crm dissertations a
TRANSCRIPT
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Dissertation submitted in part fulfillment of the requirements for the degree of Master of Business Administration at Liverpool John Moores University
On the Effectiveness of Customer Relationship
Management Strategies in Achieving Customer Loyalty: A
Case Based study of Islamic Bank of Britain
C 0320810
MBA 2010
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DECLARATION
I declare that no portion of the work referred to in the
dissertation has been submitted in support of an application
for another degree or qualification of his or any other
university or other institute of learning. Further, all the work
in this dissertation is entirely my own, unless referenced in
the text as specific source and included in the bibliography.
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Acknowledgements
First of all i am thank full to Lord Almighty
I thank Lord the Almighty to have bestowed such consciousness and chance to
have disclosed this fact to me with the firm intention to continue this Endeavour
onward.
This dissertation was not possible without help of my supervisor Marilyn May.
Her advices and suggestions helped me a lot in improving this dissertation and i
pay my regards to her. I would also like to thank Mr Tim Harris in helping me in
selecting dissertation topic and writing dissertation proposal.
I highly appreciate continuous support and prayers of my loving father,
―‖ in Pakistan and my brother ―in UK for which words are not enough to express
my ―THANKS‖.
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ABSTRACT
According to Gartner (2008) CRM is growing swiftly, while 60 % of CRM
projects are failing to deliver their expected results. This is most commonly due to
lack of proper assessment of CRM strategies which may allow organization for
timely actions to improve their CRM strategies. Managing relationship with
customers is key success factor in today’s competitive and challenging
environment. While CRM strategies can play vital role in success of any
organization. This research report answers the question of measurement of CRM
effects on customer loyalty in case of Islamic Bank of Britain. Literature review
provides basic in depth understanding of CRM and CRM effectiveness
measurement issue. After discussing different model of CRM assessment and
evaluation. Kim`s Model CRM measurement is selected as conceptual research
framework. Research was conducted accordance with Kim`s model. The
assessment of CRM strategy through questionnaire helped in determines effects
on customer loyalty by analyzing customer satisfaction rate, quality of service and
customers perception of perceived value.
This research provide in depth analysis of Islamic Bank of Britain`s CRM
strategies and its effects on customer loyalty. Customer`s loyalty is influenced by
their religious believe. Research concluded number of drawback in its customer
strategy and its negative impacts on customer loyalty are discussed in details. This
report represents the in depth analysis of CRM strategy adopted by Islamic Bank
of Britain. With need and significance of internal optimization of business
processes is discussed in details.
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CHAPTER 1
INTRODUCTION
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Introduction
1.1 Background:-
During last two decades the rapid business development has resulted in
competition of products now days customer has many products to choose from
according to his best interest. Customer is now the main focus of every business
for success in this time of tough competition and economic uncertainty (Peelan,
2003). It is also a fact that a satisfied customer will hardly tell any other person
about his experience with product while an unsatisfied customer will tell everyone
about his bad experience with product resulting into bad reputation which can
directly influence the sales. So there is very important need for getting feedback
from customer which helps in improving the product and making customers
happy with product. The Customer Relationship Management is name of
delivering high level of customer satisfaction. . The Customer Relationship
Management can be defined in many different aspects according to Gartner group
―CRM is an IT the outcomes of which optimize profitability, revenue and
customer satisfaction by organizing around customer segments, fostering
customer-satisfying behaviors and implementing customer-centric
processes.‖(Peelan.2003)
Popularity of information system based technology for personal use has forced
managers to invest heavily on information system Management to build a strong
relationship with their customers (Rigby & Ladengham, 2004). CRM information
system fastly became popular as its implementation claimed to be help full in
managing customer more effectively resulting into profitability by increase in
customer retention.
CRM is meant to integrate business strategy and technology with ability to know
the customer behaviour by interacting with them, which help organization to
improve its service efficiency according the demands of customers. This service
improvement and efficiency is obtained by improving business processes. This
improvement leads organization to create value for both parties in relationship.
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Relationship Management depends on three issues, networks, relationships and
interaction. (Gummesson, 2002)
The importance is CRM is increasing every day. Information technology
integration has made CRM strategies easy to implement and achieving customer
loyalty, From small business to large business company customer relationship is
built by human interaction, with rapid use of technology so many buyers are now
shopping online or by phone with less or no direct human contact what so ever,
building a long term relationship with customer is critical issue and this can only
be done by implementing CRM strategies (Kicaid, 2003)
According to Gartner survey significant growth in spending on CRM in past few
years CRM software related investments were $7.8 billion in 2008 with 14.4 %
increase from previous year. This healthy trend is expected to reach $13.3 billion
by year 2012. The investors remained positive despite economic meltdown.
Figure1 Source: - Gartner.com (2008)
But at the same time Gartner survey showed that 65% of CRM projects failed to
deliver its expected results and return on investment was not significant.
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1.2 Problem Statement:-
Even if a company has good customer service initially it may be decline after
sometimes due to unsatisfied customers, this will eventually fail the business or
slow down its progress, the companies can stop it happening by developing
customer loyalty with help of CRM strategy. This can deal the process of
achieving customer loyalty, (Kincaid, 2003)
Achieving customer’s loyalty is long term thing and effects of implementing
CRM strategy are not tangible. So it is complex task to effectively measure the
effectiveness of crm strategy and customer loyalty. Complexity exist when
evaluating intangible benefits like loyalty of customer, quality of service,
enhancement of value, processes effectiveness, innovation of operation,
improving the services Effectiveness of processes, innovation of operation,
service improvement, competitiveness, trust, and efficiency etc (Peelan,2003)
The most widely used and popular methods for investment evaluations are
accounting and financial methods which only depends upon cash flow and
counting the customer inflow . These are only suitable for limited type of
evaluation of business performance. These accounting methods cannot be
effectively used in evaluating investment which is expected to gain benefits in
intangible and indirect form. (Righby & Landigham, 2004)
By evaluating effectiveness of crm strategy a business can be improved on the
bases of results and necessary changes can be adopted .CRM implementation also
enable customer services department to perform effectively according to their
expectation. According to Customer Think Corporation, 68 % of customers leave
their seller due to bad customer service experience. So the importance of CRM
and its performance evaluation cannot be denied.
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Figure 1.2: Source “Customer Think Corp 2004”
Customer Loyalty is aim of every organization implementing CRM strategies, the
real complexity occurs when organizations fail to effectively monitor its
performance.
There is no doubt that wise implementation of CRM strategy results in huge
increase in profitability and customer loyalty but large number of CRM projects
fail due to following reasons. (Soukakos, Georgopoulos & Economou, 2007)
(i) The executives of organization has less or no understanding of CRM and
customers
(ii)Poorly designed CRM strategy
(iii)No performance measurement of CRM effectiveness
It is fact that CRM performance measurement strategies are not much developed.
There is huge lack of agreement in relation entities to consider for measurement
and complex comparisons are needed (Dekimps, 1999),
This Poor development Of Marketing Performance measurement is due to
complexity in measuring and assessing results from implementing marketing
strategies. Especially it is difficult to elaborate impacts on customers of specific
strategy (Hanssens, 1999)
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Therefore same is the case with CRM strategies, and its effects on customer
loyalty
The ultimate outcome of implementing CRM strategies is achieving customer
loyalty which will off course generate revenues and decrease costs in many
aspects but measuring the success is a big issue as there is no universal framework
to evaluate CRM effects on customer loyalty
1.3 Introduction to Islamic Banking in Britain:-
The concept of Islamic banking came into existence as many muslims were
concerned about interest based financial products which are prohibited in Islam.
The business model of Islamic banking is entirely different from conventional
bank. Islamic bank offer no fixed interests on investments and do not charge any
loans on loan amounts. It offers loans for business on profit and loss sharing basis.
And limited amount of interest free personal loans. Investment account holders
are not offered any fixed profits, if bank makes money it shares it with its account
holders (Hassan & Lewis, 2007)
Islamic Bank of Britain (IBB) was established in 2004 in response to needs and
demands of muslim community in UK. IBB is first Islamic bank in Europe to
offer sharia compliant products and services.IBB has more than 50000 customers
with increasing at rate of 7 % in year 2009, over all IBB `s growth rate of 15%.
IBB has six branches in London,Birmigham,Manchester and Leicester with planes
to open more branches soon.IBB claims to be offering fully interest free sharia
complaint banking services any how there is no restriction of religion to open
bank account(Wilson,2007)
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1.4 Importance of Study:-
Gartner (2007) research suggests that most of CRM projects will fail to deliver its
expected results. The main reasons behind is issue is lack of evaluation and
measurement of effectiveness of CRM strategies. As there is no universal CRM
strategy to adopt for any organization it depends and varies organization to
organization according to their needs. Due to this reason there is no universally
adopted measurement framework which can be adapted to measurement for any
organization. So organizations usually do not measure its effectiveness due to its
complexity which results in failure. It needs continuous monitoring so that change
strategy could be adopted where and when necessary. (Peelan, 2003) Loyal
customers can be big asset for any organization but this loyalty depends upon
many issue related managing customer relationship. A Proper Customer
Relationship Management (CRM) can be very helpful in wining customer loyalty
by improving business processes and customer services. (Kumar, 2008)
This study present in depth analysis of CRM issues related to banking and its
effects on customer loyalty by reviewing related literature and conducting
research to evaluate CRM strategies issues. The study provides helpful insight of
CRM in context of banking and measuring its effects on customer loyalty. This
research can help IBB in improving their CRM strategies. It will help them to
better understand customers and their requirements so that customer loyalty can
be achieved.
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1.5 Scope of Study:-
This research presents in-depth and confined study of CRM strategies and its
effectiveness issue in context of its measurement of effects on customers. The
effectiveness is measured in context of customer’s perspective. Customer-centric
CRM effectiveness evaluation model has been adopted in the research in order to
examine the effects on customer loyalty. Customer-centric approach is adopted
because customer loyalty is more directly linked with customer services.
1.6 The Objectives
a) To examine the Customer Relationship Marketing theme, and determine
its effects on customer loyalty
b) To examine the Customer Relationship Marketing theme, and its use as a
marketing tool to achieve customer loyalty in the context of the banking
industry
c) To investigate the key CRM concepts that the Islamic financial institution
utilizes to achieve customer loyalty
d) To identify the key CRM loyalty concepts that distinguishes the Islamic
financial institution from the mainstream organizations
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1.6.1Main Research Question
Q: - How the effectiveness of CRM can be achieved by the UK Islamic Bank?
1.6.2 Sub-Research Questions
a) How can CRM within organizations be internally optimized?
b) What are the CRM strategies and concepts to be utilized in achieving
customer loyalty?
1.7 Dissertation Outline
Chapter 2. Consists of literature review, provides in depth knowledge to
understand research topic
Chapter 3. Discuss research methodology, different research methodologies are
discussed and compared, justification of selected methodology is discussed in
detail
Chapter 4. Discuss data analysis, results of data collected through quantitative
and qualitative research is discussed in details
Chapter 5. Discuss findings and analysis of research of results from previous
chapter
Chapter 6. Discuss conclusions, recommendations and suggestions for future
work
Chapter 7. Discuss self reflection on learning from this dissertation.
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CHAPTER 2
LITERATURE REVIEW
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2 Introduction:-
After discussing research background, objectives and scope. This chapter deals
with background and insight of main literature related to research area. The first
part of this chapter deals with basic introduction to CRM (customer relationship
management) as business strategy and its importance .while final part deals with
performance evaluation of CRM. I have discussed relationship marketing, CRM
background, CRM as business strategy, CRM objectives, Elements of CRM
business strategy and process, and finally i have discussed the evaluation of
effectiveness of CRM with details of different CRM models. The detailed
discussion on these topics forms the basis of conducting research on CRM
effectiveness on customer loyalty in context of Islamic bank of Britain
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2.1Conceptual Framework
Research objectives
&questions
Literature reviews Relevance
To examine the CRM
Marketing theme, and
finding out its effects on
customer loyalty
David & Kutz(2003)
Gronroos (2001)
Payne & Fow (2005)
Explaining the relationship
marketing concept in relation
to CRM. With in-depth study
of relevant literature review
To examine the Customer
relationship marketing
theme, in the context of the
banking industry and its
use as a marketing tool to
achieve customer loyalty
Kumar, (2008)
Pritesh &Sinha(2008)
Berndtt(2008)
Understanding the usefulness
of CRM strategies and tools
which are applied to banking
industry for continuous
improving the services in
achieving customer loyalty.
Investigating the key
concepts of CRM and how
Islamic financial institution
utilize it to achieve
customer loyalty
Szuth & toth(2008)
Gremberg (2004 )
Keiningham(2005)
In context of explaining the
significance CRM concepts,
tools and how to make use of
them in Islamic banking to
achieve customer loyalty.
To identify the key CRM
loyalty concepts that
differentiates the
mainstream organizations
from the Islamic financial
institution.
Hassan, Lewis,(2007)
Differentiating Islamic bank
and commercial bank in the
context of relationship shared
as creditor and borrower
compared to partnership.
How the effectiveness of
CRM can be measured and
achieved by the UK
Islamic Bank?
Kim,Suh,Hwang.(2003)
Dychi,(2001)
Kevin B.
Hendrick(2005)
CRM effectiveness is
discussed in detail with
different effectiveness models
and their process of
measurement.
How can CRM within
organizations are internally
optimized?
What are the CRM
strategies and concepts to
be utilized in achieving
customer loyalty?
Garbner(2007)
Lycett(2007)
In context with Optimizing
CRM and concepts through
which customer loyalty can be
achieved and focusing to
make use of CRM strategies
and concept.
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2.2 Marketing Relationship Concept:-
Relationship marketing deals with taking care and maintaining current customer
base with long term continuous relationship forming in order to get long lasting
profitability. According to Kutz, et al. (2009) this continuous relationship creates
value for all parties and customer loyalty is formed, Marketing Relationship
defined by Gronroos (1997) is regarded as most comprehensive which is defined
as ―The objectives of relationship marketing are to identify and establish, maintain
and enhance, and, when necessary, terminate relationships with customers and
other stakeholders, at a profit so that the objectives of all parties involved are met.
This is done by mutual exchange and fulfillment of promise‖
The Relationship marketing concept can be summarized David & Kurtz (2009) as
the long term focused relationship, customer services at excellence, remaining
continuously in contact with customer, committed employees with best quality
products which results in customer-seller partnership for long time generating
profitability for company in terms of less marketing expenditure
Figure 2.1 Source: Kutz, et al.(2009)
As in figure 2.1 the relationship marketing is shown as cooperation on continuous
basis between seller and buyer, according to Kutz ,et al. (2009) while on the other
hand transaction based marketing is not continuous based cooperation. Getting
further involved in this cooperation its turns into customer relationship
management which integrates all customers needs into every aspect of sellers
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operational relationships with suppliers, distributors etc. This whole customer-
seller relationship combines people, process and technology with long term goal
of maximizing customer value.
