Title: A Critical Appraisal of CRM Strategies addressing Customer Retention Issues in the Agile Bank


As one of the largest telecommunications services companies in the world, BT Group plc operates in more than 170 countries all over the world (BT, 2011). BT opened its first Agile Bank in 2002 and this paper invests Agile Bank’s customer retention issue (BT, 2011). This research contains three parts. The first part will introduce the context, justification and research objectives so that readers could obtain deeper understanding of the research topic. The second part is to review previous studies as theoretical knowledge would help carry out further critical findings. The last part will introduce the methodology which will be adopted in future research and various concerns will be mentioned such as research design and methods, ethical considerations and limitations.



As the leading communications services company in the UK, BT provides fixed-line service, broadband, TV products and services as well as networked IT service and mobile services (BT, 2011). The BT performed well over the time and opened its first Agile Bank in 2002 (ibid). Agile Bank adopted high technology when providing service and it brought a transformation in the way of retail banks deal with customers (ibid). Agile Bank enables customers to experience different bank service and Agile Bank aimed to better satisfy customers’ needs and expectations (ibid).


Customer Relationship Management (CRM) is a wide business strategy to find and attract new customers while retaining loyal customers. An effective CRM can help companies reduce costs and enlarge its customer base. According to Harrison (2000), as the financial service sector has become more competitive and the threat to profitability from new entrants increases, financial institutions need to consider ways of developing relationship with their existing customers in order to defend their market share.


Justification of the research

Due to the increasing concerns on intensive competition in financial sector and CRM strategies, it is necessary to carry out this research as it provides a critical analysis on the issue of customer retention. Although there are a significant amount of previous studies which focus on financial services’ CRM, there are few existing studies focusing on Agile Bank. Therefore, this research will provide an in-depth understanding of Agile Bank’s CRM and will also effectively fill the gap with the previous literatures.


In addition, the research focuses on financial service, particular the case of Agile Bank’s customer retention issue, BT Group plc and other financial service institution might be interested in this study as they desire effective CRM strategies so that they could obtain competitiveness. Also, the study is valuable because academic intuitions might be interested in future findings so that they could obtain information how effective CRM works.


Research aim and objectives

Due to the great importance of CRM in financial service sector, the research investigates the CRM strategies addressing customer retention in Agile Bank. In order to carry out interesting and critical findings, an overall research aim has been conducted. The research aims to study the theories concerned on CRM strategy in financial sector and practices used by Agile Bank in order to find out and recommend to banks the effective CRM strategy. To achieve the overall research, three research objectives have been carried out which are below:

  • To identify the CRM issues in current financial sector and importance of CRM. 
  • To investigate the CRM practices adopted by Agile Bank.
  • To discover good CRM practices on customer retention and create an enhanced CRM. 


Literature Review

This part will provide theoretical knowledge on CRM in financial sector. Various previous studies will be reviewed so that readers could obtain a deeper understanding of the research topic.

The banker-customer relationship

Ford (1989) demonstrates that in the modern days, customers are considered increasingly important. Customers rightly expect all the service industries both to provide the right service at the right price, and to recognize the fact that customers have a choice in where to place their business (Ford, 1989). Hughes (1992) illustrates that financial sectors have recognized these trends and have developed different CRM strategies in order to establish effective customer relationship. The relationship between banks and their customers is basically contractual and it is fundamentally the relationship of debtor (banker) and creditor (customers) with the positive reversed where the banker makers a loan to the customers (McKechnie, 1992). According to Andrew (1987), customers of the bank are not constantly reviewing the products and services sold by the bank or its competitors. Also, customers would divert attention to competitors if they believe the products and services provided by the bank could not satisfy their needs (Andrew, 1987). Therefore, all the financial service sectors attach a great importance to CRM.


Benefits of CRM

Having understood the relationship between financial service sector and customers, it is necessary to consider why builds relationships with customers. There are a number of benefits associated with the retention of existing customers and the development of long-term satisfying relationships.


The very first benefit of building significant customers relationship is that repeat customers often cost less to service (Marshall, 1995). It is because they are more likely to be familiar with the company and its products and services and may make fewer requests or fewer demands on the time of employees (ibid). In addition, CRM allows cross-selling opportunities, leading to increased customer expenditure over time (Cowles, 1997). For many financial institutions, the attraction of building customer relationship is the promise of cross-selling: selling additional products and services to the existing customer base (Butler & Durkin, 1995). It is generally believed that longer-term customers will buy more and, if satisfied with the company and the company has what the customer wants, will buy from the same financial services provider (ibid). Furthermore, effective CRM strategy helps avoids intensive competition (Chu, 1990). This is because retained and satisfied customers may be less susceptible to competitors’ appeals or, as Stum and Thiry (1991) put it, may demonstrate the immunity to the pull of competition. Besides, satisfied customers provide referrals and may be willing to pay a price premium. Satisfied customers may generate positive word-of-mouth and provide free and credible advertising for the institution. However, Sonnenberg (1990) notes that word-of-mouth is double-edged sword and relationships need to be managed carefully to avoid any negative word-of-mouth.


