EXECUTIVE SUMMARY

The idea behind Customer Relationship Management is not new. CRM is

simply a tool & technology used to achieve incremental operational
improvement. CRM is a set of strategies, processes, metrics, organizational
culture and technology solutions that enhance an organization's ability to see
the differences in its customers’ and prospects' behavior and needs, track
new opportunities to better serve their customers and act, instantly and
profitably, on those differences and opportunities.

A vast way of approach to customers, in an attempt to realize their living

style in every field of life and eventually to influence them to change their
life style toward their benefitable direction through the company initiating
ceaseless communication of indirect, implicative and inspiring suggestion so
that the company may attract new customers and bind existing customers
steady with the company.

Recently CRM has taken a center stage in the business world with
businesses concentrating on saving money and increasing profits by
redefining internal processes and procedures. It costs a company
dramatically less to retain and grow an existing client, than it does to court
new ones. It is said that “It is seven times more expensive to acquire a new
customer than to keep an existing one”, therefore the value of customer
information and management should never be underestimated.

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A customer relation management analyst says CRM is "a buzzword that's
really not so new. The aim of CRM is optimize the use of technology and
human resources for the business to gain insight into the behavior of
costumer.

Customer Relationship Management refers to the process - usually

depending on sophisticated computer systems - to record and analyze the
buying habits of customers, so that a company can offer them goods or
services in which they are likely to be interested.

In additional to all the usual customer care principles, CRM includes the
storing of customer information in a database (or data warehouse) and using
the information in a way that improves the customer's "experience".

Today it’s widely acknowledged how you treat your customer goes long way
in determining your future profitability, and companies are making bigger
and bigger to do just that. Customers are serious about the service they
should beget and are voting with their wallets based on the experience they
receive.

Market analysts squabble over the exact figures, but all agree that in the
next few years company will pour billions of dollars into CRM solution
software and service designed to help the business more effectively manage
customer relationships through any direct or indirect channel a customer
opts the use. Specially in banking CRM it is very important because bankers
have to daily interact with their customers and provide value added services
to them.

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By investing in CRM or e-CRM applications, companies are looking at
retaining existing customers and converting potential customers into lifetime
customers. In many industries, customer retention is a key driver for
profitability.

This project answers to all the queries regarding what customer relationship
management is. In this project stress is not on the technology, which is a part
of CRM but stress is on the customer preference on the needs, so that
companies can please most of the customers all the time. Relative graphs
and diagrams are also included in this project. The role of the customer in
any business activity is very important and this can be clearly revealed from
this project.

So why, is the market of CRM technology exploding, is the most common

question at CRMguru.com “What Is CRM?” because if you ask three CRM
experts, you’ll get five different answers.

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SR.NO. CONTENTS PAGE NO.

4
1. INTRODUCTION 11-19

2. BIRTH OF CRM 20-26

3. NATURE, SCOPE, PROCESS AND

STRATEGY OF CRM 27-35
4.
BANKING ON CUSTOMER FOCUS 36-41
5.
TECHNOLOGY IN CRM 42-46
6.

CRM IN BANKING 47-56

7.
RETAIL BANKS PLANNING FOR
CRM 57-62
8.
CRM IN RETAIL BANKING 63-73
9.
E-CRM 74-84
10.
THE PAST, PRESENT AND THE
FUTURE 85-89
11.
CRM IN INDIA 90-94
12.

13. CONCULSION 95-99

SURVEY AND MANTRA OF CRM 100-101

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 INTRODUCTION

‘CUSTOMER IS THE KING’

-Toady’s seller.

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What is CRM?

Customer Relationship Management (CRM) includes the methodologies,

technology and capabilities that help an enterprise manage customer
relationships. The general purpose of CRM is to enable organizations to
better manage their customers through the introduction of reliable systems,
processes and procedures.

Customer Relationship Management is a corporate level strategy which

focuses on creating and maintaining lasting relationships with its customers.
Although there are several commercial CRM software packages on the
market which support CRM strategy, it is not a technology itself. Rather, a
holistic change in an organization’s philosophy which places emphasis on
the customer.

A successful CRM strategy cannot be implemented by simply installing and

integrating a software package and will not happen over night. Changes
must occur at all levels including policies and processes, front of house
customer service, employee training, marketing, systems and information
management; all aspects of the business must be reshaped to be customer
driven.

CRM is a term that is often referred to in marketing. However, there is no

complete agreement upon a single definition. This is because CRM can be
considered from a number perspective. In summary, the three perspectives
are:

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CRM from the information Technology Perspective
From the technology perspective, companies often buy into software that
will help to achieve their business goals. For many, CRM is far more than a
new software package, the renaming of traditional customer services, or an
It-based customer management system to support sales people. However, IT
is vital since it underpins CRM, and has the payoffs associated with modern
technology, such as speed, ease of use, power and money, and so on.

CRM from the Customer Life Cycle (CLC) Perspective

The Customer Life Cycle (CLC) has obvious similarities with the Product
Life Cycle (PLC). However, CLC focuses upon the creation of and delivery
of lifetime value to the customer i.e. looks at the products of the services that
customer needs throughout their lives. It is marketing orientated rather than
product orientated. Essentially, CLC is a summary of the key stages in a
customer’s relationship with an organization.

CRM from the Business Strategy Perspective

The Business Strategy perspective has most in common with many lessons
and topics contained on this website, and indeed within the field of
marketing itself. The diagram below shows the Marketing Teacher Model of
CRM and Business Strategy. Our model contains three key phases –
customer acquisition, customer retention and customer extension, and three
contextual factors – marketing orientation, value creation and innovative IT.

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A commonly cited definition of CRM (UK) Ltd. (2002),
is as follows:
Customer Relationship Management is the establishment, development,
maintenance and optimization of long term mutually valuable relationships
between consumers and organizations.

So CRM is the building and maintenance of long term customer

relationships. The relationship delivers value to customers, and profits to
companies. The relationship is supported (but not driven) by cutting edge IT.
The business strategy is based upon the recruitment, retention and extension
or products, services, solutions or experiences to customers. This is the core
of CRM. Simply stated, customer relationship management (CRM) is
finding, getting and retaining customers.

Defining Customer Relationship Management (CRM)

Here is the compilation of some of the most respected thoughts that can
describe CRM. Simply stated, Customer Management Relationship (CRM)
is:

• The art/science of using information to find, acquire and retain

customers.

• The people, processes, and technology questions associated with

marketing, sales, and service.

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 • At the core of ant customer-centric business strategy and culture.

• Supported, not driven, by technology. CRM involves redesigning of

functional activities.

• Actively deepening the knowledge you have of your customers to

meet individual customer needs.

• A holistic approach that unifies all points of customer interaction.

• Measured by customer retention and referrals as well as the growth of
valuable customer segments.

A Good CRM Program Needs To:

●Identify customer success factors.
●Create a customer-based culture.
●Adopt customer-based measures.

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●Develop an end-to-end process to serve customers.
●Recommend what questions to ask to help a customer solve a problem.
●Recommend what to tell a customer with a complaint about a purchase.
●Track all aspects of selling to customers and prospects as well as customer
support.

Customer Relationship Management (CRM) is NOT:

• Just about buying technology. However, some technology is required
to enable a CREM strategy.

• Possible with remembering that the driving force is often human

relationships.

• Not a destination, but a journey. CRM is iterative in nature, to be

improved on a regular basis.
“The true value of CRM is to transform strategy, operational processes and
business functions in order to retain customers and increase customer loyalty
and profitability.” by Aris Pantazopoulos.

Aspects of CRM:
There are three aspects of CRM which can be implemented with isolation
from each other:

• Operational CRM: automation or support of customer processes that

include a company’s sales or services representative.

• Collaborative CRM: direct communication with the customers that

doesn’t include a company’s sales or service representative (“self
service”).

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 • Analytical CRM: analysis of customer data for a broad range of
purposes.

The three key phases are:

1. Customer Acquisition
2. Customer Retention
3. Customer Extension

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The three contextual factors are:

4. Marketing Orientation
5. Value Creation
6. Innovative IT

1. Customer Acquisition – This is the process of attracting our

customer for their first purchase. We have acquired our customer.

Growth – Through market orientation, innovative IT and value creation

we aim to increase the number of customers that purchase from us for the
first time.

2. Customer Retention - Our customer returns to us and buys for a

second time. We keep them as a customer. This is most likely to be the
purchase of a similar product or service, or the next level of product or
service.

Growth - Through market orientation, innovative IT and value creation

we aim to increase the number of customers that purchase from us for the
first time.

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3. Customer Extension – Our customers are regularly returning to
purchase from us. We introduce products and services to our loyal
customers that may not wholly relate to their original purchase. These are
additional, supplementary purchases. Of course once our loyal customers
have purchases those, our goal is to retain them as customers for the
extended products or services.

Growth – Through market orientation, innovative 11 and value creation

we aim to increase the number of customer that purchase additional
supplementary products and services.

4. Marketing Orientation – Means that the whole organization is

focused upon the needs of the customers. Customer needs are addressed
by the Three Levels of a Product whereby the organizations not only not
only supplies the actual, tangible product, but also the core product and
its benefit, and also the augmented product such as a warranty and
customer service. Marketing orientation will focus upon the needs of
consumer for all three levels of a product. (N.B. ‘market’ orientation and
‘marketing’ orientation are not the same.)

