Project on Customer Relationship Management A study on Union bank of India And Kapol co-operative ba by Sanjay Gupta

CRM in Banking

Project on Customer Relationship Management A study on Union bank of India And Kapol co-operative bank

CRM in Banking

DECLARATION I Miss XYZ student of studying in MBAhereby declare that I have completed

the

project

“CUSTOMER

RELATIONSHIP

MANAGEMENT” A study on Union bank of India and Kapol cooperative bank under the guidance of professor XYZ. The information collected is original and true to the best of my knowledge.

Date :

Signature of student

XYZ

CRM in Banking

ACKNOWLEDGEMENT

The satiation and euphoric that accompany the successful completion of task, would be incomplete without the mention of the people who made it possible. After all, the success is the epitome of hard work, severance, undeterred, zeal, stead fast determination and most of all encouraging guidance. So with immense gratitude, I acknowledge Dr.XYZ principal of XYZ College and. XYZ- co-coordinator of the college. I would like to express my profound sense of gratitude to Prof. S Krishnan my project guide for giving me valuable suggestions and advice through out the execution of the project.

With a deep sense of gratitude and indebtedness, I sincerely and whole heartedly thank Manager of Union bank of India Mr XYZ and Manager of Kapol co-operative Bank Mr. XYZ for providing relevant data on the subject. I sincerely thank Miss XYZ credit Manager of Union Bank of India who extended flawless assistance to me with matter pertaining to the project whenever I approached her.

Last but not the least, I would like to thank almighty God, my parents, and my friends who helped me gather these data and have sat with me for hours discussing about the project.

CRM in Banking

Index Chapte r

Topic

Page no

Customer relationship management introduction 1.1 what is CRM

1.2 Meaning and defining CRM

1-20

1.3 Emergence of CRM 1.4 CRM in Indian bank 1.5 Need of CRM in bank 1.6 Objective of CRM in banks 1.7 Benefits of CRM

CRM process framework

2.1 2.2

CRM formation process A framework for successful CRM

2.3

Relationship management and governance process

2.4

Relational performance and evaluation process

2.5

Key principals of CRM 4

21-38

CRM in Banking

2.6

Customer retention

2.7

Building CRM

E- CRM

39-44

3 3.1 E-CRM in banks 3.2 Key features of e-CRM 3.3 Benefits of e-CRM to BANKS and CUSTOMERS Case study

4 5

Union bank of India

45-54

Kapol co-operative bank

Suggestions, Findings and conclusion

Annexure

55-57

CRM in Banking

DESING OF THE STUDY Objectives •

To study customer relationship management of Union bank of India and Kapol co-operative bank.

•

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

Limitations •

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

•

CRM of other banks are not disclosed.

•

CRM strategies of banks are not compared with each other.

•

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

Scope •

The project begins with a brief mention of what CRM is and its need and importance in banks. It further goes on to show the CRM strategy of Union bank of India and Kapol co-operative bank.

CRM in Banking

Methodology of study Data for the project is obtained in two ways primary source and secondary source. •

Primary source-

The researcher collected primary data by preparing questionnaire and interviewed manager, staff and customer of Union bank of India and Kapol cooperative bank Mulund West branch.

• Secondary sourceSecondary data for the project has been gathered from various CRM books and internet.

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

CRM in Banking

EXECUTIVE SUMMARY Customer relationship management is a broad approach for creating, maintaining and expanding customer relationships. CRM is the business strategy that aims to understand, anticipate, manage and personalize the needs of an organization’s current and potential customers. At the heart of a perfect strategy is the creation of mutual value for all parties involved in the business process. It is about creating a sustainable competitive advantage by being the best at understanding, communicating, and delivering and developing existing customer relationships in addition to creating and keeping new customers. So the concept of product life cycle is giving way to the concept of customer life cycle focusing on the development of products and services that anticipate the future need of the existing customers and creating additional services that extend existing customer relationships beyond transaction The intense competition which banks have come to face, both as a consequence of growth of non-banking financial institutions as well as securitization has created the fear of high risk and has increased the attention towards Customer Relationship Management. Customer relationship management (CRM) is a multifaceted process, mediated by a set of information technologies that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns. In this way, CRM is intended to help companies understand, as well as anticipate, the needs of current and potential customers. The project is a detail study of Process Involved in Planning of Customer Relationship Management and Need for Customer Relationship Management.

CRM in Banking

Chapter 1 Customer Relationship Management Introduction

CRM in Banking

1.1 WHAT IS CUSTOMER RELATONSHIP MANAGEMENT? CRM, or Customer Relationship Management, is a company-wide business strategy designed to reduce costs and increase profitability by solidifying customer loyalty. True CRM brings together information from all data sources within an organization (and where appropriate, from outside the organization) to give one, holistic view of each customer in real time. This allows customer facing employees in such areas as sales, customer support, and marketing to make quick yet informed decisions on everything from cross-selling and upselling opportunities to target marketing strategies to competitive positioning tactics. Once thought of as a type of software, CRM has evolved into a customercentric philosophy that must permeate an entire organization. There are three key elements to a successful CRM initiative: people, process, and technology. The people throughout a company-from the CEO to each and every customer service rep-need to buy in to and support CRM. A company's business processes must be reengineered to bolster its CRM initiative, often from the view of, how can this process better serve the customer? Firms must select the right technology to drive these improved processes, provide the best data to the employees, and be easy enough to operate that users won't balk. If one of these three foundations is not sound, the entire CRM structure will crumble.

