Customer Relationship Management in Banking Sector

KKIMRC IJRHRM Vol-1, No-2 Dec-Feb 2011-2012 - ISSN: 2277 -1190

Customer Relationship Management in Banking Sector- A Comparative Study

Customer Relationship Management in BankingSector- A Comparative Study

Dr. T. Satya Narayana Chary1 R.Ramesh2

1. Associate Professor and Head, Department of Commerce, Director, Centre for Research &Development, Telangana University, Nizamabad 503322. [email protected]

2. Research Scholar, School of Management Sciences (SMS), Jawaharlal Nehru Technological University,(JNTUH) Hyderabad. [email protected]

ABSTRACT- CRM is not a product or service; it isan overall business strategy that enables companiesto effectively manage relationships with theircustomers. It provides an integrated view to everycompany and to every employee in theorganization, that they have to treat their customerswith respect. Customers have a lot more choicesand they do not have to be loyal to any company ingeneral, so companies are now trying to figure outways to manage customer relationship effectively.Hence, CRM has become a major corporatestrategy for many organizations. It is concernedwith the creation, development and enhancement ofindividual customer relationship with carefullytargeted customer groups resulting in maximizingthe total customer life time value.

Key Words: Customer Relationship Management,Loyalty, Data Warehousing, Customer Satisfaction.

1. INTRODUCTION

The Marketing orientation in manufacturing andservices organization has grown a long way fromthe earlier concepts like production concept,product concept, selling concept, Marketingconcept and even societal Marketing concepts too.Production concept holds that the consumers will

support those products that are produced in largequantities at a lower cost. The assumption inproduct concept is that customers willautomatically buy products of high quality even athigh cost. The selling concept assumes that theconsumers in the absence of any selling effort willnot purchase the products. The Marketing conceptrevolves around satisfying the needs and wants ofthe customers. Now the Marketing orientation haseven grown from marketing concept to societalMarketing, wherein it is believed that the society’swelfare should be included while satisfying theneeds of the customer. However, in the recent past,Marketing has undergone lot of changes with thesurge of new products and technologies. Thediffusion of technology in several productcategories and the resultant benefits to thecustomers is forcing the marketers to quickly planfor a modified product and promotion mix. Thetraditional diffusion time of technology intocustomers markets may no longer be appropriatefor the present day context. The basic reason is theupsurge of improved technology and the speed withwhich consumers have adapted to new products andtechnologies. Technology has always been theprime mover of development of human kind.Specially, the surge of Information Technology haschanged the concept of Marketing in terms of E-commerce, E-Business, and Internet which have



brought in many changes in the strategicdevelopment. Marketing, competition and even theconsumers needs too. It is due to the developmentin information technology which made it possibleto collect data from individual customers over aperiod of time to analyze and study the patterns oftheir individual preferences. New productdevelopment process uses a number of novelmethods to reduce the time for developmentwithout developing a prototype, customerpreferences, but through only the computersimulated model. To price a new product,information about the competitor’s product’spricing and its success, potential of the customerscan be easily obtained with the help of internet.Thus the concept and aspects of Marketing havebeen dramatically changed a lot due to high pace oftechnological and cultural dynamics.

On the other hand, the established frame work ofthe 4p’s of the Marketing (Product, price, Place andPromotion) was found to be inadequate to explainthe complexities of the emerging scenario.Because, the Relationship paradigm stressing on theRelationship customization at the individual levelafter getting several experiments through MassMarketing, Segmented Marketing and NicheMarketing, it is moving toward one-on-oneMarketing. Thus the different stages of Marketingmetamorphosis started from primitive Marketing tomass Marketing, which has lead to the 4p’s andSTP model. Later on, the value-based Marketinghas emerged, which has improved itself toRelationship Marketing (See Figure 1 and Table 1).

Figure: 1

Metamorphosis of Marketing Primitive

MarketingOne – on-

One -

Marketin

g

Value Based

Marketing

4P’s STP

MODEL

Relationship

Marketing

Mass

Marketing



Table-1Distinction between Traditional Marketing and Relationship Marketing

Traditional Marketing Relationship Marketing

. Focus is on single sale

. Orientation on product features

. Little emphasis on customerservice

. Limited commitment forcustomers

. Moderate contact withcustomers

.Quality is primarily a-concern ofproduct department s

. focus is on customer retention

. orientation is on product benefits

. high emphasis on customer service

. high commitment for customer

. high contact with customers

. quality is the concern of all department sof the organization.

2. THE CONCEPT OF CUSTOMERRELATIONSHIP MANAGEMENT

CRM is the process of managing detailedinformation about individual customers andcarefully managing all the customer “touch points”with the aim of maximizing customer loyalty(Philip Kotelr). The major objective-cum-meaningof CRM is “to turn current and new customer intoregularly purchasing clients and then toprogressively move them through being strongsupporters of the company and its products andfinally being active and vocal advocate for thecompany in the market. Hence, CRM is toestablish, maintain and enhance Relationships withcustomers and other partners, at a profit, so that theobjectives of the parties involved are met. This is

achieved by mutual exchange and fulfillment ofpromises. Such relations are usually but notnecessarily always long term (Gronroos). So CRMis the commitment of the company to place thecustomer experience at the center of its prioritiesand to ensure that incentive systems, processes andinformation resources leverage the Relationship byenhancing the experience.

