Customer Relationship Management In Securities Company - The Case Of Bao Viet Securities Company.pdf

VIETNAM NATIONAL UNIVERSITY, HANOI VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS Nguyen Thu Trang CUSTOMER RELATIONSHIP MANAGEMENT IN SECURITIES COMPANY THE CASE OF BAO VIET SECURITIES COMPANY[.]

VIETNAM NATIONAL UNIVERSITY, HANOI

SCHOOL OF BUSINESS

Nguyen Thu Trang

CUSTOMER RELATIONSHIP MANAGEMENT

IN SECURITIES COMPANY - THE CASE OF

BAO VIET SECURITIES COMPANY

Major: Business Administration

Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

SUPERVISOR: DR VU XUAN QUANG

Hanoi – 2008

I would like to express my sincerely thanks to Ms Nguyen Thi Thanh Van,project manager of CRM project in Bao Viet Securities Company for hersuggestions and supports I also would like to other colleagues at Bao VietSecurities Company, especially Marketing – PR Department for their advicesand contributions to my thesis.

I also would like to thank Ms Le Thi Thu Trang, Ms Nguyen Hong Ha, Ms.Nguyen Hong Giang and others HSB faculty members for their helps andsupports

Finally, I would like to send my heartfelt thanks to my family members, myclassmates for their supports and encouragements

Nguyen Thu Trang

ABSTRACT CUSTOMER RELATIONSHIP MANAGEMENT IN SECURITIES COMPANY – THE CASE OF BAO VIET SECURITIES COMPANY

Nguyen Thu Trang

MBA Candidate, 2005-2007Vietnam National University, HanoiSchool of Business (HSB)

Supervisor: Dr Vu Xuan Quang

October 2008, 80 pages

As we all known that customer relationship management (CRM) is essentialand vital function of customer oriented marketing Its function includegathering and accumulating customer related information in order to provideeffective service CRM The aim of CRM system is to improve customerservice, develop a relationship and retain valuable customer CRM is aconcern for many organizations especially financial sector The purpose ofthis study is to gain a better understanding of the benefits CRM to customersand organization in financial industry To justify the purpose two researchquestions have been addressed and on the basis literature review wasdeveloped which helped us to answer the research questions and collect data.Empirical data was collected through in-depth interviews and questionnairesurvey was conducted with Bao Viet Securities Company and a group of itscustomers In the last chapter research result and conclusions were drawn onthe basis on research questions My findings indicate that Bao Viet Securities

Company is well aware of the benefits and applications of the CRM and usethe system to maintain good relationships with its customers We found thatBao Viet Securities Company has maintained good relationships withcustomers due to the usage of CRM My finding indicates that with theimplementation of CRM and the latest technologies have ensured full securityfor the transactions of its customer’s CRM facilitates the organizations toprovide one to one services and also maintain the transaction security of thecustomers Finally, the research was figure out some recommendations forimplement CRM and improve its customer service in order to improve therelationship with its customers.

TÓM TẮT NGHIÊN CỨU VỀ QUẢN TRỊ QUAN HỆ KHÁCH HÀNG TRONG CÔNG TY CHỨNG KHOÁN – TRƯỜNG HỢP CÔNG TY

CHỨNG KHOÁN BẢO VIỆT

Nguyễn Thu Trang

Sinh viên MBA, 2005 – 2007Khoa Quản trị Kinh doanh, Đại học Quốc gia Hà Nội

Giáo viên hướng dẫn: TS Vũ Xuân Quang

Tháng 10 năm 2008, 80 trang

Như chúng ta đã biết, quản trị quan hệ khách hàng (Customer RelationshipManagement – CRM) là một công cụ hữu ích và cần thiết đối với hoạt độngmarketing lấy khách hàng là trung tâm của hoạt động doanh nghiệp Công cụnày bao gồm cả việc thu thập và tổng hợp dữ liệu khách hàng nhằm mục tiêuđem lại cho doanh nghiệp dịch vụ quản trị khách hàng một cách hiệu quả.Mục tiêu của hệ thống CRM là nâng cao chất lượng dịch vụ, phát triển và duytrì mối quan hệ với các khách hàng mang lại hiệu quả kinh tế cao CRM làmối quan tâm lớn của rất nhiều tổ chức, đặc biệt trong lĩnh vực tài chính Mụctiêu của nghiêm cứu này là để hiểu rõ hơn các lợi ích mà CRM đem lại chodoanh nghiệp cũng như cho khách hàng trong ngành tài chính Để trả lời chohai câu hỏi nghiên cứu được đặt ra và lý thuyết nghiên cứu về CRM sẽ giúpchúng ta trong việc trả lời các câu hỏi nghiên cứu và thu thập dữ liệu Dữ liệunghiên cứu thực nghiệm thông qua phỏng vấn sâu và bảng hỏi điều tra được

tổ chức tại Công ty Chứng khoán Bảo Việt (BVSC) và hướng đến các kháchhàng của Công ty Trong phần cuối cuối sẽ trình bày về kết quả điều tra và kết

