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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 of 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 Academy,
Bangalore do here by declare that this project relating to the topic “Customer Relationship
Management And Importance Of Relationship Marketing In The Banking Sector” had been
prepared by me after undergoing the prescribed dissertation requirements a part of the
objective of the MBA program of Bangalore University ( 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.
04VWCM6117 of our Institute has completed his Dissertation report on the topic
“Customer Relationship Management and Importance of Relationship marketing In the
Banking Sector”, under my guidance, and that no part of this report has been submitted
for the award of any other Degree or Diploma to any other Board or University.


Prof. Raja Sekhar

Alliance Business Academy


The satiation and euphoric that accompany the successful completion of task, would
be incomplete without the mention of the people who made it possible. After all, the
success is the epitome of hard work, severance, undeterred, zeal, stead fast
determination and most of all encouraging guidance. So with immense gratitude, 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

Academy, for giving us an opportunity to take up this research. I thank him for being
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 vice
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 and
advice through out the execution of the project.

Last but not the least, I would like to thank almighty God, my parents, and my friends
who helped me gather these data and have sat with me for hours discussing about
the project.

No no
1a 1-5

2 6-7
3 8-12
4 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 productive and
profitable. To retain High Net Worth individuals, banks should focus strongly on relationship
management with customers. Innovative Customer Relationship Management (CRM)
strategies and cutting edge software can help, to a great extent, in achieving the desired
results. To provide customised services, banks are opening Personalised Boutiques which
provide all the required financial needs of a customer”.

The entire service industry is now metamorphosed to become customer- specific. In this
context, the management of customer relationship in financial services industry 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 token in their hand. In today’s Internet era,
no one has the leisure to wait. In this context, online banking is assuming a great significance.
Today, banking is more customer-centric, unlike the yester when it was transaction-centric.
Banks are increasingly focusing on the premise that customers choose on the service provider
who differentiates through quick and efficient service.

However, there is more to Customer Relationship Management (CRM) than just managing
customers and analysing their behaviours. Banks are well aware that their success is
predominantly dependent on the CRM strategies adopted by them. Service providers have
recognised that good CRM bonds customers with the organisation for 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 for the banks to work
towards ensuring that customers prefer their products and services over that of competing
brands. The key to develop and nurture a close relationship with customers is by appreciating
their needs and preferences and catering to their requirements. Leveraging on IT, to
appropriately analyse and understand the needs of existing customers better, to ensure
customer satisfaction, and exploring the possibility of cross-selling products to gain a
competitive advantage 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 themselves as ‘Financial
Boutiques’. Knowledge dissemination has been propelled by electronic and mass media
campaigns. Today’s knowledgeable consumer is challenging 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 product-centric to a customer-centric approach to attract and retain High Net
Worth Individuals (HNI) and profitable customers as well.
The battle of the banks, for gaining a greater slice of the market share, is taking on a new
dimension. In the current falling interest rate scenario, banks are finding it increasingly
difficult to meet the high growth expectations. In order to bolster their top lines, banks are in
pursuit of newer ways and means of achieving organic growth through strategies that enable
acquisition of new customers and retaining the loyalty of the existing customers. Success of a
bank’s strategy towards customer acquisition will depend on its ability to develop customer
insights and translate these into effective operating models. Ensuring a good customer
experience at every customer touch point is the cornerstone of a successful growth strategy. A
good customer experience will drive customer acquisition and promote customer retention,
which translates into increased profits. This, in other words, is the hallmark of a successful
CRM strategy. Emphasis on CRM arises on account of the challenges confronting retail
managers----- managing to sustain and achieve growth and profits.

Bankers are conscious of the relative costs of acquiring new customers. As top management
emphasizes on “delivering results”, most bankers resort to customer grabbing, rather that
customer cultivation and creation, with the result that “customer 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 be better employed for growth initiatives. Therefore, the challenge for the
banks is to retain and deepen the profitability of the existing customer relationships, which is
borne out by Nat West’s success.

With the shift from a transaction-centric to a relationship-centric business approach,

leveraging CRM has become sine qua non. Banks are adopting CRM to converge people,
process and products more effectively to embark on the true relationship banking--- with the
end result of accelerating the business momentum. Towards this end, experts propose various
ideas and approaches to understand the fundamental marketing motivations driving the CRM
trend in banks.

To meet the challenging preferences of the customers and to stay ahead of competitors,
bankers are bound to attract customers by providing a spectrum of services. 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, employees 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

Having understood the significance, it is prudent to plan for CRM in retail banks. To a large
extent, the success of a CRM plan is dependent on the choice of the software. Towards this
end, bankers should identify domain enterprise, credibility in the market, cost implementation
and relationship with the vendor as factors on which vendor selection is based. The domains
of software systems, multiply product database and tracking require specific CRM focus.
Besides understanding 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, banks
need to understand how CRM assists them n customer identification, acquisition and

As a part of the planning process, frontline executives in banks should thoroughly understand
their organisational structure, infrastructure, as well as the product environment. In this
context, the management initiatives for CRM assume importance. A top-down CRM focused
approach that starts with the top management, percolating and permeating to all levels of the
CRM is a necessity in the present business scenario. Initiatives, such as, introducing CRM
audit by independent teams to identify the existing lacunae, and plugging the loopholes in the
CRM strategy 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 variety of reasons. The
rationale behind losing their best clients to other service providers 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 reason. The remedies suggested by them are that banks
should adopt customer relationship building approaches such as responding to complaints
instantaneously, analyzing the attrition of the clients in a particular product, and rating of
services 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 relationship building
exercise is to obtain an electronic feedback from customers to understand the level of
acceptance of existing products, which will facilitates in developing 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. The ability to
predict the products that customers are likely to purchase over a period of time, increased
productivity of managerial executives, sales and customer service staff, and streamlining of
business processes are some of the benefits retail banks obtain by taking to successful
management of their customer relationships.

Implementing the right CRM tools can enhance customer satisfaction leading to business
growth. CRM enables organisations to motivate customers to initiate revenue-generating
contacts. Several CRM issues such as, its effectiveness, application and challenges draw
attention of the banking industry. Having witnessed the manner in which several global banks
have benefited through CRM, the Indian retail banks too need to focus on and continuously
invest in the customer relationship 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
implementation to meet the emerging demands of “universal banking”.

1.2 Defining CRM

Customer Relationship Marketing is a practice that encompasses all marketing activities

directed toward establishing, developing, and maintaining successful customer relationships.
The focus of relationship marketing is on developing long-term relationships and improving
corporate performance through customer loyalty and customer retention.

Customer Relationship Management (CRM) as the name suggests, the primary focal point 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 general, 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 include marketing, sales, and customer service strategies.
CRM helps create time efficiency and savings on both sides of the business spectrum.
Through correct implementation and use of CRM solutions, companies gain a better
understanding of their strongest and weakest areas and how they can improve 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 entire
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 solutions can help you securely,
reliably and consistently:
• Delight your customers every time they interact with your business by empowering
them with anytime, anywhere, and any channel access to accurate information and
more personalized service.
• Reach more customers more effectively, increase customer retention and boost
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 with the
ability to access more information through self-service and assisted-service
capabilities when it is convenient for them.
• Enable virtualization in your enterprise as more of your people and resources extend
beyond your offices and around the world.
• Balance sophisticated functionality with rapid implementation and effective support
for a faster return on your CRM investment.

Today’s customers face a growing range of choices in the products and services they 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 about consumer
behavior and habits in order to better control this behavior. Having an impact on
consumer behavior means being able to change consumer’s perception of the product or
service, to establish a relation between the company and its clients.

1.3 Study of Banking Sector

The Indian banking can be broadly categorized into nationalized (government owned), private
banks and specialized banking institutions. The Reserve Bank of India acts a centralized body
monitoring any discrepancies and shortcoming in the system. 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 then seen tremendous progress.
The need to become highly customer focused has forced the slow-moving public sector banks
to adopt a fast track approach. The unleashing of products and services through the net has
galvanized players at all levels of the banking and financial institutions market grid to look
anew at their existing portfolio offering. Conservative banking practices allowed Indian banks
to be insulated partially from the Asian currency crisis. Indian banks are now quoting at
higher valuation when compared to banks in other Asian countries (viz. Hong Kong,
Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets
(NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed
with efficient branch networks focus primarily on the ‘high revenue’ niche retail 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 multifarious challenges of
globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive
players, capable of meeting the multifarious requirements of the large customer base. Private
Banks have been fast on the uptake and are reorienting their strategies using the internet as a
medium The Internet has emerged as the new and challenging frontier of marketing with the
conventional physical world tenets being just as applicable like in any other marketing
The Indian banking has come from a long way from being a sleepy business institution to a
highly proactive and dynamic entity. This transformation has been largely brought about by
the large dose of liberalization and economic reforms that allowed banks to explore new
business opportunities rather than generating revenues from conventional streams (i.e.
borrowing and lending). The banking in India is highly fragmented with 30 banking units
contributing to almost 50% of deposits and 60% of advances. Indian nationalized banks
(banks owned by the government) 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 Indian financial sector.
The nationalized banks (i.e. government-owned banks) continue to dominate the Indian
banking arena. Industry estimates indicate that out of 274 commercial banks operating in
India, 223 banks are in the public sector and 51 are in the private sector. The private sector
bank grid also includes 24 foreign 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 public, repayable
on demand or otherwise and withdrawal by cheques, draft or otherwise. (Banking Regulation

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 regular 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 doing him any
• 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 courteous 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 and 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 sector, 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 should
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 relationship
with the bank.
• One on whose behalf an account is maintained.
• Any person/ entity connected with financial transaction which can pose
significant 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 reference 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 typically use banks
for services such as savings and current accounts, mortgages, loans (e.g. personal, housing,
auto, and educational), debit cards, credit cards, depository services, fixed deposits,
investment advisory services (for high net worth individuals) etc.

