Defining Customer Relationship Management Marketing Essay

Published Date: 23 Mar 2015

The banking industry is a highly competitive industry. In modern days business, they are not only competing among other banks but they have to keep up with increased competition from non-banks and other financial institutions (Kaynak and Kucukemiroglu, 1992, pp.20). Differentiation of services is therefore perceived to be a difficult task in the banking sector and thus product development in banks are known to be easily imitated by other competing financial institutions which outcome in all banks providing nearly identical services (Choong et al., 2006, pp.85). Adding to this is the burden of consumer empowerment, defined by Dennis et al. (2006, pp.10) as a state of mind accompanied by a reaction that enables a consumer to make their own choices from the many choices available through identifying their needs and wants in their decision-making with other organizational bodies. Consumer empowerment has taken place due to globalization and constant evolutions of online and social platforms which keep the present age customer well informed about what they want and therefore they demand 'smarter commerce'.

This competitive nature of the British banking sector has resulted in many banks providing identical and undiversified services. This suggests that the British banking sector, specifically the retail banking sector, has reached its maturity stage in the product lifecycle. Thus the intensity between these banks conveys a great risk of unhealthy competitive practices -the recent bank scandal of Barclays PLC being fined for rigging interest rates are only a proof of the intense ways that the retail bankers in the United Kingdom are trying to stay a step ahead from their competitors(BBC News Business, 2012, pp.65). Given these conditions, potentially the best strategy for banks to survive in this ever-changing environment is to retain existing customers whilst acquiring new prospects (Dombret and Kern, 2003, pp.99).

Customer retention and acquisition are therefore two important aspects that go along with the modern marketing concept. In the case of customer retention, it is a proved fact that it is economically more beneficial for an organization to keep their existing customers rather than attracting new ones (Loudon et al., 2007, pp.440).

Highly satisfied customers also spread positive word-of-mouth which enables free promotion to the bank. The core customers are also said to be less sensitive to price according to Blattberg et al. (2001, pp.85). These characteristics help the company to use customer retention as a cost effective tool to survive in todays business.

Businesses today are therefore increasingly becoming more customer-centric and coming up with innovative ideas and strategies to satisfy their existing customers that they believe would help to retain them in their organization (Blythe et al., 2006, pp.88). One of the key tools for customer retention as discussed by Parvatiyar et al. (2001, pp.71) and agreed by many other authors is maintaing an effective relationship with customers. Christou and Sigala (2006, pp.66) has also clearly emphasised the importance of banks building and maintaing a good relationship with their customers in order to keep up with their changing consumer patterns and providing good service quality.

There has been a complete 'paradigm shift' in the way management of marketing firms view their customers, look after them, nurture them and establish relationships with them over the long term. This concept is known as Customer Relationship Management (CRM) and is much talked about in modern marketing and management business approach.  

According to Lancaster and Reynolds (2004, pp.10) CRM is not just about keeping your customers satisfied; it allows firms to attract customers with speed, accuracy, availability, creativity and flexibility- ultimately a firm's ability to compete, survive and profit may depend on it.   Zamil (2011, pp.33) identifies CRM as a management strategy that combines information technology with marketing.

ICICI was first set up in 1994 as an Indian financial institution, named ICICI Limited, which caters only to the corporate sector organizations in India. In the last decade it has diversified its services to cater to all three banking sectors: personal, business, and corporate and was named the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the New York Stock Exchange market (NYSE Euronext, 2012).

They proudly boast to be India's second largest private bank with more than 25 million customers in 19 countries including England and Wales which was incorporated later in February 2003 (ICICI Bank UK, 2012). As of March 31, 2012, the bank's consolidated asset base is USD 4.1 billion and growing. ICICI UK was also named the first and the only Indian Brand to be ranked among the top 45 most valuable global brands in the BrandZ top 100 Global Brands report, competing with well renowned British banks like Lloyds TSB and Barclays (WPP).

ICICI is recognized amongst the top most modern banks that focus on maintaining good relationships with their customers. The long term goal of the bank is to be in a position to practice 1to1 marketing with their customers and this is only proof of how much they emphasize on building relationships with their customers (Parvatiyar et al., 2001). To attain this goal, the bank has come up with a sequence of strategies during the last few decades. ICICI's transformation into a more technology intensive banking group was one of the key initiatives they took in order to keep pace with their long term customer goal(ICICI Bank). This transformation has enabled the bank to launch world-class CRM practices that provide a 360 degrees view of their customers to all concerned parties in the organization. CRM therefore is established as an overall business strategy at ICICI group of companies.

The CRM roadmap at ICICI Bank is mostly viewed in the technological aspect that integrates the bank's sales, marketing, customer service and support functions in order to automate and improve the business process of managing relationships with customers (Parvatiyar et al., 2001). This is called e-CRM and through this the organization aims to attain their objective of one-to-one marketing with their customers. ICICI bank and City Bank are considered the leaders for adopting these competitive strategies (Rao, 2011, pp.22). However, ICICI Bank UK (2012) has a relatively smaller customer base when compared to its parent company in India and worldwide. Also, the cost involved in implementing these world-class technologies through the renowned CRM vendor - Siebel CRM is very high compared to other CRM technologies and initiatives (ORACLE, 2012).

Significance of the Problem

While Customer Relationship Management is considered an important tool in the modern marketing context, between 30% and 75% CRM implementations have failed to produce expected results as clarified by Hershey (2012, pp.22). Considering the bank's huge investments made in this area of the management issue in order to remain competitive in the British banking sector, the researcher tries to explore if these CRM initiatives have produced good returns of investment for the bank. There have been several studies emphasised either on CRM or customer retention in the banking sector, however there has been less experimental research on the impacts or the importance of customer relatonship management for customer retention in British retail banking industry.The researcher therefore attempts to find how the CRM initiatives impact the bank to retain its customers and if there is a good return on investment on implementing these CRM initiatives. The research also examines this case from the consumer's perspective, understanding if the CRM initiatives taken by the bank to retain their profitable customers actually have an impact on the customers' satisfaction and loyalty in order for them to stay with the bank.

