I, Deboshree Majumdar of M.L.Dahanukar College of Commerce TYBBI, hereby declare that I have completed the project on “CUSTOMER RELATIONSHIP MANAGEMENT IN BANKING” during the

Academic Year 2008-2009. The information submitted is original and authentic to the best of my knowledge as a lot of dedication and hard work has been put in by me for the same.

____________________ Signature of the student



This is to certify that Ms.Deboshree Majumdar has satisfactorily carried out the project work on “CUSTOMER RELATIONSHIP

MANAGEMENT IN BANKING” in partial fulfillment of Bachelor in Banking and Insurance (BBI) as per the curriculum laid down by the UNIVERSITY OF MUMBAI during the Academic Year 2008-2009.


Mr.Amit Oak (Project Guide)




During the course of this project, I’ve been helped and supported by a lot of people whose names if not mentioned, would be inconsiderate on my part. I’d like to thank all of them.

I’d like to thank my guide, Mr. Amit Oak, who guided me throughout and has been a helpful guide. Working under his guidance has been a great experience.

I’m deeply obliged to our college librarian who guided me through the reference books, without which my project wouldn’t have seen the light of the day.

Most of all, I wish to thank my family for dealing with me patiently and supporting me whilst I was working on this project.


And my sincere thanks to Mr. Bill Gates and MS Corp. Writing a book wouldn’t have been easy without MS Word- right from grammar checks to replace alls-things have become simpler with the advent of this software.

And most importantly I thank The Almighty, just for being there with me, throughout.

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.

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.

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





1. 2. 3. 4. 5. 6.


11-19 20-26

27-35 36-41 42-46 47-56


11. 12. 13. 14. 15.

85-89 90-94 95-99 100-101 102-106 107-111




-Toady’s seller.


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:


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.


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.


• 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.

●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”).

• 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


The three contextual factors are:
4. Marketing Orientation 5. Value Creation
6. Innovative IT


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.


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.



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.


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.)


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.



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).





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


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.


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

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.










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


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

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.


Customer Acquisition:
was the key for this.

This naturally led to acquisition as the

only strategy for the business to grow and expansion of customer base


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.


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.




-MR. Bhaskar Bhaggi

Sr. Vice President, ICICI

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

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.













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. `

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.


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.

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.


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.

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.


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.


Profitability-Driven Account Planning - Enables commercial

banks to better understand the overall needs of their customers and drive


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.

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.

Banker Productivity - Includes streamlined proposal and

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



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.


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.

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.






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 sales management and after-sales management management, processes.

• 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



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.


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.


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


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

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.


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.









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

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…….




-Mr. Kiran Pradhan

Account Manager, SAS


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.


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


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









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.






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 faceto-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,


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

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.

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


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


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


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

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.


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.

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.


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

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


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.


CRM Tools can be broadly classified into Operational tools and Analytical tools:

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.


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.

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.



“The prerequisite for successful CRM in banks is to have a thorough understanding of the organizational structure and environment.”

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


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.


• 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


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


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.


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.


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.






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


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.


• 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.


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.


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.


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.

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,


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.


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.

• 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.

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

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:


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 (eCRM). 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…






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


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.

Database marketing Behavior based marketing E-CRM


Single channel

Multiple channels Single enterprise view of customer integration of customer channels Outbound Campaign ROI metrics Many campaigns running simultaneously Higher effectiveness rates Opt-in-principle Strong customer metrics Many simultaneous campaign Very high response rates Leveraging customer information for specialized value proposition

Out bound only Simple metrics <25 campaigns a year

2% average response rates 20% customers deliver 100%profits

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 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, 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.

• 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


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.

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.


• 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







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


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.


• Relationship with customers. • Using e-mail for business communication. • Personalized services or one – to – one services. • Website to market product or services. • Transaction security.

• Customer interaction and satisfaction. • • Convenience.

Speed of processing the transaction through e- response. • Service quality and trust.


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

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

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


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.



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


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.


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.

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.


• 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


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 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.



Meet customer needs. Respond to complaints. Minimal evaluation of



customer service level. Evaluate customer perception. Identify customer retention



factors. Evaluate customer needs. Continuous improvements.


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, email/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.






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


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.


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.


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.

• 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.


• 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

• • • • • •

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

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.


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.



