12 Zijbemr Vol2 Issue2 Feb2012 Jgbuyg Ytftuyf Uyguytg

ZENITH International Journal of Business Economics & Management Research
Vol.2 Issue 2, February 2012, ISSN 2249 8826

Online available at http://zenithresearch.org.in/
CUSTOMER RELATIONSHIP MANAGEMENT:

A GROWTH CATALYST FOR HDFC BANK
DR. ASHOK SHARMA*; DR. TAPASYA JULKA**; MS. SONALI BHARDWAJ***
*Assistant Professor,
Department of Business Administration,
University of Rajasthan, Jaipur, India.
**Coordinator,
School of Business Management,
Jaipur National University, Jaipur, India.
***Ph.D. Scholar,
School of Business Management,
Jaipur National University, Jaipur, India.
ABSTRACT
INTRODUCTION
As the liberalisation has taken place the banking industry has been facing competition
from the services of the foreign and private sector banks. This led to the surging of the banks into
new initiatives and strategies. One such initiative for stopping the decrease in market share of
Indian banks and making more profit is CRM (Customer Relationship Management). Not only
banks but all other kinds of industries has identified the importance of CRM as strategy for
retaining the existing customer segments which are profitable and focusing on the long term
value of the customer. As all the products and services offered by the banks being same, the key
differentiator in the banking services which helps developing customer base and sales capacity is
CRM.
149
KEYWORDS: CRM, Banks, ROI, Growth.

______________________________________________________________________________
www.zenithresearch.org.in
This study explores the role of CRM in enhancing organisational growth in reference to the
banking industry (HDFC bank) by trend analysis method. Hence, CRM is the tool which is
helping the organisation to build long lasting brand image in customers mind. This paper
analyses the actual impact of CRM in enhancing the organisational performance. This study is
undertaken through the use of trend analysis method of banking sector specifically taking HDFC
bank as the universe of study. A descriptive approach will be followed in this paper for analysis.
Some key parameters affecting the organisational growth of the HDFC bank will be identified
and studied in relation to CRM. Based on the analysis of these relation of CRM and these key
parameters of growth will be established. This paper concludes with the suggestions to adopt
specific measures to enhance the impact of CRM in organisational growth of Banks.

THE BENEFITS OF CRM

Rapid growth of business through retention of the profitable customer segment.
Through CRM only those customers are acquired whose characteristics are known which
results in increased profits and hence drives growth.
CRM enables the banks (organisations) to offer the right product at right time, due to
which individual customer margins can be increased.
CRM decreases the cost of customer management.
Ease in introduction of new products as they are customer need specific and it is found
that the loyal customers readily buy 50 % of the new products rather than the new
customers.
As soon as the business philosophy is made this philosophy is enacted in the form of
technological processes where the customer centric approach is used. CRM focuses on the need
of the organisations to understand the customer behaviour patterns. It improves the
understanding between the organisation and the customer. This increases one to - one
relationship with the customers of the organisation. It has been seen that 80 % of the profits are
generated by the loyal customers of the organisation.
150
In the beginning of the civilised society the main focus was on the consumption which
means that people use their produce for their own consumption and for exchanging the goods. As
the civil society established its roots, the manufacturing and industrial era augmented. This era
led to the concept of production. In this concept, the production practices evolved for
consumption as well as for sales. As the production scale became larger the amount of produced
goods exceeded the demand and hence supply was abundant. To sell these produced goods the
concept of selling came into play. This concept follows the rule that sell everything which is
required or not required by the consumer. This was known as the transaction orientation. Finally,
when customers stopped accepting the goods which they didnt required, the era of consumerism
began. This consumer based concept states that, produce whatever is required by the consumer
and sell the products which are needed by the consumer in such a way that the consumer
purchases again and again from the same marketer or organisation. The customer should be
satisfied by the pre sales services, post sales services and the products/Services offered by the
organisation. While selling the product/services, the front liners try to make relationships with
the customers by identifying their needs, preferences, tastes and behaviour patterns etc. This
concept is called relationship marketing.
EVOLUTION OF CRM

Consumption
Production
Transaction
Marketing Oriented
Selling
Customer
-
Relationship Marketing
oriented
FIGURE 1: APPROACHES OF TRANSACTION MARKETING AND RELATIONSHIP

