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EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT
SYSTEMS ON THE PERFORMANCE OF FINANCIAL
INSTITUTIONS:
A CASE STUDY OF CHASE BANK KENYA LTD
BY
DORA WARON LODIONG
UNITED STATES INTERNATIONAL UNIVERSITY - AFRICA
SUMMER 2015
i
EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT
SYSTEMS ON THE PERFORMANCE OF FINANCIAL
INSTITUTIONS:
A CASE STUDY OF CHASE BANK KENYA LTD
BY
DORA WARON LODIONG
A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment
of the Requirement for the Executive Master of Science Degree in Organizational
Development (EMOD)
UNITED STATES INTERNATIONAL UNIVERSITY - AFRICA
SUMMER 2015
ii
DECLARATION BY STUDENT
I, the undersigned, declare that this is my original work and has not been submitted to any
other college, institution or university other than the United States International University -
Africa in Nairobi for academic credit.
Signed: _________________________ Date: _________________________
Dora Waron Lodiong
ID No: 630289
This research report has been presented for examination with my approval as the appointed
supervisor.
Signed: _________________________ Date: _________________________
Fred Newa
Signed: _________________________ Date: _________________________
Dean, Chandaria School of Business
iii
COPYRIGHT
© Copyright by DORA WARON LODIONG, 2015
All Rights Reserved
The owner has exclusive rights over this work, and the contents of this study cannot be
reproduced in material form, such as photocopied or scanned, published, either in print or
electronic format, performed in public or broadcast, communicated to the public (i.e. made
available on the web or an intranet, emailed or faxed to another person, or adapted or
modified, including translated without the permission of the researcher or the United States
International University – Africa.
iv
ABSTRACT
The general objective of the study was to determine the needs and reasons why financial
institutions need to adopt CRM and the strategies available for them to adopt CRM in Kenya
with a bias focus on Chase Bank Kenya. The study was guided by the following research
objectives: to determine the cause of CRM adoption by financial institutions in Kenya; to
examine the challenges of implementing CRM in financial institutions in Kenya; and to
determine the strategies which facilitate successful implementation of CRM in financial
institutions in Kenya.
The study used a descriptive research design. The target population in this case was all staff
members that work at Chase Bank Kenya located in the Central Business District, Nairobi
County who were 930 in total. Stratified sampling technique was used in the study to select
the respondents from among the list of staff members that was obtained from the bank and
individual elements were randomly selected. The sample size of the study was 93. Primary
data was collected from the study population using a self-administered questionnaire. The
study used quantitative method of data analysis. Statistical Package for Social Science
(SPSS) Student Version 16.0 was used to analyze the collected data thoroughly and
conveniently. Percentages were used to give the numerical figure in terms of majority of
responses on a given question. The study employed the use of regression analysis to test
strength of the relationships between the study variables.
The study showed that today’s playing field for financial institutions is both complex and
competitive and the financial laws and regulations vary globally and change continuously. It
can be seen from the study that the internet has increased pressure to margins by enabling
customers to do their own comparison shopping before selecting a financial service provider
and for organizations to remain competitive in the industry, they have to rely on their ability
to leverage on their customers.
The study revealed that CRM systems in the organization are normally used to count
customers rather than create customers and it normally measures the activities of prospects
v
after they have “self-selected” in some way by calling the office or filling-in forms
somewhere. Study clearly showed that the CRM system is very good at capturing and
organizing structured information, and also good at capturing and organizing unstructured
information and most of the systems are not complicated to use and do not require the aid of
technicians to manipulate it.
The study showed that the organization had a good implementation strategy and that the
company explained the real business needs to vendors/partners before investing in CRM and
the project was carried out in phases during implementation. It can be seen from the study
results that the organization allocated available resources to the components that were
affected by CRM and it focused its search for the most suitable solution to its CRM
development. The organization looked at how customer relationships were managed within
the CRM period and it also anticipated how business would change and grow down the road.
The company examined the short-and long-term fiscal implications of the CRM solution and
it ensured that CRM supported the existing business processes.
The study concludes that today’s playing field for financial institutions is both complex and
competitive and the financial laws and regulations vary globally and change continuously.
The study concludes that CRM systems in the organization are normally used to count
customers rather than create customers and it normally measures the activities of prospects
after they have “self-selected” in some way by calling the office or filling-in forms
somewhere. The organization had a good implementation strategy as seen in the study. The
company explained the real business needs to vendors/partners before investing in CRM, and
the project was carried out in phases during implementation. It can be concluded that the
organization allocated available resources to the components that were affected by CRM and
it focused its search for the most suitable solution to its CRM development. The organization
looked at how customer relationships were managed within the CRM period and it also
anticipated how business would change and grow down the road.
vi
Financial institutions must pay attention to focus on the main customers, as it was found to
have a direct, strong, positive and statistically significant correlation with the marketing
performance. Therefore, the study recommends that the financial institutions do the
following: exert more effort in order to discover the needs of the main customers; pay heed to
providing services in line with the needs and specializations of the main customers; the
administrations of the financial institutions must cooperate together to adapt the service that
the main customers require to adapt; financial institutions must continue discussions with
each main customer in order to provide services that suit each and every one of them; and it
is important that all individuals in the financial institutions deal with great care with the main
customers to gain their loyalty.
vii
ACKNOWLEDGEMENT
My greatest debt of gratitude goes to my supervisor, Dr. Fred Newa, whose insightful
comments, scholarly guidance and cooperation encouraged and saw me through this research
report. He was always patient and read every draft of the proposal section and guided me
through the whole process of writing the research report.
While it is not possible to give acknowledgements to all those who assisted me, I have to
give special thanks to my family and friends whose prayers and moral support enabled me to
successfully pursue my studies.
viii
TABLE OF CONTENTS
DECLARATION BY STUDENT ..............................................................................................ii
COPYRIGHT.............................................................................................................................. iii
ABSTRACT.................................................................................................................................. iv
ACKNOWLEDGEMENT ......................................................................................................... vi
TABLE OF CONTENTS ..........................................................................................................vii
LIST OF TABLES ...................................................................................................................... ix
LIST OF FIGURES ..................................................................................................................... x
LIST OF ACRONYMS .............................................................................................................. xi
CHAPTER ONE ........................................................................................................................... 1
1.0 INTRODUCTION.................................................................................................................. 1
1.1 Background of the Study ......................................................................................................... 1
1.2 Statement of the Problem......................................................................................................... 4
1.3 General Objective..................................................................................................................... 5
1.4 Specific Objectives .................................................................................................................. 6
1.5 Significance of the Study ......................................................................................................... 6
1.6 Scope of the Study ................................................................................................................... 7
1.7 Definition of Terms.................................................................................................................. 7
1.8 Chapter Summary..................................................................................................................... 8
CHAPTER TWO.......................................................................................................................... 9
2.0 LITERATURE REVIEW ..................................................................................................... 9
2.1 Introduction .............................................................................................................................. 9
2.2 Reasons for CRM Adoption by Financial Institutions........................................................... 9
2.3 The Challenges of Implementing CRM in Financial Institutions ....................................... 14
2.4 Strategies which Facilitate Successful Implementation of CRM........................................ 20
2.5 Chapter Summary................................................................................................................... 23
ix
CHAPTER THREE ................................................................................................................... 25
3.0 RESEARCH METHODOLOGY ...................................................................................... 25
3.1 Introduction ............................................................................................................................ 25
3.2 Research Design ..................................................................................................................... 25
3.3 Population and Sampling Design .......................................................................................... 25
3.4 Data Collection Methods ....................................................................................................... 29
3.5 Research Procedures .............................................................................................................. 29
3.6 Data Analysis Methods .......................................................................................................... 30
3.7 Chapter Summary................................................................................................................... 31
CHAPTER FOUR ...................................................................................................................... 32
4.0 RESULTS AND FINDINGS............................................................................................... 32
4.1 Introduction ............................................................................................................................ 32
4.2 Demographic Information ..................................................................................................... 32
4.3 Reasons for CRM Adoption by Financial Institutions......................................................... 34
4.4 Challenges of Implementing CRM in Financial Institutions............................................... 41
4.5 Successful Strategies for Implementing CRM ..................................................................... 49
4.6 Chapter Summary................................................................................................................... 55
CHAPTER FIVE ........................................................................................................................ 56
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS ................................. 56
5.1 Introduction ............................................................................................................................ 56
5.2 Summary ................................................................................................................................. 56
5.3 Discussion ............................................................................................................................... 57
5.4 Conclusion .............................................................................................................................. 64
5.5 Recommendations .................................................................................................................. 66
REFERENCES ........................................................................................................................... 68
APPENDICES............................................................................................................................. 75
APPENDIX I: COVER LETTER............................................................................................ 75
APPENDIX II: QUESTIONNAIRE........................................................................................ 76
x
LIST OF TABLES
Table 3.1 Population Distribution ............................................................................................... 26
Table 3.2 Sample Size Distribution............................................................................................. 28
Table 4.1 Bank Environment ....................................................................................................... 34
Table 4.2 CRM and Business Process Re-engineering .............................................................. 35
Table 4.3 CRM and Organizations’ Analytical Aspects ............................................................ 37
Table 4.4 CRM and its Benefit to the Organization................................................................... 39
Table 4.5 Pearson Correlation Matrix for CRM Capabilities .................................................... 41
Table 4.6 CRM Flaws and Assumptions .................................................................................... 42
Table 4.7 Regression Analysis for Flaws and Assumptions...................................................... 43
Table 4.8 CRM Failure ................................................................................................................ 45
Table 4.9 Organization Failure in Adopting CRM .................................................................... 46
Table 4.10 CRM Failure on Customer Information and Management ..................................... 48
Table 4.11 Regression Analysis for Customer Information and Management ........................ 49
Table 4.12 Organization’s CRM Strategy .................................................................................. 50
Table 4.13 Organization Needs of CRM and its Functionality ................................................. 51
Table 4.14 Organization’s Implementation of CRM Strategies ................................................ 53
xi
LIST OF FIGURES
Figure 4.1 Respondents Gender .................................................................................................. 32
Figure 4.2 Education Background ............................................................................................... 33
Figure 4.3 Years with the Organization ...................................................................................... 33
xii
LIST OF ACRONYMS
AMFI: Association of Microfinance Institutions
BPM: Business Process Management
BPR: Business Process Reengineering
CBD: Central Business District
CBK: Central Bank of Kenya
CIS: Customer Information System
CRM: Customer Relationship Management
CSS: Customer Support and Service
DTMs: Deposit Taking Microfinance companies
EMA: Enterprise Marketing Automation
ETL: Extract Transform Load
GoK: Government of Kenya
IT: Information and Technology
KDD: Knowledge Discovery Database
KPOSB: Kenya Post Office Savings Bank
SACCOs: Savings and Credit Cooperatives
SFA: Sales Force Automation
SME: Small Medium Enterprises
SPSS: Statistical Package for Social Science
1
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
The demand of customers in services from financial services has increased, and so has the
number of players in the financial services sector. The product and service offering have also
become more diverse. The increasing competitiveness in the financial service institution is
forcing organizations to place greater emphasis on building and establishing valuable
customer relationship (Oracle Corporation, 2009). Considering the situation from a wider
perspective, Canel, Rosen, and Anderson (2010) maintained that with the expanding global
competition, the emergence of new technologies and the improved communications have
increased customers’ expectation for fuller satisfaction on their investment. Against this
background is the challenge within financial institutions to direct their focus to customer
satisfaction and quality of products and services.
Customer Relationship Management (CRM) consists of three major components; customer,
relationship, and management. The customer is the only source of the company’s present
profit and future growth. The relationship between a company and its customers involves
continuous bi-directional communication and interaction. Such a relationship on the part of
management is not an activity only within a marketing department, but also involves
continuous corporate change in culture and process (Gray and Byun, 2010).
Defining CRM is challenging because any definition is contingent on the level at which
CRM is practiced in an organization or, for that matter, what the researcher or manager
believes about the correct level of CRM. There are three different possible levels of CRM
namely: functional, customer-facing, and companywide (Dyché (2008). The continuous
balance of CRM activities at each stage should be guided by the attempt to maximize the
value of the set of concurrent customer relationships and thus should be associated with
better overall company performance (Gray and Byun, 2010). Therefore, CRM can be defined
as the process at the customer-facing level as a systematic process to manage customer
2
relationship initiation, maintenance, and termination across all customer contact points to
maximize the value of the relationship portfolio (Thompson, 2009).
Thus, this study will view CRM as the process that entails the systematic and proactive
management of relationships as they move from beginning (initiation) to end (termination),
with execution across the various customer-facing contact channels. This necessitates both
information generation through the analysis of customer and prospect needs and behavior and
action on this information, contingent on the customer’s value and life-cycle stage (Gray and
Byun, 2010).
The emphasis on financial institutions now is not on the number of new customers that are
attracted to a product but on how existing customers are satisfied to ensure their retention.
Dyché (2008) explained that CRM is taken seriously because the cost of acquiring a new
customer is six times more than keeping an old one. Sandall (2009) reports on a statement by
Havard Business Review that some companies can boost profit by almost 100% by retaining
5% more of the customers. She went further to say that simply managing your customers
adds value to a business, but evaluating a customer’s experiences and tailoring your business
processes to accommodate what you have learned from them adds value to your customer
relationship. This seems to be a subtle proposition but a critical distinction that must exist
between companies with CRM strategies and those without.
Barrington (2010) states that, CRM systems began as a way to track customer interactions
with the view of producing personalized products and services. Bose and Sugumaran (2011)
explained that CRM involves managing customer knowledge to better understand and serve
them. They went further to state that CRM is an umbrella concept that places the customer at
the center of an organization. Thompson (2009) argues that CRM is emerging as a critical
strategy simply because relationships are coming to the forefront of the competitive
battleground. CRM therefore is a tool that supports an organizations strategy and business
planning and enables it to measure progress on an ongoing basis. According to Sandall
3
(2009), the basis of successful CRM is to manage people and processes more effectively
through user-friendly technology.
The financial needs of customers change throughout their lifetime, providing incentives for
financial institutions to cultivate lifelong customer relationships. A customer’s loyalty
increases as the length and quality of the relationship increases. CRM remains the goal of
creating and sustaining competitive advantage (Thompson, 2009).
Kenya is a developing country with a total population of 43 million people. Kenya has a
relatively well developed financial sector which comprises 43 commercial banks, 1 mortgage
finance company, 7 Deposit Taking Microfinance companies (DTMs), some 3,500 active
Savings and Credit Cooperatives (SACCOs), one postal savings bank - Kenya Post Office
Savings Bank (KPOSB) 125 foreign exchange bureaus, a host of unlicensed lenders, and an
Association of Microfinance Institutions (AMFI) with 56 members (Bankelele, 2014).
