Client Centricity

Relationship Management in Banking

Jan U. Hagen, Ulrich Schürenkrämer

• Publisher: Murmann Publishers
• Year: 2015
• ISBN:
  9783867744836
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Relaciones con los clientes

The financial market crisis has brought the very business models of many banks into question. What lessons should banks take from these events? What consequences will the industry have to face when dealing with clients? These questions are at the center of this book, with contributions from renowned experts and examples from theory and practice. Client commitment – the pursuit of pure customer focus – has become a success factor in many areas of the banking industry. This book sheds light on the theoretical aspects of client commitment and shows how its various facets are being put into practice.

Is Persuasion an Art or a Learnable Skill?
Dieter Frey/Verena Graupmann

In all walks of life, much of our communication is used to persuade others. This does not mean cajoling or manipulating them. People who know how to use persuasion achieve more, both in business and social organizations.

Organizations have to position themselves on the market and sell their products and services successfully. Persuading existing and, wherever possible, new customers to embrace products and services is a bigger challenge in the B2B sector than it is for fast-moving consumer goods, which people simply pick up in the store without extensive reflection. The more complex, comprehensive, and expensive the product or service, the more protracted and difficult the sales process of conveying the clear benefits they will gain from the product or service to customers. Spontaneous decisions become less frequent as the purchase price increases and as the decision has greater significance for the client company.

When it comes to persuading customers, building up longer-term relationships is crucial. This requires the use of persuasion, to achieve trust, and customer loyalty, to ensure that the customers’ subsequent decisions also benefit the organization as much as possible.

Consultants must, first and foremost, possess the necessary expertise to build customer loyalty. However, an in-depth knowledge of the products and services to be marketed is not enough.

The human factor must not be underestimated. Building a good business relationship means understanding customers and their needs. Consequently, a good – and ultimately successful – sales consultant must know the customer’s interests, desires, fears, tendencies, and preferences and integrate these into the persuasion process alongside the objective, factual aspects. In this way, the consultant can build a relationship based on trust.

With complex issues in particular, the success of consulting and sales activities is dependent on the personal relationship, especially the trust between consultant and customer. If customers feel understood by the consultant or sales assistant, do they feel that their background and interests have been recognized and taken into account?

To answer this and related questions, models and theories of persuasion established over decades of research in the fields of “attitudes and behavior” and “sender/receiver problems” can be employed.

This chapter summarizes the relevant core research findings from the field of psychology, particularly social psychology, focusing on persuasive consulting and successful sales in the banking sector. The fundamental aim of any process of persuasion is to instill a new attitude in the receiver’s mind or change an existing one, as well as to monitor the shift from attitude to behavioral changes. Consequently, the questions that need to be addressed are :

• • From the sender’s perspective, which are the success factors involved in persuasion?
• • What does the sender need to account for to persuade the recipient to change attitudes or behavior?
• • How can this be put into practice?

What is an attitude?

Eaton et al. define them as follows: Attitudes are evaluations stored away in memory, encompassing everything in our surroundings. When attitudes are activated, they influence our thoughts and judgments and cause us to interpret things in a specific way. They thus control our motives and our behavior and have a major influence on how we interact with the world.

Attitudes involve affective components (heart), cognitive components (head) and conative components (behavior).

We can illustrate this using an everyday example from the banking sector.

• • The affective components refer to whether the customer has a positive or negative emotional relationship with the bank.
• • The cognitive components are made up of the customer’s established perceptions. Based on prior interactions or information, do customers feel that this specific bank is competent and important when it comes to their decisions?
• • The conative components raise the question of whether the customer actually follows the bank’s advice and behaves accordingly.

What is the difference between persuasion and manipulation?

Any attempt to identify the success factors behind persuasion inevitably encounters one particular question: What is the difference between persuasion and talking someone into something, or even manipulating them?