MARKETING
These relationships are based on:
1. The prior purchases made by the customer from an organisation,
2. Good behaviour of the employee who interacts with the customer,
3. Extra beneficial offerings such as home delivery, good ambience, extra working hours,
etc,
Now days, due to the technological advances these relationships are maintained on the
basis of the data base of the consumers which is available with the organisation through:
1. Different researches,
2. Market studies,
3. Census reports,
4. Observation
5. Competitors data hacking
4. The quality of products / services offered by the organisation.
With reference to the banking sector, these databases serve as the basis of relationship
maintenance, and in order to differentiate every single customer the banks provides unique no. to
every customer known as account no. as whenever a client approaches the front desk the
customer care executive asks for account no. and by just feeding the account no. in the system all
151
6. Direct interaction with the customers, etc.

the relevant information gets displayed on the screen and then the problem of the customer can
be easily resolved by viewing these records. This is also known as e CRM. This is the latest
buzzword in the services industry.
IMPORTANCE OF CRM
Gartner predicted that the market for Social CRM software will be $1 billion by 2012
whereas AMR projected that the market size of CRM software will be $22 billion by 2012. At a
growth rate of 28% per annum. It has been expected that the overall worldwide software
spending will increase 31 per cent this year which is 9% more than the 2010. ABI market
research predicts that the global market for hosted services will exceed $ 34 billion in 2012, the
North American Market will be accounting for $11.6 billion out of this. Worldwide market,
which was at $13.1 billion in 2009 and expected to rise to $40.5 billion in 2014, is representing
an annual compounding growth rate of 25.3%. Hence, we can see there is a steep rise in
software as a service (SAAS)
The trend in success of CRM came in notice in early 2004 which was reported by IDC.
They surveyed different companies using the CRM software and reported that:
a) 19% of companies have positive ROI up to 50%.
b) 52% companies with ROI of 51% to 500%.
c) 30% companies reported returns of higher than 500%
The timeliness of ROI on the CRM initiative taken by various companies was also found
out to be positive i.e.:
a) 58% companies experienced payback within one year or less.
c) 8% had a payback of three years or more.

All these investments and rise in spending in the CRM has made Indian organizations
realise of the worldwide inclination of using CRM. It has been identified that in 80% of
companies CRM have proved to be profitable, therefore it has to be understood by the
organisations that in spite of heavy costs involved in CRM it is profitable for them. Time taken
for implementation was also less and it ultimately resulted in increasing customer retention and
loyalty. If the CRM is implemented and measured in a right way it may result into high ROI
(Return on Investment) for the organisations.
b) 35% got their payback after one to three years.
OBJECTIVE
152
CRM has evolved from just a good behaviour to software based big investments made by
the companies, these cater the needs of their customer, in such a way that the customer remains
satisfied and build a long lasting relationship with the organisation. This paper is an effort to
support that the CRM is a worthy investment for organisations and CRM is a very strong factor

for the organisational growth, it increases the efficiency and profitability of the organisation
which implements it properly.
REVIEW OF LITERATURE
CRM is defined as a management process of acquiring customers by understanding their
requirements, retaining customers by fulfilling their requirements more than their expectations
and attracting new customers through customer specific strategic marketing approaches. The
process invites total commitment on the part of the entire organisation in evolving and
implementing relationship strategies that would be rewarding to all concerned (A Sagadevan&
H Peeru Mohamed, 2010). Moreover another definition can be The infrastructure that enables
the delineation of and an increase in customer value, and the correct means by which to motivate
valuable customers to remain loyal- indeed, to buy again (Jill Dyche, 2009). After defining and
getting a clear vision of CRM its use in the private and public banking sectors has been
highlighted. It has been found out that through maintaining the customer service quality
customer satisfaction can be attained. This leads to the growth of the organisation and
profitability (Ipshita Bansal and Rinku Sharma, 2008). By satisfying the internal customers and
building good relationship with them the relationship with the external
customers can also be retained and satisfied by the banks
(Seema Girdhar, 2009). Any bank that wishes to either grow in size of its banking operation or
improve its profitability must consider the challenges affecting its customer relationship (Ashok
Kumar M. & Rajesh R., 2009)
UNIVERSE OF STUDY
The bank has a huge presence all over India with its distribution network of 1,986
branches and 5, 471 ATMs in 996 different cities as on March 31st 2011. The size of its balance
sheet is 277,353 crore as on March 31, 2011. The bank earned a net profit of
3,926 crore,
which has increased about 33% from the last year. While the deposits increased to 24.6% i.e.
208,586 crore and advances grew by 27.1% i.e. 159,983 since last year. The Capital adequacy
ratio (CAR) of the bank as on March 31st, 2011 was at 16.2% as against the regulatory minimum
of 9.0% Tier 1 ratio at 12.2.%.
The HDFC Bank has made a mark in the Indian banking as it has bagged many awards
for the best bank such as:
HDFC Bank Limited started operating as a Scheduled Commercial Bank in January

