Customer Relationship Management in Banks

V. G. Vaze College CRM in Banking

Project on

Customer Relationship Management

A study on Union bank of India

And

Kapol co-operative bank

Submitted in the partial fulfilment of the requirements for the

award of Degree Bachelor of commerce Banking and Insurance

(SEM V) 2010-11

Submitted by: Miss. Saily Pillewar

Roll no: B025

Under the guidance of

Prof. S.Krishnan

University of Mumbai

KELKAR EDUCATION TRUST

V.G.VAZE COLLEGE OF ARTS COMMERCE AND

SCIENCE, MITHAGAR ROAD

MULUND - EAST

Mumbai- 81

1


DECLARATION

I Miss Saily Pillewar student of KET’s V.G.VAZE COLLEGE OF

Art’s COMMERCE AND SCIENCE studying in TY Banking and

Insurance SEM V (2010 – 11) hereby declare that I have completed

the project on “CUSTOMER RELATIONSHIP MANAGEMENT”

A study on Union bank of India and Kapol co-operative bank under

the guidance of professor S.Krishnan.

The information collected is original and true to the best of my

knowledge.

Date : Signature of student

Saily Pillewar

Roll No-B025

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ACKNOWLEDGEMENT

The satiation and euphoric that accompany the successful completion of task,

would be incomplete without the mention of the people who made it possible.

After all, the success is the epitome of hard work, severance, undeterred, zeal,

stead fast determination and most of all encouraging guidance. So with

immense gratitude, I acknowledge Dr.B.B Sharma principal of KET’s

V.G.VAZE College and. S. R. Ghantwal- co-coordinator of the college. I

would like to express my profound sense of gratitude to Prof. S Krishnan my

project guide for giving me valuable suggestions and advice through out the

execution of the project.

With a deep sense of gratitude and indebtedness, I sincerely and whole

heartedly thank Manager of Union bank of India Mr. S. S. Wankhede and

Manager of Kapol co-operative Bank Mr. sanjay Inamdar for providing

relevant data on the subject. I sincerely thank Miss Vanita Waghmare credit

Manager of Union Bank of India who extended flawless assistance to me with

matter pertaining to the project whenever I approached her.

Last but not the least, I would like to thank almighty God, my parents, and my

friends who helped me gather these data and have sat with me for hours

discussing about the project.

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Index

Chapte

r

No Topic Page

no

1

Customer relationship

management introduction

1.1 what is CRM

1.2 Meaning and defining CRM

1.3 Emergence of CRM

1.4 CRM in Indian bank

1.5 Need of CRM in bank

1.6 Objective of CRM in banks

1.7 Benefits of CRM

1-20

2

CRM process framework

2.1 CRM formation process

2.2 A framework for

successful CRM

2.3 Relationship management

and governance process

2.4 Relational performance

21-38

4

V. G. Vaze College CRM in Bankingand evaluation process

2.5 Key principals of CRM

2.6 Customer retention

2.7 Building CRM

3E- CRM

3.1 E-CRM in banks

3.2 Key features of e-CRM

3.3 Benefits of e-CRM to BANKS

and CUSTOMERS

39-44

4Case study

Union bank of India

Kapol co-operative bank

45-54

5 Suggestions, Findings and

conclusion

55-57

Annexure

DESING OF THE STUDY5


Objectives

To study customer relationship management of Union bank of India and

Kapol co-operative bank.

To find general working of bank and how staff members response to

customer.

Limitations

The project is only limited to the study of CRM of two banks.

CRM of other banks are not disclosed.

CRM strategies of banks are not compared with each other.

Time, length, and depth of the study are limited as per the requirements of

Mumbai University.

Scope

The project begins with a brief mention of what CRM is and its need and

importance in banks. It further goes on to show the CRM strategy of Union

bank of India and Kapol co-operative bank.

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Methodology of study

Data for the project is obtained in two ways primary source and secondary

source.

Primary source-

The researcher collected primary data by preparing questionnaire and

interviewed manager, staff and customer of Union bank of India and Kapol co-

operative bank Mulund West branch.

Secondary source-

Secondary data for the project has been gathered from various CRM books and

internet.

Period

The period of study was from 3 August to 5 September 2010.

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EXECUTIVE SUMMARY

Customer relationship management is a broad approach for creating,

maintaining and expanding customer relationships. CRM is the business

strategy that aims to understand, anticipate, manage and personalize the needs

of an organization’s current and potential customers. At the heart of a perfect

strategy is the creation of mutual value for all parties involved in the business

process. It is about creating a sustainable competitive advantage by being the

best at understanding, communicating, and delivering and developing existing

customer relationships in addition to creating and keeping new customers. So

the concept of product life cycle is giving way to the concept of customer life

cycle focusing on the development of products and services that anticipate the

future need of the existing customers and creating additional services that

extend existing customer relationships beyond transaction

The intense competition which banks have come to face, both as a consequence

of growth of non-banking financial institutions as well as securitization has

created the fear of high risk and has increased the attention towards Customer

Relationship Management.

Customer relationship management (CRM) is a multifaceted process, mediated

by a set of information technologies that focuses on creating two-way

exchanges with customers so that firms have an intimate knowledge of their

needs, wants, and buying patterns. In this way, CRM is intended to help

companies understand, as well as anticipate, the needs of current and potential

customers.

