International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 10 -
CU5TOMER RELATION5HIP MANAGEMENT: 5TRATEGIE5
AND PRACTICE5 IN BANKING 5ECTOR
Authnrcd By
NAVEEN KUMAR 5HARMA Assislanl Irofessor Dearlmenl of Managemenl and TechnoIogy Governmenl Ingineering CoIIege, ikaner Mob: +91-9166455449 I-maiI: nksharma.a|mer+gmaiI.com
DR. VIJAY MOHAN VYA5 Assislanl Irofessor Dearlmenl of Managemenl and TechnoIogy Governmenl Ingineering CoIIege, ikaner Mob. +91-9928226700 ImaiI: vi|aymohanvyas+yahoo.com
Abstract Tc!aq, nanq |usincsscs sucn as |anks, insurancc ccnpanics, an! cincr scrticc prcti!crs rca|izc inc inpcriancc cj Cusicncr |c|aiicnsnip Managcncni (C|M) an! iis pcicniia| ic nc|p incn acquirc ncu cusicncrs rciain cxisiing cncs an! naxinizc incir |ijciinc ta|uc. Tnc purpcsc cj inis papcr is inicn!c! ic jin! cui inc taricus C|M praciiccs in sc|ccic! |cca| an! nu|iinaiicna| |anks in |n!ia. Tnis rcscarcn ucu|! |c |cncjicia| jcr |anking in!usirq an! as uc|| as ii ui|| |c nc|pju| jcr inc siu!cnis in |carning a|cui inc taricus C|M praciiccs in |anking sccicrs. |i uas jcun! inai a grcai !ijjcrcncc in C|M praciiccs is prcscni |ciuccn |cca| an! nu|iinaiicna| |anks, inis !ijjcrcncc is a|sc |asc! cn inc iqpc cj cusicncrs |anks arc iargciing, |cca| |anks arc carrqing cui C|M scrticcs cn in!iti!ua| |asis ncuctcr nu|iinaiicna| |anks arc sirici|q jccusing cn sian!ar!izc! C|M scrticcs a|cng uiin |T an! |-|anking scrticcs. Hcncc C|M praciiccs in |cin |cca| an! nu|iinaiicna| arc cnanging acccr!ing ic cusicncrs ncc!s. Tnc rcascn jcr sc|cciing |anks jcr cur rcscarcn is inai |anking in!usirq nas |cng na! a rcpuiaiicn cj |cing s|cu ic
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 11 -
rcspcnsc ic cusicncr ccnccrns, inrcugn inis rcscarcn uc arc a||c ic ana|qzc inai ncu |anks arc jccusc! cn inc cjjcris cj kncuing inc cusicncrs, !cicciing incir ncc!s, an! a|sc raising inc prcjiia|i|iiq cr inc |cncjiis cj inc ccsiuncr ic inc |usincss. Ke Words. C|M, Banking sccicr, Icca| an! Mu|iinaiicna| Banks
INTRODUCTION ReIalionshi Markeling is lhe rocess of buiIding Iong lerm muluaIIy beneficiaI reIalionshi vilh lhe cuslomers. The IinanciaI Inslilulions in lhe deveIoed counlries are using lhis markeling looI very effecliveIy by laking fuII advanlage of Informalion and Communicalion TechnoIogies. The Indian anking Induslry vhich vas oeraling in a bureaucralic slyIe rior lo 1991 had lo undergo Iarge scaIe lransformalion vilh lhe oening u of lhe economy. The Seclor has been facing unrecedenled chaIIenges vilh lhe vave of IiberaIizalion, rivalizalion and gIobaIizalion of Indian Iconomy. anks in India are under inlense ressure in loday's voIaliIe markel Iace. Slee comelilion, gIobaIizalion, groving cuslomer demand and exosure lo higher credil risks are forcing lhe banks lo find nev vays of imroving rofilabiIily. On lhe olher hand, cosl-culling measures have forced banks lo manage oeralions vilh fev Cuslomers ReIalionshi Managers and Iroducl SeciaIisls. Induslry consoIidalion aIso oses fresh chaIIenges lo lhis seclor. Iven loday, mosl of lhe banks in India reIy on lhe Iegacy of Cuslomer Informalion Syslem. In such a scenario, il is difficuIl lo have a comIele cuslomer viev across divisions. They face unrecedenled chaIIenges