EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT

SYSTEMS ON THE PERFORMANCE OF FINANCIAL

INSTITUTIONS:

A CASE STUDY OF CHASE BANK KENYA LTD

BY

DORA WARON LODIONG

UNITED STATES INTERNATIONAL UNIVERSITY - AFRICA

SUMMER 2015

i

EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT

SYSTEMS ON THE PERFORMANCE OF FINANCIAL

INSTITUTIONS:

A CASE STUDY OF CHASE BANK KENYA LTD

BY

DORA WARON LODIONG

A Project Report Submitted to the Chandaria School of Business in Partial Fulfillment

of the Requirement for the Executive Master of Science Degree in Organizational

Development (EMOD)

UNITED STATES INTERNATIONAL UNIVERSITY - AFRICA

SUMMER 2015

ii

DECLARATION BY STUDENT

I, the undersigned, declare that this is my original work and has not been submitted to any

other college, institution or university other than the United States International University -

Africa in Nairobi for academic credit.

Signed: _________________________ Date: _________________________

Dora Waron Lodiong

ID No: 630289

This research report has been presented for examination with my approval as the appointed

supervisor.

Signed: _________________________ Date: _________________________

Fred Newa

Signed: _________________________ Date: _________________________

Dean, Chandaria School of Business

iii

COPYRIGHT

© Copyright by DORA WARON LODIONG, 2015

All Rights Reserved

The owner has exclusive rights over this work, and the contents of this study cannot be

reproduced in material form, such as photocopied or scanned, published, either in print or

electronic format, performed in public or broadcast, communicated to the public (i.e. made

available on the web or an intranet, emailed or faxed to another person, or adapted or

modified, including translated without the permission of the researcher or the United States

International University – Africa.

iv

ABSTRACT

The general objective of the study was to determine the needs and reasons why financial

institutions need to adopt CRM and the strategies available for them to adopt CRM in Kenya

with a bias focus on Chase Bank Kenya. The study was guided by the following research

objectives: to determine the cause of CRM adoption by financial institutions in Kenya; to

examine the challenges of implementing CRM in financial institutions in Kenya; and to

determine the strategies which facilitate successful implementation of CRM in financial

institutions in Kenya.

The study used a descriptive research design. The target population in this case was all staff

members that work at Chase Bank Kenya located in the Central Business District, Nairobi

County who were 930 in total. Stratified sampling technique was used in the study to select

the respondents from among the list of staff members that was obtained from the bank and

individual elements were randomly selected. The sample size of the study was 93. Primary

data was collected from the study population using a self-administered questionnaire. The

study used quantitative method of data analysis. Statistical Package for Social Science

(SPSS) Student Version 16.0 was used to analyze the collected data thoroughly and

conveniently. Percentages were used to give the numerical figure in terms of majority of

responses on a given question. The study employed the use of regression analysis to test

strength of the relationships between the study variables.

The study showed that today’s playing field for financial institutions is both complex and

competitive and the financial laws and regulations vary globally and change continuously. It

can be seen from the study that the internet has increased pressure to margins by enabling

customers to do their own comparison shopping before selecting a financial service provider

and for organizations to remain competitive in the industry, they have to rely on their ability

to leverage on their customers.

The study revealed that CRM systems in the organization are normally used to count

customers rather than create customers and it normally measures the activities of prospects

v

after they have “self-selected” in some way by calling the office or filling-in forms

somewhere. Study clearly showed that the CRM system is very good at capturing and

organizing structured information, and also good at capturing and organizing unstructured

information and most of the systems are not complicated to use and do not require the aid of

technicians to manipulate it.

The study showed that the organization had a good implementation strategy and that the

company explained the real business needs to vendors/partners before investing in CRM and

the project was carried out in phases during implementation. It can be seen from the study

results that the organization allocated available resources to the components that were

affected by CRM and it focused its search for the most suitable solution to its CRM

development. The organization looked at how customer relationships were managed within

the CRM period and it also anticipated how business would change and grow down the road.

The company examined the short-and long-term fiscal implications of the CRM solution and

it ensured that CRM supported the existing business processes.

The study concludes that today’s playing field for financial institutions is both complex and

competitive and the financial laws and regulations vary globally and change continuously.

The study concludes that CRM systems in the organization are normally used to count

customers rather than create customers and it normally measures the activities of prospects

after they have “self-selected” in some way by calling the office or filling-in forms

somewhere. The organization had a good implementation strategy as seen in the study. The

company explained the real business needs to vendors/partners before investing in CRM, and

the project was carried out in phases during implementation. It can be concluded that the

organization allocated available resources to the components that were affected by CRM and

it focused its search for the most suitable solution to its CRM development. The organization

looked at how customer relationships were managed within the CRM period and it also

anticipated how business would change and grow down the road.

vi

Financial institutions must pay attention to focus on the main customers, as it was found to

have a direct, strong, positive and statistically significant correlation with the marketing

performance. Therefore, the study recommends that the financial institutions do the

following: exert more effort in order to discover the needs of the main customers; pay heed to

providing services in line with the needs and specializations of the main customers; the

administrations of the financial institutions must cooperate together to adapt the service that

the main customers require to adapt; financial institutions must continue discussions with

each main customer in order to provide services that suit each and every one of them; and it

is important that all individuals in the financial institutions deal with great care with the main

customers to gain their loyalty.

vii

ACKNOWLEDGEMENT

My greatest debt of gratitude goes to my supervisor, Dr. Fred Newa, whose insightful

comments, scholarly guidance and cooperation encouraged and saw me through this research

report. He was always patient and read every draft of the proposal section and guided me

through the whole process of writing the research report.

While it is not possible to give acknowledgements to all those who assisted me, I have to

give special thanks to my family and friends whose prayers and moral support enabled me to

successfully pursue my studies.

viii

TABLE OF CONTENTS

DECLARATION BY STUDENT ..............................................................................................ii

COPYRIGHT.............................................................................................................................. iii

ABSTRACT.................................................................................................................................. iv

ACKNOWLEDGEMENT ......................................................................................................... vi

TABLE OF CONTENTS ..........................................................................................................vii

LIST OF TABLES ...................................................................................................................... ix

LIST OF FIGURES ..................................................................................................................... x

LIST OF ACRONYMS .............................................................................................................. xi

CHAPTER ONE ........................................................................................................................... 1

1.0 INTRODUCTION.................................................................................................................. 1

1.1 Background of the Study ......................................................................................................... 1

1.2 Statement of the Problem......................................................................................................... 4

1.3 General Objective..................................................................................................................... 5

1.4 Specific Objectives .................................................................................................................. 6

1.5 Significance of the Study ......................................................................................................... 6

1.6 Scope of the Study ................................................................................................................... 7

1.7 Definition of Terms.................................................................................................................. 7

1.8 Chapter Summary..................................................................................................................... 8

CHAPTER TWO.......................................................................................................................... 9

2.0 LITERATURE REVIEW ..................................................................................................... 9

2.1 Introduction .............................................................................................................................. 9

2.2 Reasons for CRM Adoption by Financial Institutions........................................................... 9

2.3 The Challenges of Implementing CRM in Financial Institutions ....................................... 14

2.4 Strategies which Facilitate Successful Implementation of CRM........................................ 20

2.5 Chapter Summary................................................................................................................... 23

ix

CHAPTER THREE ................................................................................................................... 25

3.0 RESEARCH METHODOLOGY ...................................................................................... 25

3.1 Introduction ............................................................................................................................ 25

3.2 Research Design ..................................................................................................................... 25

3.3 Population and Sampling Design .......................................................................................... 25

3.4 Data Collection Methods ....................................................................................................... 29

3.5 Research Procedures .............................................................................................................. 29

3.6 Data Analysis Methods .......................................................................................................... 30

3.7 Chapter Summary................................................................................................................... 31

CHAPTER FOUR ...................................................................................................................... 32

4.0 RESULTS AND FINDINGS............................................................................................... 32

4.1 Introduction ............................................................................................................................ 32

4.2 Demographic Information ..................................................................................................... 32

4.3 Reasons for CRM Adoption by Financial Institutions......................................................... 34

4.4 Challenges of Implementing CRM in Financial Institutions............................................... 41

4.5 Successful Strategies for Implementing CRM ..................................................................... 49

4.6 Chapter Summary................................................................................................................... 55

CHAPTER FIVE ........................................................................................................................ 56

5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS ................................. 56

5.1 Introduction ............................................................................................................................ 56

5.2 Summary ................................................................................................................................. 56

5.3 Discussion ............................................................................................................................... 57

5.4 Conclusion .............................................................................................................................. 64

5.5 Recommendations .................................................................................................................. 66

REFERENCES ........................................................................................................................... 68

APPENDICES............................................................................................................................. 75

APPENDIX I: COVER LETTER............................................................................................ 75

APPENDIX II: QUESTIONNAIRE........................................................................................ 76

x

LIST OF TABLES

Table 3.1 Population Distribution ............................................................................................... 26

Table 3.2 Sample Size Distribution............................................................................................. 28

Table 4.1 Bank Environment ....................................................................................................... 34

Table 4.2 CRM and Business Process Re-engineering .............................................................. 35

Table 4.3 CRM and Organizations’ Analytical Aspects ............................................................ 37

Table 4.4 CRM and its Benefit to the Organization................................................................... 39

Table 4.5 Pearson Correlation Matrix for CRM Capabilities .................................................... 41

Table 4.6 CRM Flaws and Assumptions .................................................................................... 42

Table 4.7 Regression Analysis for Flaws and Assumptions...................................................... 43

Table 4.8 CRM Failure ................................................................................................................ 45

Table 4.9 Organization Failure in Adopting CRM .................................................................... 46

Table 4.10 CRM Failure on Customer Information and Management ..................................... 48

Table 4.11 Regression Analysis for Customer Information and Management ........................ 49

Table 4.12 Organization’s CRM Strategy .................................................................................. 50

Table 4.13 Organization Needs of CRM and its Functionality ................................................. 51

Table 4.14 Organization’s Implementation of CRM Strategies ................................................ 53

xi

LIST OF FIGURES

Figure 4.1 Respondents Gender .................................................................................................. 32

Figure 4.2 Education Background ............................................................................................... 33

Figure 4.3 Years with the Organization ...................................................................................... 33

xii

LIST OF ACRONYMS

AMFI: Association of Microfinance Institutions

BPM: Business Process Management

BPR: Business Process Reengineering

CBD: Central Business District

CBK: Central Bank of Kenya

CIS: Customer Information System

CRM: Customer Relationship Management

CSS: Customer Support and Service

DTMs: Deposit Taking Microfinance companies

EMA: Enterprise Marketing Automation

ETL: Extract Transform Load

GoK: Government of Kenya

IT: Information and Technology

KDD: Knowledge Discovery Database

KPOSB: Kenya Post Office Savings Bank

SACCOs: Savings and Credit Cooperatives

SFA: Sales Force Automation

SME: Small Medium Enterprises

SPSS: Statistical Package for Social Science

1

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the Study

The demand of customers in services from financial services has increased, and so has the

number of players in the financial services sector. The product and service offering have also

become more diverse. The increasing competitiveness in the financial service institution is

forcing organizations to place greater emphasis on building and establishing valuable

customer relationship (Oracle Corporation, 2009). Considering the situation from a wider

perspective, Canel, Rosen, and Anderson (2010) maintained that with the expanding global

competition, the emergence of new technologies and the improved communications have

increased customers’ expectation for fuller satisfaction on their investment. Against this

background is the challenge within financial institutions to direct their focus to customer

satisfaction and quality of products and services.

Customer Relationship Management (CRM) consists of three major components; customer,

relationship, and management. The customer is the only source of the company’s present

profit and future growth. The relationship between a company and its customers involves

continuous bi-directional communication and interaction. Such a relationship on the part of

management is not an activity only within a marketing department, but also involves

continuous corporate change in culture and process (Gray and Byun, 2010).

Defining CRM is challenging because any definition is contingent on the level at which

CRM is practiced in an organization or, for that matter, what the researcher or manager

believes about the correct level of CRM. There are three different possible levels of CRM

namely: functional, customer-facing, and companywide (Dyché (2008). The continuous

balance of CRM activities at each stage should be guided by the attempt to maximize the

value of the set of concurrent customer relationships and thus should be associated with

better overall company performance (Gray and Byun, 2010). Therefore, CRM can be defined

as the process at the customer-facing level as a systematic process to manage customer

2

relationship initiation, maintenance, and termination across all customer contact points to

maximize the value of the relationship portfolio (Thompson, 2009).