The project is a detail study of Process Involved in Planning of Customer

Relationship Management and Need for Customer Relationship Management.

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Chapter 1


Introduction

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1.1

WHAT IS CUSTOMER RELATONSHIP MANAGEMENT?

CRM, or Customer Relationship Management, is a company-wide business

strategy designed to reduce costs and increase profitability by solidifying

customer loyalty. True CRM brings together information from all data sources

within an organization (and where appropriate, from outside the organization) to

give one, holistic view of each customer in real time. This allows customer

facing employees in such areas as sales, customer support, and marketing to

make quick yet informed decisions on everything from cross-selling and up-

selling opportunities to target marketing strategies to competitive positioning

tactics.

Once thought of as a type of software, CRM has evolved into a customer-centric

philosophy that must permeate an entire organization. There are three key

elements to a successful CRM initiative: people, process, and technology. The

people throughout a company-from the CEO to each and every customer service

rep-need to buy in to and support CRM. A company's business processes must

be reengineered to bolster its CRM initiative, often from the view of, how can

this process better serve the customer? Firms must select the right technology to

drive these improved processes, provide the best data to the employees, and be

easy enough to operate that users won't balk. If one of these three foundations is

not sound, the entire CRM structure will crumble.

It's a strategy used to learn more about customers' needs and behaviors in order

to develop stronger relationships with them. After all, good customer

relationships are at the heart of business success. There are many technological

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A component to CRM, but thinking about CRM in primarily technological terms

is a mistake. The more useful way to think about CRM is as a process that will

help bring together lots of pieces of information about customers, sales,

marketing effectiveness, responsiveness and market trends. If customer

relationships are the heart of business success, then CRM is the valve the pumps

a company's life blood. As such, CRM is best suited to help businesses use

people, processes, and technology to gain insight into the behaviour and value of

customers.

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1.2

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.

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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 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 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. 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. Today’s customers face a growing range

of choices in the products and services they can buy. They base their choices on

their perception of quality, value, and service. Each Consumer has a specific

behaviour. But buying habits are sometimes difficult to understand. Therefore

companies always want to gain some insight about consumer behaviour and

habits in order to better control this behaviour. Having an impact on consumer

behaviour means being able to change consumer’s perception of the product or

service, to establish a relation between the company and its clients.

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1.3

THE EMERGENCE OF CRM :

The developing customer relationship management has historical antecedents

going back into the pre-industrial era. In the recent years however several

factors have contributed to the rapid development and evolution of CRM. These

include 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 the end customers.

The recent success of On-line banking, Charles Schwab and Merryll Lynch’s

On-line investment programs, direct selling of books, automobiles, insurance

etc. on the internet all atleast to the growing consumer interest in maintaining

direct relationship with marketers. The de-intermediation process and

consequent prevalence of Customer Relationship Management is also due to the

growth of the service economy.

Another force driving the adoption of customer relationship management has

been the total quality movement. When companies embraced Total Quality

Movement philosophy to improve quality and reduce cost, it become necessary

to involve suppliers and customers in implementing the program at all levels of

the value chain. This needed close working relationships with customers,

suppliers and other members of the marketing infrastructure. Other programs

such as Just in Time and Material resource planning also made the use of

interdependent relationships between suppliers and customers.

Similarly in the current era of hype-competition, marketers are forced to be

more concerned with customer retention loyalty. As several studies indicated,

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retaining customer is less expensive and perhaps a more sustainable competitive

advantage than acquiring new ones. Marketers are realizing that it costs less to

retain customers than to compete for new ones. Today many large

internationally oriented companies are trying to become global by integrating

their worldwide operation. To achieve this they are seeking cooperative and

collaborative solutions for global operations from their vendors instead of

merely engaging in transactional activities with them. Such customers need

make it imperative for marketers interested in the business of companies who

are global to adopt Customer relationship management programs, particularly

global account management programs. Global account management is

conceptually similar to national account management programs except that they

have to be global in scope and this they are more complex. Managing customer

relationship around the world calls for external and internal partnering activities,

including partnering across firms worldwide organizations.

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1.4

Customer Relationship Management in Indian bank :

Indian banks had presumed that their operations were customer-centric, simply

because they had customers. These banks ruled the roost, protected by

regulations that did not allow free entry into the sector. And to their credit, when

the banking sector was opened up, they survived by adapting quickly for long to

the new rules of the game.

Many managed to post profits. For them an unexpected bonanza came from

government bonds in which most were hugely invested.

Ironically, the Reserve Bank of India's moves to cut aggressively the interest

rates after 1999, pushed up the prices of bonds. So banks had a windfall doing

almost nothing. The bond profits, like manna from heaven, improved the

balance-sheets of all banks irrespective of their core performance.

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However, the era of lazy banking is soon to end. The mesh of rules that propped

up the Indian banking industry is now being dismantled rapidly.

According to a RBI road-map, India will have a competitive banking market

after 2009. As one of the most attractive emerging market destinations, India

will see foreign banks come in, what with more freedom to come in, grow and

acquire.

