Planning Crm Programme

ASSIGNMENT REPORT ON PLANNING CUSTOMER RELATIONSHIP MANAGEMENT PROGRAMME ID NO.: CBASN. 24

(Approved by AICTE, Govt. of India) (Equivalent to MBA) ACADEMIC SESSION 2008-2010

Under the Guidance of

Submitted By:-

Dr. Urvashi Makkar

Vineet Kumar Sarawagi(BM-08223)

Professor & Chairperson-Marketing

INSTITUTE OF MANAGEMENT STUDIES LAL QUAN, PB NO-57, GHAZIABAD-201009

TO WHOM SO EVER IT MAY CONCERN

This is to certify that the assignment titled, “PLANNING CUSTOMER RELATIONSHIP MANAGEMENT PROGRAMME” is the bonafide work of Vineet Kumar Sarawagi. Further Certified, that to the best of my knowledge, the work reported herein does not form part of any other report or dissertation. I wish him good luck and success in their future endeavors.

Dr. Urvashi Makkar Area Chairperson-Marketing IMS, Ghaziabad

ACKNOWLEDGMENT

Any assignment puts to litmus test of an individual knowledge credibility or experience and thus sole

efforts of an individual are not sufficient to accomplish the desire successful completion of a project involve interest and effort of many people and so this becomes obligatory on the part to record our thanks to those who helped us out in the successful completion of our project.

Life is a process of accumulating and discharging debts, not all of those can be measured. We cannot hope to discharge them with simple words of thanks but we can certainly acknowledge them. At this level of understanding it is often difficult to comprehend and assimilate a wide spectrum of knowledge without proper guidance and advice. Hence would thank to Mr. Sanjeev Mishra (Branch Manager, ICICI) and Mr. Satish Jha (Branch Manager,HDFC) for there kind and supportive nature, without with this assignment can not have been completed this way. I would like to take this opportunity to express our Heartfelt Gratitude to Respected Dr. Urvashi Makkar, PGDM, IMS, Ghaziabad , for her round the clock Enthusiastic Support, Noble Guidance and Encouragement, which made this assignment successful. I are extremely thankful to her for making this project worthful.

EXECUTIVE SUMMARY The intense competition which banks have come to face, both as a consequence of growth of non-banking financial institutions as well as securitization has created the fear of high risk and has increased the attention towards Customer Relationship Management. Customer relationship management (CRM) is a multifaceted process, mediated by a set of information technologies that focuses on creating two-way exchanges with customers so that firms have an intimate

knowledge of their needs, wants, and buying patterns. In this way, CRM is intended to help companies understand, as well as anticipate, the needs of current and potential customers. The assignment requires studying and analyzing the implementation process of CRM in a bank. The assignment requires a detailed study of Process Involved in Planning of Customer Relationship Management and Need for Customer Relationship Management. The task also comprises of making things clear with the help of corporate examples under the heading of Understanding Business Process These two banks have been selected randomly as per the convenience of the student. The banks are ICICI Bank and HDFC Bank.

TABLE OF CONTENTS i)

Certificate …………………………………………………………………...…….…… I

ii)

Acknowledgment ………………………………………………………………..……. II

iii)

Executive Summary …………………………………………………………….….… III

Chapter 1: Introduction ………………………………………………..……….……...….1-3 1.1 Customer Relationship Management: The Concept 1.2Key CRM principles 1.3Objective of CRM 1.4 Need for CRM 1.5 Future Challenges of CRM Chapter 2: Objective of study ……..………………………………….………………..…..4 Chapter 3: Methodology ………………………………………..…………………..……...5 Chapter 4: Process Involved in Planning of Customer Relationship Management …... 6-10 4.1 CRM Formation Process 4.2 CRM Governance Process 4.3 CRM Performance Evaluation Process 4.4 CRM Implementation Issues Chapter 5: Need for Customer Relationship Management ………………………………..11 Chapter 6: Understanding Business Process …………………………………………...12-16 6.1 CRM in Banking Industry 6.2 Private Banking and CRM 6.2.1 ICICI Bank: 6.2.2 HDFC Bank: Chapter 7: Analysis………………………….…………………………………………….17 Chapter 8: Conclusion ……………………………………….…………………………..18 Chapter 9: Recommendation ……………………………………………………..………19 Chapter 10: Limitations of the Study ………………………………………………….….20 Chapter 11: Bibliography …………………………………………………………….. 21-22