Before Internet era, consumers largely selected their banks based on how convenient the
location of bank’s branches was to their homes or offices. With the Advent of new
technologies in the business of bank, such as Internet banking and ATMs, now customers can
freely chose any bank for their transactions. Thus the customer base of banks has increased,
and so has the choices of customers for selecting 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 they have brought with them
several useful and innovative products. Due to forced competition, public sector banks are
also becoming more technology savvy and customer oriented.

Thus, Non-traditional competition, market consolidation, new technology, and the

proliferation of the Internet are changing the competitive landscape of the retail banking
industry. Today’ retail banking sector is characterized by following:

• Multiple products (deposits, credit cards, insurance, investments and securities)

• Multiple channels of distribution (call center, branch, Internet and kiosk)

• 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 switching costs,
customers are easily switching banks whenever they find better services and products. Banks
are finding it tough to get new customers and more importantly 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 business, 50% in
insurance and brokerage, and 125% in the consumer credit card market. Therefore banks are
now stressing on retaining customers and increasing market 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 differentiate themselves by adding
value-added service, offerings and building long-term relationships with their customers
through more customized products, enhanced value offerings, personalized services and
increased accessibility. Banks also need to identify customers and products that would be
most profitable and target customers with products that are most appropriate to their needs
and serve the customers with greater cost efficiency.

Banks also need to find out the avenues for increased customer satisfaction, which leads to
increased customer loyalty. This may be explained better from two initiatives bank took in the

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 business. 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 increases in the number of customer transactions.
The value proposition, however, was a significant increase in that intangible called customer
satisfaction. The increase in customer satisfaction has translated to loyalty that resulted in
higher customer 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, however, that the primary
value of offering Internet banking services lies in the increased retention of highly valued
customer segments. Again customer satisfaction drives the value proposition.

Thus, banks need to retain existing customers with enhanced personalized services 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 customers, across
multiple touch points including the Internet, bank branch, call center, 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 this
through Campaign Management by analyzing data from banks internal applications or

by importing data from external applications to evaluate customer profitability and
designing comprehensive customer profiles in terms of individual lifestyle
preferences, income levels and other related criteria. Based on these profiles, 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 being

stored in product centric silos, (for e.g. separate databases of savings account & credit
card customers), with CRM the information is stored in a customer centric manner
covering all the products of the bank. CRM integrates various channels to deliver a
host of services to customers, while aiding the functioning of the bank.

• Marketing Encyclopedia - Central repository for products, pricing and competitive

information, as well as internal training material, sales presentations, proposal
templates and marketing collateral.

• 360-degree view of company – This means whoever the bank speaks to, irrespective
of whether the communication is from sales, finance or support, the bank is aware of
the interaction. Removal of inconsistencies of data makes the client interaction
processes smooth and efficient, thus leading to enhanced customer satisfaction.

• 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,
including opportunity, account, news, and expense report information. This would
make sales decision fast and consistent.

• Lead and Opportunity Management - These enable organizations to effectively

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 activities of

various members. Thus improved transparency leads to improved efficiency.

• Contact Center – It enables customer service agent to provide uniform service 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 supports all
channels of customer interaction including telephone, fax, e-mail, the online portals,
wireless devices, ATMs, and face-to-face contacts with bank personnel. It also links
these customer touch points to an operations center and connects the operations center
with the relevant internal and external business partners.

• Enhanced productivity – CRM can help in enhanced productivity of customers,

partners and employees.

• CRM with Business Intelligence - Banks need to analyze the performance of
customer relationships, uncover trends in customer behavior, and understand the true
business value of their customers. CRM with business intelligence allows banks to
assess customer segments, which help them calculate the net present value (NPV) of a
customer segment over a given period to derive customer lifetime value. Customers
can be evaluated within a scoring framework. Combining the behavior key figure and
frequency to monetary acquisition analysis with a marketing revenue quota can
optimize acquisition costs and cut the number of inefficient activities. With such
knowledge, banks can efficiently allocate resources to the most profitable customers
and reengineer the unprofitable ones. Data warehousing solutions have been
implemented in Citibank, Reserve Bank of India, State Bank of India, IDBI, ICICI,
MaxTouch, ACC, National Stock Exchange and PepsiCo. And Business 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 office
operations and customer servicing also helps in coping with many services that do not need
manual intervention. These are serviced by channels like IVR, Internet and ATM. Customers
can get account information, information on credit balance, 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 banking. Banks need to be flexible enough to continue to extend the
"personal touch" that such customers prefer.

Make changes internally before going for CRM: Many banks have spent a lot of money on
CRM, finding it easier to buy CRM technology than to make the major internal changes
necessary to really make CRM work for them. Unfortunately for these banks, 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 business
transformation—changing the business from services-centric to customer-centric.

Have defined Objectives - Many CRM implementations have been approved without
examining aspects like profitability, turnover etc. CRM implementations should have 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 use 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 reflected in actual marketing budget allocation.

3.5 CRM Implementation in Banks in India

According to Nasscom report “Strategic Review 2004”, Indian CRM market was estimated at
US $ 14 million and is forecast to grow to US $ 26 million in 2005. Banking 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 CRM

Customer Segmentation- Do intensive data analysis and value-based segmentation to

highlight the value of different customer segments and the underlying drivers of that value.

Design programs- Design innovative programs focusing on customer acquisition, cross-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

Good Decisions based on Right Information- The information from a CRM program can
often guide better operational business decisions at many levels of the organization. Gather
customer information at a broader set of touch-points, perform in-depth analysis, and make
critical information available to relevant stakeholders.

The retail banking industry is undergoing revolutionary change. There are many players and
competition is tough. Customer Relationship Management is an important weapon in this
fight. The ability to mass customize the customer experience and 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 competitions increase, banks will require the robust CRM functionalities in order
to 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 dynamically affect
the marketplace and its participants, are widely known. Both the industrial and the academic
communities have to realize the need of a re-determination and re-evaluation of many basic
and traditional concepts of the strategic marketing 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
efficiently 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 eventually overcome any
obstacle or problem and create a worldwide community to sharing equal opportunities in
progress, education, communication and information. This is of great importance only when it
is clear that technology has to be user/citizen oriented and publicly accessible.

Considering the implementation of eventual globalization it is crucial to remember 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 characteristics. In practice this can be
translated into specific directions for public and private organizations and their various
orientations in order to provide opportunities 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 the traditional marketing concepts as well as global
management principles and foundations, have been used as a cover in various decisions
concerning the selection 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 globalization under
their social responsibility's point of view and the re-thinking about some basic marketing
concepts, as a direct consequence. Moreover, the authors argue that companies have to be re-
positioned in the society as well as in front 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
having as its core theme the company's orientation toward the well-being of the customer and
generally the society creates at the same time a field of dialog between the academic
community and the industry.

Marketing should always be addressed to customers in order to gain the answers it looks for,
to all its inquiries. Marketing ethicists have long criticized some marketers for making non-
socially responsible or even unethical decisions in the 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 follow in order to adopt a new orientation in the context of
globalization (An example of an exclusion decision is not providing a needed product /
service to a segment of the population which needs it ).

It is widely accepted that the social role of companies is manifested by the improvement of
the living standards of the society. But this is to ascertain that when social exclusion occurs,
then the living standards become even lower.
Financial exclusion could be experienced in many different ways. Its key characteristic is the
inability of some customers to access necessary financial services 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 marketing mix factors (marketing exclusion), strongly related to a
previous experience (condition exclusions), such as a high - not affordable price (price
exclusion), the lack of accessibility, due to a certain distribution-related decision (access
exclusion), not matching image (as a result of false or "correct" perceptions), may create
barriers between the customer and the company that do not support a further relationship.
However, not all customers experiencing financial exclusion are of any interest for a

Financial exclusion also is accepting self-exclusion. A decision made by the customer as a

result of dissatisfaction from a previously related experience. Referring to the specific
example of bank services, offered in isolated areas in India, 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 branches are not provided. In these cases, when this kind of
exclusion occurs, the local post office branches are servicing customers. However, as
probably expected, they are providing only the most common banking transactions, and of
course, from the strategic point of view, any mentioning about "corporate identity building"
and "corporate / brand equity building" is to be avoided. This is because exclusion 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 one with the determining role in its
implementation .Services are becoming more and more a major competitive tool, even in the
physical goods industries, necessitating a close relationship, often called a strategic
partnership Financial exclusion is strongly related to service providing. In some cases the lack
of the provision of financial services becomes unjustified having in mind the opportunities
provided by information technology. This is exactly the case, when referring to the banking

This piece of research reveals the correlation between the geographical and financial
exclusion concerning two geographical remote areas in India. The study identifies the banking
attitudes of a customer segment that hasn't been investigated 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 and 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 financial services
sector, including increased competition from new entrants in the markets, mergers and
information technology. All these characteristics, resulted in the development of a
combination of tactics related to the adoption of cost cutting activities and increased emphasis
on market segmentation and appropriate targeting, are present in the banking sector in India.

