Submitted to: Submitted by:

Deptt. of Business Admn. Bhag Singh

CDLU, Sirsa Roll No. 39
MBA 1st Sem.

Department of Business Administration

Ch. Devi Lal University, Sirsa
Submitted to: Submitted by:
Deptt. of Business Admn. Jaibir Singh
CDLU, Sirsa Roll No. 86
MBA 1st Sem.

Department of Business Administration

Ch. Devi Lal University, Sirsa
Submitted to: Submitted by:
Deptt. of Business Admn. Aseem Sethi
CDLU, Sirsa Roll No. 85
MBA 1st Sem.

Department of Business Administration

Ch. Devi Lal University, Sirsa
 CRM - CONCEPTUAL FRAMEWORK
INTRODUCTION
CRM is an all embracing approach, which seamlessly
integrates sales, customer service, marketing, field support
and other functions that touch customers. CRM became the
number one focus when today's competitive retail banks and
the Indian banking market space were getting more
saturated and competitive. As this is a buyer oriented
market the entire orientation, behavior and attitude of the
buyer is of immense importance in sustaining in today's
competitive world. Here comes the role of CRM which acts as
the axis to bring closer the customer and the product. In
order to maintain a successful business, the business must
understand and maintain a positive relationship with the
customer. The goal of CRM basically is to maintain current
customers as well as acquire new customers. The beauty of
CRM is that it benefits both the customer and the business or
service provider. The business benefits via improved sales,
higher customer confidence and satisfaction, and a more
effective work environment. With CRM, a small business or
large corporations can know what its customer wants; thus it
can provide the service or product the client wants, keeping
them as a repeat customer and gaining greater sales
volumes.
CRM can be viewed in four principal ways:
 1. Firstly, CRM is central to the task of making an

organization customer centric

2. Secondly, CRM is not a simple procedure but a blend
of technology and concept.
3. Third, CRM is the most certain way to increase value
to the customer and profitability to the practicing
organizations.
"CRM is the information technology face of the business
processes that alms to establish enduring and mutually
beneficial relationships with customers in order to drive
customer retention, profitability and value.
The definition underlines the fact that CRM is meant for
a common and equal good of the two stakeholders -
business and their customers. It calls for capturing pertinent
data about prospective customers and current in
respect of their buying pattern, shopping behaviour and
usage habits of the products and services and to use the
information to commence a two way dialogue with them. If
the essence of CRM is customer and continuity, The term
CRM can well be used as
• Customer returns Management
• Customer retention Management
• Creative Relations Management
• Cost Reduction management
• Continuous Relations Management
 (i) One to one marketing as opposed to mass
marketing
(ii) It stresses relationships commitment and
helps in maintaining long term
(iii) It helps in minimizing barriers and
(iv) Also reduces cost
The key dimensions of CRM that we largely ignored in
the past are customer loyalty and Profitability. There is a
very high degree of elasticity between customer satisfaction
and customer loyalty, customer profitability. A minor
negative change in satisfaction and services brings a large
change in profitability and loyalty.
 The Business Environment What
does the market allow?
Competitive reactions
• Customer demands
• Legal requirements

Managers Converting Customer Data to

How do they influence success? Knowledge
• Optimism What skills & know-hall' are
• Enthusiasm required:
• Willingness to champion Business knowledge
• Relationship experience
• Use of sophisticated
models

CRM

Organization Structure Information Technology:

What is required to ensure staff What infrastructure is required?
behaviour and altitudes are • Networks
aligned with a customer • Database
strategy? • Software
• Incentives
• Accountability

Implementation Requirements
Implementation / feasible?
• Experience with change
• Infrastructure cost
• Maintenance cost

Fig. 1.1: CRM Operational Components

For years mangers and marketers have 'emphasized
strategies designed to increase the size of their customer
base, encourage brand switching and boost purchase
frequency.
HISTORY OF CRM
The first surf of CRM solutions came in the late 1980s and
early 1990s (see Table II). The providers of these products
are Clarify (now owned by Nortel Networks Corp.), Onyx
Software, Oracle, Vantive (acquired by PeopleSoft) and
Siebel Systems. These packaged solutions emphasize
automating and standardizing the internal processes which
relate to acquiring, servicing and keeping customers. The
focus of these CRM solutions are on automating and
standardizing the internal processes to make the customers
an asset.

