FACTORS INFLUENCING CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES IN PUBLIC SECTOR BANKS IN TIRUNELVELI DISTRICT

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1 FACTORS INFLUENCING CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES IN PUBLIC SECTOR BANKS IN TIRUNELVELI DISTRICT Dr.LOURDES POOBALA RAYEN 1 T.SREERANGANACHIYAR 2 1Head and Associate Professor, Research Dept of Commerce, St Xavier College, Palayamkottai 2 Ph.D Research scholar, Dept of Commerce, St Xavier College, Palayamkottai ABSTRACT Customer Relationship Management is becoming an important factor in public sector banks. Now each and every bank is realizing the significance of relationship with customer to survive in the competitive world. So, in this paper the researcher has made an attempt to examine the factors influencing the Customer Relationship Management (CRM) in the public sector banks. Keywords: Customer Relationship Management (CRM), public sector banks, factors influencing CRM. Introduction Customer Relationship Management systems are becoming popular across several sectors and have emerged as chief business strategy in today s competitive environment in companies. It has been viewed as a process aimed at collecting customer data, find profiles of customers and use the customer knowledge in specific marketing activities. It is a discipline which enables the companies to identify and target their most profitable customers. CRM implementation is on way in many banks. From marketing aspect, CRM is defined by Couldwell (1998) as a combination of business process and technology that seeks to understand a company s customers from the perspective of who they are, what they do, and what they are like. Technological definition of CRM was given as the market place of the future is undergoing a technology- driven metamorphosis (Peppers and Rogers 1995). Consequently, IT and marketing departments must work closely to implement CRM efficiently. Statement of the problem Modern marketing philosophy advocates the concept of CRM that creates customer delight. This applies to all sectors of sales and marketing including the banking. In the banking field, a unique relationship exists between the customers and the bank. But because of various reasons and apprehensions like the financial burdens, the risk of failure, marketing inertia, etc. many banks are still following the traditional ways of marketing and only few banks are making attempts to adopt CRM. It is with this background, the researcher has made a modest attempt to study the factors influencing the customer relationship management in the banking industry to understand its role for betterment of banking services. Objectives of the study 1. To identify the factors influencing Customer Relationship Management practices in public sector banks. 2. To analyse the factors influencing Customer Relationship Management practices among the urban, semi urban and rural public sector bank customers icmrrjournal@gmail.com

2 Hypothesis of the study 1. There is no significant difference in the factors influencing the customer relationship management in public sector banks among the urban, semi urban and rural bank customers. METHODOLOGY Source of the study The data required for the study were collected from both primary and secondary sources. The primary data has been collected directly from the account holders of public sector banks by using interview schedule. The secondary data has been collected from the published journal, books, magazine and websites. Sampling Design The study is confined to account holders of the public sector banks in Tirunelveli district. There are188 branches for the public sector banks in Tirunelveli district. Out of 188 branches of the public sector banks, four public sector banks namely State bank of India is having 25 branches, Canara bank is having 35 branches, Indian bank has 24 branches and Indian overseas bank has 69 branches. The leading four public sector banks which are having 153 branches were taken for the study. From each of the 153 branches 4 customers were selected randomly. In total 612 sample customers were selected from the major public sector banks. TOOLS FOR ANALYSIS The data collected were processed further with the help of the appropriate statistical tools to analyse the data and to derive inferences. The statistical tools namely ANOVA test have been used for the analysis and to interpret the data. Factors influencing Customer Relationship Management practices in Banking Sector Many banks are still following the traditional ways of marketing and only few banks are making attempts to adapt CRM. The focus of CRM helped the banks to understand the customer s current needs, what they have done in the past, and what they plan to do in the future to meet their own goals. There are various factors influencing banking sector to implement CRM. Growing competition Proliferating customer contact Intensifying attacks on customer information Rising customer expectation Exploiting marketing opportunities Customer retention Customer loyalty Online customers have a special set of expectations that set them apart from traditional customers. In particular, they expect lots of information about the company and the products to be available online with minimal searching, close to immediate service, opportunities for self-service via website, and speedy shipment of products or services. Therefore, bank need to consider CRM principles when doing business online. CRM is the hot talk in the banking sector. Banks are realizing that CRM is the magic bullet that helps financial institutions to build stronger and more profitable relationships icmrrjournal@gmail.com

