Customer Relationship Management with Respect to Recurring Deposit Account of Sbi and Icici

INTRODUCTION OF TOPIC

TOPIC

To make comparative analysis of Customer Relationship Management with respect to

Recurring Deposit Account of SBI and ICICI.

INTRODUCTION

Aim of Customer Relationship Management is to produce Customer Equity. Three major

drivers of customer equity are:

1. Value Equity: This measures the customer perception about benefits relative to its cost.

The sub drivers of value equity are quality, price and convenience.

2. Brand Equity: Customers subjective and intangible assessment of the brand beyond the

objectively perceived value. The sub drivers are customer brand awareness, customer

attitude towards the brand, customer perception of brand ethics

3. Relationship Equity: Customers tendency to stick to the brand above and beyond the

objective and subjective assessment of its worth .Sub drivers of relationship equity

includes loyalty programs, community building programs and knowledge building

program.

BASIS OF COMPARISONS

With the aim to make comparative analysis between the two Banks with respect to

Recurring Deposit facilities, is done considering following factor:

Dissatisfaction level of customer

Reinforced customer

Convenience

Benefit and facility

Increase in customer revenue

Customer-Product profitability analysis is to compare the most profitable segment for the

bank.

INTRODUCTION OF CRM

INTRODUCTION

CRM is a set of strategies, processes, metrics, organizational culture and

technology solutions that enhance an organizations ability to see the

differences in its customers and prospects behavior and needs, track new

opportunities to better serve their customers and act, instantly and profitably,

on those differences and opportunities. Recently CRM has taken a center

stage in the business world with businesses concentrating on saving money

and increasing profits by redefining internal processes and procedures. It

costs a company dramatically less to retain and grow an existing client, than

it does to court new ones. It is said that “It is seven times more expensive to

acquire a new customer than to keep an existing one”, therefore the value of

customer information and management should never be underestimated.

Customer relation management analysts says CRM is “a buzzword thats

really not so new. Whats new is the technology is allowing us to do what we

could do at the turn of the century with the neighborhood grocer. He had few

enough customers and enough brainpower to keep track of everyones

preferences.

Technology has allowed us to go back to the future to this

model.” The aim of CRM is optimize the use of technology and human

resources for the business to gain insight into the behavior of costumer.

Seeing the new market (CRM) emerge, the worlds leading business

software vendors have reinvented themselves to focus on CRM, and there

has been a fierce competition for the dominance in this market. Technology

is now an essential part of CRM nowadays but buying technology before

defining CRM business goals, is a recipe for disaster. It is important to

remember that technology used for CRM should be tailor made depending

on the type of consumer base of the company and the business goals.

Companies need to understand CRM in relevance to customers and

customers only. Technology like call center services and softwares will

prove helpful only if they improve the customer services and relation

, otherwise all fancy technology is useless if it fails to benefit the customer.

EVOLUTION OF CRM IN BANKING SECTOR

Regulation and technological improvements are responsible for the vast

majority of innovations in banking over the past quarter century

. The introduction of personal computers and the proliferation of ATMs

in the1970s captured bank managements attention. The regulatory changes

in the 1980s fueled much of the industrys growth, then downsizing as

bankers focused on amassing market presence which resulted in significant

merger activity. Recent technological improvements are at the root of

bankers focus as well as a target for their significant investment dollars

today. In fact, according to recent projections, bankers and their financial

service company brethren will spend almost $7 billion this year on CRM and

increase that by 14 percent each year for then next several years.

Looking at this CRM phenomenon in light of the drivers of banking

innovation since the 1970s, one might wonder if CRM itself is the

innovation, or (conversely) the technology, once again.

Much is being written about CRM. Bankers at all points of the CRM

spectrum are looking for a way to quantify their return on investment

either what it actually is or, if just starting out, what it should be and over

what period of time should the value be realized. Ironically, the answer to

this question may lie in a simple review of a few known quantities generated

from historical innovation.

Look, for example, at ATMs. What drove many bankers to invest in ATMs

was the promise of reduced branch cost, since customers would use them

instead of a branch to transact business. But what was discovered is that the

financial impact of ATMs is a marginal increase in fee income substantially

offset by the cost of significant increases in the number of customer

transactions. The value proposition, however, was a significant increase in

that intangible called customer satisfaction. The increase in customer

satisfaction has translated to loyalty that resulted in higher customer

retention and growing franchise value.

