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ISSN No-2031-5063

Vol.1,Issue.III/Sept 11pp.1-4

Research Paper

Analytical study of CRM: As a strategic tool in Banking sector in Western Vidarbha with reference to Akola District Prof. Dr. G. L. Pedhiwal.
HOD (Co-ordinator) Smt.L.R.T. College of Commerce, Akola.

& Sanjay J.Tale


M.B.A

Abstract : Customer relationship management systems are being widely across various sectors and have emerged as a popular business strategy in today's competitive environment in companies. It has been viewed as a process aimed at collecting customer data, find profiles of customers and use the customer knowledge in specific marketing activities. It is a discipline which enables the companies to identify and target their most profitable customers. CRM implementation is on way in many Indian banks. However such implementations are not without hiccups. This paper takes a look at the status of a CRM in major banks operating in Western Vidarbha District. CRM involves new and advance marketing strategies which not only retain the existing customers but also acquire new customers and also analyzes their efforts in terms of a strategic framework and points out some of the deviations that have occurred in the implementations. It has been invented as a unique technique capable of remarkable changes in total output of companies.
INTRODUCTION: Rising competition, proliferating customer contact, intensifying attacks on customer information, increasing customer expectations, identifying new marketing opportunities etc have made Banking Sector to face superior challenges than ever before in executing their Customer management strategies. Every organization believes in the significance of knowing the customer. The current economic environment and financial crisis has most probably led many financial services institutions to focus on their CRM strategies while screening customer relationship as a key to profitability of a retail activity and managing the cost and risk associated with it. Every bank wants to provide goodquality customer service. Most of the Banks believe that CRM is one of the best strategies for increasing revenueprofit margin, developing new market share and to create good brand image among the customers. In Marketing Customer Relationship Management have assumed mounting importance in the overall of a Bank, particularly when competitive onslaught has been fiercely active, Customer Relationship Management has been recognized a, a new marketing paradigm and is emerging as the core marketing activity. No wonder that it has emerged as a strategic tool in the hands of marketing people. Customer relationship management is more focused on trust, commitment and conceptualized now. This paper deals with the role of Customer Relationship Management in banking sector, to gain better understanding of the role of CRM in maximizing customer profitability and to serve their customer better and meet their business objectives. Objectives: The research objective of this study is to try to identify the success factors for an effective CRM implementation within Banks in Western Vidarbha Districts. This thesis will provide valuable information on the viability of a CRM implementation and on the barriers that are related to it. The steps taken and the issues that will be addressed in order to achieve the objective of this thesis are: To study CRM in Banking Sector. To study the consumer behavior towards CRM in Banking Sector. Customer Relationship Management Ideally, CRM defines an enterprise-wide program that helps to align business processes and functions against customerdriven priorities. A broad definition of Customer Relationship Management (CRM), beyond a tactical or technical project, is being defined by Bottle (2003). "CRM is the core business strategy that integrates internal processes and functions and external networks, to create and deliver value to targeted customers at a profit. It is grounded on high quality customer-related data and enabled by information technology". CRM is not just a technology but rather a comprehensive customer-centric approach to an organization's philosophy in dealing with its customers. This includes policies and processes, front-of-house customer service. Employee training. marketing. systems and information management. Hence, it is important that any CRM implementation considerations stretch beyond technology. Towards the broader organizational requirements. In other words, CRM is about managing the customer portfolio efficiently and effectively by designing business policies which focus around the customer. CRM consists of three main strategies, the acquiring, enhancing and retaining which companies can adopt as shown in the diagram below (Kolkata, 2002)

Emergence of CRM The primary reason for the emergence of CRM is the change in the marketing environment. As shown in the figure below the marketing model is changing from the product-centered approach to customer-centered approach (Gilbert, 2003)

Golden Research Thoughts

Analytical study of CRM: As a strategic tool in Banking sector in Western Vidarbha with ...

