Professional Documents
Culture Documents
ON
A STUDY ON EFFECTIVENESS OF
CUSTOMERS RELATIONSHIP MANAGEMENT
IN STATE BANK OF INDIA
Submitted in Partial Fulfillment for The
Award of Degree of
Masters of Business Administration
This
is
to
certify
that
the
Project
Work
entitled
A STUDY ON
Place: Udaipur
Table of Contents
S.NO
.
PAGE NO.
Abstract
6-7
4
Introduction
8-10
Aims of CRM
11
Concepts of CRM
12
Scopes of CRM
13-17
18-28
Objectives of CRM
29
Research Methodology
30-35
Review of Literature
36-43
10
44
11
45-53
`12
Conclusion
54-58
13
59-60
14
Questionnaire
61-65
15
References
66-70
Abstract
Customers are the focal point in the development of successful marketing strategy.
Marketingstrategies both influence and are influenced by consumers affect and
5
The banking industry in India has undergone radical changes due to the
liberalization andglobalization measures undertaken since 1991.Today, Indian
banking industry is one of thelargest in the world. State Bank of India is the largest
public sector bank in India. There has beena great surge in efficient customer
service. A highly satisfied and delighted customer is a vitalnon-financial asset for
the banks in the emerging IT era. Customer Relationship Management(CRM)
provides interactive, personalized and relevant communication with customers
todevelop and maintain relationships.CRM is a tool to retain the 20% customers
who give 80% ofthe revenue. This paper explores the perception of Customer
Relationship Management withrespect to the Customers of State Bank of India in
Karimnagar district of Andhra Pradesh. Thestudy is based on the responses of 200
customers of State Bank of India branches in Karimnagardistrict.
INTRODUCTION
7
philosophy that seeks to build long term relationships withcustomers. CRM can be
defined as the development and maintenance of mutually beneficiallong-term
relationships with strategically significant customers (Buttle, 2002). It is
theestablishment, development, maintenance and optimization of long term
mutually valuablerelationships between consumers and the organisations.
Successful customer relationshipmanagement focuses on understanding the needs
and desires of the customers and is achieved byplacing these needs at the heart of
the business by integrating them with the organisationsstrategy, people, technology
and business processes.
Customer Relationship Management has emerged as a popular business strategy in
todayscompetitive environment. It is a discipline which enables the companies to
identify
and
targettheir
most
profitable
customers.Customer
Relationship
Management has been in India for over two decades but itspenetration into the
industry in general and financial service sector in particular has not beenvery
impressive. With the entry of many foreign banks and setting up of many private
sectorbanks, there is an increased competition in the banking sector to attain a
competitive advantage.Banks have slowly but surely realized the importance of
building and maintaining customerrelationships.
CRM is a holistic strategy which can help the banks to become customer oriented
and implement customer- focused strategies, which in turn will help them build
long lasting relationships with the customers and hence increase their profits.
9
Aims of CRM
10
The CRM is a new technique in marketing where the marketer tries to develop long
term relationship with the customers to develop them as life time customers. CRM
aims to make the customer climb up the ladder of loyalty.
The company first tries to determine who are likely prospects i.e. the people who
have a strong potential interest in the product and ability to pay for it. The company
hopes to convert many of its qualified prospect into first time customers and then to
convert those first time customers into repeat customers. Then the company tries to
convert these repeat customers into clients they are those people who buy only
from the company in the relevant product categories. The next challenge for the
company is to convert this client into advocates. Advocates are those clients who
praise the company and encourage others to buy from it.
The ultimate challenge is to convert these advocates into partners where the
customers and the clients work actively together to discover ways of getting mutual
benefit.
Thus in CRM the key performance figure is not just current market share but share
of life time value by converting customers into partners.
In CRM the company tries to identify that small percentage (20%) of key account
holders whose contribution to the company revenues is high (80%). So from this
point of view, CRM is also known as KEY ACCOUNT MANAGEMENT.
