Retain Banking
Acknowledgement
Entrance, hard work gradual progress and an exciting year that
is how I reached this level ...
Retain Banking
DECLARATION
I, Mr.Jamshed Readymoney student of T.Y.B.COM (Banking & Insurance)
Semester Vth Shri Chinai Co...
Retain Banking
SUMMARY
The most important aspect of retain banking is customer service without
which the working of it wou...
Retain Banking
DATE: 10/09/07
TO,
WHOM SO EVER IT MAY CONCERN
SUBJECT :SURVEY CONDUCTED RELATING TO THE PROJECT
RESPECTED ...
Retain Banking
INDEX
 Introduction to banking 1-3
• Services offered by banking 1-3
 Retain banking 4-13
• Introduction ...
Retain Banking
• Tipping point
• Pressing issues
 Customer
retention
18-27
• Introduction
• Measures to be taken, in orde...
Retain Banking
• Treatment for gold customers
• Cost
 Retention practices
36-38
• Integrated Marketing Communication (IMC...
Retain Banking
• Time Deposits (TDS) –
The funds of time accounts are placed on deposit with a bank
for a definite or inde...
Retain Banking
When requesting a loan, you as a borrower should keep in
mind the bank’s desire for your use of these other...
Retain Banking
Of course, new relationship accounts won’t make a bad loan
proposal good (whether personal or business), bu...
Retain Banking
Retain banking
Meaning Of Retain
1. To maintain possession of.
2. To keep or hold in a particular place, co...
Retain Banking
This retain banking or relationship banking can be obtained by
implementing a good and renowned retain bank...
Retain Banking
2. Spend service Rupees on the gold customers.
Banks top 20% customers typically represent 80% of Banks
pro...
Retain Banking
make each customer feel that they are really well known and appreciated by
your company – even though the c...
Retain Banking
7. Learn your repurchase rate.
What is the real test of customer loyalty? It is the repurchase rate.
How ma...
Retain Banking
Relationship Banking
Relationship banking means banks maintain constant
consultations with their clients th...
Retain Banking
actions of the customer; customers can be very satisfied and still not be
loyal.
Customer Loyalty has becom...
Retain Banking
and how to save precious marketing dollars in the process of creating
customers who are loyal to you longer...
Retain Banking
 Unprofitable relationships
The final step in identifying relationships in need of nurturing
and growth is...
Retain Banking
Retention of credit card customers
Once you have a credit card customer, there is one sure way to
keep her....
Retain Banking
ATM Management
Banks can also help you with ATM Management, including
new advanced-function products that g...
Retain Banking
Machine maintenance program (optional)
 Online monitoring – our customer support personnel contact
you upt...
Retain Banking
At low cost, customer
satisfaction
Notwithstanding what banks may feel about their products, customers
util...
Retain Banking
banking system underwent a phenomenal change. Multi-channel banking
gained prominence. For the first time c...
Retain Banking
Customer retention
"The aim for any business is to win customers....
And keep them."
Customer retention is ...
Retain Banking
Customer Retention is one of the most challenging and
rewarding aspects of Business Equipment sales. The lo...
Retain Banking
future behavior than demographic characteristics are. You can tell whether a
customer is about to defect or...
Retain Banking
Banking is a financial conversation. Banking with customer
data is a highly evolved and valuable conversati...
Retain Banking
make money. Unless you get a huge increase in your budget, where will the
money come from?
If you always mi...
Retain Banking
• Recognise customers at risk of attrition or churn
The solutions maximize marketing and customer relations...
Retain Banking
Our upgrade program can utilise your current customer base to
extract this information immediately. Alterna...
Retain Banking
one of the major reasons behind this kind of competition from players who
do not have a banking background....
Retain Banking
The customer is interested in how he/she can benefit from the
bank and its products. That's why it becomes ...
Retain Banking
While banks have to ensure product superiority and operational
excellence, the biggest challenge today is t...
Retain Banking
Online banking
• Introduction
Online banking presents a real mix of opportunities and
obstacles for financi...
Retain Banking
that strengthen its ties with consumers, then that has value. "This is where
there is a strong tie between ...
Retain Banking
Scenario of retain banking
• Present
Accenture believes that the key to effective CRM is to cultivate
meani...
Retain Banking
• Best next product
Which Is The Next Best Product Or Service For This Customer, The One
That Will Increase...
Retain Banking
immediate value of the six customer insight building blocks, your
organization is well positioned for the l...
Retain Banking
Acknowledging the value of gold customers
• Treatment for gold
customers
Every company has gold customers –...
Retain Banking
below gold. Here is where you can make the maximum impact per dollar
spent. Let these folks know how close ...
Retain Banking
close they are to qualifying for Gold. You tell them how wonderful it is to be
Gold, and how easy it would ...
Retain Banking
• Cost
There is only one way: Set aside a control group of gold
customers who do not get these benefits. Mo...
Retain Banking
Retention practices
• Integrated Marketing Communication (IMC)
Integrated Marketing Communications (IMC) fo...
Retain Banking
• Growth & retention through personal sales
Personal sales are the most important part of relationship-
bui...
Retain Banking
QUESTIONNAIRE
Q1 Retain Banking is also known as relationship banking. So what
Measures have you implemente...
Retain Banking
Q6 What type of people do you cater to?
All types of people but mostly we are having clients who are
self e...
Retain Banking
CONCLUSION
The most important aspect of a bank is to retain customers than
attracting new ones. Customer Re...
