CHAPTER 1 INTRODUCTION Human Resouce Management Human resource management (HRM, or simply HR) is the management process of an organization's workforce,or human resources. It is responsible for the attraction, selection, training, assessment, and rewarding of employees, while also overseeing organizationalleadership and culture and ensuring compliance with employment and labor laws. In circumstances where employees desire and are legally authorized to hold a collective bargaining agreement, HR will also serve as the company's primary liaison with the employees' representatives (usually a trades union). HR is a product of the human relations movement of the early 20th century, when researchers began documenting ways of creating business value through the strategic management of the workforce. The function was initially dominated by transactional work, such aspayroll and benefits administration, but due to globalization, company consolidation, technological advancement, and further research, HR now focuses on strategic initiatives like mergers and acquisitions, talentmanagement, successionplanning, industrial and labor relations, and diversity and inclusion. In startup companies, HR's duties may be performed by trained professionals. In larger companies, an entire functional group is typically dedicated to the discipline, with staff specializing in various HR tasks and functional leadership engaging in strategic decision making across the business. To train practitioners for the profession, institutions of higher education, professional associations, and companies themselves have created programs of study dedicated explicitly to the duties of the function. Academic and 1
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CHAPTER 1
INTRODUCTION
Human Resouce Management
Human resource management (HRM, or simply HR) is the management process of an organization's workforce,or human resources. It is responsible for the attraction, selection, training, assessment, and rewarding of employees, while also overseeing organizationalleadership and culture and ensuring compliance with employment and labor laws. In circumstances where employees desire and are legally authorized to hold a collective bargaining agreement, HR will also serve as the company's primary liaison with the employees' representatives (usually a trades union).
HR is a product of the human relations movement of the early 20th century, when researchers
began documenting ways of creating business value through the strategic management of the workforce. The
function was initially dominated by transactional work, such aspayroll and benefits administration, but due
to globalization, company consolidation, technological advancement, and further research, HR now focuses on
strategic initiatives like mergers and acquisitions, talentmanagement, successionplanning, industrial and labor
relations, and diversity and inclusion.
In startup companies, HR's duties may be performed by trained professionals. In larger
companies, an entire functional group is typically dedicated to the discipline, with staff specializing in various
HR tasks and functional leadership engaging in strategic decision making across the business. To train
practitioners for the profession, institutions of higher education, professional associations, and companies
themselves have created programs of study dedicated explicitly to the duties of the function. Academic and
practitioner organizations likewise seek to engage and further the field of HR, as evidenced by several field-
specific publications. HR is also a field of research study that is popular within the fields of management
and industrial/organizational psychology.
In the current global work environment, all global companies are focused on retaining the
talent and knowledge held by the workforce. All companies are focused on lowering the employee turnover and
preserving knowledge. New hiring not only entails a high cost but also increases the risk of the newcomer not
being able to replace the person who was working in that position before. HR departments also strive to offer
benefits that will appeal to workers, thus reducing the risk of losing knowledge.
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The CRM strategy
Setting up a successful CRM system in a company demands a vision covering the entire scope of
operations starting at the highest organisational level. When we define the guidelines for future cooperation with
customers, we need a strategy for achieving our goals. The CRM strategy takes into account the financial
objectives and business strategy of the company and represents an upgrade of its marketing strategy. It
determines how the company will create profitable relations with its customers and gain their loyalty. The
strategic goals must be measurable by CRM metrics. The main focus of attention is not the product itself, but
meeting your customers' needs and thus building their satisfaction and loyalty. This is the only way to ensure
sustainable competitive advantages and long-term success in the market.
However, the mere introduction of CRM technology does not make a company customer-oriented. The
company also needs to change its frame of mind, culture, behaviour and organisational structure. In introducing a
comprehensive CRM system, SRC offers support from a qualified team of business administration experts, rich
experience and its own proven methodology.
Features of CRM
Customer Relationship Management is a strategy which is customized by an organization to manage and administrate its customers and vendors in an efficient manner for achieving excellence in business. It is primarily entangled with following features:
1. Customers Needs
An organization can never assume what actually a customer needs. Hence it is extremely
important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and
prioritized. Without modulating the actual needs it is arduous to serve the customer effectively and maintain a
long-term deal.