3. BENEFITS OF CRM

The benefits of CRM can be enlisted as generalbenefits and specific benefits they are:

1. Identifying and targeting the mostprofitable customers and having adeeper knowledge of customers.

2. Getting more Marketing or cross-selling opportunities.



3. Ability to manage Marketingcampaigns which clear theobjectives.

4. CRM solutions increaseprofitability and boost market sharethorough specific benefits, Viz.,Increased Revenues and Reducedcosts, Increased Return onInvestment (ROI) and IncreasedCustomer Satisfaction

5. Increased revenues and costs dueto, Increased market share,Decreased Marketing andpromotion expenses, Improvedchannel efficiency, Profitablecross-selling and up-sellingopportunities to existing customer,Reduced service expenses with on-line self-service, Increased repeatbusiness revenues fromcustomized, Personalized customeron-line experience-maximizedlifetime profit per customer.On the other hand, there are certain

factors found as suitable and relevant forIncreased Return on Investment (ROI) theyare: Improved productivity of servicepersonnel, Reduced inventory on serviceparts, Reduced physical storage space ofservice parts.

4. PROBLEMS OF CRM

Despite, many benefits the CRM is expected to facethe exposure of various problems as discussed infollowing lines:

1. Building and maintain a customerdatabase require a large investment incomputer hardware, database software,analytical programmers,

communication links and skilledpersonnel.

2. It is difficult to collect the right data,especially to capture all the occasionsof company interactions with theindividual customers.

3. The difficulty of getting everyone inthe company to be customer-orientedand to use the available information.Employees find it far easier to carryon with the traditional transactionmarketing than to practice CRM.

4. The other problem is that not allcustomers want a Relationship with thecompany and they may resent knowingthat the company has collected thatmuch personal information about them.

5. Marketers must be concerned aboutcustomer attitudes towards privacy andsecurity.

5. THE CRM PROCESS

CRM process consists of all most all four majorcomponents they are: creating and management ofdata mines and warehouses, development ofappropriate organizational structures, investment intechnology and people development. The topmanagement should itself initiates CRM processand invariably all departmental heads should beinvolved in the process. Development of inter-fictional process should be ensured, so that,customer problems are resolved by all thedepartments that have a role in it. Strategicalliances like centers may be developed within theorganization that has set up a large customerservice center. In order to be effective, data mininghas to be more intelligent and offer information onthe customer in real time. This data mining shouldhelp the organization to disseminate information on



customers to everybody in the organization, whichshould facilitate each employees functioning andalso make him or her to be customer responsive.Companies should use data mining to support theirsales and service staff in particular. They shouldalso support their sales and service staff withadvance technology, which in turn helps them touse data for the purpose of developing a customizedoffer. Companies like General Motors, GE, Airlinecompanies all over the world, and even telecomcompanies have entered into strategic allianceswitch call centers that have been setup in India andin other parts of the world. Financial servicessegments and cellular phone industries commonlyuse a different structure i.e., direct sales agents orindependent Marketing groups.

6. MEASURING CRM

Measurement of Customer Relationship is veryclassical in nature, and it is important as it helps theorganization to understand not only what they aredoing but also how well they are doing the thingswith regard to CRM. There are several approachesto measure CRM. One of the techniques ofmeasuring the same is the Balanced Score Card.Evaluating the organization on the basis of such ascore card helps the organization to develop a causeand effect business strategy. The other measure isthe catalytic measure, which measure theorganization’s efforts on identifiable changes. Theimplementations of such measures facilitate andspeed up the modus operandi effectively in theareas of the organization as desired. Astrologically,most of the Indian companies still do notunderstand and change the way they treat thecustomers, but in the days to come companies willtry to change the state of affairs as far as CRM isconcerned as it is emerging as a CriticalResponsibility of Marketing. Another important

approach of CRM is an evolutionary approach thatfocuses heavily on “customer equity” assetsmanagement. This begins with business strategydevelopment based on infrastructure created thatsupports customer interactions and finally producesCRM results. At the end customer communicationchannel strategies are created, and strategyexecution technology is used to create an on-goingdialog with the customers.

