[pic] INTRODUCTION 1. 1 ‘Banking’ on CRM’ “Competition and globalization of banking services are forcing banks to be productive and profitable. To retain High Net Worth individuals, banks should focus strongly on relationship management with customers. Innovative Customer Relationship Management (CRM) strategies and cutting edge software can help, to a great extent, in achieving the desired results. To provide customized services, banks are opening Personalized Boutiques which provide all the required financial needs of a customer”. The entire service industry is now metamorphosed to become customer- specific.
In this context, the management of customer relationship in financial services industry demands special focus. Gone are the days when customers at a bank did not mind the long serpentine queues and waited patiently for their turn with a token in their hand. In today’s Internet era, no one has the leisure to wait. In this context, online banking is assuming a great significance. Today, banking is more customer-centric, unlike the yester when it was transaction-centric. Banks are increasingly focusing on the premise that customers choose on the service provider who differentiates through quick and efficient service.
However, there is more to Customer Relationship Management (CRM) than just managing customers and analyzing their behaviours. Banks are well aware that their success is predominantly dependent on the CRM strategies adopted by them. Service providers have recognized that good CRM bonds customers with the organization for a longer term, resulting in increased revenues. With customers’ expectations becoming even more competitive, banks are coming up with a wide array of novel products and services every day. The challenge is for the banks to work towards ensuring that customers prefer their products and services over that of competing brands.
The key to develop and nurture a close relationship with customers is by appreciating their needs and preferences and catering to their requirements. Leveraging on IT, to appropriately analyze and understand the needs of existing customers better, to ensure customer satisfaction, and exploring the possibility of cross-selling products to gain a competitive advantage are the other issues drawing attention and interest. With the opening up of the economy, a number of private sector banks have joined the fray and are offering a plethora of products and services- rechristening themselves as ‘Financial Boutiques’.
Knowledge dissemination has been propelled by electronic and mass media campaigns. Today’s knowledgeable consumer is challenging the Indian retail banking industry to redefine itself. Thus in this current competitive scenario, for a bank to survive competition, succeed and make profit, there is hardly any option but to learn from and actively respond to consumers’ needs. Banks offering retail products need to reorient their strategy from a product-centric to a customer-centric approach to attract and retain High Net Worth Individuals (HNI) and profitable customers as well.
The battle of the banks, for gaining a greater slice of the market share, is taking on a new dimension. In the current falling interest rate scenario, banks are finding it increasingly difficult to meet the high growth expectations. In order to bolster their top lines, banks are in pursuit of newer ways and means of achieving organic growth through strategies that enable acquisition of new customers and retaining the loyalty of the existing customers. Success of a bank’s strategy towards customer acquisition will depend on its ability to develop customer insights and translate these into effective operating models.
Ensuring a good customer experience at every customer touch point is the cornerstone of a successful growth strategy. A good customer experience will drive customer acquisition and promote customer retention, which translates into increased profits. This, in other words, is the hallmark of a successful CRM strategy. Emphasis on CRM arises on account of the challenges confronting retail managers—– managing to sustain and achieve growth and profits. Bankers are conscious of the relative costs of acquiring new customers.
As top management emphasizes on “delivering results”, most bankers resort to customer grabbing, rather that customer cultivation and creation, with the result that “customer churn” is the call of the day. Incidentally, bankers are fully aware that losing the existing customer and acquiring new customers is an expensive affair. Moreover, it acts as a drain on the existing resources of the bank, which can be better employed for growth initiatives. Therefore, the challenge for the banks is to retain and deepen the profitability of the existing customer relationships, which is borne out by Nat West’s success.
Banks are adopting CRM to converge people, process and products more effectively to embark on the true relationship banking— with the end result of accelerating the business momentum. To meet the challenging preferences of the customers and to stay ahead of competitors, bankers are bound to attract customers by providing a spectrum of services. Online banking, 1. 2 Objective of the study- The study on CRM practices adopted by bank in public as well as private banks was carried out to achieve the following objectives: • To Study the CRM development within banks in Ludhiana. To study employees perception regarding implementation and effect of CRM in banks. 1. 3 Need And Importance of the study- 1. Customer expectations are changing almost on a daily basis. Newly empowered customers, who choose, how to communicate with the companies’ various available channels? Also nowadays consumers expect a high degree of personalization 2. In the current era of hyper competition, marketers are forced to be more concerned with customer retention and customer loyalty. 3. As several researches have found out retaining customers is less expensive and more sustainable competitive advantage than acquiring new ones 4..
The growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with end- customers.. 5. Advances in information technology, networking and manufacturing technology have helped companies to quickly match competition. As a result product quality and cost are no longer significant competitive advantages. 6. The growth in service economy. Since services are typically produced and delivered at the same institution, it minimizes the role of the middlemen. 7.
Another force driving the adoption of CRM has been the total quality movement. When companies embraced TQM it became necessary to involve customers and suppliers in implementing the program at all levels of the value chain. This needed close working relationships with the customers. 8. Emerging real time, interactive channels including e-mail, ATMs and call centre that must be synchronized with customer’s non electronic activities. The speed of business change, requiring flexibility and rapid adoption to technologies. 9. On the supply side it pays more to develop closer relationships with a few suppliers than to develop more vendors. 0. The globalization of world marketplace makes it necessary to have global account management for the customers. 1. 4 SCOPE OF THE STUDY The scope of the study is limited to Public and Private sectors banks of Ludhiana city. Public sector Banks considered in this study includes: State Bank of India (SBI), Punjab National Bank (PNB), and Punjab and Sind Bank (PSB) whereas HDFC Bank, ICICI and Axis Bank were selected in the Private Sector Bank category for the study. [pic] CHAPTER-2 2. 1 Introduction: The current chapter describes the research methodology adopted for present study.