Thus, this study will view CRM as the process that entails the systematic and proactive

management of relationships as they move from beginning (initiation) to end (termination),

with execution across the various customer-facing contact channels. This necessitates both

information generation through the analysis of customer and prospect needs and behavior and

action on this information, contingent on the customer’s value and life-cycle stage (Gray and

Byun, 2010).

The emphasis on financial institutions now is not on the number of new customers that are

attracted to a product but on how existing customers are satisfied to ensure their retention.

Dyché (2008) explained that CRM is taken seriously because the cost of acquiring a new

customer is six times more than keeping an old one. Sandall (2009) reports on a statement by

Havard Business Review that some companies can boost profit by almost 100% by retaining

5% more of the customers. She went further to say that simply managing your customers

adds value to a business, but evaluating a customer’s experiences and tailoring your business

processes to accommodate what you have learned from them adds value to your customer

relationship. This seems to be a subtle proposition but a critical distinction that must exist

between companies with CRM strategies and those without.

Barrington (2010) states that, CRM systems began as a way to track customer interactions

with the view of producing personalized products and services. Bose and Sugumaran (2011)

explained that CRM involves managing customer knowledge to better understand and serve

them. They went further to state that CRM is an umbrella concept that places the customer at

the center of an organization. Thompson (2009) argues that CRM is emerging as a critical

strategy simply because relationships are coming to the forefront of the competitive

battleground. CRM therefore is a tool that supports an organizations strategy and business

planning and enables it to measure progress on an ongoing basis. According to Sandall

3

(2009), the basis of successful CRM is to manage people and processes more effectively

through user-friendly technology.

The financial needs of customers change throughout their lifetime, providing incentives for

financial institutions to cultivate lifelong customer relationships. A customer’s loyalty

increases as the length and quality of the relationship increases. CRM remains the goal of

creating and sustaining competitive advantage (Thompson, 2009).

Kenya is a developing country with a total population of 43 million people. Kenya has a

relatively well developed financial sector which comprises 43 commercial banks, 1 mortgage

finance company, 7 Deposit Taking Microfinance companies (DTMs), some 3,500 active

Savings and Credit Cooperatives (SACCOs), one postal savings bank - Kenya Post Office

Savings Bank (KPOSB) 125 foreign exchange bureaus, a host of unlicensed lenders, and an

Association of Microfinance Institutions (AMFI) with 56 members (Bankelele, 2014).

Despite the abundance of financial institutions, the financial sector in Kenya is highly

concentrated. Four financial institutions, Equity Bank, Cooperative Bank (Co-op Bank),

Kenya Post Office Savings Bank and Kenya Commercial Bank, account for two thirds of all

bank accounts which numbered 14 million by mid-2012 (CBK, 2012b). Chase Bank Kenya

Limited is a commercial bank in Kenya. It is one of the commercial banks licensed by the

Central Bank of Kenya, the central bank and national banking regulator (CBK, 2013).

The bank is continuously re-inventing itself and doing things differently in order to provide

customers with customized services. The Small Medium Enterprises (SME) is at the heart of

all that the organization does and the organization (Chase Bank) has ensured that its business

is to understand their business. The Bank’s Mission is to “Enable People Achieve the Things

that Matter Most to them”. This for the organization is more than a mission, it is a promise

that they strive to ensure every one of their clients, staff and stakeholders alike receives.

They re-affirm their commitment to customers by continually working towards providing

4

them with tailor made solutions in line with their financial needs (Chase Bank Newsletter,

2013).

As the financial services industry moves from a transaction-centric to a relationship-centric

business approach, effectively leveraging customer relationships becomes all the more

critical (PeopleSoft, 2012). Customer management issues are exacerbated when there are

many disconnected systems and no central location to capture all of the accumulated

customer data (PeopleSoft, 2012). The ability to view all customer interactions and

information is essential to providing the high quality of services that today’s customers

demand.

However, many financial institutions find their customer data fragmented by virtue of

channel segmentation, by product, or by company organizational structure. The collection

and integration of data into a single logical repository that sales people, contact center agents,

and marketing and support personnel can all use is crucial to a company’s success. This can

be achieved only if the front-end system that interacts with the customer (like the call centers,

internet, and branch) also interacts with the back end (the billing statements, and other

account information) (Bankelele, 2014).

1.2 Statement of the Problem

Financial institutions are discovering the compelling nature of the CRM business strategy.

Protecting valued customers is synonymous with protecting future earnings as an alternative

to being acquired or gaining massive scale. Thompson (2009) intimated that CRM is a

business strategy adopted to acquire, grow and retain profitable customer relationship with

the goal of creating a sustainable competitive advantage.

CRM is one of many potential business strategies that underscore the need for any financial

institution to identify and leverage its primary competitive advantage. Treacy and Wiersema

(1994), in their work, “The Discipline of Market Leaders”, pointed out that leading

5

businesses have one of three primary competitive advantages which are identified and

leveraged. These are operational excellence, product leadership and customer intimacy.

It should be noted that all financial institutions need a minimum capacity for all three

abilities. However, there should be one of these three that should be the discipline in a

successful business. Kilmer (2012) states that, to develop a CRM strategy that will have to

consider a profit, a financial institution will have to consider a variety of applications. He

was however quick to add that sorting out of these applications is a challenge to many

managers.

Among many financial institutions, CRM application technology implementations have

arrived as part of an early sales force automation movement that has expanded its presence

into a more operational, customer service focus. In many cases, the technology has arrived

with an inherent sales tracking and incentive-planning objective. Sandall (2009) maintained

that while sales tracking and performance incentives are consistent with a CRM business

strategy, they bring many organizational and cultural issues to the forefront in the process of

implementation.

In customizing, a CRM-related application, particularly the Relational CRM application, is

an iterative process. When an application technology has been designed to cross industries,

fit various data models, and all screens need to be customized, the implementation and its

resources can drag on for months and years (Kilmer, 2012). The major issue which most of

the banks are facing right now is the use of CRM and technology; therefore, there is need for

a study to determine why financial institutions need to adopt CRM and the strategies they

need to improve on.

1.3 General Objective

The general objective of the study was to determine the needs and reasons why financial

institutions need to adopt CRM and the strategies available for them to adopt CRM in Kenya

with a bias focus on Chase Bank Kenya.

6

1.4 Specific Objectives

The study was driven to:

1.4.1 To determine the reasons for CRM adoption by financial institutions in Kenya?

1.4.2 To examine the challenges of implementing CRM in financial institutions in Kenya?

1.4.3 To determine the strategies which facilitate successful implementation of CRM in

financial institutions in Kenya?

1.5 Significance of the Study

1.5.1 The General Public

This study may enlighten the general public on the successes of CRM practices, particularly

organisation strategic change management in the banking industry. Through this study they

may understand how certain changes in an organization affect it positively and how to deal

with the changes as well.

1.5.2 Banking Industry

The study may be beneficial to other companies in the banking industry such that they may

understand how strategic change in relating with customers in the organization may affect

them it in the long run. It may also enlighten them on issues related to customer relationship

management (CRM) and offer better ways of adopting CRM in their organisations.

1.5.3 Government of Kenya

This study may be of great help to the Government of Kenya (GoK) when coming up with

policies and laws that govern the banking industry. The policy makers may be able to

understand how different changes affect the performance of firms in the industry, and thus,

they may be able to think through decisions before implementing them.

1.5.4 The Managers of Chase Bank Kenya

This study may be helpful to the management and employees of Chase Bank especially when

coming up with new strategies to implement and evaluating the effect of the changes they put

7

in place. The study has highlighted the challenges of adopting a good CRM system, and this

has offered them recommendations on how to make the CRM effective and efficient within

their organization.

1.5.5 Scholars

This study may be useful to students and lecturers within the institutions of higher learning.

The study has offered a basis of reference. It has offered an opportunity for further research

to be conducted on the study topic by stating the various gaps that future researchers may

want/ need to fill.

1.6 Scope of the Study

There are many players in the banking industry but this study focused on Chase Bank

Nairobi Branch. The study focused on the Bank that operates in the city’s Central Business

District (CBD) whose total population was 930. The focus of the study was on the customer

management practices of the organization and its resulting impact. The information has been

helpful in establishing whether the CRM system in place has been effective in attracting

customers and retaining the current customers. The study was carried out between January –

April 2015.

1.7 Definition of Terms

1.7.1 Customer Relationship Management

Customer relationship management is a customer-based relationship management philosophy

that enables the coordination and cooperation between all the departments, customers and

business associates as a front office practice and back office practice (Bozgeyik, 2005).

1.7.2 Customer Loyalty

The term customer loyalty is used to describe the behavior of repeat customers, as well as

those that offer good ratings, reviews, or testimonials. It is a process, a program, or a group

of programs geared toward keeping a client happy so he or she will provide more business

(Storbacka and Lehtinen, 2009).

8

1.7.3 Customer Retention

Customer retention is the process when customers continue to buy products and services

within a determine time period (Lakshman, 2008), it can also be defined as the activity that a

selling organization undertakes in order to reduce customer defections (Storbacka and

Lehtinen, 2009).

1.7.4 Financial Institutions

These are establishments that focus on dealing with financial transactions, such as

investments, loans and deposits. Conventionally, financial institutions are composed of

organizations such as banks, trust companies, insurance companies and investment dealers

(Padmalatha, 2011).

1.8 Chapter Summary

This chapter introduces the reader to understand a brief background of Customer

Relationship Management and the nature of Financial Institutions in Kenya. This is followed

by the discussion of the problem, the purpose of the research, and specific research objectives

that guided the study, the chapter has given the significance of the study and the scope of the

study. In this section, the researcher has also defined key terms used in the study. The second

chapter reviews the literature available from scholars and it was driven to examine in detail

the benefits of CRM in financial institutions in Kenya; the challenges of implementing CRM

in financial institutions in Kenya; and the strategies which facilitate successful

implementation of CRM in financial institutions in Kenya. The third chapter offers readers

with detailed information on the research methodology that was adopted in carrying out the

research. The fourth chapter discusses the finding of the study from the analyzed data and the

final chapter offers readers with the study discussion, conclusion as well as the study

recommendations.

9

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Introduction

This chapter reviews the relevant literature in as far as the topic under investigation is

concerned. The chapter focuses on how financial institutions are effectively using CRM to

improve their profitability in Kenya. The research will examine in detail the cause of CRM

adoption by financial institutions in Kenya; the challenges of implementing CRM in financial

institutions in Kenya; and the strategies which facilitate successful implementation of CRM

in financial institutions in Kenya.

2.2 Reasons for CRM Adoption by Financial Institutions

Financial institutions are undergoing significant change, and today’s playing field is both

complex and competitive. Not only are there fewer new customers to pursue and more

entities pursuing them, but the industry is also impacted by regulations that vary worldwide

and are all in a state of transition. Competition has increased with banks and brokers adding

insurance products to their product mix, and insurers are now offering broader financial

service products (Fox and Stead, 2010). The internet has added and increased pressure to

margins by enabling customers to do their own comparison shopping. Capturing and

sustaining market advantage in this fiercely competitive industry hinges on the ability to

understand and leverage the industry’s most valuable asset - the customers (Peppers and

Rogers, 2009). This customer-centric approach which vies for customer loyalty and

satisfaction can only be successful when supported by an enterprise-wide CRM strategy

(Bee, 2008).

CRM is a multi-dimensional construct consisting of four broad behavioral components which

include, Key Customer Focus, CRM Organization, Knowledge Management, and

Technology-based CRM. This is in accord with the notion that successful CRM is predicated

on addressing four key areas: strategy; people; technology; and processes (Fox and Stead,

2010), and that only when all these four work in concert can a superior customer-relating

capability emerge (Day, 2008).

10

Dzato (2007) commented that CRM strategy of any financial services organization should

focus on integrating people, processes and technology to maximize the value exchange.

Bygstad (2002) cited Ciborra and Failla (2000) who describe CRM as an information

infrastructure, consisting of processes, people and technology. Bee (2008), simply

maintained that financial institutions who want to adopt CRM systems need to address three

critical factors - people, processes and technology.

