crm artical

7/31/2019 CRM Artical

1/25Electronic copy available at: http://ssrn.com/abstract=1852467

PARTICIPATION OF EMPLOYEES IN CUSTOMER

RELATIONSHIP MARKETING:

A CASE OF INDIAN BANKING SECTOR

Gagan Deep Sharma Mandeep Mahendru Nidhi Khanna

ABSTRACT

The way in which companies interact with their customers has changed dramatically over

the past few years. Customers loyalty towards company is no longer guaranteed in this

competitive environment. As a result, companies have found that they need to understand

their customers better, and to quickly respond to their wants and needs and that also

within shrinking time frame. They want to be proactive in their approach, where the

problem starts; while the companies actually loose the customers through their sensitive

approach. Today, there are many ways a customer can interact with a bank including via

salesperson, web site, catalog, e-mail, trade show exhibit or advertisement. With today's

technology, it's possible for each of these contact points to be driven from the same base

of information about the customer. But the problem lies in the coordination of these

technologies where sales force doesn't know about customers' interactions with the

banks web site, call center doesn't know the customer was visited by a salesperson last

week or the bank sends e-mail without consideration of recent catalog purchases.

Consequently, the customer thinks that the banks activities are not coordinated. The

requirement today is of integrated customer information architecture to support all these

applications and thereby preventing coordination problems. The objective of this paper is

to discuss about the need for integrated customer information architecture by segmenting

and analyzing what the banks have and then serving the customer with right approach.

But this is one of the challenging tasks. The challenge is to extract the necessary

customer transaction data from these discrete applications and incorporate that data in our

CRM-ready data warehouse. It is then that we have "closed the loop" and can truly attain

one-to-one marketing relationships with our customers.

Keywords: Competitive environment, customer loyalty, information architecture


2/25Electronic copy available at: http://ssrn.com/abstract=1852467

I. INTRODUCTION:

Within turbulent, highly competitive marketplace, banks are finding it increasinglyimportant to respond both quickly and effectively to changing patterns of customer

demand. Who are banks customers and what are their needs and aspirations? If banks

dont know the profitability by customer, how can banks be sure that they are servingtheir best customers and applying their value to all business decision? If banks had themeans to do both, profits would soar. Not only would banks become more efficient, the

shareholders would see an investment in their only real source of revenue, the customer,and the meaningful profits that result. With so few new revenue opportunities, do banks

need more branches? Or instead should banks consider a customer relationship

management program that uncovers and maintains shareholder value. Banks need toknow and understand those customers who contribute the most to their bottom line.

Banks in todays global marketplace are faced with increased competition and shirkingprofit margins. The challenge is sustaining and creating profits in the face of heavier

competition and product homogenization. The opportunities are in managing customer

relationships, controlling costs and applying customer profitability to the entire business.This paper begins to define, CRM and e-CRM; then identify the drivers for Banks toadapt e-CRM strategy; followed by studying the impact of CRM practices on banks

dealings and discussion of Employees perception regarding implementation& effect of

CRM in banks; finally, the researcher suggest a framework for the better CRM Practicesin banks.

Definition of CRM (Customer Relationship Management)

First of all, it must be understood that at its core, CRM is more than just a set oftechnologies: it is a process. Simply stated, CRM comprises the acquisition and

deployment of knowledge about customers to enable a company to sell more of theirproduct and service more efficiently (Flanagan and Sadie, 1998).

Providing customers with a good experience however and whenever they choose to

contact you is a key part of managing relationships with them. Ovum defines customer

relationship management (or CRM) as:

A management approach that enables organizations to identify, attract and increase

retention of profitable customers, by managing relationships with them. (Bradshaw,

2000).


3/25

Figure 1: Key Elements of CRM Architecture (Source: META Group)

Business DriversWhy CRM

There are three primary reasons why CRM has taken hold as rapidly as it has:

1. Competition is fierce;

2. The economics of customer retention are unequivocal;

3. Technology allows banks to do this more effectively and profitably today.

Positive aspects of CRM in Banking Sector

IMPROVING CUSTOMER SATISFACTION: Customers are also looking beyond a

banks products to see whether the operation as a whole addresses their needs. Theyare willing to abandon established allegiances if their needs are not being met or if theservices they require are available elsewhere at a lower cost. In addition to juggling a

broader range of business lines, financial institutions must manage a longer

customer-relationship life cycle. They must turn every customer transaction into ahighly personalized, meaningful interaction and then forge these interactions into a

firm relationship that prompts the customer to make additional purchases. This meanscontinually reinforcing the value of their operations to both their customers and their

business partners. Through targeted marketing, financial institutions can increase

brand value and recognition. Today, banks must leverage the power of their brandwhile increasing its value in the face of new competition from traditional andnontraditional players. With proper branding a bank can enjoy:

Increased market share as the positive value associated with the productsand services and attracts more customers.


4/25

The ability to charge more for products and services because customersassociate trust, reliability, and other positive attributes with companies thathave brand-name recognition.

The ability to test and launch new products because of the positive effectof brand awareness on customer acceptance.

ENHANCING PROFITABILITY: Of course, improving customer satisfaction is notenough. To stay competitive, financial institutions must also improve profitability.

They must identify the areas of business that are most profitable and find the meansto cross-sell and up-sell those business lines more effectively.

With higher product penetration per customer, it becomes easier to draw a biggershare of the market. As more products are sold, profitability rises. As customers

develop a deeper relationship with the company, customer retention increases

further expanding market share. Frequently, however, banks lack the businessintelligence to make key decisions in sales, marketing, or service. Banks must also

overcome a range of technological hurdles, including systems for data collection that

are highly fragmented and redundant.