CRM in Banking

It's a strategy used to learn more about customers' needs and behaviors in order to develop stronger relationships with them. After all, good customer relationships are at the heart of business success. There are many technological

A component to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends. If customer relationships are the heart of business success, then CRM is the valve the pumps a company's life blood. As such, CRM is best suited to help businesses use people, processes, and technology to gain insight into the behaviour and value of customers.

CRM in Banking

1.2 Defining CRM Customer Relationship Marketing is a practice that encompasses all marketing activities directed toward establishing, developing, and maintaining successful customer relationships. The focus of relationship marketing is on developing long-term relationships and improving corporate performance through customer loyalty and customer retention. Customer Relationship Management (CRM) as the name suggests, the primary focal point is placed on the customer. The key objective is to increase customer value over time by increasing customer loyalty. If a company develops better customer relationships, it also improves business processes as well as its profits. In general, CRM is a more efficient automated method used to connect and improve all areas of business to focus on creating strong customer relationships. All forces are coupled together to save, improve, and acquire greater business to customer relationships. The most common areas of business that are positively affected include marketing, sales, and customer service strategies. CRM helps create time efficiency and savings on both sides of the business spectrum. Through correct implementation and use of CRM solutions, companies gain a better understanding of their strongest and weakest areas and how they can improve upon these. Therefore, customers gain better products and services from their businesses of choice. In order to achieve better insight on CRM, it is essential to consider all of its components. 12

CRM in Banking

CRM- Meaning Customer relationship management (CRM) is a business strategy that spans your entire organization from front office to back-office. It is a commitment you make to put customers at the heart of your enterprise. The right CRM strategy and solutions can help you securely, reliably and consistently delight your customers every time they interact with your business by empowering them with anytime, anywhere, and any channel access to accurate information and more personalized service. Reach more customers more effectively, increase customer retention and boost customer loyalty by leveraging opportunities to up-sell and cross-sell and driving repeat business at lower cost Drive improvements in business performance by providing your customers with the ability to access more information through self-service and assisted-service capabilities when it is convenient for them. Enable virtualization in your enterprise as more of your people and resources extend beyond your offices and around the world Balance sophisticated functionality with rapid implementation and effective support for a faster return on your CRM investment. Today’s customers face a growing range of choices in the products and services they can buy. They base their choices on their perception of quality, value, and service. Each Consumer has a specific behaviour. But buying habits are sometimes difficult to understand. Therefore companies always want to gain some insight about consumer behaviour and habits in order to better control this behaviour. Having an impact on consumer behaviour means being able to change

CRM in Banking

consumer’s perception of the product or service, to establish a relation between the company and its clients.

1.3 THE EMERGENCE OF CRM : The developing customer relationship management has historical antecedents going back into the pre-industrial era. In the recent years however several factors have contributed to the rapid development and evolution of CRM. These include the growing de-intermediation process in many industries due to the advent of sophisticated computer and telecommunication technologies that allow producers to directly interact with the end customers. The recent success of On-line banking, Charles Schwab and Merryll Lynch’s On-line investment programs, direct selling of books, automobiles, insurance etc. on the internet all atleast to the growing consumer interest in maintaining direct relationship with marketers. The de-intermediation process and consequent prevalence of Customer Relationship Management is also due to the growth of the service economy. Another force driving the adoption of customer relationship management has been the total quality movement. When companies embraced Total Quality Movement philosophy to improve quality and reduce cost, it become necessary to involve suppliers and customers in implementing the program at all levels of the value chain. This needed close working relationships with customers, 14

CRM in Banking

suppliers and other members of the marketing infrastructure. Other programs such as Just in Time and Material resource planning also made the use of interdependent relationships between suppliers and customers. Similarly in the current era of hype-competition, marketers are forced to be more concerned with customer retention loyalty. As several studies indicated,

retaining customer is less expensive and perhaps a more sustainable competitive advantage than acquiring new ones. Marketers are realizing that it costs less to retain customers than to compete for new ones. Today many large internationally oriented companies are trying to become global by integrating their worldwide operation. To achieve this they are seeking cooperative and collaborative solutions for global operations from their vendors instead of merely engaging in transactional activities with them. Such customers need make it imperative for marketers interested in the business of companies who are global to adopt Customer relationship management programs, particularly global account management programs. Global account management is conceptually similar to national account management programs except that they have to be global in scope and this they are more complex. Managing customer relationship around the world calls for external and internal partnering activities, including partnering across firms worldwide organizations.

CRM in Banking

1.4

Customer Relationship Management in Indian bank : Indian

banks

had

presumed that their operations were customer-centric, simply because they had customers. These banks ruled the roost, protected by regulations that did not allow free entry into the sector. And to their credit, when the banking sector was opened up, they survived by adapting quickly for long to the new rules of the game. Many managed to post profits. For them an unexpected bonanza came from government bonds in which most were hugely invested. Ironically, the Reserve Bank of India's moves to cut aggressively the interest rates after 1999, pushed up the prices of bonds. So banks had a windfall doing 16

CRM in Banking

almost nothing. The bond profits, like manna from heaven, improved the balance-sheets of all banks irrespective of their core performance.

