Customer relationship management in bank the case of vietinbank ’s hanoi branch

Cohort 2015– 2017 Master’s Thesis Customer Relationship Management in Bank – The case of VIETINBANK ’s Hanoi Branch Author: Dang Trung Hieu Supervisor: Nguyen Phu Hung Hanoi, Septembe

Cohort 2015– 2017 Master’s Thesis

Customer Relationship Management in Bank

– The case of VIETINBANK ’s Hanoi Branch

Author: Dang Trung Hieu Supervisor: Nguyen Phu Hung

Hanoi, September 2017

TABLE OF CONTENTS

TABLE OF CONTENTS i

LIST OF TABLES iii

LIST OF FIGURES iii

FOREWORDS iv

CHAPTER 1 INTRODUCTION OF DISSERTATION 1

1.1 The rationale of the thesis 1

1.2 Objectives of study 2

1.3 Questions of study 2

1.4 Scope of research 2

1.5 Methodology and Data 2

1.5.1 Methodology of the research 2

1.5.2 Description of Data, Population, and Sample 3

1.5.3 Tools of survey and analysis 3

1.6 Conclusions and Roadmap of Dissertation 3

CHAPTER 2 BACKGROUNDS OF VIETINBANK 4

2.1 Introduction of VIETINBANK 4

2.1.1 Listing 5

2.1.2 Structure 5

2.1.3 Performance 8

2.1.4 Labor 11

2.1.5 Market ranking 12

2.1.6 Scope of business 14

2.1.7 Core values 14

2.1.1 Targets 15

2.2 VIETIN BANK’s Hanoi branch 16

2.3 General challenges facing VIETINBANK in general, and Hanoi Branch in particular17 2.3.1 Operation risks 17

2.3.2 Credit risks 18

2.3.3 Market risk 18

2.4 Challenges facing VIETINBANK ’s Hanoi division office 19

2.5 Conclusions 20

CHAPTER 3 LITERATURE REVIEW 21

3.1 What is Customer Relationship Management? 21

3.1.1 CRM concept 21

3.1.2 e-CRM 22

3.1.3 Benefits of CRM 23

3.1.4 The link between CRM and business performance 26

3.1.5 Criticisms of CRM 27

3.2 Factors affecting the implementation of CRM 28

3.3 Factors affecting the performance of the CRM 28

3.4 The evolution of CRM in banking 29

3.5 Conclusions 32

CHAPTER 4 SURVEY RESULTS AND FINDINGS 33

4.1 Introduction 33

4.2 Results of survey 33

4.2.1 How do you rate the overall quality of VIETINBANK service 34

4.2.2 How do you rate the staff behavior? 34

4.2.3 How do you rate quality of customer-care service 35

4.2.4 How do you compare VIETINBANK with other banks 35

4.2.5 What is the credibility you perceive of VIETINBANK 36

4.2.6 Adequacy of CRM procedures 37

4.2.7 The necessity of CRM 38

4.2.8 The necessity to create a separate specialized CRM department 38

4.2.1 Quality of the staffs working on CRM 39

4.3 Discussions of survey results 39

4.4 Conclusions 40

CHAPTER 5 RECOMMENDATIONS AND CONCLUSIONS 41

5.1 Summary of findings of the dissertation 41

5.2 The total approach to enhance building customer relationship that this thesis follows41 5.3 Recommendations to Enhance Customer Relationship Management at Hanoi Branch42 5.3.1 Making strategic Investment program in CRM 43

5.3.2 Solutions to enhance the quality of customer-care service 44

5.3.1 Solutions to enhance the adequacy of CRM procedures 47

5.3.2 Improving CRM’s IT infrastructure 49

5.3.3 Create an environment promoting CRM practices 50

5.4 Limit of the thesis 51

5.5 Conclusions 51

LIST OF REFERENCES 52 APPENDIX 54

LIST OF TABLES

Table 2-1: List of Subsidiaries of VIETINBANK 7

Table 2-2: Performance versus Obejectives 9

Table 2-3: Major performance indicators 10

Table 2-4: VIETINBANK staff composition 12

Table 2-5: Performance of the Hanoi Branch of Vietin Bank 16

Table 3-1: Characteristics of e-CRM 22

Table 5-1: Projected Investment to CRM 43

Table 5-2: Requirements and projected costs of a specialized CRM analytical unit 45

