Improve customer service quality - The case of Techcombank card service

 To identify the necessary to improve customer service quality for Techcombank card service..  To provide recommendations and solutions for Techcombank to improve customer service qual

Vietnam national university, HANOI

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i

ABSTRACT ii

TÓM TẮT iv

TABLE OF CONTENTS vi

LIST OF TABLES ix

LIST OF FIGURES xi

INTRODUCTION 1

CHAPTER 1: LITERATURE REVIEW 3

1.1 Service marketing mix in banks 4

1.1.1 Service marketing mix 4

1.1.2 Service marketing mix in banks 6

1.2 Customer satisfaction 11

1.2.1 Definition 11

1.2.2 What determines customer satisfaction? 12

1.3 Service quality and GAP model 13

CHAPTER 2: TECHCOMBANK CASE STUDY 25

2.1 Status of Techcombank and introduction of its card service 25

2.1.1 Techcombank Personal cards and card services 25

2.1.1.1 Prospects of card in Vietnam market 25

2.1.1.2 The strategy to develop card 27

2.1.1.3 Some successes and ambituous plan of card development 27

2.1.2 Card issuing, using and payment Processes and activities 30

2.2 A review of Techcombank’s previous survey on card service: Customer satisfaction on card services 31

2.2.1 Survey objectives 31

2.2.2 Sizes and methods: 32

2.2.2.1 Attendees and effective zone: 32

2.2.2.2 Investigation methods: 32

2.2.3 Results 34

2.2.3.1 Total samples and feedback percentages 34

2.2.3.2 The specific Results of Customer satisfaction on card services of Techcombank 35

2.3 Focus group and in depth-interview for updated status of customer service quality 41

2.3.1 Focus group 41

2.3.2 In depth-interview 45

CHAPTER 3: FINDINGS 48

3.1 Customer GAP analysis 48

3.2 Provider GAP analysis 52

3.2.1 Failure in Providing in line with the standards and the designed services 55 3.2.1.1 Failure to meet the technological requirements needed for the work 55

3.2.1.2 Failure in providing good consultancy to let the customers see which of their needs are met and what they can request with the service 63

3.2.1.3 Difficulties in quality management and assurance 65

3.2.2 “Barking dogs seldom bite” (Inconsistency) in retail sales activities 68

3.2.3 The training for the customer service staff has not been paid proper attention, resulting in poor quality in providing the consultancy to the customers, and sometimes generating the inconsistency in the customer service among the units 70

CHAPTER 4: RECOMMENDATION 72

4.1 Invest more in technology for card and card management 72

4.2 Improve training process and focus on customer service training for new staff before having them applied 77

4.3 Build an effective mechanism on quality management saparatedly 80

4.4 Establish a specific team to do customer care 81

CONCLUSION 83

LIST OF REFERENCES 84

APPENDIX 1 85

APPENDIX 2 87

APPENDIX 3 91

LIST OF TABLES

Table M2: Added elements of marketing mix 4

Table M1: Elements of traditional marketing mix 6

Table 1: Rate of increased investment capital for accompanied products and service .28

Table 2: Total of Card issued by years 29

Table 3: Survey Systematic Sampling with criteria of Debit amount for 4 cities 33 Table 4: Survey feedbacks 34

Table 5: Survey feedback devided by amounts 34

Table 6: Percentage on time using card 35

Table 7: Total feedbacks on normal issuance time 35

Table 8: Total feedbacks on quick issuance time 36

Table 9: Total feedbacks on home-banking regislation 36

Table 10: Total feedbacks on home-banking usage 36

Table 11: Feedbacks on Errors .37

Table 12: Average points for feedbacks on Errors 38

Table 13: Feedback on service staff 1 38

Table 14: Feedback on service staff 2 38

Table 15: Important/satisfaction criterion on customers’ point 39

Table 16: Customer satisfaction on service staff 39

Table 17: Satisfaction degree on home-banking service 40

Table 18: Total overall satisfaction on card service .40

Table 19: Customer satisfaction on Enthusiastic bank staff 42

Table 20: Customer satisfaction on home-banking 43

Table 21: Customer feedbacks on errors 43

Table 22: Customer satisfaction on main service criterion 44

Table 23: General satisfaction degree on card service 44

Table 24: Customer expectation on Card service 44

Table 25: Customer support for Card in 2009 47

Table 26: Gap on customer satisfaction 51

Table 27: Card issuance productivity calculation for old machine 55

Table 28: Card issuance productivity calculation for current machines 56

Table 29: Quality indicators of North collection 2009 66

Table 30: Quality indicators of North collection 2009 66

Table 31: Comparision on cost serving estimation with high-tech support 74

LIST OF FIGURES

Figure 1.1: Customer gap 14

Figure 1.2: Key factors leading to provider gap 1 15

Figure 1.3: Key factors leading to provider gap 2 17

Figure 1.4: Key factors leading to provider gap 3 18

Figure 1.5: Key factors leading to provider gap 4 20

Figure 1.6: Gaps model of service quality 22

Figure 2.1: Card issue procedure 30

Figure 2.2: SMS workflow 62

Figure 3.1: Grow model 79

INTRODUCTION

 Necessity of the thesis

Banking operations are becoming increasingly customer dictated The demand for 'banking supermalls' offering one-stop integrated financial services is well on the rise The ability of banks to offer clients access to several markets for different classes of financial instruments has become a valuable competitive edge