Retain Banking
BIBLIOGRAPHY
• Internet websites
 www.goggle.com
 www.answers.com
- 49 -
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Retain banking

  1. 1. Retain Banking Acknowledgement Entrance, hard work gradual progress and an exciting year that is how I reached this level and now as I stand at the threshold of the aside world. I take a look of the part year which I have spend in this college my performance with the devotion of profession. So, first of all I like to thank our college SHRI CHINAI COLLEGE OF COMMERCE & ECONOMICS and principal of this college Mrs. MALINI JOHRI for this continuous faith, and MUMBAI UNIVERSITY who gave this opportunity to do this project in this curriculum. I would also like to thank our co-coordinator and project guide Prof. NISHIKANT JHA for being very supportive and helped me to complete this project. I would like to thank Mr. ALOK KUMAR who is PROBATIONARY OFFICER of ORITENTAL BANK OF COMMERCE instead of their busy schedule they had answer to my questions and also I like to thank our Liberian for providing with the book which I needed. So, this goes to all those who have knowingly or unknowingly been a great support for me to accomplish the price of work. - 1 -
  2. 2. Retain Banking DECLARATION I, Mr.Jamshed Readymoney student of T.Y.B.COM (Banking & Insurance) Semester Vth Shri Chinai College Of Commerce & Economics. Hereby, declare that I have completed this project on RETAIN BANKING in the academic year 2007-08. The information submitted is true & original to the best of my knowledge. Signature of Student (Jamshed Readymoney) CERTIFICATE I, Prof Nishikant Jha hereby certify that Mr.Jamshed Readymoneyof T.Y.B.COM (Banking & Insurance) Semester Vth, Shri Chinai College of Commerce & Economics, has completed project on RETAIN BANKING in the Academic year of 2007-2008. The information submitted is true & original to the best of my knowledge. Signature (Project Guide) - 2 -
  3. 3. Retain Banking SUMMARY The most important aspect of retain banking is customer service without which the working of it would become very difficult. Every customer should achieve perfect service from the bank in order to build a good relation with the customer. To allow any kind of profit to the bank there should be a healthy atmosphere and a good relation with the customer as a result the bank would be able to retain the customer and also help in achieving different type of wealth management services which would help the bank to grow and fight competition. Once the customer is pleased with good customer service it would help in creating a good rapport between the customer and the bank as a result it would retain the customer for life time. - 3 -
  4. 4. Retain Banking DATE: 10/09/07 TO, WHOM SO EVER IT MAY CONCERN SUBJECT :SURVEY CONDUCTED RELATING TO THE PROJECT RESPECTED SIR, This is to inform you that Mr Jamshed Readymoney of Shri Chinai College of Commerce and Economics (TYBBI) Roll no 37 has successfully completed his survey on RETAIN BANKING under our guidance and I have seen the sincere efforts put by him in making the project. I have even tried to solve all his queries and doubts that he asked me with regards to the project. I appreciate his efforts that he has put in for this project. Thanking You, Yours Sincerely, (ALOK KUMAR) - 4 -
  5. 5. Retain Banking INDEX  Introduction to banking 1-3 • Services offered by banking 1-3  Retain banking 4-13 • Introduction to retain banking • Advantages of retain banking • Objective of retain banking • Introduction to relationship banking • Types of relationships • Retention of credit card customers  Attraction for customers 13-15 • Introduction • ATM management • Electronic bill payment  Competitions faced by the banks 15-17 • Besides increased competition or lowering of cost • At low cost, customer satisfaction - 5 -
  6. 6. Retain Banking • Tipping point • Pressing issues  Customer retention 18-27 • Introduction • Measures to be taken, in order to retain the customer • Tools • Cost pressure • Cost reduction • Differentiation • Customer centric model  Online banking 28-30 • Introduction • Web banking bonanza  Scenario of retain banking 30-33 • Present • Future  CRM in next generation  Acknowledging the value of gold customers 33-36 - 6 -
  7. 7. Retain Banking • Treatment for gold customers • Cost  Retention practices 36-38 • Integrated Marketing Communication (IMC) • Growth & retention through personal sales o Conclusion 39 Introduction to banking 1. The business of a bank. 2. The occupation of a banker. 3. Primarily the business of dealing in money and instruments of credit. Banks were traditionally differentiated from other financial institutions by their principal functions of accepting deposits—subject to withdrawal or transfer by check—and of making loans. Services offered by banking • Demand deposit accounts (DDA) – Most individuals and virtually all business maintain some form of demand account,usually in the form of a checking account.The funds in a demand accountcan be withdrawn by the customer upon “demand” in the form of cash , a cheque or electronically. - 7 -
  8. 8. Retain Banking • Time Deposits (TDS) – The funds of time accounts are placed on deposit with a bank for a definite or indefinite period of time. In return, the bank pays the depositor interest on those funds. The most common types of TDs are savings accounts and Certificates of Deposit (CDs). • Safe deposit boxes – Banks rent these boxes inside their vaults for the storage of their customers’ valuable documents and assets. • Insurance and investment services – Many banks now offer a wide range of these products in an effort to expose customers to their need for, as well as the ease and convenience of purchasing, such services. • Credit – The extension of credit is one of the most well-known services provided by banks e.g vehicle loan , house loan. • Merchant credit services – Every business that accepts Visa, MasterCard, American Express, or Discover credit cards must have a merchant account through which to process those charges. Banks provide these accounts as well as account management tools and support. - 8 -
  9. 9. Retain Banking When requesting a loan, you as a borrower should keep in mind the bank’s desire for your use of these other offered services. If you can demonstrate to the lender that their extension of credit to you will also provide to them a loyal and more deeply rooted customer, the lender might be persuaded to is more compromising in some ways to approve your loan request or grant more favorable terms. A combination of a few of these accounts could mean thousands of dollars in fee income to the bank and provide a new source of inexpensive deposits for them. - 9 -
  10. 10. Retain Banking Of course, new relationship accounts won’t make a bad loan proposal good (whether personal or business), but in can enhance a questionable or “borderline” application and provide the lender with incentive to give you a chance. If you’re a very strong borrower and don’t need any type of assistance, additional relationship accounts can help to improve the interest rate or other loan terms that the bank may offer. - 10 -
