Effect Of Crm On Customer Retention

Published Date: 02 Nov 2017

Submitted to Amity University for the partial fulfillment of the award of the degree of Masters in Business Administration (Insurance & Banking) in ASIBAS

Submitted by: Supervised by:

Name: Neha Gupta Name: Mr. Rajesh Verma

Course: MBA-Insurance And Banking Designation: Assistant Professor

A28282411041 ASIBAS

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AMITY SHOOL OF INSURANCE BANKING AND ACTUARIAL SCIENCES

DECLARATION

I hereby declare that the project work entitled as "EFFECT OF CRM ON CUSTOMER RETENTION IN PUBLIC SECTOR BANKS; A STUDY OF DELHI CUSTOMERS" is submitted to AMITY SCHOOL OF INSURANCE BANKING & ACTUARIAL SCIENCE (ASIBAS), AMITY UNIVERSITY, NOIDA, is a Bonafide work undertaken by me under the guidance of Asst. Professor Rajesh Verma, Faculty Member ASIBAS, AMITY UNIVERSITY, NOIDA and it is not submitted to any other University or Institute for the award of any Degree / Diploma / Certificate or published any time before.

(Ms. Neha Gupta)

A2828410041

ACKNOWLEDGEMENT

"Gratitude is not a thing of expression; it is more matter of feeling."

There is always a sense of gratitude which one express towards others for their help and supervision in achieving the goals. This formal piece of acknowledgement is an attempt to express the feeling of gratitude towards people who were helpful to me in successfully completing my training.

I would like to express my gratitude to everyone who made it possible for me to complete my dissertation. I would like to thank Asst. Professor Rajesh Verma for being a constant source of guidance and motivation. Thank you for believing in me and encouraging me during the completion of this report.

I take this opportunity to express my profound gratitude to the management of AMITY UNIVERSITY for giving me the opportunity to accomplish this project work.

Last but not least, I would like to thank all my friends and the entire department who directly or indirectly helped me in the completion of this project and to my family without whose support, motivation and encouragement this would not have been possible. I am also thankful to all the respondents whose cooperation and support has helped me in collecting necessary information. I would also like to thank almighty god for his blessings showered on me during the completion of my dissertation.

Neha Gupta

TABLE OF CONTENTS

Chapters Page No.

Declaration……………………………………………………………………. I

Acknowledgement……………………………………………………………. II

Introduction…………………………………………………............... 01

CRM in Banking Industry……………………………… 01

Need for Customer Relationship Management………… 02

Evolution of Customer Relationship Management ……...04

Current Status of CRM in Banks………………………....05

Vision for the future of CRM in Banks…………………..06

Literature Review……………………………………………………... 08

Need, Objective and Scope of the Study…………………………….... 11

Research Methodology………………………………………………. 12

Hypothesis…………………………………………..... 12

Research design……………………………………… 13

Sample Design……………………………………….. 13

Target Population…………………….. 13

Sample Frame………………………... 13

Sample Unit………………………….. 13

Sample Size………………………….. 13

Sampling Method……………………. 14

Methods of Data collection………………………….. 14

Tools for Data collection…………………………….. 14

Data Analysis Tool…………………………………... 14

Data Analysis and Findings…………………………………………. 15

Suggestions………………………………………………………….. 33

Conclusion…………………………………………………………… 34

Limitations and Future Research Lines……………………………… 36

Bibliography…………………………………………………………………. 37

Appendix…………………………………………………………………….. 39

CHAPTER-1

INTRODUCTION

INTRODUCTION

CRM IN BANKING INDUSTRY

Competition and globalization in banking services are forcing Public Sector Banks to be productive and profitable. To retain individuals, banks should focus on relationship management with customers. Innovative Customer Relationship Management (CRM) strategies can help in achieving desired results. The purpose of CRM is to enable banks to better serve its customers through introduction of reliable processes and for interaction with those customers.

Today, banking is customer-centric, unlike yester when it was transaction-centric. Banks are increasingly focusing on premise that customers choose service provider who differentiates through quick and efficient service. With customer’s expectations becoming more competitive, banks are coming up with wide range of novel products and services every day. The challenge for banks is to work towards ensuring that customers prefer their products and services over their competitors. The key to develop and nurture close relationship with customers is by appreciating their needs and catering to their requirements.

