International Journal of Bank Marketing Measuring effectiveness of customer relationship management in Indian retail banks C. Padmavathy, M.S. Balaji, V.J. Sivakumar, Article information: To cite this document: C. Padmavathy, M.S. Balaji, V.J. Sivakumar, (2012) "Measuring effectiveness of customer relationship management in Indian retail banks", International Journal of Bank Marketing, Vol. 30 Issue: 4, pp.246-266, https://doi.org/10.1108/02652321211236888 Downloaded by Northumbria University Library At 23:38 01 November 2018 (PT) Permanent link to this document: https://doi.org/10.1108/02652321211236888 Downloaded on: 01 November 2018, At: 23:38 (PT) References: this document contains references to 70 other documents. To copy this document: permissions@ emeraldinsight.com The fulltext of this document has been downloaded 5396 times since 2012* Users who downloaded this article also downloaded: (2003),"Understanding customer relationship management (CRM): People, process and technology", Business Process Management Journal, Vol. 9 Iss 5 pp. 672-688 <a href="https:// doi.org/10.1108/14637150310496758">https://doi.org/10.1108/14637150310496758</a> (2016),"Customer relationship management: An approach to competitive advantage in the banking sector by exploring the mediational role of loyalty", International Journal of Bank Marketing, Vol. 34 Iss 3 pp. 388-410 <a href="https://doi.org/10.1108/IJBM-11-2014-0160">https://doi.org/10.1108/ IJBM-11-2014-0160</a> Access to this document was granted through an Emerald subscription provided by emerald-srm:462515 [] For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/ authors for more information. About Emerald www.emeraldinsight.com Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 j ournals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services. Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. *Related content and download information correct at time of download.
The current issue and full text archive of this journal is available at www.emeraldinsight.com/0265-2323.htm IJBM Measuring effectiveness of 30,4 customer relationship management in Indian retail banks 246 C. Padmavathy Department of Management Studies, National Institute of Technology, Received 19 June 2011 Tamil Nadu, India Revised 3 November 2011 Accepted 16 January 2012 M.S. Balaji Downloaded by Northumbria University Library At 23:38 01 November 2018 (PT) Department of Marketing and Strategy, IBS Hyderabad, Hyderabad, India, and V.J. Sivakumar Department of Management Studies, National Institute of Technology, Tamil Nadu, India Abstract Purpose – The purpose of this paper is to develop a multi-item scale for measuring the customer relationship management effectiveness (CRME) in Indian retail banks and to examine its relationship with key customer response variable. Design/methodology/approach – This research adopts two different studies to develop and validate the scale for CRME. In study 1, responses obtained from 197 Indian retail banking customers were used to identify key dimensions of CRME. In study 2, nomological validity for the CRME scale was provided using a new sample of 261 actual bank customers. Furthermore, the relationship between CRME dimensions and customer behavioral outcomes such as customer satisfaction, loyalty and cross-buying were examined. Findings – The results of factor analyses revealed five dimensions for CRME, namely, organizational commitment, customer experience, process-driven approach, reliability and technology-orientation. Organizational commitment, process-driven approach and reliability were found to positively affect customer satisfaction. Reliability was found to have direct association with customer loyalty and both customer satisfaction and loyalty-influenced cross-buying. Research limitations/implications – The identification of the dimension will help bank managers to implement an effective customer relationship management (CRM) that enhances customer satisfaction, loyalty and provides opportunities for banks to cross-sell other related and unrelated products to its customers. Originality/value – This paper provides a robust scale for measuring CRME in the Indian banking context. It examines the relationship between CRM efforts and relational outcomes of satisfaction, loyalty and cross-buying. Keywords Customer relation management, Indian banks, Customer satisfaction, Customer loyalty, Services marketing, Cross-buying Paper type Research paper International Journal of Bank 1. Introduction Marketing Vol. 30 No. 4, 2012 Banks have a significant role to play in the economy of a country. In the past decade, pp. 246-266 q Emerald Group Publishing Limited the global banking environment has undergone a remarkable transformation. The 0265-2323 changing regulatory, structural and technological factors have produced a level of DOI 10.1108/02652321211236888
competition and disintermediation that few in the banking industry would have CRM in Indian predicted a decade ago (Klein, 2005). The Indian banking sector is of no exception to retail banks this changing landscape as it faces unprecedented challenges following deregulation, liberalization and globalization of the economy. According to Mr K.V. Kamath, the non-executive chairman and board member of ICICI bank: [ . . . ] the winner in the Indian banking sector will be the player who can understand the 247 customer, fulfil customer needs, and achieve high levels of customer retention, leveraging technology, knowledge and human resources to provide quality products and services, and manage risks and returns, thereby delivering value to all stakeholders (Kamath et al. , 2003, p. 85). Therefore, adopting customer-centric strategies aimed at maintaining and enhancing relationship with existing customers is crucial for the survival of Indian banks Downloaded by Northumbria University Library At 23:38 01 November 2018 (PT) (Roy and Shekhar, 2010). In the past years, many Indian banks have invested heavily in customer relationship management (CRM) technologies to develop and nurture a long-term and mutually benefiting relationship with the customers (Uppal, 2008). At the core of these customer-centric initiatives was the belief that by understanding customer needs and delivering greater value, banks can enhance their competitive position and generate superior shareholder returns. Despite this enormous investment in CRM systems by the Indian banks, critics have remained unconvinced about the effectiveness of such relational efforts in customer share development and meeting desired business results. The reason being that Indian banks often perceive CRM systems as “a specific technology solution project” (Payne and Frow, 2005) rather than integrating customer needs with the organization’s strategy, people and business process (Sharma and Goyal, 2011). Furthermore, research addressing the characteristics of successful CRM strategies and the scale of measurement of such CRM efforts are limited (Boulding et al. , 2005; Mithas et al. , 2005). Few studies that have put forwarded the measures of CRM effectiveness (CRME) have been from the supplier perspective (Chen et al. , 2009). This limits the understanding of how customers perceive CRM and the outcome of such efforts on their behaviors. Understanding the customer perspective is crucial for an organization, since an effective CRM requires the business process and technology focused towards the customer. Moreover, CRM effectiveness varies depending on the relationship marketing strategy and exchange situation (Palmatier et al. , 2006). As cultural differences influence relational perception and behavior, Jham and Khan (2008) recommended measurement of CRM in an Eastern cultural context such as India. In addition, Soch and Sandhu (2008) argued that since different industries exhibit varying levels of performance, it is imperative to measure CRM in the Indian banking industry. The limited scope of application (supplier perspective) and the resulting exchange context significantly reduces utility and generalizability of the existing scales for measuring CRME from a customer perspective in the Indian banking context. Consequently, there is a pressing need to develop a scale that systematically and psychometrically measures CRME, serving as a measurement foundation for the customer perspective. Additionally, there is a lack of agreement on the impact of CRM efforts on key consumer responses (Knox et al. , 2003; Boulding et al. , 2005). Therefore, the objectives of this study were two-fold. The primary objective was to develop a multi-item scale for measuring CRME from the customer perspective in the Indian banking context. The second objective was to test the relationship of the scale
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