1995. The previously known Housing Development Finance Corporation Limited (HDFC) was
one of the first to get an in principal approval by (RBI) Reserve Bank of India to set up a bank
in the private sector. HDFC was incorporated in the name of HDFC Bank Limited in August
1994 and its registered office is in Mumbai, India.
1. Forbes Asia - Fab 50 companies in Asia Pacific

2. Asian Banker Excellence Awards 2011.
153
3. Dun And Bradstreet Banking Awards 2010

4. NDTV Business Leadership Awards 2010

5. Outlook Money 2010 Awards
6. The Banker & PWM 2010 Global Private Banking Awards.
Not only these but more than these are received in best customer service category as well
as best technology and IT usage and infrastructure bank by:
1. IBA Banking Technology Awards 2010
2. IDC FIIA Awards 2011
3. Business World Best Bank Awards 2010
4. IDRBT Technology 2009 Awards: Established by RBI
5. Financial Express EVI green business leadership Award
6. Avaya global connect 2010
7. Celents 2010 Banking Innovation Award.
This establishes that this bank is very customer centric Bank. Hence there is no surprise
that the mission of the bank is to become a world Class Indian Bank. Through the focus on
product quality and service excellence in conjunction with benchmarking its services against the
international standards the bank is becoming nearer to its aim. The bank has adopted best
practices in offering products, technology, services, risk management, audit and compliance. Its
main objective is to become the preferred banking service provider by building strong customer
base amongst different categories of businesses. For this the bank always ensure that the highest
levels of ethical standards, professional integrity are followed and full compliance of corporate
governance regulatory norms is ensured.
The strategy followed by the bank emphasises on three aspects i.e. a) market share
expansion by following a path of disciplined growth strategy which focuses on balancing quality
of services and growth of volume by delivering the high quality customer service: b) maximise
the use of its technological platforms to deliver more products to more customers with minimum
operating costs: c) through disciplined credit risk management high standards of asset quality is
maintained.
8. Business World Best Bank Awards 2009 & 2010.
CRM SOFTWARE USED BY HDFC BANK
154
HDFC Bank uses CRM Next as CRM software while the cash management is done through
using software from a Pune based company i.e. Cash Tech. Moreover the depository system of
the bank runs on software provided by the Mumbai - based Kalptaru. Some of the other IT
enabled initiatives are:

1) Nucleus Software for loans.

2) Mainframe - class UNIX machine (the E10000 system) from Sun Microsystems for its
banking needs.
3) iFlexs Microbanker and Finware as a software for core banking operations.
4) Internet banking software for internet based channel.
CRM INITIATIVES BY THE BANK
A customer is an asset if he/she is loyal to the organisation, HDFC bank has got majority
of these assets in its customer base as 76% of its existing customers are found out to be loyal.
This is attained due to holistic CRM approach adopted by the bank. As the banks director
himself mentions in his annual; report that the banks data warehouse, customer relationship
management and analytics solutions have helped it target its existing and potential customers in a
cost effective manner and offer them products appropriate to their profile and needs. The Bank
realises the value of CRM and IT initiatives offered to the customers for becoming more loyal to
the bank. The frauds and credit losses are also lowered by imbibing this approach of CRM. Some
of the major initiatives taken by the bank for strengthening its customer experience are:
1) The bank provides Highly IT enabled services in the form of Internet banking. It has
been discovered that 60% of the registered banks customers transact through online
banking.
3) Service quality projects are carried out by the bank using lean Sigma Tool-kit, 5S
and other business excellence initiatives are undertaken by the bank just to deliver
customer delight. The service quality objectives and the business objectives are
merged so that the customer delight and improved profitability can be obtained.
4) Customer service committee which monitors quality of services, formulates
comprehensive deposit policy ( in terms of issues arising due to death of a depositor
for his account operations), gets approval for the products, surveys customer
satisfaction annually and triennially.
5) The bank also offers the customer helpdesk in case of any query, grievance, or direct
contact to the bank, through call centres, in branch counters, email address, and
through banks website.
2) Mobile banking and ATM are also providing multi-channel service delivery system to
the customers which are discovered to be 80% initiated by the customers which are
serviced through non-branch channels.
ANALYSIS AND FINDINGS
155
The parameter of growth for any organisation is profit which it earns. Hence a trend
analysis is done on the basis of data available to researcher.

