a project on customer relationship marketing

8/3/2019 A Project on Customer Relationship Marketing

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INTRUDUCTION

MEANING OF CRM The need to better understand customer behavior and the interest of many

managers to focus on those customers who can deliver long-term profits has changednow marketers view the world. Traditionally marketers have been trained to acquirecustomers, either new ones who have not bought the product before or those who arecurrently competitors Customers. This has required heavy doses of mass advertisingand price-oriented promotions to customers and channel member. Today, particularlyfor the companys best customers the tone of the conversation has changed formcustomer acquisition to retention. This requires a different mind set and a different

and new set of tools. A good thought experiment for an executive audience is to ask them how activities. While it is difficult to an executive versus retention activitiesfrom each other the answer is usually that acquisition dominates retention.

CRM is neither a product nor a service, But a business strategy to learnmore and mare about the customers behavior them. In other words, CRM is acomprehensive approach that provides seamless integration of every aspect of banks

business that come in contact with the customer at various stages such as marketing,service delivery after sales service etc. through the integration of people, processand technology. It is a comprehensive strategy and process of acquiring, retaining and

partnering with selective customers to create supervisor value for the bank and itscustomers.

The concept of customers relationship marketing (CRM) has stemmed up from thisvery problem of traditional marketing. CRM recognizes the concern for bothtraditional function of marketing and its scope with a goal of developing a crossfunctional, coordinated focus on customers that is to reorient the entire business toface the market.

The focus of marketing has changed from acquiring new customers to retaining old

ones. This requires a different mindset and a different and a new set of tools. A goodthought experiments for an executive audience is to ask them how much they spend or focus on acquisition versus retention activities. While it is difficult to perfectlydistinguish the two activities from each other, the answer is usually, that acquisitiondominates retention.

The following table suggests the evolution of Customers Relationship Marketing:


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Table

Period Focus Area1950s

1960s

1970s

1980s

1990s

Customer Good Marketing

Industrial Goods Marketing

Marketing of Non-Profit Organization or Societal

Marketing

Services Marketing

Customers Relations Marketing

In 1990s the concept of Relationship Marketing has emerged strongly and the focushas been changed from Transaction Marketing to Relationship Marketing as shown

below:

Transaction Marketing Relationship Marketing

Focus on Single sale Focus on customers retention

Orientation on product features Orientation on product benefits

Short timescale long timescale

Little emphasis on Customers Service High customer service emphasis

Limited customer commitment High customer commitment

Moderate customer contract High customers contact

Quality is primarily a concern of Quality in concern for all

Production


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A FRAMEWORK FOR CUSRTOMER RELATIONSHIP

MARKETING

A problem is that CRM means different things to different people. For some, CRMmeans direct e-mails. For others, it is mass customization or developing products thatfit individual customers needs. For IT consultant, CRM translate into complicatedtechnical jargon related to terms such as OLAP (on line analytical processing) andCICs (customer interaction centers).

What do managers need to know about their customers and how is that informationused to develop a complete CRM perspective?

It is explained with the help of following procedure:

Create a Database

Analysis

Customer Selection

Customer Targeting

Relationship Marketing

Privacy Issues

Metrics


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A database of customer activity. Analysis of the database. Given the analysis, decision about which customers to target. Tools for targeting the customers. How to build relationship with the targeted customers. Privacy issues Metrics for measuring the success of the CRM Programme.

1. CREATING A CUSTOMER DATBASE

A necessary first step to a complete CRM solution is the construction of acustomer database or information file. This is the foundation for any customer relationship marketing activity. For web-based businesses, construction of a databaseshould be a relatively straightforward task as the customer transaction and contactinformation is accumulated as a natural part of the interaction with customers. For exiting companies that have not previously collected much customer contract dataform internal involve seeking historical customer contract data form internal sourcessuch as accounting and customer service. Ideally the database should contain

information about the following: a. Transaction - This should include a complete purchase history withaccompanying details (Price paid, SKU, delivery date). b. Customer Contact - Today there is an increasing number of customer contact point from multiple channels and contexts. This should not onlyinclude sale calls and service requests but any customer or company-initiatedcontact. c. Descriptive Information - This is for segmentation and other dataanalysis purposes.

d. Response to Marketing Stimuli - This is part of the information fileshould contain whether or not the customer responded to a direct marketinginitiative, a sales contract or any other direct contact. This data should also berepresented over time.

2. ANALYZING THE DATA


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Traditionally customer database have been analyzed with intent to definecustomer segments. A variety of multivariate statistical methods such as cluster anddiscriminate analysis have been used to group together customers with similar

behavioral patterns and descriptive data which are then used to develop different product offerings or direct marketing campaigns. Direct marketers have used suchtechniques for many years. Their goals are to target the most profitable prospects for catalogue mailings and to tailor the catalogues to different groups.

More recently, such segmentation approaches have been heavily criticized. Takinga large number of customer and forming groups or segments presumes a marketingeffort towards an average customer in the group. Given the range of marketing toolsavailable that reach customer one at a time, using tailored messages designed for small groups of customers (What has been referred to as 1-to-1 there is less need toconsider the usual market segmentation schemes designed for small groups of customers. Rather there is increased attention being paid to understanding each rowof the database-that is understanding each customers and what he or she can deliver tothe company in terms of profits and then, depending on the nature of the product or service, addressing either customer individually or in small clusters.

As a result of new lifetime customer value (LCV) has been introduced intothe lexicon of marketers. The idea is that each row/customer of the database should beanalyzed in terms of current and future profitability to the firm. When a profit figurecan be assigned to each customer the marketing manager can then decide whichcustomers to target.

As noted a new kind of analysis born form the Internet is the click streamanalysis . In this kind of data analysis patterns of mouse clicks are examined fromcyber store visits and purchase in order to better understand and predict customer

behaviour. The goal is to increase conversion rates the percentage of browsingcustomer to actual buyers.

3. CUSTOMER SELECTION

Given the construction and analysis of the customer information contained in thedatabase the next step is to consider which customers to target with the firmsmarketing programs. If segmentation type analyses are performed on purchasing or related behaviour the customers in the most desired segments (e.g. highest purchasing


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rates greatest brand loyalty) would normally be selected first for retention programs.Other segment can also be chosen depending upon additional factors.

If individual customer based profitability is also available through LCV or similar analysis it would seem to be a simple task to determine on which customers to focus.The marketing manager can use a number or criteria such as simply choosing thosecustomers that are profitable (or projected to be) or imposing and ROI hurdle. Thegoal is to use the customer profitability analysis to separate customers that will

provide the most long term profits from those that are currently hurting profits. Thisallow the manager to fire customers that are too costly to service relative to therevenues being produced. The 80/20 rules often holds in approximation, most of acompanys profits are derived form a small percentage of their customers.

Another approach would be to take the current profitability. An obvious problem is that by not accounting for a customers possible growth in purchasing, youcould be eliminating a potentially important customer. Customers with high LCVcould be chosen, as this does a better job incorporating potential purchase. However these customers are difficult to predict and you might include a large number of unprofitable customers in the selected group. No matter what criterion is employedde-selected customers need to be chosen with care. Once driven away or ignoredunhappy customers can spread negative word or mouth quickly particularly in todaysInternet age.

4. TARGET THE CUSTOMERS

Mass marketing approached such as television radio of print advertisingare useful for generating awareness and achieving other communicationsobjective, but they are poorly suited or CRM due to their impersonal nature.More conventional approaches for targeting selected customers include a

portfolio of direct marketing methods such as telemarketing, direct mail, and,when the nature of the product is suitable direct sales.

In particulars the new mantra, 1 to 1 marketing has come to meanusing the Internet to facilitate individual relationship building with customer.An extremely popular form the Internet based direct marketing in the use of

personalized e-mails.

5. RELATIONSHIP PROGARMES


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While customer contact through direct e-mail offerings is a useful componentof CRM, it is more of a technique for implementing CRM than a program itself.Relationships are not built and sustained with direct e-mail themselves but rather through the type of programs that are available for which e-mail may be a deliverymechanism.