Therefore, it is imperative that Indian banks wake up to this reality and re-focus

on their core asset — the customer. A greater focus on Customer Relationship

Management (CRM) is the only way the banking industry can protect its market

share and boost growth.

CRM would also make Indian bankers realize that the purpose of their business

is to "create and keep a customer" and to "view the entire business process as

consisting of a tightly integrated effort to discover, create, and satisfy customer

needs."

What is CRM, and what will it deliver to the banks? CRM is, probably, one of

the least clearly defined business acronyms, as there is no single definition for it.

It is probably easier to say what CRM is not. Unfortunately, CRM has also

become a misnomer for a range of solutions from IT vendors, each providing its

own spin on the idea.

CRM is variously misunderstood as a fancy sales strategy, an expensive

software product, or even a new method of data collection. It is none of these.

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CRM is a simple philosophy that places the customer at the heart of a business

organization’s processes, activities and culture to improve his satisfaction of

service and, in turn, maximize the profits for the organization.

A successful CRM strategy aims at understanding the needs of the customer and

integrating them with the organization’s strategy, people, and technology and

business process

Therefore, one of the best ways of launching a CRM initiative is to start with

what the organization is doing now and working out what should be done to

improve its interface with its customers. Then and only then, should it link to an

IT solution.

While this may sound quite straightforward, for large organizations it can be a

mammoth task unless a gradual step-by-step process is adopted.

It does not happen simply by buying the software and installing it. For CRM to

be truly effective, it requires a well-thought-out initiative involving strategy,

people, technology, and processes. Above all, it requires the realization that the

CRM philosophy of doing business should be adopted incrementally with an

iterative approach to learn at every stage of development.

Only time will tell how Indian banks embrace the CRM philosophy and take on

the competition from foreign entities.

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1.5

Need of CRM in banks

CRM primarily caters to all interactions with the customers or potential

customers, across multiple touch points including the Internet, bank branch, call

centre, field organization and other distribution channels.

CRM can help banks in following ways:

1 Campaign Management – Banks need to identify customers, tailor products

and services to meet their needs and sell these products to them. CRM achieves

this through Campaign Management by analyzing data from banks internal

applications or by importing data from external applications to evaluate

customer profitability and designing comprehensive customer profiles in terms

of individual lifestyle preferences, income levels and other related criteria.

Based on these profiles, banks can identify the most lucrative customers and

customer segments, and execute targeted, personalized multi-channel marketing

19


campaigns to reach these customers and maximize the lifetime value of those

relationships.

2 Customer Information Consolidation - Instead of customer information being

stored in product centric silos, (for e.g. separate databases of savings account &

credit card customers), with CRM the information is stored in a customer centric

manner covering all the products of the bank. CRM integrates various channels

to deliver a host of services to customers, while aiding the functioning of the

bank.

3 Marketing Encyclopedia - Central repository for products, pricing and

competitive information, as well as internal training material, sales

presentations, proposal templates and marketing collateral.

4 360-degree view of company – This means whoever the bank speaks to,

irrespective of whether the communication is from sales, finance or support, the

bank is aware of the interaction. Removal of inconsistencies of data makes the

client interaction processes smooth and efficient, thus leading to enhanced

customer satisfaction.

5 Personalized sales home page – CRM can provide a single view where Sales

Mangers and agents can get all the most up-to-date information in one place,

including opportunity, account, news, and expense report information. This

would make sales decision fast and consistent.

6 Lead and Opportunity Management - These enable organizations to

effectively manage leads and opportunities and track the leads through deal

closure, the required follow-up and interaction with the prospects.20


7 Activity Management – It helps managers to assign and track the activities of

various members. Thus improved transparency leads to improved efficiency.

8 Contact Centre – It enables customer service agent to provide uniform service

across multiple channels such as phone, Internet, email, Fax.

9 Operational Inefficiency Removal – CRM can help in Strategy Formulation to

eliminate current operational inefficiencies. An effective CRM solution supports

all channels of customer interaction including telephone, fax, e-mail, the online

portals, wireless devices, ATMs, and face-to-face contacts with bank personnel.

It also links these customer touch points to an operations centre and connects the

operations centre with the relevant internal and external business partners.

10Enhanced productivity – CRM can help in enhanced productivity of customers,

partners and employees.

11CRM with Business Intelligence - Banks need to analyze the performance of

customer relationships, uncover trends in customer behaviour, and understand

the true business value of their customers. CRM with business intelligence

allows banks to assess customer segments, which help them calculate the net

present value (NPV) of a customer segment over a given period to derive

customer lifetime value. Customers can be evaluated within a scoring

framework. Combining the behaviour key figure and frequency to monetary

acquisition analysis with a marketing revenue quota can optimize acquisition

costs and cut the number of inefficient activities.

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With such knowledge, banks can efficiently allocate resources to the most

profitable customers and reengineer the unprofitable ones. Data warehousing

solutions have been implemented in Citibank, Reserve Bank of India, State Bank of

India, IDBI, ICICI, MaxTouch, ACC, National Stock Exchange and PepsiCo. And

Business Intelligence players hope many more will follow suit.