2.2.1 Business Process Re-engineering as a CRM Strategy

Anton (1996) characterizes CRM as an integrated approach to managing customer

relationships with reengineering of customer value through better service recovery and

competitive positioning of the offer. Couldwell (1998) further depicts CRM as a combination

of business process reengineering (BPR) and technology that seeks to understand a

company’s customer from the perspective of who they are, what they do, and what they are

like. Limayem (2007) intimated that BPR for CRM involves rethinking and redesigning

business processes to create value to customers through using Information and Technology

(IT) as the primary enabler with the aim of achieving quantum improvements.

According to Bibiano, Mayol and Pastor (2009), business process is a set of linked activities

that create value by transforming an input into a more valuable output. Both input and output

can be artifacts and/or information and the transformation can be performed by human actors,

machines, or both. They further identified three types of business processes which they

maintained should be supported by Business Process Management Systems (BPM Systems).

These three are: Management processes - the processes that govern the operation. Typical

management processes include Corporate Governance and Strategic Management;

Operational processes - these processes create the primary value stream, they are part of the

core business. Typical operational processes are Purchasing, Manufacturing, Marketing, and

Sales; Supporting processes - these support the core processes. Examples include

Accounting, Recruitment and IT-support.

11

A business process can be decomposed into several sub processes, which have their own

attributes, but also contribute to achieving the goal of the super-process. The analysis of

business processes typically includes the mapping of processes and sub-processes down to

activity level (Bibiano, Mayol and Pastor, 2009).

Operational CRM is centered in supporting business processes which includes customer

contact (sales, marketing and service). The resulting data is sent to the users since it is

required to carry out the activities related to the commercial area. According to Gartner

Group (2004) operational CRM supports the following processing tools: Sales Force

Automation (SFA); Customer Support and Service (CSS); and Enterprise Marketing

Automation (EMA). The operational processes remain the core of the business, producing the

actions that give the company their main goals. Analytical CRM is committed with the

collection and analysis of data related to customer and marketing, providing value

information for decision taking support and strategic directions in the sales area (Limayem,

2007). The supporting processes act together with the management processes, giving them

sustainable actions in order to carry out the main business processes of the company.

Similarly, Collaborative CRM supports the relations between users across the organizational

structure and aid in the actions of operational CRM (Kim et al., 2008).

2.2.3 CRM Benefits

Riddle (2010) stated that the three key reasons why companies are adopting CRM is that

CRM enables businesses to adopt a customer-focused approach and build stronger customer

relationships; it streamlines business processes - reducing operational costs and increasing an

organization’s responsiveness to market developments; and it optimizes marketing, sales and

customer service processes, allowing businesses to identify new market opportunities,

shorten sales cycles and increase customer retention.

Kim et al. (2008) maintained that by adopting a CRM strategy financial institutions among

other things can manage client data, including preferences, transactions, and communication

history, in a manner that enables executives and management to have a 360° view of the

12

client. It can also result in an increase in data accuracy with a common repository of client

information that ensures all departments within the organization are working with the same

data. It will again improve customer satisfaction, loyalty, retention, and profitability using

efficient tools that lower service costs.

By adopting CRM, financial institutions will be able to comply with the privacy and security

requirements of the current regulatory environment. It will again eliminate inefficiencies with

a solution that customizes and integrates the company’s roles and workflow. The true value

of a CRM strategy lies in its ability to transform strategy, operational processes and business

functions (Pantazopoulos, 2009). The effect, he noted, is that companies benefit from high

retention of customers and increased customer loyalty and profitability. Swift (2011)

emphasized that organizations, can obtain greater benefits from their CRM initiatives within

the following areas: higher customer retention and loyalty; increase customer profitability;

evaluating of customers profitability; reduced cost on sales; and lower cost on recruiting

customer.

The main reasons and benefits for adopting CRM suggested by Curry and Kkolou (2009) are

firstly to consolidating workflow while at the same time eliminating non- productive flow of

information. Secondly is to become competitive enough to draw customers from competing

organizations and thirdly is the impact on infrastructure which is simplified as a result of the

internal organization’s focus turned towards customers.

2.2.4 The Need for CRM

The expectations of businesses are that gaining loyal customers has a positive effect on their

survival. This is reemphasized by Payne (2008) who claims that loyal customers not only

come back, but they also serve as advocates for the organization. He further states that the

fundamental principles that underpin CRM are not unique and he identified three

characteristics which emphasis retaining profitable customers, focus on multiple markets and

cross functionality.

13

Profitable customer retention: Payne and Frow (2006) notes that it is essential for businesses

to put more emphasis on identifying the segment of the customers that is valuable to the firm

in the long term. When the targeted needs of client segments are served, they turn to loyal

customers and are therefore profitable in the end. This is more valuable than trying to serve

all customer groups.

Emphasis on multiple markets: A business works with a whole set of groups and networks.

Thus, it is vital to identify key influential stakeholders and develop an effective and

profitable relationship with them as their actions have implications on business. For example,

actions of trade unions and government policies have profound implications on business.

Thus, CRM initiatives must try to deal with these diverse stakeholders. (Payne 2007).

Cross functionality marketing: Payne (2008) suggests that again all partners both within and

out of an organization, must have customer satisfaction as the core essence of business. For

this reason, all marketing strategies must factor in the inputs of all activities of the business

and not just that marketing. Teamwork that aims at satisfying the customer’s interest and not

that of the business alone is the principle upon which CRM is founded.

Kolkata (2002) also suggested that CRM has three main aspects - acquiring, enhancing and

retaining customers. The issue of retaining customers is thus a central issue for CRM. The

customer has become the central focus of marketing as it has been evolving. This initial

emphasis was on the product, but it has now shifted to the customer.

Although the market for CRM software and support is strong (Maoz et al. 2007), there

remains considerable scepticism on the part of business commentators and academics as to

its ultimate value to the corporation and customers. Surveys of IT executives in the business

press report that CRM is an overhyped technology (Bligh and Turk, 2004) and some

academics claim the concept is fundamentally flawed because CRM ignores the reality that

many customers do not want to engage in relationships (Dowling 2002, Danaher et al. 2008).

14

Empirical studies examining the success of CRM technology have failed to alleviate this

scepticism as investigations to date span a limited range of activities (Sutton and Klein 2003)

and are noticeably silent on the extent to which CRM investment contributes to firm

performance (Boulding et al. 2005). A lack of clear and generalizable empirical support for

the expected return from CRM investments has important practical implications for market

development and firm profitability. It also raises questions regarding the most appropriate

mix of capabilities to effectively exploit investment in CRM.

The value of IT to the firm is clearly a complex issue because firms apply IT in manifestly

different ways (Kohli and Gover 2008). Moreover, investment in IT infrastructure enables

higher-order business capabilities, which in turn, is having a critical impact on the way

business is organized and conducted, but may not immediately appear to be related to that IT

investment. For example, Mithas et al. (2010) demonstrate empirically that the ability of

firms to provide accurate, timely, and reliable data and information to users - what they refer

to as a higher order “information management capability” - is based on an ability to leverage

IT infrastructure. Hence it can be difficult to capture and properly attribute the direct or

indirect value generated from investment in IT.

IT is a necessary factor, it rarely, in-and-of-itself, generates sustainable performance

advantages (Clemons and Row 1991). In other words, the business value that is generated by

IT is dependent upon the combination of complementary technical, organizational and human

resources (Francalanci and Morabito 2008). Corporation, Leonard (1998) found four distinct

clusters of core technological capabilities: technical systems, human skills, managerial

systems, and values. Tippins and Sohi (2003) provide a consistent definition of IT

competency as the body of technical knowledge about IT systems, the extent to which the

firm uses IT, and the number of IT-related artefacts.

2.3 The Challenges of Implementing CRM in Financial Institutions

Lombardo (2007) expressed that “failure” of CRM may be a combination of at least two of

these situations. The reasons for these failures are varied. From management, the focus can

15

be that they still do not have a sense of their business. Sales people may focus on the system

and its inability to be useful and end up not using it. Senior executives may complain about a

lack of return on their investment. He further reports on survey results which indicate that in

many instances, from 60% to 80% of CRM projects fail. He explained further that what these

studies mean when they use the term “failure” involves reasons as late implementation of the

project or an over budgeted project which makes senior executives hesitant to go in for.

Again, failure would include reasons that the project delivered less functionality than

originally planned or yet still a combination of all the factors mentioned above.

According to Nelson (2002) at least 70% of all CRM projects do not achieve their goals,

namely a higher customer loyalty or a bigger share of wallet. Nelson explained further that

this is not based on poor CRM-software or CRM-servers, but rather on the fact that IT

resources have not been skillfully associated with business goals and processes to improve

relationships.

2.3.1 CRM Failure

Brain (2007) summaries six reasons why CRM initiatives fail: Counting vs. Creating

Customers - The current crop of CRM systems are very useful for large companies with

thousands of customers that want to “count” them in interesting ways. If the organization is

placed like most small businesses, then probably they only have tens or hundreds of

customers and their main problem is finding new customers and efficiently growing existing

customers, not counting customers in interesting ways.

He further states that another fail is in measuring the wrong thing - CRM measures the

activities of prospects after they have “self-selected” in some way by calling the office or

filling in your form somewhere. Another challenge is in structured vs. unstructured data -

CRM systems are essentially databases with customer oriented forms built on top. They are

very good at capturing and organizing structured information, but are horrific at capturing

and organizing unstructured information.

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Brain (2007) also notes that ease-of-use is another challenge since most CRM vendors say

their product is "easy-to-use." The reality is it is easy to use if you have dedicated

“operations” people or a dedicated CRM IT person to figure out how to do the hard/useful

stuff. Feeding the Monster is another challenge where like many knowledge management

initiatives; CRM requires end-users to take actions that are not part of their natural work

process in order to “update” the system. After all, CRM output is only as good as the input –

“garbage in, garbage out”. He further notes Transactional Systems vs. Solution/Relationship

Systems where today’s CRM is more useful for transactional (like call center) types of

companies than it is for small businesses who have client relationships that are more solution

oriented in nature.

2.3.2 Organization Failure

Gerson (2009) on the article ‘CRM Today’ identified three mistakes organizations make

which impact negatively on their CRM strategy. First is when a company has No CRM value

proposition. This is because a value proposition tells a client what distinguishes the company

from other competitors, and why they should do business with said company. The Second

mistake is Failure to match their CRM technology to the way their associates’ work. Too

many CRM implementations are technology led instead of being process or performance led.

The third mistake; Treating all customers alike in the company’s CRM system actually has

two parts. The first is that firms think they actually know who their customers really are. The

second is that they treat every customer the same.

Myron (2009) identified the following: lack of guidance as an organizational challenge.

According to Gartner Group (2004), more than 60% of companies that have implemented

CRM did not have mutually agreed upon goals for their projects prior to the installation. Like

a building without a bearing wall, a CRM initiative without goals will collapse. Integration

Woes is another challenge where there is no “killer” application that solves all integration

problems. Most large-scale implementations require some customization. This may lead to

problems that put vendors and consultants’ at odds with customers.

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Guru (2008) noted that lack of a long-term strategy is an organizational challenge.

Organizations believing that CRM is a technology solution are still a tremendous obstacle for

far too many firms. The fact remains that CRM is a business process change, often supported

by technology. He further noted Dirty Data as another challenge. This is an often-overlooked,

yet insidious hurdle is dirty data, or inaccurate and old information. Data is the lifeblood of a

CRM system, and incorrect numbers, spelling mistakes, and outdated contact information can

infect that system if it is left unchecked.

Curry and Kkolou (2009) note that lack of employee buy-in is a CRM challenge. They state

that it is natural to resist change. Top salespeople may ask, for example; why should we be

forced to change our working habits, when those very habits helped them become so

successful. They state that lack of accountability is another challenge. Driven by fear of the

unknown, resistance also spills into the managerial level in the form of avoidance, or lack of

accountability. There is unwillingness in top management to assign accountability to project

leaders.

2.3.3 Customer Management

Guru (2008) reported on the following key barriers to implement customer equity asset

management implementation programmes: limited scope – he stated that many existing

Customer Information System (CIS) tools are very limited in scope, and do not support

customer equity management. He also notes a rise in complex technology as a challenge. He

states that technology solutions sold by vendors have become very complex to use, expensive

to maintain, and contain irrelevant information for data mining.

Lack of pertinent data is another customer management challenge as noted by Brain (2007)

since most of the existing data warehouses lack information on recency, frequency, and

monetary values. They also offer information that is insufficient for supporting predictive

modeling and predictive scoring. This is coupled by an extended time to market. The addition

of new capabilities to existing data warehouses is cost prohibitive and takes a long time to

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bring into production stage capabilities (or even to catch up with the fast-changing dynamic

nature of the market place) (Pantazopoulos, 2009).