The overall goal of relationship programs is to deliver a higher level of customers satisfaction than competing firms deliver. There has been a large volume of research in this area. Research has shown that there is a strong, positive relationship

between customer satisfactions an profits. Thus managers must constantly measuresatisfaction levels and develop programs that help to deliver performance beyondtargeted customers expectations. Sets of relationship programs that can be employedare as follow:

Customer Service

Programs designed to enhance customer service are normally of tow types:Reactive service is where the customer has a problem (product failure question abouta bill product return) and contacts the company to solve it. Most companies todayhave established infrastructures of deal with reactive service situation through toll freetelephone numbers; fax back systems, e-mail addresses and a variety of other solutions. Proactive service is a different matter; this is a situation where the manager had decided not wait for customer prior to complaining or other behavior sparking areactive solution.

Loyalty/ Frequency programs

Loyalty programs (also called frequency programs) provide rewards tocustomer for repeat purchasing .There have been identified some problemswith these programs. There are expensive mistakes can be difficult to correct,as customers see the company, as staking away benefits and perhaps mostimportantly, there are large questions about whether they work to increaseloyalty or average spending behavior. A problem that can be added to this listis that due to the ubiquity of these programs. It is increasingly difficult to gaincompetitive advantage. In addition in some industries, such programs have

become a competitive necessity.

Customization


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The notion of mass customization goes beyond 1-to-1 marketing as it impliesthe creation of products and services for individual customers, not simplycommunicating with them.

Community

One of the major uses of the web for both online and offline businesses is to build a networks of customers for exchanging product related information and tocreate relationships between the customer and the company or brand. The goal is totake a prospective relationship are called communities. The goal is to take a

prospective relationship with a product and turn it into something more personal. Inthis way the manager can build and environment that makes it more difficult for thecustomer to leave the family of the other people who also purchase from the company.

Privacy Issues

The CRM system depends upon a database of customers information andanalysis of that data for more effective targeting of marketing communication andrelationship building activities. There is an obvious tradeoff between the ability of companies to better deliver customized products and services and the amount of information necessary to enable this delivery. Particularly with the popularly of the

internet many customers and advocacy groups are concerned about the amount of personal information that is contained in database and how it is being used thus the privacy issue extends all the way through the hierarchy of steps outlines.

Metrics

Involve a set of tools that companies employ to evaluate the effectiveness of their CRM programs.

2. REALIONSHIP MARKETING STRATEGIES


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There are a number of possible relationship marketing strategies to beconsidered in the development of a relationship marketing plan. Five such strategiesare:

1. Core Service Strategy 2. Relationship Customization 3. Service Augmentation 4. Relationship Pricing 5. Internal Marketing

These strategies are not totally independent of another and can be used combination.A firm might use all five simultaneously.

1. Core Service

A key strategy in relationship marketing is the design and marketing of a `coreservice around which a customer relationship can be established. The ideal coreservice is one that attracts new customers through its need meeting character,cements the business through its quality, multiple parts, and long term nature, and

provides a base for the selling of additional services over time. Core services aredirected toward central rather than peripheral target market needs.

An example of a core service is the individual financial services program

offered through the trust department of Wachovia bank and trust headquartered inWinston- salem, North Carolina. In this program customers select those specificservices they wish from a package of services including tax preparation, cash analysis,

budget assistance, insurance analysis, investment analysis, purchase and safekeepingof securities, financial record keeping, bill paying , asset management, and estate

planning. Customers pay only for those services they select. The individual financialservices program address, affluent consumer need that many banks fail to address, hasmultiple parts, is long-term in nature, and offers a platform form which other financialservices can be sold.

2. Customizing the Relationship

The nature of services affords many services firm the opportunity to customizethe relationship. By learning about the specific characteristics and requirements andindividual costomers, and then capturing these data for use as needed, service firms


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can more precisely tailor service to the situation at hand. In so doing they providetheir customers with an incentive to remain as customers rather than starting overwith other suppliers.

The possibilities for relationship customization are considerable, especiallywhen personal service capabilities are combined width electronic data processingcapabilities. For example, Xerox has introduced a service system called Field Work Support System that involves keeping the history of a customers equipment in acomputerized data bank. When assistant is required, the customer calls work supportrepresentative on a toll free number. The representative can instantly access dataconcerning the customers locations, equipment, and its service record. If the problemcannot be worked out over the telephone using a computer checklist, a field servicerepresentative is sent to the customers site.

Whereas goods are manufactured, services are performed. Frequently they are performed by people who are in the position to custom-fit the service to thecustomers particular requirements. If the customer receives custom service fromcompany A but not form Company B and if receiving custom service is valued bythe customer then the customer is less likely to leave company A for B than wouldotherwise be the case.

3. Service Augmentation

Another relationship marketing strategy is service augmentation. Serviceaugmentation involves building extras into the service to differentiate it fromcompetitive offerings. For meaningful service differentiation to occur, the extras must

be genuine extras- that is, not readily available from competitor that are valued bycustomers. When this is the case, customer loyalty is encouraged. As Levitt writes :Having been offered these extras, the customer finds them beneficial and therefore

prefers doing business with the company that supply them.

One practitioner of service augmentation is the Fairfax Hotel in Washington,D.C. The Fairfax attempts to differentiate itself with its upscale target market by

providing concierge service, night butler and 24-hours room service, a multi-lingualstaff, a morning newspaper delivered to all guest rooms, a mint and cognac with theevening turn down service, and room amenities including terry- cloth robe, linenlaundry bag and bathroom telephone. More that 60% of the Fairfax Hotel guest havestayed there previously.


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One from of service augmentation becoming more prominent is the preferredcustomer club. By inviting priority customers to join a company sponsored club,the service company augments the offer with special services and added prestigewhile establishing a vehicle to stay in touch with these customers through promotionalmailings, newsletters and the like. Marriotts Club Marquis provides still another example from the hotel industry. There is no membership fee to belong to Clubmarquis. The qualify for membership, and individual must stay at Marriott hotels onfive separate occasion and have their visits validated. Members receive the followingservice:

Express reservation service through a toll-free number. Reservations automatically guaranteed for late arrival. Pre-registration. Most deluxe accommodations in the rate category requested. Complimentary Wall Street Journal delivered to the room each morning. Express check-out. Semi-annual newsletter.

Member also receiving and identification card and personalized luggagetags. Club Marquis memberships are honored at all Marriott properties.

The hotel examples used demonstrate the inherent flexibility of serviceaugmentation. The extras can be anything so long as they are valued by thetarget market and not easily matched by competitors. The use of hotelsexamples does not mean, however, the concept is applicable only to hotel. Thereal estate company that spends a portion of land anticipated listingcommission to cosmetically upgrade a home prior to marketing it is usingservice augmentation. So is the car rental company that provides time savingservices to members of a preferred membership club and the bank thatconducts business managements seminars for its small business clients.

4. Relation Pricing

An old marketing idea a better price for better customer forms the basis of relationship pricing, another strategy option available to service companies pursuing customer loyalty. Relationship pricing mean pricing services to encourage relationships. In effect,customers are given a price incentive to consolidate much or all of their business with onesupplier.

Although the concept of quantity discounts is not new, some service companies areapplying the concept in innovative ways. The frequent flyer program of various airlines, which


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offer travelers upgrades to first class seating and free trips if they fly a certain number of mileson a given carrier, are an attempted to build brand loyalty in what many regard as a commodity

business. A poll of more than 6000 frequent flyers indicated that 77% of the respondents were participating in an airline frequent flyer incentive program.

As with the other relationship marketing strategies presented, relationship pricing can be implement in various ways in various service industries.

5. Internal Marketing

A pivotal relationship marketing strategy for many service firms is internalmarketing. There are several forms of internal marketing. What all forms have incommon is the customer is inside the organization. The usage in this paper is the

employee as the customer and the job as the product. The people who buy goods and services I the role of consumer are the same

people who buy jobs. What is known in marketing about selling and reselling themgoods and services can also used in selling and reselling them jobs. The stress placedon customer satisfaction in external marketing is Justas appropriate, just as necessary,in internal marketing.