Customer relationships are an important Bank asset.A firm can use this customer equity to improve itsgrowth and profitability prospects during economicdownturns and upturns. Just as a squirrel buriesnuts in anticipation of winter, a smart business willbuild customer equity during good times in order toproduce more business during bad times.Companies should know that their Most ValuableCustomers (MVCs) are. More resources should beused to market relevant products and services tothese MVCs while fewer resources should beexpended on unprofitable customers. The goal is tomake the right offer to the right customer at theright time. Such customer knowledge canimmediately and significantly reduce total costwhile, at the same time, increase sales will alsowith individual customers. This strategy enables anorganization to anticipate greater returns from itscampaigns, a reduction in costs, an increase inconversion rates, and more one-to-onecommunication initiatives (which will graduallyreplace the organization’s previous dependence onmass marketing tactics). The “Picket Fence”strategy can be used to isolate the firm’s MVCsfrom the broader customer base. For each customerbehind the picket fence, there is a particularobjective and a strategy for achieving that objectiveby the management team. In an upturn economy,business strategies should involve growth. Thisincludes acquiring new customers and increasing



the number of current customers. In a downturneconomy, business strategies should involveharvesting. Which implies that an organization getsthe most from every existing relationship by sellingmore to current customers?

7. CRM AND BANKING SECTOR

Banks and financial institutions started recognizingthat they can no longer look at a customer from aspecific product or snapshot perspective but mustencompass the entire customer relationship towardsa client’s profitability. From a strategic standpoint,CRM mobilizes resources around customerrelationships rather than product groups and fostersactivities that maximize the value of lifetimerelationship. From an operational standpoint, CRMlinks business processes across the supply chainfrom back-office functions through all touch points,enabling continuity and consistency across acustomer relationship. From an analyticalstandpoint, CRM is a host of analytical data toolsthat enable banks to fully understand customersegments, assess and maximize lifetime value ofeach customer, model “what-if” scenarios, predictcustomer behaviors, and design and track effectivemarketing campaigns. Today, many businessessuch as banks, insurance companies, and otherservice providers realize the importance ofCustomer Relationship Management (CRM) and itspotential to help them acquire new customers andretain existing ones and maximize their lifetimevalue. At this point, close relationship withcustomers will require a strong coordinationbetween banks and its marketing departments toprovide a long-term retention of selected customers.CRM is a sound business strategy to identify thebank’s most profitable customers and prospects,and devotes time and attention to expandingaccount relationship with those customers through

individualized marketing, reprising, discretionarydecision making, and customized service throughthe various sales channels that the bank uses. Anyfinancial institution seeking to adopt a customerrelationship model should consider six key businessrequirements, they are:

1. Create a Customer-FocusedOrganization and Infrastructure

2. Gaining Accurate Picture of CustomerCategories

3. Assess the Lifetime Value ofCustomers

4. Maximize the Profitability of EachCustomer Relationship

5. Understand how to Attract and Keepthe Best Customers

6. Maximize Rate of Return on MarketingCampaigns

7. The Implications of These SixImperatives

8. RESEARCH PROBLEM

Modern Marketing philosophy advocates theconcept of CRM that creates customer delight.This applies to all sectors of sales and Marketingincludes the banking. In the banking filed a uniqueRelationship exists between the customers and thebank. But because of various reasons andapprehensions like the financial burdens, the risk offailure, Marketing inertia etc., many banks are stillfollowing the traditional ways of Marketing andonly few banks are making attempts to adapt CRM.It is with this background, the researcher has madea modest attempt towards the idea that CRM can beadapted uniformly in the banking industry forbetterment of Banking Services.

9. REVIEW OF LITERATURE



Shani and Chalasani (1992) define RelationshipMarketing as an integrated effort to identify ,maintain and build up a network with individualcustomers and to continuously strengthen thenetwork for the mutual benefit of both sidesthrough interactive, individualized and value addedcontacts over a long period. Narrow functionallybased traditional Marketing is being replaced byCRM. A narrow perspective of CRM is databaseMarketing emphasizing the promotional aspects ofMarketing linked to database efforts (Bickert 1992).Berry stresses that attracting new customers shouldbe viewed only as an intermediate step in theMarketing process. Developing close Relationshipswith these customers and turning them into loyalones are equal aspects of Marketing. Thus heproposed Relationship Marketing as attracting,maintain and in multi service organizations -enhancing Customer Relationships. Berry’s notionof customer Relationship Management resemblesthat of Gronoroos (1990), Gummensson and Levitt(1981). Another important facet of CRM iscustomer selectivity. As several research studieshave shown that not all customers are equallyprofitable for an individual company (Storbacaka2000).

While ample literature is available on CRM toady,hardly any information is forthcoming on the gainsfrom CRM, whether for the organization or thecustomer, in concrete terms. No study has yetreported in precise form and figure, as to what andhow much an organization, employing the CRMphilosophy has benefited out of it, while the claimsare many. Still more scare is literature on what isin it for the customer. Is the customer gaininganything out of the exercise (CRM) ? Does he feelthat the services handed out to him by a businesscorporation using services handed out to him by abusiness corporation using CRM as a strategy is

any better that others in the industry? In order toseek an answer to this question a survey oncustomer perception of service quality was carriedout. The paper reports findings of the said survey.

Traditionally, few people changed theirbanks unless their banks unless serious problemsoccurred. In the past there was, to certain extent, acommitted, often inherited Relationship between acustomer and his/her bank. The philosophy, cultureand organization of financial institutions weregrounded in this assumption and reflected in theirMarketing policies, which were product andtransaction-oriented, reactionary, focused ondiscrete rather than continuous activities.

