Customer Relationship Management

CUSTOMER RELATIONSHIP MANAGEMENT IN BANKS
CHAPTER 1
INTRODUCTION
CRM stands for Customer Relationship Management. It is a process or
methodology used to learn more about customers' needs and behaviors in order
to develop stronger relationships with them. There are many technological
components to CRM, but thinking about CRM in primarily technological terms
is a mistake. The more useful way to think about CRM is as a process that will
help bring together lots of pieces of information about customers, sales,
marketing effectiveness, responsiveness and market trends.
CRM helps businesses use technology and human resources to gain
insight into the behavior of customers and the value of those customers.
Customer relationship management (CRM) consists of the processes a
company uses to track and organize its contacts with its current and prospective
customers. CRM software is used to support these processes; information about
customers and customer interactions can be entered, stored and accessed by
employees in different company departments. Typical CRM goals are to
improve services provided to customers, and to use customer contact
information for targeted marketing.
While the term CRM generally refers to a software-based approach to

handling customer relationships, most CRM software vendors stress that a
successful CRM effort requires a holistic approach. CRM initiatives often fail
because implementation was limited to software installation, without providing
the context, support and understanding for employees to learn, and take full
advantage of the information systems.CRM can be implemented without major
investments in software, but software is often necessary to explore the full
benefits of a CRM strategy.
Other problems occur when failing to think of sales as the output of a
process that itself needs to be studied and taken into account when planning
automation.
Bank or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay a sum of money upon the occurrence of
the insured individual's or individuals' death or other event, such as terminal
illness or critical illness. In return, the policy owner agrees to pay a stipulated
amount called a premium at regular intervals or in lump sums.
As with most bank policies, bank is a contract between the insurer and the
policy owner whereby a benefit is paid to the designated beneficiaries if an
insured event occurs which is covered by the policy.
The value for the policyholder is derived, not from an actual claim event,
rather it is the value derived from the 'peace of mind' experienced by the
policyholder, due to the negating of adverse financial consequences caused by
the death of the Life Assured.
Bank is a complex product where personalized serviceachieved
through an intimate knowledge of customers and their histories with an bank
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companyis critical to making sales. As bank options broaden and products

grow more complex, customers seek superior, personalized service more than
ever. With the repeal of the Glass-Steagal Act in 1999, bank companies face
increased competition from banks and brokerages. With the enactment of the
Patriot Act, bank companies need to ensure that they "know their customers."
The situation grows even more urgent when one considers the bad economy that
hurts investment income; as well as the extremely narrow window of time
wherein an bank call center representative, agent or broker holds a customer's
attentionand a valuable opportunity to cross-sell or up sell. It is at this precise
moment that these individuals have the chance to maximize these fleeting sales
opportunities.
To maintain competitive edge and viability, bank companies are focusing
intently on delivering superior customer service. A comprehensive customer
relationship management (CRM) strategy addresses three imperatives: Sum
providing a unified enterprise customer view; Sum retaining customers with
great services; and Sum controlling costs as the bank company in question
expands.
CHAPTER 2
MEANING & DEFINATION OF CRM IN BANKS
MEANING OF CRM
Customer Relationship Management is the establishment, development,
maintenance and optimization of long-term mutually valuable relationships
between consumers and the organizations. Successful customer relationship
management 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.
At the heart of a perfect CRM strategy is the creation of mutual value for all the
parties involved in the business process. It is about creating a sustainable
competitive advantage by being the best at understanding, communicating, and
delivering, and developing existing customer relationships in addition to
creating and keeping new customers.
DEFINITION OF CRM
Customer Relationship Management (CRM) is a co-ordinate approach to the
selling process allowing the various operational, customer contact and sales
promotional functions of an organization to function as a whole.
CHAPTER 3
CONCEPT OF CRM IN BANKS
The two points of the concept are:
Understand your customers' unique requirements.
Offer them the services and products over their lifetime that will maintain
or increase their profitability and retain them as your-customers.
These supporting strategies generally fall into three groupings:
analytical, marketing and operational. The analytical path focuses on
mining the data you have on your existing customers, and marrying that
data with external data when possible to develop a scoring index. This
index can then be reliably applied to individual customers to indicate
their level of profitability, tendency to remain a customer, and propensity
to acquire other products and services. At its simplest level this analysis
might move your view of existing customers into one of four following
segments:
Low Profit / High Retention High Profit / High Retention
Low Profit / Low Retention High Profit / Low Retention
The second supporting strategy centers around marketing and the
design of effective programs that will enhance your customer
relationships based on their unique requirements. In many companies,
this strategy represents a different marketing focus than the traditional
one of new customer acquisition. A plan for the High Profit/High
Retention customers, for example, might focus on retaining customers,
cross-selling them specific services and insulating them from
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competition. In contrast, a plan for the Low Profit/Low Retention