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1.6

Objective of Customer Relationship Management in Banks

The push towards better CRM technologies is natural result of the search by

business of greater productivity and efficiency in customer facing operations

like sales, marketing, customer service and support. E.g. in sales, companies

need IT system that provides greater control and efficiency. This means

improved forecasting and to capability, greater visibility into sales performance

across a variety of channels increased productivity by external sales forces and

reduced sales costs, meanwhile, companies must meet customer demands for

better quality timeless and customization in the service they deliver.

Objective of customer

relationship management

Sales MarketingCustomer

serviceSupport

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Companies also need technologies that help them approach customers in a

rational way. E.g. remember a customer address from one transaction to another

and carefully choreograph contact between its, sales force and customers. In

addition to being wasteful and inefficient

pitching a new product to a customer who has just bought the same item makes

the company look incompetent to the customer.

The internet dramatically accelerate the focus on CRM by making customer

interactions more cost-efficiency. In addition, the web has established a more

direct sales channel that supports rapid customer’s interaction and short sales

cycles. Using internet technologies, customer can interact with information

from a wide variety of sources without special training.

The idea of CRM is that it helps businesses use technology and human resources

gain insight into the behaviour of customers and the value of those customers. If

it works as hoped, a business can: provide better customer service, make call

centres more efficient, cross sell products more effectively, help sales staff close

deals faster, simplify marketing and sales processes, discover new customers,

and increase

Customer revenues. It doesn't happen by simply buying software and installing

it. For CRM to be truly effective an organization must first decide what kind of

customer information it is looking for and it must decide what it intends to do

with that information. For example, many financial institutions keep track of

customers' life Stages in order to market appropriate banking products like

mortgages or IRAs to them at the right time to fit their needs. Next, the

organization must look into all of the different ways information about

24


customers comes into a business, where and how this data is stored and how it is

currently used.

25


1.7

Benefits of a Customer Relationship Management

A properly implemented CRM system can bring significant benefits to

organizations. But when I talk about a system, I mean the 3 P's, the complete

consortium of people (employees, culture), procedures (way of doing business)

and programs (supporting applications), not just an application running on a

computer.

CRM is more than just the next wave of computer-aided marketing; it's a way of

doing business. Let’s take a look at the advantages that a CRM or Customer

Relationship Management system can bring.

1.Shared or distributed data

As companies realize that customer relationships are happening on many levels

(not just through customer service or a web presence), they start to understand

the need for sharing all available data throughout the organization. A CRM

system is an enabler for making informed decisions and follow-up, on all the

different levels.

2.Cost reduction

A strong point in Customer Relationship Management is that it is making the

customer a partner in your business, not just a subject. As customers are doing

their own order entry, and are empowered to find the info they need to come to a

buy decision, less order entry and customer support staff is needed.

26


3.Better Customer Service

All data concerning interactions with customers is centralized. The customer

service department can greatly benefit from this, because they have all the

information they need at their fingertips. No need to guess, no need to ask the

customer for the n-th time. And through the use of push-technology, customer

service reps can lead the customer towards the information they need. And, most

of the time, the customer can do this on their own, as the CRM system

(remember, the 3 P's) is more and more able to anticipate the need of the

customer. The customer experience is greatly enhanced.

4.Increased Customer Satisfaction

The customer feels that he is more "part of the team" instead of just a subject for

sales and marketing (the proverbial number), customer service is better, his

needs are anticipated. There is no doubt that customer satisfaction will go up. If

the products sold exceed the customers expectation, of course, no CRM system

can help you with shoddy products. In my opinion, the term satisfaction is a

contaminated. Many companies think that if customers are satisfied that this is a

good predictor for repeat business. However, this is not the case. Only

delighted customers have a great level of loyalty.

5.Better Customer Retention

If a CRM system can help to enchant customers, this will increase customer

loyalty, and they will keep coming back to buy again and again, hence customer

retention.

27


6.More repeat business

The repeat business is coming from the delighted customers, who are turned

from doubting clients into loyal advocates.

7.More new business

If you are delivering the ultimate customer experience, this will seed the word-

of-mouth buzz, which will spawn more new business.

8.More Profit!

More business at lower cost equals more profit.

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Chapter 2


Process Framework

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2.1

Customer Relationship Management formation process

30

Connect

Cognize

Combine

Correlate

Formation process


The appropriate approach for the CRM process involve :

1. Correlate

A series of transaction that make up a dialogue between customer, customer, end

user and an organization. This is the data that is collected from all contact points

and communication. With outside points of contact.

2. Combine

The mapping and management of interactions points between a customer,

channel, end user and an organization.

3. Cognize

The insight gained through capture and analysis of detailed information is to

create continuous learning from the data warehouse and knowledge base that is

created, interrogated and analysed.

4. Connect

The application of insight to create relevant interaction or communication with

the consumers, customers, channels suppliers and partners that build value

relationships.

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2.2

A framework for successful CRM

Customer Relationship Management involves much more than installing any

one application, embracing a new technology, or even committing to one

vendor’s CRM suite. It provides better insight into customer behaviour and

enables new ways of doing business. Good implementations give employees a

complete view of the organization’s relationship with its customers and open up

internal system to customers so they can have access to sales and services

themselves.

CRM requires a cultural change that aligns a company, its employees and its

system towards customers and away from traditional product or process centric

models. Companies that are unresponsive to the shift will soon find themselves

scrambling for scraps left behind by those that are.

