CHAPTER NO.

INTRODUCTION

1.1 What is Customer Relationship Management

Philip Kotler and Gary Armstrong in their book Principles of Management define CRM is concerned
with managing detailed information about individual customers and all customer touch points to
maximize customer loyalty. The touch points include every contact between the customer and the
company which includes customer purchase, payment interactions, service calls, satisfaction surveys
etc. The aim of CRM is to build customer equity.

Customer Relationship Management is a company wide Business strategy designed to reduce costs and
increase profitability by customer loyalty. True CRM brings together information from all data sources
within an organization (and where appropriate from outside the organization) to give one holistic view
of each customer I real time.

This allows customer facing employees in such areas a sales customer support and marketing to make
quick yet informed decision on every thing form cross selling and up selling opportunities to target
marketing strategies to competitive positioning tactics.

Once thought of as a type of software CRM has evolved into a customer centric philosophy that
must permeate an entire organization. There are there key element to a successful CRM initiative
people, Process, and technology. The people throughout a company from the CEO to each and every
customer service rep-need to buy in to and support CRM. A company's business processes must be
reengineered to bolster its CRM initiative, often from the view of, how can this process better serve the
customer? Firms must select the right technology to drive these improved processes, provide the best
data to the employees, and be easy enough to operate that users won't balk. If one of these three
foundations is not sound, the entire CRM structure will crumble.

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

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

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Customer relationship management is one of the strategies to manage customer as it focuses on
understanding customers as individuals instead of as part of a group. CRM manages the relationships
between a firm and its customers. CRM and knowledge management are directed towards improving
and continuously delivering good services to customers .To understand more in customer relationship
management, we first need to understand three components which are customer, relationship and their
Management. Managing customer relationships is important and valuable to the business. Today, many
businesses such as banks, insurance companies, and other service providers realize the importance of
Customer Relationship Management and its potential to help them acquire new customers retain
existing ones and maximize their lifetime value. Banking sector is a customer-oriented service where
the customer is the KEY focus. Research is needed in such sector to understand customers’ need and
attitude so as to build a long relationship with them. Customer Relationship Management includes all
the marketing activities, which are designed to establish, develop ,maintain, and sustain a successful
relationship with the target customers.

The effective relationship between customers and banks depends on the understanding of the different
needs of customers at different stages. The objective is to effectively analyze all the available data
about the customer. The analysis of such data helps a firm assess a customer’s current and potential
profitability satisfaction and loyalty. The ability of banks to respond towards the customers’ needs
make the customers feel like a valuable individual rather than just part of a large number of customers.
CRM is a sound business strategy to identify the bank’s most profitable customers and prospects, and

devotes time and attention to expanding account relationships with those customers through
individualized marketing, reprising, discretionary decision making, and customized service-all
delivered through the various sales channels that the bank uses. In order to succeed with strategic
organizational change banks should also communicate the change to customers in a way leading them
to alter their behavior and attitudes accordingly

Customer relationship management (CRM) refers to the principles, practices and guidelines that
an organization follows when interacting with its customers. From the organization's point of
view, this entire relationship encompasses direct interactions with customers, such as sales and
service-related processes, and forecasting and analysis of customer trends and behaviors.
Ultimately, CRM serves to enhance the customer's overall experience.

With the growth of the Internet and related technologies, customers are concerned over the
privacy and safety of their personal information. Therefore, businesses need to ensure the
storage and analysis of their customer data has the highest levels of protection against cyber
criminals, identity theft and other breaches of security.

Customer relationship management (CRM) refers to a strategy widely used by companies and
organizations (including related integrated information systems and technology, often in the
form of software) to record and manage their overall data and interactions with current, past
and potential customers.

CRM works to ensure that all customer-interfacing organizational functions (i.e., sales,
marketing, technical support) are efficient and synchronized, ensuring that former and potential
customers are adequately and appropriately served.

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1.2 Defining CRM:
Customer Relationship Marketing is a practice that encompasses all marketing activities directed
toward establishing, developing, and maintaining successful customer relationships. The focus of
relationship marketing is on developing long-term relationships and improving corporate performance
through customer loyalty and customer retention.

Customer Relationship Management (CRM) as the name suggests, the primary focal point is placed on
the customer. The key objective is to increase customer value over time by increasing customer
loyalty. If a company develops better customer relationships, it also improves business processes as
well as its profits. In general, CRM is a more efficient automated method used to connect and improve
all areas of business to focus on creating strong customer relationships. All forces are coupled together
to save, improve, and acquire greater business to customer relationships. The most common areas of
business that are positively affected include marketing, sales, and customer service strategies.

CRM helps create time efficiency and savings on both sides of the business spectrum. Through correct
implementation and use of CRM solutions, companies gain a better understanding of their strongest
and weakest areas and how they can improve upon these. Therefore, customers gain better products
and services from their businesses of choice. In order to achieve better insight on CRM, it is essential
to consider all of its components.

Customer Relationship Management (CRM) has been defined in many ways. It is defined as a
business strategy that is designed to reduce cost and increase profit, respond to company's needs
for both current and potential customers in order to build relationship value. This strategy is
mainly focus on customers need and behaviour to help create a close relationship between the
customers and the business.

Customer relationship Management has three important elements to its success story. They are
people, process and technology. People within the organisation like staff and managers need to
support customer relationship management (CRM). Customer relationship Management process
must be properly investigated and planned to support the CRM initiative and locating the right
technology to enhance the processes, provide staff with the best data as well as being user
friendly. (Wikipedia)

According to Buttle, F (2008) Customer Relationship Management (CRM) is the 'core business
strategy' that combines internal processes and functions, and external networks, to create and
deliver value to targeted customers at a profit. It is grounded on high quality customer related
data and support by information technology. Customer relationship management can further be
defined as a complete set of activities covering all functions of the organisation, relating with and
supporting a consumer. Such activities build customer satisfaction by way of providing to their
needs, and want over a long period of time (Wimshurst & Mackay, 2002).

According to Starky, Woodcock (2000) Customer Relationship Management is defined as a

business attitude. 'Customer Relationship Management (CRM) is an IT-enhanced value process,
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which identifies, mature, combine and focuses the various capabilities of the organisation to the
customers opinion in order to deliver long term exceptional customer value, at a profit, to well-
known existing and future customer segments.'

Other Authors such as Rigby, Reichheld, and Schefter (2002) in their definition described that
'Customer Relationship Management (CRM) affiliates business processes with customers
strategies to build customer loyalty and to increase profit long term. 'In their definition the
words technology and software were not cited. In order words the authors believes that
customer relationship management (CRM) is seen as a set of customer strategies and processes,
supported by the pertinent software, for the purpose of improving customer loyalty and
ultimately, corporate profitability.

what is customer relationship management or crm? if you ask this question to a dozen experts,
you may get a dozen different explanations. everyone who gets benefits from crm has their own
crm definition about what it is; but all of these persons are agreed as to what it is not. thus it is a
bit difficult to provide a correct crm definition.

general crm definition

in general, customer relationship management CRM) is a term representing the business strategy
built around the concept of improved customer service. crm practice involves all aspects of
communication and dealing an organization has with its client, whether it is product or service
linked. more clearly, crm aims at increasing customer satisfaction, consequently increasing a
business’ income.

1.3 CRM- Meaning:

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

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1.4 CUSTOMER SATISFACTION
The term customer satisfaction has been defined in various ways. Customer Satisfaction can be
defined as a customer's achievement of an experience. Customer satisfaction has become the one
the most important elements in business strategy. One of the many reasons a company need to
satisfy its customers is to increase market share, repeat and referral businesses which may
increase profit margin. According to Kotler (2000) satisfaction defined as a person's feelings of
enjoyment or disappointment resulting from measuring a product or service based their
experience.

Batterson and Hoffman(2000) agrees that when customers' expectations are met and exceeded
this can increase more benefits to an organisation, word of mouth from satisfied customers can
bring in new customers. In fact he goes on to say satisfied customer buy more products or
service and the chances of leaving are less than that of dissatisfied customers.

According to Kotler (2000) he believes it is important for organisation to measure customer

satisfaction such as survey to ascertain customer satisfaction level. Often time organisations
believe customers just do not complaint but instead they leave. Dissatisfied customers simply
wants his complaint heard and be addressed and may continue to do business.

According to Barsky, (1992) customers want businesses to meet and or exceed their
expectations. Buttle (2005) argues often times customers' expectations are met, but yet the
customer is not satisfied. This is due to low expectation.

According to Zeng, Weng & Yen (2003) CRM increases customer satisfaction can be through the
usage of Information Technology (IT) fast response to customer needs. Technology plays a vital
part of customer relationship management (CRM).Technology involves the use of database as
well as data mining. These technologies are used for storing customers' data like names,
addresses, and product or service history. Businesses can benefit from this information to
contact and target their customers in a more personalised manner in meeting specific customer
needs. The personalised approach can help to increase customer value, customer loyalty and
profitability for the organization.

1.5 CUSTOMER LOYALTY AND RETENTION

Loyalty has been defined in various ways. Customer loyalty can be viewed as attitude or
behavioural. Customer attitude refers to a persons' overall attachment to product, service or
other and continue to repurchase a particular style or brand. Customer behavioural loyalty refers
to purchasing of the same product or service from the same provider.

According to Lovelock et al. (1999) loyalty is a customer's willingness to continue utilising an

organisations goods or services repeated over an extended period of time. He goes on to say
customers will continue their loyalty were organisations offers are better than that of their
competitors.

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According to Kotler (2000) he believes for organisations to achieve high customer loyalty they
need is to delivery high customer value. He goes on to say organisations place too much
emphasis on trying to attract new customers rather than retaining the existing ones. Kotler
argues that organisations are more concerned with making sales than building relationship and
care for customers. Kotler (2000) believes customer satisfaction is the key factor in obtaining
customer loyalty. He identifies the following features of a satisfied customer:

Remain loyal longer

Make more purchases

Positive word of mouth regarding the organisation

Less attention to competitors brands and prices

Customer retention according to Harris, (2007) is the continuous attempt to satisfy and keep
existing customers actively involved in carrying out business. Businesses need to recognize the
importance of existing customers and create a strong customer relationship in an atmosphere to
continue doing business. The importance of keeping existing customers is not a new concept,
today; businesses are more focused on attracting new customers rather than maintaining the
existing ones. Gummerson (1994) believes an organisation can increase and maintain its market
share through good relationship. The author identifies retention as a benefit of CRM, he goes on
to explain information such as customers' names, like and dislikes, habits expectations can be
useful information in winning customers back.

1.6CRM Practices in Thane Bharat Sahakari Bank Ltd.

Technology Based CRM:

Technology Plays the enable in CRM allows Thane Bharat SahakariBank to Achieve greater
customization and better service at lower cost that helps in customer identification and fast
,convenience services to its customers.

Customer Loyalty Program:

Thane Bharat sahakari Bank has an aim to be a customer centric Organization and build favorable and
long term relationship with its customers.

Data warehouse and Data Mining:

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The Data warehouse is the core of any decision support system and hence of the CRM. In
implementing its data warehouse Thane Bharat Sahakari Bank selected an incremental approach where
the development of informant system is integrated with the business strategy.

Instead of developing a complete design of a corporate Data warehouse before implementing it.

1.7 FEATURES OF CUSTOMER RELATIONSHIP MANAGEMENT:

customer Relationship Management is a strategy which is customized by an organization
to manage and administrate its customers and vendors in an efficient manner for achieving excellence
in business. It is primarily entangled with following features:

Customers
Needs
Customers
Customer
Response
Service

Features of
CRM Custome
Custome r
r Satisfacti
Complain on
ts Customer
Loyalty
Customer
Retention

1. Customers Needs-

An organization can never assume what actually a customer needs. Hence it is extremely
important to interview a customer about all the likes and dislikes so that the actual needs can be
ascertained and prioritized. Without modulating the actual needs it is arduous to serve the
customer effectively and maintain a long-term deal.

2. Customers Response-

Customer response is the reaction by the organization to the queries and activities of the
customer. Dealing with these queries intelligently is very important as small misunderstandings
could convey unalike perceptions. Success totally depends on the understanding and
interpreting these queries and then working out to provide the best solution. During this
situation if the supplier wins to satisfy the customer by properly answering to his queries, he
succeeds in explicating a professional and emotional relationship with him.

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3. Customer Satisfaction-

Customer satisfaction is the measure of how the needs and responses are collaborated and
delivered to excel customer expectation. In today’s competitive business marketplace,
customer satisfaction is an important performance exponent and basic differentiator of
business strategies. Hence, the more is customer satisfaction; more is the business and the
bonding with customer.

4. Customer Loyalty-

Customer loyalty is the tendency of the customer to remain in business with a particular
supplier and buy the products regularly. This is usually seen when a customer is very much
satisfied by the supplier and re-visits the organization for business deals, or when he is tended
towards re-buying a particular product or brand over times by that supplier. To continue the
customer loyalty the most important aspect an organization should focus on is customer
satisfaction. Hence, customer loyalty is an influencing aspect of CRM and is always crucial for
business success.

5. Customer Retention-

Customer retention is a strategic process to keep or retain the existing customers and not letting
them to diverge or defect to other suppliers or organization for business. Usually a loyal
customer is tended towards sticking to a particular brand or product as far as his basic needs
continue to be properly fulfilled. He does not opt for taking a risk in going for a new product.
More is the possibility to retain customers the more is the probability of net growth of business.

6. Customer Complaints- Always there exists a challenge for suppliers to deal with complaints
raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the
customer. There can be several reasons for a customer to launch a complaint. A genuine reason
can also exist due to which the customer is dissatisfied but sometimes complaints are launched
due to some sort of misunderstanding in analyzing and interpreting the conditions of the deal
provided by the supplier regarding any product or service. Handling these complaints to
ultimate satisfaction of the customer is substantial for any organization and hence it is essential
for them to have predefined set of process in CRM to deal with these complaints and efficiently
resolve it in no time.

7. Customer Service-

In an organization Customer Service is the process of delivering information and services

regarding all the products and brands. Customer satisfaction depends on quality of service
provided to him by the supplier. The organization has not only to elaborate and clarify the
details of the services to be provided to the customer but also to abide with the conditions as
well. If the quality and trend of service go beyond customer’s expectation, the organization is
supposed to have a good business with customers.

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1.8 NEED FOR CRM.

Unlike in the past, the banks today are market driven and market responsive. With the entry of new
players and multiple channels, customers (both corporate and retail) have become more discerning and
less "loyal" to banks. This makes it imperative that banks provide best possible products and services
to ensure customer satisfaction. To address the challenge of retention of customers, there have been
active efforts in the banking circles to switch over to customer-centric business model. The success of
such a model depends upon the approach adopted by banks with respect to customer data management
and customer relationship management.

Over the years, Indian banks have expanded to cover a large geographic & functional area to meet the
developmental needs. They have been managing a world of information about customers - their
profiles, location, etc. They have a close relationship with their customers and a good knowledge of
their needs, requirements and cash positions. Achieving customer focus requires leveraging existing
customer information to gain a deeper insight into the relationship a customer has with the institution,

and improving customer service-related processes so that the services are quick, error free and
convenient for the customers.

