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CBA’s Insurance Service Delivery: Analysis and Recommendations

Jul 12, 2023 | 0 comments

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Jul 12, 2023 | Essays | 0 comments

Executive Summary

This report provides an analysis of CBA’S Insurance service delivery from the point of a customer who did not receive satisfactory service. The report analyzes the service delivery process, the service communication, management of the service physical evidence, people issues and management of service customers. Therefore, the report finds the case scenario about CBA’s service as not positive and per the customers’ expectations. The company therefore needs to look at the areas highlighted which require further investigation and corrective action by the company management.


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1. Introduction

Commonwealth Bank is a well known institution offering a number of services, ranging from banking, insurance, funds management, investment and share broking among others. In the recent years the company has undergone a massive expansion to include more services and more countries. In the insurance service, CBA has recently taken over a well-known insurance company Astra CMG life, changing its name to Commonwealth Life. The Intuition has its presence in Asia, Africa, Europe and the United States of America.

The Commonwealth Bank group has a strong domestic presence in Australia with the largest customer base in both the financial and insurance sectors. Ideally expected of such a well known institution is people receive good service and have a positive experience when seeking services from such an institution. It is common however for one to encounter bad service affecting the company’s reputation in the future. In this report we use a negative service encounter experienced by one of the customers of CBA, together with other theories to highlight the bad service. The theories will include the consumer behavior for service theory, The (IMC) promotional communication mix elements and the interactive communication mix elements. The SOR Model theory, the internal marketing and the service profit chain theories.

2. Background

The services offered by CBA Are broadly categorized into to two the financial services and the Insurance services. The insurance cover has three options, the comprehensive insurance which covers, collision or impact damages, theft, flood, storm and hail. The customer has the option of accessing a number of additional benefits that are charged separately. The premium paid can also vary depending on the policy one has chosen. The second option is third party property insurance, here the vehicle is covered in case it is stolen or catches fire. Consequently, the option includes a liability cover for other people’s property up to the value of twenty million dollars. The third option is third party property damage, where the liability to cover for damages is caused by ones car to other peoples properties to a total value of twenty million dollars. In some countries the services of CBA have registered very few customers due to a number of reasons, such as unprofessional staffs, very high costs among many other reasons (Lovelock 1996).

The negative service encounter is that of poor customer relation and the lack of informing the customer on the extend of the cover on the part of CBA. The customer took a car insurance cover with CBA. The customer was not attended to well by the customer care representative who did not seem to care about the customer’s accident. At the same time the customer could not informal the customer what he needed to do to ensure that got covered. The company took very long to respond to the issues that the customer had presented. Due to lack of information, the customer discovered that the cover he had taken was not comprehensive enough to cover the accident.

The first section of this paper will examine the service delivery process with the help of the necessary theories to determine what CBA did wrong in terms of its service delivery. The next section is the service communication section which will look at effective communication theories and what CBA ought to do to ensure it has excellent service communication. Thereafter the paper will have the managing of service physical evidence; in this case we shall look at the SOR-Model that emphasizes on the creation of a better environment to ensure customer satisfaction. People issues will be the next section, which looks at the service profit chain model that creates a link between quality management and customer satisfaction. Managing service customers will be the last section of our discussion, this section evaluates ways the management can ensure customer satisfaction. The paper will then have a conclusion that will summarize the paper and include key findings of the report.

3. The service delivery process

The service delivery process not only assists the staff to meet the goals of the business but also meeting the goals and needs of clients. It is therefore important for the company to put in place strict service delivery system. Therefore, company delivery system should focus on creating value for the business at the same time involving employees to deliver a positive customer experience. The primary elements of a service delivery system are service culture. Service culture includes elements such as mission, vision, work habits, norms and principles in the working environment. With a positive culture then customer satisfaction is achieved. Another quality of service, all customers expect to get value for their money. The organization can help the client fulfill their mission by offering quality service that will help it achieve its goals (Hanna, Newman and Johnson 2000).

Customer experience is another elements of the delivery system, perception is key in business, the more positive an experience it is for a customer then the more likely they will seek the service against or refer someone to the organization. According to research, customer experience is derived from the interaction of the customer that is based on contact, observations and knowledge. The other element of a delivery system is employee engagement this entails employee attitudes and how they interact with customers. This is an important element since it helps determine the kind of customer experience.