The problem or the outcome of the research to be analyzed by the researcher is of great emphasis to the retail banking sector in the UK and globally.  Looking from ICICI Bank's perspective it's important for them to strike a balance between acquiring new customers whilst retaining existing ones due to current economic conditions. Aggressive marketing and promotions on the part of the competitor banks have resulted in most customers happily switching loyalties to enjoy better privileges, thereby making the task of retaining them more difficult for ICICI Bank UK.

Thus, this research would demonstrate the pros and cons of Customer Relationship Management initiatives implemented by the bank and how it helps in retaining their customers.

Statement of Purpose

The main purpose of this research is to analyze if Customer Relationship Management initiatives or programs implemented by ICICI bank has an impact on customer retention. The researcher will explore documented research already conducted regarding CRM, customer retention programs and consumer behavioural aspects in relation to CRM in the private banking sector.

Primary research regarding the CRM at ICICI bank, their customer retention programs, and how the bank's profitable customers perceive these programs in order for them to stay loyal to the bank will be carried out in form of an interview with ICICI Bank London's CRM Manager and a customer questionnaire in order to explore the relationship between Customer Relationship Management and Customer Retention. Finally, recommendations will be suggested, based upon research findings, so as to help the organization improve its modern marketing functions in order to retain their profitable customers.

Statement of the Problem

This research aims at exploring how customer relationship management impact customer retention programs at ICICI bank UK. This research is carried out in order to analyze if the bank's huge investment on their CRM strategies are actually giving them good returns through the form of increased customer loyalty, satisfaction, and retention. Based on the above thought, the overall purpose of this research is to explore the more focused and deeper understanding of the objectives and strategies of CRM programs to the selected bank and the type of benefits that these initiatives anticipate to develop from the implementation of these CRM strategies.

Objectives

Critical review of relevant literature for Customer Relationship Management related to customer retention.

To identify key issues of Customer Relationship Management related to customer retention.

To investigate what consumer behavioural factors influence customer retention.

To find out the overall relationship between CRM, customer satisfaction, and customer retention.

To generate recommendations for improving a Customer Relationship Management culture at ICICI Bank UK.

Research Questions

What are ICICI Bank's general objectives of CRM implementation concerning customer's retention?

What types of Customer Relationship Management strategies are implemented by ICICI Bank at present to retain the customers?

What has been the impact of CRM on customer retention at ICICI Bank UK?

How does the bank measure the performance of CRM initiatives?

What challenges does ICICI Bank UK face in implementing its Customer Relationship activities?

What impact has the Bank's CRM programs made in the minds of its consumers to remain with the bank?

CHAPTER 2: LITERATURE REVIEW

"Our greatest asset is the customer; treat each customer as if they are the only one." - Laurice Leitao (Blokdijk, 2008, pp.21).

Introduction

The previous chapter presented the introduction to the research and focused on the background of the problem. This chapter therefore is focused on reviewing and exploring the theoretical knowledge available and relevant to the problem - the impacts of customer relationship management on customer retention at ICICI bank. The researcher will also look into the different models available in relation to customer relationship management, consumer buying behaviour and customer retention in this chapter.

Defining Customer Relationship Management (CRM)

Customer relationship management (CRM), also known as relationship marketing, has recently emerged as an integral marketing concept in the business world. In an attempt to reach and connect with customers in an environment highly saturated with products, advertisements, and promotions, businesses are implementing a customer relationship management component in their marketing schemes. CRM practices enable marketers to build long lasting relationships with consumers at the individual level through the use and management of a number of different programs and key components.

As a relatively new practice, the definition of customer relationship management has been debated by field experts and is ever evolving. In its inception, customer relationship management was narrowly defined as promotional marketing based on a customer database. Peppers and Rogers (2011) define CRM to be a complex process that builds one-to-one relationships with customers in order to achieve long term growth.

Relationship marketing extends past persuading customers to buy products; it is about fulfilling their expectations in the hope of transforming them into long term, loyal customers. Most experts can agree, however, that the central theme of CRM is carefully selecting the most valuable customers and maintaining and strengthening relationships with those customers for long term profit maximization. Parvatiyar et al. (2001) define CRM as a "comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer". It is a mutually beneficial relationship built upon a foundation of trust and loyalty through marketing, customer service, and relationship programs.

The paradigm shift from focusing on attracting new customers to retaining current ones is at the backbone of CRM. Reichheld's studies revealed that small increases in customer retention rates greatly increased profits, proving that long term customers can be more valuable (1996). More revenue on average is generated from repeat-purchase customers when compared to one time buyers. With potential profit maximization in mind, businesses are turning to customer relationship management in order to better understand customers.

Given the different definitions, there has been many misconceptions formed in peoples mind about CRM and thus, in this section, the researcher will present the various misconceptions and different views and definitions formed from several authors' and management gurus' about their perspectives of CRM and how it differs accordingly.

CRM has been defined in many ways by many authors. The two common factors most of these definitions cover are - the relationships and Information Technology factor. CRM according to Brown (2000, pp.36) is a set of technical and organisational mechanisms that is intended to defend the everchanging instable market conditions with gaining knowledge about environmental variables, in order to anticipate customer needs and act accordingly.

A less complicated definition was expressed by Rajola (2003, p.63) who defined CRM as an overall business strategy that aims to understand the needs of existing customers and gain new protential leads to the organisation and all the above misconceptions play a role in the process of doing so. Another complete definition is that CRM is a complete approach that provides flawless integration to every area of the business which faces the customer - through marketing, sales, customer services and support services of the organisation - whilst integrating the people, process and technology factors of the organisation, taking advantage of the revolutionary impact of the internet to support.