However, the era of lazy banking is soon to end. The mesh of rules that propped up the Indian banking industry is now being dismantled rapidly. According to a RBI road-map, India will have a competitive banking market after 2009. As one of the most attractive emerging market destinations, India will see foreign banks come in, what with more freedom to come in, grow and acquire. Therefore, it is imperative that Indian banks wake up to this reality and re-focus on their core asset — the customer. A greater focus on Customer Relationship Management (CRM) is the only way the banking industry can protect its market share and boost growth. CRM would also make Indian bankers realize that the purpose of their business is to "create and keep a customer" and to "view the entire business process as consisting of a tightly integrated effort to discover, create, and satisfy customer needs." What is CRM, and what will it deliver to the banks? CRM is, probably, one of the least clearly defined business acronyms, as there is no single definition for it. It is probably easier to say what CRM is not. Unfortunately, CRM has also become a misnomer for a range of solutions from IT vendors, each providing its own spin on the idea. CRM is variously misunderstood as a fancy sales strategy, an expensive software product, or even a new method of data collection. It is none of these. 17

CRM in Banking

CRM is a simple philosophy that places the customer at the heart of a business organization’s processes, activities and culture to improve his satisfaction of service and, in turn, maximize the profits for the organization. A successful CRM strategy aims at understanding the needs of the customer and integrating them with the organization’s strategy, people, and technology and business process Therefore, one of the best ways of launching a CRM initiative is to start with what the organization is doing now and working out what should be done to improve its interface with its customers. Then and only then, should it link to an IT solution. While this may sound quite straightforward, for large organizations it can be a mammoth task unless a gradual step-by-step process is adopted. It does not happen simply by buying the software and installing it. For CRM to be truly effective, it requires a well-thought-out initiative involving strategy, people, technology, and processes. Above all, it requires the realization that the CRM philosophy of doing business should be adopted incrementally with an iterative approach to learn at every stage of development. Only time will tell how Indian banks embrace the CRM philosophy and take on the competition from foreign entities.

CRM in Banking

1.5 Need of CRM in banks

CRM primarily caters to all interactions with the customers or potential customers, across multiple touch points including the Internet, bank branch, call centre, field organization and other distribution channels. CRM can help banks in following ways: 1 Campaign Management – Banks need to identify customers, tailor products and services to meet their needs and sell these products to them. CRM achieves this through Campaign Management by analyzing data from banks internal applications or by importing data from external applications to evaluate customer profitability and designing comprehensive customer profiles in terms 19

CRM in Banking

of individual lifestyle preferences, income levels and other related criteria. Based on these profiles, banks can identify the most lucrative customers and customer segments, and execute targeted, personalized multi-channel marketing

campaigns to reach these customers and maximize the lifetime value of those relationships. 2 Customer Information Consolidation - Instead of customer information being stored in product centric silos, (for e.g. separate databases of savings account & credit card customers), with CRM the information is stored in a customer centric manner covering all the products of the bank. CRM integrates various channels to deliver a host of services to customers, while aiding the functioning of the bank. 3 Marketing Encyclopedia - Central repository for products, pricing and competitive information, as well as internal training material, sales presentations, proposal templates and marketing collateral. 4 360-degree view of company – This means whoever the bank speaks to, irrespective of whether the communication is from sales, finance or support, the bank is aware of the interaction. Removal of inconsistencies of data makes the client interaction processes smooth and efficient, thus leading to enhanced customer satisfaction. 5 Personalized sales home page – CRM can provide a single view where Sales Mangers and agents can get all the most up-to-date information in one place, including opportunity, account, news, and expense report information. This would make sales decision fast and consistent. 20

CRM in Banking

6 Lead and Opportunity Management - These enable organizations to effectively manage leads and opportunities and track the leads through deal closure, the required follow-up and interaction with the prospects.

7 Activity Management – It helps managers to assign and track the activities of various members. Thus improved transparency leads to improved efficiency. 8 Contact Centre – It enables customer service agent to provide uniform service across multiple channels such as phone, Internet, email, Fax. 9 Operational Inefficiency Removal – CRM can help in Strategy Formulation to eliminate current operational inefficiencies. An effective CRM solution supports all channels of customer interaction including telephone, fax, e-mail, the online portals, wireless devices, ATMs, and face-to-face contacts with bank personnel. It also links these customer touch points to an operations centre and connects the operations centre with the relevant internal and external business partners. 10Enhanced productivity – CRM can help in enhanced productivity of customers, partners and employees. 11CRM with Business Intelligence - Banks need to analyze the performance of customer relationships, uncover trends in customer behaviour, and understand the true business value of their customers. CRM with business intelligence allows banks to assess customer segments, which help them calculate the net present value (NPV) of a customer segment over a given period to derive customer lifetime value. Customers can be evaluated within a scoring 21

CRM in Banking

framework. Combining the behaviour key figure and frequency to monetary acquisition analysis with a marketing revenue quota can optimize acquisition costs and cut the number of inefficient activities.

With such knowledge, banks can efficiently allocate resources to the most profitable customers and reengineer the unprofitable ones. Data warehousing solutions have been implemented in Citibank, Reserve Bank of India, State Bank of India, IDBI, ICICI, MaxTouch, ACC, National Stock Exchange and PepsiCo. And Business Intelligence players hope many more will follow suit.