customers might be low maintenance with heavy emphasis on selfservice.
The third supporting strategy is operational. The focus here is to

develop the capabilities needed to execute the marketing plans.
Recognize that this is where most CRM initiatives have failed. Solid
analysis and well-designed plans cannot overcome the need to execute
effectively across a range of customer contact points. It also is important
to realize that developing an effective CRM operational capability is not
about technology alone. Success requires a tight integration of People,
Process and Technology.
So that is it our primer on CRM. How does such a simple concept get
confused? Easily! There is a gaggle of technology vendors labeling whatever
they have to offer as the "CRM solution." They are hoping the trend waveriders will sign the purchase order and ask questions later. To prevent your
organization from being caught in this wave, be sure you have a solid
CRM business strategy that first integrates analysis, marketing and operations.
Then demand that there be near-term benefit with real ROIs for each
project approved under that strategy.
E-CRM:E-CRM refers to the set of activities that enable a firm to utilize the power of
the Internet and the electronic medium to implement CRM. Firms all around
the world have realized the potential of the Internet as a medium for CRM and
have been actively pursuing E-CRM strategies.
The following statistics highlight the importance and potential of the e-CRM
industry.
General Motors (GM) receives about 100,000 emails from it customers,
every day.
The volume of customer related email traffic is so much that almost 42%
of the queries never get answered by the companies.
The Gartner group estimates that as of October 99, about 90% of the
firms are not equipped to handle customer e-mail with a probability of 0.9
A complete E-CRM architecture would comprise of the following components:
1.
Sales Force Automation (SFA)
2.
E-Mail Management System (EMS)
3.
Interactive Voice Response (IVR)
4.
Knowledge Management (KM)
5.
Call Centers
6.
Instant online querying through Chat
Managing the full range of the customer relationship involves two related
objectives
1. Provide the firm and its customer-dealing personnel, a complete singular

view of each and every customer
2. To provide the customer with the same singular uniform level of service in
every interaction with the company through every channel.
The above-mentioned proposition can be illustrated with a simple

example. A person dealing with a bank should be able to get the same level of
service whether he contacts the bank through phone, the Internet or in person.
This implies that all details about the person and his past transactions need to be
consistent and available vis--vis every channel.
CHAPTER 4
NEED & OBJECTIVES OF CRM IN BANKS
Need for CRM in Bank Sector
Bank CRM decreases the time required to make product changes

A holistic integrated customer view
Targeted marketing
Customer retention
Increased growth
Increased policy sales
Increased bank market share
CRM Bank integrates marketing with other operations
Efficient distribution channels are secured
CRM provides the chance to reduce operating expenses
It provides for more effective and efficient communication
It improves the response time
It increases customers satisfaction
Bank application queries/ claim status queries can be answered sooner
It reduces the time that is normally taken for printing
It decreases overall costs
BANK BUSINESS OBJECTIVES FROM CRM:

The following are some of the strategic objectives offered by the Sales
Applications in the CRM suite:
Increased Revenue
Focus your sales force on increasing your companys revenues through
better Information and better incentives to drive top line growth.
Through a CRM integrated solution, sales reps can access and share account
and contact management information throughout the enterprise, facilitating
team selling that will lead to closing more deals, faster. It also allows sales reps
to effectively target their selling efforts to focus on high-value deals and meet
revenue targets.
Closed-Loop Marketing
Improve marketing management and programs with a comprehensive
marketing system that supports planning, campaign management,
execution, Internet support and analysis.
Marketing Applications automates the entire marketing process from demand
creation to revenue recognition. Designed specifically for marketing
professionals, the application automatically collects campaign results and tracks
campaign effectiveness across different sales channels, by market segments, and
even individual customer results. This level of detail enables marketers to
reduce costs while increasing the effectiveness of their marketing efforts.
Better Information for Better Management
Implement highly focused, targeted campaigns with better returns on your
marketing investments.
Marketing applications are tightly integrated with the other applications of the
CRM suite as well as the ERP applications. This integration enables marketers
to tap into the wealth of data collected through every customer "touch" with
their company whether through field sales, a call center, or the Web. Without a
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dependence on simple demographics, marketers will be able to profile