Table 5-3: Expected investments on CRM software 49

LIST OF FIGURES Figure 2-1: Organizational structure of the VIETINBANK 6

Figure 3-1: CRM relationship (source: Kubi and Doku) 24

Figure 3-2: Stages to implement CRM 30

Figure 4-1: Responders profiles 33

Figure 4-2: Overall quality rating of VIETINBANK services 34

Figure 4-3: Rating of staff behavior 34

Figure 4-4: Rating quality of customer-care service of VIETINBANK 35

Figure 4-5: The credibility you perceive of VIETINBANK 37

Figure 4-6: The necessity of CRM 38

Figure 4-7: Necessity to create a separate specialized CRM department 38

Figure 4-8: Quality of the CRM staff 39

Figure 5-1: Total approach to enhance CRM performance for the VIETINBANK’s Hanoi Branch 42

Figure 5-2: The support of internal staffs for creation of a new CRM department 45

FOREWORDS

Today, banks are facing an aggressive competition and they have to make efforts to survive in

a competitive and uncertain market place Many banks have realized that managing customer relationships is a very important factor for their success Customer relationship management (CRM) is a strategy that can help a bank to build long-lasting relationships with their customers and increase their profits through the right management system and the application

of customer-focused strategies CRM in the banking sector is of strategic importance In this thesis, a descriptive case study of VIETINBANK is presented The aim of this thesis is to analyze the necessity, the design, and the implementation of CRM in VIETINBANK , identify the benefits, the problems, as well as the success and failure factors of the implementation and develop a better understanding of CRM impact on banking competitiveness as well as provide a greater understanding of what constitutes good CRM practices for VIETINBANK

CHAPTER 1 INTRODUCTION OF DISSERTATION

1.1 The rationale of the thesis

In Vietnam, banking is a sector in fast development All commercial banks are conscious whether their existence and development depend on achieving customer, satisfying them, maintain their loyalty All commercial banks have regarded customers much like a top priority at all times in all their activities VIETINBANK is in a hard time of competition to retain customers from a number of newer banks VIETINBANK needs a strategic tool to identify the bank's most profitable customers and prospects, devotes time and attention to expanding account relationships with those customers through individualized marketing, repricing, discretionary decision-making, and customized service-all delivered through the various sales channels that the bank uses

Today, many businesses such as banks, insurance companies, and other service providers realize the importance of Customer Relationship Management (CRM) and its potential to help them acquire new customers, retain existing ones and maximize their lifetime value At this point, close relationship with customers will require a strong coordination between sales and marketing departments to provide a long-term retention of selected customers Being top state bank in the past, VIETINBANK then did not have to struggle for acquiring new customers, because most of its customers are large state-owned enterprises Just serving these SOE customers could bring in enough revenues for VIETINBANK However, relative safe customer sources lead to poor product and service quality as well as poor customer services quality In addition, the number of state customers decline quickly in the last 5 years, forcing VIETINBANK to redirect to a new source of customers that it does not have experience before the private small and medium enterprises and the individual/household customers VIETINBANK is behind other private banks in serving these customer groups, thus is losing parts of its customers to competitors

This is the reason that this thesis will study the role of Customer Relationship Management in VIETINBANK and the need for Customer Relationship Management to increase customer value by using some analytical methods in CRM applications Under this VIETINBANK case

study, I chose the topic: “Customer Relationship Management – the case of

VIETINBANK’s Hanoi Branch”

1.2 Objectives of study

The objective of this thesis is to investigate and evaluate CRM situation of VIETINBANK , understand the perception of VIETINBANK staffs on how to improve the situation, and to propose potential solutions or directions on building the capacity to meet with growing market requirements and to improve the internal performance

1.3 Questions of study

1 What are the status-quo of VIETINBANK and how CRM is critical to the survival of VIETINBANK ?

2 How has the VIETINBANK managed CRM?

3 What are the focal points that the manager of VIETINBANK should consider to enhance the CRM?

4 How to apply new approach to increase the performance of managing customer relationship?

1.4 Scope of research

The dissertation will limit its attention on the matters of CRM in the Hanoi Branch of the VIETINBANK

