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Liberalization, privatization and globalization together have changed the entire Indian

marketing operations. Due to the innovation, development in new technologies and changes

in the customer expectations, there is a major shift from seller’s market to buyer’s market.

The problem of losing market share in this era of intense competition and retention of

existing customers is more important than acquiring new ones. In the present scenario of the

economy markets have undergone a metamorphic change to cope up with the tight and

enhanced competition, changing needs and expectations of the customers, ongoing product

improvement, changing market trends from mass marketing to interactive and customized

marketing and finally to the relationship marketing. With easy access to the information,

today’s customers are ready with the product information and have an upper hand in most of

the interactions and sellers are bending over backwards to improve their offerings. It proves

the old saying that one can please some of the people most of the time and most of the people

some of the time, but one can’t please all of the people all of the time and, thus, in performing

the activity of selling services and products to the unknown expectations of the customer, the

seller faces a big problem as he is not aware of the latest expectations of the customers.

These new trends are expected and will give birth to the age of never satisfied

customers, the organizations are changing the product centric business orientation to

customer centric business orientation and they have realized that it costs ten times as much to

acquire a new customer than to retain an existing one. The studies have shown that as fifty

per cent of the company’s satisfied customers will do business with the competitors, twenty

five percent of highly satisfied customer will also deal with the competitor and thus, twenty

five loyal customers account for almost seventy five per cent of their profits.

The continuous development in the economies has placed a whole new set of

capabilities in the hands of the customers. As presented by Drucker that the customer is the

ultimate objective of every organization as they are the one who keep the organization alive

in the market. Similarly, Mahatma Gandhi also supported the concept by saying and

considering the ‘Customer as King’ and, therefore, developing close and cooperative

relationship with customer is more important in the current era of intense competition and

demanding customers, than has ever been before. Hence, in the developing economy,

customers are getting possible positive and negative information about the product through

any of the modes of communication. It directly affects the reputation and sales of the product

and result in to Profit or Loss.

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In 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 end-customers. For example, in many industries

such as the airline, hospitality, banking, insurance, computer software, or household

appliances industries and even consumables, the de-intermediation process is fast changing

the nature of marketing and consequently making relationship marketing more popular.

Databases and direct marketing tools give these industries the means to individualize their

marketing efforts. As a result, producers do not need the functions formerly performed by

middlemen. Even consumers are willing to undertake some of the responsibilities of direct

ordering, personal merchandising, and product use related services with little help from the

producers. The recent success of on-line banking, direct selling of books, automobiles,

insurance, etc. on the Internet, attest to the growing consumer interest in maintaining a direct

relationship with marketers.

The de-intermediation process and consequent prevalence of CRM is also due to the

growth of the service economy. Since services are typically produced and delivered at the

same institution, it minimizes the role of middlemen. Between the service provider and the

service user, an emotional bond also develops creating the need for maintaining and

enhancing the relationship. Another force driving the adoption of CRM has been the total

quality movement. When companies embraced the Total Quality Management (TQM)

philosophy to improve quality and reduce costs, it became necessary to involve suppliers and

customers in implementing the program at all levels of the value chain.

This created the need for closer working relationships with customers, suppliers, and

other members of the marketing infrastructure. With the advent of digital technology and

complex products, the systems selling approach has become common. This approach has

emphasized the integration of parts, supplies, and the sale of services along with the

individual capital equipment. Customers have liked the idea of systems integration and sellers

have been able to sell augmented products and services to customers. These measures created

intimacy and cooperation in the buyer-seller relationship. Instead of purchasing a product or

service, customers are more interested in buying a relationship with a vendor.

Several marketers are concerned with keeping customers for life rather than with only

making a one-time sale. Similarly, in the current era of hyper-competition, marketers are

forced to be more concerned with customer retention and loyalty. There is greater opportunity

for cross-selling and up-selling to a customer who is loyal and committed to the firm and its

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offerings. The customer expectations have been changing rapidly over the last two decades.

Fueled by new technology and the growing availability of advanced product features and

services, customer expectations are changing almost on a daily basis. Consumers are less

willing to make compromises or trade-offs in product and service quality. In a world of ever

changing customer expectations, building cooperative and collaborative relationships with

customers seems to be the most prudent way to keep track of their changing expectations and

appropriately influencing them.

Faced with mounting pressures to contain costs and mandates to adopt continuous

quality improvement processes, the banking industry is actively engaged in customer

relationship management and relational partnering activities. Many of them have created

integrated delivery networks, which in turn develop the relationship with the customer by

serving him anywhere any time.

The growing trend of partnering with customers, suppliers and other service providers

in the banking sector is largely driven by the competitive intensity currently banks are facing.

Thus, with increased competition and improved technologies, survival has become the name

of the game in this industry. To survive, banks have to be more productive in meeting needs

of the customers. With growing customer demand for quality financial service, many banks

are seeking opportunities to engage in partnering relationships with their customers so that

they can increase the efficiency in the system. Also, understanding individual customer’s

needs become easier when long-term relationships exists and are leveraged for longitudinal

information about the customer’s general and particular banking needs.

Indian banking today is witnessing drastic changes. The liberalization of the financial

sector and banking sector reforms have exposed the Indian banks to a new economic

environment that is characterized by increased competition and new regulatory requirements.

As a result, there is a transformation in every sphere of activities of the banks in India,

especially in Governance, nature of business, style of functioning and delivery mechanisms.

The new generation banks brought the necessary competition into the industry and

spearheaded changes towards higher utilization of technology, improved customer service

and innovative products. The changes in the political, economical, social, cultural and

environmental perspective can be seen in business environment too. Above all, the business

scenario is highly influenced by the changes in the needs and aspirations of the people.

Today, the degree of such changes is very fast and more frequently experienced by them.

Therefore, the consumer status is changed from isolated to connected, unaware to well-

informed and passive to active.

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Consumers now seek to exercise their influence in every walk of the business system,

interact with firms and co-create value. As the outreach is enlarged in the industry with the

increased number of banks and wider network, the customer demands convenience, comfort,

speed, cost- effective and quality services in the banking operations. In the recent years, the

Indian banking industry saw a host of new faces called new generation banks entering with

their innovative strategies. All these banks are generally slim in structure but heavily using

the technology and multi-channel facilities to reach out to a large section of the customers.

It is no longer adequate for banks to provide only traditional banking services. Apart

from providing the conventional banking services, banks have begun offering a bouquet of

financial services to their clients, including cross selling of financial products. The ultimate

aim is to offer a one-stop-shop for meeting varied customers' financial needs. Some banks

have begun employing customer relationship management systems to not only retain the

existing customers but also to attract new customers. The establishment of new private sector

banks and foreign banks has rapidly changed the competitive landscape in the Indian

consumer banking industry and placed greater demands on banks to gear themselves up to

meet the increasing needs of customers. For the discerning current day bank customers, it is

not only relevant to offer a wide menu of services but also provide these in an increasingly

efficient manner in terms of cost, time and convenience.

Therefore, it is evident from the above facts that the changes in business environment

and scenario has made / instigated the need for implementation of Customer Relationship

Management has become the necessity for the Indian Banks for the survival and being profit

earning entities in the long run. Most of the studies have been conducted in the area of CRM

so far for the Airline, Hospitality, Retail industry with isolated factors where as very few

research projects have been taken up by the scholars for study of CRM in direct relation with

the Indian Banking Industry and covered very few aspects of CRM.

By visualizing the changes in business environment and significance of CRM for

banking industry of India it has become essential to conduct an empirical study on CRM

strategies of Indian Banks. This study is structured to understand the significance of CRM for

the banks along with the study of various factors / determinants of CRM like product and

services, customer focus, the CRM and organisation, knowledge management and planned

communication efforts and technology used for the implementation of CRM programme

together.

The proposed research work studies the different aspects of Customer Relationship

Management in the Indian Banking sector, through an empirical survey of customer and

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executives of various Indian banks. The focus of the study is to examine the need of CRM for

Indian Banking Industry and how far these banks are achieving success in creating and

maintaining CRM. Further the study also emphasis to understand the view points of

customers about their experience in context of the customer relationship management

implemented by their banks. Lastly an attempt is made to suggest some meaningful strategies

for developing a long lasting and effective relationship between Bank and its customers.

1.1 REVIEW OF EXISTING LITERATURECustomer relationship management (CRM) has attracted the highest attention of

practitioners, scholars and academicians. More and more organizations are adopting

customer-centric strategies, processes, programs, tools, and technology for efficient and

effective customer relationship management. They are realizing the need for in-depth and

integrated customer knowledge in order to build long lasting close cooperative and partnering

relationships with their customers. The emergence of new channels and technologies is

significantly altering how companies interface with their customers, a development bringing

about a higher degree of integration between marketing, sales, after sales and customer

service functions in organizations. For practitioners, CRM represents an enterprise approach

to develop full-knowledge about customer behavior and preferences and to develop programs

and strategies that encourage customers to continually enhance their business relationship

with the company. Taking this into consideration several valuable studies have been

conducted by the scholars in India and abroad on the various aspects and features of CRM. A

brief abstract of these studies particularly related to CRM in Banks has been presented in the

preceding paras. The overview and review of the existing literature would help us in

formulation and development of the problem, conceptualization, operationalisation of the

concept; focus of the problem and also in setting up the objectives of the study.

Marketing scholars are studying the nature and scope of CRM and are developing

conceptualizations regarding the value and process of cooperative and collaborative

relationships between buyers and sellers. Many scholars with interests in several sub-

disciplines of marketing, such as channels, services marketing, business-to-business

marketing, advertising, and so forth, are actively engaged in studying and exploring the

conceptual foundations of managing relationships with customers. They are interested in

strategies and processes for customer classification and selectivity; one-to-one relationships

with individual customers; key account management and customer business development

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processes; frequency marketing, loyalty programs, cross-selling and up-selling opportunities;

and various forms of partnering with customers including co-branding, joint-marketing, co-

development, and other forms of strategic alliances.

Scholars from other academic disciplines, particularly those interested in the area of

information systems and decision technologies, are also exploring new methodologies and

techniques that create efficient frontline information systems (FIS) to effectively manage

relationships with customers. Several software tools and technologies claiming solutions for

various aspects of CRM have recently been introduced for commercial application. The

majority of these tools promise to individualize and personalize relationships with customers

by providing vital information at every point in the interface with the customer. Techniques

such as collaborative filtering, rule-based expert systems, artificial intelligence, and relational

databases are increasingly being applied to develop enterprise level solutions for managing

information on customer interactions.

Various experts have given different relevant viewpoints to consider CRM only as a

tool to retain the old or existing customer. Till now, the marketing, customers’ relation

management and relationship marketing are used interchangeably. Taking this in the view,

several valuable studies have been conducted on the various aspects of CRM and a brief

abstract of those studies conducted by various experts have been presented in the succeeding

paragraphs.

The experts have conducted the research on CRM looking at it from different

perspective, Bickert had a view on the relationship marketing as database marketing whereas

Navin pointed out the difference in database marketing and relationship marketing and stated

that these terms have different concept behind each other, Peppers and Rogers; Shani and

Chalasani; Jackson; Doyle and Roth; O’Neal; Paul have proposed the relationship

management as an integrated effort to identify, maintain, and build up a network with

individual consumers and to continuously strengthen the network for the mutual benefit of

both sides, through interactive, individualized and the value – added contacts over a long

period of time. Mckenna professes a more strategic view by putting the customer first and

shifting the role of marketing from manipulating the customer to genuine customer

involvement. Morgan and Hunt and Schurt and Oh suggested that relationship marketing

refers as to all marketing activities directed towards establishing, developing and maintaining

successful relationship between the firm and customers. Levitt, Gummesson, Gronoos and

Berry proposed relationship marketing as attracting, maintaining, and – in multi – service

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organizations – enhancing customer relationships. Ganesan proposed relationship marketing

as long term orientation, which anchored on mutual gains and cooperation.