TABLE 1: PROFIT AFTER TAX ( CRORE)

YEAR
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
PAT
297
388
510
666
871
1,141
1,590
2,245
2,949
3,926
( crore)
CHART 1: PROFIT AFTER TAX ( CRORE)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
156
SOURCE: HDFC BANK ANNUAL REPORT 2011.

The Chart 1 clearly shows an increasing trend in the profit after tax (PAT), since 2002 to 2011 of
the bank this increase in the PAT has become significant from the year 2006 from when the bank
started adopting the CRM as its strategy. PAT increased 33.2% over the last financial year.
TABLE 2: BALANCE SHEET SIZE ( CRORE)
Year
2009
2010
2011
BALANCE SHEET SIZE

( crore)
183,271
222,459
277,353
CHART 2: BALANCE SHEET SIZE ( CRORE)

300,000
250,000
200,000
150,000
100,000
50,000
0
2009
2010
2011
157

The second most important parameter of growth is Balance sheet size. If it shows increasing
trend than the bank is showing higher performance in the industry. Here, the bank has shown an
increase of 24.7% over the last year as depicted by the chart 2.
TABLE 3: ADVANCES ( CRORE)
Year
2009
2010
2011
Advances ( crore)
98,883
125,831
159,983
CHART 3: ADVANCES ( CRORE)

180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2009
2010
2011
158

An increase of 26.8% was witnessed in gross advances in comparison to the previous year.
Advances give a figure that how much amount of loan is provided by the bank, as depicted in the
chart 3. The trend shows that the advances are increasing which means the customers are
availing loans from the bank, which is only possible when the customer is more satisfied and
loyal.
TABLE 4: DEPOSISTS ( CRORE)
Year
2009
2010
2011
Deposits ( crore)
142,812
167,404
208,586
CHART 4: DEPOSITS ( CRORE)

250,000
200,000
150,000
100,000
50,000
0
2009
2010
2011
159

Chart 4 shows a great rise in the deposits of the bank. This increase is 24.6% from the previous
year in total deposits of the bank.
TABLE 5: BRANCHES (NOS.)
Year
2009
2010
2011
Branches (in nos.)
1,412
1,725
1,986
CHART 5: BRANCHES ( NOS.)

2,500
2,000
1,500
1,000
500
0
2009
2010
2011
160

According to the Chart 5, bank opened 261 new branchesin the year 2011 which resulted in more
staffing and hence gave jobs to many unemployed skilled people. This led to the increase in the
presence of the bank in new areas and hence will also increase the customer base of the bank.
TABLE 6: ATMS ( NOS.)
Year
2009
2010
2011
ATMs ( Nos.)
3,295
4,232
5,471
CHART 6: ATMS ( NOS.)

6,000
5,000
4,000
3,000
2,000
1,000
0
2009
2010
2011
161

TABLE 7: DEBIT CARDS ( NOS. IN LAC)

Year
2009
2010
2011
DEBIT CARDS ( Nos. in

lac)
90.8
98.3
115.5
CHART 7: DEBIT CARDS ( NOS. IN LAC)

140
120
100
80
Series 1
Column1
Column2
60
40
20
0
2009
2010
2011
162

The Chart 6 and 7 shows that the increase in the ATM transactions increased by 14% coupled
with the growth of the number of ATMs and debit cards. And as alreay been stated that 80%
customers prefer using these non-branch channels for availing the services of the bank.
TABLE 8: CITIES ( NOS.)
Year
2009
2010
2011
CITIES ( Nos.)
528
779
996
CHART 8: CITIES (NOS.)

1,200
1,000
800
600
400
200
0
2009
2010
2011
163

The Chart 8 suggests that the banks customer base will grow due to its presence and penetration
has increased in several new cities.
TABLE 9: CUSTOMER BASE (IN MILLION)
Year
2009
2010
2011
Customer Base (in

Million)
18
19
21.9
CHART 9: CUSTOMER BASE (IN MILLION)