Internal marketing is relevant to virtually all organizations. It is especiallyimportant, however, for labor intensive service organizations. In these organizations,the quality of services sold is determined in large measure by the skills and work attitudes of the personal producing the services. To the extent that labor intensiveservice firm can use marketing to attract, keep, and motivate quality personnel, theyimprove their capability to offer quality service. Offering services that consistentlymeet the quality requirements of target markets is clearly an important factor in

building strong customer relationship in any service industries.

The process one thinks of as marketing for example, marketing research,market segmentation, product modification, and communications programming are

juust as relevant to internal marketing as to external marketing. Just as marketing

research procedures can be used to identify needs, wants and attitudes in the externalmarketplace, so can they be used for the same purposes in the internal marketiplace.Marriott Corporaation, for instance, annually surveys employees at each of its hotelsabout their jobs. Survey results are discussed with the management of the hotel

property and shared with upper management at Marriott headquarters. MinnesotaPower and Light and GEICO are among the service companies that have regularlyused small group meetings between senior management and employees to encourage


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dialogue and feedback. It employee needs and wants are to be satisfied, they must first be identified. The tools and techniques of marketing research can help.

In essence, internal marketing involves creating an organization climate ingeneral, and job-products in particular, that lead to the right service personnel

performing the service in the right way. In consumption circumstances in which the performance of people is what is being sold, the marketing task is not only that of encouraging external customers to buy but also that of encouraging internal customersto perform. When internal customers perform, the likelihood of external customer continuing to buy is increased.

3. CRM THE NEW FACE OF MARKETING INTHE BANKING SECTOR

With hot winds of competition blowing across the Indian banking industry,developing a close, symbiotic relationship with customers has become highlyimportant than ever before. Banks have to come out with innovation measures tosatisfy the needs of their present customers, acquire new ones and at the same timeadopt procedures to win back the lost customers. This problem gets compounded ascustomer expectstions for quality, service and value are increasing rapidly on acontinuous basis. Thanks to the development of IT and ?Internet, which are changingthe possibilities in terms of customer contact, service and insight, today banks can aimat meeting this expectation by adopting a strategy that is commonly known asCustomer Relationship Management.

Banks can leverage on these new inventions of science to develop, design andimplement CRM strategies in their business processes. Most of the Indian banks are


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now turning to CRM as they are increasingly realizing that the cost of acquiring newcustomer is far higher than the cost of retaining existing ones. Their quest for moreeffective way to woo and retain customers end with the Implementation of CRMmodels in their business practices. They no longer see CRM as an optional andexpensive add-on but as a must to survive in this ever-increasing competitivemarket.

Customer Relationship: What And How?

Before discussing about the customer relationship in detail, it is important tofirst examine who a customer is ? Quite often people wrongly perceive customers asindivuasuals who use the service of bank i.e., the end users. However, the definitionof customer is broader and covers partners, agents, third parties, employees and of course the end customers. Put simply, a customer is any indivual eho has a

relationship with the bank from time to time. Relationships are not built overnight. They pass through different stages namelycontact, involvement, intimacy, deterioration, repair and dissolution. A relationshipcan terminate from any of these stages. It is, therefore, essential for a bank tounderstand the stage at which it could better sell banking services. Cross-selling or up-selling can be attempted at certain stages to get better results. The recent researchindicates that some of the behavioural traits such as adaptation, trust, commitment,communication, cooperation, conflict resolution, interdependence, past satisfaction,

power equation etc., pave the way to building up relations as also to sustain them over

a long period. Adaptation is the prime skill that banks needs to cultivate to tailor their resoursesto meet the specific needs of the individual customer. Alignment of banks resourseswith customers needs is directly proportional to the quantum of trust injected into therelationship , both by the bank as well as its customer. Commitment is another essential ingredient for cementing the relation. A bank has to necessarily becommitted towards the customer for nurturing a fruitful relationship. Secondly, itshould reflect a multidimensional approach that encompasses the dimensions of continuance, normative components and effective components. Continuity of a

relationship is a function of the communication used in extending the cooperation,tracing the disagreement that creeps into the business transaction and style in whichthese conflicts are resolved. In the final analysis, it is the power equation the abilityof one party to evoke a change in other partner that greatly influences the continuityof any relationship.


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As the strategy behind the management of customer relationship is basicallyconcerned with sustaining relationship, it moves around the management of customer life cycle. A typical customer relationship starts with acquisition of customers through

personal visits, media advertisements or through referrals from exiting customers.Then the cycle movers on to customer development by way of personalizedcommunication and offering customized products and services based on what ismutually considered as good. Once the customer equity is built up, bank branches caneasily afford cross-selling and up-selling. But there is a danger of the customer migrating form the relationship, but at what stage and for what reasons the customer ismigrating has to be assessed by the individual bank branches. Using the historicaldatabase, branches can identify the underlying causes for such migration andaccordingly redraft their relationship management strategies to minimize futureattritions.

A bank being an intermediary essentially collects deposits from savers and lends toentrepreneurs at a spread. In the process it assumes the role of a repository of thenational economy. As a result its decisions need to be timely, rational and more apt inthe given context. This multidimensional goal calls for a wealth of data, of which, thecustomer related data is sizeable. A bank to function with the laid down laws of thenations has to necessarily know its customers and decision to sell a credit

product/service demands a thorough scrutiny of the customer profile. And that iswhere the modem concept of CRM through IT-enabled service applies to the bankingsystem.

How Does CRM Affect the Business of Banking?

CRM has a number of positive effects on the running of a bank. It providesmanagement with a clear picture of the business, facilitating decision-making. Using acommon architecture and data model, customer information can be shared faultlessly

between front-end staff facing the customers to deliver services and the back-officestaff who structure the deals. Front-end staff of a bank can profile a customer, createand maintain a customer account with contacts, manage activities, and explore

business development possibilities. Similarly, a call center agent can maintain client

data/information, produce call notes, replies to customer inquiries, and address andtrack customer service requests. In a nutshell, implementation of the CRM concept in banks can result in the following advantages:

Speed and accuracy in information analysis Foundation for organization-wide data and information Understanding customer behaviour


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Facilitating business process re-engineering Multiple products credit, deposits, investment, insurance etc. Multiple distribution channels branch, internet, call center, field salesetc. Multiple customer groups customers, small business, corporation etc.

4. IMPLEMENTING CRM IN INDIAN BANKS

A banks success in the field of CRM fully depends in its ability to achievecustomer intimacy. And customer intimacy can be achieved by understanding andinfluence a customers behaviour through relevant, uninterrupted, and personalizedcommunication. CRMs very motto is not only to attract new clients/customers or hold valuable ones, but also to boost the profitability of every indivuasualclient/customer and, hence, the bank as a whole. In other words, the major goal of CRM is to build a single, integrated, organization wide view of the customer,

enabling the bank to maximize customers experience. By integrating front and back office systems to include reports of all customer contact, purchase of services/products, requests for information and technical support, the bank can presenta single face to the customer and offer better services. Such an interface enables banksto access the potential of customer from time to time and offer him the customized

products to augment profits.


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Suffice to say, getting the CRM philosophy work in a bank is quite complex aswell as a challenging task for the strategists for it demands them to master some key

principles of CRM such as :

a. Offering Vs. Customer Classification

To start with, banks must realize that all customers are not equal. Customer profitability varies from person to person/context to context and not all customers areevenly desirable for the banks. Banks must differentiate their customers based on thevalue criteria i.e. how valuable the customer is? Value is nothing but the profit acustomer adds to the banks account. Put simply, a more profitable customer is a highvalue customer and a less profitable customer is as low value customer. A banksCRM system must also capture customers tastes, preferences, behaviour, living style,age education, cultural background, and physical and psychological characteristics,sensitivity etc., while differentiating them by the value criteria into low and high valuecustomers. By combining the profitability potential of a given customer and his/her

personality profile including their expectations, customers can be grouped in to four categories as follows :

Low value/less profitable customer desiring high-grade service. Low value/less profitable customer with potential to become high valuein coming days. High value/more profitable customer desiring high-grade service. High value/more profitable customer desiring low-grade service.

