Professional Documents
Culture Documents
HUBLI
TABLE OF CONTENTS
List of Tables
EXECUTIVE SUMMARY 7-14
1. INTRODUCTION 15-19
2. COMPANY PROFILE 20-35
3. RESEARCH METHODOLOGY 36
3.1 Significance of study 37
3.2 Research design 38
3.3 Sampling 38
3.4 Data sources 38
3.5 Research approach 39
3.6 Pilot study 39
3.7 Pre test 40
3.8 Tools of data collection 41
3.9 Scoring procedure 41
3.10 Statistical analysis 41
3.11 Limitations of the study 41
4. LITERATURE REVIEW 42
4.1 Competitive Advantage 43
4.2 Customer Satisfaction 44
4.3 Customer Perceptions of Value 45
4.5 Corporate Image 45
4.6 Switching Barriers 46
4.7 Consumers Behavioral Intention 46
4.8 Customer Loyalty 46
5. DATA ANALYSIS & INTERPRETATION 47-65
Results and Discussion
Research Constructs
6. FINDINGS 66-68
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EXECUTIVE SUMMARY
TITLE:
A RESEARCH ON CUSTOMER CHURN RATE IN AXIS BANK
HUBLI.
GEOGRAPHICAL AREA:
PROLOGUE:
Customer retention is an important element of banking strategy in todays increasingly
competitive environment. Bank management must identify and improve upon factors that
can limit customer defection. These include employee performance and professionalism,
willingness to solve problems, friendliness, and level of knowledge, communication
skills, and selling skills, among others. Furthermore, customer defection can also be
reduced through adjustments in a banks rates, policies and branch locations.
Clearly, there are compelling arguments for bank management to carefully consider the
factors that might increase customer retention rates. Several studies have emphasized the
significance of customer retention in the banking industry (see Dawkins and Reichheld,
1990; Marple and Zimmerman, 1999 ;). However, there has been little effort to
investigate factors that might lead to customer retention... If retention criteria are not well
managed, customers might still leave their banks, no matter how hard bankers try to
retain them.
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The study is based on the social and geographic variables like Geography/location, Type
of business, Position title, Sex, Age, Education level, to understand the socio
geographical condition of customers and a structured questionnaire related to the services
provided by Axis bank and the satisfaction level of customers related to the services and
analyzing the major reasons related to their switch over.
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RESEARCH PLAN:
RESEARCH DESIGN Exploratory & Descriptive types.
DATA SOURCES-
Primary data was obtained through a survey sent to a sample of lost customers of
Axis Bank Hubli.
Secondary data sources were previous projects, websites, magazines, newspapers,
articles & textbooks
DATA COLLECTION METHOD:
Data was obtained through a survey sent to a sample of lost customers of Axis
Bank Hubli.
The survey was designed according to the Dillman Total Design Method (1978),
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which has proven to result in improved response rates and data quality.
FINDINGS
Respondents were relatively less satisfied with banks' pricing. Many complained
about the high fees charged and expensive account maintenance costs.
76% of the respondents are happy in terms of customer service at Axis Bank.
42% of the respondents have a relatively negative impression of their bank
levying undue charges on them, which forced them to switchover to other banks
26% perceived that the other banks where providing better service than Axis Bank
revealing that respondents have a negative impression of their bank's competitive
advantage.
30% of the respondents feel annoyed due to the unresponsive nature of the
customer representative.
22% of the respondent feels annoyed when they dont listen their problems
carefully.
44% of the respondents where dis-satisfied with waiting time in Axis bank.
32% of the respondents said that the Customer representatives were unable in
answering or handling their problems or questions.
26% of the respondents said that the customer executives where not so clear &
supportive in handling their problems.
72% of the respondents have clearly said that they are unaware about the different
charges charged in Banks
39% of the respondents complained that their are hidden charges involved.
27% of the respondents said that they where not informed about the different
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charges.
20% of them said Axis bank is misleading in terms of charges levyed.
56% of the respondents have commented that the services have become worse
over a period of one year ,
36% perceived to be the same & the rest only 8% have said that it has become
better.
32% of the respondents feel that having flexibility according to the changing
customer needs will enhance Axis Bank competence. This suggests that customers
want their banks to monitor change in the financial environment, and respond
with products that add value to customers' accounts
28% of the respondents suggested to have a separate Grievance Redressal Forum
in Axis
26% of the respondents perceive that the other banks are providing better service
than Axis
Rest 20% of the respondents perceives that their current bank does not have any
Hidden charges
Alternatively research constructs have also found that having a good relationship
by bank personnel with customers contributes to reluctance to switch to
alternative providers.
70% of the current a/c respondents said that customer care executives where not
so clear & supportive in handling their problems.
71% of the respondents of the SB a/c holders felt satisfied about their ability to
handle their problems
RECOMMENDATION
Respondents saw little advantage to switching, since they perceive that all banks
provide the same range of products and services. Furthermore, inconvenience, the
disruption caused by switching, and having a good relationship with bank
personnel contributed to respondents reluctance to switch to alternative
providers.
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Some of the respondents had not switched to another bank because they felt that
they would be no better off from switching. Such a finding emphasized that a
bank should make an effort to distinguish itself from competitors through the
generation of sustainable competitive advantage and distinctive bank image.
Axis bank can decide on the appointment of officials at various levels to handle
complaints and grievances depending upon its administrative structure/ channels
used for delivery of product and services.
In this study, it was found that many of the respondents do not use a variety of
products from their current bank. This is an important issue for AXIS bank, as
cross-selling is a critical element in increasing customer loyalty and revenue.
Conversely, cross-selling may make switching an unacceptable inconvenience, as
the customer must find a provider that can replace a broader range of products.
Bank managers should analyze every facet of the service delivery process and
product attributes to ensure that it will not increase inconvenience for consumers.
