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CUSTOMER RELATIONSHIP MANAGEMENT

1

ROLE OF CRM IN CUSTOMER RETENTION WITH REFERENCE TO

BANK OF INDIA AND ITS BRANCHES IN DEFINED GEOGRAPHICAL

AREA IN DELHI AND NCR.

AJIT SHUKLA

A2828410029

MBA- INSURANCE & BANKING

AMITY SCHOOL OF INSURANCE, BANKING & ACTUARIAL SCIENCE (ASIBAS),

Amity University Campus, I-1 Block, 1st Floor, Sector-125, Noida.

Dist: Gautam Budh Nagar, U.P. - 201 303.

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Table of Contents

Declaration 3

Acknowledgement 4

Abstract 5

Introduction 6

Literature Review 21

Objective Of Study 25

Scope Of Study 25

Limitations 26

Research Methodology 27

Data Analysis and Interpretation 29

Findings and Suggestions 39

Conclusion 41

Bibliography 42

Appendix 43

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DECLARATION

I hereby declare that this project report titled

ROLE OF CRM IN CUSTOMER RETENTION WITH REFERENCE TO

BANK OF INDIA AND ITS BRANCHES IN DEFINED GEOGRAPHICAL

AREA IN DELHI AND NCR.

Is submitted by me to AMITY SCHOOL OF INSURANCE, BANKING&

ACTUARIAL SCIENCE (ASIBAS), is a Bonafide work undertaken by me and it

is not submitted to any other University or Institute for the award of any Degree /

Diploma / Certificate or published any time before.

.

Signature Signature

(Mr.Rajesh Verma) (Mr. AJIT SHUKLA)

(MENTOR) A2828410029

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ACKNOWLEDGEMENT

It has been rightly said that we are built on the shoulders of others. For everything that I

have achieved, the credit goes to all those who had helped me to complete this project

successfully.

I would like to thank a lot of people without whom this project would not have been

complete. First Prof.Rajesh Verma, Co-ordinator of my course, who was of utmost help in

guiding me structure this project. His positive attitude, forceful personality, unassailable

optimism and unwavering faith in me assured that I come out of the woods whenever I

encountered difficulties. He helped me throughout and was always present to help me whenever

I had a doubt.

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.

Finally, 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.

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ABSTRACT

Despite the extensive research undertaken in the subject area of services marketing, much is stillunknown to service providers of specific services in terms of firm-client relationships and how

customer retention rates can be increased. This study attempts to address this limitation. The

study revolves around the relationship marketing and customer retention of BANK OF INDIA,

Delhi and NCR branches.

When considering firm-client relationships and customer retention rates, it is important to gather

and link the viewpoint of Bank employees of Bank of India.

For this purpose a survey was conducted among the employees of Bank of India of branches in

Delhi and NCR. The primary aim of the study was to know the role of CRM in customer

retention. The study indicated the positive relation between CRM and Customer Retention.

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INTRODUCTION

THE BANKING INDUSTRYBanking in India originated in the first decade of18th century with The General Bank of India

coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are

now defunct. The oldest bank in existence in India is the State Bank of India being established as

"The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like

Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was

the most active trading port, mainly due to the trade of the British Empire, and due to which

banking activity took roots there and prospered. The first fully Indian owned bank was theAllahabad Bank, which was established in 1865.

By the 1900s, the market expanded with the establishment of banks such as Punjab National

Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded

under private ownership. The Reserve Bank of India formally took on the responsibility of

regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve

Bank was nationalized and given broader powers.

By the 1960s, the Indian banking industry has become an important tool to facilitate the

development of the Indian economy. At the same time, it has emerged as a large employer, and a

debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-

then Prime Minister of India expressed the intention of the GOI in the annual conference of the

All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalisation." The

paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and

the GOI issued an ordinance and nationalised the 14 largest commercial banks with effect from

the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the

step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the

Parliament passed the Banking Companies (Acquition and Transfer of Undertaking) Bill, and it

received the presidential approval on 9th August, 1969.

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A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated

reason for the nationalisation was to give the government more control of credit delivery. With

the second dose of nationalisation, the GOI controlled around 91% of the banking business of

India.

After this, until the 1990s, the nationalised banks grew at a pace of around 4%, closer to the

average growth rate of the Indian economy.In the early 1990s the then Narasimha Rao

government embarked on a policy of liberalization and gave licences to a small number of

private banks, which came to be known as New Generation tech-savvy banks, which included

banks such as UTI Bank (now re-named as Axis Bank) (the first of such new generation banks to

be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy

of India, kick started the banking sector in India, which has seen rapid growth with strong

contribution from all the three sectors of banks, namely, government banks, private banks and

foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the norms

for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights

which could exceed the present cap of 10%, at present it has gone up to 49% with some

restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were used

to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave

ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this

led to the retail boom in India. People not just demanded more from their banks but also received

more.

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Customer relationship management (CRM) is a widely implemented strategy for managing a

companys interactions withcustomers, clients and sales prospects. It involves using technology

to organize, automate, and synchronize business processesprincipally sales activities, but also

those for marketing, customer service, and technical support. The overall goals are to find,

attract, and win new clients, nurture and retain those the company already has, entice former

clients back into the fold, and reduce the costs of marketing and client service. Customer

relationship management describes a company-wide business strategy including customer-

interface departments as well as other departments.