It basically an organisation's relationship with the customer that is mutually beneficial to both the customer and the organisation (Lancaster and Reynolds, 2004). In summary of these definitions, CRM, as the name suggests, consists of three main components: 1.customer, 2.relationships, and 3.management as illustrated in figure 1 (Byun and Paul, 2001, pp.20).

Customer

CRM

Relationship Management

Figure 2.1: Components of CRM (Byun and Paul, 2001)

Objectives and Benefits of CRM

This section reviews the different views of theoretical knowledge available about the objectives - the aims and goals of CRM. According to Walton and Xu (2005) the main aim of CRM is to make the business process more easier and this was later agreed by Charantimath (2011, pp.44) who stated it in a marketing and sales context: stating that a principle goal of CRM initiative is to simplify the marketing and sales process of an organisation. The other goals of CRM as recognised by Walton and Xu (2005, pp.99) are the efficiency in terms of collecting data/information and analysing them in order to track consumer behaviour patterns, and it's mainly aimed at automating the most of the sales and marketing process. According to Mukerjee (2007, pp.87), the CRM objectives of companies differ from one another because of the differences in their strategic stance and vison and these factors also controls the CRM strategy formulation process. However he listed a few general CRM objectives as follows:

Increasing the effectivetyof cross-selling and up-selling activities of extisting customers in the organisation and better segmenting of customers which enables the organisation to focus on individuialistic lifecycles of customers (Mukerjee, 2007).

Many authors and CRM guru's agree to these given objectives. However the collaboration of Newby et al. (2007) has come up with further specific aims stating that one of the main goals of CRM is to understand the trends of the customers and to try to forecast future demand conditions. The trio has also stated that CRM therefore aims at providing superior services to the organisation's customers, better than their competitors hence aiming at competitive advantage through CRM.

The above definitions and a survey conducted by (Byun and Paul, 2001) suggest that the main objective of managing customer relationship is to satisfy existing customers and to enable an organization to retain them which will be discussed later in this chapter. The financial impacts of customer retention as discussed by Reichheld and Sasser (1990) are that retaining a customer is less expensive than aquiring one as it involves additional costs for advertising, promotion and starting up expenses. Also according to them new customers are less profitable in the early stages whereas companies can gain more profitability from existing customers through cross-selling other products and word-of-mouth.

Byun and Paul (2001, pp.22)has illustrated and summarised the benefits of CRM ina diagram. The summarized diagram of CRM benefits is illustrated in figure 2 and according to that there are benefits related to all four CRM strategicinitiatives: 1. customer identification, 2. customer differenciation, 3. Customer interaction, and 4. Customization. According to them identifying the customer needs and wants via the respective marketing channels is a crucial factor in CRM initiatives, this benefits the organisation's slaes force to cater to the right customer at the right time and place and enables to view the customers as individuals.

Then comes customer differenciation, where the organisation views and understand customers' individuality thus giving them a lifetime value. This strategy reduces the cost involved in the advertising process which can be counted as beneficial to the organisation. Customer interaction can be considered the main objective of CRM and this enables the organisation to keep track of consumers' behaviour and needs over time.

This is therefore a systematic and continuos process that helps the organisation to provide cost effective customer service to their customers. Another major objective of CRM is to provide personalisation ofservices to their customers by treating their customers uniquely catering to their individual needs and if done correctly, the organisation can gain customer loyalty through this initiative(Amofah and Ijaz, 2005)

Identification

Differenciation

Interaction

Customization

Source of benefits

Clean data about customer

Single customer view

Understand customer

Customer satisfaction and loyalty

Customer satisfaction and loyalty.

Benefits

Help sales force

Cross selling

Cost effective marketing campaign

Reduce direct mailing cost

Cost effective customer service

Lower cost of acquistion and retention of customer.

Table 1.1: Benefits of CRM initatives (Byun and Paul, 2001).

CRM Strategies

The general concept of strategy has been defined by Johnson and Scholes (1993, pp.852) as the direction or scope of an organization in the long term (Gillies and Robin, 2002). In this context, the word 'strategy' means, actions and task that are undertaken to achieve the above discussed objectives of CRM. As the researcher reviewed in the above section, the benefits of CRM in an organisation are massive, given that they are implemented effectively, followed by a proper and systematic strategy that suits the organisational objectives. According to Mukerjee (2007) the success of CRM strategies depends on the organisation's ability to integrate their technology, people, process and knowledge right according to their vision and objectives. The same has been illustrated below in figure 2 by Ajami et al. (2008).

Figure 2.2: The design of integrated CRM (Ajami et al., 2008)

According to Gartner (2001, pp.33), a well known CRM pioneer, there are eight building blocks for CRM strategy as demonstrated in figure 3. According to this figure the CRM strategy of a business consist of the objectives, segmentation of CRM factors and effective interaction. The segmentation of CRM factors and effective interaction are two key important strategies of CRM.Hence the objectives have been discussed in the above section, the researcher now will discuss the contrsting theories related to CRM segmentation and effective interaction.

Figure 3: Eight Building Blocks of CRM - A framework for success(Gartner, 2001)

As discussed above in table 1, the CRM initiatives - customer identification, differentiation, interaction and customization are enabled due to the segmentation process (Byun and Paul, 2001). Collica (2007) has further stated that there are types of segmentation involved:

1. Customer profiling is done in order to understand and predetermine the who, what, when ,where, and why factors of the customer base.

2. Customer likeliness clustering is another type of segmentation that is aimed at identifying the similarities of the different business clusters available in an organisation.

3. Purchase affinity clustering is aimed at identifying the product purchase categories and patterns of customers within a certain time period.

Effective customer interaction is another CRM strategy in marketing oriented organisations in today's 'context. According to Peelen (2005), the main types of interactions points are: media - radio or tv, website, e-mail, telephone and personal sales. These mentioned interactions are called customer 'touchpoints' because they are the points where the customers come in contact with the organisation and these touchpoints varies according to different organisations (Chen and Popovich, 2003). Hence, the CRM strategy aims to link all organisation's departments together in order for the customer tocuhpoints to be more effective.

