Customer Relationship Management

By Praveen Kadayinti and Archit Agrawal

This blog has come in two parts where we are discussing about internet banking models and CRM. In the previous blog (Part 1 - find here) we have discussed about two such models. We will highlight a third model in this part and analyze our views.

Model III
A new market has also been identified online where prospective lenders and borrowers meet online, thus reducing transaction time and costs involved with traditional banking methods. Currently banks act as middlemen, collecting funds from individuals who have a surplus (providing an interest rate), and disbursing to people in need (charging an interest rate).  The difference in interest rates funds the operation as well as helps the bank make a profit.

Called peer-to-peer lending, the third model matches lenders against borrowers at very low transaction costs, generating significantly higher returns for both. People with surplus money are directly matched to people who want to borrow, without any banks in the middle. Each prospective borrower is given a credit score, lenders choose which credit category they wish to lend to. Websites like Zopa.com and Prosper.com already have implemented this model.
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All three models look to eliminate middlemen, provide the basic necessary facilitation, and allow users to directly interact with each other. These provide cheaper alternatives to the customer, and also allow customers to execute the transactions from the comforts of their homes.
Some of the advantages of the internet models are as follows:-
• Lower costs of operation
• Lower NPAs
• More user-friendly
Disadvantages include:-
• It may take time for the user base to reach critical mass to make profits.
• It is still easier to do background check of a person physically than online.
Traditional banks can work on a number of things that can help withstand the challenges from newer models. Traditional banks need to focus on the following:-
• Better marketing and positioning of banking solutions
• Building a loyal customer base
• Increase switching costs by providing exclusive benefits to loyal customers that may not be provided elsewhere, examples include customized internet and mobile banking.
• Provide a mix of the two worlds - allowing for traditional over-the-counter banking service along with new generation online services.
If banks choose to embrace the new models early they can prevent being marginalized by the new form of disruptive banking. A lot would depend on the packaging of the solution and how the customer is made to perceive the service. Banks would have a head start as they would already have a stronger brand name compared to newer internet sites offering banking. Whoever gains the upper hand, the newer models surely promise a host of new exciting options to the customer.

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By Praveen Kadayinti and Archit Agrawal

This blog will come in two parts where we discuss in internet banking models and CRM. We will discuss on two such models that we come across in this blog.

Here, we look at some of the disruptive Internet based banking models that have come up in the last few years, and analyze how traditional banks will have to change themselves to cope with these new models. Traditional banks will have two options; either follow the curve or lead the curve. Leading the technology curve may result in cannibalization of their existing business products but following the curve might reduce the banks to insignificant players if the market grows exponentially in favor of the early adopters of technology.

Customer Relationship Management (CRM, defined as the set of processes that manage the relationships between an Organization and its customers) will play an increasingly important role, both for the new models and traditional banks. Banks will need to innovate, to reach out to the customer, to retain existing customers as well as gain new ones.
Internet is changing the banking habits of the masses in subtle ways. A lot of internet based banking models have come up in the past & failed. A few have managed to stand out for their innovativeness, user friendliness and customer centricity. We look at three such models.

Model I
The first model is an internet based currency exchange service. Traditional currency conversions involve a Sell/Buy rate set by the bank. Buying currency from the bank costs more than selling currency to the bank. The bank uses the difference in the Buy and Sell rates to fund the cost of operation, and also makes a profit in the process. Here, the bank benefits as the volume of currency converted in each transaction increases.
The internet site Transferwise.com has come up with a new model where the Buy and Sell rates are the same. An electronic payment service, this site offers a convenient process to exchange money with anyone across the world via a secure third-party between the two parties involved in the transaction. The site charges a fixed cost per transaction that is irrespective of the volume of currency converted. The exchange rate at which the conversion will take place is the true exchange rate that is reported by Reuters, Bloomberg, and XE.com etc. Unlike banks, no premium is charged over this exchange rate. The site profits as the volume of transactions increase; as the number of users increase.
Users benefit as the transactions can be done from the comfort of homes and offices, at the same transaction cost, irrespective of the volume of currency converted.

