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Dissertation submitted in part fulfillment of the requirements for the degree of Master of Business Administration at Liverpool John Moores University

On the Effectiveness of Customer Relationship

Management Strategies in Achieving Customer Loyalty: A

Case Based study of Islamic Bank of Britain

C 0320810

MBA 2010

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DECLARATION

I declare that no portion of the work referred to in the

dissertation has been submitted in support of an application

for another degree or qualification of his or any other

university or other institute of learning. Further, all the work

in this dissertation is entirely my own, unless referenced in

the text as specific source and included in the bibliography.

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Acknowledgements

First of all i am thank full to Lord Almighty

I thank Lord the Almighty to have bestowed such consciousness and chance to

have disclosed this fact to me with the firm intention to continue this Endeavour

onward.

This dissertation was not possible without help of my supervisor Marilyn May.

Her advices and suggestions helped me a lot in improving this dissertation and i

pay my regards to her. I would also like to thank Mr Tim Harris in helping me in

selecting dissertation topic and writing dissertation proposal.

I highly appreciate continuous support and prayers of my loving father,

―‖ in Pakistan and my brother ―in UK for which words are not enough to express

my ―THANKS‖.

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ABSTRACT

According to Gartner (2008) CRM is growing swiftly, while 60 % of CRM

projects are failing to deliver their expected results. This is most commonly due to

lack of proper assessment of CRM strategies which may allow organization for

timely actions to improve their CRM strategies. Managing relationship with

customers is key success factor in today’s competitive and challenging

environment. While CRM strategies can play vital role in success of any

organization. This research report answers the question of measurement of CRM

effects on customer loyalty in case of Islamic Bank of Britain. Literature review

provides basic in depth understanding of CRM and CRM effectiveness

measurement issue. After discussing different model of CRM assessment and

evaluation. Kim`s Model CRM measurement is selected as conceptual research

framework. Research was conducted accordance with Kim`s model. The

assessment of CRM strategy through questionnaire helped in determines effects

on customer loyalty by analyzing customer satisfaction rate, quality of service and

customers perception of perceived value.

This research provide in depth analysis of Islamic Bank of Britain`s CRM

strategies and its effects on customer loyalty. Customer`s loyalty is influenced by

their religious believe. Research concluded number of drawback in its customer

strategy and its negative impacts on customer loyalty are discussed in details. This

report represents the in depth analysis of CRM strategy adopted by Islamic Bank

of Britain. With need and significance of internal optimization of business

processes is discussed in details.

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CHAPTER 1

INTRODUCTION

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Introduction

1.1 Background:-

During last two decades the rapid business development has resulted in

competition of products now days customer has many products to choose from

according to his best interest. Customer is now the main focus of every business

for success in this time of tough competition and economic uncertainty (Peelan,

2003). It is also a fact that a satisfied customer will hardly tell any other person

about his experience with product while an unsatisfied customer will tell everyone

about his bad experience with product resulting into bad reputation which can

directly influence the sales. So there is very important need for getting feedback

from customer which helps in improving the product and making customers

happy with product. The Customer Relationship Management is name of

delivering high level of customer satisfaction. . The Customer Relationship

Management can be defined in many different aspects according to Gartner group

―CRM is an IT the outcomes of which optimize profitability, revenue and

customer satisfaction by organizing around customer segments, fostering

customer-satisfying behaviors and implementing customer-centric

processes.‖(Peelan.2003)

Popularity of information system based technology for personal use has forced

managers to invest heavily on information system Management to build a strong

relationship with their customers (Rigby & Ladengham, 2004). CRM information

system fastly became popular as its implementation claimed to be help full in

managing customer more effectively resulting into profitability by increase in

customer retention.

CRM is meant to integrate business strategy and technology with ability to know

the customer behaviour by interacting with them, which help organization to

improve its service efficiency according the demands of customers. This service

improvement and efficiency is obtained by improving business processes. This

improvement leads organization to create value for both parties in relationship.

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Relationship Management depends on three issues, networks, relationships and

interaction. (Gummesson, 2002)

The importance is CRM is increasing every day. Information technology

integration has made CRM strategies easy to implement and achieving customer

loyalty, From small business to large business company customer relationship is

built by human interaction, with rapid use of technology so many buyers are now

shopping online or by phone with less or no direct human contact what so ever,

building a long term relationship with customer is critical issue and this can only

be done by implementing CRM strategies (Kicaid, 2003)

According to Gartner survey significant growth in spending on CRM in past few

years CRM software related investments were $7.8 billion in 2008 with 14.4 %

increase from previous year. This healthy trend is expected to reach $13.3 billion

by year 2012. The investors remained positive despite economic meltdown.

Figure1 Source: - Gartner.com (2008)

But at the same time Gartner survey showed that 65% of CRM projects failed to

deliver its expected results and return on investment was not significant.

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1.2 Problem Statement:-

Even if a company has good customer service initially it may be decline after

sometimes due to unsatisfied customers, this will eventually fail the business or

slow down its progress, the companies can stop it happening by developing

customer loyalty with help of CRM strategy. This can deal the process of

achieving customer loyalty, (Kincaid, 2003)

Achieving customer’s loyalty is long term thing and effects of implementing

CRM strategy are not tangible. So it is complex task to effectively measure the

effectiveness of crm strategy and customer loyalty. Complexity exist when

evaluating intangible benefits like loyalty of customer, quality of service,

enhancement of value, processes effectiveness, innovation of operation,

improving the services Effectiveness of processes, innovation of operation,

service improvement, competitiveness, trust, and efficiency etc (Peelan,2003)

The most widely used and popular methods for investment evaluations are

accounting and financial methods which only depends upon cash flow and

counting the customer inflow . These are only suitable for limited type of

evaluation of business performance. These accounting methods cannot be

effectively used in evaluating investment which is expected to gain benefits in

intangible and indirect form. (Righby & Landigham, 2004)

By evaluating effectiveness of crm strategy a business can be improved on the

bases of results and necessary changes can be adopted .CRM implementation also

enable customer services department to perform effectively according to their

expectation. According to Customer Think Corporation, 68 % of customers leave

their seller due to bad customer service experience. So the importance of CRM

and its performance evaluation cannot be denied.

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Figure 1.2: Source “Customer Think Corp 2004”

Customer Loyalty is aim of every organization implementing CRM strategies, the

real complexity occurs when organizations fail to effectively monitor its

performance.

There is no doubt that wise implementation of CRM strategy results in huge

increase in profitability and customer loyalty but large number of CRM projects

fail due to following reasons. (Soukakos, Georgopoulos & Economou, 2007)

(i) The executives of organization has less or no understanding of CRM and

customers

(ii)Poorly designed CRM strategy

(iii)No performance measurement of CRM effectiveness

It is fact that CRM performance measurement strategies are not much developed.

There is huge lack of agreement in relation entities to consider for measurement

and complex comparisons are needed (Dekimps, 1999),

This Poor development Of Marketing Performance measurement is due to

complexity in measuring and assessing results from implementing marketing

strategies. Especially it is difficult to elaborate impacts on customers of specific

strategy (Hanssens, 1999)

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Therefore same is the case with CRM strategies, and its effects on customer

loyalty

The ultimate outcome of implementing CRM strategies is achieving customer

loyalty which will off course generate revenues and decrease costs in many

aspects but measuring the success is a big issue as there is no universal framework

to evaluate CRM effects on customer loyalty

1.3 Introduction to Islamic Banking in Britain:-

The concept of Islamic banking came into existence as many muslims were

concerned about interest based financial products which are prohibited in Islam.

The business model of Islamic banking is entirely different from conventional

bank. Islamic bank offer no fixed interests on investments and do not charge any

loans on loan amounts. It offers loans for business on profit and loss sharing basis.

And limited amount of interest free personal loans. Investment account holders

are not offered any fixed profits, if bank makes money it shares it with its account

holders (Hassan & Lewis, 2007)

Islamic Bank of Britain (IBB) was established in 2004 in response to needs and

demands of muslim community in UK. IBB is first Islamic bank in Europe to

offer sharia compliant products and services.IBB has more than 50000 customers

with increasing at rate of 7 % in year 2009, over all IBB `s growth rate of 15%.

IBB has six branches in London,Birmigham,Manchester and Leicester with planes

to open more branches soon.IBB claims to be offering fully interest free sharia

complaint banking services any how there is no restriction of religion to open

bank account(Wilson,2007)

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1.4 Importance of Study:-

Gartner (2007) research suggests that most of CRM projects will fail to deliver its

expected results. The main reasons behind is issue is lack of evaluation and

measurement of effectiveness of CRM strategies. As there is no universal CRM

strategy to adopt for any organization it depends and varies organization to

organization according to their needs. Due to this reason there is no universally

adopted measurement framework which can be adapted to measurement for any

organization. So organizations usually do not measure its effectiveness due to its

complexity which results in failure. It needs continuous monitoring so that change

strategy could be adopted where and when necessary. (Peelan, 2003) Loyal

customers can be big asset for any organization but this loyalty depends upon

many issue related managing customer relationship. A Proper Customer

Relationship Management (CRM) can be very helpful in wining customer loyalty

by improving business processes and customer services. (Kumar, 2008)

This study present in depth analysis of CRM issues related to banking and its

effects on customer loyalty by reviewing related literature and conducting

research to evaluate CRM strategies issues. The study provides helpful insight of

CRM in context of banking and measuring its effects on customer loyalty. This

research can help IBB in improving their CRM strategies. It will help them to

better understand customers and their requirements so that customer loyalty can

be achieved.

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1.5 Scope of Study:-

This research presents in-depth and confined study of CRM strategies and its

effectiveness issue in context of its measurement of effects on customers. The

effectiveness is measured in context of customer’s perspective. Customer-centric

CRM effectiveness evaluation model has been adopted in the research in order to

examine the effects on customer loyalty. Customer-centric approach is adopted

because customer loyalty is more directly linked with customer services.

1.6 The Objectives

a) To examine the Customer Relationship Marketing theme, and determine

its effects on customer loyalty

b) To examine the Customer Relationship Marketing theme, and its use as a

marketing tool to achieve customer loyalty in the context of the banking

industry

c) To investigate the key CRM concepts that the Islamic financial institution

utilizes to achieve customer loyalty

d) To identify the key CRM loyalty concepts that distinguishes the Islamic

financial institution from the mainstream organizations

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1.6.1Main Research Question

Q: - How the effectiveness of CRM can be achieved by the UK Islamic Bank?

1.6.2 Sub-Research Questions

a) How can CRM within organizations be internally optimized?

b) What are the CRM strategies and concepts to be utilized in achieving

customer loyalty?

1.7 Dissertation Outline

Chapter 2. Consists of literature review, provides in depth knowledge to

understand research topic

Chapter 3. Discuss research methodology, different research methodologies are

discussed and compared, justification of selected methodology is discussed in

detail

Chapter 4. Discuss data analysis, results of data collected through quantitative

and qualitative research is discussed in details

Chapter 5. Discuss findings and analysis of research of results from previous

chapter

Chapter 6. Discuss conclusions, recommendations and suggestions for future

work

Chapter 7. Discuss self reflection on learning from this dissertation.

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CHAPTER 2

LITERATURE REVIEW

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2 Introduction:-

After discussing research background, objectives and scope. This chapter deals

with background and insight of main literature related to research area. The first

part of this chapter deals with basic introduction to CRM (customer relationship

management) as business strategy and its importance .while final part deals with

performance evaluation of CRM. I have discussed relationship marketing, CRM

background, CRM as business strategy, CRM objectives, Elements of CRM

business strategy and process, and finally i have discussed the evaluation of

effectiveness of CRM with details of different CRM models. The detailed

discussion on these topics forms the basis of conducting research on CRM

effectiveness on customer loyalty in context of Islamic bank of Britain

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2.1Conceptual Framework

Research objectives

&questions

Literature reviews Relevance

To examine the CRM

Marketing theme, and

finding out its effects on

customer loyalty

David & Kutz(2003)

Gronroos (2001)

Payne & Fow (2005)

Explaining the relationship

marketing concept in relation

to CRM. With in-depth study

of relevant literature review

To examine the Customer

relationship marketing

theme, in the context of the

banking industry and its

use as a marketing tool to

achieve customer loyalty

Kumar, (2008)

Pritesh &Sinha(2008)

Berndtt(2008)

Understanding the usefulness

of CRM strategies and tools

which are applied to banking

industry for continuous

improving the services in

achieving customer loyalty.

Investigating the key

concepts of CRM and how

Islamic financial institution

utilize it to achieve

customer loyalty

Szuth & toth(2008)

Gremberg (2004 )

Keiningham(2005)

In context of explaining the

significance CRM concepts,

tools and how to make use of

them in Islamic banking to

achieve customer loyalty.

To identify the key CRM

loyalty concepts that

differentiates the

mainstream organizations

from the Islamic financial

institution.

Hassan, Lewis,(2007)

Differentiating Islamic bank

and commercial bank in the

context of relationship shared

as creditor and borrower

compared to partnership.

How the effectiveness of

CRM can be measured and

achieved by the UK

Islamic Bank?

Kim,Suh,Hwang.(2003)

Dychi,(2001)

Kevin B.

Hendrick(2005)

CRM effectiveness is

discussed in detail with

different effectiveness models

and their process of

measurement.

How can CRM within

organizations are internally

optimized?

What are the CRM

strategies and concepts to

be utilized in achieving

customer loyalty?

Garbner(2007)

Lycett(2007)

In context with Optimizing

CRM and concepts through

which customer loyalty can be

achieved and focusing to

make use of CRM strategies

and concept.

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2.2 Marketing Relationship Concept:-

Relationship marketing deals with taking care and maintaining current customer

base with long term continuous relationship forming in order to get long lasting

profitability. According to Kutz, et al. (2009) this continuous relationship creates

value for all parties and customer loyalty is formed, Marketing Relationship

defined by Gronroos (1997) is regarded as most comprehensive which is defined

as ―The objectives of relationship marketing are to identify and establish, maintain

and enhance, and, when necessary, terminate relationships with customers and

other stakeholders, at a profit so that the objectives of all parties involved are met.

This is done by mutual exchange and fulfillment of promise‖

The Relationship marketing concept can be summarized David & Kurtz (2009) as

the long term focused relationship, customer services at excellence, remaining

continuously in contact with customer, committed employees with best quality

products which results in customer-seller partnership for long time generating

profitability for company in terms of less marketing expenditure

Figure 2.1 Source: Kutz, et al.(2009)

As in figure 2.1 the relationship marketing is shown as cooperation on continuous

basis between seller and buyer, according to Kutz ,et al. (2009) while on the other

hand transaction based marketing is not continuous based cooperation. Getting

further involved in this cooperation its turns into customer relationship

management which integrates all customers needs into every aspect of sellers

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operational relationships with suppliers, distributors etc. This whole customer-

seller relationship combines people, process and technology with long term goal

of maximizing customer value.