CRM (customer relationship management) is an information industry term for methodologies,

software, and usually Internet capabilities that help an enterprise manage customer relationships

in an organized way. For example, an enterprise might build a database about its customers that

described relationships in sufficient detail so that management, salespeople, people providing

service, and perhaps the customer directly could access information, match customer needs with

product plans and offerings, remind customers of service requirements, know what other

products a customer had purchased, and so forth.

Today, many businesses such as banks, insurance companies, and other serviceproviders realize

the importance of Customer Relationship Management (CRM) andits potential to help them

acquire new customers retain existing ones and maximizetheir lifetime value. At this point, close

relationship with customers will require astrong coordination between IT and marketing

departments to provide a long-termretention of selected customers.

CRM is a sound business strategy to identify the banks most profitable customersand prospects,

and devotes time and attention to expanding account relationships withthose customers through

individualized marketing, repricing, discretionary decisionmaking, and customized service-all

delivered through the various sales channels thatthe bank uses.
http://en.wikipedia.org/wiki/Customershttp://en.wikipedia.org/wiki/Customershttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Customer_servicehttp://en.wikipedia.org/wiki/Technical_supporthttp://searchwinit.techtarget.com/sDefinition/0,,sid1_gci212065,00.htmlhttp://searchsqlserver.techtarget.com/definition/databasehttp://searchsqlserver.techtarget.com/definition/databasehttp://searchwinit.techtarget.com/sDefinition/0,,sid1_gci212065,00.htmlhttp://en.wikipedia.org/wiki/Technical_supporthttp://en.wikipedia.org/wiki/Customer_servicehttp://en.wikipedia.org/wiki/Marketinghttp://en.wikipedia.org/wiki/Saleshttp://en.wikipedia.org/wiki/Customers

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Relationship Marketing is the process of building long term mutually beneficial relationshipwith

the customers. The Financial Institutions in the developed countries are using thismarketing tool

very effectively by taking full advantage of Information and CommunicationTechnologies.The

Indian Banking Industry which was operating in a bureaucratic style prior to 1991 hadto undergo

large scale transformation with the opening up of the economy. The Sector hasbeen facing

unprecedented challenges with the wave of liberalization, privatization andglobalization of

Indian Economy. Banks in India are under intense pressure in todaysvolatile market place. Steep

competition, globalization, growing customer demand andexposure to higher credit risks are

forcing the banks to find new ways of improvingprofitability. On the other hand, cost-cutting

measures have forced banks to manageoperations with few Customers Relationship Managers

and Product Specialists. Industryconsolidation also poses fresh challenges to this sector.Even

today, most of the banks in India rely on the legacy of Customer Information System.In such a

scenario, it is difficult to have a complete customer view across divisions. Theyface

unprecedented challenges to sustain their growth path for survival. The challengesinclude

customer retention, reducing transaction costs, risk management and RegulationCompliance.The

result was a huge proliferation in customers choice. The strategic tool that was chosenfor aiding

this process was Information Technology and most of the banks went throughadoption of various

stages and forms of IT over the years and the process is still continuing.

The rapid growth in Information Technology and its potential to serve the customers in anewway

awakened the marketers and enabled them to transform these challenges intoopportunities.Under

these circumstances, customer satisfaction became an importantaspect of the business.The search

for new strategies began to meet not only the highexpectations of customers but the need to

retain them. The competitive world witnessedmany banks participating in the race to optimize

their profits. It increased the pressure toperform leading to adoption of advanced technology and

better skilled work force.

Therefore, business model changed from bank-centric approach to customer-centricapproach.

The customer became not only an essential but the most important part of thebusiness.

The Service Sector has emerged as a key sector in Indian Economy. The contribution fromthis

sector to our Gross Domestic Product (GDP) is approximately 55%, as per the currentyears

Budget Report (2008-09). The continuous growth of GDP at 8% and above hasbecome possible

due to the good performance of this sector. In the post - reforms era,there has been a sea change

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in the financial sector. In such a scenario, the services havegrown rapidly and the customer has

been more often a purchaser of services rather than aproduct.

The Financial Services is the backbone of service sector. This is important not only for

thebanking sector but of the Indian economy as a whole. This is so because banking is acatalyst

and life of modern trade and commerce. It is an integral part of all the businessesand social

activities. This rapid transformation of services in the banking system has led tothe evolution of a

highly competitive and complex market where there is a continuousrefinement of services.

Hence the increased role of banking in Indias economicdevelopment on the one hand and the

changes in the business climate on the other has putincreased pressure on them. These changes

are compelling the banks to reorganize themselves in order to cope with the present conditions.

Now, the Financial Institutions are trying to provide all the services at the customersdoorstep.

The customer has become the focal point either to develop or maintain stability inthe business.

Every engagement with the customer is an opportunity to either develop ordestroy a customers

faith in the Bank. The expectations of the customers have alsoincreased many fold. Intense

competition among the banks has redefined the concept of theentire banking system. The banks

are looking for new ways not only to attract but also toretain the customers and gain competitive

advantage over their competitors. The banks likeother business organizations are deploying

innovative sales techniques and advancedmarketing tools to gain supremacy.

Evolution of CRM

One of the important marketing tools in the developed countries is Relationship Marketing.The

CRM is a comprehensive approach for creating, maintaining and expanding relationshipwith the

customers. It has emerged as one of the most widely prescribed solutions fordiminishing market

share and sluggish growth of many industries in general and bankingand financial sector in

particular. CRM is a simple philosophy, which places the customer atthe heart of the business

processes, activities and cultures for improving customersatisfaction and maximizing profits. In

one of the encompassing definitions, CRM isdescribed as the establishment, development,

maintenance, and optimization of long term,mutually-valuable relationship between the

customers and the organizations. It is acomprehensive approach for creating, maintaining and

expanding relationship with thecustomers.