Vol.1,Issue.III/Sept 11

CRM to capture and retain the customers. There is a shift from bank centric activities to customer centric activities are opted. The private sector banks in India deployed much innovative strategies to attract new customers and to retain existing customers. CRM in banking sector is still in evolutionary stage, it is the time for taking ideas from customers to enrich its service. The use of CRM in banking has gained importance with the aggressive strategies for customer acquisition and retention being Organization needs to create customized offers for employed by the bank in today's competitive milieu. This has customers and ensure relationship by providing better resulted in the adoption of various CRM initiatives by these customer service and management of customer expectations banks. On top of that, implementing a CRM approach can (Reichheld & Sassar 1990). In fact customers are the "raison achieve value for the company as shown on the diagram de etre" and marketing should be devoted at enhancing below: customer relationships. But one should take note of the increasing use of the internet which is changing what is possible and what is expected in terms of CRM as technological advances in global networks, convergence and improved interactivity are to explain the growth of CRM (Peppard, 2000). Now companies should go beyond CRM towards whole relationship management by managing superior value chain delivers a high level of product quality, and service quality. Goals of CRM Based on the study done by Swift (2001), Person (2004, p.11), believes that by As shown above, CRM will provide and the Implementing CRM strategies, firms can achieve many economically advantage by enhancing the company value by goals such as: creating competitive advantage and customer retention (Heinze et al, 2004). But yet a number of reasons why CRM Plummeting costs of sales implementations may not always fulfill their potential Plummeting costs of acquiring new customers (Turban et al (2004) Enhanced customer satisfaction and profitability Weakening to provide again and again good experience for Decreasing the need to acquire so many new customers the customer Calculate profitability of customers Top management failing to buy into CRM strategies Higher customer retention rates CRM ultimately depends on the quality of its employees CRM Strategy: Technologies will guarantee success In any organization CRM strategy is a wide-ranging CRM in banking sector and detailed definition of the scope of' the CRM programmed According to a RBI statement, in future India will towards organizational goals. "The strategy is needed to keep have a competitive banking market as one of the most businesses customer centric and to help the company attractive market after 2009. India will see foreign banks constantly evolve internal processes and technology to come in, what with more freedom to come in. grow and acquire and retain customers," explains Krishna acquire. Therefore, it is imperative that Indian banks wake up Kumar.CRM is fundamentally a strategy aligned with the to this reality' and re-focus on their core asset - the Customer. superseding corporate strategy. It tries to attempts to A greater focus on Customer Relationship Management optimize a firm's profitability, revenue and customer (CRM) is the only way the banking industry can protect its satisfaction by focusing on a customer centric process. The market share and boost growth. With intensifying idea of CRM is that it helps businesses use technology and competition, declining market share, deregulations, smarter human resources to gain insight into the behavior of and more demanding customers there is competition customers and the value of those customers. With an between the banks to attain a competitive advantage over one effective CRM strategy, a business can increase revenues by: another or for sustaining the survival in competition. In India providing services and products that are exactly the banking sector has been operating in a very stable what your customers want environment from last thirty -forty years. In current scenario offering better customer service of banking sector the falling of interest rates and tough cross selling products more effectively competition between these players had made Indian bankers helping sales staff close deals faster to realize that the purpose of their business is to create and retaining existing customers and discovering new ones retain a customer and to see that the entire business process is Need consistent with an integrated effort to discover, retain and The present day CRM includes developing satisfy customer needs. But the success Of' CRM Strategy customer base which made bank to pay adequate attention to depends upon its ability to understand the needs of the increase customer base by all means and it is possible only customer and to integrate them with the organization's when the performance is at satisfactory level and then only strategy people and technology and business process. the existing clients can recommend others to have banking Financial services are in a structural change whereby connection with the bank which he is operating. Hence competition and customer demands are increasing. As such asking reference from the existing customers can develop financial companies need to focus shift from product their client base. If the base increased, the profitability is also provider to relationship one on core competencies in order to increase. Hence the bank has to implement lot of innovative

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Analytical study of CRM: As a strategic tool in Banking sector in Western Vidarbha with ...

