These options made customer more demanding and empowered to ask for better services and treatment. The shift in the psychology of customers forced policy makers of service companies assign due importance to marketing decisions and realise about the importance of customer retention.
The services industry in India has had great momentum in the recent past and has witnessed stark changes in terms of policies.
There are many industries which earlier were either governed by the government such as aviation, telecom, postal services or were largely in unorganised form, for example, healthcare, retail and education. Increased corporatisation of services industries has changed the market structure and, hence, the market dynamics. The corporate structure of these industries has enabled them to work on the marketing and customer-led initiatives in a better form with enough investments and in a more systematic format.
The concept of CRM is at an evolving stage and various new dimensions are being added to this at a regular pace. The book attempted to to incorporate most of them.
This comprehensive book brings out most of the latest developments in the area of CRM in services industry, which has gained greater relevance in the new customer- driven business era. It has been designed with the objective of making the readers aware of the concept of CRM, primarily from the services business perspective, in Indian context, with enough practical inputs.
It covers most of the theoretical dimensions of the topic and links them with industry illustrations. The book discusses in its chapters the topics such as emergence and development of CRM concept, its role and implementation, the latest developments in it, its industry application, the role of people and employees in particular reference to CRM implementation, and the CRM practices in various services industries.
At the end of every chapter has Review Questions based on the text and Project Assignment to be carried out by the students for better understanding of the concepts. There are two chapters exclusively based on application of Customer Relationship Management in various services industries in general and select services companies in particular.
The book is divided in 5 parts. Each part focuses on specific dimension of Customer Relationship Management. Part I focuses on making readers aware of the conceptual and literary developments and also with the strategic implementation of concepts. This part is divided in four chapters. The first step in process of integration is identification and assessment of benefits of introducing new communication channel. The bank should select those channels that correspond to particular customer segments or individual customers.
For example, customers who are in age group of 18 to 45 years prefer communication via Internet, and customers, who are retired, want to contact bank through a Call Center or Branch. Depending on response, bank may establish a communication channel that best suits customer. Branch strategy as a communication channel strategy was very Mols , : popular thirty years ago.
Strategy based on Internet involves communication with customers. This strategy is the most common practice today, banking transactions independently, with significantly reduced costs. Clients are able to perform most business with bank through modern communication technologies, while for specific jobs, bank staff is available. This strategy allows activities at the lower cost, easier support to customers and increase of sales and profit.
CRM Technology CRM technology, as a part of Information technology, provides better insight into profitability of the customer but, also recognizes customers' habits and needs. CRM technology allows gathering necessary information from different sources in order to have a unique picture of each customer in real time. However, CRM technology is considered as expensive and complex innovation.
It requires integrated information systems, costly infrastructure and advanced technological skills. The price paid by bank for purchase of CRM technology depends on volume of business usually number of customers and existing infrastructure.
If bank is technologically mature; employees have a significant level of technological knowledge; CRM technology make advantage compared to other banks, so benefit of adopting CRM concept must be higher. It is difficult to establish a direct connection between CRM activities and financial results, because success of CRM concept can be expressed in quantitative and qualitative indicators.
Banks have to define performance indicators of CRM concept, as set of activities, which will help bank to achieve objectives defined in marketing strategy.
CRM concept is successful if sales, marketing, support, and information technology within bank are organized around same goals: cooperation with existing customers; acquisition of new customers; maximizing value of each customers; improving support services to customers without increasing costs.
Organization of described functions will enable improvement of operational efficiency, which contributes development and sustainable and healthy growth. Success of CRM concept can be measured by a set of specific objectives. Lack of clear and well-defined indicators can lead to lose focus on customer.
It is often considered that monitoring of financial indicators is sufficient for maintenance, modification or termination of CRM concept.
But, long-term relationships with customers are qualitative performance indicator of CRM concept. The main problem of this indicator is that banks often do not know how good relationships with customers look like, so it is difficult to measure customer loyalty. One way of measuring customer loyalty is Return on Relationship. Return on Relationship model allows measuring and maximizing profitability of customers, through proper use of CRM technologies and changing business processes resource optimization in sales and support, encouragement of customers to use alternative channels, etc.