Model II
The second model benefits users who regularly transact on Internet shopping sites like eBay and have built a reputation of being trustworthy and reliable to conduct transactions.
This model looks at internet based lending to creditworthy vendors based on their rating by customers on EBay and Amazon. A private equity fund uses the EBay and Amazon rating to provide loans to highly rated vendors.  Highly trustworthy customers can obtain loans as quickly as in ten minutes.
The lender benefits as he does not need to do additional background verification checks to verify the credentials of the borrower; the shopping site (example eBay) has done it for him. The borrower benefits as he can get funds from a source without worrying about having to prove his history. Kabbage.com has implemented this model.

Posted by Guest Blogger at 2:03 PM | Permalink | Comments (0) | TrackBacks (0)

While the technology advancements are significantly impacting the CRM space, I wish to look back at the basics of CRM and the needs of the Customers, especially the 'Common People'.

In the 90's the buzz word Customer Relationship Management (CRM) evolved, as an extension of Customer Service Support. Today, we are talking about Customer Experience Management (CEM), as an extension of CRM. As long as Customers exist, business organizations would come up with more and more Customer centric buzz words, to catch their attention and the market place.

Taking Customer Relationship Management (CRM), it was initially evolved and positioned as a concept or a strategy by the Product/Customer Service Organizations for building good relationship with their Customers, by offering them excellent products and prompt service support.

But as technology progressively takes control, at times we tend to forget or ignore the underlying fundamental principle of any concept or strategy, which is true with CRM as well. Today, we would not be surprised to see people defining CRM just as a Technology or Software Package, than explaining it as a concept or strategy, with technology as an enabler.

We have to realize the fact that we can offer basic Customer Service (or Relationship Management) without technology, but on the contrary, even with the best of the breed technologies Customer Service (or Relationship Management), can go wrong, if we do not understand, what our customers really want.

There are many examples which we come across in our day today life. Let us take 2 simple scenarios:

• First, we always like to go and buy our house hold items, in the small favorite store, nearby our home, because of the shop owner's good customer service (with a smile) and his long term good relationship, he has built with us, over many years. There is no technology involved here.

• Second, on the other hand, we come across sophisticated Customer Service Call Centers, which has the state of the art technologies (like Multichannel Access - IVR, Web, Phone...), but we do not get the right information or solution to our problem when we reach out to them. At times, we feel that the 'human touch' in Customer Service is missing in this case.

While technology is certainly an important factor to enable better Customer Relationship Management (CRM), Customer Service Experience, improve productivity and operational efficiency, it has to be built upon a strong underlying foundation of CRM Strategy and thought process, which is based on the clear understanding of our target Customers and their needs and requirements.

As there are technology advancements, we see organizations pushing CRM to include (rather force fit) the new technologies, thinking that they have to stay ahead of their competition. But many times, mere technology sophistication (without a clear purpose or understanding of customer needs) leads to customers getting confused or puzzled with too many options/channels for interaction.

In any developing country, the tech savvy people (users of internet, smart phones/ tablets, social networks etc) are a low percentage of the total population (or overall customer base). Rest of the people, typically represent the 'Common People', comprising of people with less education/income and older people, form a significant portion of any country's population and industry's customer base. These 'Common People' still prefer customer service with a human touch (they really may not know the buzz words like CRM, CEM), where there can talk to and interact directly with a customer service person for basic utility services like banking, telecom, electricity etc, which really gives them complete Customer Satisfaction.

Anything we do, in CRM, in terms of technology, should have the underlying fact that Customers are human beings (with feelings and emotions) and not robots (which is an intelligent piece of technology). Organizations have to pause, look back and ensure that whatever they do in CRM, should help all their customers, not only the tech savvy people, but also the 'Common People'.

I would welcome and appreciate your thoughts on this subject....

 

Posted by Shanmugam Gnanasambandam at 2:48 PM | Permalink | Comments (2) | TrackBacks (0)

I had been on a vacation a couple of weeks ago.  Thinking about work while on a vacation is not my idea of fun. However, I couldn't help but notice how mobility had changed the way we planned and managed this vacation compared to earlier vacations.