As is proved by the experience, banks are now realizing that one of their best assets for building
profitable customer relationships especially in a developing country like India is the branch-branches
are in fact a key channel for customer retention and profit growth in rural and semi-urban set up.
However, to maximize the value of this resource, our banks need to transform their branches from
transaction processing centers into customer-centric service centers. This transformation would help
them achieve bottom line business benefits by retaining the most profitable customers. Branches could
also be used to inform and educate customers about other, more efficient channels, to advise on and
sell new financial instruments like consumer loans, insurance products, mutual fund products, etc.

There is a growing realization among Indian banks that it no longer pays to have a "transaction-based"
operating model. There are active efforts to develop a relationship-oriented model of operations
focusing on customer-centric services. The biggest challenge our banks face today is to establish
customer intimacy without which all other efforts towards operational excellence are meaningless. The
banks need to ensure through their services that the customers come back to them. This is because a
major chunk of income for most of the banks comes from existing customers, rather than from new
customers.

Customer relationship management (CRM) solutions, if implemented and integrated correctly, can help
significantly in improving customer satisfaction levels. Data warehousing can help in providing better
transaction experiences for customers over different transaction channels. This is because data
warehousing helps bring all the transactions coming from different channels under the same roof. Data
mining helps banks analyze and measure customer transaction patterns and behavior. This can help a
lot in improving service levels and finding new business opportunities.

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 1.9 Customer Relationship Management formation process

Correlate

Connect Formation Combine

Process

Cognize

The appropriate approach for the CRM process involve :

1. CORRELATE

A series of transaction that make up a dialogue between customer, customer, end

user and an organization. This is the data that is collected from all contact points
and communication. With outside points of contact.

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

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 3. COGNIZE

The insight gained through capture and analysis of detailed information is to

create continuous learning from the data warehouse and knowledge base that is
created, interrogated and analysed.

4. CONNECT

The application of insight to create relevant interaction or communication with

the consumers, customers, channels suppliers and partners that build value
relationships.

1.10 Building customer relationship management

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

People

Organizati Organizati
on on

Organization

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People

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

Process

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

Product

The product offered must constantly provide value addition. The expectations of the customers may
always be on the increase due to various reasons. A customer satisfied with a given product may soon
become a dissatisfied customer in view of the changes that takes place in his expectations.

Organization

In order to build customer relationship, an organization should be aware of the technology advancements
and provide quality service in tune with the customer’s expectations. It should

concentrate on total customer satisfaction and respond to the requirement of the customers faster than
its competitors. The responsive and learning nature of the organization must build Confidence in the
mind of the customers and that will go a long way in building the customer relationship.

Setting satisfactory service standard

A customer not only expects quality products but also quality services. The organization must ensure
quality and availability of the product. The understanding couple with the skills would help more
significantly the process of achieving the ultimate objective of Customer Interaction Management. At this
point, it is worthy to note that effective CIM goes much beyond the skills developed, knowledge gained,
technology enabled and infrastructure build up.

Ultimately it is love, trust and respect that an organization earns from customers that is supported by
organization help-desks, customer support, software, integrated customer information system etc. that
would help to gain maximum benefits out of Customer Interaction Management.

1.11 BENEFITS OF CRM

 These CRM initiatives have been shown to help companies attain the following objectives:
 To provide better customer service.
 To increase customer revenues.
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  To discover new customers.
 To cross sell/up sell products more effectively.
 To help sales staff close deals faster.
 To make call centers more efficient.
 To simplify marketing and sales processes.

CUSTOMER BENEFITS
With CRM systems customers are served better on day to day process and with more reliable
information their demand of self service from companies will decrease. If there is less need to
interact with the company for different problems, customer satisfaction level increases.These
central benefits of CRM will be connected hypothetically to the three kinds of equity that are
relationship, value and brand, and in the end to customer equity. Seven benefits were recognized
to provide value drivers.

Enhanced ability to target profitable customers.

Integrated assistance across channels

Enhanced sales force efficiency and effectiveness

Improved pricing

Customized products and services

Improved customer service efficiency and effectiveness

Individualized marketing messages also called campaigns

Connect customers and all channels on a single platform.

In 2012, after reviewing the previous studies, someone selected some of those benefits which are
more significant in customer's satisfaction and summarized them into the following cases:

Improve customer services: In general, customers would have some questions, concerns or
requests. CRM services provide the ability to a company for producing, allocating and managing
requests or something made by customers. For example, call center software, which helps to
connect a customer to the manager or person who can best assist them with their existing
problem, is one of the CRM abilities that can be implemented to increase efficiency.

Increased personalized service or one-to-one service: Personalizing customer service or one-to-

one service provides companies to improve understanding and gaining knowledge of the
customers and also to have better knowledge about their customers' preferences, requirements
and demands.

Responsive to customer's needs: Customers' situations and needs can be understood by the firms
focusing on customer needs and requirements.

Customer segmentation: In CRM, segmentation is used to categorize customers, according to

some similarity, such as industry, job or some other characteristics, into similar groups. Although

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these characteristics, can be one or more attributes. It can be defined as a subdividing the
customers based on already known good discriminator.

Improve customization of marketing: Meaning of customization of marketing is that, the firm or

organization adapt and change its services or products based on presenting a different and
unique product or services for each customer. With the purpose of ensuring that customer needs
and requirements are met Customization is used by the organization. Companies can put
investment in information from customers and then customize their products or services to
maintain customer interests.

Multichannel integration: Multichannel integration shows the point of co creation of customer value in
CRM. On the other hand, a company's skill to perform multichannel integration successfully, is heavily
dependent on the organization's ability getting together customer information from all channels and
incorporate it with other related information.

Time saving: CRM will let companies to interact with customers more frequently, by
personalized message and communication way which can be produced rapidly and matched on a
timely basis, and finally they can better understand their customers and therefore look forward
to their needs.

Improve customer knowledge: Firms can make and improve products and services through the
information from tracking customer behaviour to customer tastes and needs. CRM could
contribute to a competitive advantage in improving firm's ability of customer information
collecting to customize products and services according to customer needs.

1.12 Steps to Customer Relationship Management

It is essential for the sales representatives to understand the needs, interest as well as
budget of the customers. Don’t suggest anything which would burn a hole in their pockets.

Never tell lies to the customers. Convey them only what your product offers. Don’t cook fake
stories or ever try to fool them.

It is a sin to make customers waiting. Sales professionals should reach meetings on or before
time. Make sure you are there at the venue before the customer reaches.

A sales professional should think from the customer’s perspective. Don’t only think about
your own targets and incentives. Suggest only what is right for the customer. Don’t sell an
expensive mobile to a customer who earns rupees five thousand per month. He would never
come back to you and your organization would lose one of its esteemed customers.

Don’t oversell. Being pushy does not work in sales. It a customer needs something; he would
definitely purchase the same. Never irritate the customer or make his life hell. Don’t call him
more than twice in a single day.

An individual needs time to develop trust in you and your product. Give him time to think
and decide.

Never be rude to customers. Handle the customers with patience and care. One should never
ever get hyper with the customers.

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Attend sales meeting with a cool mind. Greet the customers with a smile and try to solve their
queries at the earliest.

Keep in touch with the customers even after the deal. Devise customer loyalty programs for
them to return to your organization. Give them bonus points or gifts on every second purchase.

The sales manger must provide necessary training to the sales team to teach them how to
interact with the customers. Remember customers are the assets of every business and it is
important to keep them happy and satisfied for successful functioning of organization.

1.13 BENEFITS OF CRM CONCEPT

Today, customer is a source of information which is necessary for implementation of
marketing strategy. According to changes in market place and active participation of customers
in communicating marketing activities, Relationship Marketing becomes important. Transaction
Marketing whose purpose was to attract customers through non-personalized product portfolio
is replaced by Relationship Marketing which implies building long-term relationships with
customers through cross functional cooperation within bank.

(Figure 1). Emphasis on all market domains and customer retention Relationship Marketing
Emphasis on customer acquisition Transactional Marketing Functionally based marketing Cross-
functionally based marketing Figure 1. Transition to Relationship Marketing Source: Payne,
Adrian. 2005. Handbook of CRM: Achieving Excellence in Client Management. Oxford:
Butterworth-Heinemann. Relationship Marketing assumes unique relationship with customer by
adding more value to products and services (Lindgreen and Wynstra 2005, 735). Modern
communication technology becomes a tool that enables modernization of existing processes,
raises quality of business and communication between customers and bank.

Accurate information is becoming basis of competitive advantage. Proactive usage of information

involves participation of banks in creation of information and their usage in order to introduce changes
in business. Studies show that CRM concept (Richards and Jones 2008, 121):

 Improves ability to choose profitable customers;

 Integrates offer to customers through channels

 Improves efficiency and effectiveness of sales

 Personalizes marketing messages;

 Customizes products and services for customers

Improves pricing policy.MarkoLaketa, DusicaSanader, Luka Laketa, and ZvonimirMisic. 2015.

Customer Relationship Management: Concept and Importance for Banking Sector. UTMS Journal
of Economics 6 (2): 241–254. 244 CRM concept opens new opportunities to attract customers
through cross-selling of products and services, as sale of additional products and services within
existing customer base. Good long-term relations with customers create immunity of customers
on competition. Simmons, in his research, confirmed that if a bank focuses its activities on
meeting needs of customers, the proportion of customers, who are leaving bank, is reduced up to
25% and in the long period, costs of acquiring new customers are reduced, also (Catalan-
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Matamoros 2012, 4). Benefits of CRM concept is reflected through increasing revenues and
profitability, reducing costs and organizational changes in banking sector. Benefit of CRM
Concept Increase Revenue and Profit Decrease of Costs Organizational change Increase
possibility for retention and acquisition of customers; Increase possibility of cross-selling;

Creation loyalty of customers and increase profit; Maximize value for customers; Increase
profitability of customers Increase support to customers without increasing costs of services;
Decrease costs of sales; Lower costs of acquisitions of new customers. Banks can establish better
relationship with customers; Banks have comparative advantage. Customer Relationship
Management is a specific management process which must be aligned at all levels in bank.
Advantages of CRM concept is reflected at operational, tactical and strategic level.

Benefit of CRM Concept on Different Level of Management Benefit on operational level Better
management of customers data Better management of processes Better services to customers Better
position of employees Increase of productivity Increase of possibility to answer to customers in real
time Benefit for tactical level Better segmentation of market Better management of communication
channels Better analysis, reporting and prediction of customer behavior Benefit for strategic level
Better satisfaction of customers Better performances in organization Source: Graeme Shanks et.al.
2009. A Framework for Understanding Client Relationship Management Systems Benefits.
Communications of AIS 25 (26): 263–287.

Adoption of CRM concept in the banking sector requires jointly effort on three areas:

operational, analytical and organizational

 Operational CRM provides a unique source of information about customers. It deals with creation of
information and supports sales, marketing and customer service. Marko Laketa, DusicaSanader, Luka
Laketa, and ZvonimirMisic. 2015. Customer Relationship Management: Concept and Importance for
Banking Sector. UTMS Journal of Economics

 Analytical CRM is carried out through collection, processing and systematization of data in order to
obtain information relevant to Customer Relationship Management.

 Organizational CRM requires cooperation between marketing functions and infrastructure in order to
optimize activities aimed at customers, to create value for the bank and the customer through usage of
multiple channels of communication. This CRM is responsible for establishing customer interaction
through appropriate channel of communication. CRM success in bank depends on quality of their
integration (Figure 2). Operational CRM Analytical CRM Organizational CRM Figure 2. Relationship
between Analytics, Operational and Organizational CRM In order to optimize processes in banks and
satisfy customer needs, integration between analytical, operational and organizational CRM is
essential. Banks in Europe, Asia and North America have developed a modern approach to customer
through existence of operational, analytical and organizational CRM. Banks in Balkan region also
follows their approach. Despite lots of advantages that CRM concept provides, minority of banks in
Serbia has implemented CRM concept, while majority of banks are not yet in process of
implementation.

16
Creation loyalty of customers and increase profit; Maximize value for customers; Increase
profitability of customers Increase support to customers without increasing costs of services;
Decrease costs of sales; Lower costs of acquisitions of new customers. Banks can establish better
relationship with customers; Banks have comparative advantage. Customer Relationship
Management is a specific management process which must be aligned at all levels in bank.
Advantages of CRM concept is reflected at operational, tactical and strategic level.

Benefit of CRM Concept on Different Level of Management Benefit on operational level Better
management of customers data Better management of processes Better services to customers Better
position of employees Increase of productivity Increase of possibility to answer to customers in real
time Benefit for tactical level Better segmentation of market Better management of communication
channels Better analysis, reporting and prediction of customer behavior Benefit for strategic level
Better satisfaction of customers Better performances in organization Source: Graeme Shanks et.al.
2009. A Framework for Understanding Client Relationship Management Systems Benefits.
Communications of AIS 25 (26): 263–287.

Adoption of CRM concept in the banking sector requires jointly effort on three areas:

operational, analytical and organizational

 Operational CRM provides a unique source of information about customers. It deals with creation of
information and supports sales, marketing and customer service. Marko Laketa, DusicaSanader, Luka
Laketa, and ZvonimirMisic. 2015. Customer Relationship Management: Concept and Importance for
Banking Sector. UTMS Journal of Economics

 Analytical CRM is carried out through collection, processing and systematization of data in order to
obtain information relevant to Customer Relationship Management.

 Organizational CRM requires cooperation between marketing functions and infrastructure in order to
optimize activities aimed at customers, to create value for the bank and the customer through usage of
multiple channels of communication. This CRM is responsible for establishing customer interaction
through appropriate channel of communication. CRM success in bank depends on quality of their
integration (Figure 2). Operational CRM Analytical CRM Organizational CRM Figure 2. Relationship
between Analytics, Operational and Organizational CRM In order to optimize processes in banks and
satisfy customer needs, integration between analytical, operational and organizational CRM is
essential. Banks in Europe, Asia and North America have developed a modern approach to customer
through existence of operational, analytical and organizational CRM. Banks in Balkan region also
follows their approach. Despite lots of advantages that CRM concept provides, minority of banks in
Serbia has implemented CRM concept, while majority of banks are not yet in process of
implementation.

17
1.14The advantages can also be summarized according to the domain it contributes to:

Marketing

 To make intelligent business decisions with enhanced customer insights.

 To increase marketing velocity and speed to market.
 To maximize visibility into and control of your entire marketing process.
 To drive customer demand up.
 To increase returns on the marketing investments.

Sales

 To grow profitable relationships.

 To maintain focus on productive activity.
 To eliminate barriers to productivity.
 To improve sales efficiency service.
 To transform service into a profitable line of business.
 To increase customer loyalty.
 To increase the sales revenue.
 T reduce costs of customer service and field service
 To decrease service giveaways/ Poka yokes.

WEB CHANNEL ENABLEMENT

 To drive revenue and extend market reach.

 To increase customer convenience and satisfaction.
 To reduce the cost of sales and support.
 To build lasting customer loyalty.
 To improve sales and service profitability.