  11. 11. Retain Banking Retain banking Meaning Of Retain 1. To maintain possession of. 2. To keep or hold in a particular place, condition, or position. 3. To keep in mind; remember. 4. To hire (an attorney, for example) by the payment of a fee. 5. To keep in one's service or pay. Introduction Retain banking is also known as relationship banking. It is building a strong relationship with your customer base so as to ensure their continued support and business brought about by the customers. It involves not only retaining and maintaining a strong relationship with the existing customers but also ensuring the flow of new and potentially long lasting customers. Importance and advantage of retain banking In today’s fast paced and cruel business world, businesses are competing with each other to stay afloat. The only way to ensure the continued succession of the business is to develop a good relationship with the customer base so as to ensure their faithful and trustworthy business ventures. Businesses are stepping on each other to get ahead and obtain customers from any source available even if it means the complete annihilation of another business organization - 11 -
  12. 12. Retain Banking This retain banking or relationship banking can be obtained by implementing a good and renowned retain banking program which enables the banking industry or the banking organization which implements it to ensure succession through the customer base. A vast customer base projects a positive outlook on the banking organization. Objective of retain banking The basic and most fundamental objective of retain banking is to retain its customer base by whatever means may be possible. By achieving a trustworthy and sure customer base the bank can ensure its succession and even its survival in the banking industry. As we all know the main and fundamental resource of a bank is the general public through which it generates income through deposits and loans. If a bank does not have this basic resource of deposits it is unlikely to succeed in the long run. 1. Find out who your profitable customers are Many business customers are unprofitable. Why would you want to spend money trying to retain them? Before you try to build loyalty, determine the profitability of each customer, and divide them into five groups, from the most profitable (Gold) to the least profitable (the losers). To determine profitability you will have to get some software written that includes sales, margins, recency and frequency. The software should calculate every customer’s profitability on a monthly basis. - 12 -
  13. 13. Retain Banking 2. Spend service Rupees on the gold customers. Banks top 20% customers typically represent 80% of Banks profits. Don’t deluge them with marketing. Instead, figure out ways to give them super service things that banks could not afford to do for all other customers. Airlines let their gold customers fly first class. Banks pick up their phone calls on the first ring. Rupees should be spent on customers in the second, third and fourth quintiles. Don’t waste marketing rupees on the losers at the bottom. 3. Create advisory councils. Suppose that most of your business customers consist of environmental companies, transportation companies and construction companies. Set up three advisory panels, one for each group. Find out who the key influencers or decision makers are in each of the most profitable companies in each group, and invite them to become members of your advisory panel. Get their advice by email. Create stationery with their names and companies listed prominently. You can use this for acquisition, and you will have these advisory panel members as customers for life. 4. Get Caller ID for your customer service. Whenever a regular business customer calls you up, your customer service reps should be able to see their entire purchase history on the screen before they answer the call. This can be done by storing your customer’s phone numbers in the database, and tying the DB to your phone service caller ID, so that the appropriate record is on the screen. Your reps will know when they are talking to a Gold customer. They will know the problems that occurred in the past, and how they were resolved. You will - 13 -
  14. 14. Retain Banking make each customer feel that they are really well known and appreciated by your company – even though the customer service rep has never spoken to them before. This one, inexpensive, innovation could do more for retention than a thousand "we appreciate you" letters. 5. Have contests for the best use of your product. IMarket Inc. of Waltham, MA has an annual Bull’s Eye contest for customers who use their business name lists and SIC coding system. All customers are encouraged to enter, and many of them do. The winners receive free trips and recognition. IMarket uses the entries to advertise their services. The results are announced at a major trade show. It is a win-win situation for all. 6. Debrief your defecting customers. Why do your business customers stop trading with you? In most cases, marketers haven’t a clue. Frederick Reichheld in The Loyalty Effect outlines the use of a customer defection study. Such a study needs to be conducted by phone, and in depth to determine the root causes of the departure, business practices that need fixing, and sometimes to win the customer back. In one such study at MicroScan, they discovered that customers were concerned about the reliability of MicroScan’s instruments. MicroScan took corrective action. They shifted R&D priorities, redesigned their customer service protocols, and developed a new low-end model for small labs. The result: they began to retain more customers, and became market leaders. There is real gold in such studies, providing that your company is prepared to take the results seriously, and act to correct the problems uncovered. - 14 -
  15. 15. Retain Banking 7. Learn your repurchase rate. What is the real test of customer loyalty? It is the repurchase rate. How many of your existing customers will buy from you the next time that they buy in your category? Customer satisfaction surveys are, in many cases, worthless. American automobile manufacturers typically have satisfaction survey results of close to 90%, but repurchase rates of 30% to 40%. Many companies have not calculated their repurchase rates. If you are interested in customer loyalty, find a way to determine your current repurchase rate, and compare it with other rates in the industry. It may be a sobering experience. Once you know what it is, find a way to improve it. This is the way to build true, measurable, customer loyalty. - 15 -
  16. 16. Retain Banking Relationship Banking Relationship banking means banks maintain constant consultations with their clients through various seminars , customers meets etc to evaluate, improve and widen the range of service to customer .However all customers are requested to keep banks imformed of their experiences about the various services renedered by banks and feel free to comment. Relationship Banking is not about having a "buddy-buddy" relationship with your customers. Customers do not want that. Relationship Banking uses the event-driven tactics of customer retention banking, but treats banking as a process over time rather than single unconnected events. By molding the banking message and tactics to the LifeCycle of the customer, the Relationship Banking approach achieves very high customer satisfaction and is highly profitable. The relationship banking process is usually defined as a series of stages, and there are many different names given to these stages, depending on the marketing perspective and the type of business. For example, working from the relationship beginning to the end: Customer loyalty describes the tendency of a customer to choose one business or product over another for a particular need. In the packaged goods industry, customers may be described as being "brand loyal" because they tend to choose a certain brand of soap more often than others. Note the use of the word "choose" though; customer loyalty becomes evident when choices are made and actions taken by customers. Customers may express high satisfaction levels with a company in a survey, but satisfaction does not equal loyalty. Loyalty is demonstrated by the - 16 -