Puccinelli (1999) looks the financial servicesindustry as entering a new era where personalattention is decreasing because the institutions areusing technology to replace human contact in manyapplication areas. Over the last few decades,technical evolution has highly affected the bankingindustry (Sherif, 2002). For more than 200 years,banks were using branch-based operations, since1980s things really getting changed with the adventto multiple technologies and applications. Adifferent organization got affects from thisrevolution; banking industry is one of it (Sherif,2002). In this technology revolution, technologybased remote access delivery channels andpayments systems surfaced which includedautomated teller machines (ATM) displaced cashiertellers, telephone represented by call centersreplaced the bank branch, internet replaced themail, credit cards and electronic cash replacedtraditional cash transactions, and interactivetelevision will replace face-to-face transactions(Sherif, 2002). Global changes brought new trends,directions and new ways of doing business, whichalso brought new challenges and opportunities tothe financial institutions. In order to compete with



newly increasing competitive pressures, financialinstitutions must recognize the need of balancingtheir performance by achieving their strategic goalsand meeting continues volatile customer needs andrequirements. Different ways must be analyzed tomeet Customer needs (Sherif, 2002). Business tobusiness and the move to electronic transactions isallowing corporate to gain efficiencies, reducecosts, streamline business processes and providetheir products and services to a larger customerbase. Business to business e-commerce migrate thetraditional business model towards the emergingdigital marketplace (Duckett, 2001).

Relationship marketing as a concept is widelyembraced by industrial marketers, today its time forRelationships, particularly in business markets(Morris, et, 1998). Dwyer (2001) explains businessMarketing as the Marketing of products andservices to other companies, institutions and otherorganizations. Business Marketing also includesMarketing of product and services that facilitatetheir operations. He further argues that businessMarketing is unique and has several characteristicsincluding shorter and direct channel of distribution,more emphasis is on personal and direct selling,web is fully integrated, and buying processes arecomplex resulted in unique promotional strategies.In contrast to consumer markets, there are very fewindustries and very close personal Relationshipsbetween the buyer and the seller in businessmarkets. Since it is difficult for the companies toshop around when making a purchase; they want tomake sure that the product fits their requirementsand will be available when required at the rightcost. Therefore many organizations enter into long-term contracts with its suppliers by building long-term Relationships that enable buyers and sellers toplan jointly, and work closely to secure the futurefor both companies (Dwyer, 2001). Dwyer (2001)

looks at business customers as organizations thatbuy, directly or indirectly, goods and services fortheir own use. Dwyer (2001) sorts out four types ofbusiness customers as firms that consume theproducts or services, government agencies,institutions, and firms that purchases and resells theproducts. Business customers vary in size fromsmall to large are geographically scattered and arefewer in number.

CRM is a process designed to collect data related tocustomers, and to grasp features of customers notonly that even to apply those qualities in specificmarketing activities (Swift, 2001).Further Swift(2001) looks it as recursive process, changingcustomer information into customer relationshipthrough use of and learning from the information.He further mentioned that CRM starts frombuilding customer knowledge and results in highimpact customer interactions. Business andgovernment agencies establish, manage long-term,resource-manageable, profitable customerrelationships by using this process. Swift (2001)divides this process into four stages: Knowledgediscover, Market planning, Customer interaction,Analysis & Refinement.

10. NEED FOR THE STUDY

The role of CRM is quite different anddistinguishable to traditional type of MarketingCRM participate not only in Marketing but also inimplementing the business as a strategy to acquire,grow and retain profitable customers with a goal ofcreating a sustainable competitive advantage.Particularly in banking sector, the role of CRM isvery vital in leading the banks towards high leveland volume of profits. So there is a need to studythe role of CRM in development and promotion ofbanking sector through the sidelines of the



practices, problems and impact of the CustomerRelationship Management (CRM) on bankingsector all the time.

11. OBJECTIVES OF THE STUDY

The main objective of the study is to examine theimportance of CRM in banking sector, and itsimpact on the Customer Satisfaction with a specialreference to State Bank of India (SBI) and HousingDevelopment Finance Corporation ( HDFC) Bank.The other specific objectives of the study are:

1. To review the state of Banking Sector inIndia

2. To study the concept and use of CRM inbanking sector.

3. To analyze the performance of CRM as atool of banking sector in retention ofcustomers in general and SBI and HDFCBanks in particular.

4. To offer pertinent suggestions based on thestudy for the improvement and successfulimplementation of CRM in the select banksthrough a suitable comparison.

12. SCOPE AND LIMITATIONS OF THESTUDY

The study covers a rigorous analysis over theconcept of CRM and its implementation in BankingSector in India as a comparative study withreference to select banks of private and publicsector (SBI and HDFC). The analysis was madewith regard to evaluation, growth and role of CRMin promotion of banking sector in India. Throughthe study is very comprehensive in nature, it issubjected to certain limitations as mentioned below.