11
CONCEPT OF CRM
Customer Relationship Management is a strategic orientation that identifies the
mostimportant long-term customers and develops and understanding of how these
customers can beretained.CRM can be defined as the strategies, processes, people
and technologies used bycompanies to successfully attract and retain customers for
maximum corporate growth andprofit.
Parvatiyar and Sheth (2000) defined CRM as a comprehensive strategy and
process of acquiringand partnering with selective customers to create superior value
for the company and thecustomer.
12
13
1. Every part of the companys marketing effort should be geared towards building
lifetime relationships.
2. People want to do business with friendly people. To have effective relations a
friendly attitude must permeate in the organization.
3. Information technology developments should be positively used to serve the
customers.
4. The company should always be flexible to bend its rules and procedures in the
clients favor.
5. The company should communicate with its customers even when it is not trying
to sell something.
6. The company can communicate and develop stronger customer bonding by
providing financial and social benefits.
7. The company should try to know all its customers including their lifestyles,
hobbies, likes and dislikes etc.
16
8. The company should make it a point to deliver more than what is promised.
17
Over the last few decades, technical evolution has highly affected the banking
industry. For more than 200 years, banks were using branch based operations. Since
the 1980s, things have been really changing with the advent of multiple
technologies and applications. Different organizations got affected from this
revolution; the banking industry is one of it (Sherif, 2002).
data. If the bank could track customer behavior, executives can have a better
understanding, a predicative future behavior and customer preferences. The data
and applications can help the bank to manage its customer relationship to continue
to grow and evolve (Dyche, 2001). According to Stone et al. (2002) most sectors of
the financial services industry are trying to use CRM techniques to achieve a variety
of outcomes. In the area of strategy, they are trying to:
across channels;
Identify sales prospects and opportunities;
Support cross and up-selling initiatives;
Manage customer value by developing propositions aimed at
different Customer segments;
Support channel management, pricing and migration.
CRM is a sound business strategy to identify the banks most profitable customers
and prospects, and devotes time and attention to expanding account relationship
with those customers through individualized marketing, reprising, discretionary
19
decision making, and customized service through the various sales channels that the
bank uses. Any financial institution seeking to adopt a customer relationship model
should consider six key business requirements (Chary & Ramesh, 2012), they are:
1.
2.
3.
4.
5.
6.
21
integrated with the legacy systems.Early on, the top management realized that
technology was a crucial driver for product andservice delivery. Although using the
extensive SBI group platform for cross-selling products andservices was a viable
option, reaching and engaging the customer cost effectively required atechnology
backbone. Earlier, they had little enterprise software to support its business and
theprocesses were carried out in an ad hoc manner.
Benefits
Reduction in TAT (Turn Around Time)
SBI can now integrate and manage content, campaigns and
merchandising to patronsvia the Web
Streamlined product delivery and support processes with a single
contact point on theWeb
Site offers a one-stop-shop for customers' needs
There were hiccups as various centers had problems connecting to the CRM portal,
which havebeen solved. They are using multiple types of connectivity, leased lines
that terminate at thecentral data center in Mumbai, broadband connections, dial-up
22
24
Pre-cleansing 3.3 million records data sourced from the Core Banking application.
755. Banks and Respective CRMDE duplicating the records to arrive at Unique
IDs.Identifying key customer relationship metrics based on unique individual and
household Ids. SBI is equipped to develop a blue-print for their Customer Quality
Initiatives to create long-termcompetitive advantage. State Bank of India (SBI),
Indias largest financial services conglomeratehas contracted to implement Anti
Money Laundering (AML) software AMLOCK from 3i InfoTechLtd .it helps the
bank in managing its government clients better. Cash@WillTM helps SBI improve
Revenue, maximizes profits, optimize costs, and establish efficient management
systems toaccelerate growth.SBI is now using Nucleus Softwares Cash@WillTM
for Drafts, Income TaxRefund Orders (ITRO), and Multi City Cheque (MCC) and
Collections services. The implementationwas done in a phased manner where
Payments and Collections modules implemented initiallywere subsequently
replaced by the newer version of Cash@WillTM. Nucleus' Cash@WillTM will
Power the cash management product of State Bank of India. It supports the bank in
handling ofgovernment business like ITRO, SBI rights issue.. Nucleus Cash
Management SolutionCash@WillTM built on new generation technologies of
Oracle empowers banks to offer theircorporate customers optimized cash
26
Conceptualization
A firm in textile industry has to maintain good relations with its customers. They
have to retain the customers for a long time to avail the benefit of their relations.