The battle among banks is for gaining greater slice of market share, is now taking on new dimension. In current falling interest rate scenario, banks are finding it difficult to meet high growth expectations. In order to bolster, banks are in pursuit of finding newer ways and means of achieving organic growth through strategies that enable to acquire new customers and retaining loyalty of existing customers. A good customer experience will drive customer acquisition and promote customer retention, which translates into increased profits.

Bankers are conscious of relative costs of acquiring new customers. They emphasize on delivering results, most bankers resort to customer grabbing, rather than customer cultivation and creation, with result that customer churn is call of the day. Banks are aware that losing existing customer and acquiring new customer is an expensive affair. It is a drain on existing resources of bank, which can be better employed for growth initiatives. Therefore, the challenge before bank is to retain and deepen profitability of existing customer relationships.

Banks are adopting CRM to approach people, process and products more effectively to embark true relationship banking, with the end result of accelerating business momentum.

CRM is necessity of present business scenario. Banks can gain sustainable competitive advantage from CRM by becoming low cost players in market, achieving operational efficiency and maintaining customer loyalty. The ability to predict products that customer s will require over period of time, increased productivity of managerial executives, sales and customer service staff are some of benefits banks obtain by taking to successful management of customer relationships. Implementing right CRM tool can enhance customer satisfaction leading to customer retention and business growth. The Indian Banking scenario is still at an embryonic stage as far as CRM is concerned, needs to strive towards CRM implementation to meet the emerging demands.

NEED FOR CUSTOMER RELATIONSHIP MANAGEMENT

In today’s highly competitive environment, business needs to better understand their customers, who are most profitable and how to retain those customers. This requirement is meeting through CRM. Customer Relationship Marketing is practice that encompasses all marketing activities that are directed towards establishing, developing and maintaining successful customer relationships. The focus of relationship marketing is on developing long term relationships and improving performance through customer loyalty and customer retention.

CRM is a business strategy that spans entire organization from front office to back office. It is commitment made to customers at the heart of the enterprise. Successful customer relationship management focuses on understanding needs and desires of customers and is achieved by placing these needs at the heart of business by integrating them with organization’s strategy, people, technology and business processes. Data warehousing and data mining are two important tools to start CRM in banks.

RELATIONSHIP MARKETING

INSTRUMENTS

Direct Marketing

Database Marketing

Quality Management

Service Marketing

Customer Partnering

OBJECTIVES

Customer Satisfaction

Customer Delight

Share of customer

Customer Retention

Customer Loyalty

CONSTRUCTS

Trust

Commitment

Co-operation

Communication

Shared Value

Conflicts

Power

Non-Opportunistic Behavior

Breakdown of Relationship Marketing into Objectives,

Defining Constructs and Instruments

CUSTOMER RETENTION

Customer retention is the process when customers continue to buy products and services within a determine time period. Customer retention highly depends on attrition rates. Attrition is the process when customers no longer want to use product and services provided by supplier and breaks relationship bond by informing supplier that he will be no more a customer. It is often seen that if corrective measures are implemented successfully to save defection then retention level increases to much higher level as compared to normal retention process.

In addition to saving profitable customers, retention programs allow companies to collect data about their customers. This data can be used to better understand and communicate with customers or to customize future interactions with customers. Retention programs can be relatively inexpensive means of making customers feel special, increase purchases and recommend prospects.

EVOLUTION OF CUSTOMER RELATIONSHIP MANAGEMENT

In early 20th century in the United States, demand exceeded supply to the extent that companies concentrated on selling as many products as possible. Suppliers focused on product development, production capacity and securing distribution outlets, without regard to consumers. They did not pay attention to what customers need and who bought the products. They used classical marketing tactics, i.e. mass marketing.

By middle of 20th century, however, economy had matured to a point where consumers had power of choice because supply had outstripped demand. The era of passive consumers was coming to an end. Companies began to find out who their customers were, what they wanted and how they could be satisfied. They analyzed data of their customers and segmented them based on demographics such as age, gender and other information. Then they promoted their product/service to specific subset of customers. This was called target marketing. Each company thought about four P’s (Product, Price, Promotion and Placement) the basic concept of modern marketing.

By middle of 1980s, when economy was highly matured, it became difficult to sell things. Traditional target marketing was not gratifying under circumstances in which it was difficult to cultivate new customers and this tactic could not sustain cost efficiency. At this point idea of relationship marketing gained confidence of business sector. This concept aimed at building long term relationships with customers and retention of existing customers rather than acquisition of new ones.