1. The study is mainly based on the datacollected from the customer of selectbanks; therefore, the accuracy of the data

provided by them is relied upon the pointof time of taking perceptions from thecustomers.

2. The study is carried out through the selectbanks, so the findings may not representthe entire banking sector.

13. DATA SOURCE AND METHODLOGY

The present study is a comparative and analyticalone through the perceptions of the customers. So itused both primary and secondary data. Primarydata was collected through a well structuredqualitative questionnaire from the customers ofselect banks. The sources of secondary data wasformed from News paper, Magazines, Reports,Research Bulletins, Journals annual reports ofselect banks and CRM related literature and otherlibrary sources. Data thus collected was processed,tabulated and analyzed by using various statisticaltools, namely, Arithmetic mean, StandardDeviation and Pie-Charts etc.

14. SELECTION OF SAMPLE

For the purpose of collection of primary data, asample of 120 customers of the select banks, SBI(60 customers) and HDFC (60 customers) ofWarangal District of Andhra Pradesh (AP) wereselected, as Warangal was considered as a caseproblem of the study.

15. ANALYSIS & FINDINGS

CRM has emerged as a popular business strategy intoday’s competitive environment. It is a disciplinethat enables the companies to identify and targettheir most profitable customers. It involves new



and advance marketing strategies that not onlyretain the existing customers but also acquire newcustomers. It has been found as a unique techniquecan bring remarkable changes in total output ofcompanies. Through the literature survey and dataanalysis it can be inferred that CRM tries to findout the relationship between perception andsatisfaction, commitment and loyalty thatunderlines the significance in Indian BankingSector. Customers largely select their banks basedon how convenient the location of bank was to theirhomes or offices. With the advent of newtechnologies in the business of banking, such asinternet banking and ATM’S, now customers canfreely chose any bank for their transactions. Thepressures of competitive and dynamic markets havecontributed to the growth of CRM in the FinancialServices Sector as 5% increase in customerretention can increase profitability by 35 % in themarket. Therefore, banks are now stressing onretaining customers and increasing market share.Private Banks have traditionally viewed themselvesas exceedingly “Customer Centric” offering whatthey believe to be highly personalized services tothe High Net Worth Customers.

It is also found that the structured approach ofCRM can provide various benefits to a bank,namely a distinctive and consistent customerexperience, clear identification of the organization,technological and process-related capabilities. Thebanking industry is much further along than otherindustries in recognizing the value of CRM andimplementing decision support systems to supportCRM. Though most of the banks have alreadyfocused on tactical point solutions, they’re readyfor a transition toward strategic, enterprise-wideCRM initiatives that cross major business lines. Aneffective decision support system for CRM enablesto collect data about customer from every touch

point, consolidate this information into a singleview of the customer, and use this information forcustomer profiling, segmentation, cross-selling, up-selling and retention efforts. Investment in CRMsystem is expected to grow at a compound rate ofnearly 38 percent per year in India, 40 percent inNorth America and 17 percent in Asia-Pacific. Theadoption of Internet and wireless technologies willonly accelerate interest in CRM solutions. Asbanks continue to seek a unified understanding ofcustomer relationships across diverse channels, theimportance and penetration of CRM is expected togrow like anything. With regard to various aspectsof CRM through the opinions of select bankcustomers the following findings are drawn andplaced hereunder (see table II for details).

1. From the analysis it is found that only fewcustomers recognize that there is a changein marketing approach of Banks due tochanging business environment.

2. It is found that Customer Retention is not abig challenge to Banks as per the opinionsof customers of select Banks.

3. It is beyond doubt that when banks throughCRM activity attend the needs of customerswithout time delayment the banks cancreate more awareness to customers andcan create a customer base verysignificantly.

4. It is found that though CRM activities havenot helped to increase the confidence of thecustomers in meeting the changing needs, ithelped to increase the confidence of thecustomers while rendering services in meantime efficiently.

5. CRM activities of select Banks is not up tothe mark in retaining the key customers.

6. According to the perception of customersenhancing customer loyalty through



different activities is not an absoluteactivity.

7. All the customers are uncertain about CRMof a Bank that contains creation ofcomplete customer database.

8. Through the study, it is observed that selectBanks customers are being exposed to thenew techniques, like Infrastructure, Callcenters, Websites for better services.

9. It is found that CRM is centered only to amention in the internal news magazines /Annual report, in public sector Banks.

10. Majority of customers uncertain that theCRM is centered in a particular departmentvery few of the customers have acceptedthat CRM is prevalent through all the levelsin the Banks.

11. Customers’ awareness through distributionof leaflets by the Banks is very less whencompared to advertisement being played bythe Banks

12. CRM undertaken by employee approach tocustomers is found very poor.

13. It is also observed that customers arestrongly disagreeing and some of them areuncertain about CRM activity is undertakenby e-Marketing by their banks.

