Chapter 1

Introduction of HDFC bank

WE UNDERSTAND YOUR WORLD

The Housing Development Finance Corporation Limited (HDFC) was
amongst the first to receive an 'in principle' approval from the
Reserve Bank of India (RBI) to set up a bank in the private sector, as
part of the RBI's liberalization of the Indian Banking Industry in 1994.
The bank was incorporated in August 1994 in the name of 'HDFC
Bank Limited', with its registered office in Mumbai, India. HDFC Bank
commenced operations as a Scheduled Commercial Bank in January
1995.
HDFC is India's premier housing finance company and enjoys an
impeccable track record in India as well as in international markets.
Since its inception in 1977, the Corporation has maintained a
consistent and healthy growth in its operations to remain the market
leader in mortgages. Its outstanding loan portfolio covers well over a

million dwelling units.

HDFC has developed significant expertise in

retail mortgage loans to different market segments and also has a

large corporate client base for its housing related credit facilities.
With its experience in the financial markets,

a strong market

reputation, large shareholder base and unique consumer franchise,

HDFC was ideally positioned to promote a bank in the Indian
environment.
HDFC Bank began operations in 1995 with a simple mission : to be a
World Class Indian Bank. We realized that only a single minded
focus on product quality and service excellence would help us get
there. Today, we are proud to say that we are well on our way
towards that goal

Customer Relationship Management (CRM)

What is CRM?
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.

Introduction of crm
CRM (customer relationship management) is an information
industry term for methodologies, software, and usually Internet
capabilities that help an enterprise manage customer
relationships in an organized way. For example, an enterprise
might build a database about its customers that described
relationships in sufficient detail so that management, salespeople,

people providing service, and perhaps the customer directly could

access information, match customer needs with product plans and
offerings, remind customers of service requirements, know what
other products a customer had purchased, and so forth.

The essence of the information technology revolution and, in

particular, the World Wide Web is the opportunity to build better
relationships with customers than has been previously possible in
the offline world. By combining the abilities to respond directly to
customer requests and to provide the customer with a highly
interactive, customized experience, companies have a greater
ability today to establish, nurture, and sustain long-term customer
relationships than ever before. The ultimate goal is to transform
these relationships into greater profitability by increasing repeat
purchase rates and reducing customer acquisition costs. Indeed,
this revolution in customer relationship management or CRM. 1as
it is called, has been referred to as the new mantra of
marketing.2Companies like Siebel, E.piphany, Oracle, Broadvision,
Net Perceptions, Kana and others have filled this CRM space with
products that do everything from track customer behaviour on the
Web to predicting their future moves to sending direct e-mail
communications. This has created a worldwide market for CRM
products and services of $34 billion in 1999 and which is
forecasted by IDC to grow to $125 billion by 2004. 3The need to
better understand customer behaviour and focus on those

customers who can deliver long-term profits has changed how

marketers view the world.

Traditionally, marketers have been trained to acquire

customers, either new ones who have not bought the product
category before or those who are currently competitors
customers. This has required heavy doses of mass advertising
and price-oriented promotions to customers and channel
members. Today, the tone of the conversation has changed from
customer acquisition to retention. This requires a different
mindset and a

different and new set of tools. A good thought

experiment for an executive audience is to ask them how much

they spend and/or focus on acquisition versus retention activities.

While it is difficult to perfectly distinguish the two activities

from each other, the answer is usually that acquisition dominates
retention.
12

The Customers in Banking Industry today are well informed. If a

Bank wants to have more customers, it should develop a good
relationship with its present customers and try to maintain the
same in the future also. Customer relationship management is an
important tool, for which a bank must go for in such a situation.
In the present scenario, brand loyalty is on decline. The
customers are switching over frequently to avail the better
facilities from other banks. Newer and superior products and

services are being introduced continuously in the market. With

the help of customer relationship management, strong customer
loyalty and a good image for the organisation can be developed.
In the intensely competitive banking industry, retention of
existing customers is vital, which can be achieved through the
successful process of customer relationship management.
In todays competitive scenario, the challenge is to build a safe
and sound banking system for a vibrant economy, for which
effective customer relationship management is the solution.
Therefore the study is going to be very helpful in finding out the
factors which are responsible for the success of customer
relationship management in banks.

Objectives of the Study

To analyze the customer relationship management process in HDFC bank.

To identify the role of customer relationship management in customer
retention.
To explore the role of employees in the successful implementation of customer
relationship management.
To ascertain the problems of the customers pertaining to customer relationship
management.