Furthermore, Axis Bank should regularly obtain feedback from consumers in
order to work backwards toward designing new processes or products, so that
these can be delivered effectively and efficiently.
Convincing customers that they are getting high value from their bank should be a
key advertising and promotion objective to create and strengthen Axis Bank
image.
AXIS BANK needs to place more emphasis on personnel training to its staff.
Our results indicate that banks cannot rely upon price competition alone in order
to be competitive; they must also strive to better inform consumers of the
products and services they offer, and provide convenient, agreeable surroundings,
as well as continue to emphasize the human interaction basis of service delivery.
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CONCLUSION
Considering the competitive banking in Hubli, excellence in customer service is the most
important tool for sustained business growth. Customer complaints are part of the
business life of any corporate entity & if not dealt properly & on time it will lead to
customer churn. This is more so for banks because banks are service organizations. As a
service organization, customer service and customer satisfaction should be the prime
concern of any bank. The bank believes that providing prompt and efficient service is
essential not only to attract new customers, but also to retain existing ones.
The constructs investigated in this study all received some mixed marks by the
respondents as factors that would influence their decision to stay with or leave their
current banks. The most important construct were reasons for stoppage of operations,
Charges, customer service followed by switching barriers. These results lead to
suggestions for bank managers to consider as to how they might improve customer
retention in todays competitive banking environment. According to the research
constructs the customer complaint arises due to;
a. The attitudinal aspects in dealing with customers
b. Inadequacy of the functions/arrangements made available to the customers
or gaps in standards of services expected and actual services rendered.
As my research was mainly concentrated to find out the level of churn rates and reasons
for the customer switch over and it targeted only the employees of Axis Bank, Hubli. The
research construct found that longer-term customers buy more and, if satisfied, may
generate positive word-of-mouth promotion for the company. Additionally, long-term
customers also take less of the companys time and are less sensitive to price changes.
Results of this analysis have also shown that as the age of customers increases, so too
does the propensity to stay with their current banks. In addition, respondents with higher
education are most likely to switch banks perhaps because highly educated consumers
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tend to have greater expectations of services. Gender and income appear not to have
significant association with the respondents intention to stay with or leave their service
providers.
The results further showed Axis Bank, have higher retention rates compared to the larger
banks. The smaller banks thus appear to be doing some things better than their larger
competitors. Since the results of this study are based on consumers perceptions only,
future research should investigate the congruence between consumers and service
providers perceptions. While this study found that customer satisfaction alone is not
effective in building customer loyalty. Consumers are more concerned about the
convenience issue such as location of branches, use of technology & consumers are more
focused on how bank delivers services. Given the importance of employee competence,
our research also examined the impact of employees behavior that could affect customer
retention.
Therefore, finally to conclude my project I can say that:
The research on customer churn has added a great value to my knowledge
undermining the different perceived facet of the customers who leaves/ left
the Bank.
This study & research has made me well verse about the different aspects of
the banking in specific & about Banking Industry as a whole.
Also it helped me to understand the attitudinal behavior & customers
perception about their Bank in various different circumstances.
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SECTION 1
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INTRODUCTION
The banking industry is highly competitive, with banks not only competing among each
other; but also with non-banks and other financial institutions (Kayak and
Kucukemiroglu, 1992; Hull, 2002). Most bank product developments are easy to
duplicate and when banks provide nearly identical services, they can only distinguish
themselves on the basis of price and quality. Therefore, customer retention is potentially
an effective tool that banks can use to gain a strategic advantage and survive in todays
ever-increasing banking competitive environment.
Since banks offer nearly identical products. This carries the danger of creating a
downward spiral of perpetual price discounting -- fighting for customer share (Mendzela,
1999). One strategic focus that banks can implement to remain competitive would be to
retain as many customers as possible. The argument for customer retention is relatively
straightforward. It is more economical to keep customers than to acquire new ones. The
costs of acquiring customers to replace those who have been lost are high. This is
because the expense of acquiring customers is incurred only in the beginning stages of
the commercial relationship (Reichheld and Kenny, 1990). In addition, longer-term
customers buy more and, if satisfied, may generate positive word-of-mouth promotion for
the company. Additionally, long-term customers also take less of the companys time and
are less sensitive to price changes (Healy, 1999).
These findings highlight the opportunity for management to acquire referral business, as
it is often of superior quality and inexpensive to obtain. Thus, it is believed that reducing
customer defections by as little as five percent can double the profits (Healy, 1999).
The key factors influencing customers selection of a bank include the range of services,
rates, fees and prices charged (Abratt and Russell, 1999). It is apparent that superior
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service, alone, is not sufficient to satisfy customers. Prices are essential, if not more
important than service and relationship quality. Furthermore, service excellence, meeting
client needs, and providing innovative products are essential to succeed in the banking
industry. Most private banks claim that creating and maintaining customer relationships
are important to them and they are aware of the positive values that relationships provide.
While there have been several studies emphasizing the significance of customer retention
in the banking industry, but there has been little empirical research examining the
constructs that could lead to customer retention. This research examines the constructs
that impact consumers decision to stay with or leave their current banks. In addition, the
research explores whether there is any association between consumers demographic
characteristics (i.e. age, gender, educational level and income) and loyalty decisions.
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Metrics:
The increased attention paid to CRM means that the traditional metrics used by
managers to measure the success of their products and services in the marketplace have to
be updated. Financial and market-based indicators like profitability, market share, and
profit margins have been and will continue to be important. However, in a CRM world,
increased emphasis is being placed on developing measures that are customer-centric and
give the manager a better idea of how her CRM policies and programs are working.
Some of these CRM-based measures, both Web and non-Web based are the
following:
Customer acquisition costs
Conversion rates (from lookers to buyers)
Retention/churn rates
Same customer sales rates
Loyalty measures.