Multi-Vendor Tools and Capabilities are a challenge noted by Bibiano, Mayol and Pastor

(2009). They state that, over the years, many major financial organizations have developed

data warehouses by purchasing diverse sets of software tools and then building data

warehouses in-house. For example, Data Quality and Cleansing tools, Extract Transform

Load (ETL) tools, database management and storage tools, data mining, and campaign

management solutions from various vendors.

Overburdened Internal Information Technology Organization is another customer

management challenge faced by CRM. Information technology organizations have had to

employ individuals who have specialized vendor product skill sets to support multi-vendor

tools. This can increase organizational expenses significantly (Curry and Kkolou, 2009).

Lack of integrated capabilities of CRM is another challenge. The focus of many CIS has

shifted to service-only ad hoc reporting and to provide simple querying capabilities rather

than becoming an infrastructure for efficient customer equity management or for enabling

some sort of Knowledge Discovery Database (KDD) (Bibiano, Mayol and Pastor, 2009).

2.3.4 Poor CRM Strategies

The particular CRM strategic emphasis is germane to this study because CRM programs can

focus on customer intimacy (relationship orientation, catering to individual customer service

requirements), cost reduction, data analytics or a mix of all three (Buttle 2004). In the case of

CRM, business value is unlikely to exist in the technology alone but rather in the capability

to draw information from all customer touch-points - including websites, telesales, service

departments, direct sales forces and channel partners. The capability to build a coherent

picture of the customer is costly for firms to imitate and, in many cases, highly idiosyncratic

to the firm. This is critical because recent work demonstrates that firms working with

incomplete customer data and imprecise metrics for evaluating customers run the risk of

19

alienating, rather than satisfying, customers (Boulding et al., 2005) and, as a consequence,

experience lower profitability (Ryals 2005).

The stance taken here is that IT infrastructure on its own is well known, mostly stable, and

widely shared amongst competing firms; a fact reinforced by various literature. Hence, IT

alone is unlikely to be a source of direct competitive advantage (Carr 2003; 2004; Weill and

Vitale 2002). Rather, the scarce resources and subsequent source of business value are the

managerial capabilities that are enabled by the technology (Bharadwaj 2000; Picolli and Ives

2005). When IT systems become embedded in the firm’s business architecture and human

skills, capabilities can emerge that lead to a level of causal ambiguity and structural

complexity that competitors find hard to imitate, thereby enhancing the firm’s potential for

sustainable competitive advantage (Dierickx et al. 2009).

A number of studies have demonstrated that complementary organizational and human

resources mediate the impact of IT on firm performance. For example, Francalanci and

Morabito (2008) identify that the link between information systems and firm performance is

mediated by the absorptive capacity of the firm. Brynjolfsson and Hitt (1996) argue that the

business value from IT is only generated when the IT is absorbed within the firm, as a

routinized element of a company’s value chain. Ray et al. (2005) also provide empirical

evidence that performance improvements derive not from IT expenditure alone but when

firms use embedded IT to support customer service processes (Ray et al., 2005).

2.3.5 Business Architecture

Possession of sophisticated CRM systems, and complex human skills and experience will

have little impact on the business unless action is taken. In other words, to improve

performance the outputs of any CRM program have to be deployed at scale across the

business. Many firms will own the same basic technology and possess similar skills.

However, few will possess the organizational architecture of control systems and incentive

policies required to fully exploit these resources (Barney and Mackey 2005).

20

This ability to exploit investment in CRM is observed in an overall business architecture that

supports action before, during, and after implementation. It not only ensures that customer

knowledge is effectively generated, but more importantly, it ensures that the information is

used within the organization to influence competitive advantage. For example, front-line

employees are motivated to act on reports generated by the CRM system when making

tactical decisions about customers. In the context of CRM, other aspects of this architecture

could include training in systems and policies, or control systems that focus on a relationship

rather than a transactional view of the customer.

2.4 Strategies which Facilitate Successful Implementation of CRM

Shah (2008) maintains that planning and developing a CRM strategy is not the task of an

individual but a team. The first step therefore to initiate any CRM process should be the

institution of a team. The team, he continued must consist of users as well as business area

experts.

In developing a CRM strategy, Hines (2012) expressed that organization should first tackle

business issues before choosing a technology. Again, it is a must that they explain the real

business needs to vendors/partners before investing. In any situation the customer’s priority

should be “number one”. He went further to say that the whole project should be carried out

in phases and its enterprising identity be kept. Limayem (2007) maintains that the success of

any CRM strategy is dependent on how organizations allocate available resources to the three

components that include a mix of 70% people, 20% processes and 10% technology.

2.4.1 Organization Needs

Sandall (2010) suggested a number of steps organizations can take to focus their search for

the most suitable solution to their CRM development. He maintained that such a company

should first analyze its business goals and objectives and look at how customer relationships

are managed within that period. Such a company should also anticipate how the business will

change and grow down the road. From various options, the company is to examine the short-

and long-term fiscal implications of each solution. Companies who want to develop a CRM

21

strategy should again compare the benefits and drawbacks of available solutions to business

needs.

He further stated that any viable CRM solution should provide the following minimum

functionality; it should support existing business processes and provide the capability to

improve them. It should be easy to customize but not an extensive customization for the

organizations specific business application; it should have intuitive user interfaces; it should

integrate with existing systems of the company; it should provide robust reporting, analytical,

and forecasting capabilities and above all it should be both scalable and flexible.

2.4.2 CRM Needs

LaValle and Scheld (2012) mentioned that before a company adopts a CRM strategy, it

should examine its CRM value for change, identify and prioritize its CRM value propositions

and move on to design a new CRM operational blueprint. Once a blue print has been

initiated, the company should construct a transformational multi-generational roadmap and

implement such solutions. They emphasized that the whole programme should be supported

through sponsorship, governance, and change management.

Band, Kinikin, Ragsdale and Harrington (2011) offers steps that companies should consider

in planning and implementing a CRM strategy. Understand the problem: Many businesses

fail to pinpoint simple customer service problems. Companies that are successful in

understanding customer service problems have reaped rewards; Build a team that is

empowered to take on the project: Organizations will need to resist the temptation to staff the

team too heavily from the IT department. Select personnel with business skills as well; Win

executive sponsorship: CRM applications are big-ticket items. The cost for implementation is

often double after the purchase of the software. Resources should always available; Show

how CRM will support the company’s vision; and Measure, measure, measure: After

implementation, companies are to check and assess if the CRM systems are meeting

customer needs.

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2.4.3 CRM Elements and Implementation Strategy

Kim et al. (2008) maintained that a true CRM strategy should generally encompass a broad

scope of initiatives including: developing an individualized CRM strategy; implementing

appropriate technology; building sales management systems and developing sales skills;

matching product and service offerings to the market; and optimizing branch performance.

From every indication this list suggests that CRM permeates into every aspect of a financial

institution.

McCabe (2013) outlined key guidelines to follow before implementing any CRM strategy.

She suggested that one needs to: Develop corporate wide CRM engagement from key

stakeholders. Many CRM projects fail because critical stakeholders are not involved in

setting CRM strategy, assessing requirements and selecting options. Get key sponsors

involved from the get-go and make sure that the individuals involved can make the financial

and time commitments to ensure success.

She also suggested that one needs to envision the company’s CRM strategy. CRM is more

than just software. It is also about selecting appropriate methodologies and business practices

to help the business enable better relationships with customers. She also suggested that one

has to determine and prioritize CRM drivers and requirements. Even in small companies,

CRM decisions are often stove piped in relation to departmental needs and business

problems.

Develop a CRM roadmap. Once one has the high-level vision and know which areas are

likely to bring the greatest reward, develop a master plan consisting of several smaller steps

and projects that will move you toward achieving the corporate CRM vision. The next step is

to think of integration. Here, one determines how, where and when CRM tools need to

integrate with one another and with other applications (McCabe, 2013).

She also notes that one needs to create a short list. Check out for prospective vendors’

financials and customer references; eliminate any that appear shady. Apply the 80-20 rule in

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the selection process. One needs to avoid being snowed under by competing vendors’

feature-function wars. There is also need to keep everyone involved in the loop. Once the

selection has been made, one needs to offer flexible training options to help accommodate

different schedules and learning preferences. Finally, she advices one to learn, adjust and

evolve. Develop a mechanism to monitor use, get feedback and adapt.

2.4.4 Successful Implementation

Guru (2008) stated that to ensure successful CRM implementation organizations should First

and foremost, managers of CRM initiatives should obtain an executive level buy-in and

commit to the project. Make certain that they understand the importance of their role in

upholding that commitment and communicate it downwards through the organization. The

project should be organized in such a way that it is fun and rewarding. Key employees who

will be using the system should be motivated with incentives to make it work. They should

be involved in the early planning and implementation stages. Take their feedback seriously.

This will give them ownership in the project.

Kim et al. (2008) state that it advisable to break the entire project down into smaller

manageable pieces with small milestones and all departments must ordinate to maintain a

team methodology. A robust database platform is required. CRM systems collect huge

amounts of data very rapidly and managers are to ensure that their solution can grow and

perform accordingly. It should be emphasized that every CRM system is designed around the

customer and prospect.

2.5 Chapter Summary

This chapter has looked at the cause of CRM adoption by financial institutions. It has

discussed how CRM affects an organizations’ Business Process Re-engineering by

highlighting various CRM operational, analytical and collaborative strategies. The chapter

has also highlighted the importance of people in CRM strategy as well as the benefits of

CRM. The chapter has also looked at the Challenges of Implementing CRM in Financial

Institutions while focusing on CRM failure, organization failure and customer management

24

failure. The chapter also studies the various strategies which facilitate successful

implementation of CRM in financial institutions by discussing organization and CRM needs,

CRM elements and successful implementation strategies. The next chapter discusses the

research methodology that was adopted by the study.

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CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 Introduction

This chapter shows the research design methodology that was adopted for the study. The

chapter discusses the research design, defines the population and sampling procedures

adopted, discusses the data collection methods that will be adopted in the research, it also

discusses the research procedures and section finally it discusses the data analysis methods

that were employed in the study.

3.2 Research Design

The approach to the entire process of the research study is known as the research

methodology. This is determined by the research problem, the assumptions one uses in their

research and the way the research problems is defined influences the way the study is

conducted (Marczyk, DeMatteo & Festinger, 2010). The authors further emphasize that

different authors use the word paradigms and methodology interchangeably. They stated that

there are two main research paradigms labelled positivist and phenomenological.

The study used a descriptive research design. A descriptive study involves collecting data

that test the validity of the hypotheses regarding the present status of the subjects of the study

(Cox (2008). In this study, the design was used to determine the effect of customer

relationship management systems (independent variable) on the performance of financial

institutions (independent variable) with a bias focus on Chase Bank Limited, Nairobi Branch.

3.3 Population and Sampling Design

3.3.1 Population

The target population for a study is the entire set of units for which the survey data is to be

used to make inferences (Hakim, 2012). The target population defines those units for which

the findings of the survey are meant to generalize. Cox (2008) states that establishing the

study objectives is the first step in designing a survey design, defining the target population

should be the second step. According to Hakim (2012) target populations must be

26

specifically defined, as the definition determines whether sampled cases are eligible or

ineligible for the study. The target population in this case was all the staff members of Chase

Bank Kenya located in the Nairobi (CBD) who are 930 in number.

Table 3.1 Population Distribution

Population

Distribution

Numbers Percentage

Customer Care 150 16

Business Development 400 43

Contact center 44 5

Product Development 10 1

Treasury 15 2

Finance 25 3

Human resource 60 6

Clearing 18 2

Credit 30 3

Administration 40 4

Payment 13 1

Digital Banking 15 2

Innovation 20 2

Procurement 10 1

Leasing 20 2

IT 35 4

Marketting 25 3

Total 930 100

Source: Chase Bank (2015)

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3.3.2 Sampling Design

3.3.2.1 Sampling Frame

Sampling involves a process of selecting a sub-section of a population that represents the

entire population in order to obtain information regarding the phenomenon of interest

(Creswell, 2013). Most researchers cannot include all members of the population in their

studies and must resort to limiting the number of subjects to only a sample from the

population. According to Pfeffermann and Rao (2009) a sampling frame is a list of elements

from which the sample is actually drawn and is closely related to the population. In the ideal

case, the sampling frame should coincide with the population of interest. For this study, the

sampling frame came from the list of all staff members who work at the bank. The list was

obtained from the human resource department at the bank.