When we talk someone into a specific course of action, and especially when we use manipulation, we consider our own interests but not those of the other person, e.g., the bank customer. We make a conscious decision to not be transparent. We hide certain pieces of information. There’s a hidden agenda.

With persuasion, on the other hand, we lay all our cards on the table and try to take the other person’s interests into account. Instead of using manipulative behavior to achieve short-term success, we opt to build up lasting trust.

Manipulative behavior is undesirable on ethical and commercial grounds. Customers will not keep entrusting their money to a bank that has cheated them. Any potential short-term advantages that benefit the bank but are generally disadvantageous to the customer are not, and have never been, sustainable.

Principles of persuasion

The following highlights some principles of persuasion:

• • Perception of commonalities and similarities between senders (consultants) and receivers (customers): The more senders manage to identify similarities with receivers in terms of common values, interests, and objectives and thus generate a shared identity, the easier it will be for receivers to understand the senders’ chain of argument. Senders and receivers must feel like they belong to the same in-group. Neither party can be allowed to perceive their opposite number as “the others,” as this would make it difficult to convey content and be persuasive. Consequently, it is important to seek a shared identity and consensus. It is essential that both parties identify with the bigger picture.
• • Identification of deficits and opportunities for change in the world of the receiver: If receivers feel that there are no shortcomings in their investment strategy, for example, they will be less motivated to embrace the suggestions made by consultants. It is important that senders make it possible for receivers to perceive shortcomings within the receivers’ personal value system. Perceiving opportunities for change is equally important. These fundamental aspects are relevant to senders and receivers alike.
• • The long road to changing attitudes and behavior. Generally speaking, a change in attitude does not immediately lead to a change in behavior. As shown in figure 1, achieving a change in behavior is extremely difficult and does not always produce lasting success.

This chain reflects the process of persuasion and shows what needs to happen for change to take place. Has the argument been heard? Has it been understood? Do we recognize that the other person is in agreement? Does the initial behavior indicate that what has been understood is being applied? Senders need to know that the journey from persuasion to behavioral change is long.

Figure 1: The path to achieving behavioral change (Source: authors)

• • The perception of changeable and non-changeable behaviors. Attempts of persuasion need to be realistic. Where is there scope for action, where can we exert influence? Taking into account attitudes and behavior that cannot be changed means understanding that not every attempt of persuasion will be a success. It is crucial to recognize when an attempt of persuasion has become pointless or even counterproductive.

• • The psychological contract. Senders and receivers alike have implicit ideas about what constitutes a fair persuasion and negotiation process. Senders are expected to be predictable, consistent, and correct. Receivers are expected to clearly express their expectations. As many of these conditions are not addressed explicitly, we are dealing with an implicit or psychological contract.

Perspectives on the persuasion pr...

Table of contents

• Murmann Publishers
• Client Centricity. Relationship Management in Banking
• Foreword
• Introduction
• Strategic Customer Orientation | Martin Kupp
• Value Creation in the Global Banking Industry – Back to a Client-centric Paradigm | Felix S. Fremerey
• Is Persuasion an Art or a Learnable Skill? | Dieter Frey/Verena Graupmann
• When Errors Occur | Jan U. Hagen
• Measuring the Success of Customer Loyalty Activities | Mario Rese/Valerie Wulfhorst
• Client Commitment: Building Meaningful Emotional Connections with Clients | Erik H. Schlie
• HumanSigma: A Management Operating System for Banking | John H. Fleming/Marco Nink/Katayoun Rezaiamiri
• Relationship Managers as Client Advisors | Ulrich Schürenkrämer
• Is Relationship Quality a Relevant Management Dimension in Commercial Banking? | Cornel Wisskirchen
• From Trusted Advisor to Trusted Partnership | Michael S. Duesberg
• Restoring Trust in Bank Advisory Services | Herbert Walter
• Client Centricity: The Case of Microfinance in India | Samit Ghosh
• Bibliography
• The Contributors
• About the Authors
• Impressum