Operational information of an individual customer may be stored in several places by distribution channel, product, or company division and accessible only through

those paths. Data may also be decentralizeddue to changes in company structure, a

merger, or an acquisition. Besides having an incomplete picture of individualcustomers, marketing strategists and sales representatives may find it difficult to

collect all data for the household in which a customer lives. In either case, the bankfaces significant barriers for cross selling, up selling, and otherwise extending the

customer life cycle.

A well-integrated CRM solution that is truly synchronized with the Internet and

enterprise applications, external customers, business partners, and suppliers canfacilitate the compilation and analysis of data that empowers financial institutionssales force, customer support team, and supply chain partners.

OPERATIONAL EXCELLENCE: To achieve operational excellence, a bank mustintegrate its sales and service functions across multiple channels that provide

personalized portals for the banks customers and employees. From face-to-face

contact to self-service web sites, they must capitalize on every communicationopportunity. An effective CRM solution must, therefore, support all channels of

customer interaction including telephone, fax, e-mail, the online portals, wireless

devices, ATMs, and contacts with bank personnel.

It must then link these customer touch points to an operations center and connect theoperations center with the relevant internal and external business partners. With this

capability, a banks employees can be alerted to significant customer events (such as

a large deposit or a diminishing credit line) and be prompted to take the appropriateaction.

Every employee is armed with the appropriate knowledge and tools to focus on thekey business goals of their business lines and grow assets under management. The

CRM solution should also be able to track all aspects of the banks relationship with a


5/25

customer and give the customer consistency in that relationship. Ideally, a customershould be able to initiate a transaction though one channel, such as the operations

center, and complete it through another, such as the banks Web site.

Fig: 2 POSITIVE ASPECTS OF CRM PRACTICES

BENEFITS FOR CUSTOMERS

Customers feel empowered if they have greater access to products and servicese.g., 24-hour banking.

There is a more coordinated and professional approach to customer contact.

With up-to-date customer information, businesses can prepare more personalizedservices.

Quick reaction to their problems.

BENEFITS FOR EMPLOYEES

Employees have more time to serve customers and fulfill orders.

Employees are empowered with the information to deliver high quality serviceand meet customer expectations.

Employees have higher satisfaction ratings. Managers are empowered with information that can help them manage customer

relationships and make better decisions faster.

BENEFITS FOR BANKS

There is optimum use of resources.

GOOD QUAL ITY PRODUCTS & SERVICES

IN CREASES CUSTOMER SATI SFACTI ON

IMPROVES REPUTAT ION OF BANK

ENHA NCES SALES

REDUCES COST PER UN IT

INCREASES PROFITABILITY

ENHANCES MARKET SHARE


6/25

Providing consistent personalized experiences increases customer satisfaction andloyalty.

There is improved customer acquisition, retention, and cross-selling.

Improved company image in the minds of the customers.

CRM ChallengesThe e-business capabilities of Banking addresses the key CRM challenges that face thebanking industry today, including how to:

Identify customers that have the most assets and would be the most profitable.

Identify the most profitable products

Cross-sell and up-sell products that are most relevant to a customers life stageand financial needs.

Improve customer service while reducing service costs in basic areas, such asaccount inquiry, transfers, the trading of financial instruments, and cash

management.

Find strategies to eliminate current operational inefficiencies. Implement technology that leads to enhanced productivity of customers, partners

and employees.

II. REVIEW OF LITERATURE

Banks basically sell variations of the same service, i.e. they lend money, accept deposits,and move money around. But in recent times price-led strategies are being increasingly

used to provide more customized products and higher quality service not just to retaincustomers but also to attract new ones. This study shows how banks have done just that,

through their Customer Relationship Management (CRM) initiative

Ai Mier (April, 2007) confined that most commercial banks do not consider themselvesas an agent providing service to customers where customers are clients who deserve to be

served. It starts at the counter. Many people experience an average waiting time of

more than an hour and this wait goes on whilst staff behind the counter proceed with

their work at a slow pace and laughing and joking at the same time.. The bank is dealingwith tens of thousands of customers at the counter every day; therefore the customer

relationship management foundation should start from that point. That being said, tomake the customer feel at home is a goal that is easier to talk about than actually execute.

Next, lets review the status of the customer service center in a bank. To be honest,

generally the telephone service is much better than counter service. Many commercial

banks have installed national, uniform and advanced devices. Thirdly, how should abank orientate the value-added services? This question stems from the 24-hour self-services ATM machines that we can find in every street. Most banks have set up theirown ATM networks. However, most people are concerned about whether they canwithdraw or deposit the money they earned laboriously promptly at any place or any

time. The success of CRM starts when the bank can meet the basic needs of its customers

through more conveniently located ATMs and extended counter banking hours (e.g. afterthe normal work day or on public holidays). Fourthly, the orientation of additional


7/25

services provided by the bank. Hence, bill payments services should be a starting pointfor the bank to mine for / collect personal information, it can use this to establish a

formidable database.. In a sense, the areas a bank should pay attention to are close to any

customers heart.

