PHINMA-University of Pangasinan

Arellano St., Dagupan City, Pangasinan

Building Lasting Customer

Relationship towards
Trinity International Credit Solution.

Submitted by:
Jomero, Rochelle Ann
Mamaat, Ronalyn
Maningding, Ruth Anne
Navarro, Emercy
Ocampo, Jay Ann
Sison, Denecil
Villegas, Karen
 Chapter 1

This chapter contains the introduction about the research topic, situational analysis,

conceptual framework considered and used in the study, statement of the problem,

researcher’s hypothesis, significance of the study and definition of terms.

Introduction

Loans are very simple contracts with remarkable properties. One person lends

something to another with the promise that it will be repaid in the future. Lending

Institutions are one of the most important institutions that most of the Filipinos especially

in lower and middle class society are needing for. These are any type of financial

organization or institution that provides loans to borrowers. The range of loan types

offered by any one financial institution will vary, depending on the structure of the

organization. Typically, all lenders will charge some rate of interest for the amount of

funds borrowed, and require the borrower to commit to a contract that spells out the

terms of repayment. One of the more common examples of a lending institution is a

bank. Other organizations such as building society, credit union, and savings & loan

association can also be considered examples of a lending institution.

In the Philippines, one major source of their living is through lending money to

the bank or any other financial institutions to support their small businesses in order to

provide and support an everyday living for their family, while some of them just go

directly to the people they know who can kindly lend their money to them and just

secure a non-formal loan agreement against one another. One major reason why some
of them would prefer to borrow from the people they know or from the people related to

them is because the relationship between the two parties that they have built, probably

for so many years. And that is what every establishment, either a lending institution or

not, must establish in order gain loyal customers and stay to the business world.

TRINITY INTERNATIONAL CREDIT SOLUTION is just starting to create its own

name in Lending Industry, thus, their problem arises from keeping their customers

coming back to transact for another credit solution. The research aims to determine the

variables in Customer Relationship Management that affect the clients in Trinity

international Credit Solution from not having a longer transaction. The study focuses on

the variables to consider in order to build a lasting customer relationship towards the

clients and will be within the vicinity of Mangaldan, Pangasinan only.

Situational Analysis

Expanding into a new market can be an effective way to leverage your core

business for growth. But it takes a disciplined process to accurately assess the potential

of each growth opportunity, because a bad bet can bog down your business. (Stark,

Stewart, 2013)

In order for a newly-established company to succeed on their chosen industry, to

create a wide range of target market customer must also be analyzed. For just a matter

of two years, Trinity International Credit Solution are able to get their clients at wide

range of areas in Pangasinan namely, Dagupan City, Sta. Barbara, Mangaldan,

Urdaneta City, San Fabian, San Jacinto, Mapandan, Laoac, and Pozorrubio. However,
in every organization in the business world, a problem must be faced and Trinity was

never an exemption to it. The Institution can easily gather customer to make a

transaction to them, but the researchers found out that the institution finds it hard to

create a long-term relationship with their clients, knowing the fact that they have

collected a wide area of concentration towards the vicinity of Pangasinan.

People who are engaged in business all know that customers are the lifeblood of

every business organization, the situation upon the clients of Trinity International Credit

Solution must be taken into a deeper understanding and analysis.

Customer Analysis

One of the most important part in establishing a successful business, especially

for a lending institution, is establishing good relationship with the clients.

Without customers, and the entrepreneurs who create them, there would be no

jobs, no companies, no market, no GDP and, ultimately, no human development.

Creating customers and engaging them has significant ramifications not only for your

organization’s profitability and prosperity but also, for the world’s growth and stability

(2013, Business Journal)

It has been estimated that there are 500 million economically poor people in the

world operating microenterprises and small business (Women’s World Banking 1995).

Most of them do not have access to adequate financial services. To meet this

substantial demand for financial services by low-income micro-entrepreneurs,

microfinance practitioners and donors alike must adopt a long-term perspective.

 According to Aghion (2007), Armendariz (2007), and Morduch (2007),

Microfinance presents a series of exciting possibilities for extending markets, reducing

poverty, and fostering social change. It has a clear record of social impacts and has

been shown to be a major tool for poverty reduction and gender empowerment.