Customer share or share of requirements (the share of a customers purchases in a
category devoted to a brand).
All of these measures imply doing a better job acquiring and processing internal data to
focus on how the company is performing at the customer level.
will see improvements in how companies work to establish long-term relationships with
their customers. However, there is a big difference between spending money on these
people and products and making it all work: implementation of CRM practices is still far
short of ideal. Everyone has his or her own stories about poor customer service and e-
mails sent to companies without hearing a response. Despite several years of experience.
We can expect that the technologies and methodologies employed to implement. It will
improve as they usually do. More companies are recognizing the importance of creating
databases and getting creative at capturing customer information. Real-time analyses of
customer behavior on the Web for better customer selection and targeting is already here
(e.g., Net Perceptions) which permits companies to anticipate what customers are likely
to buy. Companies will learn how to develop better communities around their brands
giving customers more incentives to identify themselves with those brands and exhibit
higher levels of loyalty.
One way that some companies are developing an improved focus on CRM is
through the establishment or consideration of splitting the marketing manager job into
two parts: one for acquisition and one for retention. The kinds of skills that are need for
the two tasks are quite different. People skilled in acquisition have experience in the
usual tactical aspects of marketing: advertising, sales, etc. However, the skills for
retention can be quite different as the job requires a better understanding of the
underpinnings of satisfaction and loyalty for the particular product category. In addition,
time being a critical scarce resource makes it difficult to do an excellent job on both
acquisition and retention. As a result, some companies have appointed a chief customer
officer (CCO) whose job focuses only on customer interactions.
The notion of customer satisfaction is being expanded to change CRM to CEM,
Customer Experience Management. The idea behind this is that with the number of
customer contact points increasing all the time, it is more critical than ever to measure the
customers reactions to these contacts and develop immediate responses to negative
experiences. These responses could include timely apologies and special offers to
compensate for unsatisfactory service. The idea is to expand the notion of a relationship
from one that is transaction-based to one that is experiential and continuous.
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SECTION II
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Axis Bank in India today is capitalized with Rs. 232.86 Crores with 47.50% public
holding other than promoters. It has more than 200 branch offices and Extension
Counters in the country with over 1250 Axis Bank ATM proving to be one of the largest
ATM networks in the country. Axis Bank India commits to adopt the best industry
practices internationally to achieve excellence.
By the end of December 2004, Axis Bank in India had over 2.7 million debit cards. This
is the first bank in India to offer the AT PAR Cheque facility, without any charges, to all
its Savings Bank customers in all the places across the country where it has presence.
With the AT PAR cheque facility, customers can name Cheques payments to any
beneficiary at any of its existence place. The ceiling per instrument is Rs.50, 000/-.
The latest offerings of the bank along with Dollar variant is the Euro and Pound Sterling
variants of the International Travel Currency Card. The Travel Currency Card is a
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signature based pre-paid travel card which enables travelers global access to their money
in local currency of the visiting country in a safe and convenient way.
Mission
Customer Service and Product Innovation tuned to diverse needs of individual and
corporate clientele.
Core Values
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Organization
Basically an organization is a group of people intentionally organized to accomplish an
overall, common goal or set of goals. Business organizations can range in size from two
people to tens of thousands.
There are several important aspects to consider about the goal of the business
organization. These features are explicit (deliberate and recognized) or implicit (operating
unrecognized, "behind the scenes"). Ideally, these features are carefully considered and
established, usually during the strategic planning process. (Later, we'll consider
dimensions and concepts that are common to organizations.)
Types of organization
a. Formal organization.
b. Informal organization.
a. Formal organization:
The formal organization or group exist in all organization .it is a group of the
people working together in all co-operation under the authority towards common
goal, objectives for the mutual benefit of the participants.
The formal groups are created to carry out some specific work to meet
some goals of the organization
b. Informal Organization:
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Departmentation:
Departmentation is the process of dividing and grouping the activities of an enterprise
in the various units for the purpose of administration .the units for the purpose of
administration .the units are designated as departments division sector or branches.
Departmentation facilitates the benefits of specialization .it aims at
achieving units of directing, co-operation, co-ordination, control and effective
communication .it leads to effective performance of activities of the enterprise
CHAIRMAN /CMD
DIRECTOR
CORPORATE BANKING
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AXIS BANK branch office Hubli started on 10 October 2003 this bank have five
SOUTH ZONE
SENIOR VICE
PRESIDENT
VICE - PRESIDENT
ASSISTANT VICE
PRESIDENT
OPERATIONS,
SALES MANAGERS
AND CREDIT
MANAGERS
OPERATIONS,
SALES & CREDIT
DEPUTY
MANAGERS
EXECUTIVES
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JUNIOR
EXECUTIVES
SALES OFFICERS
SALES
EXECUTIVES
Axis bank has 5 departments
1. Cash department
2. Credit department
3. Marketing department
4. Clearing department
5. Operation department
CASH DEPARTMENT:
It is mainly concerned with cash transactions of day to day activities these dept
have playing very much important role because more number of people are coming to
this dept.
this dept has 50% to 80% decision making power this dept has fully co-operate
with other dept performance of this dept will be appraised by the way of branch
performance based. This dept would have any plans for reaching its targets.
MARKETING DEPARTMENT:
It is concerned with achieving branch targets through creating new customers and
provides better service to these customers these dept has 50% to 100% decision making
power this dept has fully co-operate with other dept this dept performance can be
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appraised through branch performance this is having following plans for reaching its
targets by
a) By obtaining some new customers
b) By generating new business through existing customers.