14. It is found through the study that theawareness level of all respondents is less asfar as the media ads by the Banks isconcerned.

15. According to the analysis it is very vividthat CRM activities have not helped toincrease rapport with the customers toselect banks as expected.

16. Most the customers have not accepted thatthe select Banks are not showing interest inCRM activities with full attention butmaintaining the same as a compulsion.

17. Most of the customers are uncertain aboutthe CRM’s benefit in building the customerloyalty.

18. It is found through the study that CRMactivity does not help the Banks to getimmediate commercial returns and also tohave a favorable public image over the longrun unless the CRM activities are taken upby all the departments in the banks.

19. CRM is considered as essential in bankingsector with increased competition as CRMhelps the Banks to out beat the competitionin the intensely crowded Banking Sector.

20. It is also found that sometimes the attemptsfor getting nearer and closer to thecustomers may boomerang and sometimesthe commercial gains may notcommensurate with the CRM activitiesdone / undertaken by the select banks.

21. CRM activity has been felt as an additionalworkload by the employees but they havefeel CRM is useful to customers and alsothe Banks.

22. It is found that the technological necessitiesfor the implementation of CRM do notrequire the environments of advancedcountries. The basic services providinginfrastructure facilities and technologicaltools that are available in India suit theimplementation of CRM by bankingindustry in India.

23. The attention of management on CRMactivity is totally different between andamong the Banks.

24. The CRM activities are initiated andimplemented by the banks in a seriousmanner, so that the customers in particularand the society in general benefited a lot.

25. Providing service to customers has beenidentified as the prime responsibility of the



Banks, So Banks considered that CRM isthe best tool to perform the job of renderinggood services.

26. With regard to the modification oforganizational structure to implementCRM, both banks have not taken anyrequired initiation in training the employeesabout CRM and technologicaladvancements required for the same.

27. Technological advancement adopted byBanks was not useful to get the update andlatest information over CRM.

28. In improving the relations with thecustomers the technological advancementalone could not help the banks.

29. The reach of CRM of both SBI and HDFCis compared and tested through “F” Ratio.It is assumed that there is no significantdifference between the perceptions ofcustomers of SBI and HDFC towardsCRM. As the calculated value (1.65) of Fis higher than the standard value (1.54), thehypothesis is rejected at 5% significantlevel. Hence, it is clear that there is asignificant difference between theperceptions of SBI and HDFC customerstowards CRM.

30. At the end it can be said that CRM can beimplemented in a selective and focusedway even by medium and small sizecompanies. It can also be inferred thatCRM which is found to be useful for all theBanks not only gives the requiredcommercial returns but also help increating a favorable public image to theBanks in the context of global competition.



TABLE -2 ANALYSIS

Sl.no Table name Am Sd

Sbi Hdfc Sbi Hdfc1.2.3.4.5.6.7.8.9.

10.11.12.13.14.15.16.17.18.

Change in marketing approaches of bankCustomer retention a big challengeProviding necessary facilitiesRending services in mean timeRetention of existing key customersEnhancing customers loyalty through different activitiesCrm is centered only in the internal news magazinesCrm is prevalent throughout all the levels in the bankCrm creates awareness through leaf lets provided to thecustomerCrm is undertaken by employee approach to customersCrm objective is to increase relationship with thecustomersCrm objective is to get more data base about thecustomersBank interest in crm activitiesCrm can benefit the bank by retention of customersCrm can attract new customersCan crm benefit the bank by builidng customer loylaty

2.672.552.552.52.712.62.82.752.51

2.832.912.52.72.332.83.02.72.61

2.883.133.132.582.582.52.62.682.33

2.512.612.82.42.282.32.72.42.71

9.428.438.439.039.288.6810.210.39.07

9.510.778.69.38.89.711.139.7310.5

9.9712.1812.189.1612.1810.199.49.28.10

10.608.859.68.27.67.89.528.339.8



19.20.21.

Can crm benefit the bank in improving the total bankingCrm and customers awarenessCustomer preference over a bank that implement crmCan crm increase the confidence of the customer of a bankCan crm create a friendly environment between customerand bank

2.332.682.35

2.562.512.66

8.059.708.6

9.38.768.89

Source: Primary data



SUGGESTIONS

1. The Indian Banking Sector is floodedwith different banks of the samemolecule. In such a competitiveenvironment, the Banks should adoptsuitable marketing skills rather thandepending on the trading skills. Hence,new services should be constantlyintroduced to ensure the growth of theBanks and to be competitive in themarket and to keep up the enthusiasm ofthe employees and customers etc.

2. Banks should be the pioneers in thecommercial introduction of any newmolecule, because the banks whichintroduce at first such services in themarket have always outperformed thefollowers.

3. The Indian banks should allot morebudgets for R&D and should initiate theconcept of “Forward Research” todiscover molecules instead of dependingupon, “Reverse Engineering” by whichBanks are able to introduce the researchmolecules of other banks at lower rates.

4. Multiple services play a vital role for thecustomers in the present context, soservices management is essential for thesuccess of any Banks.