Eckenrode (Sep 2005) affirmed that the capability to integrate two or more deliverychannels through shared technology has only recently been deployed in any significantway. Today, a handful of retail banks can boast of globally integrated delivery channels

that are built on standard technology principles. These channels can, for example, deliver

consistent balances regardless of the customers location because of the consistentarchitecture. IT managers within the bank, as well as business managers that rely on the

delivery channels to service their products, know deep down that integrating the channelsis the right thing to do because some benefits of channel integration are intuitive if not

scientifically provable. The example of inconsistent account balance information is onethat integrated delivery channels can solve and that most bankers agree is a source of

frustration for the customer. Quantifying the effects of fixing this problem proves to be

tricky, however.

According to Frederick Reichheld (Resources, 1999), if the average company were to

boost its rate of customer retention in life or auto insurance, for example, by just 5 per

cent, it would realize an increase in customer profitability of more than 80 per cent in thatline. This phenomenon is shifting the attention away from attracting new realized that as

important as winning new customers, is retaining profitable customers. According to oneexpert, one should insurance life not just once, but every time one feels there is a change

in his life profile.

Business Online (Jan 2002) Too often it is the customer who is left out of the customer

relations management (CRM) equation. Using financial services as an example, MichaelKelly 2002 decides that it is crucial to look at things from the customers perspective if

CRM projects are to succeed. For the year 2000, industry analysts the Gartner Groupcalculated that 45 per cent of CRM projects failed. Of the top 10 reasons, it cited limited

or no input from the customers perspective as being the fourth most seriouscontributing factor to failure. Too often boardroom members were saying, to their

detriment, we already know what the customer wants, when they patently didnt. When

devising and carrying through a CRM project, customer input is vital for success, forobvious enough reasons. So every CRM project should start with these simple questions.

What is our strategy for dealing with customers? What are we trying to understand?

What does the customer want? Customers want three things from their provider: value,

convenience and want to be recognized and valued as an individual.

According to Gartner Group, customers leave a company for a variety of reasons.

Fourteen per cent move to competitors.

Four per cent die.

68 per cent leave because of poor customer service.


8/25

Gartner Research (2005) concluded that 90% of CRM initiatives will balance the needsof improved customer experience with improved customer organizational collaboration.

Today particularly for the industry best 3-C: Cooperation, Communication & Courtesy

has changed from customer acquisition to retention.

Gil (Dec, 2006) Customers and prospects are demanding more relevancy and

personalization with their campaigns. If they dont recognize messaging or offers that arepertinent to their job function, your marketing goes directly to their trash bin. Unless you

prove youre relevant to them, they wont care to hear your message or take action uponit.

Harward Business Review Statistics (2002) unfolds that5% increase in retention can

result in a bottom line profit increase of up to 75% depending upon the industry. The

dramatic economic power of customer retention is revealed when viewing customers interms of Life Time Value (LTV). The value of retaining customer makes perfect business

sense when one considers that a customer retained for life is more cost effective, requireless service, provides more business & contributes to new customer acquisition by

offering positive referrals. Thus, customer retention guarantees significant current &future economic benefit.

A study carried out on behalf of Indian Banking Association (IBA) on CRM (2000)concluded that customer retention is an issue that is being faced in foreign & new

generation private sector banks. The study covered customers & employees of variousbanks. The study revealed that customer retention was strong among nationalized banks

as compared to upcoming private and foreign banks although, the level of customersatisfaction was very high in upcoming private and foreign banks than in case of

nationalized banks.

Joshua & Moli (Sep 2005) evaluated that recognition of Service Quality, as acompetitive weapon is relatively a recent phenomenon in the Indian Banking Sector.

Prior to the liberalization era the banking sector in India was operating in a protected

environment & was dominated by nationalized banks. Banks at that time did not feel theneed to pay attention to the service quality issues & they assigned very low priority to

identification & satisfaction of customer needs. After liberalization, the nationalizedbanks & the old generation private banks started facing competition from the new private

& foreign banks that had international banking standards. These new generation bankswere characterized by the usage of modern information technology endorsed services like

ATM, tele-banking, online systems, etc.

Lee (Nov. 2006) In the words of Dick Lee what remains to be proven is whether large

and larger banks can actually make the transition to a more customer-centric state and Ibelieve they can, if they go about it the right way? Heres a potential scenario:


9/25

First, the bank thats breaking ranks, which well call Customerbank, needs to researchits markets to learnand accepthow customers want it to behave toward them. Based

on this input, Customerbank should engage is serious planning to identify how to deliver

new value to customers.

Next, Customerbank should assemble a cross-functional team of its key managers and

customer-contact staff to design the new work policies, workflow and information flowrequired to meet customer expectations and deliver new value to customersof course,

deliver new value in ways that would deliver value back to Customerbank.

Then, Customerbank should select two or three pilot branchesrather than the entire

systemto test whether and how increased customer-centricity leads to increasedprofitability. Managers and employees of these branches would not only have their

positions and incomes guaranteed, but also theyd receive a substantial bonus forparticipating in the test.

Within these branches, Customerbank should train all customer-facing employees,

including customer service center staff; in a relationship-building sales/service approachwith heavy emphasis on customer needs identification. An essential component of this

training is communicating and reinforcing the concept that without a legitimate customerneed, there is no sales opportunity. And Customerbank should also redesign employee

compensation plans to further motivate staff to do it the customers way.

Further, Customerbank should empower test branch employees to flex on policies and

even interest rates when mitigating circumstances occur (without taking undue risks orviolating regulatory standards). Customers desperately want to interact with people who

can help them, rather than puppets that recite rules.