  17. 17. Retain Banking actions of the customer; customers can be very satisfied and still not be loyal. Customer Loyalty has become a catch-all term for the end result of many marketing approaches where customer data is used. You can say Relationship Banking or Database Banking and what you are really talking about is trying to increase customer loyalty - getting customers to choose to buy or visit more. Increased customer loyalty is the end result, the desired benefit of these programs. All of the above approaches have two elements in common - they increase both customer retention and the Lifetime value of customers. Customer loyalty is the result of well-managed customer retention programs; customers who are targeted by a retention program demonstrate higher loyalty to a business. All customer retention programs rely on communicating with customers, giving them encouragement to remain active and choosing to do business with a company. Banks want customers to do something, take action.. And once they do it for the first time, banks want them to continue doing business with them, especially when the bank is probably paid big money to get them to do business with them for the first time. Banks don’t want to pay big money the second time. You want to create a "loyal" customer who engages in profitable behavior. Customer data and models based on this data can tell you which customers are most likely to respond and become loyal, no matter what kind of front-end marketing program you are running or how you "wrap it up" and present it to the customer. The data will tell you who to promote to, - 17 -
  18. 18. Retain Banking and how to save precious marketing dollars in the process of creating customers who are loyal to you longer. Types of relationships  Profitable relationships Relationship marketing has received a good deal of audiology press in recent times. Readers are referred to those articles for tactical information on implementing relationship marketing. Relationship marketing is an important part of the IMC process for a number of reasons. • Lost customers typically voice their dissatisfaction to at least nine other people, causing brand erosion and lost revenues. • Selling to repeat customer’s costs less than acquiring new customers. • Because of the Life Time Customer Value (LTCV), small increases in customer retention produce large revenue increases. • Customers benefit from brand relationships by reducing their risk of purchase, having to make fewer decisions, avoiding switching costs, receiving more latitude and special treatment from the practice, and gaining a personal association with the brand. - 18 -
  19. 19. Retain Banking  Unprofitable relationships The final step in identifying relationships in need of nurturing and growth is to recognize that not all patients and customers are profitable to your practice. Every audiology practice has patients who consume more time and complain more than the rest of the practice’s patients. In fact, you might say that 20% of your patients create 80% of your practice’s problems, which certainly affects your bottom line. The Pareto Rule may work both ways in this case. It is unnecessary, not to mention unethical, to rid your practice of these people. At the same time, it is in your practice’s and other patients’ best interest to devise messages that deter and deflect the constant trouble makers. That, too, is part of the IMC approach - 19 -
  20. 20. Retain Banking Retention of credit card customers Once you have a credit card customer, there is one sure way to keep her. Sell her a second product. Sell her a checking account, a savings account, a mutual fund, an auto or personal loan, or a home equity loan. Banks who have built a customer database have discovered that loyalty is a function of the number of products owned. The problem is that banks are not organized to take advantage of this situation. There is a VP for Credit Cards, a VP for Retail, a VP for Home Mortgages, etc. The VP for Credit Cards does not get a bonus if his customers sign up for a checking account. Often these VPs don’t even share the names. But the fact is, the number one best way to keep a credit card customer is to sign the customer up for a checking account. She will begin to identify with the bank’s branch and its personnel. She will be embarrassed to have them know that she has dropped the bank’s credit card. So she won’t. Attraction for customers The key encounter is when the customer opens an account. People still tend to open their accounts in a branch, and that might be the only time they are going into a branch, but if they have a positive experience they might go back, like my mom does. For account opening you want to make sure you have the appropriate person and appropriate systems to expedite it. There’s nothing like sending people off with a bag of coffee beans like Umpqua does. Then the customers are reminded of Umpqua every time they grind coffee beans. That’s just smart. - 20 -
  21. 21. Retain Banking ATM Management Banks can also help you with ATM Management, including new advanced-function products that gain customer loyalty, drive foot traffic, and boost your ATM profits. For example, let us introduce you to a revolutionary banking solution for your customers who have not established bank accounts and/or don’t use debit or credit cards. In essence, we create "virtual" bank accounts so that customers can access financial products and services via ATMs. For example, customers can wire funds domestically or internationally, access payroll checks, or recharge prepaid phone plans – all without accessing a traditional bank account. Our ATM program includes:  Choice of ATM equipment  Complete signage  Real-time online ATM activity reports– simply go to a dedicated web site to view up-to-the-minute reports for your machine – no need to wait for monthly reports. This feature also helps you better manage your ATM cash levels.  Shipping, installation, and training  Unparalleled customer and technical service support  Monthly residuals deposited directly to your bank account - 21 -
  22. 22. Retain Banking Machine maintenance program (optional)  Online monitoring – our customer support personnel contact you uptime Electronic Bill Payment Another payment service that will provide an additional hook to win and retain important business clients is in the rapidly growing field of EBPP. Like consumer bill pay, EBPP solutions automate paper-based Accounts Receivable and Payable processes for your business clients. EBPP reduces costs, improves efficiency, and enables better cash flow management. Competitions faced by the banks • Besides increased competition or lowering of cost These issues have always been there and all banks have to cope with these. In today's world of narrowing margins, a serious look at costs definitely is an imperative. One obviously has to ensure product superiority and operational excellence. However, to my mind, the biggest challenge today is to establish a customer intimacy without which the other two are meaningless. In the financial world, product superiority does not last for long, as it is relatively easy to copy products. So, the real strength comes from operational excellence and understanding the customer and developing rapport with him. - 22 -