5. Value Creation – Centers on the generation of shareholder value

based upon the satisfaction of customer needs (as with marketing
orientation) and the delivery of a sustainable competitive advantage.

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6. Innovative IT – It should be efficient, speedy and focus upon the
needs of customers. Whilst IT and/or software aren’t the entire story
for CRM, it is vital to its success. CRM software collects data on
consumers and their transactions. In some ways, since every consumer
displays different purchasing habits and preferences. Organizations
will track individuals, and try to market products and services to them
based upon similar buyer behavior seen in other individuals (e.g.
When Amazon tells you those customers that viewed/bought the same
product as you, also bought another product).

BIRTH OF CRM

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 “CUSTOMER FOR LIFE THROUGH SYSTEMS AND SMILES”.

-MR. MAHESH DADLANI

CUSTOMER RELATIONS, ORANGE.

BIRTH OF CRM
Throughout the 90s business were focused on improving internal
operations. CEO’s tried to distinguish their companies through
operational excellence and product innovation. Middle management
focused on automating departmental functions such as sales and help
desk support. They believed that automation and better management of
their sales and customer service process would lead to increased revenue
and customer satisfaction. Vendors were all too happy to support this

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belief and raced to the scene with independent solutions for sales force
automation, help desk and customer service functions.

While many of these applications provided increase in the productivity,

the approach of using independent solutions to address departmental
needs served only to create islands of information and database
duplication. Furthermore, the lack of system integration was unavailable
to sales and support personnel without jumping from system to system.
This did little to support cross selling opportunities or increase customer
satisfaction.

By the time customers walk into your business – or log on to your

website or call your call sales centers – most already know what they
want and how much they’re willing to pay. With easy access to
mountains of information, today’s customers do their homework, and
they now have the upper hand in most purchase transactions. In response,
sellers are bending over backwards to improve offerings and services.

However, rather than adopt a streamlined “YOU WANT IT WE’VE

GOT IT” approach sellers have created a marketplace where products
and services are sold, serviced and marketed in an increasingly
fragmented and ultimately frustrating way.

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Never before has so much “clutter” bombarded consumers from so many
online and offline sources. Trying to be all things to all buyers, sellers
face a harsh reality that brings an old adage to life: YOU CAN PLEASE
SOME OF THE PEOPLE MOST OF THE TIME AND MOST OF
THE PEOPLE SOME OF THE TIME, BUT YOU CAN’T PLEASE
ALL OF THE PEOPLE ALL OF THE TIME.

It wasn’t supposed to be this way. Customer Relationship management

(CRM), which swept through the business landscape in the early 1990s,
brought the promise of helping sellers PLEASE MOST OF THE
PEOPLE MOST OF THE TIME. Riding the coattails of customer
satisfaction, would come increased organizational efficiency and, better
still, increased revenues.

That dream has been slow in coming. While incremental improvements

have occurred, CRM has not yet delivered its ultimate promise – the
transformed customer experience.

Yes, companies have implemented call centers and sales force

automation software and customer sales representative training.
However, while improving the sales and service components of customer
transactions, companies have largely ignored the very piece required to

attract customers in the first place. It’s the piece that ensures sales and
service efforts are effective and integrated. It’s the piece that allows the

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seller to segment and analyze their customer information in order to
create a more personalized, long-term relationship. It’s the piece called
“marketing”.

We’re not saying that the last decade’s investment in CRM has been
wasted. Quite the contrary: what began as a solution for providing more
efficient customer transactions evolved into a process by which
companies could foster more meaningful customer interactions. This was
the right direction to take. However, companies haven’t reached the end
of the CRM road. Today, the challenge is to take this evolution one step
further – to focus on building lasting and profitable customer dialogues at
all interaction and transaction touch points to build customer and brand
value.

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CRM TODAY – FRAGMENTED CUSTOMER
EXPIRENCE

SERVICE SALES

CRM TOMMOROW – TRANSFORMED

CUSTOMER EXPERIENCE

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 MARKETING SALES

SERVICE

EVOLUTION OF CRM
As CRM evolved, many companies assumed that just bolting on new
technology or adding new services would enhance customer relationship.
This assumption was pernicious as it was false. After all, you can’t sell
what people don’t want to buy, no matter how efficient and service
oriented your sales channel. And as for gathering customer insights, be
careful what you wish for. Many companies faced the unsettling paradox
of having advanced data availability and analytic techniques that quickly

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outpaced their ability to absorb and apply the information. They were left
with sophisticated tools that offered little real value. The belief is that the
third wave of CRM will bring about the ultimate transformation of
customer experiences – not just by strengthening sales and service or
even promoting interaction with your customers – but by creating a series
of “Intelligent Conversations” that build over the time into a long term
meaningful dialogue.

In this next evolutionary phase of CRM, information will be exchanged

and acted on in real time. Consumer history will be recorded and the
expectations of both parties will be met. Naturally, not every
conversation will be profitable. But the series of conversations and the
ongoing knowledge transfer will continue to grow, creating a memorable
and differentiated customer experience, and, in the long run, a profitable
relationship.

The evolution process of CRM has worked as follows

1. Transaction based marketing: The volume based marketing

which was a single function approach was the first stage. The value
generation for the vendor was the sole criteria for the success of the
business.

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2. Customer Acquisition: This naturally led to acquisition as the

only strategy for the business to grow and expansion of customer base
was the key for this.

3. Customer retention: The factors like fierce competition in

growing number of vendors, closing gap in quality and performance,

commerce, technological innovations made it necessary for the
vendors to adopt strategies for customer retention.

4. Relationship management: This was the next step in the

evolution where for retention and acquisition both factors beyond just
the pricing and quality of the products need to be looked into. The
creation of long term relationship with customers by offering value
added services and creating long term value for mutual benefit was
the key.

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 NATURE AND SCOPE OF CRM

“CRM IS ALL ABOUT GETTING CLOSER TO YOUR

CUSTOMER”

-MR. Bhaskar Bhaggi

Sr. Vice President, ICICI

NATURE AND SCOPE OF CRM

The Customer is King! This credo is more powerful, relevant and true
today than ever before. In a truly customer driven economy, success

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depends on a company’s ability to be with the customer on a round with
clock basis…satisfying all their product and service specific needs.
Simply stated, Customer Relationship Management (CRM) is about
finding, getting, and retaining customers.

Customer Relationship Management is one of the hottest and most talked

about topics in the industry today and for good reason. Industry analysts
recently reported that CRM expenditures will grow from $2.8 billion
in1999 to $11 billion by 2003.

CRM is all about building long term business relationships with your
customers. It is best described as the blending of internal business
process: SALES, MARKETING AND CUSTOMER SUPPORT
WITH TECHNOLOGY. CRM solutions empower business to more
efficiently and effectively manage the activities that affect their
relationship with their customers. The ultimate goal is to meet and exceed
customer expectations, create a positive customer experience and build
customer loyalty.

CRM should finally enable “A TARGETED MUTUALLY

BENEFICIAL PROFITABLE RELATIONSHIP WITH
INDIVIDUALS AND GROUPS”.

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Key CRM Principles: A good CRM solution should allow for:
• Differentiate Customers – All customers are not equal; recognize and
reward best customers disproportionately.

• Differentiate Offerings – Customers appreciate customized offerings.

• Keep existing customers – Its 5 to 10 percent cheaper to retain current

customers than acquire new ones.

• Maximize Lifetime Value – Exploit up-selling and cross-selling

potential.
• Increase Loyalty – Loyal customers are more profitable.
`

DIFFERENTIATING CUSTOMERS
Most CRM systems allow for very little freedom to customize to
specific industry verticals. Since the customers needs emerge from the
products and offerings of the industry, CRM system should respond to
the customer needs.

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 a
service not all customers can be treated alike and CRM needs to
differentiate between a high value customer and a low value customer.

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 What CRM needs to understand while differentiating customers is

• Sensitivities, Tastes, Preferences and Personalities.

• Lifestyle and age.

• Culture, background and education.

• Physical and physiological characteristics.

DIFFERENTIATING OFFERINGS
CRM solution needs to differentiate between a low value customer and
a high value customer

• 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

KEEP EXISTING CUSTOMERS

Grading customers from very satisfied to very disappointed shall help the
organization in always improving its customer satisfaction levels and
scores. As the satisfaction level for each customer improves so shall the
customer retention with the organization.

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MAXIMIZING LIFE TIME VALUE
By identifying life stage and life trigger points by customer, marketers
can maximize share of the 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
It is an endeavor of ant corporate to see that its customers are advocate
for the company and its products. Any company will like its mindshare
status from being a suspect to being an advocate. Suspect-----
prospect-----customer client-----supporter-----advocate.

Customers have to invest in terms of its product and service offerings to

its customers. It has to innovate and meet the very needs of its customers
so that remain as advocates on the loyalty curve.

Referral sales invariably are low cost high margin sales. It has also the
implication of being not “on time scale”. Besides, referral sales are likely
to induce more satisfaction.