2.3 CRM (Customer Relationship Management):-

CRM is closely linked to relationship marketing. Generally speaking the purpose

of CRM is to develop more close relationship with customer to generate more

profits Berndtt(2007). According to Buttle (2009) CRM is the capability of

enterprise that helps them to manage customer relationship in effective way it may

be methodology, software or internet capability .CRM helps in identifying,

acquiring and retaining customers, it enables enterprise to manage its interaction

with customer across all possible channels.

CRM also helps an enterprise to properly plan, and control pre and post sales

activities. It also provides organization information about customer behavior

which helps to achieve long term relationship with customers resulting into long

term profitability and growth.

CRM can be said a comprehensive business strategy which when properly

implemented results in improving profits, revenues as well as customer

satisfaction. In other words profitability is achieved through customer satisfaction

Buttle(2009)

According to Berndtt(2007) CRM is ―combination of strategies and tools and

drives relationship programme, reorienting, the entire organization to concentrate

focus on satisfying customers‖

Customer Relationship Management can be of four types Buttle(2009) which are

Strategic, Operational, Analytical and Collaborative

2.2.1 Strategic CRM: - it is the customer-centric strategy of an organization

which is for retaining profitable customers.

2.2.2 Operational CRM: - it deals with automation of processes which are faced

by customers in order to making buying experience easy and pleasant. It includes

customer services, sales and marketing departments.

2.2.3 Analytical CRM: - it deals with analysis of customers data in order to use it

for strategic planning and tactical reasons

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2.2.4 Collaborative CRM: - it aims to deal with information sharing between

different departments about customers and collaborate it with customer service

department to help achieving customer satisfaction

2.4 CRM Definition:-

By reviewing the literature of CRM, we come to know that CRM is defined in

many different ways by different experts and scholars; there is lack of consensus

in experts on defining and conceptualization of CRM. The extensive research

was done by (Zabalah, et al 2004) in order to highlight true meaning and

definition of CRM. According to him the crm has different aspects and can be

defined by those aspects as shown in the table below. In this table the CRM

definition is discussed by different aspects together with discussing the

implication for CRM success

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Table 2-2: Dominant Perspectives on CRM

Perspective Description Implications for CRM

Success

Process Customer-Seller relationship

develop with time

Success of CRM depends on

organization capabilities like

detecting and fulfilling ever

changing customer needs

Strategy The Cost of relationship with

particular customer invested

by an organization depends

on life time value of customer

Success of CRM depends on

continuous assessment and

prioritizing relationship with

customer according to their

life time profitability

Philosophy Profitability through customer

loyalty can only be achieved

by maintaining long term

relationship with customer

Success of CRM requires that

organization should focus on

customer needs and demands

Capability Organization needs to adopt

continuous behavior towards

customers in order to gain

from long term profitable

relationship

Success of CRM depends

upon organization`s allocation

of tangible and intangible

resources with flexibility of

continues monitoring the

customers and changing

behavior to address the

customer needs

Technology A Long term relationship

management in order to gain

profitability needs an

organization to use customer

data with help of latest

technology

Success of CRM depends

upon users acceptance of

function which are driven by

technology implemented by

an organization in order to

maintain and develop the long

term relationship

Source: (Zablah et al, 2004)

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2.5 GOALS AND OBJECTIVES OF CRM:-

In generally speaking objectives of CRM can fall under two areas enhancing

effectiveness and improving efficiency of business processes. (Zoltner & Sinha,

2001). Different authors has explained the objectives and goals in different ways

we have discussed few here

1) According to Zoltner & Sinha (2001) in any business oriented company

ultimate goal of CRM is to increase profitability and reduce costs. This can be

achieved by customer centric and sales centric CRM

2) According to Mukerjee (2007) the objectives achieved through CRM are which

can be included increased customer satisfaction and enhanced customer loyalty

help organization in long run.

3) The Renolds (2002) describe as an organization can achieve the goals like, it

helps sales department in managing sales, simplifying process in marketing and

sales department, helping to find new customer, improving the customer services ,

these all processes help in increased revenues through better customer relationship

management

4) Objectives according to Wilson & McDonalds (2002) the communication

between different departments in and organization and with customers is

improved, customer needs can be addressed on right time which helps in

increasing business opportunity in organization

5) According to Zabalah(2004) following goals can be achieved through CRM

(i) Low Cost of getting new customers by using technology automation and CRM

(ii) Increase in customer loyalty which helps to retain profits with less need to

look for new customers

(iii)Cost of sales can be reduced due to improved relationship with customers and

distributers

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(iv) Customer profitability is increased with good knowledge of customer

behavior on buying

2.6Anatomy of CRM Strategy:-

According to Payne and Fow (2005) successful implementation and execution of

CRM requires ―cross-functional approach‖ which involves whole enterprise in the

CRM strategy not just limited to the marketing and sales department

In any organization there can be five key cross functions of CRM Strategy. These

are universally acceptable. (Payne and Fow, 2005) there may be slight difference

according to needs of organization

1) Process of Developing Strategy

2) Process of Value Creation

3) The Multiple Channel integration Process

4) Knowledge management Process

5) Performance Evaluation and Assessment Process

2.6.1 “Process of Developing Strategy”

This strategy development process is formed by keeping in view of organizations

strategic objectives, it acts as engine of whole CRM strategy .it depends upon two

key elements Business Strategy and Customer Strategy.

(i)Business Strategy:- Business strategy of an organization is mirror of its

objectives and long term goals. It is essential that CRM strategy should be aligned

with business strategy to deliver desired results. It is based on two elements.

(a)Business Vision: - CRM strategy is developed keeping in view of

organizations business vision. Business vision enables to visualize future targets

of organization where they want to see their business in future

(b) Industry Competitive Characteristics: - it’s vital to analyze the current

position and competitiveness of business in order to develop suitable strategy.

a) Customer Behavior and Choice: - Already known behavior and choice of

customer is very important in developing strategy development. So that their

needs and demands should be addressed.

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(b)Segmentation: - it is important to create strategy on the basis of segmentation

which will enable to understand customer better as well as their needs and

demands can be fulfilled. This segmentation is usually based on customer profile,

social-demographic background, and his value to organization as customer.

2.6.2 Value Creation Process:-

This is the process of assessing and creating value from customer as well

organizations business point of view. It is the value both get and give in the

relationship. Customer value creation is seen as competitive advantage. This

process is based on two elements

(i)Value Customer Receives: - it is the value which organization can provide to

its customer. It is total benefits which customer receive at the price or value he

pays to organization (Payne and Fow, 2005)

(a) ―Value Proposition‖:- Every organization try to create value proposition,

to show that the value customer receives is superior in sense of price and

quality than others in competition. Its explains the relationship between

products and its reputation. As customer`s have changing needs it is

difficult to create same value proposition for every customer. Value

proposition is linked to life time value of customer. Whole value delivery

system can be created in order to manage value proposition of different

segments of customers

(b) Customer value Assessment :-its assessment of customer value to

organization it is calculated to the basis of number of sales and future

prospects it is very important to deliver better customer service experience

.that customers should be identified according to their value to

organization. Customers with more value are usually more demanding and

have higher expectation.

(i)Value Received by Organization: - This is the value received by organization

as result of this relationship it may be the cost of retaining the customer and

marketing costs .this value assessment is important to organization as customer

can be offered the value of services according to his value to organization

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(a)Acquisition Economics:-it is assessment of value at which company want to

acquire new customers. Organizations are usually interested in low cost, high

value and large number of customer at start of their business.

It varies according to organization’s needs for example a new company in market

will focus on acquiring as much as customer possible at start to establish in

market. While already established company may focus on customer retention

rather than acquiring more and more new customers.

(b)Retention Economics: - Retention economics is based on cost of keeping

customer. Experts are convinced that cost of keeping customers is five time less

than cost of acquiring new customers. This is due to it takes time to turn new

customer into profitable one.CRM strategies can improve customer services. This

directly turns into profitability. Customer retention can also improve customer

acquisition with low costs because these loyal customers can be source of

reference for new customers .A framework can be created to improve customer

retention by measuring customer retention rate, identifying causes of defection,

and by taking corrective action to improve services(Payne and Fow,2005)

2.6.3 Integration Process of Multiple Channels:-

This is the process to identify which channels are to be used to increase customer

satisfaction standard .with best possibility to create ―single unified view‖ of the

customer about organization. An effectively integrated multi channel customer

service should match the needs of all different segments of customers which are

interacting with those channels. There should be good integration of channels to

share the customer needs to provide them best service. These multichannels may

include (Payne and Fow, 2005)

(i) Sales Department (include sales staff, account manager.

Representatives)

(ii) Showrooms/outlets(retail outlets,stores,depots)

(iii) Direct Marketing(face to face, TV, telephone, telex)

(iv) Internet Sales(includes website sales)

This all combines to make integrated channel management. A multichannel

integration strategy can be developed to effectively address this issue. An

integrated multichannel strategy meant to utilize every possible channel to utilize

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to serve the customer and integrate them without any impact on channel

performance (Goldenberg, 2008). It is not always feasible for every company to

have multiple channels. Some may select one channel strategy based on just

internet or showroom. Experts agree revenue can be increased significantly by

increasing customer channels. It increase company`s outlook, ease of use, and

ability o respond to customer needs. organization can automate these channels

with latest technology which increase customer experience and organization`s

ability to respond to customer needs.

2.6.4 “Data Management Process”

This process is based on gathering; correlating and using the customer data from

all customer contact channels which helps organizations updated customer

profiles which are used to enhance the quality of customer services department.

Latest information technology systems like Computer, softwares and databases

are used for this purpose. Automated Data analysis and data mining tools are used

for this purpose. (Buttle, 2008) These tools also help in back office and front

office automation which enhance the customer service experience as well as can

help

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organization employees to complete tasks more accurately. These tools help in

creating profile of customer which also provides the information about buying

behavior of particular customer. There are many CRM based software available

which help full in implementing crm strategy are. Data management Process is

based on following elements (Payne & Fow , 2005)

(i) IT /Computer Systems(CRM based, customer Management softwares)

(ii) Data Analysis Tools(usually integrated into CRM system software)

(iii) Front Office Software Applications(sales softwares, website,)

(iv) Back-Office Software Applications (Accounting, Employees.

Inventory systems)

CRM covers every aspect of organization-customer interaction like sales or

services IT influence has modified the way of company`s approach towards CRM

strategies. this is due to change in customers buying behavior. Customers are

increasingly using electronic way of interacting organization and organizations are

trying creating improved personalized experience for buyers. Every organization

is heavily relying on computer system which lack personalized customer

experience.

2.6.5 Performance Evaluation and Assessment Process:-

This process is to ensure the objectives and strategic task for CRM are delivering

a reasonable value. It also forms the basis of future developments according to

requirements. (Sheth & Shinesh, 2001) this evaluation helps in making correction

where needed and helps in modifying the relationship. There are many models

which evaluate and decide the success of CRM; Any CRM strategy should be

according to predefined objectives of that organization. As economic value of

customer relationship with organization is intangible thing it cannot be directly

measured, however it can be measured by cash flow and reduced costs. (Wubben,

2008).Where it is considered that if performance is satisfactory the program

should continue .the two key elements provides a macro view of relationship

among the

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stakeholders who drive performance and the ―Performance Monitoring‖ which

provide very detailed view of key performance indicators.

(i)”Shareholder Results‖:- these can be obtained by calculating value of all

stake holder, like employees ,customer , and total costs reduction of sales. These

stakeholders are as follows

(a)Employee Value:-Employee`s life time value is measured as balance between

employee receive in return of his performance or job. It gets value given

relationship. More satisfied employees results in more customers. (Wubben,

2008).customer`s value to organization can be measured by multiple criteria

depending on organization.

(b)Customer Value:-it is the life time value of customer, which is calculated

depending on the number of sales from specific customer, duration of loyalty,

volume of sales in terms of cash flow, cost of retaining customer etc. It can be

calculated from all customer segments deducting the costs per customer, and then

measured as average value per customer. (Johnson and Weinstein, 2004)

(d) Cost Reduction: - Cost reduction is an important factor, CRM

implementation should result in reduction costs. It is calculated by calculating

costs of new customer acquisition and costs of retaining customers. It also

included the operational, marketing, sales costs.

(ii) Performance Measurement: - CRM should results in improving business

process which definitely help to improve customer services and increasing

profitability. Performance can be measure by calculating following two values

(a)Measurement of Customer Satisfaction: - customer satisfaction is an

important matrices to judge organization`s performance. Customer satisfaction

can be measured in many ways, like by asking customer to give feedback or by

calculating elements like. Speed and quality of service, prices comparison, trust

on employees, complaints and feedback, brand image in customers mind. (Payne

and Fow, 2005)

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Figure 2.2 Source: Payne & Fow (2005)

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2.7 CRM in Banking Context:-

According to research by Pritesh & Sinha (2008) in case of banking customers

increase of 5% retention can increase profits by 35% for retail banking, insurance

by 50% and credit card profits can increase by 125%. There for bank are

concentrating on retaining customer in order to increase profitability. Gartner

(2007) the key objective of any CRM strategy in any organization is increasing

profitability with increasing customer satisfaction. Banks can assess their

customer needs and behavior by effectively implementing CRM strategy. In

banking industry it is very important to know the effects of services and products

on customers, like customers who use in branch services, ATM, Online or phone

banking etc.

Figure 2.3 Preferred Banking Channels Source: Pritesh and Sinha(2008)

It is important that the objective of any CRM strategy should be aligned with

bank`s customer strategy (Payne & Fow, 2005). The CRM is more important and

helpful for banks due to following reasons

(1) The Banking customers are tends to increase their interest in other

banking services and products as he passage of time

(2) Customers with long term relationship with bank can be a source of

referring the bank to other customers which help in increasing the

good name and increase in customer base

30

(3) Banks can understand the needs and behaviour of their customers as

long term relationship continues

(4) Customers with long term banking relationship become more

comfortable with organization services, products that they need less

assistance in bank making less over head on organization

Banks have tradition to view them self as extremely ―Customer centric‖ with

offering to personal services to customers to manage their affairs. The banks also

believe that the high worth customers are more demanding about services and

products. While the research shows that high worth customers are becoming more

complex in behavior in terms of their needs of products and services. Kumar

(2008) Customers expectations from their bank are increasing day by day due to

competetation.

The CRM Structure of the bank needs to be designed in the way that the

synchronization process should adopted on periodical level So that updated and

current data should be available all the times and across all channels. Kumar

(2008). The process of handling customer information, collection, with

maintenance support can play a vital role in improving profitability. Data

Management is key to success and it can be handled with powerful tools like

―Master Data Management‖ (MDM) which is reasonable tools to manage

customer information across the organization in effective way and getting 360

degree view of customer information. Analytical Setup in CRM architecture

enables segmentation to execute strategies for products, customers, and

geographies etc. Together with these procedure collecting and analysis customer

feedback and suggestions also important which help to monitor performance and

improvement where needed.

