The economic reforms initiated by the Government of India roughly about a decade

ago have changed the landscape of several sectors of the Indian economy. The Indian
banking sector is no exception. The economic reforms have also generated new and powerful
customers (huge Indian middle class) and new mix of players (public sector units, private
banks, and foreign banks). The emerging competition has generated new expectations from
the existing and the new customers. The new rules of competition require recognition of the
importance of consumers and the necessity to address the needs through innovative products
supported by new technology. Perceptions and expectations of the customers have undergone
a sea change, with the innovative and modern banking services offered to the customers. This
necessitates banks to include a customer-oriented approach whereby they build, maintain and
manage longstanding relationships with their profitable customers in order to gain sustainable
competitive edge.
Customer relationship management (CRM) has been as important to the banking
industry at the start of the 21st century as it has been to any other industry. Many banks have
used CRM tools to acquire more customers and to improve relationships with them. A key
aspect in banks embracing technological platforms and delivery systems is the impact this
will have on bank-customer relationships. Therefore, in order to achieve banking excellence,
meeting customer needs and offering innovative products is not sufficient in itself. The
balance between relatively high costs of relationships with customers and the need to
maintain profit growth needs to be finely tuned, if marketing is not to revert back to a
transactional paradigm. Likewise, increased customer expectations have created a
competitive climate whereby the quality of the relationship between the customer and the
institution has taken a greater significance. The development of effective customer
relationships is widely advocated as a key element of marketing strategies in the service
sector by Ennew (1996). Therefore a binding and long-term customer relationship seems to
be necessary for many banks to react to the changed conditions and to guarantee the
continuity. The Indian banks are following the CRM practices to maintain the long, healthy
and profitable relation with their customers as they have realized that they will gain the
strategic and economic benefits associated with CRM by integrating their organisation
capabilities - structure, processes, skills and metrics - into the added intelligence of CRM
technologies. The CRM practices of the selected banks are detailed below.

81

3.1 EXISTING CRM AT SAMPLED BANKS

CRM AT ICICI BANK LTD.
The CRM initiatives in India's ICICI Bank hold together its compelling story of
growth: its growth in customer base, channels, and products and service offerings. The ICICI
bank is one of the private sector bank which is providing the customer value added services.
They are not only able to satisfy the customer but they are successful in building a neverending relationship with the customer. They are able to retain them and carry business with
them to benefit both the organization and the customer. This bank very well understands
customer preferences and needs. With the help of technology they are able to develop brand
equity in the market and differentiate themselves from the competitors. ICICI Bank and the
ICICI Group as a whole have been striding purposefully down the e-pathway. The group
prefers to call it a "clicks and bricks" strategy that provides multiple access points to its
customers. For its traditional customers, there are the lean and mean brick and mortar
branches propped by ATMs, call centers and direct selling agents. Internet banking and
WAP enabled services take care of the supply and technology savvy professionals of today.
The rise in Internet banking customers is a result of the Infinity, Internet banking facility
launched by the bank. The facility, initially made available to NRIs and later to resident
Indians permits online opening of accounts, bills payment, account information etc..
ICICI Bank is certainly juggling some interesting numbers. Its Bombay call centre
handles 25 different products, for 10 million customers, with 620 positions. Now ICICI Bank's
branch network handles less than half of all transactions - a shift which has taken an axe to the
company's cost- to-serve. ICICI appreciated early on that by centralizing their service
infrastructure, and centralizing their service expertise, they created a new level of service
for customers. The call centre has played a leading role in transforming the bank's value
proposition for its customers. ICICI used to spend a lot of energy trying to make sales. Now
their emphasis has changed - they spend their energy to get to know the customer better. It is
when a customer feels comfortable with the relationship they have with ICICI that they are
likely to deepen their commercial relationship with them. The call centre is their new tool to
getting to know the customer better. The speed of the shift away from the branch as the
primary means of interacting with the bank shows the receptiveness of Indian consumer
behavior to the use of new channels. The technology usage is far higher in a call centre
compared with any other environment. The call centre is a cheaper channel than the branch,
and often it is more convenient for the customer.

82

Different Channels for Access Services

Bank Branch, ATM, Phone Banking, Internet Banking, Insta Banking, Mobile Banking, Call
Centre, Foreign Exchange Services, Corporate Banking, Credit Cards and Debit Cards.
CRM AT HDFC BANK
HDFC Bank is making all possibilities come true for its customers. The bank runs
one-to-one (customized) and one-to-all targeted messaging via all self-service channels like
the ATM, mobile banking and Internet banking. These implementations helps HDFC Bank
with a more thorough analysis of the change in customer demographics and thus, plan their
campaigns better after being equipped with a thorough data repository in the data warehouse.
Along with targeted messaging, the bank is also offering fast ATM services. HDFC
Bank has launched favorite transaction' that allows the customer to set a particular amount for
withdrawal so that every time he visits the ATM he will not be accessing the same screens.
This has reduced the number of screens the customer must access while using the ATM
machine for withdrawing cash. HDFC bank with a daily turnover of 300 transactions per day
per ATM adds up to about one million transactions per day. As part of the first phase, HDFC
is globally the first bank to deploy everything except the call centre suite. The major benefits
from the implementation is saving about 40 percent of the transaction time at the ATMs,
ability to personalize communication via self-service channels enabling active engagement
with the customer, which further enhances the ability of the CRM for analytics.
HDFC has revamped its corporate website in line with its communication philosophy.
The new improved, interactive, and user-friendly website is in sync with its need-based
communication strategy of helping individuals through their decision of selecting the right
plans that fit their needs. The bank is very careful about the following activities as these are directly
associated with the customers:

Protection: Need for a sound income protection in case of unfortunate demise of an

individual

Investment: Need to ensure long-term real growth of an individual's money.

Saving: Need to save for the milestones and protect an individual's savings

Retirement: Need to save for a comfortable life post-retirement

The new improved website leverages to educate customers in choosing the right. The

website is designed to provide an enhanced user experience to our existing as well as

prospective customers through simple navigation, faster access, rich content and enhanced
utility as a service delivery tool.

83

Different Channels for Access Services

Bank Branch, ATM, Phone Banking, Internet Banking, INSTA Banking, Mobile
Banking, Home Banking, Personalised Banking, International Banking.
CRM AT CENTRAL BANK OF INDIA
The bank has implemented core banking and presently more than 1200 branches and
extension counters are connected to the CBS. The bank is planning to have 100 percent CBS
branches for providing its customers better and efficient services which will enable the bank
for interbank remittances through RTGS and NEFT. The bank is in process of implementing
the latest technology which will provide the bank following benefits:

Synchronize Banks Financial and Non-Financial data.

Eliminate multiple data version by creating single version of data at any point of time.

Provide integrated system with existing transactional data system (CBS, Treasury etc)
and other applications.

Creating a centralised Single Data Repository (SDR) to provide effective DSS / EIS /
MIS.

Reduce the time and effort in gathering, consolidating and analyzing information and
generate reports / output faster.

Provide a system capable of providing information (adhoc query) to top management

in a sophisticated way with analytical features.

Facilitate Bank to take informed decision based on accurate data using various
technology tools.