2. Customers Response
Customer response is the reaction by the organization to the queries and activities of the
customer. Dealing with these queries intelligently is very important as small misunderstandings could convey
unalike perceptions. Success totally depends on the understanding and interpreting these queries and then
working out to provide the best solution. During this situation if the supplier wins to satisfy the customer by
properly answering to his queries, he succeeds in explicating a professional and emotional relationship with him.
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3. Customer Satisfaction
Customer satisfaction is the measure of how the needs and responses are collaborated and
delivered to excel customer expectation. In today’s competitive business marketplace, customer satisfaction is an
important performance exponent and basic differentiator of business strategies. Hence, the more is customer
satisfaction; more is the business and the bonding with customer.
4. Customer Loyalty
Customer loyalty is the tendency of the customer to remain in business with a particular
supplier and buy the products regularly. This is usually seen when a customer is very much satisfied by the
supplier and re-visits the organization for business deals, or when he is tended towards re-buying a particular
product or brand over times by that supplier. To continue the customer loyalty the most important aspect an
organization should focus on is customer satisfaction. Hence, customer loyalty is an influencing aspect of CRM
and is always crucial for business success.
5. Customer Retention
Customer retention is a strategic process to keep or retain the existing customers and not letting
them to diverge or defect to other suppliers or organization for business. Usually a loyal customer is tended
towards sticking to a particular brand or product as far as his basic needs continue to be properly fulfilled. He
does not opt for taking a risk in going for a new product. More is the possibility to retain customers the more is
the probability of net growth of business.
6. Customer Complaints
Always there exists a challenge for suppliers to deal with complaints raised by customers.
Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons
for a customer to launch a complaint. A genuine reason can also exist due to which the customer is dissatisfied
but sometimes complaints are launched due to some sort of misunderstanding in analyzing and interpreting the
conditions of the deal provided by the supplier regarding any product or service. Handling these complaints to
ultimate satisfaction of the customer is substantial for any organization and hence it is essential for them to have
predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time.
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7. Customer Service
In an organization Customer Service is the process of delivering information and services
regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by
the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to
the customer but also to abide with the conditions as well. If the quality and trend of service go beyond
customer’s expectation, the organization is supposed to have a good business with customers.
Importance of CRM
1. A CRM system consists of a historical view and analysis of all the acquired or to be acquired customers.
This helps in reduced searching and correlating customers and to foresee customer needs effectively and
increase business.
2. CRM contains each and every bit of details of a customer, hence it is very easy for track a customer
accordingly and can be used to determine which customer can be profitable and which not.
3. In CRM system, customers are grouped according to different aspects according to the type of business
they do or according to physical location and are allocated to different customer managers often called as
account managers. This helps in focusing and concentrating on each and every customer separately.
4. A CRM system is not only used to deal with the existing customers but is also useful in acquiring new
customers. The process first starts with identifying a customer and maintaining all the corresponding
details into the CRM system which is also called an ‘Opportunity of Business’. The Sales and Field
representatives then try getting business out of these customers by sophistically following up with them
and converting them into a winning deal. All this is very easily and efficiently done by an integrated
CRM system.
5. The strongest aspect of Customer Relationship Management is that it is very cost-effective. The
advantage of decently implemented CRM system is that there is very less need of paper and manual work
which requires lesser staff to manage and lesser resources to deal with. The technologies used in
implementing a CRM system are also very cheap and smooth as compared to the traditional way of
business.
6. All the details in CRM system is kept centralized which is available anytime on fingertips. This reduces
the process time and increases productivity.
7. Efficiently dealing with all the customers and providing them what they actually need increases the
customer satisfaction. This increases the chance of getting more business which ultimately enhances
turnover and profit.
Characteristics of CRM4
Customer Relationship Management includes the following characteristics:
1. Relationship management is a customer-oriented feature with service response based on customer input,
one-to-one solutions to customers’ requirements, direct online communications with customer and
customer service centers that help customers solve their questions.
2. Salesforce automation. This function can implement sales promotion analysis, automate tracking of a
client’s account history for repeated sales or future sales, and also сoordinate sales, marketing, call
centers, and retail outlets in order to realize the salesforce automation.