CHAPTER:1 INTRODUCTION 1.1 Customer Relationship Management: The Concept Customer Relationship Management or CRM is the establishment, development, maintenance and

optimization of long-term mutually valuable relationships between consumers and the organizations. It focuses on understanding the needs and desires of the customers and is achieved by placing these needs at the heart of the business by integrating them with the organization's strategy, people, technology and business processes. The core theme of all CRM and relationship marketing perspectives is its focus on co-operative and collaborative relationships between the firm and its customers, and/or other marketing actors. An important facet of CRM is “customer selectivity”. As several research studies have shown not all customers are equally profitable (In fact in some cases 80% of the sales come through 20% of the customers). The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. By reducing customer defection (by as little as 5%) will result in increase in profits by 25% to 85% depending from industry to industry. So, we can say, Customer Relationship management is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.

1.2 Key CRM principles For successful implementation of CRM, understanding the customer is very important. A customers’ reaction to a cellular company operator may be quite different as compared to a car dealer. Besides for the same product or the service not all customers can be treated alike and CRM needs to differentiate between a high value customer and a low value customer. What during CRM an enterprise needs to understand while differentiating customers is: -

Sensitivities, Tastes, Preferences and Personalities

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Lifestyle and age

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Culture Background and education

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Physical and psychological characteristics

The key principles of CRM are as follows: •

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Differentiating Offerings •

Low value customer requiring high value customer offerings

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Low value customer with potential to become high value in near future

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High value customer requiring high value service

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High value customer requiring low value service

Keeping Existing Customers Grading customers from very satisfied to very disappoint should help the organization in improving its customer satisfaction levels and scores. As the satisfaction level for each customer improves so

shall the customer retention with the organization. •

Maximizing Life time value Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points by customer, marketers can maximize share of purchase potential. Thus the single adults shall require a new car stereo and as he grows into a married couple his needs grow into appliances.

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Increase Loyalty Loyal customers are more profitable. Any company will like its mindshare status to improve from being a suspect to being an advocate. Company has to invest in terms of its product and service offerings to its customers. It has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve. Referral sales invariably are low cost high margin sales.

1.3 Objective of CRM The objective of Customer Relationship Management is as follows: •

CRM aims at integrating all business strategies that places the customer at the centre of a business consciousness.

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Aligning of organization towards customers.

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Integrating your customer touch points.

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Knowing and understanding your customers and potential customers.

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Establishing and managing relationships with customers.

1.4 Need for CRM A Relationship-based Marketing approach has the following benefits:

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Growth: Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. Referrals: Long-term customers are more likely to become a referral source. Cross-Sell: The longer a relationship continues; the better a bank can understand the customer and his/her needs & preferences, and so greater the opportunity to tailor products and services and cross-sell the product / service range. Retention and cost reduction: Customers in long-term relationships are more comfortable with the service, the organization, methods and procedures. This helps reduce operating cost and costs arising out of customer error.

According to a research by Reichheld and Sasser in the Harvard Business Review, 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Therefore, banks are now stressing on retaining customers and increasing market share.

1.5 Future Challenges of CRM •

Enhancing ability to demonstrate value through performance measurement data

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Incorporating Service Level Management (ITIL) principles into the CRM role

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Filling the competency gaps in the face of talent shortage

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Improving client recognition of the CRM function and how to leverage the role most effectively

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Keeping pace with the rapid pace of technology change and how it can transform service delivery for clients

CHAPTER:2 OBJECTIVE OF THE PROJECT

1) To Understand the significance of Customer Relationship Management and the processes involved in doing so. 2) To identify the requirements of Customer Relationship Management 3) To Study the Customer Relationship Management methodologies and its different aspects in industry (Banking Industry to be considered).

CHAPTER:3 METHODOLOGY Primary as well as Secondary source has been used for study. Primary data has been collected with the help of telephonic conversation with the bank managers of ICICI and HDFC separately. Secondary data has been collected from different websites, the links are been given in the bibliography section. Sample Size: 2 Type of study: Exploratory

Further with the help of the study done some recommendations and suggestions are been given.

