets for the next flight to their destination when the they were supposed to fly was grounded due to bad weather conditions. Even before you requested it. What was supposed to be an inconvenience turned out to be a moment of pleasant surprise for the customer. This is all the joint profitability is about: with emphasizing on customer happiness they create a loyal customer base which, in the end, will result in more revenue.

So, Southwest Airlines sees the importance of moving from a tactical to a more strategic approach of customer participation and this is critical for all their forms of social marketing. Southwest Airlines could embrace social business as a natural evolution of their business model, because they have always been customer-centric. Southwest Airlines, at least relative to their peers, have always viewed themselves as “agents of the customer,” focusing first on creating superior customer value, while understanding that profit is one outcome of successfully creating customer value. Companies that pursue any social business initiative as another tactic to improve shot-term profitability, are increasingly at risk, given the exponential increase in customers’ access to information. Southwest Airlines has done a great job with enhancing information and participation with their customers and, thus, creating a top of the bill customer centric business model.




Creating customer loyalty through service customization

Many firms see service customization as a powerful tool, but this application is not well understood yet. The paper (Coelho & Henseler, 2012) developed a model of customer relationship outcomes of service customization and the efficacy of service customization. The main idea about differentiation is to identify profitable market segments and to design products and services that satisfy that segment. Now, the more popular form of differentiation among firms is that of customization; firm’s offering tailored to meet the heterogeneous customers’ needs, aims at satisfying as many needs as possible for each individual customer and an answer to the shifting nature of customer demand for greater variety, more features, and higher quality in products as well as services. Developments in computing power have offered these possibilities and companies will keep investing in these technologies because of the strong need for information.

The methodology used in this paper are two large-scale studies in different service industries based on the European Customer Satisfaction Index framework and applied PLS path modeling to test this model. Customization is a big plus for firms because it increases their service quality, customer satisfaction and with that customer loyalty toward a service provider. It investigates the simultaneous effects of service customization on customer loyalty and other relationships variables and offers new insights relatively to the nature and size of customization effects. The paper found that this customization has both direct and mediated effects on customer loyalty. These findings and service customization is a great instrument for relationship marketing which depends on customer satisfaction and customer trust. Service providers can use this paper’s findings and thus, service customization as an effective instrument for achieving not only higher customer satisfaction, but also higher customer loyalty. Service customization is most effective for companies that have deficits in satisfying their customers, while at the same time their customer relationships are characterized by a high level of trust and could help managers to decide upon resource allocation to enhance customer loyalty.

A business example can be found in the banking industry. By introducing non-banking products or services, banks can cater to customer lifestyles and needs. For example, ‘’banks have begun to offer insurance on items such as mobile phones, travel insurance, identity theft protection and premier event access’’ ( Banks can explore lifestyle bundles with Internet services in association with a, for example, home loan. By allowing customers to customize their experiences through various channels, and by allowing banks to offer suitable products and services based on customer data, a bank could create customer stickiness and retention.