While these benefits are commonly associated with building customer relationships, Dowling and Uncle (1997) point out a few caveats. The first one is that the costs of serving existing customers may not be always less (ibid). Dowling and Uncle (1997) demonstrate that specific start-up costs are not always present for all types of products. For example, the costs of issuing travellers cheques are the same for both first-time customers and repeat customers. Furthermore, Dowling and Uncle (1997) argue that retained customers do not always spend more with the company and long-standing customers do not always pass on positive word-of-mouth recommendations.


Customer Retention

In order that customers may be retained, financial sectors need to develop a retention strategy. Some customers may be retained by accident, but for the majority of customers retention needs to be carefully planned and managed. DeSouza (1992) outlines a simple four-stage plan to foil defectors and boost retention rates (See Figure 1).









Figure 1. Customer retention plan

(Source from: DeSouza, 1992. p. 24)

According to Desouza (1992), the first step to retain the customers is to measure the current retention rate because it is important to know what the current retention level is in order that improvements can be gauged. However, Baker (1995) claims that retention will mean different things for different products. For example, with respect to mortgage business, financial sectors may want to know the proportion of customer that remain with the institution until their mortgages are fully paid up compared with those that switch mortgage provider part-way through the contract (ibid). In terms of credit cards, the financial sectors may be more concerned with measuring the proportion of customers that make regular use of the card compared with those that do no. Therefore, it is important to understand the different retention rates (ibid).


According to Desouza (1992), once customers have closed their accounts or terminated contracts with their financial services provider they are often simply written off and forgotten about. Financial institutions should not let customers leave without attempting to find out why they leaving. Therefore, Betts (1994) illustrates understanding consumers’ motives for defection can tell financial institutions why others too may choose to leave and, indeed, what can be done to encourage them to stay.


Conducting effective marketing research can enable the financial institution to highlight potentially problematic issues that may cause customers to become dissatisfied or leave (Piesse & Ward, 1995). Thus, Reichheld and Kenny (1990) say that marketing information can enable the financial institution to be proactive in terms of retaining its customers. Analysing customer complaints can be very informative (Klein, 1995). However, when the customer makes a complaint it is an indication that something has gone wrong (Llewellyn, 1999). Therefore, the financial sector is no longer in a position to prevent dissatisfaction, but must attempt to cure the problem to the satisfaction of the customer in order to prevent them from leaving.


Furthermore, Desouza (1992) points out that it should be possible for the financial institution to erect barriers to customer exit. The term ‘switching barriers’ tends to arouse negative connotations: keeping customers captive (ibid). Indeed, some examples of switching barriers do amount to ‘locking the customer in’. However, Turnbull and Gibbs (1989) argue that switching barriers can generally be categorised as either positive or negative barriers to exit. Creating positive barriers can lead to better service, superior products and technological innovation, thus eliminating several common reasons for defection (ibid). But negative barriers may increase the switching costs but the impact on customer satisfaction must be kept in mind (ibid).


Research Methodology

Research design and method

As the research focuses on CRM issue addressing customer retention in Agile Bank which requires an in-depth understanding of the topic, the research has been designed as qualitative research. Considering the research method, secondary data collection would be adopted as main research approach. Secondary research method refers to the data that have already been collected for some other purpose (Spaunders, Lewis, Thornhill, 2009). Secondary data can provide a useful source from which to answer, or partially to answer the research questions and it includes both raw data and published summaries (ibid). In order to collect secondary data, academic books would be used because they provide theoretical knowledge so that researcher and readers could obtain basic understanding of CRM strategies. Besides, academic journals such as International Journal of Bank Marketing and Journal of Business Strategy would be reviewed because the articles in these journals provide reliable information which help researcher conduct future findings. In addition, official website of Agile Bank (BT Group plc) and its annual report would be used because the data collected from the bank could provide bank’s background and information of its practices on implementing CRM strategy.


Furthermore, primary data will also be collected due to the nature of the research design which requires a deeper understanding. However, it is difficult to carry out any interview with staff in Agile Banks. Therefore, primary data will be collected among customers of the bank. Both questionnaire and interviews would be used to investigate customers’ satisfaction on Agile Bank. Since the primary data collection is not the main research method, the sample will not be large. Questionnaires will be distributed to 50 customers and semi-structured questions will be used. That is to say, participants will just need to provide the answer from given options. Also, 3 to 5 interviews will be conducted with customers because interview enables researcher to talk to participants face-to-face which offers researcher opportunities to obtain an in-depth understanding of customers’ ideas.

Ethical issues

Before collecting data and carrying out findings, ethical issues must be taken into account. Ethics refers to the appropriateness of researcher’s behavior in relation to the rights of those who become the subject of the work, or are affected by it (Spaunders, Lewis, Thornhill, 2009). In this research, ethical issues contain four considerations. The first one is to protect participants’ privacy as everyone may worry about their personal information. Therefore, the researcher will not ask them to provide private personal information when distributing questionnaires. Then, before carrying out questionnaires and interviews, an informed consent will be done. That is to say, only those who are willing to take part in the research would be chosen as respondents. Furthermore, when collecting secondary data, non-academic information and subjective ideas will be abandoned in order to make sure the research could be reliable. The last ethical consideration is to make the research critical. That is to say, any limitation of the study should be mentioned.