2.3 CRM (Customer Relationship Management):-
CRM is closely linked to relationship marketing. Generally speaking the purpose
of CRM is to develop more close relationship with customer to generate more
profits Berndtt(2007). According to Buttle (2009) CRM is the capability of
enterprise that helps them to manage customer relationship in effective way it may
be methodology, software or internet capability .CRM helps in identifying,
acquiring and retaining customers, it enables enterprise to manage its interaction
with customer across all possible channels.
CRM also helps an enterprise to properly plan, and control pre and post sales
activities. It also provides organization information about customer behavior
which helps to achieve long term relationship with customers resulting into long
term profitability and growth.
CRM can be said a comprehensive business strategy which when properly
implemented results in improving profits, revenues as well as customer
satisfaction. In other words profitability is achieved through customer satisfaction
Buttle(2009)
According to Berndtt(2007) CRM is ―combination of strategies and tools and
drives relationship programme, reorienting, the entire organization to concentrate
focus on satisfying customers‖
Customer Relationship Management can be of four types Buttle(2009) which are
Strategic, Operational, Analytical and Collaborative
2.2.1 Strategic CRM: - it is the customer-centric strategy of an organization
which is for retaining profitable customers.
2.2.2 Operational CRM: - it deals with automation of processes which are faced
by customers in order to making buying experience easy and pleasant. It includes
customer services, sales and marketing departments.
2.2.3 Analytical CRM: - it deals with analysis of customers data in order to use it
for strategic planning and tactical reasons
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2.2.4 Collaborative CRM: - it aims to deal with information sharing between
different departments about customers and collaborate it with customer service
department to help achieving customer satisfaction
2.4 CRM Definition:-
By reviewing the literature of CRM, we come to know that CRM is defined in
many different ways by different experts and scholars; there is lack of consensus
in experts on defining and conceptualization of CRM. The extensive research
was done by (Zabalah, et al 2004) in order to highlight true meaning and
definition of CRM. According to him the crm has different aspects and can be
defined by those aspects as shown in the table below. In this table the CRM
definition is discussed by different aspects together with discussing the
implication for CRM success
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Table 2-2: Dominant Perspectives on CRM
Perspective Description Implications for CRM
Success
Process Customer-Seller relationship
develop with time
Success of CRM depends on
organization capabilities like
detecting and fulfilling ever
changing customer needs
Strategy The Cost of relationship with
particular customer invested
by an organization depends
on life time value of customer
Success of CRM depends on
continuous assessment and
prioritizing relationship with
customer according to their
life time profitability
Philosophy Profitability through customer
loyalty can only be achieved
by maintaining long term
relationship with customer
Success of CRM requires that
organization should focus on
customer needs and demands
Capability Organization needs to adopt
continuous behavior towards
customers in order to gain
from long term profitable
relationship
Success of CRM depends
upon organization`s allocation
of tangible and intangible
resources with flexibility of
continues monitoring the
customers and changing
behavior to address the
customer needs
Technology A Long term relationship
management in order to gain
profitability needs an
organization to use customer
data with help of latest
technology
Success of CRM depends
upon users acceptance of
function which are driven by
technology implemented by
an organization in order to
maintain and develop the long
term relationship
Source: (Zablah et al, 2004)
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2.5 GOALS AND OBJECTIVES OF CRM:-
In generally speaking objectives of CRM can fall under two areas enhancing
effectiveness and improving efficiency of business processes. (Zoltner & Sinha,
2001). Different authors has explained the objectives and goals in different ways
we have discussed few here
1) According to Zoltner & Sinha (2001) in any business oriented company
ultimate goal of CRM is to increase profitability and reduce costs. This can be
achieved by customer centric and sales centric CRM
2) According to Mukerjee (2007) the objectives achieved through CRM are which
can be included increased customer satisfaction and enhanced customer loyalty
help organization in long run.
3) The Renolds (2002) describe as an organization can achieve the goals like, it
helps sales department in managing sales, simplifying process in marketing and
sales department, helping to find new customer, improving the customer services ,
these all processes help in increased revenues through better customer relationship
management
4) Objectives according to Wilson & McDonalds (2002) the communication
between different departments in and organization and with customers is
improved, customer needs can be addressed on right time which helps in
increasing business opportunity in organization
5) According to Zabalah(2004) following goals can be achieved through CRM
(i) Low Cost of getting new customers by using technology automation and CRM
(ii) Increase in customer loyalty which helps to retain profits with less need to
look for new customers
(iii)Cost of sales can be reduced due to improved relationship with customers and
distributers
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(iv) Customer profitability is increased with good knowledge of customer
behavior on buying
2.6Anatomy of CRM Strategy:-
According to Payne and Fow (2005) successful implementation and execution of
CRM requires ―cross-functional approach‖ which involves whole enterprise in the
CRM strategy not just limited to the marketing and sales department
In any organization there can be five key cross functions of CRM Strategy. These
are universally acceptable. (Payne and Fow, 2005) there may be slight difference
according to needs of organization
1) Process of Developing Strategy
2) Process of Value Creation
3) The Multiple Channel integration Process
4) Knowledge management Process
5) Performance Evaluation and Assessment Process
2.6.1 “Process of Developing Strategy”
This strategy development process is formed by keeping in view of organizations
strategic objectives, it acts as engine of whole CRM strategy .it depends upon two
key elements Business Strategy and Customer Strategy.
(i)Business Strategy:- Business strategy of an organization is mirror of its
objectives and long term goals. It is essential that CRM strategy should be aligned
with business strategy to deliver desired results. It is based on two elements.
(a)Business Vision: - CRM strategy is developed keeping in view of
organizations business vision. Business vision enables to visualize future targets
of organization where they want to see their business in future
(b) Industry Competitive Characteristics: - it’s vital to analyze the current
position and competitiveness of business in order to develop suitable strategy.
a) Customer Behavior and Choice: - Already known behavior and choice of
customer is very important in developing strategy development. So that their
needs and demands should be addressed.
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(b)Segmentation: - it is important to create strategy on the basis of segmentation
which will enable to understand customer better as well as their needs and
demands can be fulfilled. This segmentation is usually based on customer profile,
social-demographic background, and his value to organization as customer.
2.6.2 Value Creation Process:-
This is the process of assessing and creating value from customer as well
organizations business point of view. It is the value both get and give in the
relationship. Customer value creation is seen as competitive advantage. This
process is based on two elements
(i)Value Customer Receives: - it is the value which organization can provide to
its customer. It is total benefits which customer receive at the price or value he
pays to organization (Payne and Fow, 2005)
(a) ―Value Proposition‖:- Every organization try to create value proposition,
to show that the value customer receives is superior in sense of price and
quality than others in competition. Its explains the relationship between
products and its reputation. As customer`s have changing needs it is
difficult to create same value proposition for every customer. Value
proposition is linked to life time value of customer. Whole value delivery
system can be created in order to manage value proposition of different
segments of customers
(b) Customer value Assessment :-its assessment of customer value to
organization it is calculated to the basis of number of sales and future
prospects it is very important to deliver better customer service experience
.that customers should be identified according to their value to
organization. Customers with more value are usually more demanding and
have higher expectation.
(i)Value Received by Organization: - This is the value received by organization
as result of this relationship it may be the cost of retaining the customer and
marketing costs .this value assessment is important to organization as customer
can be offered the value of services according to his value to organization
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(a)Acquisition Economics:-it is assessment of value at which company want to
acquire new customers. Organizations are usually interested in low cost, high
value and large number of customer at start of their business.
It varies according to organization’s needs for example a new company in market
will focus on acquiring as much as customer possible at start to establish in
market. While already established company may focus on customer retention
rather than acquiring more and more new customers.
(b)Retention Economics: - Retention economics is based on cost of keeping
customer. Experts are convinced that cost of keeping customers is five time less
than cost of acquiring new customers. This is due to it takes time to turn new
customer into profitable one.CRM strategies can improve customer services. This
directly turns into profitability. Customer retention can also improve customer
acquisition with low costs because these loyal customers can be source of
reference for new customers .A framework can be created to improve customer
retention by measuring customer retention rate, identifying causes of defection,
and by taking corrective action to improve services(Payne and Fow,2005)
2.6.3 Integration Process of Multiple Channels:-
This is the process to identify which channels are to be used to increase customer
satisfaction standard .with best possibility to create ―single unified view‖ of the
customer about organization. An effectively integrated multi channel customer
service should match the needs of all different segments of customers which are
interacting with those channels. There should be good integration of channels to
share the customer needs to provide them best service. These multichannels may
include (Payne and Fow, 2005)
(i) Sales Department (include sales staff, account manager.
Representatives)
(ii) Showrooms/outlets(retail outlets,stores,depots)
(iii) Direct Marketing(face to face, TV, telephone, telex)
(iv) Internet Sales(includes website sales)
This all combines to make integrated channel management. A multichannel
integration strategy can be developed to effectively address this issue. An
integrated multichannel strategy meant to utilize every possible channel to utilize
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to serve the customer and integrate them without any impact on channel
performance (Goldenberg, 2008). It is not always feasible for every company to
have multiple channels. Some may select one channel strategy based on just
internet or showroom. Experts agree revenue can be increased significantly by
increasing customer channels. It increase company`s outlook, ease of use, and
ability o respond to customer needs. organization can automate these channels
with latest technology which increase customer experience and organization`s
ability to respond to customer needs.
2.6.4 “Data Management Process”
This process is based on gathering; correlating and using the customer data from
all customer contact channels which helps organizations updated customer
profiles which are used to enhance the quality of customer services department.
Latest information technology systems like Computer, softwares and databases
are used for this purpose. Automated Data analysis and data mining tools are used
for this purpose. (Buttle, 2008) These tools also help in back office and front
office automation which enhance the customer service experience as well as can
help
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organization employees to complete tasks more accurately. These tools help in
creating profile of customer which also provides the information about buying
behavior of particular customer. There are many CRM based software available
which help full in implementing crm strategy are. Data management Process is
based on following elements (Payne & Fow , 2005)
(i) IT /Computer Systems(CRM based, customer Management softwares)
(ii) Data Analysis Tools(usually integrated into CRM system software)
(iii) Front Office Software Applications(sales softwares, website,)
(iv) Back-Office Software Applications (Accounting, Employees.
Inventory systems)
CRM covers every aspect of organization-customer interaction like sales or
services IT influence has modified the way of company`s approach towards CRM
strategies. this is due to change in customers buying behavior. Customers are
increasingly using electronic way of interacting organization and organizations are
trying creating improved personalized experience for buyers. Every organization
is heavily relying on computer system which lack personalized customer
experience.
2.6.5 Performance Evaluation and Assessment Process:-
This process is to ensure the objectives and strategic task for CRM are delivering
a reasonable value. It also forms the basis of future developments according to
requirements. (Sheth & Shinesh, 2001) this evaluation helps in making correction
where needed and helps in modifying the relationship. There are many models
which evaluate and decide the success of CRM; Any CRM strategy should be
according to predefined objectives of that organization. As economic value of
customer relationship with organization is intangible thing it cannot be directly
measured, however it can be measured by cash flow and reduced costs. (Wubben,
2008).Where it is considered that if performance is satisfactory the program
should continue .the two key elements provides a macro view of relationship
among the
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stakeholders who drive performance and the ―Performance Monitoring‖ which
provide very detailed view of key performance indicators.
(i)”Shareholder Results‖:- these can be obtained by calculating value of all
stake holder, like employees ,customer , and total costs reduction of sales. These
stakeholders are as follows
(a)Employee Value:-Employee`s life time value is measured as balance between
employee receive in return of his performance or job. It gets value given
relationship. More satisfied employees results in more customers. (Wubben,
2008).customer`s value to organization can be measured by multiple criteria
depending on organization.
(b)Customer Value:-it is the life time value of customer, which is calculated
depending on the number of sales from specific customer, duration of loyalty,
volume of sales in terms of cash flow, cost of retaining customer etc. It can be
calculated from all customer segments deducting the costs per customer, and then
measured as average value per customer. (Johnson and Weinstein, 2004)
(d) Cost Reduction: - Cost reduction is an important factor, CRM
implementation should result in reduction costs. It is calculated by calculating
costs of new customer acquisition and costs of retaining customers. It also
included the operational, marketing, sales costs.
(ii) Performance Measurement: - CRM should results in improving business
process which definitely help to improve customer services and increasing
profitability. Performance can be measure by calculating following two values
(a)Measurement of Customer Satisfaction: - customer satisfaction is an
important matrices to judge organization`s performance. Customer satisfaction
can be measured in many ways, like by asking customer to give feedback or by
calculating elements like. Speed and quality of service, prices comparison, trust
on employees, complaints and feedback, brand image in customers mind. (Payne
and Fow, 2005)
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Figure 2.2 Source: Payne & Fow (2005)
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2.7 CRM in Banking Context:-
According to research by Pritesh & Sinha (2008) in case of banking customers
increase of 5% retention can increase profits by 35% for retail banking, insurance
by 50% and credit card profits can increase by 125%. There for bank are
concentrating on retaining customer in order to increase profitability. Gartner
(2007) the key objective of any CRM strategy in any organization is increasing
profitability with increasing customer satisfaction. Banks can assess their
customer needs and behavior by effectively implementing CRM strategy. In
banking industry it is very important to know the effects of services and products
on customers, like customers who use in branch services, ATM, Online or phone
banking etc.
Figure 2.3 Preferred Banking Channels Source: Pritesh and Sinha(2008)
It is important that the objective of any CRM strategy should be aligned with
bank`s customer strategy (Payne & Fow, 2005). The CRM is more important and
helpful for banks due to following reasons
(1) The Banking customers are tends to increase their interest in other
banking services and products as he passage of time
(2) Customers with long term relationship with bank can be a source of
referring the bank to other customers which help in increasing the
good name and increase in customer base
30
(3) Banks can understand the needs and behaviour of their customers as
long term relationship continues
(4) Customers with long term banking relationship become more
comfortable with organization services, products that they need less
assistance in bank making less over head on organization
Banks have tradition to view them self as extremely ―Customer centric‖ with
offering to personal services to customers to manage their affairs. The banks also
believe that the high worth customers are more demanding about services and
products. While the research shows that high worth customers are becoming more
complex in behavior in terms of their needs of products and services. Kumar
(2008) Customers expectations from their bank are increasing day by day due to
competetation.
The CRM Structure of the bank needs to be designed in the way that the
synchronization process should adopted on periodical level So that updated and
current data should be available all the times and across all channels. Kumar
(2008). The process of handling customer information, collection, with
maintenance support can play a vital role in improving profitability. Data
Management is key to success and it can be handled with powerful tools like
―Master Data Management‖ (MDM) which is reasonable tools to manage
customer information across the organization in effective way and getting 360
degree view of customer information. Analytical Setup in CRM architecture
enables segmentation to execute strategies for products, customers, and
geographies etc. Together with these procedure collecting and analysis customer
feedback and suggestions also important which help to monitor performance and
improvement where needed.
