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Customer Relationship Management And Importance Of Relationship Marketing
In The Banking Sector

This project report is being submitted as a part of the requirements o

f the MBA Program of Bangalore University.

The project has been undertaken

Reg. No. 04VWCM 6117
With the guidance and support of
Prof. Raja Sekhar
Faculty: MBA


BANGALORE – 560 076
Batch: 2004-2006

I, Shriya Mehrotra, student of MBA 4th semester, studying at Alliance Business A

cademy, Bangalore do here by declare that this project relating to the topic “Cu
stomer Relationship Management And Importance Of Relationship Marketing In The B
anking Sector” had been prepared by me after undergoing the prescribed dissertat
ion requirements a part of the objective of the MBA program of Bangalore Univers
ity ( Batch of 2004-2006).
The study has been done under the support and guidance of Prof. Raja Sekhar.
I further declare that this project report has not been submitted earlier to any
other University or Institute for the award of any Degree or Diploma.

Shriya Mehrotra
Reg. No. 04VWCM 6117

This is to certify that SHRIYA MEHROTRA, student of MBA 4th semester Reg. No. 04
VWCM6117 of our Institute has completed his Dissertation report on the topic “Cu
stomer Relationship Management and Importance of Relationship marketing In the B
anking Sector”, under my guidance, and that no part of this report has been subm
itted for the award of any other Degree or Diploma to any other Board or Univers


Prof. Raja Sekhar

Alliance Business Academy
The satiation and euphoric that accompany the successful completion of task, wou
ld be incomplete without the mention of the people who made it possible. After a
ll, the success is the epitome of hard work, severance, undeterred, zeal, stead
fast determination and most of all encouraging guidance. So with immense gratitu
de, I acknowledge all those whose guidance and encouragement served as a “beacon
light” and crowned our efforts with success.
I sincerely thank Mr.Sudhir.G.Angur, Honorable president- Alliance Business Acad
emy, for giving us an opportunity to take up this research. I thank him for bein
g a constant source of inspiration and encouragement. I would like to express my
profound sense of gratitude to Mr.B.V.Krishnamurthy, Director and executive vic
e president –Alliance Business Academy for providing me support to conduct this
With a deep sense of gratitude and indebtedness, I sincerely and whole heartedly
thank Prof. Raja Sekhar, my project guide for giving me valuable suggestions an
d advice through out the execution of the project.
Last but not the least, I would like to thank almighty God, my parents, and my f
riends who helped me gather these data and have sat with me for hours discussing
about the project.

Sl. No CHAPTERS Page no
4.6- FINDINGS 13-23


Table 1 Demographics of the sample
Table 2 Number of financial institution used
Table 3 Frequency of travelling for contacting financial

Table 4 Importance and availability of technology and bank
Table 5 Access to various banking services
Table 6 Use of various banking services
Table 7 Requirements of banking services in the region
Table 8 Use Automatic Teller Machines ( ATMs )

Figure 1 Workforce management system

Figure 2 Evolution of CRM
Figure 3 Customer 360 degrees
Figure 4 E- Support
Figure 5 Financial & Banking Technologies

Figure 2-1 “tell me what I get if I do this”

Figure 2-2 “I’ll do it myself when I’m ready”; “Use what I give
Figure 2-3 “let me make a valid comparison”
Figure 2-4 Helpfulness as hindrance
Figure 2-5 Conflicting navigation system
Figure 2-6 too many homes
Figure 2-7 “Don’t lock me out”

Chapter 1
1.1 ‘Banking’ on CRM’
“Competition and globalisation of banking services are forcing banks to be produ
ctive and profitable. To retain High Net Worth individuals, banks should focus s
trongly on relationship management with customers. Innovative Customer Relations
hip Management (CRM) strategies and cutting edge software can help, to a great e
xtent, in achieving the desired results. To provide customised services, banks a
re opening Personalised Boutiques which provide all the required financial needs
of a customer”.
The entire service industry is now metamorphosed to become customer- specific. I
n this context, the management of customer relationship in financial services in
dustry demands special focus. Gone are the days when customers at a bank did not
mind the long serpentine queues and waited patiently for their turn with a toke
n in their hand. In today’s Internet era, no one has the leisure to wait. In thi
s context, online banking is assuming a great significance. Today, banking is mo
re customer-centric, unlike the yester when it was transaction-centric. Banks ar
e increasingly focusing on the premise that customers choose on the service prov
ider who differentiates through quick and efficient service.
However, there is more to Customer Relationship Management (CRM) than just manag
ing customers and analysing their behaviours. Banks are well aware that their su
ccess is predominantly dependent on the CRM strategies adopted by them. Service
providers have recognised that good CRM bonds customers with the organisation fo
r a longer term, resulting in increased revenues.
With customers’ expectations becoming even more competitive, banks are coming up
with a wide array of novel products and services every day. The challenge is fo
r the banks to work towards ensuring that customers prefer their products and se
rvices over that of competing brands. The key to develop and nurture a close rel
ationship with customers is by appreciating their needs and preferences and cate
ring to their requirements. Leveraging on IT, to appropriately analyse and under
stand the needs of existing customers better, to ensure customer satisfaction, a
nd exploring the possibility of cross-selling products to gain a competitive adv
antage are the other issues drawing attention and interest.
With the opening up of the economy, a number of private sector banks have joined
the fray and are offering a plethora of products and services- rechristening th
emselves as ‘Financial Boutiques’. Knowledge dissemination has been propelled by
electronic and mass media campaigns. Today’s knowledgeable consumer is challeng
ing the Indian retail banking industry to redefine itself. Thus in this current
competitive scenario, for a bank to survive competition, succeed and make profit
, there is hardly any option but to learn from and actively respond to consumers
’ needs. Banks offering retail products need to reorient their strategy from a p
roduct-centric to a customer-centric approach to attract and retain High Net Wor
th Individuals (HNI) and profitable customers as well.
The battle of the banks, for gaining a greater slice of the market share, is tak
ing on a new dimension. In the current falling interest rate scenario, banks are
finding it increasingly difficult to meet the high growth expectations. In orde
r to bolster their top lines, banks are in pursuit of newer ways and means of ac
hieving organic growth through strategies that enable acquisition of new custome
rs and retaining the loyalty of the existing customers. Success of a bank’s stra
tegy towards customer acquisition will depend on its ability to develop customer
insights and translate these into effective operating models. Ensuring a good c
ustomer experience at every customer touch point is the cornerstone of a success
ful growth strategy. A good customer experience will drive customer acquisition
and promote customer retention, which translates into increased profits. This, i
n other words, is the hallmark of a successful CRM strategy. Emphasis on CRM ari
ses on account of the challenges confronting retail managers----- managing to su
stain and achieve growth and profits.
Bankers are conscious of the relative costs of acquiring new customers. As top m
anagement emphasizes on “delivering results”, most bankers resort to customer gr
abbing, rather that customer cultivation and creation, with the result that “cus
tomer churn” is the call of the day. Incidentally, bankers are fully aware that
losing the existing customer and acquiring new customers is an expensive affair.
Moreover, it acts as a drain on the existing resources of the bank, which can b
e better employed for growth initiatives. Therefore, the challenge for the banks
is to retain and deepen the profitability of the existing customer relationship
s, which is borne out by Nat West’s success.
With the shift from a transaction-centric to a relationship-centric business app
roach, leveraging CRM has become sine qua non. Banks are adopting CRM to converg
e people, process and products more effectively to embark on the true relationsh
ip banking--- with the end result of accelerating the business momentum. Towards
this end, experts propose various ideas and approaches to understand the fundam
ental marketing motivations driving the CRM trend in banks.
To meet the challenging preferences of the customers and to stay ahead of compet
itors, bankers are bound to attract customers by providing a spectrum of service
s. Online banking, ATM banking and telebanking are just a few of them. Banks can
enhance customer service by leveraging on technology, maintenance of efficient
service delivery standards and business process reengineering. On their part, em
ployees need to demonstrate certain service traits such as, putting on pleasing
attire. At the end of the day, bankers should display a flair for cultivating a
good relationship with customers through the mechanism of better customer servic
Having understood the significance, it is prudent to plan for CRM in retail bank
s. To a large extent, the success of a CRM plan is dependent on the choice of th
e software. Towards this end, bankers should identify domain enterprise, credibi
lity in the market, cost implementation and relationship with the vendor as fact
ors on which vendor selection is based. The domains of software systems, multipl
y product database and tracking require specific CRM focus. Besides understandin
g the requirements for CRM implementations such as, the setting up of a CRM cell
and conducting surveys at a periodic intervals to track their effectiveness, ba
nks need to understand how CRM assists them n customer identification, acquisiti
on and retention.
As a part of the planning process, frontline executives in banks should thorough
ly understand their organisational structure, infrastructure, as well as the pro
duct environment. In this context, the management initiatives for CRM assume imp
ortance. A top-down CRM focused approach that starts with the top management, pe
rcolating and permeating to all levels of the CRM is a necessity in the present
business scenario. Initiatives, such as, introducing CRM audit by independent te
ams to identify the existing lacunae, and plugging the loopholes in the CRM stra
tegy as per the recommendations of the audit report, are required to be adopted
by the banks for reaping benefits.
It is observed that banks lose their best clients to competitors due to a variet
y of reasons. The rationale behind losing their best clients to other service pr
oviders such as non-brokerage houses and mutual fund houses needs to be analysed
by banks. Experts opine that inefficient and improper service is one major reas
on. The remedies suggested by them are that banks should adopt customer relation
ship building approaches such as responding to complaints instantaneously, analy
zing the attrition of the clients in a particular product, and rating of service
s across the network of branches, and the creation of a suggestion box to elicit
the views and suggestion of their employees. Another dimension of the relations
hip building exercise is to obtain an electronic feedback from customers to unde
rstand the level of acceptance of existing products, which will facilitates in d
eveloping better products.
Banks can gain a competitive advantage from CRM by becoming low-cost players in
the market, achieving operational efficiency and maintaining customer loyalty. T
he ability to predict the products that customers are likely to purchase over a
period of time, increased productivity of managerial executives, sales and custo
mer service staff, and streamlining of business processes are some of the benefi
ts retail banks obtain by taking to successful management of their customer rela
Implementing the right CRM tools can enhance customer satisfaction leading to bu
siness growth. CRM enables organisations to motivate customers to initiate reven
ue-generating contacts. Several CRM issues such as, its effectiveness, applicati
on and challenges draw attention of the banking industry. Having witnessed the m
anner in which several global banks have benefited through CRM, the Indian retai
l banks too need to focus on and continuously invest in the customer relationshi
p activities. The Indian banking scenario, which is still at an embryonic stage
as far as the CRM domain is considered, needs to strive towards CRM implementati
on to meet the emerging demands of “universal banking”.
1.2 Defining CRM
Customer Relationship Marketing is a practice that encompasses all marketing act
ivities directed toward establishing, developing, and maintaining successful cus
tomer relationships. The focus of relationship marketing is on developing long-t
erm relationships and improving corporate performance through customer loyalty a
nd customer retention.
Customer Relationship Management (CRM) as the name suggests, the primary focal p
oint is placed on the customer. The key objective is to increase customer value
over time by increasing customer loyalty. If a company develops better customer
relationships, it also improves business processes as well as its profits. In ge
neral, CRM is a more efficient automated method used to connect and improve all
areas of business to focus on creating strong customer relationships. All forces
are coupled together to save, improve, and acquire greater business to customer
relationships. The most common areas of business that are positively affected i
nclude marketing, sales, and customer service strategies.
CRM helps create time efficiency and savings on both sides of the business spect
rum. Through correct implementation and use of CRM solutions, companies gain a b
etter understanding of their strongest and weakest areas and how they can improv
e upon these. Therefore, customers gain better products and services from their
businesses of choice. In order to achieve better insight on CRM, it is essential
to consider all of its components.
CRM- meaning
Customer relationship management (CRM) is a business strategy that spans your en
tire organization from front office to back-office. It is a commitment you make
to put customers at the heart of your enterprise. The right CRM strategy and sol
utions can help you securely, reliably and consistently:
• Delight your customers every time they interact with your business by em
powering them with anytime, anywhere, and any channel access to accurate informa
tion and more personalized service.
• Reach more customers more effectively, increase customer retention and b
oost customer loyalty by leveraging opportunities to up-sell and cross-sell and
driving repeat business at lower cost.
• Drive improvements in business performance by providing your customers w
ith the ability to access more information through self-service and assisted-ser
vice capabilities when it is convenient for them.
• Enable virtualization in your enterprise as more of your people and reso
urces extend beyond your offices and around the world.
• Balance sophisticated functionality with rapid implementation and effect
ive support for a faster return on your CRM investment.
Today’s customers face a growing range of choices in the products and services t
hey can buy. They base their choices on their perception of quality, value, and
service. Each consumer has a specific behavior. But buying habits are sometimes
difficult to understand. Therefore companies always want to gain some insight ab
out consumer behavior and habits in order to better control this behavior. Havin
g an impact on consumer behavior means being able to change consumer’s perceptio
n of the product or service, to establish a relation between the company and its

1.3 Study of Banking Sector

The Indian banking can be broadly categorized into nationalized (government owne
d), private banks and specialized banking institutions. The Reserve Bank of Indi
a acts a centralized body monitoring any discrepancies and shortcoming in the sy
stem. Ever since nationalization of banks took place in 1969, the public sector
banks or the nationalized banks have acquired a prominent place and has since th
en seen tremendous progress.
The need to become highly customer focused has forced the slow-moving public sec
tor banks to adopt a fast track approach. The unleashing of products and service
s through the net has galvanized players at all levels of the banking and financ
ial institutions market grid to look anew at their existing portfolio offering.
Conservative banking practices allowed Indian banks to be insulated partially fr
om the Asian currency crisis. Indian banks are now quoting at higher valuation w
hen compared to banks in other Asian countries (viz. Hong Kong, Singapore, Phili
ppines etc.) that have major problems linked to huge Non Performing Assets (NPAs
) and payment defaults. Co-operative banks are nimble footed in approach and arm
ed with efficient branch networks focus primarily on the ‘high revenue’ niche re
tail segments.
The Indian banking has finally worked up to the competitive dynamics of the ‘new
’ Indian market and is addressing the relevant issues to take on the multifariou
s challenges of globalization. Banks that employ IT solutions are perceived to b
e ‘futuristic’ and proactive players, capable of meeting the multifarious requir
ements of the large customer base. Private Banks have been fast on the uptake an
d are reorienting their strategies using the internet as a medium The Internet h
as emerged as the new and challenging frontier of marketing with the conventiona
l physical world tenets being just as applicable like in any other marketing med
The Indian banking has come from a long way from being a sleepy business institu
tion to a highly proactive and dynamic entity. This transformation has been lar
gely brought about by the large dose of liberalization and economic reforms that
allowed banks to explore new business opportunities rather than generating reve
nues from conventional streams (i.e. borrowing and lending). The banking in Ind
ia is highly fragmented with 30 banking units contributing to almost 50% of depo
sits and 60% of advances. Indian nationalized banks (banks owned by the governm
ent) continue to be the major lenders in the economy due to their sheer size and
penetrative networks which assures them high deposit mobilization
The Reserve Bank of India act as a centralized body monitoring any discrepancies
and shortcoming in the system. It is the foremost monitoring body in the India
n financial sector. The nationalized banks (i.e. government-owned banks) contin
ue to dominate the Indian banking arena. Industry estimates indicate that out o
f 274 commercial banks operating in India, 223 banks are in the public sector an
d 51 are in the private sector. The private sector bank grid also includes 24 f
oreign banks that have started their operations here. Under the ambit of these
nationalized banks come the specialized banking institutions.

Chapter 2
2.1 Definition of banking
The accepting for the purpose of lending or investment, of deposits from the pub
lic, repayable on demand or otherwise and withdrawal by cheques, draft or otherw
ise. (Banking Regulation Act)
Dr. Paget in Law of Banking states, “No one and no body, corporate or otherwise,
can be a banker who does not:
i. Conduct Current Accounts
ii. Pays cheques drawn on himself
iii. Collects cheques for his customers
A bank is therefore “Any company that transacts the business of banking in India
”. Negotiable Instrument Act.
Banker is “Any person acting as a banker” Negotiable Instrument Act.
There must be some recognizable course or habit of dealing in the nature of regu
lar banking business. A single transaction can constitute a customer; must have
an account; dealing must be of a banking nature; some frequency in transactions
is expected but is not essential.
• A customer is not an outsider to our business. He is a definite part of
it. A customer is not an interruption of our work. He is the purpose of it.
• A customer is doing us a favour by letting us serve him. We are not doin
g him any favour.
• A customer is not a cold statistic; he is a flesh and blood human being
with feelings and emotions like our own.
• A customer is not someone to argue or match wits with. He deserves court
eous and attentive treatment.
• A customer is not dependent on us. We are dependent on him.
• A customer brings us his wants. It is our job to handle them properly an
d profitably - both to him and us.
• A customer makes it possible to pay our salary, whether we are a driver,
plant or office employee.

Bank Customers
• Minor
• Married women
• Pardanashin Woman
• Illiterate people
• Lunatics
• Trustees
• Executors and Administrators
• Power of Attorney Holders
• Joint Account
• Hindu undivided Family
• Partnership firm
• Limited companies
• Clubs, Societies and Charitable Institutions
• Non resident and Persons of India origin
• Foreigners
Before getting into the details of how CRM actually works in the financial secto
r, it is very important to “know your customer”.
2.2 Know Your Customer (KYC)
It is very important to know the customer before having any kind of relationship
with him (especially in the banking sector).
This is important because of drugs smuggling/ trafficking, money laundering and
terrorism coming up. If one has to build a relationship with the customer one sh
ould follow all the KYC norms laid down by RBI.
Under the KYC a customer is:
• A person or entity that maintains an account and/ or has a business rela
tionship with the bank.
• One on whose behalf an account is maintained.
• Any person/ entity connected with financial transaction which can pose s
ignificant reputational or other risks.
The RBI States:
KYC must be the key principle for identification of an individual/ corporate for
opening an account. This would entail verification through an introductory refe
rence from an existing account holder, through a person known to the bank or on
the basis of documents provided by the customer.

