Beruflich Dokumente
Kultur Dokumente
ID NO.: CBASN. 24
IMS, Ghaziabad
ACKNOWLEDGMENT
Any assignment puts to litmus test of an individual knowledge credibility or experience and thus sole
efforts of an individual are not sufficient to accomplish the desire successful completion of a project
involve interest and effort of many people and so this becomes obligatory on the part to record our thanks
to those who helped us out in the successful completion of our project.
Life is a process of accumulating and discharging debts, not all of those can be measured. We cannot hope
to discharge them with simple words of thanks but we can certainly acknowledge them.
At this level of understanding it is often difficult to comprehend and assimilate a wide spectrum of
knowledge without proper guidance and advice. Hence would thank to Mr. Sanjeev Mishra (Branch
Manager, ICICI) and Mr. Satish Jha (Branch Manager,HDFC) for there kind and supportive nature,
without with this assignment can not have been completed this way. I would like to take this opportunity
to express our Heartfelt Gratitude to Respected Dr. Urvashi Makkar, PGDM, IMS, Ghaziabad , for her
round the clock Enthusiastic Support, Noble Guidance and Encouragement, which made this assignment
successful. I are extremely thankful to her for making this project worthful.
EXECUTIVE SUMMARY
The intense competition which banks have come to face, both as a consequence of growth of non-banking
financial institutions as well as securitization has created the fear of high risk and has increased the
attention towards Customer Relationship Management.
The assignment requires studying and analyzing the implementation process of CRM in a bank. The
assignment requires a detailed study of Process Involved in Planning of Customer Relationship
Management and Need for Customer Relationship Management. The task also comprises of making
things clear with the help of corporate examples under the heading of Understanding Business Process
These two banks have been selected randomly as per the convenience of the student. The banks are ICICI
Bank and HDFC Bank.
TABLE OF CONTENTS
i) Certificate …………………………………………………………………...…….…… I
ii) Acknowledgment ………………………………………………………………..……. II
iii) Executive Summary …………………………………………………………….….… III
Chapter 1: Introduction ………………………………………………..……….……...….1-3
1.3Objective of CRM
Chapter 7: Analysis………………………….…………………………………………….17
CHAPTER:1 INTRODUCTION
1.1 Customer Relationship Management: The Concept
Customer Relationship Management or CRM is the establishment, development, maintenance and
optimization of long-term mutually valuable relationships between consumers and the organizations. It
focuses on understanding the needs and desires of the customers and is achieved by placing these needs at
the heart of the business by integrating them with the organization's strategy, people, technology and
business processes.
The core theme of all CRM and relationship marketing perspectives is its focus on co-operative and
collaborative relationships between the firm and its customers, and/or other marketing actors.
An important facet of CRM is “customer selectivity”. As several research studies have shown not all
customers are equally profitable (In fact in some cases 80% of the sales come through 20% of the
customers). The company must therefore be selective and tailor its program and marketing efforts by
segmenting and selecting appropriate customers for individual marketing programs. By reducing
customer defection (by as little as 5%) will result in increase in profits by 25% to 85% depending from
industry to industry.
For successful implementation of CRM, understanding the customer is very important. A customers’
reaction to a cellular company operator may be quite different as compared to a car dealer. Besides for the
same product or the service not all customers can be treated alike and CRM needs to differentiate between
a high value customer and a low value customer.
What during CRM an enterprise needs to understand while differentiating customers is:
• Differentiating Offerings
• Low value customer requiring high value customer offerings
• Low value customer with potential to become high value in near future
• High value customer requiring high value service
• High value customer requiring low value service
• Keeping Existing Customers
Grading customers from very satisfied to very disappoint should help the organization in improving
its customer satisfaction levels and scores. As the satisfaction level for each customer improves so
shall the customer retention with the organization.
Company has to invest in terms of its product and service offerings to its customers. It has to innovate
and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty
curve. Referral sales invariably are low cost high margin sales.
• CRM aims at integrating all business strategies that places the customer at the centre of a business
consciousness.