3. Use of technology. This feature is about following the technology trend and skills of value delivering
using technology to make “up-to-the-second” customer data available. It applies data
warehouse technology in order to aggregate transaction information, to merge the information with CRM
solutions, and to provide KPI (key performance indicators).
4. Opportunity management. This feature helps the company to manage unpredictable growth and demand
and implement a goodforecasting model to integrate sales history with sales projection.
Tips for CRM Success
1. Strategy first, technology second
Business experts agree that CRM projects go off track when companies buy technology before they
have their CRM business goals clearly in mind. The first step is to develop a strategy that addresses the needs of
current and potential customers. Consider the lifecycle value of customers, taking into account different groups
of customers, and which ones are likely to yield the highest returns over the long run. Then select the technology
and vendors to help capture customer data and external sources, and consolidate the information to add
intelligence to the overall CRM strategy. Iron out the organizational and people issues so that companies must
overcome such issues before a systems that ties analysis and action can be fully effective. For example,
marketing staffs and salespeople don’t always communicate well, let alone share data. This is particularly true in
the traditional insurance industry where independent brokers represent more than one company’s insurance
products. Marketing, sales, and service must work as a team and share information. In order to facilitate sharing
information, the business users (not just management) must realize benefits to them before they adopt and
advocate shared information via any software system.
2. Develop the right contact strategy
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By knowing which offers and incentives to offer to which customers and when, an organization
won’t over market to customers and it will build loyalty and retention. Such goals can be at least as important as
realizing cross-sell opportunities.
3. Integrate, analyze, and refine data
Using the derived knowledge of the customer, various strategies, such as one-to-one mass
marketing, have the potential to enable improved business and financial planning. First, collect and consolidate
customer-related data from the customer touch points, current accounts, non-account internal information, and
external data sources. Next, integrate analysis across all customer touch points and from additional customer
profiling data measuring customer profitability, customer segmentation, and customer retention. Finally, once
knowledge is gained from data integration and analysis, refine and focus business processes and organizational
structures based on improved customer understanding.
4. Change accounts into customers
The traditional approach in many organizations has been to associate their customers with
accounts to the point of calling the account the customer and vice versa. Customers feel when they are treated
“like a number” instead of a person with personal needs and a history. A conventional account structure usually
contains very little information and recommendations about the people, their needs, and relationships to other
people and organizations in the marketplace.
5. Build customer loyalty by offering excellent service
In a competitive marketplace where price is not a differentiator, customers are easily lost through
indifferent service. It can be as simple as not calling a customer back when promised, through to delivering an
inferior product without prompt rectification. Investment in a CRM system that tracks customer interactions with
the business and facilitates automating business processes (workflow management) will lead to service
excellence, paying dividends in higher customer retention levels.
6. Improve profitability by matching channel cost to customer value.
Today, more than ever, it is important to identify the profitable customers of a company, and to
retain and grow them. This will be achieved by regularly re-evaluating the profitability of all customers—
typically done by intensive analysis of information in a data warehouse—and feeding back the revised
profitability indices to business users of a CRM system. A practical outcome of this exercise can be priority call
routing in call centers, where profitable customers get preferential treatment.
7. Streamline customer communications
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A CRM system can help identify situations where multiple bills or marketing materials are sent to
the same physical location or postal address. This usually indicates that the systems performing these functions
all contain their own sources of customer information. Consolidation of this information will reduce billing and
marketing costs and enhance customer relationships by streamlining communications.
8. Provide security and privacy
Customers’ demands for security and privacy are increasing. Therefore, it is essential to develop
an authentication mechanism that provides security and password protection. Developing a consumer household
view rather than an account view is important, but consumer privacy demands that the CRM system enable
household constituents to “opt-out” and not receive solicitations that other members may choose to subscribe to
or “opt-in.”
