The Crm Relationship And Interaction With Customers Marketing Essay

CRM projects are difficult to execute successfully. This is because of the wide range offactors influencing their success. Organisations tend to approach them as IT projects,neglecting the people and (business) process aspects. But without changing the way anbank works, in respect of its customer-facing activities, the chances of success areLimited. To make matters worse, CRM projects have to be set against a moving background of changes in technology, the organisation and its marketplace. This means they face conflicting demands to deliver short and long term benefits to the banks. All of these factors mean that it will take a long time to make CRM to work properly for banks.

Relationship’ exists between the customers and the bank. But because of various reasons and apprehensions like financial burdens, risk of failure, marketing inertia etc., many European banks are still following the traditional ways of marketing and only few banks are making attempts to adapt CRM. It is with this background, the researcher has made a modest attempt towards bring up ideas that will improving CRM in the European banks (Czech republic)

Chapter One

1.1 Introduction

Over the years, reviewed literature has argued that businesses across all sectors will have to change their approach to marketing, which should now be carried out through relationships, networks, and interactions (e.g., Day 2000; Grönroos 2000a; Gummesson 1999; Hunt 2000; Peck et al. 1999; Webster 2000). Such a marketing approach is very different from the more traditional one of marketing through 4Ps transactions (i.e., product, price, place, and promotion). The customer market is one of the many different markets that businesses need to consider with research suggesting that customer retention leads to increased market share and bigger profits (e.g., Buttle 1996; Fornell 1992; Hillier 1999; Rust, Zahorik, and Keiningham 1996). Customer relationship management (CRM) remains one of the basic vigorous aspects in achieving customer retention. commercial and financial sectors especially banks, insurance companies, and other service Providers has realize the importance of CRM and It’s potential to help them acquire new customers, retain existing ones and maximize Their lifetime value. Although the promises of how CRM can improve the performance of a business are many, the practical guidelines on how to design and implement CRM successfully are few, and practitioners have been struggling because of that. The role of the present research is to identify the problems and solutions associated to CRM and provide greater understanding of CRM practices. This indicates the need for an in-depth examination of such practices within an industry where customer relationships are a notable part of developing a competitive advantage (Price and Arnould 1998; Yin 1994). Single-industry studies are also useful for identifying universal organizational patterns and processes (Baum,Locke, and Smith 2001). This project analysed the recent experiences of a major European bank that implemented a CRM program.

1.2 Overview of CRM model

According to” parvatiyar and sheth 2000 ” CRM is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer. Brown 2000 states that “CRM has overtaken the market and it is revolutionizing marketing and reshaping entire business models. He equally state that ,We are on the verge of the most significant transformation in the business landscape Delivering pure Internet applications directly to browsers will empower a global workforce to know, to do, to measure, and to improve their jobs in support of a common, customer-oriented strategy. “This is the promise of CRM.”

CRM has become one of ‘the’ buzzwords for many organisations. A tiny proportion of a company’s customers will generate the bulk of its profits. Identifying, collecting and keeping these clients is the very essence of customer relationship management Ody (2000) offers three views of the concept of CRM.

The first is concerned with precision marketing the exact matching of a product or service with a customer’s requirement in order to secure sales.

The second relates to the notion of creating a single, coherent view of customers as commonly associated with call centres.

The third is focused on consumer databases with CRM driving investment into data warehouses.

This view shows CRM as a business theory, built around the simple premise that it pays to know about and look after customers.

1.3 The CRM relationship and interaction with customers

The new market approach has become an imperative for business to formulate their market activities to and to build relationship and networks and interactions with a number of different, but often equal important markets. CRM is said to be a business strategy to select and manage most valuable customer relations. Customers are the most valuable resource and heart of the business. The ability to access the customers can determine how well you understand and use this resource in the business goals and strategies. Business strategy is the proper application of the information which use the resources in the most efficient and economical manner. It is customer-centric business strategy with the goal of maximizing profitability, revenue and customer satisfaction.