31
2.8 Creating Customer Experience For Banks Customers:-
Banks should keep their customer expectation straight, As Customer expects their
customer to understand the customer needs of banking and their financial concern
about their money. The multiple channel relationship between customer and bank
is needed 24/7 to serve the customer needs. Good Experience should always be
consistent across every channel of banking service. There Customer needs are
slightly different according to their needs. Kumar (2008)
There are following basic Berndt(2007) elements that influence customer
experience with retail banking
(i) “Quality of Interactions‖: Customer always expects best quality of
service from all channels through which they contact with banks or use
banking services. Customers also need quick, efficient response to their
queries each time they interact. Ease of use of service is also an important
factor for customer satisfaction. So quality of interaction is vital and
fundamental in creating customers experience in right way.
(ii) “Consistency Level of Services ―As Customer always expects quick and
easy use of service. the consistency and accuracy of service can only be
achieved by correctly integrating CRM architecture with business channels of
banking service .similar and accurate data should be accessible from all
channels every time. For example difference in banking quotes of loans
application may discourage customer.etc
(iii) “Differential”:- Almost every banks offers almost same type of products
and so that its looks like a grocery store. There should be some different edge
for customer to experience with bank in order to be top in the preference list
of customers. The banks can optimize personalized services and enrich it with
lasted tools to make customer experience better and different from others in
market. Customer segmentation can be important in this regards. There can be
three pillars Kumar (2008) People, Process and Technology which are basic
enabler of managing customer’s experience
32
Figure 2.4 Three pillars of customer experience Source: Kumar (2008)
Deploy right ―CRM
technology‖ across all
channels to get desired
results
Unified model should be
developed in order to get
updated data at all times
High slandered call Centre
fully customer centric with
reasonable resources
Fully trained, educated
customer service staff at all
locations to help customers
Essential collaboration of IT
and business according to
customer needs
PEOPLE
Process across all the
channels should make
transaction easy and
reliable
Call routing strategies
should be adopted for
personalized call
handling experience
PROCESS
TECHNOLOGY
33
2.9Customer Loyalty in Banking Context:-
Many bankers consider customer loyalty as unexplainable concept; this can be
argued on due to many reasons. And the bankers find it hard conceptualization,
developing and measurement of customer loyalty (Szuth and toth, 2008). There is
disagreement among the bankers that what actually make the behavior and how
can it be best explained. This lack of consensus on customer loyalty often makes
the more discussion on it unproductive. Many banks have confusion of relating
customer loyalty with two different concepts which are customer satisfaction and
customer retention. ( Keiningham et al. 2005)
2.9.1“Customer Loyalty‖:- Customer loyalty is behavior of customer in which he
remained faithful to an organization (seller) despite occasional mistakes and
unpleasant service. So the loyal customer continues its relationship with that
organization. So it is Faithfull behavior of customer in which he remained in
relationship giving advantage to good experiences with organization over bad
experiences. Customer Loyalty can be of these types (Lawfer, 2004)
(a)”Monopoly Loyalty”:- This is the loyalty where customers have little or no
other choice but to remain with that organization, such customers are often very
dissatisfied.
(b)‖Cost of Change of Loyalty”: - It is the state of customer when customer
remains with organization mainly due to high cost of change of loyalty. And he
thinks it’s not economical to do this effort
(c)”Incentivized Loyalty”:- This is loyalty which is influenced by some
marketing strategy where customer is getting some incentives which he cannot get
being in relationship with any other bank or organization.
(d)”Habitual Loyalty”:-this is most common type of loyalty which is mainly
influenced by bank location, facilitates, or if he can complete his tasks with less
time and efforts with particular organization, so it becomes his habit to buy from
that place.
34
(e)‖Committed Loyalty”: - This loyalty must keep earning its retention of its
customers for long period of time by delivering total value according to needs and
expectations of its customers. it is not just customer retention but it is name of
total satisfaction and delivering quality to customer.
2.9.2 “Customer Satisfaction‖:- it is also a behavior or attitude of customer
according to which, the perception of customer about his needs, expectation,
wishes and desires with respect to products and banking services are fulfilled.
Banks are cautious about customer needs and expectations but it does not
guarantee about the loyalty of customer.
2.9.3 “Customer Retention‖:- it is ability of bank to hold customers over period
of time in mutual relationship. This ability can directly be measured by customer
retention rate. The better retention rate means better the bank is performing and
results in cost reduction and profitability
35
2.10 CRM in Islamic Banking Context:-
The Islamic model of banking is different in terms financial products which turns
the customer-banker relationship into partnership. Both are highly dependent on
each other in order to gain profits as both are shareholder of profit and loss. The
Plays are role of financer while lender plays are role of manager and manage the
business and money. It can be said that the relationship in Islamic banking is
stronger than traditional interest based banks. The traditional high street banks
rely heavily on difference between money landed and deposits in the bank, while
Islamic banks no earnings on fixed term basis from interest. It entirely depends on
the profits generated as result of partnership with customer business. While the
customer pays only principle amount no mark up or interest instead of that
borrower share the profits with bank.(Muhammad,2007)
The Bank earns small amount of fees on some financial services. etc the customer
relationship management strategies should in context of Islamic bank should not
be very different, As Islamic bank of Britain is only standalone Islamic bank with
sharia compliance financial service muslims , muslims have not other choice of
banking which is big advantage for IBB. Islamic bank of Britain can enhance this
relationship to muslins as well as market their products to non muslims as well by
designing more and diverse products which could attract non muslims customer as
well. CRM strategies with targeted marketing campaign can do this job easily.
(Sadik, et al. 2010)
The price related to its financial services is high and cannot compete other high
street banks, which is big disadvantage for Islamic bank of Britain. This high
pricing can be big hurdle in attracting non muslim customer. A very high level of
customer service and attractive products for long term can be suitable strategy to
achieve customer loyalty and customer retention. (Wilson, 2007)
36
2.11CRM Effectiveness: - Performance Monitoring and
Evaluation
It is very important to measure the results and evaluation the effects of CRM
strategy in order analyze return on investment (ROI) and weather the strategic
goals have been achieved. But According to a research study conducted by Meta
group(2008) 90% of organizations admitted being unable to quantify Return on
investment(ROI).the enterprise should realize that CRM is a business strategy and
need have investment and they should understand the nature of benefits it can
provide, while it’s not good to see its results in direct increase in sales only
(Gartner,2007) while experts(Kim,Suh,Hwang.2003) of CRM agree that it is
complex task to evaluate tangible Return on investment (ROI) of the resources
allocated to CRM implementation. In order to evaluate the CRM we usually need
to measure the benefits of intangible things for example Customer loyalty, quality
of service, enhancement of value, procedure effectiveness, trust ,competitiveness,
improvement of services and efficiency etc.
The most widely adopted accounting financial and accounting methods to
evaluate the return on investment are not good option for the evaluation of
intangible nature benefits. Because these accounting methods are based on
numerical calculation of amount and cash flow and cannot always be good option
for intangible and in direct calculation (Gremberg,2004). Multicriteria
methodology can solve this issue because by using multicriteria method it is
possible to calculate both tangible and intangible nature of benefits(Lycett and
Giaglis) there is strong disagreement about Performance evaluation model, Few
experts believe on other elements to monitor while others seems to disagree with
them.
37
Figure 2.4: Source (CRM Effectiveness Journal of Marketing)
38
2.12 Models for CRM Effectiveness:-
―There is no universally accepted comprehensive measurement system that allows
holistic assessment of the ongoing contribution of CRM activities to the
performance of an organization ―(Garbner-Kraeuter 2007).
Any organization can adopt its own model of evaluation of CRM Effectiveness
according to their needs (Dychi, 2001). We have disused few CRM models which
are different from each other to have an idea about the way CRM can be
effectively measured.
2.12.1 Kim, Suh & Hwang Model:-
This model was developed by ―Kim,Suh and Hwang‖ in 2003 with suggestion of
the four elements measurement for CRM Performance. These four elements of
CRM are as follows
(i) ―Customer knowledge “:- The customer focused business
organization keep the customer data with latest technology like data
warehousing and data mining. This customer data is used to help CRM
related activities. Most of the customers are usually concerned about
how much information the organization kept in their record and how
secure it is. Evaluation of Customer data which customers has no of
39
orders, Total number of customers, in web based selling it can be
based on no of customer visits on website and total number of sales per
employees etc .
(ii) “Customer Interaction”:- Many communication channels are
developed in order to interact with customers. The profitable
relationship can only be established by effective customer interaction.
Customer interaction is measured by some important elements like
number of selling campaigns, total costs of advertisement, and
response methods etc. In order to measure customer interaction an
organization may need to measure the payments, delivery methods,
and products types. Customer satisfaction hugely depends upon sales
and delivery channels management effectively and creating excellent
operational services there for the information such as product and
delivery time, response time to buyer is essential to analyse the
performance.
40
(iii) “Customer Value”:- intangible and tangible improvements due to
the implementation of CRM strategies show customer value. Customer
value can be determined by measuring rate of retention of customers,
marketing and sales campaigns etc. CRM strategy should be beneficial
for both in relationship customer and organization. Profitability per
customer needs to be calculated, with creating a benchmark of benefits
which should be analyse in regular manner in order to see which
customer is more beneficial for organization and which are less
beneficial. Customer Value calculation is shown in table with detailed
objectives and activity to calculate.
41
(iv) Customer Satisfaction:-Customer satisfaction is intangible hence
difficult to measure. In customer focused organization measuring
customer satisfaction through feedback can provide immediate
information about level of satisfaction and preferences, needs and
concern of customer. Customer satisfaction is directly linked with
organization profits .customer satisfaction is also lined with customer
retention rate. The measurement of customer satisfaction is shown in
details table below.
2.12.2 Bohling s Model of CRM Measurement:-
Bohling suggested a model of crm measurement based on multiple criteria which
any organization can implement to measure and evaluate the CRM effectiveness.
He divided these criteria into three categories. Which are ―Project Focused
Criteria‖ like Procedure compliance, ―internally oriented matrices‖ like employees
cooperation, and ―Proven efficiency gains‖ and impact on customer loyalty and
retention. According to Bohlins there are seven elements which should be
assessed in order to measure CRM .He categorize the elements in numbering from
Less important ( 4) to Most important at( 1). According to Bohling these elements
are as follows starting most important.
(i) Customer satisfaction and customer retention rate
(ii) Revenue and Sales Growth
(iii) Improved knowledge management
(iv) Reduction in cost
42
(v) Employees productivity and improvement in performance
(vi) Employees usability
(vii) Compliance to specification
2.12.3 Kevin’s Model of CRM Measurement:-
Kevin B. Hendrick(2005) proposed a model of measurement in his article ―
Effects of enterprise system on the cooperate performance‖, suggested that key
financial measurements can be good symbol of CRM performance. According to
him Stock price performance. Increase in assets value along time, and returns on
assets and sales in specific duration time period in business should be used to
analyze any CRM performance.
Step 1:- Choose the time Period on which impact need to be calculated
Step 2:- Calculating the Impacts on Stocks prices
Step3:- Estimate operating performance effects
2.12.4Wang & Lu“s Model of CRM Effectiveness Measurement:-
Wang & Lu( 2004)suggested a model of CRM performance measurement
according to this CRM performance should be evaluated in two steps. In the first
instance the ―Customer Behavior‖ is monitored and measured. According to
Wang & Lu CRM effects should be measured in sense of customer behavior as
they are current source of income for the organization and be helpful in creating
and recommending other prospective buyers in future. The customer behaviors is
based on following elements
(1) ―Repurchasing‖
(2) ―Word of Math‖
(3) ―Cross selling and Up selling‖
(4) ―Acquisition and retention rate of buyer‖
The Second important step Wang & Lu suggest to measure the quality of
relationship with buyer. Hence ―Wang and Lu‖ recommended behavior based
measurements the many other experts believe that quality of relationship is
43
intangible benefit of CRM performance. The ―relationship quality‖ can be
measured by measuring satisfaction, trust and commitment. This step is based on
measurement of two elements.
(i) ―Brand loyalty‖
(ii) ―Customer Satisfaction‖
2.12.5 Izquierdo”s Model of CRM Effectiveness Measurement:-
Izquierdo in 2005 presented model of CRM effectiveness evaluation. This Model
is based on organizations KPI, Key performance indicators including both
Marketing, sales and Economic Performance. According to him economic and
market position of organization best describe the effectiveness of CRM strategies.
The elements to measure according to him are as follows
(i) ―Customer Loyalty‖
(ii) ―Economic Performance‖
(iii) ―Market Positioning‖
(iv) ―Customer Perception‖
44
2.13 Discussion on CRM Measurement Models:-
The evaluation of effectiveness is complex task and there is no consensus about
any suitable criteria or model to measure effectiveness of crm(Kim,2003).Any
how many experts has developed different models according to their preferences
of matrices to measure as few of them are discussed earlier. By reviewing all of
them it is clear that we can clearly identify that experts are divided on importance
of perspective to measure, some experts’ emphasize on financial and process
improvement perspective, while others focus on customer perspective of
measurement. Kim’s model is seems to be extremely customer centric with all
elements of customer service quality are included. Kim believe that customer
service performance together with customer retention and acquisition rate is
mirror of CRM effectiveness, while Kim`s customer matrices has part based on
―Servaqual‖ which is renowned model for measuring service quality perception.
The major advantage of using Kim`s model is in time identification of issues
related to customer services which can be corrected in timely manner as result
success rate of CRM can be increased. On the other hand Bohlings model does
not include that much detailed customer perspective to measure but it also include
employees productivity and satisfaction rate which is totally missing from Kim’s
model. Cost reduction and total sales revenues is also important factor according
to Bohling`s model so we can say Bohlings model focus on measuring customer
satisfaction rate together with employee’s productivity and financial performance.
Kevin model of effectiveness is entirely different model with entire focus on share
price increase in stoke market. According to Kevin, the share prices increase in
stoke market is real point of success for any organization. If organization is
effectively adopting the crm strategies then it should impact on its stoke prices.
But the Kim did not explained increase that CRM strategies take time to achieve
loyalty of customer which impact the company’s performance and stock prices
but this will not enable any organization to identify the progress on short term
basis and organization cannot identify the failing strategies which needs some
change, and there will no assessment of customer service performance as well
which will let poor customer services performance go un detected which can
45
impact overall performance of company in long term basis. Wang and Lu model
seems to based on both financial and customer perspective but it seems to
suggesting entirely different financial matrices to measure as it also suggest on
measuring cross-selling and, up-selling and cost of operation together with
customer satisfaction and retention rate. But it is fact that cross-selling and up
selling increase can be due to timely factor like marketing campaign or increase of
customer acquisition etc
Izquierdo`s model is based on financial performance as well as customer
perception about organization. But customer loyalty can be built with time, this
model is not effective on new organization as customer loyalty rate will be low at
start and will not show the exact effects of crm strategies.