Internet banking, a product of the 1990s, shows similar characteristics. Again,

bankers invested believing that the Internet was a lower-cost delivery channel

and a way to increase sales. Studies have now shown, however, that the

primary value of offering Internet banking services lies in the increased

retention of highly valued customer segments. Again, the intangible called

customer satisfaction drives the value proposition.

Now we explore CRM. CRM is not another ATM or Internet bank. It is not a

checking account, a stock or a mortgage. In fact, CRM is not anything a

customer should even know about! You will never sell your customer your

CRM, will you? So, one can conclude that CRM is not tangible. If its

intangible, can it be expected to produce a tangible return? Probably not, or at

least not with any direct financial value exclusively linked back to the

investment in CRM.

.

CRM is primarily driven by the innovation of technology, but unlike other

technological innovations, CRM has power to help bankers quickly and

directly improve customer satisfaction. CRM is an added dimension to

ensure that what the customer expects is consistent with what the bank is

prepared to deliver. One expert in bank CRM initiatives recently said that

CRM is an approach that is less focused on providing the right services to

the customer than attracting customers who are the right fit for what the

bank has to offer. Further, the primary value of CRM is its potential as a

customer retention tool. People are starting to measure CRM in terms of

increased customer satisfaction. Rather than ROI.

So how much of a return can you expect from your CRM investment, and

when can you expect it? Refer to your reasons for continuing to offer ATM

and Internet banking services. The answer for CRM is the same.

STUDY OF CUSTOMER RELATIONSHIP MANAGEMENT

CUSTOMER RELATIONSHIP MANAGEMENT

Developing a close, co-operative relationship with the customers is more

important in the current era of intense competition and demanding customers

than it has ever before.

CONCEPT

Shani and Chalasani(1992) define relationship marketing as “An integrated

effort to identify, maintain and build up a network with individual

consumers and to strengthen the network for mutual benefit of both sides,

through interactive ,individualized and value added contacts over along

period of time”.

Berry(1995) has described the concept as “attracting, maintaining ,and-in

multi-service organization-enhancing customer relationship”.

Another important facet of CRM “CUSTOMER SELECTIVITY”. As all the

customers are not equally profitable for an individual company. The

company therefore must be selective in tailors its program and marketing

efforts by segmenting and selecting appropriate customer for individual

marketing programs.

CRM can be defined as “it is a comprehensive strategy and process of

acquiring, retaining and patterning with selective customers to create

superior value for the company and the customer.”

FACTORS CONTRIBUTED TO THE RAPID DEVELOPMENT AND

EVOLUTION OF CRM IS:

Growing de-intermediation process in many industries due to advent

of sophisticated computer and telecommunication technologies that

allow producers to directly interact with end customers.

Databases and direct marketing tools have given the means to

individualize their marketing efforts. As a result, producers do not

need those functions formerly performed by the middlemen. Even

consumers are willing to undertake some of the responsibilities of

direct ordering ,personal merchandising and the product use related

services with little help from producers.

The de-intermediation process and consequent prevalence of CRM is also due to growth of

service economy. Since services are typically produced and delivered at the same

institutions, it minimizes the role of middlemen .A greater emotional bond between service

provider and service user also develops the need for maintaining and enhancing the

relationship.

Another force driving the adoption of CRM has been the Total Quality movement. When

company embraced Total Quality Management (TQM) philosophy to improve quality and

reduce cost, it became necessary o involve suppliers and customers in implementing the

program at all levels of value chain. This needed a close working relationship with

customers, suppliers and other members of marketing infrastructure.

With the advent of digital technology and complex products, system selling approach

became common. Customers liked the idea of system integration and sellers are able to sell

the augmented products and services to customers .The popularity of system integration

began to extend to customer packaged goods ,as well as services .At the same time

companies started to insist upon new purchasing approaches such as national contract and

master purchasing agreement, forcing major vendors to develop key account management

programs .these measures created intimacy and cooperation in the buyer-seller

relationships. Instead of purchasing product or services customers were interested in

buying the relationship with a vendor.

Current era of hyper competition, marketers are forced to be more concerned wit customer