Ganeshan, S. and Balati, B, (1991)1 depicted that a clear-cut difference has to be

created between transaction and Relationship Management. They emphasized that such a

network of CRM must be developed that the customers must not be seen just as the supporter

of the company and its products rather it has to maintain a balance between both internal and

external markets i.e. maintaining internal climate, culture and employee relation, external

planning and customer relation. They concluded that the Quality oriented CRM is based on

the integration of Strategy, style, structure, Shared Values, Skills and staffing, Systems and

customer relationship profitability and can be computed by subtracting relationships costs

from relationships revenue.

C.R Sharma, (1991)2 studied the impact of Liberalization and Globalization and Role

of IT in the organizations, and the two major changes that has revolutionized the industrial

scenario and its influence is noticed on the Indian Banking System. He accomplished that

retail banking clients are today demanding more interactive access to their accounts, and

mobility investments. They have to integrate their accounts, mobility of investments and

better segmentation of products and services. In order to tone up the quality of customer

service, it is very essential to make the customers perceive that they are getting good service.

He defined Customer Delight as providing the facilities and services to the customers beyond

their imagination and expectations and which can be achieved by maintaining healthy

relations with the customers.

Berry and Parasuraman, (1991)3 also hold the view that high quality service gives

credibility to the field sales force and advertising, stimulates favorable word-of-mouth

communications, enhances customers’ perception of value, and boosts the morale and loyalty

of employees and customers alike. In today’s competition in Indian banking industry,

customers have to make a choice among various service providers by making a trade-off

between relationships and economies, trust and products, or service and efficiency.

Swift, Ronald S., (1991)4 studied the impact of Liberalization and Globalization and

role of IT in the organizations and the two major changes that have revolutionized the

industrial scenario and its influence is noticed on the Indian Banking System. He concluded

that retail-banking clients are today demanding more interactive access to their accounts, and

mobility of investments. They have to integrate their accounts, mobility of investments and

better segmentation of products and services. In order to tone up the quality of customer

service, it is very essential to make the customers perceive that they are getting good service.

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He defined Customer Delight as providing the facilities and services to the customer beyond

their imagination and expectations and which can be achieved by maintaining healthy

relations with the customers.

P.Bucha Reddy and K. Randheer, (1992)5 observed that CRM is applied to a

number of different marketing activities ranging from consumers frequency marketing

programs to selling activities. They defined that the role of sales personnel has evolved from

Production to Sales, Sales to Marketing and Marketing to Partnering and, thus CRM acts as

the value creation in the relationship of marketing and partnering.

V. S. R Krishnaiah, (1992)6 documented that Knowledge Management plays a

significant role while preparing the marketing techniques. Further he analyzed that

information is a necessary medium or material for eliciting and constructing knowledge. It

affects knowledge by adding something to it or restructuring it. CRM provides a whole

network of tools that helps in collecting the information through the application of

Information Technology and knowledge is derived out of it. Finally he concluded that

Customer knowledge management transforms customer information into a competitive

advantage, discovering new knowledge assets for a company in order to develop a greater

understanding of what influences the customers and in turn, predict new ways to interact and

service their experiences.

G. Radha Krishna, P. Bucha Reddy, (1992)7 in their study accepted that the role of

Internet technologies have become a new challenge and also an opportunity for the way to

business being done. The evolution of technology and the company’s adoption of the same

occurred in different functional areas like production, product design, accounting etc. The era

of computerization has created a vast potential for marketing function area for tapping the

information of customer. They analyzed that in CRM, the huge database created have to be

further molded and an appropriate set of knowledge and information have to be created for

marketers.

G.V.R.K Acharyules, (1993)8 emphasized that due to the stiff competition among the

industry and companies the major focus is on customer retention which is a growing

challenge. He analyzed and defined CRM as a business process initiative toward building

customer-centric organizations, which involves two types of relationships: - internal customer

relationship and external customer relationship. He studied the various indicators which are

significant in customer retention i.e. appropriateness, comprehensiveness, adequacy,

availability, affordability, feasibility, utilization and Quality of care in his study.

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N Subramanyam, (1993)9 analyzed that the corporate growth is highly dependent

upon the customer network and relationships maintained with them. “Customer loyalty has

always been valuable, but today it has become more vital for success.” CRM provides an

integrated view of customers to everyone in the organization, and thus ensuring that everyone

in the enterprise is focused on the customer. He has tried to establish the relationship among

the various factors like Company’s ability to quickly identify, contact, attract and acquire

new customer, understanding of the customers – their wants and needs, appropriate product

and service offering and match it to the customer’s unique needs, company’s sales cycle,

cross-selling and up-selling opportunities, relation of existing customers through after sales

service and support.

Agrawal M.L., (1994)10 accentuated that service marketers need to build up long-

term relationship with their customers by understanding the cause behind their problem and

recovering them fast to build deeper and long term relationships. Further he strengthened the

marketing principle, focusing on the repeat customers, which cost less in comparison to

attract new ones. He also studied the change in customer’s attitude after solving their

complaints.

Sanjay S Kaptan, (1995)11 investigated upon the Role of growing technological

systems that has led to the close interaction between the consumers and organization. It is the

company’s ability to continuously maximize the value of its customer franchises to specific

customers segments in the areas which are viewed as having a significant impact on the

profit, impacting behavior of customers. Further he highlighted that understanding,

differentiating, developing and customizing, interacting and delivering value in true sense,

acquiring and retaining prioritization of changes, creating an action plan and measuring

success are the key ingredients of a CRM Cycle. The success must be measured by fixing

specific parameters for each area of transaction. A balance needs to be maintained between

segmentation and individual approach, as CRM do not support segmentation as it leads to

transaction marketing instead of relationship marketing. Thus he concluded the relationship

marketing is based on valuing customers on current value and potential value by defining the

new horizon, unleashing the power of customer information, creating values in the eyes of the

customer, delivering the exceptional experience.

Arun Balakrishnan, (1995)12 examined that CRM is the establishment development,

maintenance and optimization of long-term mutually valuable relationships between

consumers and organizations. It is basically collecting the bits of information and then trading

out the crucial aspects which affects the desires and expectations of customers and then

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integration them with the business strategy, people technology and business processes. The

process of building customer relationship is creating a competitive advantage by being the

best at understanding, communicating delivering and developing existing relationships in

addition to creative and keeping new customers.

Gummerson, (1996)13 explored the extent of application of relationship marketing in

banking sector. According to his findings, the service users hold good image of the company if

it provides effective CRM services. He found that poor relationship marketing caused

discontinuation of services by many customers. The same concept applies to Indian customers

too. Service industry players need to put thrust on this area to maintain profits on a sustainable

basis.

Hallowell Roger, (1996)14 conducted a research on customer satisfaction, loyalty, and

profitability and found that as compared to public sector, private sector bank customers’ level

of satisfaction is comparatively higher.

Domino and Hal, (1996)15 in their study recognized that the role of Internet

technologies have become a new challenge and also an opportunity for the way to business

being done. The evolution of technology and the company’s adoption of the same occurred in

different functional areas like production, product design, accounting etc. The era of

computerization has created a vast potential for marketing function area for tapping the

information of customer. They analyzed that in CRM, the huge database created has to be

further moulded and an appropriate set of knowledge and information has to be created for

marketers.

Syed Abbdul Malik, (1997)16 originated the importance of CRM in financial service

business, as the customer is evaluating the services every time he uses. Throughout

companies have relied on classic competitive business strategies – product, price and channel

dominance and new fourth dimension has been included as customer knowledge. The

organization’s customer base is the result of years of investment and efforts. He framed the

important principles of customer relationship management i.e. value segmentation,

collaboration, institutional memory, touch-point alignment, real-time information

management, closed loop process, customer scorecard, listening posts, and total experience

management. Lot of changes has taken place in the way the banks have started dealing with

the customers. The relationship system is like a communication mode between the customer

and the organization, understanding customer needs and preferences, and orchestrating the

products and service to meet those needs. Due to the entry of foreign players and new

entrants from other sectors are threatening the customer base of established retail banks.

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Banks can no longer be certain that future revenue growth will come from customer

acquisition rather they are being forced to reexamine their existing customers.

Stewart K., (1998)17 discovered the reasons of customer exit in retail banks and he

found that if the marketing community is to adopt the prescriptions of the relationship

marketing school of thought, more knowledge and understanding of relationships is required.

The base of knowledge is growing and there is now greater appreciation of the processes

germane to healthy relationships, such as trust, satisfaction and commitment. Much less

attention has been paid to the negative aspects such as relationship breakdown and ending.

He addressed the neglected areas of the ending of customer-bank relationship or customer

exit. Interviews were conducted with bank customers who had recently used the exit option.

Content analysis of the customers’ stories was used to generate a model of the customer exit

process.

Moulali Shaik, (1998)18 dissected the changes in the market trends and he focused

that today customers are making buyer’s decision not just by considering product but rather

relationship. Customers want recognition, value, quality and respect for their preferences.

The retail industry is growing at a magnificent rate. The organized retail industry will be the

center of gravity for the leading industrial groups is the periods to come. He emphasized on

the relations between the customers and the businesses, as the success of any retail industry

depends very greatly on how their CRM is.

Rajesh Bhatt and Vishal Vyas, (1999)19 expressed the series of functional skills,

processes and technologies which together will allow companies to more profitable

customers as tangible assets. They examined that shorter product the cycle, rapid new product

offering, growth of demanding, well-informed and educated customer and competitive

market pressure are the factors evolved the concept of CRM.

Sarmstrong, Jeyakumar, (1999)20 measured the development of retail market in

India and they tried to correlate the success of retailing with the level of customer relations

the company has. They stated CRM as an enterprise-wide strategy that encompasses three

general sub-process solutions areas of sales, marketing and Customer service and support. It

is basically the commitments of the company to place the customer experience at the center

of priorities and to ensure that incentive systems, processes and information resources

leverage the relationship by enhancing the experience. The focus is shifting from managing

products to managing customers. Leading retailers are looking beyond category management

to incorporate information about their customers into their business analysis and decision-

making processes. This trend signals a paradigm shift from managing products and product

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categories to managing customers and customers segment. The focus of the retailing sector is

on building customer relations, and to store traffic by carefully developing the merchandise,

and offerings service around the design customer base.

M.L Saikumar, (1999)21 gave a picture of the role of developing technology in

managing the customers more accurately. He analyzed that the industry may be

manufacturing fertilizers, pesticides, textiles or consumer goods, ultimately each and every

industry has to depend on the customer and hence organizations have to be customer centric.

So, the need is for technologies, which could help us to serve customer at any time anywhere.

The problem is due to the large volume of data and the solution to manage it is e-CRM. The

information technology would help in improving the better implementation of customer

relationship management programme. He also stated that the concept of CRM brings in the

front office support for the customer. Customer is looking for an integrated services being

provided at single point of contact. Seamless integrated of the application through the web

makes the CRM application really attractive to the end customers. He concluded that with the

use of information technology the customer is brought closer to the marketer and what is

needed is a mechanism to integrate cross-functional activity in an organization to provide

technology driven effective CRM solution.

Biong, Harold and Fred Selnes, (1999)22 studied the development of retail market in

India and they tried to correlate the success of retailing with the level of customer relations

the company has. They stated CRM as an enterprise-wide strategy that encompasses three

general sub-process solutions: areas of sales, marketing and customer service and support. It

is basically the commitments of the company to place the customer experience at the center

of priorities and to ensure that an incentive system, processes and information resources

leverages the relationship by enhancing the experience. The focus is shifting from managing

products to managing customers. Leading retailers are looking beyond category management

to incorporate information about their customers into their business analysis and decision-

making processes. This trend signals a paradigm shift from managing products and product

categories to managing customers and customers segment. The focus of the retailing sector is

on building customer relations, and to store traffic by carefully developing the merchandise,

and offerings service around the design customer base.

V.P Gulati and M.V Sivakumaran, (1999)23 looked over the requirement and role of

CRM in banking and financial services in specific context to India. They studied various

banks and financial organizations in their study and defined the CRM as a concept not the

technology. They also analyzed that banks have gone many stages to reach to its present

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status of hi-tech units. But if one wants to reach customers then they have to develop multiple

channels accessibility of services and that to with same output and it needs specialized

technologies so that customers can attain information at any time. This over reliance on

technology has even created the impression that CRM is a technology by itself. They studied

the relationship between business intelligence and CRM and tried to frame out the

interdependent of both on each others. The major source of business intelligence is the

business itself. If banks can look inward into their own business and the enormous volume of

data generated by their business they would get a glimpse of the goldmine called customer

needs and preferences. Banking is a non-product differentiation industry, so the competitive

edge can be build only by providing services and intelligence maintaining relationship with

customers. CRM strategies adopted by the various banks for the purpose like improving

customer knowledge, targeted customer contact, meaningful marketing, strengthening

customer base and its impact analysis were also studied.