CHAPTER :4 PROCESS INVOLVED IN PLANNING OF CRM 4.1 CRM Formation Process In the formation process, three important decision areas relate to defining the purpose (or objectives) of engaging in CRM, selecting parties (or customer partners) for appropriate CRM programs and developing programs (or relational activity schemes) for relationship engagement with the customer. •

CRM Purpose The overall purpose of CRM is to improve marketing productivity and enhance value for parties in involved in the relationship. By seeking and achieving operational goals, such as lower distribution costs, streamlining order processing and inventory management, reducing the burden of excessive customer acquisition cost, and through customer retention economics, firms could achieve greater marketing efficiencies. It can enhance marketing effectiveness by carefully selecting, customers for its various programs, individualizing and personalizing their market offerings to anticipate and serve the emerging needs of individual customer, building customer loyalty and commitment, partnering to enter new markets and develop new products, and redefining the competitive playing field for their company. Thus, stating the objectives and defining the purpose of CRM in a company helps clarify the nature of CRM programs and activities that ought to be performed by the partners. Defining the purpose would also help in identifying suitable relationship partners who have necessary expectations and capabilities to fulfill mutual goals. It will further help in evaluating CRM performance by comparing results achieved against objectives. These objectives could be specified as financial goals, marketing goals, strategic goals, operational goals, and general goals.

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Relational Parties In the Initial phase, a company has to decide which customer type and specific customers or customer groups will be the focus of their CRM activities.

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CRM Programs A careful review of literature and observation of corporate practices suggest that there are three types of CRM programs: continuity marketing; one-to-one marketing; and, partnering programs. These take different forms depending on whether they are meant for end-consumers, distributor consumers, or business-to-business customers.

Table 1 presents various types of CRM programs developed for different types of customers. Customer Types

Mass Markets

Distributors

Business to Business Markets

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After- Marketing

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Continuity Marketing

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Loyalty Programs

One-to-One

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Cross-Selling Permission

Program Types

Marketing

Marketing

Continuous Replenishment

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ECR Programs

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Customer Business

Development

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Personalization

Partnering/Company-

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Affinity Partnering

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Logistics Partnering

Marketing

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Co-Branding

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Joint Marketing

Special Sourcing Arrangements

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Key Account

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Global Account

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Strategic Partnership

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Co-Design

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Co-Development

Source:- destinationcrm.com

Explanation of the above table: •

Continuity Marketing Programs Take the shape of membership and loyalty card programs where customers are often rewarded for their member and loyalty relationships with the marketers. The basic premise of continuity marketing programs is to retain customers and increase loyalty through long-term special services that has a potential to increase mutual value through learning about each other.

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One-to-one Marketing Meeting and satisfying each customer’s need uniquely and individually. In the mass markets individualized information on customers is now possible at low costs due to the rapid development in the information technology and due to availability of scalable data warehouses and data mining products. By using online information and databases on individual customer interactions, marketers aim to fulfill the unique needs of each mass-market customer. Information on individual customers is utilized to develop frequency marketing, interactive marketing, and after marketing programs in order to develop relationship with high-yielding customers. In the context of business-to-business markets, individual marketing has been in place for quite some time. Known as Key Account Management Program, here marketers appoint customer teams to husband the company resources according to individual customer needs.

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Partnering Programs The third type of CRM programs is partnering relationships between customer and marketers to serve end user needs. In the mass markets, two types of partnering programs are most common: co-branding and affinity partnering.

4.2 CRM Governance Process

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Greater the scope of CRM program and associated tasks, and the more complex is the composition of the relationship management team; the more critical is the role specification decision for the partnering firms. It is essential to establish intra-company communication particularly among all concerned individuals and corporate functions that directly play a role in managing the relationship with a specific customer or customer group. With mass-market customers frequent face-to-face interactions will be uneconomical. Thus marketers should create common bonds through symbolic relationships, endorsements, affinity groups, and membership benefits or by creating online communities Involving customers in the planning process would ensure their support in plan implementation and achievement of planned goals. All customers are not willing to participate in the planning process nor is it possible to involve all of them for relationship marketing programs for the mass markets. Operating process between the company and customer partners: Operating alignment will be needed in order processing, accounting and budgeting processes, information systems, merchandising process, etc Human resources decisions are also important in creating the right organization climate for managing relationship marketing. Training employees to interact with customers, to work in teams, and manage relationship expectations are important. So is the issue of creating the right motivation through incentives and rewards. Periodic evaluation of goals and results, initiating changes in relationship structure, design or governance process if needed, creating a system for discussing problems and resolving conflicts.