Due to the difficulty of data, the thesis will collect data only for the year 2015 to now

1.5 Methodology and Data

1.5.1 Methodology of the research

Thesis will first do a literature review of CRM Then, from the literature review, it creates a framework model to analyze drivers for CRM Using that model over primary data, I specify the challenges VIETINBANK is facing in managing CRM

The thesis expects to conduct survey using data mining tasks such as cluster profile analysis, concept description, and deviation detection The surveys would target specific customer populations segments, not all

1.5.2 Description of Data, Population, and Sample

The thesis also analyzes secondary data collected from academic journals, websites, and governmental offices to draw a comprehensive picture of the whole banking industry and assess the comparative competence of the VIETINBANK ’s CRM in this context Lessons drawn from literature will serve as basis for recommending solutions to enhance the CRM performance for VIETINBANK

My targeted surveyees include:

1.5.3 Tools of survey and analysis

The dissertation is going to use the following tools for survey and analysis

 Google form for online questionnaire

 Survey in paper form

1.6 Conclusions and Roadmap of Dissertation

After the first chapter of introduction, we do an analytical review of the VIETINBANK in the Chapter 2, the literature review on the CRM management in Chapter 3 The Chapter 4 describes data results from the survey, analyses and discusses the findings Finally, the Chapter 5 recapitulates the findings and contributions of the dissertation

CHAPTER 2 BACKGROUNDS OF VIETINBANK

Vision of VIETINBANK is to become the leading financial and banking corporation in Vietnam that operates in diverse areas, as well as provides products and services that conform

to international standards, aiming to improve the values of life VIETINBANK focuses on Core Values Customer-oriented operations

VIETINBANK has gone over 28 years of incorporation and development (VietinBank, 2017,

converting organization model and corporate governance in accordance with international standards and practices

VIETINBANK operates with the Business Philosophy of:

 Safe, effective and sustainable

 Loyal, dedicated, passionate & committed, wise and principled

 The prosperity of VIETINBANK customers is VIETINBANK ’s ultimate success

2.1.1 Listing

According to the Annual report of VIETINBANK (VietinBank, 2017, p 9), VIETINBANK stock has been officially traded on Ho Chi Minh City Stock Exchange (HOSE) since 16/07/2009

Type of share: Ordinary shares

Securities Code: CTG

Par value per share: VND 10,000

Total number of shares: 3,723,404,556 shares (as at 31/12/2016)

2.1.2 Structure

As a commercial bank, the structure of VIETINBANK is quite simple The departments are divided duties, powers, functions and their expertise They usually are mutual assistance in approaching customers, under the direction of bank’s manager The decisions are made by both department’s manager and transaction office’s manager The human resource distribution situation VIETINBANK in recent years has changed much

In addition, with the extension of VIETINBANK ’s system and the development of branch also change about the structure annually such as turning to widen out, having more departments, firing or hiring new employees depend on the requirements of the job and the ability of staff to meet the new demands and requirements Today, the structure of VIETINBANK is described as diagram below

According to the official websited of the bank, the VIETINBANK has 7 independent accounting subsidiaries, including VIETINBANK Leasing Company, VIETINBANK Securities Company, VIETINBANK Asset Management Company, VIETINBANK Insurance

Company, VIETINBANK Global Money Transfer Company VIETINBANK also has three non-profit making units, including VIETINBANK Information Technology Center, VIETINBANK Card Center and VIETINBANK Training Center

Figure 2-1: Organizational structure of the VIETINBANK

VIETINBANK branch network is comprised of:

 Head Office located at 108 Tran Hung Dao Street, Hoan Kiem District, Hanoi;

 02 foreign branches in Germany and 01 Subsidiary in Laos PDR;

 02 Representative Offices in Ho Chi Minh City and Da Nong;

 01 Representative Office in Myanmar

In addition to the extensive network, VIETINBANK has established correspondent relationship with over 1,000 financial institutions of more than 90 countries and territories worldwide