customers based on any number of criteria including sales cycle, payment
preference, and purchase frequency, to tailor messages and campaigns with
better accuracy for highly focused, individualized marketing campaigns.
Expand Marketing Channels Through the Web
Utilize the power of the Internet to increase your marketing reach and
effectiveness.
In addition to supporting traditional marketing and demand creation channels
such as direct mail and tele-business, many vendors are enhancing the
integrated closed-loop marketing application through relationships with several
strategic third-party vendors. The combination of these applications will expand
the automation of the marketing planning and execution process over multiple
deployment channels and sales models, specifically through the Web. By
leveraging the Web as a channel, Marketing applications will help companies
capitalize on this rapidly expanding opportunity to reach a larger audience with
their marketing campaigns.
The objectives for Service Applications offered by a CRM suite are as follows
Service Increases Profitability
Create a profit center out of your service organization using operational
and customer information to reduce costs and generate more revenues.
Service application enables organizations to reduce costs by providing a
comprehensive closed loop support and service information management
system.
Its
comprehensive
resource
management
capabilities
enable
organizations route the calls to the right agent to reduce call resolution time. Its
enterprise wide customer management ability enables you to reduce billing time
with built-in integration between contracts, warranties, resource usage and the
billing system. Further, with interfaces to customer care, organizations can track
total customer contact history to increase customer knowledge and reduce
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redundancies and resolution time. Fast parts rotation enables reduced inventory
levels and therefore, reduced costs.
Service Helps organizations to Delight Customers
Provide enhanced customer care, service and customer information
management across your organization to improve customer satisfaction
and loyalty.
With an end-to-end Customer Care and Service Solution, Organizations can
achieve a full 360-degree view of their customer. This translates into better
response to customer's needs; an ability to extend proactive customer
management programs as well as has the information at your disposal to better
understand the customer. Service applications also track all product defect
information, which enables organizations to proactively manage customer
issues, so that they are well informed and can also accurately inform customers
of service issues. The built-in self-learning knowledge base enables companies
to leverage employee knowledge and achieve skills transfer, increasing
employee retention and reducing customer churn. Additionally, Service
Applications enables organizations customers to communicate with the
company though many different venues, web, call centers, and directly with
Field Representatives, offering customers flexibility in interacting with the
company. This integrated customer contact capability ensures that the
organizations customers receive consistent service and information, thus reduce
his need to turn to one of the competitors for new products or services.
Service Helps organizations Differentiate their Product
Distinguish business by offering service as a differentiator using multiple
channel communications with customers, full enterprise wide view of
customer information.
As products become commodities, the next purchase decision customers make
is increasingly based on either the quality of service or the perceived care they
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receive from the company. Service Applications by enabling both improved

product service, and customer care, help organizations provide their customers
with a positive experience in dealing with the company, maximizing the
likelihood of additional product purchases.
CHAPTER 5
BENEFITS & CHALLENGES
Benefits
1. Reduction in the cost of customer contacts.
2. Profitable and sustainable revenue growth.
Provide the scalability and flexibility demanded by e-business (The
unique ability to handle both the high volumes and data intensity associated
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with enterprise use and the high transaction rates and random usage peaks
associated with internet use).
Provide both dramatic improvements in the speed and ease of
deployments and a true blended application for customer care.
Help companies deliver the same consistent, personalized, high-quality
service across all interactions and all communication channels: web, email,
chat, voice over IP, phone and fax.
Help companies communicate with customers on a one-to-one basis
across the many diverse channels, capture data from all customers, and interpret
customer information into strategic business intelligence and apply it across
operations to better serve customer needs.
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CHALLENGES AND SOLUTIONS

Business Challenges:
Service is perhaps the last remaining way for a business to effectively

differentiate itself. Effective service involves managing each customer
interaction to ensure a consistent experience and an outcome that is in line with
each individual customers wants, needs, and expectationsas well as being in
line with the economics the business desires from a relationship with that
customer. The customer experience should also be consistent across all
interaction channels (such as the Internet, email, telephone, web-chat, fax, etc.)
and across all areas of the company a customer interacts with (sales, service,
marketing, etc.). Delivering these consistent focused experiences over time
builds customer satisfaction and loyalty that increases sales and profitability.
Solution:
Identify a unique situation of a customer;
Prescribe rules on how to treat and influence that situation;
Execute those rules consistently across all contact channels;
Measure the effectiveness of the program on that unique situation.
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The Technology Challenges:
Truly effective E-CRM solutions involve complex architectures, timeconsuming product selection and acquisition, and integration challenges to
existing and future investments. For example, todays multi-channel solution
involves email routing, web-chat, web-collaboration, web personalization,
intelligent call routing and contact management, to name just a few. Products
providing these capabilities take significant research and skill to integrate,
implement, maintain, and continuously upgrade when you consider the
software, servers, database, hardware, and telephone switches involved. Plus,
with new technology being developed every day, its very difficult to remain on
the leading edge, while continuously researching how new technologies will
complement and coexist with an existing architecture.
The Operational Challenges:

Businesses typically focus most of their energy and investment on management
resources to develop the required marketing and customer influence programs,
and the staff resources to execute those programs. For competitive advantage,
both these investments should typically remain in-house and strategic to the
business. The retention of key staff resources to communicate with your
customer base is a vital issue. A business has to consider many things as it
enters new markets, grows in an existing market, and attempts to retain its key
personnel who interact with customers. A multi-channel E-CRM solution
involves many players, including support skills for the products involved, and
any outside guidance and direction from integrators, product companies, and
management consultants. This operating complexity can cause problems in four
distinct areas:
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1. Accountabilityfrustration due to vendor finger-pointing when technical

problems surface because of the growing number of product vendors involved
in a solution. Businesses struggle to identify who is on point to manage the
complete operation, not just one or two elements of the solution.
2. Personneldifficulty in attracting, training, and retaining the key skills to
operate, change, and enhance the supporting technologies. Maintaining and
operating the technology requires a different mind-set than the individuals who
utilize their technical skills to develop and create the initial solution.
3. Business change managementthe inability to effectively add capacity and
the natural human apprehension to change from an existing environment.
Understanding when the solution will require the next wave of investment,
and that impact on all levels of people resources using the E-CRM solution.
4. Technical change managementdifficulty in properly staging, testing, and
designing changes to the technical solution and architecture. Adding technical
capabilities requires a unique discipline and management focus to reassure the
business that the new change will have little-to-no business interruption. Most
businesses have not yet placed management attention to this very key issue.
Since the technical world changes so rapidly, this must become part of the
operating and management culture of a business.
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FINANCIAL CHALLENGES
The categories of investment required creating, operating, and maintaining ECRM solutions are:
1. Production hardware and software;
2. Labor expenseoperating staff expense to support, change, and upgrade
the business use of the technology solution;
3. Test and staging hardware and software;
4. Maintenance expenseproduction and test environments;
5. IT research and development expenseto assess new enabling
technologies in customer service management and their impact on the
Current or planned business requirements.
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The Time Challenges:

Businesses are expecting to get results and measurement of the investments
made on their E-CRM investments. The business results are directly related to
the leverage an E-CRM solution gives themthe information and data about
customer behavior and the impact their resources and customer programs are
having across all key contact channels. Multi-channel E-CRM solutions can
take 12 to 15 months or even longer to deploy. When you factor in key required
initiativessuch as business strategy and requirements, business case, customer
experience design, product RFPs and acquisition, development of a test/staging
capability, integration to legacy systems, comprehensive testing, training, and
rolloutthe required solution takes too long through the eyes of key business
sponsors. The market must address this and provide for solutions and techniques
to deploy the required E-CRM architecture and its subsequent enhancements to
provide measurement and business benefit sooner.
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CHAPTER 6
CUSTOMER RELATIONSHIP LIFE CYCLE
Customer Relationship Management facilitates closed-loop customer
interactions through all phases of the customer relationship life cycle, including:
1. Customer Engagement
Marketing
2. Business Transaction
Planning
Order Acquisition
and
Campaign Management
Telemarketing
and
Internet
Lead
E-Selling
Opportunity Management
Telesales
Sales Activity and Contact
Field Sales
Management
Profitability Analysis
Segmentation,
One Step Buying and Selling
Product, and Service Profiling

Collaborative
and
Configuration
Generation
Customer
Pricing
Content
Management
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3. Order Fulfillment
4. Customer Service
Complete Order Life Cycle
Interaction Center
Process
Internet Customer Self-Service
Real-Time Availability Checks

Contract,
Billing,
Service Management
and
Claims Management
Financials Management
Field
Fulfillment Visibility and
Service
--
Mobile
Service
Order Tracking
21
Field Service -- Dispatch
CHAPTER 7
KEY REQUIREMENTS FOR CRM IN BANK
Some of the functional and technical requirements for CRM solutions are as
described below:
Business Intelligence and Analytical Capabilities
A CRM application contains vast amounts of information that pertain to an
organizations customers and prospects. This information needs to be leveraged
and analyzed by decision makers so that they can make more informed and
timely business decisions. This is possible only if CRM solutions have robust
business intelligence and analytical capabilities. This is a major requirement
primarily for marketing applications.
Unified Channels of Customer Interaction
This involves not only integrating the functional components of CRM solution
but also integrating these components across multiple channels so that the
customer interaction can be seamless, consistent and efficient.
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Web-based Functionality Support