CRM came into existence in late 1990s. According to Jeffrey Peel, defined CRM as follows:

CRM is about understanding nature of exchange between customer and supplier and managing it appropriately. The exchange contains monetary considerations between customer and supplier, but also communication. The Challenge to supplier organizations is to optimize communication between parties to ensure long term profitable relationships. CRM is key focus for many organizations now as a shift away from customer acquisition toward customer retention and churn reduction strategies dictates need for best practice CRM processes.

CURRENT STATUS OF CRM IN BANKS

The relationship marketing practices has been practiced by all banks in India, the technology enabled CRM is still at developing stage. Different banks are at different levels of CRM adoption and implementation and majority of them are at preliminary stage. Collaborative CRM is evident in internet banking, mobile banking, ATM functions, POS devices and initiatives like availability of pass book printing machines to enable customers to update their passbooks themselves.

Yes Bank has developed YCCRM, prominent features of which are discussion boards and templates. It enables collaboration among staff and customers to create higher customer value through use of CRM software.

Punjab National Bank deployed CRM software with modules of Prospect Management, Lead Management, Activity Management, product Management, Complaint Management and Business Intelligence Reporting.

The recent CRM application by ICICI is enabling its customers to perform transactions via face book, a social networking site. SBI’s Business Intelligence system integrates data from nearly 70 databases to form single enterprise data warehouse model. The system generates 248 reports daily for top management and this has led to faster decision making.

Bank of Maharashtra has developed in-house software which generates and updates variety of reports on detailed customer information and sends to branches.

VISION FOR THE FUTURE OF CRM IN BANKS

According to McKinsey survey reveals that global market for IT enabled services would be $140 billion by 2008, of which $17 billion will belong to India. Out of this, India has $4650 million e-CRM market To take advantage of growing market, global giants like SAP, Nortel, Oracle Corporation, Siebel Systems are planning to invest in India so as to e-CRM softwares. This will facilitate e-CRM in Indian Banks.

On account of factors such as rise in depositor base of banks and increasing tendency among new generation banks to diversify into web enabled services. The trend shows that net banking is perceived as convenient and fast way of doing banking business. ICICI Bank was the first bank in India to offer e-banking services in India, has more than one lakh internet user accounts, of which 25% are of NRIs. The state run public sector bank, SBI made a quiet foray into net banking. The country’s largest commercial bank launched on-line SBI- an account browsing facility over net for customers in eight selected branches.

Recent developments in area of It, have changed the way banks were managing their customer relationships. The following are some of latest e-CRM techniques that can be used by banks in offering new products and services to customers.

Internet Banking

Data Warehousing and Data Mining

ATMs

Telebanking or Mobile banking

Computerized decision support system

E-mail

Computer networking

Customer Smart cards

Banks in India are on learning curve of e-CRM and are trying to meet latent needs of customers. The success of e-CRM will depend upon development of robust and flexible infrastructure, e-commerce capabilities, reduction of costs through higher productivity and automation of administrative functions.

CHAPTER-2

REVIEW OF LITERATURE

REVIEW OF LITERATURE

To survive in global market, focus is on customer is becoming key factor for companies. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make new purchase. A second aspect of CRM is that knowing the customer and their problem allows to acquire new customers more easily and facilitates targeted cross-selling. (Tariq Mohiuddin Ahmed)

CRM is new customer centric business model that reorients firm’s operations around customer needs in order to improve customer satisfaction, loyalty and retention. CRM is integration of customer focus in marketing, sales, production, logistics and accounting, i.e. in all parts of company’s operations and structure. (Ibid)

Service quality in banking implies consistently anticipating and satisfying needs and expectations of customers. Parasuraman et al. (1985) hold the view that high quality service gives credibility to field sales force and advertising, stimulates favorable word-of-mouth communications, enhances customers’ perception of value, and boosts morale and loyalty of employees and customers alike.

The research study on Indian banking shows that private and foreign banks are performing relatively better in offering diversified range of products and services including e-banking facilities as compared to public sector banks. The experience, size, financing pattern and ownership of bank were found to be major factors influencing the extent of e-banking services for urban customers. (Malhotra and Singh,2010)

Das et al.; 2009 has proposed list of 29 CRM best practices, for helping business organizations in achieving comprehensive CRM deployment. It also indicated that going for CRM deployment may not be profitable strategy for Indian retail banks.