It indicates the selection of sample respondents, collection of data, choice of statistical tools for analysis of data, in addition to pointing out limitations of the study. 2. 2 Review of literature- Banks basically sell variation of the same service, i. e. they lend money accept deposits, and move money around. But in recent times price led strategies are being increasing used to provide more customized products and higher quality service not just to retain customers but also to attract new one’s . This study shows how banks have done just that, through there customer relation management (CRM) initiative.
It will show why CRM can be used effectively to improve services for customer, employees, and the banks and provide a distinctive and sustainable competitive advantage. Aggarwal (2003) stated that, in initial days when everything went in the name of CRM are over. The corporate soon tighten their conceptualization of CRM, demand tangible financial and non financial return on investment of CRM and ,seek to have a output of the CRM audited and validated such that benefits the organization and fulfils expectations of the customers.
The guiding philosophy that all the firms especially those with the customer turnover must get a CRM somehow will get tempted with the new wisdom. There is no doubt of the fact that the customer information is the life blood of any business and hence, CRM initiatives. However, CRM need a better implementation, if it were to contribute to the corporate renaissance. AI Mier (April,2007) confined that most commercial banks don’t consider themselves as an agent providing service to customers where customers are clients who deserve to be served.
It starts at the counter. Many people experience an average waiting time of more than an hour and this way goes on whilst staff behind the counter proceed with their work at a slow pace laughing and joking at the same time. The bank is dealing with tens of thousand customers at the counter everyday. Therefore the customer relation management foundation should start from the point that being said, to make the customer feel at home is the goal. Arora (2002) affirmed that, CRM to grow by 40% a year.
The domestic CRM market is expected to grow by 40% yearly and touch the $ 40 million mark by 2005, and assocham study said. The size of market at present is $ 9 million. Of the 750 companies across sectors like telecom, IT financial institutes, business consulting and advertising which participated in the study 92. 3% said that CRM market in India would expanding he next 5 years “ integration of CRM solution with other businesses function is a major challenge and slow implementation of CRM projects is a moderate deterrent of its adoption.
According to Johri (2008), “A market research has shown a dissatisfied customer share its experience with at least 11 persons, each of whom in turn coveys it to another 5 persons’. A majority of the customers who switch their bank do so because of indifferent attitude of service provider. The satisfied customer repeat his order, price out new products and passes on that information to many others Gil ( December 2006) Customers and prospect are demanding more relevancy and personalization with their campaign. If it don’t recognize messaging or offer that are pertinent to their job unctions, your marketing goes directly to their trash bins. Unless you prove you are relevant to them they wont care to hear your message or take action upon it. At the same time, it has become more imperative to tie your company’s messaging across marketing and sales. Hardward Business Review (2008) unfolds that 5% increase in retention can result in bottom line profit increases upto 75% depending upon the industry. The dramatic economic power of customer retention is revealed when viewing customers in term of lifetime value(LTV).
Value of retaining customer make perfects business sense one considers that customer retain for life is more cost effective, requires less service, provide more business and contributes new customer acquisition by offering positive referrals. Thus, Customer retention guarantees significant current and future economic benefit. A study carried on behalf of Indian Banking Association (IBA) on CRM concluded that customer retention is an issue that is been faced in foreign and new generation private sector banks. The Study covered the customers and employees of various banks.
The study revealed that customer retention was strong among nationalized banks as compared upcoming private and foreign banks. Although the level of customer satisfaction was very high in upcoming private and foreign banks than in case of nationalized banks. Joshua & Moli (Sep 2008) evaluated that recognition of service Quality as a competitive weapon is relatively a recent phenomenon in the India Banking Sector. Prior to the liberalization era the banking sector in India was operating in a protected environment and was dominated by nationalized banks.
Banks at that time did not feel the need to pay attention to the service quality issues and they assigned very low priority to identification and satisfaction of customers need . After liberalization the nationalized banks and the old generation private banks started facing competition from the new private and foreign banks. That had international banking standards. These new generation banks were characterized by use of modern information technology endorsed services like ATM, online banking . The need of the hour is the Indian banking sector is to build up competitiveness through enhance ervice quality , thus making the bank more market oriented and customer friendly 2. 3 Objective of the study- The study on CRM practices adopted by bank in public as well as private banks was carried out to achieve the following objectives: • To Study the CRM development within banks in Ludhiana. • To study employees perception regarding implementation and effect of CRM in banks. 2. 4 Methodology Adopted: The research is aimed at studying the CRM practices followed by the public as well as private sector banks.
The city covered under the research was Ludhiana. The major consideration of selecting this city for the study was that this city has huge population with relatively assured income and large number of banks. 2. 5 Collection of Data In this study, sample survey was conducted; primary data was collected by structured questionnaires (Annexure) which solicit information about CRM practices practiced by the banks and what type of facilities customers are receiving. Secondary Data was also collected from Magazines ,journals, Internet, Newspaper, etc. 2. 6 Sample Plan:
Sample Unit: The study was limited to employees of public and private sectors banks of Ludhiana city. Six banks were selected randomly, in which three were nationalized banks i. e, State Bank of India (SBI), Punjab National Bank (PNB), and Punjab and Sind Bank (PSB) whereas HDFC Bank, ICICI and Axis Bank were selected in the Private Sector Bank category for the study. Sample Size- Since CRM practices are being used by the bank’s employees to attract, satisfy, and retain the customers for maintaining long term relationship with them, for this present study 10 employees of each bank were randomly selected.