VIETINBANK has many subsidiaries, as recapitulated in the following table

Table 2-1: List of Subsidiaries of VIETINBANK

operation

Percentage of ownership by VIETINBANK

1 VIETINBANK Leasing Company

Ltd

16 Phan Dinh Phung Street, Ba Dinh District, Ha Noi

Ba Dinh District, Hanoi

District, Hanoi

Gold and Gemstones Manufacturing and Trading

Ha Noi

8 VIETINBANK Lao Limited

No 029 Khounboulom, Vatchan, Chanthabouly District, Viengchan, Laos

 Total assets: VIETINBANK achieved the asset growth rate of 22% against 2015, reached VND 949 trillion, met 107% of target set at the 2016 General Meeting of Shareholders

We were proud to have maintained our leading position in the local banking system

 Fund Mobilization: Thanks to numerous fund mobilization and structuring solutions, VIETINBANK continued to maintain stable capital growth in the past several years In

2016, we focused on the mobilization and utilization of the abundant fund resources at reasonable costs in both Vietnam dong and foreign currencies Total funding as at 31/12/2016 was VND 870 trillion, an increase of 22% compared to that of 2015, reached 107% of target set at the 2016 General Meeting of Shareholders Notably, funding from customer deposits registered a growth rate of 33%, the highest growth rate among all local joint banks

 Lending activities: Along with Vietnam’s future prosperity, VIETINBANK plays an important part in the country’s economic development via adequate and timely fund

provision, which helps boosting production process for companies, encourage consumption, and support sustainable economic growth Our total credit exposure as at 31/12/2016 reached VND 722 trillion, equivalent to 102% of target set at 2016 General Meeting of Shareholders, increased by 18% compared to that of 2015

 Investment: In addition to the traditional lending and funding activities, we also emphasize on the diversification of products and services as well as investment product development as a market leader By the end of 2016, our total investment was VND 237 trillion, up 21% compared to that of 2015

 FOREX Trading: Our FOREX trading activities registered good growth rate in 2016 with the second largest market share Positive results were successfully achieved: Turnover from FOREX trading volume on primary market was up by 8.2% and profit increased 20% compared to that of 2015, delivered FOREX profit up by 20% compared to the previous year VIETINBANK continued to actively contribute to the stabilization of the forex market in 2016 in accordance with the directions of the SBV

Business results of subsidiaries: Subsidiaries and foreign branches achieved strong growth rate compared to the year before with pre-tax profit of 443 billion, up 13% compared to that

Target

Percentage achieved vs objectives

2016

+/- VND billion +/-%

Indicators 31/12/2015 31/12/2016 Compared to

31/12/2015

2016 GMS Target

Percentage achieved vs objectives

2016

(Source: VietinBank, 2017, trang 25)

Table 2-3: Major performance indicators

2.1.4 Labor

VIETINBANK has 3 groups of employees and managers, as presented in the table below System-wide scope Position

Branch Managing Director/Deputy Managing Director,

HO Department Head/

Number

of employees

Number

of training hours

Number

of employees

Number

of training hours

Number

of employees

(Source: VietinBank, 2017, trang 45)

Table 2-4: VIETINBANK staff composition

2.1.5 Market ranking

2.1.6 Scope of business

VIETINBANK ' services include Fund Mobilization in the form of Term Deposits for Retail and Corporate clients, Foreign Exchange, Guarantees, International Settlements, Letters of Credit, Capital Markets, Money Markets, Bonds, Equity Investments, Correspondent Banking, Internet Banking and other innovative financial and investment services and solutions licensed by the State Bank of Vietnam

• Towards Excellence: "With internal strength and resources, VIETINBANK management and staff are committed to reform towards perfection"

• Dynamic, creative, professional & modern: "We understand that our continued success as a financial services organization is dependent on the innovative, dedicated services we provide

We always put our relationships with the clients and partners first in every-thing we do"

• Integrity, Honesty & Transparency: "We have solid foundation of openness and accountability We ensure each and every transaction is transparent and available for public viewing"

• Respect: "Fair dealing is basis of our business, we treat e,'ery individual with respect and dignity"