According to a research by Reichheld and Sasser in the Harvard Business Review, 5% increase in
customer retention can increase profitability by 35% in banking business, 50% in insurance and
brokerage, and 125% in the consumer credit card market. Therefore, banks are now stressing on retaining
customers and increasing market share.
• Incorporating Service Level Management (ITIL) principles into the CRM role
• Improving client recognition of the CRM function and how to leverage the role most effectively
• Keeping pace with the rapid pace of technology change and how it can transform service delivery
for clients
CHAPTER:2 OBJECTIVE OF THE PROJECT
1) To Understand the significance of Customer Relationship Management and the processes involved
in doing so.
2) To identify the requirements of Customer Relationship Management
3) To Study the Customer Relationship Management methodologies and its different aspects in
industry (Banking Industry to be considered).
CHAPTER:3 METHODOLOGY
Primary as well as Secondary source has been used for study. Primary data has been collected with the
help of telephonic conversation with the bank managers of ICICI and HDFC separately. Secondary data
has been collected from different websites, the links are been given in the bibliography section.
Sample Size: 2
Type of study: Exploratory
Further with the help of the study done some recommendations and suggestions are been given.
CHAPTER :4 PROCESS INVOLVED IN PLANNING OF CRM
4.1 CRM Formation Process
In the formation process, three important decision areas relate to defining the purpose (or objectives) of
engaging in CRM, selecting parties (or customer partners) for appropriate CRM programs and developing
programs (or relational activity schemes) for relationship engagement with the customer.
• CRM Purpose
The overall purpose of CRM is to improve marketing productivity and enhance value for parties
in involved in the relationship. By seeking and achieving operational goals, such as lower
distribution costs, streamlining order processing and inventory management, reducing the burden
of excessive customer acquisition cost, and through customer retention economics, firms could
achieve greater marketing efficiencies. It can enhance marketing effectiveness by carefully
selecting, customers for its various programs, individualizing and personalizing their market
offerings to anticipate and serve the emerging needs of individual customer, building customer
loyalty and commitment, partnering to enter new markets and develop new products, and
redefining the competitive playing field for their company.
Thus, stating the objectives and defining the purpose of CRM in a company helps clarify the
nature of CRM programs and activities that ought to be performed by the partners. Defining the
purpose would also help in identifying suitable relationship partners who have necessary
expectations and capabilities to fulfill mutual goals. It will further help in evaluating CRM
performance by comparing results achieved against objectives. These objectives could be
specified as financial goals, marketing goals, strategic goals, operational goals, and general goals.
• Relational Parties
In the Initial phase, a company has to decide which customer type and specific customers or
customer groups will be the focus of their CRM activities.
• CRM Programs
A careful review of literature and observation of corporate practices suggest that there are three
types of CRM programs: continuity marketing; one-to-one marketing; and, partnering programs.
These take different forms depending on whether they are meant for end-consumers, distributor
consumers, or business-to-business customers.
Table 1 presents various types of CRM programs developed for different types of customers.
• One-to-one Marketing
Meeting and satisfying each customer’s need uniquely and individually. In the mass markets
individualized information on customers is now possible at low costs due to the rapid
development in the information technology and due to availability of scalable data warehouses
and data mining products. By using online information and databases on individual customer
interactions, marketers aim to fulfill the unique needs of each mass-market customer. Information
on individual customers is utilized to develop frequency marketing, interactive marketing, and
after marketing programs in order to develop relationship with high-yielding customers. In the
context of business-to-business markets, individual marketing has been in place for quite some
time. Known as Key Account Management Program, here marketers appoint customer teams to
husband the company resources according to individual customer needs.
• Partnering Programs
The third type of CRM programs is partnering relationships between customer and marketers to
serve end user needs. In the mass markets, two types of partnering programs are most common:
co-branding and affinity partnering.
Without a proper performance metrics to evaluate CRM efforts, it would be hard to make objective
decisions regarding continuation, modification, enhancement, or termination of CRM programs.
If co-operative and collaborative relationship with the customers is treated as an intangible asset of the
firm, its economic value ads can be assessed using discounted future cash flows estimates. Here the term
relationship equity comes in where you measure the intangible assets of the firm.