CRM in Banking

1.6 Objective of Customer Relationship Management in Banks

Objective of customer relationship management

Sales

Customer service

Marketing

Support

The push towards better CRM technologies is natural result of the search by business of greater productivity and efficiency in customer facing operations like sales, marketing, customer service and support. E.g. in sales, companies 23

CRM in Banking

need IT system that provides greater control and efficiency. This means improved forecasting and to capability, greater visibility into sales performance across a variety of channels increased productivity by external sales forces and reduced sales costs, meanwhile, companies must meet customer demands for better quality timeless and customization in the service they deliver.

Companies also need technologies that help them approach customers in a rational way. E.g. remember a customer address from one transaction to another and carefully choreograph contact between its, sales force and customers. In addition to being wasteful and inefficient pitching a new product to a customer who has just bought the same item makes the company look incompetent to the customer. The internet dramatically accelerate the focus on CRM by making customer interactions more cost-efficiency. In addition, the web has established a more direct sales channel that supports rapid customer’s interaction and short sales cycles. Using internet technologies, customer can interact with information from a wide variety of sources without special training. The idea of CRM is that it helps businesses use technology and human resources gain insight into the behaviour of customers and the value of those customers. If it works as hoped, a business can: provide better customer service, make call centres more efficient, cross sell products more effectively, help sales staff close deals faster, simplify marketing and sales processes, discover new customers, and increase Customer revenues. It doesn't happen by simply buying software and installing it. For CRM to be truly effective an organization must first decide what kind of 24

CRM in Banking

customer information it is looking for and it must decide what it intends to do with that information. For example, many financial institutions keep track of customers' life Stages in order to market appropriate banking products like mortgages or IRAs to them at the right time to fit their needs. Next, the organization must look into all of the different ways information about

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

CRM in Banking

1.7 Benefits of a Customer Relationship Management A properly implemented CRM system can bring significant benefits to organizations. But when I talk about a system, I mean the 3 P's, the complete consortium of people (employees, culture), procedures (way of doing business) and programs (supporting applications), not just an application running on a computer. CRM is more than just the next wave of computer-aided marketing; it's a way of doing business. Let’s take a look at the advantages that a CRM or Customer Relationship Management system can bring. 1. Shared or distributed data

As companies realize that customer relationships are happening on many levels (not just through customer service or a web presence), they start to understand the need for sharing all available data throughout the organization. A CRM system is an enabler for making informed decisions and follow-up, on all the different levels.

CRM in Banking 2. Cost reduction

A strong point in Customer Relationship Management is that it is making the customer a partner in your business, not just a subject. As customers are doing their own order entry, and are empowered to find the info they need to come to a buy decision, less order entry and customer support staff is needed.

3. Better Customer Service

All data concerning interactions with customers is centralized. The customer service department can greatly benefit from this, because they have all the information they need at their fingertips. No need to guess, no need to ask the customer for the n-th time. And through the use of push-technology, customer service reps can lead the customer towards the information they need. And, most of the time, the customer can do this on their own, as the CRM system (remember, the 3 P's) is more and more able to anticipate the need of the customer. The customer experience is greatly enhanced.

4. Increased Customer Satisfaction

The customer feels that he is more "part of the team" instead of just a subject for sales and marketing (the proverbial number), customer service is better, his needs are anticipated. There is no doubt that customer satisfaction will go up. If the products sold exceed the customers expectation, of course, no CRM system can help you with shoddy products. In my opinion, the term satisfaction is a contaminated. Many companies think that if customers are satisfied that this is a good predictor for repeat business. However, this is not the case. Only delighted customers have a great level of loyalty.

CRM in Banking 5. Better Customer Retention

If a CRM system can help to enchant customers, this will increase customer loyalty, and they will keep coming back to buy again and again, hence customer retention.

6. More repeat business

The repeat business is coming from the delighted customers, who are turned from doubting clients into loyal advocates.

7. More new business

If you are delivering the ultimate customer experience, this will seed the wordof-mouth buzz, which will spawn more new business.

8. More Profit!

More business at lower cost equals more profit.

CRM in Banking

Chapter 2

Customer Relationship Management Process Framework

CRM in Banking

Correlate

2.1

Connect

Formation process

Combine

Customer Relationship Management formation process

Cognize 30

CRM in Banking

The appropriate approach for the CRM process involve :

1. Correlate A series of transaction that make up a dialogue between customer, customer, end user and an organization. This is the data that is collected from all contact points and communication. With outside points of contact.

2. Combine 31

CRM in Banking

The mapping and management of interactions points between a customer, channel, end user and an organization.

3. Cognize The insight gained through capture and analysis of detailed information is to create continuous learning from the data warehouse and knowledge base that is created, interrogated and analysed.

4. Connect The application of insight to create relevant interaction or communication with the consumers, customers, channels suppliers and partners that build value relationships.