And finally, Customerbank should gauge the outcomes of new customer interactions with

the bank. Properly implemented, a customer-centric approach to customers should

increase, not decrease, profitability.Research conducted by Reichheld and Sasser (2002) in the Harvard Business Review,

revealed:

5% increase in customer retention can increase profitability by 35% inbanking business, 50% in insurance & 125% in the consumer credit card

market. Therefore, banks are now stressing more on retaining customers &thereby increasing market share.

Although it seems that increasing customer satisfaction will increasecustomer retention & therefore profits, the facts are contrary.

Long-term relationships with customers are therefore more profitable as

retaining existing customers prevents competitors from gaining marketshare. Loyal customers are likely to recommend products & services. It ishard to concentrate on acquisition quality when quantity is so much

easier. Winning more & more customers could slowly put you out ofthe business.

Sharma & Nagpal (Mar, 2006) confined that in todays competitive scenario thebiggest challenge for a bank is where it should look for customers for canvassing

business. The manager generally tries out his contacts to meet the objectives. With the


10/25

growing focus on retail business to attract customers & handle competition, the need forsetting up a well knit marketing function, has become crucial for the bank. They have

the ultimate responsibility for creating new customers and retaining existing ones.

Marketing Customer Information File (MCIF) can reduce the pain of the banks byproviding readily available report for Direct Marketing & setting up a system of CRM

(Customer Relationship Management)..

Uppal & Rimpi (Feb 2007) acknowledged that after the introduction of the IT Act,

Public Sector Banks are facing severe technological competition from their counterparts.In the present era it is not an option for the PSBs to adopt IT, rather it is a necessity for

their survival. He suggested some of the strategies, which can be adopted to improve theirworking:

Make the employees and customers aware & familiar with every aspect related toe-channels.

Merge some branches to make them stronger & efficient with the implementation

of IT infrastructure. Establish Computerization & introduce e-channels at the rural & semi-urban

branches.

Provide customer services at the cheapest rate to retain customers in this cutthroatcompetition.

Formulate appropriate HRM policies to provide excellent working conditions toget best services by making their utilization optimum.

Arrange training programs for the employees to make them more efficient forproviding services through e-channels.

Studies have proved the worth of CRM in turning the customer service into customer

sales. CRM works on the theme of retaining existing customers i.e. most businesses getcustomers but successful businesses keep them. Keeping customers happy is not just

good public relations; its an essential part of sound business strategy.

III. RESEARCH METHODOLOGY:

Research methodology indicates the selection of sample respondents, collection of data,choice of statistical tools for analysis of data.

Methodology adopted:

The research is aimed at studying the CRM (Customer Relation Management) Practicesfollowed by the public as well as private sector banks. The city covered under the

research was Ludhiana.

The major consideration of selecting this city for the study was that this city has hugepopulation with relatively assured income and large number of banks.

Data Collection Method:


11/25

In this study, sample survey was conducted; primary data was collected by structuredquestionnaires (Annexure), which solicit information about CRM practices practiced by

banks and what type of facilities customers are receiving. Secondary Data was also

collected from magazines, journals, Internet, newspapers, etc.

Sample Plan:

Sample unit: The study was limited to employees of public & private sectorbanks of Ludhiana city. Six banks were selected randomly, in which three werenationalized banks i.e.: State Bank Of India (SBI), Punjab National Bank (PNB)

and Punjab & Sind Bank (PSB) whereas Centurian Bank Of Punjab(CBOP),HDFC Bank and ICICI Bank were selected in the private sector bank category for

the study.

Sample size: Since CRM practices are being used by the banks employees toattract, satisfy & retain the customers for maintaining long term relationships with

them; for this present study 5 employees of each bank were randomly selected.

Sampling technique: For conducting this study, convenience-sampling technique

was used. As under this technique, sample of respondents was chosen accordingto the convenience.

Data Analysis & Interpretation:

After completing the study of questions asked from the respondents, data was tabulated by

calculating the frequency of response & interpreted by using tables and percentage wascalculated and conclusions were drawn there from. Charts were also drawn to present the

data.

IV. FINDINGS:

Broadly speaking, the study revealed that CRM is gradually picking up and is definitelyconsidered as a viable proposition by banks in improving services to their customers. Oneof 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.

Exhibit 1 shows the perception of three types of employees, vis--vis, poor, average,excellent, towards the CRM.


12/25

Exhibit 1

Exhibit 2: Show the Respondents Working Experience With Banks (n = 30)

Banks Less Than 5Yrs 5-10

Yrs

10-20

Yrs

More Than

20 Yrs

TOTAL

SBI - 3 2 - 5

PNB - 1 4 - 5

PSB - 1 3 1 5

CBOP 5 - - - 5

HDFC 4 1 - - 5

ICICI 4 1 - - 5

Exhibit 2 shows that the employees in nationalized banks under study are working in

their organizations for comparatively longer time span: ranging from 10 -20 years

representing their experience as well as their satisfaction level while working with thebank; whereas, in case of private sector banks, most of the respondents have relativelyworked for less than 5 years.

A Sum m ary o f Em ployees

Perc ept ion about CRM.!!

POOR AVERAGE EXCELLENT

Clear & complete

understanding of

customers needs.

Positive staff

attitude.

Good after- sales

services.

Providing solution

to customers

problems.

Consistent delivery

of superior quality

Unawareness of

CRM concept to

employees in

nationalized

banks.

Considered as

Time & ResourceWastage Tool.

Reduce Profits as

it increases cost

of services.

Not Required

. ust like that!!

Cost factor is

taken into

consideration

without analyzing

the benefits.

Lack of proper

communicationto customers

regarding its

benefits.

Customers are

neither important

nor unim ortant.