Chapter 3
3.1 CRM in banking
Retail banking refers to mass-market banking where individual customers typicall
y use banks for services such as savings and current accounts, mortgages, loans
(e.g. personal, housing, auto, and educational), debit cards, credit cards, depo
sitory services, fixed deposits, investment advisory services (for high net wort
h individuals) etc.
Before Internet era, consumers largely selected their banks based on how conveni
ent the location of bank’s branches was to their homes or offices. With the Adve
nt of new technologies in the business of bank, such as Internet banking and ATM
s, now customers can freely chose any bank for their transactions. Thus the cust
omer base of banks has increased, and so has the choices of customers for select
ing the banks.
This is just the beginning of the story. Due to globalization new generations of
private sector banks and many foreign banks have also entered the market and th
ey have brought with them several useful and innovative products. Due to forced
competition, public sector banks are also becoming more technology savvy and cus
tomer oriented.
Thus, Non-traditional competition, market consolidation, new technology, and the
proliferation of the Internet are changing the competitive landscape of the ret
ail banking industry. Today’ retail banking sector is characterized by following
• Multiple products (deposits, credit cards, insurance, investments and se
• Multiple channels of distribution (call center, branch, Internet and kio
• Multiple customer groups (consumer, small business, and corporate)
Today, the customers have many expectations from bank such as
(i) Service at reduced cost
(ii) Service “Anytime Anywhere”
(iii) Personalized Service
With increased number of banks, products and services and practically nil switch
ing costs, customers are easily switching banks whenever they find better servic
es and products. Banks are finding it tough to get new customers and more import
antly retain existing customers.
According to a research by Reichheld and Sasser in the Harvard Business Review,
5% increase in customer retention can increase profitability by 35% in banking b
usiness, 50% in insurance and brokerage, and 125% in the consumer credit card ma
rket. Therefore banks are now stressing on retaining customers and increasing ma
rket share.
3.2 Needs of a Bank
The banks now need to find out what to sell, whom to sell, when to sell, how to
sell and how to be different to increase profitability. Banks need to differenti
ate themselves by adding value-added service, offerings and building long-term r
elationships with their customers through more customized products, enhanced val
ue offerings, personalized services and increased accessibility. Banks also need
to identify customers and products that would be most profitable and target cus
tomers with products that are most appropriate to their needs and serve the cust
omers with greater cost efficiency.
Banks also need to find out the avenues for increased customer satisfaction, whi
ch leads to increased customer loyalty. This may be explained better from two in
itiatives bank took in the past:
1. Earlier what drove many bankers to invest in ATMs was the promise of reduced
branch cost, since customers would use them instead of a branch to transact busi
ness. But what was discovered is that the financial impact of ATMs is a marginal
increase in fee income substantially offset by the cost of significant increase
s in the number of customer transactions. The value proposition, however, was a
significant increase in that intangible called customer satisfaction. The increa
se in customer satisfaction has translated to loyalty that resulted in higher cu
stomer retention and growing franchise value.
2. Bankers invested in Internet banking, believing that the Internet was a lower
-cost delivery channel and a way to increase sales. Studies have now shown, howe
ver, that the primary value of offering Internet banking services lies in the in
creased retention of highly valued customer segments. Again customer satisfactio
n drives the value proposition.
Thus, banks need to retain existing customers with enhanced personalized service
s and products, which best suits their needs and satisfies them the most.
3.3 Utility of CRM in Banks
CRM primarily caters to all interactions with the customers or potential custome
rs, across multiple touch points including the Internet, bank branch, call cente
r, field organization and other distribution channels.
CRM can help banks in following ways:
• Campaign Management - Banks need to identify customers, tailor products
and services to meet their needs and sell these products to them. CRM achieves t
his through Campaign Management by analyzing data from banks internal applicatio
ns or by importing data from external applications to evaluate customer profitab
ility and designing comprehensive customer profiles in terms of individual lifes
tyle preferences, income levels and other related criteria. Based on these profi
les, banks can identify the most lucrative customers and customer segments, and
execute targeted, personalized multi-channel marketing campaigns to reach these
customers and maximize the lifetime value of those relationships.
• Customer Information Consolidation - Instead of customer information bei
ng stored in product centric silos, (for e.g. separate databases of savings acco
unt & credit card customers), with CRM the information is stored in a customer c
entric manner covering all the products of the bank. CRM integrates various chan
nels to deliver a host of services to customers, while aiding the functioning of
the bank.
• Marketing Encyclopedia - Central repository for products, pricing and co
mpetitive information, as well as internal training material, sales presentation
s, proposal templates and marketing collateral.
• 360-degree view of company – This means whoever the bank speaks to, irre
spective of whether the communication is from sales, finance or support, the ban
k is aware of the interaction. Removal of inconsistencies of data makes the clie
nt interaction processes smooth and efficient, thus leading to enhanced customer
• Personalized sales home page – CRM can provide a single view where Sales
Mangers and agents can get all the most up-to-date information in one place, in
cluding opportunity, account, news, and expense report information. This would m
ake sales decision fast and consistent.
• Lead and Opportunity Management - These enable organizations to effectiv
ely manage leads and opportunities and track the leads through deal closure, the
required follow-up and interaction with the prospects.
• Activity Management – It helps managers to assign and track the activiti
es of various members. Thus improved transparency leads to improved efficiency.
• Contact Center – It enables customer service agent to provide uniform se
rvice across multiple channels such as phone, Internet, email, Fax.
• Operational Inefficiency Removal – CRM can help in Strategy Formulation
to eliminate current operational inefficiencies. An effective CRM solution suppo
rts all channels of customer interaction including telephone, fax, e-mail, the o
nline portals, wireless devices, ATMs, and face-to-face contacts with bank perso
nnel. It also links these customer touch points to an operations center and conn
ects the operations center with the relevant internal and external business part
• Enhanced productivity – CRM can help in enhanced productivity of custome
rs, partners and employees.
• CRM with Business Intelligence - Banks need to analyze the performance o
f customer relationships, uncover trends in customer behavior, and understand th
e true business value of their customers. CRM with business intelligence allows
banks to assess customer segments, which help them calculate the net present val
ue (NPV) of a customer segment over a given period to derive customer lifetime v
alue. Customers can be evaluated within a scoring framework. Combining the behav
ior key figure and frequency to monetary acquisition analysis with a marketing r
evenue quota can optimize acquisition costs and cut the number of inefficient ac
tivities. With such knowledge, banks can efficiently allocate resources to the m
ost profitable customers and reengineer the unprofitable ones. Data warehousing
solutions have been implemented in Citibank, Reserve Bank of India, State Bank o
f India, IDBI, ICICI, MaxTouch, ACC, National Stock Exchange and PepsiCo. And Bu
siness Intelligence players hope many more will follow suit.
A word of caution….
Customers may not want what they get: A CRM system apart from improving front of
fice operations and customer servicing also helps in coping with many services t
hat do not need manual intervention. These are serviced by channels like IVR, In
ternet and ATM. Customers can get account information, information on credit bal
ance, issue instructions for drafts or even transact through these. At the same
time there may be a few customers who still prefer the traditional methods of ba
nking. Banks need to be flexible enough to continue to extend the "personal touc
h" that such customers prefer.
Make changes internally before going for CRM: Many banks have spent a lot of mon
ey on CRM, finding it easier to buy CRM technology than to make the major intern
al changes necessary to really make CRM work for them. Unfortunately for these b
anks, the software has often failed to deliver.
3.4 CRM is Business Transformation
Too often banks have focused on the wrong areas of CRM. CRM is really about busi
ness transformation—changing the business from services-centric to customer-cent
Have defined Objectives - Many CRM implementations have been approved without ex
amining aspects like profitability, turnover etc. CRM implementations should hav
e well defined objectives, such as RoI, Sales etc.
Consider Complete Life Cycle Costs while budgeting - Measurements of profit are
often constructed to embrace only the initial cost of sale. This is of little us
e if the ongoing cost of servicing a customer outweigh the margin of profit that
customer is generating. It is critical that banks have recognized and embraced
the importance of the trend towards customer development, and that this is refle
cted in actual marketing budget allocation.

3.5 CRM Implementation in Banks in India

According to Nasscom report “Strategic Review 2004”, Indian CRM market was estim
ated at US $ 14 million and is forecast to grow to US $ 26 million in 2005. Bank
ing and financial services segment has a high growth potential and accounts for
22 percent of CRM license revenue. There are many banks such as ICICI Bank, HDFC
Bank and Citibank, which are using CRM products.
Disciplined work along four dimensions can significantly improve results from CR
M initiatives:
Customer Segmentation- Do intensive data analysis and value-based segmentation t
o highlight the value of different customer segments and the underlying drivers
of that value.
Design programs- Design innovative programs focusing on customer acquisition, cr
oss-sell, retention, loyalty, and customer service, based on customer insights,
experience and industry best practices.
Design Processes- Design internal and external processes to support and sustain
successful programs.
Good Decisions based on Right Information- The information from a CRM program c
an often guide better operational business decisions at many levels of the organ
ization. Gather customer information at a broader set of touch-points, perform i
n-depth analysis, and make critical information available to relevant stakeholde
The retail banking industry is undergoing revolutionary change. There are many p
layers and competition is tough. Customer Relationship Management is an importan
t weapon in this fight. The ability to mass customize the customer experience an
d refresh the value proposition is necessary to retain the right to do business
with the customer. Consolidation and technology would become must for sustenance
and growth. The pressure will be on banks to integrate data from every channel
and know what customers say so that the banks deliver what they want. As the com
petitions increase, banks will require the robust CRM functionalities in order t
o manage their most valued asset – their customers.

Chapter 4
4.1 Consumer Exclusion and Social Responsibility in Marketing Decisions
The radical changes occurring in the micro and macro environment, which dynamica
lly affect the marketplace and its participants, are widely known. Both the indu
strial and the academic communities have to realize the need of a re-determinati
on and re-evaluation of many basic and traditional concepts of the strategic mar
keting plan. The defenders of the concept of globalization argue that it ideally
leads to a multi/cross cultural and without boundaries world. In this context,
there is a need of a worldwide community to capitalize effectively and efficient
ly the opportunities based on the principles of the "system".
It is certain that technology has a pivotal role in the context of globalization
. Moreover, technology is being presented as the magic "stick" that could eventu
ally overcome any obstacle or problem and create a worldwide community to sharin
g equal opportunities in progress, education, communication and information. Thi
s is of great importance only when it is clear that technology has to be user/ci
tizen oriented and publicly accessible.
Considering the implementation of eventual globalization it is crucial to rememb
er some of the basic axis of the concept. For example, the creation of a global
community has to underline and incorporate local and regional social characteris
tics. In practice this can be translated into specific directions for public and
private organizations and their various orientations in order to provide opport
unities at local and regional levels.
What happens in the real world when attempting to create the "global community"?
Is there any re-orientation of the aims and objectives instigated by industries
? How do companies target the market in terms of geographical dispersion? Which
are the main criteria when evaluating the selected target markets? Is there any
"space" to serve small or isolated communities? Is there any possibility, that t
he traditional marketing concepts as well as global management principles and fo
undations, have been used as a cover in various decisions concerning the selecti
on of target markets, in contradiction to the new role they have to play in the
adoption of the globalization concept?
The focus of this paper is on the companies role in the implementation of globa
lization under their social responsibility s point of view and the re-thinking a
bout some basic marketing concepts, as a direct consequence. Moreover, the autho
rs argue that companies have to be re-positioned in the society as well as in fr
ont of their selves, in order to create a new contemporary profile, in tune with
the needs and evolution even of the regional and local communities. It is known
that companies often underline their role within the society as the meaning of
their new profile and orientation. However, the concept of societal marketing ha
ving as its core theme the company s orientation toward the well-being of the cu
stomer and generally the society creates at the same time a field of dialog betw
een the academic community and the industry.
Marketing should always be addressed to customers in order to gain the answers i
t looks for, to all its inquiries. Marketing ethicists have long criticized som
e marketers for making non-socially responsible or even unethical decisions in t
he market selection. These issues have been referred to as the ethical issues of
inclusion and exclusion and these are the basic axis that marketers have to fol
low in order to adopt a new orientation in the context of globalization (An exam
ple of an exclusion decision is not providing a needed product / service to a se
gment of the population which needs it ).
It is widely accepted that the social role of companies is manifested by the imp
rovement of the living standards of the society. But this is to ascertain that w
hen social exclusion occurs, then the living standards become even lower.
Financial exclusion could be experienced in many different ways. Its key charact
eristic is the inability of some customers to access necessary financial service
s in an appropriate form. It might be caused by macro-economic factors and facts
or, of course, as the result of decisions made by the management of a specific
company or even by the whole industry. Particular conditions related to the mark
eting mix factors (marketing exclusion), strongly related to a previous experien
ce (condition exclusions), such as a high - not affordable price (price exclusio
n), the lack of accessibility, due to a certain distribution-related decision (a
ccess exclusion), not matching image (as a result of false or "correct" percepti
ons), may create barriers between the customer and the company that do not suppo
rt a further relationship. However, not all customers experiencing financial exc
lusion are of any interest for a company.
Financial exclusion also is accepting self-exclusion. A decision made by the cus
tomer as a result of dissatisfaction from a previously related experience. Refer
ring to the specific example of bank services, offered in isolated areas in Indi
a, we can see that in the vast majority of the small isolated islands in India,
not only technology aided banking services, but even traditional local bank bran
ches are not provided. In these cases, when this kind of exclusion occurs, the l
ocal post office branches are servicing customers. However, as probably expected
, they are providing only the most common banking transactions, and of course, f
rom the strategic point of view, any mentioning about "corporate identity buildi
ng" and "corporate / brand equity building" is to be avoided. This is because ex
clusion decisions have already been taken and implemented.
In any case, particularly when talking about service provision, the customer is
definitely an integral part of the marketing and delivery process. However, the
service provider via the implemented processes and the humans involved is the on
e with the determining role in its implementation .Services are becoming more an
d more a major competitive tool, even in the physical goods industries, necessit
ating a close relationship, often called a strategic partnership Financial exclu
sion is strongly related to service providing. In some cases the lack of the pro
vision of financial services becomes unjustified having in mind the opportunitie
s provided by information technology. This is exactly the case, when referring t
o the banking industry.
This piece of research reveals the correlation between the geographical and fina
ncial exclusion concerning two geographical remote areas in India. The study ide
ntifies the banking attitudes of a customer segment that hasn t been investigate
d in the past; those who have never been included. It examines the expectations
and the satisfaction of the banking services, the use of banking technologies an
d the usage of available banking products, by the inhabitants of two remote and
isolated islands in Greece. In these islands fully developed financial services
have never been offered.
Financial exclusion is often largely attributed to structural changes in the fin
ancial services sector, including increased competition from new entrants in the
markets, mergers and information technology. All these characteristics, resulte
d in the development of a combination of tactics related to the adoption of cost
cutting activities and increased emphasis on market segmentation and appropriat
e targeting, are present in the banking sector in India.
The inhabitants of isolated areas cannot satisfy their banking needs although th
ey have a healthy income profile and financial strength. Only few financial serv
ices were traditionally offered in these areas. Nowadays, due to the increased c
ompetition in the market, these neglected customer segments can be of interest t
o the banking industry.
There are many small isolated islands with no traditional local bank branches in
India. In the vast majority of them, no technology aided banking services are p
rovided. When available, the most common banking transactions are often provided
by the local post office. Banking needs, the familiarity with banking services
and the use of technology for the consumption of these services have been the su
bject area of previous research. However, little is known about the above and th
e elements contributing to satisfaction for people who have always experienced f
inancial exclusion and are not familiar with technology. Lack of awareness in th
e use of technology and limited contact with payment systems, such as cheques an
d credit cards is the norm in isolated areas. Contrary to common belief, these c
onditions can accelerate the use of new technologies and modern financial produc
This study was designed to focus on a distant, isolated population and:
Investigates the banking services currently used by customers.
• Explores their banking needs.
• Identifies their perceptions of the existing banking services.
• Investigates the usage of virtual banking services.
• Investigates their attitudes towards the provision of unmanned banking s
ervices via Information Technology.
The research is exploratory, as the available information in relation to custome
rs living in isolated areas, is insufficient on these elements. However, this pa
per attempts to examine the issues further.