Limitations of the research

The first limitation of the study is research method. Since it is qualitative research design which aims to obtain deeper understanding of the topic, primary data particular interview is most suitable to research design. However, due to the limitation of time and budget, secondary data will be used as main research method. The second limitation is the research sample size. The questionnaires will be sent to 50 customers and only 3 to 5 interviews will be conducted due to the limited time. Nevertheless, a larger sample size would enable researcher to collect more data so that more findings could be carried out. The last limitation is that the previous studies reviewed in this research are not updated. Some of them were conducted 10 years ago. The financial system is changing over the time due to changing external environment so that existing studies may not be suitable for current financial service sector. However, from the other side, it provides a gap to fill between this research and previous studies.



The research works on the CRM strategies addressing customer retention in Agile Bank. In order to carry out the future study, an overall research aims have been conducted which is to study the theories concerned on CRM strategy in financial sector and practices used by Agile Bank in order to find out and recommend to banks the effective CRM strategy. In addition, three research objectives have been carried out in order to guide a right path for researcher and these objectives should be achieved by the end the research. The literature review section reviewed the existing work and several themes have been covered such as the relationship between banker and customers, the benefits of CRM and the issues on customer retention. Methodology section introduces research design and method which will be adopted in the study. As introduced, the research will use qualitative design and both secondary and primary data will be collected in order to carry out findings. In addition to this, methodology section also discussed ethical issues and limitations of the study so that the research could be completed without bias and will be more critical.

Reference List:


  1. Andrew Kenneth (1987) The Bank Marketing Handbook (2ndedition), Published by Woodhead-Faulkner Limited
  2. C (1995) The co-operative Bank-profit with principles. Advertising Works, pp. 329-352, NTC Publications, Henley-on-Thames
  3. Bettes, E. (1994) Understanding the financial consumer, in P.J McGoldrick and S.J. Greenland (Eds), Retailing of financial services, McGraw-Hill, London, pp.41-48
  4. Butler, P & Durkin, M. (1995) Managing expectations in the small business-bank relationship, Irish Marketing Review, Vol. 8 pp. 53-60
  5. BT Group plc (2011) BT’s Agile Bank: Flexing for the future, 

Available online at: https://www.globalservices.bt.com/CampaignDetailAction.do/param/Record/BT_Agile_Bank_campaign_all_en-gb/fromPage/Search (Accessed on 24th Nov, 2011)

  1. Chu, F.J (1990) The challenge and the myth of global investment banking, Journal of International Securities Market, Autumn, pp. 219-223
  2. Cowles, D.L (1997) The role of trust in customer relationship: asking the right questions, Management Decision, March-April, Vol. 35, No. 3-4, pp. 273-283
  3. DeSouza, G. (1992) Designing a Customer Retention Plan, Journal of Business Strategy, March/April, pp. 24-41
  4. Dowling, G. & Uncle M (1997) Do customer loyalty programmes really work, Sloan Management Review, Summer, Vol. 38, No. 4, pp. 71-82
  5. Ford Philip (1989) Customer Services marketing and the competitive environment, London: Pitman
  6. Harrison Tina (2000) Financial Service Marketing, Financial Time/Prentice Hall
  7. Hughes T.J (1992) The customer database: cross-selling retail financial services, International Journal of Bank Marketing, Vol. 10, No. 7, pp. 11-16
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  11. McKechnies,S. (1992) Consumer Buying Behaviour in Financial Services: an Overview. International Journal of Bank Marketing, Vol. 10 No. 5 pp. 4-12


  1. Piesse, J., Ward, C. (1995) British Financial Markets and Institutions: an international perspective (2ndedition), Prentice Hall International (UK), Hemel Hempstead
  2. Reichheld f. & Kenny, D (1990) The hidden advantages of customer retention, Journal of Retail Banking, Vol. 13, No. 4, pp. 19-23
  3. Saunders Mark, Lewis Philip & Thornhill Adrian (2009), Research methods for business students. Published by FT prentice Hall, 5thPage 136
  4. Sonnenberg, F (1990) Marketing to Win, Harvard Business School Press, New York
  5. Stum, D. & Thiry, A (1991) Building customer loyalty, Training and development Journal, Vol. 45, No. 4 pp. 34-6
  6. Turnbull, P. W. & Gibbs, M.L (1989( The selection of banks and banking services among corporate customers in South Africa. International Journal of Bank Marketing, Vol. 7, No. 5, pp. 34-39




Appendix 1: Time Table












Reviewing the relevant literatures and designing research questions


Modifying research questions and Doing the background research in Agile Bank


Model construction and research data collection


Field Study in Agile Bank’s CRM strategies


1) Data collection and analyzing

2) initial conclusion of the theme, and 3) producing theoretical model


1) Apply model and theory in filed;

2) Identify weakness of the research;

3) Finalize the final research paper