RUNNING AND CUSTOMER INTERACTION CENTER

 To increase customer satisfaction.

 To improve credibility with your customers.
 To increase revenue and productivity.
 To manage the customer interaction life cycle.

18
1.15 TECHNIQUES OF CUSTOMER RELATIONSHIP MANAGEMENT:

Loyalty
Program
One to one
Marketing
Data Ware
housing &
Data Mining
TECHNIQUES
After sale
OF CRM Services

Suggestion
Schemes
Customer Satisfaction
Service Agents Surveys

1) Data Warehousing and data Mining:

CRM Analysis develop data warehouses and use data mining techniques to develop and
maintain long term relationship with valuable customers.
 A data warehouse is a companywide electronic database of detailed customers
information. The purpose of data warehouse is to gather information and to store it at
central location.
 Once the data warehouse locates the data at a central place the data analysts use data
mining Techniques to examine the mound of data to find out interesting facts of the
customers.

2) Loyalty Program:
Firms May Use Variety of Loyalty Programmes.

3) Priority customer Programmes:

Some firms use priority Programmes. The priority customers are the MVCs. They are
resolving Complaints.

19
 4) Satisfaction Surveys :
A firms may conduct Purchase Satisfaction surveys. Such Surveys help to find out the level of
customer Satisfaction.

1.16 THE EMERGENCE OF CRM :

The developing customer relationship management has historical antecedents going back into the pre-
industrial area. In the recent years however several factors have contributed to the rapid development
and evolution of CRM. These include the growing de-intermediation process in many industries due to
the advent of sophisticated computer and telecommunication technologies that allow producers to
directly interact with the end customers.

The recent success of On-line banking, Charles Schwab and Merryll Lynch’s On-line investment
programs, direct selling of books, automobiles, insurance etc. on the internet all atleast to the growing
consumer interest in maintaining direct relationship with marketers. The de-intermediation process and
consequent prevalence of Customer Relationship Management is also due to the growth of the service
economy.

Another force driving the adoption of customer relationship management has been the total quality
movement. When companies embraced Total Quality Movement philosophy to improve quality and
reduce cost, it become necessary to involve suppliers and customers in implementing the program at all
levels of the value chain. This needed close working relationships with customers, suppliers and other
members of the marketing infrastructure. Other programs such as Just in Time and Material resource
planning also made the use of interdependent relationships between suppliers and customers.

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

20
1.17 OBJECTIVE OF CUSTOMER RELATIONSHIP MANAGEMENT IN
BANKS

OBJECTIVE OF

CUSTOMER

RELATIONSHIP

MANAGEMENT

The push towards better CRM technologies is natural result of the search by business of greater
productivity and efficiency in customer facing operations like sales, marketing, customer service and
support. E.g. in sales, companies need IT system that provides greater control and efficiency. This
means improved forecasting and to capability, greater visibility into sales performance across a variety
of channels increased productivity by external sales forces and reduced sales costs, meanwhile,
companies must meet customer demands for better quality timeless and customization in the service
they deliver.

Customer

Sales
Support

Marketing
Service

21
Objectives of Customer Relationship Management
In this section will have various authors view on CRM objectives and benefits

According to Peppers (1999) he identifies the following objectives.

Customer differentiation: different customers have different needs and expectations, it is

important that organisation take time and interest to understand individual customers' needs.

Customer interaction: An organisations need to know its customers, communication is an

important tool when it comes to interacting with customers organisation should keep track of
customers behaviour and respond to their every need.

Personalization: This can be view in many form for example customize product or service, use
customers' names this is very important in the hotel industry make them feel important and
unique.

According to Gronroos (2004) he believes having a continuous relationship with customer can
help in building security, trust and a feeling of control.

Gummerson (1994) agrees relationship building is fundamental to an organisation in

maintaining a positive market share. Gummerson identifies these objectives:

Retention: collecting relevant information on customers such as habits, preferences or even

knowing customers' names can create a lasting relationship in winning them.

Intimacy of profits: Information Technology is very useful in creating a feeling of intimacy with
customers that means getting to "know" who the customers are. The benefit derives from
building a mutual relationship which will result in increased profits for both the customer and
the organization.

Key principals of customer relationship management

Differentiate Customer

All customers are not equal; recognize and reward best customers disproportionately.
Understanding each customer becomes particularly important. And the same customers’
reaction to a cellular company operator may be quite different as compared to a car dealer.
Besides for the same product or the service not all customers can be treated alike and CRM needs
to differentiate between a high value customer and a low value customer.

What CRM needs to understand while differentiating customers is?

- Sensitivities, Tastes, Preferences and

Personalities

- Lifestyle and age

- Culture Background and education

- Physical and psychological characteristics

22
Differentiating Offerings 

Low value customer requiring high value customer offerings 

Low value customer with potential to become high value in near future 

High value customer requiring high value service 

High value customer requiring low value service.

Keeping Existing Customers 

Grading customers from very satisfied to very disappoint should help the organization in
improving its customer satisfaction levels and scores

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

Maximizing Life time value 

Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points
by customer, marketers can maximize share of purchase potential. Thus the single adults shall
require a new car stereo and as he grows into a married couple his needs grow into appliances.

Increase Loyalty 

Loyal customers are more profitable. Any company will like its mind share status to improve
from being a suspect to being an advocate. Company has to invest in terms of its product and
service offerings to its customers. It has to innovate and meet the very needs of its clients/
customers so that they remain as advocates on the loyalty curve. Referral sales invariably are
low cost high margin sales.

Business intelligence and analytical capabilities 

CRM applications contain a vast amount of information pertaining to an organization customers

and prospects. This information needs to be leveraged an analyzed by decision. This is possible
only if CRM solutions have robust business intelligence and analytical capabilities. This is a major
requirement primarily for marketing application.

Customer retention

Under the present context of competitive environment, the focus of the organizations is more on
customer retention than simply on customer acquisition. Customer retention is the process of
keeping customer in the customer inventory for an unending period by meeting the needs and
exceeding the expectations of those customers. It is approach of converting a casual customer
not a committed loyal customer.

Why is customer retention preferred?

Some of the major benefits of customer retention are presented below. customer come within
the fold of an organization in the following ways:
23
Customer by chance. 

Customer by occasion 

Customer by choice 

Customer by reception 

Customer by loyalty 

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

24
25
Customer retention would enable the organization to minimize expenses in terms of acquisition
of new customers. Customer retention cost for an organization is expected to be far less than that
of the acquisition concerned.

Customer retention enables a long tem relationship of mutual benefit, both to the organization
and to the customer concerned.

There appears to be close interaction between customer retention and customer loyalty. Loyalty
is usually measured in terms of longevity of the patronage of customers. Loyalty that arises out of
retention is a preferred state, as compared to loyalty of reluctant customers.

Retained customers would help to spread a positive image of the organization by word of mouth,
which in turns helps to acquire new customers to the customer inventory.

Approach to retention process

The approach of the organization at the retention process is expected to be different from the
approach adopted at the acquisition process. The difference is indicated in the following lines.

At the acquisition the focus is on acquiring relationship whereas at the retention, it is on

nurturing the relationship.

At the acquisition the focus is on demographic, psychographic profile of the customer, whereas
the retention process the focus is more on past and present transactional profiles in addition to
demographic, psychographic profiles.

1.18 CUSTOMERRELATIONSHIPMANAGEMENTININDIAN BANK :

Indian banks had presumed that their operations were customer-centric, simply because They had
customers .These banks ruled the roost, protected by regulations that did not allow free entry into the
sector. And to their credit, when the banking sector was opened up, they survived by adapting quickly
for long to the new rules of the game.

Many managed to post profits. For them an unexpected bonanza came from government bonds in
which most were hugely invested.

Ironically, the Reserve Bank of India's moves to cut aggressively the interest rates after 1999, pushed
up the prices of bonds. So banks had a windfall doing almost nothing. The bond profits, like manna
from heaven, improved the balance-sheets of all banks irrespective of their core performance.

1.19 THREE PHASES OF CRM

Customer relationship management mainly covers three main aspects of customer life cycle; namely:
acquisition, retention and extension.
26
1. Acquisition – This focuses more on employee promotion, managing their profiles, sending direct
emails, customer service, incentives and services.
2. Retention – It benefits customers and add value to the customer selection by adopting loyalty
schemes, promotions, community, extranets and personalization.
3. Extension – The customer selection is extended by direct emails, onsite promotions and learning.

In today’s competent era, it is important for every business organization to work on the customer
relationship management model for making the business processes more organized and profitable.
There are countless reasons to implement CRM in a business environment.

CRM may

1. Help the business marketing departments for identifying and targeting their potential clients,
managing business marketing campaigns and discovering qualified leads.
2. Establish individual relationship with the happy customers.
3. Boost sales and streamline existing processes.
4. Provide accurate information to the employees required for improving customer services and
understand their needs better.

CRM is a faster way to

1. Identify and handle problems/ complaints of the clients regarding business processes.
2. Monitor all the sources of contact between the company’s potential clients and the business
organization.
3. Bestow employees with essential information on the product specifications, technical support and
product use criterions.
4. Schedule and manage follow-up sales and conduct periodical calls for assessing the customer
satisfaction rates & their repurchase probabilities.

1.20 IMPORTANCE O F CUSTOMER RELATIONSHIP MANAGEMENT:

Customer relationship management is one of the most important aspects of effective customer
service. Although the role of client relationship has drastically changed over the past few years due
to the popularity of communication channels such as social networks but building personal
relationships with clients is still important in order to create more value for them. Companies can
develop and maintain strong relationships with clients through the following:

 INVESTING IN HUMAN RESOURCE DEVELOPMENT

Companies should invest in developing their human resource, particularly sales and
service staff. It should be ensured that people with the right skill set and qualifications
are hired to interact with clients. Moreover, customer service training and
workshops could be organized to further enhance the skills of the current workforce.

27
 OFFERING VALUE-ADDED SERVICES
In order to develop lasting customer relationships, it is important to offer value-added
services such as after-sales support, advice and fulfilling the unique needs of individual
groups of clients. Additionally, it must be ensured that the service standards are
maintained and clients don’t have to face any form of inconvenience during the
shopping experience.

 RESULTS IN CUSTOMER SATISFACTION

Companies that spend time and energy on building and maintaining strong relationships
with their clients often experience rising customer satisfaction levels, which is mainly
because clients feel more comfortable when they know the CSRs on a personal level,
from whom they can seek advice and recommendations.

 PROVIDES AN OPPORTUNITY TO LEARN MORE ABOUT

CUSTOMERS
Staying in touch with clients and interacting with them on a regular basis, helps a
business gain insight into their expectations. In order to stay competitive, it is important
for any business to know its clients and anticipate their future needs. This can done by
building strong, reliable communication channels, which will allow the flow
ofinformation from consumers to the company in a seamless fashion. Information can
be a powerful tool for most companies, since it is the foundation upon which companies
can innovate, experiment and market new products and services.

 BRINGS YOU WORD OF MOUTH REFERRALS

Customers are more likely to recommend a particular product or service to their friends
or family if they receive high quality service experience. Word-of-mouth promotion has
proven to be an effective avenue to create hype and promote a trend among customers.
It has an added benefit of being highly cost-effective since the company doesn’t have to
spend directly on marketing and promotion.

 ENHANCES CUSTOMER LOYALTY

Effective client relationship management enables a brand to induce customer loyalty,
which in turn translates into repeat sales for the company. The greater volume of sales
also means higher revenues and profits for the brand in addition to growth. Customer
28
 loyalty also provides the opportunity for companies to effectively cross-sell since loyal
clients already trust the quality of products and services, they wouldn’t hesitate to try
other products and services that are being offered by that particular brand.

 Encourages Insightful Feedback from Customers:

Strong relationships with clients can play a significant role in terms of collecting
insightful, reliable and timely feedback from them. Clients are more likely to be honest
about their feedback if relationship between the company and them is based on mutual
trust and understanding. The feedback can be invaluable, since it has the potential to aid
the next innovation for the company. Feedback is also important to ensure the level of
service quality in line with the competition and consumer expectations. Any flaws,
shortcomings or discrepancies in the service delivery or the products can be
instantaneously recognized through feedback, along with possible suggestions as
corrective measures. Consequently, honest feedback can create a cycle of continuous
improvement that not only adds value to the brand but also helps the company achieve
the pinnacle of customer service excellence.

 CUSTOMER LOYALTY :
CRM enables business firms to maintain detailed information about individual customers.
Therefore CRM helps to develop customer loyalty
BANKS

1.21 INTRODUCTION
The word bank is originated from the German word Bank which means heap or mouth or joint stock
fund. From this, the Italian word Banco meaning heap of money was coined. The English word of bank
is prevalent today that is as an institution accepting money as deposits for lending.

A Bank is a financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or
safeguards money for its customers. Bank is an institution that deals in money and significantly makes
some or all of its profits by making loans that do not have to be repaid until some future date.

A bank is an institution which deals in money and credit. This bank is an intermediary which handles
other people money both for their advantage and to its own profit. But bank is merely a trader in
money but also an important manufacturer of money.

For a common person it may be just a storehouse where he may store his money; for a businessman it
may be a financial institution and a day to day customer it may be an institution where he can deposit
his savings.

29
Bank plays an important role in the economy of any country as they hold the saving of public. Provides
a means of payment for the goods and services and provide necessary finance for the development of
business and trade. Thus, bank may also be defined as a financial institution that links the flow of
funds from savers to the users.

There are many other financial institutions that are not usually thought of as banks but which
nevertheless provide one or more of these broadly defined banking services. These institutions include
finance companies, investment companies, investment banks, insurance companies, pension funds,
security brokers and dealers, mortgage companies, and real estate investment trusts.

DEFINITION OF BANK
Bank is also defied as “one who is ordinary course of business honors the cheque drawn upon
him by person from and for whom he receives money on current accounts.”

1.22 BANKING
Banking is an ancient business with its history dating back to the 13th century when the first bill of
exchange was used as money in medieval trade in Italy. In the late 1200’s bards ad peruzzi families of
Florence first formed bank. For centuries bank have borrowed and lend money to businesses, trade and
to people, charging interest on deposits.

There are many other financial institutions that are not usually thought of as banks but which
nevertheless provide one or more of these broadly defined banking services. These institutions include
finance companies, investment companies, investment banks, insurance companies, pension funds,
security brokers and dealers, mortgage companies, and real estate investment trusts.

Banking is the business of providing financial services to consumers and businesses. The basic services
a bank provides are Opening Accounts, which can be used to deposit money as it is not safe to keep
huge amount of money in office or house. It also provides cheque facility which acts as a cash which
had made easier to make payments and purchase goods and services and therefore help both consumers
and businesses, who would find it inconvenient to carry or send through mail huge amounts of cash. In
this way banks plays a very important role .There are various types of bank which offers such services.

Banking means accepting for the purpose of lending or investment of deposit of money from the
public, repayable on demand or otherwise and withdrawals by cheque, drafts other or otherwise. A
banking company may be defined as “any company which transacts the business of banking.”