CRM has now become a powerful concept to align the interests of firm and its customers (Boulding et al., 2005), its success depends upon appropriateness of firms CRM strategy as well as effectiveness of CRM implementation. There is very little research which has been done on defining constructs of CRM and development of index specifically catering to Indian Banking Sector .

In Indian banks CRM is gradually picking up and is considered as viable proposition in improving services to the customers (Gupta and Shukla, 2002). Although there are lot of promises on role of customer relationship management in enhancing the performance of business organizations, but practical guidelines on how to design and implement CRM effectively are few, and academicians as well as business analysts have been struggling because of this (Agariya & Singh, 2011a; Lindgreen and Antiaco, 2005).

In order to develop comprehensive list of CRM practices, it is essential to identify the key constructs of CRM. In this direction, Sin et al. (2005) had proposed that CRM comprises of following four constructs: Key customer focus, CRM organization, Knowledge management and Technology-based CRM.

The banks would need complete view of its customers across various systems that contain their data. If bank could track customer behaviour, executives can have better understanding, predicative future behaviour and customer preferences. The data and applications can help bank to manage its customer relationship to continue to grow and evolve (Dyche, 2001).

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

The emerging opportunities and need for strong CRM approach are felt by banks in India since last 2-3 years. A search is already on for comprehensive solution that can convert ever growing amount of available data into useful and actionable business opportunities since this goldmine of information if used effectively can be good source of new business growth and additional revenues for banks.

CHAPTER-3

OBJECTIVE AND SCOPE

OF STUDY

NEED OF THE STUDY

The era of liberalization, deregulation, globalization and privatization has let loose a close race for internecine competition in the banks. The cross border flows and entry of new players and products have forced banks to adjust the product-mix and undertake changes in their processes for survival. Thus, importance of CRM has been realized. Banks have realized that retaining current customers is much less expensive than attempting to attract new customers. Therefore proper CRM strategies can potentially impact customer satisfaction rating and can potentially lead to increase customer retention.

OBJECTIVE OF THE STUDY

The proposed study is centered around fulfilling the following objectives:

To study the impact of CRM on retaining customers in PSBs.

To study the role of CRM in customer retention.

SCOPE OF THE STUDY

The dissertation project undertaken by me is based on the effect of customer relationship management on customer retention. The scope of the study is limited to PSBs namely Punjab National Bank, State Bank of India, Bank of Baroda and Bank of India in Janak Puri, Delhi. The study is being conducted from 20th December 2012 to 20th January 2013.

CHAPTER-4

RESEARCH

METHODOLOGY

RESEARCH METHODOLOGY

Research is a movement from known to unknown. It is actually a voyage of discovery. Research methodology is a way to systematically show the research problem. It is necessary for researcher to know not only about research methods but also research methodology.

HYPOTHESIS:

Hypothesis is an assumption made in order to draw out and test its logical consequences. The manner in which hypothesis are developed is important since they provide focal point for research. The hypotheses are:

H0: Effect of CRM on customer retention in PSBs is independent of their age.

H1: Effect of CRM on customer retention in PSBs is dependent of their age.

H0: Helpfulness of bank’s personnel has no significant impact on good relationship with the customers.

H1: Helpfulness of bank’s personnel has significant impact on good relationship with the customers.

H0: Good relationships with customers have no significant impact on the loyalty of customers.

H1: Good relationships with customers have significant impact on the loyalty of customers.

RESEARCH DESIGN:

Causal research design will apply because this will help me in studying the effect of customer relationship management (independent variable) on customer retention (dependent variable).

SAMPLE DESIGN:

Sampling is concerned with selection of subset of individuals from part of population to estimate characteristics of whole population. Sampling helps to determine corresponding value of population and plays vital role in marketing research.

Target Population:

All items under consideration in field of enquiry constitute population. The target population will be the customers approaching State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank for their daily transactions.

Sample Frame:

A sample frame is list of all elements in population from which samples are drawn. Sample frame will be database of Janakpuri branch of State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank.

Sample Unit:

The sampling unit is individual customers.

Sample Size:

Large sample gives reliable result than small sample. However, it is not feasible to target entire population to achieve feasible result. In the aspect of selecting sample to study is known as sample size. Sample size was of 200 respondents for this study.

Sampling Method:

Convenience sampling technique was used in survey. When population elements are selected for inclusion in sample based on ease of access, it is called convenience sampling.