31

2.8 Creating Customer Experience For Banks Customers:-

Banks should keep their customer expectation straight, As Customer expects their

customer to understand the customer needs of banking and their financial concern

about their money. The multiple channel relationship between customer and bank

is needed 24/7 to serve the customer needs. Good Experience should always be

consistent across every channel of banking service. There Customer needs are

slightly different according to their needs. Kumar (2008)

There are following basic Berndt(2007) elements that influence customer

experience with retail banking

(i) “Quality of Interactions‖: Customer always expects best quality of

service from all channels through which they contact with banks or use

banking services. Customers also need quick, efficient response to their

queries each time they interact. Ease of use of service is also an important

factor for customer satisfaction. So quality of interaction is vital and

fundamental in creating customers experience in right way.

(ii) “Consistency Level of Services ―As Customer always expects quick and

easy use of service. the consistency and accuracy of service can only be

achieved by correctly integrating CRM architecture with business channels of

banking service .similar and accurate data should be accessible from all

channels every time. For example difference in banking quotes of loans

application may discourage customer.etc

(iii) “Differential”:- Almost every banks offers almost same type of products

and so that its looks like a grocery store. There should be some different edge

for customer to experience with bank in order to be top in the preference list

of customers. The banks can optimize personalized services and enrich it with

lasted tools to make customer experience better and different from others in

market. Customer segmentation can be important in this regards. There can be

three pillars Kumar (2008) People, Process and Technology which are basic

enabler of managing customer’s experience

32

Figure 2.4 Three pillars of customer experience Source: Kumar (2008)

Deploy right ―CRM

technology‖ across all

channels to get desired

results

Unified model should be

developed in order to get

updated data at all times

High slandered call Centre

fully customer centric with

reasonable resources

Fully trained, educated

customer service staff at all

locations to help customers

Essential collaboration of IT

and business according to

customer needs

PEOPLE

Process across all the

channels should make

transaction easy and

reliable

Call routing strategies

should be adopted for

personalized call

handling experience

PROCESS

TECHNOLOGY

33

2.9Customer Loyalty in Banking Context:-

Many bankers consider customer loyalty as unexplainable concept; this can be

argued on due to many reasons. And the bankers find it hard conceptualization,

developing and measurement of customer loyalty (Szuth and toth, 2008). There is

disagreement among the bankers that what actually make the behavior and how

can it be best explained. This lack of consensus on customer loyalty often makes

the more discussion on it unproductive. Many banks have confusion of relating

customer loyalty with two different concepts which are customer satisfaction and

customer retention. ( Keiningham et al. 2005)

2.9.1“Customer Loyalty‖:- Customer loyalty is behavior of customer in which he

remained faithful to an organization (seller) despite occasional mistakes and

unpleasant service. So the loyal customer continues its relationship with that

organization. So it is Faithfull behavior of customer in which he remained in

relationship giving advantage to good experiences with organization over bad

experiences. Customer Loyalty can be of these types (Lawfer, 2004)

(a)”Monopoly Loyalty”:- This is the loyalty where customers have little or no

other choice but to remain with that organization, such customers are often very

dissatisfied.

(b)‖Cost of Change of Loyalty”: - It is the state of customer when customer

remains with organization mainly due to high cost of change of loyalty. And he

thinks it’s not economical to do this effort

(c)”Incentivized Loyalty”:- This is loyalty which is influenced by some

marketing strategy where customer is getting some incentives which he cannot get

being in relationship with any other bank or organization.

(d)”Habitual Loyalty”:-this is most common type of loyalty which is mainly

influenced by bank location, facilitates, or if he can complete his tasks with less

time and efforts with particular organization, so it becomes his habit to buy from

that place.

34

(e)‖Committed Loyalty”: - This loyalty must keep earning its retention of its

customers for long period of time by delivering total value according to needs and

expectations of its customers. it is not just customer retention but it is name of

total satisfaction and delivering quality to customer.

2.9.2 “Customer Satisfaction‖:- it is also a behavior or attitude of customer

according to which, the perception of customer about his needs, expectation,

wishes and desires with respect to products and banking services are fulfilled.

Banks are cautious about customer needs and expectations but it does not

guarantee about the loyalty of customer.

2.9.3 “Customer Retention‖:- it is ability of bank to hold customers over period

of time in mutual relationship. This ability can directly be measured by customer

retention rate. The better retention rate means better the bank is performing and

results in cost reduction and profitability

35

2.10 CRM in Islamic Banking Context:-

The Islamic model of banking is different in terms financial products which turns

the customer-banker relationship into partnership. Both are highly dependent on

each other in order to gain profits as both are shareholder of profit and loss. The

Plays are role of financer while lender plays are role of manager and manage the

business and money. It can be said that the relationship in Islamic banking is

stronger than traditional interest based banks. The traditional high street banks

rely heavily on difference between money landed and deposits in the bank, while

Islamic banks no earnings on fixed term basis from interest. It entirely depends on

the profits generated as result of partnership with customer business. While the

customer pays only principle amount no mark up or interest instead of that

borrower share the profits with bank.(Muhammad,2007)

The Bank earns small amount of fees on some financial services. etc the customer

relationship management strategies should in context of Islamic bank should not

be very different, As Islamic bank of Britain is only standalone Islamic bank with

sharia compliance financial service muslims , muslims have not other choice of

banking which is big advantage for IBB. Islamic bank of Britain can enhance this

relationship to muslins as well as market their products to non muslims as well by

designing more and diverse products which could attract non muslims customer as

well. CRM strategies with targeted marketing campaign can do this job easily.

(Sadik, et al. 2010)

The price related to its financial services is high and cannot compete other high

street banks, which is big disadvantage for Islamic bank of Britain. This high

pricing can be big hurdle in attracting non muslim customer. A very high level of

customer service and attractive products for long term can be suitable strategy to

achieve customer loyalty and customer retention. (Wilson, 2007)

36

2.11CRM Effectiveness: - Performance Monitoring and

Evaluation

It is very important to measure the results and evaluation the effects of CRM

strategy in order analyze return on investment (ROI) and weather the strategic

goals have been achieved. But According to a research study conducted by Meta

group(2008) 90% of organizations admitted being unable to quantify Return on

investment(ROI).the enterprise should realize that CRM is a business strategy and

need have investment and they should understand the nature of benefits it can

provide, while it’s not good to see its results in direct increase in sales only

(Gartner,2007) while experts(Kim,Suh,Hwang.2003) of CRM agree that it is

complex task to evaluate tangible Return on investment (ROI) of the resources

allocated to CRM implementation. In order to evaluate the CRM we usually need

to measure the benefits of intangible things for example Customer loyalty, quality

of service, enhancement of value, procedure effectiveness, trust ,competitiveness,

improvement of services and efficiency etc.

The most widely adopted accounting financial and accounting methods to

evaluate the return on investment are not good option for the evaluation of

intangible nature benefits. Because these accounting methods are based on

numerical calculation of amount and cash flow and cannot always be good option

for intangible and in direct calculation (Gremberg,2004). Multicriteria

methodology can solve this issue because by using multicriteria method it is

possible to calculate both tangible and intangible nature of benefits(Lycett and

Giaglis) there is strong disagreement about Performance evaluation model, Few

experts believe on other elements to monitor while others seems to disagree with

them.

37

Figure 2.4: Source (CRM Effectiveness Journal of Marketing)

38

2.12 Models for CRM Effectiveness:-

―There is no universally accepted comprehensive measurement system that allows

holistic assessment of the ongoing contribution of CRM activities to the

performance of an organization ―(Garbner-Kraeuter 2007).

Any organization can adopt its own model of evaluation of CRM Effectiveness

according to their needs (Dychi, 2001). We have disused few CRM models which

are different from each other to have an idea about the way CRM can be

effectively measured.

2.12.1 Kim, Suh & Hwang Model:-

This model was developed by ―Kim,Suh and Hwang‖ in 2003 with suggestion of

the four elements measurement for CRM Performance. These four elements of

CRM are as follows

(i) ―Customer knowledge “:- The customer focused business

organization keep the customer data with latest technology like data

warehousing and data mining. This customer data is used to help CRM

related activities. Most of the customers are usually concerned about

how much information the organization kept in their record and how

secure it is. Evaluation of Customer data which customers has no of

39

orders, Total number of customers, in web based selling it can be

based on no of customer visits on website and total number of sales per

employees etc .

(ii) “Customer Interaction”:- Many communication channels are

developed in order to interact with customers. The profitable

relationship can only be established by effective customer interaction.

Customer interaction is measured by some important elements like

number of selling campaigns, total costs of advertisement, and

response methods etc. In order to measure customer interaction an

organization may need to measure the payments, delivery methods,

and products types. Customer satisfaction hugely depends upon sales

and delivery channels management effectively and creating excellent

operational services there for the information such as product and

delivery time, response time to buyer is essential to analyse the

performance.

40

(iii) “Customer Value”:- intangible and tangible improvements due to

the implementation of CRM strategies show customer value. Customer

value can be determined by measuring rate of retention of customers,

marketing and sales campaigns etc. CRM strategy should be beneficial

for both in relationship customer and organization. Profitability per

customer needs to be calculated, with creating a benchmark of benefits

which should be analyse in regular manner in order to see which

customer is more beneficial for organization and which are less

beneficial. Customer Value calculation is shown in table with detailed

objectives and activity to calculate.

41

(iv) Customer Satisfaction:-Customer satisfaction is intangible hence

difficult to measure. In customer focused organization measuring

customer satisfaction through feedback can provide immediate

information about level of satisfaction and preferences, needs and

concern of customer. Customer satisfaction is directly linked with

organization profits .customer satisfaction is also lined with customer

retention rate. The measurement of customer satisfaction is shown in

details table below.

2.12.2 Bohling s Model of CRM Measurement:-

Bohling suggested a model of crm measurement based on multiple criteria which

any organization can implement to measure and evaluate the CRM effectiveness.

He divided these criteria into three categories. Which are ―Project Focused

Criteria‖ like Procedure compliance, ―internally oriented matrices‖ like employees

cooperation, and ―Proven efficiency gains‖ and impact on customer loyalty and

retention. According to Bohlins there are seven elements which should be

assessed in order to measure CRM .He categorize the elements in numbering from

Less important ( 4) to Most important at( 1). According to Bohling these elements

are as follows starting most important.

(i) Customer satisfaction and customer retention rate

(ii) Revenue and Sales Growth

(iii) Improved knowledge management

(iv) Reduction in cost

42

(v) Employees productivity and improvement in performance

(vi) Employees usability

(vii) Compliance to specification

2.12.3 Kevin’s Model of CRM Measurement:-

Kevin B. Hendrick(2005) proposed a model of measurement in his article ―

Effects of enterprise system on the cooperate performance‖, suggested that key

financial measurements can be good symbol of CRM performance. According to

him Stock price performance. Increase in assets value along time, and returns on

assets and sales in specific duration time period in business should be used to

analyze any CRM performance.

Step 1:- Choose the time Period on which impact need to be calculated

Step 2:- Calculating the Impacts on Stocks prices

Step3:- Estimate operating performance effects

2.12.4Wang & Lu“s Model of CRM Effectiveness Measurement:-

Wang & Lu( 2004)suggested a model of CRM performance measurement

according to this CRM performance should be evaluated in two steps. In the first

instance the ―Customer Behavior‖ is monitored and measured. According to

Wang & Lu CRM effects should be measured in sense of customer behavior as

they are current source of income for the organization and be helpful in creating

and recommending other prospective buyers in future. The customer behaviors is

based on following elements

(1) ―Repurchasing‖

(2) ―Word of Math‖

(3) ―Cross selling and Up selling‖

(4) ―Acquisition and retention rate of buyer‖

The Second important step Wang & Lu suggest to measure the quality of

relationship with buyer. Hence ―Wang and Lu‖ recommended behavior based

measurements the many other experts believe that quality of relationship is

43

intangible benefit of CRM performance. The ―relationship quality‖ can be

measured by measuring satisfaction, trust and commitment. This step is based on

measurement of two elements.

(i) ―Brand loyalty‖

(ii) ―Customer Satisfaction‖

2.12.5 Izquierdo”s Model of CRM Effectiveness Measurement:-

Izquierdo in 2005 presented model of CRM effectiveness evaluation. This Model

is based on organizations KPI, Key performance indicators including both

Marketing, sales and Economic Performance. According to him economic and

market position of organization best describe the effectiveness of CRM strategies.

The elements to measure according to him are as follows

(i) ―Customer Loyalty‖

(ii) ―Economic Performance‖

(iii) ―Market Positioning‖

(iv) ―Customer Perception‖

44

2.13 Discussion on CRM Measurement Models:-

The evaluation of effectiveness is complex task and there is no consensus about

any suitable criteria or model to measure effectiveness of crm(Kim,2003).Any

how many experts has developed different models according to their preferences

of matrices to measure as few of them are discussed earlier. By reviewing all of

them it is clear that we can clearly identify that experts are divided on importance

of perspective to measure, some experts’ emphasize on financial and process

improvement perspective, while others focus on customer perspective of

measurement. Kim’s model is seems to be extremely customer centric with all

elements of customer service quality are included. Kim believe that customer

service performance together with customer retention and acquisition rate is

mirror of CRM effectiveness, while Kim`s customer matrices has part based on

―Servaqual‖ which is renowned model for measuring service quality perception.

The major advantage of using Kim`s model is in time identification of issues

related to customer services which can be corrected in timely manner as result

success rate of CRM can be increased. On the other hand Bohlings model does

not include that much detailed customer perspective to measure but it also include

employees productivity and satisfaction rate which is totally missing from Kim’s

model. Cost reduction and total sales revenues is also important factor according

to Bohling`s model so we can say Bohlings model focus on measuring customer

satisfaction rate together with employee’s productivity and financial performance.

Kevin model of effectiveness is entirely different model with entire focus on share

price increase in stoke market. According to Kevin, the share prices increase in

stoke market is real point of success for any organization. If organization is

effectively adopting the crm strategies then it should impact on its stoke prices.

But the Kim did not explained increase that CRM strategies take time to achieve

loyalty of customer which impact the company’s performance and stock prices

but this will not enable any organization to identify the progress on short term

basis and organization cannot identify the failing strategies which needs some

change, and there will no assessment of customer service performance as well

which will let poor customer services performance go un detected which can

45

impact overall performance of company in long term basis. Wang and Lu model

seems to based on both financial and customer perspective but it seems to

suggesting entirely different financial matrices to measure as it also suggest on

measuring cross-selling and, up-selling and cost of operation together with

customer satisfaction and retention rate. But it is fact that cross-selling and up

selling increase can be due to timely factor like marketing campaign or increase of

customer acquisition etc

Izquierdo`s model is based on financial performance as well as customer

perception about organization. But customer loyalty can be built with time, this

model is not effective on new organization as customer loyalty rate will be low at

start and will not show the exact effects of crm strategies.