Despite the abundance of financial institutions, the financial sector in Kenya is highly
concentrated. Four financial institutions, Equity Bank, Cooperative Bank (Co-op Bank),
Kenya Post Office Savings Bank and Kenya Commercial Bank, account for two thirds of all
bank accounts which numbered 14 million by mid-2012 (CBK, 2012b). Chase Bank Kenya
Limited is a commercial bank in Kenya. It is one of the commercial banks licensed by the
Central Bank of Kenya, the central bank and national banking regulator (CBK, 2013).
The bank is continuously re-inventing itself and doing things differently in order to provide
customers with customized services. The Small Medium Enterprises (SME) is at the heart of
all that the organization does and the organization (Chase Bank) has ensured that its business
is to understand their business. The Bank’s Mission is to “Enable People Achieve the Things
that Matter Most to them”. This for the organization is more than a mission, it is a promise
that they strive to ensure every one of their clients, staff and stakeholders alike receives.
They re-affirm their commitment to customers by continually working towards providing
4
them with tailor made solutions in line with their financial needs (Chase Bank Newsletter,
2013).
As the financial services industry moves from a transaction-centric to a relationship-centric
business approach, effectively leveraging customer relationships becomes all the more
critical (PeopleSoft, 2012). Customer management issues are exacerbated when there are
many disconnected systems and no central location to capture all of the accumulated
customer data (PeopleSoft, 2012). The ability to view all customer interactions and
information is essential to providing the high quality of services that today’s customers
demand.
However, many financial institutions find their customer data fragmented by virtue of
channel segmentation, by product, or by company organizational structure. The collection
and integration of data into a single logical repository that sales people, contact center agents,
and marketing and support personnel can all use is crucial to a company’s success. This can
be achieved only if the front-end system that interacts with the customer (like the call centers,
internet, and branch) also interacts with the back end (the billing statements, and other
account information) (Bankelele, 2014).
1.2 Statement of the Problem
Financial institutions are discovering the compelling nature of the CRM business strategy.
Protecting valued customers is synonymous with protecting future earnings as an alternative
to being acquired or gaining massive scale. Thompson (2009) intimated that CRM is a
business strategy adopted to acquire, grow and retain profitable customer relationship with
the goal of creating a sustainable competitive advantage.
CRM is one of many potential business strategies that underscore the need for any financial
institution to identify and leverage its primary competitive advantage. Treacy and Wiersema
(1994), in their work, “The Discipline of Market Leaders”, pointed out that leading
5
businesses have one of three primary competitive advantages which are identified and
leveraged. These are operational excellence, product leadership and customer intimacy.
It should be noted that all financial institutions need a minimum capacity for all three
abilities. However, there should be one of these three that should be the discipline in a
successful business. Kilmer (2012) states that, to develop a CRM strategy that will have to
consider a profit, a financial institution will have to consider a variety of applications. He
was however quick to add that sorting out of these applications is a challenge to many
managers.
Among many financial institutions, CRM application technology implementations have
arrived as part of an early sales force automation movement that has expanded its presence
into a more operational, customer service focus. In many cases, the technology has arrived
with an inherent sales tracking and incentive-planning objective. Sandall (2009) maintained
that while sales tracking and performance incentives are consistent with a CRM business
strategy, they bring many organizational and cultural issues to the forefront in the process of
implementation.
In customizing, a CRM-related application, particularly the Relational CRM application, is
an iterative process. When an application technology has been designed to cross industries,
fit various data models, and all screens need to be customized, the implementation and its
resources can drag on for months and years (Kilmer, 2012). The major issue which most of
the banks are facing right now is the use of CRM and technology; therefore, there is need for
a study to determine why financial institutions need to adopt CRM and the strategies they
need to improve on.
1.3 General Objective
The general objective of the study was to determine the needs and reasons why financial
institutions need to adopt CRM and the strategies available for them to adopt CRM in Kenya
with a bias focus on Chase Bank Kenya.
6
1.4 Specific Objectives
The study was driven to:
1.4.1 To determine the reasons for CRM adoption by financial institutions in Kenya?
1.4.2 To examine the challenges of implementing CRM in financial institutions in Kenya?
1.4.3 To determine the strategies which facilitate successful implementation of CRM in
financial institutions in Kenya?
1.5 Significance of the Study
1.5.1 The General Public
This study may enlighten the general public on the successes of CRM practices, particularly
organisation strategic change management in the banking industry. Through this study they
may understand how certain changes in an organization affect it positively and how to deal
with the changes as well.
1.5.2 Banking Industry
The study may be beneficial to other companies in the banking industry such that they may
understand how strategic change in relating with customers in the organization may affect
them it in the long run. It may also enlighten them on issues related to customer relationship
management (CRM) and offer better ways of adopting CRM in their organisations.
1.5.3 Government of Kenya
This study may be of great help to the Government of Kenya (GoK) when coming up with
policies and laws that govern the banking industry. The policy makers may be able to
understand how different changes affect the performance of firms in the industry, and thus,
they may be able to think through decisions before implementing them.
1.5.4 The Managers of Chase Bank Kenya
This study may be helpful to the management and employees of Chase Bank especially when
coming up with new strategies to implement and evaluating the effect of the changes they put
7
in place. The study has highlighted the challenges of adopting a good CRM system, and this
has offered them recommendations on how to make the CRM effective and efficient within
their organization.
1.5.5 Scholars
This study may be useful to students and lecturers within the institutions of higher learning.
The study has offered a basis of reference. It has offered an opportunity for further research
to be conducted on the study topic by stating the various gaps that future researchers may
want/ need to fill.
1.6 Scope of the Study
There are many players in the banking industry but this study focused on Chase Bank
Nairobi Branch. The study focused on the Bank that operates in the city’s Central Business
District (CBD) whose total population was 930. The focus of the study was on the customer
management practices of the organization and its resulting impact. The information has been
helpful in establishing whether the CRM system in place has been effective in attracting
customers and retaining the current customers. The study was carried out between January –
April 2015.
1.7 Definition of Terms
1.7.1 Customer Relationship Management
Customer relationship management is a customer-based relationship management philosophy
that enables the coordination and cooperation between all the departments, customers and
business associates as a front office practice and back office practice (Bozgeyik, 2005).
1.7.2 Customer Loyalty
The term customer loyalty is used to describe the behavior of repeat customers, as well as
those that offer good ratings, reviews, or testimonials. It is a process, a program, or a group
of programs geared toward keeping a client happy so he or she will provide more business
(Storbacka and Lehtinen, 2009).
8
1.7.3 Customer Retention
Customer retention is the process when customers continue to buy products and services
within a determine time period (Lakshman, 2008), it can also be defined as the activity that a
selling organization undertakes in order to reduce customer defections (Storbacka and
Lehtinen, 2009).
1.7.4 Financial Institutions
These are establishments that focus on dealing with financial transactions, such as
investments, loans and deposits. Conventionally, financial institutions are composed of
organizations such as banks, trust companies, insurance companies and investment dealers
(Padmalatha, 2011).
1.8 Chapter Summary
This chapter introduces the reader to understand a brief background of Customer
Relationship Management and the nature of Financial Institutions in Kenya. This is followed
by the discussion of the problem, the purpose of the research, and specific research objectives
that guided the study, the chapter has given the significance of the study and the scope of the
study. In this section, the researcher has also defined key terms used in the study. The second
chapter reviews the literature available from scholars and it was driven to examine in detail
the benefits of CRM in financial institutions in Kenya; the challenges of implementing CRM
in financial institutions in Kenya; and the strategies which facilitate successful
implementation of CRM in financial institutions in Kenya. The third chapter offers readers
with detailed information on the research methodology that was adopted in carrying out the
research. The fourth chapter discusses the finding of the study from the analyzed data and the
final chapter offers readers with the study discussion, conclusion as well as the study
recommendations.
9
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 Introduction
This chapter reviews the relevant literature in as far as the topic under investigation is
concerned. The chapter focuses on how financial institutions are effectively using CRM to
improve their profitability in Kenya. The research will examine in detail the cause of CRM
adoption by financial institutions in Kenya; the challenges of implementing CRM in financial
institutions in Kenya; and the strategies which facilitate successful implementation of CRM
in financial institutions in Kenya.
2.2 Reasons for CRM Adoption by Financial Institutions
Financial institutions are undergoing significant change, and today’s playing field is both
complex and competitive. Not only are there fewer new customers to pursue and more
entities pursuing them, but the industry is also impacted by regulations that vary worldwide
and are all in a state of transition. Competition has increased with banks and brokers adding
insurance products to their product mix, and insurers are now offering broader financial
service products (Fox and Stead, 2010). The internet has added and increased pressure to
margins by enabling customers to do their own comparison shopping. Capturing and
sustaining market advantage in this fiercely competitive industry hinges on the ability to
understand and leverage the industry’s most valuable asset - the customers (Peppers and
Rogers, 2009). This customer-centric approach which vies for customer loyalty and
satisfaction can only be successful when supported by an enterprise-wide CRM strategy
(Bee, 2008).
CRM is a multi-dimensional construct consisting of four broad behavioral components which
include, Key Customer Focus, CRM Organization, Knowledge Management, and
Technology-based CRM. This is in accord with the notion that successful CRM is predicated
on addressing four key areas: strategy; people; technology; and processes (Fox and Stead,
2010), and that only when all these four work in concert can a superior customer-relating
capability emerge (Day, 2008).
10
Dzato (2007) commented that CRM strategy of any financial services organization should
focus on integrating people, processes and technology to maximize the value exchange.
Bygstad (2002) cited Ciborra and Failla (2000) who describe CRM as an information
infrastructure, consisting of processes, people and technology. Bee (2008), simply
maintained that financial institutions who want to adopt CRM systems need to address three
critical factors - people, processes and technology.
2.2.1 Business Process Re-engineering as a CRM Strategy
Anton (1996) characterizes CRM as an integrated approach to managing customer
relationships with reengineering of customer value through better service recovery and
competitive positioning of the offer. Couldwell (1998) further depicts CRM as a combination
of business process reengineering (BPR) and technology that seeks to understand a
company’s customer from the perspective of who they are, what they do, and what they are
like. Limayem (2007) intimated that BPR for CRM involves rethinking and redesigning
business processes to create value to customers through using Information and Technology
(IT) as the primary enabler with the aim of achieving quantum improvements.
According to Bibiano, Mayol and Pastor (2009), business process is a set of linked activities
that create value by transforming an input into a more valuable output. Both input and output
can be artifacts and/or information and the transformation can be performed by human actors,
machines, or both. They further identified three types of business processes which they
maintained should be supported by Business Process Management Systems (BPM Systems).
These three are: Management processes - the processes that govern the operation. Typical
management processes include Corporate Governance and Strategic Management;
Operational processes - these processes create the primary value stream, they are part of the
core business. Typical operational processes are Purchasing, Manufacturing, Marketing, and
Sales; Supporting processes - these support the core processes. Examples include
Accounting, Recruitment and IT-support.
11
A business process can be decomposed into several sub processes, which have their own
attributes, but also contribute to achieving the goal of the super-process. The analysis of
business processes typically includes the mapping of processes and sub-processes down to
activity level (Bibiano, Mayol and Pastor, 2009).
Operational CRM is centered in supporting business processes which includes customer
contact (sales, marketing and service). The resulting data is sent to the users since it is
required to carry out the activities related to the commercial area. According to Gartner
Group (2004) operational CRM supports the following processing tools: Sales Force
Automation (SFA); Customer Support and Service (CSS); and Enterprise Marketing
Automation (EMA). The operational processes remain the core of the business, producing the
actions that give the company their main goals. Analytical CRM is committed with the
collection and analysis of data related to customer and marketing, providing value
information for decision taking support and strategic directions in the sales area (Limayem,
2007). The supporting processes act together with the management processes, giving them
sustainable actions in order to carry out the main business processes of the company.
Similarly, Collaborative CRM supports the relations between users across the organizational
structure and aid in the actions of operational CRM (Kim et al., 2008).
2.2.3 CRM Benefits
Riddle (2010) stated that the three key reasons why companies are adopting CRM is that
CRM enables businesses to adopt a customer-focused approach and build stronger customer
relationships; it streamlines business processes - reducing operational costs and increasing an
organization’s responsiveness to market developments; and it optimizes marketing, sales and
customer service processes, allowing businesses to identify new market opportunities,
shorten sales cycles and increase customer retention.
Kim et al. (2008) maintained that by adopting a CRM strategy financial institutions among
other things can manage client data, including preferences, transactions, and communication
history, in a manner that enables executives and management to have a 360° view of the
12
client. It can also result in an increase in data accuracy with a common repository of client
information that ensures all departments within the organization are working with the same
data. It will again improve customer satisfaction, loyalty, retention, and profitability using
efficient tools that lower service costs.
By adopting CRM, financial institutions will be able to comply with the privacy and security
requirements of the current regulatory environment. It will again eliminate inefficiencies with
a solution that customizes and integrates the company’s roles and workflow. The true value
of a CRM strategy lies in its ability to transform strategy, operational processes and business
functions (Pantazopoulos, 2009). The effect, he noted, is that companies benefit from high
retention of customers and increased customer loyalty and profitability. Swift (2011)
emphasized that organizations, can obtain greater benefits from their CRM initiatives within
the following areas: higher customer retention and loyalty; increase customer profitability;
evaluating of customers profitability; reduced cost on sales; and lower cost on recruiting
customer.
The main reasons and benefits for adopting CRM suggested by Curry and Kkolou (2009) are
firstly to consolidating workflow while at the same time eliminating non- productive flow of
information. Secondly is to become competitive enough to draw customers from competing
organizations and thirdly is the impact on infrastructure which is simplified as a result of the
internal organization’s focus turned towards customers.
2.2.4 The Need for CRM
The expectations of businesses are that gaining loyal customers has a positive effect on their
survival. This is reemphasized by Payne (2008) who claims that loyal customers not only
come back, but they also serve as advocates for the organization. He further states that the
fundamental principles that underpin CRM are not unique and he identified three
characteristics which emphasis retaining profitable customers, focus on multiple markets and
cross functionality.
13
Profitable customer retention: Payne and Frow (2006) notes that it is essential for businesses
to put more emphasis on identifying the segment of the customers that is valuable to the firm
in the long term. When the targeted needs of client segments are served, they turn to loyal
customers and are therefore profitable in the end. This is more valuable than trying to serve
all customer groups.
Emphasis on multiple markets: A business works with a whole set of groups and networks.
Thus, it is vital to identify key influential stakeholders and develop an effective and
profitable relationship with them as their actions have implications on business. For example,
actions of trade unions and government policies have profound implications on business.
Thus, CRM initiatives must try to deal with these diverse stakeholders. (Payne 2007).
Cross functionality marketing: Payne (2008) suggests that again all partners both within and
out of an organization, must have customer satisfaction as the core essence of business. For
this reason, all marketing strategies must factor in the inputs of all activities of the business
and not just that marketing. Teamwork that aims at satisfying the customer’s interest and not
that of the business alone is the principle upon which CRM is founded.