Sampling Frame
Two of the most isolated suburbs, Sitapur and Biswan, were chosen as collecting
data from all the remote Uttar Pradesh cities is almost impossible, due to resou
rce limitations. Sitapur is a suburb and attracts mostly business class. In 1991
it had a population of 267, living in two villages. The area of Biswan is somew
hat bigger, has a long tradition in sugarcane farming and attracts manufactures
of sugar and allied products.In both places there is a post office, offering a l
imited range of financial products.
It is worthy to mention that, it rarely happens to the citizens of those areas t
o be selected as respondents to surveys. The inhabitants experience a certain ki
nd of "exclusion" by both the private sector and the public sector, not only as
customers or as audience but even as citizens that "their opinion counts". So, t
hey feel excluded not only from what is happening but even from what is being pl
anned or prepared by almost all sectors. As expected, this kind of exclusion lea
ds them to a greater disappointment in conjunction with the other forms of exclu
A total of 359 people (representing approximately 51% of the inhabitants of the
islands) were interviewed (table 1). Of those, 190 were interviewed in Sitapur a
nd 169 in Biswan. The men had stayed in areas other than the place of origin; fu
rther more they were significantly better educated than women. It is not surpris
ing to find that a quarter of the inhabitants are retired as the population of t
hese islands is ageing, and. The education of the sample is representative of th
e educational levels of isolated areas, but not of the whole of Greece, where mo
st people graduate from high school and the majority continue a higher education
. Almost 59% of the respondents never went to High school, while only 12.5% of t
he sample had a higher education qualification. The educational profiles were mo
re extreme in those that never left the islands.
Data Collection, Research Instrument and Procedures
TABLE 1. Demographics of the sample
Never lived away Lived away>1 year Total
Total % Total % Total %
Male 73 39.04 112 65.12 185 51.53
Female 114 60.96 60 34.88 174 48.47
18 – 25 26 13.90 19 11.05 45 12.53
25 – 35 23 12.30 28 16.28 51 14.21
35 – 45 36 19.25 27 15.70 63 17.55
45 – 55 32 17.11 33 19.19 65 18.11
55 – 65 19 10.16 22 12.79 41 11.42
65 + 51 27.27 43 25.00 94 26.18
None 13 6.95 8 4.65 21 5.85
Primary School 108 57.75 81 47.09 189 52.65
High School 53 28.34 46 26.74 99 27.6
University 11 5.88 34 19.77 45 12.53
Other 2 1.07 3 1.74 5 1.39
Farmer 13 6.95 4 2.33 17 4.74
Trader 2 1.07 1 0.58 3 0.84
Salaried 6 3.21 11 6.40 17 4.74
Retired 47 25.13 42 24.42 89 24.79
Housekeeper 75 40.11 34 19.77 109 30.36
7 3.74 4 2.33 11 3.06
Civil Servant 11 5.88 23 13.37 34 9.47
Businessman 14 7.49 35 20.35 49 13.65
Privately employed 4 2.14 5 2.91 9 2.51
Other 8 4.28 13 7.56 21 5.85
Total 187 100.00 172 100.00 359 100.00
The actual study was conducted over a period of two months in three stages:
A draft questionnaire was developed during the first stage. The questionnaire wa
s pre-tested in Lucknow, the capital of Uttar Pradesh. Since the sampling frame
contained respondents, who were quite different from those in Lucknow, it was de
cided that the questionnaire should be pre-tested for a second time, under real
circumstances. In addition, it was appreciated that identifying and approaching
the inhabitants of these isolated areas was very difficult and contacts with the
local opinion leaders should be developed to overcome these problems.
During the second stage, the final research instrument was developed and links w
ith the local communities were established. Ten semi-structured in depth intervi
ews were conducted with local opinion leaders (i.e. the Mukhiya, the priest, tea
chers in the local schools). Basic information and support in reaching the gener
al population was given. Five focus groups with inhabitants of each suburb, help
ed in the development of a general understanding of the situation and attitudes
towards both technology and banking, followed. During the focus groups, the ques
tionnaire was pre-tested. It was apparent that the prospective respondents, alth
ough helpful and very interested to express their opinions, had difficulties in
understanding and filling it in. This was mostly due to their limited experience
in participating in research and answering closed questions. To overcome this p
roblem and in order to capture the true perceptions of this particular sample, i
t was clear that data should be collected by person-administered interviews.
During the last stage, the quantitative data was collected via in-home interview
s and interviews in public places that locals tend to visit on a regular basis.
The fieldwork for this part of the study was conducted in four days. I collected
the quantitative data.
4.5 Data Analysis
Research on the inhabitants views in these areas is relatively limited. Because
of the exploratory nature of all the issues examined, descriptive statistics ar
e displayed. As a next step in our analysis, we performed a series of extensive
statistical analysis, using T-Tests, chi-square statistics, in order to identify
the exact relationships. More precisely, in order to examine the hypotheses tha
t the opinion of people in the two samples and the fact that the one group has e
xperienced living away from the island was not related, independent samples t-te
st was used. To assess the ranking of different variables, by examining the mean
rank differences, Friedman two-way ANOVA test was conducted. Pearson χ2 was als
o used in order to examine omparisons of ategori al data. For all tests, obser
ved signifi an e level of the test (p) less than 0.05, the hypothesis that the v
ariables under investigation are independent was reje ted.
A primary obje tive of this study was to investigate the banking servi es urren
tly used by ustomers, in order to reveal the provision of those servi es in the
parti ular areas. In addition, the study highlights their per eptions about the
provided servi es. In this se tion, we dis uss the key findings of this study,
in order to provide also a new perspe tive on ompanies' so ial responsibility i
ssues ombining those with "ex lusion", parti ularly so ial and finan ial one.
As expe ted, the population of those remote areas is not denied a ess to finan 
ial servi es, as long as they make the effort to obtain them. As shown on table
2, almost all respondents have some sort of bank a ount. An interesting finding
is that a high per entage of the sample (56.57%), are banking with more than on
e finan ial institution. Those respondents who have lived away does not presents
any lear differentiation of those who have spent all their lives in the island
regarding the use a different number of finan ial institutions from those (Pear
son χ2= 8.97, p= 0.06).

TABLE 2. Number of finan ial institutions used

Never lived
Away Lived away>
1 year Total
Total % Total % Total %
None 2 1.1 0 0.00 2 0.56
One 90 48.1 65 37.8 155 43.18
Two 76 40.6 75 43.6 151 42.06
Three 15 8.0 27 15.7 42 11.70
Four or more 4 2.1 5 2.9 9 2.51
Total 187 100.0 172 100.0 359 100.00
As far as the onditions of use is on erned, it is lear however that 30.37% of
the sample laim that they need to travel to another island at least on e every
two weeks to make their required transa tions. Only 5.29% of the sample ited t
hat they are able to make them all in the island they live on (table 3). The res
ults highlight that it is almost ompulsory for someone who wants to satisfy ban
king needs to visit another island, while all residents travel with a similar fr
equen y (Pearson x2= 2.11, p=0.72). This ause additional ost to them asso iate
d with banking transa tions, sin e staying away overnight or even for a longer p
eriod is often ne essary due to the frequen y of the islands' onne tion by boat
and the weather onditions.
TABLE 3. Frequen y of travelling for onta ting finan ial transa tions
Never lived
Away Lived away>
1 year Total
Total % Total % Total %
On e a week 5 2.7 9 5.2 44 12.26
On e per 15 days 12 6.4 11 6.4 65 18.11
On e a month 44 23.5 44 25.6 129 35.93
Less than on e a month 62 33.2 56 32.6 102 28.41
Never 64 34.2 52 30.2 19 5.29
TOTAL 187 100.0 172 100.0 359 100.00
An interesting finding on a related topi , i.e. te hnology and its ontribution
to the areas well-being is that all respondents identified te hnology as a key f
a tor in the development of their area (table 4), sin e it was revealed that the
y believe that unless the area develops, more qualified young people will stay t
here. Similarly to banking servi es availability, te hnology was also found to b
e far from being adequate. Those that have lived away were even more disappointe
d with the servi es provided, although the observed differen e was not statisti 
ally signifi ant.
Respondents provided low s ores regarding their ability to a ess to the various
banking servi es in their area (table 5). Only when referring to the most basi 
servi es (withdrawal/deposit) this is not the ase. More pre isely, the people
feel that payment of bills is the servi e to whi h they have the most a ess to
in their region, followed by withdrawal/deposit (x2=1108, a=0.00).
Parti ularly, those respondents that have been away for a long time, and therefo
re they have experien ed ATM and other te hnologies usage in the past, they feel
that they do not re eive the quality of servi e they per eive as standard.
TABLE 4. Importan e and availability of te hnology and bank servi es
Never lived
Away Lived away>
1 year Total
Mean SD Mean SD Mean SD t-value p
Te hnology is a key fa tor for the development of the region 4.81 0.71
4.83 0.49 4.82 0.61 -0.20 0.84
The needed banking servi es are available in my region 2.10 1.36 1.85
1.25 1.98 1.31 1.79 0.07
The need for finan ial servi es in rease in summer 4.78 0.73 4.80
0.63 4.79 0.68 -0.22 0.83
1= strongly disagree, 5= strongly agree

TABLE 5. A ess to various banking servi es

Never lived
Away Lived away>
1 year Total t-test Friedman
Mean SD Mean SD Mean SD t-value p Mean Ran
Withdrawal– Deposit 3.84 1.36 3.35 1.51 3.61 1.45 3.24
0.00 5.75
Loans 1.41 0.88 1.29 0.73 1.35 0.81 1.41 0.16 3.02
Subsidies 1.75 1.23 1.58 1.06 1.67 1.15 1.38 0.17
Credit ards payments 1.44 1.00 1.31 0.84 1.38 0.93 1.39
0.17 3.03
Payment of bills 3.91 1.36 3.72 1.59 3.82 1.48 1.28
0.20 5.89
Foreign urren y ex hange 2.23 1.52 2.12 1.51 2.18 1.51
0.71 0.48 4.06
Sto k ex hange transa tions 1.23 0.73 1.21 0.67 1.22 0.70
0.28 0.78 2.81
1= very diffi ult, 5= very easy
The great majority of the respondents (67%) laim that they perform bank transa 
tions at least on e a month. Again, the basi  banking servi es (withdrawals/depo
sits and payment of bills) are those that are used the most in the area (x2=1158
, a=0.00) (table 6). Those that have lived away, appear to use the basi  bank se
rvi es more than the others and make more sto k ex hange transa tions, although
the latter is still one of the least used servi es. Only a small % of respondent
s, indi ated to make use of any kind of redit ards for their transa tions. It
seems that it is the ustom of the area to pay in ash.
TABLE 6. Use of various banking servi es
Never lived
Away Lived away>
1 year Total t-test Friedman
Mean SD Mean SD Mean SD t-value p Mean Ran
Withdrawal– Deposit 2.84 0.92 3.05 0.94 2.94 0.93 -2.12
0.03 6.08
Loans 1.14 0.47 1.15 0.46 1.14 0.46 -0.25 0.80 3.12
Subsidies 1.29 0.67 1.19 0.47 1.24 0.58 1.67 0.10
Credit ards payments 1.24 0.77 1.40 0.98 1.31 0.88 -1.67
0.10 3.26
Payment of bills 2.80 1.26 2.83 1.20 2.81 1.23 -0.18
0.86 5.62
Foreign urren y ex hange 1.52 0.98 1.47 0.94 1.49 0.96
0.53 0.60 3.57
Sto k ex hange transa tions 1.09 0.47 1.26 0.86 1.17 0.69
-2.43 0.02 3.04
1= very rarely, 5 = very often

As shown on the following table (table 6/7), the respondents all shared the same
per eptions in relation to the standards of the banking servi es offered in the
ir region. They did not express any major on erns in terms of the se urity of t
he banking servi es and were reasonably ontent with the reliability of the syst
ems. However they all expressed some dis omfort in relation to the speed of the
system. But, their major on ern refers to the overage of the banking networks.
When ompared with the others riteria measured, the findings imply that they a
ll agree that the quality of the servi e provided was not what they expe ted.
Among all requirements of the banking servi es in the region, only "personal on
ta t" re eived a slightly lower mean s ore, implying that all respondents agreed
that reliability, speed, se urity and onvenien e are most important features o
f the provided banking servi es (table 8). Those that have spent some time away
from the native pla e believed that this feature is of less importan e than thos
e that have stayed on the island for most of their lives and are used to doing b
usiness through personal onta t. When paired sample tests were performed, it wa
s revealed that there was no differen e in the per eption of the importan e of a
ll these elements (a=.00).
TABLE 7. Requirements of the banking servi es in the region
Never lived
Away Lived away>
1 year Total
Mean SD Mean SD Mean SD t-value P
Reliability 4.92 0.31 4.89 0.32 4.90 0.33 0.88 0.40
Speed 4.91 0.32 4.88 0.34 4.90 0.33 0.89 0.38
Se urity 4.94 0.27 4.93 0.30 4.93 0.28 0.19 0.85
Convenien e 4.89 0.39 4.90 0.43 4.89 0.41 -0.31 0.76
Personal onta t 3.74 1.54 3.39 1.64 3.57 1.60 2.07
1= strongly disagree, 5= strongly agree

The use of ATM servi es are not at all popular, as 71% of the sample ited to be
non users of ATM servi es, or even in the past "they have never used" an ATM (t
able 9). However, this finding was somewhat supported by the views expressed dur
ing the personal interviews and the fo us groups, where the parti ipants linked
their desire to have some personal onta t with the bank employees with the fa t
that they have to make an a tual journey to visit the bank. This ould be a pla
usible explanation, sin e they use other te hnology. For example, more than 44%
of the respondents reported that they own and use a mobile phone.
Although all respondents appear to have limited experien e in using ATMs, the re
sults indi ated slightly differen es among those who have lived away and those w
ho have stayed for their whole lives on the island, (Pearson x2=8.691, a=.00). O
n e again, it seems that the experien e of living in other, more te hnologi ally
developed areas, or in other words, not ex luded areas, appears to influen e po
sitively the potentiality of ATMs.

TABLE 8. Use of Automati  Teller Ma hines (ATMs')

Never lived
Away Lived away > 1
Year Total
Total % Total % Total %
I have used ATMs 42 22.46 63 36.63 105 29.25
I have never used ATMs 145 77.54 109 63.37 254 70.75
Total 187 100.00 172 100.00 359 100.00

In the in depth interviews, it was revealed that the inhabitants of these island
s were experien ing diffi ulties in using most of the highly sophisti ated equip
ment, and ATMs were per eived as su h. Some of the people interviewed felt that
using an ATM ma hine is risky, and were not willing to trust the equipment. This
is mainly due to problems with the telephone onne tions used at present to sup
port the ATM network.
It was not surprising, after all, that less than 2% of the respondents have ever
used a bank's web site. When they were asked, it was lear that the Internet wa
s only used for information gathering. None have used the Internet for banking.
The inhabitants of these islands were se urity ons ious, and believed that usin
g a omputer to perform finan ial transa tions is highly dangerous.
Moreover, the ex lusion of these pla es entail also very important so ial and po
liti al impli ations.
By expli itly onsidering these issues, one an argue, based not only on their i
ntention but also on their potential, that many of the respondents ould (and th
erefore should) be among the target- ustomers of the major banks of the ountry.
However this does not o ur. Is that the "real world" bank deny their so ial ro
le, or it is the result of their interpretation of some basi  marketing on epts

Chapter 5
5.1 Setting so ially responsible Marketing Obje tives and Strategy
In the free market e onomies, business organizations are free to hoose what goo
ds and servi es they produ e, the pro esses by whi h they produ e as well as the
markets they aim to serve. So, a so ial servi e does not ne essarily mean the o
ffer of spe ifi  additional servi es to parti ular ustomers. It means the ompa
ny's orientation in offering its produ ts/servi es in a more "so ial way".
In market e onomies where ompanies do have a high degree of autonomy, the manne
r in whi h organizations make strategi  de isions, taking into onsideration the
So ial Responsibility notion, be omes in itself a matter of dis retion. As Fred
eri k et al, (1992) suggests there are 3 broad views of the so ial ontribution
of the ompany. The so alled "so ial obligation", adopted by ompanies whi h a 
t, in a ordan e to what the law requires. The 'so ial responsiveness", where th
e ompanies are more open to moral issues and influen ed by involving the a ting
so ial groups, and finally, "so ial responsibility" under whi h ompanies re og
nize a wider spe trum of relationships with the different stakeholders and enhan
e ertain levels of intera tion with su h groups.

So, it is important to re ognize that the on epts of "so ial responsibility" an
d "any kind of ex lusion" are not theoreti al laims or even new, "smart" ways o
f determination of a " ompetitive advantage. Instead, it is a ertain philosophy
of doing business with serious onsequen es to so iety's well being. The real i
mportan e of ompany’s social responsibility has not to do with its reactions to
particular facts or events, but to their view, to their contribution and role t
o the society. Therefore, the subject of social responsibility of a particular c
ompany shouldn t be left to ones managers hands, but it should be the core conce
rn behind a company s existence.
Apart from Societal Marketing, which should also focus on a long-term orientatio
n towards customer satisfaction without excluding of course profitability and st
able growth, Relationship Marketing focuses on the creation of long-term relatio
nship between various participants - members of the particular network, involve
d in a process based on the axioms of "mutual exchange and fulfillment of promis
Moreover, as Kantner claims a "successful partnership manage the relationship, n
ot just the deal". Therefore, the new emerging marketing paradigm could thus be
called relationship orientation, where strength and quality of the relationship
as well as the quality and profitability of the relationship play significant ro
le. But the question arises exactly there, i.e. in the definition / identificati
on of the "various participants-members of the particular network who are going
to be involved in a relationship"! Who decides the criteria under which somebody
will become member of the "network"?
Even, the societal marketing concept holds that the organization s task is to de
termine the needs, wants and interests of target markets and to deliver the desi
red satisfaction more effectively and efficiently than competitors in a way that
preserves or enhances the consumer s and the society s well-being .
So, it is already clear, that the societal marketing concept requires the promot
ion of "proper consumption values" so that "long-run consumer welfare" may be at
tained. Thus, it requires that the business organization includes social, ethica
l and ecological considerations in its, product and market planning. But, how mu
ch emphasis has been given to the particular target markets and what balances wi
th society as a whole?
Referring to the traditional Marketing concepts of "segmenting - targeting - pos
itioning", one could claim that the "focused targeting" is among the most succes
sful strategic options. The question is about the criteria this strategic decisi
on will be implemented. The main purpose of segmenting is to create substantial,
measurable, accessible customer segments in order to target effectively and eff
iciently in the future.
Nowadays, "customer valuation" forces to a more rationalized way of usage of the
above mentioned strategic tools, since the customer of the company becomes the
"consumer of the wealth of the organization". As a result, value is seen as some
thing that has to be extracted from customers to create shareholder value and al
l customers should be shown sufficient returns to the organization.
Therefore, we strongly believe that under the scope of re-formulating the compan
ies roles in society, one should re-define the segmentation criteria as well. A
lthough traditionally, this has been implemented based on product-related variab
les (i.e. product usage and product benefit) and consumer related variables (i.e
. demographics, lifestyle, self-concept etc), community’s "well being" has to be
come the "compass" of segmentation criteria, setting.
The traditional marketers claim that "consumer/customer is the focus" and that c
onsumer s needs and desires are the raison-dieter for marketing (the marketing c
oncept can be described as an integrated effort aimed at providing customer sati
sfaction…). Is it not the appropriate time to focus on the consumers well being
and make use of the several variables according to this notion of well being? O
therwise, the claim "consumer is the focus" is not totally true and it should be
modified to "consumer of our convenience is the focus".

5.2 Customer Dialogue Builds Loyalty & Profit

Customers and potential customers are getting more sophisticated. The very marke
ting techniques used to separate the customer from their hard earned money are,
helping, by training both the old and newer generations of customers to be more
wary and smarter. Customers want to trust the companies they buy from and in som
e case may even value a relationship of a sort.
Managing Customer experience is the biggest challenge faced by businesses today.
The ability to acquire, retain and grow customer relationships is determined by
an organization s ability to quickly adapt to changing customer needs. This dem
ands an integrated approach to managing customer interactions.
5.3 Customer 360°
It is in line with these needs that a concept called Customer 360° has been gene
rated - an integrated framework that addresses every point of the customer lifec
ycle of a business - from customer support to back office to customer analytics.
What is Customer
Customer 360 is a proprietary framework for integrated Customer Lifecycle Manag
ement (CLM) services that touch every point in the customer lifecycle of your bu
siness. Customer 360 integrates both direct and indirect interactions of a cust
omer along the entire lifecycle from prospecting to acquisition to service to re
tention while also delivering insights through customer analytics. From a busine
ss point of view, this translates into reduced service costs, increased business
and enhanced profitability. From a customer centric viewpoint, it translates in
to customer delight and enhanced customer satisfaction by catering to their curr
ent and future needs.