After reviewing all models it is clear that most of models are more concerned with

customer perception than financial performance but few models does not measure

all aspects of CRM strategy as CRM strategy is name of improvements in whole

business processes and entities.

Kim’s model seems to be most efficient model in measuring effectiveness as this

model is extremely customer centric which is positive thing as customer loyalty is

linked with improvements of customer services. So Kim’s model seems to be

addressing most of the dimensions of CRM strategy and its implementation will

definitely results more accurately for organization performance and customer

satisfaction, with ability to correction of strategy.

2.14 Kim, Suh & Hwang Model as Research Framework:-

After reviewing different CRM effectiveness measurement models, Researcher

has selected Kim, Suh & Hwang `s model for measuring CRM effects on

customer loyalty. The selection of this model is due to reason it is more customer

centric rather than organization centric .This model is best suited according to

objectives of this research due to following reasons. Kim`s Model is based on

―Servqual‖ which renowned service quality framework, it is often used for

assessment of service quality. Service quality is directly linked with customer

loyalty. So it is useful idea to measure customer loyalty with such a framework

46

which is covers all the possible dimensions of CRM strategy and its effects of

customer loyalty. Other reason for choosing this model is other models are highly

dependent on financial data of any organization this model is general framework

for any organization, which can be customized according to needs of organization.

So researcher has structured according to objectives of research and accordance

with Islamic Bank of Britain. The whole research is based on Kim`s model which

leads to measuring crm effects on customer loyalty and status of current crm

strategy can be analyzed.

CRM effectiveness and Customer

loyalty metrics

Kim

`s (2003)

Bohlin

g(2

006)

Kev

in(2

006)

Wan

g (2

004)

Izquierd

o(2

00

5)

Customer knowledge X X

Customer Interaction X

Customer Satisfaction X X X X

Customer Complaints X X

Customer Loyalty X X X X

Revenue Growth X X X X

Cost Reduction X

Improved Customer productivity X

Usage of Employees

X

Compliance to Specification X X

ROI X X

Word of Math

X

Customer Acquisition X X

Repurchasing rate

X

Cross and up selling

X X

Market Positioning

X

Table 2.3 CRM Effectiveness Frame of Reference

Source: Azari (2007)

47

CHAPTER NO 3

R E S E A R C H M E T H O D O L O G Y

48

R E S E A R C H M E T H O D O L O G Y

3.0 Introduction:-

Research Methodology is systematic and scientific process to explore knowledge

about a particular problem. Research is regarded as important process in order

solves academic and business problems. Research Methodology forms the basis of

conducting research by developing step by step procedure for performing

research. (Kumar, 2005) Some People take research as rational approach or

common sense as it always starts when there is some unanswered matter and there

is no satisfactory evidence to answer that matter but research methodology is quite

different from common sense as it is based on precise objectives and has specific

methods involved. Kottler (1997) describes it as method of gathering, and

analyzing the information by using data collection methods to drive results from

this data which lead to answering and unanswered question or problem.

According to Gill and Johnson(2002) Methodology give research choice to adopt

suitable procedure to achieve objectives by ensuring the validity and reliability of

data .

After comprehensive literature review in previous chapter which formed the basis

of understanding the issue and perform research to achieve research goals and

objectives. This chapter discusses research philosophy, research approach, data

collection & analysis methods with justification. Last part of this chapter deals

with discussion on reliability, constraints, and ethics of research. Every part

contains justification of selection or rejection of alternative methods

Saunders,et al.,(2009) presented whole research process in form of an ―onion‖

consists six layers with each layer indicating steps towards achieving research

goal as shown in picture as follows

49

Figure 3.1 “Research Onion “

Source : Saunders,Lewis,Thronhill(2009)

.

50

3.1 Research Philosophy:-

The researcher`s selection of Research Philosophy shows his assumption and

perception of ―viewing the world‖. These assumption and Perceptions help

researcher to formulate suitable research strategy to achieve goals and objectives

According to Saunders, et al., (2009) research philosophy is process of

development of knowledge in specific field. Generally research Philosophy can be

viewed in three categories which are positivism, interpretivism, and realism.

(Saunders, et al., 2009)

3.1.1 Positivism is believe of majority of researchers that a apart from our own

assumptions the truth exists which can be understood through experimenting,

researching or observing.(Kincheloe,2003) Remnyi(1998) explains this

philosophy as social reality is truly exists and can be concluded through

observations. According to Denscombe(2003) positivism is based on assumption

that there are regulations, reasons, justifications exists in social world as exists in

nature.

51

3.1.2Interpretivism provides the base to identify the strategy through which

knowledge is obtained and justified in context of original search. It forms its basis

on assumption of shared or more than one reality ( Remnyi.1998). According to

Denscombe(2003) this method involves strategy of gathering information by

writing or tape recording the interviews of experts according to research topic

which is beneficial for that research topic.

3.1.3Critical realism is reality based epistemology which believes that research

in social phenomena cannot be justified unless elements created that phenomena

or world are identified (Mikkelsen, 2005) critical realisms based on faith that

there is some ultimate truth with condition to limited context. While according to

some experts that ultimate truth exists in some level.(Remnyi,1998)

The researcher has selected the ―mainly Positivism while less interpretive

approach‖ be because methodology of data collection is quantitative with portion

of qualitative research and ensure reliability. Data of quantitative research is less

likely to be influenced by behaviour.

This study can be explained as positivistic study with few parts of interpretivistic.

This is suitable method of this type of study because according to Saunders, at al.,

(2009) research related to field of Business and Management studies is more

likely to be combination of both positivism and interpretivtism .while the

conclusion and end result of research is ―general sable‖ showing that most of time

similar approach is applicable in similar research.

52

3.2 Research Approach and Design:-

A researcher can choose from deductive or inductive approach .Saunders & Lewis

(2008) consider this decision of choosing research approach an easy trap for

research as selecting one approach over other may be a mistake and may narrow

down the scope of research. The details of these types of research approaches are

as follows.

3.2.1 Inductive Research Approach:-

A Research approach which results in development of theory on the basis of data

analysis of collected data. The research does not conduct research on the basis of

any predefined theory or hypothesis. The researcher first collect data samples and

then on the basis if analysis of this data sample researcher develop a the theory on

the basis of understanding of data analysis results Steinberg(2006).According to

Saunders and Lewis (2009) development of theory on the basis of results from

data analysis is called inductive approach of research. the process of data

collection is usually done by questionnaire and interviews. Inductive approach is

usually called as ―bottom-Up‖ approach. It is considered to be more exploratory

and open-ended approach.

53

Fig3.2 Inductive Approach Source: William.K (2006)

3.2.2 Deductive Research Approach:-

Deductive approach is totally opposite to inductive research approach, in this

approach the first step is to develop a hypothesis or theory on the basis of

available information, then the suitable research strategy is adopted in order test

this hypothesis .According to Saunders, et al., (2009) research begins the research

review related study materials and develops framework and hypothesis. Then this

hypothesis or theory is tested by data gathering through different means and this

data is analyzed to check the validity of hypothesis. This approach is also known

as ―top-down‖ approach. According to Yin (2003) process of deductive approach

starts with reviewing theory about concerned topic. Then this results in narrow

downing into hypothesis .which is further narrow down into collection of data and

examining the data to find the results to confirm this hypothesis.

Fig3.3 Deductive Approach Source: William.K (2006)

Deductive approach is considered as more narrow and limited due to its nature

and relying on confirmation of hypothesis. Research is social science is usually

54

conducted by combination of both approaches at the same time.(Saunders and

Lewis,2009)

The research approach adopted for this research is deductive as the research is not

based on pre assumed hypothesis. The research is started without any assumptions

about the topic area and data collected through questionnaire and interviews is

analyzed to form a conclusion.

3.3Research Strategy:-

According to Cresswell(2003) research strategy makes it possible for a research to

proceeded systematically by arrangement of tasks that ensure focused and

organized research activity. This systematic approach is very useful in successful

completion of research.

So there is need of clearly identified research strategy research choose to follow.

According to Saunders et al., (2009) there is choice of different research strategy

from which appropriate strategy can be adopted according to research objectives

and type of research. Different research strategies are given as follows.

i. Survey

ii. Case study

iii. Experiment

iv. Archival research

v. Grounded theory

vi. Ethnography

vii. Action research

3.3.1Survey:- Survey strategy is generally identified as deductive approach of

research. It is most commonly used to answer the questions like where, who,how

much, and what questions. The strategy is famous among researchers and

55

frequently used to conduct research in business management area. In this strategy

researcher gather data by questionnaire. This data is gathered is already or

convertible in quantitative form. This quantitative data is then statically analyzed

to drive results (Saunders et al., 2009.)

3.3.2 Case Study: - According to Yin (2003) Case study is frequently used to

answer the questions with ―how‖ and ―why‖ are researched for answer. It is

particularly useful strategy for researcher with less power over incidents and

happenings. Case study is systematic way of analyzing an individual, group, or

reorganization, collecting the relevant data, analyzing it and finding the results

based on that analysis. As a result case study provide in depth understanding of

that phenomena.( Flyvbjerg,2006)

3.3.3 Experiment: - is scientific method of proving of disproving existing or new

theories or hypothesis. Experimental strategy is not useful in business

management research hence it depends of type of research done.( Saunder &

Lewis,2009)

3.3.4 Archival research: - this type of research is done by collecting and

analyzing information from organizations archive or records, these records

include, employees files, payroll information, old correspondence etc

(Remenyi,1998). According to Saunders & Lewis (2008) archival research is

usually based on past events, which changes with present time for answer.

3.3.5 Grounded theory: - is methodology used in social sciences focus on

generating theory or hypothesis on the basis of data analysis (Martin

&Berry,1986) this method acts as opposite to ―scientific methodology‖ it begin

with data gathering through multiple methods .so conceptual framework is not

present in it from starting. it is example of inductive research .this strategy is

useful for conducting research for the purpose of forecasting .(Goulding,2002)

3.3.6 Ethnography: - is research strategy used in social science. This strategy is

adapted to research on human social and cultures. Data is gathered through

observations, questionnaire, and interviews etc.(Maynard,1997) This type of

56

research is also used in biological sciences and names as field

study.(Remenyi,1998)

3.3.7 Action Research: - action research is systematic research to find a solution

of particular problem which is led by teams as part of community. This research

may also be supervised by organization, professionals, researchers, with goal to

gain more knowledge for strategies, practices of particular environment in which

they research. (Saunders& Lewis.2009)

Researcher consider survey as relevant to answer objectives (a) , (b) and (c) while

case study is more suitable for remaining objectives .So there are two tools of

research are used in this research for data collection

57

3.4 Research Choice:-

According to Saunders & Lewis (2009) researcher can choose from three research

choices, which ―Mono-methods‖, ―Multiple methods‖, and ―Mixed methods‖.

These research choices are procedures researcher can choose mix and match

quantitative or qualitative research data.

Fig 3.4 Research Choices Sources (Saunders,Lewis,Thornhill,2009)

According to Saunders, et al.(2009) these research methods which researcher can

select from one or more than one or mixed methods as shown in fig above.

According to Badke(2003) the selection of research choice depends on these three

issue(i)Types of research question(ii)Ability of researcher to keep hold on

behavioral influences on research(iii)The type of research problem in focus.

3.4.1Mono method: - Researcher selects one data collection technique and data

analysis techniques accordance to it.

3.4.2Mixed method: - the researcher use both qualitative or quantitative research

methods in his research also known as triangulate

methods.(Saunders,Lewis,Thornhill,2009)

3.4.3Multi methods:-Researcher use more than technique of data collection and

relevant data analysis technique to answer the research problem (Yin, 2003)

Research

Choices

Multiple

Method

Multi MethodMixed Method

Mono method

58

The researcher has selected the mixed method as both qualitative and quantities

research will be conducted. Questionnaire and interview will be able answer the

research question

3.5. Research Methods:-

The methods used by researcher for data collection purpose, conducting

interviews and designing’s the surveys questionnaire are discusses as follows.

3.5.1. Data Collection Methods

Yin (2003) explains that data can be collected with two methods according to

nature and condition of research problem

(i)Secondary Data - Secondary Data is when there is situation that suitable

information is already available and there is only need to drive data from this

information. This is called ―Secondary data‖. This data is collected by some other

sources by survey, interview, or case study. Secondary data is collected before

primary data due to the reason it can provide basis before conducting our own

research as some researchers may have already answered the problems trying to

solve.

59

(ii)Primary Data:-Primary data is when suitable information is not already

available and in order to perform research, the required information is collected

and then data is extracted , this data is never find before and research explore it for

his own research purpose.

There is possibility to divide data collection methodologies in to two types. which

are Qualitative Method, and Quantitative Method,(Yin, 2003) Qualitative

Methods are used to describe the characteristics which are not directly countable

or quantifiable like Behaviour of People, and emotions ,which are not always

tangible, and cannot be directly measured in numbers or amounts. Difference

between them is explained in table 3.1. As due to the nature of research topic both

qualitative and quantitative methods of data collection has been utilized in form of

Survey questionnaire and interview. Interview can be defined as person to person

contact for a specific agenda. (Saunders, at al., 2009) interviewing is different in

sense of interaction which can possibly affect quantity as well quality of response.

While interviewing is time consuming and require lot of resources. It is better to

distribute questionnaire if the sample size is bigger and relevant data can be

collected easily. Interview is good idea only for specific purposes for limited

samples (Adams, Schvaneveldt, 1985). Researcher used both quantitative and

qualitative data collection .Questionnaire was used to quantitative data and

interview were conducted in order to collect qualitative data

60

Figure 3.3 Research design “onion”

Figure 3.3 is showing selection of research methods represented in shape of Onion

adopted from research onion by Saunder et al (2009)

61

Table 1: Qualitative vs Quantitative Data Collection

Qualitative Methods Quantitative Methods

interpretation

of Reality

Various realities,

but reality is not

objective has

influence of people

who interprete it

One objective

indent from any

human interpretation

Research

Philosophy

Interpretivism Positivism

Research

Tools

Case study

Grounded theory

Action research

Questionnaire

,Survey

Experiments

Validity

internally

validity/credibility,

externally

validity/transferability,

reliability/dependability

Sampling:

purposeful

Internally and

externally reliability

Random sampling

Characteristics

Inductive ,

formulation of theory

or hypothesis

Deductuctive by

nature use to test

hypothesis

Text based Numerical based

In-depth information on a few cases

Less in-depth but

more breadth of

information across a

large number of cases

Unstructured or semi structured response options

Response options

are limited

Low Generalizability

More

Generalizability

Table 3.1 Difference Between Quantitative and Qualitative Source:- Liouka (2007)

62

3.6 Survey Questionnaire Design:-

According to Kumar(2005) questionnaire is useful way of recording information

in which respondents answers the questions in writing. The questionnaire is most

popular technique of collecting data in social sciences that experts do not feel

investing any other method to replace it with better method. Questionnaire should

be designed keeping in view respondents, interactive style is better; any question

asking a sensitive issue must be prefaced with statement addressing the

importance of that question. While Saunders, et al.,(2009) explains questionnaire

as most commonly used in survey strategy and is effective way of collecting

required data. Questionnaire should be closed ended. As respondents might not

have enough time to write answers in texts. So selection is closed end

questionnaire is better option.