luận tập trung vào việc giải đáp câu hỏi nghiên cứu Những kết luận của tôi vềCông ty Chứng khoán Bảo Việt là Công ty đã có nhận thức tốt về lợi ích vàviệc ứng dụng CRM trong hoạt động của mình nhằm duy trì mối quan hệ tốtvới khách hàng Tôi cũng nhận thấy rằng Bảo Việt đang bước đầu ứng dụngCRM trong hoạt động của mình Nghiên cứu của tôi cũng chỉ ra rằng việc ứngdụng CRM và các công nghệ tiên tiến nhất là sự đảm bảo về an ninh đối vớicác giao dịch của khách hàng Các tiện ích của CRM sẽ cho phép doanhnghiệp mang lại cho khách hàng cá nhân hóa dịch vụ tới từng khách hàng vàđảm bảo an ninh trong giao dịch của họ với Công ty Cuối cùng, nghiên cứucũng đề ra những đề xuất trong việc ứng dụng CRM trong hoạt động của BảoViệt nhằm mang lại cho khách hàng dịch vụ tốt hơn, và duy trì mối quan hệvới khách hàng

TABLE OF CONTENTS

ACKNOWLEDGEMENTS i

ABSTRACT ii

TÓM TẮT iv

LIST OF ABBREVIATIONS viii

LIST OF FIGURES ix

INTRODUCTION 1

1 Research Problem 1

2 Objective and aim of thesis 1

3 Scope and Scale of thesis 2

4 Methodology 2

5 Data and data analysis method 2

6 Hypothesis and Anticipate Results 2

7 Significance of thesis 3

8 Thesis limitation 3

9 Structure of thesis 3

CHAPTER 1: LITERATURE REVIEW 4

1.1 Customer Relationship Management 4

1.1.1 Definition of CRM 4

1.1.2 The goal of CRM 4

1.1.3 Important of CRM 5

1.1.4 PACT model in Customer Service 9

1.2 Benefit of CRM 12

1.2.1 CRM – Benefits to Securities Company 12

1.2.2 CRM-Benefits to Customers 15

1.3 CRM in financial industry 18

1.3.1 Literature of the survey 21

1.3.2 Customer Relationship Management in Service Industries 25

1.3.3 Relational Benefits to Services Industries 26

1.3.4 The Case of Financial Services Industry 28

CHAPTER 2: THE CASE OF BAO VIET SECURITIES COMPANY 34

2.1 Introduction about Bao Viet Securities Company 34

2.1.1 Overview about stock market 2007 34

2.1.2 About Bao Viet Securities Company (BVSC) 37

2.2 Brokerage Service of BVSC 43

2.2.1 BVSC Credentials in Brokerage Activity 43

2.2.2 Brokerage Service in 2007 46

2.2.3 SWOT of Brokerage Service 48

2.2.4 Customer Service in the present 50

2.3 Findings 51

2.3.1 Service Convenience 51

2.3.2 Speed of feedback 52

2.3.3 Trust 53

2.3.4 Service quality 56

2.3.5 Customer communication and satisfaction 58

2.4 Discussion 61

2.4.1 Service Convenience 61

2.4.2 Speed of feedback 61

2.4.3 Trust 62

2.4.4 Service Quality 62

2.4.5 Customer communication and satisfaction 63

CHAPTER 3: CONCLUSION AND RECOMMENDATION 65

3.1 Conclusion 65

3.1.1 CRM is very important in financial service 65

3.1.2 CRM reality in BVSC 65

3.1.3 How to apply CRM in BVSC 66

3.2 Other Recommendations 73

3.2.1 Recommendations for Theory 73

3.2.2 Recommendations for Further Research 74

APPENDIX 1 75

APPENDIX 2 78

LIST OF ABBREVIATIONS

LIST OF FIGURES

Figure 1.1: PACT Model 10

Figure 2.1 Brokerage market-share in 2006 36

Figure 2.2: Brokerage market-share in 2007 37

Figure 2.4: Total Revenue in the last 5 year 40

Figure 2.5: Net income in the last 5 year 40

Figure 2.6: Business Activities in Total Revenue of 2007 43

Figure 2.7: Brokerage Revenue in the last 5 year 48

Figure 2.8: Service Convenience 52

Figure 2.9: Speed of Feedback 53

Figure 2.10: Reasons for account open 54

Figure 2.11: Belief at BVSC 55

Figure 2.12: Attitude of Brokerage Staff 56

Figure 2.13: Ability of Brokerage Service 56

Figure 2.14: Brokerage and Service Price Policy 57

Figure 2.15: The source of information make customer comes to BVSC 58

Figure 2.16: Information from BVSC to customers 59

Figure 2.17: Customer Service of BVSC 60

Figure 2.18: Total Satisfaction for Brokerage Service at BVSC 60

1. Research Problem

2007 is the year of harder competition in stock market for SecuritiesCompany There are over 100 companies who have worked in this newindustry

Some small company after one year operation has reached many impressiveaccomplishments, for example VNDirect or FPT Securities by applying CRM

in their activities Bao Viet Securities Company is the first company insecurities market, but it has lost market share to other new competitors

Base on these threat, maintain the relationship with exist customers maybe thelive-door for BVSC

This study concern of these following issues:

- Study about the relationship between communication with customerand improvement in performance of BVSC

- Study about understand customer and customer segmentation forBVSC’s marketing campaign

2. Objective and aim of thesis

Those research problems will be discovered with the purpose to improvementthe performance of BVSC in the next 2 years

The objectives conclude:

- Study about the important and CRM performance

- Building strategy for customer relation for market segment andsearching for new market

- Choosing CRM tools and its implementation

- Implementing CRM process for BVSC.