1.23 CLASSIFICATION OF BANKS IN INDIA

1. PUBLIC SECTOR BANKS

a) These are the banks which are controlled by Governments.
b) State Bank of India and its associate banks called the State Bank Group
c) 20 Nationalized Banks.
d) Regional Rural Banks mainly sponsored by Public Sector Banks.

30
2. PRIVATE SECTOR BANKS
These are the banks which are not owned by the governments .These banks are privately owned.

a) Old generation private banks

b) New generation private banks.
c) Foreign banks in India.
d) Scheduled co-operative banks.
e) Non-scheduled banks.

3. CO-OPERATIVE BANKS
The Co-operative banking sector has been developed in the country to the supplement village money
lender.

a) State Co-operative Banks.

b) Central Co-operative Banks.
c) c ) Primary Agriculture Credit Societies.
d) Land Development Banks.
e) Urban Co-operative Banks.
f) Primary Agricultural Development Banks.
g) Primary Land Development Banks
h) State Land Development Banks

4. DEVELOPMENT BANKS
These banks help in the Infrastructure development of the economy.

a) Industrial finance corporation of India (IFCI)

b) Industrial Development bank of India (IDBI)
c) Industrial Credit and Investment Corporation of India. (ICICI)
d) Small Industrial Development Bank of India. (SIDBI)
e) National Bank for Agriculture and Rural Development. (NABARD)
f) Export Import Bank of India.
g) National Housing Banks.

1.24 SOME OF THE IMPORTANT FEATURES OF BANKING ARE AS

FOLLOWS

 DEALING OF MONEY
The bank accepts money from the public and advances them as loans to the needy people. The deposits
of different type – current account, fixed account, saving account. The deposits accepted on various
terms and conditions.

31
  DEPOSITS MUST BE WITHDRAWALS
The deposits (other than the saving deposits) made by the public can be withdraw able by cheques,
drafts, or otherwise that is bank issue and pay cheques.

 DEALING WITH CREDIT

The banks are the institution that can create credit that is creation of additional money for lending.
Thus “creation of credit” is unique feature of banking.

 COMMERCIAL IN NATURE
Since all banking functions are carried on with the aim of making profit, it is regarded as commercial
institute.

 NATURE OF AGENT
Bank possesses the character of an agent because of various agency services it provides.

Opening Accounts

A) BANKS FACILITATED THE OPENING OF THREE MAJOR TYPES OF

ACCOUNTS:
Saving Accounts

Current Account

Fixed Deposits Accounts

 SAVING ACCOUNT
Saving Account is an account in which people can save the money fort short period of time. The
customer can deposit or withdraw the money at any time and there are no restrictions on the times of
removal of money. The customer can remove the money from the saving account by cheques or
withdrawal form, but in case for issuing cheques book he needs to have a minimum balance in his
saving account and in case of withdrawal form the customer should have a minimum balance of
generally Rs.100 in case of Co-Operative banks and 500 in case of nationalized banks.

 CURRENT ACCOUNT:
A current account is mostly used by the business people because they can safely deposit their money as
keeping huge amount in the office is not safe. There are no restrictions on the number of time the
deposits and withdrawal of money. The bank also provides overdraft facility on this kind of account.
As a businessman may be in a need of money at any time. The rate of interest is very low as compared
to other types of accounts.

32
  FIXED DEPOSITS ACCOUNTS:
In this account the funds are deposited for a particular fixed period of time (5years, 10 years). This
period is known as Maturity Period prior to which the money cannot be withdrawn. If the person wants
to withdraw the money before the maturity period he will loose his interest for that particular year. The
interest earned on such accounts is maximum as compared to other accounts.

B) LOANS
Banks provide Short Term, Medium Term and Long Term Loans which can take any of the below
form:

 Commercial / Industrial Loans

 Consumer loans,
 Mortgage loans.
 Commercial and Industrial loans
Commercial and Industrial loans are loans to businesses or industrial firms. These are primarily short-
term working capital loans (loans to finance the purchase of material or labor) or transaction or longer-
term loans (loans to purchase machines and equipment). Most commercial banks offer a variable rate
on these loans, which means that the interest rate can change over the course of the loan. Whether a
bank will make a loan or not depends on the credit and loan history of the borrower, the borrower's
ability to make scheduled loan payments, the amount of capital the borrower has invested in the
business, the condition of the economy, and the value of the collateral the borrower pledges to give the
bank if the loan payments are not made.

 Consumer loans
Consumer loans are loans for consumers to purchase goods or services. There are two types of
consumer loans: closed-end credit and open-end credit.

 Closed-end
Closed-end credit loans are loans for a fixed amount of money, for a fixed period of time (usually not
more than five years), and for a fixed purpose (for example, to buy a car). Most closed-end loans are
called installment loans because they must be repaid in equal monthly installments. The item
purchased by the consumer serves as collateral for the loan. For example, if the consumer fails to make
payments on an automobile, the bank can recoup the cost of its loan by taking ownership of the car.

 Open-end
Open-end credit loans are loans for variable amounts of money up to a set limit. Unlike closed-end
loans, open-end credit does not require a borrower to specify the purpose of the loan and the lender
cannot foreclose on the loan. Credit cards are an example of open-end credit. Most open-end loans

33
carry fixed interest rates-that is, the rate does not vary over the term of the loan. Open-end loans
require no collateral, but interest rates or other penalties or fees may be charged-for example, if credit
card charges are not paid in full, interest is charged, or if payment is late, a fee is charged to the
borrower. Open-end credit interest rates usually exceed closed-end rates because open-end loans are
not backed by collatera

1.25 CRM IN CORPORATE BANKING:

Increasing competition in the Financial Services Sector has forced banks to search or superior tools to
formulate business strategies in order to win clients and establish mutually beneficial, long-
termrelations with customers. In order to achieve these objectives, a Customer Relationship
Management(CRM) tool can be implemented.

Media release - 2 June 2016

TBSB Bank announces record profit before tax of $85.6 million

New Plymouth, New Zealand - TBSB Bank today announced a record pre-tax profit for the 12 months
to 31 March 2016 of $85.6 million as a result of the Bank’s continued focus on revenue growth and
cost containment.

TBSB Bank CEO Kevin Murphy said FY2016 saw the Bank better position itself to compete and build
a sustainable financial future while maintaining a strong leadership position in customer satisfaction. “I
am pleased with this year’s results. We experienced another year of strong financial performance as a
result of our ongoing focus on meeting customers’ needs with desirable products while controlling
costs in line with a declining margin.”

Over the last year TBSB Bank continued listening to feedback to enhance and expand its products and
services to create a better customer experience. The Bank’s deposits increased 8.3% and hit a record
high of $5.8 billion. These results can be attributed to the growth strategy of the Bank supported by the
launch of a new suite of transactional, savings and investment products.

We also invested in our people, processes and tools for our business in order to improve our bench
strength and better position the Bank for long-term growth," said Mr. Murphy. "As a result, our cost to
income rate has increased from 39.0% to 46.6% and while we expect this figure may increase over the
coming year as we continue to build our capacity, it is forecast to trend back to the low forties
thereafter.”

34
At 14.52% the Bank's Capital Adequacy Ratio continues to be one of the strongest of
all New Zealand banks, and is well above the minimum Reserve Bank requirements
of 10.5%. “We continue to operate with a well-funded balance sheet and outrank
much of the sector in efficiency, without compromising our renowned focus on
building our relationships with customers and improving their experience with our
products and services,” said Mr. Murphy.

The year ahead will be one of further growth and development for TSB Bank, with a
strategic focus on enhancing our digital delivery, improving our customers’
experiences and strengthening our networks. “As the industry becomes more
competitive, we must stay focused on putting customers’ interests first,” said Mr.
Murphy. “We look forward to continuing to help New Zealanders get ahead with the
goal of making banking really easy for them – every time and everywhere.”

Financial Information

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Annual Report & Disclosure Statement (for the year ended 31 March 2017) (PDF
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Summary Annual Report (for the year ended 31 March 2017) (PDF 489.58 KB)

QFE Disclosure Statement (PDF 31.38 KB)

Disclosure Statement (for the three months ended June 2017) (PDF 526.54 KB)

CO-OPERATIVE BANK IN INDIA

Co-operative Banks in India have become an integral part of the success of Indian
Financial Inclusion story. They have achieved many landmarks since their creation
and have helped a normal rural Indian to feel empowered and secure. The story has
not been smooth and has its share of procedural glitches and woes placed at various
pockets.

35
1.26 HISTORY OF COOPERATIVE BANKING IN INDIA
The historical roots of the Cooperative Movement in the world days back to days of
misery and distress in Europe faced by common people who had little or no access to
credit to fund their basic needs, in uncertain times. The idea spread when the
continent was faced with economic turmoil which led large populations to live at
subsistence level without any economic security. People were forced to poverty and
deprivation. It was the idea of Hermann Schulze (1808-83) and Friedrich Wilhelm
Raiffeisen (1818-88) which took shape as cooperative banks of today across the
world. They started to promote the idea of easy availability of credit to small
businesses and for the poor segment of society. It was similar to the many
microfinance institutions which have become highly popular in developing economies
of today. Although this helped spread cooperative movement in many parts of Europe,
in British Isles it is came from the revivalist Christian movement and found high
acceptance with working class and lower middle class segments of society. However,
UK and Irish credit unions in 20thcentury were inspired by US credit unions which in-
turn owe their emergence to Canadian adaptations of the German cooperative banking
concept. These movements were supported by governments of the respective
countries. This success was achieved due to the failure of the commercial banks to
fund and support the needs of small business owners and ordinary people who were
outside the formal banking net. Cooperative banks helped overcome the vital market
imperfections and serviced the poorer layers of society.

1.27 THANE BHARAT SAHAKARI BANK LTD.

36
HISTORY OF THANE BHARAT SAHAKARI BANK LTD.
The Thane Bharat Sahakari Bank Ltd" is a leading Bank in Thane District. The Bank
has grown with the growing industrialization in the city of Thane. In the early
seventies, there were only 2 Banks in Thane city. However for the growing needs of
the city, these Banks were not sufficient. Therefore, Dr. V N Bedekar, M Y Gokhale
and many of like-minded senior social workers came up with the idea of having one
more Bank in the City. Accordingly, Bank was registered with District Co-Operative
register on 25th September 1978. Consequently, the first General Body meeting was
held on 20th October 1978 and the first Board of Directors was elected therein. Dr V
N Bedekar was elected as the Chairman and Shri M Y Gokhale as the Vice Chairman.
And RBI License was obtained on 19th April 1979. Within just 10 days, on the day of
Akshaytrutiya, the Bank was inaugurated at the hands of noted Economist Dr V M
Dandekar. The Bank had spacious premises at "Shatataraka" in Vishnu Nagar area.
Initially the Bank was named as "Bharat Sahakari Bank Ltd., Thane". During the
routine operations of the Bank, the Bank saw good growth and the decision of
computerizing the operations was taken. The Bank also installed ATMs. However as
the Bank was growing, it was observed that there used to be few confusions in the
people‘s mind because of the similarity in names between Bharat Co-op Bank and
Bharat Sahakari Bank. Then it was decided that our Bank be renamed as "The Thane
Bharat Sahakari Bank Ltd". This was done on 29th November 2000. On 8th March
2003, The Reserve Bank of India conferred the "Scheduled Bank" status to the Bank.
The Bank is awarded with many awards. In 2003-04, the Bank celebrated the Silver
Jubilee Year. The Bank is constantly participating in many social events in the City of
Thane and also sponsoring many of them. The Bank is operating for all 7 days of the
week and is at the service of its Shareholders, Depositors and Account Holders.

The Thane Bharat Sahakari Bank Ltd., established in 1979, is one of the leading Co-
operative Banks in Thane district. Since the date of inception, the Bank has grown by
leaps & bounds with 24 branches, spread over Mumbai, Thane, Raigad and Pune
districts. (as on 31.03.2016)

At the time of inception of the Bank, i.e. in late 1970s, there were only 2 Co-operative
Banks in Thane city. Thane city, being centrally situated in the growing industrial belt
on one hand, and being equidistant to western side on Ghodbunder Road to Karjat,
Kasara and also Mumbai on the other, was developing vertically and horizontally as
well, which resulted into growth in the population belonging to all strata of the
society. Naturally, a need for another Bank was evident. Two enthusiastic persons,
viz. Dr.V.N.Bedekar and Mr.M.Y.Gokhale, along with many such likeminded senior
social workers, came up with an idea of having one more Co-operative Bank for
Thane city and district.

37
After completing preliminary formalities, the Bank was registered with District Co-
operative Registrar on 25th September 1978. Subsequently, the first General Body
Meeting of the Bank was held on 28th October 1978 and in that Meeting, a Team of
first Board of Directors was elected. Dr.V.N.Bedekar was elected as the Chairman
and Mr.M.Y.Gokhale as Vice Chairman.

The relative Reserve Bank of India (RBI) Licence for opening the Bank was obtained
on 19th April 1979 and on the auspicious day of ‘AkshayaTritiya’, on 29th April
1979, the Bank was inaugurated at the hands of noted Economist of that era,
Dr.V.M.Dandekar. The Bank started functioning at spacious premises at
‘Shatataraka’, with its Administrative Office and the first Branch viz. Main Branch.
The Bank was awarded status of ‘Scheduled Bank’ on 8th March 2003.
It will be interesting to know that, initially the Bank was named as the “Bharat
Sahakari Bank” Ltd., Thane. Subsequently, the name was changed to the “Thane
Bharat Sahakari Bank” Ltd. to avoid confusion in the minds of the people, as two
other banks, styled as “Bharat Co-operative Bank” and Bharat Sahakari Bank”
werealso functioning at the time. Thus, the transformation in the name from “Bharat
Sahakari Bank Ltd”. Thane to “Thane Bharat Sahakari Bank Ltd”, took place.

In the year 2003-04, the Bank celebrated Silver Jubilee Year. A Souvenir was
published in the Silver Jubilee year, highlighting various milestones achieved by the
Bank during its journey of 25 years.

The Bank participates in many social events in Thane city, like “Nav Varsha Shobha
Yatra” (Nandi songs of which were famous / popular ) on the eve of Gudhi Padwa and
also contributes to many social events through donations, ads and, even on few
occasions it sponsors some social programmes.

The Bank is well equipped in the area of mechanization / computerization of its

services through 24 ATMs, Mobile Banking, RTGS, NEFT etc. etc.

38
39
40
 CHAPTER : 2

RESEARCH METHODOLOGY

2.1 RESEARCH CONCEPTUAL CLARIFICATION

Research methodology is a methodology for collecting all sorts of information and
Data pertaining to the subject to question. The objective is the examine all the issues
involved and conduct situational analysis. The methodology includes the overall
research design, sampling procedureand field work done and finally analysis
procedure.

The Study has considered the people of one Branch of the Thane District. A total of
50 People selected randomly formed the sample for the study. Questionnaire were
distributed to all the 50 Respondents. Among which there are many Respondents not
give feedback.