• Brand protection and development: "VIETINBANK staff and management are proud to be responsible for the reputation of our brand name and always carry it with honour and dignity"

• Sustainable development and social responsibility: "Our motivation is driven by constant reform and creativity with clear objectives of strong growth, prudent business & sustainable development It is an honour to give VIETINBANK staff the opportunities to participate in various volunteer programs and to allow them to reach out further to the community and take responsibility for the society and fellow citizens"

2.1.1 Targets

2017 targets

Entering 2017, with best efforts, VIETINBANK will continue to closely follow set - out targets, focus resources to promote sustainable business growth in order to maintain our leading position in the market on the basis of ensuring efficiency and asset quality control

We will place strong emphasis on the development of modern products and services, particularly payment banking services to enhance the transition of income restructuring and improve our competitiveness We will constantly standardize all aspects of VIETINBANK ’s operation including the improvement of risk management capacity, infrastructure development and the modernization of information technology according to international standards and practices, building a solid foundation towards the goal of being a regional bank

Medium and Long – term Development Strategy

VIETINBANK strategic goal for the middle and long term remains to become one of the leading banks in the region through improving competitiveness and governance, developing strongly and comprehensively in all aspects of our business, expanding both regional and international networks and becoming an important business matching bridge to promote

economic relations between Vietnam and other countries around the world, enhancing VIETINBANK’s brand domestically and internationally

VIETINBANK understand that modification of business models and sales method are breakthrough factors to ensure sustainable growth and improve the competitiveness of VIETINBANK amidst the increasingly strong wave of integration in the near future We will continue to grow our business while staying focus on catching up with the latest banking and financial trends of developed economies around the world as well as the most updated technology movement to promote digital banking and the development of advanced products and services with high technological content to meet the rising demands of our customers

Objectives for corporate environment, society and community sustainability

As a large commercial bank in the country, apart from focusing on performance improvement and profit enhancement from banking business, VIETINBANK always develops towards community interests Going forward, VIETINBANK will continue to share with the community, the Party and the Government in social welfare, targeted mainly on social security work and implementing various green projects and environmental protection projects with local enterprises while promoting investment for education, healthcare, and infrastructure which strongly reflect the true expression of our philosophy “Improving the value of life”

2.2 VIETIN BANK’s Hanoi branch

The VIETIN BANK’s Hanoi branch is the subject of study of this thesis The Hanoi Branch is one of the largest regional branch of VIETINBANK

The performance of the Hanoi Branch of VIETINBANK is summarized in the table below

Table 2-5: Performance of the Hanoi Branch of Vietin Bank

Source: Internal report

Unit: Billion Vietnamese Dong

2.3 General challenges facing VIETINBANK in general, and

Hanoi Branch in particular

2.3.1 Operation risks

The VietinBank has been growing fast in the last 15 years The speed of expansion is to high making management span become wider and more overloaded In addition, unlike many years ago when major customers are state owned enterprises, the customers now are much more diversified with a large part are private small and medium enterprises and households Thus, the tradition procedures and regulations are no longer fit and must be modified to fit with current context

2.3.2 Credit risks

Despite fundamental challenges, the Vietnamese economy in 2017 is expected to grow strongly with rising credit demand in new investments, business expansion and real estates In the context of resurgence risk of protectionism and the possibility of TPP failure, the country’s exports and FDI inflows may have to face certain obstacles, the financial health and competitiveness of local enterprises remains limited, especially for small and medium-sized businesses Given these challenges, VIETINBANK will continue to focus on credit risk management in order to ensure an appropriate loan book structure Screening and monitoring process will also be advanced to ensure growth targets are met on the basis of effective risks control

In addition, the tightening risk management requirements set by the State Bank of Vietnam (SBV) in Circular 36/2014/TT-NHNN and Circular 06/2016/TT-NHNN on safety limits and prudential ratios in the operation of banks, Circular 02/2013/TT-NHNN and Circular 09/2014/TT-NHNN on loan classification and provision had certain impacts on the overall business results of local banks if effective management measures were not comprehensive employed Moreover, the issuance of Circular 41/2016/TT-NHNN by the SBV regulating the capital adequacy ratio according to Basel II (standardized method) required VIETINBANK to conduct thorough research and actively structure our loan book in line with new requirements, ensuring business performance optimization on the basis of cost reduction and effective use of capital