According to the generic strategy sourced by Peelen (2005) illustrated in figure 4, the strategy that implies to CRM is the defensive strategy is focused on retaining the current customers through increased customer satisfaction and building switching barriers.

Figure 4: Generic strategy (Peelen, 2005)

The three levels of retention strategies as illustrated in table 5 was developed by Berry & Parasuraman (1991, 20) to understand and differenciate the categories of customer retention. According to this table there are three types customer bonds that arises due to the customization and differenciation of the three levels of customer retention strategies.

At level 1: The economic incentives provided to the customers by the firm are the key determinants for the customer to retain to the company. These financial incentives are mainly price discounts offeref for volume purchase. However Iacobucci & Swartz (2000) states that these price based strategies are easily imitable by competitors and thus is not considered a long term strategy.

Level 2: At this stage the focus turns into a social bond whilst maintaining the financial aspect. Here the customer becomes a client and therefore are identified and treated as individuals. Examples of creating social bonds are by staying in regular touch with the customers, remembering their special ocassions, sharing personal information (Lacobucci & Swartz, 2000, p.10).

Level 3: These strategies are hard to imitiation. The focus of this level is about developing structural, social and financial bonds with the customers (Lacobucci & Swartz, 2000, p.33).

Table 5: The three levels of retention strategies (Berry & Parasuraman, 1991).

Other relevant customer retention strategies listed by Mascareigne (2009) are frequently monitoring customer relationships, use of loyalty programmes, customer clubs, and recovery strategies.

Measuring CRM Performance

As discussed in above sections, the performance of CRM is a part of the organisation that can only be measured in relation to overall business performance in an organisation and thus plays a vital role in the effectiveness of an organisation's process (Payne, 2005). It is therefore important to measure the performance of the CRM process in order to check effectiveness and look for opportunities to improve in the future (Curry and Kkolou, 2004) Also, according to Payne (2005) the Critical Success Factors (CSFs) for CRM are dependent on the people, implementation of customer centric practices and proper measurements elements. He also stated that the below criteria when measuring the ROI (Return on investment) of CRM performance:

Positive changes in overall organisational performance help to measure the implemented CRM performances. However the author has also stated that this is a very difficult task to separate the ROI of CRM initiatives from the company's' other strategy implementations.

Payne (2005) also states that improvement on customer service in an organisation, enhancing customer satisfaction, and retention is a good measurement of the performance of CRM strategies.

And ROI of CRM can be measured when the CRM applications are directly linked to the customer metrics. (Payne, 2005).

The success of the CRM initiative can mainly be measured by the consistency and changes of behaviour of organisations customers, but according to Greenberg (2004) it is a difficult task to measure these changes according to theintangible aspect like feelings and opinions but still identifible and powerful factors nonetheless. Greenberg (2004) has narrowed downCRM performacemetrics into three different categories: customer, performance and diagnostic metrics (Greenberg, 2004).

The CRM Balance Score Card is defined by Berndt and Brink (2008) as the management tool that consist intergrated performance measures, linking the existing customers, employees, current processes and systems to include the financial measures gained from the CRM actions implemented. Greenberg (2004) has also discussed the many number of CRM scrorecards available at present and according to him, all these scorecards have one common factor - the final outcome needs to be presented in numbers to the stakeholders of the organisation.

Al-Mudimigh (2009), has come up with a sample illustation of a CRM Balance Scorecard for Saudi banks. It is presented in figure 5 in appendix 3.

CRM obstacles

Greenberg (2004) suggested possible failures of CRM. According to him, CRM initiatives are more likely to fail or be uneffective due to more common factors:

No clear strategy in the organisation.

No measurable objectives to set standards.

No proper knowledge about the CRM technologies

Implementing software without organisational alignment.

The process is not systematical.

Failures to adapt changes according to cultural factors.

Failure to undertstand the real benefits of CRM initiatives.

Assumption of customer needs without consulting them.

Kincaid (2003) has emphasised on three main factors for failure of CRM implementaion. Thus the author places great emphasisis on the interal failures, cultural barriers and internet created infrastructure barriers as below:

Unrealistic Expectations: Kincaid (2003) considers this one of the most harmful barriers to building relationships with customers. Many companies pay large amounts of money for CRM software and expect it alone to create customer loyalty. According to the author creating customer loyalty demands focus, effort and patience, and simply investing on the software and yielding it to produce results are unrealistic.

Cultural Barriers: Companies operate in various culture, some companies are product-cantered whereas some are customer-cantered. These different cultures require different operating styles for their CRM initiatives to be successful.

Systems Infrastructure failures: These systems evolve rapidly and sometimes it is difficult to keep in pace with the ever changing technology. Outdated and unsystematic infrastructure is another obstacle for CRM initiatives.

Consumer Behaviour

Consumer behaviour as defined by Hoyer and Macinnis (2008) is the study about consumers' buying patterns that lead to acquisition, consumption and disposition of goods and services offered by an organisation over time. The key elements higlighted by the authors in relation to consumer behaviour are goods, services, activities, experiences, people, and ideas. Hoyer and Macinnis (2008) also stresses on the fact that understanding consumers' emotions also plays a key role in this proocess. As discussed in the above sections and according to Blythe (2008) understanding how consumers' behave is critical in implementing effective CRM strategies that enables an organisation to maintain a long-term relationship with their customers rather than focusing on a single transaction. The differences between single transaction approach and relationship approach are presented in table 4 below:

Table 4: Transactional Marketing Vs Relationship Marketing (Payne, 1994).