Tools and Process for CRM
Customer application forms
Centralized software where the whole data is collected
Wide range of offerings
Cross selling
Feedback forms
Components of CRM
Customer Information
Sales
Marketing Trends
Marketing Efficiency
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CHAPTER 2
CUSTOMER RELATIONSHIP MANAGEMENT IN PRIVATE SECTOR BANKS
CRM Objectives in Banking Sector
The idea of CRM is that it helps businesses use technology and human resources gain insight into
the behavior of customers and the value of those customers. If it works as hoped, a business can: provide better
customer service, make call centers more efficient, cross sell products more effectively, help sales staff close
deals faster, simplify marketing and sales processes, discover new customers, and increase customer revenues.It
doesn't happen by simply buying software and installing it. For CRM to be truly effective, an organization must
first decide what kind of customer information it is looking for and it must decide what it intends to do with that
information. For example, many financial institutions keep track of customers' life stages in order to market
appropriate banking products like mortgages or IRAs to them at the right time to fit their needs. Next, the
organization must look into all of the different ways information about customers comes into a business, where
and how this data is stored and how it is currently used. One company, for instance, may interact with customers
in a myriad of different ways including mail campaigns, Web sites, brick-and-mortar stores, call centers, mobile
sales force staff and marketing and advertising efforts. Solid CRM systems link up each of these points. This
collected data flows between operational systems (like sales and inventory systems) and analytical systems that
can help sort through these records for patterns. Company analysts can then comb through the data to obtain a
holistic view of each customer and pinpoint areas where better services are needed.
Over the last few decades, technical evolution has highly affected the banking industry. For more
than 200 years, banks were using branch based operations. Since the 1980s, things have been really changing
with the advent of multiple technologies and applications. Different organisations got affected from this
revolution; the banking industry is one of it. In this technology revolution, technology based remote access
delivery channels and payment systems surfaced. ATM displaced cashier tellers, telephone represented by call
centers replaced the bank branch, internet replaced the mail, credit cards and electronic cash replaced traditional
cash transactions, and interactive television will replace face-to-face transactions. In recent years, banks have
moved towards marketing orientation and the adoption of relationship banking principles. The key motivators for
embracing marketing principles were the competitive pressure that arose from the deregulation of the financial
services market particularly in India.
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This essentially exposed clearing banks and the retail banking market to increased competition
and led to a blurring of boundaries in many traditional product markets (Durkin, 2004). The bank would need a
complete view of its customers across the various systems that contain their data. If the bank could track
customer behaviour, executives can have a better understanding, a predicative future behaviour and customer
preferences. The data and applications can help the bank to manage its customer relationship to continue to grow
and evolve. According to Stone et al. (2002) most sectors of the financial services industry are trying to use
CRM techniques to achieve a variety of outcomes. In the area of strategy, they are trying to:
Create consumer-centric culture and organisation;
Secure customer relationships;
Maximize customer profitability;
Integrate communications and supplier – customer interactions across channels;
Identify sales prospects and opportunities;
Support cross and up-selling initiatives;
Manage customer value by developing propositions aimed at different customer segments;
Support channel management, pricing and migration.
CRM is a sound business strategy to identify the bank’s most profitable customers and prospects,
and devotes time and attention to expanding account relationship with those customers through individualised
marketing, reprising, discretionary decision making, and customised service through the various sales channels
that the bank uses. Any financial institution seeking to adopt a customer relationship model should consider six
key business requirements they are:
1. Create a customer-focused organisation and infrastructure.
2. Gaining accurate picture of customer categories.
3. Assess the lifetime value of customers.
4. Maximise the profitability of each customer relationship.
5. Understand how to attract and keep the best customers.
6. Maximise rate of return on marketing campaigns.
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CRM is developing into a major element of corporate strategy for many organisations. A
greater focus on CRM is the only way the banking industry can protect its market share and boost growth. With
intensifying competition, declining market share, deregulations, smarter and more demanding customers, there is
competition between the banks to attain a competitive advantage over one another or for sustaining the survival
in competition. In India, the banking sector has been operating in a very stable environment from last thirty -
forty years. In current scenario of banking sector, the falling of interest rates and tough competition between
these players had made Indian bankers to realise that the purpose of their business is to create and retain a
customer and to see that the entire business process is consistent with an integrated effort to discover, retain and
satisfy customer needs. But the success of' CRM Strategy depends upon its ability to understand the needs of the
customer and to integrate them with the organisation's strategy, people, technology andbusiness process.
Financial services are in a structural change whereby competition and customer demands are increasing.