METHOD OF DATA COLLECTION:

The mode of data collection was based on Survey method. A survey solicits information from people.

4.5 TOOLS FOR DATA COLLECTION:

Primary data can be collected through survey. In survey data is collected using questionnaire. I prepared the questionnaire according to the necessity of data to be collected. A questionnaire is the vehicle used to pose questions that researcher wants respondents to answer.

DATA ANALYSIS TOOL:

Tool used for data analysis was MS Excel.

CHAPTER-5

DATA ANALYSIS

AND FINDINGS

DATA ANALYSIS AND INTERPRETATION

Data analysis is a method that helps to describe facts, detect patterns, develop explanations and test hypothesis. The numerical results provided by data analysis are simple.

GENDER:

Category

Frequency

Percentage

Male

116

58

Female

84

42

INTERPRETATION:

It has been observed that 58% of respondents are male and 42% of respondents are female.

AGE:

Category

Frequency

Percentage

Below 30

83

41

30-40

65

33

40-50

34

17

Above 50

18

9

INTERPRETATION:

In this study it has been observed that only 9% of respondents are above 50 years of age. 17% of respondents are between 40-50 years of age, 33% are between 30-40 years of age and 41% are below 30 years of age.

OCCUPATION:

Category

Frequency

Percentage

Professional

31

15

Self Employed

23

11

Salaried

74

37

Businessmen

21

11

Retired

13

7

Others

38

19

INTERPRETATION:

It has been observed that 15% of respondents are professional, 11% are self employed, 37% are salaried, 11% are businessmen, 7% are retired and 19% are others (i.e. housewife, student).

FACTORS INFLUENCING CUSTOMER RELATIONSHIP MANAGEMENT

It is very important for banks to recognize the factors that influence the customer relationship management. Following are the factors:

The personnel of bank are sincere, helpful and kind.

Particulars

Frequency

Percentage

Disagree

29

14

Neutral

37

9

Agree

134

67

INTERPRETATION:

The personnel of bank are sincere, helpful and kind is an important factor that influences CRM. 67% of respondents agree to it, 19% of respondents are neutral and only 14% of respondents disagree to it.

The personnel of bank understand demands quickly and fulfils them immediately.

Particulars

Frequency

Percentage

Disagree

32

16

Neutral

37

18

Agree

131

66

INTERPRETATION:

The personnel of bank understand demands quickly and fulfils them is an important factor that influences CRM. 66% of respondents agree to it, 18% are neutral and only 16% of respondents disagree to it.

The personnel of bank use an easy-to-understand language while giving service.

Particulars

Frequency

Percentage

Disagree

30

15

Neutral

36

18

Agree

134

67

INTERPRETATION:

The personnel of bank use an easy-to-understand language while giving service is an important factor that influences CRM. 67% of respondents agree to it, 18% are neutral and only 15% of respondents disagree to it.

The bank contacts you and informs you about new campaigns and products.

Particulars

Frequency

Percentage

Frequently

120

60

Rarely

43

21

Occasionally

37

19

INTERPRETATION:

The bank contacts you and informs you about new campaigns and products are also another factor that influences CRM. 60% of respondents said that they are frequently informed about new products, 21% are occasionally informed and 19% are rarely informed.

What makes this bank different from its rivals is that it can make good relationships with its customers.

Particulars

Frequency

Percentage

Disagree

31

15

Neutral

35

18

Agree

134

67

INTERPRETATION:

Bank’s good relationship with its customers is an important factor that influences CRM. 67% of respondents agree to it, 18% are neutral and only 15% of respondents disagree to it.

The personnel of the bank have enough experience and information.

Particulars

Frequency

Percentage

Disagree

31

15

Neutral

41

21

Agree

128

64

INTERPRETATION:

The personnel of the bank have enough experience and information is also a factor that influences CRM. 64% of respondents agree to it, 21% are neutral and only 15% of respondents disagree to it.

The products and services offered by the bank meet customer needs.

Particulars

Frequency

Percentage

Disagree

34

17

Neutral

42

21

Agree

124

62

INTERPRETATION:

The products and services offered by the bank meet customer needs is an important factor that influences CRM. 62% of respondents agree to it, 21% are neutral and only 17% of respondents disagree to it.

You have to wait for long at the bank for getting services.