13/25

Exhibit 3 shows the view of the respondents about the concept of CRM.

Banks Yes No Total

SBI 4 1 5

PNB 4 1 5

PSB 2 3 5

CBOP 5 - 5HDFC 5 - 5

ICICI 5 - 5

Total 26 4 30

Exhibit 3 represents that all employees of private sector banks are in favor of CRM.However, for Public Sector Banks, few of the employees do not consider it as a value-

adding concept.

Exhibit 4 concentrates on showing the implementation of CRM in banks. (n = 30)

Banks Yes No Total

SBI 4 1 5

PNB 3 2 5

PSB 1 4 5

CBOP 5 0 5

HDFC 5 0 5

ICICI 5 0 5

Total 23 7 30

%age of respondents 76.67 23.33 100

Exhibit 4 presents the actual implementation of CRM Practices in banks. It shows that

employees of private sector banks are completely devoted not only in identifying thecustomers needs; rather they are providing the same to enjoy the benefits there from. So

far as nationalized banks are concerned, even they are moving in the same direction, butthey are not 100% into it.

Exhibit 5 shows various CRM practices adopted by banks to retain their customers

and simultaneously attract the new ones. (n = 23)


14/25

Exhibit 5

Facility of ATMs provided by banks is on top of the list of CRM practices as it results notonly in reducing Tellers time in the office, but it is also convenient to the customers, as

they can withdraw money anytime and anywhere they feel like. Other facilities rated bythe employees in decreasing order of their importance include:

Time to time information sent to the customers regarding new schemes or offers.

Acting as a guide to help solve their problems.

Provision of free of cost monthly or quarterly statements.

Provision of 24 Hour service via Net Banking, Phone Banking, etc.

Facilitating easy installments, thereby extending loan facility

Guidance on Tax Planning.

Constant reminders of matured FDs. Provision of some more facilities like:

- Easy Bill Payments- Investment in securities

- Credit Management

Some employees in the nationalized banks were of the different opinion. They said theydont have ample time to entertain the customers. Since, their schedule is very busy with

limited time, another employee specifically recruited for this purpose must handle allthese activities.

Exhibit 6 shows the reason given by the employees for the implementation of CRM

practices. (n = 23)

Banks

I

ntimation

E

asy

I

nstallments

S

olving

P

roblems

R

eminder

o

fFD's

T

ax

S

aving

2

4Hr

S

ervices

A

TM

A

ctas

C

ounselor

D

oorStep

s

ervices

F

reeofCost

s

tatement

SBI 4 2 3 2 2 2 4 1 2 3

PNB 3 1 3 1 1 2 3 1 3 2

PSB 1 1 1 0 1 0 1 1 1 1

CBOP 5 4 4 3 3 4 5 3 3 4

HDFC 5 5 4 3 4 5 5 3 4 4

ICICI 5 4 5 3 3 5 5 3 4 5

TOTAL 23 17 20 12 14 18 23 12 19 19

% of Resp 100 73.9 86.9 52.1

7

60.86 78.2

6

100 52.1 82.6 82.6


15/25

Banks

Retain

Customers

Brand

Image

Counter

Competition

Increase

Profits

Promote

Products

SBI 4 4 3 3 2

PNB 3 2 3 3 2

PSB 1 1 0 1 1

CBOP 5 3 4 5 4HDFC 5 4 4 5 3

ICICI 5 4 5 5 3

Total 23 18 19 22 15

% of Resp 100 78.26 82.6 95.65 65.21

Exhibit 6

The exhibit depicts that the main motive of implementing CRM Practices in banks isretaining their old customers as well as attracting new ones and thereby reaching their

ultimate goal of increasing the level of profits. This concept is also considered as a

strategy to counter ever increasing fierce competition as well as a tool for improving thecompanys image.

Exhibit 7 visualizes the employees opinion about whether to continue or

discontinue the CRM implementation in banks. (n = 23)

BANKS YES NO

SBI 4 0

PNB 3 0

PSB 1 0

CBOP 5 0

HDFC 5 0ICICI 5 0

TOTAL 23 0

%age of Resp 100 0

Exhibit 7

All the employees who are completely aware of CRM Practices and the benefits derived

through its appropriate implementation are in favor of continuance of the same. This is sobecause; they are quite satisfied with its implementation. The organizations have been

able to increase their customer base due to the provision of extra facilities or add onservices to the customers merely on having an account with them.

Exhibit 8 depicts the views of employees not in favor of CRM implementation

regarding why not to implement CRM practices.(n = 7)


16/25

Banks

Unawareness

Notsopopular

TimeWastage

Useless

NotRequired

Customersnot

im

portant

SBI 1 1 1 1 1 0

PNB 2 1 2 1 2 0

PSB 4 3 4 1 4 0

CBOP 0 0 0 0 0 0

HDFC 0 0 0 0 0 0

ICICI 0 0 0 0 0 0

TOTAL 7 5 7 3 7 0

Exhibit 8

Exhibit 8 represents that all banks whether private or public give due importance to theircustomers. The difference lies only in the provision of extra services or facility via using

Information Technology. Private sector banks are cent percent involved in its provision.Even the public sector banks have started with it and are on its early stages. Some of the

identified reasons for the negligence on the part of public sector banks include:

Unawareness of the concept.

Simply not required (without any reason to justify this statement).

Wastage of time & resources.

Useless concept as the banks is already achieving the targets.

Resistance to change.

Complexity in its operations. Already working efficiently.

Increases costs with comparatively lesser benefits.

Lead to unemployment.

