Effectiveness of CRM Practices in Banking: A Comparative study of Sbi and ICICI Bank

 

Dr. Vishal Agrawal

M. Com, Ph.D Firozabad (U.P.)

*Corresponding Author Email:

 

ABSTRACT:

Customer Relationship Management has emerged as a popular business strategy in today's competitive environment. It is a discipline, which enables the banking sector to identify and target their most profitable customers. It has been invented as a unique technique capable of remarkable changes in the total output of companies. Services are then provided in a timely manner using the channels that are preferred by the customers. Effective Customer Relationship Management focuses on the development of business strategies and aligns an organization to serve customers. The present study is focused on comparing the CRM determinants of SBI and ICICI bank & CRM effectiveness practices.

 

KEYWORDS: CRM, SBI, ICICI, Banking Industry

 

 


INTRODUCTION:

The banking business is becoming more and more complex with the changes emanating from the liberalization and globalization. For a new bank, customer creation is important, but an established bank it is the retention is much more efficient and cost effective mechanism. Customer Relationship Management (CRM) would also make Indian bankers realize that the purpose of their business is to create and keep a customer and to view the entire business process as consisting of Highly Integrated effort to discover, create and satisfy customer needs. But it is surprising to note that much of the activities of the banking and financial remain focused on customer creation not retention. It is revealed in the National Survey that the most effective media for increasing awareness of the bank products is publicity through friends and relatives of potential savers.

 

 

 

CRM stands for Customer Relationship Management. It is a process or methodology used to learn more about customers‟ needs and behaviors in order to develop stronger relationships with them. There are many technological components to CRM, but thinking about CRM in primarily technological terms is a mistake. The more useful way to think about CRM is as a process that will help bring together lots of pieces of information about customers, sales, marketing effectiveness, responsiveness and market trends. CRM helps businesses use technology and human resources to gain insight into the behavior of customers and the value of those customers. In rural areas, there is a tremendous potential for deposits and advances, but most of the potential is left untapped due to lack of awareness of basic products scheme. A satisfied customer is silent advertiser for banks products.

 

CRM in banking Sector:

This CRM strategy helps in the identification of profitable customers and this CRM strategy develop customer base by paying attention to most worthy customer through customized services. In banking sector, CRM can be defined as understanding about the customer, and remain in touch with the customer and to know about the need and want of customers and ensure to fulfill their needs and also know about the reason of their satisfaction or dissatisfaction and finally we make efforts to win the customer by rending services according to their aspiration. On the basis of the performance of the bank, satisfied customers can recommend others to use banking services with the bank where he is a customer.

 

Review Literature:

Anjana Grewal (2001) suggested in her a case study on relationship management practices developed in a leading foreign bank in India in the early nineties. It is a practical paper providing insights on what makes it happen. A model has been developed thereafter.

 

Dyche (2002) puts their views that information technology helps the firm to trace customers, as well as helps them to analyze their needs and aspiration.

 

Wanget al. (2004) formed a frame works for CRM performance and customer value on the basis of important dimension of customer value, for example perceived sacrifices, emotional, social and functional value. Dibb et.al. (2004)

 

Dr. B.C. Saraswathy (2006) stated that the mail objectives of CRM are building long term, sustaining relations with customers by delivering superior customer value and satisfaction. Instead of trying to maximize profit for each every transaction, CRM focuses on maximizing profits over the lifetime value of customers. Undoubtedly, CRM is a potential tool in sustaining and boosting sales in this era of hyper competitive world.

 

OBJECTIVES OF THE STUDY:

1.      To find out the popular CRM practices in banking industry

2.      To rank the CRM practices of Indian banking industry on the basis of their relative importance

3.      To determine the impact to CRM practices on customer satisfaction in banking industry

 

HYPOTHESIS:

A hypothesis is an assumption that is tested in a scientific research to approve or disapprove a particular statement. Hypothesis always requires statistical tools to be applied for testing and finding results. There are two types of hypotheses – null and alternate. The hypotheses for this study are as below:

 

Null Hypothesis:

There is no impact of CRM practices on customer satisfaction

 

Alternate Hypothesis:

There is a significant impact of CRM practices on customer satisfaction.

 

METHODOLOGY AND DESIGN:

CRM is the one of the most important among marketing strategies. The present study is empirical. Primary and secondary, both types of data has been taken for deriving the results in this study.

 

The primary data has been collected through survey with questionnaire as the data collection tool and secondary data has been collected through magazines, newspapers and various other online sources. The content validity of the questionnaire was tested with the help of the experts.

 

The sample size of the study is 360, 180 from each bank. A standard questionnaire was prepared and distributed to the respondents for their rating. For analysis of data, statistical tools like weighted mean, ranking method and regression analysis have been applied.


 

Data Analysis and Interpretation:

Demographic profile of the respondents:

 

Table 1 Demographic Profile of the customers of SBI and ICICI Bank.

Categories

No. of customers

% age

Category

No. of customer

% age

Length of Relationship

Income

 

0.00

5 -10 years

118

32.78

Below 40,000 per month

136

37.78

10-15 years

135

37.50

40,000 to 1,00,000 per month

148

41.11

above 15 years

107

29.72

Above 1,00,000 per month

76

21.11

Total

360

100.00

Total

360

100.00

Gender

Occupation

 

0.00

Male

198

55.00

Salaried

155

43.06

Female

162

45.00

Business

126

35.00

Total

360

100.00

Professional

79

21.94

Age

Total

360

100.00

Below 30

145

40.28

Marital Status

 

 

30-50

124

34.44

Married

242

67.22

Above 50

91

25.28

Unmarried

118

32.78

Total

360

100.00

Total

360

100.00

 


Length of relationship:

Table 1 shows the demographic profile of the customers of SBI and ICICI bank. Around 37% have a relationship of 10 to 15 years long, whereas around 33% have the relationship of 5-10 years long and lastly around 30% have a relationship of more than 15 years with their banks.