3.3.2.2 Sampling Technique

Statistical sampling techniques are the strategies applied by researchers during the statistical

sampling process (Lohr, 2013). Stratified sampling technique was used in the study to select

the respondents from among the list of employees that work at Chase Bank. According to

Kothari (2004) stratified random sampling is a modification of random sampling in which

one divides the population into two or more relevant and significant groups based on one or

more attributes. This sampling technique was used because it barred the introduction of

biasness in the selection. The technique was also employed because it enabled the

generalization of a larger population with a margin of error that was statistically

determinable.

After the population had been divided into various strata in terms of the departments they

work in, each stratum was sampled as an independent sub-population, out of which

individual elements were selected. Simple random sampling was used in selecting members

in each stratum. According to Lim and Ting (2013) simple random sampling improves the

representativeness of the sample by reducing the sampling error as well as it ensures that all

elements of the study have an equal chance of being selected for the study.

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3.3.2.3 Sample Size

A sample size allows the researcher to make generalizations about the population. A sample

is a subset of a population, but that subset is only useful if it accurately represents the larger

population (Cox, 2008). To ensure that the sample accurately represents the population, the

researcher clearly defines the characteristics of the population, determines the required

sample size and selects the best method that members will be selected from the larger

population.

The sample size of the study used 10% of the target population which was 93 since the target

population of 930 was large. According to Mugenda and Mugenda (1999) a sample size of

between 10% and 30% is statistically considered appropriate to determine a sample size of a

given population. The sample size for the study was therefore 93, which according to

Mugenda and Mugenda (1999) it was above the required thresh hold. The distribution was as

shown in Table 3.2.

Table 3.2 Sample Size Distribution

Distribution

Population Sample Size (10%)

Customer Care 150 15

Business Development 400 40

Contact center 44 4

Product Development 10 1

Treasury 15 2

Finance 25 3

Human resource 60 6

Clearing 18 2

Credit 30 3

Administration 40 4

Payment 13 1

Digital Banking 15 2

Innovation 20 2

Procurement 10 1

Leasing 20 2

IT 35 3

Marketting 25 2

Total 930 93

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3.4 Data Collection Methods

The study relied greatly on primary. The data was collected from the study population

through the use of self-administered questionnaires to meet the study objectives. A

questionnaire is a general term including all data collection techniques in which each person

is asked to answer the same set of questions in a predetermined order. Fielding (2010)

defines a structured questionnaire as a formal list of questions designed so as to get the facts.

This study used closed-ended questions to gather data for the study. The questionnaire

employed the use of a five point likert scale question. The likert measure allowed the study

population to ratio various questions using the scales that were provided.

The questions in the questionnaire sought the general demographics of the respondents. The

rest were divided into three sections as per the research objectives. The second section was

driven to determine the reasons for CRM adoption by financial institutions, the third section

was driven to examine the challenges of implementing CRM in financial institutions, and the

last bit highlighted the strategies which facilitate successful implementation of CRM in

financial institutions.

3.5 Research Procedures

Arksey and O’Malley (2005) state that it is imperative for a researcher to test the reliability

of the data collection instrument for the study results to be reliable. The researcher developed

a questionnaire based on the research questions; the questionnaire was pilot tested by being

administered randomly to a selected sample of ten respondents from the target population to

refine it and test the reliability of the instrument and also ensure that the questions therein

would be able to meet the objectives of the study.

The questionnaires were administered through the “drop and pick” method to the selected

respondents. At the point of dropping of the questionnaires, the researcher ensured that the

document was intact and the researcher explained to the respondents what was expected of

them. The respondents were given a whole week (7 days) to fill in the questionnaires. The

researcher ensured that contacts for the participants were received from the respondents.

30

Follow-up phone calls were made to the respondents so as to ensure that a high response rate

was achieved for the study.

Data was collected in the month of March 2015. The prospective firm and respondents were

approached and requested to participate in the study. Bryman (2007) states that, detailed

information about the study needs to be given to the population before carrying out a study.

During this study, information was given to the target firm and respondents through their

official e-mails. Consent to participate was obtained before the data collection activity

commenced.

3.6 Data Analysis Methods

Data analysis entails editing, coding and tabulation of data collected into manageable

summaries that is easy to interpret (Cox, 2008). This study used quantitative method of data

analysis. To guarantee easy scrutiny the questionnaire was coded in accordance with each of

the research objectives to ensure precision during the study process. The data collected was

classified into meaningful categories (coded), edited and tabulation of the same was done.

Statistical Package for Social Science (SPSS) Student Version 16.0 which is a unified and

comprehensive package was used to analyze the collected data thoroughly and conveniently.

The data was summarized and categorized in a frequency distribution table out of which

graphical and chart presentations were generated to give visual image of respondent

responses. Presentations were by use of figures and tables. Statistical analysis of means and

standard deviations were used to give the strengths of the responses on the likert questions

and this gave the level of difference in terms of responses. Percentages were used to give the

numerical figure in terms of majority of responses on a given question. The study employed

the use of regression analysis to test strength of the relationships between the study variables.

31

3.7 Chapter Summary

This chapter has introduced the research methodology that was used. In this study,

descriptive research design was used. Since the target population in this study was very large,

it necessitated the researcher to select a sample that was a representative of the target

population. Data collection was done through the use of questionnaires that were

administered through a “drop and pick” method to the selected respondents. For data

analysis, frequency tables and charts were used to present results for easier understanding

and interpretation. Statistical methods of data analysis were used to translate the collected

data. The next chapter discusses and demonstrates the results and findings of the study.

32

CHAPTER FOUR

4.0 RESULTS AND FINDINGS

4.1 Introduction

The research examined in detail the cause of CRM adoption by financial institutions in

Kenya; the challenges of implementing CRM in financial institutions in Kenya; and the

strategies which facilitate successful implementation of CRM in financial institutions in

Kenya. The results of the study have been presented in this section. From the 93

questionnaires handed out, only 72 were received giving the study a response rate of 77%.

4.2 Demographic Information

4.2.1 Gender

From the data collected, it was clear that male respondents were the majority in the

population with 56% while the female were 44% as shown in Figure 4.1.

Figure 4.1 Respondents Gender

4.2.2 Education Background

The researcher was driven to determine the education background of the respondents. Figure

4.2 indicates that 50% of the respondents had done their degrees, 18% had equally finished

their Master’s degree and secondary education, and 14% had attained a diploma. These

results indicate that the population had a strong educational background.

33

Figure 4.2 Education Background

4.2.3 Years with the Bank

Experience and the number of years was also asked by the researcher and as shown in Figure

4.3, 86% of the respondents had been with the bank for 1-5 years, and 14% had been with the

bank for 6-10 years. These results show that the bank was fairly new in the market and most

of the employees had been with it since it came to the market.

Figure 4.3 Years with the Organization

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4.3 Reasons for CRM Adoption by Financial Institutions

4.3.1 Bank Environment

The respondents were asked to rate the environment where their bank operated and Table 4.1

shows the analyzed results. The mean score of 3.0 and above indicates that that particular

element affected the bank greatly while the mean of 2.5 and below shows that the element

did not affect the bank as much. The standard deviation was used to determine the level of

difference among the respondents and the value of less than 1.5 indicated that the difference

among the responses given was insignificant, which means that they were almost similar.

Table 4.1 Bank Environment

SD D NS A SA MEAN STD

DEV % % % % %

Today’s playing field for

financial institutions is both

complex and competitive

0.0 0.0 18.1 38.9 43.1 4.25 1.089

There fewer new customers in the

market to pursue and more banks

are pursuing them

20.8 18.1 6.9 54.2 0.0 2.94 1.052

The financial laws and

regulations vary globally and

change continuously

0.0 0.0 8.3 76.4 15.3 4.07 1.150

The internet has increased

pressure to margins by enabling

customers to do their own

comparison shopping

0.0 0.0 30.6 40.3 29.2 3.99 1.053

Table 4.1 shows that today’s playing field for financial institutions is both complex and

competitive as shown by 38.9% of the respondents who agreed and 43.1% who strongly

agreed, the response had a mean of 4.25 and a standard deviation of 1.089. The study showed

that there fewer new customers in the market to pursue and more banks are pursuing them as

35

indicated by 54.2% of the respondents; the results had a mean of 2.94 and a standard

deviation of 1.052. The table showed that the financial laws and regulations vary globally

and change continuously as shown by 76.4% who agreed and 15.3% who strongly agreed,

the results had a mean of 4.07 and a standard deviation of 1.150. The results also showed that

the internet has increased pressure to margins by enabling customers to do their own

comparison shopping as seen by 40.3% who agreed and 29.2% who strongly agreed, the

results had a mean of 3.99 and a standard deviation of 1.053.

4.3.2 CRM and the Organizations’ Business Process Re-engineering

The researcher was driven to determine how CRM affected the business process re-

engineering and the results were as tabled. The mean score of 3.0 and above indicates that

that particular element affected the bank greatly while the mean of 2.5 and below shows that

the element did not affect the bank as much. The standard deviation was used to determine

the level of difference among the respondents and the value of less than 1.5 indicated that the

difference among the responses given was insignificant.

Table 4.2 CRM and Business Process Re-engineering

SD D NS A SA MEAN STD

DEV % % % % %

CRM is used in our organization as an integrated approach to managing

customer relationships

0.0 0.0 0.0 66.7 33.3 3.33 0.475

CRM in our organization has

reengineered customer value through better service recovery and

competitive positioning

0.0 0.0 25.0 48.6 26.4 3.40 0.722

Our CRM combines our business

process reengineering and technology in order to understand our customers

from the perspective of who they are,

what they do, and what they are like

0.0 0.0 30.6 36.1 33.3 3.66 0.804

Our CRM creates value to customers

through using Information and Technology as an enabler for

achieving quantum improvements

0.0 0.0 36.1 37.5 26.4 4.08 0.790

36

Table 4.2 showed that CRM is used in the organization as an integrated approach to

managing customer relationships as shown by 66.7% and 33.3% of the respondents who

agreed and strongly agreed, the results had a mean of 3.33 and a standard deviation of 0.475.

It also shows that CRM in the organization has reengineered customer value through better

service recovery and competitive positioning as shown by 48.6% and 26.4% of the

respondents who agreed and strongly agreed, the results had a mean of 3.40 and a standard

deviation of 0.722. The table also shows that CRM in the organization combined business

process reengineering and technology in order to understand customers from the perspective

of who they are, what they do, and what they are like as shown by 36.1% and 33.3% of the

respondents who agreed and strongly agreed, the results had a mean of 3.66 and a standard

deviation of 0.804. Finally, it showed that CRM created value to customers through using

Information and Technology as an enabler for achieving quantum improvements as shown by

37.5% and 26.4% of the respondents who agreed and strongly agreed, the results had a mean

of 4.08 and a standard deviation of 0.790.

4.3.3 CRM and Organizations’ Analytical Aspects

The researcher was driven to determine how CRM affected the organization’s operations and

analytical aspects and the results were as shown in Table 4.3. The mean score of 3.0 and

above indicates that that particular element affected the bank greatly while the mean of 2.5

and below shows that the element did not affect the bank as much. The standard deviation

was used to determine the level of difference among the respondents and the value of less

than 1.5 indicated that the difference among the responses given was insignificant.

The study showed that CRM in the organization was centered in supporting business

processes which included customer contact (sales, marketing and service) as supported by

59.7% and 33.3% of the respondents, the results had a mean of 3.39 and a standard deviation

of 0.762. CRM in the organization also sent resulting data to users since it is required to carry

out the activities related to the commercial area as shown by 33.3% and 26.4% of the

population, the results had a mean of 3.40 and a standard deviation of 0.918.