4.3 CRM Performance Evaluation Process Without a proper performance metrics to evaluate CRM efforts, it would be hard to make objective decisions regarding continuation, modification, enhancement, or termination of CRM programs. If co-operative and collaborative relationship with the customers is treated as an intangible asset of the firm, its economic value ads can be assessed using discounted future cash flows estimates. Here the term relationship equity comes in where you measure the intangible assets of the firm. Another global measure used by firms to monitor CRM performance is the measurement of relationship satisfaction. By measuring relationship satisfaction, one could estimate the propensity of either party’s inclination to continue or terminate the relationship. Such propensity could also be indirectly measured by measuring customer loyalty.

4.4 CRM Implementation Issues One of the most interesting aspects of CRM development is the multitude of customer interfaces that a company has to manage in today’s context. Until recently, a company’s direct interface with the customers, if any was primarily through sales people or service agents. In today’s environment most companies interface with their customers through a variety of channels including sales people, service personnel, call centre, Internet websites, marketing departments, fulfillment houses, market and business development agents, etc. For large customers it also includes cross-functional teams that may include personnel from various functional departments. While each of these units could operate independently, they still need to share information about individual customers and their interactions with the company on a real time basis. For example, a customer who just placed an order on the Internet and subsequently calls the call centre for order verification expects the call centre staff to know the details of his or her order history. Similarly a customer approached by a sales person unaware that she has recently complained about dissatisfactory customer service, is not likely to be treated kindly by the customer. Therefore effective CRM requires a front-line information system that shares relevant customer information across all interface units. Relational databases, data warehousing and data mining tools are thus very valuable for CRM systems and solutions. However, the challenge is to develop and integrated CRM platform that collects relevant data input at each customer interface and simultaneously provides knowledge output about the strategy and tactics suitable to win customer loyalty and support. If a call centre personnel cannot identify or differentiate a high value customer and does not know what to up-sell or cross sell to him then it would be a tremendous loss of opportunity for the company. Although most CRM software solutions based on relational databases are helping share customer information, they still do not provide knowledge output to the front line personnel. As shown in Figure.6, CRM solutions platform needs to be based on interactive technology and processes. It should assist the company in developing and enhancing customer interactions and one-to-one marketing through the help of suitable intelligent agents that help develop front-line relationship with customers. Such a system would identify appropriate data inputs at each customer interaction site and use analytical platforms to generate appropriate knowledge output for frontline staff during customer interactions. In addition, implementation tools to support interactive solutions for customer profitability analysis, customer segmentation, demand generation, account planning, opportunity management, contact management, integrated marketing communication, customer care strategies, customer problem solving, virtual team management of large global accounts, and measuring CRM performance would be the next level of solution sought by most enterprises. Since CRM implementation comprises a significant information technology (IT) component, these companies have handed over the responsibility of CRM implementation to information technology departments. They are focused on simply installing CRM software solutions without a CRM strategy or program in place. This leads to creating an operational tool within the company, but the usability and effectiveness in producing desirable results from such tools is limited. CRM tools would be valuable when they are used to identify and differentiate individual customers and to generate individualized offer and fulfill customized solutions. The lack of CRM strategy or CRM programs would leave the front-line people without any knowledge of what they should be doing with the additional customer information that they now have access to. For those who apply themselves and develop improvised solutions, it could backfire as ad hoc solutions could cause unintended deterioration in customer relationships. Appropriate strategy and excellent implementation are both needed for obtaining successful results. From a corporate implementation point of view, CRM should not be misunderstood to simply mean a software solutions implementation project.

Information Requirements of an Effective CRM Solution The employees of a firm employing CRM would require rich information about their firm and customer base including: •Information about the market •Information about the firm •The current segment •Demographic Distribution (by age, sex, education, income, marital status, etc) •The firm’s best customers and the segment they belong to, products bought by them, their preferences, habits and tastes of each segment. •Individual level information consisting of: → Customer personal details such as name, address, family details, education, etc → The customer group /segment to which the individual belongs → History of present and past behavior → Likes, dislikes, habits and preferences → Events coming up in their personal life etc.

CHAPTER:5 NEED FOR CUSTOMER RELATIONSHIP MANAGEMENT A Relationship-based Marketing approach has the following benefits: • Growth: Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. • Referrals: Long-term customers are more likely to become a referral source. • Cross-Sell: The longer a relationship continues; the better a bank can understand the customer and his/her needs & preferences, and so greater the opportunity to tailor products and services and cross-sell the product / service range. • Retention and cost reduction: Customers in long-term relationships are more comfortable with the service, the organization, methods and procedures. This helps reduce operating cost and costs arising out of customer error. According to a research by Reichheld and Sasser in the Harvard Business Review, 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Therefore, banks are now stressing on retaining customers and increasing market share.