Customer 360° comprises of:

• Customer Interaction services
• Back-Office services
• Customer Intelligence
How will Customer 360 benefit your organization?
Traditional delivery models address short-term business objectives like the need
to attract new customers or provide support - which caters to a single customer
touch point. This approach lacks a holistic view - in terms of customer experie
nce across other touch points and insight into customer s needs and behavior. Cu
stomer 360 is an integrated solution that can ensure market adaptability, compe
titiveness and assured business.
5.4 Inbound Customer Marketing Research Report
The world of targeted marketing is moving on apace. Organizations no longer rely
just on direct mail to get their message across. The norm is fast becoming: mul
ti-channel with the call centre, website, e-mail and SMS all joining the fray; m
ulti-stage where a number of contact events are tracked prior to making the sale
; and insight driven, where consumers are targeted based on their predicted beha
viors or the occurrence of specific events in their lives.

Chapter 6


6.1 Banking on an Online Future
These are the following opportunities and threats posed to retail banks by onlin
e banking.
The development of online banking has proved a mixed blessing for retail banks.
By allowing customers to service their accounts online, online banking represent
s a clear opportunity to reduce the costs of face-to-face banking.
However, the study suggests that over a quarter of Internet users are now using
online banking, the majority of customers are proving slow to take it up, and ev
en those who do still demand the reassurance of one-to-one personal support, whe
ther provided online or over the telephone.
A survey underlines the fact that customers valued the personal touch, with 63%
citing responsive service and being treated as a valued customer as the most imp
ortant factor driving their overall satisfaction with their bank or other financ
ial institution.
The problem is that for most banks, providing the personal support that customer
s’ value so highly can rarely be justified.
But at the same time bankers admit that the single biggest reason that customers
didn’t effect was the inconvenience of changing banks.
6.2 Cost Trap
It seems that banks are caught in a classic “cost trap”: Customers want detailed
, one-to-one, personalized advice, yet neither they nor their financial provider
s are prepared to pay for it. In the past this circle was squared through the me
dium of an independent financial adviser (IFA), offering free advice in return f
or the opportunity to sell financial products on commission.
However, the threat is pensions mis-selling have made many consumers wary of the
motivation of the IFA, while the introduction of CAT standards for a number of
financial products is cutting into the commission available to fund, “free” fina
ncial advice.
“With the coming of CAT, the selling of financial products will have to be done
on a simpler, more direct model,” says Dave Patel of financial software develope
rs DPR Consulting: “You can’t have five layers of people taking 1% commission an
d then managing that product for the customer’s lifetime. A lot of the banks are
interested in getting away from IFAs and owning the client directly.”
Banks’ motivation to move into the provision of advice will be as much about, cu
stomer retention as selling products – the challenge is to be able to do it cost
-effectively. He believes that the answer is for banks to invest in online, self
-service products which use knowledge management techniques to automate the prov
ision of advice which is nevertheless personalised to the user.
A suite of products should be created which can be tailored by banks to offer a
detailed wealth check to their users. Users need to spend about 20 minutes enter
ing their details, but in return they receive instant feedback, and by the end w
ill have created an online portfolio from which they can continue to manage thei
r affairs.
A financial adviser probably has knowledge of no more than 100 products. It’s al
so more personal that one can say he does not want any IT investments, or that h
e only wants environment friendly funds. And the software will spot contradictio
ns in his responses.”
6.3 The Rewards
The payback for the bank is in the amount of information about customers the onl
ine check delivers - up to 300 items of information on employment, home ownershi
p and so on. This approach is most applicable to the “mass affluent” customer wi
th over £10,000 in liquid assets.
Once implemented, online advice systems can be made available at no extra charge
to less valuable customers, and also be used to underpin the personal advice gi
ven to customers with more complex affairs.
With several retail banks, there seems to be a great deal of caution about creat
ing more and more online capability.
E-commerce generally has failed to live up to expectations, and the withdrawal o
f players like First-e from the market has made the prospect of Internet-only ba
nking as distant as the paperless office.
“There are lots of nice things you can do online, but you have to look at the co
sts and benefits,” says Angela Mackintosh, marketing director of “multi-channel”
bank If.com. “It’s like the 1980s when people did all sorts of computerised stu
ff on the basis that you could do it, rather than that it was what the customer
Ms Mackintosh says that If.com took a conscious decision when it launched not to
offer financial advice: “About 60-70% of our mortgage business comes from inter
mediaries, and obviously if a financial adviser introduces business then that cr
eates the opportunity for them to speak face-to-face with the client. In the end
the customer doesn’t pay anything for that advice. The product costs the same,
but we do less advertising and pay the intermediaries what we would normally pay
for acquiring customers through advertising.”

6.4 Understanding Your Customer Base

However, the ability at any time to drop out of the website and contact a human
being is seen, as equally important.
The problem for direct operators is that they are heavily dependent on branding,
and therefore cannot switch advertisement spendings into customer acquisition t
hrough intermediaries. And, like all players in e-commerce, they are discovering
that the opening of new channels to the customer does not necessarily mean that
old ones can be phased out.
There is an assumption that people who are technophiles and who use the telephon
e and Internet a lot will do that across the board, but that’s not so. A lot of
people are happy to do their banking online but for other things they want to se
e someone.
A lot of the basic transactional customer calls are going onto the web or to SMS
banking via mobile phone.
6.5 Cautious Future Expected
Banks have indicated that while online advice is something that they are looking
at in the medium term, in the absence of any strongly expressed customer demand
, it is unlikely to be a priority. Either way the tradition of getting financial
advice funded by the backdoor looks set to continue for some time.
People are not prepared to pay the money but there is a balance between paying t
he money and spending the time. Ultimately the more affluent will pay for advice
simply to free up their time.
Chapter 7
In the present uncertain economic climate, can banks and customers benefit from
an actively managed relationship?
Relationship banking and its effectiveness in today’s challenging economic circu
mstances. It is observed that despite serving the economy well, banks are genera
lly focused on distribution at the expense of understanding the needs of their c
ustomers. The growing fears of recession may be reflected in how banks deal with
their customers. It can be argued that a bank’s relationship with a customer is
driven both by the current macroeconomic outlook and by the bank’s assessment o
f the impact of recession on the customer’s business.

7.1 Strong Power Base

The “big” banks in India provide about 75% of domestic lending, and as such enjo
y even greater power than their counterparts.

7.2 A Key Element

In conclusion, relationship banking is the key to successful banking. The bank g
ains a better knowledge of the customer, the business and their needs. The custo
mer enjoys a partnership with their bank, allowing both sides to manage issues i
n good times and bad. Despite technological advances and change, banking remains
a people business, and the successful committed interaction of people is the fo
undation of true relationship banking.

Chapter 8
CRM is one of the primary initiatives in any industry and more so in financial i
ndustry sector, where competitive pressures from both financial and non-financia
l services are fueling the movement toward CRM as the companies are systematical
ly raiding a bank’s territory to pick-off the most profitable customers. Thus, o
ne has to begin with a financial institution’s strategic goals, develop a consis
tent technology platform that is scalable and support across delivery channels,
train people at all levels and incorporate a customer-centric approach to every
customer interaction. This article gives an overall picture of CRM with referenc
e to financial service industry.
Customer relationship management (CRM) is one of the primary strategic initiativ
es in industry today, regardless of whether the company serves retail or wholesa
le customers, whether it provides services or manufactured goods. In the financi
al industry, the movement towards CRM (also known as ERM for enterprise relation
ship management ) is being fueled by competitive pressures from both financial a
nd non-financial services companies that are systematically raiding a bank’s ter
ritory to pick off most valuable customers. Although CRM is not a technology, mo
dern high-tech applications, from relational databases, to data mining, to compu
ter telephony integration (CTI), to Internet delivery channels, are providing th
e means to implement customer relationship strategies today.
Estimates on the size of the CRM market vary, possibly because of the difficulty
in defining CRM. International Data Group predicts the CRM market will grow fro
m $1.9bn in1998 to $11 bn by 2003. AMR Research says the CRM market will grow fr
om $2.3 bn in sales in 1998 to $ 16.8 bn in 2003.
8.1 Defining CRM
One of the greatest problems with CRM is what it means. “The whole CRM concept m
eans different people, depending on what they want to do,” says Jimmy Sawyers, c
onsultant, Reynolds, Bone & Griesbeck, Memphis, TN.
• Financial services that are transaction based, such as credit card compa
nies or bill payment providers, want to manage the customer relationship to driv
e up transaction volumes and squeeze out expenses from individual transactions.
One customer generally has one account and it doesn’t matter if others within th
e same household have accounts. The goal is to provide incentives that get the c
ustomer to use the service more. Transactions become commodities. The customer r
esponds to price incentives and loyalty programs. There is almost no opportunity
to cross-sell to the individual customer.
• Consultative financial services, such as investment advisors and financi
al planners, use CRM to deepen the trust the customer has in the service provide
r in order to increase the fees for services. These companies earn fees regardle
ss of the number of transactions the customer makes. They may be able to increas
e their fees base by cross-selling additional financial services to individuals,
or obtaining additional relationships from the same household.
• Retail oriented financial institution defines CRM as a combination of th
e two extremes- managing the entire customer relationship in order to reduce cos
ts and increase the depth of the relationship with the customer. Generally, redu
cing costs means getting the customer to use less expensive delivery channels. I
ncreasing the customer relationship means either obtaining a larger “share of wa
llet,” or increasing the number of fee-based services the customer uses, or both

8.2 The Evolution of CRM & The Challenges of Personalized E-Support

Historically, customer relationship management has been the specialty of communi
ty banks. Bank management came from the community. Bankers knew their customers,
their families, and their businesses. Lending decisions were based as much on g
ood payment histories as on good standing in the community. Customers gave all t
heir business to one bank, appreciating the good services they receive as a rewa
rd for their loyalty.
As banks automated back-office functions with mainframes, and the number of prod
ucts and services a bank offered grew, banks found it increasingly necessary to
replace branch-based filing cards with a central information file (CIF). In earl
y 1970s, CIFs in even the largest banks were centrally located file cards. But b
y the mid-to-late 1970s, these card-based systems gave way to mainframe-based, h
ierarchical database systems.
8.3 Customer Support – A historical perspective
The Customer is King. This mantra, although used for a long time, has not been p
ut into
practice until recently. Forget the ideology of royal treatment; customers were
not even treated with dignity by most organizations. As recently as the 1970s an
d 80s, the concept of customer support meant that organizations were doing a fav
or by answering a few questions for the customer on the phone – after putting th
em on hold for an hour! Standing in line to buy something was common and expecte
d. Remember when the customers had to go to the airports to buy tickets only bec
ause the airlines kept them there? Organizations simply lost touch with the real
ization – that they existed because of these customers.
The 1990s brought two new concepts that challenged the prevailing business lands
Deregulation and the Internet. These forces brought down the barriers of entry,
resulting in an
environment of intense competition. Stores faced competition from on-line start-
ups. Traditional bricks-and-mortar banks fought for customers with online or vir
tual banks. Airline tickets were increasingly purchased from the convenience of
your home. The explosion in
information allowed consumers to compare features, and prices across multiple pr
oviders. Products became commodities and prices could not be lowered further to
ensure survival.

Customer service became the only major differentiator in many cases. Customers
received what they have always deserved – respect. The customer was now truly th
e king.
Business customers, although always treated with more respect than individual co
nsumers, were more or less ignored in the early stages of the Internet boom. The
emphasis focused on expanding the consumer base regardless of positive cash flo
w, revenues, and margins.
The demise of many dot-coms brought an epiphany. Companies realized that they
needed to focus on their enterprise customers. The advent of e-CRM applications
was the first big step toward providing better support to the strategic business
customers. Although these solutions provided automated self-service to customer
s, they still treated all customers the same.
Furthermore, the focus of these applications is more on improving call-center pr
Clearly, these applications add value and help many organizations execute their
CRM initiatives. However, they are not effective in meeting the needs of an orga
nization’s strategic enterprise customers. Each enterprise customer has its own
needs and craves personalized support.
8.4 Evolution of Customer Relationship Management
The genesis of CRM (Customer Relationship Management) lies in Sales Force
Automation (SFA) tools. Companies like Siebel and Vantive (now part of PeopleSof
t) took the early lead by introducing tools to help the sales personnel become m
ore efficient in tracking their customers. There were also a few problem-trackin
g tools for help desk such as Remedy. As companies focused more on customer rela
tionships, additional applications emerged in areas of customer support, field s
upport, and marketing automation. Most CRM companies today are trying to address
these four areas usually by partnering with other companies. Most of the ERP pl
ayers are also expanding their solutions to include CRM.
There are a number of niche players focused only on certain pieces of CRM such a
s e-mail management, sales force automation, technical support, marketing campai
gns, among others.
“CRM is a business strategy designed to optimize profitability, revenue, and cus
satisfaction” – Gartner Group
Although there are quite a few vendors providing CRM related products and servic
there is still a lot of confusion around the concept of CRM. CRM is not just an
application or a technology that can be thrown at the customer satisfaction prob
lem to make it go away. CRM, essentially, is a strategy that involves applicatio
ns, processes, policies, business context, and people, to enable companies to ma
nage and increase profitable relationships with their customers. An enterprise’s
strategic customers expect top-notch treatment. They want the vendor to underst
and their needs. They want companies to build a strong relationship with them -
on a 1-to- 1 basis.
8.5 Current CRM and E-support Environment
There are currently over 200 CRM software vendors and the number continues to gr
Although, there are various types of applications included in CRM suites, as des
cribed earlier, the core application within the CRM landscape that truly builds
customer relationships is the customer service application. Other pieces, though
useful, are focused on helping the vendor rather than the customer.
Many of these applications were initially focused on providing an environment to
improve the productivity of call-centers. In addition, some of these applicatio
ns integrated message queuing functionality to provide a common environment for
all channels. So, whether
the customer was trying to reach the call-center by making a call, via e-mail, b
y fax, or through the Web site, their query is prioritized and channeled through
the same mechanism.
Most customer service applications now provide Web-based self-service features f
companies to offer their customers. Customers can look up their basic informatio
n like billing, order status, etcetera by logging in to the vendor’s Web site. W
hile this solution works for a B2C model, for enterprise customers with hundreds
of users and hundreds of products to support, this simply doesn’t work. Enterpr
ise customers demand personalized support in order to access their information q
uickly and easily. In the era of information-glut, they want specific and releva
nt information.
Companies are trying to manage relationships with their customers, partners, and
suppliers in a personalized and automated manner. True personalization is not e
asy as each
customer has its own needs and requirements. The issue is further complicated by
the fact that these customers are in different vertical industries and also geo
graphically dispersed making their requirements even more unique.
8.6 The challenges of personalized Enterprise E-Support
While certain aspects of personalization are relatively easy – such as allowing
to create their own preferences on the Web site – the process of providing only
customer-specific information, especially to enterprise customers is challenging
. These challenges include:
• Relevant information: One major issue that most organizations face is finding
information pertaining to each customer. Most often, this information is buried
in disparate databases and extraction of relevant information at a customer lev
el is a Herculean task.
• Information Updates: As the information is constantly evolving, continuous up
dating for customers’ reference is required. In most cases, information is updat
ed on an ad-hoc or periodic basis resulting in delayed and inaccurate informatio
n and high overhead costs of updating the information.
• Publishing of information: Since the information resides in various diversifi
functions within an enterprise, publishing of information is a major problem. Tr
publishing was restricted to certain IT professionals and business users who typ
ically forward their documents to these IT groups for publishing on the Web. Thi
s approach is not only bureaucratic, and expensive but also excludes a wealth of
tacit and explicit knowledge that never gets published due to lack of tools.
• Personalized Applications: Some vendors offer personalized portals based on c
ustom profiles created by users. Although these models work for the consumer lev
el user, they do
not provide value for enterprise customers. It puts the burden on users to defin
e in what information is more relevant versus not. Business customers need an au
tonomous environment can all their users interface with the vendor enterprise an
d get the relevant information quickly
• Communication: A relationship is based on two-way communication. Most esuppor
and relationship portal solutions are designed for enterprises to communicate to
the user.
A critical challenge is to enable a process where business customers are able to
truly interact with the vendors, beyond the usual e-mail and phone options.
• Security: Security continues to be a major issue for organizations especially
for -based support. User authentication and management can be a nightmare for v
endors trying to
manage thousands of users coming from diverse locations.
• Scalability: When hundreds and thousands of users try to get to the same info
rmation in a central database, scalability is a big issue. Response times get sl
ower and systems can breakdown. Companies are trying to solve the scalability is
sue by throwing more and more
powerful hardware at it.
• Deployment: Deploying a CRM solution is a tough and lengthy process. Deployin
g a Web-based support system is even tougher. Furthermore, deployment in a perso
nalized fashion focused just on enterprises, that can be a rat’s nest if not imp
lemented carefully.
8.7 Overview – More than just E-Support
As competition intensifies, organizations need to increase their focus on enterp
rise customer relationships. An urgent need exists for solutions that enable ent
erprises to manage
relationships with their key customers on a personalized basis. Most of the curr
ent solutions fall short in providing a truly scalable model, where customers re
ceive an autonomous and
personalized environment for their support needs over the Web.
Each customer gets their own personalized Weblet, with real-time information tha
t pertains only to them. Customers are able to get specific and relevant informa
tion -quickly and easily - to resolve any problems or issues without going throu
gh numerous steps or phoning the call-center. Enterprises cut their costs by dra
stically reducing the number of calls into the call-center. Since these Weblets
allow bi-directional communication, customers can give instant feedback to the e
nterprise. The solution is not just about providing support on the Web. It’s ab
out managing relationships with key customers.
The following diagram shows how solution integrates disparate databases within
enterprise and provides targeted Web-based support to the business customers:
patent-pending mediation technology provides a unique, innovative, and intuitiv
e architecture that automates an enterprise’s collaborative ecosystem comprising
customers, partners, and suppliers. The solution enables companies to interface
with multiple customers through a mediator, allowing them to deal with enterpri
se customers on a one-to-one basis, without creating separate processes. Organiz
ations can achieve a return on investment of 20X of their up front licensing and
implementation costs. The solution not only provides a major competitive differ
entiation, it also enhances an organization’s shareholder value.