Particulars

Frequency

Percentage

Disagree

129

64

Neutral

35

18

Agree

36

18

INTERPRETATION:

You have to wait for long at the bank for getting services is an important factor that influences CRM. 64% of respondents disagree that they have to wait for long for getting services, 18% are neutral and 18% of agree that they have to wait for long for getting services.

You consider yourself to be the loyal customer of the bank.

Particulars

Frequency

Percentage

Disagree

33

16

Neutral

45

23

Agree

122

61

INTERPRETATION:

You consider yourself to be the loyal customer of the bank is an important factor that studies the effect of CRM on customer retention. 61% of respondents agree that they are loyal customers of bank, 23% are neutral and 16% of respondents they do not consider themselves loyal customers of bank.

You think of changing this bank.

Particulars

Frequency

Percentage

Yes

36

18

No

121

60

Can’t say

43

22

INTERPRETATION:

You think of changing this bank also influences CRM. 60% of respondents they don’t think of changing the bank, 18% of respondents’ think of changing the bank and 22% of respondents they can’t say.

TESTING OF HYPOTHESIS USING CHI-SQUARE TEST

The hypotheses are:

H0: Effect of CRM on customer retention in PSBs is independent of their age.

H1: Effect of CRM on customer retention in PSBs is dependent of their age.

The general formula for Chi-square test is:

\Chi^2 = \sum_{ij} {(O_{ij} - E_{ij})^2 \over E_{ij}} ,

Where O= the frequencies observed

E= the frequencies expected

Degrees of Freedom= n-1

Age

O

E

O-E

(O-E)²

∑(O-E)²/E

Below 30

83

50

33

1089

21.78

30-40

65

50

15

225

4.5

40-50

34

50

-16

256

5.12

Above 50

18

50

-32

1024

20.48

Total

200

200

51.88

χ²= 51.88

Degrees of Freedom = 3 (4-1)

The table value of Chi-square at 95% confidence level, 5% significance level and 3 degrees of freedom is 7.815. The calculated value of χ² is 51.88 much higher than this table value and hence null hypothesis (H0) cannot be accepted. We will accept the alternative hypothesis (H1). We can thus conclude that the effect of CRM on customer retention in PSBs is dependent of their age.

H0: Good relationships with customers have no significant impact on the loyalty of customers.

H1: Good relationships with customers have significant impact on the loyalty of customers.

LOYAL CUSTOMERS

RELATIONSHIP WITH CUSTOMERS

Disagree

Neutral

Agree

Total

Disagree

30

1

2

33

Neutral

1

33

11

45

Agree

0

1

121

122

Total

31

35

134

200

Chi-Square Test

Chi-Square Value

df

P

297.91

4

<.0001

The above table indicates calculated value of Chi-Square is 297.91 at 5 percent level of significance, 95 percent confidence level and 4 degrees of freedom{(3-1)*(3-1)=2*2} whereas tabulated value is 9.488. The calculated value of chi-square is much higher than table value and hence null hypothesis (H0) cannot be accepted. We will accept the alternative hypothesis (H1). We can thus conclude that good relationship with customers have significant impact on the loyalty of customers.

H0: Helpfulness of bank’s personnel has no significant impact on good relationship with the customers.

H1: Helpfulness of bank’s personnel has significant impact on good relationship with the customers.

RELATIONSHIP WITH CUSTOMERS

HELPFUL PERSONNEL OF BANK

Disagree

Neutral

Agree

Total

Disagree

28

2

1

31

Neutral

1

29

5

35

Agree

0

6

128

134

Total

29

37

134

200

Chi-Square Test

Chi-Square Value

df

P

290.25

4

<.0001

The above table indicates calculated value of Chi-Square is 290.25 at 5 percent level of significance, 95 percent confidence level and 4 degrees of freedom{(3-1)*(3-1)=2*2} whereas tabulated value is 9.488. The calculated value of chi-square is much higher than table value and hence null hypothesis (H0) cannot be accepted. We will accept the alternative hypothesis (H1). We can thus conclude that helpfulness of bank’s personnel has significant impact on good relationship with the customers.

FINDINGS

67% of respondents agree that personnel of bank are sincere, helpful and kind is an important factor that influences CRM.

66% of respondents agree that personnel of bank understand demands quickly and fulfils them is an important factor that influences CRM.

67% of respondents agree that personnel of bank use an easy-to-understand language while giving service is an important factor that influences CRM.

60% of respondents said that they are frequently informed about new products. The bank contacts and informs about new campaigns and products is also another factor that influences CRM.