OPERATION DEPARTMENT:
It is heart of the Axis bank this department has control the overall operations of the
Axis bank .This department has handling customer queries and giving proper information
to needy customers this department having 30% to 80% decision making power. This
dept is fully co-operate with other dept this dept performance can be appraised branch
performance and self appraised based .this dept also having plans to achieve its targets
They are gross selling plan, marketing and contribution to the branch target plans to reach
its objectives.
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7. Remittances.
CREDIT DEPARTMENT:
Credit department has mainly concern with credit transactions of the bank like
giving loans, recovers loans etc are included in these department this department
performance can be appraised through giving targets. This department having 50% to
80% decision making power and this department has co-operated with other department
whenever other departments needed. This department different plans for reaching its
targets they are, credit appraised of balance sheet, financial strength and ratio analysis.
CLEARING DEPARTMENT:
Clearing has mainly concerned with clearing cheques of the customers this
department having 20% to 30% decision making power this department performance can
be appraised through branch performance ,this department does not have any plans for
reaching targets .
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e) ATMs
f) En cash - 24
g) Special savings account
h) Residence and foreign currency account
i) Easy access through channels
j) I connect
k) corporate I connect
l) 24 - hr tele banking
TYPES OF ACCOUNTS:
1. Easy access account.
2. Salary account
3. Womens savings account
4. Senior privilege account
5. Defense Salary account
6. Trust/NGO savings account
7. Azadi-no frills
8. RFC(D)
1. Easy access account
The Easy access Savings Bank account is an endeavor by the bank to understand the
customers needs & redefine banking to suit the customers requirements for a truly
anywhere anytime banking experience.
A-Accessibility
Wide network of branches & one of the largest ATM networks in India giving the
customers easy access to their account. The anywhere banking concept allows the
customers to access/transact their account from any branch of the bank.
C-Convenience
An International Photo-signature Debit Card with withdrawal limit of Rs.40, 000 per day,
facilitating transfer funds, deposits of cash/cheques & payment of insurance premium
[LIC]. The Debit Card also comes with a comprehensive insurance cover inclusive of
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zero lost card liability, purchase protection & personal accident Insurance up to Rs.2
lacks.
C-Comfort
Internet Banking/ Telebanking- the ease of banking from home or office. Providing the
customer with the facility of online funds transfer, requests for
the customers new cheque book, Financial Advisory Services[FAS], shopping online &
information on mutual funds.
E-Earnings
Maximize returns on the account by availing the dual benefit of Flexi deposit. Any
balance in the customers account is in excess of Rs.10,000 or any higher limit specified
by the customer will be transferred automatically to high interest earning fixed deposit
account in multiplies of Rs.10,000.
S-Speed
At-Par cheque gives the customer the unique power to encash their cheque as a local
cheque at more than 143 centers where the bank has a presence at no extra cost.
S-Service
Service of the highest quality is rendered by an affable endearing & enthusiastic staff at
the branch.
2. Salary Account:
The complete financial solution
Salary Savings Account from Axis Bank will do the job for you. We know how important
employee satisfaction is for an organization to grow to its full potential. Which is why we
have tailored our Salary Savings Account not only to be a convenient way for you to
manage salaries (across various centers, through our centralized database), but also
provide your employees with a range of value added benefits.
Salary Savings Account comes with a host of facilities that give your employees access to
the complete gamut of banking services (including overdrafts, loans and zero-balance
requirements) on a preferential basis. Making it the perfect incentive for your employees.
Features
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No minimum balance.
Banking available across the country.
Multi-city at par Cheque book.
Personal & accidental insurance cover up to Rs.2 lacs.
Joint account facility available.
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Debit card offered to the minor above the age of 12 years, who can sign
uniformly.
Daily withdrawal limit of Rs.1500 at ATMs
Daily spend limits of Rs.1000 at merchant outlets.
Free monthly Statement clubbed with the statement of the smart privilege
account of the mother.
At- par cheque book at a nominal cost.
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Banking Privileges:
At-par cheques Facility
As a Defense personnels job involves transfers across the country. With the at-par
cheque facility it will no longer be necessary to set up new bank accounts with each
transfer.
Additional Debit Card
Along with a free International Debit Card, They also get a free card for the joint
account holder. This means that their child or spouse also enjoy the same benefits of
banking with Axis.
Financial Advisory Services
The solutions provide by the Axis bank meet the twin goal of meeting their
requirements& to diversify & spread the risk of their investment portfolio, so that
they can look forward to an comfortable & worry-free life.
The investment plan may include:
Mutual Funds: Debt and equity
Bonds
Axis Bank Fixed Deposits.
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Free Demand Drafts or Pay Orders as & when required by the Trusts to remit
funds.
Free collection of cheques at outstation locations.
Monthly statement of account delivered at their doorstep.
Facility for collecting donations in the Trusts account through the Axis Banks
network of branches & extension counters across the country, as well as through
iConnect-Axiss Internet Banking facility.
Foreign Contribution Regulation Act[FCRA] Account: the FCRA account enables
approved organizations to receive foreign contributions for utilization in their
activities in India. The Bank will provide assistance in the process of
documentation & obtaining necessary approvals from the Ministry of Home
Affairs in New Delhi.
Free investment advice
Free Demat account.
Constituent Subsidiary General Ledger [SGL] account through which investments
in Government securities are carried out, it comes with a host of value added
services like concession in transaction & service charges.
An Axis Bank customer can donate funds to the Trust through the iConnect
internet facility. In such cases the Bank provides the details of the amount donated
& the donors name to the Trust so that they can issue the receipt to the donor.
7. Azadi- No Frills Account:
It is a Savings Account that doesnt require a minimum balance.
The specifications required for qualifying for an Azaadi account are:
The sum total of all credit in the customers account does not exceed Rs.1 lacc
during the financial year.
The customers do not intend to maintain an account balance higher than
Rs.50, 000 at any given instant.