Customer life cycle

Another important consumer behavioural factor an organisation needs to be aware for establishing an effective CRM concept is the customer life cycle. This according to Kincaid (2003) is the customers' perception of their relationship with the company over time. Kincaid (2003) strongly emphasises that it is not the customer life cycle in the eyes of the company, but how the customer experiences with the company from their point of view. It is beneficial for a companys point of view to be aware of and track the customer life cycle in order to segment their customers more effectively as the customers at these different phases have different requirements (Mukerjee, 2007). Also according to him, CRM plays a key role in these phases in order to enhance customer satifaction, thus improving the lifetime value of the customer (Mukerjee, 2007). According to Blattberg (2004), there are five stages in a standardised customer life cycle: 1. Prospects, 2. First time buyers, 3. Early repeat buyers, 4. Core Customers, and 5. Core Defectors. The characteristics of these five stages are illustated in figure 5.

-Potential Customers

-Consumer develops an initial set of expectations about the product or service.

-If the product or service meets these expectations, the consumer will go ahead.

Prospects

-Newly acquired and lowest retention rate.

-Consumer still in evaluation stage.

First Time Buyers

-Repeat purchase.

-More likely to buy again than the first time buyers.

- The company gains confidence of the buyer.

- Still evaluating relationship with the company.

Early Repeat Buyers

-Repeat purchases regularly.

-Firm's offerings meet their specifications and expected value and less sensitive to price.

-Highest retention rates and rarely re-evaluate.

Core Customers

-Switch at a certain point due to:

1. Competition offerings, 2. customer service problems, or 3.boredom.

-

Core Defectors

Figure 5: Five Stages of Customer Life-Cycle adapted by Blattberg (2004)

This illustrate customer lifecycle, the best example would be the banking sector. Banks provide a number of services. From savings and current accounts, student and mortgage loans to insurance and pension plans, banks always try to retain customers. An individual opts for a student loan when in college, a pension plan during his flourishing career and savings plan for his or her children after starting a family. This is how a bank retains customers by offering different customer servicing options throughout the person's life-a good example of customer lifecycle.

Market Segmentation

Shajahan et al. (2004) explain segmentation as the way of catergorising the customers according to their behaviour patterns in the market. There are four types of segmentation: analytical, response, strategic and delivered loyalty segmentation. Analytical segmentation is when the company analyses their customers and categorise them into different groups depending on their characteristics. For response segmentation the company identifies different groups in order to get a desired response or for other drives. Whereas, strategic segmentation is when a company groups a part of their customers who needs to be handled in a special manner. The final type of segmentation, the delivered loyalty segmentation is a branch of strategic segmentation.

The critical or VIP customers of the organisation is identified here (Shajahan, 2004). However, market segmentation, once a key marketing concept, according to Berndt and Brink (2008) is not operated effectively in today's business and therefore needs to go through a paradigm shift to survive in todays context.

Customer Satisfaction

Customer satisfaction has been defined by Sugandhi (2003) as the summary of customers' opinion about the services offered by the service provider. As identified above, the customer remains at the 'core customer' stage when their satisfaction levels match their expectations. However, Srinivasan (2004) portrays that factors that influnce customer satisfaction cannot be easily attained and they differ according to organisational benchmarked standards set.

Understanding customer satisfaction is a crucial aspect in any organsiation as it leads to repeat purchase, loyalty, positive word- of -mouth and increases customer retention leading to more profitability without the cost of acquistition which is higher than retaining a customer (Wirtz, 2003). It is therefore crucial for a company to measure their customers' satisfaction levels. A very famous model for measuring customer satisfaction is the Kano model that is named after Professor Noriaki Kano ( Ajami et al., 2008). According to the trio, this model is based on the idea of finding the difference between customer standards and company performance. The customer standards here are categorised into three standards: basic, performance and thrill. This model is illustrated in figure 6.

Basic Standards

Thrill Standards

Performance Standards

Figure 6: Adapted by Kano's Customer Satisfaction Model (Berger et al., 2008, cited in, Ajami et al., 2008).

Relevance of customer retention

According to Barker et al. (2002) increasing customer loyalty and retention are the two leading factors that drives and maximises customer profitability. Blattberg et al. (2001) states that giving a complete definition to customer retention is a sophisticated task unlike for acquisition. However, they have mentioned what leads to customer retention. Customer retention is when the customer repeatedly purchases a good or service over a specified period of time (Blattberg et al., 2001) The complication here is that some products or services needs not to be purchased more frequently and thus it is difficult the measure customer retention solely on repeat purchasing (Barker et al., 2002).

The financial impacts of customer retention as discussed by Reichheld and Sasser (1990) are that retaining a customer is less expensive than aquiring one as it involves additional costs for advertising, promotion and starting up expenses. Also according to them new customers are less profitable in the early stages whereas companies can gain more profitability from existing customers through cross-selling other products and word-of-mouth. Hennig-Thurau and Hansen (2000) has also mentioned that a customer lost due to unsatisfaction is a gain to the competitor therefore in todays conpetitive markets, customer retention plays a key role in identifying the profit role of an organisation.

Factors affecting customer retention

Many CRM books have identified customer satisfaction as the key driver for customer retention. However, according to Blattberg et al. (2001), there is a non linear relationship between customer retention and customer satisfaction, but customer dissatisfaction effects customer retention directly. They have also identified and listed other determinants of customer retention as below:

Service Quality - According to them if customer expectations are not met or if its too high, it is highly unlikely that a customer will repeat- purchase. Thus is is important for organisations to find the gap between their delivered quality of a product or service and customer expectations.

Uniqueness of the product and perceived value - It is also identified that when the offering of the company is unique it is difficult to substitute that so the retention rate is high for companies offering unique products.

Loyalty Mechanisms - The authors emphasise on the fact that effective loyalty mechanisms can increase customer retention rates irrespective of the fact competitors offering identical products.

Customer Service - It is a proven fact that customer service plays a key role in customer repeating purchase.

Barriers to exit - According to the trio, when there are more barriers to exist, the customer tends to stick to the company thereby increasing ccustomer retention rate (Blattberg et al., 2001).

Many authors like Patterson and Sharma (1999) and Prabhu and Ranaweera (2003) have agreed to the above mentioned factors in their journal articles in relation to customer retention. Adding to that another important factor influencing customer retention as discussed by Patterson and Sharma (1999) are customer trust and effective communication with the customer. Patterson and Sharma (1999) have illustrated these two factors in their relationship commitment model as presented in figure 7.