Sampling Technique: For conducting this study, convenience sampling technique was used. As under this technique, sample of respondents was chosen according to convenience. 2. 7 Data Analysis and Interpretation: This is an attempt to organize and summarize the data in order to increase result usefulness. After completing the study of questions asked from the respondents, data was tabulated by calculating the frequency of response and interpreted by using tables and percentage was calculated and conclusion were drawn there from. Charts were also drawn to present the data. 2. Limitation of the study: Although due care has been taken in conducting the study, still the following limitation are associated: 1. Time has played as the biggest constraint of the research work and therefore the coverage of this study was restricted to few banks only. 2. The selected sample may or may not be considered as a true representative of the whole population. The finding of the study are based on the expressed opinions of the respondent. 3. Since this is an opinion survey, personal basis may have crept in due to the respondent’s tendency to rationalize their views. . Due to unawareness of certain facts or lack of knowledge regarding the CRM concept, the answer were not given by respondents to some of the questions. [pic] CHAPTER 3 CRM IN BANKING 3. 1 The Evolution of Relationship Management It is not suddenly that the business managers have realized that the customer is supreme or the need to render personalized service . However , it was not possible to address the preference of massive group of widely dispersed individuals . Neither the tools nor the technology was available .
The smart business managers did the next best thing, which was to conduct a market research and classify the market into broad segments with different preference. The product manager would then position their product catering broadly to these segments. The information system have evolved tremendously over the last three decades and so have the communication systems . While ERP , the management mantra in nineties offered the means to optimize resource planning at the enterprise level encompassing every area of the enterprise on a real time basis , there was still no means to connect to the customer.
The customer had just too many locations. The commercial penetration of internet into the homes changed everything. It provided the means to take the integrated enterprise information system to the customer’s living room. He could buy, sell or bank sitting there, while uniquely identifying himself. This has led to the evolution of CRM, which uses the NET to integrate the customer contact points directly with the enterprise. It provides the means to interact with every customer individually .
The interactions over a period of time create history that is available to the field sales/ support personnel at the touch of a button. CRM start with a business strategy, which drives changes in the organization and work processes which are in turn enabled by information technology . The seeds of modern-day CRM were sown in the 1960s. Academic researchers found that the “ 4 Ps “ marketing framework- product, price , place and promotion was less valuable for industrial or service – centric businesses where ongoing relationships were critical .
By the 1980sunderstanding customer segments, delivering ongoing quality service and achieving high customer satisfaction. Relationship marketing was about “putting the customer in the middle of the business circle” in the words of Dick Lee. In the 1990s computer systems were deployed to support sales and services processes . Sales force automation systems quickly evolved from simple contact manager, while customer service and support systems became the backbone of automated call centers. By the mid-1990s CRM became the umbrella term as it became clear that sales and service systems should share information.
More recently, Enterprise Marketing Automation ( EMA) application joined the CRM fold , including systems for customer analysis and marketing campaign management . By the late – 1990s, the real action was outside the corporate firewall. Explosive growth in internet usage spawned a proliferation of e – business applications to manage online customer and partner relationships, often called “e –CRM” and “Partner relationship management “respectively. Now, “multi- channel CRM “systems were available to, theoretically, support direct , internet , and partner channels . hile allowing users to whatever mode of communication they liked . Now new CRM approaches are being offered that can offer greater central control or management,” says Karen S mith , senior analyst with Boston –based Aberdeen Group . “Organizations are demanding CRM solution that provides greater visibility into asset management, forecasting and inventory management, product development, procurement , order and transaction management . It’s clear that the web is making the inefficiencies and inconsistencies of big companies transparent to customers and partner.
To win the battle for customer loyalty in the future, companies must shift from stand- alone business technology approaches to systems that support the total customer experience and work across multiple enterprises. 3. 2 Defining CRM Customer Relationship Marketing is a practice that encompasses all marketing activities Directed toward establishing, developing, and maintaining successful customer relationships. The focus of relationship marketing is on developing long-term relationships and improving corporate performance through customer loyalty and customer retention.
Customer Relationship Management (CRM) as the name suggests, the primary focal point is placed on the customer. The key objective is to increase customer value over time by increasing customer loyalty. If a company develops better customer relationships, it also improves business processes as well as its profits. In general, CRM is a more efficient automated method used to connect and improve all areas of business to focus on creating strong customer relationships. All forces are coupled together to save, improve, and acquire greater business to customer relationships.