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The concept of CRM is very important to the business sector. The essence of the businesshas

been described by Mr. Peter Drucker, the Management Guru as, the purpose of thebusiness is to

attract and retain a good customer. Good Customer Service is the bestbrand ambassador for any

bank. The entire business process consists of highly integratedefforts to discover, create, arouse

and satisfy customers needs. The modern business hasrealized it and is making all out efforts to

become customer-centric across the globe.Hence, CRM is not a once-for-all affair but a

continuous process. It is the way of carryingout business covering all the aspects of the modern

business. It is an integral approach ofdealing with customers by deploying the advanced

information technology.

The important factors that establish the need for CRM in the Banking Industry are detailed

below:-

Intense Competition

There is intense competition among the Private Sector Banks, Public Sector Banksand Foreign

Banks and they are all taking steps to attract and retain the customers.New technologies, research

facilities, globalization of services, the flood of newproducts and the concept of all the facilities

under one roof to provide bettercustomer service leading to customer delight.

Well Informed Customers

The Customers in Banking Industry today are well informed. With the introduction ofnew

technology, the world has become like a small village. Thus, if a Bank wants tohave more

customers, it should develop a good relationship with its presentcustomers and try to maintain

the same in the future also.

Decline in Brand Loyalty

In the present scenario, brand loyalty is on decline. The customers are switchingover frequently

to avail the better facilities from other banks. Newer and superiorproducts and services are being

introduced continuously in the market. Thus, thebanks have to upgrade their products, improve

customer service and create bonds oftrusts through proper care of customer needs and regular

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communications. With thehelp of CRM, strong customer loyalty and a good image for the

organisation can bedeveloped.

Improved Customer Retention

In the intensely competitive banking industry, retention of existing customers isvital, which can

be achieved through the process of CRM.

CRM Objectives in Banking Sector

The idea of CRM is that it helps businesses use technology and human resources gaininsight into

the behavior of customers and the value of those customers. If it works ashoped, a business can:

provide better customer service, make call centers moreefficient, cross sell products more

effectively, help sales staff close deals faster,simplify marketing and sales processes, discover

new customers, and increasecustomer revenues.ForCRM to be truly effective an organization

must first decide what kind of customerinformation it is looking for and it must decide what it

intends to do with thatinformation.

Bank merely an organization it accepts deposits and lends money to the needy persons, but

banking is the process associated with the activities of banks. It includes issuance of cheque and

cards, monthly statements, timely announcement of new services, helping the customers to avail

online and mobile banking etc. Huge growth of customer relationship management is predicted

in the banking sector over the next few years. Banks are aiming to increase customer profitability

with any customer retention. This paper deals with the role of CRM in banking sector and the

need for it is to increase customer value by using some analytical methods in CRM applications.

It is a sound business strategy to identify the banks most profitable customers and prospects, and

devotes time and attention to expanding account relationships with those customers through

individualized marketing, pricing, discretionary decision making.

In banking sector, relationship management could be defined as having and acting upon deeper

knowledge about the customer, ensure that the customer such as how to fund the customer, get to

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know the customer, keep in tough with the customer, ensure that the customer gets what he

wishes from service provider and understand when they are not satisfied and might leave the

service provider and act accordingly.

CRM in banking industry entirely different from other sectors, because banking industry purely

related to financial services, which needs to create the trust among the people. Establishing

customer care support during on and off official hours, making timely information about interest

payments, maturity of time deposit, issuing credit and debit cum ATM card, creating awareness

regarding online and e-banking, adopting mobile request etc are required to keep regular

relationship with customers.

The present day CRM includes developing customer base. The bank has to pay adequate

attention to increase customer base by all means, it is possible if the performance is at

satisfactory level, the existing clients can recommend others to have banking connection with the

bank he is operating. Hence asking reference from the existing customers can develop their

client base. If the base increased, the profitability is also increase. Hence the bank has to

implement lot of innovative 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 employed by the bank

in todays competitive milieu. This has resulted in the adoption of various CRM initiatives by

these banks.

Nowadays, many businesses such as banks, insurance companies, and other service providers

realize the importance of Customer Relationship Management (CRM) and its potential to help

them acquire new customers retain existing ones and maximize their lifetime value. At this point,

close relationship with customers will require a strong coordination between IT and marketing

departments to provide a long-term retention of selected customers. This paper deals with the

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role of Customer Relationship Management in banking sector and the need for Customer

Relationship Management to increase customer value by using some analytical methods in CRM

applications.

CRM Lends a Hand to the Banking industry

Despite the fact that in most banks profits sometimes fail, they seldom pay attention to or adopt

any customer strategy. It has long been the misconception that banks need not pay much

attention to customer focus just because they had customers. Some banks even if they possess

good customer relationships are unable to cross sell as they have not figured out who to target

with what product/service. What happens is that customers are often approached for the wrong

products.

However the new millennium has resulted in banks and financial agencies rethinking their

strategies and goals. They have come to understand the importance of hanging onto the customer

and keeping him happy. The rules that once governed the banking industry have changed. They

have realized that adopting a customer centric strategy is essential and needs to be compulsorily

undertaken. The vast majority of banks now realize they need a customer strategy and are opting

for CRM - Customer Relationship Management.