Jeremy Galbreath and Tom Rogers, (1999)24 founded that CRM is a new

management concept - a new approach - to managing customers. CRM is about the

management of technology, processes, information resources, and people needed to create an

environment that allows a business to take a 360-degree view of its customers. CRM

environments, by nature, are complex and require organizational change and a new way of

thinking about customers - and about a business in general. Creating such an environment

requires more than adequate management of the customer relationship or new technologies, it

requires new forms of leadership as well. Customer relationship leadership, or CRL, is a new

model that leaders can embrace to recreate or readjust their leadership styles in order to foster

an atmosphere in their businesses to adopt and practice the principles of CRM. While CRM

environments improve business performance, initiatives undertaken in this new management

field require sound leadership as well. CRL is a recommended approach to bridge the gap

between a CRM vision and its reality.

Roberts, (1999)25 argues that CRM is a way for companies to identify and capture

new value throughout the supply chain. He suggests that by beginning with a systematic

exploration of exactly what buyer segments an organisation wants to serve, which products

and services customers want, and how an organisation goes about delivering them this

objective can be achieved. The next step is working to re- segment customers according to

what they actually want and are willing to pay for. Finally the company works back to tailor

the way they develop, make, and distribute products and services to leverage the most value

from today's market realities.

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McKenna, Regis, (2000)26 reflected the impact of new millennium on the relations of

customer that banks had and they found that having relatively embraced the concept of

marketing, banks approach the new millennium, operating in an increasingly competitive and

fragmented marketplace with financially literate consumers. This competition combined with

the prevailing low interest rate environment means that traditional banks with extensive

branch networks are having their profitability margins squeezed. New technology presents

opportunities for banks to become both more efficient (in terms of cost reduction) and more

effective (in terms of customer profiling and informed targeted selling). As many groups of

customers become more content while interacting with their bank through remote

technological channels (e.g. phone, Internet), the implications for bank-customer

relationships are important. Recent research shows that new ‘electronic banking’ channels,

while being keenly embraced throughout the industry, are being pursued more for their cost-

based advantages than for their business development or relationship management

capabilities. Given that the key power of the Internet arguably rests in its interactive

capabilities, and that relationships are predicted upon interactively, it seems appropriate to

conclude with some key Issues for future electronic banking strategy with particular emphasis

on staff-customer relationships.

Swartz and Iacobucci, (2000)27 determined that personal relationships with clients

are important, as loyalty to service firms has been associated with clients’ personal

relationships with a service provider. Therefore, service providers, including financial

institutions like banks, should focus on building relationships with their clients to reap the

long term rewards of support and loyalty.

Nitsche M., (2000)28 sighted the customer centric system and recommended for its

better implementation. He examined that for several decades, people and markets are

changing just as the competition is. This – alongside rapid technological progress – is

resulting in permanent modifications and the active embracing of the changes involved.

S.B. Mohanty, (2000)29 gauged the effect of distribution of electricity on the feelings

of villagers and concluded that in the developed societies, intense competition coupled with

customer education and easy access to information has given rise to a shift in bargaining

power for the customers. Customers are looking for transparency, exercising group pressure,

demanding prompt services and negotiating better terms.

Shailey Minocha, Pat Hall and Liisa Dawson, (2000)30 fabricated the impact of

Internet technology on customer relations and depicted that with growing competition in the

global e -market place, the focus of e - businesses is moving from customer acquisition to

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customer retention. Towards this, e - businesses, in addition to providing a usable site, are

integrating Customer-relationship Management (CRM) strategies into the design and

usability of e - commerce environment. These CRM strategies include personalization,

providing consistent customer service across different communication channels of the e -

business, meeting customers’ expectations with regards to product information, giving cues

for trustworthiness (e.g. security seals, data protection assurances), etc. However, CRM

strategies employed in American and West European market places are aimed at an

individual’s (customer’s) self-interest and self-gratification and these might not be applicable

in other cultures, for example, in Asia where, loyalty to family and clan, delayed

gratification, connections and networks of trust and obligations via relatives and extended

family, are valued.

Howcroft B., Durkin M., (2000)31 echoed the impact of new millennium on the

relations of customer had banks and they found that having relatively embraced the concept

of marketing, banks approach the new millennium operating in an increasingly competitive

and fragmented marketplace with financially literate consumers. This competition combined

with the prevailing low interest rate environment means that traditional banks with extensive

branch networks are having their profitability margins squeezed. New technology presents

opportunities for banks to become more efficient (in terms of cost reduction) and more

effective (in terms of customer profiling and informed targeted selling). As many groups of

customers become more content while interacting with their bank through remote

technological channels (e.g. phone, Internet) the implications for bank-customer relationships

are important. Recent research shows that new ‘electronic banking’ channels, while being

keenly embraced throughout the industry, are being pursued more for their cost-based

advantages than for their business development or relationship management capabilities.

Given that the key power of the Internet arguably rests in its interactive capabilities, and that

relationships are predicted upon interactively, it seems appropriate to conclude with some key

issues for future electronic banking strategy with particular emphasis on staff-customer

relationships.

H. Peeru Mohamed and VJ Siva Kumar, (2000)32 scanned that the world is

changing dramatically with the internet which is seen as the panacea for all things that touch

the customer facing processes. It is true that the Internet has significant potential for

increasing revenue, decreasing costs and for retaining customers through improved customer

service. With the practice of LPG, Indian bankers are forced to fine tune their operations

centered on the different segments of customers. In India, there are a number of banks, which

16

have started practicing CRM in their operations. It is imperative for these banks to swiftly

tide over the initial phase and start practicing the art of electronic customer relationship at the

earliest to capitalize on the first mover advantage.

Dretske, F., (2000)33 in his study adjudged the Issues of implementation of CRM

programme as it is well known that implementation of a plan is more important than the plan.

He studied the role of the technology in the implementation and its requirements and

concluded that business intelligence and analytical capabilities, unified channels of customer

interaction, support for web-based functionality, centralized repository for customer

information, integrated workflow, integrated with ERP application are the major essentials

needed for the implementation of the CRM programme results into increase in customer

satisfaction, increase in customer loyalty, decrease in customer defection, able to identify

profitable customers, measuring customer profitability and measuring customer lifetime

value.

Kandampully J., (2000)34 acknowledged the relation of innovation and relationship

management in customer retention and summarized that services lie at the very hub of the

economic activity of all societies, and interlink closely with all other sectors of the economy.

The exponential growth of services internationally has not only intensified competition, but

has also simultaneously posed a growth of services, and emerging views on what constitutes

a “resource” for service organizations by examining the roles of technology, knowledge and

networks as interdependent factors. It is argued here that today’s “resources” are the

culmination of various advances in knowledge. Technology facilitates the maintenance of

networks with customers and partners inside and outside the firm.

Krishnaiah, V.S.R., (2000)35 conducted the study on branding and relationship

management and its impact on the customer retention and depicted that the rise and fall of

branding and its management is due to the perception of the customer based on their

experiences. Though branding is an age-old concept, it assumed greater importance during

the mass marketing era when the brand owners had no direct contact with the ultimate

consumers and vice versa. Brands became the embodiment of product value, customer

relationship and company image. However, the downfall started with the emergence of the

Internet era. He also concluded that emergence of CRM provides a new model of Business

Equity that looks at issues in an integrated manner. Basically, the age of interactivity has

made it possible for companies to address customers on one- to- one basis and custom design

products according to individual specifications. Hence, the traditional brand management

17

concept is giving way to a new integrated model of business equity that combines brand,

customer and value equities.

Joe Peppard, (2000)36 articulated that many financial service organisations are

rushing to become more customer focused. A key component of many initiatives is the

implementation of Customer Relationship Management (CRM) software. He has highlighted

that most institutions take a rather narrow view of CRM and as such, benefits have been

limited. While second generation CRM has emerged to embrace the total organisation (hence

Enterprise CRM), success in general has still not been widespread. He has presented a

framework, which is based on incorporating e-business activities, channel management,

relationship management and back-office/front-office integration within a customer centric

stratum.

Pranay Shah, (2000)37 exposed the issues of implementation of CRM programme as

it is well known that implementation of a plan are more important than the plan. He studied

the role of the technology in the implementation and its requirements and concluded that

business intelligence and analytical capabilities, unified channels of customer interaction,

support for web-based functionality, centralized repository for customer information,

integrated workflow, integrated with ERP application are the major essentials needed for the

implementation of the CRM programme results in to increase in customer satisfaction,

increase in customer loyalty, decrease in customer defection, able to identify profitable

customers, measuring customer profitability, and measuring customer lifetime value.

Hemachandra Mulrlidhar Padukar, (2000)38 portrayed that the CRM as a strategy

used to learn more about customer needs and behaviors in order to develop stronger

relationships with them There are several electronic components used to support CRM that

makes the concept as e- CRM. He studied the role of technology in the better performance of

the CRM. The electronic components are very significant as it provide better customer

service, cross sell products more effectively, help sales staff close deals faster, simplify

marketing and sales processes, discover new customer and increase customer revenue.

M J Xavier, (2000)39 performed the study on branding and relationship management

and its impact o the customer retention and depicted that the rise and fall of branding and its

management is due to the perception of the customer based on their experiences. Though

branding is an age-old concept, it assumed greater importance during the mass marketing era

when the brand owners had no direct contact with the ultimate consumers and vice versa.

Brands became the embodiment of product value, customer relationship and company image.

However the downfall started with the emergence of the Internet era. He also concluded that

18

emergence of CRM provides a new model of Business Equity that looks at issues in an

integrated manner. Basically the age of interactivity has made it possible for companies to

address customers on a one- to- one basis and custom design products according to individual

specifications. Hence the traditional brand management concept is giving way to a new

integrated model of business equity that combines brand, customer and value equities.

Jarrare Y.F.; Neely A., (2000)40 determined the key for profit in the banks are the

customers who make the organization profitable and the Customer relationship management

(CRM) is a growing trend in banks on which billions have already been spent. Financial

service providers are, however, recognizing the many challenges they face in implementing

an enterprise CRM business strategy. They identified that the requirements for a successful

cross-selling system is to provide an external input to the current initiative already underway

at the bank.

Swift, (2001)41 investigated that CRM as a process aimed at collecting customer data,

finding profiles of customers and use the customer knowledge in specific marketing

activities. CRM has been seen as an IT-enabled business strategy focusing on developing and

retaining customers through increased scores on satisfaction and loyalty.

Dibb S., (2001)42 surveyed the impact of customer relationship on the bank’s

performance and found that technological advances are changing the nature of marketing

channels and altering how consumers shop. The changes are improving marketers’ ability to

capture and manipulate data, leading to an enhanced understanding of customers. Financial

institution is using these technological capabilities to target the individual needs of

customers. As the benefits of customer relationship management (CRM) are brought to the

fore, this focus on the ‘segment of one’ has become a feature of the service offered by some

banks and financial services institutions. Thus he finally concluded that banks should treat the

individual customer differently on the basis of their different requirements.

Lynette Ryals, Adrian Payne, (2000)43 displayed the customer relationship

management in managerial services and summarized that relationship marketing is concerned

with how organizations manage and improve their relationships with customers for long-term

profitability. Customer relationship management (CRM), which is becoming a topic of

increasing importance in marketing, is concerned with using information technology (IT) in

implementing relationship-marketing strategies. They further reported the adoption and use

of CRM in the financial services sector.

R Ashok Babu, (2001)44 substantiated the importance of CRM in service industry

and role of information technology in retaining the customer and also uncovered the

19

importance of customer satisfaction in the sector and stated as companies become

increasingly e-business focused, there is a need to align ones existing CRM strategy with its

online strategy. He concluded that an e-CRM consists of the content, store front and

merchandising, e-mail management, customer management, e- marketing and managing the

relationship which is essential for the accurate and effective results of CRM. The services are

tangibly intangible product of the market and many of the elements of service are not

quantitative in nature and hence no measurable. This makes the marketer think beyond

customer satisfaction whereas CRM is very vital for companies in the present highly

competitive scenario. However across the organization, attitude towards customer service

should be included and this should be driven from the top management to downward.