The inhabitants of isolated areas cannot satisfy their banking needs although they have a
healthy income profile and financial strength. Only few financial services were traditionally
offered in these areas. Nowadays, due to the increased competition in the market, these
neglected customer segments can be of interest to 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 provided. 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 subject area of previous research. However, little is known about
the above and the elements contributing to satisfaction for people who have always
experienced financial exclusion and are not familiar with technology. Lack of awareness in
the use of technology and limited contact with payment systems, such as cheques and credit
cards is the norm in isolated areas. Contrary to common belief, these conditions can accelerate
the use of new technologies and modern financial products.

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 services via
Information Technology.

The research is exploratory, as the available information in relation to customers living in

isolated areas, is insufficient on these elements. However, this paper 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 resource 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 somewhat 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 limited range of financial products.

It is worthy to mention that, it rarely happens to the citizens of those areas to be selected as
respondents to surveys. The inhabitants experience a certain kind 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, they feel excluded not only from what is happening but even
from what is being planned or prepared by almost all sectors. As expected, this kind of
exclusion leads them to a greater disappointment in conjunction with the other forms of
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 and 169 in Biswan. The men
had stayed in areas other than the place of origin; further more they were significantly better
educated than women. It is not surprising to find that a quarter of the inhabitants are retired as
the population of these islands is ageing, and. The education of the sample is representative of
the educational levels of isolated areas, but not of the whole of Greece, where most 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 the sample had a higher
education qualification. The educational profiles were more 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 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 was 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 decided 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 with the local
communities were established. Ten semi-structured in depth interviews were conducted with
local opinion leaders (i.e. the Mukhiya, the priest, teachers in the local schools). Basic
information and support in reaching the general population was given. Five focus groups with
inhabitants of each suburb, helped in the development of a general understanding of the
situation and attitudes towards both technology and banking, followed. During the focus
groups, the questionnaire was pre-tested. It was apparent that the prospective respondents,
although 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 problem and in order to capture
the true perceptions of this particular sample, it was clear that data should be collected by
person-administered interviews.

During the last stage, the quantitative data was collected via in-home interviews 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 are 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 that the opinion of people in the two samples and the fact that the one
group has experienced living away from the island was not related, independent samples t-test
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 also used in
order to examine comparisons of categorical data. For all tests, observed significance level of
the test (p) less than 0.05, the hypothesis that the variables under investigation are
independent was rejected.


A primary objective of this study was to investigate the banking services currently used by
customers, in order to reveal the provision of those services in the particular areas. In
addition, the study highlights their perceptions about the provided services. In this section, we
discuss the key findings of this study, in order to provide also a new perspective on
companies' social responsibility issues combining those with "exclusion", particularly social
and financial one.

As expected, the population of those remote areas is not denied access to financial services, as
long as they make the effort to obtain them. As shown on table 2, almost all respondents have
some sort of bank account. An interesting finding is that a high percentage of the sample

(56.57%), are banking with more than one financial institution. Those respondents who have
lived away does not presents any clear differentiation of those who have spent all their lives in
the island regarding the use a different number of financial institutions from those (Pearson
χ2= 8.97, p= 0.06).

TABLE 2. Number of financial institutions used

Never lived Lived away> Total

Away 1 year
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 conditions of use is concerned, it is clear however that 30.37% of the sample
claim that they need to travel to another island at least once every two weeks to make their
required transactions. Only 5.29% of the sample cited that they are able to make them all in
the island they live on (table 3). The results highlight that it is almost compulsory for someone
who wants to satisfy banking needs to visit another island, while all residents travel with a
similar frequency (Pearson x2= 2.11, p=0.72). This cause additional cost to them associated
with banking transactions, since staying away overnight or even for a longer period is often
necessary due to the frequency of the islands' connection by boat and the weather conditions.

TABLE 3. Frequency of travelling for contacting financial transactions

Never lived Lived away> Total

Away 1 year
Total % Total % Total %
Once a week 5 2.7 9 5.2 44 12.26
Once per 15 days 12 6.4 11 6.4 65 18.11
Once a month 44 23.5 44 25.6 129 35.93
Less than once 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 topic, i.e. technology and its contribution to the areas well-
being is that all respondents identified technology as a key factor in the development of their
area (table 4), since it was revealed that they believe that unless the area develops, more
qualified young people will stay there. Similarly to banking services availability, technology
was also found to be far from being adequate. Those that have lived away were even more
disappointed with the services provided, although the observed difference was not statistically

Respondents provided low scores regarding their ability to access to the various banking
services in their area (table 5). Only when referring to the most basic services
(withdrawal/deposit) this is not the case. More precisely, the people feel that payment of bills
is the service to which they have the most access to in their region, followed by
withdrawal/deposit (x2=1108, a=0.00).

Particularly, those respondents that have been away for a long time, and therefore they have
experienced ATM and other technologies usage in the past, they feel that they do not receive
the quality of service they perceive as standard.

TABLE 4. Importance and availability of technology and bank services

Never lived Lived Total

Away away>
1 year
Mean SD Mean SD Mean SD t-value p
Technology is a key factor for the 4.81 0.71 4.83 0.49 4.82 0.61 -0.20 0.84
development of the region
The needed banking services are 2.10 1.36 1.85 1.25 1.98 1.31 1.79 0.07
available in my region
The need for financial services 4.78 0.73 4.80 0.63 4.79 0.68 -0.22 0.83
increase in summer
1= strongly disagree, 5= strongly agree

TABLE 5. Access to various banking services

Never lived Lived Total t-test Friedma

Away away> n
1 year
Mean SD Mean SD Mea SD t-value p Mean
n Rank
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 3.44
Credit cards 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 currency exchange 2.23 1.52 2.12 1.51 2.18 1.51 0.71 0.48 4.06
Stock exchange 1.23 0.73 1.21 0.67 1.22 0.70 0.28 0.78 2.81
1= very difficult, 5= very easy

The great majority of the respondents (67%) claim that they perform bank transactions at least
once a month. Again, the basic banking services (withdrawals/deposits 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 basic bank services more than the others and make more stock
exchange transactions, although the latter is still one of the least used services. Only a small
% of respondents, indicated to make use of any kind of credit cards for their transactions. It
seems that it is the custom of the area to pay in cash.

TABLE 6. Use of various banking services

Never Lived Total t-test Friedma

lived away> n
Away 1 year
Mea SD Mea SD Mea SD t-value p Mean
n n n Rank
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 3.31
Credit cards 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 currency exchange 1.52 0.98 1.47 0.94 1.49 0.96 0.53 0.60 3.57
Stock exchange 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 perceptions
in relation to the standards of the banking services offered in their region. They did not
express any major concerns in terms of the security of the banking services and were
reasonably content with the reliability of the systems. However they all expressed some
discomfort in relation to the speed of the system. But, their major concern refers to the
coverage of the banking networks. When compared with the others criteria measured, the
findings imply that they all agree that the quality of the service provided was not what they

Among all requirements of the banking services in the region, only "personal contact"
received a slightly lower mean score, implying that all respondents agreed that reliability,
speed, security and convenience are most important features of the provided banking services
(table 8). Those that have spent some time away from the native place believed that this
feature is of less importance than those that have stayed on the island for most of their lives
and are used to doing business through personal contact. When paired sample tests were
performed, it was revealed that there was no difference in the perception of the importance of
all these elements (a=.00).

TABLE 7. Requirements of the banking services in the region

Never lived Lived away> Total

Away 1 year
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
Security 4.94 0.27 4.93 0.30 4.93 0.28 0.19 0.85
Convenience 4.89 0.39 4.90 0.43 4.89 0.41 -0.31 0.76
Personal contact 3.74 1.54 3.39 1.64 3.57 1.60 2.07 0.04
1= strongly disagree, 5= strongly agree

The use of ATM services are not at all popular, as 71% of the sample cited to be non users of
ATM services, or even in the past "they have never used" an ATM (table 9). However, this
finding was somewhat supported by the views expressed during the personal interviews and
the focus groups, where the participants linked their desire to have some personal contact with
the bank employees with the fact that they have to make an actual journey to visit the bank.
This could be a plausible explanation, since they use other technology. For example, more
than 44% of the respondents reported that they own and use a mobile phone.