Utility of CRM in Banks
CRM primarily caters to all interactions with the customers or potential customers, across multiple touch
points including the Internet. bank branch, call center. field organization and other distribution channels.CRM can
help banks in following ways:
1. Campaign Management
Banks need to identify customers, tailor products and services to meet their needs and sell these products to
them. CRM achieves this through Campaign Management by analyzing data from banks internal applications or by
importing data from external applications to evaluate customer profitability and designing comprehensive customer
profiles in terms of individual lifestyle preferences, income levels and other related criteria. Based on these profiles,
banks can identify the most lucrative customers and customer segments, and execute targeted. personalized multi-
channel marketing campaigns to reach these customers and maximize the lifetime value of those relationships
2. Customer information Consolidation
Instead of customer information being stored in product centric silos. (for e.g. separate
databases of savings account & credit card customers), with CRM the information is stored in a
customer centric manner covering all the products of the bank. CRM integrates various channels to
deliver a host of services to customers, while aiding thc functioning of the bank.
3. Marketing Encyclopedia
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Central repository for products, pricing and competitive information. as well as internal
training material, sales presentations, proposal templates and marketing collateral.
4. 360-degree view of company
This means whoever the bank speaks to, irrespective of whether the communication is from sales,
finance or support, the bank is aware of the interaction. Removal of inconsistencies of data makes the client
interaction processes smooth and efficient, thus leading to enhanced customer satisfaction.
5. Personalized sales home page
CRM can provide a single view where Sales Mangers and agents can get all the most up-to-date
information in one place. including opportunity, account, news, and expense report information. This would
make sales decision fast and consistent.
6. Contact Center
It enables customer service agent to provide uniform service across multiple channels such as
phone. Internet. email. Fax.
7. Lead and Opportunity Management
These enable organizations to effectively manage leads and opportunities and track the leads
through deal closure, the required follow-up and interaction with the prospects
8. Activity Management
It helps managers to assign and track the activities of various members.Thus improved
transperancy leads to improved efficiency.
9. Operational Inefficiency Removal
CRM can help in Strategy Formulation to eliminate current operational inefficiencies. An
effective CRM solution supports all channels of customer interaction including telephone, fax, e-mail,
the online portals, wireless devices. ATMs. and face-to-face contacts with bank personnel. It also links
these customer touch points to an operations center and connects the operations center with the relevant
internal and external business partners.
10. Enhanced Productivity
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CRM can help in enhanced productivity of customers,partners and employees.
11. CRM with Business Intelligence
Banks need to analyze the performance of customer relationships, uncover trends in customer behavior, and
understand the true business value of their customers. CRM with business intelligence allows banks to assi.ss customer
segments, which help them calculate the net present value (NPV) of a customer segment over a given period to derive
customer lifetime value. Customers can be evaluated within a scoring framework. Combining the behavior key figure and
frequency to monetary acquisition analysis with a marketing revenue quota can optimize acquisition costs and cut the
number of inefficient activities. With such knowledge, banks can efficiently allocate resources to the most profitable
customers and reengincer the unprofitable ones. Data warehousing solutions have been implemented in Citibank.
Reserve Bank of India. State Bank of India. IDBI. ICICI. MaxTouch, ACC, National Stock Exchange and PepsiCo.
And Business Intelligence players hope many more will follow suit.
Challenges of Implementing CRM
The challenges faced by many of the banks whilst implementing CRM can be summarized as the
followings:
• Getting management sponsorship
• Quality of customer data
• Alignment issue (Alignment of people and processes)
• Lack of skilled people
• Determining the right time for customer needs
• Using customer data more intelligently
• Incorporating customer data and customer preferences to the customer data base
• Real time data cross all customer channels
• Having 360- degree view of customers (Single view of customers)
The retail banking market is fiercely competitive and saturated.The competition is forcing
banks to find new ways of satisfying customers and quick adaptation to changes. The competition among the
banks itself is also very major domestic players on the arena. Banks are aware of this fact and exploit new
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trends to continue their existence in the market. CRM is one of these trends that are highly adopted by many
banks.
The satisfaction level of customers who agree that they are treated as a valued customer is
the measuring part for CRM's success in the bank. This could be attributed to the distinctive communication
capabilities, which target to establish an emotional link with the customer. This is highly related with
organizational learning philosophy and adaptive culture of the banks.
Application of CRM in Banking Sector
Based on the discussions made above, appropriate and effective application strategies of CRM are
given to improve bank's competitive position in the market.