One of the challenges faced by the successful business is to acquire customer satisfaction and developing CRM. While recruiting employees to give customer service there is tendency to concentrate more on functional expertise, technical competence and knowledge rather than interpersonal or communication skills. Client satisfaction levels have a reverse effect because of lack of right attitude.

In today’s competitive world it has become more important to maintain rich and fruitful relationships. CRM is a corporate level strategy focusing on creating and maintaining relationships with customers. CRM is a term not only used by the business organizations but also in any type of organizations to create a beneficial environment among the customers. This is a business approach that combines people, processes and technology to maximize the relation of an organization with all types of customers. It helps in understanding the customer better and according to the needs of the customer; the organization can effectively customize their products and services in order to retain the customers and also to increase customer’s loyalty and satisfaction. CRM has made himself a path to identify, acquire and retain customers who are the business’ greatest assets. CRM get the value out of customers by highly integrating sales, marketing and support efforts. By providing the means to manage and coordinate customer interactions, it technologically helps companies to maximize the value of every customer interaction and in turn drive improved corporate performance.it software application can enable effective CRM provided that an enterprise has the right leadership, strategy and culture. Commerce enabled CRM applications help the organizations to interact with customers through all media and channels. CRM products and services manage every point of contact with the customer to ensure that each customer gets the appropriate level of service and no sales opportunities are lost. An organization can improve the business processes and technology solutions around selling, marketing and service functions across all customer touch-point by implementing CRM strategy.

1.4 The CRM relationship and interaction with market

CRM leverages and amplifies customer base of an organization through efficient marketing. In fact CRM has brought up new dimensions in the field of marketing by significantly improving marketing functioning and execution. Intuitive CRM associated marketing strategies like direct marketing, web marketing, e-mail marketing etc. have been matured during the recent past. These marketing strategies are more promising as compared to the traditional ways on marketing as they help delivering higher-up performance and walloping business. They also help meliorating response rates in marketing campaigns, cut cost on promotions due to low asset values and provide higher scrutiny on organizational investments.

1.5 Aspects Of CRM Orientation In Marketing

Web Marketing With the growing popularity of web, customers are tending towards web marketing or web shopping. This has helped both customers and suppliers to transact in a real time environment irrespective of their locations. Web Marketing has contributed the following to market,

It is relatively very inexpensive as it reduces the cost for physically reaching to the target customers for interaction.

Suppliers can reach to more number of customers in lesser amount of time.

The online marketing campaigns can be easily tracked, traced, calculated and tested.

The selection process of any product or brand is simplified due to proven online research and analysis techniques.

Online marketing campaigns are more promotional as compared to manual campaigns.

Email Marketing:

Email marketing has turned out to be more efficacious and inexpensive as compared to mail or phone based marketing strategies. Email marketing is direct marketing which is data driven and leads to more accurate customer response and effective fulfillment of customer needs. More attractive features include newsletters, sending of eCoupons, eCards, provision of saving events into calendars etc.

Analyzing customers buying behavior online:CRM system provides a platform to analyze the customers buying behavior online. This interactive strategy provides great accuracy with high speed which includes profiling services furnishing elaborated bits of information regarding customers purchasing habits or behavior. Individualized analysis of this behavior also helps to identify to which product or brand the customers are more tended. For example an online selling website www.xyz.com can analyze the customers buying behavior by installing an in-house service with the help of a full-fledged CRM that checks what all products are being purchased by a particular customer and under which specific group they fall. This is achieved by personalized analyzing the buying history of customers in the past which predicts the future business with those customers also. This accomplishes to build a long-term relationship with customers by properly canvassing customer needs and resulting in customer satisfaction. Analyzing this particular buying behavior of customers online also helps to fix or change of marketing techniques or strategies to mould the system according to the future perspectives.