After reviewing all models it is clear that most of models are more concerned with
customer perception than financial performance but few models does not measure
all aspects of CRM strategy as CRM strategy is name of improvements in whole
business processes and entities.
Kim’s model seems to be most efficient model in measuring effectiveness as this
model is extremely customer centric which is positive thing as customer loyalty is
linked with improvements of customer services. So Kim’s model seems to be
addressing most of the dimensions of CRM strategy and its implementation will
definitely results more accurately for organization performance and customer
satisfaction, with ability to correction of strategy.
2.14 Kim, Suh & Hwang Model as Research Framework:-
After reviewing different CRM effectiveness measurement models, Researcher
has selected Kim, Suh & Hwang `s model for measuring CRM effects on
customer loyalty. The selection of this model is due to reason it is more customer
centric rather than organization centric .This model is best suited according to
objectives of this research due to following reasons. Kim`s Model is based on
―Servqual‖ which renowned service quality framework, it is often used for
assessment of service quality. Service quality is directly linked with customer
loyalty. So it is useful idea to measure customer loyalty with such a framework
46
which is covers all the possible dimensions of CRM strategy and its effects of
customer loyalty. Other reason for choosing this model is other models are highly
dependent on financial data of any organization this model is general framework
for any organization, which can be customized according to needs of organization.
So researcher has structured according to objectives of research and accordance
with Islamic Bank of Britain. The whole research is based on Kim`s model which
leads to measuring crm effects on customer loyalty and status of current crm
strategy can be analyzed.
CRM effectiveness and Customer
loyalty metrics
Kim
`s (2003)
Bohlin
g(2
006)
Kev
in(2
006)
Wan
g (2
004)
Izquierd
o(2
00
5)
Customer knowledge X X
Customer Interaction X
Customer Satisfaction X X X X
Customer Complaints X X
Customer Loyalty X X X X
Revenue Growth X X X X
Cost Reduction X
Improved Customer productivity X
Usage of Employees
X
Compliance to Specification X X
ROI X X
Word of Math
X
Customer Acquisition X X
Repurchasing rate
X
Cross and up selling
X X
Market Positioning
X
Table 2.3 CRM Effectiveness Frame of Reference
Source: Azari (2007)
47
CHAPTER NO 3
R E S E A R C H M E T H O D O L O G Y
48
R E S E A R C H M E T H O D O L O G Y
3.0 Introduction:-
Research Methodology is systematic and scientific process to explore knowledge
about a particular problem. Research is regarded as important process in order
solves academic and business problems. Research Methodology forms the basis of
conducting research by developing step by step procedure for performing
research. (Kumar, 2005) Some People take research as rational approach or
common sense as it always starts when there is some unanswered matter and there
is no satisfactory evidence to answer that matter but research methodology is quite
different from common sense as it is based on precise objectives and has specific
methods involved. Kottler (1997) describes it as method of gathering, and
analyzing the information by using data collection methods to drive results from
this data which lead to answering and unanswered question or problem.
According to Gill and Johnson(2002) Methodology give research choice to adopt
suitable procedure to achieve objectives by ensuring the validity and reliability of
data .
After comprehensive literature review in previous chapter which formed the basis
of understanding the issue and perform research to achieve research goals and
objectives. This chapter discusses research philosophy, research approach, data
collection & analysis methods with justification. Last part of this chapter deals
with discussion on reliability, constraints, and ethics of research. Every part
contains justification of selection or rejection of alternative methods
Saunders,et al.,(2009) presented whole research process in form of an ―onion‖
consists six layers with each layer indicating steps towards achieving research
goal as shown in picture as follows
49
Figure 3.1 “Research Onion “
Source : Saunders,Lewis,Thronhill(2009)
.
50
3.1 Research Philosophy:-
The researcher`s selection of Research Philosophy shows his assumption and
perception of ―viewing the world‖. These assumption and Perceptions help
researcher to formulate suitable research strategy to achieve goals and objectives
According to Saunders, et al., (2009) research philosophy is process of
development of knowledge in specific field. Generally research Philosophy can be
viewed in three categories which are positivism, interpretivism, and realism.
(Saunders, et al., 2009)
3.1.1 Positivism is believe of majority of researchers that a apart from our own
assumptions the truth exists which can be understood through experimenting,
researching or observing.(Kincheloe,2003) Remnyi(1998) explains this
philosophy as social reality is truly exists and can be concluded through
observations. According to Denscombe(2003) positivism is based on assumption
that there are regulations, reasons, justifications exists in social world as exists in
nature.
51
3.1.2Interpretivism provides the base to identify the strategy through which
knowledge is obtained and justified in context of original search. It forms its basis
on assumption of shared or more than one reality ( Remnyi.1998). According to
Denscombe(2003) this method involves strategy of gathering information by
writing or tape recording the interviews of experts according to research topic
which is beneficial for that research topic.
3.1.3Critical realism is reality based epistemology which believes that research
in social phenomena cannot be justified unless elements created that phenomena
or world are identified (Mikkelsen, 2005) critical realisms based on faith that
there is some ultimate truth with condition to limited context. While according to
some experts that ultimate truth exists in some level.(Remnyi,1998)
The researcher has selected the ―mainly Positivism while less interpretive
approach‖ be because methodology of data collection is quantitative with portion
of qualitative research and ensure reliability. Data of quantitative research is less
likely to be influenced by behaviour.
This study can be explained as positivistic study with few parts of interpretivistic.
This is suitable method of this type of study because according to Saunders, at al.,
(2009) research related to field of Business and Management studies is more
likely to be combination of both positivism and interpretivtism .while the
conclusion and end result of research is ―general sable‖ showing that most of time
similar approach is applicable in similar research.
52
3.2 Research Approach and Design:-
A researcher can choose from deductive or inductive approach .Saunders & Lewis
(2008) consider this decision of choosing research approach an easy trap for
research as selecting one approach over other may be a mistake and may narrow
down the scope of research. The details of these types of research approaches are
as follows.
3.2.1 Inductive Research Approach:-
A Research approach which results in development of theory on the basis of data
analysis of collected data. The research does not conduct research on the basis of
any predefined theory or hypothesis. The researcher first collect data samples and
then on the basis if analysis of this data sample researcher develop a the theory on
the basis of understanding of data analysis results Steinberg(2006).According to
Saunders and Lewis (2009) development of theory on the basis of results from
data analysis is called inductive approach of research. the process of data
collection is usually done by questionnaire and interviews. Inductive approach is
usually called as ―bottom-Up‖ approach. It is considered to be more exploratory
and open-ended approach.
53
Fig3.2 Inductive Approach Source: William.K (2006)
3.2.2 Deductive Research Approach:-
Deductive approach is totally opposite to inductive research approach, in this
approach the first step is to develop a hypothesis or theory on the basis of
available information, then the suitable research strategy is adopted in order test
this hypothesis .According to Saunders, et al., (2009) research begins the research
review related study materials and develops framework and hypothesis. Then this
hypothesis or theory is tested by data gathering through different means and this
data is analyzed to check the validity of hypothesis. This approach is also known
as ―top-down‖ approach. According to Yin (2003) process of deductive approach
starts with reviewing theory about concerned topic. Then this results in narrow
downing into hypothesis .which is further narrow down into collection of data and
examining the data to find the results to confirm this hypothesis.
Fig3.3 Deductive Approach Source: William.K (2006)
Deductive approach is considered as more narrow and limited due to its nature
and relying on confirmation of hypothesis. Research is social science is usually
54
conducted by combination of both approaches at the same time.(Saunders and
Lewis,2009)
The research approach adopted for this research is deductive as the research is not
based on pre assumed hypothesis. The research is started without any assumptions
about the topic area and data collected through questionnaire and interviews is
analyzed to form a conclusion.
3.3Research Strategy:-
According to Cresswell(2003) research strategy makes it possible for a research to
proceeded systematically by arrangement of tasks that ensure focused and
organized research activity. This systematic approach is very useful in successful
completion of research.
So there is need of clearly identified research strategy research choose to follow.
According to Saunders et al., (2009) there is choice of different research strategy
from which appropriate strategy can be adopted according to research objectives
and type of research. Different research strategies are given as follows.
i. Survey
ii. Case study
iii. Experiment
iv. Archival research
v. Grounded theory
vi. Ethnography
vii. Action research
3.3.1Survey:- Survey strategy is generally identified as deductive approach of
research. It is most commonly used to answer the questions like where, who,how
much, and what questions. The strategy is famous among researchers and
55
frequently used to conduct research in business management area. In this strategy
researcher gather data by questionnaire. This data is gathered is already or
convertible in quantitative form. This quantitative data is then statically analyzed
to drive results (Saunders et al., 2009.)
3.3.2 Case Study: - According to Yin (2003) Case study is frequently used to
answer the questions with ―how‖ and ―why‖ are researched for answer. It is
particularly useful strategy for researcher with less power over incidents and
happenings. Case study is systematic way of analyzing an individual, group, or
reorganization, collecting the relevant data, analyzing it and finding the results
based on that analysis. As a result case study provide in depth understanding of
that phenomena.( Flyvbjerg,2006)
3.3.3 Experiment: - is scientific method of proving of disproving existing or new
theories or hypothesis. Experimental strategy is not useful in business
management research hence it depends of type of research done.( Saunder &
Lewis,2009)
3.3.4 Archival research: - this type of research is done by collecting and
analyzing information from organizations archive or records, these records
include, employees files, payroll information, old correspondence etc
(Remenyi,1998). According to Saunders & Lewis (2008) archival research is
usually based on past events, which changes with present time for answer.
3.3.5 Grounded theory: - is methodology used in social sciences focus on
generating theory or hypothesis on the basis of data analysis (Martin
&Berry,1986) this method acts as opposite to ―scientific methodology‖ it begin
with data gathering through multiple methods .so conceptual framework is not
present in it from starting. it is example of inductive research .this strategy is
useful for conducting research for the purpose of forecasting .(Goulding,2002)
3.3.6 Ethnography: - is research strategy used in social science. This strategy is
adapted to research on human social and cultures. Data is gathered through
observations, questionnaire, and interviews etc.(Maynard,1997) This type of
56
research is also used in biological sciences and names as field
study.(Remenyi,1998)
3.3.7 Action Research: - action research is systematic research to find a solution
of particular problem which is led by teams as part of community. This research
may also be supervised by organization, professionals, researchers, with goal to
gain more knowledge for strategies, practices of particular environment in which
they research. (Saunders& Lewis.2009)
Researcher consider survey as relevant to answer objectives (a) , (b) and (c) while
case study is more suitable for remaining objectives .So there are two tools of
research are used in this research for data collection
57
3.4 Research Choice:-
According to Saunders & Lewis (2009) researcher can choose from three research
choices, which ―Mono-methods‖, ―Multiple methods‖, and ―Mixed methods‖.
These research choices are procedures researcher can choose mix and match
quantitative or qualitative research data.
Fig 3.4 Research Choices Sources (Saunders,Lewis,Thornhill,2009)
According to Saunders, et al.(2009) these research methods which researcher can
select from one or more than one or mixed methods as shown in fig above.
According to Badke(2003) the selection of research choice depends on these three
issue(i)Types of research question(ii)Ability of researcher to keep hold on
behavioral influences on research(iii)The type of research problem in focus.
3.4.1Mono method: - Researcher selects one data collection technique and data
analysis techniques accordance to it.
3.4.2Mixed method: - the researcher use both qualitative or quantitative research
methods in his research also known as triangulate
methods.(Saunders,Lewis,Thornhill,2009)
3.4.3Multi methods:-Researcher use more than technique of data collection and
relevant data analysis technique to answer the research problem (Yin, 2003)
Research
Choices
Multiple
Method
Multi MethodMixed Method
Mono method
58
The researcher has selected the mixed method as both qualitative and quantities
research will be conducted. Questionnaire and interview will be able answer the
research question
3.5. Research Methods:-
The methods used by researcher for data collection purpose, conducting
interviews and designing’s the surveys questionnaire are discusses as follows.
3.5.1. Data Collection Methods
Yin (2003) explains that data can be collected with two methods according to
nature and condition of research problem
(i)Secondary Data - Secondary Data is when there is situation that suitable
information is already available and there is only need to drive data from this
information. This is called ―Secondary data‖. This data is collected by some other
sources by survey, interview, or case study. Secondary data is collected before
primary data due to the reason it can provide basis before conducting our own
research as some researchers may have already answered the problems trying to
solve.
59
(ii)Primary Data:-Primary data is when suitable information is not already
available and in order to perform research, the required information is collected
and then data is extracted , this data is never find before and research explore it for
his own research purpose.
There is possibility to divide data collection methodologies in to two types. which
are Qualitative Method, and Quantitative Method,(Yin, 2003) Qualitative
Methods are used to describe the characteristics which are not directly countable
or quantifiable like Behaviour of People, and emotions ,which are not always
tangible, and cannot be directly measured in numbers or amounts. Difference
between them is explained in table 3.1. As due to the nature of research topic both
qualitative and quantitative methods of data collection has been utilized in form of
Survey questionnaire and interview. Interview can be defined as person to person
contact for a specific agenda. (Saunders, at al., 2009) interviewing is different in
sense of interaction which can possibly affect quantity as well quality of response.
While interviewing is time consuming and require lot of resources. It is better to
distribute questionnaire if the sample size is bigger and relevant data can be
collected easily. Interview is good idea only for specific purposes for limited
samples (Adams, Schvaneveldt, 1985). Researcher used both quantitative and
qualitative data collection .Questionnaire was used to quantitative data and
interview were conducted in order to collect qualitative data
60
Figure 3.3 Research design “onion”
Figure 3.3 is showing selection of research methods represented in shape of Onion
adopted from research onion by Saunder et al (2009)
61
Table 1: Qualitative vs Quantitative Data Collection
Qualitative Methods Quantitative Methods
interpretation
of Reality
Various realities,
but reality is not
objective has
influence of people
who interprete it
One objective
indent from any
human interpretation
Research
Philosophy
Interpretivism Positivism
Research
Tools
Case study
Grounded theory
Action research
Questionnaire
,Survey
Experiments
Validity
internally
validity/credibility,
externally
validity/transferability,
reliability/dependability
Sampling:
purposeful
Internally and
externally reliability
Random sampling
Characteristics
Inductive ,
formulation of theory
or hypothesis
Deductuctive by
nature use to test
hypothesis
Text based Numerical based
In-depth information on a few cases
Less in-depth but
more breadth of
information across a
large number of cases
Unstructured or semi structured response options
Response options
are limited
Low Generalizability
More
Generalizability
Table 3.1 Difference Between Quantitative and Qualitative Source:- Liouka (2007)
62
3.6 Survey Questionnaire Design:-
According to Kumar(2005) questionnaire is useful way of recording information
in which respondents answers the questions in writing. The questionnaire is most
popular technique of collecting data in social sciences that experts do not feel
investing any other method to replace it with better method. Questionnaire should
be designed keeping in view respondents, interactive style is better; any question
asking a sensitive issue must be prefaced with statement addressing the
importance of that question. While Saunders, et al.,(2009) explains questionnaire
as most commonly used in survey strategy and is effective way of collecting
required data. Questionnaire should be closed ended. As respondents might not
have enough time to write answers in texts. So selection is closed end
questionnaire is better option.
