CRM practices adopted by Indian banks

Important Definitions:

Kotler and Keller (2006) state that marketing has been defined by the American Marketing Association as "an entire gamut of organizational systems entailing the development, communication and delivery of value to the customers and for manipulating customer relationships for the ultimate benefit of organization and its various stakeholders ".

According to Gummesson (2004), relationship marketing (RM) can be defined as "an organizational function meant to initiate, maintain, improve and conclude relationships with customers and stakeholders where necessary so as to maximize the organizational profit and in keeping with the objectives of all relevant parties in a system of mutually beneficial exchange and keeping of promises". Zineldin (2005) also added that RM appreciates the fact that a steady base of customers is the most significant asset for any organization, since acquiring new customers is costlier than maintaining the existing ones.  Concentrating on developing long-term associations with customers spells ultimate success for business.  Therefore, customer relationships form the crux of RM.

Van Bennekom and Blaisdell (2000) state that RM literature is replete with information indicating that technology affects the possibility of enhancing the efficiency of different channels through reduction in cost, and helping in establishing more significant and profitable new relationships amongst the various channel partners. Tamminga and O'Halloran (2000) further recommend employing information technology and other non-IT mediums like physical dealings in equal measure to develop fruitful relationships with customers, considering that customers are open to various mediums in their interactions with vendors like face-to-face interactions, telephone, kiosks and other advanced systems like Internet.  Clearly, any one of these mediums alone or in combination can be selected for building a relationship with a customer.  This allows for customer interaction with the service providers in their preferred ways, since interactions will encourage the customers to build a stronger bond with the service provider – a basic requirement for competitive success of the company in the current business environment (Swift, 2001).

Information technology, particularly the Internet, is widely accepted as a medium for facilitating communication and interaction, thereby making it the most appropriate medium for the management of relationships (Parvatiyar and Sheth, 2001). Berry (1995) contend that a continuous system of interactions and communication can be established through Internet, and therefore, Internet facilitates implementing the CRM systems successfully.

Among the various definitions of CRM, the one given by Payne and Frow (2005) is most appropriate for addressing the objectives of this dissertation:

"CRM refers to methodologies and strategies employed to enhance the value for the shareholders by forging suitable relationships with important customers and customer segments.  CRM presents the ultimate system of developing relationship marketing using information technology to establish enduring relationships with various stakeholders including customers.  CRM offers greater scope for acquiring significant information about customers so as to involve them in the process of creating value for all concerned.  This can essentially be done through integrating cross-functional systems, human resources, functions and marketing proficiencies through the use of information and technology and its appropriate applications.''

Sharp (2002) present a popular classification of CRM systems highlighting three important categories:

•      Operational CRM systems, which are designed to enhance the effectiveness of CRM processes and offer solutions for greater automation of sales force, marketing structure and for call centers for enhancing the effectiveness of customer interactions.

•      Analytical CRM systems entail processes for controlling and assessing information about customers in order to better understand their requirements and behavior.  Perfect examples of analytical CRM systems are data warehousing and data mining solutions.

•      Collaborative CRM systems are involved with the management and integrating the various interaction points and channels of communication with the customer e.g. through telephone, e-mail or via the web.

According to Xu and Walton (2005), the fourth category of classification can be e-CRM which has been put forth by Sap.com (2003) and has been defined as:

“An Internet oriented process for integrating customer relationships through different channels of communication, business functions and stakeholders.  E-CRM, therefore, facilitates ordering through Internet, e-mails, and a database of information that can be employed for profiling customers, designing customized services and generating automatic feedback to the e-mail, and automatic assistance”.

The contention put forth by Xu and Walton (2005) is that the CRM systems that many organizations have adopted require operational applications like in the case of contact centers, marketing and sales have grown from on the basis of limited information about the customers which has been collected through the currently applied CRM processes.  They also been believes that organizations do not fully understand the analytical implications of CRM.