The customer is unable to furnish full documentation as required ordinarily
for fulfilling of account opening norms.
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Features:
Zero balance savings account: No need to maintain a fixed, mandatory
amount in the account.
Instant Welcome Kit: Handed over to the customer at the time of account
opening, the kit will consist of their account number, debit card, debit card
PIN, internet banking Pin & phone banking PIN.
International Debit Card: Which gives the customer access to over 1800
ATMs across the country, enabling the customer to make deposits or
withdraw cash at any time of day or night.
Phone banking & Internet banking: the customers can conveniently check
their balance, transaction details etc.anytime from anywhere over phone or
using the Internet, for no extra charge.
SECTION III
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3. RESEARCH METHODOLOGY
INTRODUCTION
Research methodology is a way to systematically solve the research problem as it
guides how research is done scientifically. It consists of different to study the research
problem along with the logic behind them.
The present chapter deals with the research methodology adopted in this study. It
discusses about the statement of the problem, aim and objectives of the study, research
design, universe and sampling, pilot study, pre-testing, tools of data collection used,
statistical application of data, problems encountered by the researcher and the limitations
of the study have been explained.
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cost money, and the higher the level of churn, the lower a firm's overall profit margin is
likely to be.
Broadly speaking, the remedy for churn is "stickiness." Sticky services are those designed
to hook a customer, who will find the service too valuable to easily give up. Firms
implement strategies such as greater personalization of services, bundled services, or
other perks to create this stickiness whereby customers are induced to build loyalty to the
company. Differentiation is another tactic. In their efforts to simply get Web sites up and
running, firms often fail to take the time to create an online presence that distinguishes
itself from those of others, thus making it very easy for customers to switch without
feeling any negative impact.
Hence my research work would certainly help the organization to know the increasing
churn rates of customers at Axis Bank and measures could be adopted to maintain a
positive relationship with the existing customers and it would be a great learning
experience for my academic purpose.
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UNIVERSE
The universe of the present study are the existing and switched over customers, of
Axis Bank, Hubli.
3.3 SAMPLING
SAMPLING UNIT- Lost Customers of Axis Bank
SAMPLE SIZE- 50
3.5 RESEARCH APPROACH- the approach made was through Survey method,
since exit customer list were huge in number and it would be easy to reach all the
customers in list and identified customers through sources.
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3.7 PRE-TEST
Before finalizing the questionnaire, the researcher conducted a pre-test with 5
respondents in order to determine the efficacy of the tool. The details of the answering
mode were explained to the respondents and they were answered of confidentiality.
During the pre-test I found that some questions were repeated and so it was avoided from
the questionnaire.
Data Collection
Data was obtained through a survey sent to a sample of lost customers of Axis
Bank Hubli.
The survey was designed according to the Dillman Total Design Method (1978),
which has proven to result in improved response rates and data quality. The
questionnaire gathered information on consumers perceptions of their banks, the
reasons they remain with their banks, and reasons why they have switched to
other banks.
Likert-format items were presented with 5-point scales, where 1 = "strongly
disagree," 3 = "neither disagree nor agree," and 5 = strongly agree."
The sampling procedure was based on the recommendations of Malhotra (1999)
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DATA COLLECTION
The researcher collected the data from the respondents during the months of July
2007 using questionnaire method. He took nearly ten days for the data collection.
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Data was collected only from the branch of Axis Bank Hubli, Karnatak.
There are many other branches over all. So the findings cannot be
generalized.
Most of the respondents were reluctant during the data collection.
A detailed study was not possible because of the time limit with in which
the study should be completed.
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SECTION IV
4. LITERATURE REVIEW
Previous studies have identified the benefits that customer retention delivers to an
organization. For example, the longer a customer stays with an organization the more
utility the customer generates (Reichheld and Sasser, 1990). This is an outcome of a
number of factors relating to the time the customer spends with the organization. These
include the higher initial costs of introducing and attracting a new customer, increases in
both the value and number of purchases, the customer's better understanding of the
organization, and positive word-of-mouth promotion.
Apart from the benefits that the longevity of customers brings, research findings also
suggest that the costs of customer retention activities are less than the costs of acquiring
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new customers. For example, Rust and Zahorik (1993) argue the financial implications of
attracting new customers may be five times as costly as keeping existing customers.
.Banks loses satisfied customers who have moved, retired, or no longer need certain
services. As a consequence, retaining customers becomes a priority.
Clearly, there are compelling arguments for bank management to carefully consider the
factors that might increase customer retention rates. However, there has been little
empirical research that investigates the constructs leading to customer retention.
Examples of constructs are competitive advantage, customer satisfaction, switching
barriers, corporate image, and bank services characteristics. There have been few, if any,
attempts to link them to customer retention. This is curious, for if retention criteria are not
well managed, customers might still leave their banks, no matter how hard bankers try to
retain them.
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Today, customers are more value oriented in their consumption of services because they
have alternative choices. Researchers explain how customers make purchase decisions
between competing providers. They argued that customers buy on value; they do not
simply buy products. Interestingly, it was observed that customers learn to think
objectively about value in the form of preferred attributes, attribute performance, and
consequences from using a product in a use situation (Woodruff, 1997). Thus, banks must
be able to provide up-close personal service for customers who come with high
expectations. For customers who value convenience most, banks must offer the latest
product such as electronic banking, touch-tone phone account access and internet
banking. Clearly, customer value can be a strong driver of customer retention. Customer
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SECTION V
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Durability of Relationships
The length of time that customers have been with their banks was also measured. As
noted above, there is a distinction between mere retention and the more desirable
outcome of loyalty. However, durability of a bank-customer relationship is a necessary
indicator of both.
Perceived Durability figures appear to demonstrate overall contentment with banking
services. Nearly eighty percent of the (78.9%) reported LOS at greater than two years.