Lynette, Ryals and Simon Knox, (2001)45 calculated the effect of cross functional

Issues on implementation of CRM programme of a company and found that there is a major

change in the way companies organise themselves as firms switch from product-based to

customer-based structures. A key driver of this change is the advent of Customer

Relationship Management, which, underpinned by information systems convergence and the

development of supporting software, promises to significantly improve the implementation of

Relationship Marketing principles. They have explored the three main issues that can enable

(or hinder) the development of Customer Relationship Management in the service sector; the

organisational issues of culture and communication, management metrics and cross-

functional integration — especially between marketing and information technology.

Mayura R. Jayaswal and Ratnaja, (2001)46 promoted that CRM is a term used to

encompass the mythologies and communication capabilities that help organizations to

structure and manage their customer relationship and interactions with the objective of

increasing customer satisfaction with the organizations product or services. Banks of present

days are not just for savings account and working capital loans they now provide all the

financial services under one roof, which is popularly known as universal banks are also

concentrating more on earning fee-based incomes to be able to compete with globalization

and reversionary conditions. This they do by handling all financial activities of their

customers in return for a fee. In a service-oriented set up delivering high quality products

quickly, error free is very important and it revolves all the time around the customers.

Nanaka, L. and H.Takeuchi, (2001)47 inspected the importance of CRM in banking

and role of information technology in retaining the customer and studied the importance of

customer satisfaction in the sector and stated as companies become increasingly e-business

focused, there is a need to align the existing CRM strategy with its online strategy. He

20

concluded that an e-CRM consists of the content, store front and merchandising, e-mail

management, customer management, e-marketing and managing the relationship which are

essential for the accurate and effective results of CRM. The services are tangibly intangible

product of the market and many of the elements of service are not quantitative in nature and

hence not measurable. This characteristic of service being a matter of perception of the

customers makes managing it a complex issue. This makes the marketer think beyond

customer satisfaction whereas CRM is vital for banking in the present highly competitive

scenario. However, across the organization, attitude towards customer service should be

included and this should be driven from the top management to downward.

Lynette, Ryals and Adrian Payne, (2001)48 premeditated the customer relationship

management in financial services and summarized that relationship marketing is cross

functional process concerned with how organizations manage and improve their relationships

with customers for long-term profitability. As a result of this research four critical elements

for successful CRM implementation were identified i.e. CRM readiness assessment; CRM

change management; CRM project management and employee engagement. They advocated

the change management in all the functional areas of the organisation for the successful

implementation of CRM strategy.

S.B. Mohanty, (2001)49 gauged the effect of distribution of electricity on the feelings

of villagers and concluded that in the developed societies, intense competition coupled with

customer education and easy access to information has given rise to a shift in bargaining

power for the customers. Customers are looking for transparency, exercising group pressure,

demanding prompt services and negotiating better terms.

Deshmuk and Romine, (2002)50 evaluated that CRM manages prospective and

existing customer data, coordinates marketing channels, and integrates customer support

functions with back-end office systems. The analytical capabilities of CRM support can

identify profitable customers, products, and regions; conduct life-cycle analysis on

customers; identify productive salespersons; and provide sophisticated sales forecasting

abilities.

Shailey Minocha, Pat Hall and Lisa Dawson, (2002)51 depicted that with growing

competition in the global E-Market place, the focus of E-Businesses is moving from customer

acquisition to customer retention. Towards this, E-Businesses, in addition to providing a

usable site, are integrating customer-relationship management (CRM) strategies into the

design and usability of E-Commerce environment. These CRM strategies include

personalization, providing consistent customer service across different communication

21

channels of the E-Business, meeting customers’ expectations with regards to product

information, giving cues for trustworthiness (e.g. security seals, data protection assurances),

etc. however, CRM strategies employed in American and West European market places are

aimed at an individual’s (customer’s) self-interest and self-gratification and these might not

be applicable in other cultures.

Dimitrios Stamoulis, Panagiotis Kanellis and Drakoulis Martakos, (2002)52

reported that an information system should be seen as a form of communication in a bank

facing the challenge of assessing the value of its main e-banking channel in operation, which

is considered as the major tool for CRM. He also suggested that planned communication

helps the bank in developing and maintaining the long-term relationship with the customer.

Hugh Wilson, Elizabeth Daniel and Malcolm McDonald, (2002)53 carried out the

research to ascertain the importance of effective customer relationships as a key to customer

value and hence shareholder value is widely emphasised. In order to enhance these

relationships, the application of IT to marketing through customer relationship management

(CRM) software, e-commerce and other initiatives is growing rapidly. This study examines

the factors that influence the successful deployment of CRM applications, with particular

emphasis on those factors which are distinct from other areas of application. Using the

analytic induction method, success factors were derived from five in-depth case studies.

Resulting factors under emphasised in previous literature include: the need for project

approval procedures which allow for uncertainty; the need to leverage models of best

practice; the importance of prototyping new processes, not just IT; and the need to manage

for the delivery of the intended benefits, rather than just implementing the original

specification.

M.P. Gupta and Sonal Shukla, (2002)54 enfolded that CRM system are particularly

relevant to Retail Financial Services companies, allowing much of the management of the

customer relationship to be automated with the objective of maximizing the profitability of

individual customer relationships whilst minimizing the cost of managing those relationships.

The various issues examined include organizational information, the CRM strategy, strategic

changes resulting from CRM implementation, implementation priorities for the banks and the

factors indicating the performance after CRM implementation. They revealed that CRM is

gradually picking up and is definitely considered as a viable proposition by banks in

improving services to their customers. One of the major challenges experienced during

implementing CRM is resistance to change. To get CRM to work, high commitment is

required in those who are implementing it.

22

Yurong Xu, David C. Yen, Binshan Lin and David C. Chou, (2002)55 established

that customer relationship marketing (CRM) solutions might be the hottest topic in business

world. CRM impelled the growth of both B2B and B2C markets. They begin with the basic

concepts of CRM, elaborate the characteristics, review its brief history and address the

current status of CRM. Then it develops the extended concepts of CRM from micro- and

macro- perspectives. In the “Implementation and tips” section, it concludes the proper steps

to approach CRM and how to bear a right attitude towards CRM solutions.

Jarrar, Yasar F, Neely and Andy, (2002)56 exposed that customer relationship

management (CRM) is a growing trend in banks today and billions have already been spent

on CRM systems. Financial service providers are, however, recognising the many challenges

they face in implementing an enterprise CRM business strategy. This paper provides an

overview of research work undertaken, in partnership with a major UK bank, to assess the

validity of the sales through service concept. The project aimed at identifying the

requirements for a successful cross-selling system to provide an external input to the current

initiative already underway at the bank. It concludes with recommendations for developing

the cross-selling initiative at the bank.

Bose, (2002)57 outlined a CRM development plan based on the development life -

cycle approach involving acquisition, analysis and use of knowledge about customers so as to

sell more goods and services and to do it more efficiently. An integration of technologies,

working together, such as data warehouse, website internet/extranet, phone support

systems, accounting ,sales marketing and sales has been called for by the author. The analytic

functions desired have been proposed to be fulfilled by separate systems such as decision

support systems and expert systems.

A similar approach is suggested by Lee and Hong, (2002)58 to create an

organization-wide KM infrastructure in banks In the model, database, data warehouse, digital

library, data mining and online analytical process (OLAP) are suggested as being the tools to

capture and develop knowledge. The model, however, is general to organizational KM rather

than specific to customer knowledge creation.

Nairn, (2002)59 commissioned that most of the companies are now adopting CRM as a

mission-critical business strategy. He also reported that the organisations in the survey

believed that CRM was a crucial and integral part of their long-term business planning

process.

Anne-Marie Croteau and Peter Li, (2003)60 highlighted that as an increasing

number of organizations realize the importance of becoming more customer-centric in today's

23

competitive economy, they are also discovering that they must deliver authentic customer

knowledge across multiple organizational functions and at all customer touch points.

Alexandra J. Campbell, (2003)61 found in his study that increasingly demanding

customers have prompted many firms to implement customer relationship management

(CRM) programs, little is known about the internal processes that assist organization-wide

learning about individual customer relationships. He proposed a conceptual framework about

the internal processes involved in creating customer knowledge competence, which allow

firms to strategically manage their CRM programs.

Jain and Dhar, (2003)62 considered the determinants of customer relationship

management effectiveness in India. It was found that customer relationship management

emerged as a core business process for maintaining and enhancing the competitive edge in

modern business affairs. In the area of bank services, the issue of customer relationship

management holds much importance. Many a times, it is the CRM that becomes the deciding

factor while selection of services. Customer loyalty is directly related to the CRM efforts

made by the service sector companies.

Johannes Liebach Lüneborg and Jorn Flohr Nielsen, (2003)63 measured the path to

relationship-marketing performance through the application of new technology in the broad

sense. They analyzed differences due to size in the use of Internet-banking and customer-

relationship management. The findings mainly indicate that the positive effects of using

customer-focused technology are strongest in small banks. Large banks generally have the

most sophisticated applications but they do not outperform small banks. Small banks seem to

have reached a sufficient technological level through inter-firm cooperation.

Injazz J. Chen and Karen Popovich, (2003)64 unhurried that customer relationship

management (CRM) is a combination of people, processes and technology that seeks to

understand a company's customers. It is an integrated approach to managing relationships by

focusing on customer retention and relationship development. CRM has evolved from

advances in information technology and organizational changes in customer-centric

processes. Companies that successfully implement CRM will reap the rewards in customer

loyalty and long run profitability. However, successful implementation is elusive to many

companies, mostly because they do not understand that CRM requires company-wide, cross-

functional, customer-focused business process re-engineering. Although a large portion of

CRM is technology, viewing CRM as a technology-only solution is likely to fail. Managing a

successful CRM implementation requires an integrated and balanced approach to technology,

process, and people.

24

Monica Law, Theresa Lau and Y.H. Wong, (2003)65 analyzed three perspectives on

customer relationship management (CRM) developed by academics. Numerous paradoxes are

illustrated, as it could bean integrated corporate approach, a specific strategy to customer

behavioral modification or differential customer treatment. He highlighted that an

evolutionary change in the concept of CRM is required. Three key findings have been made.

First, customers should be the major focus, and companies are actually dealing with

customer-managed relationships (CMR). Second, it is not just a one-to-one relationship

pattern. The linkages with other parties are the cores of the relationships between customers

and companies. It should, therefore, be a one-network-one relationship. Third, a co-creative

approach should be used in order to integrate the CRM and CMR concepts to enable

customers to participate in corporate strategy formulation and to encourage companies to

cooperate with third parties in serving customers. The financial service sector is taken as a

major example to illustrate the full concept of CRM and CMR. Managerial implications

arising from the implementation of the co-creative approach are explored, which include

market share and mind share.

Jonghyeok Kim, Euiho Suh, Hyunseok Hwang, (2003)66 articulated the role of

CRM in new millennium business and concluded that Customer relationship management

(CRM) has become one of the leading business strategies in the new millennium. CRM is a

broad term for managing business interactions with customers. The effectiveness of CRM can

be measured as a satisfaction level achieved by CRM activities. Although CRM has emerged

as a major business strategy for e-commerce, the effectiveness of CRM is evaluated. Because

it is difficult to demonstrate tangible returns on the resources expanded to plan, develop,

implement, and operate CRM, the aim of the research is to measure the intangible attributes

of these benefits, such as value enhancement, effectiveness, innovation, and service

improvement.

Anna S. Matilla and Cathy A. Enz, (2003)67 attributed the role of customer

emotions in service marketing and its significance in retention of the customers and

employees. The study revealed that providing understanding of the influence of affect in

consumers’ responses to brief, non personal service encounters. They contributed to the

services marketing literature by examining for mundane service transactions the impact of

customer-displayed emotion and affect on assessments of the service encounter and

suggested that consumer’s evaluations of the encounter correlate highly with their displayed

emotions during the interaction and post-encounter mood states. Finally, the findings indicate

that frontline employees are responsible for the ultimate satisfaction of the customers.