Although all respondents appear to have limited experience in using ATMs, the results
indicated slightly differences among those who have lived away and those who have stayed
for their whole lives on the island, (Pearson x2=8.691, a=.00). Once again, it seems that the
experience of living in other, more technologically developed areas, or in other words, not
excluded areas, appears to influence positively the potentiality of ATMs.

TABLE 8. Use of Automatic Teller Machines (ATMs')

Never lived Lived away > 1 Total

Away Year
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 islands were
experiencing difficulties in using most of the highly sophisticated equipment, and ATMs were
perceived as such. Some of the people interviewed felt that using an ATM machine is risky,
and were not willing to trust the equipment. This is mainly due to problems with the telephone
connections used at present to support 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 clear that the Internet was only used for information
gathering. None have used the Internet for banking. The inhabitants of these islands were
security conscious, and believed that using a computer to perform financial transactions is
highly dangerous.

Moreover, the exclusion of these places entail also very important social and political

By explicitly considering these issues, one can argue, based not only on their intention but
also on their potential, that many of the respondents could (and therefore should) be among
the target-customers of the major banks of the country. However this does not occur. Is that
the "real world" bank deny their social role, or it is the result of their interpretation of some
basic marketing concepts?

Chapter 5
5.1 Setting socially responsible Marketing Objectives and Strategy

In the free market economies, business organizations are free to choose what goods and
services they produce, the processes by which they produce as well as the markets they aim to
serve. So, a social service does not necessarily mean the offer of specific additional services
to particular customers. It means the company's orientation in offering its products/services in
a more "social way".

In market economies where companies do have a high degree of autonomy, the manner in
which organizations make strategic decisions, taking into consideration the Social
Responsibility notion, becomes in itself a matter of discretion. As Frederick et al, (1992)
suggests there are 3 broad views of the social contribution of the company. The so called
"social obligation", adopted by companies which act, in accordance to what the law requires.
The 'social responsiveness", where the companies are more open to moral issues and
influenced by involving the acting social groups, and finally, "social responsibility" under
which companies recognize a wider spectrum of relationships with the different stakeholders
and enhance certain levels of interaction with such groups.

So, it is important to recognize that the concepts of "social responsibility" and "any kind of
exclusion" are not theoretical claims or even new, "smart" ways of determination of a
"competitive advantage. Instead, it is a certain philosophy of doing business with serious
consequences to society's well being. The real importance of company’s social responsibility
has not to do with its reactions to particular facts or events, but to their view, to their
contribution and role to the society. Therefore, the subject of social responsibility of a
particular company shouldn't be left to ones managers hands, but it should be the core concern
behind a company's existence.

Apart from Societal Marketing, which should also focus on a long-term orientation towards
customer satisfaction without excluding of course profitability and stable growth,
Relationship Marketing focuses on the creation of long-term relationship between various
participants - members of the particular network, involved in a process based on the axioms of
"mutual exchange and fulfillment of promises".

Moreover, as Kantner claims a "successful partnership manage the relationship, not 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 role. But the question arises exactly there, i.e.
in the definition / identification 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 determine the
needs, wants and interests of target markets and to deliver the desired 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 promotion of "proper
consumption values" so that "long-run consumer welfare" may be attained. Thus, it requires
that the business organization includes social, ethical and ecological considerations in its,
product and market planning. But, how much emphasis has been given to the particular target
markets and what balances with society as a whole?

Referring to the traditional Marketing concepts of "segmenting - targeting - positioning", one

could claim that the "focused targeting" is among the most successful strategic options. The
question is about the criteria this strategic decision will be implemented. The main purpose of
segmenting is to create substantial, measurable, accessible customer segments in order to
target effectively and efficiently 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 something that has to be extracted
from customers to create shareholder value and all customers should be shown sufficient
returns to the organization.

Therefore, we strongly believe that under the scope of re-formulating the companies' roles in
society, one should re-define the segmentation criteria as well. Although traditionally, this has
been implemented based on product-related variables (i.e. product usage and product benefit)
and consumer related variables (i.e. demographics, lifestyle, self-concept etc), community’s
"well being" has to become the "compass" of segmentation criteria, setting.

The traditional marketers claim that "consumer/customer is the focus" and that consumer's
needs and desires are the raison-dieter for marketing (the marketing concept can be described
as an integrated effort aimed at providing customer satisfaction…). 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? Otherwise, 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 marketing
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 some 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 demands 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 generated - an
integrated framework that addresses every point of the customer lifecycle of a business - from
customer support to back office to customer analytics.

What is Customer 360°?

Customer 360º is a proprietary framework for integrated Customer Lifecycle Management

(CLM) services that touch every point in the customer lifecycle of your business. Customer
360º integrates both direct and indirect interactions of a customer along the entire lifecycle
from prospecting to acquisition to service to retention while also delivering insights through
customer analytics. From a business point of view, this translates into reduced service costs,
increased business and enhanced profitability. From a customer centric viewpoint, it translates
into customer delight and enhanced customer satisfaction by catering to their current and
future needs.

Customer 360° comprises of:

• Customer Interaction services

• Back-Office services
• Customer Intelligence service

How will Customer 360º 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 experience across other touch points and insight
into customer's needs and behavior. Customer 360º is an integrated solution that can ensure
market adaptability, competitiveness 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: multi-channel with the call
centre, website, e-mail and SMS all joining the fray; multi-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 behaviors 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 online banking.

The development of online banking has proved a mixed blessing for retail banks. By allowing
customers to service their accounts online, online banking represents 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 even those who do still
demand the reassurance of one-to-one personal support, whether provided online or over the

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 important factor driving
their overall satisfaction with their bank or other financial institution.

The problem is that for most banks, providing the personal support that customers’ 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 providers are prepared to pay for it. In
the past this circle was squared through the medium of an independent financial adviser
(IFA), offering free advice in return for the opportunity to sell financial products on

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” financial 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 developers DPR Consulting: “You
can’t have five layers of people taking 1% commission and 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, customer
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 provision 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 entering their details, but in return
they receive instant feedback, and by the end will have created an online portfolio from which
they can continue to manage their affairs.

A financial adviser probably has knowledge of no more than 100 products. It’s also more
personal that one can say he does not want any IT investments, or that he only wants
environment friendly funds. And the software will spot contradictions in his responses.”

6.3 The Rewards

The payback for the bank is in the amount of information about customers the online check
delivers - up to 300 items of information on employment, home ownership and so on. This
approach is most applicable to the “mass affluent” customer with over £10,000 in liquid

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 given to customers with
more complex affairs.

With several retail banks, there seems to be a great deal of caution about creating more and
more online capability.

E-commerce generally has failed to live up to expectations, and the withdrawal of players like
First-e from the market has made the prospect of Internet-only banking as distant as the
paperless office.

“There are lots of nice things you can do online, but you have to look at the costs 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 stuff on the basis that you could do
it, rather than that it was what the customer wanted.”

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 intermediaries, and
obviously if a financial adviser introduces business then that creates 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 through 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 telephone 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 see 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 the money
and spending the time. Ultimately the more affluent will pay for advice simply to free up their

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 circumstances. It

is observed that despite serving the economy well, banks are generally focused on distribution
at the expense of understanding the needs of their customers. 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 of 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 enjoy even
greater power than their counterparts.

7.2 A Key Element

In conclusion, relationship banking is the key to successful banking. The bank gains a better
knowledge of the customer, the business and their needs. The customer enjoys a partnership
with their bank, allowing both sides to manage issues in good times and bad. Despite
technological advances and change, banking remains a people business, and the successful
committed interaction of people is the foundation of true relationship banking.

Chapter 8

CRM is one of the primary initiatives in any industry and more so in financial industry
sector, where competitive pressures from both financial and non-financial services are
fueling the movement toward CRM as the companies are systematically raiding a bank’s
territory to pick-off the most profitable customers. Thus, one has to begin with a
financial institution’s strategic goals, develop a consistent 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 reference to financial service industry.

Customer relationship management (CRM) is one of the primary strategic initiatives in

industry today, regardless of whether the company serves retail or wholesale customers,
whether it provides services or manufactured goods. In the financial industry, the movement
towards CRM (also known as ERM for enterprise relationship management ) is being fueled
by competitive pressures from both financial and non-financial services companies that are
systematically raiding a bank’s territory to pick off most valuable customers. Although CRM
is not a technology, modern high-tech applications, from relational databases, to data mining,
to computer telephony integration (CTI), to Internet delivery channels, are providing the
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 from $1.9bn in1998 to
$11 bn by 2003. AMR Research says the CRM market will grow from $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 means
different people, depending on what they want to do,” says Jimmy Sawyers, consultant,
Reynolds, Bone & Griesbeck, Memphis, TN.

