The bank* has been operating successfully on the Swiss market to date. Increasing competition, the harmonization of offerings, and the growing price focus of customers when selecting offers forced the bank to revise its existing pricing model. Against the backdrop of the interest rate situation, price management bank is generally gaining in importance. In cooperation with CustomersX®, the potential of a new pricing model was to be determined and a new model introduced.
At a glance
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Customer Value-based Decision Making
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Customer-centric transformation
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Co-creation
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Customer Management
The whole story
The bank had decided not to use the Customer Centricity Canvas. As a result, it was not clear at the beginning of the project what the potentials and challenges were. This resulted in extremely inefficient project management with very many loops due to unclear priorities. In addition, the project team could not be convinced to consider customer value-based decision making, customer-centric transformation, and co-creation. The organization understood customer orientation only as an improvement of customer management, which significantly increases the chances of failure.
Based on our DTC approach, the recommendation was made at the beginning to test the new pricing model together with the customers. This showed a lot of resistance in the organization to involve the customer in such decisions. This overlooked the fact that it is precisely the sales department that needs to be convinced if a new bank pricing model is to be successfully introduced. Gaining valuable customer insights is a key success factor for this.
In the further course of the project, particular attention was paid to competition. Customer needs and customer value hardly played a role in further considerations. It is important to note that most banks do not charge customers for many services. The change in price management in banking can thus very easily lead to resistance on the part of customers.
CustomersX conducted an international study on behalf of the client to compare existing pricing models and identify best practices from other banks. This shows that the successful banks had established a complex bundling of services. This form of price differentiation offers customers a high level of convenience and the bank the opportunity to charge higher prices for services.
The subsequent profitability review of the newly developed pricing model for the bank by CustomersX came to the conclusion that the technical conversion as well as the expenses for the necessary transformation of the organization will not lead to an added value for the bank. This was also due to the fact that there were too many fears about implementing the pricing model with all possible consequences.
The bank’s lack of customer focus and the lack of understanding among managers regarding the importance of taking customer value into account when adjusting pricing models led CustomersX to drop out of the project. Due to the lack of consideration of customer orientation, the project team was subsequently unable to obtain the necessary internal buy-in from management. As a result, the bank’s pricing model was not changed.
Considering the improvement of customer orientation supports projects in internal acceptance and increases the chances of success. This cannot be emphasized often enough and can be made a recommendation for those responsible.
* We take confidentiality with our customers seriously. The name has been changed, the results are real.