lo suslain lheir grovlh alh for survivaI. The chaIIenges incIude cuslomer relenlion, reducing lransaclion cosls, risk managemenl and ReguIalion ComIiance. The resuIl vas a huge roIiferalion in cuslomer's choice. The slralegic looI lhal vas chosen for aiding lhis rocess vas Informalion TechnoIogy and mosl of lhe banks venl lhrough adolion of various slages and forms of IT over lhe years and lhe rocess is sliII conlinuing. The raid grovlh in Informalion TechnoIogy and ils olenliaI lo serve lhe cuslomers in a nev vay avakened lhe markelers and enabIed lhem lo lransform lhese chaIIenges inlo oorlunilies. Under lhese circumslances, cuslomer salisfaclion became an imorlanl asecl of lhe business. The search for nev slralegies began lo meel nol onIy lhe high execlalions of cuslomers bul lhe need lo relain lhem. The comelilive vorId vilnessed many banks arlicialing in lhe race lo olimize lheir
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 12 -
rofils. Il increased lhe ressure lo erform Ieading lo adolion of advanced lechnoIogy and beller skiIIed vork force. Therefore, business modeI changed from bank-cenlric aroach lo cuslomer-cenlric aroach. The cuslomer became nol onIy an essenliaI bul lhe mosl imorlanl arl of lhe business. The Service Seclor has emerged as a key seclor in Indian Iconomy. The conlribulion from lhis seclor lo our Gross Domeslic Iroducl (GDI) is aroximaleIy 55%, as er lhe currenl year's udgel Reorl (2008-09). The conlinuous grovlh of GDI al 8% and above has become ossibIe due lo lhe good erformance of lhis seclor. In lhe osl - reforms era, lhere has been a sea change in lhe financiaI seclor. In such a scenario, lhe services have grovn raidIy and lhe cuslomer has been more oflen a urchaser of services ralher lhan a roducl. The IinanciaI Services is lhe backbone of service seclor. This is imorlanl nol onIy for lhe banking seclor bul of lhe Indian economy as a vhoIe. This is so because banking is a calaIysl and Iife of modern lrade and commerce. Il is an inlegraI arl of aII lhe businesses and sociaI aclivilies. This raid lransformalion of services in lhe banking syslem has Ied lo lhe evoIulion of a highIy comelilive and comIex markel vhere lhere is a conlinuous Refinemenl of services. Hence lhe increased roIe of banking in India's economic deveIomenl on lhe one hand and lhe changes in lhe business cIimale on lhe olher has ul increased ressure on lhem. These changes are comeIIing lhe banks lo reorganize lhemseIves in order lo coe vilh lhe resenl condilions. Nov, lhe IinanciaI Inslilulions are lrying lo rovide aII lhe services al lhe cuslomer's doorsle. The cuslomer has become lhe focaI oinl eilher lo deveIo or mainlain slabiIily in lhe business. Ivery engagemenl vilh lhe cuslomer is an oorlunily lo eilher deveIo or deslroy a cuslomer's failh in lhe ank. The execlalions of lhe cuslomers have aIso increased many foIds. Inlense comelilion among lhe banks has redefined lhe concel of lhe enlire banking syslem. The banks are Iooking for nev vays nol onIy lo allracl bul aIso lo relain lhe cuslomers and gain comelilive advanlage over lheir comelilors. The banks Iike 3 olher business organizalions are deIoying innovalive saIes lechniques and advanced markeling looIs lo gain suremacy.
