Customer Relationship Management Systems In Banks

Published Date: 02 Nov 2017

The high rates of deployment of digital technological solutions have contributed to major changes in market research. The advancement in information technology has made mangers to look for new ways of doing market research and consequently enhance them with awareness of their current market both in terms of opportunities and problems. Technologies changes enable companies to re-strategize their plans, which allow them to have more information about their customers and their needs and requirements [1].

The collection and processing information from the client and providing an atmosphere of assurance and trust is imperative to customers’ retention. Keeping long-term relationships has a substantial effect on business success and this can be more enhanced by increasing the effectiveness of existing client relations [2]. It was estimated that the cost of winning a new customer is five times higher than that of maintaining an existing customer [3]. While the retention of an additional 5% of customers can increase profit by almost 100%. Hence, the need to keep effective and long term relationship with customers is necessary and requires a system that encourages keeping such relationships.

Customer Relationship Management Systems

The term customer relationship management (CRM) system is defined as storage of customer information which encompasses all the customers’ profiles. Apart from the conventional database functions, it also plays the role of personalizing the needs of every customer by differentiating products and services of each distinctive customer [4]. CRM systems helps businesses to gain new customers; retain the existing customers and keep good relationship with customers as well as promoting customers’ values; hence improving the organization images [5].

With increasing competition for marketing dominance, many organizations have exploited the customer relationship management (CRM) system to enhance business intelligence, better decision making and improve customer relations to offer quality services and products [6]. According to Buttle (2001), a CRM system is a technology-based business management tool for developing and leveraging customer knowledge to nurture, maintain, and strengthen profitable relationships with customers [7, 8].

CRM systems offer the framework that expedites building long term relationship with customers. It also reduces duplication in data entry and maintenance by enabling a centralized firm-wide database of customer information. It is a database which replaces the individual sales person and prevents the loss of organizational customer knowledge when that sales person leaves the enterprise [9]. CRM goes beyond information technology solution for collecting customers’ information; it is a form of universal concept where firms gain competitive advantage through by having more knowledge about customers understanding and relationships [10].

Customer relationship management systems in banks

Financial service firms are the earliest implementers of customer relationship management systems. Before the implementation of CRM systems within the financial industry, banks and insurance firms had developed close relationships with their customers through personal customized services which were mainly a costly, inefficient and time consuming process [11]. But with CRM systems and information and communication technology (ICT), organizations can provide large customer variety, lower price and customized service all at the same time [12]. The banking sector compared to most other industries has richer customer databases comprising of transaction files, balance positions and call centre records. According to Kalakota and Whinston (1997), banks are no longer "gatekeepers" but "gateways" to financial products. In the old gatekeepers’ model, banks act as an agent which limits themselves to customer related product choices. In the gateway model, banks acts as a flexible agent with wide variety of products like entertainment, insurance and investment, thereby providing more spectrum and flexibility [12].

Chapter One

Introduction

Here in this chapter, the introduction, research question, research purpose, problem statement and delimitation of the research are highlighted

Chapter Two

Research Design

In chapter two, the method of conducting research is explained. This chapter helps the reader to ascertain the research method, approach and standpoint the researcher used to carry her research.

Chapter Three

Literature Review

The chapter comprises of literature review. Literature review is conducted from several sources of databases available through the university’s library.

Chapter Four

Case study and

Bank Background

In this chapter, information about the history of the bank selected for this research is described. This chapter also describes information on customer management in Nigerian banking industry.

Chapter Five

Findings and

Analysis

This section describes the research findings and the analysis. The analysis is performed with both primary and secondary data.

Chapter Six

Conclusion and

Recommendations

This section provides the conclusion of the research by giving answer to the research question. It encloses the result of the study which is collected with the help of analysis carried out. Recommendations for organizations that adopt CRM system are also provided

Table 1: Thesis outline

1.3 Problem statement

Customer relationship management (CRM) system has been ascertained to have better relationships with customers by having detailed knowledge of their requirements with the help of various information technologies. Implementation of CRM systems appropriately will bring tremendous benefits to both the customers and the business respectively. Banks have large number of customers and for the banks to meet up with their customers’ requirements; most of the banks have embraced CRM system. This research work tries to ascertain the benefits of CRM systems to the banking industry.

1.4 Research question

The thesis will be written in accordance with the formulated research question. What benefits can be derived from implementing CRMS systems in the banking industry?

1.5 Research Purpose

The main reason of this research is to describe and analyze the benefits of implementing customer relationship management systems in the banking industry in a developing economy such as Nigeria. The strategy will be finding out both customer and businesses benefits, and thus compare the benefits with empirical data obtained from banking sector.

1.6 Delimitation

This research is limited to only one bank as it is hard for the researcher to find other contacts in banks both inside and outside of Sweden. In this research, I concentrated more on benefits with successful implementation being considered essential to accomplish benefits. This study contains the benefit which Zenith Bank got with the implementation of CRM system and it is not necessary that other banks or financial organizations got same benefits from CRM system. Research is conducted in a single bank which can be considered as limitation of the research.

Chapter Two: Research Design

2.0 Methodological Analysis: Realistic

The methodological analysis employed in this research work is related to the realist approach. The realist researcher gazes for relationships between variables and where possible tries to establish chains of cause and effect. The research of this nature involves structuring a problem by splitting it into its various parts. The connection among the parts would then be analyzed, by looking for repeated patterns and associations [13]. As noted by Fisher [13], the realist research divides the problem into various parts and then the relationship between the problems would then be collated and studied. I will embrace a similar approach as I am intending to collate and analyze the benefits of CRM systems in the banking industry. The research problem will be divided into component portions to be able to ascertain the benefits of implementation of CRM system both to the business and the customers. To establish the cause and effect chain, I will examine cause of implementing CRM systems and on the effect side the benefits which successful CRM system offers.