Adopt a suitable framework

A simple framework will help you to understand the full scope of a CRM

solution and also help to focus on areas that need your attention. A useful

framework will encompass the following elements.

Customer strategy

This will ensure that you are focused on achieving specific customer goals, and

will provide direction to the selection and deployment of CRM applications.

32


Customer insight

This encapsulates customer data acquisition and storage capabilities, insight

generation capabilities and insight generation capabilities and insight

exploitation capabilities and is used both to support customer strategy

development and to drive intelligent customer interaction in marketing, selling

and service activities.

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2.3

Relationship management and governance process

Once CRM program is developed and rolled out, the program as well as the

individual relationship must be managed and governed. For mass market

customers, the degree to which there is symmetry or asymmetry in the primary

responsibility of whether the customer or the program sponsoring company will

be managing the relationship varies with the size of market. However, for

program directed at distributor and business customers the management of the

relationship would require the involvement of both parties. The degree to which

these governance responsibilities are shared or managed independently will

depend on the perception of norms of governance processes among relational

partners given the nature of their CRM program and the purpose of engaging in

the relationship.

Whether management and governance responsibilities are independently or

jointly undertaken by relational partners, several issues must be addressed.

These include decisions regarding role specification, communication, common

bonds, planning process, process alignment, employee motivation and

monitoring procedures.

Communication with customer partners is a necessary process of relationship

marketing. It helps in relationship development, fosters trust, and provides the

information and knowledge needed to undertake cooperative and collaborative

34


activities of relationship marketing. In many ways it is the lifeblood of

relationship marketing. By establishing proper communication channels for

sharing information with a company can enhance their relationship with them. In

addition to communicating with customers, it is also essential to establish intra-

company communication practically among all concerned individuals and

corporate functions that directly pay a role in managing the relationship with

specific customer or customer group.

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2.4

Relational performance and Evaluation process

Relational parties

Customer partner selection is another important decision in the relationship

formation stage. Even though a company may serve all customer types, few

have the necessary resources and commitment to establish CRM programs for

all. Therefore I the initial phase, a company has to decide which customer type

and specific customers or customer groups will be the focus of their CRM

efforts. Subsequently when the company gains experience and achieve

successful results, the scope of CRM activities could be expanded to include

other customers into the program or engage in additional programs

Although partner selection is an important decision in achieving CRM goals, not

all companies have a formalized process of selecting customers. Some follow

intuitive judgmental approach of senior managers in selecting customer’s

partners and other partners with those customers who demand so. Yet other

companies have formalized processes of selecting relational partners through

extensive research and evaluation along chosen criteria. The criteria for partner

selection vary according to company goals and policies. These range from a

single criterion such as revenue potential of the customer to multiple criteria

including several variables such as customer commitment, resourcefulness, and

management values.

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Evaluation process

Periodic assessment if results in CRM to evaluate if programs are meeting

expectations and if they are sustainable in the long run. Performance evaluation

also helps in making corrective action in terms of relationship governance or in

modifying relationship marketing objectives and program features. Without a

proper performance metrics to evaluate CRM efforts, it would be hard to make

objective decisions regarding continuation, modification or termination of CRM

programs. Developing a performance metrics is always a challenging activity as

most firms are inclined to use existing marketing measures to evaluate CRM.

however many existing marketing measures, such as market share and total

volume of sales may not be appropriate in the context of CRM. Even when a

more CRM oriented measures are selected it cannot be applied uniformly across

all CRM programs particularly when the purpose of each program is different

from one another.

Another global measure used by firms to monitor CRM performance is the

measurement of relationship satisfaction. Similar to the measurement of

customer satisfaction measurement would help in knowing to what extent

relational partners are satisfied with their current cooperative and collaborative

relationships. Unlike customer satisfaction measures that are applied to measure

satisfaction on one side of the dyad, relationship satisfaction measures could be

applied on both sides of the dyad. Both the customer and the marketing firm

have to perform in order to produce the results in a cooperative relationship and

hence each party’s relationship satisfaction could be measured.

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2.5

Key principals of customer relationship management

Differentiate Customers :

All customers are not equal; recognize and reward best customers

disproportionately. Understanding each customer becomes particularly

important. And the same customers’ reaction to a cellular company operator

may be quite different as compared to a car dealer. Besides for the same product

or the service not all customers can be treated alike and CRM needs to

differentiate between a high value customer and a low value customer.

What CRM needs to understand while differentiating customers is?

- Sensitivities, Tastes, Preferences and

Personalities

- Lifestyle and age

- Culture Background and education

- Physical and psychological characteristics

Differentiating Offerings

Low value customer requiring high value customer offerings

Low value customer with potential to become high value in near future

High value customer requiring high value service

High value customer requiring low value service

Keeping Existing Customers

Grading customers from very satisfied to very disappoint should help the

organization in improving its customer satisfaction levels and scores.

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As the satisfaction level for each customer improves so shall the customer

retention with the organization.

Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life

event trigger points by customer, marketers can maximize share of purchase

potential. Thus the single adults shall require a new car stereo and as he grows

into a married couple his needs grow into appliances.