BUSINESS STRETEGY

HDFC BANK mission is to be

"a World Class Indian Bank",

Bench marking themselves against international standards and best

practices in terms of product offerings, technology, service levels,

risk management and audit & compliance. The objective is to build

sound customer franchises across distinct businesses so as to be a

preferred provider of banking services for target retail and wholesale

customer segments, and to achieve a healthy growth in profitability,

consistent with the Bank's risk appetite. Bank is committed to do this

while ensuring the highest levels of ethical standards, professional

integrity, corporate governance and regulatory compliance. Continue

to develop new product and technology is the main business strategy

of the bank. Maintain good relation with the customers is the main

and prime objective of the bank.

WHAT IS THE PURPOSE OF CRM?

CRM enables the company to create or keep in contact with the customer or the
prospect. In a first step, this allows the company to get known, to make its products and

services known. However, the first use of CRM is customer loyalty. With the increasingly
stiff competition, to retain customers gets very complicated. In addition, the customer is
freer to select his partner companies, products and services. Therefore, it is more costly
for a company to gain new customers than to maintain their loyalty. Indeed, a 5% rise
customer loyalty rates can increase from 25 to 100% the value of the average
customer, according to the Revue franaise de gestion (French Management Review
February 2000). In addition, a loyal customer may also recommend the brand name and
the company. CRM allows the company to be always present with the customer, to meet
his needs, if possible to anticipate these needs and to propose offers that the
clients may not have even thought about.Furthermore, customers who feel that they are
given special treatment by a company are more likely to deal again with this company
for
the
services
delivered
to
them.
Customer relationship management is a tool that can also serve as quality service.
Following the sale of the product or service, it may be a good idea to turn to the
customer in order to realize his satisfaction with his product expectation and with what
has been delivered to him. This approach enables the company to review its technical
practice, marketing or selling techniques in order tobetter correspond to the customer's
expectations, in cases in which he would have been disappointed, to make an offer to
compensate him and to remain a company present in his customer's life. Today, new
means of communication such as social media are good tools to discuss, to nurture the
relationship with the customer and to measure his satisfaction.

Research Design:
Research refers to the systematic method consisting of
enunciating the problem, formulating a hypothesis, collecting the
facts or data, analyzing the facts and reaching certain conclusions
either in the form of solutions towards the concerned problem or
in certain generalizations for some theoretical formulation. The
study is descriptive in nature, thus it follows descriptive research
design.
Types OF DATA
Data used of this report is mainly primary data, which are collected first hand by Survey in the
field. In some area secondary data may also be taken into consideration.

COLLECTION OF PRIMARY DATA

The data was collected through the primary source by survey method using Questionnaire and
taking respondents personal interview.

COLLECTION OF SECONDARY DATA

The data collected from journals and internet.
Secondary data is an information collected through published data ,various reference books,
journals, magazines, bulletines weekly and paper publish and article are referred.

Limitations of the Study

WEAKNESSES

STRENGTH
Right strategy for the

Some gaps in range for

right products.
Superior

certain sectors.

customer

service vs. competitors.

Customer service staff need

training.

Great Brand Image

Products have required

Processes and systems, etc

Management

accreditations.

insufficient.

High degree of customer

satisfaction.
Good place to work
Lower
with

response

time

efficient

and

effective service.
Dedicated workforce
aiming at
making a

cover

Sectoral growth is
constrained by low
unemployment levels and
competition for staff

long-term career in
the field.

Opportunities

Threats

Profit margins will be good.

Legislation could impact.

Could extend to overseas

Great risk involved

broadly.

Very

New specialist applications.

Could seek better customer

high

competition

prevailing in the industry.

Vulnerable to reactive

deals.
Fast-track
development

career

attack by major competitors

opportunities

Lack of infrastructure in

on an industry-wide basis.

An applied research centre

to create opportunities for
developing techniques to
provide added-value
services.

rural areas could constrain

investment.

High volume/low cost

market is intensely
competitive.

Importance of CRM:
Improve the quality of customer service, beautiful care, lack of stress in terms of
customer benefits of CRM are money today, the price increase `CRM Customer
Empowerment ultimate solution for both the customer is becoming as , is a highly
competitive business world, organizations as well. Any organization that he loses his
clients should have a clear idea as to why. It is active and the only way to avoid or at
least will tell. CRM approach from the point of view of organizations has attached
great importance to the following:
Reduction in customer recruitment costs
Generation of more and more loyal customers
Expansion of customer base
54 | P a g e

Lack of advertising and sales promotion expenses

Clients benefit selectivity approach
increase the number of profitable customers
Easy business expansion possibilities
Increased customer partnerships etc.