Once the banks differentiate their customer vis--vis the profitability and their other traits, it becomes easy for banks to customize their services and offerings to maximizethe overall value of their customer portfolio.

b. Sticking to Exiting Clients

According to a research by a software company (Magic SoftwareEnterprises), it is five to ten times cheaper to retain present client/customers than toacquire new ones. Understanding the needs and imperatives of every individualexiting client is at the heart of CRM. A customer has only a single relationship withthe bank when he purchases products and services, and so understands the bank.Banks, on the contrary, have thousands and millions of customer relationships in their

portfolio. Hence, it is practically impossible to satisfy the subsequent needs of each


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and every exiting customer to the same level what he/she had enjoyed at the beginningto the relationship. Thus, retention of customer becomes a challenging task. But asacquiring a new customer is costlier than retaining the exiting one, banks must alwaystry to retain their exiting customers to the extent possible by thoroughly and regularlymeeting their needs. It, however does not mean that the banks should not add newcustomers to their portfolio. Rather, they must acquire new customers while keepingtheir present customers satisfied.

c. How to Retain a Customer

A customer can be retaining by boosting his loyalty. Loyalty can be definedas making a customers bank again and again with the same bank. Banks must keeptheir customers serviced and happy so that they keep transacting with them. Customer loyalty can be differentiated into two categories: active loyalty and passive loyalty.Active loyalty means repeat purchases and contracts made within an appropriate time

period. Similarly, Passive loyalty is a term used to describe customer who have nottransacted with the bank in the absence of a better alternative. Unfortunately most of the Indian banks fail to distinguish between active loyalty and passive loyalty. Theymake the mistake of assuming that customer satisfaction is present in case of passiveloyalty and in this process they fail to retain their customer. To boost customer loyalty, banks must have a clear understanding of their customers unfulfilled needsand must come out with products/services that will satisfy those needs. Banks musthave the ability to promote an individual from being a suspect to become an advertise.They have to innovate to meet every need of their customers so that they become their active advertiser while remaining on the loyalty arc. Turning a suspect into an activeadvertiser will definitely boost the referral sales that are otherwise know as low cost+ high margin sales.

d. Information needed for an Effective CRM Solution

Bankers planning to implement CRM would require a large amount of information about their bank and customer base covering the following:

1. Information about the bank 2. Market information 3. Demographic distribution of present segment of customers by:

o Age

o Sex


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o Level of income o Qualification o Marital status

4. About banks valuable/best customers:

o Products/services they purchase for

o The segment they belong to o Their habits, tastes, preferences o Their businesses and future prospects

5. Customer information at the individual level:

o Personal information (name, address, family background,qualification etc.)

o The customer group/segment to which the individual belongs o Present and past behaviour record o Interests, disinterests, habits and preference

Current Technology Options and Availability of CRM Suites

Though integration of CRM platform is not a difficult concept, its plotting anddeployment can cause headaches to bankers. One of the major requirements is to havea single view of the customer. This is so because multiple views of customers areaccumulated in different databases and repositories with a bank. Some customer information is stood in several customer touch such as deposits, credits, forex,remittances departments besides new outfits like call cetters, e-business channels,direct sales departments etc. while other customer information is stored in back-officesystems that handle tasks such as safe custody, lockers, bill collection, cashmanagement etc. If these systems are made by different vendors, they might not beable to share information, and splitting them out would be costly. However, this

problem could be overcome by using CRM suits and traditional data warehousing andmining products and thereby ensure the display of a single view of every customer atany given point of time.


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Future application possibility will employ the open standards of J2EE, XML, NETas well as C++ and customer-context servers. Nowadays, CRM suites are availablefrom various vendors across the globe including some Indian vendors. However,suites offered by vedor like Oracle, PeopleSoft, SAP or Siebel are often preferred asthey can integrate with back office functions.

Is it necessary to set up a Specialized CRM division?

To be successful, the philosophy of CRM calls for an organization-wide approach.There is no need to set up a specialized CRM division. However, data understanding,warehousing and mining must be made available to everybody, so that theyunderstand the value/profit that each individual customer adds to the bank and howhis/ her future needs will vary form the present needs. It also helps in identifying whatadditionally needs to be done to keep the customer satisfied all the times.

Responsibility of Bank Staff in the Successful Implementation of CRM

like other applications and programs, the success of CRM programs too depends oncooperate management and vision. CRM needs the bank culture to shift from beingtask oriented to result oriented. This change must be initiated by the topmanagement, and must allow the participation of lower-level staff members. Over theyears, many CRM programs have failed primarily dew to inadequate staff support.

5. NEED OF THE STUDY

In todays world of cut throat competition every business unit wants to survive andearn profits. In banking industry, public and private sector is competing to gain moremarketing share shares. So, the fact is how to retain the old customers rather than toattract new customer. At this point, building relations with customers and providingthem the best is very important.

The customer is king today and dictates his on terms to get the best services formthe bank he deals with. So to maintain long term relations with customers and makehim satisfied with services is another very important factor.

Now a days customer wants zero-defect products or services and in such a casetheir complaints have to be rectified frequently, especially in service sector. The studyto be conducted hold its importance as it revels to the banks that customers mayswitch over to another bank if complaint are not removed or services are not up tomark.


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The study holds its importance for all the banks as it acts as a feed back fromcustomers regarding relationship building and customer satisfactions.

As a management student, the study is important as it brings out the importance of CRM in todays service sector.

6. RESEARCH OBJECTIVES

The entire project is concentrated upon following objectives: a. To study the level of satisfaction of customers of HDFC, ICICI,IDBI Bank and Bank of Punjab. b. To make a comparative analysis as to which bank is excelling incustomer relationship marketing in the city of Patiala. c. To know how frequently complaints made by customers arerectified or suggestions given are brought in practice. d. To know brand loyalty of the customer of the bank. e. To understand the factors contributing to the image formation of

the banks.

7. PROFILE OF BANKS


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1. HDFC Bank

History

The Bank was incorporated on 30 th August, 1994. A new private sector Bank promoted by Housing Development Corporation Ltd. (HDFC) , a premier housingfinance company. The bank is the first of its kind of receive an in principle approvalfrom the RBI for establishment of a bank in the private sector. Certificate of commitment of business was received on 10 th October,1994 from RBI as of December 31, 2006, the bank had a India network of 583 branches in 263 cities in India and over 1471ATM's. .The bank transacts both traditional commercial banking as well as investment banking.HDFC, the promoter of the bank has entered into an agreement with National West minister Bank Pc. and its subsidiaries (Natwest Group) for subscribers 20% of the banks issuedcapital and providing technical assistant in relation to the banks proposed banking

business. The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion).

The paid-up capital is Rs.311.9 crore (Rs.3.1 billion).

The HDFC Group holds 22.1% of the bank's equity and about 19.4% of the equity is held byADS Depository (in respect of the bank's American Depository Shares (ADS) Issue). Roughly31.3% of the equity is held by Foreign Institutional Investors (FIIs) and the bank has about190,000 shareholders.

The shares are listed on the Stock Exchange, Mumbai and the National Stock Exchange. The bank's American Depository Shares are listed on the New York Stock Exchange (NYSE) under the symbol.

2. ICICI BANK

History

ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year endedMarch 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank has a network of about 614 branches and extension counters and over 2,200 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and


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ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches inSingapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre andrepresentative offices in the United States, United Arab Emirates, China, South Africa andBangladesh.ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange andthe National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are

listed on the New York Stock Exchange (NYSE).

At June 5, 2006, ICICI Bank, with free float market capitalization* of about Rs. 480.00billion (US$ 10.8 billion) ranked third amongst all the companies listed on the Indian stock exchanges. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financialinstitution, and was its wholly-owned subsidiary ICICI was formed in 1955 at the initiative of theWorld Bank, the Government of India and representatives of Indian industry. The principalobjective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from adevelopment financial institution offering only project finance to a diversified financial servicesgroup offering a wide variety of products and services, both directly and through a number of

subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company andthe first bank or financial institution from non-Japan Asia to be listed on the NYSE. Consequentto the merger, the ICICI group's financing and banking operations, both wholesale and retail,have been integrated in a single entity.