Consumer behavior has been analyzed since time memorial. Different researchers have come up with different theories to explain consumer behavior. Under the utility theory, the customer is viewed as a rational being. In this theory the consumer is rational if he or she is aware of other consumption options in the market. Contemporary theories to consumer behavior suggest that customer behavior is influenced by different factors, such as the need for recognition, customer service and the quality of service. For example the psychodynamic approach suggests that consumer behavior is subject to biological influence, this is to say that every consumer acts from a conscious thought or perspective. This approach does not recognize environmental stimuli.

4. The service communication

For both bigger and small organization, effective service communication is necessary to attain both customer satisfaction and the business goals. The customer services should therefore be designed to ensure prompt and efficient quality services to the customers. At the same time the communication should quick retrieval of customer related issues. Companies and business should place emphasis on facet face communication as well as telephone and mail communication. The employees are supposed to learn from the customer experience.

5. Managing the service physical evidence

The SOR-model was developed by Mehrabian and Russsell that looks at customer experience from an environmental psychological perspective. Under this model stimulus directly control the cognitive state of a person, in this case a customer, influencing their response (Mehrabian & Russel 1974). It is for this reason that social engagements or relationships within organizations or service providers are primary to influencing customer behavior. Mehrabian and Russel continue to explain how the model works; the influence could be in form of the physical approach. The SOR Model is divided into to two processes, the stimulus participation and the responses also known as the output. The response may not be the same since individuals differ in responding to stimulus.

6. People issues

Customers are value oriented inclined to invest in services or companies that take care of their needs. It is for this reason that a customer will invest much more in an expensive service because of the quality of service received. There are several theories that can emphasize this point. When customers feel that the customer relations do not serve them well then, they will likely choose not to invest any more into the product or service. For example in the case scenario the customer seems very agitated for the bad service received from the beginning on the contract. Customers are usually profitable to a business over time; consequently they are accountable for the high profit growth in a business. To avoid such instances where growth and profit may be affected. The company needs to improve its customer relations to ensure all customers are catered for. The service chain theory model suggests that there is a relationship between different components in an organization. This means that the service the company offers is intricately intertwined to the services out. If for instance an organization registers bad performance in customer care relations then the customer satisfaction will be negatively affected (Heskett et al. 1994, 1997).

Therefore, according to the service-profit chain model a link needs to be created between the quality management, the work force and good customer care. The chain gives eight steps to the realization of the company vision. The profitable growth of a company is occasioned by customer loyalty. At the same time loyalty is influenced by customer satisfaction. Employee satisfaction is as a result of good support service and policies that empower employees so that they serve the customers well. The eight steps, to influence the higher levels in the chain the bottom levels must be catered for well (Bagozzi et al 2002).

7. Managing service customers

Management to services received by customers is necessary to ensure customer satisfaction. The proper way of managing the services is to ensure that the employees understand of what is required of them when dealing with customers. For instance, it is clear that the Management of CBA did not inform the customer representative of the work description. The representative did not offer any information and was not sympathetic with the customer.

According to Zinkhana (1992) customer satisfaction is the combination of service received and the expectations of the customer. In other words, customer satisfaction is a comparative study between outputs and inputs. Another way that the management can ensure customer satisfaction is establishment of complaints box, CBA is an established brand and should not let one incident taint their reputation. The company needs to establish a clear communication with its customers and work on the complains presented to it.

Information is very important to customers. Customers will always invest in companies that provide them with a range of information, if the customer was well-informed then he would have invested in an insurance policy that provided him with comprehensive cover (Hawkins and Kass 1982).

8. Conclusions

It is clear from the report that CBA did not deliver the up to standard service to the client. The client did not receive proper communication both at the contract making process to the inquiry after the accident. In addition, the client was not issued with enough

9. List of References

BAGOZZI, R., et al., 2002, The Social Psychology of Consumer Behaviour. Buckingham: Open University Press.

Heskett, J. L., T. O. Jones, G. W. Loveman, W. E. Sasser JR., & L. A. Schlesinger (1994), Putting the Service-Profit Chain to Work, Harvard Business Review, 72, 2, 164–175.

Hanna, M. D., W. R. Newman, & P. Johnson (2000), ‘Linking Operational and Environmental Improvement Through Employee Involvement’, International Journal of Operations and Production Management, 20, 2, 148–165.

Hawkins DM, & Kass GV. 1982. Automatic Interaction Detector. Topics in Applied

Multivariate Analysis. Cambridge University Press: 269-302.

Lovelock, C. H. (1996), Services Marketing, Prentice Hall, Upper Saddle River, New Jersey.

Zinkhan, G. M., 1992, ‘Human Nature and Models of Consumer Decision Making’ Journal of Advertising, 21, (4) II-III.

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