Effect

Cause

Customer & Business

Benefits

Successful CRM implementation

Figure 2.1: Cause and Effect Relationship Diagram

2.1 Research approach: Deductive

In this research, I considered two research approaches namely structured and grounded approach. Fisher (2007) stated that in a structured approach a structure is imposed on the research based on a preliminary theory, concept or hypothesis. So, the structure may be employed to guide the research and also material collating process. Whereas, a grounded approach allows material to collated without prejudice or preliminary conceptual thoughts about what is going to be ascertained. Fisher (2007) further stated that the use of structured approach ensures the security of understanding the structure and shape of the research before the collation of the research material.

In this research I employed structured approach for collating research material. This employs collecting of data from various articles, exploiting literature review of the material collated from various articles and build up the conceptual frame work.

Fishers (2007) noted that there are two types of discoverers "Explorers" and "Surveyors". Explorers travel into an unknown destination and their major focus is making the unknown into known. Based on the fact that they do not have clue of what they will arrive at they embrace the open approach; whereas, the surveyor task is to pin the knowledge down into precise manner. Surveyors have ideas about what they will find out and they will measure things. Surveyors always embrace the close approach [13]. In this research work I will use survey approach. I think using Survey approach is mandatory since answering research question requires using both secondary and empirical data.

2.2 Research method: Qualitative

Fisher (2007) noted that any method, either Qualitative or Quantitative can be used in a research and it is erroneous that realist research means using quantitative research method. In accordance to Fisher postulation (Fisher 2007), in this thesis I am adopting realist research that embraces using qualitative research method.

2.3 Data Collection

In this thesis work, both secondary and primary data are collated.

2.3.1 Primary data

In this research, the primary data are collated using questionnaire. Fisher (2007) noted that there are two types of questionnaires; "Precoded" and "Open". Precoded embraces using tick boxes to be fill in and Open questionnaire allows free space which enables respondents to give responses in their own words. The use of questionnaire in this research work is separated into three sections, which is to collate response from the Zenith Bank on its implementation of CRM system and the customer and business benefits they derived from it. In this research work, I use some open questions for the respondent to answer. Every answer from respondent has been collated by sending open ended questionnaire.

2.3.2 Secondary data

Secondary data is a type of data that is gathered from other researchers work. Secondary data is often gathered from articles, books and journals. In this work I use online databases available through LNU digital library. Databases used in this research work are listed in tabular form as follows:

Databases

Obtained from

Lnu.se

Lnu.se/ub

Emerald

http://www.emeraldinsight.com.proxy.lnu.se/search.htm

Diva(Digital Vetenskapliga)

http://www.diva-portal.org/smash/search.jsf

Google Scholar

cholar.google.com.proxy.lnu.se

Scirus

http://www.scirus.com.proxy.lnu.se/

Science Direct

http://www.sciencedirect.com.proxy.lnu.se/

Table 2.1: Database table

I obtained different articles and journals by typing likely keywords about my research in above mentioned online databases. I then selected close related topics to the benefits of using CRM system and information on CRM systems implementation. The various keywords I used during my literature research are:

CRM system

CRM benefits

CRM customer benefits

CRM business benefits

CRM successful implementation

2.4 Validity and reliability of the research

For validity and reliability of this work, I tried to choose articles from peer reviewed journals. Mostly the articles are collected from the university (LNU) online libraries. The empirical data were collected from the responsible and authorized persons from Zenith bank.

2.5 Method Critique

In this thesis work, I employed both secondary and primary method to collate data. For collating primary data, I selected only one bank in Nigeria. My choice of one bank limitation is because it is challenging to have contacts with banks both in Nigeria and Sweden. The limitation of contacts can hamper the amount of data collated in this work. In addition, only the head of CRM system in Zenith Bank answered the questionnaires, which can limit the research as information is provided only in one viewpoint which is pro CRM system.

Chapter Three: Literature Review

3.0 CRM system implementation

CRM system implementation requires looking beyond customers perception since it entails focusing on wider perspective. CRM system implementation entails data collation which is as important as integration of processes. Thus, it implies that technology and processes are the fundamental factors of CRM systems [14].

Technology Infrastructure:

Broadbent & Weill (1998) states that " Technology infrastructure is a key requirement of CRM and in creating any IT infrastructure around business-driven requirements must be based on a sound understanding of a firm’s strategic perspective"[15]. The level of investment in IT and system associated to CRM is imperative to realize and with the drive towards e-commerce making long term infrastructure investment decisions critical [15]. Firms must apply integrated approach instead of employing technology in different ways for successful implementation of CRM systems [14].

Front end technology:

Front end information systems such as sales force automation (SFA) and customer service automation enables enterprises to serve and engage their customers by embracing information system based tools. Most firms incline for more interaction with their clients employing such forms of technologies [14].

Data Gathering:

Data gathering encompasses obtaining the knowledge and information about customer’s requirements and preferences. Data can comprise customers’ name/address, customer status, customers’ buying habit and other information. The use of technology to capture data is faster and time efficient compared to paper based data collection technique. The use of technology facilitates direct communication and interaction of channels to gather data. Technology also allows data saving in such a way that it may be deployed across several channels and can also be deployed for strategic purpose [14]. According to Algesheimer et al (2001), "customers’ processes do not fit into traditional functional organizations so the process flexibility and data integration are most important issues while implementing CRM systems" [16]. But, the systems should be updated with the varying dynamics of the market and customers.