Questionnaire is designed on the basis of research framework adopted in after
literature review. Question are divided in to 4 parts similar to Kim`s model .Each
part is designed in order collect specific information about CRM effects on
Customer loyalty. According to objectives Islamic Bank of Britain`s CRM
strategy is examined by assessing its effects on customer`s perception as
questionnaire consists of following parts. As CRM strategy results in improving
many organization processes. A success full CRM strategy results in improving
customer satisfaction, better customer interaction channel, improved financial
performance, improved customer`s perception about perceived value
1) Questions about Customer`s perception about Perceived Value by
assessment of questions in terms of Banking Services, usability
,security, accessibility, and attractiveness of customer
2) Second part deals with questions to examine customer perception
about quality of interaction channels of Bank
3) Third part deals with customer`s perception about customer
satisfaction. Questions to asses if they are satisfied with services and
would like to remain with bank in long term basis
63
4) Fourth part deals with financial performance and customer knowledge
as improved customer knowledge management and financial
performance will definitely result in improved performance results
Interviews are also conducted in order collect the data about, which cannot be
asked in quantifiable manner. While questions were asked which further support
the findings from quantitative data collection and provided better idea to conclude
findings as well provide extra information to achieve objective (d)
3.6.1 Questionnaire Types:-
According to Saunders et al (2009) there two most common type of questionnaires
which are given as follows
(i)Interviewer Administrated Questionnaire: - interviewer administrated
questionnaire are questionnaires filled by interviewers while respondents
answering on telephone or filled during face to face interview.
(ii)Self Administrated Questionnaire: these are types of questionnaires which
are filled on internet, by Post or by any other means where there is no direct
contact between respondents and researchers are established.
Researcher selected self administrator questionnaire which was distributed to
customers in the local branch and customers filled and returned it. While
interviews were also conducted to collect some valuable information which was
not possibly recorded by questionnaire. This information will help in
understanding and co relating results with each other.
64
3.6.2 Questions Style:-
According to Piekkari, & Welch, (2004) there are following different type of
closed end questions.
(i) Likert Style: - in linkert type of question respondents answer in ―intensity of
Degree‖ like from strongly satisfied to strongly dissatisfied
(ii)Cafeteria Style: - in cafeteria style respondents are requested t answer as tick
or mark as many items relevant to their opinion
(iii) Order of merit Style: - in this style respondents are asked to answer inters
of their choices as ranked from most preferred to less preferred to show their
opinion
(iv) Demographic information Style: this style is used to ask demographic
characteristics of respondents as, gender, age, race, education, etc theses responses
are usually calculated in percentage.
Researcher has selected Likert style questionnaire for survey as this style is
according to requirements and often used to collect data about customer
behaviour. Demographic information style questions are also included as initial
part of question deals with collecting demographics information of customers.
65
3.9 Sampling:-
According to Saunders et al(2009) collection of data from whole population is
not possible so sampling is usable procedure in order to collect data on small scale
which represents whole community.
.
Fig. 3.5 Population, sample and individual case
Source: Saunders,Lewis, Thornhill (2009)
Saunders et al (2009) further explain two types of sampling as give as follows (i)
Probability sampling (ii) non probability sampling
3.9.1 Probability Sampling: - it is also known as random selection. In order do
this random selection it is necessary that each group of population has same
chances or probability to be selected for respondent.
3.9.2 Non probability Sampling:-it is not based on random selection. It does not
affect its validity; it does not necessarily mean that it doesn’t not represent the
correct ratio of respondents. It is being used where there is no possibility or
requirement of probability sampling according to the situation. for example an
interview of person passing by street shown on TV or interviews by customers.
Researcher has selected non probability sampling as it was not possible for
researcher to arranger probability sampling due to non availability of customer
data to choose or customer on same chance basis.
66
3.10 Credibility and Validity: the credibility and reliability is very
important in research. This is ensured in this dissertation by reviewing literature
review from reliable sources for example most of books referenced are well
known books in this research area, the articles and journals were taken from
credible sources like emerald, indera and Bnet on web. While to ensure validity of
research, the previously quoted scientific methods have been adopted.
3.11 Reliability: Researcher is convinced that if this research is conducted by
someone else on some other occasion with same type of sampling will result in
similar findings unless Islamic Bank of Britain has changed its strategy as whole.
Which ensures the reliability of research?
3.12 Generalizability: This study is generalizable to all banks, financial
institution, especially for banks offering Islamic banking services all over the
world. The same methods of research can be applied to any other banks. However
this is particular study is limited to Islamic Bank of Britain (IBB) branches in UK.
3.13 Ethical Issues: researcher has been every careful has been done in order
to avoid plagiarism. Every idea and option used in this dissertation is properly
referenced in the name that person. All the necessary cautions have been taken in
order to conduct the research. Research is published with approval of Islamic
Bank of Britain
67
3.14 Data Analysis Methodology:-
Data analysis can be done in two ways manual data analysis and computerized
data analysis, Computer based data analysis has its own advantages and
disadvantages over manual data analysis (Hill & Alexander,2006). These
advantages are as follows
1) Computer can analyze data quickly and in almost no time
2) Data can be stored and revisited
3) Graphs and charts to show results can be drown
There is number of good softwares in the market which can analyze survey results
these are easy to use and any one can use it. The data analysis tool Known as
―SPSS‖ is well known in UK, will be used for data analysis.‖SPSS‖is most widely
used in statically Analysis in social Sciences (Thomas 2004) statically analysis
tools included in the Package software are as follows
(i) ―Descriptive Statistics‖ includes ―Cross
tablution‖,‖Frequiencies‖,‖Descriptives ―Descriptive Ratio Stataics‖
(ii) Numerical outcome Prediction knows as ―linear aggression‖
(iii) ―Bivariate Statistics‖. Means‖,‖ T-test‖,‖Anova,‖‖Correlation‖
The Spss Statical Pakages are capable of through ―Cronbach`s Alpha‖ removel of
weak or null item‖(Guide To SPSS)‖ In the formed constructs we will use
Cronbach's Alpha to the least. Microsoft Excel is used to represent data in bar
charts.
68
C H A P T E R N O 4
D A T A A N A L Y S I S & F I N D I N G S
69
DATA ANALYSIS AND FINDINGS
4.0 Introduction:-
This chapter contains two parts the first part of this chapter deals with qualitative
data collected from interviews of customers to gather specific information about
their customer experience while second part deals with primary data gathered
from questionnaire. This is evaluated to conclude their meanings. Questionnaire
was created to gather information in accordance with Kim’s model of CRM
effectiveness measurement. Results were used to create BSC (Balance score Card)
of metrics required.
4.1 Characteristics of Interview Respondents
As part of qualitative research the respondents of questionnaire were asked
questions about their experience and reasons of banking with Islamic Bank of
Britian.The 41 respondents out of total 222 were interviewed as well. These
sample respondents are of following characteristics
(i) 28 out of these 41 respondents completed university .while remaining were
not highly educated
(ii) The respondents interviewed were 24 women and 17 men.
(iii) The respondents has varied age between 24-68
(iv) 39 people are also customer of other banks with more than one bank
accounts. while 2 people are only customer of Islamic Bank of Britain
(v)The duration with bank varies in younger respondent then mature aged
people, the average duration with Islamic bank of the people older than 35 was
with bank 4 years or more,
70
TABLE 4.1 - Demographic Characteristics of Respondents
4.2.1Reasons for Relationship with Islamic Bank
In this part we tried to discover the reasons of choosing Islamic Bank of Britain to
find out why these people choose to have an account with bank. The biggest
reason most of respondents replied due to religious reasons, while few replied
about personalized, unique services as share holder for profits and loss. Some
people may feel it safe to get loan for their business as bank will also be involved
in their share of profit and loss
An example of reason cited was the following:
I have option of unique products, have better contact with people of my
community am banking with Islamic bank mainly due to religious reasons , but i
feel my money is more secure at “TSB Lloyds” in context of investments. Reasons
of banking with Islamic bank such as trust, security, customer services were cited
with 7 respondents only.
The Islamic bank is unique in sense it offers loans without interest that is
interesting for me
As Muslims I feel more convenient banking with them as they understand my
needs and demands better, I feels like having more personalized service at Islamic
Bank of Britain
71
Any how i personally feel my investment are not secure and does not return me
any fixed term amounts’ also feel sense of having lack of protection due to no
availability of insurance services.
Some respondents responded with reasons too many people are have account in
one branch the Islamic bank has no branches in many area, for many customers
these branches are not easily accessible to them. Many people were concerned
that customer service feels like talking to robots. There is no personalized sense of
religious unity in banking customer service they treated less well than traditional
banks
4.2.2 Usability of internet and Phone Banking
Another question was meant to know about the respondents experience about
customer services, including website etc weather they are satisfied with the level
and amount of information about products easily accessible to them. Majority of
customers replied as somewhat satisfied but with lots of concerns with online
banking and phone banking services
The online Banking service offered by bank not of good standard as it lacks many
features with other banks offer in their online banking service; there is no
personalized message or name. Second concern was phone banking people cited
having trouble in contacting phone banking service as they lack the information
they required at that time. As it is not always possible to visit branch as they are in
limited areas.
72
4.2.3Cutsomer`s View about Interaction channel
In order to get information about customer preferred channel of interaction with
Islamic bank the respondents were asked which preferred channel of interaction
In this category we tried to obtain information about the channels utilized and the
level of care preferred by customers to make transactions, and if this preference is
related to the type of product traded. Table 3 shows the level of satisfaction by
percentage of respondents using each channel for the product account.
The favorite interaction channels as responded by customers are branch and
payments by using check book with more than 70% usage. Which people are not
comfortable with using online or phone banking to sort out their matters.
4.2.4 What is not good at Islamic Bank of Britain?
When respondents were asked about what is missing in the channels of interaction
they use, most of them replied that they face some troubles in sorting out their day
to day activities on phone banking and most of them don’t regard online banking
as safe to use, as results of many rumours about hacking and viruses which stole
online customer information. The reason for this insecurity was weak online
banking service from bank still not using pin sentry as used by other traditional
banks to secure online transactions. Due to these reasons people avoid using
online banking while phone banking is also not helpful enough as well. Visiting
the branch is not convenient as well due to fewer branches in limited areas. Few
customers also showed concerns about internet banking that internet banking
service is down on weekends. While the phone banking is not as appropriate to
73
their need or phone banking operator usually don’t have access to their particular
records to solve their issues.
4.3Quantitative Phase:-
The Quantitative research was done by questionnaire survey and remaining. The
total numbers of 250 questionnaires were distributed .From which 196 were filled
by customers in different branches of Islamic Bank of Britain, while 54 were
filled during interviews in different Islamic Bank`s branches in London, and
mosques of London. The questionnaire starts with 5 general questions about
customers’ background.
4.3.1 Part 1:-Demographic Characteristics of Respondent Sample:-
Out of 250 questionnaires 222 were fully answered. While remaining were
discarded and are not included in research.
Bar chart shows the Gender of Respondents
It shows majority of Islamic bank customers were men as results shows 58.55% of
respondent are male while 41.44% were female
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
Male
Female
Male Female
Responce Rate (%) 58.55% 41.44%
Gender of Respondent
74
Bar chart shows the Age of Respondents
Above bar chart shows the age group of respondents as 7.20 % of respondents
belong to age group 0-25 while 60.80% are age of age group 25-50 and 31.98%
belong to age group 50-75.
Bar chart shows the Length of time with Islamic Bank
Above bar chart represents the Length of time respondents are in relationship with
Islamic Bank of Britain, It shows about 40.99% are with this bank from 0-2
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
1-25
25-50
50-75
1-25 25-50 50-75
Response Rate (%) 7.20% 60.80% 31.98%
Age of Respondent
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
0-2
2-4
4-6
0-2 2-4 4-6
Response Rate (%) 40.99% 45.49% 14.41%
Duration with Bank
75
years,45.49 % of respondents are with bank in duration from 2-4 while 14.41% of
the respondents are with bank from duration of 4-6 years.
Bar chart showing the type of account
Above bar chart indicate the type of customer use in Islamic bank. Which indicate
the majority of customers 79.73% customer use it for personal banking while
14.14 % respondents have Business accounts and only 5.89% customer claimed
that they use Islamic Bank for Both purposes.
4.3.2 Part 2:- Customer Value Perspective
In this part respondents were asked about how they think about Value of services
they are getting value as customer of banking services. The questions were asked
about usability, attractiveness, efficiency and security of services. This part is
meant to analysis experience of banking customers about services at bank.
1 2 3 4 5
Strongly
Disagree
Disagree Not sure Agree Strongly
Agree
0.00% 20.00% 40.00% 60.00% 80.00% 100.00%
Personal Account
Business Account
Both
Personal Account Business Account Both
Response rate (%) 79.73% 14.14% 5.89%
Type Of Bank Account(%)
76
Statement 1:- Do you think Services at Islamic Bank of Britain are easy to use?
Bar chart of respondents view about usability of services
15.76% of Islamic Bank of Britain Strongly agrees that services are easy to use
while 25.22% agree while 45.94 % strongly don’t agree that services are usable
Statement 2:- Do you think Islamic Bank Services are Attractive as compare to
other banks?
Bar chart view of customer`s view about services attractiveness
15.76% are strongly agree while 30.18% merely agree with the fact services are
attractive while 39.18% strongly disagree with the services are attractive as
compared to other banks.
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 15.76% 25.22% 0% 45.94% 13%
Usability
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 15.76% 30.18% 5.40% 39.18% 10.81%
Attractiveness
77
Statement 3:- Do you Agree Personal information you share with Islamic Bank is
Secure?
Only 17.11 Customer strongly and 28.37% agree that their customer information
is secure with Islamic bank of Britain while 31.98% disagree, and 7.20% strongly
disagree about this issue.
Statement 4:-Do you think Islamic Bank has easily accessible services?
12.61% strongly agree while 23.87% agree with Islamic bank services being
easily accessible on other hand 49.09% disagree with this opinion
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 17.11% 28.37% 16.21% 31.98% 7.20%
Security of customer information
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Respondent Ratio (%) 12.61% 23.87% 1.80% 49.09% 12.61%
Accessibility
78
4.3.3 Part 3:- Customer Interaction
Statement 5: Do you receive friendly and efficient customer services at Islamic
Bank of Britain?