The customer relationship management is one of the effective tool to identify,
establish and maintain relationship with the customers. With the help of this
research we are going to identify the importance of CRM in textile industry.
The textile industry is basically manufacturing based industry. Through this study
we are going to identify the importance of CRM in the textile industry. How it is
benefited from CRM? Is there any relevance of implementing CRM? And what role
does information technology can play in CRM?
Objectives of CRM
The main objective of the study is to examine the importance of CRM in banking
sector, and itsimpact on the Customer Satisfaction with a special reference to State
Bank of India (SBI) andother nationalized bank including UBI, BOB, BOI, UCO,
PNB and Allahabad bank. The otherspecific objectives of the study are:
To review the literature on the concept and use of CRM in banking sector.
To analyze the perception of customer on CRM as a tool of banking sector in
retention of customers in general and SBI and other nationalised banks in
particular.
To offer pertinent suggestions based on the findings of the study.
28
Research Methodology
A research design is simply a plan for study in collecting and analyzing the data. It
helps the researcher to conduct the study in an economical method and relevant to
the problem.
Research methodology is a systematic way to solve a research problem. The
methodology should combine economy with efficiency.
Research design
The study conducted here is exploratory cum descriptive.
29
Primary data
primary data is that data which is collected for the first time.
These data are basically observed and collected by the researcher for the first time. I
have used primary data for my project work.
Secondary data
by the other person for his own purpose and now we use these for our purpose
secondly.
Data collection
Data is collected through schedule.
30
RESEARCH PROBLEM
Modern Marketing philosophy advocates the concept of CRM that creates customer
delight. Thisapplies to all sectors of Sales and Marketing includes the banking. In
the banking field a uniqueRelationship exists between the customers and the bank.
But because of various reasons andapprehensions like financial burdens, risk of
failure, marketing inertia etc., many banks are stillfollowing the traditional ways of
marketing and only few banks are making attempts to adaptCRM. It is with this
background, the researcher has made a modest attempt towards the idea thatCRM
can be adapted uniformly in the banking industry for betterment of Banking
Services. Therole of CRM is quite different and distinguishable to traditional type
of Marketing CRMparticipate not only in Marketing but also in implementing the
business as a strategy to acquire,grow and retain profitable customers with a goal of
creating a sustainable competitive advantage.
31
differentiating them will help the company to focus its efforts to gain the most
advantage with the most valuable customers.
REVIEW OF LITERATURE
35
In this paragraph, sincere effort is given to highlight the concept and significance of
CRMvia a vis the uses and application of CRM in Banking sector. In the literature,
the main difference among the definitions of CRM are technological and
relationship aspects of CRM. The phraseCRM appeared in the literature after the
evolution in the relationship marketing philosophy.Berry (1983) defined
relationship marketing as attracting, maintaining and enhancing thecustomers
relationships in multi-service organization. After a few decades, the evolution in
Relationship marketing philosophy changed the word relationship marketing to
CRM. Accordingto Brown (2000) CRM is a process of acquiring new customers,
retaining the existencecustomers, and at the same time understands, anticipates and
manages the needs of anorganisations current and potential customers.