Kolkata (2002) also suggested that CRM has three main aspects - acquiring, enhancing and
retaining customers. The issue of retaining customers is thus a central issue for CRM. The
customer has become the central focus of marketing as it has been evolving. This initial
emphasis was on the product, but it has now shifted to the customer.
Although the market for CRM software and support is strong (Maoz et al. 2007), there
remains considerable scepticism on the part of business commentators and academics as to
its ultimate value to the corporation and customers. Surveys of IT executives in the business
press report that CRM is an overhyped technology (Bligh and Turk, 2004) and some
academics claim the concept is fundamentally flawed because CRM ignores the reality that
many customers do not want to engage in relationships (Dowling 2002, Danaher et al. 2008).
14
Empirical studies examining the success of CRM technology have failed to alleviate this
scepticism as investigations to date span a limited range of activities (Sutton and Klein 2003)
and are noticeably silent on the extent to which CRM investment contributes to firm
performance (Boulding et al. 2005). A lack of clear and generalizable empirical support for
the expected return from CRM investments has important practical implications for market
development and firm profitability. It also raises questions regarding the most appropriate
mix of capabilities to effectively exploit investment in CRM.
The value of IT to the firm is clearly a complex issue because firms apply IT in manifestly
different ways (Kohli and Gover 2008). Moreover, investment in IT infrastructure enables
higher-order business capabilities, which in turn, is having a critical impact on the way
business is organized and conducted, but may not immediately appear to be related to that IT
investment. For example, Mithas et al. (2010) demonstrate empirically that the ability of
firms to provide accurate, timely, and reliable data and information to users - what they refer
to as a higher order “information management capability” - is based on an ability to leverage
IT infrastructure. Hence it can be difficult to capture and properly attribute the direct or
indirect value generated from investment in IT.
IT is a necessary factor, it rarely, in-and-of-itself, generates sustainable performance
advantages (Clemons and Row 1991). In other words, the business value that is generated by
IT is dependent upon the combination of complementary technical, organizational and human
resources (Francalanci and Morabito 2008). Corporation, Leonard (1998) found four distinct
clusters of core technological capabilities: technical systems, human skills, managerial
systems, and values. Tippins and Sohi (2003) provide a consistent definition of IT
competency as the body of technical knowledge about IT systems, the extent to which the
firm uses IT, and the number of IT-related artefacts.
2.3 The Challenges of Implementing CRM in Financial Institutions
Lombardo (2007) expressed that “failure” of CRM may be a combination of at least two of
these situations. The reasons for these failures are varied. From management, the focus can
15
be that they still do not have a sense of their business. Sales people may focus on the system
and its inability to be useful and end up not using it. Senior executives may complain about a
lack of return on their investment. He further reports on survey results which indicate that in
many instances, from 60% to 80% of CRM projects fail. He explained further that what these
studies mean when they use the term “failure” involves reasons as late implementation of the
project or an over budgeted project which makes senior executives hesitant to go in for.
Again, failure would include reasons that the project delivered less functionality than
originally planned or yet still a combination of all the factors mentioned above.
According to Nelson (2002) at least 70% of all CRM projects do not achieve their goals,
namely a higher customer loyalty or a bigger share of wallet. Nelson explained further that
this is not based on poor CRM-software or CRM-servers, but rather on the fact that IT
resources have not been skillfully associated with business goals and processes to improve
relationships.
2.3.1 CRM Failure
Brain (2007) summaries six reasons why CRM initiatives fail: Counting vs. Creating
Customers - The current crop of CRM systems are very useful for large companies with
thousands of customers that want to “count” them in interesting ways. If the organization is
placed like most small businesses, then probably they only have tens or hundreds of
customers and their main problem is finding new customers and efficiently growing existing
customers, not counting customers in interesting ways.
He further states that another fail is in measuring the wrong thing - CRM measures the
activities of prospects after they have “self-selected” in some way by calling the office or
filling in your form somewhere. Another challenge is in structured vs. unstructured data -
CRM systems are essentially databases with customer oriented forms built on top. They are
very good at capturing and organizing structured information, but are horrific at capturing
and organizing unstructured information.
16
Brain (2007) also notes that ease-of-use is another challenge since most CRM vendors say
their product is "easy-to-use." The reality is it is easy to use if you have dedicated
“operations” people or a dedicated CRM IT person to figure out how to do the hard/useful
stuff. Feeding the Monster is another challenge where like many knowledge management
initiatives; CRM requires end-users to take actions that are not part of their natural work
process in order to “update” the system. After all, CRM output is only as good as the input –
“garbage in, garbage out”. He further notes Transactional Systems vs. Solution/Relationship
Systems where today’s CRM is more useful for transactional (like call center) types of
companies than it is for small businesses who have client relationships that are more solution
oriented in nature.
2.3.2 Organization Failure
Gerson (2009) on the article ‘CRM Today’ identified three mistakes organizations make
which impact negatively on their CRM strategy. First is when a company has No CRM value
proposition. This is because a value proposition tells a client what distinguishes the company
from other competitors, and why they should do business with said company. The Second
mistake is Failure to match their CRM technology to the way their associates’ work. Too
many CRM implementations are technology led instead of being process or performance led.
The third mistake; Treating all customers alike in the company’s CRM system actually has
two parts. The first is that firms think they actually know who their customers really are. The
second is that they treat every customer the same.
Myron (2009) identified the following: lack of guidance as an organizational challenge.
According to Gartner Group (2004), more than 60% of companies that have implemented
CRM did not have mutually agreed upon goals for their projects prior to the installation. Like
a building without a bearing wall, a CRM initiative without goals will collapse. Integration
Woes is another challenge where there is no “killer” application that solves all integration
problems. Most large-scale implementations require some customization. This may lead to
problems that put vendors and consultants’ at odds with customers.
17
Guru (2008) noted that lack of a long-term strategy is an organizational challenge.
Organizations believing that CRM is a technology solution are still a tremendous obstacle for
far too many firms. The fact remains that CRM is a business process change, often supported
by technology. He further noted Dirty Data as another challenge. This is an often-overlooked,
yet insidious hurdle is dirty data, or inaccurate and old information. Data is the lifeblood of a
CRM system, and incorrect numbers, spelling mistakes, and outdated contact information can
infect that system if it is left unchecked.
Curry and Kkolou (2009) note that lack of employee buy-in is a CRM challenge. They state
that it is natural to resist change. Top salespeople may ask, for example; why should we be
forced to change our working habits, when those very habits helped them become so
successful. They state that lack of accountability is another challenge. Driven by fear of the
unknown, resistance also spills into the managerial level in the form of avoidance, or lack of
accountability. There is unwillingness in top management to assign accountability to project
leaders.
2.3.3 Customer Management
Guru (2008) reported on the following key barriers to implement customer equity asset
management implementation programmes: limited scope – he stated that many existing
Customer Information System (CIS) tools are very limited in scope, and do not support
customer equity management. He also notes a rise in complex technology as a challenge. He
states that technology solutions sold by vendors have become very complex to use, expensive
to maintain, and contain irrelevant information for data mining.
Lack of pertinent data is another customer management challenge as noted by Brain (2007)
since most of the existing data warehouses lack information on recency, frequency, and
monetary values. They also offer information that is insufficient for supporting predictive
modeling and predictive scoring. This is coupled by an extended time to market. The addition
of new capabilities to existing data warehouses is cost prohibitive and takes a long time to
18
bring into production stage capabilities (or even to catch up with the fast-changing dynamic
nature of the market place) (Pantazopoulos, 2009).
Multi-Vendor Tools and Capabilities are a challenge noted by Bibiano, Mayol and Pastor
(2009). They state that, over the years, many major financial organizations have developed
data warehouses by purchasing diverse sets of software tools and then building data
warehouses in-house. For example, Data Quality and Cleansing tools, Extract Transform
Load (ETL) tools, database management and storage tools, data mining, and campaign
management solutions from various vendors.
Overburdened Internal Information Technology Organization is another customer
management challenge faced by CRM. Information technology organizations have had to
employ individuals who have specialized vendor product skill sets to support multi-vendor
tools. This can increase organizational expenses significantly (Curry and Kkolou, 2009).
Lack of integrated capabilities of CRM is another challenge. The focus of many CIS has
shifted to service-only ad hoc reporting and to provide simple querying capabilities rather
than becoming an infrastructure for efficient customer equity management or for enabling
some sort of Knowledge Discovery Database (KDD) (Bibiano, Mayol and Pastor, 2009).
2.3.4 Poor CRM Strategies
The particular CRM strategic emphasis is germane to this study because CRM programs can
focus on customer intimacy (relationship orientation, catering to individual customer service
requirements), cost reduction, data analytics or a mix of all three (Buttle 2004). In the case of
CRM, business value is unlikely to exist in the technology alone but rather in the capability
to draw information from all customer touch-points - including websites, telesales, service
departments, direct sales forces and channel partners. The capability to build a coherent
picture of the customer is costly for firms to imitate and, in many cases, highly idiosyncratic
to the firm. This is critical because recent work demonstrates that firms working with
incomplete customer data and imprecise metrics for evaluating customers run the risk of
19
alienating, rather than satisfying, customers (Boulding et al., 2005) and, as a consequence,
experience lower profitability (Ryals 2005).
The stance taken here is that IT infrastructure on its own is well known, mostly stable, and
widely shared amongst competing firms; a fact reinforced by various literature. Hence, IT
alone is unlikely to be a source of direct competitive advantage (Carr 2003; 2004; Weill and
Vitale 2002). Rather, the scarce resources and subsequent source of business value are the
managerial capabilities that are enabled by the technology (Bharadwaj 2000; Picolli and Ives
2005). When IT systems become embedded in the firm’s business architecture and human
skills, capabilities can emerge that lead to a level of causal ambiguity and structural
complexity that competitors find hard to imitate, thereby enhancing the firm’s potential for
sustainable competitive advantage (Dierickx et al. 2009).
A number of studies have demonstrated that complementary organizational and human
resources mediate the impact of IT on firm performance. For example, Francalanci and
Morabito (2008) identify that the link between information systems and firm performance is
mediated by the absorptive capacity of the firm. Brynjolfsson and Hitt (1996) argue that the
business value from IT is only generated when the IT is absorbed within the firm, as a
routinized element of a company’s value chain. Ray et al. (2005) also provide empirical
evidence that performance improvements derive not from IT expenditure alone but when
firms use embedded IT to support customer service processes (Ray et al., 2005).
2.3.5 Business Architecture
Possession of sophisticated CRM systems, and complex human skills and experience will
have little impact on the business unless action is taken. In other words, to improve
performance the outputs of any CRM program have to be deployed at scale across the
business. Many firms will own the same basic technology and possess similar skills.
However, few will possess the organizational architecture of control systems and incentive
policies required to fully exploit these resources (Barney and Mackey 2005).
20
This ability to exploit investment in CRM is observed in an overall business architecture that
supports action before, during, and after implementation. It not only ensures that customer
knowledge is effectively generated, but more importantly, it ensures that the information is
used within the organization to influence competitive advantage. For example, front-line
employees are motivated to act on reports generated by the CRM system when making
tactical decisions about customers. In the context of CRM, other aspects of this architecture
could include training in systems and policies, or control systems that focus on a relationship
rather than a transactional view of the customer.
2.4 Strategies which Facilitate Successful Implementation of CRM
Shah (2008) maintains that planning and developing a CRM strategy is not the task of an
individual but a team. The first step therefore to initiate any CRM process should be the
institution of a team. The team, he continued must consist of users as well as business area
experts.
In developing a CRM strategy, Hines (2012) expressed that organization should first tackle
business issues before choosing a technology. Again, it is a must that they explain the real
business needs to vendors/partners before investing. In any situation the customer’s priority
should be “number one”. He went further to say that the whole project should be carried out
in phases and its enterprising identity be kept. Limayem (2007) maintains that the success of
any CRM strategy is dependent on how organizations allocate available resources to the three
components that include a mix of 70% people, 20% processes and 10% technology.
2.4.1 Organization Needs
Sandall (2010) suggested a number of steps organizations can take to focus their search for
the most suitable solution to their CRM development. He maintained that such a company
should first analyze its business goals and objectives and look at how customer relationships
are managed within that period. Such a company should also anticipate how the business will
change and grow down the road. From various options, the company is to examine the short-
and long-term fiscal implications of each solution. Companies who want to develop a CRM
21
strategy should again compare the benefits and drawbacks of available solutions to business
needs.
He further stated that any viable CRM solution should provide the following minimum
functionality; it should support existing business processes and provide the capability to
improve them. It should be easy to customize but not an extensive customization for the
organizations specific business application; it should have intuitive user interfaces; it should
integrate with existing systems of the company; it should provide robust reporting, analytical,
and forecasting capabilities and above all it should be both scalable and flexible.
2.4.2 CRM Needs
LaValle and Scheld (2012) mentioned that before a company adopts a CRM strategy, it
should examine its CRM value for change, identify and prioritize its CRM value propositions
and move on to design a new CRM operational blueprint. Once a blue print has been
initiated, the company should construct a transformational multi-generational roadmap and
implement such solutions. They emphasized that the whole programme should be supported
through sponsorship, governance, and change management.
Band, Kinikin, Ragsdale and Harrington (2011) offers steps that companies should consider
in planning and implementing a CRM strategy. Understand the problem: Many businesses
fail to pinpoint simple customer service problems. Companies that are successful in
understanding customer service problems have reaped rewards; Build a team that is
empowered to take on the project: Organizations will need to resist the temptation to staff the
team too heavily from the IT department. Select personnel with business skills as well; Win
executive sponsorship: CRM applications are big-ticket items. The cost for implementation is
often double after the purchase of the software. Resources should always available; Show
how CRM will support the company’s vision; and Measure, measure, measure: After
implementation, companies are to check and assess if the CRM systems are meeting
customer needs.
22
2.4.3 CRM Elements and Implementation Strategy
Kim et al. (2008) maintained that a true CRM strategy should generally encompass a broad
scope of initiatives including: developing an individualized CRM strategy; implementing
appropriate technology; building sales management systems and developing sales skills;
matching product and service offerings to the market; and optimizing branch performance.
From every indication this list suggests that CRM permeates into every aspect of a financial
institution.
McCabe (2013) outlined key guidelines to follow before implementing any CRM strategy.
She suggested that one needs to: Develop corporate wide CRM engagement from key
stakeholders. Many CRM projects fail because critical stakeholders are not involved in
setting CRM strategy, assessing requirements and selecting options. Get key sponsors
involved from the get-go and make sure that the individuals involved can make the financial
and time commitments to ensure success.
She also suggested that one needs to envision the company’s CRM strategy. CRM is more
than just software. It is also about selecting appropriate methodologies and business practices
to help the business enable better relationships with customers. She also suggested that one
has to determine and prioritize CRM drivers and requirements. Even in small companies,
CRM decisions are often stove piped in relation to departmental needs and business
problems.
