CRM practices adopted by Indian banks

Research topic:

To determine the CRM practices adopted by Indian banks to retain existing customers and attract new customers.

Background of the Research:

Barnes (2001) believes that never before has the customer been wooed with such passion.  Rapid globalization, deregulation and diversification have created the perfect backdrop for intense competition, and the hard realities of marketing are driving the companies to focus more on customers rather than products.  Butscher (2002) believes that the reasons for the present focus of marketing on issues like customer relationship management (CRM) and customer retention are competitive prices, absence of unnecessary regulation and the fickle sense of loyalty amongst customers. 

Xu et al. (2002) asserted that approaches like CRM with their intense focus on customer are the new mantra for contemporary businesses.  Indeed, software relating to CRM is the most sought after solution for 21^st business century business requirements (Auh and Johnson, 2005). It is evident from the Siebel Systems' bold prediction (See Table 1.1) that CRM is the new buzzword considering that over the next decade businesses would be spending five times more on customer oriented technology solutions than in the previous decade (emarketer.com, 2005).

Table 1.1. Cumulative Spending on Customer Facing Solutions Worldwide, 1998-2014

 

Babakus et al. (2004) suggests that organizations are being compelled towards adopting technologies like CRM in order to augment their customer retention levels, enhance the satisfaction level of the customers, create better value customers, to derive the most strategic business advantage from CRM systems and to entice new customers.  The survey conducted by Sweet (2001-4) between 2001 and 2004 has highlighted the above factors.  It also underscored the fact that three factors out of the listed five are more important than the other two.  Clearly, it indicates that managers are convinced about the economics of retaining customers than about attracting new ones.

Furthermore, Aldlaigan and Buttle (2005) argued that CRM systems like contact management/ call centers/ data warehousing/ portals/ workflow/ business process management are the popular choices for retention of existing customers and development of new ones.

Therefore, CRM refers to a system for gathering information about customers, to underline their important characteristics, and to design strategic marketing programs on the basis of the information about these characteristics (Dyché, 2002). Kincaid (2003) believes that the term CRM refers to the software, systems and methods of employing Internet options to leverage and manipulate information about the customer to augment the satisfaction of the customers while making sure that the customers return to the organization for further interactions and contribute towards the profitability of the organization (Hennig-Thurau and Hansen, 2000).

According to Girishankar (2000), CRM entails acquiring, analyzing and applying information about the customers in order to generate more business effectively.  This is also called Analytical CRM, and Kotorov (2002) believes it offers a complete perspective about the customer i.e. a 360° view. Researchers are convinced that the CRM can be made more analytical. For example, Brown (2000) recommends that CRM systems involve features like e-mail, online purchase and creating database of information relating to the customer profile in order to provide customized services.  Xu et al. (2002) assert that the organizations can enjoy advanced technologies provided by the CRM software to understand the customer behavior so that it can communicate its marketing messages, tailor-made to the requirements of the customers.  Clearly, analytical CRM must entail segmenting and profiling customers in a manner that can help to determine customers who are strategically important for the organization in terms of their cost, value and volume.  In other words, it must be capable of developing suitable strategies of marketing and promotion according to the segments, thereby enhancing the segment’s customer profitability (Xu & Walton, 2005).