Bank managers on developing customer relations

Banks are known to have stable and long lasting relations with their customers, which is why development of customer relations is a crucial strategic issue in banking. However, a basic problem in banking is that the customer base is heterogeneous, ranging from homogenous segments of customers with the same preferences to customers with individual demands for customized services. A key issue in banking is thus how bank managers view different strategies to develop their customer relations. This paper investigates how bank branch managers perceive the heterogeneity of their market and how the bank’s relationship strategy affect the development of customer relations. To this end, 135 branch bank managers answered a questionnaire, which was processed by LISREL. Results suggest that how bank managers perceive customer relationship development is determined by the heterogenous market and the bank’s relationship strategy. Contrary to our expectations, bank managers consider that more difficult relationship development leads to a more centralized locus of realized strategy. This suggests that banks relationship development need to focus more on customer orientation, and that realized strategies need to support this.