3 1.Growing Competition Moving on to the competition in the banking system, Rajan states that competition in the banking sector in India is best seen as the product of two grand bargains. The first was between successive governments and the banks, whereby banks got privileged access to low cost demand and time deposits, to the central bank's liquidity facilities, as well as some protection from competition, in return for accepting obligations for the Government. The second grand bargain was between the public sector banks (PSBs) and the government, whereby these banks undertook special services and risks for the government, and were compensated in part, by the government standing behind the public sector banks. Respondent s opinion about Growing Competition In order to find out the significant difference in growing competition factors among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in growing competition factors among the rural, semi-urban and urban areas customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table 1 Table 1 Respondent s opinion about Growing Competition Variables relating to Growing Competition Rural Region Semi-urban Urban F Statistics Competitive interest rate * Introduce attractive offers * Benchmark services against competitors Bank provide services at home Use of new technology Competitors are using CRM system Competitors are well equipped with CRM system Competitors are using CRM practices during contact with their customers * Improve the relationship among customers with bank Attracting customer through good relationship with existing customer and get new customers From Table1, it is understood that attracting customer through good relationship with existing customer and get new customers is the highly viewed variable in respect of growing competition factor among the rural and semi-urban customers since their mean scores are and Among the urban customers the highly viewed variable in respect of growing competition factor is competitors are using CRM practices during contact with their customers as their mean score is It is evident from Table 1 that significant difference exists in the growing competition factor variables namely, competitive interest rate, introduce attractive offers and competitors are using CRM practices during contact with their customers since their F statistics are significant at icmrrjournal@gmail.com

4 per cent level. INTERCONTINENTAL JOURNAL OF MARKETING RESEARCH REVIEW 2.Proliferating Customer Contact Factor The recent proliferation of CRM efforts by banks reflects their ultimate realisation that they must adapt to this changing landscape. At the core of bank, CRM initiatives is the belief that by identifying customers who have the potential to be profitable over the long term and addressing their specific needs, banks can deliver greater value to these customers, enhance their competitive position and generate higher returns to stakeholders. By recognising that not all customers are equally attractive, banks can allocate limited resources more effectively. Customers who are potentially more appealing must be given special attention, offered customised solutions and provided enhanced services. Banks ought to identify who the potentially profitable customers are, understand their particular needs and offer the customised services needed to attract, retain and grow their relationships with them. Respondent s Opinion about Proliferating Customer Contact Factor In order to find out the significant difference in proliferating customer contact factor among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in proliferating customer contact factor among customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table 2. Table 2 Respondent s Opinion about Proliferating Customer Contact Factor Proliferating Customer Contact Region F Factors New technology to improve communication to customers Ability to help customers Customer information is accessible at each point of contact Increase customer convenience using a variety of distribution channels Maintaining Customer database * Greeting during their birthdays/religious festivals/anniversary Customer forum * Educate the customers Geographical spread of customers Creating transparency Consistency From Table 2, it is understood that consistency is the important variable as regards the proliferating customer contact factors among the rural, semi-urban and urban customers as their mean scores are , and It is evident that significant difference exists among the customers as regards the proliferating customer contact factor variables maintaining customer database and customer forum since their F statistics are significant at 5 per cent level icmrrjournal@gmail.com

5 3.Intensifying Customer Information Factors The Intensifying Customer Information Factor records such information as a customer's vital statistics, account balances and transactions, and types of accounts held. It is updated as often as daily to ensure accuracy. The CIF is also used to cross-sell various products and services to customers and to assist in other administrative functions. CIFs provide the business with a summary of all of the activities associated with a particular customer. More commonly held in an electronic format today, a CIF can also be a paper folder holding relevant documents. It functions as a central point for examining customer data without having to look up each account or transaction individually. In the case of commercial banking, it provides information regarding the products currently in use by a customer. It may also show information regarding any previous inquiries, to help provide targeted information for the purpose of up selling. Respondent s Opinion about Intensifying Customer Information Factor In order to find out the significant difference in intensifying customer information factors among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in intensifying customer information factor among customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table 3 Table 3 Respondent s Opinion about Intensifying Customer Information Factors Intensifying Customer Information Region F Factors May I help you counter Deposit &cash counter Seating arrangement for waiting time Bank uses phone calls and personal visit to communicate with customer All information pamphlet are displayed to customers Addressing customer queries Up-to-date customer information Parking facility From Table 3, it is understood that deposit and cash counter is perceived as the important variable as regards the intensifying customer information factor among the rural, semi-urban and urban customers since their mean scores are , and It is evident from Table 3 that no significant difference in the intensifying customer information factor among the different region of respondents since their respective F statistics are not significant at 5 per cent level. So the null hypothesis is accepted. 4.Rising Customer Expectation Factor In order to grow, it has become imperative for banks to step up innovations around banking products and the services that they offer. As customer loyalty can no more be taken for granted, it is such innovations which will help them increase their market share while at the same time enriching their brand. Customers today are getting more and more used to the convenience, accessibility and reliability provided by digital channels, and particularly the internet and ATMs. Non-functional ATMs are a common site in India. Even if an ATM is apparently functional, there is no guarantee that the icmrrjournal@gmail.com