Enterprises that embraced strategic approach in implementation of CRM systems were successful for several reasons. First, they mapped out a business strategy which fits into their business needs, while the business needs determine the functionalities that are deployed and developed. Secondly, they developed strategic approach during the implementation of CRM system. This then provides the facility to define the scope of the project and consequently controls which of the CRM elements are included in the project and which are not. The planning for the scope of the CRM project entails thorough scrutiny of use for sales-force automation, employee relationship management, call center routing, point of sale systems, wireless application, marketing campaign automation and Web self-service [17]. Thirdly, the scope determines the needed cross departmental infrastructural modifications which are needed in building vibrant cross- functional CRM teams that effects organizational changes among various section of the business formation. In summary, vibrant design of CRM strategy, scope determination and development of cross functional teams enhance good CRM system implementation [17].

Kotorov (2003) noted that both process and system integration concurrently are required for successful CRM systems implementation, but also challenging to achieve both together. Enterprises that do not embrace strategic approach only employed partial integration that leads to incomplete customer view, confusing customer service and poor targeting

Employee’s change is an essential measure of implementation of CRM system since employees are closely related to CRM processes, and their exploits in turn impact the success of CRM projects [18]. The success of a large-scale change initiative as presented by a CRM implementation depends heavily on possibility of employees who are subscribed to change [19]. Employees’ commitment to change is one of the important factors for successful CRM implementation. Firms must create an atmosphere where employees exhibit less resistance during the implementation of CRM systems [20]. Corporation must be aware of some strategies before implementing CRM systems [21], these strategies are:

Customers:

The first strategy is identifying the target customers which organization offers services to. Enterprises may employ existing business’ model in identifying target customers. Such approach helps categorizing customers according to their brands. Hence, customer centric strategy enables firms to be more profitable through increase focus on customers, sales and market share [22].

Channel:

Ramsey (2003) noted that enterprises must assess the proper and prospective channels available to them, more so it is particularly imperative that they rationalize and understand how to effectively use those channels they choose [21]. To recognize the conflicts while implementing the new channels is not the problem, but to create and improve the new strategies demands concentration and research [23].

Brand:

It is imperatives for firms to have commitment to their brands. This implies that organization has must know their customer’s needs and preferences; must make improvement based on the feedback and train the employees about their brands and equip up businesses according to brands [24]. In accordance to Ramsey (2003) submission, businesses employ brand value strategies to identify and know customers behaviors. He also noted that brand value strategy help to recognize that it can pay real dividends, increase revenues improve capital efficiency [23].

CRM applications choices

The application of CRM system helps businesses to achieve their vital goal, which is to attract new customers and hold on to loyalty of existing customers. CRM Systems implementation along with its capabilities helps bring substantial benefits for those investments [21]. Piskar and Faganel (2009) said to gain competitive advantage through successful CRM system implementation, company’s management must understand industry’s practices; know how CRM fits into the context of the general business strategy of the organization and how to assess current CRM capabilities. Others are to understand the reason why it is imperative to implement CRM, create and execute a plan; this is defined by how to achieve the goal and how to execute the plan [25].

3.1 Customer relationship management (CRM) system benefits

CRM systems emphasis on customers and they assist in identifying customers who are prepared to pay higher margin. If these customers are identified, their situation can easily be analyzed and also other varying attributes that help them in minimizing cost can be identified. This helps firms to have edge over their competitors whenever they are negotiating with customers since customers are very interested in saving cost. CRM system helps in knowing customers that are not paying "fair" margin [26]. For this purpose, an accounting based methodology known as activity based costing (ABC) is employed and this may be used as a part of CRM process. In activity based costing the cost incurred in managing every customer is calculated with margin earned with each customer [26].

If customers’ demands are known, then CRM systems turn out to be a central aspect of business process and also enhance efficient usage of inventory. This means, less manpower will be needed in the areas of customer support functions like customer service, credit entry, order entry, finance and collections. This is because customers will be demanding less for such services since they are better served with more reliable information, and consequently increases customer [26].

CRM systems improves every customer related transactions from the first contact to the

on-going services, repeating sales and in turn getting value from each step. If these steps are performed and managed properly by the organization then it implies that customer related information and their attributes are gathered in an efficient way. Thus, providing good understanding of customers’ interests, requirements and plans. In addition, CRM systems enable evaluating the cost and return of investment in proving services to the customers. The implementation of CRM systems allows enterprises to recognize the products and services that yield profits from those that just liabilities [27].

The implementation of CRM systems enables organization to embraces proactive approaches in terms of customer interactions. For example, if the sales unit came up with sales strategy, the post-sale unit develops the post-sale strategy of interacting with customers to fulfill their post-sale needs and demands. With CRM systems, organizations can maintain and record the customer information such as objectives, desires and events. Thereafter, the information is updated into the CRM systems to ensure that the customer’s information is not outdated.

Customer interactions allow new business opportunities due to availability of more information about customer’s goals and requirements. This also encourages more customers to the enterprise for additional products and services, or to renew their contracts, thereby providing publicity about the organization to the others. Because of this kind of interactions, information is constantly expanding in the CRM systems and hence increases the profile portfolio of each customer and ultimately works as powerful tool in making business decisions [27].

The application of CRM systems assists enterprises to have good knowledge and relationship with their customers. It helps enterprises to have good market share, enhancing customers’ retention and satisfaction. It also helps in enhancing profitability and revenue. CRM systems help in providing differentiated services or for value customers. The merging of customer information in single platform as applicable in CRM systems improves customer services [28].