Increase Loyalty

Loyal customers are more profitable. Any company will like its mind share

status to improve from being a suspect to being an advocate. Company has to

invest in terms of its product and service offerings to its customers. It has to

innovate and meet the very needs of its clients/ customers so that they remain as

advocates on the loyalty curve. Referral sales invariably are low cost high

margin sales.

Business intelligence and analytical capabilities

CRM applications contain a vast amount of information pertaining to an

organization customers and prospects. This information needs to be leveraged an

analyzed by decision. This is possible only if CRM solutions have robust

business intelligence and analytical capabilities. This is a major requirement

primarily for marketing application.

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2.6

Customer retention

Under the present context of competitive environment, the focus of the

organizations is more on customer retention than simply on customer

acquisition. Customer retention is the process of keeping customer in the

customer inventory for an unending period by meeting the needs and exceeding

the expectations of those customers. It is approach of converting a casual

customer not a committed loyal customer.

Why is customer retention preferred?

Some of the major benefits of customer retention are presented below. customer

come within the fold of an organization in the following ways:

Customer by chance.

Customer by occasion

Customer by choice

Customer by reception

Customer by loyalty

In the customer retention approach the organization makes every effort to

convert a customer by chance into a customer by loyalty. A retained customer

who turns out to be loyal will shift his focus of relationship with the

organization from a mere transactional relationship to a relationship tied up with

emotion and commitment, which will benefit the organization a long way.

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Customer retention would enable the organization to minimize expenses in

terms of acquisition of new customers. Customer retention cost for an

organization is expected to be far less than that of the acquisition concerned.

Customer retention enables a long tem relationship of mutual benefit, both to the

organization and to the customer concerned.

There appears to be close interaction between customer retention and customer

loyalty. Loyalty is usually measured in terms of longevity of the patronage of

customers. Loyalty that arises out of retention is a preferred state, as compared

to loyalty of reluctant customers.

Retained customers would help to spread a positive image of the organization by

word of mouth, which in turns helps to acquire new customers to the customer

inventory.

Approach to retention process

The approach of the organization at the retention process is expected to be

different from the approach adopted at the acquisition process. The difference is

indicated in the following lines.

At the acquisition the focus is on acquiring relationship whereas at the retention,

it is on nurturing the relationship.

At the acquisition the focus is on demographic, psychographic profile of the

customer, whereas the retention process the focus is more on past and present

transactional profiles in addition to demographic, psychographic profiles.

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Re-acquisition

Defection Attrition

Retention

Acquisition

Stages of retention in

customer life cycle...


Stages of retention in the customer life cycle

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Acquisition is a stage in which customer are acquired for an organization

business. Customers so acquired would reach a state of either satisfaction or

dissatisfaction.

Satisfaction leads to retention.

Dissatisfaction leads to stage of attrition.

A satisfied customer who joins the retention stage might either proceed towards

loyalty stage or in the event of being dissatisfied will join the attrition stage.

The customer who joins the attrition stage will proceed to the stage if defection,

unless he is satisfied. T hose customers in the defection stage may be reacquired,

by means of appropriate marketing programmes designed and implemented for

the purpose Reacquisition.

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2.7

Building customer relationship management

Organization strategies towards developing and maintaining sustainable

relationship differ from one organization to another depending on certain

factors. These include nature of business, its size, its market share, nature of

product type, volume of sales, geographic concentration, socio economic status

and life style of the customer concerned, competitors strength, and so on. The

strategies that are practiced by customer driven organization with national and

global perspective. The reader may concentrate on those strategies or

combination of several strategies that suit the business context.

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People

Product

Organization Process

Setting satisfactory

service standard


People

People within the organization have the basic role in developing and

maintaining relationship with customer. Everyone in the organization must

realize the fact that their work is towards satisfying customers. Everyone from

the lowest to the highest level irrespective if their functional specialization and

responsibilities must integrate their activities towards one of the main objectives

of the organization customer satisfaction. The marketing departments can

coordinate integrated activity towards customer satisfaction.

Process

Process involves a logical sequence of activities right from the need

identification of potential customers to need fulfilment. Need fulfilment requires

manufacture of product with desired attributes. The process has to be derived

from the customer’s viewpoint which paves way for total customer satisfaction.

The performance of each link must be objectively analyzed and corrected in tune

with the internal and external customer’s expectation.

Product

The product offered must constantly provide value addition. The expectations of

the customers may always be on the increase due to various reasons. A customer

satisfied with a given product may soon become a dissatisfied customer in view

of the changes that takes place in his expectations. Customer’s expectations go

much beyond physical tangible things.

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Organization

In order to build customer relationship, an organization should be aware of the

technology advancements and provide quality service in tune with the

customer’s expectations. It should

concentrate on total customer satisfaction and respond to the requirement of the

customers faster than its competitors. The responsive and learning nature of the

organization must build Confidence in the mind of the customers and that will

go a long way in building the customer relationship.

Setting satisfactory service standard

A customer not only expects quality products but also quality services. The

organization must ensure quality and availability of the product. The

understanding couple with the skills would help more significantly the process

of achieving the ultimate objective of Customer Interaction Management. At this

point, it is worthy to note that effective CIM goes much beyond the skills

developed, knowledge gained, technology enabled and infrastructure build up.