25

G.S. Sureshchandar, Chandrasekharan Rajendran, R.N.Anantharaman, (2003)68

accomplished that the effectiveness of quality management programmes are resulting in

enhanced business performance. In service organizations, customer-perceived service quality

is considered as one of the key determinants of business performance. The influence of total

quality service (TQS) dimensions on customer-perceived service quality indicated that the

TQS dimensions, as a whole, are indeed good predictors of service quality. Furthermore, the

soft issues of TQS (such as human resource management, customer focus, service culture,

employee satisfaction, top management commitment and leadership and social

Responsibility) seem to be more vital than do hard issues in positively influencing customer-

perceived service quality.

M.J.Xavier, Dniel K. Shanthakumar, D. K.Shanthakumar, (2003)69 abridged that

Customer Relationship Management (CRM), being a relatively new discipline, is replete with

opportunities for research studies. Some of the ideas discussed in this article include the

development of a scale to measure the depth of relationship, stages of relationship

development and also the underlying dimensions of business relationships. Further, the

research should identify ideal timing (in terms of the stage of relationship and depth of

relationship) for cross selling and up-selling of products and services. Taking the customer

lifecycle into account, the article explores research opportunities at different stages, viz., (1)

customer need assessment and acquisition, (2) customer development through personalization

and customization, (3) customer equity leverage through cross-selling and up-selling and (4)

customer retention and referrals for new customers.

Bas Donkers, Peter C. Verhoef, Martijn de Jong, (2003)70 assessed the relation

between the life time value, customer relationship and retention and depicted that Customer

lifetime value (CLV) is a key-metric within CRM. The prediction of CLV in multi-service

industries is rather complex, because customers can purchase more than one service, and

these purchases are often not independent from each other. As the customer base level are

more complicated the forecasting errors are rather small, which emphasizes the usability of

CLV predictions for customer base valuation purposes.

Adrian Payne and Pennie Frow, (2004)71 reviewed the strategic role of

multichannel integration in customer relationship management (CRM) with the objective of

proposing a structured approach to the development of an integrated multichannel strategy.

Alternative perspectives of CRM are reviewed and it is concluded that adoption of a strategic

perspective is essential for success. Multichannel integration is posited as one of the key

cross-functional processes in CRM strategy development. The nature of industry channel

26

structure and channel participants, channel options, and alternative channel strategies are

reviewed. The customer experience is explored both within and across channels. Market

structure maps, the customer relationship life cycle, and demand chain analysis, are described

as the key steps in building an integrated multichannel strategy.

Babu P. George and Purva G. Hegde, (2004)72 offered a fresh look at the

paradigmatic shifts being experienced by the traditional, government supported banking

establishments, especially those in the erstwhile socialist and mixed economies, in the newly

embraced context of liberalization- privatization-globalization. It attempts to fill a great void

in debates that consistently neglected every voice except that of the triumphant customer by

giving some room for the managerial viewpoint as well. This issue is undertaken in the

context of customer complaints regarding failure in the delivery of banking services. The

article makes a case for the delicate aspect of employees' attitudes, their satisfaction and

motivation, which are posited as prerequisites for customer satisfaction, which is, again, sine-

qua-non for the competitive sustenance of the organization. It argues that sustainable

advantage is possible only through people and any normative proposal to rework the

“apprehension” traditionally attached to complaints should begin with a radical shift away

from perceiving service production and consumption as isolated systems to an altogether new

conception of the product as symbolic of a network relationship defined among the

stakeholders and co-evolved in an environment whose parameters are potentially altered

through recurrent inter-party negotiations involved in the contract. Everything, including the

formation of appropriate policies and training for the frontline personnel to cope up with the

“irate” customers, should be properly informed from this perspective.

Sally Dibb and Maureen Meadows, (2004)73 considered the shift towards

relationship marketing principles and the implementation of CRM in the retail financial

services sector. Many players offering personal banking and related products have now

'bought in' to the concepts behind relationship marketing, and are investing heavily

(particularly in new information technology) to enhance customer relationships and improve

retention rates. This trend is considered from the perspective of an organization that is one of

those leading the change. An in-depth case study reveals the progress made in recent years

towards the company's goals, focusing especially on the introduction of new systems and

moves to enhance customer data. However, they also suggested that major challenges remain

if the benefits of CRM are to be fully realized. Issues involving the structure of the

organization and its approach to a range of staff issues such as recruitment and training are of

particular concerns for the implementation of CRM principles.

27

Malcolm Johnstom and Michelle Tennens, (2005)74 concluded that companies

across the world persist in implementing marketing campaigns that are merely window

dressing and not linked to bottom line results or driven by strategic objectives. Market

research, telemarketing, brand image, collateral development, public relations and customer

relationship management has been considered as the most vital for a successful marketing

campaign.

Amoy X. Yang, (2005)75 scanned that the underlying rationale for a customer life –

time value (LTV) is well established, with the vast majority of literature citing its strategic

benefits to businesses. He presented practical guidelines by using LTV concepts to assess an

entire marketing mix. As such, with a defined analytic goal under given circumstances, a new

term LTVA (LTV averaging) is proposed to facilitate traditional LTV proceeding; an LTV

analysis relies on a constant stream of data to drive its efficiency, which will be specified

with an LTV functional data-mart; whereas LTV affects short-term breakeven rate, a new

benchmark, LTV BE percent, is derived for leveraging decision powers in terms of long-term

profitability.

Riivari, Jukka, (2005)76 determined the utility of mobile phone banking in the

customer relationship management. She found that in the last decade, mobile handsets have

become ubiquitous. There are three times as many mobile phone users as online PCs and they

are becoming very sophisticated and demanding users. Increasingly, they will expect real-

time information and access 24 hours a day, seven days a week, wherever they are in the

world — and they want very high levels of service. She studied that how and why financial

organisations across Europe are beginning to take advantage of mobile services and in

particular mobile banking as a powerful new marketing tool to build long-lasting and

mutually rewarding relationships with new and existing customers.

Mosad Zineldin, (2005)77 analyzed that the bank has to create customer relationships

that deliver value beyond that provided by the core product. This involves added tangible and

intangible elements to the core products, thus creating and enhancing the “product

surrounding”. One necessary condition for the realization of quality and the creation of value

added is quality measurement and control. This is an important function to ensure the

fulfillment of given customer requirements. The key ways to building a strong competitive

position are through CRM, product/service quality and differentiation.

E.W.T. Ngai, (2005)78 divided CRM into five broad categories (CRM – General,

Marketing, Sales, Service and Support, and IT and IS) and further 34 sub-categories. The

most popular areas covered by the papers lay in the sub-category of customer relationship

28

management, planning and strategy; and CRM general, concept, and study followed by

papers in software, tools and systems; data mining, knowledge management, and e-

commerce. The distribution of articles according to their year of publication from 1992 to

2002 as reviewed by Ngai is presented in Figure (1.1) as below:

Blery, Evangelia; Michalakopoulos and Michalis, (2006)79 represented that banks

are facing an aggressive competition and they have to make efforts to survive in a

competitive and uncertain market place. Banks have realised that managing customer

relationships is a very important factor for their success. Customer relationship management

(CRM) is a strategy that can help them to build long-lasting relationships with their

customers and increase their profits through the right management system and the application

of customer-focused strategies. CRM in the banking sector is of strategic importance. In this

study, a single descriptive case study of one major Greek bank that has implemented CRM is

presented.

Alan D. Smith, (2006)80 recapitulated that the rate of those consumers who are

adopting online banking and bill payment services has ranked to be one of the fastest growing

activities The renamed factor groupings included the following constructs: Online

Accessibilities, Security Controls, Online Capabilities, Credit Levels and Education Levels

and were found to capture a significant amount of explained variance. Perhaps the traditional

performance measures of ROE, ROA, ROI and revenue gathering are only indicators of

present performance, the equally important questions about future growth of online banking

may be found in achieving customer satisfaction through proper Customer Relationship

Management (CRM) techniques.

Yarong Chen and Ling Lie, (2006)81 eloquented that in today's highly competitive

global economy, many companies are enhancing their enterprise information systems that

include enterprise resource planning (ERP), customer relationship management (CRM) and

supply chain management (SCM). The result of the study indicates that the most influential

120

100

20

80

40

60

01992 1994 1995 1996 1997 19991993 200120001998 2002

1 1 0 0 2 1 3 6

21

65

105

Num

ber o

f Arti

cle

Figure 1.1: Distribution of articles according to their year of publication

29

factors that affect corporate customers' satisfaction are customer relationship and service

process. Both factors are served as inputs to knowledge management which generates some

new ideas for improving customer services. CRM is a component of enterprise information

systems.

Malte Geib, Lutz M. Kolbe and Walter Brenner, (2006)82 derived that key issues

of CRM in financial services networks are redundant competencies of partnering companies,

privacy constraints, CRM process integration, customer information exchange, and CRM

systems integration. To address these issues, partnering companies have to agree on clear

responsibilities in collaborative processes. Data privacy protection laws require that customer

data transfer between partnering companies has the explicit approval of customers. For

process integration, companies have to agree on process standards and joint integration

architecture. Web services and internet-based standards can be used for inter-organizational

systems integration. Data integration requires the development of a joint data model. Either a

unique customer identification number or a matching algorithm must be used to consolidate

customer data records of partnering companies.

Vyas, Richa Sharma, Math and Nijaguna Rudrayya Bhusnur (2006)83 explored

cross-selling practices in Indian public and private sector banks through the case study

method. The study revealed that cross-selling practices in public sector and private sector

banks are quite different. These differences emerge mainly from their different philosophy,

background and distinct target customer segments. However, both sectors can learn from

each other; public sector banks can introduce specialised training and incentives, whereas

private sector banks need to introduce appropriate control mechanisms and avoid

indiscriminate cross-selling.

Hemalatha Diwakar and Asish Saha, (2006)84 elaborates that Public Sector Banks

(PSBs) in India are embarking on a comprehensive set of Information Technology initiatives.

Since embracing technology alone is not enough to bring operational efficiency and

profitability in the business, it has become critical for PSBs to have an enterprise level

strategy in which technology plans are in total alignment with business strategies. In this

paper, they propose an enterprise architecture which serves as a guideline for PSBs’ IT

strategies. This architecture is based on an assessment carried out on representative PSBs-

studying their business and technology plans, business processes and information

requirements with focus on some key areas like ATM, Credit Risk Management (CRM),

Investment Portfolio Management (IPM), FOREX (Foreign Exchange) etc. Based on the

assessment and best IT enabled practices in the banking industry, an Enterprise Maturity

30

Model (EMM) has been evolved to provide banks a structured frame-work having five

hierarchical layers with defined business objectives at each level starting with basic

objectives like increasing operational efficiency at the bottom most layer and leading up to

very strategic objectives like maximizing wealth and stakeholder value at the highest level.

Lisa Nicholas, (2006)85 supported that it is important to remember that CRM is a

program that touches all areas of the organization and as long as the organization understands

that it takes time, resources, and talented employees to build a successful CRM program then

will all be better off. Over the next few years, it will be interesting to watch the CRM

providers integrate the digital age of mobile banking, RSS feeds, and other digital marketing

trends. One of the most difficult areas for financial institutions will be integrating all the

channels and information into a system that can output a more dynamic relationship pricing

model that benefits the organization and the customer.

Rahman, Zillur, (2006)86 advocated that loyal customers are considered to be the key

to survival and success in many service businesses, in particular in the hospitality, insurance

and financial sectors. The assumption is that with customer satisfaction; loyalty, retention and

profitability will automatically follow. The current thinking is that the relationship between

satisfaction and loyalty is more complex than was originally proposed, a commoditization of

many service offerings continues, new sources of competitive differentiation/advantage will

come from focusing on the management of customer experiences. Because loyalty is so very

important for the survival and profitable growth of a company, measuring it becomes all the

more important. Existing approaches to the measurement of loyalty have not proved to be

very effective in this task. They explored the relationship between experience and loyalty and

concluded that, on average, a majority of customers are satisfied with the present functioning

of the bank but would definitely be delighted if the bank changed its interface with the

customers to become more cognitive (intelligent), emotional, physically pleasing and well

connected.