The most common areas of business that are positively affected include marketing, sales, and customer service strategies . CRM helps create time efficiency and savings on both sides of the business spectrum. Through correct implementation and use of CRM solutions, companies gain a better understanding of their strongest and weakest areas and how they can improve upon these. Therefore, customers gain better products and services from their businesses of choice. In order to achieve better insight on CRM, it is essential to consider all of its components
CRM- meaning Customer relationship management (CRM) is a business strategy that spans your entire organization from front office to back-office. It is a commitment you make to put customers at the heart of your enterprise. The right CRM strategy and solutions can help you securely , reliably and consistently. 1) Delight your customers every time they interact with your business by empowering them with anytime, anywhere, and any channel access to accurate information and more personalized service. ) Reach more customers more effectively, increase customer retention and boost customer loyalty by leveraging opportunities to up-sell and cross-sell and driving repeat business at lower cost. 3) Drive improvements in business performance by providing your customers with the ability to access more information through self-service and assisted-service capabilities when it is convenient for them. 4) Enable virtualization in your enterprise as more of your people and resources extend beyond your offices and around the world. ) Balance sophisticated functionality with rapid implementation and effective support for a faster return on your CRM investment . 3. 3 Aspects of CRM CRM is beneficial in a number of different ways. For instance, it provides managers with critical tools used to analyze consumer behaviour, improve business integration and provide valuable feedback to fully understand the corporation’s return on investment or ROI. Both large and small businesses do use CRM as an absolute methodology for pursuing goals which complement the principles and philosophy of a company.
As far as career prospects are concerned, CRM plays a major role in technology, marketing, administration as well as professional services. Interested individuals can study the very basic concepts of CRM, technical aspects, CRM Architecture, function and potential of CRM, integration and maintenance of CRM in all areas of business solutions etc. Technology Consideration The most scalable CRM systems are naturally the most valuable. The company must also pay close attention to communication.
The major goal of CRM is to build and maintain a strong bond with the customers. In order to be successful with this, a company must be able to effectively communicate with their customers. It simply is not enough to employ one method of communication. In fact, they should try and use multiple forms of business communication, including the telephone, television, magazine, radio, Internet etc. When a company can effectively communicate with those they serve, they’re bound to become successful.
In addition, it is also quite important companies look at workflow, which simply means the business processes used to track and maintain beneficial information. Getting information is not quite enough for a company to become successful and established in the market. They must also be able to process and analyze the information received. Apart from that, it is also vitally important for companies to take into account the assignment, a term used to provide particular requests to a group or individual.
The correct assignments given to the proper entities will enable a company to reach their goals once such assignments have been completed. Operational CRM In a nutshell, Operational CRM is all about supporting business processes in the front office, including customer contact e. g. marketing, sales, service etc. Resulting tasks and relevant information are then forwarded to responsible employees to carry them out. Various interfaces to many back-end applications are instantly provided and customer activities are thoroughly documented for future reference.
Operational CRM typically entails 3 areas of business: Sales force automation or SFA – this one automates the company’s critical sales and functions, for instance, contact management, account management, forecasting, quote management, sales administration, demographics, buying habits and performance management. Critical tools are design to boost sales productivity. Mobile synchronization as well as integrated product configuration Customer service and support or CSS – here, complaints, service requests, information request and product returns are automated.
Traditional help desk and call-centre support for all sorts of enquiries are evolved into the so-called ‘customer interaction centre’ or CIC, which uses such multiple channels as phone, fax, web, kiosk, face-to-face etc. One of the key infrastructure requirements is computer telephony integration or CTI, providing high processing capability as well as reliability. Enterprise marketing automation or EMA – this type of operational CRM provides information about all aspects of the business environment, from competitors to industry trends and macroeconomic variables.
Put simply, it’s the execution side of lead and campaign management. EMA applications are intended to improve and maintain marketing campaign efficiencies. Some of the most notable functions include variable segmentation, demographic analysis and predictive modeling on the Business Intelligence side. Analytical CRM Analytical CRM consists of customer migration analysis, segmentation studies, new customer models, cross-sell analysis, merchandising analysis, customer contact optimization, customer attrition, credit risk scoring and much, much more.
Analytical CRM is totally different from its brother – operation CRM, which is mainly focused on interaction systems and refers to touch point. Analytical CRM is also a major source of great power. For instance, the majority of marketers promote to the customer based upon their present value, but customer value changes all the time. It is not easy to predict how your customers will move or modify that particular movement in a satisfying direction.
Customer analysis can help you to communicate and promote to your many customers in such ways which move them up the long value chain. As there are countless analytical application options, it’s important to the right application and model which will pay worthwhile dividends over the long short and long run. Everyone wants to locate technologies which have the potential to grow and evolve with their business. To accommodate the many analytic tools needed to execute their strategy, they will need a fully integrated knowledge base. Collaborative CRM
Collaborative CRM is an important approach to CRM, in which the many departments of a company, be it marketing, sales and technical support share any kind of information collected from interactions with various customers. For instance, customer feedback collected from a customer support session could be used to update marketing staff about services and products which might be of interest to prospective customers. The main purpose of collaborative CRM is to improve the customer service quality and consequently maximize customer satisfaction and most importantly 3. Dimensions of CRM Excellent customer relationship management depends on the following factors : • Commitment to customer : companies that believe in the quality of their product , make strong commitment to their customer . commitment address the principal concerns of customer and are communicated clearly and simply to customer . Many commitments takes the form of explicit guarantees and warranties • Customer focused service standard : service standards are measurable performance levels or expectations that define the quality of customer contact . ustomer needs and expectations form the basis of measurable service standards . companies need to communicate these standards to all customer contact employees. • Training and Empowerment : good CRM depends on the quality of training of customer contact personnel . Companies commitment to CRM must ensure that customer contact employees understand the campaigns analysis of customer behavior , risk assessment and management decision . 3. 5. 1 CRM in banking : Present Era Meeting the rapidly changing needs of customers is at the heart of a successful banking enterprise .