CHAPTER: 6 UNDERSTANDING BUSINESS PROCESSS

STRUCTURE OF INDIAN BANKING INDUSTRY India has a rapidly growing Banking and Financial Services sector based on sound fundamentals (low NPAs, Basel I compliant). Total banking assets of about US$664 billion in 2006: CAGR of 22% p.a. over last 2 years. Public sector (Government owned) banks account for 75% of the assets; however, Indian private banks and foreign banks are growing rapidly and gaining a larger share. Standard Chartered Bank, Citibank and HSBC are the three largest foreign banks in India with more than 65% of the total assets of foreign banks. Most global players in banking & financial services – including Goldman Sachs, Morgan Stanley, Merrill Lynch, JP Morgan, Deutsche Bank, UBS, Lehman Brothers, ABN Amro, Barclays, and Calyon etc. - are active in India. 6.1 CRM in Banking Industry With the advent of new technologies in the business of bank, such as Internet Banking and ATMs, now customers freely chose any bank for their transactions. The pressures of competitive and dynamic markets have contributed to the growth of CRM in the Financial Services Sector. 5% increase in customer retention can increase profitability by 35% in banking business, 50% in insurance and brokerage, and 125% in the consumer credit card market. Therefore, banks are now stressing on retaining customers and increasing market share. Private Banks have traditionally viewed themselves as exceedingly 'Customer Centric' offering what they believe to be highly personalized services to the High Net Worth Customers. However, changes in the customer behavior and accumulation of wealth are resulting in the needs of HNW customers becoming more diverse and complex in terms of the sorts of products they want, the channels through which they want to access them and the associated range of advice. Technical solutions deployed by banks today are flexible, user-friendly and meant to facilitate specific workflow and requirements in implementation processes. In order to simplify lives, banks have begun to implement end-to-end technologies through all departments with the intention of removing human error from processes. Previously existing manual environments could not have been adequate for future visions, growth plans and strategies. 6.2 Private Banking and CRM Private Banks have traditionally viewed themselves as exceedingly 'Customer Centric' offering what they believe to be highly personalized services to the High Net Worth Customers. However, changes in the customer behavior and accumulation of wealth are resulting in the needs of HNW customers becoming more diverse and complex in terms of the sorts of products they want, the channels through which they want to access them and the associated range of advice. The wealthier the customers, the more demanding they are - and the clients expect more and more from their banks. Competition for "Supremely elite" is increasing.

6.2.1 ICICI Bank CRM in ICICI Bank:

The CRM initiatives in ICICI Bank are the reason for its growth in customer base, channels, and product and service offerings. Since its inception in 1995, the bank has grown to have 15.8 million customers, holding about 17 million accounts. The bank’s network has expanded to 610 branches and standalone counters and over 2,000 ATMs. The bank uses the model to support its goals in sales, customer service, and analytics. ICICI Bank states that its high levels of relationship maximization are made possible by how its CRM system is able to "know and understand the customer better”, which customer is most suitable for what kind of product and at what point in time." About 30.40% of the bank’s home loans are cross-sold to existing customers. Similar ratios have also been reported in the sale of insurance policies. Ratios of about 50.60% have been seen out of the credit cards and personal loans business. ICICI Bank’s CRM capability is built on a “Teradata” data warehouse that integrates data from multiple sources, including the Oracle database and various flat files. The system provides users with information about each customer’s checking accounts, fixed deposits, credit cards, and other financial information. The bank has taken on the end-to-end proposition of SAS for enterprise intelligence, which offers a credible integrated approach to analytics, including data detection, data cleansing, data preparation, event detection, reporting and business intelligence, and campaign analysis. The bank estimates that it is able to track more than 1,200 parameters concerning demographics, transactions made, channel usage, and product relationships. CRM, according to ICICI consists of following approaches: •

Getting personalized information on customersThe bank collects all the information about the customers for processing. ICICI bank has mainly 4 service offerings like, loan account, saving account, current account and fixed deposits. Moreover, the bank has many customers in each category. So, they collect the data on one server and thus the company gets the personalized information on each customer by asking them to fill the information in customer application form.