CRM systems enhance knowledge integration that facilitates company ability to know their customers immediate needs, the capability to anticipate and solve future needs and providing customized services and goods. In CRM database, customers purchasing behaviors may easily be analyzed. By mere assessment of previous customer buying habit, new product information can be sent to customers. With this, products and services are promoted by analyzing the interest of customers, whereas unused products are removed by assessing the information in the database [29].

CRM systems also play vital role in marketing a company. With a strong marketing policy, companies can discover and understand customers need and also improve on them. CRM systems increase competitiveness among enterprises. Since CRM strategy will be totally unique to each company, this may cause competitive advantage, promote customer relationships management and boosts customer satisfaction and retention [30].

3.2 Customer benefits

3.2.1 Customer satisfaction

Because of the importance of customers to the growth of any business, there has been a tremendous amount attention to this concept. Wang et al (2004) noted that the central objective of CRM is to ensure steady streams of revenue and maximization of customer life time value or customer quality and customer behaviors [31]. Hence, CRM systems performance is focused on customer behaviors since it could impact on the organization future.

It also imperative to know that customer satisfaction contributes immensely to the profitability of a business. Satisfaction is the process of equating opportunities with performance. Thus, it is believed to encompass cognitive practice within consumers’ cognizant control and emotional practice outside of the cognizant control [32]. Hsu and Lin (2008) submitted "when satisfaction becomes an important element, CRM affects retention not only independently but also collaboratively. Moreover, the main effect of CRM is conspicuous for retention; customer satisfaction is very complicated and multi-dimensional phenomenon" [32].

3.2.2 Customer value

In the past, customer value was constraint to just quality and price, but nowadays researchers are of the opinion that there are other functions to this concept. Sweeney and Soutar (2001) submitted that it is imperative that enterprises take note of this concept because if they understand it, they will be able to evaluate process of customers and re-engineer their resource and activities [33]. "CRM is a corporate strategy and systematic approach based on relationship and one-to-one marketing that aims to integrate management of personalized relationships with customers and to continue customer’s value in the long term and to maximize value creation for companies." [32]

"Customers are becoming more value-oriented and are not simply influenced by high quality or lower price. Nevertheless, they can make a reasonable trade-off between the benefits and sacrifices in the process of obtaining and consuming products or services. However, not all customers value the same benefits and care for the same sacrifices at any given time" [31].

3.2.3 Customer Retention

"Customer retention can be achieved by attractive customer satisfaction and loyalty, civilizing problem decrease, and creating the ability to recognize and save "at-risk" customers. Actuality, an "at-risk" customer represents a major chance for extra income – if handled correctly. For example, a customer makes a large extraction from his or her account. This may sign that the customer is transferring money to a second bank. CRM driven practices aid in customers retention and also help to migrate meager account holders to more profitable and long-term customers" [34].

3.2.4 Customer Achievement

CRM systems is expected to assist customers in accordance to the "value" its bring through the life of the customer and beyond through marketing. Enterprises must ensure that their value propositions have connection with the right market segments. This will allow them to achieve their goals and gain new customers [34].

3.2.5 Customer trust

"The continuing search for added value and competitive advantage, increasing competition, similarity in core products and lack of customer loyalty lead companies to search for new ways of gaining competitive advantage over their rivals; This implies how to create offer more unique, valuable on the basis of unique business system based on multidimensional competitive advantage, better than their competitor" [35]. Thus, there is necessity for marketing technique such as customer relationship marketing (CRM) which facilitates trust between customers and suppliers to increase retention rates. "The successful delivery of CRM benefits requires fundamental changes in the way that the organization approaches marketing management. In its consequence, it represents a corporate restructuring caused by positive reasons that involves all functional areas; including production, property, financial, business, organizational and personal" [35]

3.3 Business benefits

I have so far discussed the benefits of CRM systems to the customers. But, here I will also discuss the benefits of CRM systems to the business. I have explained earlier that CRM has lots of benefits and also could have good effect on the customers, but the question is that how it can impact on whole business? I will discuss about a view that divide the business benefits of CRM systems to three sections. This view is exhibited by three students‟ names Goodhue, Wixom, and Watson in Georgia and Virginia University in the United States. In their research they examined the business benefits of CRM in some organizations. They were of the opinion that using CRM systems has three targets and by reaching to these targets managers can enhance their business profile.

3.3.1 CRM Application

The first target according to them is application. With this concept, they showed that some organizations strongly need for a particular CRM application and the benefits that are likely to be obtained. They are not prepared to run into a CRM effort and due to their culture they must first test and establish the concept before applying it in the organization. The outcome of this research showed that the use of individual application assists organizations to know important impacts in each department. Although, it was stated that implementing this view may bring some challenges for an organization [36]. They further stated that an intently attention on this approach can help an organization to have a better customer relationship management. In total, individual approach can bring about lower-cost efforts

3.3.2 Infrastructure

The second target according to them is the infrastructure. An organization must complement an efficient application with strong and suitable infrastructure to exchange information. An enterprise must work together in a synchronized way with their customers. By doing this, they demonstrate that without coordination, it may be impossible to have good customer relationship. In attaining this goal, managers require a powerful data infrastructure that are supported by both hardware and software infrastructure that can make the organization to make a fast data recovery [36].

Goodhue et al (2002) further suggested that the first step for each organization is to have an integrated system across the organization. The organization must first "put in place a data resource that is integrated across various source systems and customer touch points, using a single unique identifier for every customer; and keeps the data intact, timely and reliable". Though IT department understands the benefits of these infrastructures, but the challenges that most organizations may have is that "infrastructure investments are costly, and the gains are not really immediate. To convince the company’s management; IT department must tell them on the concrete business value of such infrastructure investments" [36].