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SUMMARIZING CRM ACTIVITIES
The CRM cycle can be briefly described as follows:

1. Learning from customer and prospects.

2. Creating value for customers and prospects.
3. Creating loyalty.
4. Acquiring new customers.
5. Creating profits.

BENEFITS OF CRM
1. Profitability-Driven Account Planning - Enables commercial
banks to better understand the overall needs of their customers and drive

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customer profitability. Key components include profitability-based
customer segmentation and integrated alignment and performance
management to allow commercial banks to coordinate their efforts and
drive cross-selling of non-interest, fee based products to the appropriate
customers.

2. End-to-End Credit Management - Enables the efficient and

consistent processing of commercial loans. Key components include

consistent credit request processing and streamlined account origination
which helps increase the quality of credit portfolios. Compliance with
regulatory procedures (such as Regulation B loan notification
requirements) is built into the workflow of the solution set.

3. Relationship-Driven Sales - Includes components such as

intelligent client coverage and enterprise call reporting that help
commercial banks better coordinate limited sales and product resources
to drive revenue growth.

4. Customer-centric Service - Allows commercial banks to increase

customer satisfaction and retention. Components such as value-added

personalized service and proactive outbound service enable organizations
to provide fast, efficient, and superior service to their customers.

5. Banker Productivity - Includes streamlined proposal and

credit document generation. Efficient product installation improves
banker productivity by automating time-consuming manual tasks.

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CRM STRATEGY - The basic CRM strategy is to align an
entire organization to service the customer better.

CRM CUSTOMER SERVICE STRATEGY - CRM tools are

capable of delivering all customer information to everybody in need.
Detailed customer reports can be accessed with customer service
histories, customer preferences and priorities.

CRM SALES MANAGEMENT STRATEGY - CRM offers plenty

of tools for automating and managing sales processes. All sales persons
will have access to key customer, product and company data and all
sales managers can effectively monitor and co-ordinate their team.

CRM DOCUMENT MANAGEMENT STRATEGY - Banks hosts

all enterprise data in a web-based centralized always updated CRM
database accessible from every where at every time. No duplicate data,
no double entry, no data loss. Superior encryption techniques with safe
data transfer and sharing tools. Real-time data backup strategy.

CRM MARKETING STRATEGY - Banks know that the best ever

marketing strategy is to combine all enterprise resources to find new
customers, retain existing customers and to make them referrers. A
wide range of CRM marketing tools are available for this purpose.

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 CRM strategy also covers many other business processes. The
simplicity in use, open-source features, and web-based CRM allow
users to develop right CRM strategies according to their industry,
customer preferences, sales territories, etc.

CRM PROCESS

Understanding customers’ tastes and requirements with precision and

effectiveness and serve them in the way they want. (CRM) process
management tools are specially designed for streamlining small and
medium business CRM practices.

As you know, a satisfied customer can bring many other customers to

you, and CRM is the process of doing it in a planned way. CRM
process management tools follow a set of simple customizable rules
that helps in planning, implementing and analyzing CRM processes in
the right way.

CRM PROCESS MANAGEMENT INVOLVE THE

FOLLOWING STEPS

• Getting all key information needed for CRM process.

• Sorting the key information to find right opportunities.
• Delivering appropriate information to users who need.
• Planning marketing management, contact management, leads
management, sales management and after-sales management
processes.

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• Pleasing customers with respect to set rules and plans.
• Regularly keeping the contact with the customers.
• Providing real-time reports and analysis about on-going processes

BANKING ON CUSTOMER FOCUS

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BANKING ON CUSTOMER FOCUS
Long serpentine queues, interminable waiting hours, unfriendly staff –
till recently, these were the characteristics of Indian banks. Intensification
of competition after liberalization has compelled the banks to get their
acts together and focus more on the customer.

To improve customer satisfaction US bank marketers are experimenting

with new techniques to capture valuable feedback. Indian banks can take
a cue from this and redefine their strategies.

Consumer surveys continually highlight customer service as a weak spot

for financial institutions. For the last decade at least, many banks have
been so absorbed in their own internal issues, particularly merger –
driven cost – cutting re-engineering, that customer service often received
short shift. The industry propensity to raise fees to boost non-interest
income hasn’t helped either.

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THE RESULT: Banks needlessly lose some of their best customers
to other providers, particularly non-brokerage and mutual fund
companies. A survey by New Ground Resources Inc; found nearly half of
the customers agreeing “it wouldn’t take a lot” for them to move to other
bank if the other institution “really treated me well”. Dischanted
customers are voting with their feet says Charlene Stern vice-president at
the Chicago based strategic marketing firm.

To help stem those defections, banks need to improve their customer

feedback mechanisms. Besides annoying customers, traditional direct
mail and telephone surveys are removed in time from the customers’
actual experiences at bank. “Banks have realized they are not effective at
gathering information about their customers and are trying to figure out
how to change that,” says Kimberly Collins, an analyst.

The quest for data has bankers turning to a wide variety of information -
gathering techniques, such as complaint data analysis: call center exit
surveys; employee feedback groups; and online surveys. Such tactics are
supplementary with traditional strategic research methods such as market
survey and bench marking studies. Through these methods, institutions
hope to gain improved insight to devise strategies for returning their
loyalty.

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The intent of most of the newer techniques is to get closer to the
emotions driving customer behavior and to gauge that sentiment closer to
the time of the transaction. No one techniques is 100% accurate, however
and some can actually backfire on the institution. Online surveys provide
immediate feedback, for e.g. but might annoy customers if they bear too
much resemblance to the much despised Internet spam.

That’s why experts advise a comprehensive and balanced approach, with

specific customer groups. “Successful approaches vary with the objective
of the research,” says Robert Hedges, M.D. distribution at fleet Boston
financial corp.

Telephone surveys, Hedges says, can be useful for sporting and tracking
broad trends, wile customer focus groups then help the institution drill
down and identify specific service problems. And the telephone surveys
themselves have been revamped to provide fresher, more immediate
information. Instead of calling customers at dinnertime, Fleer Boston
conducts a five – minute survey of a random selection of customers who
connect to the bank’s call center on a toll free line.

The key in most cases is to weave queries into ordinary interactions

between customers and the institution, so that feedback can be obtained
with a minimum of distraction. “Customers don’t want to be bothered, so

36
we have with them,” says Michelle convey, quality leader at JP Morgan
chase & Co. in New York City.

EXIT SURVEYS
Before the 1980s, when geographic restrictions were liberalized, banks
had an easier time understanding their customers. In the days when banks
focused on their local markets and tellers knew many customers by name,
bank marketers needed only to conduct simple telephone or branch
surveys to gauge customer sentiment.

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The advent of regional and national banking has changed all that when
institutions sprawl across multiple regions, what suits to a customer in
one area may not appeal to those in another. The increasing use of
electronic channels, automated teller machines, telephone call centers and
PC banking, also puts more distance between the customer and the
institution. The local branch may not be the best place to sample opinion.

Meanwhile, getting a more accurate data about the customers is

becoming more important as evidence accumulates of growing
disconnect between banks and their customers. New Ground surveyed
160 banks customers in three cities as to what advice they would give
their own banks if those institutions wanted to keep their business. 60%
cited a need for improved service, up from 38% in 1997. The strongest
demand was for more “humanized” personal service rather than more
services or reduced teller lines.

Bank attempts to improve feedback loops hindered by the fact that

traditional data gathering tools, such as direct mails and telephone
surveys, don’t work so well anymore. Customers trash the survey letters

without reading them and use voice-mail to screen out unwanted

telephone surveys.

This leaves the institution searching for alternating feedback

mechanisms. Cost is one consideration. Randall Grossman, M.D. of Bank

38
One Corp’s retail unit in Columbus, Ohio, estimates a telephone survey
of 500 people costs between $20 to $30 per person, not including
overhead or the cost of designing the survey – compared to as little as $5
per e-mail.

The cost of hosting a traditional customer focus group can reach $5,000
per group. Immediacy is also important. Traditional surveys reach
customers some time after their service contact at the bank. Some of the
newer techniques are designed to capture feedback when the customer’s
response is fresher. Fleet Boston, for e.g. has been
Fleet Boston’s Hedges says this kind of survey provides the company
with “Immediate Feedback” on its products and services.

Customer responses are tabulated and scored and then sent to call center
managers the very next day, allowing Fleet Boston to adjust its
procedures quickly. “If we change the way our reps answer the phone,
the survey will let us know whether that change was something positive
or negative fro the customer,”

Hedges say:
This gave birth to Customer Relationship Management…….

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 USE OF TECHNOLOGY IN CRM

“CRM IS NOT JUST A GOOD IDEA……….BUT A MATTER OF

SURVIVAL”

-Mr. Kiran Pradhan

Account Manager, SAS

TECHNOLOGY IN CRM

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With technology touching the way we live our lives, expectations of
individuals is fast changing. Like the television and the PCs
revolutionalized our lives in the twentieth century so is wireless
communication, internet and pervasive computing going to affect our daily
pattern of lives.

Some clear trends that can be seen are

• More and more individuals will like to be treated as one single person
rather than one among the masses.

• People wish products and services around the clock.

• With abundance of product and service offerings, consumers’ loyalty

can be commanded by providing better portfolio of the products.

• Speed response and understanding each individual one is the major

key issues.

CRM has become the central focus area which the entire gamut of
organizational activities has to revolve around.