Utilize information to serve customer better.

The bank is also intent to start the Retail Depository Services customers. With a

centralized depository application, branches are equipped to provide depository services for
both the NSDL as well as CDSL. The Bank has launched an Online Trading System for
Institutional Trading. The Banks Cash Management System is a full-function web-enabled
cash management solution offered to the Banks customers, covering services like Receipt
Management (Collections), Payment Management and Invoice Management (Receivable and
Payable

Management).

The

SWIFT

facility

for

worldwide

inter-bank

financial

communication is provided at the Banks Foreign Exchange Authorized Branches in India as

also in overseas territories. The Bank has also implemented a new Credit Card Management
System. The SMSes for all types of transactions viz., purchases, e-com transaction etc. are

84

generated online and e-statements are being sent to customers. Following online banking
services have been provided by the bank to facilitate its customers:
Internet Banking, SMS Banking, Tele Banking, Online Bill Payment, E Payments, Prepaid
Gift Cards, Credit Cards, ATM funds Transfer.
THE CRM AT STATE BANK OF INDIA
The need for system automation became critical at SBI. The challenge was to meet
the demanding service and fulfillment levels of the growing customers needs and wishes.
SBI was on the lookout for a technology solution that was easy to implement, cost-effective
and robust to expand its presence in the insurance sector and achieve a higher degree of
service differentiation. Although the organization had a centralized system, most of the work
was done manually. They had client/server architecture in place. But it was not integrated with
the legacy systems.
Early on, the top management realized that technology was a crucial driver for
product and service delivery. Although using the extensive SBI group platform for crossselling products and services was a viable option, reaching and engaging the customer cost
effectively required a technology backbone. Earlier, they had little enterprise software to
support its business and the processes were carried out in an ad-hoc manner.
The Bank has also set up a Standing Committee on Procedures and Performance
Audit on Customer Services, comprising of three eminent public personalities as members
along with both the Executive Directors and four General Managers of the Bank. This
Committee oversees timely and effective compliance of the RBI instructions on Customer
Service and also reviews the practices and procedures prevalent in the Bank and takes
necessary corrective steps on an on-going basis. The Bank has put in place a Customer
Grievance Redressal Policy, approved by the Board, and a well structured Customer
Grievance Redressal Mechanism. The General Manager in charge of the Operations and
Services is designated as Nodal Officer for customer complaints regarding the Bank. At
Zonal and Regional levels, Zonal Heads and Regional Heads are designated as Nodal
Officers for their respective Zones and Regions. The names of all Nodal Officers along with
their contact numbers are displayed in all the branches. A Note on Review of Customer
Services and Grievances Redressal Machinery is placed before the Board of Directors every
quarter giving position of customer complaints received at Regional Offices and Head office
and the follow up measures with important initiatives taken by the Bank for improving the
customer services during the period. To eradicate customer complaints fully and ensure
hassle free customer service, analysis is done on the complaints received from the customers

85

and suitable timely action is taken so that there is no repetition of such complaints in future.
The Bank has Board approved policies on Customer Services and the same are placed on the
Banks website. Based on the feedback and suggestions from the grass root level customer
committees and various studies/surveys, a slew of customer centric initiatives and measures
were taken by the Bank during the year under review to improve customer service at its
branches. The Bank has adopted a total end-to-end business and IT strategy project covering
the Banks domestic, overseas and subsidiary operations.
Benefits:

Reduction in TAT (Turn around Time)

SBI can now integrate and manage content, campaigns and merchandising to patrons
via the Web.

Streamlined product delivery and support processes with a single contact point on the
Web.

Site offers a one-stop-shop for customers' needs.

There were hiccups as various centers had problems connecting to the CRM portal,

which have been solved. Functions like cash management, proposal details and issuing
policies all happen on the portal. Plans are afoot to use the portal for providing self- service to
customers, partners and employees. One can just come in, log on to the portal, and access any
kind of information.
SBI implemented the plans and has achieved success in some challenging areas, for
instance, it has been able to reduce the Turn around Time (TAT). With this initiative, SBI has
derived quite a few benefits to this initiative they could spot a few processes that would
otherwise never be realized. They have outsourced some routine work, which was done
centrally and was manual. Now, irrespective of the location of the work, it's done through the
portal and they are able to manage it better. SBI has focused on its ATM outlets facility to
improve customer satisfaction. It has made withdrawal /deposit more simplified and less time
consuming at branch banking. Account opening systems have been more simplified and
less time-taking. Skills of the banks' employees are being upgraded for better customer
satisfaction. Banks organisation has been restructured. Bank operations have been made fully
computerized. Mobile Banking has been implemented to provide various facilities to
customers, viz., Balance Enquiry, Mini Statement, Linking of Multiple Accounts, Fund
Transfer, Request to the Bank, Bill Payments, Ticket Booking, Shopping, Feedback/
Complaints etc.

86

CRM AT PUNJAB NATIONAL BANK

PNB has developed solutions to provide the Data-cleansing and De-duplication
solution for the first 4.3 million records from branches. With its pan India presence, PNB
offers a wide variety of banking services through its branches including 249 extension counters
- the largest amongst Nationalized Banks. With an increasingly dynamic business and
regulatory environment, PNB sought to not only achieve automation, but also centralize
operations, standardize branch processes, achieve high scalability for future business growth,
provide flexibility of creating innovative banking products to its lines of business, and at the
same time, reduce overall costs.
The visionary zeal and the futuristic view of the Bank's top management in the year
2000-2001 incubated the idea of introduction of a Centralized Banking solution. In 20012002, PNB embarked upon a transformation journey unparalleled in the country in terms of
scale and technology. The bank became the first public sector bank in India to opt for a new
generation core-banking platform. Since then, bank has consolidated and centralizes its
operations, improving branch efficiency and productivity per employee. Consolidation has
also resulted in reduction of revenue leakage and cost, while increasing ease of technical
support and maintenance at branches. The solution's scalability has also enabled the bank's
scalability to be the best in the country with the number of peak transactions at 3.5 million.
With seamless integration of delivery channels such as ATM and internet banking solutions,
PNB is able to provide 24X7 services to customers at a reduced transaction cost. The CBS
branches of the Bank are enabled for interbank remittances through RTGS and NEFT The
RTGS and NEFT have also been interfaced with the Banks internet banking portal. The
Straight-Through-Processing of NEFT inward messages have been implemented in July
2010.
The feedback on quality of customer service at branches is obtained through the
Branch Level Customer Service Committee meetings that are held every month in which
customers from various cross sections of the society are invited including Senior Citizens and
Pensioners. The suggestions/views generated during the meetings are collated and
appropriate follow up action is taken to examine the feasibility to implement the suggestions
for improving the quality of customer service rendered at the branches.
PNB provides the following online services to its customers: Branch Banking,
Internet Banking, Mobile Banking, ASBA, Share Trading, Bill Payments, E-Tax Payments,
Money Transfer, Security Alerts, PNB global credit card.