However, the most correct is to measure qualitative and quantitative indicators of success of this concept. In literature Kim et al. Accordingly, the Balanced Scorecard covers financial, operational and qualitative aspects of CRM concept and allows its measurement.
However, formulation of indicators which bank will use depends on objective of implementation of concept. For example, if bank aims to reduce labor costs in branches, then a measure of implemented solutions will be not increase of sales but reducing operational costs. Therefore, measurement of results of CRM concept assumes using a combination of different indicators based on defined goals. Success of CRM concept can be expressed at different levels. Depending on the results of indicators at strategic, customer and financial level, it can be said if concept is successful or not Table 3.
Table 3. Examples of success indicators of CRM concept at different levels of the bank Level Examples of goals Expansion on new markets Strategic Increase in market share Clients have better products and services Client Transaction processes are more efficient and effective Clients have more products and services on disposal Profit increase Financial Margin increase Source: Adjusted from Payne, Adrian and Pennie Frow.
Journal of Marketing — Success rate of CRM implementation concept is very low, which is not in accordance with large investments and expectations of management. A detailed presentation of failure rate per year, conducted by research agencies is shown in Table 4. Table 4. CRM concept can be unprofitable if bank ignores value of customers; underestimates data analysis; interest of top management for CRM concept is low; inflexible decision-making process.
Another problem in process of implementing CRM concept is collection of personalized customer data. Collection of personal data is a very important and sensitive part of communicating with customers. Only with written consent of customer, bank may use personal data in analysis. However, research agency Forrester Research showed that customers increasingly report abuse of their personal data. Under such circumstances, European Commission for Justice in , presented a draft EU legislation on data protection.
European Commission seeks feedback from various companies, government groups and organs of proposed law. Bank and other organizations whose operations are based on knowledge of customers, disapprove a proposed regulations, as it will limit their operations and data which they use in decision-making process.
Final decision on adoption of law has not yet been made. Also, problem is often identification of CRM concept with technology. Campbell Campbell , believed that organization spent more effort to generate information about customer then to integrate knowledge of customer in internal processes. CRM concept is based on technology, but without building CRM strategies and adaptation process and organizational changes, CRM concept would not be successful. Without adequate CRM strategy, process and organization there is a possibility that customer information will not be available to employees in a form they need.
The emphasis on technology, without adjustment of organization, processes and strategy may cause more problems than benefits. There is also possibility that employees do not use CRM technology in a way that provides benefits for bank. Even before adoption of CRM concept, banks were trying to develop qualitative relationship with customer.
CRM approach offers possibility of building a comprehensive concept with emphasis on customers. CRM strategy provides advantages which bank uses when communicate to target group, resulting in higher performance products and services which can meet customer needs. CRM concept involves modified attitudes of bank and customer through a series of logical steps.
In order to create a framework for CRM concept, bank has to monitor needs and behaviors of customers, but also to identify actors who are of great importance for customers in long-term business relationships. If bank delivers added value to customer through its product and services, it will strengthen bank competitive advantages; so the other bank will have difficulty to copy this capability Kothandaraman and Wilson , CRM concept allows banks to focus on overall growth. Products and services can be adjusted to new market needs with adoption of new information technologies.
Also, as bank has sensitive information about customers, due to legal regulations, bank must balance between costs incurred due to data protection and need to use information. Beside technology, CRM concept includes changing business processes, defining strategies, goals and changes in organizational structure and culture.
Technology which supports CRM concept gives information about profitability from different points products, services, personnel, market segments ; information on market share and growth segments, bank as a whole ; and information to compare performance of market segments. Also, CRM technology allows marketing decision-making analysis of various marketing strategies, identification of products and services which are profitable, as well as products and services that are not.
Employees who are in direct contact with customers Branches and Call Center using CRM technology have access to information about their potential customers name, address, what products and services are used, hobbies, occupation, interests and reports on achievement of their own results. CRM technology is only basis for new process and serves as tool which can help bank to become customer-oriented bank. CRM concept should be defined at top of organization, but also it has to be coordinated on lower level in organization.
Ideal as a basic textbook for advanced undergraduate and postgraduate students on CRM or relevant courses such as digital marketing, relationship marketing, customer experience management, or key account management, the ebook is equally valuable to industry professionals, managers engaged in CRM programs, and those following professional qualifications or accreditation in sales, marketing, or service management.
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