Another global measure used by firms to monitor CRM performance is the measurement of relationship
satisfaction. By measuring relationship satisfaction, one could estimate the propensity of either party’s
inclination to continue or terminate the relationship. Such propensity could also be indirectly measured by
measuring customer loyalty.
4.4 CRM Implementation Issues
One of the most interesting aspects of CRM development is the multitude of customer interfaces that a
company has to manage in today’s context. Until recently, a company’s direct interface with the
customers, if any was primarily through sales people or service agents. In today’s environment most
companies interface with their customers through a variety of channels including sales people, service
personnel, call centre, Internet websites, marketing departments, fulfillment houses, market and business
development agents, etc. For large customers it also includes cross-functional teams that may include
personnel from various functional departments. While each of these units could operate independently,
they still need to share information about individual customers and their interactions with the company on
a real time basis. For example, a customer who just placed an order on the Internet and subsequently calls
the call centre for order verification expects the call centre staff to know the details of his or her order
history. Similarly a customer approached by a sales person unaware that she has recently complained
about dissatisfactory customer service, is not likely to be treated kindly by the customer.
Therefore effective CRM requires a front-line information system that shares relevant customer
information across all interface units. Relational databases, data warehousing and data mining tools are
thus very valuable for CRM systems and solutions.
However, the challenge is to develop and integrated CRM platform that collects relevant data input at
each customer interface and simultaneously provides knowledge output about the strategy and tactics
suitable to win customer loyalty and support. If a call centre personnel cannot identify or differentiate a
high value customer and does not know what to up-sell or cross sell to him then it would be a tremendous
loss of opportunity for the company. Although most CRM software solutions based on relational
databases are helping share customer information, they still do not provide knowledge output to the front
line personnel. As shown in Figure.6, CRM solutions platform needs to be based on interactive
technology and processes. It should assist the company in developing and enhancing customer
interactions and one-to-one marketing through the help of suitable intelligent agents that help develop
front-line relationship with customers. Such a system would identify appropriate data inputs at each
customer interaction site and use analytical platforms to generate appropriate knowledge output for front-
line staff during customer interactions.
In addition, implementation tools to support interactive solutions for customer profitability analysis,
customer segmentation, demand generation, account planning, opportunity management, contact
management, integrated marketing communication, customer care strategies, customer problem solving,
virtual team management of large global accounts, and measuring CRM performance would be the next
level of solution sought by most enterprises.
Since CRM implementation comprises a significant information technology (IT) component, these
companies have handed over the responsibility of CRM implementation to information technology
departments. They are focused on simply installing CRM software solutions without a CRM strategy or
program in place. This leads to creating an operational tool within the company, but the usability and
effectiveness in producing desirable results from such tools is limited. CRM tools would be valuable
when they are used to identify and differentiate individual customers and to generate individualized offer
and fulfill customized solutions. The lack of CRM strategy or CRM programs would leave the front-line
people without any knowledge of what they should be doing with the additional customer information
that they now have access to. For those who apply themselves and develop improvised solutions, it could
backfire as ad hoc solutions could cause unintended deterioration in customer relationships. Appropriate
strategy and excellent implementation are both needed for obtaining successful results.
From a corporate implementation point of view, CRM should not be misunderstood to simply mean a
software solutions implementation project.
Information Requirements of an Effective CRM Solution
The employees of a firm employing CRM would require rich information about their firm and customer
base including:
• Growth: Over time, retail bank customers tend to increase their holding of the other products from
across the range of financial products / services available.
• Cross-Sell: The longer a relationship continues; the better a bank can understand the customer and
his/her needs & preferences, and so greater the opportunity to tailor products and services and cross-sell
the product / service range.
• Retention and cost reduction: Customers in long-term relationships are more comfortable with the
service, the organization, methods and procedures. This helps reduce operating cost and costs arising out
of customer error. According to a research by Reichheld and Sasser in the Harvard Business Review, 5%
increase in customer retention can increase
profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer
credit card market.
Therefore, banks are now stressing on retaining customers and increasing market share.
Private Banks have traditionally viewed themselves as exceedingly 'Customer Centric' offering what they
believe to be highly personalized services to the High Net Worth Customers. However, changes in the
customer behavior and accumulation of wealth are resulting in the needs of HNW customers becoming
more diverse and complex in terms of the sorts of products they want, the channels through which they
want to access them and the associated range of advice.