The implementation of this approach enables the enterprise to have successful CRM programs by first focusing on their infrastructure, thereafter extending it and capitalizing on it to deliver value. This can help organization with some important benefits such as laying foundation for other CRM activities and identifying key loyalty drivers [36].

3.3.3 Organizational Transformation

The number three target is organizational transformation. To be a strictly customer-centric, an enterprise needs the shift in their culture and business practices. Changes in the enterprise can involve things like "information systems to business processes, incentive structures, organizational structures and employee roles. Firms that embrace CRM generally make this organizational transformation slowly, even if that is not intended. Although organizational transformation is difficult and risky but has potentially very high payoffs as the organization shifts its business processes, culture and technology to truly become customer-centric" [36]. According to views of Goodhue et al (2002) "companies can reduce their risk of failure by having a clear vision of CRM infrastructure, target application and transformation".

3.3.4 Other Researcher Viewpoints

Other researches see these three points as a main business benefits. Chen and Popovich (2003) are of the same viewpoint to these business benefits. They submitted that business process change, technology and people change are the major targets that will propel an enterprise to high profitability and good customer loyalty [30].

But Harej and Horvat (2004) in their own research noted that "business processes have to be integrated across marketing, sales and customer support. Also processes in connection with business partners and employees have to be considered. Knowledge about specific customers is needed before an organization establishes such change management". They emphasize that total commitment of company’s management is imperative for the success of the organizations [37].

Hoon and Gul (2003) believe that for an organization to have a successful management, managers of such enterprise must have to "support diverse customer information – such as of-the-customer, for-the-customer, and by-the-customer information". They also demonstrate the key role customer information system (CIS) plays in managing and distribution of customer information. Their research also emphasizes on customer information and encourages improvement and enhancement of the IT department. This they said will reflect on whole business process that the organization is customer centered, and consequently help the managers to consolidate the customer information and have a better idea about their needs, and as result enhance the overall business of the organization [38].

3.3.5 Customer support

Application of CRM systems enables an enterprise to support their customers so that they can have high level of value from the customer purchases. Using CRM systems assists an organization in finding new market opportunities and to make a competitive advantage over other competitors. A CRM system enables customer support service to evaluate customer support needs during the new product development process [39].

3.3.6 Customer segment

If an organization segments its customers, such organization could gain the customer preferences in order to efficiently distribute resource according to information. The segmentation enables the organization to "differentiate themselves by providing appropriate and suitable services for their customers’ needs, therefore building up a competitive advantage, and second direct companies to where their most valuable

customers are located and helps allocate major capital, effort and time to generate the most profit" [39].

Chapter Four: Bank Background Case Study

4.0 Customer Management in Nigerian Banks

Marketing is known to be one of the most powerful business’ tools that enhance the profit portfolio of an enterprise, particularly banks. A senior top manager of Zenith bank submitted that aggressive marketing by various stakeholders in the bank has contributed immensely to the bank successes. He also submitted that with aggressive marketing, about 5% of customers can generate 85 % profit of a bank.

Customer Relationship management (CRM) is a business strategy that every bank should embrace. Effective banking requires aggressive marketing, deployment of latest technologies and a superb customer service [40]. The adoption of IT systems by companies aid better communication with customers since IT infrastructure helps with fast information delivery and sharing of information with customers.

Zenith Bank Ltd was founded in the early 1990’s. The bank was a product of deregulation and liberalization policies of the Nigerian government. According to Balogun (2007) review article, he wrote that Professor Charles Soludo (CBN Governor) reforms were focused on strengthening the financial systems through banking sector consolidation in which Zenith bank was one of the twenty five banks that emerged as a product of the deregulation and liberalization policies of the Nigerian government [41]. Currently, due to tremendous competition in the banking industry, most banks have adopted CRM systems to enhance their operational efficiency and profitability.

For banks to maintain and strengthening their customers’ base, they must embrace and implement powerful and useful CRM systems. This statement will remain true because customer management is the pillar of successful banking system. The implementation of CRM system makes banks to have a shorter sales cycle and hence increase revenues. The general expectation of CRM systems implementation to both customers and the business is to increase speed and reduce waiting time on queues in banks.

The deregulation and liberalization of financial institution and privatization policies of the Nigerian Government had made almost all government owned banks to become private banks. There are many types of banks in Nigeria, each of these types of banks are operating under different set of rules and policies. We have commercial banks, mortgage banks, micro-finance banks and agricultural banks [42]. Zenith bank falls under the commercial banks that privately owned and established by private individuals, and the bank is one of the two banks in Nigeria that is managing Nigeria’s external reserves.

There are variances in ways in which CRM systems is being implemented in private and governmental banks. While managers and other employees in private banks have respect and regards for customer’s time and values, their counterpart in governmental banks care less about customers’ time and values.

A CRM system is imperative to the operations and activities of private banks, while in governmental banks CRM systems are not fully implemented. The governmental banks are still working with the old systems and consequently they are characterized with long queues at the banking halls, ineffective customers’ services, prompt breakdown of IT infrastructure, weariness and poor accuracy to perform normal banking services [43].

4.1 Zenith Bank

4.1.1 History

Zenith International Bank Limited was established in 30 May 1990 with its head office located in Lagos Nigeria. The bank is a private limited liability company and was licensed by Central Bank of Nigeria (CBN) in June 1990 to operate banking business in Nigeria. The bank's name was later changed to Zenith Bank Plc. in May 2004 to portray its position as a public limited liability company. Zenith bank shares were listed on the Nigerian Stock Exchange in October 2004 due to a highly successful Initial Public Offering. Nigerian institutions and private individuals of over a million currently hold the shares of the bank.