87

CRM AT BANK OF BARODA

Efficient customer service and customer satisfaction are the primary objectives of the
Bank in its day to day operations. The Bank is highly responsive to the needs and satisfaction
of its customers, and is committed to the belief that all technology, processes, products and
skills of its people must be leveraged for delivering superior banking experience to its
customers without fail. Recently, the Bank has taken several measures to improve customer
service at the branches and at the same time, strengthened the customer complaint redressal
machinery for fast disposal of customer complaints.
The Bank is focused towards providing excellent customer service through all
delivery channels and has been making continuous efforts for enhancing the level of
customers satisfaction by leveraging technology to provide e-products and alternative
delivery channels best suited to the diverse needs of different customers. The varied interests
and expectations of customers are taken care of by improving upon the various processes and
procedures.
All branches and extension counters of the Banks Indian operations are on the Core
Banking Solution (CBS) platform. Additionally, during the year 2010-11, the CBS was
implemented in Banks five Regional Rural Banks in record time covering 1,218 branches
and three extension counters. As regards the Banks international operations, the CBS was
implemented during the course of the year in New Zealand and Belgium territories.
Moreover, the Banks IT setup has been developed for account opening process and
transactions, both online and offline, to be carried out through the Business Correspondents
thus enabling Financial Inclusion. The Mobile Van Banking too is launched by the Bank in
Gujarat, UP and Bihar as a Financial Inclusion initiative.
The Bank has implemented a Fraud Management Solution for two factor
authentication for e-banking transactions in India. The roll out in International Territories will
synchronize with the roll out of new versions of e-banking. The SMS Alerts Delivery
gateway has been upgraded by the Bank for delivering Internet Banking alerts in India, UAE,
Botswana, Uganda, New Zealand, Kenya, Mauritius and Seychelles. This will be further
extended to all customers of the Bank shortly. Internet Payment Gateway services for debit
cards/ credit cards are increasingly offered to merchants and internet shoppers as a safe and
secure channel for online purchases.

88

CRM AT CITI BANK

Citibank has been providing world class banking services in India since 1902. The
Banks endeavor is to continue to provide best in class products and services to its
customers. The bank acts fairly and reasonably in all dealings with all the customers by
meeting the commitments and standards. The bank also helps to make the customer
understand how their financial products and services work by giving verbal information about
the financial products/services in plain Hindi and/or English and/or the local language and
written information in English. The bank also ensures about the advertising and promotional
literature that it is clear and is not misleading and helping the customer to choose the
financial product/service that meets his needs providing periodic and appropriate updates
regarding products that the customer has purchased providing information on the benefits that
the customers are entitled to. Giving information to its customers on who they contact for
their queries. The bank informs its customers about the products and services they offer in
more than one way through ATMs, on the Internet, over the phone, or in branches along with
the interest rates and common fees and Charges.
The bank is very responsive in dealing quickly and proactively with things that go
wrong by:

Correcting mistakes quickly

Handling customer complaints quickly

Telling the customers how to take their complaint forward if the customers are still
not satisfied with the assistance

Reversing any bank charges that the bank applies due to any mistake
The Citibank is always committed to protecting Customer privacy and Customers

right to information. According to its global standards, as encapsulated in the Citigroup

Privacy Promise, the bank provides customer with a copy of the Citigroup Privacy Promise
and opt outs rights and process for exercising these rights. Customer Privacy will also be
protected through relevant disclosures that are required by local laws and regulations, as part
of Terms and Conditions. This information is the cornerstone to provide superior service, to
the most important asset i.e. customers trust. The bank also explains to its customers the
procedural formalities required to manage his account by providing account statements at
regular intervals/as per the policy. The customers are given a series of products, services and
facilities to improve its CRM programme and process, which are as below:

89

Branch Banking, ATM, Phone Banking, Internet Banking, INSTA Banking, Mobile
Banking, Home Banking, Personalized Banking, International Banking, Citi Alert on
Demand, Bill Pay, Prepaid Mobile Recharge, CitiAlert, Citi Tap and Pay, SMS Banking,
Statement on E-mail, Online Tax Payment.
CRM AT HSBC
The HSBC Group, one of the world's largest banking and financial services
organizations, had its beginnings in Hong Kong more than 137 years ago. Today, the HSBC
Group has some 10,000 offices in 76 countries and territories in Europe, the Asia-Pacific
region, the Americas, the Middle East, and Africa.
Globally speaking, at the Group's core lies domestic commercial banking and
financial services, which fund themselves locally and do business locally. Highly efficient
technology links these operations to deliver a wide range of international products and
services, adapted to local customers' needs. The Hong Kong and Shanghai Banking
Corporation (HSBC) is the founding member of the HSBC Group. It is the group's flagship in
the Asia-Pacific region and the largest bank incorporated in Hong Kong.
By performing customer segmentation, the company can make resource planning
effectively and efficiently. Precise customer segmentation requires a huge amount of
customer information and sales figures for analysis. Below is the typical Customer pyramid,
which contains customer groups of Top, Big, Medium, Small, Inactive, Prospects and
Suspects. HSBC Personal Banking categorized customers by their "Total Relationship
Balance". To make it simple, it is the total amount of money flowing between the bank and
the customer, including money deposits, investments, insurance, etc. From the above
Customer Pyramid, the customer categories of HSBC Personal Banking are as follow:
1.

Top - This is the segment the customers of which are those who have a
total relationship balance of over one billion Hong Kong Dollars. They are HSBC's
Premier Customers, and constitute the top 5percent of highly valuable customers of
HSBC Personal Banking.

2.

Big - This is the customer segment of those who have a total relationship balance of
over one million Hong Kong Dollars. They are HSBC's Premier Customers as well
and are in the next 15percent of highly valuable customers

3.

Medium - This is the customer segment of those who have a total relationship
balance of over twenty thousand Hong Kong Dollars. They are the Power Vantage
Customers of HSBC. They are the largest group amongst the customer segments, and
make up 60percent of HSBC's Personal Banking customers.

90

4.

Small - This is the customer segment of those who have a total relationship balance
below twenty thousand Hong Kong Dollars. They are the normal customers of HSBC
Personal Banking. 20percent of HSBC Personal Banking customers fall into this
segment.

5.

Inactive - Those customers whose account status is "Dormant" or "Closed". Accounts

with a dormant status are those accounts that have not been in operation for a long
period of time, say 2 years. Accounts with a closed status are those that have been
formally closed by the customers.

6.

Prospects - Those customers who are using HSBC products other than Personal
Banking, such as Corporate Banking. The bank has some data about them, and has
already established communications with them through their use of that product.

7.

Suspects - The customers of other banks. HSBC has collected some data about them,
but has not yet established communications with them.
A loyal customer is a good customer. There are two Customer Relationship

Management principles about customer loyalty, customer satisfaction and customer

experience:
.

Only

very

satisfied

customers

will

be

very

loyal

to

company.

Customer Satisfaction equals Customer Experience minus Customer Expectations.