Various steps taken by Bank for increasing CRM

SkyCell Communications Ltd. one of the two cellular service providersin Chennai, has launched Sky Banking, for which the Company has tied up

with ICICI Bank and HDFC Bank. The ICICI has announced the launch the mobile banking services for itscustomers, using the wireless application protocol (WAP) technology. Ford India has tied up with ICICI Bank to introduce a scheme, enablingnon-resident Indians (NRIs) to purchase a Ford Ikon car for their friends andrelatives in India. ICICI Bank has tied up with Chennai Telephones to provide Internet bill

payment facility to its customers. ICICI Bank has tied up with the Siddhivinayak temple trust to enable the

banks infinity (Internet banking) customers to order and pay for a poojaonline, on the occasion of Aandaraki Chaturthi. The Finance portal India Infoline has tied up with ICICI Bank andHDFC Bank for banking back-ends. Tata Tele services Ltd. has tied up with ICICI Bank to enable itscustomers to use Internet banking facility for the payment of telephones bills.


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ICICI Bank will provide credit for online transaction over chemb.com ,the online trading site for chemicals and chemical products, launched byChembazaar online Pvt. Ltd. ICICI become the first financial institution to go for placement of dematerialized debt securities. electricmela.com , the B2B portal for the electrical industry is enteringinto an alliance with ICICI Bank for payment gateways. Spice cell has tied up with ICICI Bank for mobile bill settlements. ICICI Bank and UAE Exchange Centre have entered into a wire transfer arrangement, for electronic and telex transfer of funds. The Bank has tied up with Munshikaka.com to provide value addedservices to its customers. The Kerala Government has joined hands with ICICI Bank to introduceInternet banking facility in the States public sector undertakings. ICICI Bank launched its debit card under the brand name ICICI N-Cash. ICICI Bank and Deutsche Bank have entered into a long-term rupeeinterest rate swap benchmarked to Government bond yields. ICICI Bank has tied up with Advantage e-accounting to offer an on-linetaxation and personal finance services along with off-line services like filling. The Bank has entered into a wire-transfer arrangement calledMoney21India with the United Arab Emirates Largest foreign exchangehouse for transfer of funds to India. ICICI Bank and BPL mobile have tied up to launch a co branded credit

card. To be named ICICI Bank BPL Mobile Credit Card, the card will beoperation by the end of August this year. ICICI Bank has launched its interactive touch screen Kiosk Sparsh atits automated teller machine (ATM)centers and branches allowing free access to its online services. ICICI Bank has introduced Web-based product that facilities on-lineconclusion of forex deals in the city. Visa international and ICICI Bank on September 10, 2001announced

pilot programme for facilitating e-commerce in the country. As parts of its drive to introduced alternate delivery channels ICICI

Bank has launched mobile banking facilities in conjunction with spicecommunications. ICICI Bank and BPL Mobile have tied-up to launch a co-branded creditcard. To be named ICICI Bank BPL Mobile Credit Card. ICICI Bank acquired Shimla in Darjeeling Branches from SlanderedCharted Grind lays Bank.
http://chemb.com/http://electricmela.com/http://electricmela.com/http://chemb.com/


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3. IDBI Bank

History

IDBI Bank Ltd. a premiere technology driven scheduled commercial bank, promoted by IDBI, SIDBI. IDBI bank is constantly looking for ways and means toserve better. This is also reflected in their corporate slogan What can I do for you?.The bank was incorporated on 15 th September, 1994 under the Companies Act, 1956.The Bank was granted a in principle license by RBI to carry on banking business inIndia. IDBI bank was promoted by IDBI and SIDBI, two of Indias premier financialinstitutions. IDBI was set up as a wholly owned subsidiary of RBI to provide creditand other facilities for the development of industry.


IDBI Bank singed an agreement with Gemplus and Worldwide Smart Net to launch smart cards-based solutions and Worldwide Smart Net to deliver Multi Application Payment Chip Operating System smart cards for its India-wide electric pursue rollout. IDBI Principal AMC, the 50: 50 joint venture mutual fund of IDBI andPrincipal Financial Service of the US, proposes to come out with a set of innovative schemes focusing on retirement planning. IDBI Bank has launched Money Home, a housing loan product with afixed rate and floating rate option. IDBI Bank launched its pioneering smart card product under the brandMoney Smart at Renukoot in Uttar Pradesh. IDBI Bank has launched Money Smart card for commercial transactionin Mumbai. The Bank has kicked off its restructuring programme by setting upcorporate and retail banking divisions in addition to an e-commerce team. IDBI Bank is to launch mobile banking as part of its retail bankinginitiatives. IDBI Bank has tied up with Infosys, Reuters and Synergy Log-In torevamp its technology platform in line with its new focus area of retail

banking.


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IDBI Bank, launched Money Mobile, its wireless application protocoland short messaging service mobile banking services, simultaneously atBangalore, Kolkata, Delhi, Hyderabad, Indore and Mumbai. The Bank has tied up with American Express whereby Amexcardholders can access IDBI Bank ATMs to withdraw cash. IDBI Bank has launched a retail investment product for the retirees andvoluntary retirement seekers. IDBI Bank has forged an alliance with MTNL in Delhi to held theaccount holders of the bank to pay their phone bill through ATMs andInternet.

4. PUNJAB NATIONAL BANK

PNB is professionally managed bank with a successful track record of over 110 years.Established in 1895 at Lahore, undivided India, Punjab National Bank (PNB) has the distinctionof being the first Indian bank to have been started solely with Indian capital. The bank wasnationalized in July 1969 along with 13 other banks. From its modest beginning, the bank hasgrown in size and stature to become a front-line banking institution in India at present. Punjab

National Bank is serving over 3.5 crore customers through 4520 branches including 439extension counters - largest amongst Nationalized Banks.

The bank has been conscious of its social responsibilities by financing agriculture and alliedactivities and small-scale industries (SSI). Considering the importance of small-scale industries

bank has established 31 specialized branches to finance exclusively such industries.

It has strong correspondent banking relationship which Punjab National Bank maintains withover 200 leading international banks all over the world enhances its capabilities to handletransactions worldwide. Besides, bank has Rupee Drawing Arrangements with 15 exchangecompanies in the Gulf and one in Singapore. Bank is a member of the SWIFT and over 150

branches of the bank are connected through its computer-based terminal at Mumbai. With itsstate-of-art dealing rooms and well-trained dealers, the bank offers efficient forex dealingoperations in India. Punjab National Bank India maintains relationship with more than 200leading international banks world wide. PNB India has Rupee Drawing Arrangements with 15exchange companies in UAE and 1 in Singapore. Punjab National Bank has its Branches in allthe 7 metropolitan and cosmopolitan cities in India namely New Delhi, Mumbai, Calcutta,Chennai, Ban galore, Hyderabad and Ahmedabad. It even has its branches in small town in bothurban as well as rural areas. PNB is always focusing on expanding abroad and till date hasidentified some emerging economies abroad. They are in few of these places.

Almaty Kazakhktan


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Shanghai China London Kabul Afghanistan


o Bank of Punjab has a wide area network of branches across thecountry. The bank has established correspondent banking relationshipsacross 60 countries. o The Bank has already launched its e-banking services and mobile

phone banking for its customers as value added services. o The Bank has put in place a 24-hour customer care centre

enabling secure Online Banking and information services. o Bank of Punjab has made a strategic tie up with Master CardInternational for its MASTERO, SWADHAN and CIRRUSInternational Card Network. o Over and above its own ATM Network the customer of Bank of Punjab would also be able to access hundreds of ATMs of other Master Card Member bank in India and over 5,40,000 worldwide displayingCIRRUS logo. o The Banks reach is further being extended through over 5000merchant establishments that would be accepting the Banks e-bank

card and the Maestro Debit Card from Master Card.