Microfinance clients are typically self-employed, low income entrepreneurs in

both urban and rural areas. Clients are often traders, street vendors, small farmers,

service providers (hairdressers, rickshaw drivers), and artisans and small producers,

such as blacksmiths and seamstresses. Usually their activities provide a stable source

of income (often form more than one activity). Although they are poor, they are

generally not considered to be the “Poorest of the poor.” (Ledgerwood, 1999)

The researchers’ focus will be the relationship between Trinity International

Credit Solution and its clients who decided to stop their transaction within the

organization. This is to understand the variables such as the communication between

the collector and client, Efficiency of collection, Location of the Business, and the

Delivery Process of Loan.

Based on the researcher’s observation, the customers or “clients”, as to what the

company always refer to, are good loan payers during the 1 st and 2nd cycle of the

lending process, but during the 3rd cycle, the collectors find it hard to collect the loans

and some of the clients will be “missing-in-action”. The failure of paying during the 3 rd

cycle resulted to bad accounts and the company can no longer do anything about it.

Another behavior that the clients in Trinity International are misbehaving was that, they

are good loan payers, and they have also finished all the cycles but these clients did not

come back for another transactions and it has been made for a short period of time.
SWOT Analysis

The researchers wanted to emphasize the current performance of Trinity

International Credit solutions by identifying the organization’s Strengths, Weaknesses,

Opportunities, and Threats.

STRENGTHS WEAKNESSES

 No other charges – Trinity has no  Poor facilities – collectors in

other charges like Service Charge Trinity has not being grant brand

Processing Fee. new transportation vehicles.

 Quick Processing – the  Modernization – Trinity has not

transaction of processing loan by yet been engaged into social

clients does not need to come media or other online

back for another processing communications.

transaction.  Lack of Employee – Trinity is

 Wide Area of Concentration – having a problem when it comes to

Trinity has been dealing with their choosing an employee because

clients in 9 municipalities of most of the applicants has bad

Pangasinan and counting in just a records on their previous

duration of 2 years. companies.

 Less Balance – If a client has a

difficulty in paying his/her current

balance based on the said due

 date, Trinity will offer the less

balance system in order for them

to renew their accounts.

OPPORTUNITIES THREATS

 Large Market Size – as small  No Penalties – Trinity

newly formed businesses arise, International has not been putting

and every individual can get penalties to clients who has slow

engaged as a loan payer in moving accounts and overdue

different parts of Pangasinan, accounts. This might cause clients

Trinity International takes it as an to take paying their loans for

opportunity to reach a larger target granted.

audience.

 The World Wide Web – Trinity

International Credit Solution, being

in the business for two years with

enough market size, can gain

opportunities through the use of

online media in order to reach a

broader size of target market.

Conceptual Framework

There are several of theories concerning customer relationship management

especially that the sector of business concerns with properly dealing with your
customers. In the study, the researchers would like to know how influential

communication, location, efficiency of collection, and delivery of loan are when it comes

to building a lasting customer relationship.

COMMUNICATION

LOCATION

CUSTOMER RELATIONSHIP
MANAGEMENT
EFFICIENCY OF
COLLECTION

DELIVERY OF LOAN

Before knowing how influential these variables are, the researchers created a review of

related literature in connection to the History of Lending and Theories concerning

Customer Relationship Management in order to understand the problem better by

knowing the major roots of the subject matter.

History of Money Lending

According to the research, In the Middle Ages, the church forbade interest in all

instances because of the misapplication of the Biblical prohibition of charging interests

written in Leviticus 25:35-37 that says, “ 35If your brother becomes poor and cannot

maintain himself with you, you shall support him as though he were a stranger and a

sojourner, and he shall live with you.36Take no interest from him or profit, but fear you

God, that your brother may live beside you. 37You shall not lend him your money at

interest, nor give him your food for profit.” (The Holy Bible, ESV) but in contrast, the

Talmud, a Hebrew abbreviation of Shisha Sedarim or the “six orders”, created an

economic system in which loans could be converted into investments, so interest could

accrue from them, but still under the Christian interpretation, no credit must be possible.