Figures for the other LOS categories are generally small, perhaps reflecting low defection
rates or a small number of first time accounts. Given the preponderance of customers in
the greater than five years categories across banks.
Switching Barriers
The switching barriers index was composed of seven items. The overall mean was 3.79,
implying that these impediments have a moderate degree of influence on the respondents
intention to stay. The strongest contributor to this construct was banks ability to provide
products and services that meet respondents needs. In addition, the respondents saw little
advantage to switching, since they perceive that all banks provide the same range of
products and services. Furthermore, inconvenience, the disruption caused by switching,
and having a good relationship with bank personnel contributed to respondents
reluctance to switch to alternative providers.
However, in this study, it was found that many of the respondents do not use a variety of
products from their current bank. This is an important issue for bankers, as cross-selling
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is a critical element in increasing customer loyalty and revenue. Indeed, Jones 16 and
Farquhar (2003) demonstrated that lower levels of cross-selling may also lead to the loss
of market share and decreasing profitability. Furthermore, increased competition and on-
going development of new delivery channels are leading to commoditization of bank
products as these are relatively easy for competitors to copy. This might lead to a higher
propensity to switch providers, as consumers may be able to purchase similar products
and services for better prices elsewhere. Conversely, cross-selling may make switching
an unacceptable inconvenience, as the customer must find a provider that can replace a
broader range of products.
Table: Mean Scores of Respondents Perceived Switching Barriers ( =
Consumers do not feel like switching Mean Std. Deviation
because.
Their banks are able to provide products 4.05 1.001
and services they need
They see little advantage in switching 3.98 1.094
Switching would be too disruptive 3.96 1.052
They have good relationships with their 3.89 1.060
banks
Switching is too inconvenient 3.85 1.125
They use a variety of products from 3.65 1.070
their banks
They receive incentives from their 3.14 1.244
banks
Mean Perceived Switching Barriers 3.79
Customer Loyalty
The index of customer loyalty was composed of six items. The mean score for the index
was 3.35, implying that most of the respondents have an intention to stay loyal with their
banks. It has been documented that the respondents tend to stay loyal with their service
providers if they have excellent relationship with its staff.
Another crucial variable is respondents perception of difficulty in changing banks. In
today's banking environment, it would not be unusual for a customer to have many
automatic payment orders to a wide variety of different firms, such as electricity and
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Customer service
Frequency Percent
strongly agree 9 18.0
agree 16 32.0
neutral 13 26.0
disagree 8 16.0
strongly disagree 4 8.0
Total 50 100.0
strongly disagree
18.0%
disagree
16.0%
agree
neutral 32.0%
26.0%
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Seven items were used to assess the reasons for stopping the operations in Axis Bank.
The construct index signifies that 42% of the respondents have a relatively negative
impression of their bank levying undue charges on them, which forced them to
switchover to other banks & 26% perceived that the other banks where providing better
service than Axis Bank revealing that respondents have a negative impression of their
bank's competitive advantage. Service quality may be the only sustainable form of
differentiation in such a highly competitive and homogenous industry. However bank
managers should bear in mind that delivering superior service is not enough. In effect,
they should deliver services that are better than consumers expectations in order to
enhance satisfaction and maintain a positive image.
career change
6.0%
relocation move
6.0%
4.0%
Commute
8.0%
26.0%
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The qualities of the customer service representative which annoyed the respondents
were measured using a five-item index.
30% of the respondents feels annoyed due to the unresponsive nature of the customer
representative , 22% of the respondent feels annoyed when they dont listen their
problems carefully & 18% feels annoyed because they seems to be unfriendly with
the customers. Customer service representative should be properly trained for
handling complaints. We are dealing with people and hence difference of opinion and
areas of friction can arise. With an open mind and a smile on the face we should be
able to win the customers confidence. It would be the responsibility of the Branch
Head to ensure that internal machinery for handling complaints/grievances operates
smoothly and efficiently at all levels.
Annoyed / Irked
Frequency Percent
Not enthusiastic 5 10.0
Dint listen
11 22.0
carefully
unfriendly 9 18.0
Unresponsive 15 30.0
None 10 20.0
Total 50 100.0
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not enthusiastic
7 10.0%
20.0%
Unresponsive
30.0%
unfriendly
18.0%
TRANSACTION SATISFACTION
Waiting time
The transaction satisfaction index i.e. the waiting time was composed of three
parameters. More than half of the respondents had a neutral positive response on the
waiting time in Axis bank & 44% of the respondents where dis satisfied with waiting
time in Axis bank.
Waitin Time
Frequency Percent
satisfied 2 4.0
average 26 52.0
not satisfied 22 44.0
Total 50 100.0
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30.0
26.0
22.0
20.0
10.0
0.0 2.0
satisfied average not satisfied
Waitin Time
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supportive in handling their problems, 14% said the customer representatives should still
spend more time in elaborating & the rest 28% where satisfied that their problems or
questions where dealt accordingly.
Handle Problems
Frequency Percent
Customer care
executives were not 13 26.0
so clear & supportive
Problems & questions
not clearly answered 16 32.0
CHARGES:
Awareness about the charges in Axis Bank was measured using a two-item index. 72% of
the respondents have clearly said that they are unaware about the different charges
charged in Banks. Hence there is a great need for a banker to educate or make awareness
about the charges, as constructing on this will greatly enhance the customer satisfaction
or loyalty.