Furthermore, Mylonakis (2009) described CRMas an innovative process to create a
long term relationship and gaining trust.
its customer base and sales capacity. The goal ofCRM is to manage all aspects of
customer interactions in a manner that enables the organizationto maximize
profitability from every customer. Panda (2003) described customer expectations
are difficult to manage but are often the cause of dissonance which results in loss of
existingcustomer base. So understanding of customer expectations with regard to
service delivery levelsand product quality is essential for establishing a long term
symbolic value relationship. Fromthe foregoing, it can be said that the purpose of
CRM is to bring about Customer FocusedServices (Gummesson, 1987; Gronroos,
1990; Varki and Colgate, 2005; Gan et al., 2006),Information and Communication
Technology, Complaints Management (Wilke 1994;Ingram, 1996; Omarley and
Tynan, 2000; Gilly et al., 2005; Achumba, 2006), High QualityService
(Khandwalla, 1995; Eisingerich and Bell, 2006), Timeliness in Service Delivery,
Friendliness of Employees (Reinatz and Kumar, 2003), Ease of Opening Account
andCompetitive Charges in order to enhance organizational performance as
indicated by suchvariables as Customer Satisfaction (Morgan and Hunt, 1994;
Naidu et al., 1999), CustomerRetention (Dick and Basu, 1994; Morgan and Hunt,
1994; Reichheld, 1996), increase in numberof customers (Groonroos, 1990), and
increased net profit (Khandwalla, 1995; Page et al., 2006).
37
challenge before the banks is not only to obtain updatedinformation for each
customer, but also to use the information to determine the best time to offer
the most relevant products (Lau et al., 2003). It is also important to understand that
if customersbring in profits for the bank, it becomes imperative for the bank to
provide excellent services tothose customers, otherwise they switch to other banks
(Ray, 2007). Service quality in bankingimplies consistently anticipating and
satisfying the needs and expectations of customers.
Parasuraman et al. (1985) also hold the view that high quality service gives
credibility to thefield sales force and advertising, stimulates favorable word-ofmouth communications,enhances customers perception of value, and boosts the
morale and loyalty of employees andcustomers alike. Puccinelli (1999) looks the
financial services industry as entering a new erawhere personal attention is
decreasing because the institutions are using technology to replacehuman contact in
many application areas. Over the last few decades, technical evolution hashighly
affected the banking industry (Sherif, 2002). In todays competitive banking
industry,customers have to make a choice among various service providers by
making a trade-off betweenrelationships and economies, trust and products, or
39
Many researchers have been done in various industries especially in the banking
sector thatfocusing on customer oriented services (Ndubisi et al., 2007; Rootman et
al., 2008; and Duttaand Dutta, 2009). Lu and Shang (2007) explored the CRM
perceptions in freight forwarderservices from managerial perspectives. They had
come out with six dimensions of CRM namelycustomer acquisition, customer
response, customer knowledge, customer information system,customer value
evaluation, and customer information process.The following literature review
section provides a discussion and argument for the selection ofthe variables for the
40
The literature on CRM suggests that banks should consider the customer
relationship life cycle(Dwyer et al., 1987). In general, there are three core phases:
customer acquisition, customerenhancement, and customer recovery. The
acquisition phase describes the initiation of acustomer-bank relationship. In CRM
initiatives, customer representatives help customers getused to the products and
services, thereby increase customer familiarity. As the service industryhas a high
41
42
43
tries
to
find
out
the
relationship
between
perception
and
highly personalized services to the High Net Worth Customers. It is also found that
thestructured approach of CRM can provide various benefits to a bank, namely a
distinctive andconsistent customer experience, clear identification of the
organization, technological andprocess-related capabilities. The banking industry is
much further along than other industries inrecognizing the value of CRM and
implementing decision support systems to support CRM.Though most of the banks
have already focused on tactical point solutions, theyre ready for atransition toward
strategic, enterprise-wide CRM initiatives that cross major business lines.
Aneffective decision support system for CRM enables to collect data about
customer from everytouch consolidate this information into a single view of the
customer, and use this informationfor customer profiling, segmentation, crossselling, up selling and retention efforts. As bankscontinue to seek a unified
understanding of customer relationships across diverse channels, theimportance and
penetration of CRM is expected to grow like anything.
1. From the analysis, it is found that only few customers recognize that there is a
change inmarketing approach of Banks due to changing business environment.