• Financial services that are transaction based, such as credit card companies or bill
payment providers, want to manage the customer relationship to drive up transaction
volumes and squeeze out expenses from individual transactions. One customer
generally has one account and it doesn’t matter if others within the same household
have accounts. The goal is to provide incentives that get the customer to use the
service more. Transactions become commodities. The customer responds 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 financial planners,
use CRM to deepen the trust the customer has in the service provider in order to
increase the fees for services. These companies earn fees regardless of the number of
transactions the customer makes. They may be able to increase 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 the two

extremes- managing the entire customer relationship in order to reduce costs and
increase the depth of the relationship with the customer. Generally, reducing costs
means getting the customer to use less expensive delivery channels. Increasing the
customer relationship means either obtaining a larger “share of wallet,” 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 community

banks. Bank management came from the community. Bankers knew their customers, their
families, and their businesses. Lending decisions were based as much on good payment
histories as on good standing in the community. Customers gave all their business to one
bank, appreciating the good services they receive as a reward for their loyalty.

As banks automated back-office functions with mainframes, and the number of products
and services a bank offered grew, banks found it increasingly necessary to replace branch-
based filing cards with a central information file (CIF). In early 1970s, CIFs in even the
largest banks were centrally located file cards. But by the mid-to-late 1970s, these card-
based systems gave way to mainframe-based, hierarchical database systems.

8.3 Customer Support – A historical perspective

The Customer is King. This mantra, although used for a long time, has not been put 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 and 80s, the concept of customer
support meant that organizations were doing a favor by answering a few questions for the
customer on the phone – after putting them on hold for an hour! Standing in line to buy something
was common and expected. Remember when the customers had to go to the airports to buy tickets
only because the airlines kept them there? Organizations simply lost touch with the realization –
that they existed because of these customers.

The 1990s brought two new concepts that challenged the prevailing business landscape:
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 virtual 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 providers.
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 the king.
Business customers, although always treated with more respect than individual consumers, 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 flow, 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 customers, they still treated all customers the same.
Furthermore, the focus of these applications is more on improving call-center productivity.
Clearly, these applications add value and help many organizations execute their CRM initiatives.
However, they are not effective in meeting the needs of an organization’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 PeopleSoft) took the
early lead by introducing tools to help the sales personnel become more efficient in tracking their
customers. There were also a few problem-tracking tools for help desk such as Remedy. As
companies focused more on customer relationships, additional applications emerged in areas of
customer support, field support, and marketing automation. Most CRM companies today are
trying to address these four areas usually by partnering with other companies. Most of the ERP
players are also expanding their solutions to include CRM.

There are a number of niche players focused only on certain pieces of CRM such as e-mail
management, sales force automation, technical support, marketing campaigns, among others.
“CRM is a business strategy designed to optimize profitability, revenue, and customer
satisfaction” – Gartner Group

Although there are quite a few vendors providing CRM related products and services,
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 problem to make it go away. CRM,
essentially, is a strategy that involves applications, processes, policies, business context, and
people, to enable companies to manage and increase profitable relationships with their customers.
An enterprise’s strategic customers expect top-notch treatment. They want the vendor to
understand 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 grow.
Although, there are various types of applications included in CRM suites, as described 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 applications 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, by 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 for
companies to offer their customers. Customers can look up their basic information like billing,
order status, etcetera by logging in to the vendor’s Web site. While 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. Enterprise customers demand personalized support in order to access their
information quickly and easily. In the era of information-glut, they want specific and relevant

Companies are trying to manage relationships with their customers, partners, and suppliers in a
personalized and automated manner. True personalization is not easy 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 geographically 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 customers
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 level is a Herculean task.

• Information Updates: As the information is constantly evolving, continuous updating for

customers’ reference is required. In most cases, information is updated on an ad-hoc or periodic

basis resulting in delayed and inaccurate information and high overhead costs of updating the

• Publishing of information: Since the information resides in various diversified

functions within an enterprise, publishing of information is a major problem. Traditionally,
publishing was restricted to certain IT professionals and business users who typically forward
their documents to these IT groups for publishing on the Web. This 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 custom profiles
created by users. Although these models work for the consumer level user, they do
not provide value for enterprise customers. It puts the burden on users to define in what
information is more relevant versus not. Business customers need an autonomous environment
can all their users interface with the vendor enterprise and get the relevant information quickly

• Communication: A relationship is based on two-way communication. Most esupport

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 vendors trying to
manage thousands of users coming from diverse locations.

• Scalability: When hundreds and thousands of users try to get to the same information in a
central database, scalability is a big issue. Response times get slower and systems can breakdown.
Companies are trying to solve the scalability issue by throwing more and more
powerful hardware at it.

• Deployment: Deploying a CRM solution is a tough and lengthy process. Deploying a Web-
based support system is even tougher. Furthermore, deployment in a personalized fashion focused
just on enterprises, that can be a rat’s nest if not implemented carefully.

8.7 Overview – More than just E-Support

As competition intensifies, organizations need to increase their focus on enterprise customer
relationships. An urgent need exists for solutions that enable enterprises to manage
relationships with their key customers on a personalized basis. Most of the current solutions fall
short in providing a truly scalable model, where customers receive an autonomous and
personalized environment for their support needs over the Web.

Each customer gets their own personalized Weblet, with real-time information that pertains only
to them. Customers are able to get specific and relevant information -quickly and easily - to
resolve any problems or issues without going through numerous steps or phoning the call-center.
Enterprises cut their costs by drastically reducing the number of calls into the call-center. Since
these Weblets allow bi-directional communication, customers can give instant feedback to the
enterprise. The solution is not just about providing support on the Web. It’s about managing
relationships with key customers.

The following diagram shows how solution integrates disparate databases within the
enterprise and provides targeted Web-based support to the business customers:
patent-pending mediation technology provides a unique, innovative, and intuitive architecture
that automates an enterprise’s collaborative ecosystem comprising of
customers, partners, and suppliers. The solution enables companies to interface with multiple
customers through a mediator, allowing them to deal with enterprise customers on a one-to-one
basis, without creating separate processes. Organizations can achieve a return on investment of
20X of their up front licensing and implementation costs. The solution not only provides a major
competitive differentiation, 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 who have
recently released market information. Each company listed is then also hyper-linked to the
latest relevant press release relating to that company. Although the opening page only lists
those companies on which information has recently been released, it is also possible to list
every company currently being tracked in order to get more information on what that
company has been doing. This listing is updated each evening so as to keep you abreast of all
the latest changes. The Screenshot below will provide a fuller example of how this looks:

source: financial editorial “ Money mantra”, 1999 Oct. ( Publication: vikas press)

Chapter 10
10.1 Ten Myths About the Customers

To become customer centered and customer preferred, a firm must change its orientation and
design its business capabilities, infrastructure, and measures of success 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 about its customers tend to drive its policies, decision
making, and not only what 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 ingrained.
The automobile company, for example, did not want to hear that customers were more
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 how a mindset about customers can
filter out and resist hearing ideas or concepts that do not match prior conceptions about

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 contact centers, yet the
volume of calls was growing at such a rate that the capacity 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 made 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 the void and
"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 answer is yes. Not many
executives realised this aspect to serve customer at a lower 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 channels, 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 telephone 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 (under certain circumstances, which the
customers would highly value). Besides, how an offer of a product during a service
conversation (cross-sell) would be feasible.

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 that 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-solid 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 additional sales and "make it up on volume."
Consider how to attract and retain customers on a value proposition other than price: The
value-added expert advices that can be given to help the customer better 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, although 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 result 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 "customer 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 decades 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 customer! In
order to develop an ideal, customer-defined future vision of the firm, there is no other
That does not mean that the company has no valuable information at all. Front-line, 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 on what's not working. The important thing in
those cases, however, is that the information still come directly from the customer, not from
one’s intuition due to years of "being in the business."
However, over time it can become less clear which of your beliefs regarding customers is
actual, literal customer feedback versus intuitive beliefs formed and reformed over the years.
The result can be a strongly held set of beliefs, such as 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 about 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 customers get value/benefit from the things

they want—it is possible to jointly envision and develop creative, new breakthrough ideas,
which brings us to the next 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, and sitting
for hours behind one-way mirrors watching ineffective focus groups that 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. Probably no
customer spontaneously may have said, "Eureka, I want to take my big console radio and
strap it to my head for music while I am out jogging—if only engineers could reduce the size
of the components and then come up with cool-looking headphones."
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 generate a line of thinking that
breaks the person out of using only currently available and existing things to develop their
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 prejudices, likes, and
dislikes onto the customers. In fact, customers in visioning workshops 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 program 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 if I don't own a boat!"
However, if a customer owns a particular investment product and something happens 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 industries to provide
great customer value during touch-point interactions.
As with all these items, there is both opportunity and risk involved. The risk with 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 originally called. Second, never make a
generalized, mass-market, blanket offer. The opportunity 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 and targeted to their personal interests and values. "Mr. Thompson, I'm
glad we could resolve that for you. Before we end our discussion, I see that you are an avid
golfer (perhaps Thompson used his credit card to charge a set of clubs or a golf cart rental).
As you may know, our travel service department has a special offer for two nights at the

Hilton in Myrtle Beach, with free golf, for only $99.00 next weekend. Would you be