3.2 SIGNIFICANCE OF CRM IN THE BANKING INDUSTRY

Unlike manufacturing operations, services processes are denied the luxury of
stockpiling service products before they are not consumed, nor do they have detailed
knowledge of actual upcoming demand. Thus, the characteristics of services negate the
opportunity to plan for the service performance, and require the service to prepare for every
eventuality, ordering materials arbitrarily, hiring staff, paying for variable costs such as
lighting and heating, and often storing materials to await final purchase. The ability to
accurately predict future individual purchases would amend these drawbacks, reducing costs,
increasing efficiency, increasing customer satisfaction and ultimately, increasing customer
loyalty. Thus, the move towards customer relationship management (CRM) should result in
an escalating pattern of increased loyalty, further increasing customer participation, allowing
better preparation for each customer, which in turn, increases customer loyalty and reduces
the cost in long run.

91

Regulation and technological improvements are responsible for the vast majority of
innovations in banking over the past quarter century. The introduction of personal
computers and the proliferation of ATMs in the 1970s captured bank management's
attention. The regulatory changes in the 1980s fueled much of the industry's growth, then
downsizing as bankers focused on amassing market presence, which resulted in significant
merger activity. Recent technological improvements are at the root of bankers' focus as well
as a target for their significant investment.
What drove many bankers to invest in ATMs was the promise of reduced branch cost,
since customers would use them instead of a branch to transact business. But what was
discovered is that the financial impact of ATMs is a marginal increase in fee income
substantially offset by the cost of significant increases in the number of customer
transactions. The value proposition, however, was a significant increase in that intangible
called customer satisfaction. The increase in customer satisfaction has translated to loyalty
that resulted in higher customer retention and growing franchise value. Internet banking, a
product of the 1990s shows similar characteristics. Again, bankers invested believing that the
Internet was a lower-cost delivery channel and a way to increase sales. Studies have now
shown, however, that the primary value of offering Internet banking services lies in the
increased retention of highly valued customer segments. Again, the intangible called
customer satisfaction drives the value proposition. CRM is not another ATM or Internet bank.
It is not a checking account, a stock or a mortgage. CRM is primarily driven by the innovation
of technology, but unlike other technological innovations, CRM has power to help bankers
quickly and directly improve customer satisfaction. CRM is an added dimension to ensure
that what the customer expects is consistent with what the bank is prepared to deliver. One
expert in bank CRM initiatives recently said that CRM is an approach that is less focused on
providing the right services to the customer than attracting customers who are the right fit for
what the bank has to offer. Further, the primary value of CRM is its potential as a customer
retention tool.
Indian banking today is witnessing drastic changes. The liberalization of the financial
sector and banking sector reforms have exposed the Indian banks to a new economic
environment that is characterized by increased competition and new regulatory requirements.
As a result, there is a transformation in every sphere of activities of the banks in India,
especially in Governance, nature of business, style of functioning and delivery mechanisms.
The new generation banks brought the necessary competition into the industry and

92

spearheaded changes towards higher utilization of technology, improved customer service

and innovative products.
The changes in the political, economical, social, cultural and environmental
perspective can be seen in business environment too. Above all, the business scenario is
highly influenced by the changes in the needs and aspirations of the people. The human
factors such as, the mindset of the people, ethics and values, social system, lifestyle, work
culture etc. have greatly influenced the different sections of the people for changing their
day-to-day requirements. But today, the degree of such changes is very fast and frequency of
experience by them is more. Therefore, the consumer status is changed from isolated to
connected, unaware to well-informed passive to active.
Consumers now seek to exercise their influence in every walk of the business system,
interact with firms and co-create value. As the outreach is enlarged in the industry with the
increased number of banks and wider network, the customer demands convenience, comfort,
speed, cost- effectiveness and quality services in the banking operations. In the recent years,
the Indian banking industry saw a host of new faces called new generation banks entering
with their innovative strategies. All these bankers are generally slim in structure but heavily
using the technology and multi-channel facilities to reach out to a large section of the
customers.
After the introduction by Levitt (1983), the relationship management was rapidly
accepted among marketers. The popularity, however, soon fell as it was found that the
information needed to work with Relationship Management was mostly missing as
corporations were still much aimed at product and segmented marketing.
A greater focus on Customer Relationship Management (CRM) is the only way the
banking industry can protect its market share and boost growth. A successful CRM strategy
aims at understanding the needs of the customer and integrating them with the organization's
strategy, people, technology and business process. Therefore, one of the best ways of
launching a CRM initiative is to start with what the organization is doing now and working
out what should be done to improve its interface with its customers. It does not happen
simply by buying the software and installing it. For CRM to be truly effective, it requires a
well-thought-out initiative involving strategy, people, technology, and processes. Above all, it
requires the realization that the CRM philosophy of doing business should be adopted
incrementally with an iterative approach to learn at every stage of development. Most widely
accepted classification of Customer Relationship Management (CRM) systems includes
operational, analytical, collaborative and e-CRM. While operational, collaborative, and e-

93

CRM has received a significant interest among practitioners and scholars, but they have mostly
neglected analytical CRM. The major function of analytical CRM is to support strategic
customer information provision and customer knowledge acquisition to help achieve the final
goal of CRM, which is to enhance customer profitability. Customer profitability is the
difference between revenue and costs.
With increased number of banks, products and services and practically nil switching
costs, customers are easily switching over banks whenever they find better services and
products. Banks are finding it tough to get new customers, and more importantly, retain
existing customers.
As CRM has been considered very significant in service industry by Abbott, J.,
Stone, M. and Buttle F., (2001) it plays a crucial role in increasing the profitability of the
organisation and also enhances market share. CRM plays a significant role in building mutual
trust with customers and providing value for customers. Dyche J., (2002) averred that
organisations use CRM in attracting new customers and retaining the existing customers.
This section addresses the analysis related to the first objective i.e. Significance of
Customer Relationship Management, of the study. In order to achieve this objective, a survey
was conducted on 200 executives and 800 customers from all the three categories of the
banks. Percentage analysis has been done to understand the individual weight of the
dimensions of significance of CRM. Descriptive analysis has been used to present the
viewpoint of the Banks executives and customers. Factor analysis has been applied to
identify the significant factors regarding the significance of CRM in banks. A two sample t
test was applied to compare the response of the executives as well as the customers from
various banks taken in the study. One-way ANOVA has been applied in order to determine
the significance of the variation among the means of samples taken from all the banks.
TABLE: 3.1 - COMPARISON BETWEEN THE PUBLIC, PRIVATE AND FOREIGN
BANKS ON SIGNIFICANCE OF CRM IN BANKING INDUSTRY: EXECUTIVE
VIEW POINT
S.
No.