  23. 23. Retain Banking At low cost, customer satisfaction Notwithstanding what banks may feel about their products, customers utilize these products only for a few minutes. The key lies in making those few minutes convenient, efficient and effective. There are multiple ways to achieve these objectives. For instance, we introduced welcome kits wherein; a customer who comes in to open an account with our bank walks out with a fully enabled account, debit card, chequebook, Net Banking account, and phone banking account—in a matter of minutes. Another key area that I can immediately think of is integration of services. Why should a customer receive multiple mailers from the bank when he can instead receive integrated financial statements? Why should a customer have multiple login IDs for different electronic channels? These measures not only lead to customer convenience, they also help the banks save on cost. Identifying customer needs and tailoring products to match these needs is another area where a lot can be done. For example, we recently launched a 110 percent Housing Loan to address other needs of a customer when he goes for a housing loan. • Tipping point The opening up of the Indian banking sector to private players acted as 'the tipping point' for this transformation. The deregulatory efforts prompted many financial institutions (like HDFC and ICICI) and non- financial institutions enter the banking arena. With the entry of private players into retail banking and with multi-nationals focusing on the individual consumer in a big way, the - 23 -
  24. 24. Retain Banking banking system underwent a phenomenal change. Multi-channel banking gained prominence. For the first time consumers got the choice of conducting transactions either the traditional way (through the bank branch), through ATMs, the telephone or through the Net. Technology played a key role in providing this multi-service platform. The entry of private players combined with new RBI guidelines forced nationalized banks to redefine their core technology and strategy was central to this change. • Pressing issues Today banks have to look much beyond just providing a multi- channel service platform for its customers. There are other pressing issues that banks need to address in order to chalk-out a roadmap for the future. Here are the top three concerns in the mind of every bank's CEO. - 24 -
  25. 25. Retain Banking Customer retention "The aim for any business is to win customers.... And keep them." Customer retention is one of the main priorities for banks today. With the entry of new players and multiple channels, customers have become more discerning and less 'loyal' to banks. Given the various options, it is now possible to open a new account within minutes. Or for that matter shift accounts within a couple of hours. This makes it imperative that banks provide best levels of service to ensure customer satisfaction. Customer Retention marketing is a tactically driven approach based on customer behavior. It's the core activity going on behind the scenes in Relationship Banking. It’s a sad fact that many banks are continually looking for new customers and not recognizing the “Goldmine” that lies within their current user base. The Operating Lease “Customer Retention Program” has been designed to mine your entire current client base, systematically providing advanced notice of up-grade opportunities. These notices contain detailed finance proposals to allow your sales team to easily upgrade your customer’s current equipment to your latest technology. - 25 -
  26. 26. Retain Banking Customer Retention is one of the most challenging and rewarding aspects of Business Equipment sales. The long-term investment in customer retention improves your business and allows your company to plan for growth into the future. Customer Retention program is based on managing the Entire Customer Lifecycle. Finance provides an ideal tool for being able to lock in your customer base over the long term. • Measures to be taken, in order to retain the customer 1. Past and Current customer behavior is the best predictor of Future customer behavior. Think about it. In general, it is more often true than not true, and when it comes to action-oriented activities like making purchases and visiting web sites, the concept really shines through. We are talking about actual behavior here, not implied behavior. Being a 35-year-old woman is not a behavior; it’s a demographic characteristic. Take these two groups of potential buyers who surf the ‘Net: • People who are a perfect demographic match for your site, but have never made a purchase online anywhere • People who are outside the core demographics for your site, but have purchased repeatedly online at many different web sites If you sent a 20% off promotion to each group, asking them to visit and make a first purchase, response would be higher from the buyers (second bullet above) than the demographically targeted group (first bullet above). This effect has been demonstrated for years with many types of Direct Marketing. It works because actual behavior is better at predicting - 26 -
  27. 27. Retain Banking future behavior than demographic characteristics are. You can tell whether a customer is about to defect or not by watching their behavior; once you can predict defection, you have a shot at retaining the customer by taking action. 2. Active customers are happy (retained) customers; and they like to "win." They like to feel they are in control and smart about choices they make, and they like to feel good about their behavior. Marketers take advantage of this by offering promotions of various kinds to get consumers to engage in a behavior and feel good about doing it. These promotions range from discounts and sweepstakes to loyalty programs and higher concept approaches such as thank-you notes and birthday cards. Promotions encourage behavior. If you want your customers to do something, you have to do something for them, and if it’s something that makes them feel good (like they are winning the consumer game) then they’re more likely to do it. Retaining customers means keeping them active with you. If you don't, they will slip away and eventually no longer be customers. Promotions encourage this interaction of customers with your company, even if you are just sending out a newsletter or birthday card. The truth is, almost all customers will leave you eventually. The trick is to keep them active and happy as long as possible, and to make money doing it. 3. Retention Banking is all about:Action – Reaction – Feedback – Repeat. - 27 -
  28. 28. Retain Banking Banking is a financial conversation. Banking with customer data is a highly evolved and valuable conversation, but it has to be back and forth between the marketer and the customer, and you have to LISTEN to what the customer is saying to you. For example, let's say bank looks at some average customer behavior. Bank looks at every customer who has made at least 2 purchases, and bank calculates the number of days between the first and second purchases. This number is called "latency" - the number of days between two customer events. Perhaps you find it to be 30 days. Now, look at your One-Time buyers. If a customer has not made a second purchase by 30 days after the first purchase, the customer is not acting like an "average" multi-purchase customer. The customer data is telling you something is wrong, and you should react to it with a promotion. This is an example of the data speaking for the customer; you have to learn how to listen. 4. Retention banking requires allocating banking resources. You have to realize some marketing activities and customers will generate higher profits than others. You can keep your budget flat or shrink it while increasing sales and profits if you continuously allocate more of the budget to highly profitable activities and away from lower profit activities. This doesn't mean you should "get rid" of some customers or treat them poorly. It means when you have a choice, as you frequently do in marketing, instead of spending the same amount of money on every customer, you spend more on some and less on others. It takes money to - 28 -