Develop a CRM roadmap. Once one has the high-level vision and know which areas are
likely to bring the greatest reward, develop a master plan consisting of several smaller steps
and projects that will move you toward achieving the corporate CRM vision. The next step is
to think of integration. Here, one determines how, where and when CRM tools need to
integrate with one another and with other applications (McCabe, 2013).
She also notes that one needs to create a short list. Check out for prospective vendors’
financials and customer references; eliminate any that appear shady. Apply the 80-20 rule in
23
the selection process. One needs to avoid being snowed under by competing vendors’
feature-function wars. There is also need to keep everyone involved in the loop. Once the
selection has been made, one needs to offer flexible training options to help accommodate
different schedules and learning preferences. Finally, she advices one to learn, adjust and
evolve. Develop a mechanism to monitor use, get feedback and adapt.
2.4.4 Successful Implementation
Guru (2008) stated that to ensure successful CRM implementation organizations should First
and foremost, managers of CRM initiatives should obtain an executive level buy-in and
commit to the project. Make certain that they understand the importance of their role in
upholding that commitment and communicate it downwards through the organization. The
project should be organized in such a way that it is fun and rewarding. Key employees who
will be using the system should be motivated with incentives to make it work. They should
be involved in the early planning and implementation stages. Take their feedback seriously.
This will give them ownership in the project.
Kim et al. (2008) state that it advisable to break the entire project down into smaller
manageable pieces with small milestones and all departments must ordinate to maintain a
team methodology. A robust database platform is required. CRM systems collect huge
amounts of data very rapidly and managers are to ensure that their solution can grow and
perform accordingly. It should be emphasized that every CRM system is designed around the
customer and prospect.
2.5 Chapter Summary
This chapter has looked at the cause of CRM adoption by financial institutions. It has
discussed how CRM affects an organizations’ Business Process Re-engineering by
highlighting various CRM operational, analytical and collaborative strategies. The chapter
has also highlighted the importance of people in CRM strategy as well as the benefits of
CRM. The chapter has also looked at the Challenges of Implementing CRM in Financial
Institutions while focusing on CRM failure, organization failure and customer management
24
failure. The chapter also studies the various strategies which facilitate successful
implementation of CRM in financial institutions by discussing organization and CRM needs,
CRM elements and successful implementation strategies. The next chapter discusses the
research methodology that was adopted by the study.
25
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter shows the research design methodology that was adopted for the study. The
chapter discusses the research design, defines the population and sampling procedures
adopted, discusses the data collection methods that will be adopted in the research, it also
discusses the research procedures and section finally it discusses the data analysis methods
that were employed in the study.
3.2 Research Design
The approach to the entire process of the research study is known as the research
methodology. This is determined by the research problem, the assumptions one uses in their
research and the way the research problems is defined influences the way the study is
conducted (Marczyk, DeMatteo & Festinger, 2010). The authors further emphasize that
different authors use the word paradigms and methodology interchangeably. They stated that
there are two main research paradigms labelled positivist and phenomenological.
The study used a descriptive research design. A descriptive study involves collecting data
that test the validity of the hypotheses regarding the present status of the subjects of the study
(Cox (2008). In this study, the design was used to determine the effect of customer
relationship management systems (independent variable) on the performance of financial
institutions (independent variable) with a bias focus on Chase Bank Limited, Nairobi Branch.
3.3 Population and Sampling Design
3.3.1 Population
The target population for a study is the entire set of units for which the survey data is to be
used to make inferences (Hakim, 2012). The target population defines those units for which
the findings of the survey are meant to generalize. Cox (2008) states that establishing the
study objectives is the first step in designing a survey design, defining the target population
should be the second step. According to Hakim (2012) target populations must be
26
specifically defined, as the definition determines whether sampled cases are eligible or
ineligible for the study. The target population in this case was all the staff members of Chase
Bank Kenya located in the Nairobi (CBD) who are 930 in number.
Table 3.1 Population Distribution
Population
Distribution
Numbers Percentage
Customer Care 150 16
Business Development 400 43
Contact center 44 5
Product Development 10 1
Treasury 15 2
Finance 25 3
Human resource 60 6
Clearing 18 2
Credit 30 3
Administration 40 4
Payment 13 1
Digital Banking 15 2
Innovation 20 2
Procurement 10 1
Leasing 20 2
IT 35 4
Marketting 25 3
Total 930 100
Source: Chase Bank (2015)
27
3.3.2 Sampling Design
3.3.2.1 Sampling Frame
Sampling involves a process of selecting a sub-section of a population that represents the
entire population in order to obtain information regarding the phenomenon of interest
(Creswell, 2013). Most researchers cannot include all members of the population in their
studies and must resort to limiting the number of subjects to only a sample from the
population. According to Pfeffermann and Rao (2009) a sampling frame is a list of elements
from which the sample is actually drawn and is closely related to the population. In the ideal
case, the sampling frame should coincide with the population of interest. For this study, the
sampling frame came from the list of all staff members who work at the bank. The list was
obtained from the human resource department at the bank.
3.3.2.2 Sampling Technique
Statistical sampling techniques are the strategies applied by researchers during the statistical
sampling process (Lohr, 2013). Stratified sampling technique was used in the study to select
the respondents from among the list of employees that work at Chase Bank. According to
Kothari (2004) stratified random sampling is a modification of random sampling in which
one divides the population into two or more relevant and significant groups based on one or
more attributes. This sampling technique was used because it barred the introduction of
biasness in the selection. The technique was also employed because it enabled the
generalization of a larger population with a margin of error that was statistically
determinable.
After the population had been divided into various strata in terms of the departments they
work in, each stratum was sampled as an independent sub-population, out of which
individual elements were selected. Simple random sampling was used in selecting members
in each stratum. According to Lim and Ting (2013) simple random sampling improves the
representativeness of the sample by reducing the sampling error as well as it ensures that all
elements of the study have an equal chance of being selected for the study.
28
3.3.2.3 Sample Size
A sample size allows the researcher to make generalizations about the population. A sample
is a subset of a population, but that subset is only useful if it accurately represents the larger
population (Cox, 2008). To ensure that the sample accurately represents the population, the
researcher clearly defines the characteristics of the population, determines the required
sample size and selects the best method that members will be selected from the larger
population.
The sample size of the study used 10% of the target population which was 93 since the target
population of 930 was large. According to Mugenda and Mugenda (1999) a sample size of
between 10% and 30% is statistically considered appropriate to determine a sample size of a
given population. The sample size for the study was therefore 93, which according to
Mugenda and Mugenda (1999) it was above the required thresh hold. The distribution was as
shown in Table 3.2.
Table 3.2 Sample Size Distribution
Distribution
Population Sample Size (10%)
Customer Care 150 15
Business Development 400 40
Contact center 44 4
Product Development 10 1
Treasury 15 2
Finance 25 3
Human resource 60 6
Clearing 18 2
Credit 30 3
Administration 40 4
Payment 13 1
Digital Banking 15 2
Innovation 20 2
Procurement 10 1
Leasing 20 2
IT 35 3
Marketting 25 2
Total 930 93
29
3.4 Data Collection Methods
The study relied greatly on primary. The data was collected from the study population
through the use of self-administered questionnaires to meet the study objectives. A
questionnaire is a general term including all data collection techniques in which each person
is asked to answer the same set of questions in a predetermined order. Fielding (2010)
defines a structured questionnaire as a formal list of questions designed so as to get the facts.
This study used closed-ended questions to gather data for the study. The questionnaire
employed the use of a five point likert scale question. The likert measure allowed the study
population to ratio various questions using the scales that were provided.
The questions in the questionnaire sought the general demographics of the respondents. The
rest were divided into three sections as per the research objectives. The second section was
driven to determine the reasons for CRM adoption by financial institutions, the third section
was driven to examine the challenges of implementing CRM in financial institutions, and the
last bit highlighted the strategies which facilitate successful implementation of CRM in
financial institutions.
3.5 Research Procedures
Arksey and O’Malley (2005) state that it is imperative for a researcher to test the reliability
of the data collection instrument for the study results to be reliable. The researcher developed
a questionnaire based on the research questions; the questionnaire was pilot tested by being
administered randomly to a selected sample of ten respondents from the target population to
refine it and test the reliability of the instrument and also ensure that the questions therein
would be able to meet the objectives of the study.
The questionnaires were administered through the “drop and pick” method to the selected
respondents. At the point of dropping of the questionnaires, the researcher ensured that the
document was intact and the researcher explained to the respondents what was expected of
them. The respondents were given a whole week (7 days) to fill in the questionnaires. The
researcher ensured that contacts for the participants were received from the respondents.
30
Follow-up phone calls were made to the respondents so as to ensure that a high response rate
was achieved for the study.
Data was collected in the month of March 2015. The prospective firm and respondents were
approached and requested to participate in the study. Bryman (2007) states that, detailed
information about the study needs to be given to the population before carrying out a study.
During this study, information was given to the target firm and respondents through their
official e-mails. Consent to participate was obtained before the data collection activity
commenced.
3.6 Data Analysis Methods
Data analysis entails editing, coding and tabulation of data collected into manageable
summaries that is easy to interpret (Cox, 2008). This study used quantitative method of data
analysis. To guarantee easy scrutiny the questionnaire was coded in accordance with each of
the research objectives to ensure precision during the study process. The data collected was
classified into meaningful categories (coded), edited and tabulation of the same was done.
Statistical Package for Social Science (SPSS) Student Version 16.0 which is a unified and
comprehensive package was used to analyze the collected data thoroughly and conveniently.
The data was summarized and categorized in a frequency distribution table out of which
graphical and chart presentations were generated to give visual image of respondent
responses. Presentations were by use of figures and tables. Statistical analysis of means and
standard deviations were used to give the strengths of the responses on the likert questions
and this gave the level of difference in terms of responses. Percentages were used to give the
numerical figure in terms of majority of responses on a given question. The study employed
the use of regression analysis to test strength of the relationships between the study variables.
31
3.7 Chapter Summary
This chapter has introduced the research methodology that was used. In this study,
descriptive research design was used. Since the target population in this study was very large,
it necessitated the researcher to select a sample that was a representative of the target
population. Data collection was done through the use of questionnaires that were
administered through a “drop and pick” method to the selected respondents. For data
analysis, frequency tables and charts were used to present results for easier understanding
and interpretation. Statistical methods of data analysis were used to translate the collected
data. The next chapter discusses and demonstrates the results and findings of the study.
32
CHAPTER FOUR
4.0 RESULTS AND FINDINGS
4.1 Introduction
The research examined in detail the cause of CRM adoption by financial institutions in
Kenya; the challenges of implementing CRM in financial institutions in Kenya; and the
strategies which facilitate successful implementation of CRM in financial institutions in
Kenya. The results of the study have been presented in this section. From the 93
questionnaires handed out, only 72 were received giving the study a response rate of 77%.
4.2 Demographic Information
4.2.1 Gender
From the data collected, it was clear that male respondents were the majority in the
population with 56% while the female were 44% as shown in Figure 4.1.
Figure 4.1 Respondents Gender
4.2.2 Education Background
The researcher was driven to determine the education background of the respondents. Figure
4.2 indicates that 50% of the respondents had done their degrees, 18% had equally finished
their Master’s degree and secondary education, and 14% had attained a diploma. These
results indicate that the population had a strong educational background.
33
Figure 4.2 Education Background
4.2.3 Years with the Bank
Experience and the number of years was also asked by the researcher and as shown in Figure
4.3, 86% of the respondents had been with the bank for 1-5 years, and 14% had been with the
bank for 6-10 years. These results show that the bank was fairly new in the market and most
of the employees had been with it since it came to the market.
Figure 4.3 Years with the Organization
34
4.3 Reasons for CRM Adoption by Financial Institutions
4.3.1 Bank Environment
The respondents were asked to rate the environment where their bank operated and Table 4.1
shows the analyzed results. The mean score of 3.0 and above indicates that that particular
element affected the bank greatly while the mean of 2.5 and below shows that the element
did not affect the bank as much. The standard deviation was used to determine the level of
difference among the respondents and the value of less than 1.5 indicated that the difference
among the responses given was insignificant, which means that they were almost similar.
Table 4.1 Bank Environment
SD D NS A SA MEAN STD
DEV % % % % %
Today’s playing field for
financial institutions is both
complex and competitive
0.0 0.0 18.1 38.9 43.1 4.25 1.089
There fewer new customers in the
market to pursue and more banks
are pursuing them
20.8 18.1 6.9 54.2 0.0 2.94 1.052
The financial laws and
regulations vary globally and
change continuously
0.0 0.0 8.3 76.4 15.3 4.07 1.150
The internet has increased
pressure to margins by enabling
customers to do their own
comparison shopping
0.0 0.0 30.6 40.3 29.2 3.99 1.053
Table 4.1 shows that today’s playing field for financial institutions is both complex and
competitive as shown by 38.9% of the respondents who agreed and 43.1% who strongly
agreed, the response had a mean of 4.25 and a standard deviation of 1.089. The study showed
that there fewer new customers in the market to pursue and more banks are pursuing them as
35
indicated by 54.2% of the respondents; the results had a mean of 2.94 and a standard
deviation of 1.052. The table showed that the financial laws and regulations vary globally
and change continuously as shown by 76.4% who agreed and 15.3% who strongly agreed,
the results had a mean of 4.07 and a standard deviation of 1.150. The results also showed that
the internet has increased pressure to margins by enabling customers to do their own
comparison shopping as seen by 40.3% who agreed and 29.2% who strongly agreed, the
results had a mean of 3.99 and a standard deviation of 1.053.
4.3.2 CRM and the Organizations’ Business Process Re-engineering
The researcher was driven to determine how CRM affected the business process re-
engineering and the results were as tabled. The mean score of 3.0 and above indicates that
that particular element affected the bank greatly while the mean of 2.5 and below shows that
the element did not affect the bank as much. The standard deviation was used to determine
the level of difference among the respondents and the value of less than 1.5 indicated that the
difference among the responses given was insignificant.
Table 4.2 CRM and Business Process Re-engineering
SD D NS A SA MEAN STD
DEV % % % % %
CRM is used in our organization as an integrated approach to managing
customer relationships
0.0 0.0 0.0 66.7 33.3 3.33 0.475
CRM in our organization has
reengineered customer value through better service recovery and
competitive positioning
0.0 0.0 25.0 48.6 26.4 3.40 0.722
Our CRM combines our business
process reengineering and technology in order to understand our customers
from the perspective of who they are,
what they do, and what they are like
0.0 0.0 30.6 36.1 33.3 3.66 0.804
Our CRM creates value to customers
through using Information and Technology as an enabler for
achieving quantum improvements
0.0 0.0 36.1 37.5 26.4 4.08 0.790
36
Table 4.2 showed that CRM is used in the organization as an integrated approach to
managing customer relationships as shown by 66.7% and 33.3% of the respondents who
agreed and strongly agreed, the results had a mean of 3.33 and a standard deviation of 0.475.
