FOCUS, STRATEGY AND VALUE
FOR CUSTOMERS
4
working relations
WHAT'S NewS Issue 3 March 1997
Rl has been in the business of assimilating and implementing a new strategy over the past
year. But in the reality of day to day business is the Customer Focus Strategy understood by
everyone? And what about Customer Value, the creation of which has been designated our
ultimate objective as an organization? Is this notion alive and well and prospering in the
organization? Does the concept of customer value mean the same to all of us? What's NewS
put these and other questions to Dominique Bech of Rabo Securities, Steven Spiekhout of
Utrecht branch's corporate banking and F&A's Ab Gillhaus.
WNs: Can you define customer value?
Dominique: It's something of a buzz word
and has been for quite a long time.
Essentially, I think most companies say
they provide customer value as a
marketing ploy. But if you ask for my own
definition, I'd say that it's when a cliënt
welcomes you back because they're
pleased with your previous performance.
Steven: What's fascinating to me about
this is the concept of customer value as an
ultimate objective. Most organizations opt
for shareholder value. And that means
their ultimate objective is profitability. So
customer value is a means, not an end. By
saying our ultimate goal is customer value,
are we saying profitability is not a
priority?
WNs: That's a good point, especially as if
we say customer value and service is our
primary goal rather than profitability,
Ab Gillhaus: 'profit is a vital tooi, not a goal
itself.
what happens to the ROS requirements
that are very real?
Ab: Let me try and build that case here
and explain how it fits together.
Rabobank is a cooperative organization.
In the old days, it was created for and
through the members, the borrowers, who
were local businesses or corporates. RI
developed on the back of those local
member banks. Rabobank Nederland did
the things that the local banks weren't
able to do, such as expanding
internationally and providing services like
centralized treasury. As RI, we've evolved
and become a really extensive
international network. It's very difficult in
that sense to apply the same basic
concepts as the local member banks in the
same way. So the customer focus strategy
says: as an international operation, we
don't have members. We have customers.
Unlike the local banks, we can't be there
for members, so we are there for our
customers. The world's a big place, and
we can't be everything to everybody. So
we've had to make a choice about who
our customers are and then focus on doing
for them what local banks do for their
customers, ie. members.
WNs: You mean that the customer focus
strategy is simply an extrapolation of and
application of the cooperative concept in
an international context?
Steven: I thought it was more a survival
tactic.
Dominique: Right. We don't really have
much choice. We cannot compete with the
global banks already firmly entrenched
around the world because we started
internationalization too late - I'm playing
devil's advocate here, Ab.
Ab: That's fine.
Dominique: Are we putting this
origination and definition on our
customer focus strategy after the fact? I
know the tradition, the history. But really
it was our only option to make profits.
And let's not kid ourselves. We need to
make profit.
Ab: Of course we do. I'm not saying we're
in this for philanthropic reasons - no way.
What I am saying is that profits and
profitability in our organization are a
measure of customer value. If you provide
customer value, and your customers are
prepared to pay a price for your services,
then you will be profitable. Basically,
we're pursuing an ultimate objective,
customer value, in which profit is a vital
tooi, but it is a tooi, not a goal in itself.
Dominique: Let me play devil's advocate
again. It all sounds very idealistic to me, is
it a trick?
Ab: No one is saying profitability isn't
crucial. All I'm saying is that it is a
means not an end to achieving customer
value.
Steven: But if that is the case, and if we
are to create the kind of customer value
everyone seems to be talking about, then
we need a number of things. One is
investment in resources. But we also need
much better communication.
Dominique: I agree. The way Ab
described the customer focus strategy is
the first time I've ever heard it explained
in that way, and in such simple and easily
accessible terms. It's clearer to me now
than it has ever been. I also think that
investment in resources is crucial. I work
for a subsidiary of RL Our equity base is
supplied by the parent - no one has said
to us that we can forget bringing in a
certain return on that investment as long
as we're providing customer value.
Steven: I'm also under the strong
impression that I have to achieve some
kind of profit goals.
Ab: Why?
Dominique: To survive. If we want to
