The Benefits Of Implementing Crm Systems

Published Date: 02 Nov 2017

Marketing is known to be one of the most powerful business’s 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 is 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, co-operative 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 customers 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 to carry on the business of banking in June 1990. The bank's name was later changed to Zenith Bank Plc. in May 2004 to portray its status 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 benefits 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 maximum 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 attributes in the Nigerian banking industry:        

Innovation

Strategic distribution channels

Stable and dedicated management team

The 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 as well as sustain and keep high quality growth in a volatile business environment through [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: Mangers, 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; cost 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

document, 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 loose 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 implementation.

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 baking 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 department 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 44% in sales and increase of 63% 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]. Such tangible benefits are apparent as investment in CRM system yields 63% 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 bring 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 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 through 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 IT-centric 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.