Portal de Periódicos da CAPES

Customer Perception Towards CRM Practices in Private Banks in Indore

2011; World Wide Journals; Volume: 4; Issue: 5 Linguagem: Inglês

10.15373/2249555x/may2014/108

2249-555X

Tarannum Syed, Kali Charan Modak,

Securities Regulation and Market Practices

In today’s era banks are becoming increasingly customer centric and almost all the banks have embraced CRM as a tool for customer acquisition, satisfaction and retention.CRM is a business strategy which increases customer value and ensures that the customer stays loyal which is very critical for growth and profitability of banks. Banks which have made inadequate investment in CRM are losing out in this fierce competitive market. This paper explores the customer perception and importance of CRM practices in private banks in Indore. Introduction With intensifying competition, globalization and technological breakthroughs, the banking sector is compelled to realize the importance of knowing their customer better. Banking sector is a customer-oriented service where the customer is the KEY focus. Experts define CRM as “a business strategy to acquire and retain the most valuable relationships. CRM requires a customer centric business philosophy and culture to support effective marketing, sales and service processes. CRM applications can enable effective customer relationship management, provided that an enterprise has right leadership, strategy and culture”. This move has increased the importance of customer relationship management (CRM) for organizations. Customer relationship management is an approach to manage customer related information and utilize it to acquire new customers, retain existing ones, and maximize their lifetime value. This is the reason it is considered as a source of competitive advantage for organizations. The new age marketing aims at winning customers through the principles of customer delight and customer life time value. CRM involves gathering of customer data, and then using it to facilitate customer service transactions by making the needed information available to resolve the specific issue and concern of the customers. This results in more satisfied customers, a more profitable business and more resources available to the support staff. Some recent CRM packages integrate the speech-enabled specific application functions which embrace customer support order management and sales force automation or modules within individual applications. These products are provided by companies such as Siebel system, Oracle, and SAP Indian banking industry has undergone tremendous transformation post liberalization and globalization process initiated from 1991. These changes have forced the Indian banking industry to adjust the product mix to effect the rapid changes in their process to remain competitive in the globalised environment. Over the years the nature and scope of services provided by banks have changed and expanded so much. Literature review CRM appeared in the literature after the evolution in the relationship marketing philosophy. Berry (1983) defined relationship marketing as attracting, maintaining and enhancing the customers’ relationships in multi-service organization. After a few decades, the evolution in relationship marketing philosophy changed the word relationship marketing to CRM. According to Brown (2000) CRM is a process of acquiring new customers, retaining the existence customers, and at the same time understands, anticipates and manages the needs of an organization’s current and potential customers. Over the last few decades, technical evolution has highly affected the banking industry (Sherif, 2002). CRM in financial service industry is a cyclical process which starts with definition of customer actions (Panda, 2003). CRM is fundamental to building a customer-centric organization. CRM is a key element that allows a bank to develop its customer base and sales capacity. The goal of CRM is to manage all aspects of customer interactions in a manner that enables the organization to maximize profitability from every customer. Panda (2003) described customer expectations are difficult to manage but are often the cause of dissonance which results in loss of existing customer base. In today’s competitive banking industry, customers have to make a choice among various service providers by making a trade-off between relationships and economies, trust and products, or service and efficiency (Sachdev et al., 2004). The challenge before the banks is not only to obtain updated information for each customer, but also to use the information to determine the best time to offer the most relevant products (Lau et al., 2003). It is also important to understand that if customers bring in profits for the bank, it becomes imperative for the bank to provide excellent services to those customers, otherwise they switch to other banks (Ray, 2007). CRM is a key to create a superior customer experience. It manages the customer relationship by creating a clear understanding (Know), by developing services and products based on the added value for target groups (Target), then enabling the actual sale and delivery of services and products through the selected channels (Sell), and developing long term profitable relationships with customers after sales services (Service) (Hussain, et.al., 2009) Furthermore, Mylonakis (2009) described CRM as an innovative process to create a long term relationship and gaining trust. Nguyen and Mutum (2012) found that the firm creates long lasting relationships and successful CRM implementation when there is an effective blend of the following four factors; namely (a) trust and commitment; (b) satisfaction; (c) symmetry and dependence; and (d) fairness. Objectives • To study customer perception towards CRM practices in banking sectors in Indore. • To study the importance of CRM practices in private sec-