The collected data was tabulated using Microsoft Excel spreadsheet with appropriate
coding . Further the data was analyzed using pie and Bar diagrams for easy
interpretation of Frequently

2.2 RESEARCH DESIGN:

A simple definition of research design is “specification of methods and procedures for
acquiring the information needed.

A research design is the arrangement of condition for collection and analysis of data
in manner that aims to combine relevance to the research purpose with economy in
produced.

In short it provides the necessary framework for understanding the study and
collection of data.

2.3 RESEARCH INSTRUMENT

Research Instrument is generally used to collect primary data. It is used to collect
information through using the instruments. Instrument should be suitable as per the
study.

2.4 QUESTIONNAIRE

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Questionnaire is the formal set of question prepared to collect the required
information. This is one of the most effective and popular technique used in surveyed.
Before deciding the questions it is important to understand the exact nature of the
information required.

2.5 SOURCES OF DATA

Sources of
data
Primary data secondary data

PRIMARY DATA
The data which are originally collected by investors or agency for the first time for
any statistical investigation and used by them in the statistical analysis are term as
primary data.

Use in the project work

This data is collected by using questionnaire method on the sample size. The
questionnaire is designed in such a manner that it covers open ended which was
necessary to fetch the information in the pure form.

Secondary data:
The data which have been already collected and proceed by some agency or person
and take over from there and used by any other agency for their statistical are term as
secondary data.

Internet provides easy and quick references from website related to the study

USE IN THE PROJECT WORK

Secondary data are data complied originally by somebody and available in
publication, records, books, etc. which may be used by me for my project work. This
was collected from various sources such as books, websites, newspapers, etc.

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2.6 SAMPLE
A finite subset of a unit selected from it with the objective of investigating its
properties is called as sample.

USE IN THE PROJECT WORK

The questionnaire is use as a sample in the project work.

SAMPLE SIZE
Sample of 50 customer was taken into study their data was collected . However
respondents of 50 customer is considered for the study.

The number of units in sample is known as a sample size. These refer to the number
of item to be selected form the universe to constitute a sample. The sample should
neither be large nor too small. The survey was done by forwarding the questionnaire
to more than 50 customers. The responses came from 50 customers within a specific
time period.

SAMPLING TECHNIQUE:
To study the project, a simple random sampling techniques is used.

USE IN THE PROJECT WORK

The sample size used in the project work is 50.

SAMPLING UNIT
A decision has to be taken into concerning a sampling unit before selecting sample.
Sampling unit may be a geographical one such as a state, district, village etc. or a
construction unit such as house or it may be an individual. The researcher will have to
decide one or more of such unit that he has to select for his study.

The questionnaire was given & the data was collected from direct final customers
directly, thus the sample unit was direct customers.

USE IN THE PROJECT WORK

Sampling unit is final customer.

3.7 OBJECTIVE:

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 The main objective of the study is to examine the importance of CRM in banking
sector, and its impact on the ‘Customer Satisfaction’. The other specific objectives of
the study are:

1. To understand concept of Customer Relationship Management.

2. The study of Customer Relationship Management Practice in Banking.
3. To Analyze the Data Analysis.
4. To Provide Loyalty Program to its Customer
5. To review the literature on the concept and use of CRM in banking sector.
6. To analyze the perception of customer on CRM as a tool of banking sector in
retention of customers in general

2.8 HYPOTHESIS:

1. Customer Relationship Management Practices helps in building customer

2.9 SCOPE:
1. CRM, or customer relationship management, is concerned with the
development and maintenance of mutually beneficial relationships with
strategically significant partners.
2. Its focus is the creation of long-term value, and not just short-term profits, for
the company and all it works with.
3. The scope of CRM can thus be defined according to its constituencies, how
long-term value can be created for and with them and the benefits of doing so.
4. The Customer is key importance because only relationship with customer
generate revenue for a company.
5. The good relationship with customer is also increase the profit margin of
Bank.
6. The scope is limited because only cover one Branch of Shreenagar

2.10 SIGNIFICANCE:
1. Customer Relationship Management is important to increase profitability.
2. It helps to encourage customers.
3. It improvecustomer service.
4. A CRM system is not only uses to deal with the existing customers but it also
useful I acquiring new customers.
5. This helps in focusing and concentrating on each and every customer
separately.
6. This increases the chance of getting more business which ultimately enhances
turnover and profit.

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2.11 LIMITATION:
1. It is not cover whole of the Branches of Bank.

2. The time period for the study is also a limited factor and the results of the
study may tend to change in future course of time, where the time period
changes.

3. The researcher faces some difficulty due to the lack of co-operation from some
respondents and the bias of respondents cannot be completely ruled out.

4. It is very difficult to fetch sufficient customer information from the bank since
they maintain privacy and security in providing customer profile.

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 CHAPTER 3

REVIEW OF LITERATURE

3.1 Introduction:
A restricted view of Customer Relationship Management would be database
marketing focusing on how promotional marketing is linked to database management
tools. A more widely accepted idea states that it is the application of technology that
emphasizes on individual or one to one relationships with customers by integrating
database knowledge with the long term prospects of growth and customer loyalty.
Managing a successful CRM implementation requires an integrated and balanced
approach to technology, process, and people (Chen, J. Injazz, Popvich, K., 2003).CR

.CRM or Customer Relationship Management is an enterprise wide initiative that

belongs to all areas of an organisation (Singh D. and Agrawal, D.P. 2003). It reflects
the comprehensive strategy and process of acquiring, retaining, and partnering with
selective customers to create superior value for the company and the customer.
Customer Relationship Management is a term for the methodologies, technologies
and e-commerce capabilities used by the firms to manage customer relationships. In
particular CRM software packages aid the interaction between the customer and the
company, enabling the company to co-ordinate all of the communication efforts so
that the customer is presented with a unified message and image.

CRM coordinates touch points around a common view of the customer (Eckerson and
Watson, 2000). As the business gets larger and number of customer relationships to
be managed increase exponentially, it calls for integration of different business
departments to collaborate the customer information to provide a unified view of
customer interaction to serve the customers better. Customer Relationship
Management is the strategic process of shaping the interactions between a company
and its customers with the goal of maximizing current and lifetime value of customers
for the company as well as maximizing satisfaction for customers (Rajagopal,
Sanchez and Romulo Sanchez, 2005).

CRM can be viewed as an application of one-to-one marketing and relationship

marketing, responding to an individual customer on the basis of what the customer
says and what else is known about that customer (Peppers, Rogers and Dorf, 1999).It
is a management approach that Chapter 2 20 Ph.D. Thesis enables organisations to
identify, attract, and increase retention of profitable customers by managing

relationships with them (Hobby, J., 1999) and further identifying strategically
significant customers (Buttle, F., 2001).

46
CRM is an enterprise wide approach to understanding and influencing customer
behaviour through meaningful communication to improve customer acquisition,
customer retention, customer loyalty, and customer profitability. CRM can be viewed
as an application of one-to-one marketing and relationship marketing, responding to
an individual customer on the basis of what the customer says and what else is known
about that customer (Rogers Peppers and Dorf, 1999). It is a management approach
that enables organisations to identify, attract, and increase retention of profitable
customers by managing relationships with them (Hobby, J., 1999) and further
identifying strategically significant customers (Buttle, F., 2001).

In the academic community, the terms “relationship marketing” and CRM are often
used interchangeably (Parvatiyar, A. and Sheth, J., 2002).The heart of marketing is
relationships and nurturing long term relationships should be the goal of marketing
practice (Berry, L.L. and Wall, E.,2006). Five macro environmental factors
responsible for the growth of relationship orientation in marketing (Sheth, J.N. and
Parvatiyar, A., 2000) included-  Rapid technological advancements, especially in the
field of information technology.  The adoption of total quality programs by
companies.  The growth of the service economy.  Organisational development
processes leading to the empowerment of individuals and teams.  An increase in
competitive intensity leading to concern for customer retention.

Customers are now more than ever demanding a different relationship with their
suppliers, managing a close relationship has become a central aspect in delivering the
business goals (Xu, Yen et al. 2002). A company’s product can quickly be compared
to another, and many companies are offering very similar products or services to each
other. With this in mind, the relationship experience becomes one of the greatest
competitive aspects for a business’s survival. Increased competition reduces brand
loyalty, making the job of the marketers more complex. Further, customers also
become indifferent to the myriad marketing messages being thrust upon them. As a
result, marketing needs to be more well directed and specific, because customers,
whether consumers or businesses, do not want more choices. They want exactly what
they want, Chapter 2 22 Ph.D. Thesis when, where and how they want it, and
technology now makes it possible for companies to give it to them (Joseph, P.B.,
Peppers, D. and Rogers, M., 1995).

Customers have hidden or overt preferences which marketers can reveal by building a
learning relationship. Earlier, marketers were attempting to interpret consumer needs

on the basis of their buying behaviours. Now, with the arrival of consumer generated
media, which I discuss in the next section, marketers have another avenue to learn
about the consumer. The objective is to keep the consumers satisfied and keep them
loyal towards the company or brand. CRM, which has also been described as

47
‘information-enabled relationship marketing’ (Ryals, L. and Payne, A.F.T., 2001)
comprises processes used by organisations to manage consumer relationships which
also include collecting, storing and analyzing data, and is often termed as data-driven
marketing. CRM attempts to provide a strategic bridge between information
technology and marketing strategies aimed at building long-term relationships and
profitability. This requires ‘information-intensive strategies’ (Glazer, R., 2002). It is
vital to maintain appropriate Customer Information Management systems by
acquiring customer databases and consolidating customer feedback.

Customer Relationship Management (CRM) has become one of the most dynamic
technology topics of the millennium. According to Chen and Popovich (2003), CRM
is not a concept that is really new but rather due to current development and advances
in information and enterprise software technology, it has assumed practical
importance.The root of CRM is relationship marketing, which has the objective of
improving the long-term profitability of customers by moving away from product-
centric marketing. Bose (2002) noted that CRM was invented because the customers
differ in their preferences and purchasing habits . If all customers were alike, there
will be little need for CRM. As a result, understanding customer drivers and customer
profitability, firms can better tailor their offerings to maximize the overall value of
their customer portfolio (Chen and Popovich) . The attention CRM is currently
receiving across businesses is due to the fact that the marketing environment of today
is highly saturated and more competitive (Chou et al, 2002) . According to Greenberg
(2004), CRM generally is an enterprise-focused endeavor encompassing all
departments in a business . He further explains that, in addition to customer service,
CRM would also include, manufacturing, product testing, assembling as well as
purchasing, and billing, and human resource, marketing, sales and engineering. Chen
and Popovich (2003) argued that CRM is a complicated application which mines
customer data, which has been retrieved from all the touch points of the customer,
which then creates and enable the organization to have complete view of the
customers. The result is that firms are able to uncover and determine the right type of
customers and predicting trend of their future purchases. CRM is also defined as an
all embracing approach that seamlessly integrates sales, customer service, marketing,
field support and other functions that touch customers (Chou et al, 2002) . They
further stated that CRM is a notion regarding how an organization can keep their most
profitable customers and at the same time reduce cost, increase in values of
interaction which then leads to high profits. The modern customer relationship
management concept was shaped and influenced by the theories of total qualitty

management (Gummesson) and by new technological paradigms (Zineldin, 2000).

There is however, a perceived lack of clarity in the definition of customer relationship
management, although all accepted definitions are sharing approximately the same
basic concepts: customer relationships, customer management, marketing strategy,
customer retention, personalization (Zineldin 2000). However, while academics

48
debate the subtitles of various definitions, the practitioners have developed a wealth
of applicative papers analyzing the concrete challenges and opportunities of
implementing the systems (Bacuvier et al. 2001). CRM in some firms is considered as
a technology solution, considering of individual databases and sales force automation
tools and sales and marketing functions so as to improve targeting effort. Peppers and
Rogers (1999) argued that other organizations view CRM as a tool, which has been
particularly designed for one-to-one customer communications, which is the function
of sales, call centres or the marketing departments. Accordingly Frow and Payne
(2004) added that CRM stresses two-way communication from the customer to the
supplier to build the customer over time. The two-way communication has been
enhanced greatly by advances in technology particularly the Internet. In term of
information technology (IT), CRM means an enterprise –wide integration of
technologies working together such as data warehouse, web site, and intranet/extranet,
phone support system, accounting, sales, marketing and production.

Kotler (2000) assured that CRM uses IT to gather data, which can then be used to
develop information acquired to create a more personal interaction with the customer.
In the long-term, it produces a method of continuous analysis and reinforcement in
order to enhance customer’s lifetime value with firms. Goldenberg (2000) believes
that CRM is not merely technology applications for marketing, sales and services but
rather when it is successfully implemented ; it enables firms to have crossfunctional ,
customer-driven , technology-integrated business process management strategy that
maximses relationships. Chin et al (2003) stated that that due to many technological
solutions available for CRM automation, it is often misconstrued as a piece of
technology. But they maintained that in recent times many companies have realized
the strategic importance of CRM, and as a result, it is becoming a business value-
effort rather than technology- centric effort. Using information technology as an
enabler, CRM strategy leverages key functional areas to maximize profitability of
customer interactions (Chen and Popovich, 2003). It has been recognized that
technological advancements and innovations , keen competitive marketing
environment , coupled with the internet are main drivers of present and future
customer profitability which makes it possible to appropriately and proportionately
allocate firm’s resources to all functional areas that affect customer relationship (
Chou et al , 2003). For customers, CRM offers customization, simplicity and
convenience for completing transactions irrespective of the kind of channel of
interaction used (Gulati and Garino, 2000). Many businesses today realize the
importance of CRM and its potential to help them achieve and sustain a competitive
edge (Peppard, 2000). This view was further boosted by Bose (2002) that as a result

of changing nature of the global environment and competition, firms cannot compete
favorably with minor advantages and tricks that can easily be copied by competing
firms .The implementation of CRM is an enabled opportunity to rise above minor
advantages with real focus on developing actual relationships with customers. Firms

49
those are most successful at delivering what customers want are the more likely to be
leaders of the future.

According to Chen and Popovich (2003), CRM applications have the ability to deliver
repositories of customer data at a much smaller cost than old network technologies.
Throughout an organization, CRM systems can accumulate, store, maintain, and
distribute customer knowledge.