37

Table 4.3 CRM and Organizations’ Analytical Aspects

SD D NS A SA MEAN STD

DEV % % % % %

Our operational CRM is centered in

supporting business processes which

includes customer contact (sales,

marketing and service)

0.0 6.9 0.0 59.7 33.3 3.39 0.762

Our CRM sends the resulting data to

users since it is required to carry out

the activities related to the

commercial area

0.0 6.9 33.3 33.3 26.4 3.40 0.918

Our operational CRM supports sales

force automation (SFA)

0.0 6.9 33.3 33.3 26.4 3.40 0.918

Our operational CRM supports

customer support and service

0.0 0.0 6.9 79.2 13.9 3.31 0.454

Our operational CRM supports

enterprise marketing automation

0.0 6.9 51.4 20.8 20.8 3.18 0.902

Our analytical CRM collects and

analyzes data related to customer and

marketing

0.0 0.0 33.3 45.8 20.8 3.43 0.730

Our analytical CRM provides value

information for decision taking

support and strategic directions in the

sales area

0.0 0.0 33.3 33.3 33.3 3.40 0.822

Our collaborative CRM supports the

relations between users across the

organizational structure

0.0 0.0 33.3 22.2 44.4 3.66 0.881

Our collaborative CRM aids in the

actions of operational CRM

0.0 0.0 22.2 51.4 26.4 4.08 0.701

38

Table 4.3 also shows that CRM supported sales force automation (SFA) as shown by 33.3%

and 26.4% of the respondents; the results had a mean of 3.40 and a standard deviation of

0.918. The study shows that CRM supported customer support and service as shown by

79.2% and 13.9% of the respondents, the response had a mean of 3.31 and a standard

deviation of 0.454. The results show that CRM also supported enterprise marketing

automation as evidenced by 20.8% who equally agreed and strongly agreed, the response had

a mean of 3.18 and a standard deviation of 0.902. The study also showed that analytical

CRM in the organization collected and analyzed data related to customer and marketing as

shown by 45.8% and 20.8% of the respondents, the response had a mean of 3.43 and a

standard deviation of 0.730. It also showed that it provided value information for decision

taking support and strategic directions in the sales area as shown by 33.3% of the respondents

who equally agreed and strongly agreed, the response had a mean of 3.40 and a standard

deviation of 0.822. The study also showed that collaborative CRM supported the relations

between users across the organizational structure as evidenced by 22.2% and 44.4% of the

respondents; the response had a mean of 3.66 and a standard deviation of 0.881. It also shows

that CRM aided in the actions of operational CRM as shown by 51.4% and 26.4% of the

respondents, the response had a mean of 4.08 and a standard deviation of 0.701.

4.3.4 CRM Benefits

The respondents were asked to rate the benefits of CRM in their organization and Table 4.4

showed the analyzed results. The mean score of 3.0 and above indicates that that particular

element affected the bank greatly. The standard deviation was used to determine the level of

difference among the respondents and the value of less than 1.5 indicated that the difference

among the responses given was insignificant.

39

Table 4.4 CRM and its Benefit to the Organization

SD D NS A SA MEAN STD

DEV % % % % %

CRM in the organization has resulted in an increase in data accuracy

0.0 8.3 43.1 27.8 20.8 3.61 0.765

CRM has ensured that all

departments within the organization

are working with the same data

0.0 30.6 15.3 40.3 13.9 3.38 0.774

CRM has improved customer satisfaction, loyalty, retention, and

profitability using efficient tools that

lower service costs

0.0 18.1 15.3 52.8 13.9 3.62 1.018

CRM has improved customer loyalty using efficient tools that lower

service costs

0.0 0.0 0.0 86.1 13.9 4.14 0.752

CRM has improved customer

retention using efficient tools that lower service costs

0.0 0.0 0.0 79.2 20.8 4.21 0.814

CRM has improved customers

profitability using efficient tools that

lower service costs

0.0 0.0 0.0 79.2 20.8 4.21 0.814

By adopting CRM, our organization

has complied with the privacy and

security requirements of the current

regulatory environment

0.0 0.0 8.3 58.3 33.3 4.25 0.910

CRM has eliminated inefficiencies

with a solution that not only

customizes but also integrates the

company’s roles and workflow

0.0 8.3 0.0 65.3 26.4 4.10 0.830

CRM has enabled the organization to reduce cost on sales when evaluating

customers profitability

0.0 0.0 26.4 45.8 27.8 4.01 0.877

CRM has enabled the organization to

reduce in the cost of recruiting customers when evaluating customers

profitability

0.0 12.5 18.1 48.6 20.8 3.78 0.936

CRM has simplified the company’s

infrastructure as a result of the internal organization’s focus turned

towards customers

0.0 21.5 26.4 40.3 20.8 3.69 0.910

Table 4.4 showed that CRM in the organization had resulted in an increase in data accuracy

since 27.8% had agreed and 20.8% strongly agreed, the response had a mean of 3.61 and a

40

standard deviation of 0.765. CRM had ensured that all departments within the organization

were working with the same data as shown by 40.3% who agreed and 13.9% who strongly

agreed, the response had a mean of 3.38 and a standard deviation of 0.774. CRM had

improved customer satisfaction, loyalty, retention, and profitability using efficient tools that

lower service costs as stated by 52.8% who agreed and 13.9% who strongly agreed, the

response had a mean of 3.62 and a standard deviation of 1.018. CRM had improved customer

loyalty using efficient tools that lowered service costs as shown by 86.1% of the respondents

who agreed and 13.9% who strongly agreed, the response had a mean of 4.14 and a standard

deviation of 0.752. CRM had improved customer retention using efficient tools that lowered

service costs as shown by 79.2% who agreed and 20.8% who strongly agreed, the response

had a mean of 4.21 and a standard deviation of 0.814. CRM had improved customers

profitability using efficient tools that lowered service costs as shown by 79.2% who agreed

and 20.8% who strongly agreed, the response had a mean of 4.21 and a standard deviation of

0.814. Adopting CRM, the organization had complied with the privacy and security

requirements of the current regulatory environment as shown by 58.3% who agreed and

33.3% who strongly agreed, the response had a mean of 4.25 and a standard deviation of

0.910. CRM had eliminated inefficiencies with a solution that not only customized but also

integrated the company’s roles and workflow as shown by 65.3% who agreed and 26.4%

who strongly agreed, the response had a mean of 4.10 and a standard deviation of 0.830.

CRM had enabled the organization to reduce cost on sales when evaluating customers’

profitability as shown by 45.8% who agreed and 27.8% who strongly agreed, the response

had a mean of 4.01 and a standard deviation of 0.877. CRM had enabled the organization to

reduce the cost of recruiting customers when evaluating customers’ profitability as shown by

48.6% that agreed and 20.8% who strongly agreed, the response had a mean of 3.78 and a

standard deviation of 0.936. CRM had simplified the company’s infrastructure as a result of

the internal organization’s focus had turned towards customers as shown by 40.3% who

agreed and 20.8% who strongly agreed, the response had a mean of 3.69 and a standard

deviation of 0.910.

41

4.3.5 Relationship between CRM Capabilities

Table 4.5 presents the results of correlation analysis between the organization performance

and CRM capabilities. The results shown in table indicate that the correlation between

organization performance and CRM re-engineering have a correlation of 0.058 at a

significant level of 0.01. This showed that re-engineering was not significant to business

performance since the correlation is greater than 0.01. Component wise, the table shows that

operational CRM and collaborative CRM had correlations of 0.037, and 0.214 respectively at

a significant level of 0.01. These results also show that operational CRM and collaborative

CRM do not affect the performance of an organization.

Table 4.5 Pearson Correlation Matrix for CRM Capabilities

Organization Re-engineering Operational

CRM

Collaborative

CRM

Organization 1 .058 .037 .214

Re-engineering .058 1 .575 .044

Operational CRM .037 .575 1 .366

Collaborative CRM .214 .044 .366 1

** Correlation is significant at the 0.01 level (2-tailed)

4.4 Challenges of Implementing CRM in Financial Institutions

4.4.1 CRM Flaws and Assumptions in the Organization

The researcher was driven to determine whether CRM had flaws and assumptions that

affected its performance in the organization and the results were as tabled. The standard

deviation was used to determine the level of difference among the respondents and the value

of less than 1.5 indicated that the difference among the responses given was insignificant,

meaning that they were more or less the same. The mean score of 3.0 and above indicates

that that particular element tested affected CRM greatly while the mean of 2.5 and below

shows that the element did not affect CRM as much.

42

Table 4.6 CRM Flaws and Assumptions

SD D NS A SA MEAN STD

DEV % % % % %

CRM ignores the reality that many

customers do not want to engage in

relationships

26.4 22.2 36.1 8.3 6.9 2.47 1.175

We lack clear generalizable

empirical support for the expected

return from CRM investments as an

organization

26.4 6.9 41.7 18.1 6.9 2.72 1.236

Our CRM raises questions

regarding the most appropriate mix

of capabilities to effectively exploit

the investment

0.0 0.0 12.5 73.6 13.9 4.01 0.517

It is difficult to capture and

properly attribute the direct or

indirect value generated from our

CRM system

13.9 6.9 37.5 41.7 0.0 3.07 1.025

The business value generated by

CRM depends on a combination of

complementary technical,

organizational and human resources

0.0 6.9 0.0 72.2 20.8 4.07 0.699

Table 4.6 showed that CRM in the organization did not ignores the reality that many

customers did not want to engage in relationships as shown by 26.4% of the respondents who

strongly disagreed and 22.2% who disagreed, the response had a mean of 2.47 and a standard

deviation of 1.175. The organization did not lack clear generalizable empirical support for

the expected return from CRM investments as indicated by 26.4% who strongly disagreed

and 6.9% who disagreed, the response had a mean of 2.72 and a standard deviation of 1.236.

CRM in the organization raised questions regarding the most appropriate mix of capabilities

43

to effectively exploit the investment as shown by 73.6% of the respondents who agreed and

13.9% that strongly agreed, the response had a mean of 4.01 and a standard deviation of

0.517. It was difficult for the company to capture and properly attribute the direct or indirect

value generated from the CRM system as shown by 41.7% of the population that agreed, the

response had a mean of 3.07 and a standard deviation of 1.025. The business value generated

by CRM depended on a combination of complementary technical, organizational and human

resources as attested to by 72.2% that agreed and 20.8% that strongly agreed, the response

had a mean of 4.07 and a standard deviation of 0.699.

4.4.2 Regression Analysis for Flaws and Assumptions

A regression analysis was carried out to test the analysis of the flaws and assumptions of

CRM. Table 4.7 shows the model summary of the test. The table shows that CRM’s

ignorance to customer needs is affected by the CRM integrated approach at 0.587=58.7%.

This shows that CRM ignorance to customer needs was significant.

Table 4.7 Regression Analysis for Flaws and Assumptions

Model Summary

Mode R R Square Adjusted R

Square

Std. Error of the

Estimate

1 .766 .587 .581 .307

a. Predictors: (Constant) Ignores Customer Reality

The regression coefficients table shows that CRM adoption by the organization affected its

ability to ignore customers negatively and the p. value of 0.000 shown in the table was less

than the study’s alpha level of 0.05. These results showed that statistically, CRM adoption

impacted CRM in ignoring customer needs.

44

Coefficients

Model

Unstandardized

Coefficients

Standardized

Coefficients

t

Sig B Std. Error Beta

1 (Constant)

Ignores Customer Reality

5.099

-.310

.087

.031

-.766

60.095

-9.977

.000

.000

a. Dependent Variable: CRM Integrated Approach

4.4.3 CRM Failure

The researcher was driven to determine whether CRM had failed in the organization and the

results were as tabled. The standard deviation was used to determine the level of difference

among the respondents and the value of less than 1.5 indicated that the difference among the

responses given was insignificant. The mean score of 3.0 and above indicates that that

particular element affected CRM greatly while the mean of 2.5 and below shows that the

element did not affect CRM as much.

Table 4.8 showed that CRM system in the organization was normally used to count

customers rather than create customers as shown by 47.2% of the respondents who agreed,

the response had a mean of 2.89 and a standard deviation of 1.157. CRM in the organization

measured the activities of prospects after they had “self-selected” in some way by calling the

office or filling-in forms somewhere as shown by 59.7% of the respondents who agreed, the

response had a mean of 3.38 and a standard deviation of 0.830. The table also shows that the

CRM system was very good at capturing and organizing structured information, and also

good at capturing and organizing unstructured information as shown by 20.8% who strongly

disagreed and 37.5% who agreed, the response had a mean of 2.89 and a standard deviation

of 1.157. CRM system in the organization was not complicated to use as it did not require the

aid of technicians to manipulate it as shown by 31.9% who strongly disagreed and 34.7%

who disagreed, the response had a mean of 2.26 and a standard deviation of 1.163. CRM in

the organization did not require end-users to take actions that were not part of their natural

work process in order to update the system as shown by 31.9% who strongly disagreed and

45

22.2% who disagreed; the response had a mean of 2.53 and a standard deviation of 1.300.