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 to, 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 receive (see
Myths 4 and 5 above) from targeted, individualized, and customer-specific interactions. For
example, the term tailored and personalized crept into their 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 customers must now enable their vendor with relevant data about themselves. In
return, the firm must secure the data (with controlled, employee-only, and role-appropriate
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 represents both opportunity and risk to the extreme.
Personalized interactions can literally become your most powerful loyalty generator, but if
you misuse customer information and lose their trust, you can lose not only your customers,
but also 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, they 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 incoming calls to also be an expert in all things. In this case, a
transfer of their call can actually reassure them they are going to the "right" person who has
the 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 customers
don't want an apology; they only want some form of personal compensation or concession for
mistakes. In many businesses that myth is not only accepted, culturally, but it is an actual
business practice to never admit or take responsibility, 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 accompanied 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 letter from management that the reason for the mistake has been
determined and that corrective measures are now in place, can actually increase loyalty.
Customers are often delighted with how a firm responds to and corrects a mistake. Customer

defections in those instances were actually less than the defection rate of customers 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, industries, or geographies.
Virtually everyone needs responsive service, and easy, timely access to their vendors,
irrespective of industry.2 However, the customers of a stock brokerage will 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 more greatly demand precision than
customers of a hair stylist, although it is a need shared by both.
Within an industry, customer segments will tend to have similar needs but different priorities,
e.g., financial services where older people value safety over growth and younger ones tend to
prefer taking risks in order to attain growth. Both 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
• Once the firm can "walk" and provide such basic loyalty-driving needs, it can progress
to "run," via market research to determine the 30 percent or so of unique needs and
any prioritization differences that may be necessary to attract and retain segments.
• However, it is dangerous to then assume that when a business model is successful for
one customer set that it can be cloned as "our standard set of corporate processes" and
will work around the world. It's that 30 percent of variability that can still kill the

Myth 10: We know what our customers need (not want . . . need).
This myth or misunderstanding is tightly linked to discussions that firms founded on their
own internal expertise and product knowledge often continue to believe that, due to their
product expertise, they are the experts on what customers need. This is quite different from
the issue of what customers want. It assumes that 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 less 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 understands how they get value or
benefit from something they want, and that underlying benefit is why they NEED it.
Understanding what they want is good. Understanding 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 services (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 elsewhere
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 call?

Why? What was it that you valued greater than being undisturbed?

Have you ever received an offer or proposal, although you originally initiated the contact on a
different subject, and appreciated it? Why? What makes it okay in 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 phone 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 expect to be
transferred to reach an expert on that subject? If you were not transferred to someone who
specialized in such a topic, would you be comfortable with and trust the answers you get?

Do you think the above is true only for financial issues, advice, and counsel? Or is it also true
for other businesses—such as yours? For example, how secure are you that a salesperson can
also give you accurate technical advice about the electronics under the hood of your new ZOT
12? Would you be happy if a single transfer could get you from the salesperson to the right
technically knowledgeable person?

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 future 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 teaming 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
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 evaluating 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 of 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 company enough to do
business with them. Customers are more likely to actively search 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 idea of what the company is up to. Customers who
already have dealings with a business are less likely to actively seek out their general
company information. However, 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 technology 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, product information is key for
new and existing customers. Customers will evaluate different products offered by one
company and by different companies. Sometimes that evaluation will result in a sale (either
online or offline) and sometimes it won'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 of their decision-making process.

The importance of being able to find useful product information has been reinforced 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 information they were looking for.

Customers' evaluation of product information is not about passively viewing product 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 interactive product information is, the more the customer will use it.

Mortgage calculators provide a good example of useful interactivity. Customers enter the
amount of the desired loan, and the various features they require, to find 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 calculator 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 information, the more
likely they are to spend time evaluating them. If product information is not useful, chances are
customers will abandon your Web site for someone else's. The tenth GVU user survey
showed that Web users can spend up to half an hour 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 customers 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 it 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 make when entering their comments. In fact,
sometimes this makes inquiries easier for 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 they receive. That
selection will comprise the choices they make to get around your site and identification of the
things that they want or that particularly interest them. This may involve choosing a particular
product there and then or setting themselves up to receive information and services later.

And sometimes, that selection will lead to a transaction. This transaction may or may not be
financial. When customers transact with you, they give you something in return for a service.
Sometimes that is simply information, for example, when they register to receive particular
information online.

Customers have to select the path they take through your site as much as the particular
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 of personalization.

When making their selections, customers rely heavily on tools to seek out personally relevant
information, such as site maps, search functions, indexes, and shortcuts. They also use tools
that help them receive personally relevant information and services, such as entering personal
information to create profiles and receive 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 find Web sites irrelevant and intrusive if they
do not receive something personally relevant and useful in return for the information they
have provided. E-customers are more likely to provide personal information on Web sites that
clearly offer valuable and useful information and functionality in return for the information
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 can'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 important 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 you, either
on your Web site, or in general. A Web site provides a medium where people can have a good
moan without having to talk to someone in person.

Customers will complain and unprompted feedback is usually negative, unfortunately 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 may not otherwise have. It also
gives you a chance to get things right where you may 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 stinks" might be
all the feedback you get after a customer has spent half an hour unsuccessfully trying to do
something useful. You may never find out what the customer was trying to do or exactly what
went wrong. However, if you prompt feedback 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 useful feedback.

Customers are more passive when it comes to prompted feedback. However, customers 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 have 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 either. 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-service providers
will determine how much they want to "tune in" to their Web site. For example, a bank's
customer is more likely to want to use a Web site for frequent transactions than a computer
supplier's customer who may only purchase once a year.
Even if customers are not transacting with you on a frequent basis, they will still 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 service experience.
Customers may have relationships with people within the service-providing 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 frustrated. 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 sites and
industries. Customers don't know all the marketing and business reasons behind 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 they 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 with some very useful things, they may put
up with some blunders and learn how to get 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 thinking and planning that goes into a
site, the content that ends up there, the visual 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 likely to direct
their energy into areas most likely to result in customer effectiveness.

1. It should Be Worth the Wait

Everything we offer on the Web is subject to higher expectations because customers have to
wait for it.
On the Internet we have to wait for things to download; that's a given. Slow download speed
is still rated by customers as the biggest negative in their experience of the Web, but they live
with it. Customers get mad when they wait for a page to download and then find there's very
little on it. Sometimes it's just obvious that that part of the site is under construction.
Customers feel that companies 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 page 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 their ultimate destination under

Dead ends
It is surprising the number of times a customer comes to a "dead end" on a Web site, a point
where no new content is delivered. This is especially true of Web sites where a standard
navigation (such as frames) has been used across all product content. A page should not be
offered if there is no new content available on it.

Another common frustration is taking one path to find information and then taking another,
only to find yourself receiving exactly the same information. Customers expect different paths
to reflect different customer needs, and they get annoyed when they find the same information
having taken different paths. This is particularly problematic in relation to calculative or
scenario-based functionality, 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 variables, why would a customer bother going through the process of generating
scenarios always to end up at the same place?

Gratuitous content and functionality

Download time also makes customers more sensitive to time wasting. Customers will 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, therefore, worth the wait.

Navigation leading to nothing
Say a Web site offers "tips from other customers" as part of the standard navigation for
evaluating products. However, only one in five products actually has customer 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 annoyance would be even greater if it was something
fundamental, like product prices, that was sporadically available.

Worthless downloads
Consider a company who has run a series of TV ads and has decided to profile those 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 minutes. Customers who complete the
download find it to be a reproduction of the TV 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 for the ad anyway. They expect the Web site to give them more
information, to complement 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 impossible. We have to
put different information on different levels and give customers paths 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 more 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 written and visual cues.

Blind action and hidden consequences

Unfortunately, we often don't make a certain path clear to customers and they don'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

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

Also, when customers are considering whether or not to purchase online, they want to know
what the process is and need help every step of the way (including confirmation of a
successful purchase at the end of the process). Customers often feel 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 that 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 customers also aren't comfortable with performing
downloads; they feel they don't know 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 research 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 are two types of registration,
one for clients and one for a complimentary account. There is no explanation of what the
registration processes will offer. Irrespective of this, the researcher is willing to register for a
complimentary account, because they expect it to give them access to the piece of research
they're looking 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 password 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 client 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 actually 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 exactly
who they are. Customers use their anonymity as a basis for getting impartial advice and
information without any sales pressure. This tends to be early in the process when a customer
is evaluating alternatives.
The importance of anonymity is reinforced in GVU's tenth user survey, where people agreed
strongly with the statement that they valued their anonymity on the Internet 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 want to
be identified. Forcing customers to identify themselves too early in an inquiry process could
prevent them from going through with it. Additionally, Web sites sometimes don't make it
clear whether customers are anonymous or not. Customers can sometimes incorrectly surmise
that they have been identified, and then get disappointed when they don't receive personalized

4. Customers have to use what is generally given

If you ask customers for information, they expect you to use it in some way. This applies to
information that returns a response then and there, as well as later 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 information 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-site
experience, and then you don't use it for anything useful to them, they wonder 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 give you personal information the first time,
they expect you to remember it, to save 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 United 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
customer 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 Web 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 that 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 form 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 plan 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 information they filled in the last time has disappeared. Now
the customer is really annoyed. If the error messages or the forms aren't very helpful as well,
this customer 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 repeat
everything they've already been told without offering anything new. It also sticks out like a
sore thumb when known parts of the business or product offerings 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 marketing and customer
service. And this is something we will explore in more detail later in this book.