Banking CRM software serves to increase the market share and boost growth in the banking

industry. What happens in CRM banking solutions is that they change the way the employees

think and mould them into customer conscious people. CRM induces bankers to know that they

are required to maintain good relationships with their customers and should strive to retain them.

They are made to realize that the business process should consist of efforts to discover and

satisfy customer requirements. Since the banking field now boasts of so much of technological

innovations there has been a wide variety of innovations in CRM banking as well.

CRM Have to Offer Banks:

Customer Information Assimilation and Storage Analyzing Profitability Aiding Marketing Efforts Gaining New Customers

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Relationship Management Assisting Customer retention Cross-Selling

CRM Banking Benefits:

CRM Banking Focuses on the Customer CRM manages to places the customer at the focal point

of the organization in order to cater to his needs, satisfy him and thus maximize the profits of the

organization. Banking CRM understands the needs of the customer and integrates it with people,

technology, resources and business processes. It focuses on the existing data available in the

organization and uses it to improve its relationship with customers. Banking CRM uses

information and analytical tools to secure customer focus. Thus it is completely essential that

banks implement CRM in order to secure this.

Overall Profitability:

CRM enables banks to give employee's better training that helps them face customers easily. It

achieves better infrastructure and ultimately contributes to better overall performance. The

byproducts of CRM banking solutions are customer acquisition, retention and profitability.

Banks that don't implement CRM will undoubtedly find themselves with lesser profitability

coupled with a sharp decline in the number of customers.

Satisfied Customers:

It is important to make a customer feel as if he / she is the only one - this will go a long way in

satisfying and retaining them. Bankers need a return on investment and it has been proved that

increase in customer satisfaction more than contributes a fair share to ROI. The main value of

CRM banking lies in satisfaction and increased retention of customers.

Centralized Information:

CRM banking solutions manage to clearly integrate people, processes and technology. CRM

banking provides banks with a holistic view of all bank transactions and customer information as

well and stores it in a single data warehouse where it can be studied later.

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CRM Banking Boosts Small Banks:

Banking CRM software meets the needs of banks of all sizes in terms of attaining the required

accuracy and understanding of customers. Merely assuming that banks that are considerably

smaller in size have a better customer approach and are able to deal with their customers in a

better manner is wrong. They are just as much in need of CRM aid as the others. Small banks on

account of a limited amount of money have had to realize that a large contribution to profits is

directly the result of good customer service. CRM makes sure that the bank delivers exactly what

the customer expects.

Customer Segregation:

CRM enables a bank to see which customers are costing them and which are bringing benefits.

CRM provides them with the required analytical tools that will help them focus on the

importance of segregating these two and doing what is required to avail of the maximum returns.

After this segregation is done CRM easily enables banks to increase their communication and

cross-selling to their customers effectively and efficiently.

How to Get the Most Out of CRM Banking Systems:

The main problem the CRM industry now faces is reluctant, hesitant bankers who seldomopt for CRM implementation. This is because banks feel that the transition to being

customer centric involves a lot of problems and costly. They are of the opinion that

returns hardly ever equal the expected profits and that the entire implementation is

unnecessary and time consuming. In addition to this the number of failed CRM

implementations has also resulted in invoking a feeling of reluctance in banks, making

them hesitate. This needs to be obliterated in order to succeed.

It is imperative that business policies and processes are put early in place in order that thebest can be got out of the CRM business solution. Doing this at a later stage will result inuntoward complications.

It is imperative that business policies and processes are put early in place in order that thebest can be got out of the CRM business solution. Doing this at a later stage will result in

untoward complications.

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Training of customer-facing staff is being given more importance now. This not onlyequips them to better deal with the customer but CRM learning also empowers the

employee with sufficient knowledge to carry out his job confidently and to the best of his

ability.

The assimilation and storage of bank customer data is a tedious task. Since this sectormostly involves numerical data this is highly essential and needs to be undertaken. It

involves a lot of added work and minute attention to detail. There are loads and loads of

data that need to be evaluated. Minute attention to detail is essential so that discrepancies

and errors don't take place. With technology getting more complicated banks need to

attend to minute details to ensure success.

It is important to test the CRM system before implementation. Aside from minimizingerrors this will go a long way in alleviating problems and difficulties. The new trends in

CRM have seen banks adopting methods like phased CRM implementation - adopting

incremental approaches and getting ample rewards.

It is not sufficient to merely install CRM software. For CRM to be truly successful it isimperative that there is a well established strategy. For CRM to be truly effective, it

requires a carefully planned strategy that makes proper use of people and business

processes in order to secure the maximum CRM ROI.

When adopting CRM it is essential that banks realize that incremental adoption isessential with a firm commitment to learn at every stage. A well developed CRM strategy

catering to phased implementation should be established and implemented.

Innovative Services through CRM:

Banks have made several innovations for sustenance by using the CRM System such as:

The introduction of ATMs. Biometric ATMs. Single Window Service. Teller System. Internet Banking Introduction of Plastic Money: Credit Card, Debit Card, Smart Card.

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Mobile and E-Mail Alerts Electronic Cash Introduction of two in one Accounts. Introduction of new loan schemes as per the customers needs viz. Education Loans,

Marriage Loans, Housing Loans, Personal Loans, Vehicle Loans, Furniture

Loans,Renovation Loans and Tourism Loans.

The gains are enormous. Banking CRM software endeavors to improve customer profitability

and manages to keep banks way ahead of the others by helping banks to study customer activity

and satisfy customer needs through the help of CRM banking solutions. It is definite that the

future will see CRM being adopted by banks as a part of their everyday business.