2.2 A framework for successful CRM Customer Relationship Management involves much more than installing any one application, embracing a new technology, or even committing to one vendor’s CRM suite. It provides better insight into customer behaviour and enables new ways of doing business. Good implementations give employees a 32

CRM in Banking

complete view of the organization’s relationship with its customers and open up internal system to customers so they can have access to sales and services themselves. CRM requires a cultural change that aligns a company, its employees and its system towards customers and away from traditional product or process centric models. Companies that are unresponsive to the shift will soon find themselves scrambling for scraps left behind by those that are. Adopt a suitable framework A simple framework will help you to understand the full scope of a CRM solution and also help to focus on areas that need your attention. A useful framework will encompass the following elements.

• Customer strategy This will ensure that you are focused on achieving specific customer goals, and will provide direction to the selection and deployment of CRM applications.

• Customer insight This encapsulates customer data acquisition and storage capabilities, insight generation capabilities and insight generation capabilities and insight exploitation capabilities and is used both to support customer strategy development and to drive intelligent customer interaction in marketing, selling and service activities.

CRM in Banking

2.3 Relationship management and governance process Once CRM program is developed and rolled out, the program as well as the individual relationship must be managed and governed. For mass market customers, the degree to which there is symmetry or asymmetry in the primary responsibility of whether the customer or the program sponsoring company will be managing the relationship varies with the size of market. However, for 34

CRM in Banking

program directed at distributor and business customers the management of the relationship would require the involvement of both parties. The degree to which these governance responsibilities are shared or managed independently will depend on the perception of norms of governance processes among relational partners given the nature of their CRM program and the purpose of engaging in the relationship. Whether management and governance responsibilities are independently or jointly undertaken by relational partners, several issues must be addressed. These include decisions regarding role specification, communication, common bonds, planning process, process alignment, employee motivation and monitoring procedures. Communication with customer partners is a necessary process of relationship marketing. It helps in relationship development, fosters trust, and provides the information and knowledge needed to undertake cooperative and collaborative

activities of relationship marketing. In many ways it is the lifeblood of relationship marketing. By establishing proper communication channels for sharing information with a company can enhance their relationship with them. In addition to communicating with customers, it is also essential to establish intra-company communication practically among all concerned individuals and corporate functions that directly pay a role in managing the relationship with specific customer or customer group.

CRM in Banking

2.4 Relational performance and Evaluation process

Relational parties Customer partner selection is another important decision in the relationship formation stage. Even though a company may serve all customer types, few 36

CRM in Banking

have the necessary resources and commitment to establish CRM programs for all. Therefore I the initial phase, a company has to decide which customer type and specific customers or customer groups will be the focus of their CRM efforts. Subsequently when the company gains experience and achieve successful results, the scope of CRM activities could be expanded to include other customers into the program or engage in additional programs Although partner selection is an important decision in achieving CRM goals, not all companies have a formalized process of selecting customers. Some follow intuitive judgmental approach of senior managers in selecting customer’s partners and other partners with those customers who demand so. Yet other companies have formalized processes of selecting relational partners through extensive research and evaluation along chosen criteria. The criteria for partner selection vary according to company goals and policies. These range from a single criterion such as revenue potential of the customer to multiple criteria

including

several

variables

such

customer

commitment,

resourcefulness, and management values.

Evaluation process Periodic assessment if results in CRM to evaluate if programs are meeting expectations and if they are sustainable in the long run. Performance evaluation also helps in making corrective action in terms of relationship governance or in modifying relationship marketing objectives and program features. Without a proper performance metrics to evaluate CRM efforts, it would be hard to make objective decisions regarding continuation, modification or termination of CRM programs. Developing a performance metrics is always a challenging activity as 37

CRM in Banking

most firms are inclined to use existing marketing measures to evaluate CRM. however many existing marketing measures, such as market share and total volume of sales may not be appropriate in the context of CRM. Even when a more CRM oriented measures are selected it cannot be applied uniformly across all CRM programs particularly when the purpose of each program is different from one another. Another global measure used by firms to monitor CRM performance is the measurement of relationship satisfaction. Similar to the measurement of customer satisfaction measurement would help in knowing to what extent relational partners are satisfied with their current cooperative and collaborative relationships. Unlike customer satisfaction measures that are applied to measure satisfaction on one side of the dyad, relationship satisfaction measures could be applied on both sides of the dyad. Both the customer and the marketing firm have to perform in order to produce the results in a cooperative relationship and hence each party’s relationship satisfaction could be measured.

2.5 Key principals of customer relationship management Differentiate Customers: All customers are not equal; recognize and reward best customers disproportionately.

Understanding

each

customer

becomes

particularly

important. And the same customers’ reaction to a cellular company operator 38

CRM in Banking

may be quite different as compared to a car dealer. Besides for the same product or the service not all customers can be treated alike and CRM needs to differentiate between a high value customer and a low value customer. What CRM needs to understand while differentiating customers is? Sensitivities,

Tastes,

Preferences

and

Personalities -

Lifestyle and age

Culture Background and education

Physical and psychological characteristics

• Differentiating Offerings → Low value customer requiring high value customer offerings → Low value customer with potential to become high value in near future → High value customer requiring high value service → High value customer requiring low value service • Keeping Existing Customers Grading customers from very satisfied to very disappoint should help the organization in improving its customer satisfaction levels and scores.

As the satisfaction level for each customer improves so shall the customer retention with the organization.

•

Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points by customer, marketers can maximize share of purchase 39

CRM in Banking

potential. Thus the single adults shall require a new car stereo and as he grows into a married couple his needs grow into appliances.