Excellent customer service can improve the bank's ability to lure affluent prospects, elevate the bank's profitability, lower bank operation costs, and/or create greater customer loyalty

Customer requirements and satisfaction are the term many people talking about nowaday The customer's requirements must be translated and quantified into measurable targets This provides an easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction We can recognize where we need to make changes to create improvements and determine if these changes, after implemented, have led to increased customer satisfaction "If you cannot measure it, you cannot improve it." - Lord William Thomson Kelvin (1824-1907)

With better understanding of customers' perceptions, companies can determine the actions required to meet the customers' needs They can identify their own strengths and weaknesses, where they stand in comparison to their competitors, chart out path future progress and improvement Customer satisfaction measurement helps to promote an increased focus on customer outcomes and stimulate improvements in the work practices and processes used within the company

 Objective:

From my intention to learn about such an interesting thing and to apply what I comprehend into a bank, my study aims:

 To review available status of service quality on card service

 To comprehend some important aspects which are related to marketing and Customer satisfaction concept

 To identify the necessary to improve customer service quality for Techcombank card service

 To provide recommendations and solutions for Techcombank to improve customer service quality for Techcombank card service

 Scope of work

The scope of study is service quality and how to improve service quality The

research scope is also for card customer service of TECHCOMBANK

 Methodology

The study was implemented by result of the previous TECHCOMBANK survey, research second data at home, system analysis and comparison method Because of large customer number, so the study mainly used survey and analysis to solve the issues under business rules and customer behavior theory

The study also gather ideas of experts working in customer service and system support for card operation of TECHCOMBANK Expecially, thesis also is the fact experience of 9 years working for TECHCOMBANK up to now

Some models and information from some books, e-books, and article were used to make the line for the thesis Processes and procedures issued by TECHCOMBANK and other banks were also good refference for the study

Based on the findings, the thesis give out some key conclusions and some guideline solutions which are focused on improving service quality by changing current GAPs

in the bank’s operation

 Contribution of the thesis

The study is of great practical value, providing a comprehensive overview on banking service: Card - which is relatively new in Vietnam This thesis is aimed at showing a full picture of card services at a bank, discussing the shortcomings and weaknesses which the Bank needs to pay due attention and timely address so as to achieve its target: Becoming Number 1 in a fiercely competitive market in Vietnam for the time being

The thesis also posed for such a new service like Card, it requires high technology and huge investment in order to operate well and to satisfy the demands of targeted customers

CHAPTER 1: LITERATURE REVIEW

1.1 Service marketing mix in banks

1.1.1 Service marketing mix

There are many different definitions of service, but by the most simple way, services are deeds, processes, and performances Although we rely on the simple definition of services, to be aware of that over time services and the service sector

of the economy have been defined in subtly different ways Compatible with the simple way, broad definition is one that defines service to include “all economic activities whose output is not a physical product or construction, is generally consumed at the time it is produced, and provides added value in forms (such as convenience, amusement, timeliness, comfort, or health) that are essentially intangible concerns of its first purchaser.”1

A primary issue that marketers face in relation to service perishability is the ability

to inventory Demand forcasting and creative planning or capacity utilization are therefore important and challenging decision areas The fact that services cannot typically be returned or resold also implies a need for strong recovery strategies when things do go wrong

One of the most basic concepts in marketing is marketing mix, defined as the elements an organization control that can be used to satisfy or communicate with customers The traditional marketing mix is composed of the four elements (four Ps): product, price, place (distribution) and promotion These elements appear as the core decision variable in many marketing text or marketing plan The notion of mix implies that all the variables are interrelated and depend on each other to some extent Further, the marketing mix philosophy implies an optimal mix of the four factors for a given market segment at a given point in time

Table M1: Elements of traditional marketing mix

Promotion blend Salespeople

- selection

- training

Flexibility Price level Terms Differentiations

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Principle of Service Marketing, 1994, MCGaw Hill

Managing channel

- Incentive Advertising

- Media types

- Types of Ad Sales promotion Publicity

Internet/web strategy

Discounts Allowances

Careful management of product, place, promotion, and price will clearly also be essential to the successful marketing of service However, strategies for the four Ps require some modifications when applied to services For example, traditionally promotion is thought of as involving decision related to sales, advertising, sales promotions, and publicity In services, these factors are also important, but because services are produced and consumed simultaneously, service delivery people (such

as clerks, ticket takers, nurses, and phone personnel) are involved in real time promotion of service even if their jobs are typically defined in terms of the operational function they perform

Expanded Mix for service:

Because services are produced and consumed simultaneously, customers are often present in the firm’s factory, interact directly with the firm’s personnel, and are actually part of service production process Also, because services are intangible, customers will often be looking for any tangible cue to help them understand the nature of the service experience For example, in hotel industry, the design and décor of hotel as well as the appearance and attitudes of its employees will influence customer perceptions and experiences