Figure 7: Relationship Commitment Model (Sharma and Patterson, 1999)

CHAPTER 3: RESEARCH METHODOLOGY

The purpose of this chapter is to describe the research methodology. The methodology refers to the procedural framework within which the research is conducted. This chapter will present how the current study was designed and providing a clear description of the specific steps that were taken to address the research problem and test each of the five hypothesis laid out in chapter one. First, the research design will be discussed followed by population, sample, research sitting, questionnaire design, statistical data analysis content validity, pilot testing and the ethical aspect of the research.

Study Design

The researcher followed the descriptive analytical approach in conducting the research. This research is categorized under applied researches that depend mainly on data collection from primary sources through distributing designed questionnaire for research purposes.

The data was collected by distributing a questionnaire on the target population (Customers of ICICI Bank).

The cover letter that accompanied the questionnaires presents a definition of CRM and its use in order to minimize the misunderstanding amongst the responders.

The researcher used secondary sources such as Business journals, books, previous research papers and business letters that are related to the research topic.

Statistical analysis carried out on the questionnaire. Frequencies and percentages were calculated in the model along with accuracy conditions.

The statistical analysis results were examined and the final research conclusion and recommendation were formulated based upon.

At the end of the research the researcher suggests further studies.

Population and sample

The study population consists of customers with household subscriptions representing 90% of the total registered customers. The governmental and institutional subscriptions have been removed out of the sample population range because these institutes follow certain policy procedures and the personals in charge in Rafah city has no effect regarding paying the water bills to the customers. The total number of the registered customers is 15,272 which represent the research population. The researcher classified the customers according to their areas, and the sample was selected from the area with largest customer numbers in order to ensure the randomness and the diversification of the customers.

Moreover, and after reviewing customers' bill paying behaviour in different areas, the figures showed similar behaviour for the customers in this regards. Adding to that, the sharing mentality and social behaviour among residents support the sample representativeness in order to fulfil the purpose of the study. Basically, the customers in the selected areas were categorized according to their bill paying behaviours as seen below:

Committed customers (CC): customers pay the bills on monthly basis.

Committed customers (PCC): Customers pay the bills every 2-5 months.

Uncommitted customers (UCC): Customers don't pay the bills or pay the bills in more than 6 months.

Questionnaire Design and Preparation

The questionnaire consisted of two sections; the first section was concerned with personal traits (age, educational attainment, monthly income, how and where the customer pays the bills, investigating whether the customer visited the CMWU customer services offices and web site or not). The second section focused on the four objectives of the study: The adoption of CRM concept in CMWU has positive effect on customers:

Satisfaction,

Acquisition,

Retention

and finally,

Decrease customer loss, at 5% level of significant.

The questionnaire was drawn in English in order to be understood by the entire sample. The questions were arranged in logical order and proper sequencing starting with personal data and ending with suggestions.

The questionnaire which was distributed to the CC contained the attributes related to satisfaction, retention and decreasing customer loss only, hence the customers already acquire this group.

The questionnaire which was distributed to the PCC contained the attributes related to satisfaction, acquisition, retention and decreasing customer loss. This group is similar to the CC group, the only difference is that the customers did not acquire them totally. So, there is a need to study the acquisition objective for this group.

The questionnaire which was distributed to the UCC contained the attributes related to satisfaction, and acquisition only, hence it's not reasonable to study the retention and decreasing the customer loss with the customers that customers did not acquire yet.

Data Collection

The data collection phase was performed under the direct supervision of the researcher. Workshop was conducted for the employees in the customer services department of ICICI branch, to explain the purposes of the questionnaire and its objectives, how to distribute the questionnaire, and how to encourage the customers to fill in the required data. The employees (volunteers) distributed and collected the questionnaires. It was noticed that there was no duplication occurred because of the distribution phase, as it was performed according to prepared customers list and officially reviewed database produced for this purpose.

Ethical Matter

The study and the questionnaire purpose were printed in the water bills remarks section for the period pertaining the distribution of the questionnaires. The customers' services employees visited the selected customers in appropriate time and kindly encouraged the customers to fill in the questionnaire.

Data Coding and Entry

Questionnaires were coded numerically in different numbers from serial numbers to enable the researcher to enter the data systematically and efficiently and to maintain no missing questionnaires. Data were entered using SPSS (the Statistical Package for Social Science) An expert statistician was consulted for guidance. Data screening was performed through frequency to assure check for any error.

Data Measurement

In order to be able to select the appropriate method of analysis, the level of measurement must be understood, for each type of measurement, there is/are an appropriate method/s that can be applied and not others. In this research, ordinal scales were used. Ordinal scale is a ranking or a rating data that normally uses integers in ascending or descending order. The numbers assigned to the important (1, 2, 3, 4, and 5) do not indicate that the interval between scales are equal, nor do they indicate absolute quantities. They are merely numerical labels. Based on Likert scale the following is illustrated:

Statistical analysis Tools

The researcher used data analysis both qualitative and quantitative data analysis methods. The Data analysis was made utilizing (SPSS 16) The researcher utilized the following statistical tools:

Cronbach's Alpha for Reliability Statistics

Spearman Rank correlation for Validity

Frequency and Descriptive analysis

Reliability of the Research

The reliability of an instrument is the degree of consistency which measures the attribute; it is supposed to be measuring (Polit and Hunger, 1985). The less variation an instrument produces in repeated measurements of an attribute, the higher its reliability.

Reliability can be equated with the stability, consistency, or dependability of a measuring tool. The test is repeated to the same sample of people on two occasions and then compares the scores obtained by computing a reliability coefficient Cronbach's Coefficient Alpha. This method is used to measure the reliability of the questionnaire between each field and the mean of the whole fields of the questionnaire. The normal range of Cronbach's coefficient alpha value between 0.0 and + 1.0, and the higher values reflects a higher degree of internal consistency. The Cronbach's coefficient alpha was calculated for each field of the questionnaire.