The Jews become the bankers or “money lenders” but according to them,

“Bankers, at least one at a time, represented a term of honor”. They were forced by the

church and this was how the Jewish money lending worked: “The Count or Nobleman of

the town will loan money to the Jew, and the Jew in turn would loan money to the non-

Jewish peasants.” The Jew became the middleman, which was a very dangerous

position, when the peasants would have a hard time paying back, the Jews’ life would

be in danger because the nobleman would kill them if they failed to collect the money

(Wein, 2010).

Customer Relationship Management

Buttle and Maklan (2015) define CRM as the core business strategy that

integrates internal processes and functions, external networks, to create and deliver

value to targeted customers at a profit. It is grounded on high-quality customer-related

data and enabled by information technology. If CRM is about developing and

maintaining relationships with customers, it is important to have a clear understanding

of what a relationship looks like and how, if at all, it can be managed.

At present, a number of different conceptual understandings are associated with

the term “Customer Relationship Management (CRM)”. Their understanding range from

IT driven programs designed to optimize customer contact to comprehensive

approaches for the establishment and design of long-term relationships. The effort to

establish a meaningful relationship with the customer is a characteristic of this last

understanding (Barnes 2003).

According to Lehtinen (2007, p. 18) CRM came into being together with

development of marketing which gradually became more personal until it transformed

into direct customer marketing, also known as one-to-one marketing, which aims at

individual customers. Therefore CRM implementation requires companies to change

their view of marketing. Transactional (classical) marketing is becoming a thing of the

past and the new trend is relational marketing, defined by Dohnal (2002, p. 32) as: “A

process of identifying, establishing, maintaining, improving, and if necessary timely

termination of economic relations with customers and other concerned subjects for the

mutual benefit of all involved parties, which is achieved by mutual fulfilling of obligations

and values.”

Whereas, Kumar and Reinartz (2012) define CRM from a business strategy level,

CRM aims to gain a long-term competitive advantage by optimally delivering value and

satisfaction to the customer and extracting business value from the exchange. From this

standpoint, CRM is the strategic process of selecting customers that a firm can most
profitably serve and shaping interactions between a company and these customers. The

ultimate goal is to optimize the current and future value of customers for the company.

In order for any action in CRM to be successful it requires consistent data about

customers which will be accessible to every employee of a company. That is also highly

demanding on a technology providing CRM in a company. According to the authors and

critics, it would be too complex to explain how CRM functions. Buttle (2009, p. 3, 22)

calls this “types” of CRM, but other authors incline to a view by Dohnal (2002, p. 59) that

describes this as three parts of CRM application architecture: analytical, operative and

collaborative.

(Dohnal, 2002, p.63) The purposes of Analytical CRM are customer data

analysis, evaluation, modelling and prediction of customer behavior. The analytical

CRM can gather information using data mining (tool for data gathering), what services

they purchased right away and what they have purchased eventually. It can find

patterns in their behavior and propose next steps during up-selling or cross selling,

propose prices or even develop and propose new products. At some point, Analytical

CRM serves as a help during decision making e.g. manuals for employees working in

services concerned with how to react to certain customer’s behavior.

(Dohnal, 2002, p.60) The advantage of this Operative CRM being the possibility

to communicate with various employees using various channels but creating the feeling

that customer is being taken care of by just one person. It can also minimize the time

that the worker has to spend typing the information and administrating (the data is
shared). This allows the company to increase the efficiency of their employees work and

they are then able to serve more customers. All communication with the customer is

tracked and stored in the database and if necessary it is effectively provided to users

(workers).

And the last part of CRM function is the Collaborative CRM that enables all

companies along the distribution channel, as well as all departments in a company, to

work together and share information about customers (Dohnal, 2002, p. 63-64). The

goal of collaborative CRM then is maximum sharing of relevant information acquired by

all departments with the focus on increasing the quality of services provided to

customers. The ultimate outcome of this process should be an increase in customer’s

utility and his loyalty (Edwards, 2007, online).

For effective relationship management it is necessary for a company to not only

hold onto their perspective but also try to understand why it is beneficial for a customer

to establish a long term relation. Customer always cares primarily about satisfaction of

his needs. If a company wants to establish mutual long-term relationship it must offer

him something extra, some “reward” that will give him the desired value. The success

rate of company being able to satisfy this desired value represents the quality of CRM.