Technical solutions deployed by banks today are flexible, user-friendly and meant to facilitate specific
workflow and requirements in implementation processes. In order to simplify lives, banks have begun to
implement end-to-end technologies through all departments with the intention of removing human error
from processes. Previously existing manual environments could not have been adequate for future
visions, growth plans and strategies.
Private Banks have traditionally viewed themselves as exceedingly 'Customer Centric' offering what they
believe to be highly personalized services to the High Net Worth Customers.
However, changes in the customer behavior and accumulation of wealth are resulting in the needs of
HNW customers becoming more diverse and complex in terms of the sorts of products they want, the
channels through which they want to access them and the associated range of advice. The wealthier the
customers, the more demanding they are - and the clients expect more and more from their banks.
Competition for "Supremely elite" is increasing.
ICICI Bank’s CRM capability is built on a “Teradata” data warehouse that integrates data from multiple
sources, including the Oracle database and various flat files. The system provides users with information
about each customer’s checking accounts, fixed deposits, credit cards, and other financial information.
The bank has taken on the end-to-end proposition of SAS for enterprise intelligence, which offers a
credible integrated approach to analytics, including data detection, data cleansing, data preparation, event
detection, reporting and business intelligence, and campaign analysis. The bank estimates that it is able to
track more than 1,200 parameters concerning demographics, transactions made, channel usage, and
product relationships.
The bank collects all the information about the customers for processing. ICICI bank has mainly 4
service offerings like, loan account, saving account, current account and fixed deposits. Moreover,
the bank has many customers in each category. So, they collect the data on one server and thus the
company gets the personalized information on each customer by asking them to fill the
information in customer application form.
After the collection of the personalized information on every customer, the department checks out
the value of the relationship with each and every customer and find out customer’s wants and
needs so as to offer him the customized product.
After deciding the value of the customer the company offers him the customized product. They
also practice cross-selling. Cross – selling refers to offering another product from the service
offering of the bank to the customer which he has not gone for. For example, if customer has
saving account with the bank then we offer him loan, insurance and other investments.
The last approach of CRM according to ICICI bank is that they try to convert the prospective
customer into a true customer. Right from the moment the inquiry comes, they follow- up the
customer and then make him to come to the bank occasionally and then regularly.
The Processes for Delivering CRM
The tools and the processes are as follow –
• Cross – selling
It refers to offering another product from the service offering of the bank to the customer which he has
not gone for. This depends on the value of the customer to the bank. It is not offered to every customer.
It depends on how loyal the customer is to the bank. The more business he gives to the bank, the more
are his chances of being special services offered.
• Feedback forms
The bank distributes feedback forms at all its branches. The customer feedbacks on the service,
technology used, employee behavior and promptness in solving customer’s problems, are taken and
they are analyzed.
For understanding the CRM model and activities of ICICI Bank, Mr. Sanjeev, one of the officials of
Darbhanga branch of ICICI Bank was talked with twice on 20th & 22th July, 2009. The findings are-
• The CRM model has mainly two parts - Walk-ins in branch and Call centers.
• Finacle is used by ICICI bank to store data, record transactions and update on a daily basis in all
branches.
• The customers either come to branches for their queries and other help where personal/ one-to-one
interaction is required or they call at call centers to solve their queries.
• The profiling of the walk-ins is done and the details are recorded or updated using Finacle
software.
• The CRM has helped in solving the problems of customers as well as banks. It has improved
efficiency and productivity of Bank officials, reduced time in problem solving and query handling.
• While choosing the software for CRM activities cost was a major criterion, quality was also
considered.
• Training was required by the officials and was parted with them. No information regarding the
cost of the software, training cost, training period was shared.
• It has helped in generating more revenues and profits and is cost effective.
• The feedback of the customers as well as the employees of the bank was positive.
HDFC Bank Ltd. is a commercial bank of India, incorporated in August 1994, after the Reserve Bank of
India allowed establishing private sector banks. The Bank was promoted by the Housing Development
Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has
1,500 branches and over 2,890 ATMs, in 528 cities in India, and all branches of the bank are linked on an
online real-time basis.