3. Scope and Scale of thesis

This research will be conducted base on two major objects are:

- Brokerage customers of BVSC in Hanoi Office

- Staff and manager of BVSC

4. Methodology

The methodology of this research is:

- Desk research: content all the secondary information about theoryand practical of others financial institutions about CRM

- Questionnaire survey: collect the primary data of BVSC byinterviewing customer and Staff, Manager of BVSC

- Number of customers sending questionnaire: 60 samples

- Number of customers interviewing: 40 samples

5. Data and data analysis method

Research data was collected though questionnaire survey

Data analysis will be done by statistical software

6. Hypothesis and Anticipate Results

- Show evidence of the needs for applying CRM of BVSC, which isthe major for affect BVSC’s performance.

- Support the strong relation between CRM and BVSC’sperformance

Part 1: Literature Review

Part 2: The case of Bao Viet Securities Company

Part 3: Conclusion and Recommendations

1

CHAPTER 1: LITERATURE REVIEW

1.1.1 Definition of CRM

CRM stands for Customer Relationship Management It is a strategy used tolearn more about customers' desires and behaviors in order to enlarge strongerrelationships with them High-quality customer relationships are at the heart

of business success There are many technological components to CRM, butthinking about CRM in mainly technological terms is a mistake The morehelpful way to think about CRM is as a strategic process that will help youbetter recognize your customers’ needs and how you can meet thoserequirements and enhance your bottom line at the same time This strategydepends on bringing together lots of pieces of information about customersand market trends so you can sell and market your products and services moresuccessfully

1.1.2 The goal of CRM

The idea of CRM is that it helps businesses use technology and humanresources to gain insight into the behavior of customers and the value of thosecustomers With an effective CRM strategy, a business can increase revenuesby:

want

- Helping sales staff close faster to customer

This growing role of service in the business has resulted in a need for detaileduseable customer information to be readily available for the servicerepresentative, as well as affording the representative the ability to provide thebusiness with necessary information about the customer’s needs andrequirements This is a very different approach from the current attitude, andwill alter the configuration of a business The majority of existing tools stillfocus on gathering data about productivity and performance of the break/fixaspect of the operation, and without an effective customer information systemthe whole structure struggles to provide the additional information required.

Customer Relationship Management (CRM) has had a radical impact on thecustomer service environment, in particular the role of service, since theintroduction of this software tool in 1995 Changes to this arena continue, asthere is further movement away from service being seen as simply providing

a break-fix role and towards provision of a total business solution

Recognizing these innovations and capturing them are two very differentcapabilities In many businesses the information from service has beencollected to a separate database and dismissed as irrelevant to the customerrelationship equation In reality, such information on the customer providesinsights and knowledge unobtainable from anywhere else in the business.All this is not really surprising, as most Service Management System (SMS)packages in place, or being sold today, were designed primarily to support thebreak-fix environment, while the CRM packages were devised to automatesales and marketing and at best support salesmen through complex sales Theoriginal design of the software was very different from that now required tosupport an extended sales cycle of selling a service-based solution into abusiness: the decision makers and their roles have broadened and significantlychanged

The change in thinking and the radical new way businesses treat CRM, as aconcept and not just a software tool, has come about because of therecognition of the value of the customer and the importance of treating them

as critical to the long term success of the business Satisfying and therebykeeping customers for life, can be seen as the most cost effective way ofreducing sales costs, so businesses should understand that the relationshipstarts as a partnership, when the product is sold; all the promises should bebinding and the relationship will have the potential to grow through

performance Without a system that is capable of capturing these changingrequirements and recognizing the significance for the future, businesses willstart the service process on the back foot.

Achieving this level of integration requires a strategic approach to customerservice and a customer service management system that can support theextraction of all necessary information, in a form that can be readily used byall aspects of the business that interact with the customer Having accountmanagers as part of service, not sales, means that the focus of the salesdepartment can be predominantly new sales, with the service-led accountteams free to focus on existing customers and enhance service-led retentionprojects, thereby increasing value to the customer and sales for the business.Customer satisfaction is recognized as an important issue for consideration bymany companies, because existing customers are more profitable than newones, if only because cost of acquisition of new customers is high, comparedwith the costs of maintaining existing customers It is also significant torealize however, that the average company still loses half its customer baseevery five years because of poor service Can such wastage really be toleratedand condoned through a lack of attention and effort?

CRM is designed to provide a single view of the business, in other words thecustomer will not identify one person or group as salesmen, and another asservice - this should be done through business cards / job descriptions and thelike – (even down to the cars provided or dress code expected) The customerhas been trained to treat them all differently, and more importantly theseindividuals have been trained to act differently The assumption is that asalesperson can’t service and a serviceperson can’t sell By applying the trueconcept of a CRM solution, such rigid demarcations do not need to apply

If the concept of CRM thinking is applied fully during the development ofcustomer relationships, then there is a legitimate argument in favor ofpromoting the service team as the ideal customer intermediary becauseservice will potentially be better equipped than the sales team, and thereforemore able to establish a long term relationship with the customer.