Aran Sharma and Gopalkrishnan R. Iyer, (2007)87 placed that Customer

relationship management (CRM) adoption is growing at a dramatic pace in firms and is

significantly impacting customer and business market behaviors. As a result, most firms have

started developing and implementing CRM strategies. However, country effects on CRM

strategy outcomes in international environments have not been discussed and are the focus of

this paper. They examined the impacts of marketing infrastructure and marketing institutions

on the development of CRM strategies and success in the implementation of such strategies.

31

Their framework has utility in understanding the impacts of country-specific factors in the

outcomes of CRM Strategy.

Riyad Eid, (2007)88 believed that customer relationship management (CRM) has

been the favored theme for numerous studies and reports. Yet, there is a lack of systematic

empirical evidence regarding the critical success factors (CSFs) for the CRM implementation,

the activities that are affected by the use of the CRM programmes, and their consequent

performance outcomes. He documented the role of the CRM programmes in the banking

sector and identified marketing activities that are affected by CRM usage and founded a

substantial positive effect of the CRM usage on relationships effectiveness and marketing

objectives. His results of the study have major implications for marketing people, the notion

that the CRM critical success factors should be implemented holistically rather than

piecemeal to achieve the full potential of the CRM.

Chen, Zhang, Hu, and Fu, (2007)89 approached the concept of CRM framework

developments from the customer segmentation perspective, highlighting research into the

application of data mining technology in customer segmentation. They proposed a customer

segmentation framework based on data mining but constructed a new customer segmentation

method clustering arithmetic and Survival analysis.

Mendoza, Marius, Perez, and Griman, (2007)90 highlighted that most organisations

perceived the CRM concept as a technological solution for problems in individual areas,

accompanied by a great deal of uncoordinated initiatives. However the authors argued that

CRM must be conceived as a strategy, due to its human, technological, and processes

implications, at the time an organisation decides to implement it and found the three key

factors of every CRM strategy i.e. human factor, processes and technology, which are

providing organisations with a global focus and propitiating success.

Richards and Jones, (2008)91 documented that the increased management of

customer relationships should improve business performance by increasing the firm's value

equity, brand equity and relationship equity which are components of customer equity.

King and Burgess, (2008)92 took into account the technological aspects of CRM

accompanying vendor hype and subsequent failure surrounding CRM initiatives. The authors

identified a need for stronger theoretical models of the entire CRM innovation process which

could then be used by managers to better understand the underlying causes of success and

failure. To address this, King and Burgess developed a conceptual model of CRM innovation

and then converted this model into a dynamic simulation model. To support this framework,

they presented some early simulation results illustrating changes in CRM benefits and

32

organizational support over time along with some of the underlying causes and suggestions

for how managers can counteract potential innovation failure.

Forza and Salvador, (2008)93 in response to flawed CRM software decision-making

provided a conceptualization of the essential functions of Product Configuration (PC),

Product Data Management (PDM) and CRM systems, discussing how these functions help a

company to manage its product variety and how they relate to each other. To augment the

possibilities for successful CRM implementation, they proposed that two core data structures

of PC systems, namely the sales and technical configuration models are essential elements of

the information management infrastructure of a company offering a large variety of products,

because they enable a number of important product variety management functions also

present within PDM and CRM systems.

Rootman, Tait and Bosch, (2008)94 affirmed that to survive in a competitive

business environment, banks need to focus on building and maintaining client relationships

and identify how their employees influence these relationships. They investigated the

influence of variables, with regard to bank employees, on the CRM systems of banks.

Findings revealed that “knowledge ability” and “attitude of bank employees” variables have a

statistically significant impact on the effectiveness of the CRM strategies once again

highlighting the human element central to the nature of CRM’s success or failure.

S.S. Hugar and Nancy H. Vaz, D'Costa, (2010)95 declared that India is on the

threshold of a stark global competition, especially so for the banking sector with the

likelihood of the economy opened for global banks soon. The Indian public sector banks,

which have come face-to-face with competition just since last decade, are found wanting both

with regard to performance as well as their customer orientation. The CRM practices of the

banks can help them in retention of their existing customers in the competitive market.

Parviz Hajizadeh, Mehdi Rouholamini, Azra Hajizadeh, (2011)96 invented that the

CRM practices contribute to a significant lowering of the transaction costs and also to a

reduction of the marketing communication asymmetries. Basically, CRM is an accelerator,

which facilitates establishment and maintenance of mutually beneficial relationship between

banks and customers. CRM applications, or e-CRM applications, are hardware and software

solutions that utilize various marketing and communication strategies and resources to meet

business, public administration, social and other needs. The relationship between banking and

CRM practices is such that nowadays it is almost impossible to think of the former without

the latter.

33

G. Peevers, G. Douglas, D. Marshall, M.A. Jack, (2011)97 evaluated that the

transaction confirmation is shown to be important to customers – whether by an SMS

message or within the IVR telephone call itself. Customers judged the role of SMS for CRM

as highly desirable after monetary transactions; they prefer the version of the IVR banking

service that provides (out-of-band). SMS confirmation compared to one that does not – and

they judged it significantly higher for quality. As a consequence, the tools and facilities

developed are useful in implementation of CRM strategy by the banks.

Purnima S. Sangle, Preety Awasthi, (2011)98 revealed that perceived utility value is

regarded as the most important factor for mobile CRM services. The other factors which

emerged were ease of use, context, compatibility, cost, risk, and personal innovativeness.

Joseph Vella, Albert Caruana, Leyland F. Pitt, (2012)99 resulted that the human

behavior plays an important role in adoption of CRM strategy as the CRM is relationship

between the employees and the customers and both are carrying human characteristics. The

attitude of both employees and customers is responsible for the success or failure of the CRM

strategy.

Joseph Vella, Albert Caruana, Leyland F. Pitt, (2012)100 indicated that the higher

the perceived ease of use, the greater the perceived usefulness and the higher the intention to

use CRM. Moreover, perceived usefulness is also found to act as a partial mediator between

perceived ease of use and intention to use CRM.

Thus, the review of literature clearly signifies the role of customer relationship

management in service industry especially financial service industry and that too in banks

particularly. It has also reveled that the CRM helps in retention of the customers by

enhancing their satisfaction level in regard to the products and services, customer knowledge,

technology, communication and tools used by the banks.

1.2 CONCEPTUALIZATIONBefore examining the conceptual foundations of CRM, defining what CRM is would

be useful. In the marketing literature, the terms customer relationship management and

relationship marketing are used interchangeably. Berry’s notion of customer relationship

management resembles with Levitt that relationship marketing is to establish, maintain, and

enhance relationships with customers and other partners, at a profit, so that the objectives of

the parties involved are met. This is achieved by a mutual exchange and fulfillment of

promises.

34

CRM means seeking customer retention by using a variety of after marketing tactics

that lead to customer bonding or staying in touch with the customer after a sale is made. The

more popular approach with the recent application of information technology is to focus on

individual or one-to-one relationships with customers that integrate database knowledge with

a long term customer retention and growth strategy as defined by Peppers and Roger. A

narrow perspective of customer relationship management is database marketing emphasizing

the promotional aspects of marketing linked to database efforts. As Nevin pointed out, these

terms have been used to reflect a variety of themes and perspectives. Some of these themes

offer a narrow functional marketing perspective while others offer a perspective that is broad

and somewhat paradigmatic in approach and orientation.

Further, Shani and Chalasani have defined relationship marketing as “an integrated

effort to identify, maintain, and build up a network with individual consumers and to

continuously strengthen the network for the mutual benefit of both sides, through interactive,

individualized and value added contacts over a long period of time”. Jackson applies the

individual account concept in industrial markets to suggest CRM to mean, “Marketing

oriented toward strong, lasting relationships with individual accounts”. In other business

contexts, Doyle and Roth, O’Neal and Paul have proposed similar views of customer

relationship management.

Thus the CRM definitions and interpretation vary among academics, across industries,

between organizations and even across departments within the same organization. CRM can

be broken down and segmented into three categories as follows:

1. CRM Philosophy

2. CRM Strategy and

3. Operational CRM

Within the three categories presented above, the researcher will now present a bullet

point review of the literature specific to these areas. The first of these three categories relate

to CRM philosophy.

1.2.1 CRM PHILOSOPHY

CRM is an approach that recognizes that customers are the core of the business and

that the organization's success depends on effectively managing relationships with them,

(Brown).

CRM’s purpose is to build relationship strategies that refine relationships and thus

increase their value, (Storbacka and Lehtinen).

35

CRM as the way to treat customers more as individuals and to exercise their choice

positively towards an organization while embracing many current marketing and

management methods, such as customer loyalty and marketing database management,

(Roberts-Phelps).

CRM is a total discipline that can be linked to a manufacturing business as it uses a

machine (CRM technology), power (people) to turn raw material (customer information) into

products (processes and interactions that build customer loyalty), (Kincaid).

CRM, as all of the elements inside the business, is associated with the customer

function connected in an intelligent manner, (Cunningham).

CRM as an IT enhanced value process, which identifies, develops, integrates and

focuses the various competencies of an organisation to the “voice” of the customer in order to

deliver long-term superior customer value, at a profit, to well identify existing and potential

customer segments, (Plakoyiannaki and Tzokas).

CRM as the process of predicting customer behavior and selecting actions to

influence that behavior to benefit the organization, typically leveraging on IT and database

related tools, (Chye and Gerry).

CRM is the focus of keeping customers and building a strong relationship with them,

thus enhancing customer loyalty, (Pendharkar).

CRM includes the harnessing of technology for mining data related to customer

preferences and behavior. It is the use of these data to design business processes than enhance

efficiency and effectiveness, (Kale).

CRM is a great opportunity to increase customer value and provides a way to

systematically attract, acquire and retain customers, (Lin and Su).

CRM is a process that involves identifying customer wants and expectations,

managing them, closely monitoring the customer experience, anticipating problems and

taking appropriate actions to foster and nurture relationships, (Nancarrow, Rees, and

Stone).

CRM is the process that builds on the relationship marketing idea that lifetime

relationships with customers are more profitable than short-term transactional relationships,

(Ryals).

CRM is a set of tools and processes marketed to large organizations as a way of

facilitating comprehensive customer service organization-wide, (Eichorn).

CRM is a process that provides necessary knowledge for the retailer’s proposition to

reflect individual customer requirements; customer loyalty is more likely to be gained when

36

the customer is won over by both a rational argument and an emotional bond, (Cuthbertson

and Laine).

1.2.2 CRM STRATEGY

CRM is a business strategy that aims to understand, anticipate and manage the needs

of an organization’s current and potential customers, (Brown).

CRM Strategy comprises of elements necessary to develop a market relating

capability as a competitive strategy, (Day).

CRM is a comprehensive strategy and process of acquiring, retaining, and partnering

with selective customers to create superior value for the organization and the customer,

(Parvatiyar and Sheth).

CRM is a customer-centric business strategy that requires alignment among people,

processes and technologies to achieve growth and profitability, (Lochridge).

CRM is a business strategy focusing on winning, growing and keeping the right

customers, (Knox, et al).

CRM is the strategic use of information, processes, technology and people to manage

the customer’s relationship with an organization (marketing sales services and support)

across the whole customer life cycle, (Kincaid).

CRM is the business strategy and model of operation deployed to maintain and

develop relationships with profitable customers, and manage the cost of doing business with

less profitable customers, (M. Stone and Foss).

CRM strategy aims to achieve growth by building and nurturing high-value

relationships with carefully selected groups of customers; through these relationships, both

the organization and its customers can enjoy lifelong benefits; the strategy considers all the

elements that go into a relationship and how they fit together, (Crosby and Johnson).

CRM is a customer-oriented business strategy that involves many business units such

as IT, sales departments, marketing personnel and public relations staff as well as top and

middle management, (Rajola).

CRM is a business strategy that works to ensure every customer interaction (whether

sales or service) appropriate, relevant and consistent regardless of the communication

channel, (Ragins and Greco).