Vol.1,Issue.III/Sept 11

deliver to the value of the customers (Lehman, 2000) as shown in the diagram below:

banking brands of world are having their branches in Akola. Almost all banks offer a huge potential in all types of jobs viz. teller jobs, bank manager, security, call center, courier and investigator jobs. The banking community all over doing a lot of investment in Akola. The operative people are hired preferably from Akola itself. Also a growth in demand of examiner jobs is being seen.

General survey of the Banks in Western Vidarbha: In Western Vidarbha one of the oldest systems survived in India is the money-lender's system district through the centuries past. Even today major saucepan of this system holds good influence over the agricultural masses in the district of Western Vidarbha. The main reason for this is that he is an important source of credit supply to the agricultural people in the district. Another reason is the reluctance of the village people to invest their funds for productive purposes or deposit them in savings banks. The growth of modern banking in this district of Western As shown in the Porter Analysis below, the threat of new Vidarbha was one of the factors responsible for reducing the entrance is higher with the opening of private banks such as influence of money-lenders. With the establishment of the ICICI, HDFC, and Axis etc., which offers a different set of Indian Banks the banking facilities spread in the Western services. The threat of substitutes is also increasing whereby Vidarbha areas such as Amravati, Akola, Buldhana, Yavtmal, now insurances companies are offering the opportunity to and Washim with the result that the hold of the money-lender put money. All these increase the barging power of customers on rural credit declined to some extent. In the beginning of who will have variety of options: the 19th century some firms started banking business in Akola district including Washim district. The following Research Methodology table gives the list of banks in Akola district and Washim Rising competition, proliferating customer contact, district, their date of establishment and the place of location. intensifying attacks on customer information, increasing customer expectations, identifying new marketing Table No. 21 opportunities etc have made Banking Sector to face superior List of banks in Akola & Washim District challenges than ever before in executing their Customer Sr. Place Name of bank Date of opening management strategies. CRM is one of the approaches that is No. build around the customer and provides banks with tools and Central Bank of India 19/02/1945 Punjab National Bank 31/03/1954 techniques to build up this relationship and strengthen the State Bank of India 01/07/1955 bond between the customer and the bank. However as 1. Akola Bank of Maharashtra 14/10/1956 noticed in literature, CRM in banking sector is a Bank of Baroda 29/04/1961 companywide philosophy which is focus around the State Bank of India 07/11/1968 Allahabad Bank 19/04/1969 customer. But are banks really doing so or they are just 2. Akot State Bank of India 14/12/1957 making wrong use of the concept whereby its applicability is 3. Balapur State Bank of India 28/10/1965 far from evident. Bearing this in mind, the problem definition State Bank of India 28/10/1965 4. Karanja will be termed as Customer Relationship as a strategic tools Bank of Baroda 29/04/1961 in the banking sector. For the purpose of the study, both Bank of Baroda 29/04/1961 5. Murtizapur State Bank o f India 13/09/1963 exploratory and descriptive research has been used for Bank of Maharashtra 03/05/1965 accomplishment of the aims and objectives of the study. 6. Mangrulpir State Bank of India 24/12/1965 Exploratory research was used in a vision to discover how 7. Washim State Bank of India 30/07/1959 CRM brings competitive advantage and to support The nationalization of 14 eminent banks in 1969 by the explanatory research; both quantitative and qualitative data Government of India was a very - important landmark in the were used in completing the survey. For the purpose of this development of banking out of them the 14 nationalized study both secondary and primary data have been used. banks. The Punjab National Bank, the Central Bank of India, Secondary data were mainly from journal, articles etc. For the Bank of Baroda. The Bank of Maharashtra and the the case of primary data, three methods namely interview, Allahabad Bank had their branches in the district in 1969. questionnaire and focus group were used in view to ensure a These bank, provide easier and better credit facilities and good synergy for the study. To ensure reliability, the devotes time and attention to expanding account questionnaire was designed according to a process and relationships with those customers through individualized validated. marketing and customized service-all delivered through the 5.0 Findings and Analysis various sales channels that the bank uses to small industries The major findings of the study will be illustrated in this self employed and farmers than they used to provide prior to section. In view to get a concise and precise analysis, data has nationalization. been analyzed from the customer point of view and is listed Overview of the Banking Sector in Akola:as follows: Akola is emerging as a fast growing city in this part of country. Like all other cities, the economy of Akola is also connected to banking sector. So in Akola, this sector is also witnessing a boom for last so many years. Akola has a number of public sector and private sector banks. The best