Incomplete offering
Consider a telecommunications company that offers connectivity to the Internet through 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, mysteriously the company's Web site makes
no mention of its ISP. The customer is baffled 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 site, so they go there. But, they still can't understand why there are two Web
sites. Both sites may represent two companies, but they're all part of the same service 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 from 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 information to be nothing more than what they
already have in the provider's brochures. 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 the 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 the 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 that it makes a
valid comparison difficult. Lack of consistency in how product information is presented
makes comparison difficult for customers, and that relates to consistency in visual
presentation and access as well as it does to the nature of the content that's provided.
Ignoring relativity
Customers also struggle when Web sites ignore obvious relationships between products they
are evaluating. Some products are obviously related, or maybe even packaged, by the service
provider, and yet the customer finds that the Web site does 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 visiting a site
they find information on a range of checking accounts. The customer starts off with a list of
the accounts available and clicks through to evaluate the first one. Having evaluated the first
one, the customer has to go back in order 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 complementary 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 options at the same time as evaluating the checking

account, not to mention being able 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 advice on
a project and wants to find out what other areas the company could assist with. The customer
goes to the consulting company's Web site and clicks through on "products and services" to
get a list of broad service areas. However, none of those services can be clicked on for more
The customer then goes back to the home page and realizes that this is an international 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 United States, they select the U.S. Web site.
Now they click through on "products and 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 look like products and services.
The customer starts to go through the list, clicking on the ones that look interesting. However,
the customer finds that each click returns a new Web site-one for every service (each with its
own home page). Each of these Web sites is completely different and each seems to be more
of a brag book for a subsidiary company or department than a guide to products and services.
Needless to say, evaluating services on the Web site would be a labor of love. The customer
decides it's probably quicker and easier just to call the head consultant 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 invitation 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 products with a brief description of
each product. Next to each product name is a button inviting the customer to "buy now." The
customer feels uncomfortable with the process at this point because they don't feel they know
enough about any of the 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 recommended 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 invited to "buy now," but unfortunately no
prices are given for the different printers, probably because each printer must be packaged
with software, thus making each combination a different price. The customer feels they can't
possibly purchase 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 is 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 may not tell you enough
to second-guess what makes them tick.
Many Web sites invite customers to personalize content and functionality for their own uses.
Creating a home page has become quite a common concept-and maybe that's part of the
problem. People take an idea that may have worked on another site and apply it to their own,
without realizing the fundamentals of what it takes to make it successful.
To work well, personalization is dependent on what's being personalized. Personalized
irrelevance is never going to be relevant. Customers just can't be bothered 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 up 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 directly address their needs. And
sometimes we don't know them as well as we think we do.
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 useful. 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 better 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 their 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 Web sites will
offer content and/or functionality to help them make the best choice. That's fine, but
sometimes this help is couched as "customized solutions"-generating 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 recommendation." Hopefully, this directive will become less needed over time as
we utilize the Web to better understand our customers. In the meantime, care needs to be
taken not to make the worst of a good idea.
Ill-informed solutions
A business customer wants to evaluate the types of advertising and promotion they should be
engaging in. The customer goes to one of their favorite Web sites, which 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 businesses that have tight budgets and need focused results.
The customer is given three areas of selection: type of business you are in, what you are likely
to spend, and how well you pitch yourself against your competitors. The customer makes a
selection under each of these areas and clicks on "solution" to get some advice on the type of
advertising and promotion that might work best for them. The results come back as a list of
different types of marketing approaches, a long list it seems, and a lot of the approaches don't
seem that suitable.
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 customer any more than what they already
knew. Fortunately, it didn't take a lot of time to go through, but the customer is unlikely to go
back to the Web site for advice.
Personalized irrelevance
Apparently, the extranet is aimed at sharing privileged information with the industry'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 assumes that personalization

of the extensive database of articles will deliver most of 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 anyway, they can only personalize by broad subject areas, none of
which, on the face 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 customers. The
things they want to do are likely to fall into one of the five "doing areas" identified earlier.
Lack of utility
One of the most common areas of customer frustration is not being given access to people
within a company. A Web site that only gives a generic e-mail or mail address or phone
number, may not be seen to be particularly helpful.
Frustration also commonly arises when customers can't transfer their everyday transactions 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 transactions. Of course,
access to personal information is a lot easier than it sounds. Customers generally don't
understand the complexities of providing access to 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 service. 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 information 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 say there is "one best way." What I can
say is that, when information classification gets in the way of customers doing the things they
need to do, they get annoyed and frustrated.
Needless to say, few Web sites classify information on the basis of what customers want to do
or tasks they want to perform. Often the necessary utility is buried deep in a site and the
customer has to ferret it out. Some Web sites don't even 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 marketing 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 if brand names are given

to different products). If a company has a high market profile, at a product level, customers
need to make direct access to those products as quickly and easily as possible.
Hidden utility
A customer finds out that their electricity supplier now has a Web site, and they 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 supplier online.
The customer goes to the Web site. The home page presents "Electricity for the Home" as an
area for selection, and the customer clicks on that. Then the customer 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 called "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 which 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 address. The
customer clicks on "The Bill" and gets a page that explains a typical bill. Just when the
customer thinks that they haven't found what they're looking 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 the make and
model of the car they are interested in, they've seen it advertised everywhere 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 generate 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 point, 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 search engines is checkered at best). After clicking on
"Product Search" the customer 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
themselves "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 select or purchase, or they
have to go through some convoluted process to end up doing something other than purchasing
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 lot 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, but it sounds great and
it's affordable. The customer decides they want it and clicks on "Get It." This results in a page
that details what you need to run the software, terms and conditions and how to install it, as
well as a link to "Register 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 contact
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 enter comments; the customer
simply types, "So, how do I get it?" and sends the form.

11. Help Customers Navigate

Given that we have to create layers of information, and paths through them, we need to
provide signposts that show customers where they're going. We need to help customers
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 doing 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 you'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. Here, 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 apply throughout the
whole site, without exception. The main "anchors" for customers are navigation bars and
frames-when these differ, for no apparent reason, customers start to flounder.
Consistency is also particularly important in relation to site hierarchies; often Web sites don't
clearly show levels, or layers, of information, or they mix them 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 front, 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, customers don't even really notice it's there; they just use it intuitively.
(And note 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 with a reasonable
amount of complexity in the navigation system, as long as it makes sense to them and they
can learn it quickly. An overly simple navigation system doesn't necessarily win points if it
"hides" the site from the customer (as is 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 treat 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 particularly problematic in transactional
processes where the customer uses the browser 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-elements of the
Web site that allow customers to get around within the basic navigational 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, customers 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 when selected or
the colors are inconsistent. This leaves the customer wondering what the different
responses mean in relation to where they've been.
• What is clickable? Every clickable object should be obvious. I have observed 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 because they've tried,
repeatedly, to click on something that they expect to take them somewhere, only to
find that it's not "live". Passive images, such as "wallpaper" images, seem to be
particularly problematic, because customers try to click on them.
• Sending no feedback on where customers have been. Some sites provide feedback 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 offer 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-speak" and not "customer-speak."
Labels that are different from the "standard" labels 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 the site in which it is
offered. Usually the search is general, vague, and not particularly well directed. To
avoid customer frustration, a search function should 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 navigation system.
However, many attempts at iconography only go so far, and not far enough-they
disappear leaving customers wondering what their signposts are.
• Multiple windows. Some Web sites use new windows to present new information. If
customers can't understand why this new information has appeared in a new 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 to
customers, who take them at face value. Also, common symbols may be loaded with
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 items by
moving them). This additional meaning may be lost on customers.
• Vague use of indexes. Customers sometimes face indexes that they don't understand.
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 sort of thing; they have no
idea how you would categorize your products, and, chances 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 product 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 "section 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 when they click on one of the links from the home page they
get a different Web site with a different navigation bar. And there are no links between the
two navigation systems. The customer sits for a few moments going forward and back trying
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 pages on each
product category) has just been wallpapered over the underlying navigational system (the list
of links on the home page and the Web sites they correspond to). This has introduced
conflicting navigation systems and confused the customer, who has been forced to either lose
the perspective of one system in favor 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 like 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 generates 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 selection from there.
This is extremely time-consuming, and cumbersome, and the customer asks themselves "Why
couldn't they just put links to all the sections on all the pages to save 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 the 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 local office they are interested
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 left-hand frame set.
The customer looks around for a while and then decides to go back to the international home
page they received on entering the site, so they can select another local office. The customer
absent mindedly clicks on "Home," forgetting that this 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 clicks on that to get the international home page. Phew.
From here, the customer selects the next local office and they receive yet another home page.
This time the customer discovers that the "home" icon does actually take you back to the
international home page and not the local office home page. 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 customers can
get at some information while others can't. The users who can get at 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 those magic doors
and why they can't get at it too. This negative reaction is greatest 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 research it has
done lately. The home page does not offer any obvious links to research, 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 for a login id and password. Well, the customer
doesn't have a login id or password. There is no explanation as to who has access here or how
they go about getting 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 select
"Products and Services." This brings up information including mention of an article on one of
the consultancy company's recent research studies. The customer 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 the 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 customer had to do
was register, but didn't know that. It's some time before the customer 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 they won't be able
to make the appropriate selections to get to where they need to go.
The broader issue of navigation aside, we will look at some specific instances where
customers are directly offered choices and where those tend to be problematic.
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 these different
customers are along with their needs. Too often, customer classifications are made from a
company's perspective and are not meaningful to customers.
Beware of putting your customers in boxes, unless you really know they'd put themselves in a
box, without a moment's hesitation. Your marketing segmentation approach 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 customer
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 customers are looking for, or they don't allow
customers to send the right messages about who they are, their problems, their needs, or what
they need to do.
Lists that require mutually exclusive selections stump customers. What do customers do when
more than one, or maybe even all, of the possible selections apply to them? They are forced to
limit their response to one selection, and it just isn'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 selection 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, especially
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 probably because it is
potentially one of the most useful tools customers have to get where 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" searches to criteria other
than those the customer is interested in at a particular time (anchors are discussed further in
Chapter 7).
Customer service
Customers also get very frustrated when they are presented with limited online services. They
get annoyed when they want to make a particular transaction, and can't, or are forced to limit
their interaction.
This problem is particularly prevalent when customers are completing forms to receive certain
services. Some forms ask the customer to check certain boxes and obviously limit the nature
of the service available.