CRM is a business strategy that maximises profitability, revenue and customer

satisfaction by organising around customer segments, fostering behavior that satisfies

customers and implementing customer-centric processes, (Nelson).

37

CRM is a business strategy that aims to maximize customer value by exploiting

proprietary customer data and analysis to acquire, develop, and retain high-value customers,

(Harding, Cheifetz, DeAngelo, and Ziegler).

The final category is that of operational CRM. Below is a bullet point list of

definitions by various authors in relation to operational CRM.

1.2.3 OPERATIONAL CRM

Operational CRM is a process of acquiring, retaining and growing profitable

customers, requiring a clear focus on the service attributes that represent value to the

customer and that create loyalty, (Brown).

Operational CRM is a combination of business processes and technology that seeks to

understand an organization's customers from multiple perspectives to competitively

differentiate an organization's products and services, (Tiwana).

Operational CRM is the optimization of all customer contacts through the distribution

and application of customer information, (Newell and Newell Lemon).

Operational CRM is a management approach that enables organizations to identify,

attract and increase retention of profitable customers by managing relationships with them, as

data-driven marketing, (Ryals and Payne).

Operational CRM is a managerial process that focuses on the development and

maintenance of relationships with individual customers in such a way that value is created for

both the customer and the organization using customer databases, statistical decision-support

tools and interactive communication techniques, (Verhoef and Langerak).

Operational CRM about understands the nature of the exchange between customer

and supplier and managing it appropriately, (Peel).

Operational CRM is the system of how an organization works with its customers,

solves problems for them, encourages them to purchase products and services, and deals with

the financial transactions that includes all aspects of organizations interactions with clients,

(Cunningham).

Operational CRM is a comprehensive approach that provides seamless coordination

between all customer-facing functions, (Goldenberg).

Operational CRM is the dynamic process of managing a customer-organization

relationship such that customers elect to continue mutually beneficial commercial exchanges

and are dissuaded from participating in exchanges that are unprofitable to the organization,

(Bergeron).

38

Following is a sample of the general definitions of customer relationship management

offered in the literature.

Dwyer, Schurr and Oh suggested that CRM refers to the activities directed towards

establishing, developing and maintaining the successful relationships with the customers.

Mckenna defined the CRM as “strategy which puts the customer first and shifting the

role of marketing from manipulating the customer to genuine customer involvement”.

Jackson applies the individual account concept in Industrial Markets to suggest CRM

to mean, “marketing oriented towards strong lasting relationships with individual accounts”.

Berry proposed the relationship management as “attracting, maintaining and – in

multiservice organizations – enhancing customer relationships”.

Shani and Chalasani defined CRM as “an integrated effort to identify, maintain, and

build up a network with individual customers and to continuously strengthen the network for

mutual benefit of both sides, through interactive, individualized and value added contacts

over a long period of time”.

Galbreath puts forward a more detailed definition, “Activities an enterprise performs

to identify, select, acquire, develop, and retain increasingly loyal and profitable customers.

CRM integrates sales, marketing and service functions through business process automation,

technology solutions and information resources to maximize each customer contact. CRM

facilitates relationships among enterprises, their customers, business suppliers and

employees”.

Reed proposes what he describes as “stable” definition of CRM; “Identifying and

interacting with customers for more profitable, long term investment with the company”.

Fletcher focuses on specific tasks in her definition: “CRM is a way of using existing

customer information and of controlling further data as it accumulates over time. Customer

relationship management also means ensuring that staffs on the frontline have easy access to

customer histories.”

Tan et al. faced with widespread global-economic technological and cultural change,

organizations around the world are seeking to enhance the value and profitability of their

existing customer relationships, while attracting new and profitable customers.

Wilson, Daniel and McDonald describe CRM as a management approach that

enables organizations to identify, attract and increase retention of profitable customers by

managing relationships with them.

39

1.3 CRM MODELS AND CONCEPTSThe researcher will now present a selection of the models and concepts discovered in

the review of CRM literature. The work of Parvatiyar and Sheth, Nairn, Anton,

Plakoyiannaki and Tzokas, Verhoef and Langerak, Buttle, Croteau and Li, Anderson

and Narus and Payne and Frow are summarised.

PARVATIYAR AND SHETH

Parvatiyar and Sheth developed a four-stage CRM process framework comprised of

the following four sub-processes:

1. a customer relationship formation process

2. a relationship management and governance process

3. a relational performance evaluation process and

4. a CRM evolution or enhancement process.

The components of their process framework are presented in the Figure 1.2 below.

Parvatiyar and Sheth suggested the formation process of CRM refers to the decisions

regarding initiation of relational activities for an organization with respect to a specific group

of customers or to an individual customer with whom the organization wishes to engage in a

cooperative or collaborative relationship.

Purpose- Increase Effectiveness- Improve Efficiency

Program- Features and Offerings

Partners- Selection Criteria andProcess

Team Structure

Role Specification

Communication

Common Bonds

Planning Process

Process Alignment

Employee Motivation

Monitoring Process

Evolution- Enhancement- Termination

Performance- Strategic Goals- Financial goals- Termination Goals Loyalty Satisfaction

FormationManagement and Governance

Performance

Figure 1.2: The CRM process framework, Parvatiyar & Sheth

40

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

individual relationships must be managed and governed. For mass market customers, the

degree to which there is symmetry or asymmetry in the primary responsibility for whether the

customer or the program sponsoring organization will be managing the relationship varies

with the size of the market.

From this point onward, periodic assessment of results in CRM is needed to evaluate

whether programs are meeting expectations and if they are sustainable in the long run. These

performance evaluations also help in taking corrective action in terms of relationship

governance or in modifying relationship marketing objectives and program features.

NAIRNOver recent years, however, CRM study and practice has come a long way from

where the concept was first introduced in 1998. Nairn presented a CRM Technology timeline

in Figure 1.3 below. This illustrates the technological development that has evolved over the

past 20 years.

Nairn’s technology timeline above shows the successive development of technologies

since the mid-1980s that have forged a chain, each link facilitating the process of collecting,

analyzing and acting on customer information to identify and communicate with the most

profitable customers.

Geodemographics

Early 80s

CustomerService andSupport

1990

Data ProcessingCapability

Early 90s

EPOS

Sales ForceAutomation

1992

Internet

1994

ECommerce

1996

DataWarehousing

1997

Term CRM

1998

Help desktracking

IVR

Documentimaging

ERMS

2000 onwards

Figure 1.3: Technology Timeline, Nairn

41

ANTONAnton puts forward the concept that CRM comprises of two components: Operations

CRM and Analytical CRM as presented in Figure 1.4 below:

Anton’s total CRM system, operational and analytical CRM combines to present and

fully integrated CRM system. Anton stated that when operational CRM is undertaken in

conjunction with analytical CRM, that the total CRM system has a higher probability of

providing customers with the services they want, thereby, offering them a higher return on

investment on their purchase and use.

PLAKOYIANNAKI AND TZOKAS

Plakoyiannaki and Tzokas presented an axiomatic view of the CRM process as

presented in the eight steps below.

Operational CRM

People

Process

Technology

Analytical CRM

People

Process

Technology

Fully integrated CRM=+

MeasureMarketAndManage

Effectiveand efficientuse of

Figure 1.4: Antons Total CRM system, Anton

Create corporate cultureconducive to customer,learning and innovation

Make Customer Value a keycomponent of corporatestrategy

Identify and nurtureknowledge creation,

dissemination and use in theorganisation

Collect, store and transformcustomer and competitive

data

Develop clear marketsegments and customer

portfolios

Define, develop and deliverthe Value proposition

Use campaign and channelmgt as part of the value

proposition

Measure and monitorperformance to navigate

decision making throughout

Figure 1.5: Building blocks of CRM – A Process View, Plakoyiannaki and Tzokas

42

As illustrated in Figure 1.5 above, eight building blocks of CRM presented by

Plakoyiannaki and Tzokas are as follows:

1. Creating a corporate culture conducive to customer orientation, learning and

innovation: A cultural focus that encourages processing and cross-functional sharing

of information and knowledge appreciation is essential.

2. Making customer value a key component of the corporate strategy and planning

process: Goals entail profit orientation through customer, employee and stakeholder

satisfaction and relationship building.

3. Collecting and transforming customer data to aid strategic and operational

decision-making: The CRM process is fuelled by information flows, which

contribute to customer insight generation.

4. Appreciating, identifying and nurturing knowledge creation, dissemination and

use within the organization: Companies embrace CRM, they realize that employees

need to be introduced to new processes, knowledge and technologies and develop a

mindset and skills for relationship building.

5. Developing clear market segments and customer portfolios: CRM enhances the

efficiency of market segmentation.

6. Defining, developing and delivering the value proposition: Ultimately, customer

insight is translated to product and service offerings and delivers constantly

differentiated treatment.

7. Using campaign and channel management as part of the value proposition: CRM

replaces the broadcast mentality of traditional marketing; it relies on a two-way

information flow and attempts to reach customers with appropriate information and

tailored messages.

8. Measuring performance at each stage of the process to navigate decision making:

The justification of the CRM system is anchored in future performance and is often

hindered by the lack of proper measures integrating several activities of the

organization.

Continuing on from these building blocks, Plakoyiannaki and Tzokas presented a

conceptual framework for CRM capabilities in Figure 1.6 below.

43

As illustrated in Figure 1.6 above, Plakoyiannaki and Tzokas illustrated that

capabilities and processes are closely entwined; using the CRM process as a starting point, the

authors propose that the following set of capabilities will determine the success of a CRM

system:

1. Learning and market orientation capabilities: The learning process has been

closely linked with market orientation.

2. Integration capabilities: ‘Weaving’ business processes together into capabilities

mandates integration.

3. Analytical capabilities: Analytical capabilities are linked to technological artifacts

and knowledge and hold an active role in enhancing relationships with customers.

4. Operational capabilities: Operational capabilities utilize and enhance resources.

5. Direction capabilities: CRM initiatives suffer from strategic focus.

This last group of capabilities - often underestimated by CRM commentators - is the

compass for the course of the CRM system and the organization. Direction capabilities

depend on strategic skills and reflect the sharpness of corporate long-term vision and

organizational values.

Direction Capabilities

Operational Capabilities

INTE

GR

ATI

ON

CA

PAB

ILIT

IESCorporate

Culture

Learning and Market OrientationCapabilities

Analytical Capabilities

Figure 1.6: A Conceptual Framework, Plakoyiannaki and Tzokas

44

VERHOEF AND LANGERAK

Verhoef and Langerak stated that the essence of CRM is comprised of three

elements as presented in Figure 1.7 below.

As presented in Figure 1.7 above, Verhoef and Langerak stated that CRM is based

on three aspects of marketing management as follows:

1. Customer Orientation

2. Relationship Marketing and

3. Database marketing.

Verhoef and Langerak affirmed that CRM is the managerial process that focuses on

the development and maintenance with individual customers in such a way that value is

created for both the customer and the organization using databases, statistical decision

support tools and interactive communication techniques.

BUTTLE

According to Buttle, there are three different perspectives on CRM as presented in

table 1.1 below:

Level of CRMStrategic. Dominant characteristicStrategic A top down perspective on CRM which views CRM as a core customer-centric business

strategy that aims at winning and keeping profitable customers.Operational A perspective on CRM which focuses on major automation projects such as service,

force automation or marketing automation.Analytical A bottom-up perspective on CRM which focuses on the intelligent mining of customer

data for strategic or tactical purposes

- Customer orientation- Relationship Marketing- Database marketing

Information andcommunicationtechnology

- Customer orientation- Relationship Marketing- Database marketing

CustomerRelationshipManagement

Figure 1.7: Three Elements of CRM, Verhoef and Langerak

Table 1.1 : Buttle’ s Three Major Perspectives on CRM, Buttle

45

Level of CRM Dominant characteristic

Strategic: A top down perspective on CRM, which views CRM as a core customer-

centric business strategy that aims at winning and keeping profitable customers.

Operational: A perspective on CRM, which focuses on major automation projects

such as service automation, sales force automation or marketing automation.

Analytical: A bottom-up perspective on CRM, which focuses on the intelligent

mining of customer data for strategic or tactical purposes.