EVALUATION OF CRM One of lhe imorlanl markeling looIs in lhe deveIoed counlries is ReIalionshi Markeling. The CRM is a comrehensive aroach for crealing, mainlaining and
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 13 -
exanding reIalionshi vilh lhe cuslomers. Il has emerged as one of lhe mosl videIy rescribed soIulions for diminishing markel share and sIuggish grovlh of many induslries in generaI and banking and financiaI seclor in arlicuIar. CRM is a simIe hiIosohy, vhich Iaces lhe cuslomer al lhe hearl of lhe business rocesses, aclivilies and cuIlures for imroving cuslomer salisfaclion and maximizing rofils. In one of lhe encomassing definilions, CRM is described as lhe eslabIishmenl, deveIomenl, mainlenance, and olimizalion of Iong lerm, muluaIIy-vaIuabIe reIalionshi belveen lhe cuslomers and lhe organizalions. Il is a comrehensive aroach for crealing, mainlaining and exanding reIalionshi vilh lhe cuslomers. The concel of CRM is very imorlanl lo lhe business seclor. The essence of lhe business has been described by Mr. Ieler Drucker, lhe Managemenl Guru as, lhe urose of lhe business is lo allracl and relain a good cuslomer. Good Cuslomer Service is lhe besl brand ambassador for any bank. The enlire business rocess consisls of highIy inlegraled efforls lo discover, creale, arouse and salisfy cuslomer's needs. The modern business has reaIized il and is making aII oul efforls lo become 'cuslomer- cenlric' across lhe gIobe. Hence, CRM is nol a once-for-aII affair bul a conlinuous rocess. Il is lhe vay of carrying oul business covering aII lhe asecls of lhe modern business. Il is an inlegraI aroach of deaIing vilh cuslomers by deIoying lhe advanced informalion lechnoIogy.
COMPONENT5 OF CRM Il is a bundIe of saIes, Markeling and Cuslomer suorl aIicalions. Inlegralion of lhe aIicalions lhrough lhe veb makes lhe CRM aIicalions reaIIy allraclive. Transaclions are lracked lhrough CRM and Dala mining is used for lhe anaIysis of dala.
Thc n!d cnnccpt (Diag.1)
THE BACK OFFICE (General Manager, Manager Finance, HR etc.) THE FRONT OFFICE (Cashier, Clerk) THE CUSTOMER
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 14 -
Thc Currcnt Cnnccpt (Diag.2)
OBJECTIVE5 To undersland lhe use of CRM in lhe banks. To evaIuale lhe CRM slralegies and raclices in Indian banking seclor
NEED FOR 5TUDY The imorlanl faclors lhal eslabIish lhe need for CRM in lhe anking Induslry are delaiIed beIov:- Intcnsc Cnmpctitinn There is inlense comelilion among lhe Irivale Seclor anks, IubIic Seclor anks and Ioreign anks and lhey are aII laking sles lo allracl and relain lhe cuslomers. Nev lechnoIogies, research faciIilies, gIobaIizalion of services, lhe fIood of nev roducls and lhe concel of aII lhe faciIilies under one roof lo rovide beller cuslomer service Ieading lo cuslomer deIighl. THE BACK OFFICE THE FRONT OFFICE THE FRONT OFFICE THE CUSTOMER THE BACK OFFICE
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 15 -
Wc!! InInrmcd Custnmcrs The Cuslomers in anking Induslry loday are veII informed. Wilh lhe inlroduclion of nev lechnoIogy, lhe vorId has become Iike a smaII viIIage. Thus, if a ank vanls lo have more cuslomers, il shouId deveIo a good reIalionshi vilh ils resenl cuslomers and lry lo mainlain lhe same in lhe fulure aIso. Dcc!inc in Brand Lnya!ty In lhe resenl scenario, brand IoyaIly is on decIine. The cuslomers are svilching over frequenlIy lo avaiI lhe beller faciIilies from olher banks. Never and suerior roducls and services are being inlroduced conlinuousIy in lhe markel. Thus, lhe banks have lo ugrade lheir roducls, imrove cuslomer service and creale bonds of lrusls lhrough roer care of cuslomer needs and reguIar communicalions. Wilh lhe heI of CRM, slrong cuslomer IoyaIly and a good image for lhe organizalion can be deveIoed. Imprnvcd Custnmcr Rctcntinn In lhe inlenseIy comelilive banking induslry, relenlion of exisling cuslomers is vilaI, vhich can be achieved lhrough lhe rocess of CRM.
REQUIREMENT5 OF AN EFFECTIVE CRM 5TRUCTURE An effeclive CRM syslem consisls of lhe foIIoving: Pcrsnna! Custnmcr Nccds IersonaI conlacl A knovIedgeabIe and reIiabIe banker. ReIevanl Informalion. Cuslomized and limeIy soIulions VaIue for money. Busincss Custnmcr Nccds A rofessionaI arlnershi aroach. High IeveIs of informalion. Cuslomized and highIy resonsive service. QuaIily Cuslomer Informalion.