Acknowledgement of importance of these additional variables has led services marketers to adopt the concept of an expanded marketing mix for services shown in table 1.3 below:

Table M2: added elements of marketing mix2

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Service Marketing – integrating customer focus across the firm – Valarie A Zeithaml, Mary Jo Bitner, Dwayne D Gremler – 4th eddition

- Simple

- Complex Customer Involvement

 People:

All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customers, and other customers in service environment

 Physical evidence

The environment in which the service is delivered and where the firm and customers interact, and any tangible components that facilitate performance or communication of the service

 Process

The actual procedures, mechanisms, and flow of activities by which the service is delivered – the service delivery and operation system

1.1.2 Service marketing mix in banks

Service marketing in banks

Marketing approach in banking sector had taken significance after 1950 in western countries and then after 1980 in Turkey New banking perceptiveness oriented toward market had influenced banks to create new market Banks had started to perform marketing and planning techniques in banking in order to be able to offer their new services efficiently

Marketing scope in banking sector should be considered under the service marketing framework Performed marketing strategy is the case which is

determination of the place of financial institutions on customers’ mind Bank marketing does not only include service selling of the bank but also is the function which gets personality and image for bank on its customers’ mind On the other hand, financial marketing is the function which relates uncongenitalies, differences and non similar applications between financial institutions and judgement standards

of their customers

The reasons for marketing scope to have importance in banking and for banks to interest in marketing subject can be arranged as3:

Change in demographic structure: Differentiation of population in the number and

composition affect quality and attribute of customer whom benefits from banking services

Intense competition in financial service sector: The competition became intense due

to the growing international banking perceptiveness and recently being non limiting for new enterprises in the sector Increase in liberalization of interest rates has intensified the competition

Bank’s wish for increasing profit: Banks have to increase their profits to create new

markets, to protect and develop their market shares and to survive on the basis of intense competition and demographic chance levels

The marketing comprehension that are performed by banks since 1950 can be shown as in following five stages:

1 Promotion oriented marketing comprehension

2 Marketing comprehension based on having close relations for customers

3 Reformist marketing comprehension

4 Marketing comprehension that focused on specializing in certain areas

5 Research, planning and control oriented marketing comprehension

Marketing activities of firms begin with determination of the market that they offer their services or goods Firms must find out the features of the market that it f anging market

condition While marketing manager is arranging the variables under firm’s control, she/he

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Article “Service marketing in banks” – http://www.oppapers.com

should also adopt the external variables We could call the factors that affect banks’ market as technological developments, legal arrangements and competition

Service marketing mix in banks

Nowaday when mentioning about service marketing mix in banking, people think about these below elements4:

PRICE

The price which is an important component of marketing mix is named differently

in the base of transaction exchange that it takes place Banks have to estimate the prices of their services offered By performing this, they keep their relations with extant customers and take new ones The prices in banking have names like interest, commission and expenses Price is the sole element of marketing variables that create earnings, while others cause expenditure

While marketing mix elements other than price affect sales volume, price affect both profit and sales volume directly

Banks should be very careful in determining their prices and price policies Because mistakes in pricing cause customers’ shift toward the rivals offering likewise services

Traditionally, banks use three methods called “cost-plus”, “transaction volume base” and “challenging leader” in pricing of their services

The complexity of banking services are resulted from different kinds of them The most important feature of banking is the persuasion of customers benefiting from services

Most banks’ services are complex in attribute and when this feature joins the intangibility characteristics, offerings take also mental intangibility in addition to physical intangibility On the other hand, value of service and benefits taken from it mostly depend on knowledge, capability and participation of customers besides features of offerings This is resulted from the fact that production and consumption have non separable characteristics in those services

Most authors argue that those features of banking services makes personal interaction between customer and bank obligatory and the direct distribution is the sole alternative Due to this reason, like preceding applications in recent years, branch offices use traditional method in distribution of banking services

PROMOTION

One of the most important element of marketing mix of services is promotion which

is consist of personal selling, advertising, public relations, and selling promotional tools

ADVERTISING

Banks have too many goals which they want to achieve Those goals are for accomplishing the objectives as follows in a way that banks develop advertising campaigns and use media

1 Conceive customers to examine all kinds of services that banks offer

2 Increase use of services

3 Create well fit image about banks and services

4 Change customers’ attitudes

5 Introduce services of banks

6 Support personal selling

7 Emphasize well service

Advertising media and channels that banks prefer are newspaper, magazine, radio, direct posting and outdoor ads and TV commercials In the selection of media, target market should be determined and the media that reach this target easily and cheaply must be preferred

Banks should care about following criteria for selection of media

1 Which media the target market prefer

1 Activities of banks, results, programs, new services

2 Situation of market, government decisions, future developments

3 The opportunities offered for industry branches whose development meets national benefits

PUBLIC RELATIONS

Public relations in banking should provide;

1 Establishing most effective communication system

2 Creating sympathy about relationship between bank and customer

3 Giving broadest information about activities of bank

It is observed that the banks in Turkey perform their own publications, magazine and sponsoring activities