The bank's major service delivery channels in Nigeria are its business offices which as at 2012 had increased to over 338 branches and more than 125 cash offices. These offices are situated in key business and commercial centres in every state in the country and Abuja. Since the beginning of its operation, the bank has been making its mark in profitability and every other performance indices, and is maintaining this leading position till date. 

Zenith Bank Plc has grown progressively to become a financial services institution of choice with presence in Africa and the United Kingdom. This is because of the bank’s strategic measure in surpassing the limitations of the Nigerian banking industry, and strengthening its brand. The striking performance of the bank in all its branches within Nigeria and abroad is a testimony of the bank's ardent commitment to global best practices and steady reliable service delivery [43].

4.1.2 Business

The bank is a leading financial services provider in all areas of banking that provide and satisfy the banking needs of its numerous customers both in private and public sectors.

The core businesses of the bank are:

Investment and corporate banking

Private and personal banking

Treasury and cash management services

Consumer and commercial banking

Foreign Exchange and trade service

Non-banking financial services through its subsidiaries

Zenith bank provides specialized financial services like Pension Management but would not provide services in Insurance, Capital Market dealings, Trusteeship, Registrar, Mortgage and financial advisory services because of its resolve to focus on the commercial banking license with international authorization [43].

4.1.3 Culture

The bank culture is exceptional service delivery that exceeds customer beliefs in accordance to global best practices with the highest industry standards. All these potentials have bonded the bank to its numerous customers who have been of tremendous assets to the bank.  

The bank philosophy of engaging the services of the best has attracted the most professional and highly motivated workforce in the industry that discharges their duties with the utmost integrity and professionalism.  

Zenith bank places steady importance on its main business strategy based on People, Technology and Service [43].

4.1.4 Customer Base

Zenith bank customer network comprises largely corporate bodies most of which are subsidiaries of multinational corporations and large indigenous companies. The bank lending strategy emphasizes on rational practices and transparency. Because of this approach, Zenith bank credit portfolio is the best asset quality in the banking industry in Nigeria. The bank's non-performing loans to total loans ratio is lower than industry average right from beginning and through the thick of the global financial crises in 2008/2009 [43].

Zenith bank customer base, which is over 1.6 million accounts, cuts across the following sectors:

ICT and Telecommunications

Transport, Shipping and Aviation

Entertainment

Oil and Gas

Power and Infrastructure

Real Estate, Building and Construction

Commodities and General Commerce

4.1.5 Vision and Strategic Objectives

From the beginning, the bank demonstrably defines service standards in the banking industry with its drive for a unique customer experience, service quality and the strength of its customer base. Currently, the bank is known with the following qualities in the Nigerian banking industry:        

Innovation

Strategic distribution channels

Stable and dedicated management team

Adoption of latest Information and Communication Technology solutions

Excellent financial performance

Good asset quality

Highly skilled personnel

 

The vision of the bank is centered on "building the Zenith brand into a reputable international financial institution recognized for innovation, superior performance while creating premium value for all stakeholders". The tactical objectives of the bank consist of continuous improvement of its capacity to meet the customer's increasing and dynamic banking needs and to maintain highest quality possible growth in an unpredictable business environment by [43]:

Investment and deployment of latest and state of the art technological solutions

Branch network expansion

Training and re-training of personnel

Employment of the best manpower available and motivating them

4.2 Zenith Bank’s IT and CRM systems

Zenith bank’s electronic-strategies (e-strategies) are centered on internet banking services, mobile banking services and telephone banking services together with CRM as its distant delivery channels. The CRM implementations of Zenith bank are centered on the following:

Customization and localization: Appropriate software systems are purchased from reputable foreign firm; which is customized for the bank in line with Nigeria’s banking laws.

Database migration: The old database were discarded and incorporated into new database systems.

Training of staff/users: Managers, employees and customers are trained on the use of the new systems.

Infrastructure: Networks infrastructure, data centers equipment and recovery databases were provided.

Back up: The new systems are duplicated for a back-up provision incase of unexpected failure.

With the successful implementation of CRM system, the various modules such as telephone, mobile internet and customer management service (CMS) were integrated into the CRM system and the outcome was an integrated e-banking system, which Zenith bank is a reference model in the Nigerian banking industry.

Chapter Five: Findings and Analysis

5.0 CRM system Implementation

Broadbent & Weill (1998) noted that "creating IT infrastructure around business driven

requirement are based on firms strategic perspective and proper IT infrastructure, and selection of technology is key requirement of CRM system" [15]. A senior manager in CRM department in Zenith bank submitted that their major strategy in the bank in the implementation of CRM system is the selection of suitable technology. After the selection of appropriate technology, they then estimate the cost of implementing the selected technology; costs such as installation and training of users. Thereafter, they try to identify the type of CRM data that can be used to address the problematic areas in the customer relationship cycle and the value such process have on the organization.

Zenith bank uses front end technology during the selection process, with this they relate

and interact better with their customers by employing information system based tools. Hill and Shore (2005) noted that technology should basically be employed as a tool for customer management and essential for implementing CRM system successful is the front end planning and the use of data collected [44]. Zenith bank employs centralized server based CRM software tool that has every information about customer management stored in the sever; this enables them to have important information about their business and be connected to their customers.

Zenith bank central features of CRM system software are email marketing and reporting since these make it possible to spread information to many potential customers at a very low cost and within short time. These are then complemented with the ability to customize the knowledge base to enhance changes in the collection, organization and retrieval of information about the customers. Zenith bank CRM system software comprises of other features that enhance wide variety of reports such as sharing of

documents, tracking of support and tasks.