Majority ofcustomers uncertain that the CRM is centered in a particular department
very few of thecustomers have accepted that CRM is prevalent through all the
45
2. It is found that Customer Retention is not a big challenge to Banks as per the
opinions ofcustomers of selected Banks. It is found that though CRM activities have
not helped toincrease the confidence of the customers in meeting the changing
needs, it helped toincrease the confidence of the customers while rendering services
in mean timeefficiently. CRM activities of the selected Banks are not up to the mark
in retaining thekey customers.
3. It is beyond doubt that when banks through CRM activity attend the needs of
customerswithout delay in time, the banks can create more awareness to customers
and can create acustomer data base very significantly. According to the perception
of customersenhancing customer loyalty through different activities is not an
46
4. All the customers are uncertain about CRM of a Bank that contains creation of
completecustomer database. Technological advancement adopted by Banks was not
useful to getthe update and latest information over CRM.
5. Through the study, it is observed that the selected Banks customers are being
exposed tothe new techniques. It is found that CRM is centered only to a mention in
the Annualreport, of the public sector Banks. It is also observed that customers are
stronglydisagreeing and some of them are uncertain about CRM activity is
47
6. Most the customers have not accepted that the selected Banks are not showing
interest inCRM activities with full attention but maintaining the same as a
compulsion. CRMactivity has been felt as an additional workload by the employees
but they have feel CRM is useful to customers and also the Banks. The attention of
management on CRM activityis totally different between and among the Banks.
48
8. The reach of CRM of both SBI and other nationalized banks is compared and
testedthrough F Ratio. It is assumed that there is no significant difference between
theperceptions of customers of SBI and other nationalized banks towards CRM. As
thecalculated value (1.65) of F is higher than the standard value (1.54), the
hypothesis isrejected at 5% significant level and inferred that there is significant
difference betweenthe perceptions of SBI and other nationalised banks customers
towards CRM.
Findings:
The customers of COMPANY are the wholesalers throughout India. COMPANY also export the
fabric to countries like Egypt and U.A.E.
The needs of the customers are clearly defined and the products are customized
according to the needs of the customers.
Customers comments and complaints are welcomed and resolved quickly and
positively. Comments and complaints are taken through face to face interviews.
49
The company provides credit facility to its customers up to 90 days. If the customers
pay within 7 days they are given 4% cash discount.
Sales persons of the company maintain frequent and informative communication with
the customers.
The average sale per customer has increased by 15% and customers response to the
marketing activities is also improving. Customer retention is also improving.
The factors which have an impact on the CRM are organization culture, support from
top management, interpersonal skill of the sales personals and working environment
of the company.
50
Analysis:
The customers of the COMPANY are the wholesalers. It is because the number of
retailers is very large as compared to the wholesalers. So it is not possible for the
company to approach to the retailers. Therefore the company sells to the
wholesalers and then wholesalers sell to the retailers.
Customers are encouraged to give suggestions and complaints so that the company
can improve its working and services. If the customers complaints are not resolved
the customers will be dissatisfied and the company may lose its customers.
Different customers have different requirements. So the company customizes its
product accordingly to satisfy the customers. It also gives more choice to the
customers.
To get the information about the customers and to measure the satisfaction the
company conducts surveys. Because of the expertise needed in the research the
company give this work to research agencies like AC NILSON.
51
The company gives credit facility to its customers to increase the sales volume. If
the company do not sell on credit the customers may switch over to other
companies.
The company maintains frequent communication with the customers. As soon as the
product is ready or a new product is launched the information is provided to the
customers. Communication is also necessary to maintain the interest of the
customers in the company.
The company gives concession to its regular customers so as to retain its most
valuable and profitable customers.
The company regularly reviews the business process in order to eliminate non
value-adding activities, to reduce the cost and to make the whole work efficient and
effective. If the internal customers are not satisfied and there is lack of coordination
among the departments then it will affect the external customers also.
52
CONCLUSION
The general discussion can be said that the bank is yet to develop an integrative
approachwhich focuses on the customer needs and to deliver to it. As shown by the
study, the bank is farfrom developing a customer centric approach both for the
customer as well as for the employees.Thus, for customer relationship management
to deliver to its expectations, it should play anintegrative role within the bank and
ensure that all processes are integrated in the bank globalstrategy, which is far from
reality in the study above. In view of this, to implement a CRMintegration strategy,
the following recommendations can be adopted:
1. The Indian Banking Sector is flooded with different banks of the same molecule.
Insuch a competitive environment, the Banks should adopt suitable marketing
skillsrather than depending on the trading skills. Hence, new services should be
53
3.