5. Banks are supposed to offer or applyspecial strategies should be adopted tosell “me too” services. They can be in theform unique reminders.

6. In the name of quality of service andresearch the Banks should not to try tosell their services at a premium price,hence the services are within the reach ofthe average person.

7. The Banks should not totally adopt the“PUSH” Marketing strategies like aconsumer company, rather they shouldadopt “PUSH and PULL” strategies.

8. Individual customers can be segregatedas small groups and on a regular basisthey can be made to involve in an updateconducted by a Key Opinion Leader(KOL) of Banks.

9. The trend of collect the full details aboutthe personal data can be minimized andmore interest should be given to thecollection of professional data.

10. Pamphlets should be given in locallanguage and the content should be easilyunderstandable in a colloquial styleparticularly to suit the needs of ruralcustomers.

11. Traditional method of meeting thecustomer’s needs and providing uniformmaterial to them suits the Banking Sectorthan specific promotion in the form ofCRM to select customers.

12. Proper follow-up should be done aftercollecting the details of the personal datafrom customers. On the eve of theirmarriage day of customer, banks shouldoffer a good domestic gift along with agreeting card or a good children bookgiven on the birthday of the childrensome memorable follow up should bedone after collecting the personal data ofselect customers by the banks.

13. Proper training should be given to thebank personnel regarding the behavioralpatterns by the Banks before they comeand work in the field. They should beable to change their modus operandiaccording to the mood of the customersand the situation. Moreover, they should



have good knowledge, manners, attitudeetc., which will add flavor to “one toone”.

14. Web promotion should be done moreaggressively by the Banks. Customerscan be provided with free access to thewebsite through which they can updatetheir knowledge, get some clarifications.

15. The Advertisements by the Banks shouldbe simple explaining more about theservices. Customers who see theadvertisements should not be confused.

16. More importance should be given tohandling online transaction and using m-commerce and mobile banking services.

17. Relevant and recent information shouldbe given to the specific customers insteadof repeating the already knowninformation. Instead of regularly givingirrelevant information in a costly printsome reputed journal can be sponsoredonce in a year.

18. CRM cannot be done suddenly by Banks.The Banks should try to establish arelation with the customers with regularin touch with them.

19. The banks should reduce the numberdivisions. They should create divisionsaccording to customers’ needs andservices.

20. The information provided to thecustomers about the services should beunbiased.

21. CRM should be considered asContinuous Relationship Management.Wherein CRM team should work withspecific software of CRM to conductEdutainment (combination of educationand entertainment) programmes to get thefavor of customers

22. CRM requires proper planning to see thata correlation exists between the inputmethod and output.

23. It should be realized that customerrelation cannot be built overnight. Initialcommercial returns should not be themain objective of the companies.However continuous persuasion inbuilding CRM should be the policy of theBanks throughout all levels. Fear offailure should not be the causative factorfor not initiating the CRM activity or forwithdrawal. One should not get deterredby the initial hiccups from the process ofimplementing CRM.

24. Data gathered from the customers shouldbe given proper value and it should beproperly utilized. Decision makingauthority should be extended to fieldforce and some resources should be givenfor faster implementation.

25. More knowledge oriented CRM activitiesshould alone be with an outward “non-commercial” touch and the concentrationof the banks should be more fulfill theircustomer needs.

26. Banks should stop “Imposing and beingPushy” with customers just because theydid some CRM activity. The wholeactivity should be customer centered.

27. The Banking Sector is developing andgetting higher day by day in urban andsemi urban areas; there is large numberof customers using the services in theurban and semi urban areas. So a widescope in rural areas is expected in thedays to come hence, the Banks can offertheir services in rural areas to grad suchopportunity.



28. Customers reward the Banks which treatthem with care by being loyal. They usethe Banks service over a period of time,so it is important for the banks to be loyalin providing the services to customers inorder to retain them forever.

29. The success in marketing of any servicelies in the quality and time aspect of theservice. So there is need to have morequalitative and mean time orientedservices and centers for both banksparticularly HDFC.

30. CRM is found to be the buzz word and itis essential for the Banks to “stay” in thebusiness as the expectations fromcustomers are constantly changing. Inthe highly competitive environment theservices should be extended according tothe likes and dislikes of the customers

31. CRM is necessary to build up CustomerRelationship to have a substantial growth ofthe organization and to establish the newservices successfully. However, CRM shouldnot be overdone to avoid the unhealthy andunethical practices and the cost of CRMshould not be a charged.

CONCLUSIONBased on the analysis it is very clear that

in almost all issues, the working performanceof HDFC and SBI is similar but differing atcertain aspects only. The SBI though it ispublic sector bank, taking much care inimplementation of CRM, fine tuning theCRM and finally putting it on track. Whereas,HDFC was not at par with SBI in most of theaspects like database management,responding to the customers in mean time andprovisionaising the services as expected bythe customers. Particularly in marketing

approach, considering customer retention as abig challenge, provisioning the facilitiesattending the needs without time delayment,meeting the changing needs creating thedatabase, employee approach to customers,Advertisements in the media, customerawareness impact of CRM relationship withcustomer impact over bank objectives, CRMand public image, CRM and updating thedata, CRM and customer satisfaction, HDFCis found quite good.