SELLING PROMOTIONAL TOOLS

Another element of the promotion mixes of banks is improvement of selling Mostly used selling improvement tools are layout at selling point, rewarding personnel, seminaries, special gifts, premiums, contests

1.2 Customer satisfaction

1.2.1 Definition

Satisfaction is consumer’s fulfillment response It is a judgment that a product or service feature, or the product or service itself, provide a pleasurable level of consumption-related fulfillment 5

In less technical term, satisfaction is the customer’s evaluation of a product or service in term of whether that product or service has met the customer’s needs and expectations Failure to meet needs and expectations is assumed to result in dissatisfaction with the product or service

In addition to a sense of fulfillment in the knowledge that one’s needs have been met, satisfaction can also be related to other types of feeling, depending on the particular context or type of service For example, satisfaction can be viewed as contentment – more of passive response that consumer may associate with services they do not think a lot about or services that they receive routinely over time Satisfaction may also be associated with feelings of pleasure for services that make the consumers feel good or are associated with a sense of happiness For those services that really surprise the consumers in a positive way, satisfaction may mean delight In some situations, where the removal of a negative leads to satisfaction, the consumers may associate a sense of relief with satisfaction Finally, satisfaction may be associated with feeling of ambivalence when there is a mix of positive and negative experiences associated with the products or services

Although consumer satisfaction tends to be measured at a particular point in time as

if it were static, satisfaction is a dynamic, moving target that may evolve over time, influent by a variety of factors Particularly when product usage or the service experience takes place over time, satisfaction may be highly variable depending on

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Service Marketing – integrating customer focus across the firm – Valarie A Zeithaml, Mary Jo Bitner, Dwayne D Gremler – 4th eddition

which point in the usage or experience cycle one is focusing on Similarly, in the case of very new services or a service not previously experienced, customer expectations may be barely forming at the point of initial purchase; these expectations will solidify as the process unfolds and the consumer begins to form his or her perceptions Through the service cycle the consumer may have a variety

of different experiences – some good, some not good – and each will ultimately impact satisfaction

1.2.2 What determines customer satisfaction?

Customer satisfaction is influenced by specific product or service features, perception of product and service quality, and price In addition, personal factor such as the customer’s mood or emotional state and situational factors such as

family member opinions will also influence satisfaction

Product and service features

Customer satisfaction with a product or service is influenced significantly by the customer’s evaluation of product or service features For a service such as resort hotel, important feature my include the pool area, access t gold facilities, restaurants, room comfort and privacy, helpfulness and courtesy of staff, room price, and so forth In concluding satisfaction studies, most firms will determine through some means (often focus groups) what the important features and attributes are for their service and them measure perceptions of those features as well as overall service satisfaction

Attributions for service success or failure

Attribution – the perceived cause of events – influences perceptions of satisfaction

as well When they surprise by an outcome (the service is either much better or much worse that expected), consumers tend to look for the reasons can influence their satisfactions For many services, customers take at least partial responsibility for how things turn out Even when customers do not take responsibility for the outcome, customer satisfaction may be influenced by other kinds of attributions

Perceptions of equity or fairness

Customer satisfaction also is influenced by perceptions of equity and fairness Customers ask themselves: have I been treated fairly compared with other customers? Did other customers get better treatment, better prices, or better quality service? Did I pay a fair price for the service? Was I treated well in the exchange for what I paid and the effort I expended? Notion of fairness are central to customer’s perceptions of satisfaction with products and services, particularly in service recovery situations

Other consumers, family members, and coworkers

In addition to product and service features and one’s own individual feelings and beliefs, consumer satisfaction is often influenced by other people For example, satisfaction with a family vacation trip is dynamic phenomenon, influenced by reactions and expressions of individual family members over the duration of the vacation Later, what family member express in terms of satisfaction or dissatisfaction with the trip will be influenced by stories that are retold among family and selective memories of the events In a business setting, satisfaction with

a new service or technology will be influenced not only by individuals’ personal experiences with the software itself but also by what others say about it in company, how others use it and feel about it, and how widely it is adopted in the organization

1.3 Service quality and GAP model

How customers perceive service, how they assess whether they have experienced quality service, and whether they are satisfied are mentioned below Customers perceive service in term of service quality and how satisfy they are overall with

their experience Companies today recognize that they can compete more effectively by distinguishing themselves with respect to service quality and improved customer satisfaction

In order to find out the way to improve service quality, Companies can score Service quality gap model to know where the process of improving service quality begins and how customer perceive its services

Service quality gap model has been divided by 2 parts: Customer gap and provider gap

CUSTOMER GAP 6

The customer gap is the difference between customer expectation and perceptions (Figure 1.1) Customer expectations are standards or reference points that customers bring into the service experience, whereas customer perceptions are subjective assessments of actual service experiences Customer satisfactions often consist of what a customer believes should or will happen The sources of customer expectations are marketer-controlled factors (such as pricing, advertising, sales promises) as well as factors that marketer has limited ability to affect (innate personal needs, word-of-mouth communications, competitive offerings)