Forecasting future marketing strategies:Down the line marketing strategies keeps on changing according to the emotional behavioral change of customers. CRM market forecasting techniques help to understand this change through regression and statistical analysis of customer behavior online. These are some complex but more accurate analysis techniques provided by CRM system which are proved to be one of best marketing strategies. This innovative approach is carried out with greater risks but is believed to outturn astonishing rewards.

Building business impact models: It is important for an organization to have check on marketing performance regularly so that the techniques never deteriorate and always match to yield greater results. These CRM oriented models help in delivering accurate measurement of marketing performance throughout the organization and to do better every time.

These synergistic marketing strategies make a part of CRM system to develop high-end marketing business. Hence it is very important for an organization to incorporate them by carefully anticipating change, testing their performance and assembling the best possible combination of these strategies to meet the needs of the customers and maximize its marketing growth.

CRM FOR BANKS AND CREDITS

The Bank and Credit Management unions allow banks to better understand their customers and strengthen the customer relationship. The solution is based on the Microsoft Dynamics CRM platform and is tailored for retail banks, commercial banks, investment banks, credit unions and private bankers. This CRM solution provides banks with 360 degree relationship view of customers including checking/ savings accounts, transaction information, individual preferences and helps bankers strengthen the relationships with their customers

Bank Account & Customer Management on CRM

Bank account master with real-time bank balance and other transaction information

1,Bank account master with real-time bank balance and other transaction information

2, Native multi-currency support to transact with accounts in different currencies

CRM Multi-currency bank Accounts

Multi-currency bank accounts

Features

Record Bank Transactions including Branch and ATM Transactions including Account Opening, Deposits, Withdrawals, Account Closures

Record and Update Signature Type – Joint, Single, Any/ Either

Add, Delete Account Holders to a Bank Account. Record all history of past owners with active/inactive status

Ability to view and manage account owners for a bank account

Attach signatures recorded on an electronic signature pad to the customer for bank representatives to view .

Attach signatures recorded on an electronic signature pad to the customer for bank representatives to view

Attach signatures recorded on an electronic signature pad to the customer for bank representatives to view

Record Electronic Signatures on a customer record for verification. Signatures can be scanned in from a paper copy or automatically captured on an electronic signature pad.

RELATIONSHIP MANAGEMENT & MARKETING

Automatically classify customers into different preferred customer tiers based on bank balance and transaction history.

Automatically Recommend Financial Products based on past history and balances.

Organize various types of campaigns including mail, email, phone and event campaigns.

Run Tailored Marketing Campaigns for Customers. Track Responses of a campaign.

Marketing campaigns tracking outlook

Marketing campaigns for bank customers with ability to track success of each campaign

Relationship Management & Marketing

Automatically classify customers into different preferred customer tiers based on bank balance and transaction history.

Automatically Recommend Financial Products based on past history and balances.

Organize various types of campaigns including mail, email, phone and event campaigns.

Run Tailored Marketing Campaigns for Customers. Track Responses of a campaign

CUSTOMER PROFILE ANALYTICS AND REPORTS

Track average transaction size by customer segment

Track profitability of each customer

Advanced customer profile – contact preferences, product preferences for tailored marketing activities

Customer Service

CRM have target dates automatically predicted. Ability to track actual Vs. Target completion date

Customer service cases have target dates automatically predicted. Ability to track actual Vs. Target completion date

FEATURES

Accept Incoming cases via phone, fax, email and chat

Automatic Assignment of Cases to Queues or Customer Service Representatives (CSRs)

Automatic template-based responders for case acknowledgements, case resolution

Knowledge base to help with improving first contact resolutions (FCR) and reducing Turn-around time

System assigned target close date. Tracking of expected close date to actual close dates

Automatic escalation of cases if beyond expected close date

{Source bank management for dynamics CRM: ignify.com}

1.6 CRM IN BANKING

Banks are highly focusing on CRM for the last five years that is expected to continue (Foss, 2002). According to Foss (2002) most of the financial services industries are trying to use CRM techniques to achieve varieties of outcomes.