It also shows that CRM in the organization has reengineered customer value through better
service recovery and competitive positioning as shown by 48.6% and 26.4% of the
respondents who agreed and strongly agreed, the results had a mean of 3.40 and a standard
deviation of 0.722. The table also shows that CRM in the organization combined business
process reengineering and technology in order to understand customers from the perspective
of who they are, what they do, and what they are like as shown by 36.1% and 33.3% of the
respondents who agreed and strongly agreed, the results had a mean of 3.66 and a standard
deviation of 0.804. Finally, it showed that CRM created value to customers through using
Information and Technology as an enabler for achieving quantum improvements as shown by
37.5% and 26.4% of the respondents who agreed and strongly agreed, the results had a mean
of 4.08 and a standard deviation of 0.790.
4.3.3 CRM and Organizations’ Analytical Aspects
The researcher was driven to determine how CRM affected the organization’s operations and
analytical aspects and the results were as shown in Table 4.3. The mean score of 3.0 and
above indicates that that particular element affected the bank greatly while the mean of 2.5
and below shows that the element did not affect the bank as much. The standard deviation
was used to determine the level of difference among the respondents and the value of less
than 1.5 indicated that the difference among the responses given was insignificant.
The study showed that CRM in the organization was centered in supporting business
processes which included customer contact (sales, marketing and service) as supported by
59.7% and 33.3% of the respondents, the results had a mean of 3.39 and a standard deviation
of 0.762. CRM in the organization also sent resulting data to users since it is required to carry
out the activities related to the commercial area as shown by 33.3% and 26.4% of the
population, the results had a mean of 3.40 and a standard deviation of 0.918.
37
Table 4.3 CRM and Organizations’ Analytical Aspects
SD D NS A SA MEAN STD
DEV % % % % %
Our operational CRM is centered in
supporting business processes which
includes customer contact (sales,
marketing and service)
0.0 6.9 0.0 59.7 33.3 3.39 0.762
Our CRM sends the resulting data to
users since it is required to carry out
the activities related to the
commercial area
0.0 6.9 33.3 33.3 26.4 3.40 0.918
Our operational CRM supports sales
force automation (SFA)
0.0 6.9 33.3 33.3 26.4 3.40 0.918
Our operational CRM supports
customer support and service
0.0 0.0 6.9 79.2 13.9 3.31 0.454
Our operational CRM supports
enterprise marketing automation
0.0 6.9 51.4 20.8 20.8 3.18 0.902
Our analytical CRM collects and
analyzes data related to customer and
marketing
0.0 0.0 33.3 45.8 20.8 3.43 0.730
Our analytical CRM provides value
information for decision taking
support and strategic directions in the
sales area
0.0 0.0 33.3 33.3 33.3 3.40 0.822
Our collaborative CRM supports the
relations between users across the
organizational structure
0.0 0.0 33.3 22.2 44.4 3.66 0.881
Our collaborative CRM aids in the
actions of operational CRM
0.0 0.0 22.2 51.4 26.4 4.08 0.701
38
Table 4.3 also shows that CRM supported sales force automation (SFA) as shown by 33.3%
and 26.4% of the respondents; the results had a mean of 3.40 and a standard deviation of
0.918. The study shows that CRM supported customer support and service as shown by
79.2% and 13.9% of the respondents, the response had a mean of 3.31 and a standard
deviation of 0.454. The results show that CRM also supported enterprise marketing
automation as evidenced by 20.8% who equally agreed and strongly agreed, the response had
a mean of 3.18 and a standard deviation of 0.902. The study also showed that analytical
CRM in the organization collected and analyzed data related to customer and marketing as
shown by 45.8% and 20.8% of the respondents, the response had a mean of 3.43 and a
standard deviation of 0.730. It also showed that it provided value information for decision
taking support and strategic directions in the sales area as shown by 33.3% of the respondents
who equally agreed and strongly agreed, the response had a mean of 3.40 and a standard
deviation of 0.822. The study also showed that collaborative CRM supported the relations
between users across the organizational structure as evidenced by 22.2% and 44.4% of the
respondents; the response had a mean of 3.66 and a standard deviation of 0.881. It also shows
that CRM aided in the actions of operational CRM as shown by 51.4% and 26.4% of the
respondents, the response had a mean of 4.08 and a standard deviation of 0.701.
4.3.4 CRM Benefits
The respondents were asked to rate the benefits of CRM in their organization and Table 4.4
showed the analyzed results. The mean score of 3.0 and above indicates that that particular
element affected the bank greatly. The standard deviation was used to determine the level of
difference among the respondents and the value of less than 1.5 indicated that the difference
among the responses given was insignificant.
39
Table 4.4 CRM and its Benefit to the Organization
SD D NS A SA MEAN STD
DEV % % % % %
CRM in the organization has resulted in an increase in data accuracy
0.0 8.3 43.1 27.8 20.8 3.61 0.765
CRM has ensured that all
departments within the organization
are working with the same data
0.0 30.6 15.3 40.3 13.9 3.38 0.774
CRM has improved customer satisfaction, loyalty, retention, and
profitability using efficient tools that
lower service costs
0.0 18.1 15.3 52.8 13.9 3.62 1.018
CRM has improved customer loyalty using efficient tools that lower
service costs
0.0 0.0 0.0 86.1 13.9 4.14 0.752
CRM has improved customer
retention using efficient tools that lower service costs
0.0 0.0 0.0 79.2 20.8 4.21 0.814
CRM has improved customers
profitability using efficient tools that
lower service costs
0.0 0.0 0.0 79.2 20.8 4.21 0.814
By adopting CRM, our organization
has complied with the privacy and
security requirements of the current
regulatory environment
0.0 0.0 8.3 58.3 33.3 4.25 0.910
CRM has eliminated inefficiencies
with a solution that not only
customizes but also integrates the
company’s roles and workflow
0.0 8.3 0.0 65.3 26.4 4.10 0.830
CRM has enabled the organization to reduce cost on sales when evaluating
customers profitability
0.0 0.0 26.4 45.8 27.8 4.01 0.877
CRM has enabled the organization to
reduce in the cost of recruiting customers when evaluating customers
profitability
0.0 12.5 18.1 48.6 20.8 3.78 0.936
CRM has simplified the company’s
infrastructure as a result of the internal organization’s focus turned
towards customers
0.0 21.5 26.4 40.3 20.8 3.69 0.910
Table 4.4 showed that CRM in the organization had resulted in an increase in data accuracy
since 27.8% had agreed and 20.8% strongly agreed, the response had a mean of 3.61 and a
40
standard deviation of 0.765. CRM had ensured that all departments within the organization
were working with the same data as shown by 40.3% who agreed and 13.9% who strongly
agreed, the response had a mean of 3.38 and a standard deviation of 0.774. CRM had
improved customer satisfaction, loyalty, retention, and profitability using efficient tools that
lower service costs as stated by 52.8% who agreed and 13.9% who strongly agreed, the
response had a mean of 3.62 and a standard deviation of 1.018. CRM had improved customer
loyalty using efficient tools that lowered service costs as shown by 86.1% of the respondents
who agreed and 13.9% who strongly agreed, the response had a mean of 4.14 and a standard
deviation of 0.752. CRM had improved customer retention using efficient tools that lowered
service costs as shown by 79.2% who agreed and 20.8% who strongly agreed, the response
had a mean of 4.21 and a standard deviation of 0.814. CRM had improved customers
profitability using efficient tools that lowered service costs as shown by 79.2% who agreed
and 20.8% who strongly agreed, the response had a mean of 4.21 and a standard deviation of
0.814. Adopting CRM, the organization had complied with the privacy and security
requirements of the current regulatory environment as shown by 58.3% who agreed and
33.3% who strongly agreed, the response had a mean of 4.25 and a standard deviation of
0.910. CRM had eliminated inefficiencies with a solution that not only customized but also
integrated the company’s roles and workflow as shown by 65.3% who agreed and 26.4%
who strongly agreed, the response had a mean of 4.10 and a standard deviation of 0.830.
CRM had enabled the organization to reduce cost on sales when evaluating customers’
profitability as shown by 45.8% who agreed and 27.8% who strongly agreed, the response
had a mean of 4.01 and a standard deviation of 0.877. CRM had enabled the organization to
reduce the cost of recruiting customers when evaluating customers’ profitability as shown by
48.6% that agreed and 20.8% who strongly agreed, the response had a mean of 3.78 and a
standard deviation of 0.936. CRM had simplified the company’s infrastructure as a result of
the internal organization’s focus had turned towards customers as shown by 40.3% who
agreed and 20.8% who strongly agreed, the response had a mean of 3.69 and a standard
deviation of 0.910.
41
4.3.5 Relationship between CRM Capabilities
Table 4.5 presents the results of correlation analysis between the organization performance
and CRM capabilities. The results shown in table indicate that the correlation between
organization performance and CRM re-engineering have a correlation of 0.058 at a
significant level of 0.01. This showed that re-engineering was not significant to business
performance since the correlation is greater than 0.01. Component wise, the table shows that
operational CRM and collaborative CRM had correlations of 0.037, and 0.214 respectively at
a significant level of 0.01. These results also show that operational CRM and collaborative
CRM do not affect the performance of an organization.
Table 4.5 Pearson Correlation Matrix for CRM Capabilities
Organization Re-engineering Operational
CRM
Collaborative
CRM
Organization 1 .058 .037 .214
Re-engineering .058 1 .575 .044
Operational CRM .037 .575 1 .366
Collaborative CRM .214 .044 .366 1
** Correlation is significant at the 0.01 level (2-tailed)
4.4 Challenges of Implementing CRM in Financial Institutions
4.4.1 CRM Flaws and Assumptions in the Organization
The researcher was driven to determine whether CRM had flaws and assumptions that
affected its performance in the organization and the results were as tabled. The standard
deviation was used to determine the level of difference among the respondents and the value
of less than 1.5 indicated that the difference among the responses given was insignificant,
meaning that they were more or less the same. The mean score of 3.0 and above indicates
that that particular element tested affected CRM greatly while the mean of 2.5 and below
shows that the element did not affect CRM as much.
42
Table 4.6 CRM Flaws and Assumptions
SD D NS A SA MEAN STD
DEV % % % % %
CRM ignores the reality that many
customers do not want to engage in
relationships
26.4 22.2 36.1 8.3 6.9 2.47 1.175
We lack clear generalizable
empirical support for the expected
return from CRM investments as an
organization
26.4 6.9 41.7 18.1 6.9 2.72 1.236
Our CRM raises questions
regarding the most appropriate mix
of capabilities to effectively exploit
the investment
0.0 0.0 12.5 73.6 13.9 4.01 0.517
It is difficult to capture and
properly attribute the direct or
indirect value generated from our
CRM system
13.9 6.9 37.5 41.7 0.0 3.07 1.025
The business value generated by
CRM depends on a combination of
complementary technical,
organizational and human resources
0.0 6.9 0.0 72.2 20.8 4.07 0.699
Table 4.6 showed that CRM in the organization did not ignores the reality that many
customers did not want to engage in relationships as shown by 26.4% of the respondents who
strongly disagreed and 22.2% who disagreed, the response had a mean of 2.47 and a standard
deviation of 1.175. The organization did not lack clear generalizable empirical support for
the expected return from CRM investments as indicated by 26.4% who strongly disagreed
and 6.9% who disagreed, the response had a mean of 2.72 and a standard deviation of 1.236.
CRM in the organization raised questions regarding the most appropriate mix of capabilities
43
to effectively exploit the investment as shown by 73.6% of the respondents who agreed and
13.9% that strongly agreed, the response had a mean of 4.01 and a standard deviation of
0.517. It was difficult for the company to capture and properly attribute the direct or indirect
value generated from the CRM system as shown by 41.7% of the population that agreed, the
response had a mean of 3.07 and a standard deviation of 1.025. The business value generated
by CRM depended on a combination of complementary technical, organizational and human
resources as attested to by 72.2% that agreed and 20.8% that strongly agreed, the response
had a mean of 4.07 and a standard deviation of 0.699.
4.4.2 Regression Analysis for Flaws and Assumptions
A regression analysis was carried out to test the analysis of the flaws and assumptions of
CRM. Table 4.7 shows the model summary of the test. The table shows that CRM’s
ignorance to customer needs is affected by the CRM integrated approach at 0.587=58.7%.
This shows that CRM ignorance to customer needs was significant.
Table 4.7 Regression Analysis for Flaws and Assumptions
Model Summary
Mode R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .766 .587 .581 .307
a. Predictors: (Constant) Ignores Customer Reality
The regression coefficients table shows that CRM adoption by the organization affected its
ability to ignore customers negatively and the p. value of 0.000 shown in the table was less
than the study’s alpha level of 0.05. These results showed that statistically, CRM adoption
impacted CRM in ignoring customer needs.
44
Coefficients
Model
Unstandardized
Coefficients
Standardized
Coefficients
t
Sig B Std. Error Beta
1 (Constant)
Ignores Customer Reality
5.099
-.310
.087
.031
-.766
60.095
-9.977
.000
.000
a. Dependent Variable: CRM Integrated Approach
4.4.3 CRM Failure
The researcher was driven to determine whether CRM had failed in the organization and the
results were as tabled. The standard deviation was used to determine the level of difference
among the respondents and the value of less than 1.5 indicated that the difference among the
responses given was insignificant. The mean score of 3.0 and above indicates that that
particular element affected CRM greatly while the mean of 2.5 and below shows that the
element did not affect CRM as much.
Table 4.8 showed that CRM system in the organization was normally used to count
customers rather than create customers as shown by 47.2% of the respondents who agreed,
the response had a mean of 2.89 and a standard deviation of 1.157. CRM in the organization
measured the activities of prospects after they had “self-selected” in some way by calling the
office or filling-in forms somewhere as shown by 59.7% of the respondents who agreed, the
response had a mean of 3.38 and a standard deviation of 0.830. The table also shows that the
CRM system was very good at capturing and organizing structured information, and also
good at capturing and organizing unstructured information as shown by 20.8% who strongly
disagreed and 37.5% who agreed, the response had a mean of 2.89 and a standard deviation
of 1.157. CRM system in the organization was not complicated to use as it did not require the
aid of technicians to manipulate it as shown by 31.9% who strongly disagreed and 34.7%
who disagreed, the response had a mean of 2.26 and a standard deviation of 1.163. CRM in
the organization did not require end-users to take actions that were not part of their natural
work process in order to update the system as shown by 31.9% who strongly disagreed and
45
22.2% who disagreed; the response had a mean of 2.53 and a standard deviation of 1.300.
CRM output was only as good as the input i.e. “garbage in, garbage out” as shown by 30.6%
who agreed and 40.3% who strongly agreed, the response had a mean of 3.97 and a standard
deviation of 1.061. The table showed that CRM would not be more useful for transactional
(like call center) types of companies than banks as shown by 13.9% who strongly disagreed
and 45.8% who disagreed, the response had a mean of 2.75 and a standard deviation of
1.275.