Web-based functionality is essential for applications such as web self-service
and unassisted sales. Web is also a critical channel for e-business and is also
important from an infrastructure perspective. Users of CRM applications require
access to their applications, which is supported via standard web-browsers.
Moreover business logic and data are maintained centrally, thus facilitating the
deployment, maintenance, and upgrading of applications.
Centralized Repository for Customer Information
CRM solutions should work from a centralized repository so that current
customer information is available in real-time to all customer-facing employees.
Integrated Workflow
CRM solutions should have a strong workflow engine to ensure that crossfunctional tasks can be accomplished as dynamically and seamlessly as
possible.
Integrated with ERP applications
Integration must include low-level data synchronization as well as business
process integration so that the integrity of business rules can be maintained
across systems and workflow tasks can pass between the systems. CRM-to-ERP
integration also ensures that organizations can perform business intelligence
across systems.
5. CRM & TECHNOLOGY IN BANKS Maximize customer

satisfaction and maximize your bottom line.
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Over the last decade, too many organizations have assumed that their products
or services were so superior that customers would automatically keep coming
back for more. But in order to compete effectively in todays marketplace,
organizations must change their strategy to become more customer focused, not
product focused.
Customer Relationship Management (CRM) is the best way to integrate this
customer-facing approach throughout an organization. Aimed at understanding
and anticipating the needs of an organizations current and potential customers,
this innovative book shows how CRM links people, process, and technology to
optimize an enterprises revenue and profits by first providing maximum
customer satisfaction.
24
Covers developing a market-oriented strategy, innovation in products and

services, sales and channels transformation, customer relationship marketing,
and customer care.
25
CRM & TECHNOLOGY

The Internet has really opened up the prospects for one to one marketing
on a global scale.
Today several technologies are helping the ever-busy
consumer obtain more targeted assistance than ever before. The idea of mass
customization is at the heart of Customer Relationship Management. Every
CEO out there realizes or is in the process of realizing the importance of
customer needs to their business, and never before have their options been so
diverse. There are such things as intelligent agents, learning agents, negotiation
agents, chat rooms, FAQs pages, personalized web pages, help desks, call
centers, and, as we are all aware, automated emails and automated response
systems.
Today's CEO is bound to be a bit overwhelmed by his or her options with
respect to Customer Relationship Management. In fact, the options available
are so astounding, that several companies specialize in customer relationship
management alone. However, there is some basic theory upon which all of the
different software packages offered by all of these companies are founded:
customer loyalty, trust, and referrals. Loyalty is basically self-explanatory, and
it is the single most significant contributor to profitability. "Customer loyalty,
measured in repeat purchases and referrals, is the key driver of profitability for
online businesses, even more so than for offline companies, according to a
series of joint studies in online retail by Bain & Company and Mainspring. For
example, in apparel, the average repeat customer spent 67 percent more overall
in the third year of his or her shopping relationship with an online retail vendor
than in the first six months. And, over three years, customers referred by online
grocery shoppers spent an additional 75 percent of what the original shopper
spent." (Mind spring) "The study also found that the average online apparel
shopper was not profitable for the retailer until he or she had shopped at the site
26
four times. This implies that the retailer has to retain the customer for 12 months
in order to break even.
CHAPTER 8
27
Implementation & Strategies of CRM in Bank
Before embarking on a CRM implementation insurers need to:

Understand prospective policy holder requirements.
Understand what products and services will retain them and increase
profitability.
It is imperative that the objective behind the implementation is clearly
spelt out and understood. Without this it is almost impossible to proceed
further. Clarity of objectives both CRM and general organizational goals
is mandatory for Bank CRM success. It is only against this that the actual
results are marked. Goals although varying from company to company
should be realistic and benefit the firm in the log run. Establishment of
these goals has to be done after excessive scrutiny of company
requirements. The more clearly defined objectives are the more chance
your CRM implementation has of succeeding.
Organizations need to understand that the bank CRM implementation is
not merely about technology. CRM encompasses far more than mere
technology and transcends to the customer as well. Organizations need to
assimilate the fact that it is a combination of people, processes and
technology. Obliterating this fact will surely hamper the process.
Making the customer the focal point and understanding that it is about
meeting their needs will go a long way in ensuring success.
It is imperative that the entire organization realizes the importance of the
implantation and endorse it. It requires approval not only from top
management but individual employees as well need to give their support
28
Staff need to accept the fact that this will do them good and willingly give
off their best customer support effort.
Implementing in phases is always easier and far less time consuming as
well as being cost advantageous. There are always added advantageous
when the implementation is done in stages rather than as a onetime plan.
It facilitates the easy involvement of resources when done on a short term
basis, and makes easy the constant monitoring of results so that corrective
measures can be taken.
Adequate metrics need to be established if the organization wants to
succeed at its CRM bank implementation. Without this there will be no
benchmark against which performance can be measured.
It is imperative to train staff adequately in order to ensure that they are
equipped to deal with the CRM implementation. It is essential to have
productive staff in order to better customer service. Inexperienced staff
will undoubtedly give wrong responses to questions and yield wrong
customer service. It is important to see that staff maintains proper
customer service. Training staff is thus essential.
CRM manages to put the bank company in a position where it is able to
let staff know which customers are likely to leave and move to
competitors. This helps staff take the required steps to stop this from
happening and prevents the loss of valuable policy holders.
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STRATEGIES OF CRM
Strategy
Several CRM software packages are available, and they vary in their
approach to CRM. However, as mentioned above, CRM is not just a technology
but rather a comprehensive, customer-centric approach to an organization's
philosophy of dealing with its customers. This includes policies and processes,
front-of-house customer service, employee training, marketing, systems and
information management. Hence, it is important that any CRM implementation
considerations stretch beyond technology toward the broader organizational
requirements.
The objectives of a CRM strategy must consider a companys specific
situation and its customers' needs and expectations. Information gained through
CRM initiatives can support the development of marketing strategy by
developing the organization's knowledge in areas such as identifying customer
segments, improving customer retention, improving product offerings (by better
understanding customer needs), and by identifying the organization's most
profitable customers.
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CRM strategies can vary in size, complexity, and scope. Some companies
consider a CRM strategy only to focus on the management of a team of
salespeople. However, other CRM strategies can cover customer interaction
across the entire organization. Many commercial CRM software packages
provide features that serve the sales, marketing, event management, project
management, and finance industries.
From this perspective, CRM has for some time been seen to play an important
role in many sales process engineering efforts.
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CHAPTER 9
CHALLENGES FACED BY BANKS IN SUCCESSFUL
IMPLEMENTATION OF BANK
The most pervasive challenges to effective customer knowledge include:

The difficulty of obtaining a complete view of customers.
The need to move away from disjointed, standalone, and inconsistent
channels to provide a cohesive, multichannel offering.
The burden of disconnected legacy systems and disparate databases that
store client financial data.
The cost and complexity of meeting stringent government regulatory and
client security and privacy requirements.
The pressure on margins and growth prospects from increased competition.
The costs associated with retaining customers and developing customer
loyalty.
Although CRM can help banking institutions efficiently manage their
customers, many banks fail to meld the concept into the prevailing work
culture. But the high incidence of CRM failure has very little to do with the
CRM concept itself. Usually it's a case of the banks failing to pay attention
to customer data they already have.
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A lot of banks underestimate the magnitude of CRM. They tend to treat it

just like any other application technology, without realizing that CRM, if
done properly, is a strategic initiative that touches all areas of an
organization. According to CRM software firm People soft, banks need to be
aware of three key problems:
1.Measuring CRM benefits
A key basic CRM challenge is establishing the measurement method. Banks
may find it hard to build the initial business case justification and then to
prove the worth or success of their investment What makes the latter task
even more difficult is the fact that the metrics that are best used to justify a
significant IT investment are not always the most appropriate for evaluating
ongoing success.
When banks seek to justify the cost of their investment in CRM-related
technology they usually focus on hard numbers, typically those related to
decreased costs and increased sales. In other words, the proponents look to
justify the top-line expenses with bottom-line benefits.
Traditionally, banks have determined the success of any project or product
mainly in terms of internal business gauges such as return on investment,
units sold asset growth, or service level agreement measures. One exception
to the typical practice of focusing solely on internal data for gauging success
is market share, or market performance. Interestingly, most CRM
practitioners quickly default to marketing and sales measures when asked
about the success of CRM implementations. The tendency to frame the
discussion of CRM measurements in terms of sales and marketing measures
is completely understandable given the phased nature of most CRM projects.
33
Since the majority of CRM projects are expensive multiphase and multiyear
projects that often involve multiple technologies, the funding for CRM
projects is also often phased. CRM sponsors grant funding to project leaders
at the completion of one phase and start of the next. To ensure that the
subsequent phases will get funding, project leaders typically build into each
phase of a CRM project demonstrable business benefits.
At completion of each phase of a project, business benefits are expected to
accrue rapidly to the bank. Revenue generation--whether through sales or
marketing improvements--is the preferred business benefit for CRM project
sponsors. Not surprisingly, it is far easier to continue funding large, intricate
IT projects when incremental revenue generation can be squarely identified.
2.Customer profitability
Many banks use profitability as a key component in determining how to treat
their customers. But measuring profit in a bank is not an easy task. Many
banks allow the use of an accountant's approach to the measurement process.
This means the accounting and finance people are in charge of the process,
resulting in textbook-accurate allocations that often do not accurately reflect
the activities they are intended to measure.
For example, most bank costs are step-fixed. This means they are neither
purely fixed nor purely variable, with the resource able to process only a
finite number of transactions before more investment is required. The way
the step-fixed resources are allocated can dramatically affect the resulting
measurement of account level profitability.
34
3.The 80-20 Rule