“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.”


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 OneTo-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

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.


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.


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

They need to satisfy customer needs that are complex and difficult to manage.


They need to face up to increased competition from within the sector and from new entrants coming into the financial services market.

3. 4.

They need to address the demands based on supply chain. They must continually invent new products and services in the light of envisaged changes.



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.


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.


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.


My discussion regarding CRM in Banking was with Ms.Shyamala Borkar, Head, Client Services Group - India Commercial Banking, Standard Chartered. It was an enlightening experience for me. She gave me all the valuable information regarding the various CRM strategies adopted by SCB and the various techniques adopted by the bank to manage its customers effectively. Customer-attrition is a serious threat to the bank and efficient CRM strategies can help to reduce customer attrition. 1. What are the CRM Strategies that Standard Chartered Bank follows? Why is it essential? --To address the drawback of the current query system, we are going from the manual to the web based system as a part of SCB group strategy, which is user friendly, and easy to access. 2. How do you segment and identify your customers? --Basically we have three segments of customers they being PLATINUM, KEY and CORE. Also based on their A/C No. We use some caller verification code, Address, PAN card No. etc, as it is easy to identify them. We have (CIC) Client Identification Code which is unique. 3. Is customer satisfaction a part of your banks vision?


--Yes, our vision is to have customer delight and “To be a service partner with our clients delivering simply first class service”. We believe in going beyond Call of Duty.

4. What strategies Standard Chartered Bank follows for customer retention? --Best of service, Comprehensive pricing, Customer visits and Service reviews.
5. Strategies followed to enhance customer loyalty

--Segregation of services based on KEY and CORE client segments, such as customized services and normal services. We have • Dedicated telephone No. for KEY clients, • Dedicated key service managers, • Proactive calling with clients, • Specialized services 6. Do you maintain a complaint management / feedback system? --Yes, it is very imperative. Our Complaint and Feedback system is called as COMMAND. SCB tracks all complaints on a daily basis. We have (TAT) Turn Around Time which enables us to solve the complaints within 8hrs time. 7. Do you pay attention to all your customers effectively?


--Yes we pay a lot attention and cover all the segments of our clients; we distinguish our services based on (CR) Client Relationship Key and Core Coverage Model.

8. Do you regularly make up an inventory of all the needs and expectations of your customers? --Yes, this happens during monthly service review visits and feedback from our sales team. 9. Do you make recommendations to customers about the products and services that suit their needs? --Yes, absolutely. Its via our website, advertisement, calling up our clients etc.
10. Do you organize meetings with customer groups to learn about

their needs, wants, ideas and complaints? --Yes, its our deep-seated priority. We conduct a visit on regular basis (Covering all segments). We visit the client along with operations and sales team. It enables us SCB to retain customers, enhance loyalty, and pitch the wallet share.
11. Do you know what it costs when you lose a customer?

--We believe in a well-built strategy that helps SCB to retain its existing customers. Hence SCB does not lose a customer time and again. It is about 0.1%.

12. Do you have an up-to-date databank in which all characteristics

of your customers are registered? --Yes, our system is a core system which covers all the profile and characteristics of our clients and it is stored in this system. It is based on • Nature of business • Authorized signatory • Source of business • Line of business etc.
13. Are customer complaints replied to within a day and solved with

within a day or two? --Yes, SCB has (TAT) Turn Around Time with the help of which complaints are solved within 8 working hours. 95% of complaints are solved within 8hrs and 5% are Holding Reply as they are investigation related but are solved within 2 days time.
14. Do you identify where improvements are needed from the

customers perspective? --Yes, we do. Improvement areas are identified by the way of


• Service review • Command system • Feedback from sales team • Customer visits

15. Are products and services delivered within the period expected

by the customer? --Yes, infact we try our level best to deliver it before the period expected by our clients. SCB is a multinational bank and all the products and services are immediate. Its even better than what they expect. 16. Does top level management also personally handle complaints of your customers? --Yes, all the employees are involved in complaint management process and personally handle the complaints of customers and are registered in the Command system.


Standard Chartered Bank was looking for a tool that would help it analyze the huge volumes of data captured by its OLTP systems. The objective was to analyze new business opportunities, provide better customer service, and boost profitability.