Technology Component of a Total CRM strategy:

The technology component of CRM offers bank a comprehensive
understanding of its customers through data analysis and data modeling, to
support sales and marketing strategies.

41
Single Customer View: A managed and integrated view of the

customer drawn from all contact points and product purchases enables
financial institutions to better understand customers and therefore even
serve them effectively.

Predictions for profit: Banks can accurately predict which products

and services will appeal to the customer, and which they are most likely to
purchase.

Customer Lifetime Value: Banks can calculate the probable profit

of a customer over a lifetime, ensuring that they don’t alienate low-value
customers with high – value potential.

Personalized services: Business can segment the market into specific

targets by demographics or purchase types. With a closer understanding of
customers by small segments, banks can adopt individual marketing
approaches rather than relatively ineffective mass marketing.

The Technological Ecosystem: Technology is the essential enabler

of the CRM. To implement the CRM in the modern day organizations with
millions of customers, so as to achieve one-to-one relationships with all the
profitable and valuable customers, leveraging on technology is a must. The
entire ranges of the technologies used in CRM are known as “Technology

42
Ecosystem”. These comprises of three building blocks. They are
Operational CRM, Analytical CRM and the Collaborative CRM.

TYPES OF CRM

OPERATIONAL CRM
The operational CRM includes technologies and business processes that
can improve the efficiency and accuracy of day-to-day customer facing
activities. These activities include sales, marketing and customer service.

The sales force automation includes opportunity management, account

management, sales encyclopedia, sales forecasting, and sales analysis
activities. Marketing automation includes activities like marketing
campaign planning and execution, and campaign analysis. Customer
service activities include customer service, customer support, field service
and quality management. Supply chain management, ERP and legacy
systems are considered as back office where as sales force automation,
customer service and marketing are considered as the front office
activities. Mobile sales and field service are known as Mobile Office
Operations. Operational CRM integrates the mobile office, front office
business processes and the delivery channels and the back office activities.

ANALYTICAL CRM

43
Analytical CRM is used for analyzing customer data to support operational
CRM activities. They are used to identify different pattern behavior of
customers, profiling and segmenting the customers using the analysis tools
and data warehouses.

Analytical CRM provides a 360-degree view of customer, which is

essential to develop and optimize customer relationships. The data mining
tools and the OLAP tools perform the analysis of the customer and other
organizational data and provide the results to the operational CRM with a
view to maximize the outcome of each customer contact.

COLLABORATIVE CRM
Collaborative CRM includes all the components that manage and integrate
activities across the entire customer contact points. The collaborative
technologies include call – centers, web, e-mail, fax, and intelligent agents.

Collaborative CRM facilitates the customer interaction with organization

and also interaction between sales and marketing people with the customer.
The interaction can take different forms and diverse media. The interaction
points include call centers or customer interaction centers, sales calls, field
service. Web interaction can include self-service, publishing, and catalog
and product configurations.

44
The interactions also include personalization or one-to-one
communications; customer portals that are meant to provide information to
the customers and can also include communications between communities.
Finally the interaction between the organizational entities like automated
sales forces and marketing with the customer in field comes under the
umbrella of collaborative CRM.

CUSTOMER RELATIONSHIP MANAGEMENT IN

BANKING

“BANKS IN THE DAYS TO COME HAVE TO PROVIDE THEIR

BROAD BASED SERVICE PACKAGE IN THE MIDST OF STIFF

45
COMPETITION. TO ENSURE THEIR COMPETATIVE EDGE IN
FUTURE, THEY HAVE TO SURPASS THEIR RIVALS IN THE
AREA OF QUALITY OF THEIR CUSTOMER SERVICES.”

-UNKNOWN

INTRODUCTION
In simpler days, it was so easy to select your bank. You choose the local
bank, where the teller was your neighbor’s sister-in-law, the bank manager
knew you by name, and your family had conducted business for years.

All else being equal, customers chose an institution because it was

convenient and personal. Banks earned customers’ loyalty on the basis of
personal relationships, trading on history and mutual loyalty, and on face-
to-face interactions and long term knowledge of the customer as a person,
not just an account number.

Technology, commoditization, deregulation and globalization forever

changed the face of banking. The model of the personalized bank is quaint
memory, replaced by national and multi-national service providers, ATMs,

46
Internet Banking, Automated call systems and a proliferation of product
choices, none of them fettered by traditional ties of geography and
familiarity.

For consumers, this competitive scene has brought a wealth of choices, yet
it has eliminated the personalized nature of banking. No matter, say
consumers, who have traded loyalty for the ability to pick and choose from
the latest deals-of-the-day that, appear, pre-appeared, in the mailbox.

For banks and other financial institutions this competition makes it

difficult or rather impossible to show competitive differentiation, and
harder than ever to show profit. A typical financial institution has

thousands of local, regional, national and global competitors. In this

increasingly fragmented industry, most players hold a relatively small and
unreliable market share. Customers stick around until enticed by the latest
short term interest rate or direct mail offer.

This new order calls for a new mindset. Retail bankers have to behave
more like retail merchants, focusing on ways to gain customers, keep them
and maximize profitability from each all while streamlining product costs
and customer contact channels.

Banks have been doing that all along. . . They spend large advertising
budgets on television and print ads to lure new customers; they wage

47
ambitious campaigns to cross sell services to the existing customers. They
constantly monitor and seek to increase sales in each product line. So
what’s the problem?

The problem is that these measures fall short of the potential to truly
maximize value from the existing customers, and can even be self
defeating. Banks need to reconsider their traditional focus on product lines.
It’s time to adopt comprehensive view of the customer as a part of
continuum, not just a series of transactions.

THE CHANGING SCENARIO IN BANKING

With opening up of the economy many private sector banks have joined
the fray and are offering a plethora of products and services rechristening
themselves as ‘financial boutiques’. Knowledge dissemination has been
propelled by electronic and mass media campaigns.

Today’s knowledge savvy consumer is challenging the Indian retail

banking industry to redefine itself. In the current competitive scenario – for

48
a bank to survive competition, succeed and make profit, there is hardly any
option but to learn from and actively respond to customers’ needs.

Banks offering retail products need to reorient their strategy from a product
centric to a customer centric focus to attract and retain high net worth
individuals (HNI) and profitable customers.

The battle of the banks, for gaining a greater slice of market share, is
taking on a new urgency. In the current falling interest scenario, banks are
finding it increasingly difficult to meet the high growth expectations.

In order to bolster their top line banks are increasingly looking at newer
ways and means of achieving organic growth through strategies that enable
acquisition of new customers and retaining the loyalty of the existing
customers.

Success of a bank’s strategy towards customer acquisition will depend on

its ability to develop customer insights and translate these into effective
operating models.

Ensuring a good customer experience at every customer touch point is the

corner stone of a successful growth strategy. A good customer experience

49
will drive customer acquisition and promote customer retention, which
translates into increased profits. This in other words is the hallmark of a
successful CRM strategy.

Emphasis on CRM arises on account of the confronting retail managers –

managing multiple customer touch points which sell the burgeoning
complex products with the attendant risks and rewards, and managing to
sustain and achieve growth and profits.

The entire service industry is now metamorphosed to become customer

specific. The management of customer relationship in the financial service
industry demands special focus. Bankers are conscious of the relative costs
of acquiring new customers.

With the emphasis on ‘delivering results’ most bankers are resorting to

customer grabbing, rather than customer cultivation and creation, with the
result that customer churn is the order of the day. Incidentally, bankers are
fully aware that replacing customers increase the relative cost of new
customer acquisition.

Moreover, it is a drain on the existing resources of the bank, which can be

better deployed for growth initiatives. Therefore, the challenge for the

50
banks is to retain and deepen the profitability of the existing customer
relationships.

CUSTOMER CENTRIC ORGANISATION

Banks and financials institutions are recognizing that they can no longer
look at a customer from a specific product or snapshot perspective but
must encompass the entire customer relationship to fully understand a
client’s profitability.

From a strategic standpoint, CRM mobilizes resources around customer’s

relationships rather than product groups and fosters activities that
maximize the value of lifetime relationships.

From an operational standpoint, CRM links business process across the

supply chain from back – office functions through all touch points,
enabling continuity and consistency across a customer relationship.

From an analytical standpoint, CRM is a host of analytical data tools that

enable banks to fully understand customer segments, assess and maximizes
lifetime value of each customer, model “what-if” scenarios, predict
customer behaviors, and design and track effective marketing campaigns.

51
 According to Meridian Research, retail financial services institutions are
expected to spend some $6.8 billion on CRM in 2001. Those investments
will pay off for banks by

• Restoring the personal service connotation that previously removed.

• Fostering greater long term loyalty through relationship building.

• Maximizing lifetime value of each customer through cross-selling.

• Enabling immediate action to retain the most valuable customers.

• Identifying high risk customers and adjusting service accordingly.

• Enabling the bank to fulfill customer needs at the right time with the right
offer.

• Increasing the rate of return on marketing initiatives.

GOALS REQUIRING CRM SOLUTIONS

The primary goals of banks that require CRM solutions are:

CUSTOMER IDENTIFICATION: It refers to acquiring the

customer centric data such as knowledge of customers’ current
demographic details, related products and their holding pattern with the
bank. This should allow the banks to generate a single, comprehensive
view of every one of its customers. With this base, the banks must identify
prime customers who require to be specially treated under CRM.

