Customer Relations Management in the UKs Financial Institutions - Research Proposal Example

Effectiveness relations management in the United Kingdom’s financial s: A comparative study banks and micro-financial institutions Name Program: Institution: Supervisor: Date: April 22, 2014. Effectiveness of customer relations management in the United Kingdom’s financial institutions: A comparative study banks and micro-financial institutions Introduction Background information Customer relationship management is gaining significance in the competitive scope of markets that force business organizations to explore strategies for market caption and retention. It involves management of interactions between an organization and its current and future customers and offers benefits that some organizations have pursued for competitiveness and profitability. With its core objective of developing a link between organizations and ther customers, the management branch facilitates an understanding of customers needs, and meeting these needs establishes the benefits of customer relations management. Increased sales is one of the potential benefits of customer relationship managent and results from identification and utilization of customers’ needs. Market expansion and higher profit margins are other benefits that organizations may reap from implementing customer relationship management. In addition, developing an understanding of customers’ needs ensures utility among the customers, a factor that also ensures customer retention and even marketing through customers’ testimonies. Customer relationship management also has an ultimate effect of decreasing an organization’s sales and other marketing expenses (Chaturvedi 2009, p. 5). Different approaches and techniques, however, exist that determine banks’ application of customer relationship management and may be a factor to the current trend in application of the management approach in the financing sector and establish a difference in application of customer relationship management by different types of players in the sector (Rai and Singh 2012, n.p.). The study focuses on the current trend among banks and micro-finance institutions in the United Kingdom. Contribution of the study Customer relationship management offers numerous advantages towards competitive advantage, should an organization implement it. This study seeks to investigate the use of the management towards these benefits with the aim of identifying possible inefficient application and creating awareness among the target organizations towars higher competitiveness and customer utility. Identifying trend in application of the managent and comparing this with trends in applicable technologies for customer relationship management will help inform the target population of necessary changes in the applications. In addition, understanding applications of customer relationship management, as applied by banks and other micro-finance organizations, will help in integrating techniques in the management branch, and particularly help micro finance organizations to match banks in development and management of relationships with customers. This research is new because scarce literature exists on application of customer relationship management in the finance sector and no publication exists on comparative analysis of the management’s application by the sub sectors. It is important and relevant to banks and micro finance organizations because it will develop insights on application and role of customer relationship management in the sector and help in initiating improvements for better realization of the management’s benefits. The study will also enrich existing literature by developing new knowledge on customer relationship management in the finance sector. Research questions The study will explore the following research questions. What is the trend in application of customer relationship management among banks and micro finance organizations in the United Kingdom? Does customer relationship management yield expected benefits to the institutions? Is there a difference in application and benefits of customer relationship management between banks and micro finance organizations in the United Kingdom? Literature review Application of customer relationship management varies across sectors and organizations. The finance sector, for example, identifies distinct approach and perspective to customer relationship management from application and perception in other sectors. While organizations in professional services’ sectors have a positive opinion towards the management and hold strong belief in consistency between needs among customers and other stakeholders, financial institutions and their employees seems sceptical over customer relationship management. The stakeholders view the management approach as unreasonable and unneccessary and this suggest reluctance to implement it (Meadows and Dibb 2012, p. 332). Even for organizations that would implement the management aspect, under the attitude, may fail to reap its optimal benefits. Organizations in the finance sector may also be reluctunt to make adequate investments in customer relationship management and therefore undermine the benefits. A study that sought to understand application of customer relationship management among banks supports this school of thought by establishing variation in aspects of customer relationship management in a sample of banks. In investigating nine banks, the researchers established existence of customers’ contacts and organizations of the contacts by segments in eight organizations. Less than this proportion maintained active databases for managing their relationships with customers. More advanced aspects of customer relationship management even reported fewer positive results. Only three out of nine banks reported ability to coordinate information on customer relationship management and all of the studied organizations did not maintain pure information on their customers, but had information on their products (Person 2011, p. 110). The resulst indicates that despite availability of