Table 4.8 CRM Failure
SD D NS A SA MEAN STD
DEV % % % % %
Our CRM system is normally used to count customers rather than create
customers
13.9 30.6 8.3 47.2 0.0 2.89 1.157
Our CRM measures the activities of
prospects after they have “self-selected” in some way by calling the
office or filling in your form
somewhere
0.0 22.2 18.1 59.7 0.0 3.38 0.830
Our CRM system is very good at
capturing and organizing structured information, but are horrific at
capturing and organizing
unstructured information
20.8 37.5 15.3 26.4 0.0 2.47 1.100
Our CRM system is complicated to use as it requires the aid of
technicians to manipulate it
31.9 34.7 8.3 25.0 0.0 2.26 1.163
Our CRM requires end-users to take
actions that are not part of their natural work process in order to
update the system
31.9 22.2 6.9 38.9 0.0 2.53 1.300
Our CRM output is only as good as
the input i.e. “garbage in, garbage out”
0.0 13.9 15.3 30.6 40.3 3.97 1.061
The CRM would be more useful for
transactional (like call center) types
of companies than our bank
13.9 45.8 0.0 31.9 8.3 2.75 1.275
46
4.4.4 Organization Failure in Adopting CRM
The researcher was driven to determine whether the organization had failed in adopting CRM
and the results were as tabled. The mean score of 3.0 and above indicates that that particular
element affected the organizations ability to adopt CRM greatly while the mean of 2.5 and
below shows that it did not. The standard deviation was used to determine the level of
difference among the respondents and the value of less than 1.5 indicated that the difference
among the responses given was insignificant.
Table 4.9 Organization Failure in Adopting CRM
SD D NS A SA MEAN STD
DEV % % % % %
Our company has No CRM value proposition
20.8 15.3 48.6 6.9 8.3 2.67 0.809
Our organization has failed to match
its CRM technology to the way our
partners work
0.0 6.9 52.8 26.4 13.9 3.47 1.006
Our CRM treats all customers alike 31.9 22.2 12.5 25.0 8.3 2.56 1.194
Our organization lacks a proper
CRM guideline system
18.1 41.7 0.0 18.1 22.2 2.85 1.060
Our organization suffers from a lot
of dirty and inaccurate data
6.9 27.8 25.0 40.3 0.0 2.99 1.701
Our CRM system suffers a lot from
lack of employee buy-in attitude
0.0 0.0 41.7 26.4 31.9 3.90 0.561
Table 4.9 showed that the company has a CRM value proposition as shown by 20.8% who
strongly agreed and 15.3% that agreed, the response had a mean of 2.67 and a standard
deviation of 1.809. The organization had failed to match its CRM technology to the way their
partners worked as shown by 26.4% who agreed and 13.9% who strongly agreed; the
response had a mean of 3.47 and a standard deviation of 1.006. CRM in the organization did
not treat all customers alike as shown by 31.9% who strongly agreed and 22.2% who agreed,
the response had a mean of 2.56 and a standard deviation of 1.194. The organization did not
lack a proper CRM guideline system as shown by 18.1% who strongly agreed and 41.7%
who agreed, the response had a mean of 2.85 and a standard deviation of 1.060. The
organization suffered from a lot of dirty and inaccurate data as shown by 40.3% of the
respondents who agreed, the response had a mean of 2.99 and a standard deviation of 1.701.
47
The CRM system in the organization suffered a lot from lack of employee buy-in attitude as
shown by 26.4% of the population that agreed and 31.9% that strongly agreed, the response
had a mean of 3.90 and a standard deviation of 0.561.
4.4.5 CRM Failure on Customer Information and Management
The researcher was driven to determine whether the CRM system had failed in managing
customer information and the results were as tabled. The mean score of 3.0 and above
indicates that that particular element affected the ability of CRM in managing customer
information greatly. The standard deviation was used to determine the level of difference
among the respondents and the value of less than 1.5 indicated that the difference among the
responses given was insignificant.
Table 4.10 shows that customer information system (CIS) tools were not limited in scope as
shown by 31.9% who agreed and 26.4% who strongly agreed, the response had a mean of
3.36 and a standard deviation of 1.004. The study showed that CRM was not very complex to
use as shown by 40.3% who agreed, the response had a mean of 3.04 and a standard
deviation of 0.914. The study showed that CRM was not very expensive to maintain as
shown by 26.4% who agreed, the response had a mean of 3.00 and a standard deviation of
1.112. CRM in the company contained irrelevant information for data mining as shown by
40.3% who agreed, the response had a mean of 2.83 and a standard deviation of 1.245. The
existing data warehouses lacked information on monetary values as shown by 47.2% who
agreed, the response had a mean of 2.90 and a standard deviation of 1.297. The existing data
warehouses lacked information frequency as shown by 31.9% who agreed and 8.3% who
strongly agreed, the response had a mean of 2.85 and a standard deviation of 1.301. The
existing data warehouses did not extend time in the market as shown by 6.9% who strongly
agreed and 27.8% who agreed, the response had a mean of 2.89 and a standard deviation of
1.137. The CRM system in the organization had multi-vendor tools and capabilities and was
overburdened by internal IT formation as shown by 31.9% who agreed and 8.3% who
strongly agreed, the response had a mean of 3.14 and a standard deviation of 0.830.
48
Table 4.10 CRM Failure on Customer Information and Management
SD D NS A SA MEAN STD
DEV % % % % %
Our customer information system
(CIS) tools are very limited in
scope
6.9 34.7 31.9 26.4 3.36 1.004
Our CRM is very complex to use 6.9 22.2 30.6 40.3 0.0 3.04 0.914
Our CRM is very expensive to
maintain
0.0 26.4 47.2 26.4 0.0 3.00 1.112
Our CRM contains irrelevant
information for data mining
22.2 12.5 25.0 40.3 0.0 2.83 1.245
Our existing data warehouses lack
information on monetary values
22.2 12.5 18.1 47.2 0.0 2.90 1.297
Our existing data warehouses lack
information frequency
22.2 19.4 18.1 31.9 8.3 2.85 1.301
Our existing data warehouses
extends time in the market
6.9 27.8 43.1 13.9 8.3 2.89 1.137
Our CRM system has multi-
vendor tools and capabilities and is
overburdened by internal IT
formation
0.0 34.7 25.0 31.9 8.3 3.14 0.830
4.4.6 Regression Analysis for Customer Information and Management
The regression analysis was run to test how customer information management was handled
by the CRM system. Table 4.11 shows the regression model summary. The table shows that
customer information system was affected by the CRM integrated approach at 0.145=14.5%.
This showed that CRM impact on CIS was insignificant.
49
Table 4.11 Regression Analysis for Customer Information and Management
Model Summary
Mode R R Square Adjusted R
Square
Std. Error of the
Estimate
1 .381 .145 .133 .442
a. Predictors: (Constant) Customer Information System (CIS)
The regression coefficients table shows that CRM adoption affected CIS negatively and the
p. value of 0.001 shown in the table was less than the study’s alpha level of 0.05. These
results showed that statistically, CRM adoption impacted CIS in the organization.
Coefficients
Model
Unstandardized Coefficients Standardized
Coefficients
t
Sig B Std. Error Beta
1 (Constant)
CIS
4.774
-.131
.138
.038
-.381
34.531
-3.444
.000
.001
a. Dependent Variable: CRM Integrated Approach
4.5 Successful Strategies for Implementing CRM
4.5.1 The Organization’s CRM Strategy
The researcher was driven to determine how the organization’s strategy of adopting CRM
worked out and the results were as tabled. The mean score of 3.0 and above indicates that
that particular strategies adopted by the organization were very impactful. The standard
deviation was used to determine the level of difference among the respondents and the value
of less than 1.5 indicated that the difference among the responses given was insignificant.
Table 4.12 shows that the organization explained the real business needs to vendors/partners
before investing in CRM as shown by 29.2% who agreed and 12.5% who strongly agreed,
the response had a mean of 3.54 and a standard deviation of 0.714. The CRM project was
50
carried out in phases during implementation as shown by 44.4% who agreed and 12.5% who
strongly agreed, the response had a mean of 3.69 and a standard deviation of 0.812. The
organization allocated available resources to the components that were affected by CRM that
were people, processes and technology as shown by 44.4% of the respondents who agreed
and 19.4% who strongly agreed, the response had a mean of 3.83 and a standard deviation of
0.971. All affected parties were involved before the CRM project was rolled out as shown by
22.2% who agreed and 26.4% who strongly agreed, the response had a mean of 3.75 and a
standard deviation of 0.614.
Table 4.12 Organization’s CRM Strategy
SD D NS A SA MEAN STD
DEV % % % % %
The organization explained the real
business needs to vendors/partners
before investing in CRM
0.0 0.0 58.3 29.2 12.5 3.54 0.714
The CRM project was carried out in
phases during implementation
0.0 0.0 43.1 44.4 12.5 3.69 0.812
The organization allocated available
resources to the components that were
affected by CRM that were people,
processes and technology
0.0 0.0 36.1 44.4 19.4 3.83 0.971
All affected parties were involved
before the CRM project was rolled out
0.0 0.0 51.4 22.2 26.4 3.75 0.614
4.5.2 Organization Needs of CRM and its Functionality
The researcher was driven to determine how the organization’s needs were addressed by
CRM and its functionality and the results were as tabled. The mean score of 3.0 and above
indicates that that particular organization needs were met by CRM functionality. The
standard deviation was used to determine the level of difference among the respondents and
51
the value of less than 1.5 indicated that the difference among the responses given was
insignificant.
Table 4.13 Organization Needs of CRM and its Functionality
SD D NS A SA MEAN STD
DEV % % % % %
The organization focused its
search for the most suitable
solution to its CRM development
13.9 0.0 59.7 13.9 12.5 3.11 0.714
The organization looked at how
customer relationships were
managed within the CRM period
13.9 0.0 36.1 30.6 19.4 3.42 0.651
The company anticipated how business would change and grow
down the road
0.0 13.9 36.1 37.5 12.5 3.49 0.981
The company examined the short-
and long-term fiscal implications of the CRM solution
0.0 6.9 65.3 15.3 12.5 3.33 0.544
Our CRM supports the existing
business processes
0.0 0.0 44.4 43.1 12.5 3.68 0.741
Our CRM provides the capability
to improve them
0.0 8.3 0.0 91.7 0.0 3.83 0.413
Our CRM is easy to customize for
the organizations specific business
application
0.0 19.4 0.0 59.7 20.8 3.82 0.404
Our CRM has intuitive user interfaces
13.9 0.0 12.5 66.7 6.9 3.53 0.752
Our CRM integrates with existing
systems within the company
0.0 0.0 8.3 63.9 27.8 4.19 0.514
Our CRM provides robust reporting
0.0 13.9 0.0 72.2 13.9 3.86 0.477
Our CRM provides forecasting
capabilities
13.9 8.3 12.5 51.4 13.9 3.43 0.512
Our CRM is analytical 13.9 8.3 12.5 51.4 13.9 3.43 0.512
Our CRM is scalable 0.0 8.3 12.5 65.3 13.9 3.85 0.447
Our CRM is flexible 0.0 22.2 18.1 45.8 13.9 3.51 0.643
Table 4.13 shows that the organization focused its search for the most suitable solution to its
CRM development as shown by 13.9% who agreed and 12.5% who strongly agreed, the
response had a mean of 3.11 and a standard deviation of 0.714. The organization looked at
how customer relationships were managed within the CRM period as indicated by 30.6%
52
who agreed and 19.4% who strongly agreed, the response had a mean of 3.42 and a standard
deviation of 0.651. The company anticipated how business would change and grow down the
road as shown by 37.5% who agreed and 12.5% who strongly agreed, the response had a
mean of 3.49 and a standard deviation of 0.981. The company examined the short-and long-
term fiscal implications of the CRM solution as shown by 15.3% who agreed and 12.5% who
strongly agreed, the response had a mean of 3.33 and a standard deviation of 0.544. CRM
supported the existing business processes as shown by 43.1% who agreed and 12.5% who
strongly agreed, the response had a mean of 3.68 and a standard deviation of 0.741. CRM
provided the capability to improve business processes as shown by 91.7% who agreed, the
response had a mean of 3.83 and a standard deviation of 0.413. The study shows that CRM
was easy to customize for the organizations specific business application as shown by 59.7%
who agreed and 20.8% who strongly agreed, the response had a mean of 3.82 and a standard
deviation of 0.404. CRM in the organization had intuitive user interfaces as shown by 66.7%
who agreed and 6.9% who strongly agreed, the response had a mean of 3.53 and a standard
deviation of 0.752. CRM integrated with existing systems within the company as shown by
63.9% who agreed and 27.8% who strongly agreed, the response had a mean of 4.19 and a
standard deviation of 0.514. CRM provided robust reporting as shown by 72.2% who agreed
and 13.9% who strongly agreed, the response had a mean of 3.86 and a standard deviation of
0.477. CRM provided forecasting capabilities as shown by 51.4% who agreed and 13.9%
who strongly agreed, the response had a mean of 3.43 and a standard deviation of 0.512.
CRM was analytical as shown by 51.4% who agreed and 13.9% who strongly agreed, the
response had a mean of 3.43 and a standard deviation of 0.512. CRM was scalable as shown
by 65.3% who agreed and 13.9% who strongly agreed, the response had a mean of 3.85 and a
standard deviation of 0.447. CRM was flexible as shown by 45.8% who agreed and 13.9%
who strongly agreed, the response had a mean of 3.51 and a standard deviation of 0.643.
4.5.3 Organization’s Implementation of CRM Strategies
The researcher was driven to determine how organization’s implementation of CRM
strategies was impactful and the results were as tabled. The mean score of 3.0 and above
indicates that those particular strategies were impactful. The standard deviation was used to
53
determine the level of difference among the respondents and the value of less than 1.5
indicated that the difference among the responses given was insignificant.