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CROSS-SELLING/UP-SELLING: Cross-selling and Up-selling
are huge untapped opportunities for banks. CRM solution should adopt an
integrated approach to customer needs, which not only would build
customer loyalty and business, but also enable banks to offer their
customer the additional services they might really want. For example, a
minor customer may be offered an educational loan; a savings bank
customer may be offered a credit card or a housing loan, a busy business
may be offered internet banking etc.

CUSTOMER ACQUISITION: CRM is aimed at optimizing

processes and functions related to the customer. All operations can be
optimized and systemized to enhance efficiency and effectiveness, on a
continuous basis. This continuous learning process would help banks to
bring out better products that target potential as well as existing customers.
The operations can be aimed at getting the right customers and then
retaining them by extending special treatment under CRM environment.

CUSTOMER RETENTION: Customer Retention is the most

important focus of CRM. Banks should employ a CRM solution that
consolidates information from all customer interactions; whether it is
personal contact or inquiries to the call center or the internet it should be
kept in mind that it is many times costlier to obtain a new customer than to
retain an existing one. Every banking representative should have ability to

53
access 360-degree view of any customer, in time, to enhance the
competitive advantage and customer retention.

CUSTOMER SATISFACTION AND DELIGHT: When a

customer receives a higher level of service that what he expects, he is

satisfied. On the contrary, if he receives a level of service lower than his
expectations, he is dissatisfied. A dissatisfied Customer tells at least 10
other people about what went wrong with the bank, which can trigger an
exodus of customers from the bank. Else, it will definitely stem the flow of
new customers into the bank. Hence, the banker should make all efforts to
improve services on a continuous basis. Banks operate in a very dynamic
market and it is important to be proactive to delight a customer, at least,
the prime ones, beyond the level of satisfaction. To achieve this, banks
must continuously innovate new producers and features, using technology
as a tool.

54
CRM TOOLS FOR BANKING
CRM Tools can be broadly classified into Operational tools and Analytical
tools:

OPERATIONAL CRM
Provides the software support for business that requires customer contact.
It aimed at providing information to employees and documenting all
customer interactions across channels such as personal contacts,
telephonic, electronic and wireless.

55
For e.g. if an important customer dials to the bank’s call center, the
operational CRM can alert the call center of the customer’s account status
and other details.

ANALYTICAL CRM
Helps banks make sense of the information collected. It is aimed at
utilizing the customer’s potential to the maximum. It helps in tracking the
activities of the customer on a real time basis.

For e.g. if there is a monthly debit of certain amount in the customer’s

account by means of cheques in favor of some other bank, it is an
indication that the customer is having a loan with that bank. Analytical
CRM can trace this and the banker can offer him a loan with better benefits
and in the process benefit himself.

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 RETAIL BANKS PLANNING FOR CRM

“The prerequisite for successful CRM in banks is to have a thorough

understanding of the organizational structure and environment.”

RETAIL BANKS PLANNING FOR CRM

In order to derive maximum advantage, it is necessary for the banks to lay
a solid foundation on which the edifice of CRM can be built.

Preparing for CRM involves three important steps

1. Understand the organization environment.
2. Understand the bank’s products.
3. Analyze the product environment.

57
1. Understand the organization environment
There are essentially two components to the services provided by banks:
CUSTOMER INTERFACE and TRANSACTION EXECUTION.

While both components are complementary in nature, the skill-set required

for the components are unique. Components of customer interface are field
sales staff, customer call centers, web portals and written queries.
Transaction execution is the forte of the operations staff and IT. Inputs
received from customer interface staff are executed and delivered by the
transaction processing personnel.

Very often we come across a situation where there is dichotomy between

what the field staff assures the customer and what the transaction executive
delivers. This is common in the case of loan products. Customer interface
executives who do their homework on the above issues are likely to make
commitments to the customers which cannot be delivered. This holds good
for both internal as well as external customers.

The reason can broadly be attributed to

• Lack of understanding of the line and staff functions and the overall
structure and organization.

• Inadequate knowledge about the sphere of operations at different

levels.

58
• Failure to judge the idiosyncrasies of superior peers and subordinates.

2. Understand the bank’s products

Despite banks organizing internal campaigns and contests on themes
‘know your products’ experience has shown that expect the winners of
the contest, the rest of the pack woefully lacking in product knowledge.

Walk into any private bank or public sector and enquire about demat
account operation or the procedure for obtaining cash credit limits.
Chances are that the executive would answer one query and refer you
another table for the second. Your worst nightmares is when you call the
bank for the above information and are informed that the person who can
provide the exact details is not in his seat and you are politely requested
to cal back again. Improvements in the area of CRM are evident since the
executives in some banks ask you to leave your phone number so that the
concerned executive can call back.

What is being suggested is not to do away with the policy of having

experts to answer customer enquiries but to equip every executive with
an in-depth knowledge about his/her ‘baby’ while acquiring adequate

inputs to nurture your colleagues ‘baby’ in his/her absence. Executives

must master the art of ‘baby – sitting’. Adequate knowledge about all the

59
products of the bank would ensure that the CRM efforts are finally
entrenched.

3. Analyze the product environment

Enhanced service competency and product knowledge are the building
blocks in a relationship – building exercise. A ‘professional’ should be
equipped with the following adequate information:
-Competitors by rank:

• Close competitors for the products handled.

• Their strength and weakness with respect to each product for

which they compete with you.

-Analysis of marketing strategies adopted by competitors’ that catapulted

them to the top slots

-The bank’s status vis-à-vis competitors’ as also the relative market

niche being created to

-Knowledge of strengths and weakness in relation to the

product/organization.

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MANAGEMENT GAME-PLAN OF CRM
Some of the time tested and popular strategies adopted by banks towards
relationship building and management efforts range from sending out a
greetings message on special occasions, data mining and cross selling to
Organizing mega events or ‘melas’. Experience has shown that each
interaction at an event may not result in a sale; nevertheless the aim to
make every interaction a potentially profitable opportunity to offer
additional value to the customer.

Again, banks embarking on event driven marketing strategies are in a

better position to feel the pulse of the customers and channel their
energies towards meeting customer expectations. The other advantage is
that this strategy results in a greater return on marketing investment
coupled with reduced marketing costs, lesser cost of communication
reaching out to a larger targeted audience and a higher response rate.

Campaign management in retail banks is growing by leaps and bounds

from single channel mass campaigns to multi-channel targeted
campaigns. Technologies has evolved to such an extent that management
can keep a tab on real-time status of a campaign, complete with client
history to enable devising an appropriate action plan.

Proliferation of services due to intense competition has turned the

banking into a buyers’ paradise. “The more you give the more one
wants” seems to be the adage. Consider the introduction of ATM facility
that was meant to reduce transaction pressure on daily basis.

61
In their anxiety to reach out to more customers and grab a bigger piece of
cake, bank breaches appear to be mushrooming all over the cities. More
branches entail deployment of more staff.

Recruitment and deployment of personnel without adequate inputs

relating to issues explained above have a detrimental effect on CRM. A
CRM focused approach that starts with the top management, percolates
and permeates all levels of organizations, is the need of the hour.

Success of such a strategy will be possible only when an exclusive CRM

team ensures dissemination of the CRM philosophy, conducts a regular
CRM audit and offers suggestions and ideas while filing the ‘CRM
performance report’ with the top management.

62
 CRM IN RETAIL BANKING.

CRM IN PUBLIC SECTOR

“OF THE PEOPLE, BY THE PEOPLE, FOR THE PEOPLE”

63
CRM IN RETAIL BANKING
CRM has been in India for over seven years now. But its penetration into
the industry in general and that into the financial services market in
particular has been rather uninspiring. The surprising aspect that came
out from the study was that though banks were aware of the benefits of
CRM, they were skeptical about its applicability to their organization.
The root cause for this is the astonishing delving deeper into the CRM
retail banking application and finding out any hidden undercurrents that
have been affecting the CRM adoption in the said segment. Additionally,
an effort has been made to present a relative weight age among various
factors that goes into making the vendor selection decision which can
additionally be used by software vendors and its analysis and
methodology used for arriving at the same has not been detailed herein.

Benefits that banks can look forward to form CRM

In highly competitive and dynamic market landscape, a key differentiator
for retail banks is the way their customers view them: how
satisfied/dissatisfied they are from their respective bank services – in
short how loyal the customers are towards their banks. It is found in a
research that the cost of acquiring a new customer is over 5 times the cost

64
of retaining an existing customers; one cannot be complacent as far as
customer satisfaction is concerned.

Apart from enhancing customer satisfaction, the adoption of CRM

philosophy and its tools leads to the following benefits:

• Real time forecasting for true sales pipeline visibility and more
accurate decisions owing to the ability to predict what all products the
customers are expected to purchase over a period of time.
• Providing an integrated view of customers across companies and
channels, this makes cross selling and up selling easier. Research shows
the more products a customer buys from a firm; the less likely that person
is to leave it. Cross selling to existing customers produces incremental
underwriting accuracy.

• Increased productivity of managerial executives, sales and customer

service staff.

• Reduced training costs.

• Streamlining of the business process across different functions aligned

to the best practices.

• Giving customers the ability to transact through multiple channels.