6 transaction will be 100 percent smooth. In case of any problem it will take weeks for redressal. Customers today expect technology to be leveraged to deliver a more seamless and personalized experience. This will allow the deployment of new customer treatment strategies using mobile, and social media to drive appropriate cross sales and retention outcomes. Respondent s Opinion about Rising Customer Expectation Factor In order to find out the significant difference in rising customer expectation factor among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in rising customer expectation factor among the customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table 4 Table 4 Respondent s Opinion about Rising Customer Expectation Factor Rising Customer Expectation Factor Region F Appropriate location of ATM centre Hospitality offered Sending of transaction information through SMS Getting loan and advance transaction is * very quickly Customer can expect prompt service from employees Customized and timely solution ATM deposit counter New product to offer through SMS to customers Inquire about the customer s needs * From Table 4, it is understood that inquire about the customer s needs perceived as the important variable as regards rising customer expectation factor among the rural and urban customers since their mean scores are and respectively. Appropriate location of ATM centre is the important variable as regards rising customer expectation factor among the semi-urban customers as their mean score is It is inferred from Table 4 that significant difference exist among the urban, semi-urban and rural respondents in the case of rising customer expectation factor variable inquire about the customer s needs and getting loan and advance transaction is very quickly, since their F statistics is significant at 5 per cent level. 5.Exploiting Marketing Opportunities Factor The global banking industry is in recovery and marketers within the banking industry are now looking for new opportunities and new markets to tap into. Number of trends emerged which have opened up doors for marketers and guided them towards marketing opportunities that did not exist a decade ago. Credit union and other financial institution marketers who want to grow their member base should focus on key areas and targets. Respondent s Opinion about Exploiting Marketing Opportunities Factor In order to find out the significant difference in exploiting marketing opportunities factor icmrrjournal@gmail.com

7 among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in exploiting marketing opportunities factor among customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table 5 Table 5 Respondent s Opinion about Exploiting Marketing Opportunities Facto Exploiting Marketing Opportunities Region F Factor Business expansion possibilities * Increase in customer partnering Relationship marketing in terms of improved service quality Alternate offering of service models, * supplies and other annuities Easy introduce of new products Brand awareness and strength Identifying sales prospects and * opportunities From Table 5, it is understood that identifying sales prospects and opportunities is perceived as the important variable as regards exploiting marketing opportunities factor among the rural customers as its mean score is Among the semi-urban and urban customers the highly perceived variable is business expansion possibilities as their mean scores are and Regarding the exploiting marketing opportunities factor, significant difference in the perception among the customers exists regarding the variables business expansion possibilities, alternate offering of service models, supplies and other annuities and identifying sales prospects and opportunities since their F are statistically significant at 5 per cent level. 6. Customer Retention Factors Ro King (2005) also explained that customer retention involves steps taken by a selling organization in order to reduce customer defection and successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship. Also customer retention is important to most companies because the cost of acquiring a new customer is far greater than the cost of maintaining a relationship with a current customer Respondent s Opinion about Customer Retention Factor In order to find out the significant difference in customer retention factor among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in customer retention factor among customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table icmrrjournal@gmail.com