•

Increase Loyalty

Loyal customers are more profitable. Any company will like its mind share status to improve from being a suspect to being an advocate. Company has to invest in terms of its product and service offerings to its customers. It has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve. Referral sales invariably are low cost high margin sales. • Business intelligence and analytical capabilities CRM applications contain a vast amount of information pertaining to an organization customers and prospects. This information needs to be leveraged an analyzed by decision. This is possible only if CRM solutions have robust business intelligence and analytical capabilities. This is a major requirement primarily for marketing application.

2.6 Customer retention Under the present context of competitive environment, the focus of the organizations is more on customer retention than simply on customer acquisition. Customer retention is the process of keeping customer in the 40

CRM in Banking

customer inventory for an unending period by meeting the needs and exceeding the expectations of those customers. It is approach of converting a casual customer not a committed loyal customer.

Why is customer retention preferred? Some of the major benefits of customer retention are presented below. customer come within the fold of an organization in the following ways: •

Customer by chance.

•

Customer by occasion

•

Customer by choice

•

Customer by reception

•

Customer by loyalty In the customer retention approach the organization makes every effort to convert a customer by chance into a customer by loyalty. A retained customer who turns out to be loyal will shift his focus of relationship with the organization from a mere transactional relationship to a relationship tied up with emotion and commitment, which will benefit the organization a long way.

Customer retention would enable the organization to minimize expenses in terms of acquisition of new customers. Customer retention cost for an organization is expected to be far less than that of the acquisition concerned. Customer retention enables a long tem relationship of mutual benefit, both to the organization and to the customer concerned. 41

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There appears to be close interaction between customer retention and customer loyalty. Loyalty is usually measured in terms of longevity of the patronage of customers. Loyalty that arises out of retention is a preferred state, as compared to loyalty of reluctant customers. Retained customers would help to spread a positive image of the organization by word of mouth, which in turns helps to acquire new customers to the customer inventory.

Approach to retention process The approach of the organization at the retention process is expected to be different from the approach adopted at the acquisition process. The difference is indicated in the following lines. At the acquisition the focus is on acquiring relationship whereas at the retention, it is on nurturing the relationship. At the acquisition the focus is on demographic, psychographic profile of the customer, whereas the retention process the focus is more on past and present transactional profiles in addition to demographic, psychographic profiles.

Stages of retention in the customer life cycle

CRM in Banking

Acquisition

Reacquisition

Retention Stages of retention in customer life cycle...

Defection

Attrition

CRM in Banking

Acquisition is a stage in which customer are acquired for an organization business. Customers so acquired would reach a state of either satisfaction or dissatisfaction. •

Satisfaction leads to retention.

•

Dissatisfaction leads to stage of attrition.

A satisfied customer who joins the retention stage might either proceed towards loyalty stage or in the event of being dissatisfied will join the attrition stage. The customer who joins the attrition stage will proceed to the stage if defection, unless he is satisfied. T hose customers in the defection stage may be reacquired, by means of appropriate marketing programmes designed and implemented for the purpose Reacquisition.

2.7 44

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Building customer relationship management Organization strategies towards developing and maintaining sustainable relationship differ from one organization to another depending on certain factors. These include nature of business, its size, its market share, nature of product type, volume of sales, geographic concentration, socio economic status and life style of the customer concerned, competitors strength, and so on. The strategies that are practiced by customer driven organization with national and global perspective. The reader may concentrate on those strategies or combination of several strategies that suit the business context.

Setting satisfactory service standard

People

Process

Organization

Product

People 45

CRM in Banking

People within the organization have the basic role in developing and maintaining relationship with customer. Everyone in the organization must realize the fact that their work is towards satisfying customers. Everyone from the lowest to the highest level irrespective if their functional specialization and responsibilities must integrate their activities towards one of the main objectives of the organization customer satisfaction. The marketing departments can coordinate integrated activity towards customer satisfaction.

Process Process involves a logical sequence of activities right from the need identification of potential customers to need fulfilment. Need fulfilment requires manufacture of product with desired attributes. The process has to be derived from the customer’s viewpoint which paves way for total customer satisfaction. The performance of each link must be objectively analyzed and corrected in tune with the internal and external customer’s expectation.

Product The product offered must constantly provide value addition. The expectations of the customers may always be on the increase due to various reasons. A customer satisfied with a given product may soon become a dissatisfied customer in view of the changes that takes place in his expectations. Customer’s expectations go much beyond physical tangible things.

Organization 46

CRM in Banking

In order to build customer relationship, an organization should be aware of the technology advancements and provide quality service in tune with the customer’s expectations. It should concentrate on total customer satisfaction and respond to the requirement of the customers faster than its competitors. The responsive and learning nature of the organization must build Confidence in the mind of the customers and that will go a long way in building the customer relationship.

Setting satisfactory service standard A customer not only expects quality products but also quality services. The organization must ensure quality and availability of the product. The understanding couple with the skills would help more significantly the process of achieving the ultimate objective of Customer Interaction Management. At this point, it is worthy to note that effective CIM goes much beyond the skills developed, knowledge gained, technology enabled and infrastructure build up. Ultimately it is love, trust and respect that an organization earns from customers that is supported by organization help-desks, customer support, software, integrated customer information system etc that would help to gain maximum benefits out of Customer Interaction Management.