Zenith bank employs integrated approach in implementing its CRM system. This takes the form of using a single database for the storage of all information across the organization and hence enables them to have full customer view that facilitates better customer service. Boon and Corbitt (2002) submitted that to get better advantage from CRM system, an enterprise must embrace integrated approach during the implementation of CRM system instead of using technology in a separate island [14]. With a centralized single database Zenith bank is able to store and use customer information efficiently.

According to senior official of Zenith bank, some risks and challenges arise during the implementation of CRM software. The major problem in Zenith bank is the training of personnel on the use of the new software. Foss et al (2008) reported that employee’s engagement encompasses their support and obligation towards CRM implementation and "organizations cannot operate and develop customer focused CRM software without motivated and trained employees" [8]. In the beginning of CRM system implementation in Zenith bank, another challenge for the bank was customer’s awareness. Because of this the bank missed some customers in the initially due of newness of CRM software in the bank and because of less ability of their personnel in the use of the software.

Meyer et al, (1998) noted that the success of a large-scale change initiative, like the one incorporated by implementing CRM system is dependent on having personnel with very high readiness of affective commitment to change [19]. Employees’ effective commitment to change is one other issue face by the bank in their implementation of CRM system. The bank reported that they initially faced with the challenge of employee commitment to change as the problem of resistance and difficulties from employees of how to use the CRM software arose. However, the bank noted that they were able to overcome this problem by training and re-training activities and by enlightening them how their works would be easier and simpler after implementing CRM system.

Ramsey (2003) advised that certain strategies such as customers, channel, brand and application choice are imperative for an enterprise in the course of implementing CRM system [21]. But Zenith bank did not have any system in place to know about these strategies before implementation of CRM software. The bank got ideas about these during monthly evaluations based on the scale of customers and monthly investment’s estimation of customers. Initially, the focus of the bank was on brand as they considered brand value imperative in identifying the customer behavior and enhances revenue portfolio and capital efficiency. Christ (2006) noted that an enterprise has to commit itself to its brands, which requires them to know their customers’ necessities and preferences and consequently come up with changes based on the feedback they got from their customers [24]. Thus, Zenith bank brand value strategy is employed for motivating customers and to enhance profitability. The bank employs various ways and channels such as telephone and email. They do send email to their customers and also notify their customers of new information or changes in their operation and services. The bank uses the channels in evaluating the appropriate and potential channels available to them; and embraces brand value strategies to identify their customers’ behaviors.

5.1 CRM system and customer benefits

Implementing CRM system was initially hard and challenging for the bank just like any organization that is trying to introduce a new system into its network. Since the bank is one of the banks that first implemented CRM system in Nigeria, it brought some problems for the bank because the system was strange to the Nigerian banking industry. But with advertisement and training of personnel, the system started becoming popular in the Nigerian market and many other banks and corporate organizations started embracing it. After couple of years the bank became successful and their customers based had increased more than expectation after implementing CRM system. Their customers increased by over 50% within couple of years of successful CRM system implementation. Thus, this shows that employing CRM system was an important competitive advantage for Zenith bank over its competitors.

One of the most important functions Zenith bank used in increasing and sustaining the customers was satisfaction. Managers believed that using this system is not enough but they have to remain with their customers and must improve on the numbers of customers they have based on the fact that for a bank the number of the customers and their satisfaction are the important functions. Because, when the number of customers increases, profitability will also increase too. This theory is also applicable to Zenith bank. Hence, satisfaction of the customers is key important function to Zenith bank.

Attaining the level in which the bank is today is not an easy journey. Initially, during the implementation stage of the CRM systems, the bank confronted many challenges in the various parts of the organization, while the customers were also confronted with many problems. The problems confronted by the bank if had not be managed properly could have led to losing high substantial numbers of its customers and as a result decline in profitability. The first major problem for the bank is how the bank’s customers would cope with e-services comprising of internet services, telephone services, e-payment and e-application. The problem is even more severe for uneducated customers. Although the bank lost substantial numbers of this class of customers since they were unable to cope with the innovations of the bank. With the new system, many thing were change in the bank’s systems and customers were nor familiar with them. But with superb customer service unit support both in the banking halls and via telephones, the bank was able to solve the problems the customers were encountering with the new system. According to the bank’s official, they perform routine maintenance and updates on the system to avoid any major breakdown.

Now that the customer’s problems have been solved, CRM system has been of great benefits to the customers as their banking transactions are easier than before. Moreover, the system has been of great benefits to the bank as employees do their works faster but also helps to have a better relationship with customers; and having a better relationship will help them to know the customers problems better. But one thing the bank refused to mention is that the implementation of CRM system helped the bank to cut some jobs as the system made the bank to lay-off some redundant employees after successful implementation of CRM system.

In line with the submission of Wang et al (2004) "customers are becoming more value-oriented and are not simply influenced by high quality or lower price. Rather, they tend to make a reasonable trade-off between the perceived benefits and perceived sacrifices in the process of obtaining and consuming products or services. However, not all the customers value the same potential benefits and care for the same sacrifices at any given time" [31]. The bank built its systems with new services and they are providing support to their customers and keeping them informed about the changes and modifications to the system. CRM system helps organizations to support their customers, helps in finding new market opportunities and to make competitive advantage. Thus, CRM system is a valuable resource to an enterprise.

In today’s technological world with increasing number of customers and banking transactions, banks must continuously make modifications to their systems to have better and easier system and consequently leading to better relationship between the customers and the bank. In Zenith bank, there is a unit in place in the bank that works 24/7 that is responsible for recognizing the problems and proffering solutions to problems detected or reported by the customers. The bank does this because they are of the view that customer satisfaction is paramount and that customer satisfaction aids profitability of the organization.