The biggest hurdle to overcome is to get the business to realize this approach

as a potential revenue generator In many businesses, revenue is consideredthe prerogative of the sales department and most sales personnel are measured

by volume of sales and not margin In addition, there is an assumption that aslong as the volume of sales is maximized and the rest of the operation is costcontrolled, the margins will be delivered In most service environments this isnot the case, particularly when sales become value based, not cost based: theneed to manage by margin, as well as volume, puts a very different pressure

on the business This is particularly true when the emphasis in the businessmoves towards customer relationships rather than product-based selling

Achieving a targeted return on investment (ROI) depends on how a project isset up and the way it is viewed in the business If the key value of a CRMsolution is to produce satisfied customers and improve customer retention, itdoes not seem sensible to value only cost reduction Focusing on CustomerRetention and Customer Satisfaction and delivery of theses objectives willimprove the bottom line Given that one of the major advantages of CRM isincreased customer retention, and that research indicates that re-acquiringexisting customers costs one tenth of the costs of acquiring new customers,then the value of a CRM solution, and its significance, become obvious: areduction in selling costs will result, and if the percentage of retainedcustomers rises by 10%, then the significant increase in revenue will be easy

A CRM solution, to be successful, has to support cross-business processesand a number of operations within the business, from Marketing to Service,including Sales This integration of what, historically, have been treated asvery separate parts of the organization, provides the opportunity to rethinkexisting operational mechanisms.

The most obvious is the role of sales and service working together underaccount managers who are associated with customer retention and whomanage accounts or - in the new jargon - manage customer relationships Ifsuch account managers were part of service, not sales, this would release thesales team to focus on new sales and could significantly increase salesperformance while enhancing existing service-led retention projects whichwill be much more cost efficient

CRM must now be viewed from a business holistic perspective across alldepartments including service and its impact and reach can be very wideranging with an inevitable requirement for significant culture change in theway the business regards and utilizes service in the management of customerrelationships As a result the role of CRM in service is now recognized ascrucial to a business if it is to provide an integrated solution to the customer’sneeds and requirements

1.1.4 PACT model in Customer Service

PACT stands for Process, Attitude, Communication and Time Delight yourcustomers by keeping your side of the PACT and your customers will keeptheirs

If you have a good Process in place, you meet customer expectations

If your staff has a positive Attitude you pleasantly surprise the customer.With effective Communication, you keep customers well informed

If you perform on Time, you satisfy your customers.

And

If your PACT is in place, you delight customers

If any business focuses on these four keys areas, customer satisfactionfollows:

Figure 1.1: PACT Model

Process or procedure is what keeps the ball rolling from start to finish If thechain of activities is well designed and run smoothly, focused on customerrequirements you meet his expectations

A process snag in the accounts department leading to an imbalance betweenfrontline and them Mr King is satisfied in the manner the refund washandled but not in the process of actual refund leaving him with a sourfeeling

1.1.4.2 Attitude

For a process to be in place and work well you require an attitude - a positiveattitude It is a positive attitude that nudges you to understand the process andwork towards meeting customer requirements Process by itself cannot do it

It requires the human element The human element, that thinks positively andworks positively to keep the process in place The human element thatcompliments the process in satisfying customers

A positive attitude that pleasantly surprises customers Something seldomfound but yearned by all customers A positive attitude that puts any businessahead of competition

Many a business has breakdowns in its process or attitude due to gaps incommunication This is even more evident when frontline handles customers.Effective communication, towards both internal as well as external customerscan overcome many a pitfalls in business Proper communication helpsdevelop understanding and, understanding only makes one moreknowledgeable This paves the way for accommodation in processes or anyother shortfalls

Time is prime Given today’s fast pace, time plays a very important role incustomer satisfaction A timely act is more appreciated than a delayedperformance with excuses

On time performance holds the key for any process to be efficient It plays a

vital role in not leaving a customer waiting It also speaks volumes onefficiency and attitude Effective communication is a direct result of on timeperformance It helps bridge many a gaps Time is of essence where customer

is concerned On time performance can give you that edge over slipshodcompetition

Though there are numerous other facets while serving or satisfying acustomer, they all stem from a PACT For, all service and satisfactionrevolves around your PACT with the customer

1.2 Benefit of CRM

In the previous part, an introduction and conditions to the research area ofthis study was presented as well as overall purpose and research questions.This part presents a review of literature concerning to each of the 2mentioned research questions