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Frequency Percent
Yes 14 28.0
No 36 72.0
Total 50 100.0
yes
28.0%
no
72.0%
The respondents unawareness about the charges was measured using a four-item
index.39% of the respondents complained that their where hidden charges involved, 27%
of the respondents said that they where not informed about the different charges, 20% of
them said that they are misleading as & when initially they where no charges & all of
sudden some charges crops up in middle without proper intimation & the rest 14% said
that due to their ignorance they do not know about the different charges.. Research
Constructs & the customers of Axis Bank recognize that customers
expectation/requirement/grievances can be better appreciated through personal
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interaction with customers by banks staff. Thus structured customer meets, say once in a
month will give a message to the customers that the bank cares for them and values their
feed back/suggestions for improvement in customer service. Research findings
constructed that complaints arise on account of lack of awareness among customers about
Axis bank services and such interactions will help the customers appreciate banking
services better. As for the bank the feed back from customers would be valuable input for
revising its product and services to meet customer requirements.
Unaware
Frequency Percent
Ignorance 5 14.0
Misleading 7 20.0
Hidden charges 14 39.0
Not informed 10 27.0
16
14
14
12
10
10
7
6
5
4
2
ignorance misleading hidden charges not informed
unaware
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Tracking Dimensions:
Three items were used to assess the customer service at Axis bank as compared to one
year ago. The construct table above signifies that overall, respondents have a relatively
negative impression of their bank as regards to service compared to one year ago.56% of
the respondents have commented that the services have become worse over a period of
one year , 36% perceived to be the same & the rest only 8% have said that it has become
better.
Tracking
Frequency Percent
Better 4 8.0
Undefined error #60868 - Cannot open text file "spss.err": No such file
worse 28 56.0
same 18 36.0
Total 50 100.0
Tracking Dimension
30
28
20
18
10
4
0
better w orse same
tracking
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Improvement & gaining competitive advantage was measured using a four-item index.
Excellence in customer service is the most important tool for sustained business growth.
Customer complaints are part of the business life of any corporate entity & if not dealt
properly & on time it will lead to customer churn. This is more so for banks because
banks are service organizations. As a service organization, customer service and customer
satisfaction should be the prime concern of any bank. The bank believes that providing
prompt and efficient service is essential not only to attract new customers, but also to
retain existing ones. The above construct is signifying that overall, respondents have a
relatively negative impression of their bank. Of the individual items, the highest i.e. 32%
was to have flexibility according to the changing customer needs. This suggests that
customers want their banks to monitor change in the financial environment, and respond
with products that add value to customers' accounts. It also suggests that banks that offer
new or refine current products in a proactive manner may enhance their customer
relationships. 28% of the respondents say that a separate Grievance Redressal Forum
should be there & 20% of them say charges charged must be properly communicated.
These respondents suggested that Axis Bank should aim at minimizing instances of
customer complaints and grievances through proper service delivery and review
mechanism and to ensure prompt Redressal of customer complaints and grievances. The
review mechanism should help in identifying shortcomings in product features and
service delivery. Customer dissatisfaction spoils banks name and image.
Hence Axis Bank should frame a policy on grievance Redressal on some principles, as
noted below-
Customers be treated fairly at all times
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Improving
Frequency Percent
current products &
10 20.0
services are satisfactory
Have to be flexible
according to customer 16 32.0
needs
Charges charged must
10 20.0
be still more reasonable
seperate grievanc
14 28.0
redressal forum
Total 50 100.0
17
16
16
15
14
14
13
12
11
10
10 10
9
current products & s Charges charged must
Have to be flexible seperate grievanc re
Improving
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What best services were you attracted from the current bank
Best services
Frequency Percent
Low charges 21 42.0
Better service 13 26.0
Better response
6 12.0
No Hidden
10 20.0
charges
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30
20 21
13
10
10
0
low charges better response
better service No hidden Charges
Best services
Count
Customer service
strongly
strongly agree agree neutral disagree disagree Total
Type of Curent 6 5 9 5 25
product SB A/C 3 11 4 3 4 25
Total 9 16 13 8 4 50
Relationship between Customer satisfaction & the type of a/c holding was measured
using a cross tab construct table. Relatively the construct showed that there is no much
correlation between these two variables. Moreover the respondents are satisfied with the
overall performance of customer service being offered to both types of account holders.
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12
11
10
9
8
Customer service
6 strongly agree
6
agree
5 5
4 neutral
4 4
disagree
3 3
2 strongly disagree
Current a/c SB A/C
Type of product
Count
Handle problems
Customer
care
executives Problems &
were not questions Info have to
so clear & not clearly be still more
supportive answered elaborated Satisfied Total
Type of Curent 9 10 2 4 25
product SB A/C 4 6 5 10 25
Total 13 16 7 14 50
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12
10
10 10
9
8 Handle problems
0 Satisf ied
Current a/c SB A/C
Type of product
Relationship between Customer problems & the type of a/c holding was measured using
a cross tab construct table. 70% of the current a/c respondents said that customer care
executives where not so clear & supportive in handling their problems. 62% of the
current a/c respondents said that their problems & questions where not clearly answered
whereas more than 71% of the respondents of the SB a/c holders felt satisfied about their
ability to handle their problems.
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SECTION VI
FINDINGS
Respondents were relatively less satisfied with banks' pricing. Many complained
about the high fees charged and expensive account maintenance costs.
76% of the respondents are happy in terms of customer service at Axis Bank.
42% of the respondents have a relatively negative impression of their bank
levying undue charges on them, which forced them to switchover to other banks
26% perceived that the other banks where providing better service than Axis Bank
revealing that respondents have a negative impression of their bank's competitive
advantage.
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30% of the respondents feel annoyed due to the unresponsive nature of the
customer representative.
22% of the respondent feels annoyed when they dont listen their problems
carefully.
44% of the respondents where dis-satisfied with waiting time in Axis bank.
32% of the respondents said that the Customer representatives were unable in
answering or handling their problems or questions.
26% of the respondents said that the customer executives where not so clear &
supportive in handling their problems.
72% of the respondents have clearly said that they are unaware about the different
charges charged in Banks
39% of the respondents complained that their are hidden charges involved.