How well a bank knows its customer and how effectively it leverages that knowledge in the face of intense competition , shrinking margins , new technologies and increasing customers demands- can make the difference thriving and barely holding on . CRM systems have provided partial solutions to complex heterogeneous banking issues . At times , technology- rather than business needs – has been the driver for CRM development. But CRM solution hold great promise for banking when there is a focus on providing support for key business processes .
The financial industry has always been extremely dynamic and banks have been among the early adopters of technology to business needs. New issues have emerged to join existing business challenges . At the same time banks must find new ways to target customers with the products that are most appropriate to their needs and to serve customer with greater cost efficiency . Given the current economic environment bank have to justify any investment and a CRM solution must achieve a quantifiable return on investment .
As economic globalization intensifies competition and creates a climate of constant change , winning and keeping customers has never been more important . Now that newer channels of doing business like the internet have leveled the playing field , customers have a greater choice of products and service than ever before. Con sequently they are more demanding and financial institutions need state –of – the –art CRM SYSTEMS to succeed in this environment . Financial products have become commodities so banks needs to differentiate themselves by adding value added service offerings . . 5. 2 Positive aspects of CRM in banking sector ? IMPROVING CUSTOMER SATISFACTION :Customers are also looking beyond a banks products to see whether the operation as a whole addresses their needs . They are willing to abandon established allegiances if their needs are not being met or if the services they require are available elsewhere at a lower cost . In addition to juggling a broader range of business lines , financial institutions must manage a longer customer – relationship life cycle . They must turn every customer transaction into highly personalized , eaningful interaction and then forgo these interactions into firms relationship that prompts the customer to make additional purchases . This means continually reinforcing the value of their operation to both customers and their business partners . At the same time , they must ensure that their customer facing processes make it an easy , convenient and in expensive as possible to do business with them . The period of time between a new customer request and its fulfillment is decreasing so a financial institution must react quickly or risk losing customer to someone who can .
It must compile a complete , personalized picture of each customer using information collected from wherever and whenever customer interactions occurs and then use that information to create marketing and sales strategies that will meet the challenges of increased globalize , consolidation and cross industry competition . The rough targeted marketing , financial institution can increase brand value and recognition . Today banks must leverage the power of their brand while increasing its value in the face of new competition from traditional and non traditional players .
With proper branding bank can enjoy : • Increased market share as the positive associated with products and services and attracts more customers . • The ability to charge more products and services because customers associate trust , reliability and other positive attributes with companies that have brand- name recognition . • The ability to test and launch new products because of the positive effect of brand awareness on customer acceptance . ? ENHANCING PROFITABILITY : Improving customer satisfaction is not enough .
To stay competitive financial institutions must also improve profitability . They must identify the areas of business that are most profitable and find the means to cross sell and up sell those business lines more effectively. With higher product penetration per customer , it is easier to draw a bigger share of the market . As more products are sold , profitability rises . As customer develop a deeper relationship with the company , customer retention increases- further expanding share . Frequently however banks lack the business intelligence to make key decisions in sales , marketing or services .
Banks must also overcome a range of technological hurdles , including systems for data collection that are highly fragmented and redundant. Operational information of an individual customer may be stored in several places – by distribution channel , product or company division- and accessible only through those paths. Data may also be decentralized due to changes in company structure , a merger or an acquisition . Besides having an incomplete picture of individual customers , marketing strategists and sales representatives may find it difficult to collect all data for the household in which a customer lives .
A well integrated CRM solution that is truly synchronized with the internet and enterprise application , external customers , business partner and suppliers can facilitate the compilation and analysis of data that empowers financial institutions sales force , customer support team and supply chain partners . ? OPERATIONAL EXCELLENCE : TO achieve operational excellence a bank must integrate its sales and service functions across multiple channels that provides personalized portals for the bank customers and employees . From face to face contact to self service web sites , they must capitalize on every communication opportunity .
An effective CRM solution must support all channels of customer interaction – including telephone, fax , e –mail , the online portals , wireless device , ATMs and contacts with bank personnel . It must then link these customer touch points to an operations centre and connect the operation center with the relevant internal and external business partners . With this capability , a bank s employees can be alerted to significant customer events ( such as a large deposit or a diminishing credit line ) and be prompted to take the appropriate action .
Every employees is armed with the appropriate knowledge and tools to focus on the key business goals of their business lines and grow assets under management . The CRM solution should also be able to track all aspects of the banks relationship with a customer and give the customer consistency in that relationship . Fig:3. 1 ( POSITIVE ASPECTS OF CRM PRACTICES ) BENEFITS FOR CUSTOMERS – Customers feels empowered if they have access to products and services eg . 24 – hours banking . -There is a more coordinated and professional approach to customer contact . With up to date customer information , businesses can prepare more personalized services. -Quick reaction to their problems. BENEFITS FOR EMPLOYEES -Employees have more time to serve customers and fulfill order . -Employees are empowered with the information to deliver high quality service and meet customer expectations . -Employees have higher satisfaction rating . -Managers are empowered with information that can help them customer relationship and make better decisions faster . BENEFITS FOR BANKS -There is optimum use of resources . Providing consistent personalized experiences increases customer satisfaction and loyalty -There is improved customer acquisition , retention and cross – selling . -Improved company image in the minds of the customers . 3. 5. 3 CRM CHALLENGES CRM, despite all the talk about it being one of the most ‘profitable’ customer strategies of the decade, still allows room for failure. The most important aspect of CRM problems is its excellent ability to achieve customer retention but its failure to do so. This is indirectly responsible for CRM collapse. What actually is CRM failure and why does it occur?