 

Gender:

Out of the 360 customers 55% are males and 45% are females. Hence this study gives good representation to both males and females.

 

Age:

The study includes the customers from all age groups. There are around 40% customers below the age of 30 followed by 34% that are between the age of 30-50 and finally 25% above the age of 50.

 

Occupation:

Regarding Occupation is has been observed that 43% are salaried, 35% have their own businesses and lastly 22% are professionals like CAs, ICWA or Lawyers.

 

Marital Status:

Regarding marital status it may be observed from table 1 that 67% respondents are married and rest 33% are unmarried.

 

Popular CRM practices and their ranking:

Table 2 Mean Value and Ranking

Sl. No.

CRM Practice

Mean Value

Ranking

1

Personal Service Manager

4.46

1

2

Regular tips for security

3.99

2

3

Regular tips for better banking

3.19

6

4

E-mail, SMS or calls about new products or services

2.92

8

5

Priority treatment in branch

3.64

4

6

Quick response of queries on calls

3.38

5

7

Special interest rates offers on loans and deposits

3.93

3

8

24X7 connectivity with the bank

3.10

7

9

Customer Satisfaction

3.29

Not ranked

 

Table 2 shows the mean values and the ranking of the various statements related to the CRM practices adopted by SBI and ICICI. It has been found from the table that personal service manager is ranked number 1 by the customers with a mean value of 4.46. It is followed by regular tips for security at rank 2 with mean value 3.99, Special interest rates offers on loans and deposits with rank 3, with a mean value of 3.93 priority treatment in branch which has got a rank of 4 with a mean value of 3.64.

 

Rank 5 has been given by the customers to Quick response of queries on calls with a mean value of 3.38. Regular tips for better banking has got a mean value of 3.19 with a ranking of 6 and, rank 7th is given to 24X7 connectivity of bank with the customers with mean value of 3.10 and the last is E-mail, SMS or calls about new products or service with a mean value of 2.92.

 

The value of customer satisfaction is 3.29 which show a moderate satisfaction. It has not been ranked because it is a dependent variable on the other 8 variables. The analysis of its dependency or impact of other independent variables has been shown in the table 3.

 

 

Interpretations: Wherever the significant value is below 0.05 the null hypothesis is rejected and alternate hypothesis is accepted. Where t value is positive it means that a dependent variable has positive impact on independent variable and where t value is negative, it means that an independent variable has negative impact on dependent variable.

 

 

 


 

Multiple Regression Analysis

 

Table 3: impact of CRM practices on customer satisfaction.

Model

Independent Variables

Beta

t

Sig.

IVs *

(Constant)

 

 

 

1

Personal Service Manager

0.422

2.546

0.009

2

Regular tips for security

0.334

6.877

0.000

3

Regular tips for better banking

0.412

12.606

0.000

4

E-mail, SMS or calls about new products or services

-0.358

-7.327

0.000

5

Priority treatment in branch

0.286

3.620

0.000

6

Quick response of queries on calls

0.155

2.173

0.019

7

Special interest rates offers on loans and deposits

0.127

3.991

0.000

8

24X7 connectivity with the bank

0.104

2.224

0.025

IVs–Independent Variables, DV–Customer Satisfaction

 


 

 

Table 3 shows the results of the hypothesis testing. It has been observed from the last column of the table that all the null hypotheses have been rejected and alternate hypothesis have been accepted. Hence it can be concluded that CRM practices in banking sector largely influence the customer satisfaction.

 

In the above case the t value is negative for one independent variable viz. E-mail, SMS or calls about new products or services, which means that this activity of CRM has a negative impact on customer satisfaction.

 

FINDINGS AND CONCLUSION:

CRM in any sector is very important and contemporary, whether it is banking and finance or retail. CRM ensures customer retention. The findings of this study also confirm the same. Customers feel special and they retain with the bank if their bank provide them personalized treatment, proper information about the new offers, products and services and available with the services 24X7.

 

However, at the same time it has been observed that too much communication such as communicating again and again with the phone or mail or other similar means of communication may irritate the customers. In this study it has been found that customer satisfaction is negatively connected with email, SMS and calls. However with all the other activities of CRM the customer feels connected positively.

 

The study is an important contribution in the field of banking CRM. This study finds out the relationships which can further help of the bank managers to take their decision appropriately for a better CRM and better customer retention.

 

REFERENCES:

1.       Grewal, Anjana, „Customer Relationship Management-Emerging Concepts, Tools and Applications' 2001, Tata Mcgraw Hill Publishing.

2.       Sheth, J. N. and Parvatiyar, A. (2000) Handbook of Relationship Marketing. Thousand Oaks, CA: Sage Publications.

3.       Kotler, P. and Armstrong, G. (2004) “Principles of Marketing” Pearson Education.

4.       Dyche, J. (2006) The CRM Handbook- The Business Guide to Customer Relationship Management. Pearson Education.

5.       Bickert, J. (1992, May) “The Database Revolution.” Target Marketing.

6.        Morgan, R. M. and Hunt, S. D. (1994) “The Commitment-Trust Theory of Relationship Marketing.” Journal of Marketing,

 

 

 

 

 

 

Received on 21.02.2019       Modified on 28.02.2019

Accepted on 08.03.2019      ©AandV Publications All right reserved

Res.  J. Humanities and Social Sciences. 2019; 10(1): 219-222.

DOI: 10.5958/2321-5828.2019.00039.1