CROTEAU AND LI

Croteau and Li present five Critical Success Factors of CRM based on technological

initiatives realized by 57 large organization in Canada as follows:

1. Operational and strategic perceived benefits: The more managers

comprehend and recognize the relative advantage of a specific technology, the greater

the chances for successful implementation.

2. Top management support: The higher the buy-in, the more likely the success of the

initiative.

3. Organizational readiness: Requires a significant level of financial support, IT

sophistication, and technological skill.

4. Knowledge management capabilities: The organisation’s ability to capture, manage

and deliver real time authenticated customer, products and services information.

5. CRM impact: The actual benefits that organizations received through the CRM

initiative.

ANDERSON AND NARUS

Anderson and Narus offered a four step CRM process to assist organizations

selectively pursue more of their customers as follows in Figure 1.8 below:

ESTIMATE SELECTShare-growthprospects on thebasis of

PURSUEThese share-growthinitiatives through

DOCUMENT

Share of customerneeds by marketofferings and bylocations(s) supplied

Value of each offeringsupplied relative tocustomer’s next-bestalternative

Cost to serve bymarket offerings andby locations(s) supplied

Availability ofsignificant incrementalshare of the offering

Superior projectedgrowth in customer’sneed

Customer willingnessto equitable share gainsfrom addedvalue/reduced costs

Focused share building

Broadening the scopeof market offering

Broadening the scopeof market offering

Developmentmultiple, single-sourcing opportunities

Attained versustargeted gain in shareof offering

Added value andreduced cost

Enhanced customerprofitability

Enhanced profitabilityof your company

Figure 1.8: Four Step CRM Process, Anderson and Narus

46

The four steps put forward by Anderson and Narus in Figure 1.8 above is explained

in more detail below:

1. Estimating Share: For any given customer, a supplier's share of business is its

percentage of the customer's total purchase requirements for all market offerings that

the supplier would be able to supply. In short, of the potential business that a supplier

and customer could potentially do together, how much are they doing?

2. Selecting and Pursuing Share: When suppliers know how much of each of their

customers' business they are getting, they can, then, better understand the array of

growth prospects possible with each customer. Further, when suppliers know which

offerings customers value most and the cost of providing those offerings, they can

accurately target those growth prospects that will be most profitable.

3. Focused share building: This relies on account profitability analysis to guide efforts

in building its share of a customer's business. The process avoids pursuing business

that builds revenue but is only marginally profitable. Instead, it seeks to become a

focused single-source provider of a customer's purchase requirements. That is, it

attempts to attain 100 percent of a customer's business in targeted offering categories

while not pursuing others.

4. Documenting the Profitability of Greater Share: Best-practice suppliers have the

discipline to accurately assess their total cost to serve each customer, including the

costs of providing supplementary services, programs and systems. To guide these

decisions, an organization can perform a customer-contribution analysis including

acquisition costs per product group, the cost of sales calls on the customer, the logistics

cost, the handling cost, the credit cost and the year-end bonus paid to the customer.

Thus, the net result and true profit margin for each customer are known.

5. Profiting from Finer-Grained Knowledge of Customers: Beneath the veneer of the

often-heard rhetoric about being "market-oriented" and "customer-focused”, most

companies in business markets still have difficulty being anything more than sales -

oriented. Building the scope of the market offering, broadening collaboration and

multiple single sourcing, each represents a way to grow share of business selectively

with a customer and, at the same time, improve the profitability of doing business

together for both the supplier and customer.

47

PAYNE AND FROW

Payne and Frow claimed their conceptual framework for CRM helps broaden the

understanding of CRM and its role in enhancing customer value and, as a result, shareholder

value. The author’s framework is presented in Figure 1.9.

As presented in Figure 1.9 above, Payne and Frow identified five key cross-

functional CRM processes as follows:

1. A strategy development process: Organizational strategy and its customer strategy.

2. A value creation process: Transforms the outputs of the strategy development

process into programs that both extract and deliver value. The three key elements of

the value creation process are:

a. Determining what value the organization can provide to its customer

b. Determining what value the organization can receives from its customers

c. Maximizing the lifetime value of desirable customer segments.

3. A multi-channel integration process: Takes the outputs of the business strategy and

value creation processes and translates them into value-adding activities with

customers.

BusinessStrategy

BusinessvisionIndustry andcompetitivecharacteristics

CustomerStrategy

Customerchoice andcustomercharacteristicsSegmentgranularity

ValueCustomerReceives

ValuepropositionValueassessment

ValueOrganization

ReceivesAcquisitioneconomicsRetentioneconomics

Co creation

Custom

er Segment Lifetim

e Value A

nalysis

Phys

ical

Virt

ual

Sales force

outlets

Telephony

Direct marketing

Electroniccommerce

Mobile commerce

Inte

grat

ed C

hann

el M

anag

emen

t

ShareholderResult

EmployervalueCustomervalueShareholdervalueCost reduction

PerformanceMonitoring

StandardsQuantitative andqualitativemeasurementResults and keyperformanceindicators

Data Repository

IT systems Analysis tools Front office applications Back officeapplications

StrategyDevelopment

Process

Value CreationProcess

Multichannel Integration Process PerformanceAssessment Process

Information ManagementProcess

Figure 1.9: A Strategic Framework for CRM, Payne and Frow

48

4. An information management process: Concerned with the collection, collation, and

use of customer data and information from all customer contact points to generate

customer insight and appropriate marketing responses.

5. A performance assessment process: Covers the essential task of ensuring that the

organization’s strategic aims in terms of CRM are being delivered to an appropriate

and acceptable standard and that a basis for future improvement is established.

1.4 FOCUS OF THE STUDYWith the above theoretical and conceptual background of Customer Relation

Management, the present study intends to focus on tracing out various determinants of CRM

in Indian Banks i.e. Public, Private and Foreign Sector Banks. This has also been revealed

that research gaps exist in evaluating the effectiveness of CRM in general; and with special

reference to its applications in banking organization in particular. Further evaluation studies

exist on multiple fronts but an integrated view is missing. It has been revealed that none of

the research work mentioned above has given an integrated outcome for the CRM strategies

for Indian banking sector as most of the studies have been conducted on isolated factors. The

perception of this sector about CRM strategies needs to be further researched along with

benefits which this sector hopes to achieve through CRM. This constitutes a research gap and

has been the focus of this paper. As discussed in the previous sections, the existing studies have

multiple points of views but none of them have offered an integral and specific study in CRM

specifically for the comparison of different sector of banks present in India.

Thus a need is felt to initiate research in this direction so as to evaluate a model and

establish relationship between different parameters that will reflect the effectiveness

efficiency of CRM. Building a true objective model is not feasible, it is better to identify the

practices at industry level and then move to generalization. The present work is an initial

attempt at the industry level where the comparison of CRM strategies on Indian Banks will be

made and checked through the customer’s perception.

The study is mainly focused on the origin and development of the concept of

Customer Relation Management (CRM) in India and how it will solve the purpose of

improving the marketing productivity and enhance mutual value for the parties involved in

the relationship. It has the ability to increases the marketing effectiveness and efficiency that

improve the marketing productivity and creates mutual values. It will help in understanding

the effectiveness of CRM programs launched by the various banks. In spite of phenomenal

49

growth in financial sector of the country after 1991, there is a growing general feeling among

the users of the financial services about the security and facilities which are not increasing as

they might have expected. This feeling may be due to the over reliance of Indian investor on

the public sector or nationalized banks than private or foreign banks.

1.5 THE OBJECTIVE OF THE STUDYOn the basis of the researches conducted on the topic of customer relation

management (CRM), personal observation and findings recorded through the survey of the

existing literature, the following objectives could be set for the present study:

To study the need of CRM in Indian Banking Industry.

To examine what CRM strategies the banking industry has formulated for the

convenience and greater satisfaction of the customer.

To assess that how far the CRM strategies designed by bank succeeded in enhancing the

satisfaction level of the customer.

To examine the drawbacks or shortcomings of designed and implemented CRM

Strategies.

To recommend that how the CRM strategies followed by Indian Banks can be

strengthened and what could be the possible new strategies for effective CRM for

optimum satisfaction of the customer.

1.6 HYPOTHESIS OF THE STUDYCustomer Relationship Management leads to the ultimate satisfaction and retention of

the customer especially in the service industry. After the era of free economy the new

entrants have crowded the market and attracting the customers of existing players by

providing the better services than the existing one. To examine the factors related to CRM

strategy and customer satisfaction dimensions of executives and customers, the following

three null hypothesis were framed.

H01: The CRM is highly significant for the banks

H02: The factors of CRM do not have any relation with the CRM strategies of the banks

H03: There is no difference in the CRM strategies of the public, private and foreign banks

operating in India

50

1.7 LIMITATIONS OF THE STUDYEvery effort has been made to focus the study around the chosen objectives. An

attempt has also been made to conduct the study in a precise and accurate manner but any

study at individual level is bound to suffer with certain limitations and constraints. The

present research endeavours with the study of CRM strategies among public, private and

foreign sector banks.

It is very difficult, rather impossible, to cover whole of it in a single study, therefore,

like other studies the present study has also been conducted under the limitation explained

below:-

The measuring tools and instruments are partially reliable and valid.

If the scope of the study is made too wide, the depth is reduced.

More accurate results can be obtained from whole of the population rather than

from sample drawn from a population unless the sample is a true representative of

the population which is quite difficult to achieve. Due to the limitations of time

and resources on the part of investigator, an attempt has been made to delimit the

study in terms of sample, method of study and measuring instruments.

Delimitation in Sampling

The study was delimited to 200 executives and 800 customers of 8 banks (4 Public

Sector, 2 Private Sector and 2 Foreign sector banks).

The study was confined to the jurisdiction of National Capital Region of India

(Delhi and its Neighbor hood cities).

Method

The study adopted the various research techniques and, therefore, suffers from all

those short comings, which are inherent in such techniques.

Instruments

The instruments used to assess the factors of CRM strategy and its significance have

been standardized by the investigator him self. These may not be described as perfect tools

because of the various limitations involved in construction and standardization of tools.

The following are the general and noteworthy limitations and the conclusions and the

suggestions of the study should be considered in the light of the same.

1. The relationship between the implemented strategies and level of strategies has

been examined only on the basis of the perception of the respondents. However,

efforts have been made by the scholars to get the complete and authentic response

51

from the respondents but even then; the few responses are incomplete due to

certain dissentient or unawareness of the respondent.

2. All the respondents may not be using the CRM programme of the banks as they

are not interested sometimes or they are not aware of the facilities.

3. The banks may not provide the actual strategies due to the fear of leakage of

information, which is very important in today’s fast technical era.

4. Apart from primary data, secondary data has also been used in the study. Thus,

study may also suffer from the inherited limitations of the secondary data.

1.8 ORGANIZATION OF THE STUDYThe whole study is divided into six chapters. The chapter first, ‘The introduction’,

introduces the topic with specific emphasis on the nature of the problem, focus of the study,

review of existing literature, defining and conceptualizing the CRM, operationalisation of the

concept, focus of the study, objectives of the study, limitations and organisation of the study.

In chapter second the researcher has included the Research Methodology followed to

complete the study. It covers the current scenario of CRM in Indian banks, brief profile of the

sampled banks, research design, universe and survey population of the study, the pattern of

sample selection, and collection of secondary and primary information, the analysis pattern

with key variables and content analysis and statistical tools used for the analysis.

Chapter three of the study would be devoted to examine the significance or need of

CRM in Indian banks along with a brief detail of the existing CRM strategies or practices

employed by the sampled banks.

The chapter four covers the assessment of various determinants and factors

considered in formulating the CRM strategies and its impact on the customers of sampled

banks. The analysis pertaining to deficiencies in these identified factors or determinants and

the existing gap between the formulation and implementation of CRM strategy has also been

discussed and interpreted in this chapter.

The Chapter five contains the major research findings along with the observations

made in the study. The recommendations to improve the effectiveness of the CRM in banks,

suggestions for future research and the final conclusion have been covered in last part of this

chapter.

52

The brief summary of the study has been the contained by sixth chapter of this study.

The concluding part of the study comprises the appendices pertaining to the questionnaire,

raw data and bibliography of consulted books, articles, records and reports.

53

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