CRM output was only as good as the input i.e. “garbage in, garbage out” as shown by 30.6%

who agreed and 40.3% who strongly agreed, the response had a mean of 3.97 and a standard

deviation of 1.061. The table showed that CRM would not be more useful for transactional

(like call center) types of companies than banks as shown by 13.9% who strongly disagreed

and 45.8% who disagreed, the response had a mean of 2.75 and a standard deviation of

1.275.

Table 4.8 CRM Failure

SD D NS A SA MEAN STD

DEV % % % % %

Our CRM system is normally used to count customers rather than create

customers

13.9 30.6 8.3 47.2 0.0 2.89 1.157

Our CRM measures the activities of

prospects after they have “self-selected” in some way by calling the

office or filling in your form

somewhere

0.0 22.2 18.1 59.7 0.0 3.38 0.830

Our CRM system is very good at

capturing and organizing structured information, but are horrific at

capturing and organizing

unstructured information

20.8 37.5 15.3 26.4 0.0 2.47 1.100

Our CRM system is complicated to use as it requires the aid of

technicians to manipulate it

31.9 34.7 8.3 25.0 0.0 2.26 1.163

Our CRM requires end-users to take

actions that are not part of their natural work process in order to

update the system

31.9 22.2 6.9 38.9 0.0 2.53 1.300

Our CRM output is only as good as

the input i.e. “garbage in, garbage out”

0.0 13.9 15.3 30.6 40.3 3.97 1.061

The CRM would be more useful for

transactional (like call center) types

of companies than our bank

13.9 45.8 0.0 31.9 8.3 2.75 1.275

46

4.4.4 Organization Failure in Adopting CRM

The researcher was driven to determine whether the organization had failed in adopting CRM

and the results were as tabled. The mean score of 3.0 and above indicates that that particular

element affected the organizations ability to adopt CRM greatly while the mean of 2.5 and

below shows that it did not. The standard deviation was used to determine the level of

difference among the respondents and the value of less than 1.5 indicated that the difference

among the responses given was insignificant.

Table 4.9 Organization Failure in Adopting CRM

SD D NS A SA MEAN STD

DEV % % % % %

Our company has No CRM value proposition

20.8 15.3 48.6 6.9 8.3 2.67 0.809

Our organization has failed to match

its CRM technology to the way our

partners work

0.0 6.9 52.8 26.4 13.9 3.47 1.006

Our CRM treats all customers alike 31.9 22.2 12.5 25.0 8.3 2.56 1.194

Our organization lacks a proper

CRM guideline system

18.1 41.7 0.0 18.1 22.2 2.85 1.060

Our organization suffers from a lot

of dirty and inaccurate data

6.9 27.8 25.0 40.3 0.0 2.99 1.701

Our CRM system suffers a lot from

lack of employee buy-in attitude

0.0 0.0 41.7 26.4 31.9 3.90 0.561

Table 4.9 showed that the company has a CRM value proposition as shown by 20.8% who

strongly agreed and 15.3% that agreed, the response had a mean of 2.67 and a standard

deviation of 1.809. The organization had failed to match its CRM technology to the way their

partners worked as shown by 26.4% who agreed and 13.9% who strongly agreed; the

response had a mean of 3.47 and a standard deviation of 1.006. CRM in the organization did

not treat all customers alike as shown by 31.9% who strongly agreed and 22.2% who agreed,

the response had a mean of 2.56 and a standard deviation of 1.194. The organization did not

lack a proper CRM guideline system as shown by 18.1% who strongly agreed and 41.7%

who agreed, the response had a mean of 2.85 and a standard deviation of 1.060. The

organization suffered from a lot of dirty and inaccurate data as shown by 40.3% of the

respondents who agreed, the response had a mean of 2.99 and a standard deviation of 1.701.

47

The CRM system in the organization suffered a lot from lack of employee buy-in attitude as

shown by 26.4% of the population that agreed and 31.9% that strongly agreed, the response

had a mean of 3.90 and a standard deviation of 0.561.

4.4.5 CRM Failure on Customer Information and Management

The researcher was driven to determine whether the CRM system had failed in managing

customer information and the results were as tabled. The mean score of 3.0 and above

indicates that that particular element affected the ability of CRM in managing customer

information greatly. The standard deviation was used to determine the level of difference

among the respondents and the value of less than 1.5 indicated that the difference among the

responses given was insignificant.

Table 4.10 shows that customer information system (CIS) tools were not limited in scope as

shown by 31.9% who agreed and 26.4% who strongly agreed, the response had a mean of

3.36 and a standard deviation of 1.004. The study showed that CRM was not very complex to

use as shown by 40.3% who agreed, the response had a mean of 3.04 and a standard

deviation of 0.914. The study showed that CRM was not very expensive to maintain as

shown by 26.4% who agreed, the response had a mean of 3.00 and a standard deviation of

1.112. CRM in the company contained irrelevant information for data mining as shown by

40.3% who agreed, the response had a mean of 2.83 and a standard deviation of 1.245. The

existing data warehouses lacked information on monetary values as shown by 47.2% who

agreed, the response had a mean of 2.90 and a standard deviation of 1.297. The existing data

warehouses lacked information frequency as shown by 31.9% who agreed and 8.3% who

strongly agreed, the response had a mean of 2.85 and a standard deviation of 1.301. The

existing data warehouses did not extend time in the market as shown by 6.9% who strongly

agreed and 27.8% who agreed, the response had a mean of 2.89 and a standard deviation of

1.137. The CRM system in the organization had multi-vendor tools and capabilities and was

overburdened by internal IT formation as shown by 31.9% who agreed and 8.3% who

strongly agreed, the response had a mean of 3.14 and a standard deviation of 0.830.

48

Table 4.10 CRM Failure on Customer Information and Management

SD D NS A SA MEAN STD

DEV % % % % %

Our customer information system

(CIS) tools are very limited in

scope

6.9 34.7 31.9 26.4 3.36 1.004

Our CRM is very complex to use 6.9 22.2 30.6 40.3 0.0 3.04 0.914

Our CRM is very expensive to

maintain

0.0 26.4 47.2 26.4 0.0 3.00 1.112

Our CRM contains irrelevant

information for data mining

22.2 12.5 25.0 40.3 0.0 2.83 1.245

Our existing data warehouses lack

information on monetary values

22.2 12.5 18.1 47.2 0.0 2.90 1.297

Our existing data warehouses lack

information frequency

22.2 19.4 18.1 31.9 8.3 2.85 1.301

Our existing data warehouses

extends time in the market

6.9 27.8 43.1 13.9 8.3 2.89 1.137

Our CRM system has multi-

vendor tools and capabilities and is

overburdened by internal IT

formation

0.0 34.7 25.0 31.9 8.3 3.14 0.830

4.4.6 Regression Analysis for Customer Information and Management

The regression analysis was run to test how customer information management was handled

by the CRM system. Table 4.11 shows the regression model summary. The table shows that

customer information system was affected by the CRM integrated approach at 0.145=14.5%.

This showed that CRM impact on CIS was insignificant.

49

Table 4.11 Regression Analysis for Customer Information and Management

Model Summary

Mode R R Square Adjusted R

Square

Std. Error of the

Estimate

1 .381 .145 .133 .442

a. Predictors: (Constant) Customer Information System (CIS)

The regression coefficients table shows that CRM adoption affected CIS negatively and the

p. value of 0.001 shown in the table was less than the study’s alpha level of 0.05. These

results showed that statistically, CRM adoption impacted CIS in the organization.

Coefficients

Model

Unstandardized Coefficients Standardized

Coefficients

t

Sig B Std. Error Beta

1 (Constant)

CIS

4.774

-.131

.138

.038

-.381

34.531

-3.444

.000

.001

a. Dependent Variable: CRM Integrated Approach

4.5 Successful Strategies for Implementing CRM

4.5.1 The Organization’s CRM Strategy

The researcher was driven to determine how the organization’s strategy of adopting CRM

worked out and the results were as tabled. The mean score of 3.0 and above indicates that

that particular strategies adopted by the organization were very impactful. The standard

deviation was used to determine the level of difference among the respondents and the value

of less than 1.5 indicated that the difference among the responses given was insignificant.

Table 4.12 shows that the organization explained the real business needs to vendors/partners

before investing in CRM as shown by 29.2% who agreed and 12.5% who strongly agreed,

the response had a mean of 3.54 and a standard deviation of 0.714. The CRM project was

50

carried out in phases during implementation as shown by 44.4% who agreed and 12.5% who

strongly agreed, the response had a mean of 3.69 and a standard deviation of 0.812. The

organization allocated available resources to the components that were affected by CRM that

were people, processes and technology as shown by 44.4% of the respondents who agreed

and 19.4% who strongly agreed, the response had a mean of 3.83 and a standard deviation of

0.971. All affected parties were involved before the CRM project was rolled out as shown by

22.2% who agreed and 26.4% who strongly agreed, the response had a mean of 3.75 and a

standard deviation of 0.614.

Table 4.12 Organization’s CRM Strategy

SD D NS A SA MEAN STD

DEV % % % % %

The organization explained the real

business needs to vendors/partners

before investing in CRM

0.0 0.0 58.3 29.2 12.5 3.54 0.714

The CRM project was carried out in

phases during implementation

0.0 0.0 43.1 44.4 12.5 3.69 0.812

The organization allocated available

resources to the components that were

affected by CRM that were people,

processes and technology

0.0 0.0 36.1 44.4 19.4 3.83 0.971

All affected parties were involved

before the CRM project was rolled out

0.0 0.0 51.4 22.2 26.4 3.75 0.614

4.5.2 Organization Needs of CRM and its Functionality

The researcher was driven to determine how the organization’s needs were addressed by

CRM and its functionality and the results were as tabled. The mean score of 3.0 and above

indicates that that particular organization needs were met by CRM functionality. The

standard deviation was used to determine the level of difference among the respondents and

51

the value of less than 1.5 indicated that the difference among the responses given was

insignificant.

Table 4.13 Organization Needs of CRM and its Functionality

SD D NS A SA MEAN STD

DEV % % % % %

The organization focused its

search for the most suitable

solution to its CRM development

13.9 0.0 59.7 13.9 12.5 3.11 0.714

The organization looked at how

customer relationships were

managed within the CRM period

13.9 0.0 36.1 30.6 19.4 3.42 0.651

The company anticipated how business would change and grow

down the road

0.0 13.9 36.1 37.5 12.5 3.49 0.981

The company examined the short-

and long-term fiscal implications of the CRM solution

0.0 6.9 65.3 15.3 12.5 3.33 0.544

Our CRM supports the existing

business processes

0.0 0.0 44.4 43.1 12.5 3.68 0.741

Our CRM provides the capability

to improve them

0.0 8.3 0.0 91.7 0.0 3.83 0.413

Our CRM is easy to customize for

the organizations specific business

application

0.0 19.4 0.0 59.7 20.8 3.82 0.404

Our CRM has intuitive user interfaces

13.9 0.0 12.5 66.7 6.9 3.53 0.752

Our CRM integrates with existing

systems within the company

0.0 0.0 8.3 63.9 27.8 4.19 0.514

Our CRM provides robust reporting

0.0 13.9 0.0 72.2 13.9 3.86 0.477

Our CRM provides forecasting

capabilities

13.9 8.3 12.5 51.4 13.9 3.43 0.512

Our CRM is analytical 13.9 8.3 12.5 51.4 13.9 3.43 0.512

Our CRM is scalable 0.0 8.3 12.5 65.3 13.9 3.85 0.447

Our CRM is flexible 0.0 22.2 18.1 45.8 13.9 3.51 0.643

Table 4.13 shows that the organization focused its search for the most suitable solution to its

CRM development as shown by 13.9% who agreed and 12.5% who strongly agreed, the

response had a mean of 3.11 and a standard deviation of 0.714. The organization looked at

how customer relationships were managed within the CRM period as indicated by 30.6%

52

who agreed and 19.4% who strongly agreed, the response had a mean of 3.42 and a standard

deviation of 0.651. The company anticipated how business would change and grow down the

road as shown by 37.5% who agreed and 12.5% who strongly agreed, the response had a

mean of 3.49 and a standard deviation of 0.981. The company examined the short-and long-

term fiscal implications of the CRM solution as shown by 15.3% who agreed and 12.5% who

strongly agreed, the response had a mean of 3.33 and a standard deviation of 0.544. CRM

supported the existing business processes as shown by 43.1% who agreed and 12.5% who

strongly agreed, the response had a mean of 3.68 and a standard deviation of 0.741. CRM

provided the capability to improve business processes as shown by 91.7% who agreed, the

response had a mean of 3.83 and a standard deviation of 0.413. The study shows that CRM

was easy to customize for the organizations specific business application as shown by 59.7%

who agreed and 20.8% who strongly agreed, the response had a mean of 3.82 and a standard

deviation of 0.404. CRM in the organization had intuitive user interfaces as shown by 66.7%

who agreed and 6.9% who strongly agreed, the response had a mean of 3.53 and a standard

deviation of 0.752. CRM integrated with existing systems within the company as shown by

63.9% who agreed and 27.8% who strongly agreed, the response had a mean of 4.19 and a

standard deviation of 0.514. CRM provided robust reporting as shown by 72.2% who agreed

and 13.9% who strongly agreed, the response had a mean of 3.86 and a standard deviation of

0.477. CRM provided forecasting capabilities as shown by 51.4% who agreed and 13.9%

who strongly agreed, the response had a mean of 3.43 and a standard deviation of 0.512.