65
• Turn around time (TAT) for closing leads, opening accounts and
closing service requests can be drastically improved.

• Campaign definition and performance tracking on a periodic basis (for

different financial programs).

Retail banks are facing greater challenges than ever before in executing
their customer management strategies. Intensifying competition,
proliferating customer contact channels, escalating attacks on customer
information, rising customer expectations and capitalizing on new market
opportunities are at the top of every bank executive’s agenda.

Today, more than ever before, the ability to maximize customer loyalty
through close and durable relationships is critical to retail banks’ ability
to grow their business. As banks strive to create and manage customer
relationships, several emerging trends affect the approach and tools banks
employ to achieve sustainable growth. These trends reflect a fundamental
change in the way banks interact with the customers they have – and
those they want to acquire.

66
IMPROVING CRM MANAGEMENT IN BANKING
WITH INTEGRATED DELIVERY CHANNELS
The capability to integrate two or more delivery channels through shared
technology has only recently been deployed in any significant way.
Today, a handful of retail banks boast of globally integrated delivery
channels that are built on standard technology principles. These channels
can, for e.g., deliver consistent architecture. No institution, however, can
claim to have all channels working on a common platform or claim even
to share information or process across all channels.

IT managers within the bank, as well as business managers that rely on

the delivery channels to their service products, know deep down that
integrating the channel is the right thing to do because some benefits of
channel integration are intuitive if not scientifically provable. The
example of inconsistent account balance information is one that
integrated delivery channels can solve and that most bankers agree is a
source of frustration for the customer. Quantifying the effects of fixing
this problem proves to be tricky, however.

67
SERVICES AND SALES PROCESSES MADE
MORE PREDICTABLE
Many banks have implemented, or are in the process of designing,
integrated delivery channel architectures based on these soft benefits as
well as on the goal of maintaining and deepening the customer
relationship in the face of competitive pressures. The implementation of
integrated delivery channels has to date focused on the service side of the
relationship equation.

On the sales side, marketing and product line managers have benefited
greatly from a relatively plentiful source of analytics systems in the
market. Bankers are getting better at knowing how to calculate customer
profitability, predict propensity to buy, even recognize attrition behavior
thanks to the segmentation and focus of solution providers in the
analytics markets.

Customer knowledge databases and analytic engines have made the

selling process more predictable then ever before. But the actual use of
the information from these systems has been limited to mail campaigns
and outbound telemarketing, both of which traditionally have had low
response rates. Although, these rates have improved somewhat with the
improved customer knowledge in hand.

68
Thus, for banks, neither the chicken nor the egg came first. Both arrived
at the same time. The opportunities to combine these powerful
capabilities are built in to the very systems that enable them individually.
But the marriage of integrated delivery channels and customer
knowledge is not a trivial arrangement. For once, perhaps, technology is
not the problem.

EFFECTIVE USE OF INFORMATION BUILDS

KEY CUSTOMER BENEFITS
The issues surrounding the collaboration of knowledge and delivery have
to do with the management of the data and the processes involved as well
as some very emotional aspects of the customer’s relationship with the
bank and the extent to which individual customers perceive the bank as a
threat to their privacy. To build on the full strength of this collaboration,
banks need to completely understand the issues surrounding the use of
knowledge, and then tread lightly.

Data acquisition through customer interaction is determined by the

delivery channels, themselves, or through some integrated channel
management architecture. Institutions are already collecting most of the
available information today such as identity, account, channels,

69
transactions performed, time of the day, and all the pieces of information
that have some value to the institution.

Such basic information is included in the transactions that are sent to the
core of the banking system such as a credit processor. For now, there
seems to be no need to collect information that is not currently acquired.
What is required is the use of the data in managing the relationship with
the customer in a more fulfilling way.

The shift to the existing use of data comes in the form of the centralized
acquisition of this information outside of the transactional sense. Along
with the use of transactional information by the systems that perform the
basic units of work, specialized applications collect and analyze
information about the customer interaction, itself, to give insight into
customer behavior.

Banks can also collect and store information about nontrivial transactions
to provide continuity among customer contacts. So if a customer has an
unresolved problem, that information is available at all appropriate
channels.

70
While many institutions are currently performing such analysis with a
given channel, the next step includes analysis of the customer’s behavior
across in a broader context, analysis of all external providers of service,
and analysis of how customer uses these products.

A FEW EXAMPLES OF THIS INFORMATION

MANAGEMENT STRATEGY
• Using channel analysis to model and predict demand at the delivery
channels after marketing campaigns or to gauge the impact of channel
downtime on service or revenue, tying to a quantified loss.

• Using customer preference to understand the individual customer’s

favorite channels for specific transactions.

• Keeping certain transactions open – ended to maintain continuity of

service. This is done by having recent problem reports or unresolved
account applications available at all delivery channels to present the
agent with what may be peripheral yet important information about
the current state of customer relationship. This information can also
be made available to the automated channels to keep the customer
aware of the status of problems or account applications.

By itself, this management of information from the delivery channels

offers many benefits to the institution and the customer. But the real
value in the effective use of customer information at the point of
interaction comes from the customer knowledge systems that are
becoming pervasive in most retail banks.

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POWERFUL CUSTOMER KNOWLEDGE
SYSTEMS FOR THE FUTURE
The pace of implementation of integrated delivery channel architectures
will quicken and eventually prevail at top banks. The deployment of
powerful customer knowledge systems will also increase as more and
more useful information can be distilled from the myriad of resources in
the bank IT network.

As these two infrastructures evolve, the integration between them will

also increase. Already, many institutions use information gleaned from
the customer knowledge systems to suggest new products to the
customers at the branch teller. The use of information between the
knowledge systems and the delivery channels has yet to be fully realized.
With most of the technology in place, banks must begin from strategies
around the use of information in the day – to – day contact with the
customers.

As the capability to build on this flow of information grows, it has the

potential to out space the customer’s acceptance of the bank’s
knowledge. Privacy is an emotional issue and, so, not entirely rational.
Technology and policy can only go so far in ensuring that the use of
information at the point of contact is not intrusive to the customer’s
comfortable level of privacy. Relationship training is more important

72
than before as banks begin to learn more about their customers and use
that information to bring financial value to them.

Ultimately, the management of customer information at the point of

interaction is about service, about keeping the customer happy, and,
simply put, about keeping the customer. It’s about strengthening the
relationship and showing the customer that the bank’s knowledge can
lead to real benefit. It’s about increasing the bank’s benefit as well, and
doing it in way that does not sacrifice the customer’s long term well
being. Finally, it’s about trust as a result of knowing the customer and not
as an excuse for misusing information.

CRM: Do you get along with your customers?

Most companies say they do. But for many, CRM is just a philosophy to
be bandied about in boardrooms, not a business practice. Companies can
get a lot of mileage out of effective CRM practices.

Most companies consider themselves customer focused and believe that

in being so they are servicing the customer. But essentially, being
customer focused means to have a consistent, dependable and convenient
interaction with customers in every encounter. Some facts to chew before
we get started:

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• It costs six times more to sell to a new customer than to sell an
existing one.

• A company can boost profits but 85% percent by increasing annual

customer retention by just 5%.
• 70% of customers will do business with the company again if it
quickly takes care of a service.

Out of this comes electronic customer relationship management (e-

CRM). CRM is typically defined as an integrated sales, marketing and
service strategy that precludes lone existence and depends on coordinated
actions among the customer, the suppliers, partners and vendors.

E-CRM goes a step ahead and adopts Web – centric approach that
synchronizes customer relationships across communication channels,
business functions and audiences.

CRM is an integrated framework, or a business strategy, and putting it in

to place will require a set of integrated applications that will address
every aspect of business of function and the customer.

CRM tools help companies understand their customers from a multi

faceted perspective: who they are, what they like, and what they do…

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ELECTRONIC CUSTOMER RELATIONSHIP
MANAGEMENT
(E-CRM)

75
 “CRM IS A CORE ELEMENT IN ANY CUSTOMER CENTRIC E-
BUSINESS”

-ANONYMOUS

ELECTRONIC CUSTOMER RELATIONSHIP

MANAGEMENT
E-CRM is an integrated online sales, marketing and service strategy that is
used to identify, attract and retain an organization’s customers. It describes
improved and increased communication between an organization and its
clients by creating and enhancing customer interaction through innovative
technology.

E-CRM software provides profiles and histories of each interaction the

organization has with its customers, making it an important tool for all small
and medium businesses. E-CRM, is according to Paul Greenberg (2000), is

76
CRM on line. This definition dispels all the doubts people might be having
about E-CRM.

E-CRM shares all the philosophy of CRM and the only difference is the
underline technological architecture. New technologies mean availability of
additional faster means of communication between the customer and the
organization. E-CRM implies interaction with the customer using these new
technologies. It provides organizations with tools for a high level of
interaction communications with the customers with personalized messages.

E-CRM provides a high degree of self service to the customers, using the
internet technologies, by understanding customer’s needs and personal
preferences. E-CRM integrates all the communication from and to the
customer from various channels both, the traditional and latest technology

based. For e.g., if the customer prefers to use emails and not telephone, the
organization will ensure this while dealing with the customer.