Generally one of the reasons this happens is because most organizations that actually employ CRM, experience a lot of confusion about its attributes and what it really is. Some would define it as a business strategy while others view it as something to do with technology. The statistics show that only one in every six companies that have installed CRM have been successful. CRM has lost its appeal as it has failed to meet expectations. Almost 75% of projects have not succeeded in delivering the expected ROI and have faced numerous problems with CRM.
However the absolute failure rate is just 5%. It’s mostly the larger corporate that fail. This happens generally because smaller projects fair better. Mid size organizations also have a higher success rate. 1) Exorbitant Costs One of the problems with CRM is the huge investment needed to maintain a customer database. The additional expense comes because of the money needed for computer hardware, software, personnel etc. The costs involved are enormous and most often than not the resultant ROI from the CRM implementation fail to cover the costs involved.
This leads to a negative feeling within the company about CRM and it’s so called successes and ultimately results in CRM collapse. 2) Inadequate Focus on Objectives Secondly when starting off on a CRM strategy the objectives are clearly established and followed. Management and employees know fully well what is needed to work towards organizational goals. The goals themselves are clearly laid out after meticulous planning. However midway during the CRM implementation, when hard times hit, the organization loses sight of its goals and ultimately steers away from it.
At times goals get interchanged and lose their importance. Companies find themselves work at home directory towards goals that are less important and forgetting the ones that really are. This is one of the fundamental and mostly felt problems in CRM. 3) Insufficient Resources Sometimes in phased implementation of CRM, if conditions worsen within the company or without, organizations start lessening their budgets for the current phase. When funds are less, budgets strained, the necessary costs required for CRM success are not employed. As a result CRM starts failing midway.
The most important aspect- that of maintaining consistency is lost. Organizations fail to utilize the necessary resources for success and thus result in failure. 4) Inappropriate Metrics Organizations have basically failed to use the right metrics. Failure to choose the right method of measurement and implement it is one of the chief reasons why CRM fails. Different metrics have to be employed for the calculation of different goals. Companies seldom pause to analyze which metric is needed for which element and ultimately use the wrong one. This results in faulty measurement and CRM disappointments. ) Complex Systems CRM simple? The hype says so, the experts agree. Is this really the case? Organizations who have employed it though have a different opinion. They are witness to the fact that CRM packages can be highly complex, with vast amounts of intricacies. If this is the case then how do simple employees cope? The answer lies in sufficient training being given in order that they are able to comprehend and deal with the difficulties easily. 6) Business Needs Most Important One of the chief mistakes companies make is letting the technology drive their CRM functionality.
What’s happening is that companies are endeavoring to go to the industry leaders, gain the technology needed and then apply it to the business problems only to find that it isn’t solving any of them. Instead they need to analyze their business problems first and then find the appropriate CRM solution for it. This backwards step is responsible for CRM failure. 7) No Customer Focus Customer oriented strategy? Yes, CRM does play the part. Customer oriented employees? Now ‘that’ requires an effort on the part of the organization. It needs to motivate employees to be absolutely customer centric.
This involves tremendous effort on the part of the company but is highly essential. CRM problems arise because of employee reluctance to be more customer focused. The result is a highly expensive customer strategy being adopted by the company in an effort to retain customers, with reluctant, unfocussed employees implementing it. 8) Slow Returns Another failure of CRM is its inability to provide quick returns on investment. Organizations find themselves waiting for years before they are able to see actual returns on their investment.
Most experts view the low ROI as a major problem with CRM but fail to see that the long wait is just as difficult. Waiting for years to see their investments show results, tests patience and leads to both employees and management. Most CRM problems can be mitigated, resolved and ultimately obliterated. What is highly required is the ability to focus on the business needs, choose a CRM package that works towards it, employ the right resources and assume the right metrics. Adopting these measures would go a long way in alleviating CRM problems. 3. 5. 4 COUNTER STRATEGIES A well –conceived CRM solution is crucial to the success of banks .
Industry consolidated and cross –industry competition has expanded the product lines that banks must offer . banks must focus on building long term relationship with their customers if they are to continue adding market share . Given the keen competition for these relationships among a broad range of fianancial service providers, banks must distinguish themselves by offering more customized products , enhanced value , a more personalized array of services and better accessibility than ever before . Today, customers want banks that are easy to work with and convey helpful information and services through all points of customer contact.
To provide relevant information , financial institution need a CRM solution that can effectively capture real –time information from customers , store it in a central repository and then use that information to develop a clear picture of customers current and future needs . With quality data , banks can create effective marketing campaigns leverage the most profitable customer relationships and weed out the unprofitable ones . The banks that succeed in today market place must be able to identify and exploit new business opportunities rapidly by developing the specific products and services their target markets demand .
To meet these challenges bank require web –based technology that can centralize data collection and dissemination. make the most of cross-selling and up-selling opportunities and help decision makers with strategic planning , The attention span of customers has decreased and customer loyalty is subject to new rules . Differences in prices and products are becoming negligible, so banks can no longer attract customer by offering standard products or services. The products must offer the variety and customization that today s betted –informed customer’s demand –without premium prices.
Customers are the means of the business and the main aim of the bank employees is to protect and grow its customer base and ultimately its profitability . Some of the customers needs and corresponding employees requirements includes : 3. 5. 5 PITFALLS OF CRM In today’s CRM environment, there is a danger we see with multiple vendors offering systems built on relational database technology and touting theirs as the one customer relationship management tool you need.