1.2.1 CRM – Benefits to Securities Company

Computers, information technology, and networking are fast replacing intensive company activities across industries and government Since therecent years, the computer, the Internet, information technology and mobilenetwork service have been combined to become a viable alternate for labor-and paper- intensive securities trading processes between and acrossSecurities Company This has been seen in the extensive use of the onlinetrading system, check account and give comments, explanations throughCRM via the Internet, call center or mobile service This type of computer-based company-to-stock exchange, securities house to consumer and

labor-referred to as Electronic Commerce (EC) The word EC which taken place out

of CRM and benefits of CRM to Securities Company and its clients presentedbelow

A CRM is an idea, which has its genetics line in the technology In theprevious days relationship marketing’s single aim was to get informationabout the preference of the clients and the information, which was stored bythem in their databases, So as to look after and deal with one to onerelationship with customers CRM was developed Once when the companyacquires the customers and is able to have them enduringly forever, thisimplies that the customer becomes more dedicated and making good use ofthe services of the company Trust, collaboration and satisfaction have to beseen as the face of guarantee between both the parties, for a long lastingrelationship with customers Organizations need to be in stable touch withtheir customer’s in order to make long-term relationships

The most popular tool for customer service is mail Inexpensive and fast, mail is used to distribute information, to send product information and orderconfirmations, to accomplish connection regarding any topic with customersand business partners, and responding to enquiries from customers To reply

e-a le-arge number of e- me-ails quickly e-and cost-efficiently e-autome-atic e-me-ail replysystems are increasingly implement Automatic e-mail reply responses tocustomer inquiries are developed using intelligent agents that distinguish keywords and quickly respond to common ways However, the greatestadvantage of e-mail as a communication tool is providing quick andappropriate information to all customers’ requirement E-mails can include

forms, reviews, referrals and new contacts sent to customers as attached filesand how CRM bringing bridge between securities company and customerthrough email business communication.

Personalization is a plan that can be easily differentiated and which cannot bepretend by competitors in the market A superior personalized idea willenhance in the increase of sales and improves the customer relationship.Personalization can be stated as serving the unique desires of individualcustomers By humanizing the customer conversations the organization candevelop the customer relationships Personalized services are not only limited

in cheering new sales, but its successful implementation allows theorganization to develop its usefulness plus efficiency in serving thecustomers established already

Identify the needs of the customers and provide them the best solution beforethey make a request shows excellence in service of the customers Currentlycustomers do not visit their securities company for other kind of additionalservices such as trading activities or account information, custody andinvestment consultancy etc customers still see the company as providingsecurities services Customers of the company are becoming choosier and thesuccess of securities house does depend on this

CRM providing cost savings, opportunism, and pressure drive action andinnovation even in conservative securities house They have influenced howfirm must re-position themselves to take advantage of new opportunities thatinclude establishing new service delivery channels and new markets forexisting services (loans, REPO, investment consultancy etc.) Many

companies have already built web sites on the Internet, offering securitiesservices Leveraging the power of the web is a move from static pages toactive applications that are connected to company’s data A Web service thatgives real-time access to merchants for information rather than waiting forhardcopy from Securities Company

Protection was seen as a major barrier to Online Securities service The firmwas worried about unauthorized access to their systems, and customers wereconcerned about the protection of their personal data and the threat of fakeand false transactions The securities company has been able to managesecurity with least repercussions However, companies are exploring alternatesecurity dealings such as electronic signatures, digital certificates, smartcards and biometrics A main problem with most of these measures is, theircomplications and expenditure to invest and maintain In addition, in manycountries, electronic signatures are not enforceable by law The e-pursebombed several years before, and smart cards have been warm at best It isclear that companies are trying to ensure secure transactions on the Internet.However, a large amount favorable solution keeps on avoiding them

1.2.2 CRM-Benefits to Customers

Securities company’s customers form expectations derived from manysources –proposed that customers form prospect of what will happen in theirnext encounters based on what they “deserve” They recognize two levels ofexpectations, desired service and sufficient service Desired servicerepresents the “wished for” level of performance and sufficient servicereflects showing extra basic service expectations The model permits study ofthe perceived difference between expected service and the experienced

service, particularly the zone of tolerance; they’re by customer particularbenefits are under for the study.

The importance of CRM technology in company-customer communicationsremains undisputed, commentators; on the other hand, emphasize howcustomer evaluation is created by group and personal forces Communicationhas got a very prime place in the securities brokerage services On the otherhand, in order to make the interactions good it is extremely important thatboth organization as well as clients actively involve themselves in theinteraction The relationship, which is maintained among customer andorganization, has always a special position in the financial industry whencompared to other industries The communication process has includes threemajor factors

1.) Information exchange

2.) Business or financial (transactions)

3.) Social exchange

The transaction process involves engaging both organization and customers

in order to satisfying terms The organization should know what exactlycustomer wants; at the same time customer should also make sure that hasenough knowledge about the organization offerings Social exchangeinvolves more of maintaining long-term relationship with the customers.Confidence, trust, ethics and friendship to some area are the aspects of thesocial exchange

1.2.2.2 Convenience

With the growing knowledge and advantage of the customers securities houseare now trying to persuade the customer by determining the aspects, whichare really very important for them Therefore the aspects may includefacilities, reputations, service, operation hours, interest on investments aswell as location of the company, convenience, friendliness, responsiveness,efficiency of employees, ambience of the organization, etc

Convenience plays a fundamental role when selecting a brand and if thecustomers are not satisfying with the convenience of a particular brand.Switch brands is easy for customers The extent of power of the convenience

on the customer is that it can also make customers loyal to the brands

Location is considered to be convenient if it helps the customer to decreasethe travel costs Location also has broader influence on convenience includestime, place, acquisition etc It has also greater influence on other conveniencedimensions and is believed to be a requirement for other types ofconvenience A convenient location is often considered to be an additionalservice aspect of the core services