As a tribute to the memory of its founder late Dr. Inderjit Singh

and his commitment of giving the very bestto customers,employees and the world of Banking, Bank of Punjab has set up astate-of-the-art, Dr. Inderjit Singh Institute of Banking and InsuranceManagement at Gurgaon, near Delhi. The first among pear banks, theresidential institute, of truly international standards, is equipped with

comprehensive training aids, an extensive library and the latest ITtools. The institute provides an ideal learning environment for professionals from banking, insurance and financial sectors.

8. REVIEW OF LITERATURE


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Many studies and researches have been conducted relating to CRM by variousresearches and some of them have been discussed below:

Lovelock (1996) The services sector of the economy is going through a period of almost revolutionary properties in which established ways of doing businesscontinued to be shunted aside. Around he world, innovative new offering, newstandards of services succeeded in the market where established competition hasfailed to please todays demanding customer.

As per Mc Dowell (1953) , CRM has become full-fledged subject of importancetoday. The Eight Ps Product, place, price, promotion, People, process and PhysicalEvidence and Pace-helping meeting customer standards and Expectation thusenhancing quality of Services nd Brand loyalty. Parker (1958), in his DBAdissertation visualized the importance of Customer Services. Johansons Dissertationin 1969, asked the question Are goods and services different? And launched thegoods versus services debate.

The Era of Pre 1980s has been deifned as the Revolution of Services as stated by Regan (1963). During this period the Marketing was at infant stage and lot of things were to cleared. He expressed now the marketing through his traveled a longdistance and the concept of services marketing has come into existence. He describedthe United States as well advance into device revolution that would significantlychange consumer behavior.

Berry (1985, 1988) suggested that the criteria used by customers are important inmoulding their expectations, precipitations and hence satisfaction, fir ten dimensions,these are Tangibility, reliability, and responsiveness, communication, Credibility,security, Competence, Courtesy, Understanding and access. Later the author condensed it to five categories viz. Tangibility, Reliability, responsiveness, Assuranceand Empathy Gronross added the sixth dimension i.e. recovery.

Lewis and Smith (1989) investigated the expectation and precipitation of banksand building society retail customers with regard to 39 elements of services dividedinto 4 dimensions as Physical features, reliability, characteristics of the staff andresponsiveness towards the customers.

Ganesan (1994) suggested that long-term orientation in buyer-seller relationship isimportant, as it is the function of two things: mutual dependence and trust betweenthem. Both these parameters help in bonding of buyer and seller thus improving their relationship.


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Stewart (1998) suggested that as the customer relationship marketing or management is given more stress in the recent past but much emphasis is required onwhy customers exit? Policies, strategies are to frame in order to avoid the situation.

Seethapathi and Karuna (1999) discussed that only those banks would survivewhich would give quality services to the customers and believe in the long termrelationship management.

Vyas (1999) is of the view that customer satisfaction is the core competence toolfor long-term relationship and profitability. He expressed the view that this would be

possible only if the services provided to the customers are of highest quality.

Aggarwal (2000) observed that the customer is the central figure in therelationship marketing as his loyalty can be commanded towards the particular brandof service.

A.Purushothaman (2002) concluded that relationship building leads to customer loyalty, which, in turn, helps in retention of customers. Some highly successfulcompanies use already exiting strong relationships to cultivate and strengthen newones.

Chris Lawer (2004) observed that the organizations who identify opportunities for improving customer relationships and who co-ordinate and measure change in allcustomer impact zones will have a greater chance of success. A disciplined approachto customer management will help them to:

Redefine the interior and construct new interfaces between itself, itscustomer and partners (orientation and interface) Identify new markets, new relationship opportunities, new service

processes and new customer value to create loyalty (Insight and Innovation)

9. RESEARCH METHODOLOGY

PROJECT TITLE

Importance Of Customer Relationship Marketing In Banking Sector (A ComparativeStudy Of IDBI, ICICI, HDFC, BANK and BANK OF PUNJAB In The City Of Patiala)


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SCHEME OF THE STUDY

CHAPTER I It is the introductory chapter relating to the introduction to the CRM andneed, objectives of the study.

CHAPTER II

This chapter deals with profiles of HDFC, ICICI, IDBI, Bank and Bank OFPunjab .

CHATPER III

This chapter review of literature.

CHAPTER IV

This chapter deals with research methodology covering statement of the problem, scheme, and limitations of the study and research methodology.

CHAPTER V

This chapter covers analysis and interpretation of the data collected throughquestionnaires.

CHAPTER VI

This chapter covers the findings and conclusion drawn from the study andvarious recommendations and suggestions given.

DATA COLLECTION METHOD

The present study is based on both primary and secondary data sources.

i. Secondary Sources

1. To study the profile of banking in Patiala, the secondary data wascollected from the District Credit Planner 2002 2003 published by thePunjab National Bank, the lead bank, Patiala. 2. To study the profile of banks and to carry out its swot analysis thesecondary data was collected from internet, newspapers, magazines andinformation brochures of the banks.

ii. Primary Sources


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To study the customer satisfaction level regarding the four banks, the primary datawas collected through a structured questionnaire having both close ended and openended questions.

RESEARCH APPROACH :

Market survey method of data collection by administering the structuredquestionnaire was found suitable.

Survey approach is best suited for gathering descriptive information. This is the mostwidely used method for primary data collection. Its purpose is to collect specific dataconcerning the market that cannot be enumerated from the companys internalrecords. The major advantage of survey research is its flexibility. It can be used toobtain many different kinds of information in many different sitiations.

SAMPLING PLAN

In sampling plan three decisions are to be taken :

I. Sampling Unit

This answers: who is to be surveyed? That is among the total populationwho forms the population for the purpose of research. In this case the customers of HDFC, ICICI, IDBI Bank and Bank Of Punjab were taken up as sampling unit.

II. Sample Size

This answers: what number is to be surveyed? It is difficult rather impossible to survey each and every unit of the population due to certain constraintslike time and cost. The samples are drawn to be surveyed. Here the sample size takenis 100 in total.

III. Sampling Procedure

Convenience Stamping Technique

IV. Contact Method

This answers : how the sample should be contacted? It can be done through personal interview, telephone calls etc. For this purpose, personal interviewingmethod i.e. collecting the information by personally interviewing the respondents andfilling the information in the questionnaire.


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DATA ANALYSIS

The collected data was tabulated and analysed using the simple statistical tools like percentages and weighted average method. The formula used for weighted averagemethod is as follow:

Fn = No. of respondents of an attribute in a specific bank

t = No. of attributes (factors)

x = Total no. of respondents of a bank

Wn = Weight assigned to an attribute

r = Weighted average

LIMITATIONS OF THE STUDY

The project may suffer form certain limitations which are as follow:

a. The findings of the study are based in the subjectiveopinion of the respondents. All though utmost care was taken toget the accurate results, yet because of risk of ambiguities andmisinterpretations on the part of respondents, some element of in accuracy might have crept in.

b. Area of study was Patiala and finding may not hold true for large cross section of population. c. The finding of the survey are based on the opinion of respondents and there is no way of assessing the truth of thestatements. d. Although every effort has been made to includerespondents belonging to various socio-economic backgroundseven then the sample (due to its small size) may not be trulyrepresentative of the universe.


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10. DATA ANALYSIS AND INTERPRETATION

It is the important aspect of the entire market research. The result from the qutionnairre areanalysed by applying various tests like percentages,+weighted average etc. and interpretation ismade on the basis of data analysed . These results are helpful both for the user and fir theorganisation for which the researcher is conducted .

In all 100 questionnaries were analysed . Entire sample coverd respondents belonging todifferent categories , depending upon the demografic characteristics. The respondents belongingto different categories, depending upon the demografic characteristics . The respondents whowere interviewed are the existing customers of HDFC Bank, ICICI Bank, IDBI Bank and Bank of Punjab . The respondents were to answer in all 9 questions. Each question was analysed on the

basis of relevant technique and interpreted as under:

RESPONDENT PROFILE

Respondents gave brief information about their age , education ,occupation , monthly incomeand their background . This information was collected so as to give respondents profile withrespect to this study.