On the other hand, in terms of retentionof existing key customers, enhancingcustomer loyalty, provisionisingtechnological infrastructure, location ofCRM, existence of CRM, approaches ofCRM, coverage of CRM by e-Marketing, ,relationship with the customer, CRM’sobjectives and making the customer delight,retention of customers benefits of CRM to theorganization, loyalty, customer confidence,commercial returns through CRM,controlling the problems, technicaladvancements, impact of technical advanceover the relationship and making therequirements in short time or mean time arefound quite satisfactory and in goodcondition with SBI . It is very clear from theforegone analysis that the approach of CRMby SBI and HDFC are same and one but thereach is quiet distinguishable. It is due to theprofile, their capability and the strategy ofCRM in making it and reaching down tocustomers. On the contrary, it can also beasserted that the background of both banksalso found as a big cause for reaching the topCRM. Hence, CRM is an inevitable tool ofmarketing that can be considered as CriticalResponsibility of Market with regard toBanks in present context. If the SBI and



HDFC work on the gaps or variances in theprocess of implementation and reach of CRMin a strategic way, it is beyond doubt thatHDFC and SBI will be shining in the bankingsector with a great smile.

ANNEXURE I - TEST OF HYPOTHESISIn general there would be a significant

difference between and among the customers of

various banks. As, the present study is acomparative one between SBI and HDFC, there isa need to test the difference between thecustomers of SBI and HDFC, through ‘F’ – Test.The ‘F’ – Test or the variance ratio test has beencalculated as follows:

It should be noted that S12 is always the larger estimate of variance, i.e., S1

2>S22

F=

SBI HDFCX1 (x1 –

x1)x1

2 X2 (x2-x2) x22

2.672.552.552.562.112.52.712.62.63.12.82.812.362.752.512.833.112.662.91

0.03-0.09-0.09-0.08-0.53-0.14-0.007-0.04-0.040.460.160.17-0.280.11-0.130.190.470.020.25

0.0090.00810.00640.28090.01960.00490.00160.00160.21160.02560.02890.07840.01210.01690.03610.22090.00040.06250.0196

2.883.133.133.032.532.583.12.52.82.42.62.432.362.682.332.932.62.732.61

0.270.520.520.42-0.08-0.030.49-0.110.19-0.21-0.001-0.18/-0.250.007-0.280.32-0.010.120

0.07290.27040.27040.17640.00640.00090.24010.01210.03610.04410.00010.96040.06250.00490.07840.10240.00010.01440

F= Where S12 = F=S12

S22∑(X1-X1)2

n1-1

and S22 =∑(X2-X2)2

n2-1



2.52.83.02.72.152.332.83.02.72.612.332.682.352.62.82.72.62.42.42.72.32.62.92.4∑X1 =113.58

-0.140.160.360.060.490.310.160.360.060.03-0.03-0.310.04-0.29-0.040.160.06-0.24-0.240.06-0.34-0.040.26-0.24∑x1 =-0.53

0.02560.12960.00360.24010.09610.02560.12960.00360.00090.09610.00160.08410.00160.02560.00360.00160.05760.05760.00360.11560.00160.06760.05760.0016∑x1

2

=2.2156

2.82.52.82.42.052.282.32.72.42.712.562.512.662.32.82.62.72.82.62.42.42.42.53.11∑X2=112.63

0.19-0.110.19-0.21-0.56-0.33-0.310.09-0.210.1-0.05-0.10.005-0.310.19-0.010.10.19-0.01-0.21-0.21-0.21-0.110.5∑x2=0.39

0.003610.01210.03610.04410.31360.10890.09610.00810.04410.00010.00250.00010.00250.09610.03610.00010.0010.03610.00010.04410.04410.04410.01210.25∑x2

2 =3.6204

X1 = ∑x1/n1 = 113.58/43 = 2.64X2 = ∑x2/n2 = 112.63/43 = 2.61

S12 = 2.2156/43-1 = 0.052

S22 = 3.6204/43-1 = 0.086

F= = 0.086/0.052 = 1.65HO: There is no significant difference between the perceptions of customers of SBI and HDFC towardsCRM

S12 =

∑X12

n1-1

S22 =

∑X22

n2-1S2

2

S12



As the calculated value of ‘F’ is1.65which is higher than the table value, at 5%significant level (i.e., 1.543), the hypothesis isrejected. Hence, it is very clear that there is asignificant difference between the perceptions ofcustomers of SBI and HDFC towards CRM.

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TestApplied

D.F Level ofSignificance

CalculatedValue

Standard / TableValue

Result

F Test 42,42 5% 1.65 1.543 Rejected



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Documents

Customer Relationship Management in Banking Sector