Questionnaire is designed on the basis of research framework adopted in after

literature review. Question are divided in to 4 parts similar to Kim`s model .Each

part is designed in order collect specific information about CRM effects on

Customer loyalty. According to objectives Islamic Bank of Britain`s CRM

strategy is examined by assessing its effects on customer`s perception as

questionnaire consists of following parts. As CRM strategy results in improving

many organization processes. A success full CRM strategy results in improving

customer satisfaction, better customer interaction channel, improved financial

performance, improved customer`s perception about perceived value

1) Questions about Customer`s perception about Perceived Value by

assessment of questions in terms of Banking Services, usability

,security, accessibility, and attractiveness of customer

2) Second part deals with questions to examine customer perception

about quality of interaction channels of Bank

3) Third part deals with customer`s perception about customer

satisfaction. Questions to asses if they are satisfied with services and

would like to remain with bank in long term basis

63

4) Fourth part deals with financial performance and customer knowledge

as improved customer knowledge management and financial

performance will definitely result in improved performance results

Interviews are also conducted in order collect the data about, which cannot be

asked in quantifiable manner. While questions were asked which further support

the findings from quantitative data collection and provided better idea to conclude

findings as well provide extra information to achieve objective (d)

3.6.1 Questionnaire Types:-

According to Saunders et al (2009) there two most common type of questionnaires

which are given as follows

(i)Interviewer Administrated Questionnaire: - interviewer administrated

questionnaire are questionnaires filled by interviewers while respondents

answering on telephone or filled during face to face interview.

(ii)Self Administrated Questionnaire: these are types of questionnaires which

are filled on internet, by Post or by any other means where there is no direct

contact between respondents and researchers are established.

Researcher selected self administrator questionnaire which was distributed to

customers in the local branch and customers filled and returned it. While

interviews were also conducted to collect some valuable information which was

not possibly recorded by questionnaire. This information will help in

understanding and co relating results with each other.

64

3.6.2 Questions Style:-

According to Piekkari, & Welch, (2004) there are following different type of

closed end questions.

(i) Likert Style: - in linkert type of question respondents answer in ―intensity of

Degree‖ like from strongly satisfied to strongly dissatisfied

(ii)Cafeteria Style: - in cafeteria style respondents are requested t answer as tick

or mark as many items relevant to their opinion

(iii) Order of merit Style: - in this style respondents are asked to answer inters

of their choices as ranked from most preferred to less preferred to show their

opinion

(iv) Demographic information Style: this style is used to ask demographic

characteristics of respondents as, gender, age, race, education, etc theses responses

are usually calculated in percentage.

Researcher has selected Likert style questionnaire for survey as this style is

according to requirements and often used to collect data about customer

behaviour. Demographic information style questions are also included as initial

part of question deals with collecting demographics information of customers.

65

3.9 Sampling:-

According to Saunders et al(2009) collection of data from whole population is

not possible so sampling is usable procedure in order to collect data on small scale

which represents whole community.

.

Fig. 3.5 Population, sample and individual case

Source: Saunders,Lewis, Thornhill (2009)

Saunders et al (2009) further explain two types of sampling as give as follows (i)

Probability sampling (ii) non probability sampling

3.9.1 Probability Sampling: - it is also known as random selection. In order do

this random selection it is necessary that each group of population has same

chances or probability to be selected for respondent.

3.9.2 Non probability Sampling:-it is not based on random selection. It does not

affect its validity; it does not necessarily mean that it doesn’t not represent the

correct ratio of respondents. It is being used where there is no possibility or

requirement of probability sampling according to the situation. for example an

interview of person passing by street shown on TV or interviews by customers.

Researcher has selected non probability sampling as it was not possible for

researcher to arranger probability sampling due to non availability of customer

data to choose or customer on same chance basis.

66

3.10 Credibility and Validity: the credibility and reliability is very

important in research. This is ensured in this dissertation by reviewing literature

review from reliable sources for example most of books referenced are well

known books in this research area, the articles and journals were taken from

credible sources like emerald, indera and Bnet on web. While to ensure validity of

research, the previously quoted scientific methods have been adopted.

3.11 Reliability: Researcher is convinced that if this research is conducted by

someone else on some other occasion with same type of sampling will result in

similar findings unless Islamic Bank of Britain has changed its strategy as whole.

Which ensures the reliability of research?

3.12 Generalizability: This study is generalizable to all banks, financial

institution, especially for banks offering Islamic banking services all over the

world. The same methods of research can be applied to any other banks. However

this is particular study is limited to Islamic Bank of Britain (IBB) branches in UK.

3.13 Ethical Issues: researcher has been every careful has been done in order

to avoid plagiarism. Every idea and option used in this dissertation is properly

referenced in the name that person. All the necessary cautions have been taken in

order to conduct the research. Research is published with approval of Islamic

Bank of Britain

67

3.14 Data Analysis Methodology:-

Data analysis can be done in two ways manual data analysis and computerized

data analysis, Computer based data analysis has its own advantages and

disadvantages over manual data analysis (Hill & Alexander,2006). These

advantages are as follows

1) Computer can analyze data quickly and in almost no time

2) Data can be stored and revisited

3) Graphs and charts to show results can be drown

There is number of good softwares in the market which can analyze survey results

these are easy to use and any one can use it. The data analysis tool Known as

―SPSS‖ is well known in UK, will be used for data analysis.‖SPSS‖is most widely

used in statically Analysis in social Sciences (Thomas 2004) statically analysis

tools included in the Package software are as follows

(i) ―Descriptive Statistics‖ includes ―Cross

tablution‖,‖Frequiencies‖,‖Descriptives ―Descriptive Ratio Stataics‖

(ii) Numerical outcome Prediction knows as ―linear aggression‖

(iii) ―Bivariate Statistics‖. Means‖,‖ T-test‖,‖Anova,‖‖Correlation‖

The Spss Statical Pakages are capable of through ―Cronbach`s Alpha‖ removel of

weak or null item‖(Guide To SPSS)‖ In the formed constructs we will use

Cronbach's Alpha to the least. Microsoft Excel is used to represent data in bar

charts.

68

C H A P T E R N O 4

D A T A A N A L Y S I S & F I N D I N G S

69

DATA ANALYSIS AND FINDINGS

4.0 Introduction:-

This chapter contains two parts the first part of this chapter deals with qualitative

data collected from interviews of customers to gather specific information about

their customer experience while second part deals with primary data gathered

from questionnaire. This is evaluated to conclude their meanings. Questionnaire

was created to gather information in accordance with Kim’s model of CRM

effectiveness measurement. Results were used to create BSC (Balance score Card)

of metrics required.

4.1 Characteristics of Interview Respondents

As part of qualitative research the respondents of questionnaire were asked

questions about their experience and reasons of banking with Islamic Bank of

Britian.The 41 respondents out of total 222 were interviewed as well. These

sample respondents are of following characteristics

(i) 28 out of these 41 respondents completed university .while remaining were

not highly educated

(ii) The respondents interviewed were 24 women and 17 men.

(iii) The respondents has varied age between 24-68

(iv) 39 people are also customer of other banks with more than one bank

accounts. while 2 people are only customer of Islamic Bank of Britain

(v)The duration with bank varies in younger respondent then mature aged

people, the average duration with Islamic bank of the people older than 35 was

with bank 4 years or more,

70

TABLE 4.1 - Demographic Characteristics of Respondents

4.2.1Reasons for Relationship with Islamic Bank

In this part we tried to discover the reasons of choosing Islamic Bank of Britain to

find out why these people choose to have an account with bank. The biggest

reason most of respondents replied due to religious reasons, while few replied

about personalized, unique services as share holder for profits and loss. Some

people may feel it safe to get loan for their business as bank will also be involved

in their share of profit and loss

An example of reason cited was the following:

I have option of unique products, have better contact with people of my

community am banking with Islamic bank mainly due to religious reasons , but i

feel my money is more secure at “TSB Lloyds” in context of investments. Reasons

of banking with Islamic bank such as trust, security, customer services were cited

with 7 respondents only.

The Islamic bank is unique in sense it offers loans without interest that is

interesting for me

As Muslims I feel more convenient banking with them as they understand my

needs and demands better, I feels like having more personalized service at Islamic

Bank of Britain

71

Any how i personally feel my investment are not secure and does not return me

any fixed term amounts’ also feel sense of having lack of protection due to no

availability of insurance services.

Some respondents responded with reasons too many people are have account in

one branch the Islamic bank has no branches in many area, for many customers

these branches are not easily accessible to them. Many people were concerned

that customer service feels like talking to robots. There is no personalized sense of

religious unity in banking customer service they treated less well than traditional

banks

4.2.2 Usability of internet and Phone Banking

Another question was meant to know about the respondents experience about

customer services, including website etc weather they are satisfied with the level

and amount of information about products easily accessible to them. Majority of

customers replied as somewhat satisfied but with lots of concerns with online

banking and phone banking services

The online Banking service offered by bank not of good standard as it lacks many

features with other banks offer in their online banking service; there is no

personalized message or name. Second concern was phone banking people cited

having trouble in contacting phone banking service as they lack the information

they required at that time. As it is not always possible to visit branch as they are in

limited areas.

72

4.2.3Cutsomer`s View about Interaction channel

In order to get information about customer preferred channel of interaction with

Islamic bank the respondents were asked which preferred channel of interaction

In this category we tried to obtain information about the channels utilized and the

level of care preferred by customers to make transactions, and if this preference is

related to the type of product traded. Table 3 shows the level of satisfaction by

percentage of respondents using each channel for the product account.

The favorite interaction channels as responded by customers are branch and

payments by using check book with more than 70% usage. Which people are not

comfortable with using online or phone banking to sort out their matters.

4.2.4 What is not good at Islamic Bank of Britain?

When respondents were asked about what is missing in the channels of interaction

they use, most of them replied that they face some troubles in sorting out their day

to day activities on phone banking and most of them don’t regard online banking

as safe to use, as results of many rumours about hacking and viruses which stole

online customer information. The reason for this insecurity was weak online

banking service from bank still not using pin sentry as used by other traditional

banks to secure online transactions. Due to these reasons people avoid using

online banking while phone banking is also not helpful enough as well. Visiting

the branch is not convenient as well due to fewer branches in limited areas. Few

customers also showed concerns about internet banking that internet banking

service is down on weekends. While the phone banking is not as appropriate to

73

their need or phone banking operator usually don’t have access to their particular

records to solve their issues.

4.3Quantitative Phase:-

The Quantitative research was done by questionnaire survey and remaining. The

total numbers of 250 questionnaires were distributed .From which 196 were filled

by customers in different branches of Islamic Bank of Britain, while 54 were

filled during interviews in different Islamic Bank`s branches in London, and

mosques of London. The questionnaire starts with 5 general questions about

customers’ background.

4.3.1 Part 1:-Demographic Characteristics of Respondent Sample:-

Out of 250 questionnaires 222 were fully answered. While remaining were

discarded and are not included in research.

Bar chart shows the Gender of Respondents

It shows majority of Islamic bank customers were men as results shows 58.55% of

respondent are male while 41.44% were female

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Male

Female

Male Female

Responce Rate (%) 58.55% 41.44%

Gender of Respondent

74

Bar chart shows the Age of Respondents

Above bar chart shows the age group of respondents as 7.20 % of respondents

belong to age group 0-25 while 60.80% are age of age group 25-50 and 31.98%

belong to age group 50-75.

Bar chart shows the Length of time with Islamic Bank

Above bar chart represents the Length of time respondents are in relationship with

Islamic Bank of Britain, It shows about 40.99% are with this bank from 0-2

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

1-25

25-50

50-75

1-25 25-50 50-75

Response Rate (%) 7.20% 60.80% 31.98%

Age of Respondent

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

0-2

2-4

4-6

0-2 2-4 4-6

Response Rate (%) 40.99% 45.49% 14.41%

Duration with Bank

75

years,45.49 % of respondents are with bank in duration from 2-4 while 14.41% of

the respondents are with bank from duration of 4-6 years.

Bar chart showing the type of account

Above bar chart indicate the type of customer use in Islamic bank. Which indicate

the majority of customers 79.73% customer use it for personal banking while

14.14 % respondents have Business accounts and only 5.89% customer claimed

that they use Islamic Bank for Both purposes.

4.3.2 Part 2:- Customer Value Perspective

In this part respondents were asked about how they think about Value of services

they are getting value as customer of banking services. The questions were asked

about usability, attractiveness, efficiency and security of services. This part is

meant to analysis experience of banking customers about services at bank.

1 2 3 4 5

Strongly

Disagree

Disagree Not sure Agree Strongly

Agree

0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Personal Account

Business Account

Both

Personal Account Business Account Both

Response rate (%) 79.73% 14.14% 5.89%

Type Of Bank Account(%)

76

Statement 1:- Do you think Services at Islamic Bank of Britain are easy to use?

Bar chart of respondents view about usability of services

15.76% of Islamic Bank of Britain Strongly agrees that services are easy to use

while 25.22% agree while 45.94 % strongly don’t agree that services are usable

Statement 2:- Do you think Islamic Bank Services are Attractive as compare to

other banks?

Bar chart view of customer`s view about services attractiveness

15.76% are strongly agree while 30.18% merely agree with the fact services are

attractive while 39.18% strongly disagree with the services are attractive as

compared to other banks.

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 15.76% 25.22% 0% 45.94% 13%

Usability

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 15.76% 30.18% 5.40% 39.18% 10.81%

Attractiveness

77

Statement 3:- Do you Agree Personal information you share with Islamic Bank is

Secure?

Only 17.11 Customer strongly and 28.37% agree that their customer information

is secure with Islamic bank of Britain while 31.98% disagree, and 7.20% strongly

disagree about this issue.

Statement 4:-Do you think Islamic Bank has easily accessible services?

12.61% strongly agree while 23.87% agree with Islamic bank services being

easily accessible on other hand 49.09% disagree with this opinion

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 17.11% 28.37% 16.21% 31.98% 7.20%

Security of customer information

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Respondent Ratio (%) 12.61% 23.87% 1.80% 49.09% 12.61%

Accessibility

78

4.3.3 Part 3:- Customer Interaction

Statement 5: Do you receive friendly and efficient customer services at Islamic

Bank of Britain?