Example of how CRM solution works

Source: Maaya solution

Chapter 9

The Today s Events function displays a continuously updating list of companies w

ho have recently released market information. Each company listed is then also h
yper-linked to the latest relevant press release relating to that company. Altho
ugh the opening page only lists those companies on which information has recentl
y been released, it is also possible to list every company currently being track
ed in order to get more information on what that company has been doing. This li
sting is updated each evening so as to keep you abreast of all the latest change
s. The Screenshot below will provide a fuller example of how this looks:

source: financial editorial “ Money mantra”, 1999 Oct. ( Publication: vikas pres
Chapter 10
10.1 Ten Myths About the Customers
To become customer centered and customer preferred, a firm must change its orien
tation and design its business capabilities, infrastructure, and measures of suc
cess from the outside-in by using the customers perspective. There are several
real issues to overcome to do that. The first is that a firm s current beliefs a
bout its customers tend to drive its policies, decision making, and not only wha
t its employees do with customers, but also what they don t do. This becomes so
embedded that firms practice this without realizing it, and thus resulting in a
great resistance to new ideas about customers when the old ideas are so heavily
The automobile company, for example, did not want to hear that customers were mo
re interested in their coffee cup holders than other attributes of the vehicle.
"We build cars for driving, not for drinking coffee" was a typical example of ho
w a mindset about customers can filter out and resist hearing ideas or concepts
that do not match prior conceptions about customers.
10.2 Retail Bank: Let s Ask the Customers
At one of the largest, most successful banks in India, in a survey,there were in
a quandary because tens of millions of rupees had been expended on telephone co
ntact centers, yet the volume of calls was growing at such a rate that the capac
ity of that relatively new equipment would be exceeded in a year or so.
"Who s going to tell him?" asked one executive, referring to their CEO. No one m
ade eye contact. Some examined the ceiling tiles, while other execs scrutinized
their feet, apparently concerned that some shoelaces might be loose and in need
of tying.
The silence grew heavy. Ultimately, as an outsider, I felt it was okay to fill t
he void and speak.
"If a customer comes into your bank it costs X to handle the interaction, but if
they call your contact center it reduces your cost by 90 percent?" well the ans
wer is yes. Not many executives realised this aspect to serve customer at a lowe
r cost.
"Thus volumes are growing, because the more you can change customer behavior by
providing a desirable, less-costly access channel, the more profit you will make
Eventually all companies want customer contact to be conducted at low-cost chan
nels, rather than via high-cost brick-and-mortar branches".
A customer vision has to be developed, outside-in, of an ideal bank and of the
ideal customer experiences during touch-point interactions with a bank s telepho
ne contact center. One element of this vision is what the customers view of how
the bank could provide greater benefit to them by contacting them at home (unde
r certain circumstances, which the customers would highly value). Besides, how a
n offer of a product during a service conversation (cross-sell) would be feasibl
Securing an actionable, outside-in vision of business from a customer can enable
it to stay up with newly emerging needs and wants and to overcome the myths tha
t currently have an impact on the organization’s effectiveness.
Ten common myths about your customers.
Myth 1: Customers want the lowest price—period.
A powerful concept to remember is that a product or service offering is rarely a
commodity that can only be differentiated by price. The fact is that the savvy
business can differentiate even a roll of steel, arguably one of the most rock-s
olid examples of a commodity. The traditional way to compete with a commodity is
to lower your cost of manufacturing, and then lower the price to drive addition
al sales and "make it up on volume."
Consider how to attract and retain customers on a value proposition other than p
rice: The value-added expert advices that can be given to help the customer bett
er use that product. In many cases these can be leveraged to provide great value
to differentiate a firm or product and can often warrant a higher price, altho
ugh the competitors offer a lower price.
Myth 2: We know what our customers want (or don t want).
Perhaps the greatest inhibitor to go beyond "Have a nice day" service platitudes
is the belief within a firm that its prior history and years of experience resu
lt in perfect knowledge of what customers want and do not want. Virtually every
firm at one time has felt it could skip the development of requirements via "cus
tomer visioning" and go straight to implementation of new processes and channels
for customers. After all, the firm has been in that business for (number of dec
ades here) and no one knows their customers better than they do.
There is, in fact, someone else who better knows what the customer wants—the cus
tomer! In order to develop an ideal, customer-defined future vision of the firm,
there is no other substitute.
That does not mean that the company has no valuable information at all. Front-li
ne, customer-facing personnel can be a valuable source of information regarding
the performance of current processes, channels, and product or service offerings
. Customer complaints and customer service contacts provide excellent feedback o
n what s not working. The important thing in those cases, however, is that the i
nformation still come directly from the customer, not from one’s intuition due t
o years of "being in the business."
However, over time it can become less clear which of your beliefs regarding cust
omers is actual, literal customer feedback versus intuitive beliefs formed and r
eformed over the years. The result can be a strongly held set of beliefs, such a
s those of the bank contact center, that are rigidly driving the wrong actions.
Even if known once, exactly what customers wanted, in the current environment of
rapidly rising service levels, such desires are fast-changing and if one has no
formal vehicles to monitor these, then do not know them.
Finally, while front-line employees may know what customers like or dislike abou
t current products and services, they often lack the ability to place themselves
in the customer s position to envision creative new offerings and interactions
that would appeal to deeply hidden or newly emerging customer value systems. By
probing directly with the customers why they want things—and understanding how c
ustomers get value/benefit from the things they want—it is possible to jointly e
nvision and develop creative, new breakthrough ideas, which brings us to the nex
t customer myth.
Myth 3: Customers cannot envision what does not exist; focus groups are a waste
of money and, besides, no Sony customer ever envisioned the Walkman.
This wonderful myth is born from many firms expending great sums on research, an
d sitting for hours behind one-way mirrors watching ineffective focus groups tha
t yield little of value. Anything, done the wrong way, can be disappointing and
ineffective, including focus groups.
It may be true that engineers, not customers, envisioned the Sony WalkMan. Proba
bly no customer spontaneously may have said, "Eureka, I want to take my big cons
ole radio and strap it to my head for music while I am out jogging—if only engin
eers could reduce the size of the components and then come up with cool-looking
But that is not because customers lack the capability to envision things that do
not exist. Rather, it is because market research techniques often do not genera
te a line of thinking that breaks the person out of using only currently availab
le and existing things to develop their vision.
With such approaches, Sony could have arrived at the same idea, probably earlier
, and from a customer. And with such approaches, any business can.
Myth 4: Customers do not want to be telephoned at home—always.
As the banking client learned, it is unwise to project one’s own personal prejud
ices, likes, and dislikes onto the customers. In fact, customers in visioning wo
rkshops for many different industries have stated that the primary problem with
being contacted at home is that it is almost always by a blanket marketing progr
am and not targeted to their specific interests. Customers hate to be contacted
when the call has nothing uniquely to do with them, but is merely part of a mass
-marketing campaign: "Don t call me about your great special on boat insurance i
f I don t own a boat!"
However, if a customer owns a particular investment product and something happen
s that could impact them personally—perhaps new legislation that could have tax
implications—they would actually appreciate receiving a targeted, personalized,
individual-specific contact. "Except during the dinner hour. Always."
Myth 5: Customers do not want to be sold to, when they telephone for service.
This is a common misconception resulting in missed opportunities in all industri
es to provide great customer value during touch-point interactions.
As with all these items, there is both opportunity and risk involved. The risk w
ith this one is twofold: First, never try to sell a customer something until you
have handled—to their satisfaction—whatever the issue was for which they origin
ally called. Second, never make a generalized, mass-market, blanket offer. The o
pportunity here is reciprocal: After the customer s issue has been addressed, it
is almost always appropriate to make them an offer as long as it is tailored an
d targeted to their personal interests and values. "Mr. Thompson, I m glad we co
uld resolve that for you. Before we end our discussion, I see that you are an av
id golfer (perhaps Thompson used his credit card to charge a set of clubs or a g
olf cart rental). As you may know, our travel service department has a special o
ffer for two nights at the Hilton in Myrtle Beach, with free golf, for only $99.
00 next weekend. Would you be interested?"
Myth 6: Customers do not want to give us information about themselves.
In today s world there are well-publicized and growing public concerns regarding
the use of personal information. These include, but are certainly not limited t
o, real issues of invasion of privacy, breach of confidentiality, identity theft
, and plain old irritation at being contacted by someone who has obtained one s
phone number, postal address, or Internet address.
However, customers also place a high value on the benefits and value they can re
ceive (see Myths 4 and 5 above) from targeted, individualized, and customer-spec
ific interactions. For example, the term tailored and personalized crept into th
eir vocabulary by the late 1990s. During the early 2000s, personalization moved
from a distant rumble of occasional customer delight to a roar of expectations.
And to receive the benefits of targeted, personalized products and services cust
omers must now enable their vendor with relevant data about themselves. In retur
n, the firm must secure the data (with controlled, employee-only, and role-appro
priate access) and then use it only for the purposes for which it was provided.
With these assurances, and some well-earned trust in your brand, customers will
share information with you. This is a highly volatile and critical issue that re
presents both opportunity and risk to the extreme. Personalized interactions can
literally become your most powerful loyalty generator, but if you misuse custom
er information and lose their trust, you can lose not only your customers, but a
lso your market
Myth 7: Customers who call hate to be transferred.
While this statement appears to be intuitively correct, the reality is actually
counter-intuitive and it depends on why they are calling. If a customer contacts
for general information regarding your business, products, prices, and so on, t
hey may well expect to get an answer from their first point of contact. However,
if they want expert advice, they do not expect the first person who answers inc
oming calls to also be an expert in all things. In this case, a transfer of thei
r call can actually reassure them they are going to the "right" person who has t
he expertise. However, that should occur with no more than one transfer.
Myth 8: An apology is never enough (so we don t do it).
A common myth that drives the behavior of customer-facing employees is: Our cust
omers don t want an apology; they only want some form of personal compensation o
r concession for mistakes. In many businesses that myth is not only accepted, cu
lturally, but it is an actual business practice to never admit or take responsib
ility, for fear it would only encourage the customer to feel aggrieved and would
somehow later be held against them.
This is almost universally incorrect. In fact, customers repeatedly say that the
most powerful thing a firm can do after an error is to admit it—and apologize.
However, in order to have the greatest effect, the apology should also be accomp
anied by assurance that action has been taken to insure the error will not occur
again. For example, an apology during the customer interaction, followed by a l
etter from management that the reason for the mistake has been determined and th
at corrective measures are now in place, can actually increase loyalty. Customer
s are often delighted with how a firm responds to and corrects a mistake. Custom
er defections in those instances were actually less than the defection rate of c
ustomers who had experienced no problems at all.
Myth 9: Our customers and their needs are unique.
Another common misconception is that customer needs for a given firm, industry,
or geography are unique and quite different from those of other firms, industrie
s, or geographies.
Virtually everyone needs responsive service, and easy, timely access to their ve
ndors, irrespective of industry.2 However, the customers of a stock brokerage wi
ll place a higher priority on quick and easy access to placing their orders than
customers of a locomotive manufacturer. The customers of an accountant will mor
e greatly demand precision than customers of a hair stylist, although it is a ne
ed shared by both.
Within an industry, customer segments will tend to have similar needs but differ
ent priorities, e.g., financial services where older people value safety over gr
owth and younger ones tend to prefer taking risks in order to attain growth. Bot
h groups need growth and safety, but to attract and retain each of them requires
a dramatically different offering by the industry.
Beyond the prioritization or importance weighting differences, we also find that
approximately 30 percent or so of the actual customer needs are often unique to
a specific industry or customer set. What is important here is:
• A firm can begin its customer journey and focus on some basic needs that
are relatively common to all customers (and which I will share with you in the
next chapter).
• Once the firm can "walk" and provide such basic loyalty-driving needs, i
t can progress to "run," via market research to determine the 30 percent or so o
f unique needs and any prioritization differences that may be necessary to attra
ct and retain segments.
• However, it is dangerous to then assume that when a business model is su
ccessful for one customer set that it can be cloned as "our standard set of corp
orate processes" and will work around the world. It s that 30 percent of variabi
lity that can still kill the business.
Myth 10: We know what our customers need (not want . . . need).
This myth or misunderstanding is tightly linked to discussions that firms founde
d on their own internal expertise and product knowledge often continue to believ
e that, due to their product expertise, they are the experts on what customers n
eed. This is quite different from the issue of what customers want. It assumes t
hat product expertise equates to also knowing what is best for the customer. In
fact, firms with extreme product competence may be even less likely than others
to know the (changing) needs of their customers. These firms are also the ones l
ess likely to have processes and competencies for listening, understanding, and
responding to customers in a rapidly changing environment.
Beyond that, even the companies that listen to what customers want almost always
lack the insight required to know and fully leverage what the customer actually
needs and would most value. This is because only the customer completely unders
tands how they get value or benefit from something they want, and that underlyin
g benefit is why they NEED it. Understanding what they want is good. Understandi
ng why they need it is critical to creatively develop new products and services
to better meet those needs. And that is why the customers, not only the company,
must be included in creative visioning of needs-based, future products and serv
ices (see Chapter 9, "What They Need: Customer Visioneering").
Exercise: You Are the Customer
What about when you are the customer?
Do you always search out the lowest price? And do you always then purchase from
that low-cost provider? Always?
If not, when have you bought something and known a similar item was available el
sewhere and cheaper? Why? What was it that you valued greater than price?
Have you ever been contacted by phone, at home, and actually appreciated the cal
Why? What was it that you valued greater than being undisturbed?
Have you ever received an offer or proposal, although you originally initiated t
he contact on a different subject, and appreciated it? Why? What makes it okay i
n your mind, even great, to be offered something (such as a product or service)?

When you contact a business, do you expect the first person that answers the pho
ne to be able to answer questions or handle issues on any topic? Why or why not?
If you need advice on a complex matter such as investment products, do you expec
t to be transferred to reach an expert on that subject? If you were not transfer
red to someone who specialized in such a topic, would you be comfortable with an
d trust the answers you get?
Do you think the above is true only for financial issues, advice, and counsel? O
r is it also true for other businesses—such as yours? For example, how secure ar
e you that a salesperson can also give you accurate technical advice about the e
lectronics under the hood of your new ZOT 12? Would you be happy if a single tra
nsfer could get you from the salesperson to the right technically knowledgeable
What if a business made a major mistake with your account? Would it be important
to you that they apologized? What if they did not? What if they would not even
admit to the error?
Can a vendor best envision new products or services to meet your unexpressed fut
ure needs, or would you need to apply your knowledge of why you need things and
how you could get the greatest benefit or value? For example, can you envision t
eaming with a vendor and discussing why you want what you want and then together
envisioning new ways they could better provide that benefit?
Could a firm that offers this steal away your business?
• What about your customers?
• Would they answer the above very differently?
• Are you treating them differently?

What Customers Want

10.3 Five "Doing-Areas"
We can categorize what customers want to do on the Web under five "doing areas,"
as follows:
1. Evaluate competing businesses and products.
2. Select products and transact with e-service providers.
3. Get help.
4. Provide feedback.
5. Stay tuned in as e-customers.
These five areas are all important. Customers will operate in one area more than
another at a given point in time, depending on where they are at with what they
re trying to do. We can think of the five areas as a rough progression, from ev
aluating businesses and products to becoming customers to receiving after-sales
support and information
Customers have to decide between businesses and products. Web sites are a part o
f that decision-making process.
When deciding among businesses, customers will either actively or passively get
information from a company s Web site. Customers want to make sure they like a c
ompany enough to do business with them. Customers are more likely to actively se
arch for, and evaluate, information on a company when they are new to the market
for a product. They re likely to look at parts of the site that give them an id
ea of what the company is up to. Customers who already have dealings with a busi
ness are less likely to actively seek out their general company information. How
ever, they may actively seek out information on a particular incident or company
activity if it affects their preference for that company.
Potential and existing customers will get a feel for a company just by being on
its Web site. How customer-centric the site feels will give them an idea of the
quality of the customer service they can expect. How well the company has used t
echnology will give customers an idea of how switched on it is.
Of course, a company must be the type a customer is looking for, and must offer
the type of products a customer wants. The search for, and evaluation of, produc
t information is key for new and existing customers. Customers will evaluate dif
ferent products offered by one company and by different companies. Sometimes tha
t evaluation will result in a sale (either online or offline) and sometimes it w
on t, but it is all critical to the decision-making process. Customers may also
evaluate product information available in other forms, like brochures, as part o
f their decision-making process.
The importance of being able to find useful product information has been reinfor
ced in GVU s tenth user survey. The survey showed that the provision of quality
information is the most important attribute of a vendor s site. In addition, the
greatest cause for customers to leave a site is not being able to find the info
rmation they were looking for.
Customers evaluation of product information is not about passively viewing prod
uct blurbs. Customers seek out product information and interact with Web sites,
and a business, to find out what suits them best. Customers are quick to use any
sort of useful interactivity to get a better view of what a product offers them
, how much that will cost, and how easily they can get it. The more usefully int
eractive product information is, the more the customer will use it.
Mortgage calculators provide a good example of useful interactivity. Customers e
nter the amount of the desired loan, and the various features they require, to f
ind out how much it will cost them, over a certain loan period. By changing the
variables and running the process a few times, customers get a good idea of what
they re in for.
Customers will provide information on themselves to get an intelligent response.
This can take many forms, not just strictly mathematical as in the mortgage cal
culator example. They will enter information to get a personalized response. And
they want as much help doing that as possible. They want to compare the various
scenarios they ve generated and the responses they ve got, and they may do that
right then and there on the Web site or come back a few times to try things out
Customers will take time out to evaluate products. The more useful the informati
on, the more likely they are to spend time evaluating them. If product informati
on is not useful, chances are customers will abandon your Web site for someone e
lse s. The tenth GVU user survey showed that Web users can spend up to half an h
our looking for the information they want.
Sometimes, you can t tell customers everything they need to make a decision. In
these cases they will ask you questions or request more information. Or customer
s may not be able to locate the information they need, and they ll come straight
to you and ask for it.
At this point, customers are pretty single-minded, and they re unlikely to give
you a whole lot of background information when asking questions. This can make i
t difficult to direct and respond to customer questions. You can lead customers
to ask more meaningful questions, if you give them some simple selections to mak
e when entering their comments. In fact, sometimes this makes inquiries easier f
or customers.
Customers are faced with a lot of choices when they go to a Web site. They will
make selections to personalize their experience and the services and products th
ey receive. That selection will comprise the choices they make to get around you
r site and identification of the things that they want or that particularly inte
rest them. This may involve choosing a particular product there and then or sett
ing themselves up to receive information and services later.
And sometimes, that selection will lead to a transaction. This transaction may o
r may not be financial. When customers transact with you, they give you somethin
g in return for a service. Sometimes that is simply information, for example, wh
en they register to receive particular information online.
Customers have to select the path they take through your site as much as the par
ticular services and products they want. They are using your Web site to create
a context that is relevant to them personally. Selection, then, is the process o
f personalization.
When making their selections, customers rely heavily on tools to seek out person
ally relevant information, such as site maps, search functions, indexes, and sho
rtcuts. They also use tools that help them receive personally relevant informati
on and services, such as entering personal information to create profiles and re
ceive personalized content.
Personalization is an all or nothing proposition. Personalization should allow e
-customers to modify the information and functionality they receive on Web sites
, based on facts related to their own particular situation. E-customers will fin
d Web sites irrelevant and intrusive if they do not receive something personally
relevant and useful in return for the information they have provided. E-custome
rs are more likely to provide personal information on Web sites that clearly off
er valuable and useful information and functionality in return for the informati
on they have provided.
Customers may seek help at different times, as part of their evaluation process
or after they have made a selection and transacted. Customers will also seek out
help on different levels: getting around the site, evaluating what is best for
them, and getting the best out of something, and solving a particular problem.
Customers will interact with your site to:
• Work out how to use your site. Customers want to learn how to get around
and optimize the use of your site as quickly and easily as possible.
• Find out how something works once they have it.
• Resolve a problem online.
• Find out where to go, or whom to talk to, if they have a problem that ca
n t be easily resolved online.
And don t forget, a Web site is only part of a customer s experience. Customers
may also seek help outside of your Web site. Tailored advice is still very impor
tant and, oftentimes, this only comes from talking to someone.
Customers will provide feedback. This may be voluntarily provided by e-customers
(unprompted) or solicited (prompted).
Customers sometimes want to provide feedback on an experience they ve had with y
ou, either on your Web site, or in general. A Web site provides a medium where p
eople can have a good moan without having to talk to someone in person.
Customers will complain and unprompted feedback is usually negative, unfortunate
ly and fortunately. It s unfortunate because it can create a skewed view of how
well you are doing and fortunate because it provides an outlet that customers ma
y not otherwise have. It also gives you a chance to get things right where you m
ay not have otherwise known something was wrong.
Feedback on your Web site may not be particularly helpful, because customers don
t understand the way your Web site works as well as you do. "Your Web site stin
ks" might be all the feedback you get after a customer has spent half an hour un
successfully trying to do something useful. You may never find out what the cust
omer was trying to do or exactly what went wrong. However, if you prompt feedbac
k in places related to specific things you know customers are trying to do, and
give them some guidance on what you want to know, you re more likely to get usef
ul feedback.
Customers are more passive when it comes to prompted feedback. However, customer
s will give you information, provided they get something worthwhile in return. A
customer who is very involved with your company or your product may want to hav
e some involvement with the decisions your company makes. Those customers still
need to see payback for time spent. This payback does not equate to a bribe eith
er. Seeing the difference the feedback makes may be enough for a customer.
The level of day-to-day involvement e-customers have with businesses as e-servic
e providers will determine how much they want to "tune in" to their Web site. Fo
r example, a bank s customer is more likely to want to use a Web site for freque
nt transactions than a computer supplier s customer who may only purchase once a
Even if customers are not transacting with you on a frequent basis, they will st
ill use your Web site to:
• Access and maintain any information they ve given you or that you share
as a result of your service relationship.
• Be sure they ve gotten the best deal you can provide.
• Access special deals or offers.
• Get the most out of the product they ve purchased.
And, again, let s not forget that a Web site is only part of a customer s servic
e experience. Customers may have relationships with people within the service-pr
oviding organization, and these are also an integral part of day-to-day support.

