Including the customer in efficiency analysis

Abstract

2Including the customer in efficiency analysis: evidence of a hybrid relational-transactional approach Abstract Purpose This paper illustrates the effect of including the customer as a resource in efficiency measurement. Variations in counting the customer illustrate the different impacts on efficiency between a transactional and a relational approach to bank branch marketing. Design/methodology/approachThe paper uses Data Envelopment Analysis (DEA) to analyse the efficiency of the branch network under consideration. This technique, while well established in the bank branch efficiency literature, is used here to gain insight into how relationship and transactional paradigms are affecting performance. FindingsAlthough the average profile of the efficiency scores was similar, the scores of the individual branches differed greatly depending on how customers were counted. Some branches then can be typified as relationship oriented while others as transactions oriented bearing in mind that all branches have both remits. Practical implicationsFuture research in efficiency measurement should include customers as a resource of the bank given the importance of them for the activity of co-production. Careful consideration is required however of the method of accounting for these customers bearing in mind that different conceptualisations may significantly affect the efficiency score of the individual branches. Originality/valueThis paper sheds light on what is happening at branch level in a large network in the UK in terms of how transactions and relationship marketing approaches are affecting efficiency scores and the objectives of the branch. It also answers a call (Fruchter and Sigue, 2005) for research into organisations that simultaneously use relationship and transactions marketing.

Number of ATMs, IT investments, bank profitability and efficiency in Greece

“…The number of ATMs has been considered as an input or output from several studies, such asAthanassopoulos (1997) for Greece,Camanho and Dyson (1999) for Portugal,Coughlan et al (2010) for UK, Howcroft (1994, 2002) for UK,Sherman and Rupert (2006),Sherman and Zhu (2006) for US, andYavas and Fisher (2005) for US.6 We have performed a Hausman test, in order to compare the fixed effects estimates to the random effects estimates, and we find that the estimates are equal in both methods, so it is safe to apply the fixed effects model. 7 These banks were selected in terms of their total assets.…”

Efficiency Measurement in

“…Using data envelopment analysis (DEA) and a data sample from 1997-2004 for eighteen branch banks in a system, we test to measure the comparative efficiency of eighteen markets using the Sturm and Williams (2002) models for measuring efficiency. More recently Coughlan et al (2010) used DEA to include the customer as resource in efficiency measurement. That study was limited to a large network of branch banks and focused on marketing relationships with organization objectives.…”