Right from finding a good travel deal, ticket booking and cancellations, resolving seat related disputes (amicably) to sorting out booking related issues, we did everything on-the-go. My iPhone proved to be really handy in this whole process.

Commute time from office to home was put to good use by browsing and searching for a good travel package. It proved to be a little challenging as most of the travel sites were not mobile friendly leading to a lot of squinting, dragging and zooming in & out. While we had to do most train and flight bookings via the websites, it was very helpful to get the confirmation messages on the phone. We were able to put these to good use at a later stage. Eg: A flight delay alert via the mobile enabled us to enjoy a leisurely lunch vs rushing to catch a taxi.

The seating dispute was an interesting story. We boarded the train to find our seats occupied by two fierce looking persons with the ticket checker nowhere in sight. We had incidentally misplaced the e-ticket printout for that journey. I had a bright idea and opened the ticket confirmation email on the iPhone. The unauthorized occupants of our seats realized that they were in the wrong train bogey and vacated the seats with an apology. (Turned out they were not that fierce after all). All this was resolved amicably without any harsh words/raised voices typical to that part of India.

It is also interesting to note how government departments are accepting mobile based proofs. We had requested for cancellation of an accommodation booking via emails that went unanswered. When we finally managed to go to the tourism office and used the (very handy) iPhone to show them our emails, they accepted and gave us the refund despite the fact that the cancellation deadline had passed.

For most part of our journey, we realized that all we needed was a smart phone! We had a complex schedule involving many flights, trains, back up bookings etc. Once we entered the entire schedule into my phone, it became the only assistant that we needed. Digital record of all bookings, transactions etc were stored and could be retrieved easily.

Things have improved from a few years ago where booking were done through agents, you had to carry heaps of documents while on travel and heaven help you in case you forgot or lost anything. While everything is not digital or seamless like our package tour operator's schedule, but I for one could see the huge leaps that we have made.

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Posted by Shyamalee Samvatsar at 5:08 AM | Permalink | Comments (0) | TrackBacks (0)

Today Agile methodology is getting used widely across companies to handle software development effectively. Agile is more adaptive to changing realities surrounding a project. Such projects are able to respond to unpredictability and changes effectively. 

While Agile is more adaptive, Waterfall methodology is more predictive. In a predictive method, there is detailed planning done for the future and thus it is easier to predict where the project will be at the end of a farther point of time.

I would like to share my personal experience in working in a project that managed to blend both of these methodologies for effective management and succeed in achieving customer delight. This project started off in the waterfall model. There was a very clear mandate on when this project needed to be rolled out. Accordingly a very detailed project plan was created with details of different phases that need to be executed with dates, deliverables, dependencies etc.

Today all CRM green field implementations are complex involving many semi-independent tracks having their own deliverables and interdependencies. The current scenario I am talking about involved a program that was rebuilding the entire infrastructure for their business partners and hence involved development of multiple applications that were to be integrated using an identified middleware. Also corresponding data conversion programs for sun-setting of current systems were to be executed simultaneously. So there were multiple tracks and teams in the program handling application development, middleware development, infrastructure, data conversion etc. There was an intense need to make the different teams work together as a well oiled machine with effective communication and tracking of the dependencies.

This is where we managed to utilize Agile methodology while still progressing forward on the milestones set by our waterfall methodology project plan. 

The most acknowledged advantage of Agile methodology is the ability to provide tangible deliverables to the customer in short time periods utilizing incremental releases. Here we were no going to utilize this advantage. However another great advantage of Agile, the ability to ensure effective communication and collaboration between different teams and management, was what we wanted.  Agile allows for effective flow of feedback, acknowledgement and assistance between the project teams allowing for creation of a more responsible and cohesive unit.

I will explain how we managed to do so in detail in my next post. If anyone has similar experiences or wants to share suggestions on Agile methodology, please feel free to comment.

Posted by Rajesh Ramachandran at 5:53 AM | Permalink | Comments (0) | TrackBacks (0)