Gap closed to zero or perception service similar to expectation is perfect thing, but Companies tend to close customer gap to develop

PROVIDER GAPS

To close the all important customer gap, the gaps model suggests that provider gaps need to be closed These gaps occur within the organization providing the service and include four gaps:

Gap 1: Not knowing what customers expect

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Service Marketing – integrating customer focus across the firm – Valarie A Zeithaml, Mary Jo Bitner, Dwayne D Gremler – 4th eddition

Figure 1.1: Customer gap

Gap 2: Not selecting the right service designs and standards

Gap 3: Not delivering to service designs and standards

Gap 4: Not matching performance to promises

More details of these gaps are provided below:

Gap 1: Not knowing what customers expect

Gap 1 defines the difference between customer expectations of service and company understanding of those expectations

There are many reasons for managers not being aware of what customers expect: they may not interact directly with customers, they may be unwilling to ask about expectations or they may be unprepared to address them When people with the authority and responsibility for setting priorities do not fully understand customers’ service expectations, they may trigger a chain of bad decisions and supoptimal resource allocations that result in perceptions of poor service quality In today changing organizations, the authority to make adjustments in service delivery is often delegated to empowered teams and frontline people

When management or empowered employees do not acquire accurate information about customers’ expectations, provider gap 1 is large Formal and informal methods to capture information about customer expectations must be developed through marketing research

To minimize gap 1, Companies should focus on how to understand customers through multiple research strategies, how to built strong relationship with customers and understand customer needs overtime, and how to implement recovery strategies when things go wrong

Figure 1.2 shows the key factors responsible for provider gap 1 An inadequate marketing research orientation is one of the critical factors

Gap 2: Not having the right service quality designs and standards

Gap 2 focuses on difference between company understanding of customer expectations and development of customer-driven service designs and standards

Customer-driven standards are different from the conventional performance standards that company establish for service in that they are based on pivotal customer requirements that they are visible to and measured by customers They are operations standards set to correspond to customer expectations and priorities rather than to company concerns such as productivity or efficiency

Customer expectation

 Inadequate marketing research orientation

o Insufficient marketing research

o Research not focused on service quality

o Inadequate use of marketing research

 Lack of upward communication

o Lack of interaction between management and customers

o Insufficient communication between contact employees and managers

o To many layers between contact personnel and top management

 Insufficient relation focus

o Lack of market segmentation

o Focus on transactions rather than relationship

o Focus on new customers rather than relationship customers

 Inadequate service recovery

o Lack of encouragement to listen to customer complaints

o Failure to make amends when things go wrong

o No appropriate recovery mechanisms on place to service failures

Company perception of Customer expectation

Figure 1.2: Key factors leading

to provider gap 1

G A

P

Because services are intangible, they are difficult to describe and communicate This difficulty becomes especially evident when new services are being developed

It is critical that all people involved (managers, frontline employees, and the-scenes support staff) be working with the same concepts of the new services, based on customer needs and expectations For a service already exists, any attempt

behind-to improve it will also suffer unless everyone has the same vision of the service and associated issues

One of the most important ways to avoid gap 2 is to clearly design service without oversimplification, incompleteness, subjectivity, and bias To do so, tools are

Customer –driven service designs and standards

 Poor service design

o Unsystematic new service development process

o Vague, undefined service designs

o Failure to connect service design to service positioning

 Absence of customer-driven standards

o Lack of customer-driven standards

o Absence of process management to focus on customer requirements

o Absence of formal process for setting service quality goals

 Inappropriate physical evidence and servicescape

o Failure to develop tangibles in line with customer expectation

o Servicescape design the does not meet customer and employee needs

o Inadequate maintenance and updating of the servicescape

o No appropriate recovery mechanisms on place to service failures

needed to ensure that new and existing services are developed and improved in as careful a manner as possible

The quality of services delivered by customer contact personnel is critically influenced by the standards against which they are evaluated and compensated Standard signals to contact personnel what the management priorities are and which types of performance really count When service standards are absent or when standards in place do not reflect customer expectations, quality of services they receive s likely to be enhanced If service standards are developed appropriately they can have powerful positive impact on closing both gap 1 and customer gap

Gap 3: Not delivering to service designs and standards

Gap 3 is discrepancy between development of customer-driven service standards and actual service performance by company employees

Customer –driven service designs and standards

 Deficiencies in human resource policies

o Ineffective recruitment

o Poor employee-technology job fit

o Inappropriate evaluation and compensation system

o Lack of empowerment, perceived control, and team work

 Customers who do not fulfill roles

o Customers who lack knowlegde of their roles and responsibility

o Customers who negatively impact each other

 Problems with service intermediaries

o Channels conflict over objectives and performance

o Difficulty to controlling quality and consistencies

o Tension between empowerment and control

 Failure to match supply and demand

o Failure to smooth peaks and valleys of demand

o Inappropriate customer mix

o Overreliance on price to smooth demand

Service delivery

Figure 1.4: Key factors leading

to provider gap 3

G A

P

Even when guidelines exist for performing services well and treating customers correctly, high-quality service performance is not certainty Standards must be backed by appropriate resources (people, systems, and technology) and also must be enforced to be effective – that is, employees must be measured and compensated on the basis of performance along those standards Thus, even standards accurately reflect customers’ expectations, if company fails to provide support for those standards – if it does not facilitate, encourage, and require their achievement – standards do no good When the level of service delivery falls short of the standards, it falls short of what customers expect as well