Peppard (2000) noted that effective management of information has a very important
role to play in CRM because it can be used to for product tailoring, service
innovation; consolidate views of customers, and for calculating customer lifetime
value. CRM systems assists companies evaluate customer loyalty and profitability
based on repeat purchases, the amount spent, and longevity. Bull (2003) added CRM
makes it practicable for companies to find unprofitable customers that other
companies have abandoned. This position is supported by Galbreth and Rogers (1999)
that CRM helps a business organization to fully understand which customers are
worthwhile to acquire , which to keep, which have untapped potential, which are
strategic, which are important , profitable and which should be abandoned. Greenberg
emphasized that CRM can increase the true economic worth of business by improving
the total lifetime value of the customer , adding that successful CRM strategies
encourage customers to buy more products, stay loyal for longer periods and
communicate effectively with a company. CRM can also ensure customer satisfaction
through allocation, scheduling and dispatching the right people, with the right parts, at
the right time (Chou et al., 2002). According to Swift (2001), companies can gain
many benefits from CRM implementation. He states that the benefits are commonly
found in one of these areas:

i) Lower cost of recruiting Customers

ii) No need to acquire so many customers to preserve a steady volume of business

iii) Reduced cost of sales

iv) Higher Customer Profitability

v) Increased Customer retention & Loyalty

vi) Evaluation of customers Profitability Curry and Kkolou (2004) refer to the major
benefits and reasons for adoption of CRM which include: customers from the
competition will come prefer the organization; a simplified, customer – focused
internal organization will simplify the infrastructure, shrinking the work flow
andeliminating non-productive information flow; and profits will increase from
satisfied customers which will lead to more compact & focused company. There are
some companies that adopt CRM systems just because it is the most advanced

50
technology and they think they should have it since their competitors have it (Chou et
al, 2002), Some statistics that motivate this behavior are resumed as follows:

a) By Pareto’s principle, it is assumed that 20% of a company’s customers generate

80% of its profits.

b) In industrial sales , it takes an average of 8 to 10 physical calls in person to sell to

a new customer , 2 to 3 calls to an existing customer.

c) It is 5 to 10 times more expensive to acquire a new customer than obtain repeat

business from existing customer.

d) A typical dissatisfied customer tells 8 to 10 people about his or her experience

source. Getting to “know” each customer through data mining techniques and a
customer-centric business strategy helps the organization to proactively and
consistently offer and sell more products and services for improved customer
retention and loyalty over long periods of time. Peppers and Rogers (1999) refer to
this as maximizing “lifetime customer share”, resulting in customer retention and
customer Profitability. Like any other new function, CRM too has its own drawbacks
and challenges. Any organization that seeks to implement CRM may focus on value
creation and on a continuous stream of profits. They will give up their myopic fix that
CRM is the fixed responsibility of marketing or IT department. The firms will realize
that in order for CRM to contribute to corporate renaissance, the CRM responsibility
must rise to the level of CEO. CRM will be more strategy driven, and thus be able to
concentrate on what customer expects from relationships. The ‘final take’ for the
CEOs will be that CRM is and can be a vehicle for cultural integration in the
organization. In short, a true CRM encourages a relationship view of the world that
goes beyond the customers, includes multi –members and facilitates corporate
renaissance. Two trends have brought CRM to the forefront, explains Boston
University professor Tom Davenport, who directs Andersen consulting’s Institute for
Strategic Change. First, as global competition has increased and products have
become harder to differentiate, “companies have begun moving from a product-
centric view of the world to a customer-centric one,” says Davenport. Second,
technology has ripened to the point where it is possible to put customer information
from all over the enterprise into a single system. “Until recently, we didn’t have the
ability to manage the complex information about customers, because information was
stored in 20 different systems,” says Davenport. But as network and Internet
technology has matured, CRM software has found its place in the world. Many
companies are turning to customer relationship management systems to better
understand customer wants and needs. CRM applications, often used in combination

with data warehousing, E-commerce applications, and call centers, allow companies
to gather and access information about customers’ buying histories, preferences,

51
complaints, and other data so they can better anticipate what customers will want. The
goal is to instill greater customer loyalty.

Customer relationship management has been defined as “a business approach that

integrates people, processes, and technology to maximise relationships with
customers” Goldenberg (2008, p.3). Moreover, it has been stated that customer
relationship management “characterises a management philosophy that is a complete
orientation of the company toward existing and potential customer relationships”
(Raabet al, 2008, p.6)

Mueller (2010) characterises customer relationship management aspect of the

business as a highly dynamic, and convincingly argues that businesses have to adopt a
proactive approach in devising relevant programs and initiatives in order to remain
competitive in their industries.

Sinkovics and Ghauri (2009) relate the necessity for engaging in customer
relationship management to high cost of direct sales, highly intensifying level of
competition in the global level, and need for information about various aspects of the
business in general, and consumer behaviour in particular, that can be used to increase
the levels of sales.

According to Peppers and Rogers (2011), there is global tendency in customer

relationship management that relates to the shift from transactional model towards the
relationship model. In other words, Peppers and Rogers (2011) argue that satisfying
customer needs as a result of on-time transaction is not sufficient today in order to
ensure the long-term growth of the businesses.

Instead, businesses have to strive to maintain long-term relationships with their

customers in order to maintain flexibility to adopt their increasing expectations and
thus achieving their life-long loyalty. Peppers and Rogers (2011) further stress that,
businesses that refuses to acknowledge this tendency in the global marketplace would
be risking their market share and growth prospects in the future.

One of the most critical sources for the research is the book “Relationship Marketing
and Customer Relationship Management” authored by Brink and Berndt (2009). The
book offers an in-depth discussion of the concept of Customer Touch Map and
discusses the role of information technology in facilitating customer relationship
management.

The work of Mathur (2010) represents another significant contribution to the research
area to be used in the study. Namely, the author provides a wide range of specific
customer relationship management techniques and principles that are used by
multinational businesses. The findings of Mathur (2010) can be compared to the
primary data findings in the proposed research, thus enhancing the scope of the study.

52
Khurana (2010), on the other hand, discusses the concept of customer relationship
management in a great detail, and also addresses advantages and disadvantages
associated with a range of relevant software applications. The third edition of
Pradan’s (2009) “Retailing Management” is another noteworthy source that is going
to be used in the study. Specifically, Pradan (2009) identifies customer relationship
management as an emerging aspect of marketing in retail and discusses its importance
for ensuring long-term growth for retail businesses.

A global approach towards the issues of customer relationship management is adopted

by Raab et al (2008) in “Customer relationship management: a global perspective”.
The value of this specific work to the proposed research can be explained in a way
that it will allow the comparison of customer relationship management principles to
the similar principles exercised by other multinational retailers in a global
marketplace.

Bhatia’s (2008) work, “Retail Management” is also going to be used in the proposed
study due to the significance of the contribution of the work to the research area.
Bhatia (2008) offers in-depth discussions related to the use of loyalty cards by
retailers, and this represents a comprehensive analysis of the issue in the secondary
data.

Moreover, Cox’s (2011) “Retail Analytics: The Secret Weapon” deserves also to be
mentioned in here thanks to the most modern and fresh perspective the author adopts
in order to approach the research issues. The most valuable part of this specific article
is that it provides highly practical recommendations to retailers of various sizes in
terms of increasing the levels of revenues through adopting a range of customer
relationship management principles.

A range of academic models and writings relate to this research in direct and indirect
ways and some of the most relevant models are going to be explored in the study. One
of the most models to be used in the study is The Gap Model of Service Quality. “A
model of service quality called the gap model identifies five gaps that can cause
problems in service delivery and influence customer evaluations of service quality”
(Lamb et al, 2011, p.189).

These five gaps are a) the gap between customer wants and the management
perceptions about customer wants; b) the gap between the management perceptions
about customer wants and the specifications of service developed; c) the gap between
the service specifications and the actual service provided; d) the gap between the
quality of service promised and the quality of service provided, and e) the gap
between expected service and perceived service on behalf of customer.

Another relevant model to be tested during the study constitutes Relationship Model
of customer relationship management proposed by Peppers and Rogers (2011).
Specifically, the model advocates adopting a pro-active approach in sustaining
customer relationships and proposes a set of specific principles that would assist to
accomplish this task.

53
F.Dretske8 (2000) in his study on “Knowledge and the Flow of Information” has
studied the role of technology in the implementation and its requirements and
concluded that business intelligence and analytical capabilities, unified channels of
customer interaction, support for web-based functionality, centralized repository for
customer information, integrated workflow, integrated with ERP application were the
major essentials needed for the implementation of the CRM programme that resulted
into increase in customer satisfaction, increased customer loyalty, decrease in
customer defection, ability to identify profitable customers, measuring customer
profitability and measuring customer lifetime value.

35 Hemachandra Murlidhar Padukar9 (2000) in his book entitled, “Working

Knowledge” had seen that the CRM as a strategy used to learn more about customer
needs and behaviours in order to develop stronger relationships with them There were
several electronic components used to support CRM that had made the concept as e-
CRM. According to him the electronic components were very significant as it
provided better customer service, cross sell products more effectively, helped sales
staff close deals faster, simplify marketing and sales processes, discover new
customer and increase customer revenue.

Deepali Singh10 (2001) in his article titled “Information Technology enabled

Customer Relationship Management” had found that the development of information
technology and opening up of digital market enabled the marketers to provide
customized products/services and thereby develop value-based long lasting customer
relationships. The only strategy that was perceived to make sense in the emerging
marketing environment was that the marketers should learn and practice customer
relationship management.

Joe Peppard 11 (2001) in his article entitled, “Customer Relationship Management

(CRM) in Financial Services” has stated that many financial services organisations
are rushing to become more customer focused. A key component of many initiatives
was the implementation of customer relationship management (CRM) software. His
study had highlighted that most institutions take a rather narrow view of CRM and as
such, benefits were limited. While second generation CRM demerged to embrace the
total organization, success in general was still not widespread. He had presented a
framework, which was 36 based on incorporating e-business activities, channel
management, relationship management and back office/ front-office integration
within a customer centric strategy.

Lynette, Ryals and Adrian Payne12 (2001) in their article titled, “Selectively pursuing
more of your customer’s business” have summarized that relationship marketing is
concerned with how organizations manage and improve their relationships with
customers for long-term profitability. Customer relationship management (CRM),

54
which is becoming a topic of increasing importance in marketing, is concerned with
using information technology (IT) in implementing relationship-marketing strategies.
They further reported the adoption and use of CRM in the financial services sector.
K.Ramachandran13 (2001) in his article entitled, “How customer relationship
management can be strengthened beyond the hype” had suggested that since customer
needs are dynamic, new dimensions have to be added to the set of customer
relationship management tools based on information technology.

T. Shainesh and R.Mohan14 (2001) in their book entitled, “Status of CRM in India-
A Survey of Service Firms” has discussed that Customer Relationship Management:
Emerging Concepts, Tools and Applications had revealed that aspects such as
business processes, information technology, employee empowerment, quality
assurance and customer knowledge strategies should be made more customer-centric.

M.P Gupta and Sonal Shukla15 (2002) in their article titled, “Learning from
Customer Relationship Management (CRM) Implementation in a Bank”, have stated
that the customer relationship management was gradually picking up and is definitely
37 considered as a viable proposition by banks in improving services to their
customers. Since there is resistance to change, while implementing the customer
relationship management, high commitment is required in those who are
implementing it.

S.T.Ramachandran16 (2002) in his article entitled, “Customer Relationship

Management – Emerging Strategies” has concluded that for laying the right
foundation for a better customer relationship management, the banks should be
customer-centric and give importance to the retention of existing customers than
acquiring new ones for promoting cross-selling and re-purchase of products.
M.L.Agarwal17 (2003) in his article entitled, “Customer Relationship Management
and Corporate Renaissance” has recommended a line of action for an effective CRM
implementation towards a quicker corporate renaissance. He also urged business
schools of South Asia to incorporate CRM in their teaching curricula so that the
business and academics can continue to stay relevant to each other.

J.Injazz Chen and Karen Popovich18 (2003) in their article entitled, "Understanding
Customer Relationship Management (CRM): People, Process and Technology" have
stated that customer relationship management (CRM) is a combination of people,
processes and technology that sought to understand a company's customers. It is an
integrated approach to managing relationships by focusing on customer retention and
relationship development. CRM has evolved from advances in information
technology and organizational changes in customer-centric processes. Companies that
successfully implement CRM would reap the rewards in customer loyalty and long
run profitability. However, successful implementation of CRM was elusive to many
38 companies, mostly because they did not understand that CRM required company-

55
wide, cross functional, customer-focused business process re-engineering. Although a
large portion of CRM was technology, viewing CRM as a technology-only solution
was likely to fail. Managing a successful CRM implementation requires an integrated
and balanced approach to technology, process, and people.

Jain and Dhar19 (2003) in their article titled, “Measuring Customer Relationship
Management” have discussed that customer relationship management emerged as a
core business process for maintaining and enhancing the competitive edge in modern
business affairs. In the area of bank services, the issue of customer relationship
management had held much importance. Many a time, it is the CRM that became the
deciding factor in the selection of services. Customer loyalty is directly related to the
CRM efforts made by the service sector companies.

Peer Mohamed and Elgina Sweetline20 (2003) in their article titled, “Call Centres and
Strategic Tools for Customer Relationship Management” have attempted making a
cost-benefit analysis. The authors proved that web based call centres were much more
cost effective. It was further found that organizations were evolving strategies to
attract and retain customers, who desire to be listened to, recognized, cared for and
responded to by the organization. Call centres emerged as strategic tools in building
such customer relationship. K.Tapan21 (2003) in his study on “Creating Customer
Life-Time Value through effective Customer Relationship Management in Financial
Services Industry” has stressed the importance of the customer relationship
management in financial services 39 industry. Customer data management gave clues
about the probability of customer demand and the technology, helped in tracking the
characteristics and categorization of customers depending on their part behaviour. He
has concluded that with increased competition customers were moving very fast from
one firm to another. It was essential to have an integrated customer relationship
management strategy across the whole organization for generating higher customer’s
life-time value.

J.Werner Reinartz and V.Kumar22 (2003) in their article titled, “The Impact of
Customer Relationship Characteristics on Profitable Lifetime Duration” have stressed
the relevance and importance of establishing customer relationship management
capabilities. Customers were heterogeneous on an important life-time relationship.
Under such condition, an appropriate firm response should be made to develop
customer relationship management capabilities, which will help such firms to
establish competitive advantage in the market.

G. Ganesan and D. Rajagopalan23 (2004) editors of the book titled, “Service

Excellence, Trends and Strategies” have highlighted that competitive environment,
eroding margins, need to reduce costs and keeping customers were the prime drivers
for the organizations to embrace e-CRM. They have concluded that a well executed e-
CRM strategy could result in a number of quantitative benefits including greater

56
ability to sell and cross-sell, improved customer retention besides reduced cost of
service. T. Maria Salazar, Tina Harrison, Jake Ansell 24 (2004) in their study on
“CRM in the Insurance Industry: An Attempt to Use Survival Analysis in Retention
and Cross Selling” have stated that relationship marketing emphasized the benefits
associated with 40 customer retention over new clients’ acquisition. However,
financial organizations were not still completely enhanced with this idea. In order to
improve the retention ratios of organizations, cross-selling has been identified as a
very effective strategy with positive benefits for companies. This identification of new
business opportunities depended on the detection of product acquisition and timing
evaluation. Lynette Ryals25 (2005) in her article titled, “Making Customer
Relationship Management Work: The measurement and profitable management of
customer relationships” had demonstrated that the implementation of the customer
relationship management activities delivered greater profits. The study finds that the
changes in customer management strategies signified the value of the customers.
These changes lead to a better firm performance. The study suggests that the
important issue was not customer loyalty or customer retention but it was profitable
customer retention and profitable customer portfolio management.