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CRM Development

To be prepared to the changing economic conditions and, in particular, to a rapidlydecreasing

inflation rate scenario Garanti Bank has started timely to focus ondeveloping a customer

relationship management (CRM) system. The total number ofcustomers is presently around twomillllions, but an increase to roughly three millionsis foreseen as mergings with Osmanli Bank

and Koferzbank are achieved and thepresent growth targets are reached.

The importance for the bank of managing the relationhips with their customers hasbeen the drive

of the joint projects that have been developed with IBM in the lastthree years. During the

projects a number of crucial technological and architecturechoices have been made to implement

the entire process. Realizing the importance ofcustomer information availability the first of these

projects has focussed on theproblem of routinely collecting and cleansing data. The project has

been undertakenby the bank with the spirit that has characterized the whole CRM development.

Theproject has promoted a massive involvement of the branches, namely of the

portfoliomanagers and campaigns have been launched for popularizing among branch staff the

importance of gathering and maintaining reliable customer data. Another set ofmethods have

been tested for customer not included in portfolios (pool customers),such as mailing or

distributing questionnaires in the branches or using automatic tellermachines (ATM) and the call

center. Methods for data checking and testing have beendeveloped to be routinely employed by

the bank's staff. Results obtained are verygood: for portfolio customers data available are

respectively 98% for the commercialones and 85% for the retail ones. For pool customers

availability goes down to 65%:this is a well-known phenomenon due to the loose relationship

with the lattercustomers.

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Bank of India

A group of eminent businessmen from Mumbai started the Bank of India (also known as BoI) on

7th September, 1906. Initially the bank was owned privately till it was nationalized in July 1969.Bank of India began its operations with just ` 50 lakh and 50 employees. Over the years, the bank

has made rapid progress and has become a one of the leading financial institutions in the country

with presence both in and outside the country. The bank has over 3000 branches spread all over

the country consisting of 136 specialized branches. Among the nationalized banks in the country,

the business volume of the Bank of India occupies a premier position.

Bank of India Products and Services

Apart from the standard services offered by the bank to its clients, the bank offers some special

services as well. The bank offers multi banking facility to customers of network branches of the

bank. As a part of this facility, the customers of one branch will be able to transact on his

account from any of the network branch of the bank. Currently this facility is available at 200

cities across the country. The various services available under multi branch banking includes

cash payment, cash deposit, inquiry about the fate of a cheque, stop payment on a cheque,transfer of funds, balance inquiry and bank statement.

Bank of India has been one of the pioneers in launching important schemes in the areas of

distribution, technology, international operations and risk management. The bank aims at

strengthening customer relations, expand delivery channels, strengthening the revenue streams

and increasing international capabilities and services.

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LITERATURE REVIEW

CRM evolves from business processes such asrelationship marketing and the increased

emphasis on improved customer retentionthrough the effective management of customer

relationships.

[1] Bose, (2002) described the customer relationship management (CRM), essentialand vital

function of customer oriented marketing is to gather and accumulaterelated information about

customers in order to provide effective services. CRMinvolves attainment analysis and use of

customers knowledge in order to sellgoods and services. Reasons for CRM coming to existence

are the changes anddevelopments in marketing environment and technology. Massey et al.,

(2001)believes that CRM is about attracting, developing, maintaining and retainingprofitable

customers over a period of time.

[2] Academics and practitioners are taking keen interest in professional adoptability ofCRM

since 1990s (Payne and Pennie 2005). It has been defined in many wayssince the introduction of

the concept. However, the best definition of CRM isdeveloped by Payne and Frow (2005) by

stating that CRM is a strategic approachthat is concerned with creating improved shareholder

value through thedevelopment of appropriate relationships with key customers and

customersegments. CRM unites the potential of relationship marketing strategies and IT tocreate

profitable, long-term relationships with customers and other keystakeholders. CRM provides

enhanced opportunities to use data and informationto both understand customers and create

value. This requires a cross-functionalintegration of processes, people, operations, and marketing

capabilities that isenabled through information, technology, and applications (Boulding et al

2005).

Reference:

1. Bose, R. 2002. Customer Relationship Management: key components for ITsuccess,Industrial Management & Data System, Vol 102 No. 2, pp. 89-97

2. Boulding, William, Richard Staelin, Michael Ehret, and Wesley J. Johnston. 2005.ACustomer Relationship Management Roadmap.

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[3] CRM serves the purpose of value creation for all stake holders: customers,employees and

shareholders (Payne, Holt and Frow 2001). The service profitchain (SPC) Model (Heskett et al

1994) shown in Figure 1 helps illuminate thisvalue creation process by representing horizontal,

cross-functional value creationprocesses rather than isolated perspectives with in each function.

[4] Levitt (1960) gave the idea that for firms to stay in existence, they should not focuson selling

products but rather on fulfilling needs. Again Levitt (1969) introduced theconcept of the

augmented product, stressing that consumers are interested in thetotal buying experience, not just

the core product.

[5] Bagozzi (1974) refocusedpeoples attention on the actual exchange process by reiterating the

fundamentaleconomic concept that an exchange occurs only when both parties perceive that

they are receiving value.

[6] Berry (1983) shifted the emphasisto the relationship between the company and the customer.

On the basis of hisideas and related conceptual work the concept of building relationships was

expanded to several different domains, such as industrial buyersellerrelationships (Dwyer,

Schurr, and Oh 1987) and channels of distribution (Gaski1984). Concurrently concepts such as

market orientation (Kohli and Jaworski1990; Narver and Slater 1990), market focus (Day 1994),

and market-basedlearning (Vorhies and Hunt 2005) were developed to understand the needs and

wants of customers, thus making firms more efficient and effective in

managingcustomerrelationships.