23.87% respondents strongly agree while 34.23% just agree that Islamic bank
provide efficient and friendly service while 34.48% disagree and 5.40% strongly
disagree that Islamic bank of Britain provides them friendly and efficient service
Statement 6:-Do you think Phone banking service at Islamic Bank of Britain full
fill your needs?
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Respondents Rate (%) 23.87% 34.23% 0.00% 34.48% 5.40%
Efficient and Friednly Customer Service
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Responce Rate (%) 7.20% 18.46% 8.10% 54.50% 11.76%
Phone Banking
79
7.20% of respondents strongly agree while 18.46% just agree phone service, while
54.50% respondents disagree that phone service at Islamic bank is according to
their needs
Statement 7:-Do you think Online Banking Service at Islamic Bank of Britain is
reliable and safe to use?
9.90% strongly agree and 25.22% just agree with reliability and security of online
banking services at Islamic Bank of Britain while 38.28% respondents disagree
with this view
Statement 8:-Do you think information about products at (Islamic Bank of
Britain) is easily available when and where required?
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 9.90% 25.22% 21.62% 38.28% 17.11%
On line Banking( Security & Reliability)
80
22.97% respondents strongly agree and 44.59% strongly agree that product
information is easily available when they required while 21.62% disagree with
this opinion
Part 4 Customer Satisfaction Perspective
Statement 9:-Do you think Islamic Bank of Britain is well known Brand in
society?
12.16% of customer strongly, while 31.08 agrees with brand popularity of Islamic
Bank, while 44.14% disagree with this opinion
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 22.97% 44.59% 2.25% 21.62% 8.55%
Product information availability
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 12.16% 31.08% 6.30% 44.14% 6.30%
Brand Popularity
81
Statement 10:-Do you agree products of the Islamic bank are in line with your
social values?
62.60% respondents strongly agree while 28.82% just agree with product
compliance with their social values. While 5.85 disagree with this opinion
Statement 11:-Do you think you have full confidence in the bank’s services?
16.66% respondents strongly agree while 34.68% agree with that they have full
confidence on their bank while 38.73% disagree with this opinion
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 62.60% 28.82% 2.70% 5.85% 0.00%
Products Complaince with values
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 16.66% 34.68% 1.80% 38.73% 8.10%
Confidence on Bank
82
Statement 12:-Do you agree that the Islamic bank is consistent in providing
quality services?
16.21% respondents are strongly agree ,while 25.67% just agree with service
quality at Islamic bank while 49.54% disagree with quality of service they receive
at Islamic bank of Britain.
Statement 13:- Do you consider the Islamic bank as first choice among other
banks in area?
23.42% respondents strongly agree while 31.08% just agree that their favorite
choice is Islamic bank of Britain while 31.98% disagree with this opinion
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response Rate (%) 16.21% 25.67% 3.15% 49.54% 5.40%
Service Quality
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 23.42% 31.08% 9.45% 31.98% 4.05%
Favorite Choice
83
Statement 14:-Do agree if you had another choice, would you still choose to bank
with the Islamic Bank?
30.18% respondents strongly agree while 26.57% just agree with choosing to
bank again with Islamic bank even of they have another choice, while 22.97%
disagree with this fact
Statement 15:- Do you think you do not like to change to another bank
because you value your relationship with Islamic Bank?
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 30.18% 26.57% 16.21% 22.97% 4.05%
Retention
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 19.43% 31.98% 15.31% 26.12% 7.20%
Relationship value
84
19.43% strongly agree while 31.98% agree that they value their relationship with
Islamic bank while 26.12% disagree with this opinion
Statement 16:-Do you think your relationship with Islamic Bank has encouraged
your loyalty?
22.07% of respondents strongly agree while 36.48% agree with to be loyal with
Islamic bank while 22.97% disagree that Islamic bank experience has not
encouraged their loyalty
Statement 17:-Do you agree it will be good idea to refer Islamic Bank to your
friends?
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate(%) 22.07% 36.48% 11.71% 22.97% 6.75%
Loyality
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 17.56% 34.23% 9.45% 36.36% 2.70%
Recommendation
85
17.56% strongly agree while 34.24% agree that they will refer their friends to
Islamic bank of Britain while 36.36% will not choose to refer this bank to their
friends
Statement 18:-Do you agree Islamic Bank has enough branches to serve its
customers?
13.96% strongly agree while 16.12% agree that Islamic bank of Britain has
enough branches to serve its customers while 59.00% are not satisfied with
number of branches it has in their area
Statement 19:-Do you agree marketing department at Islamic Bank is doing
satisfactory work to advertise and offer products to customers?
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 13.96% 16.21% 4.05% 59.00% 6.75%
No. of Branches
0.00% 10.00% 20.00% 30.00% 40.00% 50.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 18.46% 25.22% 9.00% 41.44% 5.85%
Marketing Performance
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18.46% of respondents strongly agree while 25.22% agree that marketing
department of bank is doing good job in marketing the products to them, while
41.44% disapprove the performance of marketing department
Statement 20:-Do you feel satisfied with overall banking experience with Islamic
Bank of Britain?
26.57% of respondents strongly agree while 28.37% agree that they are satisfied
with overall performance of Islamic bank while 34.68% are not satisfied with
banking experience.
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%
Strongly Agree
Agree
Not sure
Disagree
Strongly Disagree
Strongly Agree
Agree Not sure DisagreeStrongly Disagree
Response rate (%) 26.57% 28.37% 8.10% 34.68% 2.25%
Satisfaction
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4.4 Part 5:- Financial Perspective and Customer Knowledge Perspective
Assessment of financial and customer knowledge perspective is also important
part of overall CRM performance measurement. Due to data privacy policy of
Islamic Bank of Britain it is not possible to measure all the aspects of financial
and customer knowledge perspective. Some important financial matrices are
measured where data was publically available from annual financial reports of
Islamic bank of Britain.
1. No of Customers:-
According to financial year reports Islamic bank customers were increased from
42000 in 2007 to 50000 in 2010.
2. Deposits:-
38000 40000 42000 44000 46000 48000 50000 52000
2007-2008
2008-2009
2009-2010
2007-2008 2008-2009 2009-2010
No of customers 42000 47000 50000
No of Customers
0 50 100 150 200
2007-2008
2008-2009
2009-2010
2007-2008 2008-2009 2009-2010
Deposits (Million)£ 135 158 172
Deposits (Million)£
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Bank deposits were also kept on increasing 135m £ in 2007 to 172 m £ in
2010
3. No of Online Banking Users:-
No of online banking users were on increase 10200 in year 2007 to 14400 in year
2010
4. No of Phone Banking Users
Number of online Phone banking users was increased from 8400 in 2007 to 11300
in year 2010.
0 2000 4000 6000 8000 10000 12000 14000 16000
2007-2008
2008-2009
2009-2010
2007-2008 2008-2009 2009-2010
No of online Banking Users
10200 12300 14400
No of online Banking Users
0 2000 4000 6000 8000 10000 12000
2007-2008
2008-2009
2009-2010
2007-2008 2008-2009 2009-2010
No of Phone Banking Users 8400 9100 11300
No of Phone Banking Users
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4.5 Creating Balance Score Card
Balance score card is very important and last step in order to assessment of results
of all crm customer perspective analysis. This balance score card represents the
score of each category where crm is implemented and can provide quick idea
about how much it affecting the customer loyalty. According to Kim (2003) a
balance score is created according to needs and requirements of organization and
every particular metrics is measure and compared with the results of past
assessment. The variation between results is noted which represents the overall
performance of CRM strategies and its effects on customer loyalty. We
particularly in case of Islamic Bank of Britain have created the balance score card
which score is derived from data gathered from questionnaires and annual report
of bank. The score is measured in mean value and in percentage of increase which
is shown in variance row. The Balance score card is usually compared with the
results of previous rating. Researcher is comparing his own results to similar
balance score (Sadek, et al, 2009) conducting in Islamic Bank of Britain Leicester
branch. The results of this research are compared with Service quality survey
results in order asses the improvements due to CRM strategy and its effects on
customer loyalty
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Balance Score Card of Islamic Bank of Britain (Kim’s Model of CRM Assessment)
Metric P1 2009 P11 2010 Var
a. Customer knowledge
Customer acquisitions NA NA NA
Total no Number of customers 47000 50000 7%
Average page views per day NA NA
Total deposits (m) £ 158m 172m 8.80%
Net sales per employee £
Technological capacity (million hit) NA NA NA
Frequency of hardware upgrade (no./year) 2 4 100%
R&D investment (£) NA NA
No of online banking users 12300 14400
17.73% 17
No of Phone Banking Users 9100 11300 24.10%
b. Customer value
Net sales (£) NA NA NA
Ordinary sales (£) NA NA
Channel Interface
Usability 3.75 4.13 0.38
Attractiveness 3.72 3.55 -0.17
Accessibility 3.75 2.80 -1.50
Security and Reliability 3.06 3.19 0.13
Consistency of site structure 3.64 4.20 0.56
c. Customer interaction
Friendly Service 4.05 4.40 0.35
Phone Banking 3.10 3.20 0.10
Online Banking 3.45 3.50 0.05
Number of payment methods 4 5 1
Number of response channels to customer
Inquiry 3 5 2
Cost for managing channel NA NA NA
Response time NA NA NA
Product diversity 4.75 4.75 0
Detailed product information 4.95 4.65 -0.35
d. Customer satisfaction
Brand image 3.17 3.20 0.03
Quality of Service 3.91 4.0 0.09
Confidence 3.18 3.25 0.07
Compliance to social values 6.00 5.80 0.20
Retention(prospects) 3.79 3.7 0.09
Favorite choice Bank 3.33 3.4 0.07
Reliability 4.25 4.5 0.25
Loyalty 4.15 4.78 0.62
No of Branches 3.18 2.8 -1.10
Overall banking experience(satisfaction) 4.89 4.70 -0.19
Table 4.2 Comparison of CRM Performance and customer Loyalty Kim .et al (2003)
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C H A P T E R N O 5
FINDINGS ANALYSI S AND DISCUSSION
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5.0 Introduction:-
This chapter has two parts first part is based abstraction of findings from
qualitative and quantitative data. While second part deals with detailed discussion
on the basis of these results leading into objectives achievement and answering
the research question.
Questionnaire and interviews results are evidence of following findings
(i)Financial results for past years show healthy growth rate in terms of customer
acquisition and deposits
(ii)Majority of customers chosen to bank with Islamic bank of Britain due to
religious obligation and banks capability to address customer’s religious needs.
(ii)Majority of customers not satisfied about security of their personal information
(iii)Customers are not satisfied with online and phone banking services
(iv)Half of the customers are not satisfied with overall quality of banking service
(v) Half of customers are not satisfied with accessibility of banking services
(vi)Majority of customers believe bank severely needs to open new branches
(vii) Majority of customer’s don’t trust online banking service due to security
concerns
(viii) Bank is not fully successful in providing personalized customer services
(ix)Half of the customers are loyal with bank and will not change to alternative
(x) 40% of customers are not having full confidence and trust on bank
(xi)Qualitative research findings indicate most popular channel for customer is
local branch service
(xii) Most of the respondents use checks for their payments
(xiii)Most of the customers are unhappy from phone banking and online banking
service
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These findings helped researcher in analyzing CRM strategy of Islamic Bank of
Britain by measuring its effects on customer loyalty by four most important
customer perspectives. According to objective of examining CRM strategy is
achieved through this examination. As CRM is strategy and has intangible effects
.it can only be examined by measuring its effects on customer in terms of
increased customer loyalty, satisfaction, improved performance of customer
interaction channels, customer retention, acquisition and ultimately achieving high
profits through customer satisfaction. The examination of crm and its effects
achieved research objective as well as qualitative research helps in identifying
Islamic Bank strategy to market its products related to religious significance as
advantage from other institution is also discussed here. This was also identified as
objective at start of research
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5.1Analysis of Islamic Bank `s CRM strategy and its effects on
customer Loyalty
Although bank`s financial results show positive outlook in terms of satisfactory
increase in customer acquisition and customer deposited. Bank seems to be failing
to address customer’s expectations and demands. As according to (Payne, 2006)
customer retention is not symbol of customer loyalty and customer satisfaction.
These two are totally different things. Despite the fact that bank is failing to
respond to customers’ needs the high growth rate is due to other factors which are
influencing more and more customers to bank with Islamic bank of Britain.
Keeping in view the bank was establishes only six years back and this is only
stand alone Islamic financial bank in UK which is providing such products.
Muslims in UK were desperate to bank with such bank which provides them such
facility, Islamic bank Britain established to address this popular demand of
muslims in UK. This from start attracted muslims of Britain, so this played a key
role in success of bank. So the banks high growth rate is due to its advantage of
being new and a unique bank in market. According to (Kumar, 2008) customer
retention rate will not be same as the time passes due potential of new competent
in the market or most of the people already banking with Islamic bank. Here it
becomes necessary to develop customer loyalty in order to gain long term
profitability by developing long term relationship. Customer relationship
management is answer to banks this needs. But findings shows that customers are
not very satisfied with banking experience at Islamic bank of Britain which
indicate that high retention rate has badly affected the banking services ability to
serve its customers. Current findings indicates problems in CRM strategy of
Islamic Bank of Britain, most of the problems directs towards mismanagement of
―customer knowledge‖ in CRM strategy. All findings are discussed in details in
order to understand it in context of crm strategy.
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5.2Customer Interaction Perspective:-
Based on findings from qualitative research, respondents of interview the most
popular interaction and service channel was local bank branch with more than 65
% respondents feel it convenient to visit the local branch for their banking
services. While about 60% of respondents were satisfied terms of services
provided at local branch of Islamic bank.
Respondents quoted different reasons of using local branch instead of using any
online banking or mobile banking services. Most of them replied they feel it more
convinets to visits branch and discuss their issues face to face with employees as
they live near to local branch. While qualitative and quantitative survey suggests
that banking customers don’t feel confident in using online banking service and
60% are concerned with security of online banking service. This lack of
confidence in online banking service is due to many factors like the increase of
customers knowledge about security have created concerns about security of
online banking. As majority of respondents in interviews revealed that they also
have bank accounts with other high street banks like Barclays and Lloyds Tsb and
these banks provide special devices called ―pin centry‖ for online baking security
and phone confirmation of every transaction has increased their perception about
security of transaction. These kinds of security measures for online banking are
still not available in Islamic Bank of Britain.
As according to Alexendra (2003)
―Customer Loyalty is most precious asset for any bank, in terms of both sides
customers and employees at bank. The Customer loyalty even pays in hard times
when bank forced to impalement customer negative priorities but better for bank.