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What is the value of the relationship? After the collection of the personalized information on every customer, the department checks out the value of the relationship with each and every customer and find out customer’s wants and needs so as to offer him the customized product.

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Customized offerings to the customers After deciding the value of the customer the company offers him the customized product. They also practice cross-selling. Cross – selling refers to offering another product from the service offering of the bank to the customer which he has not gone for. For example, if customer has saving account with the bank then we offer him loan, insurance and other investments.

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Converting a prospective customer into a true customer The last approach of CRM according to ICICI bank is that they try to convert the prospective customer into a true customer. Right from the moment the inquiry comes, they follow- up the customer and then make him to come to the bank occasionally and then regularly.

The Processes for Delivering CRM The tools and the processes are as follow – • Customer application form ICICI Bank collects all the data from customer application forms and gets the personalized information to know which product to offer to which customer. This process helps in collecting the data and knowing what the customer wants and understanding his needs. • Centralized software where the whole data is collected The data collected through customer application forms is available at one server and can be accessed anytime, anywhere. So, this helps in the further process of customized offerings and cross –selling. • Wide range of offering After collecting the data from the customer, team decides what product to offer to which customer. In case the bank recognizes you as a valuable customer then is offers a more customized service. • Cross – selling It refers to offering another product from the service offering of the bank to the customer which he has not gone for. This depends on the value of the customer to the bank. It is not offered to every customer. It depends on how loyal the customer is to the bank. The more business he gives to the bank, the more are his chances of being special services offered. • Feedback forms The bank distributes feedback forms at all its branches. The customer feedbacks on the service, technology used, employee behavior and promptness in solving customer’s problems, are taken and they are analyzed.

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Telephonic Conversation with ICICI Official- Darbhanga, Branch

For understanding the CRM model and activities of ICICI Bank, Mr. Sanjeev, one of the officials of Darbhanga branch of ICICI Bank was talked with twice on 20th & 22th July, 2009. The findings are•

The CRM model has mainly two parts - Walk-ins in branch and Call centers.

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Finacle is used by ICICI bank to store data, record transactions and update on a daily basis in all branches.

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The customers either come to branches for their queries and other help where personal/ one-to-one interaction is required or they call at call centers to solve their queries.

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The profiling of the walk-ins is done and the details are recorded or updated using Finacle software.

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The CRM has helped in solving the problems of customers as well as banks. It has improved efficiency and productivity of Bank officials, reduced time in problem solving and query handling.

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While choosing the software for CRM activities cost was a major criterion, quality was also considered.

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Training was required by the officials and was parted with them. No information regarding the cost of the software, training cost, training period was shared.

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It has helped in generating more revenues and profits and is cost effective.

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The feedback of the customers as well as the employees of the bank was positive.

6.2.2 HDFC Bank HDFC Bank Ltd. is a commercial bank of India, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India. HDFC Bank has 1,500 branches and over 2,890 ATMs, in 528 cities in India, and all branches of the bank are linked on an online real-time basis. CRM in HDFC Bank The HDFC bank has implemented a data warehouse solution that would eliminate the inconsistencies of working with disparate sources. The warehouse pulls information from the different customer interface channels the bank offers, centralizing them in a single database. In early 2002, the bank completed the interface of the warehouse with the retail banking liability system, followed by the assets system and the depository system by the end of 2002. The bank gives certain profitable customers ‘preferred’ status in service deliveries and pricing. This helps the bank to know which channels the particular customer prefers to use. The bank then sets up its investments in that channel. The bank undertakes analytics-driven database driven marketing efforts based on the banking behavior of the customer. If he has used his card in an apparel shop, customized incentive mailers are sent to him; or marketing programs are sent to merchants who facilitate usage of the bank’s cards on the bank’s terminals. The data warehouse with over two terabyte of data under management empowers the product managers to study and monitor the customer and business trends over the last six quarters in an online manner. According to researchers, 81% customers recommend HDFC BANK products, 91% of these are having good purchasing experience with the company.58% of the customers said that the maintenance charges

charged by the company is moderate, 55%of which are having good purchasing experience and 85% of which recommend HDFC BANK to others.63% customers are satisfied with the existing services rendered by the organization. Majority (67%) of customers rated the HDFC BANK products as “good” and 67% of which are highly satisfied with the service of the company. According to HDFC Bank, a customer is an asset to the company only if he is a loyal customer. Approximately 76% customers of HDFC BANK are discovered to be loyal. This is the area where the organization can and plans to improve in the near future. HDFC Bank uses iFlex's Microbanker and Finware for its core banking operations. It plans to transfer to their new ``Universal Banking Services'' package as soon as the acceptance tests currently under way are completed. The bank also uses their Internet banking software. For the, the IT activities span three segments: • •

