The Internal Marketing Strategy of ING Direct - Essay Example

?Marketing Report – Case Study Executive Summary The case study is about ING Direct that has achieved success within a short period of time. The company is a new entrant in banking sector and has a wide range of customer base. The reason for acquiring higher number of customers is their internal employees. The strategy of the company is to provide priority to the employees in order to keep the customers happy and satisfied. Hence, the internal marketing strategy has helped the company to gain competitive advantage. An alternative strategy has been presented for further development of the company in this paper. Table of Contents Executive Summary 2 4 Marketing Situation 4 Marketing Strategies 5 Motivation of Employees 6 Building Blocks of Internal Marketing 6 Implementation of Internal Marketing Activities 7 Current Marketing Strategies 9 Alternative Strategy and Their Impact 9 1. Centralized Strategic Planning Resource 9 2. Senior Management Participation 10 3. Performance Appraisal Criteria 10 Recommendation 11 Conclusion 12 References 13 Marketing Situation In today’s competitive market, customer satisfaction is an important factor that should be undertaken by every organization. The theoretical context of customer satisfaction was first operationalized in the year 1985. Customers can be satisfied once the organization is able to identify the expectation level of the customers. The company will be able to achieve the expectation level of the customer only if the internal employees are happy and satisfied. The employees are internal customers for the organization, thus, it is necessary to take care of their staffs or employees because they are involved in assisting the customers. In ING Direct call centre department, the calls are answered by their employees. The employee motivation is also an important way to meet the customers’ expectation and therefore the company will be able to achieve the sustainable growth. The growth of the company leads to profitability and hence increases the market share. The new approach towards employee management is based on the fact that customer buys labor, or human acts of performance. Employee retention and motivation are critical to maintain the service quality and differentiate themselves from other competitors. ING Direct is also highly dependent on the employees’ satisfaction as the company provides financial services where the employees have the responsibility to interact with the customers for generating their faith and trust (Rafiq & Ahmed, 2000). Marketing Strategies The strategies are the plans of an organization to achieve goals and objectives which show direction to the organization. The strategies are developed at different levels such as corporate, business, divisional and departmental level. All the strategies are integrated to form a plan for the organization as a whole. The support from the other components of business unit function such as production, finance and R&D are necessary to achieve the marketing objectives. Every department is inter-related and has to combine together in an integrated manner while taking a strategic decision (Corey, 2003). Marketing strategies mainly focus on long term competitive and consumer advantages and are composed of different elements. These are the strategies related to selection of product and market, deciding the price of a product, finding out the best possible distribution system, i.e. wholesale or retail channel and creating awareness of the product to different customers through advertisement in newspaper, television and others (Corey, 2003). The strategies are driven by cost, technology, distribution, service or other competitive advantages of the firm to turn out to be successful, but the company is required to be consistent with customers’ needs, perception and preferences (Wind & Robertson, 1983). According to Mornay Roberts-Lombard (2007), internal marketing emphasizes on the teamwork of the employees in developing and retaining successful business strategies. The internal marketing means that business must have positive relationship with its employees. This is made possible if the business focuses on aspects such as developing the understanding, the emotions and intellect of employees, the management of employees as individuals, the delivery of customized products and services to employees and the establishment of long-term relationship with employees (Roberts-Lombard, 2007:208-210). Motivation of Employees The management of the organization must develop an internal environment that supports and encourage the customer-centered employees. The interaction between the business and management must focus on need satisfaction and service delivery. The employees of the business, process for planning and management approach and training policies for employees must support the development of internal environment. The internal marketing strategy is formed by innovative empowered employees, who place themselves above inter-departmental variance (Lucas and Kline, 2008:277-278). Building Blocks of Internal Marketing In international market, employees play a significant role which is the main focus in internal marketing. The employees build a strong relationship with their customers if the customers are aware that their wants and preferences are researched and satisfied by the business on a regular basis. Consistent emphasis has to be given to employees’ needs and preferences. The business will become successful if it provides importance on the following aspects: 1. Constant research on training and skill of the employees 2. Measurement, assessment as well as remuneration of performance results of the employees 3. Providing authority to employees, and 4. Establishment and development of internal customer relationships (Herington, Jhonson and Scott 2006: 365-381). The challenge of modern business is to focus on two types of customers such as external as well as internal customers (Browers and Martin, 2007: 88-89). The management of business must focus on the following factors to support the establishment of an internal marketing environment: 1. Training and development of the employees as well as continuous communication with the employees 2. Supportive work environment and appraisal of their performances 3. Empowerment and participation of the employees 4. Recognition and rewards for the employees (Steyn, Ellis and Musika, 2004:34-43). Implementation of Internal Marketing Activities The development of marketing programme of internal market is parallel to marketing programmer for the external customers of the company (Kale, 2006:3). The implementation of internal marketing activities of a business must result in outcomes such as creation, development and management of internal relationships. Motivations to the employees for delivering quality services to both internal and external customers of the business, empowering the employees with skill, knowledge and support from higher level management, internal service provider and technology which empower them to deliver customer-oriented services are essential for the organisation. The customer will get better service only if the internal customers’ needs are fulfilled. It implies that fulfilling employees’ needs boost up the employees which in turn helps to retain them As a result, maximum employee satisfactions stimulate loyalty and satisfies external customers (Lombard, 2009). In the book of Frederick F. Reichheld and Thomas Teal titled “The Loyalty Effect: The Hidden Force Behind Growth, Profits, And Lasting Value”, he has shown with an example from financial services companies, manufacturing units and advertising agencies that the small improvement in customer retention doubles the profit of the company. The reasons for this are as follows (Reichheld & Teal, 2001): 1. Less cost is involved in serving long term customers. 