It is essential for bank to create possibility of use of multiple interaction channels
for customers. Which fulfill his needs and customer satisfaction same time”
This customer trend of using local branch is opposite to normal trend as in other
high street banks the most favorite channel of customer interaction is ATM or
online banking. Because it is according to human natural instinct is to attract
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towards ease of use and availability of channels any time day. This may also save
them to be in long lines inside the branch.
This is the fact that most popular channel of interaction is customer services
inside local branch this fact is also varied by quantitative data which revealed that
only 28% of Islamic Bank customers are registered with online banking. This is
quite low in context of 75% national average of online banking user. Other
reasons may be businessmen and people residing near local branch feel it convent
to come directly in branch to use banking services. Whatever the reason Islamic
bank should concentrate on agreeing people to use alternative method of customer
interaction. This will be beneficial for Islamic bank as well by reducing costs of
operations. it is not practical to deal most of customers in local branch for day to
day transaction. As Less branches, high customer acquisition rate, with less online
banking users can create lot of burden on customers services which may not treat
customers according to expectations of customers .which may reversely affect
customer loyalty.
As Roscoi (2001) stated about CRM
―CRM is helpful in addressing strategies more efficiently with increasing chance
of success by double; also improve the sales together with customer satisfaction
by suitable products to customers”
A point of concern for Islamic bank of Britain is low satisfaction rate of customers
from online banking service and phone banking service. Only 40% of customers
are satisfied with online banking service while 35% is satisfaction rate from phone
banking service which is quite low as a result customers find it easy to visit the
local branch. Few of the respondents replied the reasons like internet service is not
secure and usually down. While phone banking service is not according to their
needs as call centre don’t have access to data or authority to proceed with
problems usually. Customer centre representatives have limited access which
usually doesn’t solve their problem. There is huge need to employee and integrate
business process by effectively implementing suitable CRM strategies to fulfill
needs of customers.
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as many of interview respondents preferred local branch of bank as prefer channel
instead of traditional popular interaction channels it is due some other factors like
online banking security concerns, online banking service problems and usability
of call centre representative to help customers. While other reason for this trend
was also stated that was type of account they hold in the branch as call centre
representative usually unable to help mortgagee account customers, and there is
no fixed amount of profits due to banks operations are based on interest less
products. So customers need to visit local bank branch to seek advice and further
information. Anyhow today`s latest technology has made it possible to provide
customer with any kind of customized services online which seems to be missing
in Islamic bank of Britain. Today’s IT market offers personalized and artificially
intelligent softwares. These softwares can provide customer interactive interface
and as well as personalized experience. Many respondents were also not satisfied
with internet banking interface and quoted as lacking personalized experience.
Islamic Bank of Britain can upgrade their system to provide their customers better
and personalized experience which can help in visual cases of mortgage customers
and solve their matters with leaving comforts of their homes. Respondents agree
the fact that using other interaction channel is more comfortable to use but their
concerns and problems force them use local branch channel.
On the other hand according to most of respondents preferred form of payment is
check instead of debit card, online banking, and phone banking. When asked for
reasons most of respondents replied for ease and security reasons were top reasons
for using this form of method. It is obvious when there are less online banking and
phone banking customer their preferred mode of payments will be off course
check. It seems like customers’ lacks confidence and security on form of
payments as well.
As according to Alexandra (2003)
“Trust is key success factor and relationship and is representative of capability to
fulfill promises with reliability”
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According to few respondents if they had option of using internet banking and
ATM what will be their preferred choice then and why the response was it will be
based on ease and availability of service without leaving home. Few respondents
replied that they only try to visit local branch when online banking cannot help to
resolve their problems as it has limited services online and call centre unable to
offer help as well,
when asked if he had any problem with some service channel gave the following
response some customers agree that it is not easy to going to local branch for
every day banking, it not easy and it happens only when there is no other resort.
The customer interaction is very important part of CRM strategy as it is directly
linked with providing service quality to customers. For most of customer the
interaction channels is first contact for tangible experience as banking customer.
In case of Islamic bank of Britain evidence shows gap in between customer’s
requirements and customer interaction strategy of bank. There is gap in between
strategy and customers needs is vital in success of CRM stratagy.customers needs
and requirements are dynamic in nature(Kumar,2008) there is need of continuous
monitoring of customer requirements and needs for CRM success and in
achieving customer loyalty.
5.3Customer Satisfaction Perspective
According to findings from quantitative research and qualitative research most of
were using local bank branch as interaction channel and most of them more than
65% were satisfied with the customer service inside the local branch. While
overall satisfaction rate of customers is 53%. While 62% of customer which are
not satisfied with no of branches .this demand of more branches is due to their
favorite channel of interaction is being local branch. This can only be handles by
opening more branches to offer more convenient to serve customers. But it might
not be good idea for a bank which has most of its customer base is muslims and
has target market of specific community. Opening of new branches in more area
might not be feasible unless Islamic bank increase its customer base in non
muslims communities. This can be done by designing more products to attract non
muslims customer as well being in accordance with law of interest less products,
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there might be other customers who join the bank which may create economically
feasible for Islamic bank to open branches in other geographical areas as well.
Other option to answer this problem is shift customers visiting the local branch to
alternative channel of interaction which is will reduce costs and customer
satisfaction as well.
Currently CRM strategies of Islamic bank seems to fully concentrating on its
products as 90% customers believe that designed and offered products are in
complaisance of their social values while other figures from financial reports
show 20% increase in number of bank accounts every year. This is despite the fact
that most of customers are not satisfied with overall service quality at Islamic
bank of Britain. Satisfaction rate of service quality is 41%. This means that
Islamic bank of Britain is successfully attracting the muslim customers towards its
products and they are ready and to remain with bank even if they are not very
satisfied with service quality. This fact can also be proved by customer loyalty
figures in where 58.55% customers found to be loyal with bank in their own
words. It means that customers are quite satisfied with bank due mainly due to
reason of attractive products. These attractive products which are according to
needs and requirements is good strategy for customer acquisition. This proves
Islamic bank of Britain’s CRM strategy is fully based on its products which is
only strength of its strategy.
As customer satisfaction rate from its products is 41% which is not very high as
compared to customer satisfaction with products line. this can be due to the reason
that most of customers are also banking with other high street banks .these high
street banks seems to be having better quality of its banking services. This has
created quality perception in customers because they always try to compare the
services of Islamic bank or Britain to other high street interest based bank. This
quality perception increase expectations of customers which expect better and
more personalized service from Islamic bank Britain and if they don’t found it
equal or better as compared to other banks they feel unsatisfied about service
quality. Today’s competitive market has created lot customer orientation in
organization and there is race of attracting customers by better quality from other
organizations .Islamic bank should develop CRM strategies in accordance with
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customers expectations and demand. Islamic Bank has an advantage of being
unique in the market in term s of products offering so instead of focusing the
strength of its products the focus should be building better relationship with
customer and to deliver quality which is necessary for customer satisfaction.
It is also a point to be noted that customer’s confidence on Islamic bank is merely
51% which seems to be due to many factors like most of respondents that they
feel their deposits and investments are more secure on other banks like Barclays
and Lloyd’s tsb. This is due to the fact that bank don’t offer any interest or profit
on current accounts while investments account have no guarantee on returns it is
based on banks capability of making profits. So that amount of profits is not sure
until the end of year and may be different from customer expectation. As Islamic
Bank of Britain has relationship of partnership rather than relationship of lender-
borrower as in other high street banks. It always difficult to establish confidence
in such kind of relationship of partnership when profits and earnings depends
upon business partner`s capability of making profits.
Findings also indicate that 50% customers value their relationship with Islamic
Bank of Britain while 51% respondents think positive in referring Islamic Bank of
Britain to their friends and relatives. In case of Islamic bank this referral and value
of relationship can be quite high because this bank is offering the products which
rely on religion and customers always have emotions linked with their religion. So
people feels take it religious obligation to refer such products to their friends and
relatives. So this value can easily be increased by better CRM strategies and
marketing products in such a way that people feel it necessary to refer Islamic
banking products to other people of community. But this relationship value is also
directly linked with customer perceived value. If customers feels that they getting
value of money from Banking products and services together with quality of
service will increase the perception of customer about perceived value as
compared to value of money invested in bank. This can be only be done by proper
―value creation Process‖ (Kims2003) by developing and implementing such CRM
strategies which increase quality and value perception of customers so this feel
and sense of receiving better quality as compared to other bank will increase
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relationship value in thoughts of customers. Such CRM strategies will definitely
help Islamic bank to achieve customer satisfaction and customer loyalty.
As according to Fullerton (2004)
“A customer oriented organization with intention of working for better confidence
building and establishing long term relationship always take huge steps in
creating high value perception for their products”
5.4Customer Value Perspective:-
In order measure customer value perspective in is essential to measure perceived
value customer is getting, customers usually measure it in terms of type of
services they get together with products. As Islamic bank of Britain is financial
institute. Customer value was measured in terms of usability, accessibility,
attractiveness, and security of private information. Because customers usually
demand for these characteristics in services. Customer value can always be
measured by two perspectives (Kims, 2003). From customer perspective and from
organization perspective. These both are different things. As it was only possible
to measure in customer perspective the results show that customer’s perception
about usability of services they are getting is quite low at 41%while 45%thinkis
that bank has attractiveness of services. we can understand that low satisfaction
rate can be related to some other results as people are gettinging difficulty in using
internet and phone banking services while local bank branches are less in
numbers. So that can be big reason behind it that people feels to have struggle to
get there work done whenever they want. While customer services plays big role
and creating customer perception of perceived value. Other reasons behind this
seems to be non existence of personalized services sue to lack of proper customer
knowledge management as discussed earlier. Customer knowledge management
create bog role in profiling and prioritizing the customers according to their value.
This can help employees at bank to provide better and personalized services to the
customers with high value .it are the fact that customer perception about perceived
value depends upon many factors. For example a customer with long term
relationship with bank and regular buyer of products expect more personalized
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and better services for the bank. So there is direct link between customer value,
requirements and expectation. This whole process can be explained as ―Value
creation process‖. In order to retain and win loyalty of customers it is necessary
for bank to adopt such CRM strategies which create perception of perception o f
being special and create sense that the value for money they are getting is better
than their competitors
Customer perception about perceived value low in Islamic bank of Britain in
terms of usability, attractiveness, accessibility and security. These are basic
requirements for any customers to be satisfied and loyal with any organization.
Islamic bank of Britain needs to adopt proper and well managed ―value creation
process‖ in their CRM strategy. This will help Islamic bank in achieving customer
loyalty creating long term profitability.
5.5Customer knowledge Management Perspective
―Knowledge management‖ plays key role in success of CRM strategy .in other
words knowledge management acts as engine of whole CRM strategy. Knowledge
management is combination of three kinds of knowledge which flows through the
process and integrate with whole CRM strategy to achieve customer loyalty.
Which comprise of knowledge about customer, knowledge from customers, and
knowledge for customers. So knowledge management is critical for success of any
crm strategy it is the most important factor in order to increase level of customer
satisfaction by improving customer services. Knowledge management is essential
in order to create understanding of customer related issues and creating strategy to
deliver better services to them. . In context of Islamic Bank CRM strategy’s
failure to deliver is due to ineffective use of knowledge management. Research
findings indicate that Islamic bank of Britain is not utilizing it customer
knowledge management capabilities. And it is being handled as less important
business process. Most of organizations handle customer knowledge management
as just technological issue (Payne & Fow, 2005).while it not the fact, it’s true that
knowledge management has huge influence of IT on it. But it is not merely a
technological issue. It works as process enabler. Knowledge management
provides a platform to integrate all other processes concerning customer services
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(Kims, 2003).Findings also indicate that Islamic bank of Britain is dealing
knowledge with ―segmented approach‖ while this whole process require holistic
approach to apply knowledge management.
Qualitative research reveals their concerns about customer data sharing and
information system down problems in between branch network is too slow and
usually does not occur quickly which means that information management system
needs to redevelop according to requirements. It seems like due very high
retention rate, and rapid increase in customer accounts Islamic bank of Britain is
not expanding its knowledge management and it infrastructure. When too much
customer information is manipulated and updated at same time, and IT
infrastructure is not meant to deal with such amount of data resulting in data not
being updating simultaneously or down in sever case.
On the other hand if look on bigger picture Knowledge management is not just
name of data updating, and data deletion. It also improves the effectiveness of
customer services by managing and recording data in such a way that profiles of
each customer is managed individually, together with all customer details, which
allow employees to deal with customer according to their value and staff at bank
is easily able to offer them appropriate products and services. Research also
shows lack such kind of knowledge management system which can provide
efficiency in dealing with customers inside the bank or online.
According to annual financial report of Islamic bank of Britain its knowledge
management capabilities are meant to support its crm strategy and to provide its
employees to deal its customers more effectively .Islamic bank intends to enhance
its knowledge management capability for relationship management but Islamic
bank is still seems to be in process of maximizing it capacity utilize knowledge
management in effective way. So this failure of bank to utilize the potential of
knowledge management is affecting whole process of CRM strategy. This is
failing to provide better and managed relationship to both parties. There is huge
possibility and opportunity for Islamic bank to increase performance capability of
its employees by utilizing latest automated knowledge management system with
better practices. This will enable Islamic bank of Britain customer satisfaction
which is essential to create permanent customer loyalty.
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According to four modes of knowledge conversion (Payne & Fow 2005), the
knowledge conversion at Islamic bank of Britain seems to be at branch level only,
customers and respondents are able to provide their feedback and suggestions to
branch level while there is no mechanism of providing suggestions and feedback
at organizational level so that appropriate action could be suggested at strategic
level. research suggest that customers are not encouraged to provide feedback and
share their views and ideas with any one in branch or through any other mean
even whenever they encounter any problem related to banking services
As knowledge management model is based on three key elements, technology,
process and people, these three are the enabler of whole knowledge management
system, it can be concluded that Islamic bank of Britain is not concentrating on all
the aspects of knowledge management process. It is very important for any
organization to concentrate on integration of all elements to utilize
In effective use of knowledge management system also effects operational
capability of an organization. In case of Islamic bank of Britain bank still has to
take benefits of knowledge management system which allows multiple functions
by optimization of operation according to requirements of organization. These
functions also include, invent, source, evaluate. Measure all the elements of
operation management as well.
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C H A P T E R NO 6
C O N C L U S I O N
106
6.0 Conclusion
On the basis of findings and discussion we can conclude our research question
Q: - How the effectiveness of CRM can be achieved by the UK Islamic Bank?
Findings conclude that there is gap between CRM strategies adopted by Islamic
Banks and customer`s needs and requirements. This gap can be filled by
assessment of customer’s needs and requirement and adopting the CRM strategies
according to them. Customer needs, requirements and expectation are ever
changing and evolving in nature. So it is very important to continuously monitor
effectiveness of strategies which are directly concerned with customers. This gap
between customer`s requirements and crm strategies indicate the mismanagement
or negligence of customer knowledge system. Issues related to customers services
can be identified and solved easily by proper knowledge management system.