Satish et.al.26 (2005) in their study on “The Role of Relational Information Processes
and Technology use in Customer Relationship Management” have showed that
relational information processes played a vital role in enhancing an organizations’
customer relationship performance. By moderating the influence of relational
information processes on customer relationship performance, technology used for
customer relationship management performed an important and supportive role. The
study provided insights into why the use of customer relationship management
technology might not always deliver the expected customer relationship performance
outcome. 41 Rahman, Zillur27 (2006) in their article entitled, “Customer Experience
Management - A

Case Study of an Indian Bank” has discussed that loyal customers were considered to
be the key to survival and success in many service businesses, in particular in the
hospitality, insurance and financial sectors. The assumption was that with customer
satisfaction; loyalty, retention and profitability will automatically follow. They
explored the relationship between experience and loyalty and concluded that, on
average, a majority of customers were satisfied with the present functioning of the
banks but would definitely be delighted if the bank changed its interface with the
customers to become more cognitive (intelligent), emotional, physically pleasing and
well - connected.

Timothy Bohling, Douglas Bowman, et.al.28 (2006) in their article titled, “CRM
Implementation Effectiveness Issues and Insights” have viewed that customer
relationship management (CRM) had been widely embraced by businesses. In
practice, however, the diffusion of CRM into organizations continues to be a slow

57
process and/or where CRM implementation outcomes have fallen short of
expectations. Successful implementation depends on a number of factors such as fit
between of a firm’s CRM strategy and programs and its broader marketing strategy,
and intra-organizational and inter-organizational co-operation and co-ordination
among entities involved in the implementation.

Freimut Bodendorf and Andreas Schobert 29 (2007) in their article on “Enhancing e-

CRM in the Insurance Industry by Mobile e-services” have observed that with
customers increasingly demanding full-scale solutions, insurance companies were
more and more forced to continuously increase their portfolio of products and
services. As 42 customers also expect high quality and variety of services when
needed, insurance companies had to find ways to present the right service at the right
moment and with the right quality.

Madhu Jasola30 (2008) in her study on “CRM: A Competitive Tool for Indian
Banking Sector” has pointed out how CRM had emerged as a popular business
strategy in today’s competitive environment. It is a discipline which enables the
companies to identify and target their most profitable customers. CRM involved new
and advance marketing strategies which not only retain the existing customers but
also acquire new customers. It was observed that customers in the CRM, rated its
services far more favourably than those in the non – CRM, which was an indicator of
the superior level of services in the former. This could be further attributed to CRM –
a closer understanding (of) and individualized service to the customer. There was a
direct relationship between perception and satisfaction, commitment and loyalty,
which underlined the significance of CRM in service industry. For those planning to
up-sell and cross-sell, raising customer perceptions is all the more important.
Mohammad Almotairi31 (2008) in his article titled, “CRM Success Factors
Taxonomy” has stated that despite the promising future and the attractive benefits
expecting from CRM projects, the outcomes of many implementations were still
below these expectations and the failure percentage of CRM is still relatively high.
The author had focused on the success factors that could facilitate successful
implementation of CRM. The author had aimed to provide taxonomy for success
factors based on the analysis of the main components of CRM (People, Processes and
Technology).

Tapal Dula Babu32 (2009) in his article titled, “An Analytical Study on Industry
Perceptions on e-CRM” has revealed the customer classification and preference
giving same priorities about the critical aspects. Therefore, features of e-CRM (as it is
rated number one) can be developed further with the latest features to suit exactly the
needs of market. Besides, in this dynamic competitive and technological business
world, every company should look for GCTC (getting closer to the customer). The e-
CRM helps very much in this respect to build an image and reputation for the
company.

58
S.S. Hugar and Nancy H. Vaz, D'Costa33 (2010) in their article entitled, “ A Model
for CRM Implementation in Indian Public Sector Banks” have declared that India is
on the threshold of a stark global competition, especially so for the banking sector
with the likelihood of the economy opened for global banks soon. The Indian public
sector banks, which have come face-to-face with competition just since last decade,
are found wanting both with regard to performance as well as their customer
orientation. The CRM practices of the banks can help them in retention of their
existing customers in the competitive market. CH. Raja Ramesh34 (2010) in his
article entitled, “Customer Relationship Management System with Actionable
Knowledge Discovery Approach of Domain Driven Data Mining” has pointed out
that customer relationship management is one of the newest innovations in customer
service today. CRM involves gathering a lot of data about the customer. The data is
then used to facilitate customer service transactions by making the information
needed to resolve the issue or concern readily available to those dealing with the
customers. This results in more satisfied customers, a more profitable 44 business and
more resources available to the support staff. Furthermore, customer relationship
management systems are a great help to the management in deciding on the future
course of the company. CRM is a strategy and process used to develop stronger
relationship with customers, and CRM is the essential guide.

Anand Deo Rai35 (2011) in his article on “CRM in Insurance Industry” has observed
that insurance industry is in a complex and competitive environment tinged with little
stability. This is due to the fact that the big fish in the insurance industry dominates
the sector, which had become increasingly difficult for this sector to gain profits while
curtailing costs. Customers tend to lose out as they were not buying from the right
provider. In addition to this, the internet had increased the pressure for insurance
companies in capturing the market. All this had succeeded in making the insurance
world more complicated. CRM helps insurance companies to ensure that the customer
is understood better.

M.V.S. Srinivasa Rao36 (2012) in his article entitled, “Customer Relationship

Management in India: An Empirical Analysis on Implementation of Selected
Industries” has observed that CRM implementation differed from organization to
organization as there were many factors that could influence the success of CRM
implementation. In most cases the technology would have less to do with the CRM
success. Therefore it was important to focus as much importance on communication
training and other aspects as much as the technology involved. Employees
implementing CRM and forming a part of the CRM process ranged from the lower
level right to the grade of management. It was 45 imperative that the business ensured
that the CRM software chosen was easy to use and implement by not only by a few
employees but by everyone using the system.

59
THE FOUR FACTORS FOR ENSURING CUSTOMER SERVICE
ARE:
• What satisfies the customer?

• Devising quantifiable determinants

. • Continually monitoring and improving these parameters.

• Seeking customer feedback to ensure alignment with customer needs. These four
approaches can go a long way in helping the banks to achieve its quality goals.
Customers, who are central to the banking service, are not a homogeneous class. They
come from varying socio-economic and cultural backgrounds. Their perception about
the banking services is so dynamic that it may differ from customer to customer and
even for the same customer at different points of time, depending on their mood and
mind-set. Successful banking relationships are formed at a human level.

FACTORS WHICH HELP IN RETAINING THE EXISTING

CUSTOMERS ARE:-
• Past experiences with the bank.

• Familiarity with the services offered by the bank and simplified procedures.

• Knowledge of or experience with competitor’s products and services.

• Brand image-banking with a particular bank is regarded as a status symbol.

• Overall ambience at the bank premises

Extra services or value addition provided by the bank. 67 In this

article the author also studied the factors which irk (trouble) the
customers and they are:
• Poor service attitude

• Long queues

• Inability of the bank to meet customer needs

• Lack of proper ambience

• Lack of humility that prevents banks from meeting customer needs Author also
mentioned that by adhering to the following factors customer’s complaints could be
avoided:

• Prompt collection of cheques

60
• Faster payment/receipts in cash counter

• Positive attitude of the counter staff

• Proper adherence to the standing instructions to the customers

• Correct crediting of interest on deposit accounts and avoiding fraudulent

withdrawals

• Timely honouring of invoked LCs, guarantees, et

• Seeking only required documents for processing loan applications

• Timely sanctioning of loans at reasonable market related interest rates.

A study conducted by Mishra A. K. [16] examined the reasons for the satisfaction of
the customers with the services rendered by the Urban Cooperative Banks. The author
described that, urban cooperative banks are operating in a more competitive
environment and therefore, the need to take care of customer requirements has
become more important. The branches of UCBs must cater to the betterment of the
customers. They should also improvise on their own image, customer satisfaction and
their profits. The time norms for specific business transactions should be displayed
prominently in the banking hall so that it attracts the customers’ attention. In the
ultimate analysis, what is necessary for improving customer services is the active
participation of employees at all levels in the bank functions. The author also raised
some points which can be a plus point for UCBs to impress & attract their customers.
These points are: effective board of 68 management, efficient employees/staff, cordial
personalised services, proper guidance, provision of loan facilities, good systems,
computer systems, prompt services, good work culture, convenient timings, proper
clearing services for outstation cheques and demand drafts, split hour facilities,
Sunday working day, discounting facilities for outstation cheques, and good location
of the bank.

Uppal R. K. [17] described that in the post-LPG (Liberalization, Privatization and

Globalization) era and Information Technology (IT) era, transformation in Indian
banks is taking place with different parameters and the curves of banking services are
dynamically altering the face of banking, as banks are stepping towards e-banking
from traditional banking. The paper empirically analyzes the quality of e-banking
services in the changing environment. With different statistical tools such as weighted
average method and ranking, the paper concludes that most of the customers of e-
banks are satisfied with the different e-channels and their services, but the lack of
awareness is a major obstacle in the spread of e-banking services. The paper also
suggests some measures to make e-banking services more effective in the future.

61
 Kamakodi et al. discussed that, it is almost 15 years since the Indian banking sector
was liberalized and paradigm shift happened in the Indian banking services. All banks
have either totally implemented ‘core banking systems’ or halfway through. The
results of a survey, obtained from 292 respondents about their views on electronic
banking channels, indicate that the banks are exceeding the expectations in
technology based services; and their perceived service level on branch network is
below the expected levels of the respondents. This result is in tune with the
respondents’ opinion on the perceived ‘gap’ with the bank because of the introduction
of technology, and on the necessity of human contact with the clients by the banks.
This throws up a challenge to banks. Technology alone cannot give a sustainable
competitive advantage for the banks. When all banks introduce IT, it will lose its
position as a differentiator. Beyond a point, IT along with ‘personal touch’ will be
necessary for the banks to retain existing clients and to attract new ones. Banks have
to incorporate this in their operational strategy.

SakalyaVenkata analyzed the factors that affect the choice of customers in choosing
the retail banks by the customers. In the study, the authors have tried to identify
various factors and also analyzed as to which of these factors exert the greatest,
moderate and relatively lower influence as choice criteria. It is an attempt to study the
consumer behavior with respect to the people’s choice of retail banks. Efforts are
made to dwell deep in the psychology by talking to the customers surveyed, wherever
possible.

3.2 The 15 different factors that could be identified, approximately

in the order of their importance, are
(1) Safety of Deposits,

(2) Size and Strength,

(3) Accuracy,

(4) General Service Quality

(5) Speed of Delivery,

(6) Proximity,

(7) Security of Environment,

(8) Cordiality of Staff,

(9) Price and Service Charges,

62
(10) Product Packaging,

(11) General Public Impression,

(12) Peer Group Impression,

(13) Face Lift (Structural),

(14) Friendship with Staff and

(15) Advertisement and Publicity.

According to the findings, based on the empirical study, the first six factors exert the
greatest influence, next four have moderate importance, and the rest five have
relatively lower influence. Thus, retail banks must reorganize their activities to
achieve their corporate mission through customer orientation. In the competitive and
capitalistic markets consumer is sovereign and therefore the bankers must reengineer
their view and recognize the predilection and tang of the retail customers. IT and
manufacturing industry.

Morrison and Bernlt (1990) [20] found that in the manufacturing industry, estimated
marginal benefits of investment in IT are less than the marginal cost, implying the
problem of over investment. More specifically they found that for each dollar spent on
IT, the marginal increase in output was only 80 cents.

Similarly Loveman (1994) [21] found insignificant contribution of IT expenditure to

the output of manufacturing firms. Lichtenberg (1995) on the other hand, concludes
that there are significant benefits from investment in IT to the firms. It is also found
that one information system (IS) employee is equivalent to six non-IS employees in
terms of marginal productivity.

Brynjolfsson and Hitt (1996) [3] found that computerisation aids significantly, to the
firm’s level of output. In fact they found that computer related capital investment 70
contributes 81 percent to the marginal increase in output, where as non-IT capital
contributes only 6% to the marginal output. It is also found that IS labour is more than
twice as productive as non- IS labour. Most of such studies related to the contribution
of IT towards the firm’s level of productivity have been restricted to the
manufacturing industry. 3.4 IT framework for Indian banking sector [23] IT planning
is an ongoing effort intended to match the bank’s technology capabilities with its
changing strategic objectives. It is necessary for a bank to identify technology gaps
and develop a plan that supports the bank’s long/medium term-strategic goals in order
to bridge the gaps. It is imperative for banks to have a clearly defined technology
planning process that is based on a well founded technology action plan for the
following reasons: - Increasing competition, new products and changing distribution

63
channels. - Banks currently spend a huge amount of their budget annually on
technology. Such investments will only continue to escalate. - Effective technology
management requires an underlying technology plan. Without it, scarce resources are
likely to be wasted and opportunities missed.

Gulati et al. (2002) [23] suggested IT policy framework for Indian banks as follows.
IT strategies need to be formulated by banks taking into consideration the critical
aspects of long/short-term planning to align technology systems with business
objectives. Conscious efforts must be made to place the entire organization’s proper
perspective and to have a holistic approach to planning. The following strategic
evaluation needs to be made:

• Current state (Where are we?): There should be a self-assessment process which
analyses the present/current technology in use. It also involves evaluation of staffing,
training, organizational processes and controls, communication and management
reporting. To successfully integrate new technologies, banks must objectively
confront internal operating issues and be willing to make changes 71 wherever
necessary. Business process re-engineering should be accorded top priority to
successfully absorb new technology.

• Desired state (Where do we want to go?): Identification and prioritisation of the

reasons behind technology adoption is vital. Technology goals should always be
firmly grounded in an understanding of the marketplace. Sizing up the competition
and measuring up to its pace, based on a SWOT analysis, must be the foundation of
the decision on where to go.

• Destination (How do we get there?): This phase of the technology planning process,
involves making decisions about, how to implement the technology action plan and
the technology initiatives required to be pursued in the short/mid/long term. As part of
the planning of technology initiatives, a list of projects to be undertaken needs to be
made. For this, the element of time span should be considered relative to the bank’s
position and future needs (what initiatives are planned in short/mid/long term). A
technology plan is a document that lays down the steps necessary for each action
item. It serves as a road map for investment. 3.4.1. Internet Banking in India Jadhav
Anil (2004) [24] described various channels of e-banking services such as ATM,
Telephone banking (Tele-banking), Mobile banking, Internet banking and its features.
The focus is also given on e-banking opportunities, challenges and security aspects
while performing the banking transactions on the internet. Comparison of public,
private, foreign and co-operative banks and barriers to the growth of e-banking in
India are also discussed. Finally the paper discusses an overview of the major private
sector banks such as ICICI, HDFC, IDBI, UTI & GTB banks which provides e-
banking services. The author’s observations are: Many Indian banks are yet to make a
desirable progress in implementing the technology and gearing up to confront the

64
challenges posed by the rapid changes that are sweeping the banking sector globally.
Private and Foreign banks 72 have been fast in adopting and adapting to the Internet
technology. Very few public sector banks offer Internet banking services whereas;
none of the co-operative banks offer Internet banking services. ATM is becoming a
most preferred delivery channel from the common banking services. In order to
enhance the reach to the rural population in the remote areas, the banks will need to
automate the delivery channels in the local language which could eventually lead to
shrinking of the number of branches. The banking industry’s security is at a higher
risk, due to the advent of e-banking. The banking organizations which provide e-
banking services should take the following precautions/responsibility: a) The Banks
should hire the services of anti Cyber crime professional to avoid cyber crime b) To
take the responsibility of customer’s transactions c) Create awareness of e-banking
services amongst the customers and motivate/encourage them to use it. Mishra A. K.
[25] described that the Internet banking is a cost-effective delivery channel for
financial institutions. The author also describes the advantages of internet banking,
current status of internet banking in India, and the mechanism to protect the
customer’s data.