[7] There was an evolution from product, or brand,management to customer management (Sheth

2005) and from product portfoliomanagement to customer portfolio management (Johnson and

Selnes 2004).

Reference:

3. Heskett, L., Jones, O., Sasser, Jnr, W. and Schlesinger, A. 1994.4. Levitt, Theodore. 1960. Marketing Myopia, Harvard Business Review, 38. 5. Bagozzi, Richard P. 1974. Marketing as an Organized BehavioralSystem of Exchange.6. Berry, Leonard L. 1983. Relationship Marketing,.7. Johnson, Michael D. and Fred Selnes. 2004. Customer Portfolio Management.

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[8] There was an explosion of customer data in the 1980s. To organize these data foranalytic

purposes Peppers and Rogers (1993) introduced the concept of one-toonemarketing, and Pine

(1993) introduced the concept of mass customization.Vendors capitalized on these ideas with

hardware and software solutions andbegan using the term CRM.Organizations are realizing the

importance.

[9] According to a study conducted in the sector of banking, convenience oflocation, price,

recommendations from others and advertising are notimportant selection criteria for banks. From

customers point of view,important criteria are: account and transaction accuracy and

carefulness,efficiency in correcting mistakes and friendliness and helpfulness ofpersonnel. Thus,

CRM, high-quality attributes of the product / service anddifferentiation proved to be the most

important factors for customers.Zineldin , M . ( 2005 )

[10] CRM when successfully deployed can have a dramatic effect on bottom-lineperformance.

For example, Lowes Home Improvement Warehouse, in aspan of 18 months, achieved a 265

percent return on investment (ROI) onits $ 11m CRM investment. Stringfellow et al. ( 2004 ).

[11] Another study conducted in a European bank shows that with CRM, thebank was able to

focus on profitable clients through efficient segmentationaccording to individual behaviour.

Information about who buys what andhow much enabled the bank to have a commercial

approach based on theclient and not solely on the product. Thus, the bank was able to

bettersatisfy and retain its customers. Lindgreen and Antioco , ( 2005 ).

Reference:

8. Peppers, Don and Martha Rogers.1993. The One-to-One Future: BuildingRelationshipsone Customer at a Time. New York: Currency Doubleday.

9. Zineldin , M . 2005. Quality and customer relationship management (CRM)ascompetitive strategy in the Swedish banking industry.

10.Stringfellow , A . , Winter , N . and Bowen , D . 2004. CRM: Profitingfromunderstanding customer needs.

11.Lindgreen , A . and Antioco , M . 2005. Customer relationship management: The case ofEuropean bank, Marketing Intelligence & Planning , Vol. 23 , No. 2 ,pp. 136 154 .

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[12] According to Chen and Popovich, 2003; Plakoyiannaki and Tzokas, 2002, therelative

success of CRM initiatives are strongly influenced by the interplaybetween three key

organizational elements: people, process and technology.Additionally, integration of activities,

such as cross-functional processes, is citedas the most critical success factor (Wilson et al., 2002;

Kale, 2004, Meyer andKolbe, 2005). The coordination of customer relationship activities is

necessary onvarious dimensions such as strategy, processes, and technology, to ensuresuccess.

[13] Bateman & Snell (2007) observed that CRM is a business process which results in

optimizedprofitability and revenue generation, while achieving customer satisfaction. Often

alsoknown as relationship marketing by marketing academicians, CRM is an

informationtechnology assisted process that establishes a collaborative environment for

businesses toanalyze the buying behaviour and product/service requirements of an individual or

group ofexisting as well as potential customers.

[14] Reinartz & Kumar (2002) pointed out that Managers need to be careful in

differentiatingcustomer loyalty and customer profitability. Enterprises ought to understand the

fact thatmanaging customers for loyalty is different from managing them for profits.

[15] As per the Research Note by Gartner Group (2001), more than 75% of enterprises

engagedin CRM initiatives are incapable of putting together a comprehensive view of

theircustomers. Further, it noted that market leadership would be attained by enterprises

thatachieve maximum value and customer satisfaction within each customer segment

beingserved by them.

______________________________________________________________________________

Reference:

12.Chen, I & Popvich, K. 2003. Understanding customer relationship management (CRM).13.Bateman & Snell (2007)14.Reinartz & Kumar (2002)15.Research Note by Gartner Group (2001)

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NEED FOR STUDY

In the current trend, customer plays a major role in all parts of services. This research is used to

predict the role of CRM in customer retention in banks.

OBJECTIVES OF THE STUDY

The main objectives of the study are:

To analyze the extent of the implementation of CRM in BANK OF INDIA. To analyze the perceptions of the customers regarding the impact of CRM on

servicequality.

To evaluate the impact of CRM on customer retention.

SCOPE OF STUDY

The study was confined to Bank of India branches in Delhi and NCR. The survey was conducted

in branches of Bank of India in Delhi and NCR.

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LIMITATIONS

There are limitations that need to be acknowledged and addressed regarding the present study.

There was constraint of finance.

There was a constraint of time.

Less number of respondents. The Research was conducted in Bank of India branches in Delhi and NCR.

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RESEARCH METHODOLOGY

HYPOTHESIS

1. CRM AND CUSTOMER RETENTION

H0:CRM has impact on customer retention.

H1:CRM has no impact on customer retention.