Gap 4: Not matching performance to promises

Provider gap 4 illustrates the difference between service delivery and the service provider’s external communications Promises bade by a service company through its media adverting, sales force, and other communications may potentially raise customer expectations, the standards against which customers assess service quality The discrepancy between actual and promised service therefore has an adverse effect on customer gap

Broken promises can occur for many reasons: overpromising in advertising or personal selling, inadequate coordination between operation and marketing, and differencies in policies and procedures across service outlets

One of the major difficulties associated with provider gap 4 is that communications

to customer involve issues that cross organizational boundaries Because advertising promises what people do, and because what people do can not be controlled like machines that produce physical goods can be controlled, this type of communications involves functions other than the marketing department This type

of marketing is what we call interactive marketing – the marketing between contact people and customer – and it must be coordinated with the conventional type of

 Ineffective management of customer expectations

o Absence of customer expectation management through all forms of communication

o Lack of adequate education for customers

 Overpromising

o Overpromising in advertisement

o Overpromising in personal selling

o Overpromising through physical evident cues

 Inadequate horizontal communications

o Insufficient communication between sales and operations

o Insufficient communication between advertisings and operations

o Differences in policies and procedures across branches or units

external marketing used in product and service firms When employees who promote service do not fully understand the reality of service delivery, they are likely to make exaggerated promises or fail to communicate to customer aspects of the service intended to serve them well The result is poor service quality perception Effectively coordinating actual service delivery with external communications, therefore, narrow provider gap 4 and favorably affects customer gap as well

In summary, service quality is created from all organization’s operation procedures, and it is measured by how well organization can shorten its gaps, included customer gap and provider gaps The key to close provider gaps is to close gap 1 through gap

4 and keep them closed

The full conceptual model in figure 1.6 provides clear message to manager wishing

to improve service quality The gap model of service quality serves as a framework for service organizations attempting to improve service quality and service marketing

In order to make it easy to define, some organizations put all gap with some clear main questions and score them, then they can position their quality service and point out where they have to focus on to improve their service quality By this way, Gap model is called Service quality gap model audit

Expected service

Perceived service

to customers

Company perceptions of consumer expectations

Customer driven-service designs and standards

Customer gap

Gap 3

Gap 2

Gap 4 Company

Customer

Gap 1

Figure 1.6: Gaps model of service quality

Gaps model of service quality

Service quality gap model audit:

1 Market research orientation

 Is the amount and type of market research adequate to understand

customer expectations of service?

 Does the company use this information in decisions about service

provision?

2 Upward communication

 Do managers and customer interact enough for management to

know what customer expect?

 Do contact people tell management what customer expect?

3 Relationship focus

 To what extent does the company understand the expectations of

different customer segments?

 To what extent does the company focus on relationships with

customer rather than transactions?

4 Service recovery

 How effective are the recovery efforts of organization?

 How well does the organization plan for service failure?

Score for Provider gap 1

1 = poor

excellent

Provider gap 2:

5 Systematic service design

 How effective is the company’s service development process?

 How well are new services define for customers and employees?

6 Presence of customer – define standard

 How effective are the company’s service standard?

 Are they defined to correspond to customer expectations?

 How effective is the process for setting and tracking service quality

goals?

7 Appropriate physical evidence and servicescape

 How appropriate, attractive and effective are the company’s

physical facilities, equipment and other tangibles?

Score for provider gap 2

1 = poor

excellent

Provider gap 3:

8 Effective human resource policies

 How effective does the company recruit, hire, train, compensate,

and empower employees?

 Is service quality delivery consistent across employees, teams, units,

and branches?

9 Effective role fulfillment by customer

 Do customers understand their roles and responsibilities?

 Does the company manage customers to fulfill their roles, especially

customers that are incompatible?

10 Effective alignment with service intermediaries

 How well are the service intermediaries aligned with the company?

 Is there conflict over objectives and performance, cost and reward?

 Is service quality delivery consistent across the outlets?

11 Alignment of supply and demand

 How well is the company able to match supply with demand

12 Integrated service marketing communications

 How well do all company communications – including the

interactions between company’s employees and customers – express

the same message and level of service quality?

13 Effective management of customer expectations

 How well does the company communicate to customers about what

will be provided to them?

14 Accurate promising in advertising and personal selling

 Does the company avoid over-promising and overselling?

15 Adequate horizontal communications

 How well do different parts of the organization communicate with

each other so that service quality equals what is promised?

Score for provider gap 4

1 = poor

excellent

The score for each gap should be compared to the maximum score possible Are

particular gaps weaker than others? Which areas in each gap need attentions?