Split Half Method

This method measures the relationship between the odd and even paragraphs.

Internal Validity

The researcher assessed the fields' internal validity by calculating the correlation coefficients between each paragraph in one field and the whole filed. Data clarifies the correlation coefficient for each Paragraph of the "?" and the total of the field. The p-values (Sig.) are less than 0.05, so the correlation coefficients of this field are significant at α = 0.05, so it can be said that the paragraphs of this field are consistent and valid to be measure what it was set for.

Research Philosophy

Saunders et al., (2007, pp.33) refer the term research philosophy to the development of knowledge in a particular field in the quest of answering a specific problem. The research philosophy the researcher adopts in the research has very much to do in the way the researcher views the world and other practical considerations according to the research questions the researcher chooses to answer. However, according to the research questions the researcher seeks to answer she believes that the research philosophy is a blend between positivist and interpretive philosophies.

Research Approach

The research will follow a deductive approach as it involves the development of general theory which is then intended to be tested through data collection and rigorously tested. The important characteristics of deduction method such as operationalization of concepts, principle of reductionism and generalization will hence be followed (Lewis et al, 2007, pp.20) However, the researcher anticipates using both not only quantitative methods but qualitative techniques for collection of data.

The research will be more focused on qualitative data collection methods as this is important to conduct interviews in order to conceptualize theory into data but the gathered information cannot be resultant of numbers and needs to be in line with the theory and what the interviewees have to say. However these answers need to be verified using quantitative methods for more accurate finding as the interviews are conducted with human and not all have same perceptions.

CHAPTER 4: FINDING AND DATA ANALYSIS

The previous chapter established on introducing and justifying a suitable research methodology in order to answer the research problem and questions as proposed by the review of literature in customer relationship management in Chapter 2. This chapter offers an experiential analysis that unfolds the answers to the research questions raised in Chapter 1. The case study nature of this research therefore limits this analysis to the selected bank, ICICI Bank, London, in order to analyse the impacts of customer relationship management for customer retention in the Bank.

This chapter therefore discusses the interconnection between the bank's customer relationship management strategies and target consumer behaviour using various statistical and analytical methods. As discussed above, a mixed research approach was used to collect data for research in the forms of self-completion questionnaire to the bank's existing customers for quantitative data and a semi-structured interview with the Customer Relationship Manager at the ICICI bank, London for qualitative data collection. In section 1 of this chapter, the researcher emphasises on the findings and data analysis of the interview conducted with the Customer Relationship Manager of the ICICI Bank, London. Then, Section 2 tries to answer the final but most important question of the research with the support of the customer questionnaire findings.

CRM Objectives

5

4

3

2

1

Increase Customer Satisfaction

Enhance Customer Loyalty

Increase Customer Retention

Efficiency in collecting information

Understanding Customer Needs

Meet Customer Needs

Cross Selling

Forecasting future trends

Automation of sales and marketing

The responses are graded: 5-very important, 4-important, 3-Niether important or irrelevant, 2- less important, 1-irrelevent.

Table: CRM objectives relevance ICICI Bank

According to the ICICI bank manager all the above objectives and benefits of CRM go hand in hand and thus the bank's main focus is on customers rather than on operations as represented by customer intimacy so he feels it is really important to the manager of the relationships with their customers. Sales, marketing and customer service are just three of the functions that operate within the CRM framework, simultaneously drawing information from the customer database to facilitate interactions and also feeding new details gleaned from the contact back into the system - whether this is feedback or buying behaviour of customers.

The CRM strategies or initiatives of ICICI Bank UK (2012) are therefore interconnected with these objectives and benefits mentioned. These strategies also changes according to their customer base and since the UK customer base for retention is comparatively small than other regions, the CRM initiatives.

What has been the impact of Customer Relationship Management on customer retention at ICICI Bank UK?

ICICI bank has a systematic and coordinated CRM process as illustrated below:

Understand and differentiate: This is the first step of the process and this is considered important in order to maintain relationships with customers. The differentiation is then segmented according to demographics, purchase patterns, and channel preferences. The profitability of the customer and customer life time value is also identified here.

Develop and customise: The bank is always focusing on developing and customising service channels to meet customer needs.

Interact and deliver: ICICI Bank ensures that that the customer touch points of interaction adds value to the customer thereby giving easy access to the customers to receive and give customer information and feedback.

What impact has the Bank's CRM programs made in the minds of its consumers to remain with the bank?

The customer questionnaire (as shown in appendix 1) was categorised into three sections.

Section A

A total of 60 self-completion questionnaires were distributed. 40 questionnaires were distributed at ICICI Bank Knightsbridge and Harrow branches and the remaining were e-mailed to 20 existing customers as selected from the ICICI bank's database who have acknowledged their desire to partake in surveys conducted by the bank. A total of 50 completed questionnaires were received corresponding to a respondent rate of 83% which was then analysed using the SPSS software. These data are presented in the figures below:

Figure: Gender of respondents

Figure: Age of respondents

From the sample chosen for the survey, 70% respondents were male and 30% respondents were female.

As shown in figure, majority (50%) of respondents were between 20-30 age groups.

The respondents as shown in the figure belonged to different age group, 50% respondents belonged to age group 20-30 years and 22% respondents belonged ot the age group 31-40. Furthermore, 15% respondents belonged to the age group 41-50 abd 5% respondents were 51 and above. In addition, 3% respondents belonged to the under 20 age group.

Figure: Occupation of respondents

The occupation of the respondents as shown in the graph represents that 90% respondents were employed and 6% respondents were unemployed. In addition, 4% respondents were retired.

The respondent's annual income as shown in the graph represents that 30% respondents had annual income less than £10000. Furthermore, 40% respondent's annual income was £10000-20000. In addition, 30% respondents annual income was £20000 and over.