EVOLUTION OF E-CRM
Database marketing Behavior based E-CRM
marketing

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Single channel Multiple channels Single enterprise view
of customer integration
of customer channels

Out bound only Outbound Opt-in-principle

Simple metrics Campaign ROI Strong customer

metrics metrics

<25 campaigns a year Many campaigns Many simultaneous

running campaign
simultaneously
2% average response Higher Very high response
rates effectiveness rates
rates
20% customers deliver Leveraging customer
100%profits information for
specialized value
proposition

The SIX “E’s” OF E-CRM

The “e” in E-CRM not only stands for electronic but also can be perceived
to have many other connotations. Though the core of E-CRM remains to
be cross channel integration and optimization. The six “e” in E-CRM can
be used to frame alternative definitions of E-CRM based upon the channels

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which E-CRM utilizes, the issues which it impacts and other factors, the
six “E’s” of E-CRM are briefly explained as followed:

1. Electronic channels: New electronic channels such as the web

and personalized e-messaging have become the medium for fast,

interactive and economic communication, challenging companies to keep
pace with this increased velocity. E-CRM thrives on these electronic
channels.

2. Enterprise: Through E-CRM a company gains the means to touch

and a shape a customers experience through sales, services and corner
offices whose occupants need to understand and assess customer behavior.

3. Empowerment: E-CRM strategies must be structured to

accommodate consumers who now have the power to decide when and
how to communicate with the company. Through, which channel, at what
frequency? An E-CRM solution must be structured to deliver timely
pertinent, valuable information that a customer accepts in exchange of
his/her attention.

4. Economics: An E-CRM strategy ideally should concentrate on

customer economics, which drive smart asset-allocation decisions,

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directing efforts at individuals likely to provide the greatest return on
customer communication initiatives.

5. Evaluation: Understanding customer economics relies on a

company’s ability to attribute customer behavior to market programs,

evaluate customer interactions along various customer touch point channel,
and compare anticipated ROI against actual returns through customer
analytic reporting.

6. External information: The E-CRM solution should be able to

gain leverage information from such sources as third party information

networks and web page profiler application.

ONE MUST ADDRESS CUSTOMER

OPTIMIZATION ALONG THREE DIMENSIONS
• Acquisition (increasing the number of customer).

• Expansion (increasing portability by encouraging customer to

purchase more products and service).

• Retention (increasing the amount of time that customer stays

customers).

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An E-CRM strategy must be able to identify the expansion potential for
each customer. A company should be able to identify the opportunities to
cross sell and up sell to the same set of customers.
ECRM solution should also establish a central mechanism to determine
which customer should receive which investment at relationship level.

WHAT ARE THE BUSINESS BENEFITS OF E-

CRM?
Implementation of E-CRM system enables an organization to streamline
process and provide sales, marketing and service personnel with better,
more complete customer information. The result is that an E-CRM
organization to build more profitable customer relationships and decrease
operating costs.

A DIRECT BENEFIT OF AN E-CRM SYSTEM INCLUDES

• Service level improvements – Using an integrated database to deliver

consistent and improved customer responses.

• Revenue growth – Decreasing cost by focusing on retaining

customers and using interactive service tools to sell additional products.

• Productivity – consistent sales and service procedures to create

efficient work processes.
• Customer satisfaction – Automatic customer tracking and detection

will ensure enquires are met and issues are managed. This will improve
the customer’s overall experience in dealing with the organization.

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 • Automation – E-CRM software helps automatic campaign including

Telemarketing.
Telesales.
Direct mail.
Lead tracking and response.
Opportunity management.
Quotes and order configuration.

Across every sector and industry, effective CRM is a strategic

imperative for corporate growth and survival

• Sales organizations can shorten the sales cycle and increase e-sales
performance metrics such as revenue per sale representative, average
order size and revenue per customer.

• Marketing organization can increase campaign response rates and

marketing driven revenue while simultaneously decreasing lead
generation and customer acquisition costs.

• Customer service organizations can increase service agent

productivity and customer detention while decreasing service cost,
response time and request resolution times.

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HOW DOES E-CRM WORK
In today’s world, customers interact with an organization via multiple
communication channels – the World Wide Web, call centers, field sales
people, dealers and partner networks. Many organizations also have
multiple lines of business that interact with the same customers.
E-CRM system enables customers to do business with the organization the
way the customer wants – anytime, via any channels, in any language or
currency – and to make customers feel that they are dealing with a single,
unified organization that recognizes them every step of the way.
The E-CRM system does this by creating a central repository for customer
records and providing a portal on each employee’s computer system
allowing access to customer information by any member of the
organization at any time.
Through this system, E-CRM gives you the ability to know more about
customers, products and performance results using real time information
across your business.

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 E-CRM BENEFITS TO BANKS
• Relationship with customers.

• Using e-mail for business communication.

• Personalized services or one – to – one services.

• Website to market product or services.

• Transaction security.

E-CRM BENEFITS TO CUSTOMERS

• Customer interaction and satisfaction.

• Convenience.

• Speed of processing the transaction through e- response.

• Service quality and trust.

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CRM EVERYWHERE
By investing in CRM or e-CRM applications companies are looking at
retaining existing customers and converting potential customer into
lifetime customers. In certain industries, customer retention is a key
driver for profitability.

Also, with the advent of new technologies, it is critical for any business
to meet the expectations of the customers (that is changing ever so
fast…)

For long, only enterprises thought of such applications as part of their

business processes. Today, with competition being the ‘key’ word in
every industry, even the small and medium businesses have realized the
importance of customer related activities and are adopting these
technologies at a fast rate.

Also not to ignore, advancement and choice of technology have

permitted the cost of these technologies to fall to an affordable rate.
Companies that have fewer than 100 employees can now adopt and
implement these applications.

Various studies have reflected that the CRM industry is poised to grow at
an exponential rate. According to a recent study by McKinsley, solution

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based on e-CRM already account for a third of the $100-billion global
market for customer care.

GUIDELINES FOR A SUCCESSFUL E-CRM

SOLUTION
Customer data needs to be collected, clean, stored in a format that makes
it easily accessible for analysis and then analyzed by statisticians so that
meaningful information regarding customer behavior, friends and
attitudes can be extracted.

It is this ability to transform raw data into actionable customer

understanding that defines analytical e-CRM, making the process

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indispensable to marketers in developing targeted initiatives and to
management needing near term project.

E-CRM initiatives are often implemented with to many business

objectives in mind and managed by departments with different priorities
and conflicting politics. In many instances, millions and solutions
overrun budget become impossible to deploy.

When it comes to an enterprise e-CRM solutions, few of the multi

million dollars initiatives ever see the light of the day, let alone provide
the desired results.

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 THE PAST, PRESENT AND THE FUTURE OF
CRM.

“As the years have gone by CRM has gained global importance.”

-Anonymous

THE PAST, PRESENT AND THE FUTURE OF

CRM
CRM means many different things to different people. By CRM it’s
possible to develop a greater understanding of it by looking at its origin
and the principles that drove its development.

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By then examining the present day definitions of what it means, it is
possible to understand more clearly how it could be applied to our
business. By looking at the future of CRM, we more clearly see where
the benefits may be derived and we where we should see CRM
developing over the next few years.

THE PAST
Looking back at a snapshot history of marketing, we can see the
following clearly developments and progression over the last few
decades:
1960’s – The era of mass marketing.
1970’s – Saw the beginning of segmentation, direct mail campaigns and
clearly telemarketing.
1980’s – Where niche marketing made millionaires of those who were
best at it.
1990’s – Relationship marketing, the explosion of telemarketing and call
centers all setup to develop relationships with the customers, the
recognition of the true value of retention and the use of lifetime value as
a business case.

In addition to this, a number of key marketing concepts can also be used

to see where CRM has developed from:

• Satisfying needs, customer orientation.

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 • The organization needs to be arranged so that all functions contribute.

• Profit must be the consequence of delighting customers.

It is possible to draw further information definition of marketing and
direct marketing.

MARKETING
“Determining the needs and want of target markets and delivering the
desired satisfaction more efficiently and effectively than the
competition.”

DIRECT MARKETING
“The planned recording, analysis and tracking of customers direct
response behavior over time…in order to develop future marketing
strategies for long term customer loyalty and to ensure continued
business growth.”

THE PRESENT

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The key differences between the concepts of marketing and direct marketing
is that CRM is about change throughout the organization (focused around
customer) and that technology developments are enabling the concept. What
we are finding is that the organizations are now moving through several
stages of CRM.

STAGE STATE CULTURE

SATISFACTION RE-ACTIVE Meet customer needs.
BASED Respond to complaints.
Minimal evaluation of
customer service level.
PREFORMANCE PRO-ACTIVE Evaluate customer
BASED perception.
Identify customer retention
factors.
COMMITMENT VERY PRO-ACTIVE Evaluate customer needs.
BASED Continuous improvements.

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THE FUTURE
So what does the future hold? The astronomic development rates of
technology are what many people see the key driver. However, they need to
look beyond this to the changes in customer expectations.

In terms of what the future holds

• Customers will play a significant role in managing relationships

service models will continue to change (skills, remuneration, volume,
transaction types).

• The web will create globalization but will replace the need for people,
at least not for the foreseeable future.

• Technology will consolidate (fixed and mobile telephone, e-

mail/web/e-commerce).