Research Design

We first used Exploratory Research.Exploratory research is used principally to gain a deeper

understanding of something. Exploratory research is conducted to clarify ambiguous problems.

Management may have discovered general problems, but research is needed to gain better

understanding of the dimensions of the problems. Exploratory studies provide information to use

in analyzing a situation, but uncovering conclusive evidence to determine a particular course of

action is not the purpose of exploratory research. Usually, exploratory research is conducted with

the expectation that subsequent research will be required to provide conclusive evidence. It is a

serious mistake to rush into detailed surveys before less expensive and more readily available

sources of information have been exhausted.

Then we used Descriptive Research. Descriptive research, also known as statistical research,

describes data and characteristics about the population or phenomenon being studied. Descriptive

research answers the questions who, what, where, when and how.
http://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Statistical_populationhttp://en.wikipedia.org/wiki/Statistical_populationhttp://en.wikipedia.org/wiki/Statistics

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Sampling

Target PopulationEmployees of Bank of India in Delhi and NCR. Sampling FrameBank of India branches Delhi and NCR. Sampling UnitOrganization. Sample Size50 Sampling MethodConvenience Sampling.

Data Collection

MethodSurvey Tools for Data Collection

For Primary DataQuestionnaire and Personal Interview.

For Secondary DataJournals, Books, Internet

Tools for Data Analysis

MS Excel

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DATA ANALYSIS & INTERPRETATION

DEMOGRAPHIC PROFILE

GENDER:

Out of 50 respondents, 31 were found to be male and 19 were females.

Table 1: GENDER

Characteristics Number Percentage

MALE 31 62%

FEMALE 19 38%

62%

38%

MALE

FEMALE

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AGE:

It has been seen that majority of the respondents belong from the age category 25-35, followed by

those in category above 45.

TABLE 2: AGE OF RESPONDENTS

Characteristics Numbers Percentage

BELOW 25 2 4%

25 - 35 19 38%

36 - 45 14 28%

ABOVE 45 15 30%

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

BELOW 25 25 - 35 36 - 45 ABOVE 45

Series1

Series2

Series3

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EMPLOYEES RESPONSE

CRM PRACTICE IS HELPFUL FOR BANKS:

Out of 50 respondents who are the employees of Bank of India of different branches of Delhi and

NCR, 72% agrees that CRM practice is helpful for Banks.

Table 2: CRM PRACTICE HELPFUL FOR BANKS


AGREES 36 72%

NEUTRAL 11 22%

DISAGREE 3 6%

72%

22%6%

AGREES

NEUTRAL

DISAGREE

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CRM IMPLEMENTATION IN BANK OF INDIA:

Out of 50 employees of Bank of India from different branches, 17 says that implementation of

CRM in Bank is excellent, 16 says it is very good, 11 says it is good, 4 says it is moderate and 2

says it is poor.

TABLE 3: CRM IMPLEMENTATION IN BANK

Characteristics Numbers Percentage

EXCELLENT 17 34%

VERY GOOD 16 32%

GOOD 11 22%

MODERATE 4 8%

POOR 2 4%

34%

32%

22%

8%4%

EXCELLENT

VERY GOOD

GOOD

MODERATE

POOR

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CRM HELPS THE BANK IN CUSTOMER RETENTION:

Out of 50 employees 31 agrees that CRM helps the Bank in customer retention. Whereas 16 are

neutral and 3 disagrees that CRM helps in Customer Retention.

Table 4: CRM HELPS IN CUSTOMER RETENTION


AGREES 31 62%

NEUTRAL 16 32%

DISAGREE 3 6%

HYPOTHESIS

H0:CRM has impact on customer retention.

H1:CRM has no impact on customer retention.

74%

20%

6%

AGREES

NEUTRAL

DISAGREE

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N = 50

Proportion Agree = 33.33% or 0.3333

Hypothesized Frequency Agree = 0.3333 x 50 = 16.665

Proportion Neutral = 33.33% or 0.3333

Hypothesized Frequency Neutral = 0.3333 x 50 = 16.665

Proportion Disagree = 33.33% or 0.3333

Hypothesized Frequency Disagree = 0.3333 x 50 = 16.665

Observed N Expected N Residual

Agree 31 16.665 14.335

Neutral 16 16.665 -0.665

Disagree 3 16.665 -13.665

Chi square0.002073

Degree of Freedom 2Level of Significance 5%

Tabulated Value: 5.991

It is learned from the above table that the calculated chi-square is more than the tabulated value.

Hence,H0 is accepted. From this it has been inferred that CRM has impact on Customer

Retention.

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CRM FOCUSES ON MAXIMIZING THE VALUE FOR CUSTOMER AND

BANK:

Out of 50 respondents 28 agrees that CRM approach adopted by Banks focuses on maximizingthe value for customers and Bank.

Table 5: CRM MAXIMIZE VALUE FOR CUSTOMER & BANK


AGREES 28 56%

NEUTRAL 19 38%

DISAGREE 3 6%

0% 20% 40% 60% 80%

AGREES

NEUTRAL

DISAGREE

Series1

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CRM HELPS IN MEETING CUSTOMERS EXPECTATION ACCORDING

TO THEIR NEEDS:

Out of 50 respondents 35 agrees that CRM is a tool that helps in meeting the customersexpectations. 12 out of 50 respondents are neutral while 3 disagree.