Standard Chartered Bank (SCB) previously used Online Transaction Processing (OLTP) system, which facilitated and managed transactionoriented applications. The system was reliable but provided little scope for in-depth customer analysis, which is the key to survive in the fiercely competitive financial marketplace. It answered the financial queries and generated reports at a broad portfolio level, which included total earnings, debt situation, interest income, cost, fee income, and profits.


The bank realized that it needed to go a step further and deploy a solution which it can use to analyze the huge volumes of data captured by its OLTP systems. The idea was to search for crucial nuggets of information from the vast amounts of transactional data at its disposal to get the right information, to the right executive and at the right time. This information can help a bank take critical business decisions in the dog-eat-dog financial world.

It was clear that in order to achieve the desired benefits, the bank had to implement a data warehouse and analytical solution. They wanted a solution that can perform analytics on the valuable customer data to answer queries across divisions. The answers would then enable them to proactively service customers and thereby ensure customer loyalty and retention. This exercise is a must for survival in a fiercely competitive environment.

The bank's IT team looked at the business requirement in detail and deduced that the organization needed a data warehousing and analytical solution that would help analyze customer data to enable fact-based decision making in areas ranging from acquisition and risk management to cross-selling and portfolio management. After evaluating a number of vendor offerings, SCB decided to use a suite of products from SAS. It went for the SAS Customizable CRM Solutions.


The bank created a team of 25 people in Bangalore and called it a Business Intelligence Unit. This unit was responsible for deriving and implementing strategies to analyze and exploit customer data. The company evaluated a number of solutions and SAS was chosen as the preferred solution partner and SCB today relies on SAS solutions across Asia for its customer analytics.

It was easier for them to run targeted campaigns and elicit substantially higher returns since they perform profit modeling for each account. This also enables micro-segmentation. Using analytics, and a test and learn culture they know the likelihood of customers to take a new product. SCB now knows which member is more likely to avail a service or product. This has resulted in more focused marketing campaigns and reduced costs with improved customer satisfaction.

Standard Chartered Bank uses SAS Customizable CRM Solution to adopt a truly customer-centric approach to manage its business. It means that fundamental decisions on strategy and resource allocation must be based on a detailed and accurate understanding of customers and the overall market.

The customizable CRM solution provided SCB with:


Integrate information from multiple sources, eliminate data errors and

redundancies, tailor data for efficient access and analysis, and reduce the complexity of data management.

Anticipate customer expectations and predict customer behavior like, Allow to cross-sell and up-sell. It can help identify the best candidates

propensity to purchase, lifetime profitability, and credit risk.

for purchasing particular combinations of products and services, and focus the marketing efforts on a more receptive audience.

Combine business rules and analytic models to accurately segment

and profile customers, and construct a personalized strategy for each group.

Deliver customer intelligence into front office systems to enable Combine behavioral insights derived from analytics with attitudinal

smarter customer interactions through various channels.

data obtained from online and offline customer surveys. Hence the bank's vision was to champion fact-based strategic business decisions using best-in-class analytics. The objective was to enhance the organization's competitive advantage and boost profits.

The bank was looking forward to the following broad benefits:

The ability to exploit changing and widening markets.


The ability to implement a customer-centric approach focused on The ability to concentrate on financial budgeting, cost control, and To look for new ways to minimize costs, while increasing profitability

optimizing the lifetime value of the customer.

risk management.

and shareholder value by effectively managing consumer relationships.


THE COMPANY Standard Chartered Bank has over 2.2 million retail customers and over 1.3 million credit card customers nationwide. Its products and services include cash management, custody, lending, foreign exchange, interest rate management, and debt capital markets.

• •

THE NEED The bank needed to manage and analyze the huge volumes of data captured by its OLTP systems. It had to get the right information, to the right people, at the right time, in order to carry out a number of critical business activities and provide excellent customer service.


THE SOLUTION SCB decided to go for SAS Customizable CRM Solutions to address its business needs.

• •

THE BENEFITS The bank can now exploit changing and widening markets; implement a customer-centric approach; concentrate on financial budgeting, cost control, and risk management; and figure out new ways to minimize costs, while increasing profitability and shareholder value.


MAGAZINES The Week Business Today




NEWSPAPERS Economic Times DNA Money




Master your semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master your semester with Scribd & The New York Times

Cancel anytime.