Table 4.14 Organization’s Implementation of CRM Strategies
SD D NS A SA MEAN STD
DEV % % % % %
The organization understood its
customer relationship problem
before CRM implementation
0.0 8.3 0.0 65.3 26.4 4.10 0.809
Our company built a team that was
empowered to take on the CRM
project
0.0 0.0 33.3 54.2 12.5 3.79 0.906
Our CRM project implementation was supported by the executive
sponsorship
0.0 18.1 6.9 55.6 19.4 3.76 0.494
After implementation, the
company checked and assessed if the CRM systems were meeting
customer needs
0.0 25.0 15.3 47.2 12.5 3.47 0.650
The organization developed
corporate wide CRM engagement from key stakeholders
0.0 0.0 38.9 47.2 13.9 3.75 0.701
The company got key sponsors
involved from the get-go and made
sure that the individuals involved
made financial and time commitment
0.0 0.0 18.1 68.1 13.9 3.96 0.561
The company determined as well
as prioritized CRM drivers and
requirements
0.0 0.0 30.6 48.6 20.8 3.90 0.914
The organization used developed
CRM roadmap
0.0 0.0 59.7 26.4 13.9 3.54 0.742
The organization created a short
list to check out prospective vendors’
0.0 0.0 58.3 27.8 13.9 3.56 0.596
The organization kept everyone
involved in the loop
18.1 0.0 41.7 26.4 13.9 3.18 0.971
The company offered flexible training options to help
accommodate different schedules
as well as learning preferences for
employees
0.0 18.1 26.4 41.7 13.9 3.51 0.731
The company motivated users to 0.0 18.1 15.3 52.8 13.9 3.63 0.544
54
accept the application
The company motivated users to
use the application
16.7 11.1 27.8 25.0 19.4 3.19 0.741
The CRM system was broken
down into smaller manageable
pieces with small milestones
during implementation
0.0 0.0 48.6 41.7 9.7 3.61 0.413
The company has learnt to adjust
to the CRM system
19.4 16.7 6.9 33.3 23.6 3.25 0.404
Table 4.14 shows that the organization understood its customer relationship problem before
CRM implementation as shown by 65.3% who agreed and 26.4% who strongly agreed, the
response had a mean of 4.10 and a standard deviation of 0.809. The company built a team
that was empowered to take on the CRM project as shown by 54.2% who agreed and 12.5%
strongly agreed, the response had a mean of 3.79 and a standard deviation of 0.906. CRM
project implementation was supported by the executive sponsorship as shown by 55.6% who
agreed and 19.4% who strongly agreed, the response had a mean of 3.76 and a standard
deviation of 0.494. After implementation, the company checked and assessed if the CRM
systems were meeting customer needs as shown by 47.2% who agreed and 12.5% who
strongly agreed, the response had a mean of 3.47 and a standard deviation of 0.650. The
organization developed corporate wide CRM engagement from key stakeholders as shown by
47.2% who agreed and 13.9% who strongly agreed, the response had a mean of 3.75 and a
standard deviation of 0.650. The company got key sponsors involved from the get-go and
made sure that the individuals involved made financial and time commitment as shown by
68.1% who agreed and 13.9% who strongly agreed, the response had a mean of 3.96 and a
standard deviation of 0.561. The company determined as well as prioritized CRM drivers and
requirements as shown by 48.6% who agreed and 20.8% who strongly agreed, the response
had a mean of 3.90 and a standard deviation of 0.914. The study also showed that the
organization used and developed a CRM roadmap as shown by 26.4% who agreed and 13.9%
who strongly agreed, the response had a mean of 3.54 and a standard deviation of 0.742. The
organization created a short list to check out prospective vendors’ as shown by 27.8% who
agreed and 13.9% who strongly agreed, the response had a mean of 3.56 and a standard
deviation of 0.596. The organization kept everyone involved in the loop as shown by 26.4%
55
who agreed and 13.9% who strongly agreed, the response had a mean of 3.18 and a standard
deviation of 0.971. The company offered flexible training options to help accommodate
different schedules as well as learning preferences for employees as shown by 41.7% who
agreed and 13.9% who strongly agreed, the response had a mean of 3.51 and a standard
deviation of 0.731. The company motivated users to accept the application as shown by
52.8% who agreed and 13.9% who strongly agreed, the response had a mean of 3.63 and a
standard deviation of 0.544. The company motivated users to use the application as shown by
25.0% who agreed and 19.4% who strongly agreed, the response had a mean of 3.19 and a
standard deviation of 0.413. The CRM system was broken down into smaller manageable
pieces with small milestones during implementation as shown by 41.7% who agreed and
9.7% who strongly agreed, the response had a mean of 3.61 and a standard deviation of
0.413. The company has learnt to adjust to the CRM system as shown by 33.3% who agreed
and 23.6% who strongly agreed, the response had a mean of 3.25 and a standard deviation of
0.404.
4.6 Chapter Summary
This section has presented the results and findings of the study. These findings have been
recorded from the SPSS results that were received from analyzing primary data. Percentages
have been used to indicate the frequency of responses, means and standard deviations were
also used to analyze the strength and difference in responses respectively. Pearson correlation
was used to test the relationship of variables and regression analysis was used to test the
significance of the study variables. The next chapter presents the study discussion and
conclusion.
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CHAPTER FIVE
5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
This chapter concludes the study by giving the study summary, discussions, conclusions and
recommendations. The study offers recommendations for improvement based on the study
findings and recommendations for further studies.
5.2 Summary
The general objective of the study was to determine the needs and reasons why financial
institutions need to adopt CRM and the strategies available for them to adopt CRM in Kenya
with a bias focus on Chase Bank Kenya. The study was guided by the following research
objectives: to determine the cause of CRM adoption by financial institutions in Kenya; to
examine the challenges of implementing CRM in financial institutions in Kenya; and to
determine the strategies which facilitate successful implementation of CRM in financial
institutions in Kenya.
The study used a descriptive research design. The target population in this case was all staff
members that work at Chase Bank Kenya located in the Central Business District, Nairobi
County who were 930 in total. Stratified sampling technique was used in the study to select
the respondents from among the list of staff members that was obtained from the bank and
individual elements were randomly selected. The sample size of the study was 93. Primary
data was collected from the study population using a self-administered questionnaire. The
study used quantitative method of data analysis. Statistical Package for Social Science
(SPSS) Student Version 16.0 was used to analyze the collected data thoroughly and
conveniently. Percentages were used to give the numerical figure in terms of majority of
responses on a given question. The study employed the use of regression analysis to test
strength of the relationships between the study variables.
The study showed that today’s playing field for financial institutions is both complex and
competitive and the financial laws and regulations vary globally and change continuously. It
57
can be seen from the study that the internet has increased pressure to margins by enabling
customers to do their own comparison shopping before selecting a financial service provider
and for organizations to remain competitive in the industry, they have to rely on their ability
to leverage on their customers.
The study revealed that CRM systems in the organization are normally used to count
customers rather than create customers and it normally measures the activities of prospects
after they have “self-selected” in some way by calling the office or filling-in forms
somewhere. Study clearly showed that the CRM system is very good at capturing and
organizing structured information, and also good at capturing and organizing unstructured
information and most of the systems are not complicated to use and do not require the aid of
technicians to manipulate it.
The study showed that the organization had a good implementation strategy and that the
company explained the real business needs to vendors/partners before investing in CRM and
the project was carried out in phases during implementation. It can be seen from the study
results that the organization allocated available resources to the components that were
affected by CRM and it focused its search for the most suitable solution to its CRM
development. The organization looked at how customer relationships were managed within
the CRM period and it also anticipated how business would change and grow down the road.
The company examined the short-and long-term fiscal implications of the CRM solution and
it ensured that CRM supported the existing business processes.
5.3 Discussion
5.3.1 Reasons for CRM Adoption by Financial Institutions
The study showed that today’s playing field for financial institutions is both complex and
competitive. This is backed up by Fox and Stead (2010) who state that financial institutions
are undergoing significant change, and today’s playing field is both complex and
competitive. The study showed that the financial laws and regulations vary globally and
change. Fox and Stead (2010) noted that but the financial industry is also impacted by
58
regulations that vary worldwide and are all in a state of transition. The results of the study
also showed that the internet has increased pressure to margins by enabling customers to do
their own comparison. Peppers and Rogers (2009) noted that the internet has added and
increased pressure to margins by enabling customers to do their own comparison shopping.
The study showed that remaining competitive in the industry hinged on the ability of the
banks to understand and leverage on the. Peppers and Rogers (2009) stated that, capturing
and sustaining market advantage in the fiercely competitive financial industry hinges on the
ability to understand and leverage the industry’s most valuable asset - the customers.
The study revealed that CRM is used in the organization as an integrated approach to
managing customer. It also shows that CRM in the organization has reengineered customer
value through better service recovery and competitive. Anton (1996) characterizes CRM as
an integrated approach to managing customer relationships with reengineering of customer
value through better service recovery and competitive positioning of the offer.
The study also showed that CRM in the organization combined business process
reengineering and technology in order to understand customers from the perspective of who
they are, what they do, and what they are. Couldwell (1998) also depicted that CRM was a
combination of business process reengineering (BPR) and technology that seeks to
understand a company’s customer from the perspective of who they are, what they do, and
what they are like.
The study showed that CRM created value to customers through using Information and
Technology as an enabler for achieving quantum. Limayem (2007) intimated that BPR for
CRM involves rethinking and redesigning business processes to create value to customers
through using Information and Technology (IT) as the primary enabler with the aim of
achieving quantum improvements.
59
The study showed that CRM in the organization was centered in supporting business
processes which included customer contact (sales, marketing and service. CRM in the
organization also sent resulting data to users since it is required to carry out the activities
related to the commercial. According to Gartner Group (2004) operational CRM is centered
in supporting business processes which includes customer contact (sales, marketing and
service). The resulting data is sent to the users since it is required to carry out the activities
related to the commercial area.
From the study, it was clear that CRM supported sales force automation (SFA, supported
customer support and, and it also supported enterprise marketing automation. According to
Gartner Group (2004) operational CRM supports the following processing tools: Sales Force
Automation (SFA); Customer Support and Service (CSS); and Enterprise Marketing
Automation (EMA). The operational processes remain the core of the business, producing the
actions that give the company their main goals.
The study showed that CRM in the organization had resulted in an increase in data accuracy.
CRM had ensured that all departments within the organization were working with the same.
Kim et al. (2008) maintained that by adopting a CRM strategy financial institutions among
other things can manage client data, and can also result in an increase in data accuracy with a
common repository of client information that ensures all departments within the organization
are working with the same data.
CRM had improved customer satisfaction, loyalty, retention, and profitability using efficient
tools that lower service. CRM had improved customer loyalty using efficient tools that
lowered service. CRM had improved customer retention using efficient tools that lowered
service. CRM had improved customers profitability using efficient tools that lowered service.
Kim et al. (2008) also state that CRM will again improve customer satisfaction, loyalty,
retention, and profitability using efficient tools that lower service costs.
60
5.3.2 Challenges of Implementing CRM in Financial Institutions
The study showed that CRM system in the organization was normally used to count
customers rather than create. Brain (2007) summaries six reasons why CRM initiatives fail:
Counting vs. Creating Customers - The current crop of CRM systems are very useful for
large companies with thousands of customers that want to “count” them in interesting ways.
CRM in the organization measured the activities of prospects after they had “self-selected” in
some way by calling the office or filling-in forms. Brain (2007) further states that another fail
is in measuring the wrong thing - CRM measures the activities of prospects after they have
“self-selected” in some way by calling the office or filling in your form somewhere.
The study showed that the CRM system was very good at capturing and organizing
structured information, and also good at capturing and organizing unstructured. Brain (2007)
also notes that another challenge is in structured vs. unstructured data - CRM systems are
essentially databases with customer oriented forms built on top. They are very good at
capturing and organizing structured information, but are horrific at capturing and organizing
unstructured information.
CRM system in the organization was not complicated to use as it did not require the aid of
technicians to manipulate it. Brain (2007) also notes that ease-of-use is another challenge
since most CRM vendors say their product is "easy-to-use." The reality is it is easy to use if
you have dedicated “operations” people or a dedicated CRM IT person to figure out how to
do the hard/useful stuff.
CRM in the organization did not require end-users to take actions that were not part of their
natural work process in order to update the system. Brain (2007) states that feeding the
monster is another challenge where like many knowledge management initiatives; CRM
requires end-users to take actions that are not part of their natural work process in order to
“update” the system. CRM output was only as good as the input i.e. “garbage in, garbage out.
Brain (2007) further notes that CRM output is only as good as the input – “garbage in,
garbage out”.
61
The study showed that CRM would not be more useful for transactional (like call center)
types of companies than. Brain (2007) indicated that Transactional Systems vs.
Solution/Relationship Systems where today’s CRM is more useful for transactional (like call
center) types of companies than it is for small businesses who have client relationships that
are more solution oriented in nature.
The study showed that the company has a CRM value. Gerson (2009) on the article ‘CRM
Today’ identified three mistakes organizations make which impact negatively on their CRM
strategy. First is when a company has No CRM value proposition. This is because a value
proposition tells a client what distinguishes the company from other competitors, and why
they should do business with said company.
The organization had failed to match its CRM technology to the way their partners. Gerson
(2009) also states that failure to match CRM technology to the way associates’ work is a
challenge. Too many CRM implementations are technology led instead of being process or
performance led. CRM in the organization did not treat all customers. Gerson (2009) also
notes that treating all customers alike in the company’s CRM system actually has two parts.
The first is that firms think they actually know who their customers really are. The second is
that they treat every customer the same. The organization did not lack a proper CRM
guideline. Myron (2009) identified the following: lack of guidance as an organizational
challenge. According to Gartner Group (2004), more than 60% of companies that have
implemented CRM did not have mutually agreed upon goals for their projects prior to the
installation.
The study showed that customer information system (CIS) tools were not. Guru (2008)
reported that limited scope was a CRM challenge – he stated that many existing Customer
Information System (CIS) tools are very limited in scope, and do not support customer equity
management. He also notes a rise in complex technology as a challenge. The study showed
that CRM was not very complex to. The study showed that CRM was not very expensive to.
62
Guru (2008) also notes a rise in complex technology as a challenge. He states that technology
solutions sold by vendors have become very complex to use, expensive to maintain, and
contain irrelevant information for data mining.
CRM in the company contained irrelevant information for data. The existing data warehouses
lacked information on monetary. The existing data warehouses lacked information. Lack of
pertinent data is another customer management challenge as noted by Brain (2007) since
most of the existing data warehouses lack information on recency, frequency, and monetary
values. They also offer information that is insufficient for supporting predictive modeling
and predictive scoring.
The CRM system in the organization had multi-vendor tools and capabilities and was
overburdened by internal IT. Multi-Vendor Tools and Capabilities are a challenge noted by
Bibiano, Mayol and Pastor (2009). They state that, over the years, many major financial
organizations have developed data warehouses by purchasing diverse sets of software tools
and then building data warehouses in-house.
5.3.3 Successful Strategies for Implementing CRM
The organization explained the real business needs to vendors/partners before investing in
CRM. Hines (2012) expressed that organization should first tackle business issues before
choosing a technology, it is a must that they explain the real business needs to
vendors/partners before investing. The CRM project was carried out in phases during. Hines
(2012) further states that the whole project should be carried out in phases and its
enterprising identity are kept.
The organization allocated available resources to the components that were affected by CRM
that were people, processes and technology. Limayem (2007) maintains that the success of
any CRM strategy is dependent on how organizations allocate available resources to the three
components that include a mix of 70% people, 20% processes and 10% technology. The
organization focused its search for the most suitable solution to its CRM development. The
63
organization looked at how customer relationships were managed within the CRM period.
Sandall (2010) suggested a number of steps organizations can take to focus their search for
the most suitable solution to their CRM development. He maintained that such a company
should first analyze its business goals and objectives and look at how customer relationships
are managed within that period.
The company anticipated how business would change and grow down the road. The company
examined the short-and long-term fiscal implications of the CRM solution. Sandall (2010)
further suggests that a company should also anticipate how the business will change and
grow down the road. From various options, the company is to examine the short- and long-
term fiscal implications of each solution.