As shown in the figure 60% respondents answered they had more than one bank account and 40% respondents answered no.

When the respondents were asked about ht bank they use for day to day transactions, 25% respondents answered they had bank account in Lloyds TSB and 15% respondents answered they have a bank account in Barclays bank. Furthermore, 15% respondents answered they had a bank account in NatWest bank and 5% respondents answered they had bank account in ICICI Bank. In addition, 20% respondents answered they had a bank account in HSBC and 20% respondents had bank account in Santander Bank.

When the respondents were asked about the type of account they have Introduction he bank, 30% respondents answered they have a personal account and 45% respondents answered they have a business account. In addition, 25% respondents answered they have a corporate account.

When the respondents were asked about he time duration they have been in the bank, 25% respondents answered they have been with the bank less than 1 year. Furthermore, 30% respondents answered they have been with the bank for 1-2 years. In addition, 20% respondents answered they have been with the bank for 2-3years and 25% respondents answered they have been with the bank for 3 and more than 3 years.

What is your overall satisfaction rating with your bank?

Frequency

Percent

Valid Percent

Valid

Highly Satisfied

32

32.00

32.00

Satisfied

48

48.00

48.00

Neutral

10

10.00

10.00

Dissatisfied

5

5.00

5.00

Highly Dissatisfied

5

5.00

5.00

Total

100

100.0

100.0

When the respondents were asked about their overall satisfaction with the bank, 32% respondents answered they are highly satisfied with the bank and 48% respondents answered they are satisfied. Furthermore, 10% respondents were neutral and 5% were dissatisfied and 5% were highly dissatisfied.

When the respondents were asked about the duration they have been with the bank, 20% respondents answered they have been with the bank for less than 1 year and 15% respondents answered they have been with the bank for 1-2years. Furthermore, 30% respondents answered they have been with the bank for 2-3years in addition, 35% respondents answered they have been with the bank for 3 years and more.

When the respondents were asked about the factors that influence their long-term relationship with the bank in relation to core banking requirements being fulfilled, 30% respondents answered that core banking requirements are being fulfilled to the most priority and 50% respondents answered their requirements are fulfilled and 10% respondents answered with level 3 and 5% respdoents answered with level 4.

When the respondents were asked about the factors that influence their long-term relationship with the bank for excellent customer service, 25% respondents answered that excellent customer service is being provided to the most priority and 55% respondents answered good customer service is being provided and 5% respondents answered with level 3 and 10% respondents answered with level 4 and 5% respondents with level 5.

When the respondents were asked about the factors that influence their long-term relationship factor as customization of services to cater individuality of banker, 15% respondents answered customization of services are catered individuality of banker to the most priority and 70% respondents answered good customer service is being provided and 10% respondents answered with level 3 and 5% respondents answered with point 4

When the respondents were asked about the factors that influence their long-term relationship factor as reward programs, 30% respondents answered reward programs to the most priority and 50% respondents answered reward programs influence their long-term relationship factor and 15% respondents answered with point 3 and 5% respondents answered with level 4.

When the respondents were asked about the factors that influence their long-term relationship factor as good loyalty schemes, 20% respondents answered good loyalty schemes to the most priority and 60% respondents answered good loyalty schemes influence their long-term relationship factor and 10% respondents answered with point 3 and 5% respondents answered with level 4 and 5% respondents ticked point 5.

When the respondents were asked about the factors that influence their long-term relationship factor as building community, 55% respondents answered building community are the most prior and 35% respondents answered building community influence their long-term relationship factor and 5% respondents answered with point 3 and 5% respondents answered with level 4 and 5% respondents ticked point 5.

When the respondents were asked about rate the bank in relation to listening customer needs, 20% respondents ranked very good to the bank for listening customer needs and 55% respondents ranked good to the bank for listening customer needs and 10% respondents ranked neither good not bad and 5% respondents ranked bad and 5% respondents answered very bad.

When the respondents were asked about rate the bank in relation to convenient branch location, 25% respondents ranked very good to convenient branch location and 65% respondents ranked good to the convenient branch location and 5% respondents ranked neither good not bad and 5% respondents ranked bad.

When the respondents were asked to rate the bank in relation to helpful banking hours, 50% respondents ranked "very good", 40% respondents ranked good and 10% respondents ranked "neither good nor bad" and 5% respondents ranked bad.

When the respondents were asked about rate the bank in relation to accuracy of banking hours, 45% respondents ranked "very good", 40% respondents ranked good and 5% respondents ranked neither good nor bad and 5% respondents ranked bad.

When the respondents were asked about rate the bank in relation to customization of marketing service and products, 35% respondents ranked very good and 60% respondents ranked good and 5% respondents ranked neither good nor bad.

When the respondents were asked about rate the bank in relation to customer service relationship with staff and efficiency in handling complaints, 50% respondents ranked very good and 40% respondents ranked good and 5% respondents ranked neither good nor bad.

When the respondents were asked about rate the bank in relation to effort to keep customer informed of new products, 40% respondents ranked very good and 35% respondents ranked good and 15% respondents ranked neither good not bad. In addition, 5% respondents ranked bad and 5% respondents ranked very bad.

When the respondents were asked about rate the bank in relation to responsive changing needs of customers, 60% respondents ranked "very good" and 40% respondents ranked good and 5% respondents ranked neither good nor bad. In addition, 5% respondents ranked bad.

When the respondents were asked about rate the bank in relation to offering rewards and benefits, 55% respondents ranked "very good" and 45% respondents ranked good.

When the respondents were asked about rate the bank in relation to banks reputation, 50% respondents ranked "very good", 40% respondents ranked good and 10% respondents ranked neither good nor bad.

When the respondents were asked if they would recommend the bank to their family and friends, 55% respondents answered yes and 45% respondents answered no.

When the respondents were asked if they would considering switching to another bank, 20% respondents answered yes and 80% respondents answered no.

When the respondents were asked about the factors which restrain them from switching to another bank, 50% respondents answered bank provi