10.4 Seventeen Customer Directives- evolution of E- CRM

When we get in the way of what customers want to do on the Web, they get frustra
ted. What they want to do will comprise getting around a site and making use of
the content and functionality it offers.
There are some complaints, or requests, in relation to a whole range of Web site
s and industries. Customers don t know all the marketing and business reasons be
hind the way a business has done things, they just know what they want it to do,
and they ll state it in simple terms they understand.
However it does not imply that customers will be equally frustrated by all these
blunders. They will be most frustrated by what gets in the way of the things th
ey want to do the most (and this will change depending on where the customer is
at). Also, customers will take the Web site on balance. If they are provided wit
h some very useful things, they may put up with some blunders and learn how to g
et around them (but that s not an excuse for making the blunder).
The following customer directives will give some triggers for thinking about all
of the factors that contribute to a frustrating customer experience, the thinki
ng and planning that goes into a site, the content that ends up there, the visua
l interface and interactive functionality, and the performance of the system in
general. All of these dynamics will be explored in depth in this book, and these
customer directives will set a frame of reference for later. If businesses and
Web site designers are aware of what frustrates customers they will be more like
ly to direct their energy into areas most likely to result in customer effective
1. It should Be Worth the Wait
Everything we offer on the Web is subject to higher expectations because custome
rs have to wait for it.
On the Internet we have to wait for things to download; that s a given. Slow dow
nload speed is still rated by customers as the biggest negative in their experie
nce of the Web, but they live with it. Customers get mad when they wait for a pa
ge to download and then find there s very little on it. Sometimes it s just obvi
ous that that part of the site is under construction. Customers feel that compan
ies should make the effort to complete each page before offering it online.
Under construction
This doesn t necessarily mean that a business should refrain from presenting a p
age that is "under construction," but it does need to be handled appropriately.
Customers will feel cheated if they spend time following a path only to find the
ir ultimate destination under construction.
Dead ends
It is surprising the number of times a customer comes to a "dead end" on a Web s
ite, a point where no new content is delivered. This is especially true of Web s
ites where a standard navigation (such as frames) has been used across all produ
ct content. A page should not be offered if there is no new content available on

Another common frustration is taking one path to find information and then takin
g another, only to find yourself receiving exactly the same information. Custome
rs expect different paths to reflect different customer needs, and they get anno
yed when they find the same information having taken different paths. This is pa
rticularly problematic in relation to calculative or scenario-based functionalit
y, where the customer sees quite different variables and considerations leading
to exactly the same outcome. If the outcome is the same for all the different va
riables, why would a customer bother going through the process of generating sce
narios always to end up at the same place?
Gratuitous content and functionality
Download time also makes customers more sensitive to time wasting. Customers wil
l see anything that doesn t exist for a reason as gratuitous. This does-n t mean
they don t want graphics or other interesting and creative devices on Web sites
; they just want these things to be a worthwhile part of the journey, and, there
fore, worth the wait.
Navigation leading to nothing
Say a Web site offers "tips from other customers" as part of the standard naviga
tion for evaluating products. However, only one in five products actually has cu
stomer tips associated. When the customer clicks on "customer tips," chances are
, there won t be any. This will get annoying after a while. The level of annoyan
ce would be even greater if it was something fundamental, like product prices, t
hat was sporadically available.
Worthless downloads
Consider a company who has run a series of TV ads and has decided to profile tho
se ads on their Web site. Customers can click on a picture of a screen shot from
each of the TV ads and this starts a download. The download takes about five mi
nutes. Customers who complete the download find it to be a reproduction of the T
V ad, nothing more, nothing less. They wonder why they bothered taking the time
to see something they ve already seen on TV. After all, TV is a better medium fo
r the ad anyway. They expect the Web site to give them more information, to comp
lement the ads, not just reproduce them.
2. What Customers Get If They Do This
Web sites can t show everything all on one level. It s just physically impossibl
e. We have to put different information on different levels and give customers p
aths to navigate their way through it.
Customers need to make an informed decision of whether or not it is worth their
while to head down a particular path or partake in a particular process. The mor
e we can tell customers about the consequences of their actions, the better. And
"telling" a customer what s going to happen, or is happening, will involve writ
ten and visual cues.
Blind action and hidden consequences
Unfortunately, we often don t make a certain path clear to customers and they do
n t know what they re committing to when taking a certain action. The result of
an action isn t always clear. This means that customers will not try the action
or will try it and be disappointed or confused.
This is particularly problematic when customers become eligible for something as
a result of a transaction, but don t know exactly what that is until after the
transaction. This might result in customer delight if they are eligible for more
than they expect, but, chances are, they ll be disappointed.
Also, when customers are considering whether or not to purchase online, they wan
t to know what the process is and need help every step of the way (including con
firmation of a successful purchase at the end of the process). Customers often f
eel uncertain about what s happening to them if they don t understand the steps
they re going through. This lack of understanding sometimes results in fear, and
this will prevent some customers from purchasing online.
Hidden time requirements
Some processes take up a lot of customer time, but the customer doesn t know tha
t up front. Customers don t mind investing a bit of time if the payback is good,
but they get angry when things unexpectedly pop up along the way. Downloads are
particularly problematic because of the time taken to complete them. Many custo
mers also aren t comfortable with performing downloads; they feel they don t kno
w enough about what s going on. Some customers will venture a download, but they
need to know exactly what s involved up front and receive help along the way.
Blind registration
A researcher comes to a Web site to find out about a particular piece of researc
h they know has been completed by a research organization. They are not a client
, as such, but are prepared to register and pay for the research if necessary.
On coming to the Web site the researcher finds that the information they want is
not publicly available. The Web site does, however, offer registration. There a
re two types of registration, one for clients and one for a complimentary accoun
t. There is no explanation of what the registration processes will offer. Irresp
ective of this, the researcher is willing to register for a complimentary accoun
t, because they expect it to give them access to the piece of research they re l
ooking for.
The researcher goes through four screens to complete the registration process. (
It would have been five or six if someone else had chosen the same username or p
assword as they did.) On completing the registration process, it finally becomes
clear to the researcher what they are eligible for. It turns out that they can
access the research they want, but they can t access the full transcript without
client access.
The researcher now has to go back and find out what is required to qualify for c
lient access. They are perturbed that they didn t know, up front, what they had
to do to get the information they wanted. Let s hope the research, if they can a
ctually get hold of it, is worth all this hassle.
The sequence the researcher goes through is shown in Figure 2-1.
Figure 2-1
3. Blind Registration
Sometimes customers want to be anonymous and sometimes they want you to know exa
ctly who they are. Customers use their anonymity as a basis for getting impartia
l advice and information without any sales pressure. This tends to be early in t
he process when a customer is evaluating alternatives.
The importance of anonymity is reinforced in GVU s tenth user survey, where peop
le agreed strongly with the statement that they valued their anonymity on the In
ternet and enjoyed online shopping because of the absence of sales pressure.
Figure 2-1 Blind registration.
However, if customers want to transact with you, and if they have a history with
you, they may well want you to know who they are. This is likely to be later in
the process when identification benefits the customer.
Problems arise when we misjudge when people want to be anonymous and when they w
ant to be identified. Forcing customers to identify themselves too early in an i
nquiry process could prevent them from going through with it. Additionally, Web
sites sometimes don t make it clear whether customers are anonymous or not. Cust
omers can sometimes incorrectly surmise that they have been identified, and then
get disappointed when they don t receive personalized information.
4. Customers have to use what is generally given
If you ask customers for information, they expect you to use it in some way. Thi
s applies to information that returns a response then and there, as well as late
r on.
If customers are using functionality, such as a calculator, or a drop-down menu,
to create outcomes from different scenarios or selections, they expect the info
rmation they enter to directly affect the outcome. Customers get frustrated when
they enter information and it doesn t change the outcome.
Similarly, if customers give you information about themselves during their Web-s
ite experience, and then you don t use it for anything useful to them, they wond
er why you needed it in the first place.
In addition, customers expect Web sites to remember things so they don t have to
tell you the same thing over and over. This is particularly true when customers
transact-if they seek to do a number of transactions sequentially, and they giv
e you personal information the first time, they expect you to remember it, to sa
ve them from reeking it each time.
Go-nowhere selection
A customer wants to find out the cost of a phone call to, say, part of the Unite
d States. They find a calculator that allows them to enter where they re calling
, and when, to find out the cost of the call. The calculator returns the cost of
the call, and also presents a drop-down list from which the customer can select
the time at various places called. The customer would have to select the exact
place they are calling from the drop-down list to find out the time there. The c
ustomer is confused as to why the tool couldn t tell them the time at the place
they were calling at the same time as telling them the cost of the call-they had
already provided information on where they were calling.
Insufficient memory
A customer wants to buy a mobile phone. They go through some scenarios on the We
b site to work out what they need. The Web site recommends a particular type of
mobile phone and the customer decides to get it. The customer clicks through to
purchase the product but finds that the form needs some information identical to
what they ve already entered.
OK so maybe they can live with that. They then fill out the form to purchase the
product. They then realize that they also need to sign up for the call plan tha
t goes along with the mobile phone. Having ordered the mobile phone, they go on
to sign up for the call plan they want. They get a form to sign up and discover
that a lot of the information they just filled in on the previous mobile phone f
orm hasn t been captured in this form either, and they have to rekey it.
By this time the customer is getting a little frustrated and is thinking, "This
could have been easier." The customer submits the form to sign up for the call p
lan but they get an error message telling them that they haven t filled the form
in correctly. They go back to fix the form but find that some of the informatio
n they filled in the last time has disappeared. Now the customer is really annoy
ed. If the error messages or the forms aren t very helpful as well, this custome
r could end up going back and forth a number of times to rekey, rekey, and rekey
Chances are that this will be the last time they try and order something on that
Web site.
The sequence the customer goes through is shown in Figure 2-2.

Figure 2-2 Insufficient memory.

5. Customers expect to be given more

Because Web sites are not the only medium that customers have to find out about
companies and their products, they expect Web sites to "make sense" in relation
to all of the dealings and exposure they have with a company.
Customers expect businesses to tell them more than what they already know, not r
epeat everything they ve already been told without offering anything new. It als
o sticks out like a sore thumb when known parts of the business or product offer
ings are obviously excluded from the Web site.
If customers already know your company, they expect to be able to learn more.
Of course, this directive is largely to do with integration; integrated marketin
g and customer service. And this is something we will explore in more detail lat
er in this book.

Incomplete offering
Consider a telecommunications company that offers connectivity to the Internet t
hrough an ISP (Internet Service Provider). A customer goes to the company s Web
site to find out about its ISP s rates relative to their current ISP. But, myste
riously the company s Web site makes no mention of its ISP. The customer is baff
led and confused as to why such a relevant service would be missing from the Web
site. They then find out, in "other links," that the ISP has a separate Web sit
e, so they go there. But, they still can t understand why there are two Web site
s. Both sites may represent two companies, but they re all part of the same serv
ice as far as the customer is concerned.
Insufficient interactivity
A customer who is evaluating different mortgage options goes to the Web site of
a financial services provider. The customer has already gathered information fro
m a few other Web sites and is hoping to be able to decide among them. However,
when the customer gets to this particular Web site they find the available infor
mation to be nothing more than what they already have in the provider s brochure
s. The Web site does not provide the customer with information relevant to their
particular situation. Chances are that this company will not win the sale as th
e customer moves on to check out the next Web site.
6. Customers make Comparison
Customers evaluate products and services against each other; those products may
be offered by one company or across companies. Customers also want to compare th
e value of the different information offerings on your Web site.
Inconsistent product information
Customers get frustrated when product information is presented in such a way tha
t it makes a valid comparison difficult. Lack of consistency in how product info
rmation is presented makes comparison difficult for customers, and that relates
to consistency in visual presentation and access as well as it does to the natur
e of the content that s provided.
Ignoring relativity
Customers also struggle when Web sites ignore obvious relationships between prod
ucts they are evaluating. Some products are obviously related, or maybe even pac
kaged, by the service provider, and yet the customer finds that the Web site doe
s not relate those products at all through content or even basic navigation.
Difficult product comparisons
Consider a customer who wants to select a day-to-day checking account. On visiti
ng a site they find information on a range of checking accounts. The customer st
arts off with a list of the accounts available and clicks through to evaluate th
e first one. Having evaluated the first one, the customer has to go back in orde
r to click through to evaluate the second one, and so on for the seven checking
accounts available-forward and back seven times.
But then the customer realizes that the last three accounts are actually complem
entary to the checking accounts; they detail the different ATM and card options.
The customer then has to work out which of the previous four checking accounts
these three options relate to. It would have been helpful to evaluate those opti
ons at the same time as evaluating the checking account, not to mention being ab
le to get between products without having to go forward and back all the time.
Company structure versus product comparison
A customer of a global management consulting company receives good consultancy a
dvice on a project and wants to find out what other areas the company could assi
st with. The customer goes to the consulting company s Web site and clicks throu
gh on "products and services" to get a list of broad service areas. However, non
e of those services can be clicked on for more information.
The customer then goes back to the home page and realizes that this is an intern
ational home page and that they will need to select a country-specific Web site
in order to get information on services. Given that this customer is in the Unit
ed States, they select the U.S. Web site. Now they click through on "products an
d services" and get a list as long as your arm; the list appears to detail every
service and sub-service available, plus a lot of other items that don t even lo
ok like products and services.
The customer starts to go through the list, clicking on the ones that look inter
esting. However, the customer finds that each click returns a new Web site-one f
or every service (each with its own home page). Each of these Web sites is compl
etely different and each seems to be more of a brag book for a subsidiary compan
y or department than a guide to products and services.
Needless to say, evaluating services on the Web site would be a labor of love. T
he customer decides it s probably quicker and easier just to call the head consu
ltant on the project already completed to find out what other areas the company
may be able help with.
The sequence the customer goes through is shown in Figure 2-3.