2.3.3 Market risk

The 2017 world economic outlook is expected to be more volatile due to changes in political and economic policies in leading economies such as the US, China, France, Germany, especially when the UK to start Brexit process before end of March 2017 While the European economies continue to address the consequences of Greece’s public debt crisis and the significant influxes of migrants and refugees as well as China is experiencing fluctuations in their financial and monetary system, the US seems to be leading of the world economic growth in 2017 with new economic protection policies, further investment in infrastructure, tax reductions set by US President Donald Trump The possibility of strengthened US dollar coupled with the US economic growth and the expected rise of interest rates by the FED in 2017 will put certain pressures on USD/VND exchange rate

Recovery in energy market is also expected in 2017, especially after the OPEC countries reached a deal to cut oil production earlier this year However, uncertainties remain as a surge

in US dollars might cause a negative impact on oil prices Gas price, another important input

of the world economy, has a major impact on inflation Therefore, the energy market evolution will undoubtedly affect the funding and lending rates across the globe

In addition, under the provisions of Circular 06/2016 (the amended version of Circular 36/2014), the ratio of short term capital to long-term loans decreased compared to that of

2016, and this ratio requirement will continue to decline in 2018 as directed by the SBV As a result, pressure on liquidity and lending activities of the bank is expected to rise which demands us to focus on improving our asset and capital structure towards promoting short-term loans and discouraging long-term loans

2.4 Challenges facing VIETINBANK ’s Hanoi division office

This part covers some of the most challenging issues facing Ha noi Branch, which obstructs bank in managing its relationships with its customers

Firstly, CRM software is difficult for employees to use Having many useful functions of CRM software, staffs get trouble in using This shows that customer profiles are not used effectively

Secondly is the shortage of experienced staffs Most employees of VIETINBANK are young and have no rich experiences in field of banking while banking is a specialized job Thus, VIETINBANK is also facing some challenges in this point

Thirdly, VIETINBANK got many challenges in reducing the cost of selecting and then managing the right clients set To approach new customer, staffs must take many phone calls

or even beg intermediaries and they must bear all the costs such as telephone fees or the commission fees, and so on

And one more challenges is that determine which products and services should be sold to which customers, profitably, and then help bank implement its sales plan Each year, all transaction offices, along with VIETINBANK , must complete all targets that the Head Office entrusts Because of the difference of customers, it is a typical challenge for each employee For example, sales plan of VIETINBANK is to earn VND 3 billion in revenues in March,

2017 And to complete the task in one month, they must do15 sets of limited guarantee, 5 sets

of unlimited guarantee, and 5 units of loans to purchase cars But Ha noi branch does not know the needs of customers, this make it get many obstructs in achieving expected plan The final one is how to coordinate the multi-product, multi-country relationship in real time Each country has private laws and their products may differ from other countries Thus, the coordination between two or more products and more than two countries sometimes gets disadvantage and it is one of challenges facing Ha noi branch

2.5 Conclusions

The section above has reviewed current status of VIETINBANK The next section is going to

CHAPTER 3 LITERATURE REVIEW

3.1 What is Customer Relationship Management?

According to Dyche, CRM is “Infrastructure that enables the delineation of increase in customer value and the correct means by which to motivate valuable customers to remain loyal” (Dyché, 2001)

The CRM depends on five-pillar approach (including (i) segmentation, (ii) information networking, (iii) algorithms, (iv) IT systems, and (v) sales and client support) to control companies wanting to implement relationships with their clients (Lindgreen and Antioco, 2005) As such, the CRM involves a strategic use of information, processes, technology, as well as people (Kincaid, 2003)

With the main objectives of acquiring and retaining customers, CRM is the efforts to create,

customer groups so that to maximize total customer lifetime value” (Payne, 2000) That is done by delivering superior customer values and satisfaction, through the integration of different activities for anticipating, understanding, and meeting customer needs CRM makes the interaction between customers and the firm become more informed, closer, thus keep both partners more focused CRM is very demanding, and require more attention from staffs to make the relationships to last longer (Kotler and Armstrong, 2004; Anton and Hoeck, 2002; Khalifa and Shen, 2005)