23.87% respondents strongly agree while 34.23% just agree that Islamic bank

provide efficient and friendly service while 34.48% disagree and 5.40% strongly

disagree that Islamic bank of Britain provides them friendly and efficient service

Statement 6:-Do you think Phone banking service at Islamic Bank of Britain full

fill your needs?

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Respondents Rate (%) 23.87% 34.23% 0.00% 34.48% 5.40%

Efficient and Friednly Customer Service

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Responce Rate (%) 7.20% 18.46% 8.10% 54.50% 11.76%

Phone Banking

79

7.20% of respondents strongly agree while 18.46% just agree phone service, while

54.50% respondents disagree that phone service at Islamic bank is according to

their needs

Statement 7:-Do you think Online Banking Service at Islamic Bank of Britain is

reliable and safe to use?

9.90% strongly agree and 25.22% just agree with reliability and security of online

banking services at Islamic Bank of Britain while 38.28% respondents disagree

with this view

Statement 8:-Do you think information about products at (Islamic Bank of

Britain) is easily available when and where required?

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 9.90% 25.22% 21.62% 38.28% 17.11%

On line Banking( Security & Reliability)

80

22.97% respondents strongly agree and 44.59% strongly agree that product

information is easily available when they required while 21.62% disagree with

this opinion

Part 4 Customer Satisfaction Perspective

Statement 9:-Do you think Islamic Bank of Britain is well known Brand in

society?

12.16% of customer strongly, while 31.08 agrees with brand popularity of Islamic

Bank, while 44.14% disagree with this opinion

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 22.97% 44.59% 2.25% 21.62% 8.55%

Product information availability

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 12.16% 31.08% 6.30% 44.14% 6.30%

Brand Popularity

81

Statement 10:-Do you agree products of the Islamic bank are in line with your

social values?

62.60% respondents strongly agree while 28.82% just agree with product

compliance with their social values. While 5.85 disagree with this opinion

Statement 11:-Do you think you have full confidence in the bank’s services?

16.66% respondents strongly agree while 34.68% agree with that they have full

confidence on their bank while 38.73% disagree with this opinion

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 62.60% 28.82% 2.70% 5.85% 0.00%

Products Complaince with values

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 16.66% 34.68% 1.80% 38.73% 8.10%

Confidence on Bank

82

Statement 12:-Do you agree that the Islamic bank is consistent in providing

quality services?

16.21% respondents are strongly agree ,while 25.67% just agree with service

quality at Islamic bank while 49.54% disagree with quality of service they receive

at Islamic bank of Britain.

Statement 13:- Do you consider the Islamic bank as first choice among other

banks in area?

23.42% respondents strongly agree while 31.08% just agree that their favorite

choice is Islamic bank of Britain while 31.98% disagree with this opinion

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response Rate (%) 16.21% 25.67% 3.15% 49.54% 5.40%

Service Quality

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 23.42% 31.08% 9.45% 31.98% 4.05%

Favorite Choice

83

Statement 14:-Do agree if you had another choice, would you still choose to bank

with the Islamic Bank?

30.18% respondents strongly agree while 26.57% just agree with choosing to

bank again with Islamic bank even of they have another choice, while 22.97%

disagree with this fact

Statement 15:- Do you think you do not like to change to another bank

because you value your relationship with Islamic Bank?

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 30.18% 26.57% 16.21% 22.97% 4.05%

Retention

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 19.43% 31.98% 15.31% 26.12% 7.20%

Relationship value

84

19.43% strongly agree while 31.98% agree that they value their relationship with

Islamic bank while 26.12% disagree with this opinion

Statement 16:-Do you think your relationship with Islamic Bank has encouraged

your loyalty?

22.07% of respondents strongly agree while 36.48% agree with to be loyal with

Islamic bank while 22.97% disagree that Islamic bank experience has not

encouraged their loyalty

Statement 17:-Do you agree it will be good idea to refer Islamic Bank to your

friends?

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate(%) 22.07% 36.48% 11.71% 22.97% 6.75%

Loyality

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 17.56% 34.23% 9.45% 36.36% 2.70%

Recommendation

85

17.56% strongly agree while 34.24% agree that they will refer their friends to

Islamic bank of Britain while 36.36% will not choose to refer this bank to their

friends

Statement 18:-Do you agree Islamic Bank has enough branches to serve its

customers?

13.96% strongly agree while 16.12% agree that Islamic bank of Britain has

enough branches to serve its customers while 59.00% are not satisfied with

number of branches it has in their area

Statement 19:-Do you agree marketing department at Islamic Bank is doing

satisfactory work to advertise and offer products to customers?

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 13.96% 16.21% 4.05% 59.00% 6.75%

No. of Branches

0.00% 10.00% 20.00% 30.00% 40.00% 50.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 18.46% 25.22% 9.00% 41.44% 5.85%

Marketing Performance

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18.46% of respondents strongly agree while 25.22% agree that marketing

department of bank is doing good job in marketing the products to them, while

41.44% disapprove the performance of marketing department

Statement 20:-Do you feel satisfied with overall banking experience with Islamic

Bank of Britain?

26.57% of respondents strongly agree while 28.37% agree that they are satisfied

with overall performance of Islamic bank while 34.68% are not satisfied with

banking experience.

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

Strongly Agree

Agree

Not sure

Disagree

Strongly Disagree

Strongly Agree

Agree Not sure DisagreeStrongly Disagree

Response rate (%) 26.57% 28.37% 8.10% 34.68% 2.25%

Satisfaction

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4.4 Part 5:- Financial Perspective and Customer Knowledge Perspective

Assessment of financial and customer knowledge perspective is also important

part of overall CRM performance measurement. Due to data privacy policy of

Islamic Bank of Britain it is not possible to measure all the aspects of financial

and customer knowledge perspective. Some important financial matrices are

measured where data was publically available from annual financial reports of

Islamic bank of Britain.

1. No of Customers:-

According to financial year reports Islamic bank customers were increased from

42000 in 2007 to 50000 in 2010.

2. Deposits:-

38000 40000 42000 44000 46000 48000 50000 52000

2007-2008

2008-2009

2009-2010

2007-2008 2008-2009 2009-2010

No of customers 42000 47000 50000

No of Customers

0 50 100 150 200

2007-2008

2008-2009

2009-2010

2007-2008 2008-2009 2009-2010

Deposits (Million)£ 135 158 172

Deposits (Million)£

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Bank deposits were also kept on increasing 135m £ in 2007 to 172 m £ in

2010

3. No of Online Banking Users:-

No of online banking users were on increase 10200 in year 2007 to 14400 in year

2010

4. No of Phone Banking Users

Number of online Phone banking users was increased from 8400 in 2007 to 11300

in year 2010.

0 2000 4000 6000 8000 10000 12000 14000 16000

2007-2008

2008-2009

2009-2010

2007-2008 2008-2009 2009-2010

No of online Banking Users

10200 12300 14400

No of online Banking Users

0 2000 4000 6000 8000 10000 12000

2007-2008

2008-2009

2009-2010

2007-2008 2008-2009 2009-2010

No of Phone Banking Users 8400 9100 11300

No of Phone Banking Users

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4.5 Creating Balance Score Card

Balance score card is very important and last step in order to assessment of results

of all crm customer perspective analysis. This balance score card represents the

score of each category where crm is implemented and can provide quick idea

about how much it affecting the customer loyalty. According to Kim (2003) a

balance score is created according to needs and requirements of organization and

every particular metrics is measure and compared with the results of past

assessment. The variation between results is noted which represents the overall

performance of CRM strategies and its effects on customer loyalty. We

particularly in case of Islamic Bank of Britain have created the balance score card

which score is derived from data gathered from questionnaires and annual report

of bank. The score is measured in mean value and in percentage of increase which

is shown in variance row. The Balance score card is usually compared with the

results of previous rating. Researcher is comparing his own results to similar

balance score (Sadek, et al, 2009) conducting in Islamic Bank of Britain Leicester

branch. The results of this research are compared with Service quality survey

results in order asses the improvements due to CRM strategy and its effects on

customer loyalty

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Balance Score Card of Islamic Bank of Britain (Kim’s Model of CRM Assessment)

Metric P1 2009 P11 2010 Var

a. Customer knowledge

Customer acquisitions NA NA NA

Total no Number of customers 47000 50000 7%

Average page views per day NA NA

Total deposits (m) £ 158m 172m 8.80%

Net sales per employee £

Technological capacity (million hit) NA NA NA

Frequency of hardware upgrade (no./year) 2 4 100%

R&D investment (£) NA NA

No of online banking users 12300 14400

17.73% 17

No of Phone Banking Users 9100 11300 24.10%

b. Customer value

Net sales (£) NA NA NA

Ordinary sales (£) NA NA

Channel Interface

Usability 3.75 4.13 0.38

Attractiveness 3.72 3.55 -0.17

Accessibility 3.75 2.80 -1.50

Security and Reliability 3.06 3.19 0.13

Consistency of site structure 3.64 4.20 0.56

c. Customer interaction

Friendly Service 4.05 4.40 0.35

Phone Banking 3.10 3.20 0.10

Online Banking 3.45 3.50 0.05

Number of payment methods 4 5 1

Number of response channels to customer

Inquiry 3 5 2

Cost for managing channel NA NA NA

Response time NA NA NA

Product diversity 4.75 4.75 0

Detailed product information 4.95 4.65 -0.35

d. Customer satisfaction

Brand image 3.17 3.20 0.03

Quality of Service 3.91 4.0 0.09

Confidence 3.18 3.25 0.07

Compliance to social values 6.00 5.80 0.20

Retention(prospects) 3.79 3.7 0.09

Favorite choice Bank 3.33 3.4 0.07

Reliability 4.25 4.5 0.25

Loyalty 4.15 4.78 0.62

No of Branches 3.18 2.8 -1.10

Overall banking experience(satisfaction) 4.89 4.70 -0.19

Table 4.2 Comparison of CRM Performance and customer Loyalty Kim .et al (2003)

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C H A P T E R N O 5

FINDINGS ANALYSI S AND DISCUSSION

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5.0 Introduction:-

This chapter has two parts first part is based abstraction of findings from

qualitative and quantitative data. While second part deals with detailed discussion

on the basis of these results leading into objectives achievement and answering

the research question.

Questionnaire and interviews results are evidence of following findings

(i)Financial results for past years show healthy growth rate in terms of customer

acquisition and deposits

(ii)Majority of customers chosen to bank with Islamic bank of Britain due to

religious obligation and banks capability to address customer’s religious needs.

(ii)Majority of customers not satisfied about security of their personal information

(iii)Customers are not satisfied with online and phone banking services

(iv)Half of the customers are not satisfied with overall quality of banking service

(v) Half of customers are not satisfied with accessibility of banking services

(vi)Majority of customers believe bank severely needs to open new branches

(vii) Majority of customer’s don’t trust online banking service due to security

concerns

(viii) Bank is not fully successful in providing personalized customer services

(ix)Half of the customers are loyal with bank and will not change to alternative

(x) 40% of customers are not having full confidence and trust on bank

(xi)Qualitative research findings indicate most popular channel for customer is

local branch service

(xii) Most of the respondents use checks for their payments

(xiii)Most of the customers are unhappy from phone banking and online banking

service

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These findings helped researcher in analyzing CRM strategy of Islamic Bank of

Britain by measuring its effects on customer loyalty by four most important

customer perspectives. According to objective of examining CRM strategy is

achieved through this examination. As CRM is strategy and has intangible effects

.it can only be examined by measuring its effects on customer in terms of

increased customer loyalty, satisfaction, improved performance of customer

interaction channels, customer retention, acquisition and ultimately achieving high

profits through customer satisfaction. The examination of crm and its effects

achieved research objective as well as qualitative research helps in identifying

Islamic Bank strategy to market its products related to religious significance as

advantage from other institution is also discussed here. This was also identified as

objective at start of research

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5.1Analysis of Islamic Bank `s CRM strategy and its effects on

customer Loyalty

Although bank`s financial results show positive outlook in terms of satisfactory

increase in customer acquisition and customer deposited. Bank seems to be failing

to address customer’s expectations and demands. As according to (Payne, 2006)

customer retention is not symbol of customer loyalty and customer satisfaction.

These two are totally different things. Despite the fact that bank is failing to

respond to customers’ needs the high growth rate is due to other factors which are

influencing more and more customers to bank with Islamic bank of Britain.

Keeping in view the bank was establishes only six years back and this is only

stand alone Islamic financial bank in UK which is providing such products.

Muslims in UK were desperate to bank with such bank which provides them such

facility, Islamic bank Britain established to address this popular demand of

muslims in UK. This from start attracted muslims of Britain, so this played a key

role in success of bank. So the banks high growth rate is due to its advantage of

being new and a unique bank in market. According to (Kumar, 2008) customer

retention rate will not be same as the time passes due potential of new competent

in the market or most of the people already banking with Islamic bank. Here it

becomes necessary to develop customer loyalty in order to gain long term

profitability by developing long term relationship. Customer relationship

management is answer to banks this needs. But findings shows that customers are

not very satisfied with banking experience at Islamic bank of Britain which

indicate that high retention rate has badly affected the banking services ability to

serve its customers. Current findings indicates problems in CRM strategy of

Islamic Bank of Britain, most of the problems directs towards mismanagement of

―customer knowledge‖ in CRM strategy. All findings are discussed in details in

order to understand it in context of crm strategy.

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5.2Customer Interaction Perspective:-

Based on findings from qualitative research, respondents of interview the most

popular interaction and service channel was local bank branch with more than 65

% respondents feel it convenient to visit the local branch for their banking

services. While about 60% of respondents were satisfied terms of services

provided at local branch of Islamic bank.

Respondents quoted different reasons of using local branch instead of using any

online banking or mobile banking services. Most of them replied they feel it more

convinets to visits branch and discuss their issues face to face with employees as

they live near to local branch. While qualitative and quantitative survey suggests

that banking customers don’t feel confident in using online banking service and

60% are concerned with security of online banking service. This lack of

confidence in online banking service is due to many factors like the increase of

customers knowledge about security have created concerns about security of

online banking. As majority of respondents in interviews revealed that they also

have bank accounts with other high street banks like Barclays and Lloyds Tsb and

these banks provide special devices called ―pin centry‖ for online baking security

and phone confirmation of every transaction has increased their perception about

security of transaction. These kinds of security measures for online banking are

still not available in Islamic Bank of Britain.

As according to Alexendra (2003)

―Customer Loyalty is most precious asset for any bank, in terms of both sides

customers and employees at bank. The Customer loyalty even pays in hard times

when bank forced to impalement customer negative priorities but better for bank.

