Executive summary
This report identifies the symptoms, critical factors and current state of Commerce Bank services followed by a short statement identifying the main problem faced by the Commerce Bank. The bank is facing some difficulties while providing entertainment services to customers.
In analysis section, a general discussion of the problem and its solution has been discussed; meanwhile a model for identifying the gaps between the perception regarding quality of services of manager employees and customers has been applied. This section also discusses financial figures of Commerce Bank as compared to the industry, followed by three alternatives evaluating provision of Retailtainment services, degree of descriptions allowed to branch manager for providing Retailtainment services and to be a Mee-to Bank.
At the end, this report concludes on recommending the best alternative based on analysis of the report that Retailtainment services should be continued with no discretionary powers delegated to branch managers but with a centralized philosophy.
Background
Competitors are adopting the services currently being offered by Commerce Bank, which is deteriorating its differentiating position in the banking sector. Some of the competitors are offering better rates than Commerce Bank but since the Commerce Bank is deliberately competing on services; this is somehow not sure that its customers know this point as they are expecting better service, which attracts them to the Commerce Bank. Mishaps or accidents should not take place while the customers are served, in order to avoid the bank’s image from being damaged.
Providing entertainment to customers while they are waiting for their turn to be served will prevent them from getting bored, so they do not feel like they are wasting their time because they are getting entertainment for which they might have to go somewhere else.
Currently the greater numbers of customer are satisfied and happy with the service of Commerce Bank but somehow there are some customers who are not happy with the service and are also complaining about the service methodology of the bank.
Problem Statement
Commerce Bank is offering services other than financial products like the entertainment service of Commerce Bank called “Retailtainment” was introduced in order to gain competitive advantage in the industry; which needs to be managed effectively for achieving desired objective of the service.
Analysis
In the given scenario Commerce Bank is offering lower interest rates, which in turn is not attracting customers to deposit their money in the bank; however still the bank is somehow managing not only its survival but is making handsome profits as well. All of this has become possible due to the innovative and differentiating services offered by Commerce Bank from time to time.
Recently introduced service called “Retailtainment” to engage the customer during waiting time has been a very successful strategy for gaining a differentiating position in the industry; although it is being adopted by the other commercial banks as well but Commerce Bank has the first mover advantage in offering these kinds of services. Since the branch managers at Commerce Bank are allowed to decide the way of entertaining the customers on their own, hence they are taking all the possible actions in this regard, resulting in the recent mishap at one of the branch, which was a disaster for the Commerce Bank’s brand image.
While looking at comparison of the financial figures of the Commerce bank and the Banking industry, cost of salaries and benefits per employee at Commerce Bank is lower than the industry average; hence showing that Commerce Bank is not heavily investing in human capital despite its claim that they want competitive advantage on the basis of differentiating services which are ultimately rendered by the human capital. Average numbers of employee at each branch are slightly higher than the industry level, which confirms the commitment of Commerce Bank to provide enhanced services. Net profit per branch is almost half as compared to the industry; but percentage change in net interest income is almost 3 times higher than that of the industry.
Model of Service Quality Gaps
This model analyzes the major gaps in the service quality concept, enabling the Commerce Bank to fill the identified gap for providing better service quality to its customers. The three important gaps, which are more associated with the external customers, are Gap1, Gap3, Gap5 and Gap6; since they have a direct relationship with customers.
Gap1: Customers’ expectations versus management perceptions
Hill, Chairman and CEO of Commerce Bank made commitment to investment in provision of services, which was done after recognizing that the customers wanted better services in respect of high rates of interest, good quality of services, and convenience. Since then, time has passed and the customer expectations have kept on changing which was indicated by a recent phone call received by Jacovelli.
Gap2: Management perceptions versus service specifications
Commerce Bank is fully committed to offer quality services and to the convenience of customers by introducing 10 minute rule for keeping the branches open 10 minutes before and after the official timing. The commitment of staff towards the offering of services and resulting profitability confirms the feasibility of services. However, some of the services are not standardized all over the branches and managers are allowed to decide the type and extent of services.
Gap3: Service specifications versus service delivery
Right person is being selected for the right job as stated by Manning and Falese. Experienced personnel are being hired at the Commerce Bank and training is also being provided to the staff.
Supervisory controls are in place to measure the performance and to make sure that controls are being followed. As part of the performance measurement, a team of 100 “Mystery Shoppers” visited the branches and rated them according to their observation.
Gap4: Service delivery versus external communication
The emphasis on providing Retailtainment services as compared to the traditional commercial bank commodities has helped Commerce Bank to gain a competitive advantage in the banking industry.
Gap5: The discrepancy between customer expectations and their perceptions of the service delivered
Overall, the customers of Commerce Bank are satisfied with the services which they are receiving however; some of the customers are not satisfied as the Dean of Commerce University who is responsible for training of Commerce bank staff, Jacovelli had received a phone call of......................
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