Because most new banking applications are being developed with a database that aggregates customer data, a “data mart,” these vendors are jumping on the CRM bandwagon. The problem will come when you have implemented multiple CRM data marts to handle various applications, and then find you cannot reconcile the data in each database. It will be better to implement a single CRM system first and then hang multiple applications off the core database. While the idea of customer orientation sounds ideal ,there are many pitfalls that prevent significant improvement .
By avoiding them the organization may minimize the risk of falling short orientation goals . These are : • Unrealistic business definition • Poor information base • Long planning time • Under commitment to customers • Ignoring the human side of equation • Power conflicts • Lack of rules clarity • Lack of motivation • Inadequate authority • Expecting too much from customer orientation • Failure to reengineer business process [pic] CHAPTER 4 DATA ANALYSIS AND INTERPRETATION
The various issues examined include organizations information, the CRM awareness, strategic changes resulting from CRM implementation, implementation priorities for the bank and the satisfaction of employees after CRM implementation. The study revealed that CRM is gradually picking up and is definitely considered as a viable proportion by banks in improving services to their customers. The major challenges experienced during implementing CRM are lack of awareness and time consumption. To get CRM to work, high commitment is required in those who are implementing it. Table 4. : Analysis of Respondent’s Working Experience with banks |Banks |Less than 5 Yrs |5-10 Yrs |10-20 Yrs |More Than 20 Yrs |Total | |SBI |- |2 |6 |2 |10 | |PNB |- |- |8 |2 |10 | |PSB |- |- |6 |4 |10 | |HDFC |8 |2 |- |- |10 | |ICICI |6 |4 |- |- |10 | |Axis |4 |6 |- |- |10 | Figure 4. 1:-Repondent’s working experience in banks [pic] Figure 4. 1 Shows that the ratio of employee in nationalized banks under study, namely State bank of India , Punjab National Bank, Punjab and Sind Bank are working un their organizations for comparative longer time span: ranging from 10-20 years representing their experience as well as their satisfaction level while working with the bank. Whereas, in case of private sector banks, most of the respondents have relatively worked for less than 5 years. Table 4. : Analysis of Respondent’s view about CRM as best concept |Banks |Yes |No |Total | |SBI |8 |2 |10 | |PNB |6 |4 |10 | |PSB |6 |4 |10 | |HDFC |10 |- |10 | |ICICI |10 |- |10 | |Axis |10 |- |10 | |Total |50 |10 |60 | Figure 4. 2:- Decision of employees regarding CRM as the Best Concept [pic] Figure 4. 3 represents that all the employees of private sector banks are in favor of CRM. Since the awareness level of the customers is increasing, banks are vigorously trying to trap most of the market. Therefore, in order to earn a market standing private banks are focusing more on the customer- oriented practices. On the other hand, even nationalized banks are also adopting the same strategy to recover their lost share. Table 4. 3: Analysis of CRM implementation in Banks Banks |Yes |No |Total | |SBI |6 |4 |10 | |PNB |8 |2 |10 | |PSB |6 |4 |10 | |HDFC |10 |- |10 | |ICICI |10 |- |10 | |Axis |10 |- |10 | |Total |50 |10 |60 | |Percentage |83 |17 |100 | (N=60) Figure 4 . 3:- Analysis of CRM implementation in Banks [pic] Figure 5 . 3 pesents the actual implementation of CRM practices in banks. It shows that employees of private sector banks are completely devoted not anly in identifying the customers’s needs; rather they are providibg the same to enjoy the benefits there from. As far as nationalized banks are concerned, even they are moving in the same direction, but they are not 100 % into it. Table-4. 4:- Analysis of reasons for deploying CRM practices |Banks |Retain customers |Build Brand image |Counter Promote Products | | | | |Competition |of bank | |SBI |6 |4 |2 |2 | |PNB |8 |4 |- |4 | |PSB |6 |- |2 |2 | |HDFC |10 |8 |4 |4 | |ICICI |10 |2 |6 |2 | |Axis |10 |8 |8 |2 | |Total |50 |26 |22 |16 | |Percentage of |83 |43 |36 |26 | |respondents | | | | | Figure 4. 4:-Analysis of CRM Practices [pic] Figure 4. Shows that bank practices CRM practices mainly to retain their customers and simultaneously attract the new ones: although the usage of these practices is higher in case of private sector bank as compared to nationalized banks. And the second main objective of adopting CRM practices by bank is of building a good bran image in the eyes of the customers. And a relatively less importance is given to promote new products in bank by using CRM. Table 4. 5: Analysis of Continuation of CRM implementation in Bank (N=25) |Banks |Yes |No | |SBI |6 |- |PNB |8 |- | |PSB |6 |- | |HDFC |10 |- | |ICICI |10 |- | |Axis |10 |- | |Total |50 |- | |Percentage of Respondents |100 |0 | Figure 4. 5:- Analysis of continuation of CRM implementation in Banks [pic] Figure 4. 5 shows that all the employees who are completely aware of CRM practices and the benefits through its appropriate implementation are in favor of continuance of the same. This is because they are quite satisfied with its implementation. The bank has been able to increase their customer base due to the provision of extra facilities or add on services to the customers merely on having an account with them. Table 4. 6: Analysis of reasons for Non-implementation of CRM in Banks (N=10) Banks |Lack of awareness |Wastage of time and money |Other reasons specify | |SBI |- |4 |- | |PNB |2 | |- | |PSB |2 |2 |- | |HDFC |- |- |- | |ICICI |- |- |- | Axis |- |- |- | |Total |4 |6 |- | Figure 4. 6:-Analysis of Not-Implementing CRM in Bank [pic] Figure 4. 7 represents that all banks whether private or public give due importance to their customers. Private sectors banks are cent percent involved in its provision. Even the public sector banks have started with it and are on its early stages. Some of the identified reasons for the negligence on the part of the public sector banks include: Lack of awareness -40 % among those who do non implement CRM practices Wastage of time and resources -60 % among those who do non implement CRM practices. Table 4. : Analysis of Satisfaction level of employees while implementing CRM |Banks |Satisfied |Dissatisfied |Total | |SBI |6 |4 |10 | |PNB |8 |2 |10 | |PSB |6 |4 |10 | |HDFC |10 |- |10 | |ICICI |10 |- |10 | |Axis |10 |- |10 | |Total |50 |10 |60 | |Percentage of respondents |83 |17 |100 | Figure 4. 7:- Analysis of Satisfaction level of employees while implementing CRM [pic] Figure 4. 7 shows the employees in the private banks are satisfied with the CRM practices adopted by them. It is because they are extracting monetary as well as non-monetary gains in the form of goodwill of the bank, which further increases their own worth. In case of nationalized banks, employees of SBI are also quite satisfied.