25
20
15
10
0
2010
2011
164
2009

Chart 9 states that customer base of the bank has increased to 21.9 million from 18 million in
2009 this is a result of holistic approach adopted by the bank for providing CRM in the bank.
CONCLUSION
It is an continuous process, more the services will be offered more the customer base will grow
and more the customers grow more the services has to be offered . Instead of having broad
customer base, the banks aim is to get broad loyal customer base and the same is achieved by
offering better service quality and customer relationship management to its customers.
CRM is an important catalyst for the growth of the HDFC bank. The bank is able to attain
growth as a whole due to its emphasis on the customer centricity as a key objective. As the bank
is providing multi-channel services through ATMs, internet, phone, and mobile banking in
addition to its expanding branching network and deeper penetration in untapped areas, the
customer base is increasing and hence the banks profitability is increasing. This ensures the
banks growth.
SUGGESTIONS
1. The banks must use CRM software not only core banking software to improve its service
experience such as SAP or People Soft. This software helps in handling large data
volume and integrating with the IT.
2. The bank should take care of employee behaviour towards the CRM and customers as it
has been seen during the study that many bank employees yet lack customer centricity in
providing service to the customers.
3. The bank should position itself as a more customer friendly bank as it is the second
largest private sector bank in India.
This study is mainly based on the secondary data but in further research the primary data in
combination with this secondary data may further prove the relevance of CRM in the Growth of
HDFC Bank.
REFERENCES
H Peeru Mohamed A. Sagadevan, 2010, Customer Relationship Management a step by step
approach, New Delhi, Vikas Publications.
IDC, 2004, The Financial Impact of CRM, a report.
FUTURE SCOPE
165
Jill Dyche, 2009, The CRM Handbook- a business guide to customer relationship
Management, New Delhi, Pearson Education.

JOURNALS
Ashok Kumar M. and Rajesh R., (2009), Whether Todays Customers are Satisfied? A study
with Banks, Indian Journal Of Marketing, New Delhi, Vol. XXXIX, No.9
IpshitaBansal and Rinku Sharma, (2008), Indian Banking Services: Achievement s and
challenges, The Icfai University Journal of services marketing, Hyderabad. Vol.VI No.2.
SeemaGirdhar, (2009), Building Relationship through Internal customer: a study of south asian
selected co-operative banks with special reference to Surat district of Gujarat State Pranjana The Journal of management awareness, Delhi, Vol. 12 No.2
MAGAZINES
Business today
WEBSITES
http://www.hdfcbank.com/
http://www.crminfoline.com/
http://www.webopedia.com/
http://www.destinationcrm.com/
166
http://www.crmlandmark.com/

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ZENITH International Journal of Business Economics & Management Research

Vol.2 Issue 2, February 2012, ISSN 2249 8826

CUSTOMER RELATIONSHIP MANAGEMENT:

KEYWORDS: CRM, Banks, ROI, Growth.

ZENITH International Journal of Business Economics & Management Research

THE BENEFITS OF CRM

ZENITH International Journal of Business Economics & Management Research

FIGURE 1: APPROACHES OF TRANSACTION MARKETING AND RELATIONSHIP

4. The quality of products / services offered by the organisation.

6. Direct interaction with the customers, etc.

ZENITH International Journal of Business Economics & Management Research

c) 8% had a payback of three years or more.

b) 35% got their payback after one to three years.

ZENITH International Journal of Business Economics & Management Research

HDFC Bank Limited started operating as a Scheduled Commercial Bank in January

1. Forbes Asia - Fab 50 companies in Asia Pacific

3. Dun And Bradstreet Banking Awards 2010

ZENITH International Journal of Business Economics & Management Research

4. NDTV Business Leadership Awards 2010

8. Business World Best Bank Awards 2009 & 2010.

CRM SOFTWARE USED BY HDFC BANK

ZENITH International Journal of Business Economics & Management Research

1) Nucleus Software for loans.

ANALYSIS AND FINDINGS

ZENITH International Journal of Business Economics & Management Research

TABLE 1: PROFIT AFTER TAX ( CRORE)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

BALANCE SHEET SIZE

CHART 2: BALANCE SHEET SIZE ( CRORE)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

CHART 3: ADVANCES ( CRORE)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

CHART 4: DEPOSITS ( CRORE)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

Branches (in nos.)

CHART 5: BRANCHES ( NOS.)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

CHART 6: ATMS ( NOS.)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

TABLE 7: DEBIT CARDS ( NOS. IN LAC)

DEBIT CARDS ( Nos. in

CHART 7: DEBIT CARDS ( NOS. IN LAC)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

CHART 8: CITIES (NOS.)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

Customer Base (in

CHART 9: CUSTOMER BASE (IN MILLION)

SOURCE: HDFC BANK ANNUAL REPORT 2011.

ZENITH International Journal of Business Economics & Management Research

ZENITH International Journal of Business Economics & Management Research

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