CRM is significant
as it

Public Sector
Banks
Scores
N = 125

Increases profitability

Increases market share

Private Sector
Banks
Scores
N = 125

Foreign Sector
Banks
Scores
N = 125

115

92

118

94.4

122.5

98

117.25

93.8

120

96

121.5

97.2

94

3
4
5
6

Helps to gain an edge

over competition in
the market place
Increases
customer
loyalty
Differentiates
competitive products /
Services
Attract new customers

Retains
customers

Increases
customer
satisfaction
for
products and services
Customize products /
services for customers

9
10

11

existing

Helps in developing
new
products
/
services
for
the
customers
Reduces cost of sales
effort

109.95

87.96

118

94.4

121.5

97.2

108.35

86.68

116.5

93.2

123.5

98.8

110.35

88.28

118.5

94.8

123

98.4

102.9

82.32

118.5

94.8

123

98.4

118.6

94.8

123.5

98.8

124

99.2

106.95

85.56

118.5

94.8

123

98.4

107.4

85.92

119

95.2

121.5

97.2

102.15

81.72

118

94.4

122

97.6

111.75

89.4

118.5

94.8

121

96.8

12

Provides
cross

selling opportunities

113.7

90.96

120

96

118.4

94.72

13

Increase
opportunities

117.7

94.16

121

96.8

123.5

98.8

14

Reduces
conflicts

112.25

89.8

117.5

94

124

99.2

15

Achieves Mutual Trust

with Customers

116.75

93.4

120.5

96.4

122.5

98

16

Achieves reputation
for
fairness
with
customers
Provides value for
customers

111.95

89.56

120.5

96.4

123.5

98.8

113.95

91.16

122.5

98

124

99.2

113.45

90.76

117.5

94

124

99.2

114

91.2

119.5

95.6

123.5

98.8

118.25

94.6

120.5

96.4

121.5

97.2

118

94.4

120.5

96.4

119

95.2

116.5

93.2

120.5

96.4

123

98.4

118.6

94.88

123.5

98.8

121.5

97.2

17
18
19
20

21
22
23

selling
customer

Maintains Long term

relation
with
customers
Shares
information
with customer related
to bank
Helps
in
understanding
customers needs and
expectations
Provides
significant
business benefits to
the bank
Helps
for
better
management
of
customers
Improves efficiency of
marketing processes in
the bank

Source: Primary Data; Percentage Analysis

Bartletts Test Significance: 0.000
KMO: 0.882

95

Cronbachs Alpha: 0.871

Table 3.1 presents the executives responses regarding the significance of CRM due
to its benefits as mentioned in table. Response from various respondents indicates that Banks
consider the CRM as very significant as it in turn provides various benefits and plays an
important role in overall satisfaction of the customers. By Comparing the Public, Private and
Foreign sector Banks, it is observed that all the three categories of bankers values the CRM
due its significance but there is insignificant difference in frequency of the opinions from the
executives, with respect to the parameters mentioned in the table. All the parameters have
been considered important by all the bankers as the response varies between 95.2 percent to
99.2 percent in case of foreign banks which means the bank considers and recognise the
above mentioned benefits of CRM where as the response from the private sector bank varies
among 91.6 percent to 98.8 percent which also underpin the benefits associated with the
implementation of CRM in banks. The response of the public sector banks varies in the range
of 81.7 percent to 94.8 percent, which shows the consent of the public sector banks regarding
the significance of CRM and its associated benefits. The retention of existing customers and
improve efficiency of marketing process in the bank has been considered as the top most
benefit of CRM as both have got the 94.8 percent and 98.8 percent response of the executives
belonging to the public and private sector banks respectively. The response of foreign sector
banks indicates the retention of existing customers, reduces customer conflicts, provides
value for customers and maintains long term relations as the most precious with a value of
99.2 percent.
It shows that the executives of Private and Foreign Banks are more appreciative for
the significance of CRM over the executives of the public sector banks. However, in the rest
other points, no considerable differences have been observed and found that all the three
categories of bankers consider the same sought of assessment to these benefits of CRM. The
same has also been confirmed by Grnroos (1995) in his study where he pointed out that the
CRM implementation helps the banks in retaining the existing customers, reducing the
conflicts and improving the efficiency of banks.
Further the response of the customers belonging to these three categories of banks has
also been analysed in relation to the significance of CRM and its associated benefits in
table 3.2.

96

TABLE 3.2: COMPARISON BETWEEN THE PUBLIC, PRIVATE AND FOREIGN

BANKS ON SIGNIFICANCE OF CRM IN BANKING INDUSTRY: CUSTOMERS
VIEW POINT
S.
No.

CRM is
significant
as it

Public Sector
Banks
Scores
%
N = 500

Private Sector
Banks
Scores
%
N = 500

Foreign Sector
Banks
Scores
%
N = 500

1.

Increases profitability

448.5

89.7

442.5

88.5

455

91

2.

Increases market share

351.25

70.25

453

90.6

452

90.4

3.

Gaining an edge over

competition in the
marketplace
Increases customer
loyalty
Differentiates from
competitive products /
Services
Attracts new customers

449.25

89.85

459.5

91.9

457

91.4

441

88.2

480

96

462

92.4

363

72.6

458.5

91.7

486

97.2

359.75

71.95

471

94.2

488

97.6

Retains existing
customers
Increases customer
satisfaction for
products and services
Customize products /
services for customers
Helps in developing
new products / services
for the customers
Reduces cost of sales
effort
Provides cross
selling opportunities
Increase selling
opportunities
Reduces customer
conflicts
Achieves Mutual Trust
with Customers
Achieves reputation for
fairness with customers
Provides value for
customers
Maintains Long term
relation with customer
Shares information
with customer related
to bank
Helps in understanding
customers needs and
expectations
Providing significant
business benefits to the
bank
Helps for better
management of
customers
Improves efficiency of
marketing processes in
the bank

460

92

470

94

475

95

449.75

89.95

442.5

88.5

446

89.2

406.75

81.35

417

83.4

452

90.4

367.75

73.55

433

86.6

460

92

391.3

78.26

410

82

457

91.4

410

82

456

91.2

427.5

85.5

383

76.6

447

89.4

410

82

422.6

84.52

445

89

470

94

411.25

82.25

434

86.8

480

96

446.25

89.25

449

89.8

440

88

410.25

82.05

409

81.8

452

90.4

446

89.2

474

94.8

490

98

403

80.6

420

84

440

88

411.25

82.25

472.5

94.5

466

93.2

434.5

86.9

472

94.4

490

98

385.75

77.15

425

85

475

95

393.75

78.75

448

89.6

481

96.2

4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.

Source: Primary Data; Percentage Analysis

Bartletts Test Significance: 0.000
KMO: 0.882

97

Cronbachs Alpha: 0.871

The Significance of CRM due to various motives mentioned in the table, the
responses clearly indicate that the customers of Public, Private and Foreign sector banks
believe that the retention of existing customers is the most significant advantage of CRM as
the 92 percent, 94 percent and 95 percent of the response is in favor of this statement,
respectively. The customers of foreign sector banks have submitted their response in favor of
all the statements mentioned in the table above as the range of response lies between 82
percent and 98 percent. Further, as indicated in the table, 81.8 percent to 96 percent
customers of the Private sector banks and 70.2 percent to 92 percent customers of the Public
sector banks have favored the various statements related to the significance of CRM in banks.
The major benefits as per the customers view point are maintaining long term relation;
provide significant benefits to the bank, gaining an edge over the competitors, enhancing
customer loyalty and reduction in customer conflicts. The results have also been tested and
confirmed by Bitner (1990) as he concluded that the increase in customer loyalty and long
term relation with the customers can be achieved by designing and implementing a good
CRM process. N Subramanyam (1998) also supported that the corporate growth is highly
dependent upon the customer network and relationships maintained with them. He further
believed that the Customer loyalty has always been valuable and has become more vital for
the success of service firms. Further these results regarding the significance of CRM has also
been verified with the help of statistical techniques like mean score, standard deviation, t
test and ANOVA.
Table 3.3 is indicating the mean score and the standard deviation for the various
benefits of Significance of CRM and among the various variables, the highest mean score (x
= 4.87 and x = 4.70) by the executives and customer respectively, has been observed by the
statement that CRM is significant as it helps in retention of existing customers. Therefore, it
could be concluded that the CRM process in the banks are helpful in retaining the existing
customer as retention of customer is more profitable for the banks instead of acquiring the
new customers. The same has been supported by a survey conducted by FICCI and E&Y in
the year 2010 where they have sighted the retention of customers as the biggest challenge for
the Indian Banks in the current competitive environment. The mean score of the statements or
variables 1 to 6 and 8 to 23 are in the range of 4.56 to 4.85, which depicts that the executives
of the banks have the same opinion and agrees upon these benefits of customer relationship
management. The mean score is further observed in the range of 4.50 to 4.70 on the benefits
coupled with CRM stated at the number 3, 4, 18, 21 and in the range of 4.13 to 4.49