It is essential for bank to create possibility of use of multiple interaction channels

for customers. Which fulfill his needs and customer satisfaction same time”

This customer trend of using local branch is opposite to normal trend as in other

high street banks the most favorite channel of customer interaction is ATM or

online banking. Because it is according to human natural instinct is to attract

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towards ease of use and availability of channels any time day. This may also save

them to be in long lines inside the branch.

This is the fact that most popular channel of interaction is customer services

inside local branch this fact is also varied by quantitative data which revealed that

only 28% of Islamic Bank customers are registered with online banking. This is

quite low in context of 75% national average of online banking user. Other

reasons may be businessmen and people residing near local branch feel it convent

to come directly in branch to use banking services. Whatever the reason Islamic

bank should concentrate on agreeing people to use alternative method of customer

interaction. This will be beneficial for Islamic bank as well by reducing costs of

operations. it is not practical to deal most of customers in local branch for day to

day transaction. As Less branches, high customer acquisition rate, with less online

banking users can create lot of burden on customers services which may not treat

customers according to expectations of customers .which may reversely affect

customer loyalty.

As Roscoi (2001) stated about CRM

―CRM is helpful in addressing strategies more efficiently with increasing chance

of success by double; also improve the sales together with customer satisfaction

by suitable products to customers”

A point of concern for Islamic bank of Britain is low satisfaction rate of customers

from online banking service and phone banking service. Only 40% of customers

are satisfied with online banking service while 35% is satisfaction rate from phone

banking service which is quite low as a result customers find it easy to visit the

local branch. Few of the respondents replied the reasons like internet service is not

secure and usually down. While phone banking service is not according to their

needs as call centre don’t have access to data or authority to proceed with

problems usually. Customer centre representatives have limited access which

usually doesn’t solve their problem. There is huge need to employee and integrate

business process by effectively implementing suitable CRM strategies to fulfill

needs of customers.

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as many of interview respondents preferred local branch of bank as prefer channel

instead of traditional popular interaction channels it is due some other factors like

online banking security concerns, online banking service problems and usability

of call centre representative to help customers. While other reason for this trend

was also stated that was type of account they hold in the branch as call centre

representative usually unable to help mortgagee account customers, and there is

no fixed amount of profits due to banks operations are based on interest less

products. So customers need to visit local bank branch to seek advice and further

information. Anyhow today`s latest technology has made it possible to provide

customer with any kind of customized services online which seems to be missing

in Islamic bank of Britain. Today’s IT market offers personalized and artificially

intelligent softwares. These softwares can provide customer interactive interface

and as well as personalized experience. Many respondents were also not satisfied

with internet banking interface and quoted as lacking personalized experience.

Islamic Bank of Britain can upgrade their system to provide their customers better

and personalized experience which can help in visual cases of mortgage customers

and solve their matters with leaving comforts of their homes. Respondents agree

the fact that using other interaction channel is more comfortable to use but their

concerns and problems force them use local branch channel.

On the other hand according to most of respondents preferred form of payment is

check instead of debit card, online banking, and phone banking. When asked for

reasons most of respondents replied for ease and security reasons were top reasons

for using this form of method. It is obvious when there are less online banking and

phone banking customer their preferred mode of payments will be off course

check. It seems like customers’ lacks confidence and security on form of

payments as well.

As according to Alexandra (2003)

“Trust is key success factor and relationship and is representative of capability to

fulfill promises with reliability”

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According to few respondents if they had option of using internet banking and

ATM what will be their preferred choice then and why the response was it will be

based on ease and availability of service without leaving home. Few respondents

replied that they only try to visit local branch when online banking cannot help to

resolve their problems as it has limited services online and call centre unable to

offer help as well,

when asked if he had any problem with some service channel gave the following

response some customers agree that it is not easy to going to local branch for

every day banking, it not easy and it happens only when there is no other resort.

The customer interaction is very important part of CRM strategy as it is directly

linked with providing service quality to customers. For most of customer the

interaction channels is first contact for tangible experience as banking customer.

In case of Islamic bank of Britain evidence shows gap in between customer’s

requirements and customer interaction strategy of bank. There is gap in between

strategy and customers needs is vital in success of CRM stratagy.customers needs

and requirements are dynamic in nature(Kumar,2008) there is need of continuous

monitoring of customer requirements and needs for CRM success and in

achieving customer loyalty.

5.3Customer Satisfaction Perspective

According to findings from quantitative research and qualitative research most of

were using local bank branch as interaction channel and most of them more than

65% were satisfied with the customer service inside the local branch. While

overall satisfaction rate of customers is 53%. While 62% of customer which are

not satisfied with no of branches .this demand of more branches is due to their

favorite channel of interaction is being local branch. This can only be handles by

opening more branches to offer more convenient to serve customers. But it might

not be good idea for a bank which has most of its customer base is muslims and

has target market of specific community. Opening of new branches in more area

might not be feasible unless Islamic bank increase its customer base in non

muslims communities. This can be done by designing more products to attract non

muslims customer as well being in accordance with law of interest less products,

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there might be other customers who join the bank which may create economically

feasible for Islamic bank to open branches in other geographical areas as well.

Other option to answer this problem is shift customers visiting the local branch to

alternative channel of interaction which is will reduce costs and customer

satisfaction as well.

Currently CRM strategies of Islamic bank seems to fully concentrating on its

products as 90% customers believe that designed and offered products are in

complaisance of their social values while other figures from financial reports

show 20% increase in number of bank accounts every year. This is despite the fact

that most of customers are not satisfied with overall service quality at Islamic

bank of Britain. Satisfaction rate of service quality is 41%. This means that

Islamic bank of Britain is successfully attracting the muslim customers towards its

products and they are ready and to remain with bank even if they are not very

satisfied with service quality. This fact can also be proved by customer loyalty

figures in where 58.55% customers found to be loyal with bank in their own

words. It means that customers are quite satisfied with bank due mainly due to

reason of attractive products. These attractive products which are according to

needs and requirements is good strategy for customer acquisition. This proves

Islamic bank of Britain’s CRM strategy is fully based on its products which is

only strength of its strategy.

As customer satisfaction rate from its products is 41% which is not very high as

compared to customer satisfaction with products line. this can be due to the reason

that most of customers are also banking with other high street banks .these high

street banks seems to be having better quality of its banking services. This has

created quality perception in customers because they always try to compare the

services of Islamic bank or Britain to other high street interest based bank. This

quality perception increase expectations of customers which expect better and

more personalized service from Islamic bank Britain and if they don’t found it

equal or better as compared to other banks they feel unsatisfied about service

quality. Today’s competitive market has created lot customer orientation in

organization and there is race of attracting customers by better quality from other

organizations .Islamic bank should develop CRM strategies in accordance with

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customers expectations and demand. Islamic Bank has an advantage of being

unique in the market in term s of products offering so instead of focusing the

strength of its products the focus should be building better relationship with

customer and to deliver quality which is necessary for customer satisfaction.

It is also a point to be noted that customer’s confidence on Islamic bank is merely

51% which seems to be due to many factors like most of respondents that they

feel their deposits and investments are more secure on other banks like Barclays

and Lloyd’s tsb. This is due to the fact that bank don’t offer any interest or profit

on current accounts while investments account have no guarantee on returns it is

based on banks capability of making profits. So that amount of profits is not sure

until the end of year and may be different from customer expectation. As Islamic

Bank of Britain has relationship of partnership rather than relationship of lender-

borrower as in other high street banks. It always difficult to establish confidence

in such kind of relationship of partnership when profits and earnings depends

upon business partner`s capability of making profits.

Findings also indicate that 50% customers value their relationship with Islamic

Bank of Britain while 51% respondents think positive in referring Islamic Bank of

Britain to their friends and relatives. In case of Islamic bank this referral and value

of relationship can be quite high because this bank is offering the products which

rely on religion and customers always have emotions linked with their religion. So

people feels take it religious obligation to refer such products to their friends and

relatives. So this value can easily be increased by better CRM strategies and

marketing products in such a way that people feel it necessary to refer Islamic

banking products to other people of community. But this relationship value is also

directly linked with customer perceived value. If customers feels that they getting

value of money from Banking products and services together with quality of

service will increase the perception of customer about perceived value as

compared to value of money invested in bank. This can be only be done by proper

―value creation Process‖ (Kims2003) by developing and implementing such CRM

strategies which increase quality and value perception of customers so this feel

and sense of receiving better quality as compared to other bank will increase

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relationship value in thoughts of customers. Such CRM strategies will definitely

help Islamic bank to achieve customer satisfaction and customer loyalty.

As according to Fullerton (2004)

“A customer oriented organization with intention of working for better confidence

building and establishing long term relationship always take huge steps in

creating high value perception for their products”

5.4Customer Value Perspective:-

In order measure customer value perspective in is essential to measure perceived

value customer is getting, customers usually measure it in terms of type of

services they get together with products. As Islamic bank of Britain is financial

institute. Customer value was measured in terms of usability, accessibility,

attractiveness, and security of private information. Because customers usually

demand for these characteristics in services. Customer value can always be

measured by two perspectives (Kims, 2003). From customer perspective and from

organization perspective. These both are different things. As it was only possible

to measure in customer perspective the results show that customer’s perception

about usability of services they are getting is quite low at 41%while 45%thinkis

that bank has attractiveness of services. we can understand that low satisfaction

rate can be related to some other results as people are gettinging difficulty in using

internet and phone banking services while local bank branches are less in

numbers. So that can be big reason behind it that people feels to have struggle to

get there work done whenever they want. While customer services plays big role

and creating customer perception of perceived value. Other reasons behind this

seems to be non existence of personalized services sue to lack of proper customer

knowledge management as discussed earlier. Customer knowledge management

create bog role in profiling and prioritizing the customers according to their value.

This can help employees at bank to provide better and personalized services to the

customers with high value .it are the fact that customer perception about perceived

value depends upon many factors. For example a customer with long term

relationship with bank and regular buyer of products expect more personalized

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and better services for the bank. So there is direct link between customer value,

requirements and expectation. This whole process can be explained as ―Value

creation process‖. In order to retain and win loyalty of customers it is necessary

for bank to adopt such CRM strategies which create perception of perception o f

being special and create sense that the value for money they are getting is better

than their competitors

Customer perception about perceived value low in Islamic bank of Britain in

terms of usability, attractiveness, accessibility and security. These are basic

requirements for any customers to be satisfied and loyal with any organization.

Islamic bank of Britain needs to adopt proper and well managed ―value creation

process‖ in their CRM strategy. This will help Islamic bank in achieving customer

loyalty creating long term profitability.

5.5Customer knowledge Management Perspective

―Knowledge management‖ plays key role in success of CRM strategy .in other

words knowledge management acts as engine of whole CRM strategy. Knowledge

management is combination of three kinds of knowledge which flows through the

process and integrate with whole CRM strategy to achieve customer loyalty.

Which comprise of knowledge about customer, knowledge from customers, and

knowledge for customers. So knowledge management is critical for success of any

crm strategy it is the most important factor in order to increase level of customer

satisfaction by improving customer services. Knowledge management is essential

in order to create understanding of customer related issues and creating strategy to

deliver better services to them. . In context of Islamic Bank CRM strategy’s

failure to deliver is due to ineffective use of knowledge management. Research

findings indicate that Islamic bank of Britain is not utilizing it customer

knowledge management capabilities. And it is being handled as less important

business process. Most of organizations handle customer knowledge management

as just technological issue (Payne & Fow, 2005).while it not the fact, it’s true that

knowledge management has huge influence of IT on it. But it is not merely a

technological issue. It works as process enabler. Knowledge management

provides a platform to integrate all other processes concerning customer services

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(Kims, 2003).Findings also indicate that Islamic bank of Britain is dealing

knowledge with ―segmented approach‖ while this whole process require holistic

approach to apply knowledge management.

Qualitative research reveals their concerns about customer data sharing and

information system down problems in between branch network is too slow and

usually does not occur quickly which means that information management system

needs to redevelop according to requirements. It seems like due very high

retention rate, and rapid increase in customer accounts Islamic bank of Britain is

not expanding its knowledge management and it infrastructure. When too much

customer information is manipulated and updated at same time, and IT

infrastructure is not meant to deal with such amount of data resulting in data not

being updating simultaneously or down in sever case.

On the other hand if look on bigger picture Knowledge management is not just

name of data updating, and data deletion. It also improves the effectiveness of

customer services by managing and recording data in such a way that profiles of

each customer is managed individually, together with all customer details, which

allow employees to deal with customer according to their value and staff at bank

is easily able to offer them appropriate products and services. Research also

shows lack such kind of knowledge management system which can provide

efficiency in dealing with customers inside the bank or online.

According to annual financial report of Islamic bank of Britain its knowledge

management capabilities are meant to support its crm strategy and to provide its

employees to deal its customers more effectively .Islamic bank intends to enhance

its knowledge management capability for relationship management but Islamic

bank is still seems to be in process of maximizing it capacity utilize knowledge

management in effective way. So this failure of bank to utilize the potential of

knowledge management is affecting whole process of CRM strategy. This is

failing to provide better and managed relationship to both parties. There is huge

possibility and opportunity for Islamic bank to increase performance capability of

its employees by utilizing latest automated knowledge management system with

better practices. This will enable Islamic bank of Britain customer satisfaction

which is essential to create permanent customer loyalty.

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According to four modes of knowledge conversion (Payne & Fow 2005), the

knowledge conversion at Islamic bank of Britain seems to be at branch level only,

customers and respondents are able to provide their feedback and suggestions to

branch level while there is no mechanism of providing suggestions and feedback

at organizational level so that appropriate action could be suggested at strategic

level. research suggest that customers are not encouraged to provide feedback and

share their views and ideas with any one in branch or through any other mean

even whenever they encounter any problem related to banking services

As knowledge management model is based on three key elements, technology,

process and people, these three are the enabler of whole knowledge management

system, it can be concluded that Islamic bank of Britain is not concentrating on all

the aspects of knowledge management process. It is very important for any

organization to concentrate on integration of all elements to utilize

In effective use of knowledge management system also effects operational

capability of an organization. In case of Islamic bank of Britain bank still has to

take benefits of knowledge management system which allows multiple functions

by optimization of operation according to requirements of organization. These

functions also include, invent, source, evaluate. Measure all the elements of

operation management as well.

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C H A P T E R NO 6

C O N C L U S I O N

106

6.0 Conclusion

On the basis of findings and discussion we can conclude our research question

Q: - How the effectiveness of CRM can be achieved by the UK Islamic Bank?

Findings conclude that there is gap between CRM strategies adopted by Islamic

Banks and customer`s needs and requirements. This gap can be filled by

assessment of customer’s needs and requirement and adopting the CRM strategies

according to them. Customer needs, requirements and expectation are ever

changing and evolving in nature. So it is very important to continuously monitor

effectiveness of strategies which are directly concerned with customers. This gap

between customer`s requirements and crm strategies indicate the mismanagement

or negligence of customer knowledge system. Issues related to customers services

can be identified and solved easily by proper knowledge management system.