These areas are:

• Creating consumer-centric culture and organization;

• Securing customer relationships;

• Maximizing customer profitability

• Aligning effort and resource behind most valuable customer groups.

To implement strategies these aspects must be considered

• Communications and supplier – customer interactions through channels;

• Identifying sales prospects and opportunities;

• Supporting cross- and up-selling initiatives;

• Managing customer value by developing propositions aimed at different customer segments;

• Supporting channel management, pricing and migration. (Ibid)

According to foss(2002) It is equally necessary for banks to identify this four stages

1. Building the infrastructure and systems to deliver customer knowledge and understand customer profitability;

2. Aligning corporate resource behind customer value – developing segment management strategies to maximize customer profitability and satisfaction

3. Incorporating a market perspective into understanding of customer value, to avoid any possibly adverse effects and maintain customer relationships;

4. Integrating strategic planning and customer value management.

Foss pointed out that the four stages are usually sequential, but not always so. The bank would need a complete view of its customers across the various systems that contain their data. If the bank could track customer behaviour’s, it will help their staff to understand and predict customer future behaviours and preferences.

1.7 CRM Objectives in Banking Sector

The idea of CRM is that it helps businesses use technology and human resources gain insight into the behaviour of customers and the value of those customers. If it works as hoped, a business can: provide better customer service, make call centers more efficient, cross sell products more effectively, help sales staff close deals faster,

Simplify marketing and sales processes, discover new customers, and increase customer revenues. It doesn’t happen by simply buying software and installing it. For CRM to be truly effective an organization must first decide what kind of customer information it is looking for and it must decide what it intends to do with that

information. For example, many financial institutions keep track of customers’ life stages in order to market appropriate banking products like mortgages or IRAs to them at the right time to fit their needs. Next, the organization must look into all of the different ways information about customers comes into a business, where and how this data is stored and how it is currently used. One company, for instance, may interact with customers in a myriad of different ways including mail campaigns, Web sites, brick-and-mortar stores, call centres, mobile sales force staff and marketing and advertising efforts. Solid CRM systems link up each of these points. This collected data flows between operational systems (like sales and inventory systems) and analytical systems that can help sort through these records for patterns. Company analysts can then comb through the data to obtain a holistic view of each customer and pinpoint areas where better services are needed.

1.8 The Benefits of CRM

According to Newell (2000) the real value to a company lies in the value they create for their customers and in the value the customers deliver back to the company. Accordingly, it is important to mark that the value does not lie in more information and in more advanced technology. The value lies in the customer knowledge and in how the company uses that knowledge to manage their customer relationships. Knowledge is the sole of CRM. Unfortunately, few companies are transforming the information to customer knowledge and therefore they miss the opportunity to provide value to their customer. However, applied in the right way, CRM is the tool that contributes to profit. If companies are transforming the customer data into knowledge and then uses that knowledge to build relationships it will create loyalty, followed by profits (Newell, 2000).

1. Lower cost of recruiting customers: Customer recruitment cost will decrease and there will be savings in marketing, mailing, contact, follow-up, fulfillment, services, and so on (Newell, 2000)

2. No need to recruit so many customers to preserve a steady volume of business Increase in long-term customers’ relationship will ultimately minimize the need for new customer recruitment (Newell, 2000)

3. Reduced Costs of sales: Long-term customers are more responsive than the newer ones that will decrease the selling cost. As well as marketing campaign cost will also decrease due to familiarity with the distribution channels (Newell, 2000)

4. Higher customer Profitability Customer profitability will increase by higher customer wallet-startup-selling, cross-selling and follow-up sales and satisfied customer refers more customers (Newell, 2000)

5. Increased customer retention and loyalty: The retained or long-staying customer buys big quantities frequently. The customers initiatives increases bounding relationships and as a result- loyalty (Newell, 2000)

6. Evaluation of customer profitability: The Company evaluates which customers are profitable, going to be profitable in future and never profitable in future. The key to success in business is to discover economically beneficial customers, acquire them and never let them go (Newell, 2000).