Deviating from the main goal of banks: deposits & loans management.

Serving best to the illiterate (uneducated) population who dont need those (extra)services.

Employees are quite experienced & satisfied by adopting simple & easy to handlemethod of working and hence, do not require any kind of change.

The above-mentioned points are the beliefs of the respondents which may be a myth or

simply resistance to change to what they have been doing long since they were employed.


17/25

In Exhibit 9, we present the employees opinion about implementation of CRM in

future. (n = 7)

Exhibit 9

When the employees were enquired whether they would like to implement CRMpractices in their banks in near future most of them confirmed, except one respondent. He

declared that he is already completing his tasks very efficiently and is achieving the settargets every time. CRM is merely wastage of time, efforts and most importantincreases cost. He further added that, if ever these practices are introduced here, theremust be a separate department; may be a care cell, as in private banks who will be

responsible for the same.

Exhibit 10 presents the satisfaction level of Employees while implementing CRM

practices. (n = 30)

BANKS Satisfied Indifferent Dissatisfied Total

SBI 4 1 0 5

PNB 3 1 1 5

PSB 1 2 2 5CBOP 5 0 0 5

HDFC 5 0 0 5

ICICI 5 0 0 5

Total 23 4 3 30

% of Respts 76.67 13.33 10 100

Exhibit 10

Employees in the private sector banks are satisfied with the CRM practices adopted by

them. It is because they are extracting monetary as well as non monetary gains in theform of goodwill of the bank, which further increases their own worth. In case of

nationalized banks, employees of SBI are also quite satisfied. But, due to vague definitionof CRM in the minds of some respondents, they are dissatisfied or indifferent towards it.

BANKS YES NO

SBI 1 0

PNB 2 0

PSB 3 1

CBOP 0 0

HDFC 0 0

ICICI 0 0

TOTAL 6 1


18/25

Taking cue from Exhibit 10, we wanted to analyze the reasons from dissatisfiedemployees (3 in number). Exhibit 11 explains the reasons for dissatisfaction among

employees while implementing CRM.

Exhibit 11: Reasons for Dissatisfied Employees while implementing CRM (n = 3)

BANKS

Decreasing

Customers

Reduced

Profits

Dissatisfied

Customers

Decreasing

faith

Harm

Image

Increased

Costs

PNB 1 1 0 0 0 1

PSB 1 2 0 1 0 2

Total 2 3 0 1 2 3

When questioned as to what is the reason for their dissatisfaction, they pointed towardsthe increased Costs of the banks if compared to its benefits. They added that if the sameare transferred on the shoulders of the customers, they switch over to other banks; which

further hampers banks business.

In Exhibit 12, we show the feedback system of banks for deploying CRM practices.

(n=23)

Banks

Sales

P

rofit

W

ord

Of

M

outh

A

gencies

C

ustomer

C

areCell

B

ankOffice

SBI 5 4 2 0 2 5

PNB 4 3 1 0 1 4

PSB 4 4 1 0 1 5

CBOP 3 2 4 0 3 3

HDFC 2 2 5 1 4 3

ICICI 3 3 5 1 4 2

Total 21 18 18 2 15 22

%age of Resp

91.3 78.26 78.26 8.69 65.21 95.65

The Exhibit states that banks normally evaluate their performance on the basis of theirsales target achievement, thereby indicating a positive sign of their business.

Furthermore, nationalized banks collect the data within their premises by interacting with

their customers whereas private sector banks derive such results through their customercare cell or through word of mouth publicity. Independent agencies are not hired for this

purpose as stated by one of the respondents.


19/25

Exhibit 13 presents the views of employees about handling the dissatisfied

customers. (n = 30)

Banks Discussion

Providing

Solutions

Expla

ining

Benefits

Custo

mized

Services

Door

Step

Services

Custo

mersas

Assets

SBI 5 5 2 2 4 5

PNB 5 3 1 3 3 4

PSB 4 5 3 2 3 5

CBOP 4 5 2 4 5 5

HDFC 5 5 0 5 5 5

ICICI 5 5 1 4 4 5

TOTAL 28 28 7 20 24 29

%age of Resp 93.3 93.3 23.3 66.7 80 96.7

The employees opine that in order to handle the dissatisfied customers, banks have to

take a lot of steps. The first & the foremost thing is the consideration of customer as anasset for the organization. Discussing the reasons for their dissatisfaction and providing

them solutions for the same can achieve this. Moreover, the level of services must also beincreased.

IV. SUGGESTIONS:

In order to gain full value from their customer relation management technology and

processes, banks should apply segmentation and analytics to their service delivery

strategies. Moreover, they must implement front-end applications that optimize thesestrategies. The target can be achieved only if bank leverages customer knowledge during

every phase of customer interaction by providing pro-active personal service andimplement targeted selling in all of their delivery channels - branches, online banking,

call centers, and ATMs.


20/25

To satisfy your customers following suggestions emerge from the study:

1. Nationalized Banks must educate and train their employees about the CRMPractices already adopted by the private sector banks & benefits derived there

from.

2. CRM solution must involve the participation of each & every employee of thebank; irrespective of his/ her department & designation. It is not the job of single

individual, rather ir requires team effort.3. All employees of the bank must interact with customers so that they can get

first hand feedback (about their level of satisfaction derived on consumption ofbanks products & services).

4. Banks must ensure that every customer interaction is considered as an

opportunity to retain a valued customer, increase revenue, build loyalty orstrengthen a brand.