7. Customers make Decision by analyzing the Facts

Customers are likely to feel like they re being subjected to a hard sell if they
do not have sufficient information before being faced with a decision or an inv
itation to purchase. There will be some fundamental information that a customer
wants before deciding whether to purchase. The nature of these fundamentals will
depend on the service being offered.
Inappropriate timing
Consider a customer who is evaluating products offered by an electronics company
. The customer interacts with a tool that helps them identify some solutions to
common desktop publishing problems. By identifying with some problem scenarios,
the customer receives some recommendations; a list of software and hardware prod
ucts with a brief description of each product. Next to each product name is a bu
tton inviting the customer to "buy now." The customer feels uncomfortable with t
he process at this point because they don t feel they know enough about any of t
he products to purchase anything at that point.
Missing facts
Continuing the above scenario, the customer chooses to ignore the inappropriate
invitation to "buy now" and clicks through to the product page for one of the re
commended products, a printer. From the product page the customer clicks through
to a page that allows them to choose the printer model. Here they are again inv
ited to "buy now," but unfortunately no prices are given for the different print
ers, probably because each printer must be packaged with software, thus making e
ach combination a different price. The customer feels they can t possibly purcha
se a printer without knowing how much it is going to cost, and they bail out of
the process at that point.
8. Customers want business to know their Needs
Customers make brilliant and smart use of the Web, only to find them ambivalent
toward it (or, when too much liberty is seen to be taken; disdainful. Everyone i
s limited in their knowledge of the customers, one way or another. The better we
know our customers, the more we can directly address their needs. But sometimes
we need to remind ourselves of the obvious because lots of Web sites just aren
t getting this right.
One be very careful assuming you know what customers need-what they need to know
or what they need to get. Remember that their use of a Web site is only part of
their whole experience, and what you know from a customer s Web site behavior m
ay not tell you enough to second-guess what makes them tick.
Many Web sites invite customers to personalize content and functionality for the
ir own uses. Creating a home page has become quite a common concept-and maybe th
at s part of the problem. People take an idea that may have worked on another si
te and apply it to their own, without realizing the fundamentals of what it take
s to make it successful.
To work well, personalization is dependent on what s being personalized. Persona
lized irrelevance is never going to be relevant. Customers just can t be bothere
d with the process of personalization unless they get something that s useful to
them. And, of course, the process has to be user-friendly as well. Customers do
not want to go through a painful process to create something that may not end u
p being useful to them.
Many Web sites also make recommendations to customers. Customers may find these
useful, be ambivalent, or find them a waste of time and space. Why? Because, to
state the obvious again, the better we know our customers, the more we can direc
tly address their needs. And sometimes we don t know them as well as we think we
So we can make recommendations on what we know we know, and find out what we don
t know, before making recommendations. For example, we do know what a customer
has done on our Web site (well, we should). If we base our recommendations on a
good dose of Web site behavior, then we might have a better chance of being usef
ul. Also, if we ask customers to select the things that they find important, or
identify with, before we start making recommendations, we will also have a bette
r chance of being useful.
In general, if customers needs are not well understood, it is better to provide
customers with adequate, quality information and leave it up to them to make th
eir own decisions, rather than take the liberty of second-guessing their needs.
Decision support
Customers want to find out which product or service is best for them, and some W
eb sites will offer content and/or functionality to help them make the best choi
ce. That s fine, but sometimes this help is couched as "customized solutions"-ge
nerating solutions on the basis of customer needs. This type of decision support
is an all-or-nothing proposition to the customer who would say, "Either make a
recommendation based on adequate knowledge or don t bother making a recommendati
on." Hopefully, this directive will become less needed over time as we utilize t
he Web to better understand our customers. In the meantime, care needs to be tak
en not to make the worst of a good idea.
Ill-informed solutions
A business customer wants to evaluate the types of advertising and promotion the
y should be engaging in. The customer goes to one of their favorite Web sites, w
hich has a center just for small businesses. The Web site says that it can offer
helpful advice and solutions to small businesses. The customer finds a section
on advertising and promotion right away-it s obviously a hot topic for small bus
inesses that have tight budgets and need focused results.
The customer is given three areas of selection: type of business you are in, wha
t you are likely to spend, and how well you pitch yourself against your competit
ors. The customer makes a selection under each of these areas and clicks on "sol
ution" to get some advice on the type of advertising and promotion that might wo
rk best for them. The results come back as a list of different types of marketin
g approaches, a long list it seems, and a lot of the approaches don t seem that
The customer decides that the tool doesn t know enough about their business, who
their customers are, the products they sell, geographic considerations, things
that have, or haven t, worked in the past, etc. The tool hasn t told the custome
r any more than what they already knew. Fortunately, it didn t take a lot of tim
e to go through, but the customer is unlikely to go back to the Web site for adv
Personalized irrelevance
Apparently, the extranet is aimed at sharing privileged information with the ind
ustry s top decision makers.
Unfortunately, the site offers content areas that don t really seem to relate to
what this customer wants to do, or know about, as CEO. However, the site assume
s that personalization of the extensive database of articles will deliver most o
f the site s value. While this type of personalization is a good idea, this CEO
can t be bothered trying to find some content that might be of interest, and any
way, they can only personalize by broad subject areas, none of which, on the fac
e of it, are particularly relevant.
The CEO decides this particular site is of little value and not worth the effort

9. Doing Area For Customers

Some Web sites just don t allow customers to do the things they need to do as cu
stomers. The things they want to do are likely to fall into one of the five "doi
ng areas" identified earlier.
Lack of utility
One of the most common areas of customer frustration is not being given access t
o people within a company. A Web site that only gives a generic e-mail or mail a
ddress or phone number, may not be seen to be particularly helpful.
Frustration also commonly arises when customers can t transfer their everyday tr
ansactions to the online medium. The level of that frustration will increase if
those transactions are routine and frequently performed.
Customers also get frustrated when they can t access their personal information
online, especially if they think it is required to perform routine, everyday tra
nsactions. Of course, access to personal information is a lot easier than it sou
nds. Customers generally don t understand the complexities of providing access t
o internally held information via the Web.
Customers expect to be able to get closer to the company they re doing business
with, and no capitulation is often taken by customers to be inferior customer se
rvice. These customer expectations were illustrated by Figure 1-1 in Chapter 1.
Information classification
Information has to be classified into areas that customers can access. That info
rmation can be cut many different ways, and the particular approach adopted may
help or hinder customers.
There is a lot of debate over the most effective way to categorize information.
I too have been involved in this debate and have observed customers preferences
with interest, keen to discover "one best way of doing it." However, I can t sa
y there is "one best way." What I can say is that, when information classificati
on gets in the way of customers doing the things they need to do, they get annoy
ed and frustrated.
Needless to say, few Web sites classify information on the basis of what custome
rs want to do or tasks they want to perform. Often the necessary utility is buri
ed deep in a site and the customer has to ferret it out. Some Web sites don t ev
en provide obvious links to frequently required utility.

Obtrusive content
Customers get frustrated when they come to a Web site already knowing what they
want and end up going through an interminable process of unnecessary persuasion.
They want to go straight to the object of their desire, not churn through marke
ting blurb.
Frustration increases when customers are very familiar with a company s products
; they may even know the name of the product they want (which is no small feat i
f brand names are given to different products). If a company has a high market p
rofile, at a product level, customers need to make direct access to those produc
ts as quickly and easily as possible.
Hidden utility
A customer finds out that their electricity supplier now has a Web site, and the
y have heard that it s supposed to offer good customer service. This customer is
about to move to another home in a few weeks and wants to notify their supplier
. Rather than sit in a long phone queue, the customer decides to advise their su
pplier online.
The customer goes to the Web site. The home page presents "Electricity for the H
ome" as an area for selection, and the customer clicks on that. Then the custome
r gets the "Home Page" for "Electricity for the Home." There is no obvious link
to the type of activity the customer wants to perform, but there is a section ca
lled "Customer Service." The customer clicks on "Customer Service" and goes to a
page that categorizes services under a few headings. The customer is not sure w
hich one is exactly the closest to the activity they want to perform, but thinks
"The Bill" is probably closest, since they will need the bill sent to the new a
ddress. The customer clicks on "The Bill" and gets a page that explains a typica
l bill. Just when the customer thinks that they haven t found what they re looki
ng for, they remember to scroll down. And there it is, "Notify Change of Address
." Clicking on this brings up a form that the customer fills in and sends.
It was there, just four layers down.
Helpfulness as hindrance
A customer goes to a car manufacturer s Web site. This customer knows exactly th
e make and model of the car they are interested in, they ve seen it advertised e
verywhere recently. They go to the Web site and, on the home page, are met by a
"guide" that offers to help the customer plug in some simple requirements to gen
erate a list of models that meet those general requirements. The customer doesn
t want to head down that route, because they already know what they want.
The customer notices that they can click through to a product search at this poi
nt, or they can click on a few other areas, but these are general categories and
the customer is not sure which category this particular model would fall under.
So the customer decides to risk the search function (their experience with sear
ch engines is checkered at best). After clicking on "Product Search" the custome
r receives a page that just lists the same product categories as were presented
on the home page. At this point the customer scratches their head and asks thems
elves "How am I supposed to get to this product?"
Depending on how keen the customer is, they may go back to the home page and try
to generate a recommendation for the model they want, so they can click through
from there. Or, they may just go make a cup of coffee instead.
The sequence the customer goes through is shown in Figure 2-4.

Figure 2-4 Helpfulness as hindrance.

10. Customer’s Frustration

Customers get frustrated when a Web site leads them down a path to a product and
then they can t get it. Either the Web site does not give them the option to se
lect or purchase, or they have to go through some convoluted process to end up d
oing something other than purchasing it.
This happens with frightening frequency in relation to special deals.
Hype and no hustle
A customer goes to a software company s Web site for business customers to find
out about its special deals. They click on "Special deals" off the home page and
get a page with mini-ads for three hot specials. One of them looks interesting;
this new software could help the customer manage business forecasting a whole l
ot better. The customer clicks on this special to find out more.
A promotional Web site comes back, with good explanatory information about what
this software can do for businesses. It s only a beta version of the software, b
ut it sounds great and it s affordable. The customer decides they want it and cl
icks on "Get It." This results in a page that details what you need to run the s
oftware, terms and conditions and how to install it, as well as a link to "Regis
ter Interest" in the final version of the product. But nowhere does it actually
tell the customer how to get hold of the beta version of the software, only a co
ntact for more information. Since there s nothing else, the customer clicks on "
Contact for More Information" and receives an e-mail form that allows them to en
ter comments; the customer simply types, "So, how do I get it?" and sends the fo

11. Help Customers Navigate

Given that we have to create layers of information, and paths through them, we n
eed to provide signposts that show customers where they re going. We need to hel
p customers navigate.
When a Web designer designs a navigation system, they are designing a system of
visual cues that helps customers find their way around a Web site. We can think
of navigation as the framework that helps customers understand what they are doi
ng on a Web site.
Some navigation systems are better than others. That said, there are some common
areas where navigation systems frustrate customers. Within these systems we use
navigation devices that provide the cues as to where we are, where we ve been,
and where we re going. Some of these are also better than others.
Customers get frustrated when you throw them too many curve balls. When they go
to your Web site, they have to learn to use your navigation system and devices.
Customers become angry when you don t allow them to learn your system, because y
ou re inconsistent or it just "doesn t make sense" (and, remember, that sense is
defined by the customer).
Information architecture and navigation are huge topics. We will look at them in
more depth in Chapter 7 when considering customer-effective Web site design. He
re, we will look at the common things that trip customers up.
Navigation systems
Inconsistency seems to be the thing that most often trips customers up. If a Web
site introduces customers to a navigation system up front, they expect it to ap
ply throughout the whole site, without exception. The main "anchors" for custome
rs are navigation bars and frames-when these differ, for no apparent reason, cus
tomers start to flounder.
Consistency is also particularly important in relation to site hierarchies; ofte
n Web sites don t clearly show levels, or layers, of information, or they mix th
em up. Customers very quickly lose their grasp of your navigation system if the
hierarchy is messed up.
Many sites revert to different navigation systems within one site (particularly
in cases where the site is structured around the company and not the customer).
Unless customers can see the relationships between these different systems, up f
ront, and have some common way of navigating between them, they re likely to get
lost. A single, consistent system seems to work best-in fact, if it works, cust
omers don t even really notice it s there; they just use it intuitively. (And no
te here that a system can be consistently made up of a number of approaches that
all function as one system.) Interestingly, customers seem to be comfortable wi
th a reasonable amount of complexity in the navigation system, as long as it mak
es sense to them and they can learn it quickly. An overly simple navigation syst
em doesn t necessarily win points if it "hides" the site from the customer (as i
s sometimes the case). Sometimes customers won t go digging into a "hidden" site
, because they don t know its value, or they will start to dig, find some useful
stuff, and get annoyed that they didn t know about it in the first place.
Another, very interesting, and disappointing, discovery is that many customers t
reat their browser as an inseparable part of your navigation system. For example
, some customers blame a company s Web site that doesn t do what they want when
they hit "back" on their browser; they don t get mad at the browser. This is par
ticularly problematic in transactional processes where the customer uses the bro
wser to go back and forth while entering and sending information-many Web sites
aren t technically able to cope with this and the customer ends up getting error
messages, losing information, or giving up.
Navigational devices
Within the navigation system there will be a number of navigation devices-elemen
ts of the Web site that allow customers to get around within the basic navigatio
nal structure.
One of the most common frustrations is not being able to work out where they are
at a certain point in time or where they ve been. From your home page, customer
s get a path (or paths) in mind. Customers will want to roughly follow that path
and make sure they re roughly on track as they go.
There are some simple devices that help customers, and, when these are not used
properly, they cause the most problems:
• Inconsistent or non-existent highlighting to show where the customer is
on the site.
• Changes in the color of links. Sometimes the links don t change color wh
en selected or the colors are inconsistent. This leaves the customer wondering w
hat the different responses mean in relation to where they ve been.
• What is clickable? Every clickable object should be obvious. I have obse
rved many customers who run their mouse over a page to see what s clickable or "
live" once a page has downloaded. If you don t consistently show customers what
is clickable, they will get frustrated quickly. I have seen customers curse beca
use they ve tried, repeatedly, to click on something that they expect to take th
em somewhere, only to find that it s not "live". Passive images, such as "wallpa
per" images, seem to be particularly problematic, because customers try to click
on them.
• Sending no feedback on where customers have been. Some sites provide fee
dback on the layers and/or sections of the site customers pass through. In very
deep sites, this seems to help customers to keep track of things. Many sites off
er no feedback or only sporadic feedback. Customers get confused about the cues
they are supposed to be using to find their way around.
• Misleading or nonexistent labels. We don t have room on a single screen
to write full explanations of what each object is; we use labels. In truncating
instructions to labels we create a real risk of confusing customers. Many labels
just don t make sense to customers, particularly when the label is "company-spe
ak" and not "customer-speak." Labels that are different from the "standard" labe
ls customers are used to seeing on Web sites are also problematic.
• Unknown search functions. Often search exists at a number of levels on a
site. Not surprisingly, customers expect the search to relate to the level of t
he site in which it is offered. Usually the search is general, vague, and not pa
rticularly well directed. To avoid customer frustration, a search function shoul
d appear in the appropriate context and customers should know what the search is
being performed on.
• Inconsistent and misleading use of iconography. Sometimes sites combine
words and labels to form their own icons, and these are often key to the navigat
ion system. However, many attempts at iconography only go so far, and not far en
ough-they disappear leaving customers wondering what their signposts are.
• Multiple windows. Some Web sites use new windows to present new informat
ion. If customers can t understand why this new information has appeared in a ne
w window, or don t even realize they are in a new window, they will get confused
, and lost, very quickly. I ve seen some customers panic when a new window opens
and heard them ask themselves, "How did that happen?"
• Misleading visual symbols. Sometime sites use common visual symbols as a
way of showing meaning. However, these symbols often mean something different t
o customers, who take them at face value. Also, common symbols may be loaded wit
h meaning over and above what a customer would normally expect. For example, an
arrow shows direction. Some web sites use arrows to indicate movement as well as
direction (e.g., using arrows to indicate that customers can order a list of it
ems by moving them). This additional meaning may be lost on customers.
• Vague use of indexes. Customers sometimes face indexes that they don t u
nderstand. This makes the indexed information inaccessible to the customer. For
example, a product index that is simply shown at the top level as A B C D, etc.,
means nothing to a customer. I ve observed customers totally stumped by this so
rt of thing; they have no idea how you would categorize your products, and, chan
ces are, they certainly don t know all your product names.
Conflicting navigational systems
A customer goes to a company s home page, which introduces a main navigation bar
across the top of the screen. This navigation bar categorizes the site by produ
ct groups. The home page also provides a list of links to all parts of the site
(under the navigation bar).
The customer clicks on one of the product categories in the main navigation bar.
This takes them to a page that lists all the links available within that "secti
on of the site." However, the customer later discovers that these are, in fact,
"pseudo" sections and not actually core to the navigation of the site, because w
hen they click on one of the links from the home page they get a different Web s
ite with a different navigation bar. And there are no links between the two navi
gation systems. The customer sits for a few moments going forward and back tryin
g to work out the relationship between the home page and the next level of pages
, trying to decide which system they want to use (i.e., they are about to make a
trade off).
It seems the top-level system (the main navigation bar on the Web site and the p
ages on each product category) has just been wallpapered over the underlying nav
igational system (the list of links on the home page and the Web sites they corr
espond to). This has introduced conflicting navigation systems and confused the
customer, who has been forced to either lose the perspective of one system in fa
vor of the other, or learn both.
The sequence the customer goes through is shown in Figure 2-5.
Absence of a navigational system
A customer goes to a company s Web site. The home page is roughly in two halves.
The top half includes three images that the customer can click on, "Articles,"
"Introduction to the Firm," and "Special Feature." The bottom half looks more li
ke a list of links to different sections of the Web site: "Contacts," "Services,
" "Search," "Clients," etc.

Figure 2-5 Conflicting navigation systems.

The customer discovers that clicking on the top half and the bottom half generat
es a stand-alone section relative to the area selected. To get to a new section
of the Web site the customer has to go back to the home page and make a selectio
n from there.
This is extremely time-consuming, and cumbersome, and the customer asks themselv
es "Why couldn t they just put links to all the sections on all the pages to sav
e me going backward and forward all the time?" Good question.
Too many homes
A customer goes to the Web site of an international company to find out about th
e services offered by some of its local offices. The home page downloads and it
relates to the international company. From here the customer selects the first l
ocal office they are interested in.
Selecting the local office brings up a local office home page with its own "home
" icon. There s also a link to the international home page at the top of the lef
t-hand frame set.
The customer looks around for a while and then decides to go back to the interna
tional home page they received on entering the site, so they can select another
local office. The customer absent mindedly clicks on "Home," forgetting that thi
s relates to the local site and not the International site. Remembering that the
international site is linked to at the top of the frame set, the customer click
s on that to get the international home page. Phew.
From here, the customer selects the next local office and they receive yet anoth
er home page. This time the customer discovers that the "home" icon does actuall
y take you back to the international home page and not the local office home pag
e. The customer slips up a couple of times while looking around this local site
and hits "Home" to go back to the local office home page, only to end up at the
international home page.
The customer decides, rightly or wrongly, that this company has no international
coordination of local Web sites.
The sequence the customer goes through is shown in Figure 2-6.

Figure 2-6 Too many homes.

12. Privacy
Some Web sites offer different access to different users. In other words, some c
ustomers can get at some information while others can t. The users who can get a
t this privileged information will have to identify, or authenticate, themselves
to gain access.
Customers don t always react positively to this, wondering what lies behind thos
e magic doors and why they can t get at it too. This negative reaction is greate
st when the Web site doesn t explain what the different privileges are or doesn
t give customers equal access to the parts that should be available to everyone.