27% of the respondents said that they where not informed about the different
charges.
20% of them said Axis bank is misleading in terms of charges levyed.
56% of the respondents have commented that the services have become worse
over a period of one year ,
36% perceived to be the same & the rest only 8% have said that it has become
better.
32% of the respondents feel that having flexibility according to the changing
customer needs will enhance Axis Bank competence. This suggests that customers
want their banks to monitor change in the financial environment, and respond
with products that add value to customers' accounts
28% of the respondents suggested to have a separate Grievance Redressal Forum
in Axis
26% of the respondents perceive that the other banks are providing better service
than Axis
Rest 20% of the respondents perceives that their current bank does not have any
Hidden charges
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Alternatively research constructs have also found that having a good relationship
by bank personnel with customers contributes to reluctance to switch to
alternative providers.
70% of the current a/c respondents said that customer care executives where not
so clear & supportive in handling their problems.
71% of the respondents of the SB a/c holders felt satisfied about their ability to
handle their problems
RECOMMENDATION
Respondents saw little advantage to switching, since they perceive that all banks
provide the same range of products and services. Furthermore, inconvenience, the
disruption caused by switching, and having a good relationship with bank
personnel contributed to respondents reluctance to switch to alternative
providers.
Some of the respondents had not switched to another bank because they felt that
they would be no better off from switching. Such a finding emphasized that a
bank should make an effort to distinguish itself from competitors through the
generation of sustainable competitive advantage and distinctive bank image.
Axis bank can decide on the appointment of officials at various levels to handle
complaints and grievances depending upon its administrative structure/ channels
used for delivery of product and services.
In this study, it was found that many of the respondents do not use a variety of
products from their current bank. This is an important issue for AXIS bank, as
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Bank managers should analyze every facet of the service delivery process and
product attributes to ensure that it will not increase inconvenience for consumers.
Furthermore, Axis Bank should regularly obtain feedback from consumers in
order to work backwards toward designing new processes or products, so that
these can be delivered effectively and efficiently.
Convincing customers that they are getting high value from their bank should be a
key advertising and promotion objective to create and strengthen Axis Bank
image.
AXIS BANK needs to place more emphasis on personnel training to its staff.
Our results indicate that banks cannot rely upon price competition alone in order
to be competitive; they must also strive to better inform consumers of the
products and services they offer, and provide convenient, agreeable surroundings,
as well as continue to emphasize the human interaction basis of service delivery.
CONCLUSION
Considering the competitive banking in Hubli, excellence in customer service is the most
important tool for sustained business growth. Customer complaints are part of the
business life of any corporate entity & if not dealt properly & on time it will lead to
customer churn. This is more so for banks because banks are service organizations. As a
service organization, customer service and customer satisfaction should be the prime
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concern of any bank. The bank believes that providing prompt and efficient service is
essential not only to attract new customers, but also to retain existing ones.
The constructs investigated in this study all received some mixed marks by the
respondents as factors that would influence their decision to stay with or leave their
current banks. The most important construct were reasons for stoppage of operations,
Charges, customer service followed by switching barriers. These results lead to
suggestions for bank managers to consider as to how they might improve customer
retention in todays competitive banking environment. According to the research
constructs the customer complaint arises due to;
a. The attitudinal aspects in dealing with customers
b. Inadequacy of the functions/arrangements made available to the customers
or gaps in standards of services expected and actual services rendered.
As my research was mainly oriented to find out the reason for high churn rate in Axis
Bank and reasons for the customer switch over and was targeted only to the lost
customers & the employees of Axis Bank, Hubli. The research construct found that
longer-term customers buy more and, if satisfied, may generate positive word-of-mouth
promotion for the company. Additionally, long-term customers also take less of the
companys time and are less sensitive to price changes.
Results of this analysis have also shown that as the age of customers increases, so too
does the propensity to stay with their current banks. In addition, respondents with higher
education are most likely to switch banks perhaps because highly educated consumers
tend to have greater expectations of services. Gender and income appear not to have
significant association with the respondents intention to stay with or leave their service
providers.
The results further showed Axis Bank, have higher retention rates compared to the larger
banks. The smaller banks thus appear to be doing some things better than their larger
competitors. The results of this study are based on consumers perceptions only. While
this study found that customer satisfaction alone is not effective in building customer
loyalty. Consumers are more concerned about the convenience issue such as location of
branches, use of technology & consumers are more focused on how bank delivers
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services. Given the importance of employee competence, our research also examined the
impact of employees behavior that could affect customer retention.
Therefore, finally to conclude my project I can say that:
The research on customer churn has added a great value to my knowledge
undermining the different perceived facet of the customers who leaves/ left
the Bank.
This study & research has made me well verse about the different aspects of
the banking in specific & about Banking Industry as a whole.
Also it helped me to understand the attitudinal behavior & customers
perception about their Bank in various different circumstances.
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ANNEXURES
REFERENCES
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QUESTIONNAIRE
1. Geography/location
2. Type of business ............................
3. Position title
4. Types of product(s)/Service(s) used.
...
5. Sex: .
6. Age:
7. Education level: ..
8. Years of Service Obtained through Axis Bank .
10. Tick the below reasons for your Exit/Stopping the operations from Axis
Bank?
Charges
Other banks providing better service
Commute (Transfer)
Conflict with other employees
Conflict with managers
Relocation/Move
Career Change
Other ..
11. What qualities of the customer service representative irked (annoyed) you?
Not patient
Not enthusiastic
Didn't listen carefully
Unfriendly
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Unresponsive
Others specify.
None
TRANSACTION SATISFACTION
Ignorance
Mis Leading
Hidden Charges
Not informed
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18. What best services were you attracted from the current bank?
Low charges
Better Service
Better response
Others
Thank you
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