5. They must look to CRM solutions as helping the employees/ organizations toconnect with customers, anticipate customer needs and deliver them the

products and services to meet their satisfaction level.6. Good customer relations can be maintained with the provision of latest facilities

which matches with the ever changing needs of the customers. Hence, its theneed of the hour to supply what is being demanded.

7. The CRM practices that are implemented in the bank must leverage the banks

existing systems without having to replace whats already working. This helps

in meeting your business needs by providing targeted solutions that enhance the

customer insight, improve retention, increase cross-sell revenue, maximize callcenter effectiveness and boost overall customer profitability.


21/25

8. CRM practices must be viewed as a tool of conitnuous improvement even if thebank is already achieving its targets.

9. Employees should not only hear to the customers problems, but they must try to

provide solutions to their problems at the earliest.10. Provision of door step services must be increased, to maintian & widen the

customer base.11. Banks should employ new technology as the rapid growth of Internet based

techniques have helped in the establishment of one to one relationship with thecustomers online.

12. New products or services must be launched keeping in mind the changing needs

& expectations of the customers.

13. Cost of implementing CRM strategies nust be evaluated by the banks while

taking into account their profitability in the long run & not keen on earning

short run profits.

14. Focus on one mindset change - improving banks service culture is the criticalsuccess factor in developing service industry.

15. Banks must follow 3 step formula to achieve the best results:

16. At all times provoke suggestions from the customers as no one else can betterput in the picture their actual needs & expectations. It is because all three parties -

companies, service staff and customers - have a role to play in improving service.

17. Companies must show leadership and adopt service friendly policies, systemsand processes

18. Emphasize service training for all employees - not just for frontline workers,but also managers and supervisors. Management must walk the talk.

19. This new technology is transforming the skill structure in banking. Hence, inthis fast changing scenario, new competencies required by banks employees

include:


22/25

CHANGING COMPETENCIES

Old Competencies New Competencies

Ability to operate in well defined and

stable environment

Ability to operative in ill-defined and

ever changing environment.

Capacity to deal with repetitivestraight-forward and concrete work

process

Capacity to deal with routine andabstract work process

Ability to operate in a supervised work

environment

Ability to handle decisions and

responsibilities

Isolated work Group work, Interactive work

Ability to operative within narrow

geographical and time horizons

System-wide understanding, ability to

operative within expanding

geographical and time horizons

Broad unspecified knowledge Specialized knowledge

Procedural competencies Customer assistance orientedcompetencies.

Source: Human Resource Management in Banks Contemporary Issues by Dr.

Jacob Mankidy

VI. CONCLUSION:Customers are the lifeblood of the business and that the way to protect and grow its

customer base - and ultimately its profitability - is to build strong customer relationshipsthrough delivery of superior quality service and to meet customer needs better than the

competition. The CRM approach focuses on maximising value for the customer and thebank. The analysis of the study on the use of CRM Practices in Banks reveal:

1. Research has shown that the key drivers of maintaining good relationships with

customers are:

POSITIVE STAFF ATTITUDE SIMPLICITY & EASE OF DOING BUSINESS

HONESTY, INTEGRITY AND RELIABILITY GOOD AFTER-SALES SERVICE

PROACTIVE ADVICE DELIVERY OF PROMISE

CONSISTENT DELIVERY OF SUPERIOR

QUALITY SERVICE

A FAIR AND EFFICIENT COMPLAINTS

RESOLUTION POLICY

2. Although private sector banks are attracting the major chunk of society by its

provision of CRM practices, nationalized banks are also following them.


23/25

3. Most commonly used CRM practices implemented in most of the banks include:

ATM facility, Intimation to customers about new products, solving problems,

24-hour services, etc.

4. Banks employees admitted that CRM Practices helped them in retaining thecustomers, & thereby increasing profitability. Due to attainment of their

motives they prefer to continue with the same practices & also upgrade them.5. Some employees of nationalized banks were unaware of this concept & hence

considered them as merely wastage of time & resources.6. More than of the respondents (77%) were satisfied with the implementation

of these practices, 10% are dissatisfied & 13% are indifferent towards it.7. Dissatisfied employees evaluated the system negatively due to cost

considerations (costs incurred is more than the benefits derived).8. Banks try to satisfy their dissatisfied customers by discussing with them the

reasons for the same & simultaneously providing solutions.

9. Gradually, banks are moving away from the Traditional Approach of Sellers

Market to the Modern Approach of Buyers Market.

10. Due to changing scenario, banks are adopting various strategies to overcome thehurdles of increased level of competition, customer dissatisfaction, constantly

changing customer needs, etc. Some of these incorporate:

Setting the Goals or Purpose

Identification of Customer Groups

Defining their needs

Differentiation of CRM practices

Technology has been a major driving factor for CRM and therefore, is bringing radicalchanges. The need of the hour is uninterrupted dialogue with customer about product

selection, product use, product enhancement and product replacement. The developments

in several technological areas are likely to have a major impact on CRM. Some of theareas are: e- CRM, Digital signatures, Biometric sensing & M- commerce. So the needhere is to adopt these technologies as early as possible so to become the movers in the

business. This encompasses not only in developing long term relationships with thecustomers but also increases profitability over a lifetime on the one hand and increased

shareholders wealth on the other hand.


24/25

BIBLIOGRAPHY1. Aggarwal, M.L. 2003. South Asian Journal of Management, April

June 2003.

2. Ai, Mier. 2007. Questions on the development of Customer

Relationship Management in Banking Sector http://www.gccrm.com/

Apr, 28.