8 Table 6 Respondent s Opinion about Customer Retention Factor Customer Retention Factors Region F Customer centric approach * Complaint management system * Customers meet Customer care programme Feedback system Bank provide additional care to the customers Dedicate CRM technology in place Source: Primary data *Significant at five per cent level From Table 6, it is understood that the variable dedicate CRM technology in place is perceived as the important customer retention factor among the rural customers as its mean score is Among the semi-urban and urban customers the highly perceived variable as regards the customer retention factor is customer centric approach as its mean scores are and It is inferred from Table 6 that significant difference exist among the rural and semi-urban, urban respondents in the case of customer retention factor variables customer centric approach and complaint management system, since its F statistics are significant at 5 per cent level. 7.Customer Loyalty Factor Every supplier wants to create and retain a loyal customer who engages in continued profitable business with him. Customer Loyalty is the measure of success of the supplier in retaining a long term relationship with the customer. Thus customer loyalty is when a supplier receives the ultimate reward of his efforts in interacting with its customer. Customer loyalty tends the customer to voluntarily choose a particular product against another for his need. Respondent s Opinion about Customer Loyalty Factor In order to find out the significant difference in customer loyalty factor among customers of different region, ANOVA test is used with the null hypothesis as, There is no significant difference in customer loyalty factors among customers of public sector banks in Tirunelveli district. The result of ANOVA test is presented in Table 7 Table 7 Respondent s Opinion about Customer Loyalty Factor Customer Loyalty Factors Region F Customer continued business * relationship Customer recommends friends & family members Establish a personal relationship with individual customer Wish to use all the services Loyalty to the bank From Table 7, it is understood that customer continued business relationship is perceived as icmrrjournal@gmail.com

9 the important customer loyalty factor among the rural, semi-urban and urban customers as their mean scores are , and respectively. It is evident from the analysis that significant difference exists in the variable customer continued business relationship among the customers since its F statistics is significant at 5 per cent level. Findings Region wise there is a significant difference in growing competition factor variables namely competitive interest rate, introduce attractive offers and competitors are using CRM practices during contact with their customers. There is a significant difference in proliferating customer contact factor variable namely maintaining customer database and customer forum. There is no significant difference in intensifying customer information factor variables namely may I help you counter, deposit and cash counter, seating arrangement for waiting time, bank uses phone calls and personal visit to communicate with customer, all information pamphlet are displayed to customers, addressing customer queries, up-to-date customer information and parking facility. Significant difference exists as regards rising customer expectation factor variable, getting loan and advance transaction is very quickly and inquire about the customers needs. Significant difference exists as regards exploiting marketing opportunities factor variables, business expansion possibilities, alternate offering of service models, supplies and other annuities and identifying sales prospects and opportunities. There is a significant difference in customer retention factor variable namely customer centric approach and complaint management system. There is a significant difference in customer loyalty factor variable namely customer continued business relationship. Conclusion The service sector in India is fast growing and their contribution to economic development is really impressive due to advancement in information technology. Among various services in service sector, banking services occupies a key role both in the development of individual customer in their business and in social life. The study will be useful to the banking to understand the banking perception and expectation of customer in relation to the service rendered by them. Bankers can further identify the extent to which they are able to the maintain customer relations and the measures they can take to improve their relationship. Hence the concept of CRM may be emphasized so that the customers are treated royally in relation to bank services. To be successful a bank need to be not just high tech but high touch as well. Reference 1. Shahzeb Ali Malik, Trevor Wood-Harper, "Customer Relationship Management (CRM) in the Banking Sector of Pakistan: Problems and Challenges", Creating Global Economies through Innovation and Knowledge Management: Theory & Practice 2. Ontario, "Customer Relationship Management", [Online] Available: ebiz_customer_relationship_ en.pdf 3. Miroslava Heczkova, Michal Stoklasa, "Customer Relationship Management Theory and Principles", [Online] Available: icmrrjournal@gmail.com

10 4. Semih Onut, Ibrahim Erdem, Bora Hosver, "Customer Relationship Management in Banking Sector and a Model Design for Banking Performance Enhancement", [Online] Available: onutcrmiccs fixed.pdf 5. Sanjay Kanti Das, "Customer Relationship Management in Banking Sector: A Comparative Study of SBI and other Nationalized Commercial Banks in India", Arth Prabhand: A Journal of Economics and Management Vol. 1, Issue 6, September Gary B. Grant, Greg Anderson, "Customer Relationship Management: A Vision for Higher Education", Jossey-Bass, A Wiley Company, [Online] Available: edu/ir/library/pdf/pub5006f.pdf 7. Madhu Jasola, Shivani Kapoor, "CRM: A Competitive Tool for Indian Banking Sector", Communications of the IBIMA, Vol. 5, Anu putney, MM puney, A study on the role of customer relationship management in Indian banking sector, international journal of management and studies vol.3, issue 2. April-June icmrrjournal@gmail.com