  29. 29. Retain Banking make money. Unless you get a huge increase in your budget, where will the money come from? If you always migrate and reallocate marketing towards higher ROI efforts, profits will grow even as the marketing budget stays flat. You have to develop a way to allocate resources to the most profitable promotions, deliver them to the right customer at the right time, and not waste time and money on unprofitable promotions and customers. This is accomplished by using the data customers create through their interactions with you to build simple models or rules to follow. These models are your listening system , like the "30 day latency" model above . They allow the data to speak to you about the customer. How you manage your customer relationships—and the information that powers them—is paramount to your success. You have to truly understand, serve and satisfy your customers if you want them to be loyal to your company. With marketing and information management solutions, you know your customers like never before—enabling you to foster enduring and profitable customer relationships. In short, we enable you to: • Recognise and retain profitable customers • Determine customer lifetime value • Strengthen customer relationships • Increase share of wallet • Increase number of customer touch points - 29 -
  30. 30. Retain Banking • Recognise customers at risk of attrition or churn The solutions maximize marketing and customer relationship efforts. The Banking industry has leading Customer Information Management solutions that include Customer Data Integration (CDI) and customer recognition. This gives you the power of immediate information that also helps bank to develop a more complete picture of each customer using their comprehensive Customer Information solutions so the bank can offer the products and services that their customers want. Bank Customer Information Consulting solutions also provide consulting, analytics and privacy expertise. Banks helps them to honors their customers’ privacy preferences - vital to building trust-based relationships. Additionally, banks consulting and analytics services help banks to provide them with a true understanding of their products. • Tools Most banks and finance companies can provide equipment finance. But not all financiers want to be involved in helping you win sales. Not all financiers keep the Retention of your Customers as their end goal. When was the last time your bank or finance company called you to tell you about a possible sales lead? The Customer Retention Program provides your sales team details of up-grade customers each month. Potentially with this tool, they could have 50% of their monthly sales budget locked in. This makes reaching their targets easier and enables them to spend more time concentrating on new prospects. - 30 -
  31. 31. Retain Banking Our upgrade program can utilise your current customer base to extract this information immediately. Alternatively, we can develop this tool over the long term once our finance program has been implemented. Banks should do a meeting annually to keep their customers updated abouth the changing needs and even allowing for existing contracts to be varied to add or remove equipment, as the customers requirements change. An important aspect of the Customer Retention Program is that Banks systems have been designed and modified based on years of experience. But it has also been designed to be adaptable so that Customer Retention Program can be tailored to banks current business systems. • Cost pressure Cost pressures come into play when banks are not able to afford the cost of a certain service or initiative although they want to or need to have it in place. This is primarily because the cost structure at the backend is not efficient enough to offer that kind of service to the marketplace. Increased competition: The entry of new players into the banking space is leading to increased competition. A recent example would be of Kotak Mahindra Finance Limited (KMFL)—a financial services company focused on investment consulting, auto finance, insurance, etc— morphing into Kotak Bank. Many other such players are waiting on the sidelines. Technology makes it easier for any company with the right channel infrastructure and money reserves to get into banking. This has been - 31 -
  32. 32. Retain Banking one of the major reasons behind this kind of competition from players who do not have a banking background. Kotak Bank overcame the initial costs of setting up its own ATM network by getting into a sharing agreement with UTI bank. New entrants with strategies such as these make the banking game tougher With this banks have redefined their business priorities. They are now focused on • Cost reduction • Product differentiation • Customer-centric services Although the ways in which banks implement these vary, the underlying objectives remain the same. • Cost reduction Reduced costs basically translate to higher profit margins. If banks can reduce costs, it can go a long way in increasing profits. The focus is on increasing the profit margins by cutting costs where it matters—on the operations side. Banks have woken up to the fact that they need to get into shape fast in order to handle competition. "Banks have been increasingly facing sliding margins and fierce competition. It is imperative for them to increase the volumes and reduce the cost of operations," says K.P. Padmakumar, Chairman, Federal Bank. • Differentiation - 32 -
  33. 33. Retain Banking The customer is interested in how he/she can benefit from the bank and its products. That's why it becomes necessary for a bank to differentiate its products from the others. Some of the ways in which differentiation can be introduced are through specialization, new products, and increasing the added value. Specialization basically means that the bank gets involved only in selected areas. For example, the bank might be getting involved only in housing finance. Or, it could be limiting its services just for corporate banking clients. Another way to specialize could be by handling just specific sets of portfolios. Banks can differentiate themselves by adding new products to their range of services. This will provide the bank with better yields per contact. Increasing the added value of products is another way of differentiation for banks. Operational excellence is also a key factor in effective differentiation from the competition. • Customer centric model Indian banks have realized that it no longer pays to have a 'transaction-based' operating model. This has led to the development of a relationship oriented model of operations focusing on customer-centric services. - 33 -
