Customer Relationship Management
Definition
CRM is a comprehensive strategy and process of acquiring, retaining and partnering with selective customers to create superior value for the company and the customer.
Purpose of CRM
The purpose of CRM is to improve marketing productivity. Marketing productivity can be improved by increasing marketing efficiency and by enhancing marketing effectiveness. CRM improve marketing efficiency through cooperative and collaborative processes by reducing transaction costs and overall development costs for the company. Marketing effectiveness is enhanced by seeking and achieving strategic marketing goals.(entering new
markets, developing new products or services, serving new and expanded needs of customers etc.)
Goals of CRM
Build long-term and profitable relationships with chosen customers, Getting closer to those customers at every point of contact with them. Learning about customers
Knowledge acquisition Customer differentiation
Customization of marketing mix
Programs types of CRM
Continuity Marketing
Membership, loyalty cards programs, JIT Programs
One-to-one marketing
Personalization, key account, customer business development
Partnering/co-marketing
Co-branding, Joint Marketing, co-design, codevelopment.
Customer Life-cycle Management
Customer Need Assessment & Acquisition
Customer retention & referrals for new customers
CRM
Customer development through personalization and customization
Customer equity leverage through cross selling & Up selling
Emergence of CRM
CRM in retail banking: current trends and dynamics
Focusing on organic growth. Seeking out and better serving emerging customer segments. Creating deep business insight into customer preferences. Responding to intensifying competition through revitalized offerings. Improving distribution and channel management. Safeguarding customer information.
Achieving greater organic growth
Challenges
Finding new revenue streams Obtaining higher levels of products per customer Saving at risk customers through business intelligence Can no longer rely on M&As to grow by adding more branches
Required Actions
Improving sales and service consistency Building greater customer loyalty Having actionable customer information across the entire enterprise
Benefits
Increase products-to-customer ratio Improve up-sell and cross-sell close rates Build greater customer loyalty Improve profitability by reducing cost of sales
Serving emerging customer segments
Challenges
Providing consistent and culturally aligned service to diverse populations Developing highly skilled customer service professionals capable of serving a specific customer segment
Required Actions
Develop workforce skills aligned with customer needs Implement workforce management to ensure the right CSR handles the right call Develop IT and process frameworks to secure customer information
Benefits
Gain rapid access to emerging markets to grow revenues Reduce the cost of new customer acquisition Maximize customer loyalty through culturally aligned service
Revitalizing product offerings
Challenges
Losing market share to new, more agile competitors Differentiating products and services in a commoditized marketplace
Required Action
Faster time-to-market with new products tailored to your customers Greater flexibility and responsiveness to market changes Differentiating your brand through superior and consistent service
Benefits
Reduce time-to-market for new products Improve product targeting to the right segments Improve brand consistency and loyalty Respond faster to market changes with greater flexibility
Improving channel management
Challenges
Inconsistent customer treatments across the channels Lack of enterprise integration on the customer service platform Difficult to access a full view of the customer and assess value to the bank
Required Action
Deploy a consistent, customer-tailored treatment strategy Deploy an IT platform that operates across all channels
Benefits
Improve customer loyalty through consistent service across the enterprise Cut costs by using standardized processes across all channels Enable the enterprise to use lower cost channels
Securing customer information
Challenges
Increasingly sophisticated identity thieves Avoiding security breaches by banking staff Balancing the need for security against the cost
Required Actions
Adhere to all compliance regulations (Basel II) Secure customer information, but allow access by the right agent to the right customers
Benefits
Avoid lost revenue due to customer attrition Maintain brand reputation Reduce capital reserve requirements Achieve ROI on your security investments
Need of CRM in the Banking Industry
A Relationship-based Marketing approach has the following benefits:
Over time, retail bank customers tend to increase their holding of the other products from across the range of financial products / services available. Long-term customers are more likely to become a referral source. The longer a relationship continues, the better a bank can understand the customer and his/her needs & preferences, and so greater the opportunity to tailor products and services and cross-sell the product / service range.
Need of CRM in the Banking Industry
Customers in long-term relationships are more comfortable with the service, the organization, methods and procedures. This helps reduce operating cost and costs arising out of customer error. Intense Competition. Well Informed Customers. Decline in Brand Loyalty. Improved Customer Retention is vital
Benefits of CRM
Benefits for Customers
There is a more coordinated and professional approach to customer contact. With up-to-date customer information, Banks can offer more personalized services. Customers feel empowered if they have greater access to products and services. For example 24 Hours banking. Targeted product and service offerings can be timed to coincide with customer events and requirements e.g., Education Loans and Tourism Loans.