1. Age

100 respondents forming sample were categorized in the following age group:

Table 1: Age wise distribution of respondents


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Age Group No. Of respondents (% age)20-30 4330-40 3540-50 or above 22

Table 1 reveals the maximum % age of respondents i.e. 43% were in the age group of 20-30years followed by 35% in 30-40 years and 22% in the age group of 40-50 years.

2) Occupation

Occupations of respondents were categorized into four groups.

Table 2: Occupation wise distribution of Respondents

Occupation No. Of Respondents (%age)Student 15

Salaried 43Businessman 25Professional 17

Table 2 reveals the most of the respondents i.e. 43% were salaried followed by 25% belonging to business class, 17% professional and 15% were students.

3) Qualification


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Respondents were segmented into three groups on the basis of qualifications.

Table 3: Qualification wise distribution of respondents

Qualification No. Of respondents (%age)

Undergraduate 10Graduate 51Postgraduate 39

Table 3 reveals the maximum number of respondents 51% were graduates, followed by 39% as post graduates and 10% undergraduates.

4) Monthly Family Income

Table 4: Income wise distribution of Respondents

Monthly Income (Rs.) No. of respondents (% age)

10000-15000 6915000-25000 2325000 and above 8

Table 4 reveals that 69% of respondents belong to the income group of Rs. 10000-15000followed by 23% in Rs. 15000-25000 group and 8% in income Rs. 25000 and above group.

FINDINGS OF THE STUDY


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Table 5: No. Of customers in various Banks

Banks No.of Respondents PercentageHDFC 25 25%ICICI 25 25%IDBI 20 20%PNB 30 30%

Table6: Length of relation (%age)

YearBank

Less than1Year

Between 1-2Years

Between 2-3Years

Between 3-4Years

More than 4years

HDFC 28 28 32 12 0ICICI 20 40 24 16 0IDBI 30 70 0 0 0


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PNB 26 30 20 16 8

Table 6 reveals that most of the respondents for HDFC bank are sustaining their relations for more than 2 years but less than 4 years. For ICICI bank the length ismore favorable towards 1-2 years and 2-3 years. As IDBI bank has been recentlyopened its branch in Patiala, so most of its customers are 1-2 years old. PNB havecustomers almost equally distributed over times with more concentration on 1-2 years.

Table 7: Service Accessed by Respondent (%age)

Services HDFC% ICICI% IDBI% PNB%

Deposits

Loans

Credit cards

ATM

Net Banking

Tele Banking

100

60

44

100

40

36

100

52

36

100

28

24

100

40

20

100

25

20

100

40

33.3

100

26.67

23.3

The above table shows that all the respondents from the sample of all the four banksare accessing the deposits from the deposits and ATM. Loans and credit cards arefairly accessed by the respondents. Net Banking and Tele banking are also showinggood levels of awareness but still in their infancy stage.


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Table 8: Rating of the services (weighted Average)

Factors HDFC ICICI IDBI PNBEmployee Attitude

Wide Range Of Products

Security

Client Servicing

Teller operations

Infrastructure Facilities

Network

Location

Returns on Investment

ATM Transactions

3.76

3.24

3.16

3.36

3.32

3.08

3.16

3.44

3.72

3.96

3.92

3.60

3.56

3.72

3.48

3.36

3.60

3.84

3.64

3.88

3.50

3.05

3.25

3.40

3.55

3.00

2.90

3.30

3.75

3.75

3.63

3.56

3.76

3.23

3.36

3.26

3.53

3.76

3.83

3.96

Table 8 and figure 4 has been clearly showing information relating to rating given tovarious services provided by banks. It clearly indicates that ICICI is doing the best ascompared to other three banks if all the factors are taken in a composite but still thereis scope of improvement in Teller operations and ATM transactions.

HDFC bank needs to improve on networking, client servicing, Teller operations andsecurity. People are satisfied with other factors as far HDFC bank is concerned.

The main factor influencing the decision of respondents regarding the choice of IDBI

Bank was its return on investment, Teller operations and ATM Transactions. Rest allother factors are on a back seat as compared to other banks. PNB needs to improve onclient servicing, employee attitude and Teller operations. But people are moresatisfied with other factors as far as PNB is concerned. It is giving tough competitionin almost all factors to HDFC bank and in ahead in some.


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Table 9: General Environment Of The Banks (weighted Average)

Factors HDFC ICICI IDBI CBOPConvenient Working Hours

Proper decorum

Proper parking facilityNo over crowding

Proper guidance

Documents at proper place

Proper sitting arrangements

3.76

3.64

3.082.92

3.64

3.68

3.56

3.8

3.56

2.842.96

3.52

3.52

3.48

3.55

3.25

2.652.95

3.35

3.45

3.3

4

3.7

3.033.1

3.43

3.6

3.7

According to table 9, it seems that respondents are not happy with the overcrowdingduring working hours in HDFC Bank. Also many were of the opinion that there needs


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to be improvement in proper sitting arrangements and decorum. ICICI Bank is alsofacing similar kind of problems. Improvement in parking facility required. IDBI needsto improve on all factors. PNB should provide proper guidance and parking facility tothe customers.

Table 10: Total time taken for transactions of HDFC Bank (% age)

Attribute Less than 5 5-10 min. 10-20 min. More than 20Open an account 16 20 48 16Receipt of cash 4 44 44 8Payment of cash 4 48 40 8Issue/renewal of FDs 4 44 40 12Overall services at front desk 0 40 52 8

From Table 10, the results reveal that the bank has timely completion of transactionsand generally complete the transactions with (5-20) min. time range which is quitequick and satisfactory but 12% people going for more than 20 minutes inissue/renewal of FDs as well as 16% going for opening an account means that thereneeds to be close monitoring of these two aspects.

Table 11: Total time taken for transactions of ICICI Bank (%age)

Attribute Less than 5 5-10 min. 10-20 min. 20 min. and moreOpen an account 8 16 60 16Receipt of cash 12 28 44 16Payment of cash 8 32 44 12

Issue/renewal of FDs 4 32 40 24Overall services at front desk 0 32 56 12

Table 11 shows that ICICI Bank is able to complete most of its transactions in 5 to 20minutes. Here also the process of issue/renewal of F.Ds, Receipt of cash and opening


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of an account needs to be quicken up.

Table 12: Total time taken for transactions of IDBI Bank (%age)

Attribute Less than 5 5-10 min. 10-20 min. 20 min and moreOpen an account 0 0 25 75Receipt of cash 0 35 45 20Payment of cash 0 35 45 20Issue/renewalof F.Ds 0 15 50 35Overall services at front desk 0 20 45 35

The results reveal that the bank has not timely completion of transactions andgenerally complete the transactions using more than 10 minutes and in some caseseven more than 20 min., which is not quick and satisfactory.

Table 13: Total time taken for transaction of PNB (%age)

Attribute Less than 5 5-10 min. 10-20 min. 20 min. and moreOpen an account 6.67 7 56 30Receipt of cash 0 47 47 7Payment of cash 7 39 40 13

Issue/renewal of FDs 7 33 43 16Overall services at front desk 0 32 37 30


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The results reveal that the bank has timely completion of transactions and generallycomplete the transactions within (5-20) min. time range which is quite quick andsatisfactory. Overall services at front desk and opening of account needs to bequickened up.

From above tables it is clear that all the banks seem to be able to complete most of transactions within (5-20) min. time frame except IDBI Bank. HDFC Bank has beenmost successful in completing most of the tasks in 5-10 minutes with ICICI bank andPNB closely following it.

Table 14: Response regarding the problems (%age)

Problems HDFC ICICI IDBI PNBYes 65 30 53 55

No 35 70 47 45

Table 14 shows that people are having less problems in HDFC Bank. Few are facing problems in ICICI bank and CBOP but a majority of them are facing some kind of problem in IDBI bank.

Table 15: Problems as faced by the respondents

Problems HDFC ICICI IDBI PNBLimited Products

Time consuming Procedure

Poor Personalized Banking

Limited Network

Complicated Documentation

0

8

5

3

4

0

5

3

1

2

3

9

10

9

8

5

11

8

7

7


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In HDFC bank more people were concerned about the time consuming procedure butICICI bank customers would love to see the personalized banking and network improve. In IDBI except limited products, rest all aspects are proving to be problemsfor respondents. In PNB more people were concerned about the time consuming

procedure and personalized banking.

