Customer Relationship Management (CRM) Best Practices and Customer Loyalty A Study of Indian Retail Banking Sector Kallol Das School of Management, International Institute of Information Technology, P-14 Rajiv Gandhi Infotech Park, Hinjawadi, Pune, Maharashtra, India E-mail: firstname.lastname@example.org Jitesh Parmar Shrimad Rajchandra Institute of Management & Computer Application Gopal Vidyanagar, Bardoli Mahuva Road, Dist. Surat, Gujarat, India E-mail: email@example.com Vijay Kumar Sadanand Bhoj Reddy Engineering College for Women Hyderabad Vinay Nagar Saidabad, Hyderabad - 500059 Andhra Pradesh, India E-mail: firstname.lastname@example.org Abstract The current study explores the association between deployment of customer relationship management (CRM) best practices and loyalty of profitable customers in Indian retail banking sector. The study comprises two parts. The first part called the CRM best practices survey involves the use of descriptive research design. The second part viz. case study research involves the use of embedded customer loyalty survey. The hypothesis testing based on literal and theoretical replication is done using the concept of pattern matching. The findings reveal that there is no perfect bank, as yet, across the three bank types, which has deployed all the 29 CRM best practices to the fullest extent. The results of literal and theoretical replication done by using pattern matching technique indicates no strong association between deployment of CRM best practices in scheduled commercial banks and loyalty levels of both high and medium relationship value retail customers. The study develops a list of 29 CRM best practices, which may be helpful to the organizations toward achieving comprehensive CRM deployment. The results also imply that going for CRM deployment may not be a profitable strategy for retail banks, particularly in the Indian context.
Keywords: Customer relationship management (CRM), customer loyalty, best practices, retail banking, India
The current study explores the association between deployment of customer relationship management (CRM) best practices and loyalty of profitable customers in scheduled commercial banks of India with respect to retail banking segment. This is important because a strong positive association will act as a significant motivator to organizations for making larger investments towards deployment of CRM best 61
European Journal of Social Sciences – Volume 11, Number 1 (2009) practices. On the other hand, a weak association will fail to provide necessary encouragement to the same organizations for CRM deployment. The paper begins with an introduction to Indian banking industry and delineates the scope of the study. It is followed by a literature review on CRM best practices as well as customer loyalty. The methodology used is discussed in detail followed by the findings and implications. 1.1. Indian Banking The structure of schedule banks in India in shown in figure 1. The total number of public sector banks (PSBs) stands at 28. In the category of private banks (PBs), there are 16 banks classified as old private banks (OPBs) which were existing prior to the liberalization of the banking sector. The new private banks (NPBs) were born after 1991-92 with the opening up of this sector to private players. The total number of NPBs, as of 1st May, 2007, is 8. Plus, there are 29 foreign banks (FBs), most of which are limited to the metropolitan cities (RBI, 2006). In all, the total number of scheduled commercial banks as of 1st May, 2007 is 81. 1.2. Retail Banking Retail banking refers to the dealing of commercial banks with individual customers, both on liabilities and assets sides of the balance sheet (Gopinath, 2005b). Similarly, Sood (2003) defines retail banking as “catering to the multiple banking requirements of individuals relating to deposits, advances and associated services” (p. 9)....