Internet Banking at Citibank UK Essay Example | Topics and Well Written Essays - 2000 words

Internet Banking at Citibank UK - Essay Example Marketers are now focusing on existing customer development rather than just new customer acquisition. Major changes have occurred in the traditional view of customer defection rates, most noticeably in the banking industry where churn has increased from -10 percent in 2003 to almost +20 percent by 2005. These studies showed that the supposedly massive rates of customer inertia in banking is no longer a given. Banks need to fight for every customer, not only to capture each one but, more importantly, to retain them. One economic justification for this mindset change was the research finding that â€Å"it can cost five times more to obtain a new customer than to keep an existing one†. What started the trend towards customer loyalty was Reichheld who found that a 5 percent increase in loyalty can lead to a 25 to 85 percent increase in profitability.On the contrary, Reinartz and Kumar argued that whilst serving customers over a long period may be beneficial, long-term customers m ay not necessarily be profitable, and that managers should not equate customer retention with increased lifetime spending, decreased cost of service, and lower price sensitivity. They concluded that companies should study if long-term customers stay profitable, implying that if they are not, the business must jettison those customers who eat into profits.These were the concepts in our mind when we decided, exploring its look and feel and the products offered, and evaluating the over-all Internet-based customer experience.