Chapter 3 47

CRM in Banking

E-CRM

3.1 48

CRM in Banking

E –CRM in banks What is E-CRM? As the internet is becoming more and more important in business life, many companies consider it as an opportunity to reduce customer-service costs, tighten customer relationships and most important, further personalize marketing messages and enable mass customization Together with the creation of Sales force automation (SFA), where electronic methods were used to gather data and analyze customer information, the trend of the upcoming Internet can be seen as the foundation of what we know as eCRM today. We can define eCRM as activities to manage customer relationships by using the Internet, web browsers or other electronic touch points. The challenge hereby is to offer communication and information on the right topic, in the right amount, and at the right time that fits the customer’s specific needs. Channels, through which companies can communicate with its customers, are growing by the day, and as a result, getting their time and attention has turned into a major challenge. One of the reasons eCRM is so popular nowadays is that digital channels can create unique and positive experiences – not just transactions – for customers. An extreme, but ever growing in popularity, example of the creation of experiences in order to establish customer service is the use of Virtual Worlds, such as second life. Through this so-called eCRM, companies are able to create synergies between virtual and physical channels and reaching a very wide consumer base. However, given the newness of the

technology, most companies are still struggling to identify effective entries in Virtual Worlds. Its highly interactive character, which allows companies to respond directly to any customer’s requests or problems, is another feature of 49

CRM in Banking

eCRM that helps companies establish and sustain long-term customer relationships.

3.2 50

CRM in Banking

Key features of E-CRM

• Focused on process A CRM process brings you the appropriate technology and it will reduce the technology gap as well as refining your business process. • Data warehouse driven In a e-CRM solution, the data warehouse or customer data mart contains a consolidated and comprehensive view of the customer. The warehouse provides the broadest possible profile of the customer. This is needed to determine an appropriate course of action, the most effective offer to make, and the best channel to deliver your pertinent message.

CRM in Banking

• A multi channel view Organizations today have different methods of interacting with customers. E.g. A bank might use one application to support its website , another to support sales and another to support ATM’s and yet another to support direct mail and telemarketing. An e-CRM solution must have applications that coordinate or synchronies customer communication across channels and do so in real time. These applications must be able to capture customer transaction across disparate touch points and Store that information in a temporary data store for immediate assessment and response. In addition, this application must feed information captured from those touch points into the data warehouse to broaden the customer profiles obtained from back-end transactional systems and external sources. • Measurement driven Today many companies spend millions of dollars communicating with customers, but spend little time and effort determining the effectiveness of those campaigns CRM provides the means to measure communication efforts. ECRM is a continuous process.

CRM in Banking

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

BENEFITS TO

BANK

CUSTOMER

Relationship with the

Customer interaction and

customer

satisfaction

Using e-mail for business

Convenience

communication Personalized services

Speed of processing the

or one to one services

transaction

through

response Website

market

products and services

Service quality

Transaction security

Trust

Chapter 4.1 53

CRM in Banking

Union bank of India case study

4.1 54

CRM in Banking

Union bank of India The Union Bank of India was built up in twentieth century and declared open by the Father of the Nation, Mahatma Gandhi. The bank with its efficient valueadded services, sustained growth, consistent profitability and development of new technologies bank has ensured complete customer delight, living up to its image of, “GOOD PEOPLE TO BANK WITH”. Bank is offering credit cards, home loan, union demat, Kisan ATM, International debit card, online tax payment facility, Railway e-ticketing kiosk, etc., services to its customers through core banking solution. The Union Bank of India has 2261 branches out which 1031 branches are under CBS. Presently 939 ATMs spread out across India both Onsite and Offsite. All the ATMs are inter-connected through the Bank’s ATM Switch, thus facilitating on-line operations in case of CBS customers. The Bank is a member of Cash Tree consortium and also has bilateral arrangement with State Bank of India, enabling the Bank’s ATM cardholder access to over 20000 ATMs across the country. UBI Net connects 65 Offices and 984 branches located in 323 centres, facilitating speedier transmission of MIS data (Network Map). The network also facilitates the implementation of Core Banking Solution, apart from DEMAT services, Cash Management services, fund transfers, messaging system, etc.The Bank is using VSAT network for connecting branches and ATMs wherever leased line connectivity is not feasible. We have 590 VSATs operational, connecting 194 branches/extension counters and 316 ATMs.

4.2 Customer satisfaction survey 55

CRM in Banking

Responsiveness of employee in dealing with customer? 70 60 50 40

12 26 62

30 20 10 0

average

good

best

Quality service provided by bank? 60 50 40 24 24 52

30 20 10 0

average

good

best

Customer care service of the bank? 56

CRM in Banking

50 45 40 35 30 25 20 15 10 5 0

10 40 50

average

good

best

4.3 57

CRM in Banking

Steps followed by the bank for customer retention • Quality service is provided for building good relationship with customer. • The following services are provided by bank for customer retention o

SMS banking

Internet banking

ATM facility

Telebanking

Debit cards

Credit card

Lockers etc..

•

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

•

The call centres of bank are also available.

•

All customers are given equal services.

•

Bank track individual problem of customer.