technology for customer relationship management, banks have not been keen on implementing the management strategy and attemts are limited to basic applications for maintaining contacts. A review of organizations within the finance sector that implements aspects of customer relationship management however shows differences by types of organizations. In using likert scales to establish customers’ opinion on their organizations’ aspects of relations management, institutional customers and large enterprises earned higher scores in quality of developed relationships, communication, trust, and conflict resolution. The types of organizations in the sector also reported consistent high scores in other aspects of customer relationship management such as employees’ utility, compitence in relationship management, and dedication to establishing and maintaining good relations with customers (Erina and Lace 2011, p. 738- 740). The authors’ findings suggest that different results emerge within the sector, based on types of organizations, and this could imply differences between banks and micro finance organizations, which as considerably smaller. Factors such as resource base towards ability to employ technologies and expertise for customer relationship management could be factors to the observed differences. The poor application of customer relationship management in the financial sector occurs despite ientification of specific benefits that the sector’s institutions could derive from customer relationship management. According to a study by Rudawska, relationships that a bank develops and maintains has direct effects on its value that may transend from value in products offered to value in stock (2011, p. 190- 193). Existing literature suggests poor application of customer relationship management by service providers in the finance sector and the limited application varies by types of organizations. Limited literature can however be identified on the trend of application of customer relationship management and its benefits among banks and micro finance organizations in the United Kingdom. This knowledge gap forms the basis of this study with the aim of informing the organizations towards increased applications of the management approach for effeciency in market potentials. Methodology Research phylosophy The study seeks to investigate application of customer relationship management by banks and micro finance organizations in the United Kingdom based on the background knowledge that the institutions underutilize the application and that the use vary between banks and micro finanance organizations. This leads to the following hypothesis. Organizations in the sector, in the United Kingdom, do not optimize potentials of customer relationship management Banks apply and benefit from customer relationship management than micro finance organizations do A deductive approach is proposed for the study. Based on the identified knowledge gap, and research questions and hypothesis, quantitative data will be collected from sampled organizations to test the developed hypotheses. The research phylosophy is proposed because of its consistency with the scope of the study and the quantitative nature of the involved data. The scope seeks to verify observed trends in the finance sector. Research methods Quantitative method’s survey design will be used to implement the study. The appoch will involve collection of data on organizations’ use of aspects of customer relationship management and benefits of the applications. Colleted data will then be compared between the two types of organizations and with standats levels derived from general use of customer relationship management. Organization in the United Kingdom’s finance sector will be the study’s research participants, with focus on banks and mocro finance organizations. Tweny-seven bank branches and 27 micro finance branches will for the study’s sample. Stratified random sampling will be used for the study. Type of institution will for the basis for stratification and then random sampling done for each type of organizarion. The sampling strategy is prefered for its representativeness and its ability to minimize or eliminate sampling bias. Online questionnaires will be used to collect data. The questionnaires will consist of developed scales for evaluating organizatins’ levels of usage of the management styles and associated benefits. The questionnaires will be self-prepared, based on elements of customer relationship management, applicable technologies, and general benefits of application. Organizations will be recruited by their types and informed consent sought from branch managers. This will include explaining to the managers, scope of the study and possible benefits and consequences of participation. Managers who consent to participation will then be samples and the online questionnaires sent to them after which contacts will be made to explain the questionnaires’ scope. Returned questionnaires will then be analyzed using SPSS data analysis software. Informed consent, autonomy, integrity, and anynomity are the most significant ethical concerns to the proposed study but measures will be taken at the sampling, data collection, data analysis, and documentation stages to ensure ethical practice. Reference list Chaturvedi, M 2009, Customer relationship management, Excel Books India, New Delhi. Erina, J and Lace, N 2011, ‘Quality and customer relationship management in the bank,’ Economics & Management, Vol. 16, pp. 736-742. Meadows, M and Dibb, S 2012, ‘Progress in customer relationship management adoption: A cross-sector study,’ Journal of Strategic Marketing, Vol. 20, No. 4, pp. 323-344. Person, A 2011, ‘The management of customer relationships as assets in the retail banking sector,’ Journal of Strategic Marketing, pp. 105-119. Rai, R and Singh, R 2012, ‘CRM in banking: Trends & dynamics,’ Gian Jyoti E-Journal, Vol. 1, No. 2, n.p. Rudawska, E 2011, ‘The influence of customer relationships on the market value of a bank- A methodological perspective,’ Journal of Customer Behavior, Vol. 10, No. 2, pp. 181-199. Read More