Chapter 2
Conceptual framework

Concept of Customer Relationship Management

Customer Relationship Management 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 customer relationship
management, but thinking about customer relationship
management in primarily technological terms is a mistake. The
more useful way to think about customer relationship
management is as a process that will help bring together lots of
pieces of information about customers, sales, marketing
effectiveness, responsiveness and market trends.
Fox and Stead (2001) 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 organizations
strategy, people, technology and business processes.
Customer relationship management helps businesses use
technology and human resources to gain insight into the behavior
of customers and the value of those customers.
The Customer Relationship Management process is one of the
more important topics in the world of business. Its impact and
measurement simply cannot be

denied. Without proper customer relationship management there

is no way to draw in and keep customers to your business and it
will be unsuccessful as a result. The process has a few steps
involved
Establishing customer relationship management goals, Educating
other departments, Assembling customer information, Designing
the data model, Vendor study , Selecting the customer
relationship management solution, Establishing authority and
responsibility, Pilot projects, Communication with customers
through direct mail , electronic mail etc, Customer surveys,
Customer satisfaction program, Collection of customer
information, Provision of customer information to employees,
Usage of customer information in the business activities,
Feedback, Analyze, Documenting a new process, Implementing
final methodology.
Benefits:
Customer relationship management results in the following
benefits:
Provide better customer service
Increase customer revenues
Discover new customers
Cross sell/Up Sell products more effectively
Help sales staff close deals faster
Make call centers more efficient
Simplify marketing and sales processes

ADVANTAGES OF CRM
The advantages of carrying out a proper business CRM are many and varied:
- First of all, it is a good way to expand the customer's portfolio. By contacting prospects, it is most
likely that many of them are interested in the company activity, in its products and services. It is
obvious that if the company does not initiate a process to go towards the customer, then the
customer will not come to the company, unless he experiments a specific and urgent need.

Naturally, CRM offers the advantage of gaining customer loyalty. As stated

above, loyalty is less costly for a company and the loyal customer becomes a
professional recommendation of the company and its services. Furthermore, the
company can promote the work it has done for its customers in order to
approach prospects. It is always more convincing to present a work carried out
rather than to rely on our own theoretical expertise.

A good CRM associated with a good tool ensures companies to have a good
view over the list of customers and prospects, to know where it stands with
relationship management, when to contact them again, etc. Furthermore, an
improved customer and prospect insight ensures a better and more targeted
communication.

CRM also ensures enhanced productivity. By fostering customer's loyalty, the

company spends less time acquiring new customers and saves then time on
other projects.

4. DISADVANTAGES OF CRM
However, despite the significant advantages of CRM, there are several disadvantages:

First, a mistaken tool choice may make CRM more complicated. This is why
you need to consider in advance what kind of tools would be appropriate to your
structure in order to follow its relationship with its customers and prospects.

CRM is not easy to put in place, attention must be given to the choice of tools,
but also to the effective implementation of CRM process that will be undertaken
by the company.

Review of Literature for CRM practices

2.1. Customer Relationship Management:
According to B. C. Saraswathy (2006), Customer relationship management /
customer relationship marketing (CRM) today changed customer behavior in the
environment has become a typical marketing strategy. Late, customers are smart and
communications revolution and the explosion of the Internet have all the information

at their fingertips. They have become more cost conscious and value driven with equal
or better offers are contacted by a legion of competitors. Accordingly, reactive
marketing of basic marketing practices for marketing and relationship marketing has
shifted again. CRM, thus, repeated purchases with customers to promote profitable,
long-term relationship building process. For its successful implementation, CRM but a
mere short-term marketing tool to boost sales in the organization must be seen as
cutting a philosophy.
According to Madhu Jasola (2008), Customer relationship management in today's
competitive environment has emerged as a popular business strategy. The companies
identify their most profitable customers and enable you to target a discipline. CRM
retain existing customers, but also acquiring new customers, which not only includes
the new and advanced marketing strategies.
Semih Onut & Bora Hosver discuss that Important satisfaction dimensions and the
private bank sector specific preferences and expectations with customer groups
focused on determining the evaluation of CRM in banking sector. Data analysis and
interpretation of the methodological approach used for modeling and multi-criteria are
Modeling is based on the principles of preference disaggregation. Together noted was
the key to long-term success of the firm? It also provides social interaction and
customer relationship management, focused on long-term relationships that help
develop cooperative and profitable affiliates based on the equity in the firm.
Tuesday, July 01, 2014: HDFC Bank has been recognised as the winner of the Best Sales
Effectiveness award during the tenth Gartner & 1to1 Media CRM Excellence Awards
Programme. It won the award for implementing CRMnext, a leading global CRM (Customer
relationship Management) product, which has delivered high impact results boosting its
sales and operational efficiency. The awards ceremony was held in conjunction with Gartner
Customer 360 Summit in Orlando, one of the years flagship events where solutions
providers across globe meet to craft their customer experience vision and strategy, vet their
plan against the best in the business and leverage new channels and technologies to seize
growth opportunities.