HDFC Bank uses iFlex's Microbanker and Finware for its core banking operations. It plans to transfer to
their new ``Universal Banking Services'' package as soon as the acceptance tests currently under way are
completed. The bank also uses their Internet banking software.
For cash management, the bank uses a package from a Pune company called CashTech. The bank’s
Depository systems run on software provided by Mumbai-based Kalpataru. For loans, bank uses the
Nucleus Software.
To provide round-the-clock service and support to its customers, HDFC Bank has Unix-based systems
from Sun Microsystems as hosts for its banking software. It is in the process of moving the application to
a mainframe-class UNIX machine (the E10000 from Sun) in the near future.
CHAPTER :7 ANALYSIS
• CRM aims to provide organizational effectiveness by reducing sales cycle and selling cost,
identifying markets and channels for expansion, and improving customer value, satisfaction,
profitability, and retention.
• While choosing CRM software, the COST is one of the important factors. The quality,
customizability, and flexibility of the software are few other factors considered.
• An efficient and effective CRM model is one which answers what the different customer segments
are, who more likely to respond to a given offer is, which customers are the bank likely to lose,
which customer is most likely to default on credit cards, what the risk associated with this loan
applicant is.
• The data warehouse is the first step in building an effective customer relationship management
(CRM) solution that will help banks such to overcome the danger of becoming increasingly
impersonal as business grows and customers are reduced to PIN numbers. All new private banks
are aware of this and are now putting in place the systems that will enable them to focus on
individuals.
In the private sector both ICICI Bank and HDFC Bank have put in place the building blocks for an
elaborate CRM solution. UTI Bank has implemented a CRM software with respect to its priority
banking offering for its high net worth clients, where the software carries out profiling and
analysis, contact management, data analysis and cross-selling.
• In every organization, for successful implementation of CRM Training is provided. The cost of
training provided forms a small percentage of total cost. Generally, Banks prefer to provide
training by Train the trainer method. In the banking industry, generally, no resistance from the
employees is faced.
• The biggest advantage that private banks brought to customers was anywhere-anytime-banking.
Customers no longer needed to dash out during lunch hour to queue up at counters to withdraw
money. But because of a large number of products like debit cards, demat accounts, loans and
credit cards an efficient effective CRM is required.
• The Banks use both SAAS as well as the Ownership Model. They use the open and also the closed
model.
• The software is implemented in phases and it takes months for the complete implementation of the
CRM. The cost of the software depends on the company and the industry. For example, SFA is Rs.
2000 to Rs. 3000 per person per year.
CHAPTER:8 CONCLUSION
Customer relationship management is a multifaceted process, mediated by a set of information
technologies that focuses on creating two-way exchanges with customers so that firms have an intimate
knowledge of their needs, wants, and buying patterns. In this way, CRM is intended to help companies
understand, as well as anticipate, the needs of current and potential customers.
CRM is a sound business strategy to identify the bank’s most profitable customers and prospects, and
devotes time and attention to expanding account relationships with those customers through
individualized marketing, re-pricing, discretionary decision making, and customized service-all delivered
through the various sales channels that the bank uses.
CRM aims to provide organizational effectiveness by reducing sales cycle and selling cost, identifying
markets and channels for expansion, and improving customer value, satisfaction, profitability, and
retention.
CRM helps to acquire new customers, retain existing customers and maximize their lifetime value. This
close relationship with customers requires a strong coordination between IT and marketing departments
to provide a long-term retention of selected customers.
With the growth of private banks in India, the biggest advantage brought to customers was anywhere-
anytime-banking. But over time as these banks introduced a number of new products like debit cards, de-
mat accounts, loans and credit cards the problems began to show. While operating costs were low,
customer grievances were increasing day by day. The banks responded to this by moving over from a
product-centric to customer-centric approach by installing CRM solutions that enable them to recognize
customer needs beforehand.
Unlike an IT system which merely processes transactions, a CRM system keeps track of a database of
account holder and a historical database of various transactions these account holders have entered into.
This helped the customers to obtain information from any branch about any of the accounts he holds with
the bank without being passed around from counter to counter.