Most banks make critical pricing decisions based on the so-called 80-20 rule,
the notion that 80 per cent of profits derive from 20 per cent of customers.
This may be true, but the use of incomplete or inaccurate cost information
and unproven hypotheses on customer buying behavior make this rule
difficult to apply. One significant problem is that banks let their customers
use the bank's products and services in an unprofitable way.
By providing a lower level of service to these customers, the bank faces the
danger of driving them away to institutions that provide better service. Given
the step-fixed nature of bank costs as discussed, banks should not view
losing unprofitable customers as the way to improved profits.
35
RECOMMENDATION
Customer Relationship Management (CRM), the most exciting strategies
that emerged from networking technology revolution of the nineties, is today
fast emerging s one of the most important cooperates strategies. A wellexecuted Customer Relationship Strategies can result in number of
quantitative benefits, including greater ability to sell and cross sell, improved
retention besides cost of services.
Customer Relationship Management is do-able. However the following must
take into consideration before embarking upon its implementation. All
aspects of customer relationship management, including technology solution,
must be fully explored effectively deliver the competencies required to
realize the business benefits.
1.Tackling any one competence alone will lead to a dysfunctional business.
One competence does not customer relationship management make.
2.Take pragmatic steps with a clear view on delivery of all the components
in the medium term, rather than piecemeal in the short term.
3.Successful mass customization is crucial to reducing customer acquisition
cost and improving the cross selling capacity.
4.Channels are a delivery mechanism. The effectiveness of the mechanism is
achieved when it is faultless!
5.75% of all Customer Relationship Management projects have failed due to
lapses in implementation. Technology is not enough, implementationis the
key and this is where the people aspect comes into the forefront.
36
6.Customer Relationship Management implementation is effective when