Ultimately it is love, trust and respect that an organization earns from customers

that is supported by organization help-desks, customer support, software,

integrated customer information system etc that would help to gain maximum

benefits out of Customer Interaction Management.

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Chapter 3

E-CRM

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3.1

E –CRM in banks

What is E-CRM?

As the internet is becoming more and more important in business life, many

companies consider it as an opportunity to reduce customer-service costs,

tighten customer relationships and most important, further personalize

marketing messages and enable mass customization Together with the creation

of Sales force automation (SFA), where electronic methods were used to gather

data and analyze customer information, the trend of the upcoming Internet can

be seen as the foundation of what we know as eCRM today.

We can define eCRM as activities to manage customer relationships by using

the Internet, web browsers or other electronic touch points.

The challenge hereby is to offer communication and information on the right

topic, in the right amount, and at the right time that fits the customer’s specific

needs.

Channels, through which companies can communicate with its customers, are

growing by the day, and as a result, getting their time and attention has turned

into a major challenge. One of the reasons eCRM is so popular nowadays is that

digital channels can create unique and positive experiences – not just

transactions – for customers. An extreme, but ever growing in popularity,

example of the creation of experiences in order to establish customer service is

the use of Virtual Worlds, such as second life. Through this so-called eCRM,

companies are able to create synergies between virtual and physical channels

and reaching a very wide consumer base. However, given the newness of the

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technology, most companies are still struggling to identify effective entries in

Virtual Worlds. Its highly interactive character, which allows companies to

respond directly to any customer’s requests or problems, is another feature of

eCRM that helps companies establish and sustain long-term customer

relationships.

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3.2

Key features of E-CRM

Focused on process

A CRM process brings you the appropriate technology and it will reduce the

technology gap as well as refining your business process.

Data warehouse driven

In a e-CRM solution, the data warehouse or customer data mart contains a

consolidated and comprehensive view of the customer. The warehouse provides

the broadest possible profile of the customer. This is needed to determine an

appropriate course of action, the most effective offer to make, and the best

channel to deliver your pertinent message.

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A multi channel view

Organizations today have different methods of interacting with customers.

E.g. A bank might use one application to support its website , another to support

sales and another to support ATM’s and yet another to support direct mail and

telemarketing.

An e-CRM solution must have applications that coordinate or synchronies

customer communication across channels and do so in real time. These

applications must be able to capture customer transaction across disparate touch

points and

Store that information in a temporary data store for immediate assessment and

response. In addition, this application must feed information captured from those

touch points into the data warehouse to broaden the customer profiles obtained

from back-end transactional systems and external sources.

Measurement driven

Today many companies spend millions of dollars communicating with

customers, but spend little time and effort determining the effectiveness of those

campaigns CRM provides the means to measure communication efforts. E-CRM

is a continuous process.

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3.3

BENEFITS OF E-CRM TO Bank’s AND Customer’s

BENEFITS TO

BANK

BENEFITS TO

CUSTOMER

Relationship with the

customer

Customer interaction and

satisfaction

Using e-mail for

business

communication

Convenience

Personalized services

or one to one services

Speed of processing the

transaction through e-

response

Website to market

products and services Service quality

Transaction security Trust

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Chapter 4.1

Union bank of India case study

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4.1

Union bank of India

The Union Bank of India was built up in twentieth century and declared open by

the Father of the Nation, Mahatma Gandhi. The bank with its efficient value-

added services, sustained growth, consistent profitability and development of

new technologies bank has ensured complete customer delight, living up to its

image of, “GOOD PEOPLE TO BANK WITH”. Bank is offering credit cards,

home loan, union demat, Kisan ATM, International debit card, online tax

payment facility, Railway e-ticketing kiosk, etc., services to its customers

through core banking solution.

The Union Bank of India has 2261 branches out which 1031 branches are under

CBS. Presently 939 ATMs spread out across India both Onsite and Offsite. All

the ATMs are inter-connected through the Bank’s ATM Switch, thus facilitating

on-line operations in case of CBS customers. The Bank is a member of Cash

Tree consortium and also has bilateral arrangement with State Bank of India,

enabling the Bank’s ATM cardholder access to over 20000 ATMs across the

country. UBI Net connects 65 Offices and 984 branches located in 323 centres,

facilitating speedier transmission of MIS data (Network Map). The network also

facilitates the implementation of Core Banking Solution, apart from DEMAT

services, Cash Management services, fund transfers, messaging system, etc.The

Bank is using VSAT network for connecting branches and ATMs wherever

leased line connectivity is not feasible. We have 590 VSATs operational,

connecting 194 branches/extension counters and 316 ATMs.

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4.2

Customer satisfaction survey

Responsiveness of employee in dealing with customer?

Quality service provided by bank?

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Customer care service of the bank?

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4.3

Steps followed by the bank for customer retention

Quality service is provided for building good relationship with customer.

The following services are provided by bank for customer retention

o SMS banking

o Internet banking

o ATM facility

o Telebanking

o Debit cards

o Credit card

o Lockers etc..

Bank doesn’t focus on certain group of customer, it caters all groups.

The call centres of bank are also available.