3. Arora, Balraj. 2002. The Times Of India, September 21, 2002.c

4. Bhatia, Anil. 1999. A Roadmap to implementation of Customer

Relationship Management (CRM), www.crmassist.com

5. Chatterjee, P.K. and Prasad, A. Vipalpa. Jan - Mar 2003.

6. Customer Relationship Management Tata McGraw Reprint , 2004.

http://elibrary.line56.com/detail/RES/1110304946_406.html

7. Dr. Saraswathy, B.C. 2006. CRM A New Dimension of

Marketing, Indian Journal Of Marketing, 36/2, Feb, pp 9 11.

8. Eckenrode, Jim. 2005. Improving Customer RelationshipManagement in Banking with Integrated Delivery Channels,TowerGroup

9. Gartner Group, 2002, Business Online .Jan, 2002.

10. Gil, Ben-Dov. 2006. Customers are expecting you to know them

better. http://www.market2lead.com

11.Johri, Govind. 2000. Customer Satisfaction in emerging Insurance

Market in India. The Insurance Times, October 2000.

12.Joshua, A.J. & Moli, P.Koshi. 2005. Expectations & perceptions of

Service Quality in Old & New Generation Banks A Study of Select

Banks in the South Canara Region. Indian Journal Of Marketing,

Sep, pp 6 11.

13.Le Boeuf .1987. Total Quality Management. K. Shridhara Bhat.

14.Lee, Dick. 2006. CRM Success in Financial Institutions? Dont Bank

on it yet. http://crmguru.custhelp.com

15.Saraf, Vikas. 2003. Understanding & implementing CRM: a key

component for tommorows Business leaders, Indian Journal of

Marketing, 33/1, Jan, pp 3-7.

16.Sharma, Ashvine Kumar & Nagpal, Shafali. 2006. Marketing

Customer Information File (MCIF): A Powerful Tool For Banks,Indian Journal Of Marketing, 36/3, Mar, pp 27 30.

17. Titus, A.P. Sebastian. & Lawrence, Albin D. Robert. 2004.

Customer Focus in Banking Services, Indian Journal of Marketing,

34/1, Jan, pp 17 18.
http://www.gccrm.com/http://www.crmassist.com/http://elibrary.line56.com/detail/RES/1110304946_406.htmlhttp://www.market2lead.com/http://crmguru.custhelp.com/http://crmguru.custhelp.com/http://www.market2lead.com/http://elibrary.line56.com/detail/RES/1110304946_406.htmlhttp://www.crmassist.com/http://www.gccrm.com/


25/25

18.Uppal, R.K. & Kaur, Rimpi. 2007. Quality of Services in E-Banks &

Traditional Banks: An Empirical study of Employees Perceptions in

India.

19.www.sap.com/banking

20. http://www.aib.ie/

21. http://www.forrester.com/Research/Document/0,7211,40497,00.html

22.file:///C:/Documents%20and%20Settings/Administrator/Desktop/crm.

..intro/crm/pic/Google%20Image%20Result%20for%20http--

www_celent_com-PressReleases-20040617-TCF_gif.htm

23.file:///C:/Documents%20and%20Settings/Administrator/Desktop/crm.

..intro/crm/pic/Google%20Image%20Result%20for%20http--

www_crmproject_com-assets-images-CRM5_Epiphany_fig2_gif.htm

24.file:///H:/1/Indo%20Rama.htm

25. file:///H:/1/Making%20customer-

focused%20moves%20with%20CRM%20-%20Cover%20Story%20-%20Network%20Magazine%20India.htm

26. file:///H:/1/Network%20Magazine%20India.htm

27. Address by Shri Vepa Kamesam, Chairman, Governing Council,

IDRBT, Hyderabad and former Deputy Governor, Reserve Bank of

India at the Meet of General Managers in charge of HRD & Training

at JNIBD, Hyderabad on February 7, 2004

28. Thompson, Bob. 2002. What is CRM?, www.crmguru.com, April,

2002.

29. Harnish, Michael & Casari, Tricia. 2004. Are we there yet? The

ongoing Evolution of Customer Relationship Management Issue No1

file:///H:/pic1/Are%20We%20There%20Yet%20The%20Ongoing%2

0Evolution%20of%20Customer%20Relationship%20Management.ht

m

30.file:///H:/pic1/CRM%20Blog%20Guidelines%20for%20Implementin

g%20CRM.htm

31. file:///H:/pic1/Customer%20Relationship%20Management%20-

%20The%20Evolution%20of%20Relationship%20Management.htm

32.http://www.microsoft.com/industry/financialservices/banking/default.

mspx33. http://findarticles.com/p/articles/mi_hb3252
http://www.aib.ie/http://www.forrester.com/Research/Document/0http://h/1/Making%20customer-http://h/1/Network%20Magazine%20India.htmhttp://www.crmguru.com/http://h/pic1/Are%20We%20There%20Yet%20The%20Ongoing%2http://0evolution%20of%20customer%20relationship%20management.ht/http://h/pic1/Customer%20Relationship%20Management%20-http://findarticles.com/p/articles/mi_hb3252http://findarticles.com/p/articles/mi_hb3252http://h/pic1/Customer%20Relationship%20Management%20-http://0evolution%20of%20customer%20relationship%20management.ht/http://h/pic1/Are%20We%20There%20Yet%20The%20Ongoing%2http://www.crmguru.com/http://h/1/Network%20Magazine%20India.htmhttp://h/1/Making%20customer-http://www.forrester.com/Research/Document/0http://www.aib.ie/