  34. 34. Retain Banking While banks have to ensure product superiority and operational excellence, the biggest challenge today is to establish customer intimacy without which the other two are meaningless. "In the financial world, product superiority does not last long as it is relatively easy to copy products. So, the real strength comes from operational excellence and understanding the customer and developing rapport with him," says Gunit Chadha. In this context, it is very important that banks identify and understand customer needs. This will help banks in tailoring their products according to customer needs. It also helps in new business opportunities like cross-selling and 'upselling,' which takes cues from customer aspirations and transaction patterns. Customer relationships have to be managed in the best possible manner. This will ensure that the customer comes back to the bank. In addition to good customer retention rates, it will also provide better income generation capability. This is because a major chunk of income of most banks comes from existing customers, rather than from new customers. - 34 -
  35. 35. Retain Banking Online banking • Introduction Online banking presents a real mix of opportunities and obstacles for financial service providers. Customers in this market are intelligent and tech savvy and are 50 percent more likely to stay with their bank than customers using traditional services. Unfortunately, many financial institutions do not have adequate technological infrastructures to reap the rewards of this channel. Banks are known for legacy systems and information silos--segregated databases from autonomous divisions with separate record keeping, customer information and agendas to protect. Online channels are said to be the most un-integrated of all channels and can easily pose more problems than they resolve. Over the last few years, most banks took a laissez-faire approach to online banking initiatives. Now they acknowledge the need to invest heavily, and they know that CRM--a key factor in an industry built on trust and relationships--is key to fully integrating this channel and to maximizing return on investment. Richard Bell, director of e-Banking at TowerGroup, a Massachusetts-based banking technology consulting service, says banking institutions are beginning to realize that offering their existing services on the Internet probably doesn't have a strong business case behind it. "But," he says, "there are things they can do once those services are online that do have strong business cases." According to Bell, if a bank can find out enough about its customers' financial environments and it can make more appropriate offers - 35 -
  36. 36. Retain Banking that strengthen its ties with consumers, then that has value. "This is where there is a strong tie between Internet banking and CRM because people, who do Internet banking, by their actions, provide a real gold mine of data about what their financial needs and activities actually are." • Web banking bonanza This emerging financial services tenet comes at a moment when online banking is in transition. Until recently there was not a lot of value in banking via the Internet: It actually took longer to pay a bill online than it did to write, stamp and mail a check. One third of early online banking adopters retreated to offline channels with more services. According to Bell, the percentage of households banking online has increased from approximately 15 percent to 19 percent over the last two years. (These numbers vary widely depending upon institution, region and specific geographic location.) Experts disagree on the actual number of current and future customers banking online. Estimated 6 million in 1999 and predicts 23 million by 2004. Gartner's similar figures range between 27.5 and 55 million, respectively. Different definitions of what actually constitutes an online customer contribute to the blame--the industry is that green. These numbers, which may seem low, could represent as much as 40 percent of the total possible market. Yet, obstacles remain. In the United states, between one third to one half of banking customers are currently unwilling to use an ATM. - 36 -
  37. 37. Retain Banking Scenario of retain banking • Present Accenture believes that the key to effective CRM is to cultivate meaningful insights about customers--insights that reveal not only what makes the customer satisfied, but also what brings profitability to the organization. Although most companies understand that developing insights about individual customers can increase satisfaction and drive sales, few truly understand which insights are critical, how to use them to deliver value, or how to develop them in the first place. Through more than a decade of work in this area, Accenture has identified six key insights that enable companies to obtain a more accurate reading of their most valued customers: • Current value—- How Valuable Is This Customer To The Organization Right Now? • Share-of-customer How Much Of The Customer’s Financial Services Activity Is With This Organization? • Future value How Valuable Is The Customer Likely To Become In The Future, As Life Stage And Wealth Change? - 37 -
  38. 38. Retain Banking • Best next product Which Is The Next Best Product Or Service For This Customer, The One That Will Increase Value For The Customer And The Organization? • Attrition risk How likely is the customer to leave? • Future We believe the answer lies in the new wave of technology innovation that promises to help transform CRM yet again. “Reality Online”—Accenture’s vision of the future of technology and business—will be instrumental in enabling companies to further enhance their ability to build and maintain lasting, profitable customer relationships. Bringing together the virtual and the physical worlds, the next generation of CRM embraces technology as the critical enabler. These solutions will create a world where objects will sense, reason, communicate and act; where every physical entity or event has a corresponding “virtual double” and where the time between stimulus and response approaches zero. In this world, insight will be bought and sold in a market that rewards those who build trust and harness the real-time economy.  CRM in next generation So how do financial institutions convert the nemesis of data overload to the nirvana of customer insight? Without doubt, there is both an opportunity to be realized and value to be unlocked. If you can tap into the - 38 -
  39. 39. Retain Banking immediate value of the six customer insight building blocks, your organization is well positioned for the longer-term opportunities such as increasing customer retention, fighting the brand wars, protecting your customers’ privacy, gaining greater value from your customer base and creating a new set of offerings in the future. If you understand the potential value of your customers, you can make decisions about where not to invest as well as how to draw even greater reward from the high potential value customers. Thinking creatively about this vision while maintaining a laser focus on the customer and on value, you will position your organization to compete effectively now and in the new world of financial services. Traditional one-to-one customer interaction is unsustainable as customer numbers grow. The goal for the financial services sector therefore is to use customer insight to understand how to create an effective multi-channel customer experience that is personalized and relevant, differentiated by value and respectful of privacy concerns. As technological advances continue, many more applications will emerge. One thing is clear for now: The “Reality Online” vision has tremendous potential to make the next-generation CRM initiatives more effective and more profitable than those of the past. New capabilities will be required for capturing, storing and analyzing greater amounts of data. But by making this a part of the future of CRM strategies, financial services companies will be much better positioned to keep pace with the demands of their customers and competitors and, above all, to grow profitably in the years to come. - 39 -