But, due to vague definition of CRM in the minds of respondents, they are dissatisfied or indifferent towards it. FINDINGS & CONCLUSION CRM in fact, is a process that helps to maximize medium to long term profits as a result of a better customer knowledge, customized treatment of customers or a perception of it, and improved fulfillment of customer needs. Research has shown that the key drivers of maintaining good relationship with customer are: • Positive Staff attitude • Honesty, integrity and reliability • Proactive advice • Consistent delivery of superiors a fast and efficient complaints • Quality Service • Delivery of promise • Simplicity and ease of doing business • Resolution Policy
Although private sector banks are attracting the major chunk of society by its provision of CRM practices, nationalized banks are also following them. Bank’s employees admitted that the CRM practices helped them in retaining the customers and thereby increasing profitability. Due to attainment of their motives they prefer to continue with the same practices and also upgrade them. Some employees of nationalized banks were unaware of this concept and hence considered them as merely wastage of time and resources. More than 83% of the respondents were satisfied with the implementation of these practices, and 17% were dissatisfied mainly due to cost consideration. Implementing a CRM process means gathering flows of information concerning actual and potential customers.
Information flows coming from delivery channels should ideally be consolidated into a customer database in order to develop customer profiles that enable banks to improve customer services. Most financial suppliers believe that customer support services are a core business in the financial industry. Most of the financial organizations choose to internalize the customer support contact center, whereas others choose to outsource front-office customer care tasks to contact centre companies. Financial institutions have to realize the importance of the technology scalability as well as the reengineering of the business processes. A medium to long term CRM strategy requires significant innovation in the organization of the banks’ flow of information.
Ideally, CRM technologies and processes could make the slogan “the right customer with the right product at right place and in the right moment” possible. But many banks face the problem of having multiple database with customer information, so that multiple entries refer to the same customer if he/she holds more than one product with the company. This makes it difficult for sales people or relationship managers to have a full view of their customers. A number of CRM deployments have failed because of inconsistent customer data. This problem results in companies sending, for example, the same offer twice to the same customer. Hence CRM is a vital tool for financial institution to prosper…….
Banks are moving away from the Traditional Approach of Seller’s Market to the Modern Approach of Buyer’s Market. Suggestions CRM is a set of strategies, processes, metrics, organizational culture and technology solutions that enhance an organization’s ability to see the differences in its customers’ and prospects’ behavior and needs, track new opportunities to better serve their customers and act, instantly and profitably, on those differences and opportunities. Recently CRM has taken a center stage in the business world with businesses concentrating on saving money and increasing profits by redefining internal processes and procedures. It costs a company dramatically less to retain and grow an existing client, than it does to court new ones.
It is said that “It is seven times more expensive to acquire a new customer than to keep an existing one”, therefore the value of customer information and management should never be underestimated. The banks should adopt customer relationship building approaches such as responding to complaints instantaneously, analyzing the attrition of the clients in a particular product, and rating of services across the network of branches, and the creation of a suggestion box to elicit the views and suggestion of their employees. Another dimension of the relationship building exercise is to obtain an electronic feedback from customers to understand the level of acceptance of existing products, which will facilitates in developing better products.
Banks can gain a competitive advantage from CRM by becoming low-cost players in the market, achieving operational efficiency and maintaining customer loyalty. The ability to predict the products that customers are likely to purchase over a period of time, increased productivity of managerial executives, sales and customer service staff, and streamlining of business processes are some of the benefits retail banks obtain by taking to successful management of their customer relationships. Implementing the right CRM tools can enhance customer satisfaction leading to business growth. CRM enables organizations to motivate customers to initiate revenue-generating contacts.
Several CRM issues such as, its effectiveness, application and challenges draw attention of the banking industry. Having witnessed the manner in which several global bank shave benefited through CRM, the Indian retail banks too need to focus on and continuously invest in the customer relationship activities. The Indian banking scenario, which is still at an embryonic stage as far as the CRM domain is