Based on these, company will find more details and best ways to improve their

service quality

CHAPTER 2: TECHCOMBANK CASE STUDY

2.1 Status of Techcombank and introduction of its card service

2.1.1 Techcombank Personal cards and card services

Techcombank became issued bank for card from 2003 with Vietcombank support, and its Card Center was officially established from April of 2004 At the beginning, Techcombank has only one kind of card, that is domestic debit card named

fastaccess In 2005, they variated their debit card with different types such as the card for VIP/Priority customers, for Vietname airline team, or for gift End the

2006, they gained an agreement with Visa international institution who allow and support them to issue and make payment with visa card Up to now, they have customized many types of card for different types of customers based on visa card and domestic debit card

2.1.1.1 Prospects of card in Vietnam market

Vietnam Economy is regarded as stability and developing step be step Commercial banking system has changed much, especially in payment technology of banks which model technologies in the world have many opportunities to be brought to Vietnam, and create chances for Vietnam to explore our product in international market World economy with good status will promote credit card development – one of the very convinient payment method which accepted in many areas in the world – and widen the location for using card and making payment

In Vietnam, there are good opportunities for technology to develop and popularize, and this is a very good framework for card service decelopment, and then customers’ knownledge about technology will change in positive orientation

According to some experts, with current status of the economy, incomes of Vietnamese will increase to 600 USD/year in next some years, and that fit what Vietnamese goverment expects that Vietnamese incomes will reach 700 USD/year

in next 10 years Even Vietnam is one of the countries whose people has low

incomes and the GAP between the rich the the poor is still big, but everage incomes

of vietnamese tend to increase, and with the support of high technology and integration trend, there will be some good change in applying high-tech products like card At this time, popolation of urban areas is about 20-30% of all the nation in which the age under 45 still working and studying with their basic knowledge about science and technology is the potential for new development trends In the next 5-7 years, the range of age who are acceptable science and technology will be wider, under 50-52 years old, and at high rate in working people in the urban areas When incomes increase, the fund for consuming will be increase, and payment methods without cash will be applied much more

Commercial environment will positively change by development of commercial centers, services, supermarkets, shops, and the result is that consuming habits of people will be changed that will be good conditions for payment tools without cash One of the important thing is that legal environment tend to be more closed, and that is a legal corridor for commercial development With this corridor, the government opens new ways for businesses and banks to develop and increase compatitive advantages

With many good conditions above, there will be a big movement with credit card in the next time The first gain of card payment is to go over big stucks and recover users’ belief, improve payment quality compared to other around markets in the area

In the near future, cards issued by banks will fit customers at various class, its limit

in payment will be lower than current to wider the range of consumption domestically Card is not only for cash withdrawing, making payment for goods and services, it also can be used to make a phone call, or can be used as citizen ID, Beside that, POS network will be explored to serve customer need in payment Card will be used to pay for petro fees, telephone fees, tuition fees, and then e-commerce will develop in vietnam, so card will be the most convinient method for payment It’s estimated that there are 90% secured transactions which will be automatically well done

2.1.1.2 The strategy to develop card

Card market in Vietname is devided into 3 banking groups: the leadings, the developings, and new commers TECHCOMBANK is in the 2nd group – Developing Techcombank purpose is to make market segment, choose market target, develop market share, attach the GAPs that the leadings missed, and prevent newcomers to penetrade the market In Techcombank personal service strategy, card product is regarded as a driven product and card development strategy is the key strategy, so TECHCOMBANK draw out its action plan as below7:

- Following the world trend, TECHCOMBANK will find out the partners to establish new products which are modern and suitable with target customers

- Paralleled with pushing new products, TECHCOMBANK is proactive in promotion and quality improvement, because card service is new to vietnamese customers, and these method will help to attract new customers and maintain them

- Improving the card management system in order to fix existant errors and advoid risk

- Being hury to occupy the market share in the North, paralleled with re-designing card product and service to penetrade in the South, exploring ATM and POS system

in business center, shops, supermarkets, for transactioning and branding

2.1.1.3 Some successes and ambituous plan of card development

To develop cards, a prerequiste on development of service accompanied must be supplemented Techcombank is regarded as the leading bank in this field thanks to investing into services namely: Hombanking, F@st advance, Mobipay, F@st-i-bank, F@st saving F@saSaving is one kind of account developed basing on Techcombank’s modern technology and has been lauching into market since June

2004 This special product is provided by Techcombank for customers having current accounts

FastSaving account can be considered as an automactic investment amount in which customers can benefit from interest which is higher than normal one Using Fast

7

Techcombank PFS strategy, 2007

Saving, customers can get other benefits of an account owner as: transaction authorization, colleteral, mortgage and other characters of a normal saving amount Cash advance from FastSaving can be made twice a month, each one 30% of current outstanding balance Customers can withdraw money or clear account at customer service counter area They can take money from saving account by transfering such as using an order to pay or FastAccess card via ATM to make payment

If you would like an amount of money in provision for your daily expenditure needs, to travel or buy a new TV, new car but you’re waiting for next coming salary period, Fast Advance is exactly what you need Fast Advance allows customers to withdraw money more than credit outstanding balance in their account at Techcombank at a certain limit (so called Advance limit) If you want to book airplane ticket via internet, you do not need a credit card, just a fastaccess card can help you to do that It’s the difference that Techcombank create to meet customer’s needs and expectation