CRM helps in enhancing the customer’s ‘Life Time Value’ by efficiently servicing the customer’s needs.
Greater satisfaction leads to customer advocacy. At the very least this helps the bank acquire business
from the customer’s family. More importantly, for the bank CRM solution helps to map profitability of
every individual customer rather than an individual account. An employee manning the call centre can
now get a unified view of all the relationships that a customer has with the bank.
To conclude, a good CRM software for Banking industry will be one which:
• The software will help in selling more as there will be pressure on top and bottom
line.
• It will build up more trust of the customers in the bank. This will increase the
investments made by them in the bank. The CRM will go a long way in reposing
this faith.
CHAPTER:9 RECOMMENDATIONS
The recommendations are based on the basis of data collected through internet, Experts, Bank officials
and my colleagues:
• The three banks under study ICICI, HDFC and Axis Bank are using Finacle and SFA; CRM
NEXT; and only Finacle respectively. The banks, in general, are using Core Banking Software and
not CRM software. They should use software like SAP or PEOPLE SOFT which will help in
handling large volume of data and will integrate seamlessly with the IT and is customizable.
• They should work on capturing faith of the existing customers. They should work on growing the
existing customers. Better CRM software can help in growing the existing customers, increasing
the customer base, acquiring new customers.
• They need to implement a more effective CRM which requires a front-line information system
that shares relevant customer information across all interface units. Relational databases, data
warehousing and data mining tools are thus very valuable for CRM systems and solutions and
should be worked upon for better customer satisfaction and loyalty.
• They need to find and implement the implementation tools to support interactive solutions for
customer profitability analysis, customer segmentation, demand generation, account planning,
opportunity management, contact management, integrated marketing communication, customer
care strategies, customer problem solving, virtual team management of large global accounts, and
measuring CRM performance would be the next level of solution sought by most enterprises.
• Customize CRM to a high degree so that they are able to handle a rapidly scaling call workload
without any disruption in services and allow call centre agents to have an “always connected”
view of the database.
CHAPTER:10 LIMITAIONS OF THE STUDY
The report has been prepared on the basis of primary data collected by interactions with the bank officials
and experts of the industry and the secondary data. The report and my findings are subjected to the
following limitations:
• The information shared by the officials of the bank may not be up to the mark.
• The qualitative aspect of the benefits received by CRM implementation cannot be measured.
• The research conducted is confined to the Banks and their branches in Darbhanga(Bihar).
For understanding the financial implication of CRM in a bank, and whether it is advantageous for the
industry, only three banks are being studied.
CHAPTER:11 BIBLIOGRAPHY
Websites:
• www.icicibank.com
• www.wikipedia.com
• www.hdfcbank.com
• www.axis.com
• http://www.coolavenues.com/know/mktg/lochan_1.php3
• www.managementparadise.com
• http://infotech.indiatimes.com/Enterprise_IT/IT_Applications/CRM_Caring_about_you/arti
cleshow/2794494.cms
• http://www.infosys.com/finacle
• http:// www.crmguru.com
• http:// www.crmcommunity.com
• http:// www.crmassist.com
• http:// www.searchcrm.com
• http:// www.crm-forum.com
• http:// www.destinationcrm.com
• http:// www.realmarket.com
• www.moneycontrol.com
• http://www.icicibank.com/pfuser/aboutus/investorrelations/annualreport/pdf/2001-
2002/a_r2h2(45-68).pdf
• http://www.infosys.com/finacle/pdf/Banking-transformation-in-the-flat-world.pdf
• http://economictimes.indiatimes.com/articleshowarchive.cms?msid= 19700871
• http://www.expresscomputeronline.com/20060220/management02.shtml
• http://timesofindia.indiatimes.com/
• http://whitepapers.techrepublic.com
• www.techrepublic.com
• http://www.iex.com/case-studies/financial-services/bank-of-montreal.html
• http://i.i.com.com/cnwk.1d/html/itp/CRMTippitResourceGuide2.pdf
• http://search.techrepublic.com.com/search/bank+and+customer+relationship+management
+(crm).html
People are not Difficult, they are Different