Including the customer in efficiency analysis

Abstract

Purpose The purpose of this paper is to illustrate 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/approach The paper uses data envelopment analysis 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. Findings Although 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 implications Future 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/value This 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 for research into organisations that simultaneously use relationship and transactions marketing.