companies are able to identify the internal and external customer and
integrate themwith its core business proces
37
CHAPTER 10
CRM IN BANK: THE NEW MANTRA
Today in the era of cutthroat competition in the bank sector it is hard for
the organizations to survive with their traditional strategy of selling. They need
to be customer centric. We have seen the decline of the market share of LIC (it
recently went down below 80%) because of its large size and its inability to
change. Todays customer has a wide range of choices and he would opt for
those that provide him, not the better, but the best service. So, to the customer
centric and maintain loyal customer based, it is must that the organization
should focus on CRM strategies and inculcate a culture of being customer
friendly not just in words but also in practice.
With the increase in the number of bank players in the market and
consumers becoming more and more aware of different products, insurers have
realized the importance of CRM. CRM has been practiced for decades now, the
grocery shopkeeper near our home, the paanwala etc all of them have been
practicing it
In todays competitive era, where customer is the king, it is a must for
insurers to not only make new clients but also maintain the existing customers
and encourage repeat purchase. It is estimated that the cost of attracting a new
customer is five times more than that incurred to make an existing customer
happy.
LIC of India has been the sole player in the market before the appearance
of the private players. It exploited its monopoly powers and didnt care much
about either attracting new customers or retaining the existing ones. If anyone
38
needed an bank policy he had to purchase it from LIC. It was mostly the tax
saving schemes, which encourage the purchase of bank policy. Customers were
not educated regarding bank matters and the source of knowledge to them was
only the bank agent: and he was the person who suggested the policy to the
customer instead of the customer making his own choice. The customer could
not even choose some other policy from some other insurer because it was
Hobsons choice, i.e., LIC.
But, when private players entered the market, the competition forced LIC
and the other new entrants to become customer-centric.
Customer service is becoming more and more important as most of the
time buying bank policy is a one-time purchase and customers are unaware of
the variations available in the market. In the bank sector, there is an agent-client
relationship and a satisfied client can be the biggest brand ambassador for the
company (word of mouth advertising). Thus, it is in the interests of the company
to build a good relationship with the clients.
39
The bank agents of the company play an role in building this relationship
because they are the people who interact with prospective and existing clients.
Therefore, every organization should build a foundation of relationship
marketing because relationship marketing is the new mantra and the faster the
company adopts it, the better it would be in taking care of its customers.
Relationship efforts help the agents to talk about the company and the product,
and convince the customer. The need of the hour is to go in for training the
agents in building customer relationship.
The best effort is to go from CRM in an integrated approach. To be more
friendly and customer-centric, organizations need to implement a CRM strategy
which helps to interact with their customers in a more informed manner because
CRM helps the manger, the agent and the other officials (present or past
employees) to understand the status of the present client: His past transaction;
his last meeting with the agent and the comments of the agent or the manager or
the concerned employee; the dealings and the other relative information which
can be of use to the present employee or the agent of the company handling a
particular company, etc. so, CRM should be implemented in such a way that it
does become a hurdle to the organization but is its asset, which facilitates. The
smooth flow of information and better care of consumer CRM has been
estimated to be of use to all organizations, be it of service sector or any other
sector still, the experience in the implementation part has not been so
successful. In most of the cases, it has been practically observed that CRM
implementation in an unstructured manner has led it to become a hurdle for the
organization instead of becoming a valuable asset and an integrated part of the
company.
40
LIC, the biggest player in the Indian bank sector has also gone for
implementing CRM in its organization it facilitate better care of customer. Now
the consumer can deposit their premium in any computerized branch all over
India. The manager can look into all the details of the client at the moment,
regarding the policy, the premium paid and the due date for the next premium.
But it has not been able to implement the CRM strategy at the bottom level; i.e.,
the level of the frontline manager and agents who are the persons interacting
directly with the clients (potential and existing).
So, it is a must that the agents should be equipped with the relationshipmarketing tool, which can provide an upper edge in this competitive scenario.
41
It is a task of the top level and middle level managers to train their agents
to practice relationship management and build relationships with their clients.
1. The agents should be trained to analyze their environment (society,
friends, peer groups, etc.) and build good relationships with their
environment because a good marketer first forms relationships and then
sells his goods.
2. An agent should make a profile of the prospective target (or potential
client).
3. He should be trained and interact with them.
4. He should be trained to build the customer database and classify them
into potential and existing customers and then the existing customers into
dissatisfied, satisfied and highly satisfied customers.
5. The agents should be trained to get the feedback of the customer because
bank selling is a confidence-building measure where a relationship is
built between the client and the agent, which last for a long duration.
Apart from this, the management or the organization also needs to be
trained in CRM approaches because some academicians perceive that the agents
or business associates or partners in the bank sector are more CRM-oriented
then the organization. So, it is the organization, which needs to be trained in
CRM approaches.
Therefore, to survive and have an upper hand over the competitors, bank
companies need to implement CRM in their organizations not only technically
(computers, networks, database
systems, CRM software, trained personnel) but also as part of the culture.
Relationship marketing is the key to success in the present era and only those
organizations can succeed who have been able to build a base of their loyal
customers, because the loyal customer advocates the companies product much
42
better than the organization itself. The basic existence of the organization lies in
the hand of the customer. It can be easily concluded that for success, it is
necessary to implement CRM in the right manner.
43
CHAPTER 11
CONCLUSION
Maximize customer satisfaction and maximize your bottom line.
Over the last decade, too many organizations have assumed that their products
or services were so superior that customers would automatically keep coming
back for more. But in order to compete effectively in todays marketplace,
organizations must change their strategy to become more customer focused, not
product focused.
Customer Relationship Management (CRM) is the best way to integrate this
customer-facing approach throughout an organization. Aimed at understanding
and anticipating the needs of an organizations current and potential customers,
this innovative book shows how CRM links people, process, and technology to
optimize an enterprises revenue and profits by first providing maximum
customer satisfaction.
Covers developing a market-oriented strategy, innovation in products and
services, sales and channels transformation, customer relationship marketing,
and customer care.
44
CHAPTER 12
BIBLOGRAPHY
CUSTOMER RELATIONSHIP MANAGEMENT
- Vipul Prakashan
WEBILOGRAPHY
www.google.co.in
www.scribd.com
www.wikipedia.com
45

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