•

According to bank customers are satisfied with the bank, and it can be seen by number of accounts opened regularly and increase in business of bank in all departments.

• It is very important for the bank to have good customer relationship management debt of the bank. • Customer satisfaction ultimately results in increase in profit of the bank.

CRM in Banking

• To help customer at our best. • To keep a track of every complaint and problems of customer to solve it and see to it that it doesn’t get repeated. • Customer retention is important. • Increase in number of customer • Various services are provided (e.g. Debit card, credit card, internet banking etc..)

CRM in Banking

Chapter 4.4

Kopal bank case study

CRM in Banking

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

Shri.

Khushaldas

Kurji

Parekh.

The

Bank

was

first

introduce"Counterless Banking “and "Branch-on-Button" in the Indian Banking Industry, which have been lauded by its clients as most convenient banking services. The Bank is also extending Depository Services to the investors.

4.5 Customer satisfaction survey 61

CRM in Banking

Responsiveness of employee in dealing with customer? 12 10 8 40 33.33 26.66

6 4 2 0

average

good

best

Quality service provided by bank? 50 45 40 35 30

33.33 50

25 20 15 10 5 0

16.66

average

good

best

How good are customer queries solved? 62

CRM in Banking

45 40 35 30 25 20 15 10 5 0

43.33 20 36.66

average

good

best

Steps followed by the bank for customer retention • Aware customer about services and new technology.

• Quality and efficient services should be provided to the customer. • Customer retention is very important in this competitive world. • Expansion of business should be done. • Various services should be provided by the bank for customer retention, and

increase in customer.

Chapter 5 63

CRM in Banking

Suggestion findings and conclusion

Suggestions •

Bank should increase staff.

•

Bank transaction should be fully computerised.

•

Customer care service of the bank should be improved for convenience of the customers. 64

CRM in Banking • Customer •

care service of the bank should be fast and responsive.

ATM’s should be increase.

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

initiative, and assigned the CRM implementation project to their information system or IT group. • Technology

is needed in order to implement CRM particularly the

customization part but technology is not the driver of CRM or the solution to successful CRM implementation. • CRM is not exclusively a sales initiative similar to marketing; CRM is often

lodged with the sales department. The sales force after all it’s extremely close to their customers, understanding their needs and wants, and trying to fulfil them.

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

relationship management and that is necessary for effective customer relationship management.

CONCLUSION: Providing excellent customer service is no easy task. This aspect of business is a major force that can make or break profits. However, customer service is 65

CRM in Banking

rarely mentioned in an organization's mission statement nor is it the top of the discussion list for staff meetings or training sessions. Providing the type of customer service that is expected by customers take a lot of thought and flexibility on the part of management as well as staff members. The challenges faced by banks and their customers are many but the trick lies in de-mystifying complex financial relationships. Technical solutions deployed by banks today are flexible, user friendly and meant to facilitate specific workflow and requirements in implementation processes. In order to simplify lives, banks have begun to implement end-to-end technology through all departments with the intention of removing human error from processes previously existing manual environments could not have been adequate for future visions, growth plans and strategies. In this day and age, customers enjoy complete luxury in terms of customized technical solutions and banks us the same for long term, mutually beneficial relationships.

ANNEXURE

CRM in Banking Ket’s V.G.VAZE.college of ARTS, COMMERCE & SCIENCE MULUND- EAST, MUMBAI-81 CUSTOMER SATISFACTION SURVEY Name: ADD: 1. How would you rate the responsiveness of the employee in dealing with you? o Average o Good o Best 2. How would you rate the quality of the services provided? o Average o Good o Best 3. How are you satisfied with the schemes and policies of the bank? o Average o Good o Best 4. How is the customer care service of the bank? o Average o Good o Best 5. Is HELP DESK for the customer queries available in the bank? o Yes o No 6. How good are your queries solved by the help desk? o Average o Good o Best 7. Is there communication between customer and branch manager? 8. Why have you chosen this bank? 9. Do you have any suggestion for the bank?

CRM in Banking 10. How would you totally rate the bank? o Average o Good o Best

Employee questionnaire

CRM in Banking Ket’s V.G.VAZE.college of ARTS, COMMERCE & SCIENCE MULUND- EAST, MUMBAI-81 EMPLOYEE Name: ADD: 1. Does the bank track individual problems of customer? o Yes o No 2. Does your bank offer personal banking services? o Yes o No 3. Are Call Centers of the bank available? o Yes o No 4. Are all the customer given equal services in the bank? o Yes o No 5. What strategy do you use in building relationship with the customer? 6. What steps are followed by bank for customer retention? 7. Does bank focus on a certain group of customer? If yes, why? 8. If the customer close account from your bank, do you try to find the reason Behind it? 9. According to you are customers satisfied with the bank? REASON?

CRM in Banking Ket’s V.G.VAZE.college of ARTS, COMMERCE & SCIENCE MULUND- EAST, MUMBAI-81 MANAGER Name: ADD:

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

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

3. How does the bank retain the customer?

4. Why does the bank use CRM?

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

Signature

CRM in Banking

BIBLIOGRAPHY Book

Author

Customer relationship

Mohammed, H.Peeru

management

Customer

Sheth, jagdish. N

relationship

and others ed.

management strategies

WEBLIOGRAPHY www.wikipedia.com www.ebooks.com www.google.com