In 2006, Fast Mobipay and Fast i-bank were launched, this marks a strong step forward of Techcombank’s card activities With these two products, customers can buy goods and services anywhere all around the world, transfer money to anywhere within Vietnam without coming to point of sale or bank directly The capital invested for this product is not much thanks to modern technology level and creative, active staff, especially updated software system

Table 1: Rate of increased investment capital for accompanied products and service Năm Investment capital (triệu đồng) Speed (%)

In 2006, there was a sudden mutation in investment, thanks to strong collaboration with strategic partners in order to implement means of payment under method Mobilpay The second reason, which is more important: Techcombank did not hesitate to put first steps in Fast i-bank payment From 2007, the investment into accompanied products and services with cards has been regarded indispensable in system of infrastructure investment items for card (transfer Swift, ATM/POS system, card-maker machines/PIN…)

With their ceaseless efforts, Techcombank has got some significant achievements in development of card volumes The data on number of card issued and payment volumes through several stages can be found herewith:

Table 2: Total of Card issued by years

ATM transactions value

(withdraw + transfer) (Bil) 612 1,624 3137 7,744 6,272 POS transaction value

Source: Report on Card Operations

In paranoma, the development in number of card issued increased drammatically in

2007, twice in comparision with 2006, only after one year of enhancing for investment into cards The really significant leap is recorded in 2009 after HSBC took part in supporting directly Techcombank with strategy of becoming the leading retail bank in which cards are the main product As the same, volume of payment via ATM and POS has increasing correlatively with number of cards This proves

that the capacity of card use is always in maintenance and improvement, in other words, cards Techcombank issues have a high number of active accounts

2.1.2 Card issuing, using and payment Processes and activities

Like other activities, account opening, card issuance and payment in Techcombank comply with a general process and small-divided processes (if neccessary) In accordance with card issuance process, issuing account opening (personal account) serves as first step and card handing over to customers serves as last step Personal Finance Service of Techcombank gradually launched a set of standards of transaction time for each department to ensure the implementation in accordance with customer-oriented standard system during working time This will help Techcombank improve customer service

Figure 2.1: Card issue procedure

Provide customers with application form Teller (Branches)

Give card to customer and save records

For small-size process, the detail of transaction of each step will be paid attention, but certain time for each step has been not standardized yet, just basing on general regulations

2.2 A review of Techcombank’s previous survey on card service: Customer satisfaction on card services

2.2.1 Survey objectives

Vietnam with urban population of more than 10 million is the big potential market for card services Card service in Vietnam is the most eventful market than ever, in which many banks are joining in Penetrating in the market in 2003, the

“Fast-access” card of Techcombank positioned itself with 28.000 card in the end of the year, the combination with Vietcombank card service and providing very value-added services With the orientation of becoming a multi-functional urban bank and the best bank, Techcombank has tried to explore the payment card as the key for development However, because of the strict competition of the market, Techcombank decided to build another card strategy, and the survey taken in 2006 with the title “customer satisfaction on “Fast-access” card” for 4 big cities: Ha noi, Hai Phong, Da nang and Ho Chi Minh

Some targets set up for survey: the survey was expected to find out some factors below:

1 Customer satisfaction on Fast-access

2 Customer evaluation on card services of Techcombank

3 Customer expectations

4 Customer behaviors

5 The structure of current customers

The results is an important base for Techcombank to review its customer service quality provided, evaluate features of Fast-access, and find out the realization of incentive programs of Techcombank In this survey, Techcombank also wants to find out true expectations of customers on card services, so that they can take actions to improve the quality that fit customer needs

2.2.2 Sizes and methods:

2.2.2.1 Attendees and effective zone:

“Current customers of Techcombank card service”

Total current customers: 68.972

Criterion for survey on satisfaction of customers about card service:

1) Fast and accurate money withdrawal

2) Numerous ATM locations where customers can withdraw money with a card 3) Prompt responses to customers’ requests

4) Enthusiastic bank staff

5) Multi-functional card

6) Effective Home-banking services

7) Informative and helpful manual

8) Incentive programs attached

9) Quick turnaround time for card issuance

10) Well-designed card

In which we found some below criterion of service quality:

 Fast and accurate money withdrawal

 Prompt responses to customers’ requests

 Enthusiastic bank staff

 Effective Home-banking services

 Quick turnaround time for card issuance

2.2.2.2 Investigation methods:

Through letters, direct interview samples in Ha Noi

Method to pick samples size:

n = Z² P(1-P)/E²

In which:

n – the size

Z – fail-safty, Z is defined at 95%

P – the rate of satisfaction customers

E – error rate, defined at 5%

70% of customers were estimated for attention (no feedback + unreachable + others)

So number of samples are 1.100 (customers)

Method to choose the samples:

Systematic Sampling with criteria of Debit amount for 4 cities See below:

Table 3: Survey Systematic Sampling with criteria of Debit amount for 4 cities

STT DEBIT AMOUNT Ha Noi Hai Phong Da Nang

Ho Chi Minh Total