Employee
Relationship
Management
first
before
Customer
RelationshipManagement.
6. Proper training should be given to the bank personnel regarding the behavioral
patterns by the Banks before they come and work in the field.
54
9. Data gathered from the customers should be given proper value and it should be
Properlyutilized. Decision making authority should be extended to field force and
some resources should be given for faster implementation.
10. The Banking sector is developing and getting higher day by day in urban and
semiurban areas; there is large number of customers using the services in the urban
andsemi urban areas. So a wide scope in rural areas is expected in the days to
come.Based on the analysis it is very clear that in almost all issues, the working
performance of SBIand other nationalised banks is similar but differing at certain
aspects only.
55
The SBI though it ispublic sector bank, taking much care in implementation of
CRM, fine tuning the CRM andfinally putting it on track. Whereas, other
nationalised was not at par with SBI in most of theaspects like database
management, responding to the customers in mean time andprovisionaising the
services
as
expected
by
the
customers.
Particularly
in
marketing
enhancing
customer
loyalty,
provisionising
technological
CRM by SBI and other nationalised are to some extent same and one but the reach
is quietdistinguishable. It is due to the profile, their capability and the strategy of
CRM in making it andreaching down to customers. On the contrary, it can also be
asserted that the background of bothbanks also found as a big cause for reaching the
top CRM. Hence, CRM is an inevitable tool ofmarketing that can be considered as
Critical Responsibility of Market with regard to Banks inpresent context. The
results in this study show the respondents either agree or strongly agree on majority
of the statements in the dimensions used. This study is significant to banks as they
getinformation on what are items that are important to customers so as to maintain
the relationship.
57
2.
3.
4.
there.
58
Suggestions
There should be more and more emphasis given by the company for satisfying the
customer up to a apex limit and by providing the utility of every penny of his
money.
The company should be flexible to bend its rules and procedures in the clients
favour.
59
Questionnaire
1.
Wholesaler
b) Retailers
c)
2.
Both
Yes
b) No
3.
Yes
b) No
4.
Yes
60
b) No
5.
Yes
b) No
6.
7.
Others means
b) Surveys.
c)
8.
Do you analyze channel effectiveness? ie which channel is most effective in serving the
customer?
a)
Yes
b) No
61
9.
Yes
b) No
Yes
b) No
Yes
b) No
Yes
b) No
Yes.
b) No.
62
Yes.
b) No.
15. Do you regularly review the business process to eliminate non value- adding activities
and improve customer satisfaction?
a)
Yes
b) No.
16. Is the working environment is conducive to the well-being and morale of all employees?
a)
Yes
b) No.
No role to play.
63
Yes
b) No such database.
Yes
b) No
20. Is there commitment from top management to support the customer-focused service
concept?
a)
Yes
b) No
Yes
b) No
22. Is there any improvement in customer response rate to the marketing activities?
a)
Yes
64
b) No
REFERENCES
1. Almossawi, M. (2001). Bank selection criteria employed by college students in
Bahrain:An empirical analysis. International Journal of Bank Marketing, 19 (3),
115-125.
65
8. Berry, L. L. (1983). Relationship Marketing.In Berry L., Shostack L.G. and Upah
G. D.(Eds.).Emerging Perspectives on Service Marketing. Chicago: American
MarketingAssociation, 28-30.
12. Dutta, K. &Dutta, A. (2009). Customer Expectations and Perceptions across the
IndianBanking Industry and the Resultant Financial Implications. Journal of
Services Research,9, 31-49.
67
17. Gan, C., Cohen, D., Clemes, M. and Chong, E. (2006). A Survey of Customer
Retentionin the New Zealand Banking Industry: Banks and Bank Systems. Journal
of BusinessResearch, 1 (4), 83-99.
68
69