By

Suhas Naik, 41

SYBBI

CRM Strategy of ICICI Bank

INTRODUCTION OF CRM

CRM, or Customer relationship management, is a number of strategies and technologies that are used to build stronger relationships between companies and their customers. A company will store information that is related to their customers, and they will spend time analyzing it so that it can be used for this purpose.

Some of the methods connected with CRM are automated, and the purpose of this is to create marketing strategies which are targeted towards specific customers. The strategies used will be dependent on the information that is contained within the system. Customer relationship management is commonly used by corporations, and they will focus on maintaining a strong relationship with their clients. There are a number of reasons why CRM has become so important in the last 10 years. The competition in the global market has become highly competitive, and it has become easier for customers to switch companies if they are not happy with the service they receive. One of the primary goals of CRM is to maintain clients. When it is used effectively, a company will be able to build a relationship with their customers that can last a lifetime. Customer relationship management tools will generally come in the form of software. Each software program may vary in the way it approaches CRM. It is important to realize that CRM is more than just a technology. Customer relationship management could be better defined as being a methodology, an approach that a company will use to achieve their goals. It should be directly connected to the philosophy of the company. It must guide all of its policies, and it must be an important part of customer service and marketing. If this is not done, the CRM system will become a failure. There are a number of things the ideal CRM system should have. It should allow the company to find the factors that interest their customers the most. A company must realize that it is impossible for them to succeed if they do not cater to the desires and needs of their customers. Customer relationship management is a powerful system that will allow them to do this. It is also important for the CRM system to foster a philosophy that is oriented towards the customers. While this may sound like common sense, there are a sizeable number of companies that have failed to do it, and their businesses suffered as a result. With CRM, the customer is always right, and they are the most important factor in the success of the company. It is also important for the company to use measures that are dependent on their customers. This will greatly tip the odds of success in their favor.

While CRM should not be viewed as a technology, it is important to realize that there are end to end processes that must be created so that customers can be properly served. In many cases, these processes will use computers and software. Customer support is directly connected to CRM. If a company fails to provide quality customer support, they have also failed with their CRM system. When a customer makes complaints, they must be handled quickly and efficiently. The company should also seek to make sure those mistakes are not repeated. When sales are made, they should be tracked so that the company can analyze them from various aspects. It is also important to understand the architecture of Customer relationship management.

The History of CRM

Customer relationship management is a concept that became very popular during the 1990s. It offered long term changes and benefits to businesses that chose to use it. The reason for this is because it allowed companies to interact with their customers on a whole new level. While CRM is excellent in the long term, those who are looking for short term results may not see much progress. One of the reasons for this is because it was difficult to effectively track customers and their purchases. It is also important to realize that large companies were responsible for processing tremendous amounts of data. This data needed to be updated on a consistent basis. In the last few years, a number of changes have been made to Customer relationship management that has allowed it to advance. These capabilities have allowed CRM to become the system that was once envisioned by those who created it. However, the biggest problem with these newer systems is the price. A number of personalized Internet tools have been introduced to the market, and this has driven down the cost of competition.

While this may be a bane for vendors who are selling expensive systems, it is a bonanza for small companies that would otherwise not be able to afford CRM programs. The foundation for CRM was laid during the 1980s. During this time, it was referred to as being database marketing. The term "database marketing" was used to refer to the procedure of creating customer focus groups that could be used to speak to some of the customers of the company. The clients who were extremely valued were pivotal in communicating with the firm, but the process became quite repetitive, and the information that was collected via surveys did not give the company a great of information. Even though the company could collect data through surveys, they did not have efficient methods of processing and analyzing the information. As time went on, companies begin to realize that all they really needed was basic information. They needed to know what their customer purchased, how much they spent, and what did with the products they purchased. The 1990s saw the introduction of a number of advances in this system. It was during this time that term Customer relationship management was introduced. Unlike previous customer relationship systems, CRM was a dual system.

Instead of merely gathering information for the purpose of using for their own benefit, companies started giving back to the customers they served. Many companies would begin giving their customers gifts in the form of discounts, perks, or even money. The companies believed that doing this would allow them to build a sense of loyalty in those who brought their products. Customer relationship management is the system that is responsible for introducing things such as frequent flyer gifts and credit card points. Before CRM, this was rarely done. Customers would simply by from the company, and little was done to maintain their relationship. Before the introduction of CRM, many companies, especially those that were in the Fortune 500 category, didn't feel the need to cater to the company. In the minds of the executives, they have tremendous resources and could replace customers whenever it became necessary. While this may have worked prior to the 1980s, the introduction of the Information Age allowed people to make better decisions about which companies they would buy from, and global competition made it easier for them to switch if they were not happy with the service they were getting.