67% of respondents agree that bank’s good relationship with its customers is an important factor that influences CRM.

64% of respondents agree that personnel of the bank have enough experience and information is also a factor that influences CRM.

62% of respondents agree that products and services offered by the bank meet customer needs is an important factor that influences CRM.

64% of respondents disagree that they have to wait for long for getting services. Wait for long at the bank for getting services is an important factor that influences CRM.

61% of respondents agree that they are loyal customers of bank. Loyal customer of the bank is an important factor that studies the effect of CRM on customer retention.

It has been concluded that the effect of CRM on customer retention in banks is dependent of their age.

It has been concluded that good relationship with customers have significant impact on the loyalty of customers.

It has been concluded that helpfulness of bank’s personnel has significant impact on good relationship with the customers.

CHAPTER-6

SUGGESTIONS

SUGGESTIONS

Proper training should be given to bank’s personnel regarding their behavioral patterns before they come and work in field.

Good customer relationships cannot be built overnight. CRM should be considered as Continuous Relationship Management in banks.

In a competitive environment, banks should adopt suitable marketing skills. New services should be constantly introduced to ensure growth and to be competitive in market and to keep up the enthusiasm of employees and customers.

Implement customer centric process in banks.

Banks should have a thorough understanding of what customers want, and then use that information to follow up with actions, solution and resolution.

Banks should acknowledge customers and treat them with respect to earn their trust which will help in customer retention.

Banks should make customers feel special, provide personalized services which will help eliminate customer’s feeling of insignificance and help forming bond with them.

Banks can empower customer service agents to resolve problems on the spot, including special services to retain customers who might otherwise head to competitor.

Banks should handle complaints by keeping in contact with customers and produce solutions peculiar to the customers so that customer is satisfied which will result in customer loyalty.

Banks can offer processes that are streamlined and automated, but also provide guidance or have confirmation available at the end of the process to ensure and to show that customer’s complaints, issues have been resolved.

CHAPTER-7

CONCLUSION

CONCLUSION

CRM in banking industry is entirely different from other sectors, because banking industry is related to financial services, which needs to create trust among people. Establishing customer care support, making timely information about interest payments, creating awareness regarding online and e-banking, etc are required to nurture long lasting relationship with customers. However, two things that would make difference for a bank, so far as he clients go, would be (i) innovation in products which would invariably anticipate needs of the people and (ii) attitude of banks personnel towards clients.

With improved technology, banks offer service for 24 hours through telephone, internet and ATMs. It is of significance that banks should make individualized relationships with their customers, offer privatized services and determine customers’ needs. To collect information and update them are important milestones of CRM. Research results reveal that not only collecting data about customers but also giving information to them arouses customer loyalty. The customer report that they are not kept waiting for long. The fact that banking procedures are speedy and customers are not kept waiting much are rather important for customer loyalty. Banks personnel’s knowledge and mastery of subject accelerate speed of service given, so attempt to train personnel is necessary for customer loyalty.

There are two objectives of CRM in banks. One is to gain customers, to activate the potential customers, and other to retain existing customers. To this end, customer database should be updated frequently. For communicative success of the personnel with customers, use of information systems is requirement of customer based understanding.

Forming and sustaining healthy and long term relationships with customers have become an important means of competition in banking sector. It is possible if customer service is at satisfactory level, existing clients can recommend others to have banking connection with bank he is operating with. A satisfied customer works wonder for getting more clients. He is true brand ambassador for institution. One must remember that adoption of most advanced software on CRM will deliver only if it is backed by committed and passionate human ware to capture and retain customer who truly is purpose of any business.

In summary, bank’s ability to retain existing customers and gain new customers depends on CRM. Listening to customer’s demands and complaints and producing solutions with considerations paid to customer differences are important in creating customer satisfaction and customer retention.

LIMITATIONS AND FUTURE RESEARCH LINES

The study has been limited to the State Bank of India, Punjab National Bank, Bank of Baroda and Bank of India branches in West Delhi. All the PSBs and their branches could not be covered completely. Due to time constraints sample size was small. Large and diversified samples can be taken for further enhancement and validation of research work. The customers were bias in giving information. There is still lot of scope for future study. Since the subject is vast and at the same time requires complete attention many new innovations can be brought forward. As subject is based on customers who are indispensible part of operations thus, suggestions are welcomed for further research.

BIBLIOGRAPHY

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