Faster processing the transaction by CRM, the fact that e-responses tocustomer queries, order acknowledgement, delivery and payment informationvia e-mails or automated responses are greatly appreciated by customers Ithas also been highlighted that the nature of e-responses also helps strengthenthe relationship between the supplier and the customer and makes up for thepersonal response that prevails in the traditional shopping arena One of thebusiness respondents emphasized that “via e-mail order acknowledgment, werecognize and address our customers by their first names”, strengthening e-relationships with this service Another business viewed that “a close

relationship with customers can be developed from a distance with responses” E-mail responses were widely used by businesses toacknowledge receipt of orders, payment and delivery of information An e-response to say thank you, an apology for any delays, tailored e-mails fromanalysis of shopper profile to provide online shopping guidance and toannounce the release of new products and specials supported online shoppers.Customer responses confirmed the value of e-responses in the B2C e-space,CRM how timely responds to customer for their requirement?

It is an attitude of trust among the partners of substitute It’s a vital aspect forunderstanding the potency of marketing relationships Trust is an essentialrelationship structure, which is found in most of all relationship models.Trust factor can be seen in many ways like motivation to depend on asubstitute partner and one who sees confidence in him

Service quality satisfied customers Service quality has its connections withthe events that are behavioral like the outcomes from a mouth of a humanbeing There’s a lot of attention that has been focused in the relationshipbetween service quality and its outcomes such as profitability and retention

of customers and their loyalty Five proportions of service quality arereliability, responsiveness, quality, empathy and assurance

Service quality is an important criterion that is being used by the customers

in selecting a securities company Accounts, transactions accuracy,carefulness, factors in subject with functional quality, availability of theinformation technology, helpful and friendly personal and effectiveness incorrecting mistakes are the most important determinants for the customers to

determine the securities house.

1.3 CRM in financial industry

Customer Relationship Management (CRM) has its origin in the basicparadigm of marketing i.e to satisfy customers with the best possiblealternative in the market through a relational exchange process Customerrelationship management goes beyond the transactional exchange and enablesthe marketer to estimate the customer’s sentiments and buying intentions sothat the customer can be provided with products and services before he startsdemanding about it

This is possible through the integration of four important components i.e.people, process, technology and data Customer data management gives usleads about the probability of customer demand and the technology helps us

in tracking the characteristics and categorization of customers depending onhis past behavior The process reorients the traditional business models to suit

to the integrative approach of customer relationship management by puttingemphasis on customer life time value than a products life time value Thesimple strategy making through a product life cycle approach is now obsoleteand it gives path to customer life time value The concept of customer lifetime value helps the marketer to analyze the cost of acquiring serving andretaining a certain set of customers in the market

This research paper throws insight in to CRM in financial services industry.The financial services industry today is facing an upheaval task of reorientingitself with changing technology and varying customer demand The literature

survey highlights the earlier research references in the area of customerrelationship management to augment the body of knowledge for this study.The concepts of creating value to customer are analyzed with the examples oftrust and convenience in securities transactions.

Customer Relationship Management (CRM) is a term for methodologies,technologies and ecommerce capabilities used by companies to managecustomer relationships The traditional database marketing captures customerinformation including demographic and psychographic data that helps themarketer to develop suitable target marketing strategy, to forecast demand, todetermine type and quality of service required by customers and to buildstrategy for market entry, diversification and expansion This macromarketing view has led to look at database for building strategic links for thebenefit of the organization and customer in the face of rising costs andcompetition The purpose of every business is to create and keep customers.Today’s corporations should view the entire business process as consisting ofclosely held integrated effort to discover, create, arouse and satisfy customerneeds

Customer Relationship Management is now actively considered byorganizations across the globe as an integration of database marketing withtechnology enables strategy The CRM software market is likely to grow by700% in four years period of time and estimate to generate revenue of $3billion by the year 2004 The basis proposition of a CRM strategy is based onthe age old idea that knowing, understanding, and serving the customer is thebest method of developing a sustainable competitive advantage But building

a sustainable and successful relationship with a large customer base is not the

easiest thing to do and carries a direct impact on many core operationalprocesses from development of new products to faster debt recovery infinancial services industry.

It is not a tactical decision of software implementation but interaction of theentire business with customers through an integrated interface The moderninformation technology allows larger organizations to individualize theirproducts and services as per the varying needs of the customers Thisresearch focuses on the customer relationship management issues in financialservices area

Customer Relationship Management is the establishment, development,maintenance and optimization of long term mutually valuable relationshipsbetween consumers and the organizations Successful customer relationshipmanagement focuses on understanding the needs and desires of the customersand is achieved by placing these needs at the heart of the business byintegrating them with the organization’s strategy, people, technology andbusiness processes