98

mentioned at statement number 1, 2, 5, 6, 8 to 17, 19, 20, 22, 23 which indicates that the
customers have also realized the value and benefits associated with the CRM.
TABLE 3.3: MEAN SCORE TABLE OF THE RESPONSE OF THE EXECUTIVES
AND CUSTOMERS IN RELATION TO SIGNIFICANCE OF CRM
S.
No.

CRM is
significant
as it

Executives
Std.
Mean
Deviation

Customers
Std.
Mean
Deviation

1. Increases profitability

4.74

0.151

4.49

0.063

2. Increases market share

Helps to gain an edge over competition
3.
in the market place
4. Increases customer loyalty
Differentiates competitive products /
5.
Services
Attracts new customers through referral
6.
marketing
7. Retains existing customers
Increases customer satisfaction for
8.
products and services
Customize products / services for
9.
customers
Helps in developing new products /
10.
services for the customers
11. Reduces cost of sales effort
12. Provides cross selling opportunities
13. Increase selling opportunities
14. Reduces customer conflicts
15. Achieves Mutual Trust with Customers
Achieves reputation for fairness with
16.
customers
17. Provides value for customers
Maintains Long term relation with
18.
customers
Shares information with customer
19.
related to bank
Helps in understanding customers needs
20.
and expectations
Provides significant business benefits to
21.
the bank
Helps for better management of
22.
customers
Improves efficiency of marketing
23.
processes in the bank

4.78

0.086

4.19

0.585

4.66

0.237

4.55

0.053

4.64

0.303

4.61

0.195

4.71

0.284

4.36

0.646

4.59

0.422

4.40

0.697

4.87

0.590

4.72

0.566

4.65

0.331

4.46

0.036

4.64

0.301

4.25

0.237

4.56

0.420

4.20

0.474

4.68
4.69
4.83
4.73
4.80

0.191
0.131
0.116
0.256
0.117

4.19
4.31
4.13
4.46
4.42

0.339
0.232
0.321
0.237
0.350

4.75

0.240

4.45

0.046

4.81

0.217

4.24

0.245

4.83

0.213

4.70

0.223

4.76

0.191

4.21

0.185

4.80

0.067

4.50

0.336

4.77

0.050

4.66

0.283

4.80

0.131

4.29

0.447

4.78

0.099

4.41

0.441

Source: Primary Data

Bartletts Test Significance: 0.000

KMO: 0.882

Cronbachs Alpha: 0.871

EXPLORATORY FACTOR ANALYSIS FOR SIGNIFICANCE OF CRM

The statements were further put for factor analysis by using principal component
analysis with varimax rotation. Factor analysis resulted into four-factor solution for
significance of CRM. The scale of variables were also put to the reliability test and the
obtained value revels that Cronbachs Alpha of the scale was 0.871, which has been
considered satisfactory. Kaiser Meyer Olkin (KMO) measure of sampling adequacy was
also applied and the value obtained 0.882 (> 0.5) indicates that the factor analysis applied to

99

the scale is appropriate. Further the Bartletts test of Sphericity was also checked which
resulted in 0.000 level of significance.

S. No.

TABLE 3.4: TOTAL VARIANCE AND EGIEN VALUE

Factor

Eigen
Value

Percentage of variance explained

Cumulative
Percentage

Factor 1

5.30

32.2

32.2

Factor 2

1.88

10.4

42.6

Factor 3

1.24

8.3

50.9

Factor 4

1.04

7.6

58.5

Note: Extraction method: Principal Component Analysis; Source: Primary data

The scale consisting of 23 items was subjected to factor analysis and the items having
Eigen value more that 1 were kept. These factors were selected and provided appropriate
titles like Customer trust and loyalty, Customer Retention, Competitive Advantage and
Customer Satisfaction. The descriptive statistics of these factors has been covered in
subsequent analysis.
FACTOR 1: CUSTOMER TRUST AND LOYALTY
This factor is comprised of eight aspects related to the significance of CRM in Indian
banking Industry. The factor loading for increase customer loyalty is 0.765 which helps in
increase in market share and profits for which the factor loading is 0.649 and 0.654
respectively revealing that by increasing the customer loyalty the market share can be
amplified which in turn raise the profits for the banks. It also helps in attracts new customers
through referral marketing with a factor loading of 0.715, which means that the loyal
customer can give the referral customers, which is also supported by Dibbs L., (2000). It
signifies that the loyal customers can influence the new customers very easily.
The issues like Increase in selling (Factor loading 0.587) and cross selling
opportunities (Factor Loading 0.567) are also the considerable benefits provided by the
customer loyalty which means that the new selling opportunities are strongly associated with
the customer loyalty and trust. The next dimension of customer loyalty i.e. reduces the sales
effort has the factor loading 0.688 which means as the selling and cross selling opportunities
increases the sales cost reduces extensively and add up the earnings of the bank. The same
has been confirmed by Atul Parvityar and Jagdish Seth (2001) where they advocated that
the CRM helps in reducing the sales cost as it generates the repetitive buying. It also helps the
bank in promoting their new products as the banks save a lot on the cost of sales effort.