2. Loyal customers pay price premium. 3. Loyal customers will provide word-of-mouth recommendation to other customers which in turn would help in generating new customers (Sorce, 2002). Current Marketing Strategies ING Direct had first entered in Australia in the year 1999 and soon became the 5th largest retail bank in the country. The strategy that has been adopted by the company for its rapid success is internal marketing strategies. The company provides primary emphasis to its employees because it believes that for the satisfaction of customers, it should take care of their internal customers especially the employees. The employees are those who help the company in generating more and more customers and increase profitability of its company. The dissatisfaction of customer will decrease the turnover, thus in order to avoid the problem of employee turnover, they are motivated and empowered. Rewards are also provided to the employees on the basis of their performance. ING Direct mainly focuses on human resource. The company also won the top CEO award in the year 2008 which proves that internal customers’ satisfaction are the key factors for the retention of external customers. Alternative Strategy and Their Impact ING Direct can adopt the following strategies in future: 1. Centralized Strategic Planning Resource ING Direct can follow the strategies of 3M, which has been adopted as one of the best strategies for customer retention. ING Direct can create a group that will take care of strategic communication planning and manage ‘cross functional teams’ especially for internal marketing proposals. The centralized strategic planning resource will play the role of consultant for the group of clients within the organization, which will help them in solving their problems and try to analyze their needs and desires. This may help ING Direct to understand its employees and adopt the strategies according to the internal clients in order to increase the customer base. The offsite employees, those who have gone out for different types of projects can communicate with the centralized strategic planning team through mails and faxes (Incentive Performance Center, 2008). 2. Senior Management Participation Major changes will occur when the followers will truly believe in their leaderships. The internal marketing success depends upon the leadership and support initiative from the senior managers. The best way to motivate employees is through the process of work done by senior level manager so that they will follow their leadership and approach their techniques of doing things. 3. Performance Appraisal Criteria The performance can be evaluated by considering different criteria such as customer satisfaction, timeliness, business potential, examining satisfaction, quality of work carried out by internal customers and others. The company can also evaluate the personal skills of employees based on their adaptation of knowledge and analytical ability, decision making and communition skills. These criteria can be measured by giving a score to every internal customer on a scale of 1 to 5, where 1 signifies above the expectation performance level, while 5 signifies below the performance level. This practice is adopted by Infosys (ICMR, 2006). Recommendation Any decision cannot be taken in isolation. Involvement of every department is necessary while taking decisions. The views of different departments are analyzed and evaluated before finalizing the decisions. ING Direct can approach horizontal integrated management process which enables all the function to be involved in decision making process. ING Direct was able to be the 5th largest retail bank in Australia because the company had taken care of their employees. The company is realizing the impact of ‘internal marketing strategies’ as it helps in increasing the profitability of the company. Most of the companies avoid measuring their non-financial performance. The strategic management team is required to create hard performance measures and assessment techniques to know the impact of applying new approaches or programmes to achieve the organizational goals. Communication audits, assessment of employees’ behavior are included in hard performance measures. The adaptation of pre-measurement and post-measurement is essential to understand the behavior of employees before joining, change in their behavior after joining and impact of changes in the performance of the company (For People Performance Management and Measurement, n.d.). Conclusion After analyzing the techniques that have been used by ING Direct for achieving its goals, it has been found that these are still not enough to compete in this present competitive market. ING Direct is required to adopt more innovative strategies in order to sustain in the market. Alternative strategies have been discussed in the above section which may help them in future. It is quite essential for every business to create hard performance measures in order to evaluate the impact of changes in behavior and attitude of employees in the financial performance of the company. The internal marketing strategy includes motivation, empowerment and gives importance to the employees primarily, which has become the most important in every field of business. References Allen, D. R. & Wilburn, M., 2002. Linking Customer and Employee Satisfaction to the Bottom Line. ASQ Quality Press. [Online] Available at: http://books.google.com/books?id=4eEFG2rIcoIC&pg=PA94&dq=marketing+strategies%28+employee+satisfaction+for+customer+retention%29&hl=en&ei=35O_TdC-No_wrQft7cTuAw&sa=X&oi=book_result&ct=book-preview-link&resnum=1&ved=0CGcQuwUwAA#v=onepage&q=customer%20satisfaction&f=false Corey, R. E., 2003. Marketing Strategy- An Overview. Harvard Business School. 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[Online] Available at: \http://marketing.wharton.upenn.edu/documents/research/8302_Marketing_Strategy_New_Direction_for.pdf [Accessed May 04, 2011]. Read More