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Back-office, which enables all transactions Distribution of the bank's products and services in the market. That is, enabling customer interaction through the Internet, ATMs, the mobile phone. HDFC's corporate customers need not visit the bank for many of their transactions either. PC-based corporate banking lets authorized personnel in corporate open letters of credit or pays suppliers and integrates the transaction with the ERP system. The third sort of automation enables the business intelligence and CRM aspects of a bank's business.

For cash management, the bank uses a package from a Pune company called CashTech. The bank’s Depository systems run on software provided by Mumbai-based Kalpataru. For loans, bank uses the Nucleus Software. To provide round-the-clock service and support to its customers, HDFC Bank has Unix-based systems from Sun Microsystems as hosts for its banking software. It is in the process of moving the application to a mainframe-class UNIX machine (the E10000 from Sun) in the near future.

CHAPTER :7 ANALYSIS •

CRM aims to provide organizational effectiveness by reducing sales cycle and selling cost, identifying markets and channels for expansion, and improving customer value, satisfaction, profitability, and retention.

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While choosing CRM software, the COST is one of the important factors. The quality, customizability, and flexibility of the software are few other factors considered.

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An efficient and effective CRM model is one which answers what the different customer segments are, who more likely to respond to a given offer is, which customers are the bank likely to lose, which customer is most likely to default on credit cards, what the risk associated with this loan applicant is.

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The data warehouse is the first step in building an effective customer relationship management (CRM) solution that will help banks such to overcome the danger of becoming increasingly impersonal as business grows and customers are reduced to PIN numbers. All new private banks are aware of this and are now putting in place the systems that will enable them to focus on individuals. In the private sector both ICICI Bank and HDFC Bank have put in place the building blocks for an elaborate CRM solution. UTI Bank has implemented a CRM software with respect to its priority

banking offering for its high net worth clients, where the software carries out profiling and analysis, contact management, data analysis and cross-selling.

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In every organization, for successful implementation of CRM Training is provided. The cost of training provided forms a small percentage of total cost. Generally, Banks prefer to provide training by Train the trainer method. In the banking industry, generally, no resistance from the employees is faced.

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The biggest advantage that private banks brought to customers was anywhere-anytime-banking. Customers no longer needed to dash out during lunch hour to queue up at counters to withdraw money. But because of a large number of products like debit cards, demat accounts, loans and credit cards an efficient effective CRM is required.

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The Banks use both SAAS as well as the Ownership Model. They use the open and also the closed model.

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The software is implemented in phases and it takes months for the complete implementation of the CRM. The cost of the software depends on the company and the industry. For example, SFA is Rs. 2000 to Rs. 3000 per person per year.

CHAPTER:8 CONCLUSION Customer relationship management is a multifaceted process, mediated by a set of information technologies that focuses on creating two-way exchanges with customers so that firms have an intimate knowledge of their needs, wants, and buying patterns. In this way, CRM is intended to help companies understand, as well as anticipate, the needs of current and potential customers. CRM is a sound business strategy to identify the bank’s most profitable customers and prospects, and devotes time and attention to expanding account relationships with those customers through

individualized marketing, re-pricing, discretionary decision making, and customized service-all delivered through the various sales channels that the bank uses.

CRM aims to provide organizational effectiveness by reducing sales cycle and selling cost, identifying markets and channels for expansion, and improving customer value, satisfaction, profitability, and retention. CRM helps to acquire new customers, retain existing customers and maximize their lifetime value. This close relationship with customers requires a strong coordination between IT and marketing departments to provide a long-term retention of selected customers. With the growth of private banks in India, the biggest advantage brought to customers was anywhereanytime-banking. But over time as these banks introduced a number of new products like debit cards, demat accounts, loans and credit cards the problems began to show. While operating costs were low, customer grievances were increasing day by day. The banks responded to this by moving over from a product-centric to customer-centric approach by installing CRM solutions that enable them to recognize customer needs beforehand. Unlike an IT system which merely processes transactions, a CRM system keeps track of a database of account holder and a historical database of various transactions these account holders have entered into. This helped the customers to obtain information from any branch about any of the accounts he holds with the bank without being passed around from counter to counter. CRM helps in enhancing the customer’s ‘Life Time Value’ by efficiently servicing the customer’s needs. Greater satisfaction leads to customer advocacy. At the very least this helps the bank acquire business from the customer’s family. More importantly, for the bank CRM solution helps to map profitability of every individual customer rather than an individual account. An employee manning the call centre can now get a unified view of all the relationships that a customer has with the bank. To conclude, a good CRM software for Banking industry will be one which:

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The software will help in selling more as there will be pressure on top and bottom line.

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It will build up more trust of the customers in the bank. This will increase the investments made by them in the bank. The CRM will go a long way in reposing this faith.

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It will give ideas of innovation to redeem funds that are stuck.

CHAPTER:9 RECOMMENDATIONS The recommendations are based on the basis of data collected through internet, Experts, Bank officials and my colleagues:

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The three banks under study ICICI, HDFC and Axis Bank are using Finacle and SFA; CRM NEXT; and only Finacle respectively. The banks, in general, are using Core Banking Software and not CRM software. They should use software like SAP or PEOPLE SOFT which will help in handling large volume of data and will integrate seamlessly with the IT and is customizable.

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They should work on capturing faith of the existing customers. They should work on growing the existing customers. Better CRM software can help in growing the existing customers, increasing the customer base, acquiring new customers.

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They need to implement a more effective CRM which requires a front-line information system that shares relevant customer information across all interface units. Relational databases, data warehousing and data mining tools are thus very valuable for CRM systems and solutions and should be worked upon for better customer satisfaction and loyalty.

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They need to find and implement the implementation tools to support interactive solutions for customer profitability analysis, customer segmentation, demand generation, account planning, opportunity management, contact management, integrated marketing communication, customer care strategies, customer problem solving, virtual team management of large global accounts, and measuring CRM performance would be the next level of solution sought by most enterprises.

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Customize CRM to a high degree so that they are able to handle a rapidly scaling call workload without any disruption in services and allow call centre agents to have an “always connected” view of the database.

CHAPTER:10 LIMITAIONS OF THE STUDY The report has been prepared on the basis of primary data collected by interactions with the bank officials and experts of the industry and the secondary data. The report and my findings are subjected to the following limitations: •

The information shared by the officials of the bank may not be up to the mark.

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The Branch officials may be biased.

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The qualitative aspect of the benefits received by CRM implementation cannot be measured.

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The research conducted is confined to the Banks and their branches in Darbhanga(Bihar).

For understanding the financial implication of CRM in a bank, and whether it is advantageous for the industry, only three banks are being studied.

CHAPTER:11 BIBLIOGRAPHY

Philip Kotler. Marketing Management ICFAI Publications. Marketing Management Ed Peelen. Customer Relationship Management Paul Greenberg. Customer Relationship Management Websites:

• www.icicibank.com • www.wikipedia.com • www.hdfcbank.com • www.axis.com • http://www.coolavenues.com/know/mktg/lochan_1.php3 • www.managementparadise.com • http://infotech.indiatimes.com/Enterprise_IT/IT_Applications/CRM_Caring_about_you/arti cleshow/2794494.cms

• http://www.infosys.com/finacle • http:// www.crmguru.com

• http:// www.crmcommunity.com • http:// www.crmassist.com • http:// www.searchcrm.com • http:// www.crm-forum.com • http:// www.destinationcrm.com • http:// www.realmarket.com • www.moneycontrol.com • http://www.icicibank.com/pfuser/aboutus/investorrelations/annualreport/pdf/20012002/a_r2h2(45-68).pdf

• http://www.infosys.com/finacle/pdf/Banking-transformation-in-the-flat-world.pdf • http://economictimes.indiatimes.com/articleshowarchive.cms?msid= 19700871 • http://www.expresscomputeronline.com/20060220/management02.shtml • http://timesofindia.indiatimes.com/ • http://whitepapers.techrepublic.com • www.techrepublic.com • http://www.iex.com/case-studies/financial-services/bank-of-montreal.html • http://i.i.com.com/cnwk.1d/html/itp/CRMTippitResourceGuide2.pdf • http://search.techrepublic.com.com/search/bank+and+customer+relationship+management +(crm).html

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