According to Budhwani (2002) all the customers are not beneficial; if the customers are taking company’s time, energy and resources without generating enough business, they are dangerous customers. Newell (2000) describes that the company must use CRM where they can get good profitable customers.

{source: how banks manage CRM: http://epubl.ltu.se}

1.9 RESEARCH PROBLEM

Modern Marketing philosophy advocates the concept of CRM that creates customer delight. This applies to all sectors of Sales and Marketing includes the banking. In the banking field a unique ‘Relationship’ exists between the customers and the bank. But because of various reasons and apprehensions like financial burdens, risk of failure, marketing inertia etc., many banks are still following the traditional ways of marketing and only few banks are making attempts to adapt CRM. It is with this background, the researcher has made a modest attempt towards the idea that CRM can be adapted uniformly in the banking industry for betterment of Banking Services. The role of CRM is quite different and distinguishable to traditional type of Marketing CRM participate not only in Marketing but also in implementing the business as a strategy to acquire, grow and retain profitable customers with a goal of creating a sustainable competitive advantage. Particularly in banking sector, the role of CRM is very vital in leading the banks towards high level and volume of profits. So there is a need to study the role of CRM in development and promotion of banking sector through the side lines of the practices, problems and impact of the CRM on banking sector all the time.

1.91 OBJECTIVES OF THE STUDY

The main objective of the study is to examine the importance and how to improve CRM in European banks, and its impact on ‘Customer Satisfaction’ with a special reference to Czech republic. The other specific objectives of the study are:

1.To review the literature on the concept and use of CRM in banking sector.

2.To analyse the perception of customer on CRM as a tool of banking sector in retention of customers in general and European banks in particular.

3.To offer pertinent suggestions based on the findings of the study.

Chapter Two

2.0 Literature Review

Over the last few decades, technical evolution has highly affected the banking industry. For more than 200 years, banks were using branch based operations. Since the 1980s, things have been really changing with the advent of multiple technologies and applications. Different organisations got affected from this revolution;the banking industry is one of it (Sherif, 2002).

In this technology revolution, technology based remote access delivery channels and payment systems surfaced. ATM displaced cashier tellers, telephone represented by call centers replaced the bank branch, internet replaced the mail, credit cards and electronic cash replaced traditional cash transactions, and interactive television will replace face-to-face transactions (Sherif, 2002). In recent years, banks have moved towards marketing orientation and the adoption of relationship banking principles. The key motivators for embracing marketing principles were the competitive pressure that arose from the deregulation of the financial services market particularly in Europe. This essentially exposed clearing banks and the retail banking market to increased competition and led to a blurring of boundaries in many traditional product markets (Durkin, 2004). The bank would need a complete view of its customers across the various systems that contain their data. If the bank could track customer behaviour, executives can have a better understanding, a predicative future behaviour and customer preferences. The data and applications can help the bank to manage its customer relationship to continue to grow and evolve (Dyche, 2001). According to Stone et al. (2002) most sectors of the financial services industry are trying to use CRM techniques to achieve a variety of outcomes.

In this literature, the main difference among the definitions of CRM are technological and relationship aspects of CRM. The phrase CRM appeared in the literature after the evolution in the relationship marketing philosophy. Berry (1983) defined relationship marketing as attracting, maintaining and enhancing the customers’ relationships in multi-service organisation. After a few decades, the evolution in relationship marketing philosophy changed the word relationship marketing to CRM.According to Brown (2000) CRM is a process of acquiring new customers, retaining the existence customers, and at the same time understands,anticipates and manages the needs of an organisation’s current and potential customers. Furthermore, Mylonakis (2009) described CRM as an innovative process to create a long term relationship and gaining trust.