This can help employees to manage and understand customers better. Proper use
of customer knowledge management can help optimization of customer services
as well. Which can help in solving the customer`s concerns easily and effectively.
Optimization of different business process in accordance with customer’s
requirements can be achieved by integration of knowledge management system
with customer services.
As CRM strategies optimize internal and external processes of organization to
deliver quality to its customer and this optimization requires reasonable use of
technology. The research concludes that Islamic Bank of Britain is not fully
optimized according to customer needs. Research provides evidence that quality
of banking services is not competitive to other high street banks. It may also be
concluded that Islamic Bank of Britain is not fully concentrating on technological
infrastructure optimization and automation to maintain its relationship with
customers. Islamic Bank of Britain’s online banking and phone banking needs
serious optimization because these services are failing to deliver according to
needs of customers.
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Evidence show that CRM strategies used by Islamic Bank of Britain are able to
maintain its customer base due to its unique ability to respond to needs of religion
sensitive muslims.
So Islamic Bank of Britain is offering unique products which are main attraction
to spiritual, economical and social needs of its customers. This ability of Islamic
Bank of Britain is unique advantage which differ it from conventional interest
based banks.
Current CRM strategies are reasonable for customer acquisition not for retaining
its customer. High growth rate as shown in previous financial years can only be
sustained if Islamic bank of Britain design its CRM strategies to address customer
requirements and needs. This will result in customer satisfaction and customer
loyalty. Infect Islamic bank needs to shift its crm strategies towards understanding
customer needs and requirements to fill the gaps in its customer services. Islamic
Bank seems to missing proper knowledge management strategy. Knowledge
management can help in individualizing customer, improving customer services
and reducing costs.
Evidence concludes Islamic bank of Britain’s current high customer retention and
acquisition rate is not possibly due to its crm strategies. There might be other
factors behind this success like monopoly of Islamic Bank, as this is only stand
alone Islamic bank in Britain, so the customer loyalty is conditioned to this
monopoly factor. Loyalty of most of customers can be concluded as ―monopoly
loyalty‖. Islamic Bank needs to concentrate in turning this ―monopoly loyalty‖
into ―committed loyalty‖. Otherwise there is always risk for Islam bank to lose its
customer to new competitor in market.
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6.1 Recommendations
a) Islamic Bank of Britain needs to concentrate on customer service strategy
by identifying needs and requirements of customers and address those
needs by implementing suitable CRM practices.
b) The Islamic Bank of Britain’s needs to optimize its online and phone
banking services according to needs of customers
c) The Islamic Banks of Britain’s needs to employee customer knowledge
technologies and practices in order provide individualized customer and
improve customer services. It will also reduce it costs of retaining
customer and increasing customer value.
d) The Islamic Bank of Britain needs to increase its customer base to other
segments of society as well by developing attractive and suitable products.
e) Islamic bank needs to continuously evaluate and monitor the success of its
CRM strategies so that any gaps in strategies and current condition can be
filled.
f) Islamic bank of Britain needs to shift its focus of crm strategy from
customer acquisition to customer retention so that customer loyalty can be
achieved. Because customer retention is less expensive then customer
retention.
g) Furthermore Islamic bank needs to continuously monitor for its competitor
so suitable products can be launched in order to remain in competition. As
better and good choice can always attract them and bank customer can
switch without hesitation if they are un happy with service.
109
6.2 Limitations of Research:-
Although this research is subjected to some limitations but researcher is
convinced that under similar conditions the results will be same if it is conducted
by someone else. Those restrictions are discussed as follow.
(i) Researcher selected ―Kim, Suh & Hwang Model for assessment of crm
effectiveness in Islamic bank of Britain and quantitative and qualitative data was
collected accordingly. While some of the financial and statically data was not
available from any source. And bank was unable to provide that data due to its
privacy policy. So few metrics were left unmeasured. While concentration was
given to customer satisfaction perspective of this model as this perspective is
more important in order to deal with customer loyalty. Because a satisfied
customer can be loyal customer as well.
(ii)This research conducted is based on non probability sampling. As non
probability sampling based on discretion of researcher. Whole population has not
same chance of being selected as sample. Hence it can still provide accurate
measure of whole population but objective assessment of sample is not missing.
(iii) These research results have possibility of influenced by geographical location
as research was conducted in London branches only. There might be chance of
different results on other location as customers may be influenced by habits and
different experience from same bank
(iv) Although this research represents the current status of CRM strategies effects
on Islamic Bank of Britain it is necessary to conduct more detailed review as
CRM strategy covers all aspects of an organization but it is not possible to discuss
every area in this research
110
6.3 Suggestion for Future work:-
Keeping in view of limitations of this research it is advisable further assessment
of metrics as an extension of research to particularly target the problem area and
services. In order improve them. This research can lead to further in depth
analysis of whole CRM strategy of Islamic Bank of Britain if more relevant and
financial and customer knowledge is available. Future research can also be
conducted in more geographical location and CRM Performance can be measured
for every branch separately and can be combined in order to assess the benefits
derived from CRM strategy. It would be interesting to see results of such
research. While it is also possible to conduct research by using some other model
and including organizational perspective as well by observing and recording
organization CRM practices.
111
CHAPTER NO 7
SELF REFLECTION
112
7.0 Introduction
World around us today is challenging, and demanding. The only way to success is
determination, hard work and ruthless ambitiousness. The success only comes to
the person who strongly believes on himself. This self reflection represents an
insight of personal capabilities, experiences and learning’s. It shows the whole
process of learning and its application in personal life. As according to renowned
scientists ―Albert Einstein‖
―Learning is not a product of schooling but the lifelong attempt to acquire it.‖
Albert Einstein”
Today’s graduate job market is highly competitive. This market respects only
those who stand out to be different from crowd. It is very important to aware our
own strengths and weakness in order to succeed self reflection is name of leaning
about own self by looking inner self, assessing our own capabilities to utilize them
properly
This research report helped in leaning lifelong experiences by making researcher
learn some very important and useful skills like. Self confidence, time
management. Communication skills, research skills etc. This research also
provided opportunity to look any issue in multiple perspectives. Dissertation helps
in learning research methodology, data collection, data analysis, and report
writing. These skills are essential for organizational management role (Dr
Hofstee, 2006)
This report has helped the researcher in revealing his hidden skills which includes
confidence while communicating, brain storming, reading and writing style, and
time management. The self reflection is discussed in accordance with David
113
Kolb (1984) theory of learning by diving learning experiences in phases similar to
dissertation.
Figure 7.1 Kolb`s model of learning
114
7.1Concrete Experience (Selection of Research Topic)
Selection of research topic from business management area was not easy because
there were lots of good topics in mind. But researcher wanted to choose
challenging but important in terms of learning and market demand. So the topic
on CRM (customer relationship Management) was selected. Researcher has prior
introduction to the topic which also helped in visualizing the research plan and
research topic. CRM was relatively new and hot concepts involving business
processes and customer service related issue(Payn,2006).So this topic has great
learning potential due to coverage of CRM on almost every aspects of an
organization. Measurement its effects on customer loyalty was another
challenging issue. So selection of this topic provides much more learning
opportunity than any other topic. This topic provide researcher reading and
learning material about multiple fields from customer relation to business
processes, its optimization and customer behaviors. As according to Kolb`s model
―thinking, and acting. Immediate or concrete experiences lead to observations and
reflections.‖(Kolb,1984)
7.2 Reflective Observation (Reviewing Literature)
Articles, books and journals are great source of knowledge and help in developing
understanding about certain issue. It also helps in developing skills of reading and
interconnecting facts and figures to develop broader perspective. Researcher
searched and read many books, journals and articles about CRM, and its
effectiveness measurement issue.
Researcher believes that conceptualization and ideas are very useful for learning
anything and there for consider himself more as ―assimilating learner‖. The
literature review phase of dissertation help researcher in developing in depth
understanding of research area.CRM effectiveness models and its implementation
helped researcher in conceptualization whole research phase. This literature
review was also helpful in creating understanding of different aspects of any
organization.
115
7.3. (Abstract Conceptualization) Designing Research
Methodology:-
The literature review helped researcher in developing understanding of research
area which forms the basis of research and conceptualization of methodology and
procedures. Researcher explored and compared different research methods and
techniques and chosen relative research methods which were more appropriate for
this kind of research. Deductive research approach was selected after careful
consideration and comparative study of different methodologies. While this
research reports provide in depth understanding of step by step research process
and methodologies which will help in life long and conducting future research.
The literature review help in creating conceptual framework based on Kim`s
model of CRM effectiveness. Based on this model a questionnaire was designed
which was used for quantitative data. Few respondents were interviewed as well
and together with quantities data help to extract results .design proper
questionnaire and distributing it for data collection was challenging and
interesting.
. 7.4 Active Experimentation (Data analysis)
After collection of data the next step was to analyze data to drive the results, it
was very interesting task as researcher learned different statically data analysis
concepts learned SPSS tool for data analysis. While it also lead researcher to learn
application of different formulas in Microsoft excel. Collected data through
questionnaires was analyzed and results were derived in accordance with Kim`s
model Balance Score Card. These results were placed in Kim`s balance score card
table to compare the results. This phase helped researcher in developing capability
of analyzing data and interconnecting it with literature review and driving data in
accordance with research framework .which help to understand and visualize
116
research results. Researcher is convinced that this learning is very help full in
work places the new data recording and analysis skills are very useful in
performing accounting and managerial task in any organization.
7.5 Report Writing:-
Report writing helps to communicate any matter in official way to others in an
organization about any issue .Reports are source of information which represents
insight out about any issue in one place (Gilbaldi,2003).effective report
communication is useful skill for perspective MBA graduate. These skills are very
valuable in developing the career. Compilation of this particular research report
helped researcher in developing effective report writing skills and forming
arguments to deliver the message to readers.
7.6 Conclusion
This research helped the researcher in gaining new skills and discovering our own
strengths and weaknesses. Researcher believes that he has now right skills and
training to handle any projects. This research has added lot of new skills in terms
of personal experience and knowledge Researcher feels himself fully confident to
face competition in this world. And feel satisfied on learning such lifelong help
full skills. This will keep on adding value in life long term basis.
117
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APPENDIX
QUESTIONAIRE
Part 1: Demographics Information
Statement 1:- What is you Gender?
Male
Female
Statement 2:- What is your Age?
1-25
25-50
50-75
Statement 3:- What Type of Bank Account you have with Islamic Bank of
Britain?
Personal Account
Business Account
Both
Statement 4:- How long you have been with Islamic Bank?
0-2
2-4
4-6
124
Part 2 1 2 3 4 5
Strongly
Disagree
Disagree Not sure Agree Strongly
Agree
Statement 1:- Do you think Services at Islamic Bank of Britain are easy to use?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 2:- Do you think Islamic Bank Services are Attractive as compare to
other banks?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 3:- Do you Agree Personal information you share with Islamic Bank is
Secure?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 4:-Do you think Islamic Bank has easily accessible services?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
125
Statement 5: Do you receive friendly and efficient customer services at Islamic
Bank of Britain?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 6:-Do you think Phone banking service at Islamic Bank of Britain full
fill your needs?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 7:-Do you think Online Banking Service at Islamic Bank of Britain is
reliable and safe to use?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 8:-Do you think information about products at (Islamic Bank of
Britain) is easily available when and where required?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
126
Statement 9:-Do you think Islamic Bank of Britain is well known Brand in
society?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 10:-Do you agree products of the Islamic bank are in line with your
social values?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 11:-Do you think you have full confidence in the bank’s services?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 12:-Do you agree that the Islamic bank is consistent in providing
quality services?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 13:- Do you consider the Islamic bank as first choice among other
banks in area?
127
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 14:-Do agree if you had another choice, would you still choose to bank
with the Islamic Bank?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 15:- Do you think you do not like to change to another bank because
you value your relationship with Islamic Bank?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 16:-Do you think your relationship with Islamic Bank has encouraged
your loyalty?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
128
Statement 17:-Do you agree it will be good idea to refer Islamic Bank to your
friends?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 18:-Do you agree Islamic Bank has enough branches to serve its
customers?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 19:-Do you agree marketing department at Islamic Bank is doing
satisfactory work to advertise and offer products to customers.
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
Statement 20:-Do you feel satisfied with overall banking experience with Islamic
Bank of Britain?
Strongly Disagree
Disagree
Not sure
Agree
Strongly Agree
129
Statement 21-24 Qualitative questions
Q1: Reasons for Relationship with Islamic Bank?
Q2: Usability of internet and Phone Banking?
Q3: Customer’s View about Interaction channel?
Q4: What is not good at Islamic Bank of Britain?
130
T
The BSC Table of K Company
Metric PI PII V
a. Customer knowledge
Customer acquisitions 2.3K 75K 226%
Number of customers 42K 132K 214%
Average page views per day 25K 50K 100%
Average visits per day 5K 11K 120%
Net sales per employee ($) 290K 350K 21%
Technological capacity (million hit) 1 1.5 0.5
Frequency of hardware upgrade (no./year) 1 2 100%
R&D investment ($) 21K 42K 100%
Customer profile research ($) 4K 2K —50%
Security level (firewall and SSL encryption) high high —
b. Customer value
Net sales ($) 2.3M 9.7M 322%
Ordinary sales ($) —850K 490K 142%
Assets per employee ($/person) 91K 80K —12%
Profit per employee ($/person) —34K 15K 156%
Channel Interface
Usability 7.1 8.0 0.9
Attractiveness 6.2 7.6 1.4
Navigation efficiency 7.5 7.8 0.4
Contents search 8.6 8.4 —0.2
Consistency of site structure 8.5 8.2 —0.3
c. Customer interaction
Marketing campaign frequency (no./year) 4 12 200% Promotions cost ($/year) 2K 6K 200%
Frequency of contents update
Number of payment methods
Number of response channels to customer
1/day
3
1/day
4
—
1
Inquiry 1 4 3
Cost for managing channel 2K 3K 50%
Average delivery time after order
fulfillment (days)
3–5
3–5
—
Response time to customer inquiry (hours) 1 2.5 1.5
Transactions conducted by members 3% 12.1% 9.1%
Product diversity 8.5 8.5 —
Detailed product information 8.5 8.2 0.3
Timely sales on popular products 6.1 8.0 1.9
d. Customer satisfaction
Brand image 35% 53% 18%
Service level (response to customer
inquiry)
100%
96%
—4%
Number of daily customer inquiries 3 71 68
Customer satisfaction
Assurance 6.1 8.1 2
Reliability 8.5 8.5 —
Empathy 7.3 8.2 0.9
Responsiveness 5.3 8.0 2.7
Tangibles 4.9 7.5 2.6
Note: PI, Feb–Apr 2002; PII, Aug–Oct 2002; Var, variance.
131
132