• Develop end to end customer processes.

• Make the best possible use of customer information – particularly

when you are transacting with them.

• Be interactive.

• Use your people.

• Recognize customer individuality.

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 CRM IN INDIA

“INDIA IS A BIG MARKET FROM CRM”

-DAKSH
INDIAN CRM CO-SOURCING COMPANY

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CRM IN INDIA
In India CRM satisfies three basic objectives for companies that are keen
on retaining customers and increasing market share.

1. It offers a 360-degree view: A company should have a clear

understanding of clients and their needs. It means that whoever the
company speaks to, irrespective of whether the communication is from
operations, sales, systems, finance or support, the company is aware of the
interaction.
This is one of the key steps of CRM implementation. CRM gives a
complete set of tools that are required to improve efficiency. There are
numerous channels of communication i.e. e-mail (e-CRM), fax, telephone,
Personal Data Assessments and many other wireless devices. In order to
get a complete picture these must be integrated and tracked.

2. CRM optimizes processes and functions related to the

customer: All operations can be optimized and systematized to enhance
efficiency and effectiveness. It is a matter of continuous improvement.
This is why sales force automation became important and critical.
Corporates began to realize that in the face of increasing competition, sales
force automation is critical. They problem lay in convincing the sales guy
who believed in his personal abilities. Sales automation results in more
accurate predictions as well. Sales operations organizations have to make
customer – facing systems more efficient and effective.

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3. To learn from integration: The learning process should be focused
on bettering marketing, sales and any other function that interacts with
the customer. The interaction will help an organization to bring out better
products that target potential and existing customers. The whole idea is
that if you know your customer better, you can target him better. Their
operations are aimed at getting the right customer and then retaining
them by giving them the service they require. Some customers have
preferred channels of communicating. Some customers may not like to
transact over the net but may prefer physical transaction. This varies from
customer to customer. All these differences lead to the importance and
need for CRM.

SURVEY REPORT ON INDIAN CRM MARKET

• The need for improved customer service and high global adoption
shall drive the Indian market.

• The high cost of implementation and low awareness of benefits is

going to prove a major deterrent.

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ACCEPTANCE OF CRM IN INDIA

MARKET DRIVERS
• Reduced Product Differentiation – 18% Response

• Media Attention – 12% Response

• High Global Adoption – 23% Response

• Capabilities Of New Technology – 16% Response

• Need For Improved Customer Services – 31% Response

MARKET INHIBITORS
• Lack Of Information About CRM Market – 12% Response
• Lack Of Success Stories – 8% Response
• Poor IT Infrastructure – 19% Response
• Low Awareness Of Benefits – 22% Response
• High Cost Of Implementation – 22% Response
• Lack Of Customer Orientation – 17% Response

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CRM IN BANKS – INDIAN SCENARIO
One industry best suited for the implementation of CRM is the Indian
banking and financial service, which has the highest growth potential and
accounts for 22% of CRM license revenue in 2002. Banks such as ICICI
bank, HDFC bank and Citibank are using CRM products. ICICI bank, in
fact, has won the DM review World Class Solution Award in 2003 in the
business intelligence category for its Teradata enterprise data warehouse
solutions.

However, CRM market in India is still in a nascent stage. Indian banks

haven’t yet seen big results from CRM solutions, probably because of
improper implementation. Being short – sighted, they have adopted new
technology without a clear understanding of how to integrate it with the
existing system and processes.

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Indian Banking Industry should aim to formulate strategies incorporating
people, processes and technology issues. In accordance with the
strategies, current and future IT initiatives can be formulated, prioritizing
the related activities and their feasibility. Once this is done,
implementation in a phased manner will definitely lead to organization’s
success in achieving the goals.

CONCLUSION

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“CRM is not simply about a system, it is about serving our customers,
delivering on what we promised and having a shared vision on what it
means having World Class Customer Service.”

-TOBY DETTER
CRM HEAD, SHELL EUROPE.

CONCLUSION
It used to be that one could think of marketing as totally separate form
the rest of the business enterprise. But with the advent of CRM or One-
To-One marketing or loyalty, the dynamics have changed. CRM involves
knowing your customers individually and having some mechanism for
interacting with them or hearing from them, and customizing your
business for them. This is an inherently integrated operation.

One of the benefits of CRM is that it would make a company’s customers

more loyal. Every time a company interacts with the customer, the
company customizes its service to be a bit more closely suited to the
customer needs. The company is getting a little higher up on the

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customers learning curve. Moreover the companies are making the
product more and more valuable to the customer. The relationship with
the customer is developing in its own context.

With customer expectations becoming increasingly demanding, the

diversity and range of products and services on offer form the banks are
widening continually. The challenge for the banks is to work towards
ensuring that the customers prefer their products and services vis-à-vis
that of their competitors. The key is to develop and nurture a close
relationship with customers by understanding their needs and preferences
and catering to their requirements. That not only means listening
carefully to what customers have to say, but also following through with
an improved organizational approach.

The banking industry in India has undergone volatile changes during the
last decade and one of the major areas of change has been Customer
Service. Customers of today demand “UNIVERSAL BANKING”. This
is possible if CRM is implemented in its true spirit. ‘Dog Eats Dog’
competition in banking has almost made CRM an in evitable solution.

Much has been written about customer relationship management (CRM).

It has been called a strategic tool that combines business processes,
technology, employees and information across an enterprise to attract and
retain profitable customers. Despite this, the jury is still out on whether
CRM has fulfilled its promises.

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Banks and telcos still create silos of information with little scope for
sharing information. All of us have received unsolicited calls and mail
from financial companies and telcos asking us to buy products that we
don’t need and sometimes already have!

Companies, especially those focussed on retail such as banks, insurance

providers and telcos, have suffered because of a lack of understanding of
their clientele in terms of behaviour, spending patterns, needs, and causes
of dissatisfaction. Rivals, sometimes even fledgling organisations with
better planned systems and processes, have grabbed some of their
customers.

Has CRM in India been reduced to an empty buzzword that’s tossed

around so that a company appears to be keeping up with the industry?
Not entirely, because organisations like Standard Chartered Bank,
ICICI Lombard, BPL Telecom and Air-India have successfully used
these tools—and benefited. The difference lies in the way CRM has been
deployed at these organisations. It is a combination of technology and
process change that has worked.

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 Customer mentalities are always growing, and business services should
increase along with these potentials. Here, the definition of CRM can
be stated as a way through which companies can interact with their
customers and so serve them better. Businesses with wealthy CRM
approaches and applications will result in a large raise in sales,
customer pleasure, and merely the overall achievement of the business.

The challenge that lies ahead for banks is Four Fold

1. They need to satisfy customer needs that are complex and
difficult to manage.
2. They need to face up to increased competition from within the
sector and from new entrants coming into the financial services market.
3. They need to address the demands based on supply chain.
4. They must continually invent new products and services in the
light of envisaged changes.

CRM BASICALLY IS:

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 CRM Vs Traditional CRM

• No in-house infra structure requirement.

• Scalability and adaptability.
• No requirement of in-house technical persons.
• Open-source CRM software made up of modules.
• Better protection to enterprise data.
• Web based easy to use interface accessible from anywhere.
• Centralized well sorted enterprise database.
• Better sales pipeline visibility.
• 360 degree customer visibility and automated lead management.
• Extremely mobile with mobile/PDA/wireless Editions.
• Entirely customizable to get desired result.
• Always free updated to keep you on top.
• Integration with office and web-based systems and programs.

• 30 day free trial.

RECENT SURVEY ON CRM

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According To The Second Annual Customer Experience Impact
Report, a Harris Interactive study sponsored by Right Now
Technologies, 80% of consumers will never go back to an organization
after a bad customer experience, up form 68% in 2006

According To A Survey Of 25,000 Consumers, The Majority (96%),

would seriously consider changing a provider, if I meant it was easier to
contact a customer service representative for enquiries, rather than be
faced by a recorded telephone message or no facility to speak to a live
operator. The survey commissioned by outsourced contact centre,
Converso, also found a disgruntled 86% of Brits said they find
themselves constantly saying yes or no to an answer phone rather than
actually talking to someone.

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THE MANTRA FOR CRM SUCCESS

For companies that use CRM and those that plan to, it is important to
understand that CRM technology has developed, evolved and matured
over the years. It is now a reliable process that combines business and
technology to power a customer-focussed organisation.

To create successful customer-centric organisations, CIOs and even

CEOs are asked to repeat this mantra: “CRM is a business initiative and
is not about technology.”

CRM is a management strategy that enables an organisation to become

customer - focussed and develop stronger relationships with its clientele.
It helps piece together information about customers, sales, marketing
effectiveness, responsiveness and market trends.

Technology can play a significant role in CRM being an enabler, but

thinking about CRM solely in technological terms is wrong. It is not
about solving a technology problem, it is a process that aligns your
business around your customers’ needs.

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BIBILOGRAPHY

WEBSITE
www.google.com
www.crmguru.com
www.crmnext.com
www.crmadvocate.com
www.crmtoday.com

MAGAZINES
The Week
Business Today
Mint

BOOKS
CRM IN BANKING – By V V GOPAL
UNDERSTANDING CRM – By R S PRASAD

NEWSPAPERS
Economic Times
DNA Money

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