Badly placed and poorly explained authentication
A customer of a consultancy company goes to its Web site to find out what resear
ch it has done lately. The home page does not offer any obvious links to researc
h, but there is a navigation bar that offers "Client" as an option. The customer
clicks on "Client," given that they are a client, to receive a screen asking fo
r a login id and password. Well, the customer doesn t have a login id or passwor
d. There is no explanation as to who has access here or how they go about gettin
g it. The customer then notices a search option in the navigation bar.
Selecting search brings up the same screen as before, just a request for a login
id and password. The customer thinks, "Hang on a minute, why can t I search the
site to find out about your research, why are you locking me out?" The customer
surmises that the search probably relates only to the "locked" information and
not to the site in general.
The customer decides to try another route. They go back to the home page and sel
ect "Products and Services." This brings up information including mention of an
article on one of the consultancy company s recent research studies. The custome
r thinks, "Aha, I can find out what this research is here." They select the link
to the article and get the same screen again, just a request for a login id and
password. The customer thinks, "I just want to read the damn article!" By now t
he customer has decided that they re not going to get the information they want.
They grab the phone and call their consultant demanding to know why they aren t
allowed to see the consulting company s research. It turns out that all the cus
tomer had to do was register, but didn t know that. It s some time before the cu
stomer goes back to attempt to find, or complete, the registration process.
The sequence the customer goes through is shown in Figure 2-7.

Figure 2-7.

13. Should Not Limit Customers Choices

Poor navigation will, of course, restrict the choices customers have because the
y won t be able to make the appropriate selections to get to where they need to
The broader issue of navigation aside, we will look at some specific instances w
here customers are directly offered choices and where those tend to be problemat
Classifying customers
Different customers have different needs, and many Web sites classify customers
to help direct them to different information. This might work if you know who th
ese different customers are along with their needs. Too often, customer classifi
cations are made from a company s perspective and are not meaningful to customer
Beware of putting your customers in boxes, unless you really know they d put the
mselves in a box, without a moment s hesitation. Your marketing segmentation app
roach may make sense to you and mean absolutely nothing to your customers.
Incorrect classification will anger your customers because it gets in the way of
them doing what they want to do on your Web site.
Drop-down lists
Drop-down lists can be double-edged swords. They offer finite parameters to cust
omer selections, and that can be very helpful and useful to customers. However,
these lists often fall short because they just don t include the options custome
rs are looking for, or they don t allow customers to send the right messages abo
ut who they are, their problems, their needs, or what they need to do.
Lists that require mutually exclusive selections stump customers. What do custom
ers do when more than one, or maybe even all, of the possible selections apply t
o them? They are forced to limit their response to one selection, and it just is
n t enough. I ve observed customers who sit and look at lists like this, scratch
their heads and say, "What do I do now?" Some customers will make a single sele
ction and make do while others will just decide not to interact on the basis of
limited choices. If customers bail out, it can have significant consequences, es
pecially if they re in the middle of buying your product.
Figure 2-7 Badly placed and poorly explained authentication.
"Search" is one of the areas most likely to frustrate customers. This is probabl
y because it is potentially one of the most useful tools customers have to get w
here they want to go. Get it wrong, and it s a double whammy.
Search functions can limit customers choices when the functions present search
criteria unrelated to what the customer is looking for, and by "anchoring" searc
hes to criteria other than those the customer is interested in at a particular t
ime (anchors are discussed further in Chapter 7).
Customer service
Customers also get very frustrated when they are presented with limited online s
ervices. They get annoyed when they want to make a particular transaction, and c
an t, or are forced to limit their interaction.
This problem is particularly prevalent when customers are completing forms to re
ceive certain services. Some forms ask the customer to check certain boxes and o
bviously limit the nature of the service available.

Insufficient choices
Consider a customer who is thinking about getting a mobile phone. They go to a W
eb site and select the section on mobile phones. The site offers a link that pro
vides "guidance" to customers wanting to evaluate mobility products. Clicking on
this link brings up a series of drop-down lists. The customer is able to select
one of the scenarios in each list to generate advice in relation to each select
ion. A drop-down list presents the following options: I would use a mobile phone
• To have one just in case, but not make many calls
• But don t want monthly contracts, monthly bills, or fees
The customer thinks to themselves, "Hang on. I ll probably make lots of calls an
d I don t mind having monthly contracts. What do I select, since neither of thes
e apply?" The customer proceeds down the other lists and finds that none of them
apply. The customer has to go straight to the product list so they can work out
what they need for themselves.
Restrictive search criteria
A professional goes to a Web site that offers job-finding services. The professi
onal wants to see the types of roles on offer, to see whether there is a fit wit
h their skills and experience.
The professional clicks on "Search Available Jobs" to receive a search function.
However, the search function they are presented with only allows them to search
against location. Actually, location is the least relevant criteria for this pr
ofessional because they are happy to be located anywhere, provided they re in a
good job.
To avoid wading through jobs classified by location, the professional goes onto
another company s Web site. This one allows them to search against lots of diffe
rent criteria: type of role, salary range, skills, etc. However, every time the
search engine produces results, they are all "pinned" to, or "anchored" on, loca
tion. To view jobs by role, the professional has to also click through location
(and sometimes there are up to three or four levels of locations to click throug
h). Well, this isn t perfect but it s better than the last site. Depending on ho
w good the roles look, the professional might wade through locations as well, or
, then again, they might not...
Limited customer service
Continuing the above scenario, the professional finds a link on the Web site inv
iting them to "Provide Feedback on the Site". They decide they ll do just that a
nd click on this link to receive a form they can complete and send. However, thi
s form only allows them to check boxes in relation to "bugs encountered" on the
Web site. Can frustrations with a search engine be classified as a bug? Probably
not. The form doesn t allow them to enter any comments either, and the professi
onal is forced to give up.
14. Relevant Details
Many customers seem to hate scrolling, and scrolling, and scrolling, to get at a
company s information. Customers get angry, in fact, when they feel like they r
e drowning in your information. They expect to receive information in chunks the
y can digest, and quite often, they ll even suggest what those chunks might be.
For example, in the case of product pages, customers prefer to see links to prod
uct information within the page so they can go straight to the part of the page
they are most interested in without having to scroll through all of the other in
formation available.
15. Give what is genuine to a customer
Customers often feel that a site over-promises and under-delivers. In some ways
this is almost unavoidable given that we can t always do everything customers wa
nt online. However, we would manage customer expectations, and stave off disappo
intment, much better if we called a spade "a spade"; i.e., called things exactly
what they are.
"Too clever" is what many customers would call fancy, and often misleading, labe
ling on a Web site. "Just tell me what it is," they would say, "straight up." In
addition, there are a lot of labels that have taken on a certain meaning in the
Web world. Many sites use these terms and deliver something that is a far cry f
rom what has come to be expected, and incur customer criticism as a result. Some
examples of customer criticism follow:
• Home-"Don t call it home unless it is."
• Site map-"Is it a map or just a basic list of links that doesn t help di
rect me"
• Search-"Is it actually a way of searching relevant information or just a
rudimentary index."
• Contact-"So, give me the contacts then!"
• Buy now-"This doesn t mean register interest, or see if you qualify, or
anything else, it means buy now!"
• Help-"Don t give me vague information on irrelevant stuff; I need to kno
w how to solve my problem."
• Feedback-"I don t think you actually want it."
• Special deals-"Doesn t look like much of a deal for a customer who s esp
ecially come to your Web site to find it."
16. Should Be innovative
Customers get very frustrated when they re transacting with you and you don t te
ll them the information you need them to provide, or the format that you need it
provided in. They can waste a lot of time going backward and forward, "correcti
ng things," to get a transaction accepted.
Success through trial and error only
A customer decides to purchase a weekend holiday package at a hotel they ve been
wanting to stay at for ages. They call up the package information and click on
"Buy Now." They receive a form which they can complete and send. The form asks f
or lots of different information, but some of it doesn t seem to apply particula
rly well to them, so they leave those particular fields blank. They complete the
form and click "send." An error message comes back saying, "You have not filled
in all of the necessary fields, try again." "Which fields?" the customer asks t
hemselves. They engage in a process of trial and error to find out which fields
have to be filled in.
The customer then gets to the point where all the fields are filled in and the f
orm is still generating an error message. This time the error reads, "You have n
ot entered information correctly, please try again." "Which information, and wha
t format should it be in?" the customer now asks themselves. They go back and lo
ok at the fields most likely to be required in a different format, such as date
and phone number. Trial and error reveals that the phone number shouldn t have h
ad any spaces in it, and the form is finally accepted. Success at last!
The customer decides that, next time, it s probably easier just to call the toll
-free number and organize it over the phone.
17. Do not Ignore Important Relationships
Web sites are only one part of customers relationships with a business. Some cu
stomers have very important personal relationships with the people inside. Custo
mers often expect these relationships to carry over to the Web, particularly in
a business-to-business environment, where customers will expect to have access t
o someone like their account manager.
Web sites that ignore important relationships to provide a less adequate level o
f service will frustrate customers. Of course, sometimes anonymity is a good thi
ng, but as discussed before, if it means losing out on the benefits of good serv
ice, customers will identify themselves and their personal relationships.
Customers and Organizations
Now, having thought about what customers want to do on the Web, and the directiv
es they might give us in providing what they want, we are faced with a very fund
amental issue-customers and businesses don t necessarily want the same things. B
usinesses often want to create or change customer behavior. Businesses want to i
nfluence the services customers use in different situations and the way they use
them. This may not always line up with what the customer is trying to do. While
businesses can use Web sites as a means to influence e-customers, that influenc
e should be in harmony with what e-customers are trying to do. When businesses t
ry to explicitly mould a customer s Web site experience, contrary to a customer
s natural expectations, it is seen as obtrusive and the customer becomes frustra
Conflict between business and e-customer goals becomes very apparent in cases wh
ere bricks-and-mortar companies begin to migrate some of their services online.
Sometimes bricks-and-mortar companies will introduce new service processes and r
elationships on their Web site, and they can be contrary to what the customer no
rmally experiences offline, and potentially expects online. This won t be a prob
lem for bricks-and-mortar companies or their customers, as long as customers nee
ds are recognized and the company works with customers to change service process
es over time in a way that makes sense. If bricks-and-mortar companies are seen
to immediately offer a lesser quality of service (through the absence of physica
l contacts and services, for example), then there will be a direct conflict betw
een what companies and customers are trying to achieve.
It is unlikely that we will be able to provide all of the content and functional
ity required to service every need customers have. Some of those needs just can
t be met (well, not now anyway), and sometimes the business chooses not to meet
them for their own reasons. For starters, it may not be technologically possible
to provide customers with the experience they want.
Creating customer-effective Web sites can be a win-win proposition-it s just a b
alancing act. A company has to deliberately consider the customer needs they can
not meet and work out how that is going to be handled.
A business that does not consider the balancing of organizational and customer n
eeds may be seen to be ignoring its customers and offering inferior customer ser
vice. And a company s apparent silence on the matter will make it "guilty as cha
rged." In addition, if a business gets its first attempt at electronic service s
o wrong that customers have a bad experience, it may not be given a second chanc
e to get it right.
Ways that businesses can establish their requirements with customers needs in m
ind, understand the balancing act required, and manage and implement Web sites t
hat effectively meet customer needs are explored further in Chapters 4 and 5.
Meanwhile, we will look at customer testing and some ways to go about getting qu
ality information from our customers.

Chapter 11
Customer relationship management is meant to shore up less than adequate efforts
in the past at understanding who your most profitable customers are. This means
creating a profile of desirable customers, developing marketing and sales campa
igns to reach those prospects, and maintaining your best customers to increase t
he lifetime value of the relationship.
In short, CRM should provide the benefits of:
• Selling to your best prospects, and
• Retaining your best customers for
• Improving the profitability of your institution.
However, Ernst & Young reports that 63% of respondents to their e-commerce/ CRM
survey did not know how much their profitability increased as a result of their
CRM projects. Unfortunately, the CRM process is so new that bankers we talked wi
th have not had any time to obtain measurable results. Most CRM projects are bei
ng implemented on the faith that obtaining and analyzing customer data will enab
le the bank to be more profitable. As a side benefit, CRM systems help the bank
present a consistent view of the customer relationship across all delivery chann
CRM is costly. It generally requires new database management systems, integratio
n with legacy system, analysis and decision support systems, campaign management
systems, new messaging and routing systems, and sales tracking systems. When do
ne right, CRM is an enterprise-wide endeavor. It requires the melding of employe
e behaviors with information technologies, for the benefit of the customer.

Warnings and Pitfalls

In today’s CRM environment, there is a danger we see with multiple vendors offer
ing systems built on relational database technology and touting theirs as the on
e customer relationship management tool you need. Because most new banking appli
cations are being developed with a database that aggregates customer data, a “da
ta mart,” these vendors are jumping on the CRM bandwagon. The problem will come
when you have implemented multiple CRM data marts to handle various applications
, and then find you cannot reconcile the data in each database. It will be bette
r to implement a single CRM system first and then hang multiple applications off
the core database.
You should think of CRM technologies as basically handling two major operations:
• Back office customer data aggregation and analysis
• Front office end-user data presentation and manipulation
All CRM solutions are built on a relational database, often called “middleware”
because it suits between the legacy systems that handle the transaction processi
ng and the front end systems that deliver the data across end points. Between th
e back office and the front office are many technologies that facilitate analysi
s and presentation. The end-user may be a banker or the customer. End-user touch
points may be in the bank, at the credit officer’s workstation, in the call cen
ter, at the teller line or on the platform, or on remote, at an ATM machine, a k
iosk, on the telephone, via internet, or soon, through wireless devices.
The question is where should you begin your CRM implementation? In the rush to p
rovide new, or enhance old delivery channels-from call centers, to ATMs, to the
Internet-with consistent customer relationship record at each touch point, you r
un the internet banking solutions, and total delivery channel solutions, is the
inherent customer relationship management technology on which they are based.
1. By satisfying the clients’ business objectives a bank can satisfy their
own professional and personal objectives.
2. Every bank wants their client to regard the organization as their partne
r of choice time after time.
3. Satisfied customers/clients become engaged clients when they trust the b
ank the are linked with and feel a sense of pride through an association with it
4. Engaged clients form a significant source of continued and improved grow
5. An engaged client will actively sell the bank’s product and services to
6. Engaged client forms a sound commercial foundation for the existing bank
7. Don’t keep good news to yourself-inform the client of every success.
8. Give every customer a reason to trust the bank.
9. Do what you said; you could do it, when you said you would do it.
10. Take personal ownership& responsibility for keeping the client informed
of progress in any matter they have raised.
The main objective of the report has been to assess the current state of the CRM
development within Indian credit institutions and to evaluate its organizationa
l impacts.
The study has identified issues that need to be assessed if CRM is to be used mo
re productively to take advantage of new opportunities.

CRM should be viewed neither as a new competitive tool nor as a cluster of techn
ologies, but rather as a set of business processes that help manage client credi
t institutions relationships and improve internal credit institutions workflow.
CRM in fact, is a process that helps to maximize medium to long term profits as
a result of a better customer knowledge, customized treatment of customers or a
perception of it, and improved fulfillment of customer needs. These goals can be
better reached by adoption of enabling ICTs. Ideally, an effective CRM project
needs to be very well integrated in the credit institution organization.
Implementing a CRM process means gathering flows of information concerning actua
l and potential customers. Information flows coming from delivery channels shoul
d ideally be consolidated into a customer database in order to develop customer
profiles that enable banks to improve customer services CRM based on ICT can str
engthen the marketing strategy of the financial organization by making more effe
ctive the management of all the information concerning customers.
The exploitation of CRM appears to have a positive impact on the quality and qua
ntity of information conveyed to customers. This is particularly relevant for th
e most sophisticated customers, i.e. those who are used to dealing with new tech
nological tools and are not afraid of interacting with the bank through the tele
matics channels. Nevertheless, distant interaction is not as effective as person
al interaction between customers and their bank. Therefore, according to almost
all of the bank representatives, e-business supports low value information needs
, while more sophisticated requests for information can be addressed only throug
h personal interaction between the bank and the customer that usually takes plac
e at the branch.
Almost all the credit institutions have adopted the strategy of launching their
e-business services as an additional service rather than as an alternative to of
fline services. The impact of e-business in banks is being limited by their stra
tegic decision not to cannibalize their branches. This research highlights how s
ome of the credit institutions which had originally invested only in the develop
ment of a virtual channel had to drastically re-define their customers or by ope
ning a call centre. The credit institutions representatives argued that their c
ustomers want a choice of channels and they are adopting a multi-channel strateg
y. Most of the banks consider that since Internet and telephone are most useful
for managing operational and low value added tasks, the traditional delivery str
ucture still has a fundamental role and can be developed to specialize in high a
dded value tasks and consultancy services.
Most financial suppliers believe that customer support services are a core busin
ess in the financial industry. Most of the financial organizations choose to int
ernalize the customer support contact center, whereas others choose to outsource
front-office customer care tasks to contact centre companies. But the final ela
boration of data on customers and their exploitation for CRM strategy is maintai
ned in house and involves the bank management personnel.
The customer retention is the result of an increasing degree of product personal
ization and differentiation. Credit institutions apparently prefer to compete on
quality (product information, broader range of product and services) rather tha
n on price (meant as product acquisition cost to the customer: price, mode of pa
yment, delivery). Therefore product innovation (cross-selling, product different
iation and personalization) seems to be the crucial issue of the CRM strategy.
Financial institutions have to realize the importance of the technology scalabil
ity as well as the reengineering of the business processes.
A medium to long term CRM strategy requires significant innovation in the organi
zation of the banks’ flow of information.
Ideally, CRM technologies and processes could make the slogan “the right custome
r with the right product at right place and in the right moment” possible.
But many banks face the problem of having multiple database with customer inform
ation, so that multiple entries refer to the same customer if he/she holds more
than one product with the company. This makes it difficult for sales people or r
elationship managers to have a full view of their customers. A number of CRM dep
loyments have failed because of inconsistent customer data. This problem results
in companies sending, for example, the same offer twice to the same customer.
Hence CRM is a vital tool for financial institution to prosper…….

• Gandy A.,2001, Customer first- A study of customer relationship manageme
nt strategies in Indian financial services Financial World Publishing: London
• Boston Consulting Group, 2001, Active and integrate: optimizing the valu
e of on-line banking
• Assessing the impact of e-business on Indian financial services, by Vikr
am T.Lund JP Morgan Equity Research (2001)
• ‘Assessing the impact of e-business on Indian retail financial services’
.WEBM Global Services
• Sato S.J. Hawkins and A. Berenstein (2001) “ E-finance: recent developme
nts and policy implications”
• www.databank.it/star
• www.google.com/CRM in Indian Financial Industry
• www.vivisimo.com/CRM in Indian Financial Industry