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Analytical study of CRM: As a strategic tool in Banking sector in Western Vidarbha with ...
5.1 Internal CRM (Employees Point of View) Statements Staff are endow with CRM Objectives Strongly Agree 19 Agree 32. 20 Neutral 34. 47 Disagree 10 8 Strongly disagree 5 4

Vol.1,Issue.III/Sept 11

Reference : Customer Relationship Management ( By, Roger J. Baran Robert J. Galka Daniel, P. Strunk. Indian As shown in the table above, 18% of respondents do Edition ISBN -13 : 978-81-315-05182-2). not agree of whether there is an obligation to sustain a long Marketing Strategy (Planning. Implementation, and Control) By Subhash C. Jain (ISBN 81-315-0543-X) term relationship with the bank. This shows that the Edited by V V Gopal year 2004. CRM In Banking Concepts employees are motivated to be part of the company and and Cases,The ICFAI University Press. Hyderabad, which may in turn affect the company ability to provide a better customer service to its customers. On the other hand, R.S. Prasad year 2005. Understanding CRM Present and Future. The ICI FAI university Press. Hyderabad only 12% of the employees do not agree that employees share a customer centric culture within the company which is http://www.ameinfo.com/43019 http://networkmagazineindia.com/200505/coverstory01.sht very low. 5.2 Perception of the bank to the general public point of ml. view Study shows that only 19% strongly agree that the bank is trustworthy as compared to 12% and 10% who strongly agree that the bank is committed to customer financial needs and provides Valuable information as shown in the table below;
Statements Credibility of the bank Strongly Agree 19 Agree 42 33 34 36 Neutral 25 36 32 33 Disagree Strongly disagree 10 4 9 12 9 10 12 7

Recruits contribute to a 21 Customer Centric Culture Obligation to sustain 13 protracted term relationship The banking strategy is 16 focused on excel the customer needs Information about the 21 customers is stored in databases for future analysis

26

43

10

33

31

12

important. And employing CRM may only strengthen the relationship between perceptions and up-buying and crossbuying which is all in support of introducing CRM in service sector. Banks are realizing that CRM is the magic bullet that helps financial institutions to build stronger and more profitable relationships. Hence Banks should focus on delivering to customers by having a concise and precise ways of doing things through effective CRM solutions rather than developing product strategy.

38

24

10

Dedicated to customer 12 financial needs The bank provides precious 10 information Customer complaints are 15 welcomed and resolve quickly

Yet, it should be noted that there is a high majority of customers who agree that they trust the bank, commit themselves to the customer financial needs and provides valuable information. It can clearly be deduced that the bank image in the market is nearby from a customer centric bank, which customers are far from using the bank as a sole banking business partner for transactions. Hence majority of customers maintain relationships with other private banks which deliver to the expectations of the customer. Conclusion It is observed that CRM is the hot talk in the banking sector and its services are far more favorably. This could be further accredited to CRM a closer understanding and individualized service to the customer. There is strong recognition of its benefits for the long term organizational survival at both top and middle levels of management amongst Indian banking companies. This study shows that if organizations want to attain a sustainable competitive advantage through CRM, they should efficiently apply all the CRM resources to create CRM process capabilities which are unique and can not be copied by other organizations. There is a direct relationship between perception and satisfaction, commitment and loyalty which underlines the significance of CRM in service industry. For those planning to up-sell and cross-sell, raising customer perceptions is all the more

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