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What is our strategy for dealing with customers? What are we trying to understand? What does the customer want?

This last question is key. The answer is straightforward. Customers want three things from their financial services provider. Same as it ever was, they want value. Second, they want convenience. And third, they want to be recognised and valued as an individual.

This is achievable, if you accept this precept: that CRM projects should be broken into two categories. These categories are internal and external. Internal forces involve the interplay of a host of issues such as business strategy, organisational structures, processes, people skills, technology and metrics.

The external forces revolve around the customer experience. So you have this clear dichotomy of internal resources that must be carefully balanced with what you deliver to the customer.

The internal issues mentioned have been addressed ad nauseam elsewhere. The purpose of this article is to examine how the customer experience is handled, which brings us back to those three deliverables: value, convenience and recognition.

Let's look at them more closely. Value is a time-honoured goal, which comes down to price and, as regards to financial services products, involves issues such as flexibility and portability if you're talking about, say, a pension product.

Convenience is about a number of things. It's about things as simple as providing transparency and doing away with hand-offs. This is especially true in insurance. For example, what stage is a customer at in the claims process? Can the customer find out this information without being passed interminably from person to person? It's about offering customers the ability to contact you when and where they please, across the channel that is best suited for the interaction in question.

The thing about convenience, the explosion of consumer technologies and the creation of an "always on" communication channel is that it puts greater strain on the bank or insurance company than on the customer. This is because ubiquitous access - and the expectations of attendant service levels - tends to be mostly one way, i.e. from the customer to the financial institution.

Look at it this way. Morgan Stanley has an average of 17-20 interactions for every transaction it has with a customer. It's a fair assumption to say that your bank or insurance company will have a similar rate of interactions per transaction. This fact has huge repercussions when you consider that you may be operating four or more channels, the worst of which - in terms of responsiveness to the customer query - will be responsible for how your customer will perceive the quality of your customer service. And if you're not frightened by this fact, you should be. Do you have email enquiry on your website? In 2000, 37% of companies never responded to email requests!

Frightened yet? According to GartnerGroup, customers leave a company for a variety of reasons. Fourteen percent move to competitors. Four percent die! But most worrying of all, 68 percent leave because of poor customer service. Providing convenience to the customer is a lofty goal, but it doesn't come without making heavy operational demands - and, as can be seen, risks.

The third thing customers want is to be recognised, and for their status as an individual to be acknowledged. In the same way that bank managers, in the pre-digital age, used to have personal relationships with clients. This is about turning customer information into insight. It's about knowing customers, and tailoring behaviour accordingly.

A bank or insurance company may have integrated its channels, providing real-time integration of customer information and a unified corporate face to the customer, but fail utterly to understand the customer as an individual.

This is because knowing the customer intimately enough to have a meaningful conversation is about more than just operational CRM and acquiring a single view of customer information.

Ask yourself. What's the use in trying to sell a Stakeholder to someone who's more interested in saving for a mortgage deposit? Why try and sell a savings or investment product to someone who's interminably overdrawn?

Yes CRM is about integrating customer information and contact channels, but it's also about analysing that customer information, and using automated workflow that intelligently routes that information to the appropriate places. This way your staff can really begin to understand - and better serve - your customers.

This is what The Britannia Group, the second largest mutual building society in the UK, has done. It implemented a CRM solution in 1997.

The Britannia has segmented its customer base according to customer profitability, which includes snapshot profitability views as well as lifetime profitability views. It has complete knowledge of its customer base, which is no mean feat when you consider it has 2 million customers.

This information resides in its customer information database, which it uses as the foundation for all its activities, from orchestrating sales strategies and marketing campaigns down to the logistics of automatically feeding leads, with scripting, to branch and call centre staff.

"When somebody comes into one of our branches, we know the extent of the relationship which exists between that customer and ourselves," explains Gerald Gregory, Director of Sales and Marketing, The Britannia Group.

"We know which products they hold. We know how long they've been customers. We know the relationships that exist between them and other people at the same address. We know if we have actually sent them a direct mail shot in the recent past. We know whether or not they've responded to that. We know whether or not there has been a recent customer visit to a branch, whether or not it's in that branch or any other branch."

For The Britannia, CRM is about customer knowledge. It's not about carpet-bombing customers with direct mail shots. (The Britannia has a direct mail response rate of 40-60%, which compares rather favourably with the industry average of 4% for retail banks.) It's about knowing the customer well enough to conduct meaningful conversations. This level of intimacy brings its own rewards.

According to Gregory, "It is now the case that of the customer interactions that happen in our branch network, one in four of them actually lead to a sale."