CRM in financial service industry is a cyclical process which starts with definition of customer actions (Panda, 2003). CRM is fundamental to building a customer-centric

organisation. CRM is a key element that allows a bank to develop its customer base and sales capacity. The goal of CRM is to manage all aspects of customer interactions in a manner that enables the organisation to maximise profitability from every customer. Panda (2003) on his own describe that customer expectations are difficult to manage but are often the cause of dissonance which results in loss of existing customer base. So understanding of customer expectations with regard to service delivery levels and product quality is essential for establishing a long term symbolic value relationship. From the foregoing, it can be said that the purpose of CRM is to bring about Customer Focused Services (Gummesson, 1987; Gronroos, 1990; Varki) Information and Communication Technology, Complaints Management (Wilke 1994; Ingram,1996; O’marley and Tynan, 2000) High Quality Service (Khandwalla, 1995; Eisingerich and Bell, 2006), Timeliness in Service Delivery, Friendliness of Employees (Reinatz and Kumar, 2003), Ease of Opening Account and Competitive Charges in order to enhance organisational performance as indicated by such variables as Customer Satisfaction (Morgan and Hunt, 1994; Naidu etal., 1999), Customer Retention (Dick and Basu, 1994; Morgan and Hunt, 1994; Reichheld, 1996), increase in number of customers (Groonroos, 1990), and increased net profit (Khandwalla, 1995; Page et al., 2006). The organisational performance is enhanced because marketing efficiency is achieved due to the cooperative and collaborative processes (Sheth and Sisodia, 1995) introduced by CRM which helps in reducing transaction costs and overall development costs for the company. These brings about two important processes of proactive customer business development and building partnering relationships with the most important customers (Chitanya, 2005) and eventually leads to superior mutual value creation between the organisation and the customer. Further, a clear vision of CRM along with appropriate strategies if applies in banking sectors found out that beneficial in maintaining the customer service quality, customer satisfaction and customer retention which ultimately leads to the growth of the organisation and profitability (Bansal and Sharma, 2008). Girdhar (2009) observed that by satisfying the internal customers and building good relationship with them, the relationship with the external customers can also be retained and satisfied by the banks. Kumar & Rajesh (2009) reveals that any bank that wishes to either grow in size of its banking operation or improve its profitability must consider the challenges affecting its customer relationship.

2.1 Discussion And Argument For The Service Quality And CRM Practices.

The challenge before the banks is not only to obtain updated information for each customer, but also to use the information to determine the best time to offer the most relevant products (Lau etal., 2003). It is also important to understand that if customers bring in profits for the bank, it becomes imperative for the bank to provide excellent services to those customers, otherwise they switch to other banks (Ray, 2007). Service quality in banking implies consistently anticipating and satisfying the needs and expectations of customers. Parasuraman et al. (1985) also hold the view that high quality service gives credibility to the field sales force and advertising, stimulates favourable word-of-mouth communications, enhances customers’ perception of value, and boosts the morale and loyalty of employees and customers alike. Puccinelli (1999) looks the financial services industry as entering a new era where personal attention is decreasing because the institutions are using technology to replace human contact in many application areas. Over the last few decades, technical evolution has highly affected the banking industry (Sherif,2002). In today’s competitive banking industry, customers have to make a choice among various service providers by making a trade-off between relationships and economies, trust and products, or service and efficiency (Sachdev et al., 2004). Roger Hallowell (1996) conducted a research on customer satisfaction, loyalty, and profitability and found that as compared to public sector, private sector bank customers’ level of satisfaction is comparatively higher. CRM is a key to create a superior customer experience. It manages the customer relationship by creating a clear understanding (Know),by developing services and products based on the added value for target groups (Target), then enabling the actual sale and delivery of services and products through the selected channels (Sell), and developing long term profitable relationships with customers after sales services (Service) (Hussain, et.al., 2009). Many researchers have been done in various industries especially in the banking sector that focussing on customer oriented services (Ndubisi et al., 2007;