At the heart of a perfect CRM strategy is the creation of mutual value for allthe parties involved in the business process It is about creating a sustainablecompetitive advantage by being the best at understanding, communicating,and delivering and developing existing customer relationships in addition tocreating and keeping new customers So the concept of product life cycle isgiving way to the concept of customer life cycle focusing on the development

of products and services that anticipate the future need of the existingcustomers and creating additional services that extend existing customer

relationships beyond transactions The customer life cycle paradigm looks atlengthening the life span of the customer with the organization rather than theendurance of a particular product or brand A good customer relationshipmanagement program addresses to the changing need of the customers bydeveloping products and services that continuously seek to satisfy thelifestyle and need patterns of individual customers Organizations tend toacquire a structure around customer segments and not on the basis of productlines to deliver customer satisfaction

1.3.1 Literature of the survey

The term customer relationship management in to the literature but severalideas of relationship marketing have emerged much before There are sixactivities in the formal list of marketing functions included: contractualfunction, propaganda function, merchandising function, physical distributionfunction, pricing function and termination function

The contractual function falling within the main task of marketing reflectsrelational orientation and emphasis on developing cooperation and mutualinterdependence among marketing actors It has not been widely publicized,and the relational ideas did not lead to the same flurry of interest focus oninter- and intra-channel cooperation These provided impetus to relationshipmarketing thinking, particularly in business to business context Thesymbiotic relationships between firms that were not linked by traditionalmarketer – intermediary relationship They examined other manifestation ofsymbiotic relationships in marketing

The second impetus was provided the tendency of firms engaged in

business-to-business marketing in developing long-lasting relationships with their keycustomers and their key suppliers rather than focusing on discrete exchangeand termed this phenomenon as “domesticated markets” The impact of theseworks spread across two continents In the United States, several scholarsbegan examining long-term inter-organizational relationships in business-to-business markets and the Industrial Marketing and Purchasing (IMP) Group

in Europe laid emphasis on business relationships and networks

In recent years customer relationship management is being enlarged toinclude an integrated perspective on marketing, sales, customer service,channel management, logistics and technology for engaging in customersatisfaction Practitioners are calling it customer relationship management(CRM) and are interested in all aspects of interactions with customers tomaintain a long-term profitable relationship with them They are very keen

on learning about the programs, strategies, processes and technologies thatwould be applicable for effective customer relationship management in thenew millennium

While undertaking a study on the field of customer retention and corporateprofitability, the role of customers is essential for corporate performance, sothat when relationships with customers endure, profits rise up In addition,the cost of retaining current clients is frequently much lower than cost ofacquiring new ones In the same way, economic benefits of high loyalty areimportant, and in many industries they explain the cost-effectivenessdifferences among companies Furthermore, there are two ways by whichthese improvements can take place i.e customer retention entails animprovement of corporate performance by means of repeated purchases and

references; enhanced organizational performances enable the company toinvest more resources on motivating and improving the relationship with itsemployees, and this will affect again customer retention.

Today's businesses are facing fierce and too aggressive competition whileoperating in both domestic and global market This diverse and uncertainenvironment has forced organizations to restructure themselves in order toenhance their chances of survival and growth

The restructuring efforts have included, among others, the emergence of the

"new paradigm" which is commonly referred to as relationship marketing.Relationship marketing is coined to reflect a variety of relational marketingactivities

The term customer relationship management has become a buzzword, withthe concept being used to reflect a number of differing themes or perspectivesand becomes a "catch-all" phrase Ongoing relationships between businessesand their customers are receiving renewed interest in marketing Indeed, thebuilding of strong customer relationships has been suggested as a means forgaining competitive advantage However, these definitions of relationshipmarketing provide the basis for the new paradigm argument that viewsmarketing as an integrative activity involving personnel from across theorganizations, with emphasis on building and maintaining relationships overtime Personal relationships, interactions, and social exchange are the coreelements of relationship marketing

Customer relationship management is to identify, establish, maintain,

enhance and when necessary also to terminate relationships with customersand stakeholder, at a profit, so that the objective of both parties are met, andthat this is done by mutual exchange and fulfillment of promises Anextensive review of literature reveals ten different but interrelated forms ofrelationship marketing as mentioned below:

1 The partnering involved in relational exchanges between manufacturersand their external goods’ suppliers

2 Relational exchange involving service providers, as between advertising ormarketing research agencies and their respective clients

3 Strategic alliances between firms and their competitors, as in technologyalliances

4 Alliance between a firm and nonprofit organizations, as in public-purposepartnership

5 Partnerships for joint research and development, as between firms andlocal, state, or national governments

6 Long term exchanges between firms and ultimate customers as particularlyrecommended in the service marketing area

7 Relational exchanges of working partnership, as in channels ofDistribution

8 Exchange involving functional departments within the firm

9 Exchanges between a firm and its employees, as in internal marketing

10 Within-firm relational exchanges involving such business units assubsidiaries, divisions or strategic –business units

1.3.2 Customer Relationship Management in Service Industries

Globalization and deregulation, combined with advances in informationtechnology, have radically changed the managerial context of serviceindustries Though the origin of customer relationship management wasinitially in the industrial context, the service industry is also focused onmaintaining and enhancing customer relationships Services are produced anddelivered by the same institutions Success of a service provider is dependent

on long term relationships that develop between the provider and customer ofthe service A greater emotional bond and trust between the service providerand service user develops a need of maintaining and enhancing relationship

Customer relationship management is attracting, maintaining and enhancingcustomer relationships in multi service organizations Berry stressed that theattraction of new customers should be viewed only as intermediate step in themarketing process Solidifying the relationship, transforming indifferentcustomers into loyal ones and serving customers as clients should also beconsidered as marketing There are five strategy elements for practicingcustomer relationship management: developing a core service around which

to build a customer relationship, customizing the relationship to theindividual customer, augmenting the core service with extra benefits, pricing

services to encourage customer loyalty and marketing to employees so thatthey, in turn, will perform well for customers.