Table 16: Percentage of Respondents going for each scale for banks (%age)

Rating HDFC ICICI IDBI PNB

Excellent 10 8 3 4

Very Good 20 25 10 15

Good 40 30 32 37Average 15 24 30 30

Poor 15 13 25 14

Table shows that the respondents rate HDFC BANK highest. The respondents rate ICICIBANK and PNB equally55 while IDBI bank is far behind of all the banks.

Table 17: Suggestions given by Respondents (%age)

Suggestions/ Complaints HDFC ICICI IDBI PNBYes 37 24 35 42


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No 63 76 65 58

From the above table it seems that more people are ready to give suggestions or complaints to HDFC bank and ICICI bank as compared to PNB and IDBI bank. But

people were conceived that their complaints were rectified within a week or month inHDFC bank but respondents in IDBI bank were of the opinion that it sometimes takesmore than a month. or are never rectified .ICICI bank and PNB respondents weresaying that their complaints get rectified within a month.

11. FINDINGS

The entire study conducting regarding IMPORTANCE OF RELATIONSHIP MARKETINGIN BANKING SECTOR reveals the following findings:

The result show that HDFC bank has been the o overall winner incustomer Relationship Marketing with ICICI and PNB second in the list andIDBI closely following it. 60% of the respondents for HDFC bank have 1-3 years old relations and28% are having less than 1 year old relation with the bank. For ICICI Bank opened its branch in Patiala in 2002 , so 70% respondents are customers

between 1-2 years. The two most important factors considered by the respondents of all the

banks as important for CRM are timely and quick service and cooperation and behavior of staff followed by others.

100% respondents from all the four banks are availing the facility of Deposits and ATM. Loans are also fairly accessed by the respondents HDFC(60%), ICICI (52%),IDBI(40%) and PNB (40%). Net banking and tele

banking are not so much accessed by the respondents. HDFC Bank needs to improve on Teller Operations, ATM transactions.But people are more than satisfied with factors like Employee Attitude, ClientServicing. ICICI is doing good too as far as ATM transactions, Employee Attitude ,Client Servicing is concerned.


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The main factor influencing the decision of respondents regarding thechoice of IDBI bank was its return on investment, and TELLER Operations.Rest all other factors are on a back seat as compared to other banks. PNB needs to improve on client servicing, Employee Attitude and Teller Operations. But people are more than satisfied with others factors as far asPNB is concerned. It is giving tough competition in almost all factors toHDFC bank and in ahead in some. The Working Hours of PNB were found to be most convenient as the

bank have increased banking hours uptil 8 in late evening . But respondentswere also satisfied with the working hours of HDFC and icici Bank. There is a problem of overcrowding both in HDFC and IDBI bank butPNB and ICICI bank have been able to prevent this problem. PNB also scores over the other banks in maintaining proper decorumduring working hours and proper sitting arrangements. HDFC came out as winner in parking facilities and proper placing of documents over the other banks. All the banks seems to be able to complete most of the transactionswithin (5-20) min time frame except IDBI bank. Respondents for IDBI bank were having most problems with their bank as 55% answered in affirmative that they have some kind of problems. Thenumber was far less for HDFC (32%) and PNB(43%). Those having problems were mostly concerned about limited network for ICICI bank & poor personalized bank in case of IDBI Bank. HDFC Bank is ahead in rating by customers with ICICI Bank and PNB

closely following it but IDBI Bank far behind. All the three banks are having the provision of complaints / suggestion box and 24% respondents from HDFC ,24% from ICICI , 15% from IDBI bank and 16% from PNB have given the complaints/suggestion.

But there seems to be a difference in implementation part as most of therespondents is implemented within a month but for IDBI it takes more than amonth or never implemented. In all the four banks, those respondents who have not given anycomplaint/ suggestion are of the view that services of the bank are up to mark.

12. RECOMMNDATIONS

1 Bank should improve their service and leap ahead in customer relationshipmarketing by maintaining separate database for high valued customers. Maintain a


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comprehensive and exhaustive database indicates as to how banks can use thisinformation to tap the customers and retain the customers.

1. Bank do not contact their customers very often. To improve uponrelationship , banks should go in for continual contract with customers.They should go in for continual contact with customers. They shouldcontact their high value customers from time to time and also sendupdates about latest development in their banks, 2. Although all banks have a relationship manager but objectives androle of managers ins not clearly defined. They are being utilized for marketing , Finance and various other purposes which distract themfrom real objective of CRM. 3. All banks are not actually making an attempt to measure theeffectiveness of CRM. The tools for measuring effectiveness are notwidely used. 4. The bankers who do not perceive a difference in conventional andrelationship marketing should try to change their point of view of theywant to survive through cu throat competition from other bank 5. Banks should hold a CRM training workshop with customer facing employees to develop and instill a new attitude to creativity andinnovation. 6. The bankers should do proper planning for relationship marketing.

13. CONCLUSION

In the prevailing market scenario, competing for what has already arrived incommon place, does not keep the company ahead of its competitors Anessential requirement for companies is to develop and retain the futureindustry share . Leadership will be to develop capabilities for identifyingcustomers unarticulated needs and design products they want. The public doesnot know what is possible what we do.

Therefore, with the multiplicity of options available to a customer today, to quote Peter Drucker, The only profit center is are going beyondcustomer satisfaction to customer delight because customer satisfaction is


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limited to meeting the minimum requirements, Where there is no limit to givethem something better than that . The companies/ banks need to develop valueoriented marketing to develop satisfaction value proposition and a valuedelivery system as the customer would not be satisfied merely by being loved

but would also like to feel the comfort and warmth of that love.

In crux ,It is useless to tell a river to stop running, the best thing is to learnthe direction it is flowing.

To conclude it can be firmly said that there has not been a lot of difference between the application of customer Relationship Marketing for all the four banks. All the four banks HDFC, ICICI, IDBI, PNB are close competitors of each other and are very well aware of the fact that in todays competitiveworld customer is the ultimate king .There are difference in certain aspects buton the whole HDFC is leading in CRM by a very small margin.

Further advancement in technology section particularly ininformation technology sector, the communication process has become morespeedy and thus the organizations and their customers are being brought into avery close atmosphere, Wherein the organizations are trying to haveconversations to their customers and thus give an individualized dealing totheir customers which in turn would help them to create relationship bond.

So the overall business has been shifted from makingsales of the short horizon to that of building long lasting relationship with thecustomer.

14. BIBLIOGRAPHY

Websites

o www.temenos.com/Software/Core- Banking .../Banks -CRM -ARC/o www.essays.se/essay/75f3d73165/o www.faqs.org/.../Towards-a-successful- CRM -implementation-in- banks -an-integrated-model.html o www.iba.org.in/ibahenley.aspo http://en.wikipedia.org/wiki/Customer_relationship_managemento www. hdfc bank.com
http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.essays.se/essay/75f3d73165/http://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.iba.org.in/ibahenley.asphttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://www.hdfcbank.com/http://www.hdfcbank.com/http://www.hdfcbank.com/http://www.hdfcbank.com/http://www.temenos.com/Software/Core-Banking.../Banks-CRM-ARC/http://www.essays.se/essay/75f3d73165/http://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.faqs.org/.../Towards-a-successful-CRM-implementation-in-banks-an-integrated-model.htmlhttp://www.iba.org.in/ibahenley.asphttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://www.hdfcbank.com/


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o www. idbi .com/o www. pnb india.como www. icici bank.com
http://www.idbi.com/http://www.idbi.com/http://www.idbi.com/http://www.idbi.com/http://www.pnbindia.com/http://www.pnbindia.com/http://www.pnbindia.com/http://www.pnbindia.com/http://www.icicibank.com/http://www.icicibank.com/http://www.icicibank.com/http://www.icicibank.com/http://www.idbi.com/http://www.pnbindia.com/http://www.icicibank.com/