HISTORY OF CRM IN ICICI BANK

The CRM initiatives in India’s ICICI Bank hold together its compelling story of growth. Its growth in customer base, channels, and product and service offerings. Since its inception in 1995, the bank has grown to have 15.8million customers, holding about 17 million accounts. The bank’s network has expanded to 610 branches and standalone counters and over 2,000 ATMs. CRM has been envisioned by the bank to support its goals in sales, customer service, and analytics. Already, about30.40% of the bank’s home loans are cross-sold to existing customers. Similar ratios have also been reported in the sale of insurance policies. Ratios of about 50.60% have been seen out of the credit cards and personal loans business. The bank’s stated intention is to take these ratios to as high as 60.75%.

ICICI Bank states that these high levels of relationship maximization are made possible by how its CRM system is able to "know and understand the customer better.´ which customer is most suitable for what kind of product and at what point in time. In the area of service, the bank receives as many as 150,000 customer requests per day, a challenge not only to channel capacity but also to how the bank is able to ensure that each request is recorded, tracked, and resolved.

Last, customer analytics have been used to support various strategic decisions of the bank. Recent strategic decisions of note are several anti-attrition programs, the intended attrition of unprofitable customers, the imposition of fees, and various customer segment tactical initiatives. ICICI Bank’s CRM capability is built on a Teradata´ data warehouse that integrates data from multiple sources, including the Oracle database and various flat files. The system provides users with information about each customer’s checking accounts, fixed deposits, credit cards, and other financial information.

The bank has taken on the end-to-end proposition of SAS for enterprise intelligence, which offers a credible integrated approach to analytics, including data detection, data cleansing, data preparation, event detection, reporting and business intelligence, and campaign analysis. The bank estimates that it is able to track more than 1,200 parameters concerning demographics, transactions made, channel usage, and product relationships. Through Behavior Explorer and views, business users develop customer profiles and run ad hoc queries. Analysts then use the information to guide product development and marketing campaigns that are intended to address each individual’s total requirements, instead of just pushing a product.

The success of cross-selling to existing customers has also been enabled by the bank’s growing capabilities in lead management. The home loans business unit, for example, has built a lead management system rolled out to about 700 users. The system is able to allocate leads, schedule meetings, provide a record of all interactions with the customer, and give reminders for customer follow-ups. A lead generation tool has also been developed in-house to capture and route Product applications made over mobile phones.

ICICI Bank’s CRM Initiatives

ICICI Bank has to manage more than 13 million customers. The bank has over 550 branches, a network of 2025 ATMs, multiple call centers, Internet banking and mobile banking. Its customers often use multiple channels, and they are increasingly turning to electronic banking options. Business from the Internet. ATMs and other electronic channels now comprise more than 50 per cent of all transactions. In the process of making its business grow to this level, ICICI Bank has distinguished itself from other banks through its relationship with customers. The Teradata solution focuses on a CRM platform. Information from various legacy and transaction systems is fed into a single enterprise called wide data warehouse. This allows the bank to generate a single view of its customers. The warehouse has the capability to integrate data from multiple sources comprising Oracle and flat files. The Behaviour Explorer enables profiling of customers and querying on various parameters. These enable the bank staff create suitable campaigns for targeting individual customers on the basis of their requirements. The logistics in the system have also led to other benefits like interactive reports, unearthing cross-selling opportunities as well as finding out about the channel usage undertaken by a segment. The data access was facilitated through the use of Cognos Power Cubes.

The Profitability through CRM process:

Customers’ usage pattern:

ICICI’s CRM data warehouse integrates data from multiple sources and enables users to find out about the customer’s various transactions pertaining to savings accounts, credit cards, fixed deposits, etc. The warehouse also gives indications regarding the customer’s channel usage.

New product development:

Analysis at ICICI guide product development and marketing campaigns through Behaviour Explorer, whereby customer profiling can be undertaken by using ad hoc queries. The products thus created take into account the customer’s needs and desires, enabling the bank to satisfy customers through better personalization and customization of services.

Central data management:

The initial implementation of CRM allowed ICICI to analyse its customer database, which includes information from eight separate operations systems including retail banking, bonds, fixed deposits, retail consumer loans, credit cards, custodial services, online share trading and ATM.

The Process

CRM at ICICI Bank involves increased communication between the bank and its present and prospective customers. Its philosophy focuses on each and every customer's satisfaction.

CRM facilitated coordination of multiple business functions & multiple channel of communication with the customers to carry out customer management more efficiently. It also automated the process flow tracking in the product sales process and helped generate customized reports and promote cross-selling.