Insufficient choices
Consider a customer who is thinking about getting a mobile phone. They go to a Web site and
select the section on mobile phones. The site offers a link that provides "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 selection. 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 and I don't mind
having monthly contracts. What do I select, since neither of these 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 professional wants to
see the types of roles on offer, to see whether there is a fit with 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 professional 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 different criteria: type of
role, salary range, skills, etc. However, every time the search engine produces results, they are
all "pinned" to, or "anchored" on, location. 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
through). Well, this isn't perfect but it's better than the last site. Depending on how good the
roles look, the professional might wade through locations as well, or, then again, they might
Limited customer service
Continuing the above scenario, the professional finds a link on the Web site inviting them to
"Provide Feedback on the Site". They decide they'll do just that and click on this link to
receive a form they can complete and send. However, this 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 professional 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're drowning in your
information. They expect to receive information in chunks they 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 product 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
information 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 want online. However, we
would manage customer expectations, and stave off disappointment, 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, labeling 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 from 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 direct me"
• Search-"Is it actually a way of searching relevant information or just a rudimentary
• 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 know 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 especially 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 tell 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, "correcting things," to get a transaction
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 for lots of different information, but
some of it doesn't seem to apply particularly 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
themselves. 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 form is still
generating an error message. This time the error reads, "You have not entered information
correctly, please try again." "Which information, and what format should it be in?" the
customer now asks themselves. They go back and look 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 had 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 customers have
very important personal relationships with the people inside. Customers often expect these
relationships to carry over to the Web, particularly in a business-to-business environment,
where customers will expect to have access to someone like their account manager.
Web sites that ignore important relationships to provide a less adequate level of service will
frustrate customers. Of course, sometimes anonymity is a good thing, but as discussed before,
if it means losing out on the benefits of good service, 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 directives they
might give us in providing what they want, we are faced with a very fundamental issue-
customers and businesses don't necessarily want the same things. Businesses often want to
create or change customer behavior. Businesses want to influence 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 influence should be in harmony with what e-customers are trying to do. When
businesses try 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 frustrated.
Conflict between business and e-customer goals becomes very apparent in cases where
bricks-and-mortar companies begin to migrate some of their services online. Sometimes
bricks-and-mortar companies will introduce new service processes and relationships on their
Web site, and they can be contrary to what the customer normally experiences offline, and
potentially expects online. This won't be a problem for bricks-and-mortar companies or their
customers, as long as customers needs are recognized and the company works with customers
to change service processes 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
physical contacts and services, for example), then there will be a direct conflict between what
companies and customers are trying to achieve.
It is unlikely that we will be able to provide all of the content and functionality 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
Creating customer-effective Web sites can be a win-win proposition-it's just a balancing act.
A company has to deliberately consider the customer needs they cannot meet and work out
how that is going to be handled.
A business that does not consider the balancing of organizational and customer needs may be
seen to be ignoring its customers and offering inferior customer service. And a company's
apparent silence on the matter will make it "guilty as charged." In addition, if a business gets

its first attempt at electronic service so wrong that customers have a bad experience, it may
not be given a second chance to get it right.
Ways that businesses can establish their requirements with customers' needs in mind,
understand the balancing act required, and manage and implement Web sites that 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 quality
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 campaigns to reach those prospects, and
maintaining your best customers to increase the 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 with have not had any time
to obtain measurable results. Most CRM projects are being implemented on the faith that
obtaining and analyzing customer data will enable 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 channels,

CRM is costly. It generally requires new database management systems, integration with
legacy system, analysis and decision support systems, campaign management systems, new
messaging and routing systems, and sales tracking systems. When done right, CRM is an
enterprise-wide endeavor. It requires the melding of employee 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 offering systems
built on relational database technology and touting theirs as the one customer relationship
management tool you need. Because most new banking applications are being developed with
a database that aggregates customer data, a “data 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 better 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 processing and the front end
systems that deliver the data across end points. Between the back office and the front office
are many technologies that facilitate analysis 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 center, at the teller line or on the platform, or on remote, at an ATM machine, a
kiosk, on the telephone, via internet, or soon, through wireless devices.

The question is where should you begin your CRM implementation? In the rush to provide
new, or enhance old delivery channels-from call centers, to ATMs, to the Internet-with
consistent customer relationship record at each touch point, you run 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 partner of choice time
after time.

3. Satisfied customers/clients become engaged clients when they trust the bank 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 growth.

5. An engaged client will actively sell the bank’s product and services to others.

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 organizational impacts.

The study has identified issues that need to be assessed if CRM is to be used more
productively to take advantage of new opportunities.




CRM should be viewed neither as a new competitive tool nor as a cluster of technologies, but
rather as a set of business processes that help manage client credit 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 actual and
potential customers. Information flows coming from delivery channels should 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 strengthen the marketing strategy of the
financial organization by making more effective the management of all the information
concerning customers.

The exploitation of CRM appears to have a positive impact on the quality and quantity of
information conveyed to customers. This is particularly relevant for the most sophisticated
customers, i.e. those who are used to dealing with new technological tools and are not afraid
of interacting with the bank through the telematics channels. Nevertheless, distant interaction
is not as effective as personal 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 through
personal interaction between the bank and the customer that usually takes place 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 offline services. The impact of

e-business in banks is being limited by their strategic decision not to cannibalize their
branches. This research highlights how some of the credit institutions which had originally
invested only in the development of a virtual channel had to drastically re-define their
customers or by opening a call centre. The credit institutions representatives argued that their
customers want a choice of channels and they are adopting a multi-channel strategy. Most of
the banks consider that since Internet and telephone are most useful for managing operational
and low value added tasks, the traditional delivery structure still has a fundamental role and
can be developed to specialize in high added value tasks and consultancy services.

Most financial suppliers believe that customer support services are a core business in the
financial industry. Most of the financial organizations choose to internalize the customer
support contact center, whereas others choose to outsource front-office customer care tasks to
contact centre companies. But the final elaboration of data on customers and their exploitation
for CRM strategy is maintained in house and involves the bank management personnel.

The customer retention is the result of an increasing degree of product personalization and
differentiation. Credit institutions apparently prefer to compete on quality (product
information, broader range of product and services) rather than on price (meant as product
acquisition cost to the customer: price, mode of payment, delivery). Therefore product
innovation (cross-selling, product differentiation and personalization) seems to be the crucial
issue of the CRM strategy.

Financial institutions have to realize the importance of the technology scalability as well as
the reengineering of the business processes.

A medium to long term CRM strategy requires significant innovation in the organization of
the banks’ flow of information.

Ideally, CRM technologies and processes could make the slogan “the right customer 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 information, 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 relationship managers to have a full view
of their customers. A number of CRM deployments 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 management

strategies in Indian financial services Financial World Publishing: London

• Boston Consulting Group, 2001, Active and integrate: optimizing the value of on-line

• Assessing the impact of e-business on Indian financial services, by Vikram T.Lund JP

Morgan Equity Research (2001)

• ‘Assessing the impact of e-business on Indian retail financial services’.WEBM Global


• Sato S.J. Hawkins and A. Berenstein (2001) “ E-finance: recent developments and
policy implications”

• www.databank.it/star

• www.google.com/CRM in Indian Financial Industry

• www.vivisimo.com/CRM in Indian Financial Industry