5.2 CRM System and business benefits

The bank’s senior official stated that implementing CRM system in the bank’s operation does not only provide customers’ benefits but also a great deal of business benefits to the bank. These benefits include improvement in customers’ information quality, internal efficiency and system support enhancement. Roh et al (2005) noted that the "ultimate measure of CRM success is achieved when CRM system equals net benefits" [6]. There has been an average increase of 50% in sales and increase of 67% in revenues since the implementation of CRM system by the bank; an indication of the business viability and benefits of the CRM system to the bank.

The bank’s official also noted that CRM application, organizational infrastructure and transformation also play greater roles in getting business benefits. This is centered on selection of proper technology and transformation that are necessary to gain business’s benefits from CRM system. Though, the bank acknowledged that organizational transformation brought challenges due initial reluctance to change from staff. Goodhue et al (2002) submitted that organizational transformation brings some risks and most often not easy but has great benefits overall as it allows the organization to be truly customer-centric [36].

Zenith bank business prospects increases by CRM system application since the system enhances customer-centric strategies. The system enables the bank to facilitate more customers’ oriented services with improvement in sustaining and managing customers over a long time. One of the bank’s strategies in customers satisfaction is centered on quality training and re-training exercise for its employees. With quality training, employees provide good services to the customers and also portray good image of the organization. Thus, customers flow into the bank in numbers and invested in the bank. Such investments from customers bring more business openings and profitability for the bank.

The implementation of CRM system by the bank also aids the bank’s operational efficiency since it makes processes easier, shorter and faster. Irani (2002) noted that "the purpose of IT investments is to improve operational efficiency; many traditional appraisal techniques may be considered appropriate. Such investments are largely geared to the generation of tangible (financial) benefits" [45]. These tangible benefits are apparent as investment in CRM system yields 67% increase in profits.

CRM system helps in growing a business as the case of Zenith bank. The bank noted that they recorded growth in their business through incorporation of useful data and information obtained from their customers into the CRM system; which other organization signaled their readiness of buying from them. Thus, this is an example of classical case that CRM brings new business opportunities for an organization. The implementation of CRM system aids the bank in calculating the cost and return on investment as noted by the bank that the budget of implementing, installing and training is at strategic side in the implementation of the system. Smith (2006) noted "by using CRM systems an organization would be able to support their customers in order to achieve high level of value from the customer purchases" [39]. The bank provides customer support for its CRM system through the customer service center and a special unit in the IT department that operates 24/7 who is ready for customers’ complaints and provide them with the support that are necessary. By attending to customers’ complaints, Zenith bank receives customer support and gets benefits from it.

Chapter Six: Conclusion and Recommendation

This research has demonstrated that CRM system can be of great benefits to any organization. CRM system enables businesses to strengthening and increasing the relationship with their customers. In order to gain the expected benefits from CRM system, the system must be implemented in accordance to the strategy. Most businesses developed their strategies by paying attention to their customers and brand value before implementing this system. In Zenith bank, CRM data are being used to locate the problems discovered in the customer relationship cycle and the outcome of this is that it is winning and attracting more customers to the bank.

Selection of appropriate technology and formation of technological infrastructure are imperative to successful CRM system implementation. In the course of implementing CRM system, some fundamental issues such as training of employees, customer awareness, possibilities of losing some customers at the beginning of the system and uncertainty of return on investment are easily overcome with total support of top management staff. The challenges with employee’s commitment to change are fixed by enlightening employees the advantages they would have with the implementation of the system.

There is no organization that can be successful without customers’ satisfaction showing that customers is a determinant factor in the growth of a business. An organization cannot attain its objectives if they do not satisfy their customer requirements. CRM system allows enterprises to have good relationship with their customers and understands their requirements. On the business side, this system enables organizations to achieve their goals such as competitive advantage over other competitors, profitability, customer value and customer satisfaction. The data and information that I obtained from Zenith bank indicate that CRM system brings benefits to both customers and the business. On the customers’ benefits of CRM system, the expected result is that CRM system should enhance the number of customers with increase satisfaction of customers, which is the case of Zenith bank. My study discovers that after successful implementation of CRM system, there was 50% increase in the number of customers, whereas other banks that did not adopt the system have only single digit percentage growth

On the business benefits of CRM system, the system helps the bank to expand its operational networks as more branches were opened due to increase in customer numbers, sales and revenues. The system also helps to improve operational efficiency and collaboration across the bank as it makes processes easier, faster and simple. Some of the banks satisfied customers made more investment in the bank, which the bank diverted to its subsidiaries for more profitability.

Adopting a system like CRM system that is ICT oriented in a developing economy like Nigeria is not really an easy task. This is because such an economy is sure to be characterized with high numbers of uneducated customers and who are most often reluctance to change. This factor played an important role at the early years of CRM system implementation in Zenith bank, as the bank lost a good numbers of its customers. Though, after few years the bank recovered from this with awareness and after the customers got to know the benefits of the system. The idea of just using CRM technology is not enough, but managers and staff must be integrated into the system by the organization. Because in the early years of the implementation of the system, the bank relied much upon expatriate from outside that were providing support services for them. This brought a setback for the bank initially as the experts sometimes were not available to fix the problems due to other engagement. Though, the bank has overcome this since they have their own specialists who are available 24/7 to resolve any problem in the system. I will also recommend that organizations should be very careful during implementation of the system because the system requires proper strategy formulation. It is also important to know that whatever strategy is adopted, such strategy should be built based on available resources and expected realizable goals. The strategy should be customer centric and not be afraid of initial result putting into cognizance the future benefits of the system for the organization.