100

The eighth parameter achieves mutual trust with the customer has the factor loading
of 0.755 which illustrates that the development of mutual trust is an important outcome of the
CRM which has been the main attempt of the service industry especially the financial
services industry like banks. Building up trust is basic fundamental of the CRM as loyalty
and trust are complementary to each other. Thus the CRM practice brings and enhances the
trust level of the customers in the Banks policies and practices which consequences in the
customer loyalty in last.
TABLE 3.5: FACTOR LOADINGS OF THE VARIABLES REGARDING
SIGNIFICANCE OF CRM
S. No.
F1
S1
S2
S3
S4
S5
S6
S7
S8
F2
S9
S 10
S 11
S 12
S 13
F3
S 14
S 15
S 16
S 17
S 18
S 19
F4
S 20
S 21
S 22
S 23

Factor Labels (F) and Variables (S)

Factor Loadings

Customer Loyalty and Trust

Increases profitability
Increases market share
Increases Customer Loyalty
Attracts new customers through referral marketing
Reduces cost of sales effort
Provides Cross Selling Opportunities
Increase Selling Opportunities
Achieves Mutual Trust with Customers
Customer Retention
Retains existing customers
Maintains Long term relation with customers
Reduces customer conflicts
Improves efficiency of marketing processes in the bank
Helps for better management of customers
Customer Satisfaction
Increases customer satisfaction for product and services
Customised product / services for the customers
Provide values for customers
Helps in developing new products / services for the customers
Shares information with customer related to bank
Helps in understanding customers needs and expectations
Competitive Advantage
Differentiates from competitive products / Services
Gaining an edge over competition in the market place
Provides significant business benefits to the bank
Achieves reputation for fairness with customers

Source: Primary Data

0.654
0.649
0.765
0.715
0.688
0.567
0.587
0.755
0.801
0.798
0.657
0.621
0.635
0.768
0.678
0.589
0.560
0.583
0.639
0.781
0.798
0.769
0.598

FACTOR 2 CUSTOMER RETENTION

The current factor is consisting five features related to the significance of CRM in
banking Industry. Retains the existing customer has scored the factor loading of 0.801,
which means Customer Relationship Management results in to the retention of the customers
who are considered as the most valuable assets for the banks. Retention of the existing
customers results in to the cost saving and image building of the bank. The high factor
loading indicates that the retention of the customer has been the most essential objective of
the banks in current era. Maintains long term relationships with the customer with a factor
loading of 0.798 depicts that it also helps in continuing the long lasting relationships with the

101

customers as it reduces customer conflicts which has scored the factor loading of 0.657 and
means that a better managed customer with a factor loading of 0.635 as their needs and
preferences has been taken care in advance and helps in improving the efficiency of
marketing process of the bank which has obtained the factor loading of 0.621.
FACTOR 3: CUSTOMER SATISFACTION
This factor is comprised of six issues related to the significance of CRM in Indian
Banking. Increase in customer satisfaction with a factor loading of 0.768 plays an important
role as it helps in understating the customers need and expectations, which has a factor
loading of 0.639. It implies that banks considers the need and expectation of the customer as
of utmost importance as the products or services can be customised accordingly which has a
factor loading of 0.678 and provides value to the customer with a factor loading of 0.589
vividly indicates that after understanding and customizing the needs and preferences of the
customers, their satisfaction level can be increased. The bank takes the help of satisfied
customer in developing the new products and services (factor loading of 0.560). The bank
shares valuable information related to bank has scored a factor loading of 0.583, which means
that the bank takes suggestions from their valuable customers for further improvement in
their process or functions. Thus from the current analysis it could be concluded that the banks
considers the customer satisfaction as an important factor to develop and maintain the
relationships with their customers.
FACTOR 4: COMPETITIVE ADVANTAGE
This era of intense competition has enforced the banks to develop the competitive
advantage over the competitors and the CRM plays as important role in achieving this
objective. The bank Differentiates from competitive products and Services with a factor
loading of 0.781 indicates that competitive markets are expecting the latest and competitive
products and services which has helped the banks in gaining an edge over the competitors
with a factor loading of 0.798 depicts that the CRM helps in building up the competitive
advantage over the competitors. It also improves the reputation of banks being fair in the
process with the customers with a factor loading of 0.598 which in last provides significant
intangible benefits to the banks has a factor loading of 0.769.
Thus from the above factor analysis and factor loadings, it is evident that the CRM is
highly valuable for the Indian banks in current economic scenario.

102

COMPARISONS OF MEANS BETWEEN EXECUTIVES AND CUSTOMERS OF

PUBLIC SECTOR BANKS FOR SIGNIFICANCE OF CRM
Table 3.6 presents the comparison of the mean scores of the response submitted by
the executives and customers of the public sector banks with respect to the four factors for
significance of CRM in banking. The mean score for the first factor i.e. customer loyalty and
trust is 4.51 for executives and 3.99 for the customers. The variance of means is insignificant
as per the t value 1.897 at 0.05 level. In regard to the next factor customer retention the
mean scores are 4.44 and 4.04 for the executives and customers respectively. The difference
in means indicates some variance among the executives and customers but it is insignificant
as per the t value 1.944 at 0.05 level. The mean score for the customer satisfaction are 4.41
in case of executives and 4.08 in case of the customers but the variance in means has proved
insignificance as per the t value obtained 2.987 at 0.05 level. The last factor of significance
of CRM is competitive advantage and has obtained the mean score of 4.50 and 4.23 for the
executives and customers respectively but the variance has been proved insignificant on the
basis of obtained t value 1.453 at 0.05 level.
TABLE 3.6: t RATIO OF THE RESPONSE OF EXECUTIVES AND CUSTOMERS
OF PUBLIC SECTOR BANKS ON FACTORS OF SIGNIFICANCE OF CRM
Factors for Significance of
CRM
Customer
Trust

Loyalty

and

Executives
(n = 25)
Mean
S.D.
4.51
0.204
0.374

Customer Retention

4.44

Customer Satisfaction

4.41

0.237

4.50

0.149

Competitive Advantage

Customers
(n = 100)
Mean
S.D.
3.99
0.350
4.04

0.292

4.08

0.260

4.23

0.406

t-value

Sig. Vale
(2 tailed)

1.897

.76

1.944

.98

2.987

.34

1.453

.11

Source: Primary Data

** Significant at 0.05 level, * Significant at 0.01 level
COMPARISONS OF MEANS BETWEEN EXECUTIVES AND CUSTOMERS OF
PRIVATE SECTOR BANKS FOR SIGNIFICANCE OF CRM
Table 3.7 presents the comparison of the mean scores of the response submitted by
the executives and customers of the private sector banks with respect to the four factors for
significance of CRM in banking. The mean score for the first factor i.e. customer loyalty and
trust is 4.76 for executives and 4.49 for the customers. The variance of means is insignificant
as per the t value 2.443 at 0.05 level. With regard to the next factor customer retention the
mean scores are 4.74 and 4.52 for the executives and customers respectively. The difference

103

in means indicates some variance among the executives and customers but it is insignificant
as per the t value 2.090 at 0.05 level. The mean score for the customer satisfaction are 4.78
in case of executives and 4.32 in case of the customers but the variance in means has proved
insignificant as per the t value obtained 2.613 at 0.05 level. The last factor of significance
of CRM is competitive advantage and has obtained the mean score of 4.77 and 4.59 for the
executives and customers respectively but the variance has been proved insignificant on the
basis of obtained t value 2.043 at 0.05 level.
TABLE 3.7: t RATIO OF THE RESPONSE OF EXECUTIVES AND CUSTOMERS
OF PRIVATE SECTOR BANKS ON FACTORS OF SIGNIFICANCE OF CRM
Factors for Significance
of CRM
Customer Loyalty and
Trust
Customer Retention
Customer Satisfaction
Competitive Advantage

Executives
(n = 25)
Mean
S.D.
4.76
0.060
4.74

0.136

4.78

0.065

4.77

Customers
(n = 100)
Mean
S.D.
4.49
0.217
4.52

0.052

0.200

4.32

0.230

4.59

0.094

t-value

Sig. Vale
(2 tailed)