Table 6: CRM HELPS IN MEETING CUSTOMERS EXPECTATION


AGREES 35 70%

NEUTRAL 12 24%

DISAGREE 3 6%

0% 20% 40% 60% 80%

AGREES

NEUTRAL

DISAGREE

Series1

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CRM PRACTICE PROVIDES QUALITY SERVICES TO CUSTOMERS:

Out of 50 respondents 37 agrees that CRM practice in Bank of India provides quality services to

its customers.

Table 7: CRM PROVIDES QUALITY SERVICES TO CUSTOMERS


AGREES 37 74%

NEUTRAL 10 20%

DISAGREE 3 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

AGREES NEUTRAL DISAGREE

Series1

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CRM PRACTICE SHOULD BE EFFECTIVE IN BANK OF INDIA:

Out of 50 employees 41 of the respondents says YES that CRM practice of Bank of India shoulb

be more effective and Bank should take steps for it.

Table 8: CRM PRACTICE TO BE MORE EFFECTIVE


Yes 41 82%

No 9 18%

82% 18%18%YES

NO

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FINDINGS

The survey was conducted among the employees of Bank of India, Delhi and NCR region. It was

found from the study that CRM practice in Banks is very important. Some of the findings from

this study are:

CRM practice is very helpful for Banks acquiring customers. CRM helps in Customer Retention. CRM gives strategies for Customer Retention.

Customer Retention helps the Banks in making profits. From the study it has been

concluded that CRM has impact on Customer Retention.

It has been found that CRM implementation in Bank of India has been satisfactory. It has been found from the study that CRM helps in maximizing the value of customers

and value of Bank.

CRM practice helps the Bank to provide quality services to its customers.

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SUGGESTIONS

Banks must take steps to improve their CRM practices. This would be very beneficial for Bank

of India as it would help them to maintain their relationship with customers and would help the

banks in earning profits.

Bank of India must implement Customer Acquisition strategies. They must take referralsfrom their customers so as to acquire new customers.

Bank must do campaigning to attract customers. This would help the banks in wideningtheir Customer base.

Bank must do the promotion for their products and services on wide scale so that theycan attract large customer base.

Bank must provide after services to its customers. Bank must deliver services to customers in time. There should not be delay in delivery of

ATM cards, Credit cards etc.

Banks in order to retain customers must give continuous quality initiatives to itscustomers.

Banks must keep the personalized information of the customers which would help themin maintaining long term relations with them.

Bank must adopt CROSS SELLING. Bank must listen to the problems of the customers and try to resolve their problems. Bank must take feedback from the customers so that their opinion can be kept in mind. Bank must provide customized offerings to the customers who are having long term

relationship with them.

This would help the bank in maintaining good relationship with their customers.

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CONCLUSION

CRM is an on-going learning process; every contact with the customer providingthe Bank

additional information about him/her. Hence, Bank should benefit from this valuable source of

information for making continuousimprovements. From the study it is very clear that CRM

practice in Bank helps the Bank in maintaining their relationship with customers. It is very clear

that CRM has impact on the customer retention. For any bank customer is the king and retention

of huge customer base helps the banks in earning profits. Quality is one of the important litmus

tests which customers use to differentiate between the services offered by different

organizations. Therefore, making ongoing improvements to the quality of service and/or product

is vital for the success of all CRM initiatives.

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BIBLIOGRAPHY

www.google.com www.yahoo.com www.wikipedia.com www.scholor.google.co.in www.bankofindia.com
http://www.google.com/http://www.google.com/http://www.yahoo.com/http://www.yahoo.com/http://www.wikipedia.com/http://www.wikipedia.com/http://www.scholor.google.co.in/http://www.scholor.google.co.in/http://www.bankofindia.com/http://www.bankofindia.com/http://www.bankofindia.com/http://www.scholor.google.co.in/http://www.wikipedia.com/http://www.yahoo.com/http://www.google.com/

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APPENDIX

QUESTIONNAIRE

Name of Respondent: Mr./Mrs._________________________________________

Age: _____________________________________

Gender: Male Female

Address In Full: -

______________________________________________________________________________

______________________________________________________________________________

City: ________________ Pin Code: ________________________

Email Address ____________________________________________

Name Of Bank and Branch name ___________________________________________________

Q: CRM practice is helpful for Bank.

(a)Strongly Agree(b) Agree(c) Neutral(d) Disagree(e) Strongly Disagree

Q: CRM implementation in Bank of India:

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(a)Excellent(b)Very Good(c) Good(d)Moderate(e)

Poor

Q: Service Quality in Bank of India (Rank the following from 1 5):

(a) Tangibility ________(b)Reliability ________(c) Responsiveness ________(d)Assurance ________(e)Empathy ________

Q: CRM helps the bank in customer retention.


Q: The CRM approach adopted by banks focuses on maximizing thevalue for the customer and

the bank.

(a)Strongly Agree(b)

Agree

(c) Neutral(d) Disagree(e) Strongly Disagree

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Q: Key drivers to customer loyalty (Rank them from 1 6)

(a) Positive Staff Attitude. _________(b)Honesty, Integrity and Reliability. _________(c) Productive advice and delivery of the promised service. _________(d)Consistent delivery of superior quality service. _________(e)Simplicity and easiness of doing business. _________(f) A fair and efficient complaints resolution. _________

Q: The CRM is one such tool which helps in meeting thecustomers expectations according to

their changing needs.


Q: CRM practice in banks provides quality service to customers.

(a)Strongly Agree

(b) Agree(c) Neutral(d) Disagree(e) Strongly Disagree

Q: Do you think Bank of India should take steps in making their CRM practice more effective?

(a) Yes(b)No

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