The study showed that CRM supported the existing business processes. CRM provided the
capability to improve business processes. CRM was easy to customize for the organizations
specific business application. CRM in the organization had intuitive user interfaces. CRM
integrated with existing systems within the company. Sandall (2010) also states that
companies who want to develop a CRM strategy should again compare the benefits and
drawbacks of available solutions to business needs. He further stated that any viable CRM
solution should provide the following minimum functionality; it should support existing
business processes and provide the capability to improve them.
CRM provided robust reporting. CRM provided forecasting capabilities. CRM was
analytical. CRM was scalable. CRM was flexible. Sandall further states that it should be easy
to customize but not an extensive customization for the organizations specific business
application; it should have intuitive user interfaces; it should integrate with existing systems
of the company; it should provide robust reporting, analytical, and forecasting capabilities
and above all it should be both scalable and flexible.
The organization understood its customer relationship problem before CRM implementation.
Band, Kinikin, Ragsdale and Harrington (2011) state that companies need to understand the
64
problem. Many businesses fail to pinpoint simple customer service problems. The company
built a team that was empowered to take on the CRM project. Band et al. (2011) also state
that companies need to build a team that is empowered to take on the project: Organizations
will need to resist the temptation to staff the team too heavily from the IT department. Select
personnel with business skills as well.
CRM project implementation was supported by the executive sponsorship. Band et al. further
state that companies need to win executive sponsorship: CRM applications are big-ticket
items. The cost for implementation is often double after the purchase of the software.
Resources should always available; Show how CRM will support the company’s vision.
After implementation, the company checked and assessed if the CRM systems were meeting
customer needs. Band et al. (2011) finally state that organizations need to measure, measure,
and measure: After implementation, companies are to check and assess if the CRM systems
are meeting customer needs. The company got key sponsors involved from the get-go and
made sure that the individuals involved made financial and time commitment. McCabe
(2013) state that organizations need to get key sponsors involved from the get-go and make
sure that the individuals involved can make the financial and time commitments to ensure
success.
5.4 Conclusion
5.4.1 Reasons for CRM Adoption by Financial Institutions
The study concludes that today’s playing field for financial institutions is both complex and
competitive and the financial laws and regulations vary globally and change continuously. It
can be stated that the internet has increased pressure to margins by enabling customers to do
their own comparison shopping before selecting a financial service provider and for
organizations to remain competitive in the industry, they have to rely on their ability to
leverage on their customers. The study concludes that CRM is used by organizations as an
integrated approach to managing customer relationships and CRM has reengineered customer
value through better service recovery and competitive positioning. CRM has improved
65
customer satisfaction, loyalty, retention, and profitability using efficient tools that lower
service costs for organizations.
5.4.2 The Challenges of Implementing CRM in Financial Institutions
The study concludes that CRM systems in the organization are normally used to count
customers rather than create customers and it normally measures the activities of prospects
after they have “self-selected” in some way by calling the office or filling-in forms
somewhere. Study clearly shows that the CRM system is very good at capturing and
organizing structured information, and also good at capturing and organizing unstructured
information and most of the systems are not complicated to use and do not require the aid of
technicians to manipulate it. The study concludes that Chase Bank has a CRM value
proposition and it has successfully matched its CRM technology to the way their partners
work. CRM in the organization does not treat all customers alike and the organization has
proper CRM guideline system. The CRM system used in the organization was not limited in
scope and it did not have irrelevant information for data mining. Finally the CRM system in
the organization had multi-vendor tools and capabilities and was not overburdened by
internal IT formation.
5.4.3 Strategies which Facilitate Successful Implementation of CRM
The organization had a good implementation strategy as seen in the study. The company
explained the real business needs to vendors/partners before investing in CRM, and the
project was carried out in phases during implementation. It can be concluded that the
organization allocated available resources to the components that were affected by CRM and
it focused its search for the most suitable solution to its CRM development. The organization
looked at how customer relationships were managed within the CRM period and it also
anticipated how business would change and grow down the road. The company examined the
short-and long-term fiscal implications of the CRM solution and it ensured that CRM
supported the existing business processes. CRM provided the organization with the capability
to improve business processes and it was easy to customize for the organizations specific
business application. The organization understood its customer relationship problem before
66
CRM implementation and it built a team that was empowered to take on the CRM project.
The project implementation was supported by the executive sponsorship and after
implementation, the company checked and assessed to determine whether the systems were
meeting customer needs.
5.5 Recommendations
5.5.1 Recommendations for Improvement
5.5.1.1 Reasons for CRM Adoption by Financial Institutions
Financial institutions must pay attention to focus on the main customers, as it was found to
have a direct, strong, positive and statistically significant correlation with the marketing
performance. Therefore, the researcher recommends that the financial institutions do the
following: exert more effort in order to discover the needs of the main customers; pay heed to
providing services in line with the needs and specializations of the main customers; the
administrations of the financial institutions must cooperate together to adapt the service that
the main customers require to adapt; financial institutions must continue discussions with
each main customer in order to provide services that suit each and every one of them; and it
is important that all individuals in the financial institutions deal with great care with the main
customers to gain their loyalty.
5.5.1.2 The Challenges of Implementing CRM in Financial Institutions
It is necessary to pay attention to the assessment of the employee performance and to reward
them on basis of their ability to satisfy the needs of the customer and succeed in servicing
them. The organization should put efforts to enhance the skills of the employees to efficiently
use CRM systems by designing qualifying training programs. It is necessary to take care of
the accurate design of the organizational framework related to the financial institution in
order to facilitate effectiveness of the system. It is necessary to assign clear goals related to
company objectives and goals and align them to the CRM system. The organization needs to
assign standards of performance and monitor them in all the stages of the CRM system.
67
5.5.1.3 Strategies which Facilitate Successful Implementation of CRM
Attention must be paid to the presence of information systems, so that they are supported
with all information related to customers in order to support decision-making. It is necessary
to promulgate the culture of marketing through relationships based on the presence of long-
term relationships with the customer through the commitment to satisfy his/her needs and the
great concern about quality on the part of each individual in the financial institution. The
organization must ensure that customer-orientation through understanding the market and
directing the resources of the financial institution towards achieving the desires and the needs
of the customers and measuring the ability to provide a value for the customer.
5.5.2 Recommendations for Further Studies
The researcher suggests some researches that the academics and the researchers can conduct
in the future: studying the scope of the effect of CRM on the general performance of the
financial institution in other banks within the country; studying the degree of the integration
of the financial institution in the light of CRM; assessing the performance of the Kenyan
financial institutions in the light of CRM (comparative study); and studying the role of CRM
in supporting information systems and the effect of this support on the quality of the
organizational decisions taking.
68
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APPENDICES
APPENDIX I: COVER LETTER
DORA WARON LODIONG,
UNITED STATES INTERNATIONAL UNIVERSITY,
P.O. BOX 14634-00800,
NAIROBI.
Dear Respondent,
RE: REQUEST FOR YOUR PARTICIPATION IN MY RESEARCH PROJECT.
I wish to request you to kindly participate in a research study that I am currently undertaking
as part of my Executive Master of Science Degree program at USIU. My EMOD research
study seeks to investigate the effect of customer relationship management systems in
financial institutions with a focus on the Chase Bank Kenya Ltd.
The study will be driven to: determine the reasons for CRM adoption by financial institutions
in; examine the challenges of implementing CRM in financial institutions; and determine the
strategies which facilitate successful implementation of CRM in financial institutions.
The information you provide will strictly be used for academic purposes and will not be
disclosed to third parties. The identity and information you offer will be treated with strict
confidentially.
Yours Sincerely,
DORA WARON LODIONG.
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APPENDIX II: QUESTIONNAIRE
This study seeks to establish the effect of Customer Relationship Management systems on
customer loyalty with a key focus on Chase Bank Kenya Ltd. The following questionnaire
has been developed to help the researcher gather information necessary to meet the research
objectives that have been highlighted above.
SECTION A: DEMOGRAPHIC INFORMATION
1. Please state your gender?
Male [ ] Female [ ]
2. What is your education background?
Primary [ ] Secondary [ ] Certificate [ ] Diploma [ ] Degree [ ]
Other [ ] specify……………………………….
3. How long have you worked with the bank?
1-5 Years [ ] 6-10 Years [ ] 11-15 Years [ ] 16-20 Years [ ]
21 and Above [ ]
SECTION B: REASONS FOR CRM ADOPTION BY FINANCIAL INSTITUTIONS
4. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the financial
institution environment your bank operates in.
Statements 5 4 3 2 1
Today’s playing field for financial institutions is both complex and
competitive
There fewer new customers in the market to pursue and more banks
are pursuing them
The financial laws and regulations vary globally and change
continuously
The internet has increased pressure to margins by enabling
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customers to do their own comparison shopping
Remaining competitive in the industry hinges on the ability to
understand and leverage on the customers
5. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the impact
of CRM on the organizations business process re-engineering.
Statements 5 4 3 2 1
CRM is used in our organization as an integrated approach to
managing customer relationships
CRM in our organization has reengineered customer value through
better service recovery and competitive positioning
Our CRM combines our business process reengineering and
technology in order to understand our customers from the
perspective of who they are, what they do, and what they are like
Our CRM creates value to customers through using Information
and Technology as an enabler for achieving quantum improvements
6. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the impact
of CRM on the organizations operations and analytical aspects.
Statements 5 4 3 2 1
Our operational CRM is centered in supporting business processes
which includes customer contact (sales, marketing and service)
Our CRM sends the resulting data to users since it is required to
carry out the activities related to the commercial area
Our operational CRM supports sales force automation (SFA)
Our operational CRM supports customer support and service
Our operational CRM supports enterprise marketing automation
Our analytical CRM collects and analyzes data related to customer
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and marketing
Our analytical CRM provides value information for decision taking
support and strategic directions in the sales area
Our collaborative CRM supports the relations between users across
the organizational structure
Our collaborative CRM aids in the actions of operational CRM
7. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the benefits
of CRM to your organization.
Statements 5 4 3 2 1
CRM in the organization has resulted in an increase in data
accuracy
CRM has ensured that all departments within the organization are
working with the same data
CRM has improved customer satisfaction, loyalty, retention, and
profitability using efficient tools that lower service costs
CRM has improved customer loyalty using efficient tools that
lower service costs
CRM has improved customer retention using efficient tools that
lower service costs
CRM has improved customers profitability using efficient tools
that lower service costs
By adopting CRM, our organization has complied with the privacy
and security requirements of the current regulatory environment
CRM has eliminated inefficiencies with a solution that not only
customizes but also integrates the company’s roles and workflow
CRM has enabled the organization to reduce cost on sales when
evaluating customers profitability
CRM has enabled the organization to reduce in the cost of
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recruiting customers when evaluating customers profitability
CRM has simplified the company’s infrastructure as a result of the
internal organization’s focus turned towards customers
SECTION C: CHALLENGES OF IMPLEMENTING CRM IN FINANCIAL
INSTITUTIONS
8. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the flaws
and assumptions needs of CRM in your organization.
Statements 5 4 3 2 1
CRM ignores the reality that many customers do not want to
engage in relationships
We lack a clear and generalizable empirical support for the
expected return from CRM investments as an organization
Our CRM raises questions regarding the most appropriate mix of
capabilities to effectively exploit the investment
It is difficult to capture and properly attribute the direct or indirect
value generated from our CRM system
The business value generated by CRM depends on a combination
of complementary technical, organizational and human resources
9. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the reasons
why CRM has failed in the organization.
Statements 5 4 3 2 1
Our CRM system is normally used to count customers rather than
create customers
Our CRM measures the activities of prospects after they have “self-
selected” in some way by calling the office or filling in your form
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somewhere
Our CRM system is very good at capturing and organizing
structured information, but are horrific at capturing and organizing
unstructured information
Our CRM system is complicated to use, it requires the aid of
technicians to manipulate it
Our CRM requires end-users to take actions that are not part of
their natural work process in order to update the system
Our CRM output is only as good as the input i.e. “garbage in,
garbage out”
The CRM would be more useful for transactional (like call center)
types of companies than our bank
10. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about places where
the organization has failed on adopting CRM.
Statements 5 4 3 2 1
Our company has No CRM value proposition
Our organization has failed to match its CRM technology to the
way our partners work
Our CRM treats all customers alike
Our organization lacks a proper CRM guideline system
Our organization suffers from a lot of dirty and inaccurate data
Our CRM system suffers a lot from lack of employee buy-in
attitude
11. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about CRM failure
on customer information and management.
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Statements 5 4 3 2 1
Our customer information system (CIS) tools are very limited in
scope
Our CRM is very complex to use
Our CRM is very expensive to maintain
Our CRM contains irrelevant information for data mining
Our existing data warehouses lack information on monetary values
Our existing data warehouses lack information frequency
Our existing data warehouses extends time in the market
Our CRM system has multi-vendor tools and capabilities and is
overburdened by internal IT formation
SECTION D: SUCCESSFUL STRATEGIES FOR IMPLEMENTATION OF CRM
12. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the
organization’s CRM strategy.
Statements 5 4 3 2 1
The organization explained the real business needs to
vendors/partners before investing in CRM
The CRM project was carried out in phases during implementation
The organization allocated available resources to the components
that were affected by CRM that were people, processes and
technology
All affected parties were involved before the CRM project was
rolled out
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13. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the
organization needs of CRM and its functionality.
Statements 5 4 3 2 1
The organization focused its search for the most suitable solution to
its CRM development
The organization looked at how customer relationships were
managed within the CRM period
The company anticipated how business would change and grow
down the road
The company examined the short-and long-term fiscal implications
of the CRM solution
Our CRM supports the existing business processes
Our CRM provides the capability to improve them
Our CRM is easy to customize for the organizations specific
business application
Our CRM has intuitive user interfaces
Our CRM integrates with existing systems within the company
Our CRM provides robust reporting
Our CRM provides forecasting capabilities
Our CRM is analytical
Our CRM is scalable
Our CRM is flexible
14. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and
1=strongly disagree; how would you rate the following statements about the
organization’s implementation of the CRM strategies.
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Statements 5 4 3 2 1
The organization understood its customer relationship problem
before CRM implementation
Our company built a team that was empowered to take on the CRM
project
Our CRM project implementation was supported by the executive
sponsorship
After implementation, the company checked and assessed if the
CRM systems were meeting customer needs
The organization developed corporate wide CRM engagement from
key stakeholders
The company got key sponsors involved from the get-go and made
sure that the individuals involved made financial and time
commitment
The company determined as well as prioritized CRM drivers and
requirements
The organization used developed CRM roadmap
The organization created a short list to check out prospective
vendors’
The organization kept everyone involved in the loop
The company offered flexible training options to help
accommodate different schedules as well as learning preferences
for employees
The company motivated users to accept the application
The company motivated users to use the application
The CRM system was broken down into smaller manageable pieces
with small milestones during implementation
The company has learnt to adjust to the CRM system
THANK YOU