Then in the mid-1990s the Web emerged. It changed botl1

the CRM market and customer-related business
requirements of all sizes of companies. The new CRM system
means that the existing and potential customers are now
able to interact and communicate with corporations.

EVOLUTION OF CRM IN BANKING SECTOR

Regulation and technological improvements are responsible
for the vast majority of innovations in banking over the past
quarter century. The introduction personal computers and
the proliferation of ATMs in the 1970s captured bank
management's attention. The regulatory changes in the
1980s fueled much of the industry's growth, then downsizing
as bankers focused on amassing market presence which
resulted in significant merger activity. Recent technological
improvements are at the root of bankers' focus as well as a
target for their significant investment dollars today. In fact,
according to recent projections, bankers and their financial
service company brethren will spend almost $7 billion this
year on CRM and increase that by 14 percent each year for
then next several years. Looking at this CRM phenomenon in
light of the drivers of banking innovation since the 1970s,
one might wonder if CRM itself is the innovation, or
(conversbly) the technology, once again. Bankers at all
points of the CRM spectrum are looking for a way to quantify
their return on investment - either what it actually is or, if
just starting out. what it should be and over what period of
time should the value be realized.
Ironically, the answer to his question may lie in a simple
review of a fell known quantities generated from historical
innovation. For example, at A TMs. What drove many
bankers to invest in A TMs was the promise of reduced
branch cost, since customers would use them instead of a
branch to transact business. But what was discovered is that
the financial impact of A TMs is a marginal increase in fee
income substantially offset by the cost of significant
increases in the number of customer transactions. The value
proposition, however, was a significant increase in that
intangible called customer satisfaction. The increase in
customer satisfaction has translated to loyalty that resulted
in higher customer retention and growing franchise value.
Internet banking, a product of the 1990s, shows similar
characteristics. Again, hankers invested believing that the
Internet was a lower-cost delivery channel and a way to
increase sales. Studies have now shown, however, that the
primary value of offering Internet banking services lies in the
increased retention of highly valued customer segments.
Again, the intangible called customer satisfaction drives the
value proposition. Now we explore CRM. CRM is not another
A TM or Internet bank. It is not a checking account, a stock
or a mortgage. In fact, CRM is not anything a customer
should even know about! You will never sell your customer
your CRM, will you? So, one can conclude that CRM is not
tangible. If it's intangible, can it be expected to produce a
tangible return? Probably not or at least not with any direct
financial value exclusively linked back to the investment in
CRM.
CRM is primarily driven by the innovation of technology,
but unlike other technological innovations, CRM has power to
help bankers quickly and directly improve customer
satisfaction. CRM is an added dimension to ensure that what
the customer expects is consistent with what the bank is
prepared to deliver. One expert in bank CRM initiatives
recently said that CRM is an approach that is less focused on
providing the right services to the customer than attracting
customers who are the right fit for what the bank has to
offer. Further, the primary value of CRM is its potential as a
customer retention tool. People are starting to measure CRM
in terms or increased customer satisfaction rather than ROI.
So how much of a return can you expect from your CRM
investment, and when can you expect it? Refer to your
reasons for continuing to offer A TM and Internet banking
services. The answer for CRM is the same.
THE BEST BANKS' STRATEGY
Trim expenditure on provisions and contingencies, thus
narrowing the
gap between operating profits and net profits. Expenditure
on provisions and contingencies grew by just 4.88 per cent,
making it the slowest-growing component of bank
expenditure in 1997-98. Three factors account for this
deceleration, none of which is likely to be present in 1998-
99. The first was a smaller tax-bite. Budget 97 slashed
corporate tax I rates from 40 to 30 per cent, lowering tax
provisioning requirements. Budget 98, however, has
maintained tax rates at these levels. limiting the possibility
of further tax savings. Second, lower maturity yields on
government securities provided a bonanza for the banks. Not
only did it shrink provisioning requirements for the year, it
also allowed the banks which had not marked their full
investment portfolios to market-- namely, the public sector
banks to write back provisions for depreciation in previous
years to the P&l account. Successive monetary policies have
hiked the proportion of the bank investment portfolio that is
to be marked to market. The current proportion is 60 per
cent, but several public sector banks seized the opportunity
offered by lower yields to mark their entire investment
portfolio to market. Some of the biggest beneficiaries: State
Bank of India (total write backs on account of excess
depreciation: Rs 964 crore); Punjab National Bank (Rs 386
crore).