CRM is defined as a management process of acquiring customers by understanding

their requirements, retaining customers by fulfilling their requirements more than
their expectations and attracting new customers through customer specific
strategic marketing approaches. The process invites total commitment on the part
of the entire organisation in evolving and implementing relationship strategies that
would be rewarding to all concerned (A Sagadevan& H Peeru Mohamed, 2010).
Moreover another definition can be The infrastructure that enables the delineation
of and an increase in customer value, and the correct means by which to motivate
valuable customers to remain loyal- indeed, to buy again (Jill Dyche, 2009). After
defining and getting a clear vision of CRM its use in the private and public banking
sectors has been highlighted. It has been found out that through maintaining the
customer service quality customer satisfaction can be attained. This leads to the
growth of the organisation and profitability (Ipshita Bansal and Rinku Sharma,
2008). 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 (Seema Girdhar, 2009). 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 (Ashok Kumar M. & Rajesh R., 2009)

Chapter 3

Observation
It is an continuous process, more the services will be offered more the customer
base will grow and more the customers grow more the services has to be offered .
Instead of having broad customer base, the banks aim is to get broad loyal
customer base and the same is achieved by offering better service quality and
customer relationship management to its customers. CRM is an important catalyst
for the growth of the HDFC bank. The bank is able to attain growth as a whole due
to its emphasis on the customer centricity as a key objective. As the bank is
providing multi-channel services through ATMs, internet, phone, and mobile banking
in addition to its expanding branching network and deeper penetration in untapped
areas, the customer base is increasing and hence the banks profitability is
increasing. This ensures the banks growth.

Chapter 4
Findings
Customer Relationship Management (CRM) is an organizational strategy that can assist a bank to
build lasting relationship with its clients and improve its performance by increasing revenue and
productivity. CRM in the banking industry is of great importance. Today, banking is more customercentric, unlike the yester when it was transaction-centric. CRM is essential and vital function of
customer oriented marketing. However there is more to CRM than just client management. CRM is a
broad approach to create, maintain, and expand relationship with customers. It is a strategic plan
that aims in understanding, anticipating, managing and personalizing the organizational needs of
current as well as potential customers. The idea behind this is that it would help the bank to
effectively utilize technology and other resources to gain insight into the clients behaviour and
customers values. If adapted and implemented successfully, CRM can help banks provide better
customer service, make banking operations more efficient and simplify selling and marketing
processes. CRM is a comprehensive approach to cater, maintain and expand customer
relationships. It is important for banks to use CRM strategy that aims to understand, anticipate,
manage and personalize the needs of banks current and potential customers. CRM applications
deliver many benefits across organizational processes and functions. It reshapes the workplace

environment and influences the ways business being carried. Successful integration or adaption of
CRM system in the banks may not be as easy as it looks. Every concept has limitations such as
limitation of finance, resistance to change, government regulations, etc.; so does the CRM in banks.
Banks can overcome many of the limitations by efficiency managing CRM and adapting some
comprehensive CRM model along with effective CRM software. Managers play an important role to
minimize risks. CRM manager is a key factor who can effectively manage the issues related to CRM.
It is vital for banks that their CRM applications and systems are supported and controlled by qualified
and experienced manager. Bringing together trained and professional staff, encouraging
communication and coordination among them, promoting team working and instructing ways in
quality service, are some of the duties managers have to perform in order for CRM to work efficiently
and harvest benefits.
The banks need CRM to survive as it is impossible nowadays not to focus upon the customer
expectations. CRM is needed because of ever changing technology and highly competitive banking
sector in India. The importance of CRM can be assessed by evaluating CRM that provides enhanced
opportunities to use data and information to both understand customers and create value. The
ultimate purpose of the CRM is to improve performance and to assess how well the bank needs are
met by CRM adaption and implementation.