One hundred percent success rate is rarely achieved. However if the success rate in

“rewarding” is acceptable then the customer continues in the relationship.

Statement of the Problem

The main problem that the researchers wanted to study is about building lasting

customer relationship towards the clients of Trinity International Credit Solution.

In order to answer the main problem, the researchers formed the following

questions:

1. What is the profile of the respondents of Trinity International Credit Solution?

a. Sex

b. Age

c. Civil Status

d. Educational Attainment

e. Monthly Income

2. How influential are the factors affecting the sustainability of a lasting relationship

towards the clients of Trinity International Credit Solution:

a. Location

b. Delivery of Loan

c. Communication between the collector and client

d. Efficiency of collection

3. Does respondent’s sex identification affects the company’s relationship with

customers?

Researcher’s Hypothesis

Based from the references of the researchers, hypothesis was gathered.

 The variable: sex does not affect the company’s relationship with the

respondents.

Significance of the Study

Lending Institutions are one main source of business and life support of major

Filipino Citizens today and Trinity International Credit Solution are one of these

institutions that gives support to the Filipinos, especially in areas of Pangasinan while at

the same time, they are earning profits based on the interests that they are able to get.

The Lending Institution’s problem, which is building a long-term and lasting customer

relationship is very important to study and find its solutions because main source of

every Lending Institution’s profitability comes from the clients. It is very significant to

study for it will identify the areas in CRM that Trinity International fails to be done, in

addition to that, the said institution will be able to carefully identify and handle problems

towards their future long-term customers.

Definition of Terms

The following terms used were precisely defined by the researchers to enable a

more significant understanding on the terms being used all throughout the study.

Bad Accounts – These are accounts that failed to finish the whole duration of the loan

cycle process.

Borrowers – These are the clients in Trinity International Credit Solution.

Delivery Of Loan – One of the factors that will be studied as the effect of a short-term

relationship with the clients, this is defined by the researchers as to how the loans are

being delivered such as house-to-house, personal, transactional, etc.

Efficiency Of Collection – One of the factors that will be studied as the effect of a short-

term relationship with the clients. This is defined by the researchers as to how the loans

are being collected by the collectors.

Location – One of the factors that will be studied as the effect of a short-term

relationship with the clients. It is the area or the place where the establishment or the

lending institution resides.

Online references:

http://www.wisegeek.com/what-is-a-lending-institution.htm

https://www.theobjectivestandard.com/issues/2007-fall/morality-of-

moneylending/(HIS)

http://www.thirdeyecapital.com/news/our-insights/time-travelling/(HIS)

https://prezi.com/loukc7zhljm7/the-history-of-moneylending/

http://www.jewishhistory.org/the-rothschilds/

https://www.biblegateway.com/passage/?search=Leviticus+25%3A35-

37&version=ESV

https://books.google.com.ph/books?

id=mtBFK_ACbv8C&pg=PA561&lpg=PA561&dq=history+of+lending+in+the+Philippines

&source=bl&ots=3EyegVklt8&sig=DeDUwEgEfvtnQ_GxYa6RItd-
35g&hl=en&sa=X&ved=0CE8Q6AEwCGoVChMIl82D45fbxgIViS2ICh13QQXC#v=onep

age&q=history%20of%20lending%20in%20the%20Philippines&f=false

http://www.inc.com/karl-and-bill/5-step-primer-to-entering-new-markets.html

http://www.opf.slu.cz/aak/2011/04/heczkova.pdf

(CUSTOMER RELATIONSHIP MANAGEMENT – THEORY AND PRINCIPLES)

file:///C:/Users/SIS0N/Downloads/5140-17986-1-PB-1.pdf

(Customer Relationship Management: Related Theories, Challenges and

Application in Banking Sector)

Other References:

The Economics of Microfinance

By Beatriz Armendáriz de Aghion, Beatriz Armendariz, Jonathan Morduch

Microfinance Handbook: An Institutional and Financial Perspective

By Joanna Ledgerwood

Customer Relationship Management: Concept, Strategy, and Tools

By V. Kumar, Werner Reinartz

Customer Relationship Management: Concepts and Technologies

By Francis Buttle, Stan Maklan