The advantages of internet banking are:

• To improve customer access

• To facilitate more services

• To increase customer loyalty

• To attract new customers

• To provide services offered by competitors

• To reduce customer attrition Current status of internet banking is:

• Throughout the country, the Internet Banking is in the emerging stage of

development 73

• In general, these Internet sites offer only the most basic services. 55% are so called
'entry level' sites, offering little more than company information and basic marketing
materials. Only 8% offer 'advanced transactions' such as online funds transfer,
transactions & cash management services.

• Foreign & Private banks are much advanced in terms of the number of sites & their
level of development.

Geetika et.al. [26] discussed the concept of Internet Banking, perception of Internet
bank customers, non-customers and issues of major concern in Internet banking. The
state of Internet banking in India has been explored using various concepts like E-

65
banking scale, and gap analysis related to the various services and the security
features offered. In order to have a clear and focused insight about the perceptions of
users (and non-users) about Internet banking a survey was conducted. The findings of
the survey provide valuable insights into concern for security, reasons for lower
penetration, and likeliness of adoption, which have been used to make useful
recommendations.

RadhakrishnaGeeta and Pointon Leo [27] examined the legal issues specific to
internet banking, focusing on the incidence of fraud and its prosecution. The objective
of research was to investigate three questions in relation to Malaysia. Firstly, the
incidence of fraud in internet banking; secondly, the adequacy of the relevant
regulations and statutes; and thirdly, whether the setting up of a cyber court would
better facilitate the prosecution of such financial crimes in Malaysia. Technology and
the borderless nature of the internet present fraudsters with manifold opportunities.
‘Phishing’ leads to identity theft and ‘money laundering’ has been found to be the
main threat to internet banking. The newness of the subject and traditional banking
secrecy have contributed to a dearth of legal literature pertaining to issues in internet
banking, specific to Malaysia. It was found that the applicability of various existing
laws and banking practices to internet banking has not been fully tested in Malaysia
and is still evolving. The study conducted by the author Jain Abhay and Hundal B. S.
[28] presented the rapid changes in the financial services environment—increased
competition by new players, 74 product innovations, globalization and technological
advancement—have led to a market situation where battle for customers has become
intense. In order to rise up to the challenges, service providers are even more
interested to enhance their understanding of consumer behavior patterns. This paper
examines the forces that can act as barriers in mobile banking service adoption. 3.4.2
Security aspects of banking transactions Hebbar Raveendranath (2004) described that
the advancements in computing and telecom have revolutionised the financial
industry. Banks are developing alternative channels of delivery like ATM,
telebanking, remote access, internet banking etc., Some questions that need to be
answered are , how can one trust these channels, our personal data and transactions
which are driven by technology.

Are they reliable and accurate? Is there a way out to independently validate the
integrity of information? If we analyse, why the lack of trust exists, we realize that the
primary issues center on the following aspects of information security:

• Authentication and identity of user: The act of verifying the identity of a user. How
to recognize the person dealing on the net? Can one be sure of his or her identity?

• Confidentiality: How can one be sure that the information transmitted has not been
intercepted or viewed by any other party in transit?

66
• Integrity: How can one ensure that the information sent, received or stored has not
been tampered with the modified at any time?

If information technology is used in a scientific manner, the co-operative banks can

benefit in the following way:

• It could offer new and innovative financial products.

• Will benefit by getting accurate information

• They can maintain a good management information system (MIS)

• Improve head office perfection and reconciliation which will improve customer
services. The main benefit of computerisation to the employees of cooperative banks
is that they can have information at their fingertips. The information technology has
removed manual transactions and has replaced old control room with one operator.
Another benefit of computerisation is that IT has increased the accessibility of
customers to banks. This has improved customer service through new banking
concepts such as telephone, online, internet banking, automated teller machine, and
other innovative banking concepts. All the banking transactions are done through the
computers. 3.6 The Indian Banking Sector: challenges and opportunities A
distinguished panel of managing directors and chief executive officers of some of the
well-known banks in the country responded to the theme on the challenges and
opportunities faced by the Indian banking sector in the liberalized environment [K. V.
Kamath et. al] [32].

The contributors addressed some of the following important issues regarding E-

Banking and its importance:

• The Indian banking sector is at an exciting point in its evolution. The opportunities
to enter new business and new markets and to deliver higher levels of customer
service are immense.

• As the Indian bank’s position itself is that of a financial service provider, banking
business is getting redefined. Technology is unsettling the earlier business processes
and customer behaviour is undergoing a change. These have enhanced the focus of
competition.

• Competitive advantage can be achieved by harnessing the potential of the

employees by creating a positive work culture and enlisting the support of all the
employees to achieve the organisational goals.

• Indian banks have adopted better operational strategies and have upgraded their
skills. They have withstood the initial challenges and have become more adaptive to
the changing environment.

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 CHAPTER 4

DATA ANALYSIS , Interpretation and Presentation

This chapter shows the result of data analysis that has been undertaken and has been
achieved from the studies Data were collected through a questionnaire distributed by
the researcher. The questionnaire comprises

4.1 GRAPHIC REPRESENTATION OF QUESTIONAIRE

After data collection, respondents views, ideas and opinions related to Customer
relationship management are analyzed.

Interpretation of data is done by using statistical like pie diagrams, Bar graph.

4.2 Customer Respondents Data analyze :

4.1 Reason for choosing

Sr.no. Particulars Respondents % of total

1 Family 6 12
2 Incentive 5 10
3 Nearness 38 76

4 Chance 1 2
50 100

From the above table 4.1 I had feedback of 50 people and in

1. In 1St case 12% people have choose this Bank because the family already has
open account in this bank .Only 10% people have choosen this bank out of
100%

2. In 2nd case 10% people have choosed this Bank because of Incentive Scheme.

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 3. In the 3rd case there are 38 people have choosed this bank out of 50 people
Because this Bank is nearest in their Residence/ office.76% people chooses
this Bank .
4. In the 4th case there is only 2% Customer have choose this Bank Because of
Just by chance.

Table 4.1 Pie Charts Reason for choosing this Bank

2
12

10
1
2
3
4

76

Table No. 4.2 Customer relationship practices of Thane Bharat Sahakari

Bank

Sr.no. Particulars Respondents % of total

1 Prefered Customers 10 20
2 Loyalty Program 28 56
3 Mobile Banking 11 22
4 E-commerce Facility 0 0
5 Internet banking 1 2
6 RTGS 0 0
50 100

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 Table no. 4.2 56% customer are satisfied CRM practices in
Thane Bharat Sahakari Bank for Loyalty program.

Table No. 4.2 Column Customer relationship Practices of Thane Bharat Sahakari
Bank Ltd.

60

50

40
Series1
30

20

10

0
1 2 3 4 5 6

Table no. 4.3 Facility used

Sr. no. Particulars Respondent % of total

1 Prefered Customers
2 Loyalty Program
3 Mobile banking
4 E-commerce facility
5 Internet Baking
6 RTGS
4 8
2 4
36 72
1 2
7 14
0 0
50 100

From the above table 4.3 I had feedback of 50 people and in

1. In the 1st case their are only 4 people who have used this facility because of
Prefered customer.
2. In the 2ndcase there are only 2 people who have used this facility because of
Loyalty program.

70
 3. In the 3rd case there are 36 people who have used Mobile banking.

4. In the 4th case there are 1 people who have used e-commerce facility provided
by Bank.
5. In the 5thcase there are 7 people who have used Internet banking out of 50
people.
6. No people used RTGS facility provided by bank.

Table 4.3 Pie Charts Facility used

0
14 8
2 4
1
2
3
4
5
72
6

Table no. 4.4 Frequently used facility

Sr. no. Particulars Respondents % of total

1 Regular 43 86

2 Rare 7 14

50 100

In the above table 4.4 I had Data of 50 people

71
1. I have suggested two options to customers in 1st case there are 43 people are
asked regular facility used is provided by their bank for customers.
2. In the 2nd case only 7 people are rare facility used provided by bank.

Table no.4.4 Pie charts Frequently used facility

14

1
2

86

Table no. 4.5 Level of satisfaction of CRM strategies

Sr.no. Particulars Respondents % of total

1 Very Satisfied 10 20

2 Satisfied 30 60

3 Less Satisfied 3 6

4 Average 7 14

5 Dissatisfies 0 0

50 100

72
Table no. 4.5 Level of Satisfaction of CRM Strategies

70

60 60

50

40
Series1
30

20 20
14
10
6
0 0
1 2 3 4 5

The Above Table 4.5 are 20% people are very satisfied and 60% customers are
satisfied of CRM Strategies. It is Good for Bank. Only 6% people are less satisfied.
14% customer are average. There are no any customer are Dissatisfied of CRM
Strategies.

Table No. 4.6 Customer Relationship Management Attributes

Sr.no Particulars Respondents % of total

1 Speed 29 58

2 Accuracy 16 32

3 Quality 12 24

50 100

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In the above table 4.6 I had data of 50 people .

1. In the 1st case 29 people give feedback satisfied because of speed of bank is
speed of this bank is best.
2. In the third case 16 people give feedback satisfied because of Accuracy of this
bank is good.
3. In the 3rd case only 12 People are giving feedback because of quality of data is
good .

Table 4.6 Doughnut Customer Relationship Management Attributes

24

58 2
3
32

Table No. 4.7 Staff Behaviour

Sr.no. Particulars Respondents % of total

1 Superior 12 24
2 Good 38 76

3 Average 0 0
50 100

In the Table 4.7 I had 50 customer of data

1. In the 1st case 12 customer give feed back staff behavior with customer is
Superior.

74
 2. In the 2nd case 38 customer give feedback staff behavior with customer if
good.
3. In the 3rd case the staff behavior is average is not any customer give feedback.
4. In 4th case No any customer give feedback on Average.

Table no. 4.7 Column Staff Behavior

70

60 60

50

40
Series1
30

20 20
14
10
6
0 0
1 2 3 4 5

Table No. 4.8 Satisfied Services

Sr. no. Particulars Respondents % of total

1 Very Satisfied 7 14

2 Satisfied 38 76

3 Some what Satisfied 5 10

4 Dissatisfied 0 0

50 100

In the above table 4.8 I had data of 50 Customers.

1. In the 1st case only 7 customers are very satisfied because of services
provided by bank is superior.

75
2. In the 2nd case 38 customer are satisfied because of services provided by bank
is good.
3. In the 3rd case only 5 customer are some what satisfied .
4. In the 4th case there are no any customer are dissatisfied for services provided
by bank

Table no. 4.8 Pie Chats Satisfied Services provided by bank

0
10 14

1
2
3
4
76

76
4.5 Bank Manager Respondents:
1) The Bank manager of Thane Bharat Sahakari Bank Ltd .Thane Shreenagar
Branch give feedback . The various techniques used by bank manager like
Data warehousing and data Mining, Loyalty program etc.

2) The Management of Bank give best CRM practices like Loyalty Program,
Provide correct information to the customer.

3) The Manager of Bank have Data Mining CRM practices strategy like collect
the data and approach the valuable customer know the customer need analysis.

4) The bank provided many E- commerce facilities like Phone Bank , Net
Banking.

5) The Bank are provided loyalty program to a valued customer like, Offered to
the customers investment Plan+ protection plan and Housing loans.
6) The Bank are believe in customer delight and give Proper information , Good
service, Need analysis.

7) The bank also encourage suggestion scheme like give vouchers discount,
easily available sources, create advertise.

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 Chapter 5

Conclusion and Suggestion

FINDINGS AND ANALYSIS

5.1 Finding

Findings in the project are based on the questionnaire analysis. The questionnaire was
filled by 50 respondents. The information given by the respondents is right as per the
knowledge.

OTHER IMPORTANT FINDINGS

It was found that maximum number of customers is involved in CRM such as , Loyalty
Program ,Provided correct information of TBSB bank.

It was found that interest rates provided by the bank on various schemes should be increased

‘Better CRM Practices’ is one of the factors which were highly rated by everyone. Maximum
people rated it 4 or 5 which shows how important this factor is.

People’s Rating to the Factors

From the survey done the following can be observed that;

 ‘Better Service’ is one of the factors which were highly rated by everyone.
Maximum people rated it 4 or 5 which shows how important this factor is.
 It was found from the survey that people want agents which should give them
full information about the bank and the services. Many people rated it 3 or 4. It
also got rating of 5 from some people.
 ‘Better Claim Satisfaction’ was the factors which were highly rated by
maximum number of people.
 ‘Flexibility’ is factor which got average rating from the people. This shows that
people want flexibility in the services to some extent.

Suggestions given by the people

All the people contacted were not satisfied with their some services. They wanted a
banker which can satisfy them by providing better service by better after sales-service

78
and better claim satisfaction. People want a new range of services with a wide
coverage of risk. This shows that till now no bank is able to satisfy their customers in
every way. This is the fact that every bank should try to understand and try to provide
better and satisfactory service.

5.2 SUGGETIONS

“Change” is a continuous process and banking industry is no exception to this

law which is natural. Due to the implementation of the financial sector reforms and
policies for the country change in the banking industry is inevitable.

This changes and challenges are taking place in the present globalization
scenario. This can be done through the customer’s satisfaction, suggestions through
the customers.

 To bring change in product development strategy this means changes in the

structure of bank product.
 As per the changing trends, compel certain modification to be made in the
existing product line.
 The banker must offer a multinational product. They need to add more
innovation services to their product.
 Incorporating technological development as per the scenario, with introduction
of new schemes.
 Banking services need proper segmentation to deal with the different type of
customers.
 Bank should adopt the internal marketing in order to make the customer-
oriented.
 The focus is on creating product and services that meet the needs of the target
customer and are profitable for the bank as well.
 As per today’s scenario, skill for operating in electronic environment and new
internal audit skill in a business environment.
 The banker should establish the committee of customer service in each and
every bank.

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5.3 CONCLUSION

The study has been conducted on “study customer Relationship Management of

various services offered by Thane Bharat Sahakari Bank at Thane.

The study focused on the involvement of the customers in various CRM Practices
offered by Thane BharatSahakari Bank at Thane.

The study has been concluded that the bank should announce more innovation
services to their product.

The interest rate on fixed deposit should be increased to attract the customers. Their
should be attractive interest rates for both short term & long term fixed deposits

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