3.1.2 e-CRM

Studies found that using Internet technology helps reducing costs and building relationships performance and effectiveness The use of the Internet as a channel for interaction between customers is a faster ways, able to keep history, thus both partners will be more well-informed However, interaction through this channel would be more demanding, and require more efforts (Feinberg and Kadam, 2002)

The review of the relevant CRM literature shows that many researchers have watched the CRM by different aspects and perspectives

e-Phavaphan Sivaraks (e-Phavaphan Sivaraks, 2011) summarizes e-CRM characteristics in the Table below

Table 3-1: Characteristics of e-CRM

(Retrieved from Phavaphan Sivaraks, 2011)

E-CRM is defined as an component of online distribution and marketing that expands the traditional CRM techniques by integrating technologies of new electronic channels, such as Web, wireless, and voice technologies, and combining them with e-business applications into the overall CRM strategy of an enterprise (Retrieved from Phavaphan Sivaraks, 2011)

Researchers identify two main types of e-CRM

(i) Operational e-CRM: concerned with the customer touch-points, including in-person,

Web-based, e-mail, telephone, direct sales, and fax;

(ii) Analytical e-CRM: focuses on using technology to process and make sense of large

amounts of customer data

The integration between CRM systems and all channels across all areas in the company is common and critical to a company's success The channels include not only the traditional ones, but also other electronic technologies and channels (i.e., web-based, smart-phone app, customer contact centers, mobile telephones, and voice response systems) that allow companies to manage customer interactions with least or even no human contact to reduce the cost of interaction (Anon, 2002; Kennedy, 2006)

3.1.3 Benefits of CRM

Once a business has implemented CRM, it expects greatest gains from CRM implementation

to be in the areas of customer relationship quality and relationship outcome The CRM operations would create a competitive edge for an organization to thrive in competition, and that also has a positive impact on internal organizational performance (Sin, Tse, and Yim, 2005)

The advantages of the application of CRM approach/strategy to its service interaction marketing include quick service response time, two-way interaction service relationships, and the ability to provide service for customers from anywhere at any time

Many studies have researched CRM outcomes from the customer's point of view from three perspectives: (i) customer perspective, (ii) business perspective, and (iii) the technology perspective

First, from the customer perspective, analysis identified five main characteristics of an

(i) Marketing efforts are oriented toward longer-lasting and closer relationships with

individual accounts (Jackson, 1985)

(ii) Establishment of customer trust in CRM systems

(iii)Delivery of the right products and service to customers at the right time through the

Moreover, customer-centric evaluation of CRM include the following components:

(i) customer lifetime value and loyalty;

(ii) customer satisfaction, retention, and acquisition;

(iii)customer reaction; and

(iv) customer knowledge, profiling, and understanding

Second, from the business perspective, CRM is “…an approach that creates a competitive edge for an organization”, and CRM is also “… has a positive impact on organizational performance” (Sin, Tse, and Yim, 2005)

Figure 3-1: CRM relationship (source: Kubi and Doku)

In addition, many studies found 4 benefits from CRM or associated with building customer relations management system, as below:

 CRM allows cross selling opportunities, leading to low customer expenditure over time For firms, the attractiveness of building customer relationship is the future or potential of cross selling - the selling of additional products and services to current customers For those customers who are more loyal, they will buy more and if satisfied with the products

or services of company and the company itself, the customers would likely to buy from the same sellers Of course, that depends on if the firm has the products and services the customers want

 The customer relationship management allows firms to develop a strong process management to target, to acquire, and to promote the businesses to considerable higher levels CRM helps retain customers and promote their loyalty; that means customer would stay longer with the firm, contribute more revenues to firm as they buy at larger amounts and more frequent

 As CRM results in customers are keen to the firm, they become more loyal, that in turn make it harder for competitors to attract them That deters competitors from attacking traditional customer base of the firm, because satisfied customers would be very likely less susceptible to appeals from other product offers

 CRM helps understanding customers deeper, reducing costs associated with acquiring new customers, retaining them, protecting them from other competitors, and attracting