BENEFIT5 OF CRM enefils of CRM can be calegorized inlo lhree grous nameIy: enefils for cuslomers, benefils for emIoyees and benefils for banks.
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 16 -
(i) BcncIits Inr Custnmcrs There is a more coordinaled and rofessionaI aroach lo cuslomer conlacl. Wilh u-lo-dale cuslomer informalion, anks can offer more ersonaIized services. Cuslomers feeI emovered if lhey have grealer access lo roducls and services. Ior examIe 24 Hours banking. Targeled roducl and service offerings can be limed lo coincide vilh cuslomer evenls and requiremenls e.g., Iducalion Loans and Tourism Loans. (ii) BcncIits Inr Emp!nyccs ImIoyees are emovered vilh lhe informalion lo deIiver high quaIily service and meel cuslomer execlalions. ImIoyees have more lime lo serve cuslomers. ImIoyees have higher salisfaclion ralings. (iii) BcncIits Inr Banks Managers are emovered vilh informalion lhal can heI lhem manage cuslomer reIalionshis and make beller decisions. Olimum use of resources. Cuslomer salisfaclion and increased IoyaIly. Imroved cuslomer acquisilion and cross-seIIing. Il heIs in cailaIizing on shorl vindovs of oorlunilies in lhe markel.
INTRODUCTION OF INNOVATIVE 5ERVICE5 THROUGH CRM anks have made severaI innovalions for suslenance by using lhe CRM Syslem such as: The inlroduclion of ATMs. iomelric ATMs. SingIe Windov Service. TeIIer Syslem. Inlernel anking Inlroduclion of IIaslic Money: Credil Card, Debil Card, Smarl Card. MobiIe and I-MaiI AIerls IIeclronic Cash Inlroduclion of lvo in one Accounls.
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 17 -
Inlroduclion of nev Ioan schemes as er lhe cuslomer's needs viz. Iducalion Loans, Marriage Loans, Housing Loans, IersonaI Loans, VehicIe Loans, Iurnilure Loans, Renovalion Loans and Tourism Loans.
CONCLU5ION Indian anks have recorded a henomenaI grovlh in lhe asl decade vilh lhe inilialion of Iconomic Reforms. The banks, bolh IubIic and Irivale, have lransformed lhemseIves inlo rofil-orienled business organizalions besides Iaying a deveIomenlaI roIe in lhe economy. In an alleml lo be more rofilabIe, lhe banks have become comelilive and more cuslomer orienled. This nev orienlalion has comeIIed lhem lo lake a more ragmalic aroach for conducling lhe business. The CRM is one such looI vhich heIs in meeling lhe cuslomer's execlalions according lo lheir changing needs. WhiIe anaIyzing lhe CRM ImIemenlalion in bolh lhe seclors, il vas found lhal lhe Irivale Seclor anks have been abIe lo imIemenl lhe CRM raclices more effecliveIy vhen comared lo lheir IubIic Seclor counlerarls. This indicales lhal slralegicaIIy seaking, lhe Irivale Seclor anks have been more innovalive in underslanding lheir cuslomers and in buiIding good reIalions vilh lhem. The CRM aroach adoled by banks focuses on maximizing lhe vaIue for lhe cuslomer and lhe bank. The key drivers lo cuslomer IoyaIly are: (a) Iosilive Slaff Allilude. (b) Honesly, Inlegrily and ReIiabiIily. (c) Iroduclive advice and deIivery of lhe romised service. (d) Consislenl deIivery of suerior quaIily service. (e) SimIicily and easiness of doing business. (f) A fair and efficienl comIainls resoIulion.
REFERENCE Anand, S (2008), Cuslomer ReIalionshi Managemenl in Indian anks, }ournaI of IrofessionaI anker, Dec. 2008 66-70. agozzi, Richard I. (1974), Markeling as an Organized ehavioraI Syslem of Ixchange, }ournaI of Markeling, 38 (4), . 7781. enlum, Van, RaIh, and MerIin Slone (2005), Cusicncr |c|aiicnsnip Managcncni san! inc inpaci cj Ccrpcraic Cu|iurc A |urcpcan Siu!q, Dalabase Markeling and Cuslomer Slralegy Managemenl, VoI. 13, No. 1, . 28-54.