It is a consensus that the relationship between the firm and its customers iscritical to their firm’s survival and success The management of customerrelationships is critical in services marketing for three reasons

Many services by their very nature require on going membership (e.g.insurance, banking etc) Even when membership is not required, customersmay seek on – going relationships with service providers to reduce perceivedrisk in evaluating service characterized by intangibility and credenceproperties Customers are more likely to form relationships with individualsand with the organizations they represent than with goods Services areperformances where the employees play a major role in shaping the serviceexperience The service setting is especially conducive to customers formingrelationships with individual service providers

1.3.3 Relational Benefits to Services Industries

Inseparability is widely cited as one of the distinctive features of services.The fact that services typically are produced and consumed simultaneouslymeans that it is common for customers to have a direct input to serviceprovision For service businesses, strong customer relationships are importantbecause of their inherently interpersonal focus and relative lack of objectivemeasures for evaluating service quality Previous empirical research hasfocused on the benefits of customer loyalty as viewed from the perspective ofthe firm, typically in business-to-business contexts Loyal customers can lead

to increased revenue, result in predictable sales and profit streams, are more

likely to purchase additional goods and services, typically lead to lowcustomer turnover and often generate new business for a firm via word-of-mouth recommendation In addition, a loyal customer base can lead todecreased costs Loyal and satisfied customers are likely to cost less toservice, sales, marketing and setup costs can be amortized over a longercustomer lifetime.

Customers who have developed a relationship with a service business expertexpect to receive satisfactory delivery of core service There exist differenttypes of relational benefits through effective customer relationshipmanagement Customers derive social benefits from long-term relationshipswith service firms In addition to the benefits received from core service, akind of friendship often occurs between customer and service providers Asecond set of relational benefits reported by respondents can be described aspsychological benefits Customers realize that there is often a comfort orfeeling of security in having developed a relationship with a provider

This feeling of reduced anxiety, trust, and confidence in the provider appear

to develop over time and only after a relationship has been establishedbetween customer and the service providing organization The economicbenefits relate to discounts or price breaks for those customers who havedeveloped a relationship with an organization In addition to monetarybenefits, a non-monetary benefit is also identified many times by thecustomer The economic benefits customers may receive for engaging inrelational exchanges, both monetary and in the form of time saving, areconsistent with what scholars have argued is the primary motivation fordeveloping relationships with businesses For their regular customers many

service providers may tailor their service to meet particular needs In somecases this may be perceived by customers as preferential or special treatment.Special treatment in marketing exchange relationships has been brieflymentioned in the literature.

1.3.4 The Case of Financial Services Industry

In today’s deregulated world, members of financial services industry arecontinuously forced to seek new ways to gain on their competitors and tooutdo one another in terms of effectively reaching to retail customersdemands for increasing sophisticated financial products and services As theyhave moved away from traditional broad based marketing to retailrelationship service provision to attract and hold customers, to cross-sellproducts and most importantly to turn customers to avail multi products andservices, customer relationship management is of utmost importance tofinancial services industry for survival and growth To keep customers intoday’s competitive environment, financial institutions are increasing thedepth of relationship through implementation of customer relationshipmanagement programs

A successful customer relationship management program in financialservices addresses four key areas of business: strategy, people, technologyand process The processes in the organizations are the drivers of change thatgive direction to the organization The strategic direction moves the twoenabler’s people and technology and their systematic interaction leads to asuccessful customer relationship management program

Knowledge focused organizations collect data on their customers to provide

them with a framework to build an understanding of their market.Innovations in technology has played the role of an enabler in capturingcustomer data, in developing an ability to store, share, analyze and transfervast amount of data at low costs Growth in the use of sophisticateddatabases, data warehouses and data mining software applications make itpossible for organizations to analyze customer behavioral patterns, individuallevels of profitability and life time value of their customers.

In a financial services industry it is untypical to find website interactions inone database, lease agreements in an administration system, call centerhistory in another and payment history in accounting system Thoughdifficult to do but integrating such a huge information system can providevaluable insight in to financial customer’s behavioral pattern, preferences andsignals for intended behaviors Advanced data analysis models can providevaluable information on customer behavior and can help in projectingbehavior in more accurate way about the likelihood of purchase of specificproducts and services, the best next offer information and the probability ofdefection to the competitor brands These models are customized to thatorganization’s business domain and customer behavior and are not based onany behavioral or non behavioral correlates but are purely based on actualinteractions of customers with financial institutions

Customer relationship management delivers value to the businessorganizations Finding out the type and nature of customers, their buyingpatterns and delivering a product of their choice increases the return oninvestment and makes the marketing strategy more scientific and goal driven.The paradigm is based over assumption that creating satisfied customer