  40. 40. Retain Banking Acknowledging the value of gold customers • Treatment for gold customers Every company has gold customers – they are the life blood of their revenue stream. Gold customers represent 20% or less of the customer base, and about 80% of the revenue. Some companies have not yet identified these valuable people. That is a mistake, since the health of any business depends onthem.Gold customers have a higher retention rate. They are more loyal, less price sensitive, and buy more products, more often. Once you know who they are, how should your marketing strategy address them? One school says, “Market to them like mad. Get them to buy more.” That might work, but, in most cases, is probably a mistake. The proper course is to work to retain them. Five percent of their customers provided 80% of their profits. Getting these five percent to put more money in their bank would have been a fruitless enterprise. Whatever banks can do, they should make gold customers aware that they are very important to us , and show it by really valuable services. Banks should create a services budget just for the gold customers. So where should you put your marketing dollars? With that segment just - 40 -
  41. 41. Retain Banking below gold. Here is where you can make the maximum impact per dollar spent. Let these folks know how close they are to gold status. Encourage them to spend a little more to get the services that go with gold. You could use points, or monthly statements to make them aware of what they need to do. Many customers and companies will respond to these incentives. We soon learn that each customer segment needs to be treated differently based on their contribution to overall profits. If we segment the customer base into five quintiles, based on lifetime value, for example, we get a picture that looks like this: The top quintile, our Gold customers, are where the bulk of our revenue and profits are generated. We must treat these customers with respect. Don’t, necessarily, market to them. Provide them with super services – service so good that you could not possibly afford to provide it to every one of your customers. The marketing dollars should be aimed at the second, third, and fourth quintiles. To the second quintile, you tell them how - 41 -
  42. 42. Retain Banking close they are to qualifying for Gold. You tell them how wonderful it is to be Gold, and how easy it would be for them to move up. - 42 -
  43. 43. Retain Banking • Cost There is only one way: Set aside a control group of gold customers who do not get these benefits. Monitor the performance of those who get the benefits with those who do not. You will soon be able to see the difference in retention and sales. Control groups for gold customers are difficult to manage. The word gets around, and some in the control group ask to be included in the benefits. How do you respond? “There was a computer error. Of course, you are included in the gold program.” Only a small percentage will complain and can easily be handled. Nieman Marcus solved this problem with their gold customers. They called the ones that they switched to the gold program the “out of control group”. If you have not yet developed a special program for your gold customers, begin at once. It may be the If you have not yet developed a special program for your gold customers, begin at most important single customer relationship program in your company. - 43 -
  44. 44. Retain Banking Retention practices • Integrated Marketing Communication (IMC) Integrated Marketing Communications (IMC) focuses on building brand by creating databases that continuously monitor and respond to market needs as relationships are fostered between practices and customers (e.g., patients, referral sources). The first two articles in this four- part series focused on two aspects of IMC: Customer Relationship Management (CRM) strategies for database mining and building brand awareness through strategic messaging to target markets. The purpose of IMC is the same as traditional marketing, which is to maximize profitability of a business. IMC is an ongoing, circular process that requires continual communication between an audiology practice and its target markets. This communication dynamic is what distinguishes traditional marketing from IMC: the former works to increase profitable transactions , whereas IMC works to increase profitable relationships. This is not a semantic quibble. The concept of a profitable relationship requires that both parties benefit and “profit,” as described by Schultz. IMC is based on continual exchange between marketer and customer. The former seeks and stores information on each individual customer in a database. The latter, through transactions, surveys, and other methods is encouraged to communicate back. Thus the fields of experience of both become greater and more useful to both parties. - 44 -
  45. 45. Retain Banking • Growth & retention through personal sales Personal sales are the most important part of relationship- building in an audiologist practice. In IMC parlance, we are engaged in “solution selling” – working in collaboration with every customer, developing customer-specific dialogues to extract the most from our brand features to solve as many of the customers’ problems as possible and retain the customer within the practice. One of the great strengths of personal selling is that it allows flexibility to each provider as a means to integrate customer needs/wants/demands with the practice’s offerings - 45 -
  46. 46. Retain Banking QUESTIONNAIRE Q1 Retain Banking is also known as relationship banking. So what Measures have you implemented to retain your customer? The needs of a customer are met with quality service like free ATM cards , Drafts etc. Q2 Do you prefer to retain your customers or make new ones? Both are important at the same time because as it is said that “Old Is Gold” and new customers to achieve targets. Q3 Do you have some special or attractive offers in order to attract Or retain your customers? Yes we have a scheme called CASA (Current And Savings Account) with Rs 50,000/- of free accidental insurance. Q4 Do you have a CRM department or relationship management department in your bank? No. Q5 Do you provide any extra benefit or special service for loyal regular customers? No - 46 -
  47. 47. Retain Banking Q6 What type of people do you cater to? All types of people but mostly we are having clients who are self employed. Q7 Does your bank have a motto or a saying or a favourite line to which it stands by and performs? Yes. The Favourite line is “Where Every Individual Is Committed” Q8 At what level of management does the decision of retain banking or the retain department are taken? Top level management. Q9 Does the RBI have any influence or say in the matter of retain Banking? Yes - 47 -
  48. 48. Retain Banking CONCLUSION The most important aspect of a bank is to retain customers than attracting new ones. Customer Retention is one of the most challenging and rewarding aspects of business equipment sales. The customer of a bank should feel proud while receiving the services from his bank. The bank should retain its customer base by whatever means may be possible. The succession of a bank is to develop a good relationship with the customers to retain them in the bank. - 48 -
  49. 49. Retain Banking BIBLIOGRAPHY • Internet websites  www.goggle.com  www.answers.com - 49 -

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