2.443

.76

2.090

.10

2.613

.78

2.043

.30

Source: Primary Data

** Significant at 0.05 level, * Significant at 0.01 level
COMPARISONS OF MEANS BETWEEN EXECUTIVES AND CUSTOMERS OF
FOREIGN SECTOR BANKS FOR SIGNIFICANCE OF CRM
Table 3.8 presents the comparison of the mean scores of the response submitted by
the executives and customers of the foreign sector banks with respect to the four factors for
significance of CRM in banking. The mean score for the first factor i.e. customer loyalty and
trust is 4.87 for executives and 4.53 for the customers. The variance of means is insignificant
as per the t value 3.009 at 0.05 level. In regard to the next factor customer retention the
mean score are 4.94 and 4.78 for the executives and customers respectively. The difference in
means indicates some variance among the executives and customers but it is insignificant as
per the t value 2.097 at 0.05 level. The mean score for the customer satisfaction are 4.90 in
case of executives and 4.52 in case of the customers but the variance in means has proved
insignificant as per the t value obtained 2.487 at 0.05 level. The last factor of significance
of CRM is competitive advantage and has obtained the mean score of 4.88 and 4.68 for the
executives and customers respectively but the variance has been proved insignificant on the
basis of obtained t value 1.055 at 0.05 level.

104

TABLE 3.8: t RATIO OF THE RESPONSE OF EXECUTIVES AND CUSTOMERS

OF FOREIGN SECTOR BANKS ON FACTORS OF SIGNIFICANCE OF CRM
Factors for Significance
of CRM

Executives
(n = 25)
Mean
S.D.
4.87
0.067

Customers
(n = 100)
Mean
S.D.
4.53
0.254

t-value

Sig. Vale
(2 tailed)

3.009

.15

Customer Retention

4.94

0.052

4.78

0.076

2.097

.87

Customer Satisfaction

4.90

0.042

4.52

0.093

2.487

.76

Competitive Advantage

4.88

0.097

4.68

0.238

1.055

.17

Customer Loyalty and

Trust

Source: Primary Data

** Significant at 0.05 level, * Significant at 0.01 level
As the significance value is not less than .05 and .01 means that the difference of
means is not significant.
Thus from the above discussion it is clear that though there is some difference in the
mean score of executives and customers on the factors for significance of CRM. This
variance is insignificant and can be concluded that both the executives and the customers has
the same opinion for the significance of CRM and its benefits.
3.3.6 COMPARISON OF VARIANCE BETWEEN PUBLIC, PRIVATE AND
FOREIGN SECTOR BANKS IN RELATION TO THE SIGNIFICANCE OF CRM BY
USING ANOVA (EXECUTIVE VIEW POINT)
Table 3.9 present the results of ANOVA regarding the comparison of variance among
the response of executives from the three categories of the banks taken under study, which
reveals that the variance is insignificant as the F value is above the significant value of 0.05
in case of all the four factors of significance of CRM. Thus it could be concluded that there is
no significant variance in the response of the executives of public, private and foreign sector
banks.
TABLE 3.9: SUMMARY OF VARIANCE BETWEEN PUBLIC, PRIVATE AND
FOREIGN SECTOR BANKS IN RELATION TO THE SIGNIFICANCE OF CRM BY
USING ANOVA (EXECUTIVE VIEWPOINT)
S.
No.
1

Factors

Sig. Groups

Sum
of
Squares
66.715

Df
3

Mean
Square
22.238

F1

Between Groups

4.71

25

0.188

Total
Between Groups

71.425
66.585

28
3

22.195

With in
Group

4.66

25

0.189

71.245

28

With in
Group
2

F2

Total

the

the

105

Sig.

2.356

.089

2.387

.112

F3

F4

Between Groups

66.307

21.102

With in
Group

4.71

25

0.189

Total
Between Groups

71.017
66.817

28
3

22.272

With in
Group

4.60

25

0.188

71.417

28

the

the

Total

2.948

.169

2.835

.095

Source: Primary Data

** Significant at 0.05 level, * Significant at 0.01 level

3.3.7 COMPARISON OF VARIANCE BETWEEN PUBLIC, PRIVATE AND

FOREIGN SECTOR BANKS IN RELATION TO THE SIGNIFICANCE OF CRM BY
USING ANOVA (CUSTOMER VIEW POINT)
Table 3.10 present the results of ANOVA regarding the comparison of variance
among the response of customers from the three categories of the banks taken under study,
which reveals that the variance is insignificant as the F value is above the significant value of
0.05 in case of all the four factors of significance of CRM. Thus it could be concluded that
there is no significant variance in the response of the customers of public, private and foreign
sector banks.
Table 3.10: Summary of variance between public, private and foreign sector banks in
relation to the significance of CRM by using ANOVA
(Customer viewpoint)
S.
No.
1

Factors

Sig. Groups

F1

F2

F3

F4

Df

Between Groups

Sum
of
Squares
56.601

Mean
Square
18.867

With in the Group

4.33

100

0.043

Total
Between Groups

60.931
59.600

103
3

19.866

With in the Group

4.44

100

0.044

Total
Between Groups

64.04
55.739

103
3

18.579

With in the Group

4.30

100

0.043

Total
Between Groups

60.039
60.863

103
3

20.287

With in the Group

4.50

100

0.045

Total

65.363

103

Source: Primary Data

** Significant at 0.05 level, * Significant at 0.01 level

Sig.

4.967

.243

3.834

.087

2.966

.158

3.583

.176

Based on the significance table 3.9 and 3.10, the gained numbers indicate that the
significance of CRM have explained 95 percent of changes and proved insignificant at

106

5percent level indicating that the hypothesis H 01 is accepted which states that CRM is
significant for the banks and the hypothesis H 11 is rejected.
3.3.8 OVER ALL FACTOR STATUS
Table 3.11 indicates the overall status of the factors related to the significance of
CRM for banking industry in India with the combined view of executives and customers.
S.No.
1
2
3
4

TABLE 3.11: FACTORS STATUS

Factors
Customer Loyalty and Trust
Customer Retention
Customer Satisfaction
Competitive Advantage

Mean
4.61
4.67
4.47
4.43

S.D.
.515
.504
.641
.565

Source: Primary Data

It is evident from the table that the customer retention (x = 4.67) has been considered
as the most important factor of the CRM by the banks followed by Customer loyalty and trust
(x = 4.61), Customer satisfaction (x = 4.47) and competitive advantage (x = 4.43) which are
also emerged as the important factor related to the significance of CRM in Banking Industry.
The mean score indicates that for the development of long and profitable relations, CRM is
essential as it not only retains the existing customer but also results in to higher profits for the
banks. The results of the study has also been confirmed by Joe Peppard, (2000) that
retaining of the customer is cost effective than acquiring the new customers.
From the above analysis and discussion it could be vividly seen that CRM is highly
significant for the Indian banks as it results in to various benefits like retention of customers,
customer loyalty, reducing sales cost, increasing market share and profits, building up the
image and competitive advantage and customer satisfaction. The analysis has indicated that
the both executives and customers have similar opinion on the significance of CRM in banks
and agree with regard to its benefits.

**********

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