Suggestion

Recommendations
HDFC Bank has achieved almost all its objectives by introducing CRM technology and processes
within the bank. They have received better response from employees and customers than expected.
But they still lack in some areas such as cooperation and coordination, effective integration, and
efficient use of latest technology. The bank can improve further by updating its CRM policies and
procedures. After gathering data and doing analysis, the researcher noticed and considered few
drawbacks in the bank system and policies and the approach it has taken. Following are some
important recommendations:
Recommendation 1: The bank can improve its performance and can better evaluate the results if it
has set objectives. It must also ensure that the CRM has defined and documented objectives. It
must be properly aligned to other banking systems and functions and must also be part of bank
mission statement and bank strategies. By doing this, bank can make the working environment
effective and promote flexibility.
Recommendation 2: The results provide some information about the service provided by the
employees to customers. Although the customers agree that the service has improved but few have

complaints. Even the employees feel that service should be improved. The bank must concentrate
on employee training and continuous development especially in the ever changing and constantly
updating technological environment. The bank is committed in employee development but they must
focus on soft skills areas of training. Employees must be taught how to effectively use and apply
CRM technology to provide quality service to customers. Training and development can provide
necessary skills and make employees, more experienced and competent.
Recommendation 3: CRM is still developing stages in the bank. The management can show
commitment by developing a personal bank strategy regarding the use of CRM system, processes,
procedures, tools and CRM policies. The management need to focus on bank mission and, strategic
vision and ethical stance when designing CRM strategy. Incorporating CRM related issues in
strategic planning; the bank can increase the trust of all stakeholders and satisfy them that the bank
is interested in their well-being.
Recommendations 4: The bank can never ignore the environmental factors that may influence and
negatively affect the CRM related decisions. The factors include social and cultural issues as the
bank cannot adapt the CRM without taking into account the Indian environment and its
requirements; legal and political issues, and other technological issues.
Recommendation 5: By empowering employees and involving them in decision making process can
increase their morale and satisfaction. They will feel more motivated and will work more effectively
serving customers to the best of their abilities. They will enthusiastically learn the latest CRM
technology and will apply it successfully. By providing them facilities to deal with customers queries
will help the bank to improve the customer relationship management.
Recommendation 6: Evaluation of the CRM requirements, its use and its effects can help identify
whether it is working efficiently. It will also help fulfil CRM needs and will solve problems thus
improving bank performance.
There are many other recommendations that can be provided but the bank must focus on major
issues first. Other recommendation may include 24/7 call centre where customers can contact for
services, central database for employees to get all the information, providing feedback on the
website, etc.

Conclusion
The aim of this dissertation was to examine the importance of CRM for HDFC Bank. To achieve this
aim, following objectives were set: To analyze the effectiveness and efficiency of CRM services
provided by the HDFC Bank, to examine the effects of CRM on business performance and
operational effectiveness and to evaluate the improvements in customer service due to it, to assess

the awareness of the bank employees to the concept of CRM and its benefits for the organization, to
determine the extent of customer satisfaction level by conducting interviews, distributing
questionnaire and carrying out a survey in HDFC Bank, to gather relevant data and critically
analyzing it using a vast variety of sources and research tools. The researcher believes that each
and every objective has been achieved. The researcher applied most relevant research tools and
applications to gather valid and reliable data. The data collected from secondary sources like books,
latest journals and articles, websites, etc. has been critically analyzed by taking into account
theories, concepts, arguments and debates on CRM and related issues by various academic
scholars. The data collected by applying primary resources has been analyzed and presented in
data analysis section. The researcher ensured that the data collected is valid and relates to literature
review and aim and objectives of the dissertation.
The results produced by the research provides information on how effectively HDFC Bank has
managed to use CRM system and applications and how efficient it has been in applying CRM tools,
processes and strategy. By incorporating CRM effectively, the bank has improved its performance as
well as the performance of its employees. Bank profitability has increased and the so does the
customer satisfaction. Changes produced by CRM are intense. CRM has helped the bank to access
ideas and experiences from variety of sources. CRM applications have delivered many benefits
across bank operations, organizational processes and functions. CRM has improved information and
increased knowledge management. It helped to reduce costs of transaction and increased speed
and reliability of transactions. CRM technology has also improved effective communications and
service quality. In conclusion, CRM is important as it has positively influenced every business
function which helped in improving the customer service and relations.