This can help employees to manage and understand customers better. Proper use

of customer knowledge management can help optimization of customer services

as well. Which can help in solving the customer`s concerns easily and effectively.

Optimization of different business process in accordance with customer’s

requirements can be achieved by integration of knowledge management system

with customer services.

As CRM strategies optimize internal and external processes of organization to

deliver quality to its customer and this optimization requires reasonable use of

technology. The research concludes that Islamic Bank of Britain is not fully

optimized according to customer needs. Research provides evidence that quality

of banking services is not competitive to other high street banks. It may also be

concluded that Islamic Bank of Britain is not fully concentrating on technological

infrastructure optimization and automation to maintain its relationship with

customers. Islamic Bank of Britain’s online banking and phone banking needs

serious optimization because these services are failing to deliver according to

needs of customers.

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Evidence show that CRM strategies used by Islamic Bank of Britain are able to

maintain its customer base due to its unique ability to respond to needs of religion

sensitive muslims.

So Islamic Bank of Britain is offering unique products which are main attraction

to spiritual, economical and social needs of its customers. This ability of Islamic

Bank of Britain is unique advantage which differ it from conventional interest

based banks.

Current CRM strategies are reasonable for customer acquisition not for retaining

its customer. High growth rate as shown in previous financial years can only be

sustained if Islamic bank of Britain design its CRM strategies to address customer

requirements and needs. This will result in customer satisfaction and customer

loyalty. Infect Islamic bank needs to shift its crm strategies towards understanding

customer needs and requirements to fill the gaps in its customer services. Islamic

Bank seems to missing proper knowledge management strategy. Knowledge

management can help in individualizing customer, improving customer services

and reducing costs.

Evidence concludes Islamic bank of Britain’s current high customer retention and

acquisition rate is not possibly due to its crm strategies. There might be other

factors behind this success like monopoly of Islamic Bank, as this is only stand

alone Islamic bank in Britain, so the customer loyalty is conditioned to this

monopoly factor. Loyalty of most of customers can be concluded as ―monopoly

loyalty‖. Islamic Bank needs to concentrate in turning this ―monopoly loyalty‖

into ―committed loyalty‖. Otherwise there is always risk for Islam bank to lose its

customer to new competitor in market.

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6.1 Recommendations

a) Islamic Bank of Britain needs to concentrate on customer service strategy

by identifying needs and requirements of customers and address those

needs by implementing suitable CRM practices.

b) The Islamic Bank of Britain’s needs to optimize its online and phone

banking services according to needs of customers

c) The Islamic Banks of Britain’s needs to employee customer knowledge

technologies and practices in order provide individualized customer and

improve customer services. It will also reduce it costs of retaining

customer and increasing customer value.

d) The Islamic Bank of Britain needs to increase its customer base to other

segments of society as well by developing attractive and suitable products.

e) Islamic bank needs to continuously evaluate and monitor the success of its

CRM strategies so that any gaps in strategies and current condition can be

filled.

f) Islamic bank of Britain needs to shift its focus of crm strategy from

customer acquisition to customer retention so that customer loyalty can be

achieved. Because customer retention is less expensive then customer

retention.

g) Furthermore Islamic bank needs to continuously monitor for its competitor

so suitable products can be launched in order to remain in competition. As

better and good choice can always attract them and bank customer can

switch without hesitation if they are un happy with service.

109

6.2 Limitations of Research:-

Although this research is subjected to some limitations but researcher is

convinced that under similar conditions the results will be same if it is conducted

by someone else. Those restrictions are discussed as follow.

(i) Researcher selected ―Kim, Suh & Hwang Model for assessment of crm

effectiveness in Islamic bank of Britain and quantitative and qualitative data was

collected accordingly. While some of the financial and statically data was not

available from any source. And bank was unable to provide that data due to its

privacy policy. So few metrics were left unmeasured. While concentration was

given to customer satisfaction perspective of this model as this perspective is

more important in order to deal with customer loyalty. Because a satisfied

customer can be loyal customer as well.

(ii)This research conducted is based on non probability sampling. As non

probability sampling based on discretion of researcher. Whole population has not

same chance of being selected as sample. Hence it can still provide accurate

measure of whole population but objective assessment of sample is not missing.

(iii) These research results have possibility of influenced by geographical location

as research was conducted in London branches only. There might be chance of

different results on other location as customers may be influenced by habits and

different experience from same bank

(iv) Although this research represents the current status of CRM strategies effects

on Islamic Bank of Britain it is necessary to conduct more detailed review as

CRM strategy covers all aspects of an organization but it is not possible to discuss

every area in this research

110

6.3 Suggestion for Future work:-

Keeping in view of limitations of this research it is advisable further assessment

of metrics as an extension of research to particularly target the problem area and

services. In order improve them. This research can lead to further in depth

analysis of whole CRM strategy of Islamic Bank of Britain if more relevant and

financial and customer knowledge is available. Future research can also be

conducted in more geographical location and CRM Performance can be measured

for every branch separately and can be combined in order to assess the benefits

derived from CRM strategy. It would be interesting to see results of such

research. While it is also possible to conduct research by using some other model

and including organizational perspective as well by observing and recording

organization CRM practices.

111

CHAPTER NO 7

SELF REFLECTION

112

7.0 Introduction

World around us today is challenging, and demanding. The only way to success is

determination, hard work and ruthless ambitiousness. The success only comes to

the person who strongly believes on himself. This self reflection represents an

insight of personal capabilities, experiences and learning’s. It shows the whole

process of learning and its application in personal life. As according to renowned

scientists ―Albert Einstein‖

―Learning is not a product of schooling but the lifelong attempt to acquire it.‖

Albert Einstein”

Today’s graduate job market is highly competitive. This market respects only

those who stand out to be different from crowd. It is very important to aware our

own strengths and weakness in order to succeed self reflection is name of leaning

about own self by looking inner self, assessing our own capabilities to utilize them

properly

This research report helped in leaning lifelong experiences by making researcher

learn some very important and useful skills like. Self confidence, time

management. Communication skills, research skills etc. This research also

provided opportunity to look any issue in multiple perspectives. Dissertation helps

in learning research methodology, data collection, data analysis, and report

writing. These skills are essential for organizational management role (Dr

Hofstee, 2006)

This report has helped the researcher in revealing his hidden skills which includes

confidence while communicating, brain storming, reading and writing style, and

time management. The self reflection is discussed in accordance with David

113

Kolb (1984) theory of learning by diving learning experiences in phases similar to

dissertation.

Figure 7.1 Kolb`s model of learning

114

7.1Concrete Experience (Selection of Research Topic)

Selection of research topic from business management area was not easy because

there were lots of good topics in mind. But researcher wanted to choose

challenging but important in terms of learning and market demand. So the topic

on CRM (customer relationship Management) was selected. Researcher has prior

introduction to the topic which also helped in visualizing the research plan and

research topic. CRM was relatively new and hot concepts involving business

processes and customer service related issue(Payn,2006).So this topic has great

learning potential due to coverage of CRM on almost every aspects of an

organization. Measurement its effects on customer loyalty was another

challenging issue. So selection of this topic provides much more learning

opportunity than any other topic. This topic provide researcher reading and

learning material about multiple fields from customer relation to business

processes, its optimization and customer behaviors. As according to Kolb`s model

―thinking, and acting. Immediate or concrete experiences lead to observations and

reflections.‖(Kolb,1984)

7.2 Reflective Observation (Reviewing Literature)

Articles, books and journals are great source of knowledge and help in developing

understanding about certain issue. It also helps in developing skills of reading and

interconnecting facts and figures to develop broader perspective. Researcher

searched and read many books, journals and articles about CRM, and its

effectiveness measurement issue.

Researcher believes that conceptualization and ideas are very useful for learning

anything and there for consider himself more as ―assimilating learner‖. The

literature review phase of dissertation help researcher in developing in depth

understanding of research area.CRM effectiveness models and its implementation

helped researcher in conceptualization whole research phase. This literature

review was also helpful in creating understanding of different aspects of any

organization.

115

7.3. (Abstract Conceptualization) Designing Research

Methodology:-

The literature review helped researcher in developing understanding of research

area which forms the basis of research and conceptualization of methodology and

procedures. Researcher explored and compared different research methods and

techniques and chosen relative research methods which were more appropriate for

this kind of research. Deductive research approach was selected after careful

consideration and comparative study of different methodologies. While this

research reports provide in depth understanding of step by step research process

and methodologies which will help in life long and conducting future research.

The literature review help in creating conceptual framework based on Kim`s

model of CRM effectiveness. Based on this model a questionnaire was designed

which was used for quantitative data. Few respondents were interviewed as well

and together with quantities data help to extract results .design proper

questionnaire and distributing it for data collection was challenging and

interesting.

. 7.4 Active Experimentation (Data analysis)

After collection of data the next step was to analyze data to drive the results, it

was very interesting task as researcher learned different statically data analysis

concepts learned SPSS tool for data analysis. While it also lead researcher to learn

application of different formulas in Microsoft excel. Collected data through

questionnaires was analyzed and results were derived in accordance with Kim`s

model Balance Score Card. These results were placed in Kim`s balance score card

table to compare the results. This phase helped researcher in developing capability

of analyzing data and interconnecting it with literature review and driving data in

accordance with research framework .which help to understand and visualize

116

research results. Researcher is convinced that this learning is very help full in

work places the new data recording and analysis skills are very useful in

performing accounting and managerial task in any organization.

7.5 Report Writing:-

Report writing helps to communicate any matter in official way to others in an

organization about any issue .Reports are source of information which represents

insight out about any issue in one place (Gilbaldi,2003).effective report

communication is useful skill for perspective MBA graduate. These skills are very

valuable in developing the career. Compilation of this particular research report

helped researcher in developing effective report writing skills and forming

arguments to deliver the message to readers.

7.6 Conclusion

This research helped the researcher in gaining new skills and discovering our own

strengths and weaknesses. Researcher believes that he has now right skills and

training to handle any projects. This research has added lot of new skills in terms

of personal experience and knowledge Researcher feels himself fully confident to

face competition in this world. And feel satisfied on learning such lifelong help

full skills. This will keep on adding value in life long term basis.

117

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APPENDIX

QUESTIONAIRE

Part 1: Demographics Information

Statement 1:- What is you Gender?

Male

Female

Statement 2:- What is your Age?

1-25

25-50

50-75

Statement 3:- What Type of Bank Account you have with Islamic Bank of

Britain?

Personal Account

Business Account

Both

Statement 4:- How long you have been with Islamic Bank?

0-2

2-4

4-6

124

Part 2 1 2 3 4 5

Strongly

Disagree

Disagree Not sure Agree Strongly

Agree

Statement 1:- Do you think Services at Islamic Bank of Britain are easy to use?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 2:- Do you think Islamic Bank Services are Attractive as compare to

other banks?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 3:- Do you Agree Personal information you share with Islamic Bank is

Secure?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 4:-Do you think Islamic Bank has easily accessible services?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

125

Statement 5: Do you receive friendly and efficient customer services at Islamic

Bank of Britain?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 6:-Do you think Phone banking service at Islamic Bank of Britain full

fill your needs?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 7:-Do you think Online Banking Service at Islamic Bank of Britain is

reliable and safe to use?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 8:-Do you think information about products at (Islamic Bank of

Britain) is easily available when and where required?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

126

Statement 9:-Do you think Islamic Bank of Britain is well known Brand in

society?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 10:-Do you agree products of the Islamic bank are in line with your

social values?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 11:-Do you think you have full confidence in the bank’s services?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 12:-Do you agree that the Islamic bank is consistent in providing

quality services?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 13:- Do you consider the Islamic bank as first choice among other

banks in area?

127

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 14:-Do agree if you had another choice, would you still choose to bank

with the Islamic Bank?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 15:- Do you think you do not like to change to another bank because

you value your relationship with Islamic Bank?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 16:-Do you think your relationship with Islamic Bank has encouraged

your loyalty?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

128

Statement 17:-Do you agree it will be good idea to refer Islamic Bank to your

friends?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 18:-Do you agree Islamic Bank has enough branches to serve its

customers?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 19:-Do you agree marketing department at Islamic Bank is doing

satisfactory work to advertise and offer products to customers.

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

Statement 20:-Do you feel satisfied with overall banking experience with Islamic

Bank of Britain?

Strongly Disagree

Disagree

Not sure

Agree

Strongly Agree

129

Statement 21-24 Qualitative questions

Q1: Reasons for Relationship with Islamic Bank?

Q2: Usability of internet and Phone Banking?

Q3: Customer’s View about Interaction channel?

Q4: What is not good at Islamic Bank of Britain?

130

T

The BSC Table of K Company

Metric PI PII V

a. Customer knowledge

Customer acquisitions 2.3K 75K 226%

Number of customers 42K 132K 214%

Average page views per day 25K 50K 100%

Average visits per day 5K 11K 120%

Net sales per employee ($) 290K 350K 21%

Technological capacity (million hit) 1 1.5 0.5

Frequency of hardware upgrade (no./year) 1 2 100%

R&D investment ($) 21K 42K 100%

Customer profile research ($) 4K 2K —50%

Security level (firewall and SSL encryption) high high —

b. Customer value

Net sales ($) 2.3M 9.7M 322%

Ordinary sales ($) —850K 490K 142%

Assets per employee ($/person) 91K 80K —12%

Profit per employee ($/person) —34K 15K 156%

Channel Interface

Usability 7.1 8.0 0.9

Attractiveness 6.2 7.6 1.4

Navigation efficiency 7.5 7.8 0.4

Contents search 8.6 8.4 —0.2

Consistency of site structure 8.5 8.2 —0.3

c. Customer interaction

Marketing campaign frequency (no./year) 4 12 200% Promotions cost ($/year) 2K 6K 200%

Frequency of contents update

Number of payment methods

Number of response channels to customer

1/day

3

1/day

4

—

1

Inquiry 1 4 3

Cost for managing channel 2K 3K 50%

Average delivery time after order

fulfillment (days)

3–5

3–5

—

Response time to customer inquiry (hours) 1 2.5 1.5

Transactions conducted by members 3% 12.1% 9.1%

Product diversity 8.5 8.5 —

Detailed product information 8.5 8.2 0.3

Timely sales on popular products 6.1 8.0 1.9

d. Customer satisfaction

Brand image 35% 53% 18%

Service level (response to customer

inquiry)

100%

96%

—4%

Number of daily customer inquiries 3 71 68

Customer satisfaction

Assurance 6.1 8.1 2

Reliability 8.5 8.5 —

Empathy 7.3 8.2 0.9

Responsiveness 5.3 8.0 2.7

Tangibles 4.9 7.5 2.6

Note: PI, Feb–Apr 2002; PII, Aug–Oct 2002; Var, variance.

131

132