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 18 -
hoIanalh Dulla (2008), CRM in IinanciaI Services Markeling, }ournaI of Markeling Maslermind Davids M (1999), Hov lo Avoid lhe 10 iggesl Mislakes in CRM, }ournaI of usiness Slralegy, Nov-Dec 1999, 22-26. Day GS (2000), Managing Markel ReIalionshi, }ournaI of lhe Academy of Markeling Science VoI. 28 (1), 24-30. Dvyer, I. Roberl, IauI H. Schurr, and Se|o Oh. 1987. Octc|cping BuqcrSc||cr |c|aiicnsnips, }ournaI of Markeling, 51 (AriI), . 1128. Id Thomson el aI (2005), Organisalions are beginning lo lhink aboul CRM again, Managemenl udale, November, 2005. Ioss, . and Slone, M. 2001. Succcssju| Cusicncr |c|aiicnsnip Markciing. Ncu Tninking, Ncu Siraicgics . Nev TooIs for Gelling CIoser lo Your Cuslomers, Kogan Iage, London. GaIbrealh, }. and Rogers, T. 1999, Cuslomer reIalionshi Ieadershi, TQM magazine, VoI. 11 No. 3, . 161-71. Gaski, }ohn I. 1984. Tnc Tnccrq cj Pcucr an! Ccnj|ici in Cnannc|s cj Oisiri|uiicn, }ournaI of Markeling, VoI. 48, . 930. Heskell, L., }ones, O., Sasser, }nr, W. and SchIesinger, A. 1994. Puiiing inc scrticc Prcjii Cnain ic Wcrk, Harvard usiness Reviev, VoI. 72 (2), .164. IDC. 2002. Surtcq |T A!cpiicn Paiicrns in inc |urcpcan Banking Sccicr. |ccus cn Sc|uiicns. 24 December 2002. }ohnson, MichaeI D. and Ired SeInes. 2004. Cuslomer IorlfoIio Managemenl: Tovard A Dynamic Theory of Ixchange ReIalionshis, }ournaI of Markeling, 68 (AriI), . 117. KaIe, S. H., 2004, CRM IaiIure and lhe Seven DeadIy Sins Markeling Managemenl, voI. 13, no. 5, . 42-46. KimberIy, C el aI (2005), CRM Markeling Slralegies and TechnoIogies Malure, Managemenl udale, November, 2005. KohIi, A|ay K. and ernard }. }avorski. 1990. Markel Orienlalion: The Conslrucl, Research Iroosilions, and ManageriaI ImIicalions, }ournaI of Markeling, 5 (AriI), . 118. Levill, Theodore. 1960. Markeling Myoia, Harvard usiness Reviev, 38 (}uIy Augusl), . 4560.
International Journal of New Practices in Management and Engineering: Vol: 4 Issue: 1 - 19 -
Iarvaliyar A and Shelh }N (2001), ConceluaI Iramevork of Cuslomer ReIalionshi in Cuslomer ReIalionshi Managemenl Imerging Concels, TooIs and AIicalions, Tala McGrav HiII, Nev DeIhi, . 3-25. Shanmuganlhan, IremaI, Sinder DhaIIvaI, MerIin Slone and ryan Ioss. 2005. Occs |innic |ccus Cnangc Hcu Banks Sncu|! |np|cncni Cusicncr |c|aiicnsnip Managcncni, }ournaI of IinanciaI Services Markeling, VoI. 8 (1), . 49-62. Shelh, }agdish. 2005. The enefils and ChaIIenges of Shifling Slralegies, Cuslomer Managemenl, (MSI conference summary). Cambridge, MA: Markeling Science Inslilule, . 45. Srinivasan, Ra|i and Chrisline Moorman. 2005. Slralegic Iirm Commilmenls and Revards for Cuslomer ReIalionshi Managemenl in OnIine RelaiIing, }ournaI of Markeling, 69 (Oclober), 193200. SlringfeIIov, A., Winler, N. and oven, D. 2004. CRM: Irofiling from underslanding cuslomer needs, Busincss Hcrizcns , VoI. 47 , No. 5, Selember Oclober , . 45 52 Thomas, }acqueIyn S. and UrsuIa Y. SuIIivan. 2005. Managing Markeling Communicalions vilh MuIlichanneI Cuslomers, }ournaI of Markeling, 69 (Oclober), . 239251.