The typical components of a CRM strategy at ICICI are as follows:

Understand and differentiate: Understanding customers is important in order to develop a sound relationship with them. Customer profiling is done in order to understand demographics, purchase pattern and channel preference. CRM also helped ICICI in valuation of . customers to understand customer profitability and Customer Life Time Value (CLV).

Develop and customize: In a customer centric business environment, the products and processes have to be according to customers' needs and preferences. ICICI has always focused on developing channels of service delivery according to customers' need and service expectation.

Interact and Deliver: To foster a strong customer relationship ICICI ensured that all areas of the bank have easy access to relevant, actionable customer information and employees should be trained on how to use customer information to tailor interactions based on both customer needs and potential customer value.

Acquire and Retain: CRM helped ICICI to figure out valuable customers and made it easy to formulate retention strategies for them. It also helped it cope up with the change in customer's life cycle and offer services accordingly.

Implementing CRM at ICICI Bank

The key to implementing CRM was in understanding organization and customers in a better way. There are five interrelated areas that were taken care of before implementing CRM:

- Business Focus

- Organizational Structure

- Business Metrics

- Marketing Focus and Technology

Business Focus : There are various components of CRM like customer information, sales, marketing trends and marketing efficacy that acted in tandem to improve relationship between ICICI and its consumers. ICICI captured customer data and analyzed them while dealing with customers at these very touch points. A CRM solution from Siebel was implemented for the automation of customer handling in all key retail products of the Group. The solution allows customer service agents to track all customer complaints and requests. It also allows target setting and centralized tracking of turnaround times for request fulfillment. The solution went .e in phases during fiscal 2002. The Bank has also undertaken a retail data warehouse initiative to achieve customer integration at the back-office. This central view of the total customer relationship is being used extensively for identifying opportunities to cross-sell new products and services to the existing customer base.

Technology Focus : ICICI Bank continues to leverage ICT-2 as a strategic tool for its business operations to gain competitive advantage. technology strategy emphasizes enhanced level of customer services through 24x7 availability, multi-channel banking and straight through processing, and cost efficiency through optimal use of electronic channels, wider and focused market reach and opportunities cross-selling. The Technology Management Group (TMG) is the focal point for the ICICI Group's technology strategy and Group-wide technology initiatives. This group reports directly to the Managing Director & .0. A key to ICICI's success has been its ability to harness business information to CRM initiatives that have fueled growth and helped attract more than 30 million customers. The foundation for ICICI Bank's wide-ranging CRM programs is a Sybase IQ-based data warehouse. Developers had used a combination of PL/SQL and BTEQ scripting, a proprietary technology specific to the data warehouse for data extraction, transformation, and loading (0Th). With 0 growing customer base, IT administrators recognized that the bank needed a more power., sophisticated data integration system to help ensure the warehouse lived up to its potential as an analytic CRM engine that delivered tangible bottom-tine results. To step up to the next level of data integration, ICICI Bank officials agreed with a recommendation from Teradata's professional services division, which provided systems integration support for the data warehouse, to implement the Infornmatica PowerCenter enterprise data

integration platform. (The Bank initially used Teradata as its data warehouse platform and migrated to Sybase IQ a year ago.) ICICI Bank deployed Power Center in 2003 as it embarked on the next phase of its warehouse, which would add data from five new sources. in addition to the initial three sources of retail banking, credit card and securities information.

The next step in the CRM implementation process was gap analysis which essentially ass.sing different loopholes in:

- Marketing, sales and service practices

- Collection, capture, processing and deployment of customer information

- Distribution and operations effectiveness at customer touch points

In the first table, we can see that the benchmarks set by ICICI are dermitely of world class and clearly values customer's precious time. Similarly, in the sceond table it's evident that ICICI Bat. and HDFC Bank have done very well compared to other banks in terms of C. best practices. Moreover, the standard deviation is also very .s cotrpared to most of t. otirr banks. Clcerly this has helped ICICI bak acquire a large customer base (about 30 million) in a short wan of time.

Conclusion:

Thus, we see that a focused and customer centric approach helped ICICI Bank become 2 bal. in India (till recently, as PNB has taken over it as theN 2 bal. in India now). ICICI has used CRM not only as a tool but also as a svategy to gain competitive advantage over other new generation private banks. It has invested a lot in ICT and spared no pains in giving best to the customers. Its multi-pronged approach towards managing customer relationship is paying divide'. constantly and as a resuft we see millions of happy satisfied customers determined to make it one of the most successful ban. in India.