All customers are given equal services.

Bank track individual problem of customer.

According to bank customers are satisfied with the bank, and it can

be seen by number of accounts opened regularly and increase in business of

bank in all departments.

It is very important for the bank to have good customer relationship management

debt of the bank.

Customer satisfaction ultimately results in increase in profit of the bank.

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To help customer at our best.

To keep a track of every complaint and problems of customer to solve it and see

to it that it doesn’t get repeated.

Customer retention is important.

Increase in number of customer

Various services are provided (e.g. Debit card, credit card, internet banking etc..)

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Chapter 4.4

Kopal bank case study

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4.4

Kapol bank

The Kapol Bank was established on 14th October, 1939 by its founder late

Rajratna Shri. Khushaldas Kurji Parekh. The Bank was first to

introduce"Counterless Banking “and "Branch-on-Button" in the Indian Banking

Industry, which have been lauded by its clients as most convenient banking

services. The Bank is also extending Depository Services to the investors.

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4.5

Customer satisfaction survey

Responsiveness of employee in dealing with customer?

Quality service provided by bank?

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How good are customer queries solved?

Steps followed by the bank for customer retention

Aware customer about services and new technology.

Quality and efficient services should be provided to the customer.

Customer retention is very important in this competitive world.

Expansion of business should be done.

Various services should be provided by the bank for customer retention, and

increase in customer.

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Chapter 5

Suggestion findings and conclusion

Suggestions

Bank should increase staff.

Bank transaction should be fully computerised.

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Customer care service of the bank should be improved for convenience

of the customers.

Customer care service of the bank should be fast and responsive.

ATM’s should be increase.

Findings

CRM is not a technology initiative; many have confused as a technology

initiative, and assigned the CRM implementation project to their information

system or IT group.

Technology is needed in order to implement CRM particularly the customization

part but technology is not the driver of CRM or the solution to successful CRM

implementation.

CRM is not exclusively a sales initiative similar to marketing; CRM is often

lodged with the sales department. The sales force after all it’s extremely close to

their customers, understanding their needs and wants, and trying to fulfil them.

Sales however is just one functional area that can benefit from customer

relationship management and that is necessary for effective customer

relationship management.

CONCLUSION:

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V. G. Vaze College CRM in BankingProviding excellent customer service is no easy task. This aspect of business is a

major force that can make or break profits. However, customer service is rarely

mentioned in an organization's mission statement nor is it the top of the

discussion list for staff meetings or training sessions. Providing the type of

customer service that is expected by customers take a lot of thought and

flexibility on the part of management as well as staff members. The challenges

faced by banks and their customers are many but the trick lies in de-mystifying

complex financial relationships. Technical solutions deployed by banks today

are flexible, user friendly and meant to facilitate specific workflow and

requirements in implementation processes. In order to simplify lives, banks have

begun to implement end-to-end technology through all departments with the

intention of removing human error from processes previously existing manual

environments could not have been adequate for future visions, growth plans and

strategies. In this day and age, customers enjoy complete luxury in terms of

customized technical solutions and banks us the same for long term, mutually

beneficial relationships.

ANNEXURE

65

V. G. Vaze College CRM in BankingKet’s V.G.VAZE.college of ARTS, COMMERCE & SCIENCE

MULUND- EAST, MUMBAI-81

CUSTOMER SATISFACTION SURVEY Name: ADD:

1. How would you rate the responsiveness of the employee in dealing with you? o Average o Good o Best

2. How would you rate the quality of the services provided?

o Average o Good o Best

3. How are you satisfied with the schemes and policies of the bank?


4. How is the customer care service of the bank?


5. Is HELP DESK for the customer queries available in the bank?

o Yes o No

6. How good are your queries solved by the help desk?


7. Is there communication between customer and branch manager?

8. Why have you chosen this bank?

9. Do you have any suggestion for the bank?

10. How would you totally rate the bank?

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V. G. Vaze College CRM in Bankingo Average

o Good

o Best

Employee questionnaire

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EMPLOYEE Name: ADD:

1. Does the bank track individual problems of customer? o Yes o No

2. Does your bank offer personal banking services?

o Yes o No

3. Are Call Centers of the bank available?

o Yes o No

4. Are all the customer given equal services in the bank?

o Yes o No

5. What strategy do you use in building relationship with the customer?

6. What steps are followed by bank for customer retention?

7. Does bank focus on a certain group of customer? If yes, why?

8. If the customer close account from your bank, do you try to find the reason Behind it?

9. According to you are customers satisfied with the bank? REASON?

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MANAGER Name: ADD:

1. What are the customer relationship management goals’s of the bank?

2. How CRM as a sole factor affected the profits of the bank?

3. How does the bank retain the customer?

4. Why does the bank use CRM?

5. Has bank received any award for good customer management or services? If yes, when?

Signature

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BIBLIOGRAPHY

Book Author

Customer relationship

management

Mohammed, H.Peeru

Customer

relationship

management

strategies

Sheth, jagdish. N

and others ed.

WEBLIOGRAPHY

www.wikipedia.com

www.ebooks.com

www.google.com

70

http://www.google.com/

http://www.ebooks.com/

http://www.wikipedia.com/

Customer Relationship Management in Banks

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