CRM was analytical as shown by 51.4% who agreed and 13.9% who strongly agreed, the

response had a mean of 3.43 and a standard deviation of 0.512. CRM was scalable as shown

by 65.3% who agreed and 13.9% who strongly agreed, the response had a mean of 3.85 and a

standard deviation of 0.447. CRM was flexible as shown by 45.8% who agreed and 13.9%

who strongly agreed, the response had a mean of 3.51 and a standard deviation of 0.643.

4.5.3 Organization’s Implementation of CRM Strategies

The researcher was driven to determine how organization’s implementation of CRM

strategies was impactful and the results were as tabled. The mean score of 3.0 and above

indicates that those particular strategies were impactful. The standard deviation was used to

53

determine the level of difference among the respondents and the value of less than 1.5

indicated that the difference among the responses given was insignificant.

Table 4.14 Organization’s Implementation of CRM Strategies

SD D NS A SA MEAN STD

DEV % % % % %

The organization understood its

customer relationship problem

before CRM implementation

0.0 8.3 0.0 65.3 26.4 4.10 0.809

Our company built a team that was

empowered to take on the CRM

project

0.0 0.0 33.3 54.2 12.5 3.79 0.906

Our CRM project implementation was supported by the executive

sponsorship

0.0 18.1 6.9 55.6 19.4 3.76 0.494

After implementation, the

company checked and assessed if the CRM systems were meeting

customer needs

0.0 25.0 15.3 47.2 12.5 3.47 0.650

The organization developed

corporate wide CRM engagement from key stakeholders

0.0 0.0 38.9 47.2 13.9 3.75 0.701

The company got key sponsors

involved from the get-go and made

sure that the individuals involved

made financial and time commitment

0.0 0.0 18.1 68.1 13.9 3.96 0.561

The company determined as well

as prioritized CRM drivers and

requirements

0.0 0.0 30.6 48.6 20.8 3.90 0.914

The organization used developed

CRM roadmap

0.0 0.0 59.7 26.4 13.9 3.54 0.742

The organization created a short

list to check out prospective vendors’

0.0 0.0 58.3 27.8 13.9 3.56 0.596

The organization kept everyone

involved in the loop

18.1 0.0 41.7 26.4 13.9 3.18 0.971

The company offered flexible training options to help

accommodate different schedules

as well as learning preferences for

employees

0.0 18.1 26.4 41.7 13.9 3.51 0.731

The company motivated users to 0.0 18.1 15.3 52.8 13.9 3.63 0.544

54

accept the application

The company motivated users to

use the application

16.7 11.1 27.8 25.0 19.4 3.19 0.741

The CRM system was broken

down into smaller manageable

pieces with small milestones

during implementation

0.0 0.0 48.6 41.7 9.7 3.61 0.413

The company has learnt to adjust

to the CRM system

19.4 16.7 6.9 33.3 23.6 3.25 0.404

Table 4.14 shows that the organization understood its customer relationship problem before

CRM implementation as shown by 65.3% who agreed and 26.4% who strongly agreed, the

response had a mean of 4.10 and a standard deviation of 0.809. The company built a team

that was empowered to take on the CRM project as shown by 54.2% who agreed and 12.5%

strongly agreed, the response had a mean of 3.79 and a standard deviation of 0.906. CRM

project implementation was supported by the executive sponsorship as shown by 55.6% who

agreed and 19.4% who strongly agreed, the response had a mean of 3.76 and a standard

deviation of 0.494. After implementation, the company checked and assessed if the CRM

systems were meeting customer needs as shown by 47.2% who agreed and 12.5% who

strongly agreed, the response had a mean of 3.47 and a standard deviation of 0.650. The

organization developed corporate wide CRM engagement from key stakeholders as shown by

47.2% who agreed and 13.9% who strongly agreed, the response had a mean of 3.75 and a

standard deviation of 0.650. The company got key sponsors involved from the get-go and

made sure that the individuals involved made financial and time commitment as shown by

68.1% who agreed and 13.9% who strongly agreed, the response had a mean of 3.96 and a

standard deviation of 0.561. The company determined as well as prioritized CRM drivers and

requirements as shown by 48.6% who agreed and 20.8% who strongly agreed, the response

had a mean of 3.90 and a standard deviation of 0.914. The study also showed that the

organization used and developed a CRM roadmap as shown by 26.4% who agreed and 13.9%

who strongly agreed, the response had a mean of 3.54 and a standard deviation of 0.742. The

organization created a short list to check out prospective vendors’ as shown by 27.8% who

agreed and 13.9% who strongly agreed, the response had a mean of 3.56 and a standard

deviation of 0.596. The organization kept everyone involved in the loop as shown by 26.4%

55

who agreed and 13.9% who strongly agreed, the response had a mean of 3.18 and a standard

deviation of 0.971. The company offered flexible training options to help accommodate

different schedules as well as learning preferences for employees as shown by 41.7% who

agreed and 13.9% who strongly agreed, the response had a mean of 3.51 and a standard

deviation of 0.731. The company motivated users to accept the application as shown by

52.8% who agreed and 13.9% who strongly agreed, the response had a mean of 3.63 and a

standard deviation of 0.544. The company motivated users to use the application as shown by

25.0% who agreed and 19.4% who strongly agreed, the response had a mean of 3.19 and a

standard deviation of 0.413. The CRM system was broken down into smaller manageable

pieces with small milestones during implementation as shown by 41.7% who agreed and

9.7% who strongly agreed, the response had a mean of 3.61 and a standard deviation of

0.413. The company has learnt to adjust to the CRM system as shown by 33.3% who agreed

and 23.6% who strongly agreed, the response had a mean of 3.25 and a standard deviation of

0.404.

4.6 Chapter Summary

This section has presented the results and findings of the study. These findings have been

recorded from the SPSS results that were received from analyzing primary data. Percentages

have been used to indicate the frequency of responses, means and standard deviations were

also used to analyze the strength and difference in responses respectively. Pearson correlation

was used to test the relationship of variables and regression analysis was used to test the

significance of the study variables. The next chapter presents the study discussion and

conclusion.

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CHAPTER FIVE

5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter concludes the study by giving the study summary, discussions, conclusions and

recommendations. The study offers recommendations for improvement based on the study

findings and recommendations for further studies.

5.2 Summary

The general objective of the study was to determine the needs and reasons why financial

institutions need to adopt CRM and the strategies available for them to adopt CRM in Kenya

with a bias focus on Chase Bank Kenya. The study was guided by the following research

objectives: to determine the cause of CRM adoption by financial institutions in Kenya; to

examine the challenges of implementing CRM in financial institutions in Kenya; and to

determine the strategies which facilitate successful implementation of CRM in financial

institutions in Kenya.

The study used a descriptive research design. The target population in this case was all staff

members that work at Chase Bank Kenya located in the Central Business District, Nairobi

County who were 930 in total. Stratified sampling technique was used in the study to select

the respondents from among the list of staff members that was obtained from the bank and

individual elements were randomly selected. The sample size of the study was 93. Primary

data was collected from the study population using a self-administered questionnaire. The

study used quantitative method of data analysis. Statistical Package for Social Science

(SPSS) Student Version 16.0 was used to analyze the collected data thoroughly and

conveniently. Percentages were used to give the numerical figure in terms of majority of

responses on a given question. The study employed the use of regression analysis to test

strength of the relationships between the study variables.

The study showed that today’s playing field for financial institutions is both complex and

competitive and the financial laws and regulations vary globally and change continuously. It

57

can be seen from the study that the internet has increased pressure to margins by enabling

customers to do their own comparison shopping before selecting a financial service provider

and for organizations to remain competitive in the industry, they have to rely on their ability

to leverage on their customers.

The study revealed that CRM systems in the organization are normally used to count

customers rather than create customers and it normally measures the activities of prospects

after they have “self-selected” in some way by calling the office or filling-in forms

somewhere. Study clearly showed that the CRM system is very good at capturing and

organizing structured information, and also good at capturing and organizing unstructured

information and most of the systems are not complicated to use and do not require the aid of

technicians to manipulate it.

The study showed that the organization had a good implementation strategy and that the

company explained the real business needs to vendors/partners before investing in CRM and

the project was carried out in phases during implementation. It can be seen from the study

results that the organization allocated available resources to the components that were

affected by CRM and it focused its search for the most suitable solution to its CRM

development. The organization looked at how customer relationships were managed within

the CRM period and it also anticipated how business would change and grow down the road.

The company examined the short-and long-term fiscal implications of the CRM solution and

it ensured that CRM supported the existing business processes.

5.3 Discussion

5.3.1 Reasons for CRM Adoption by Financial Institutions

The study showed that today’s playing field for financial institutions is both complex and

competitive. This is backed up by Fox and Stead (2010) who state that financial institutions

are undergoing significant change, and today’s playing field is both complex and

competitive. The study showed that the financial laws and regulations vary globally and

change. Fox and Stead (2010) noted that but the financial industry is also impacted by

58

regulations that vary worldwide and are all in a state of transition. The results of the study

also showed that the internet has increased pressure to margins by enabling customers to do

their own comparison. Peppers and Rogers (2009) noted that the internet has added and

increased pressure to margins by enabling customers to do their own comparison shopping.

The study showed that remaining competitive in the industry hinged on the ability of the

banks to understand and leverage on the. Peppers and Rogers (2009) stated that, capturing

and sustaining market advantage in the fiercely competitive financial industry hinges on the

ability to understand and leverage the industry’s most valuable asset - the customers.

The study revealed that CRM is used in the organization as an integrated approach to

managing customer. It also shows that CRM in the organization has reengineered customer

value through better service recovery and competitive. Anton (1996) characterizes CRM as

an integrated approach to managing customer relationships with reengineering of customer

value through better service recovery and competitive positioning of the offer.

The study also showed that CRM in the organization combined business process

reengineering and technology in order to understand customers from the perspective of who

they are, what they do, and what they are. Couldwell (1998) also depicted that CRM was a

combination of business process reengineering (BPR) and technology that seeks to

understand a company’s customer from the perspective of who they are, what they do, and

what they are like.

The study showed that CRM created value to customers through using Information and

Technology as an enabler for achieving quantum. Limayem (2007) intimated that BPR for

CRM involves rethinking and redesigning business processes to create value to customers

through using Information and Technology (IT) as the primary enabler with the aim of

achieving quantum improvements.

59

The study showed that CRM in the organization was centered in supporting business

processes which included customer contact (sales, marketing and service. CRM in the

organization also sent resulting data to users since it is required to carry out the activities

related to the commercial. According to Gartner Group (2004) operational CRM is centered

in supporting business processes which includes customer contact (sales, marketing and

service). The resulting data is sent to the users since it is required to carry out the activities

related to the commercial area.

From the study, it was clear that CRM supported sales force automation (SFA, supported

customer support and, and it also supported enterprise marketing automation. According to

Gartner Group (2004) operational CRM supports the following processing tools: Sales Force

Automation (SFA); Customer Support and Service (CSS); and Enterprise Marketing

Automation (EMA). The operational processes remain the core of the business, producing the

actions that give the company their main goals.

The study showed that CRM in the organization had resulted in an increase in data accuracy.

CRM had ensured that all departments within the organization were working with the same.

Kim et al. (2008) maintained that by adopting a CRM strategy financial institutions among

other things can manage client data, and can also result in an increase in data accuracy with a

common repository of client information that ensures all departments within the organization

are working with the same data.

CRM had improved customer satisfaction, loyalty, retention, and profitability using efficient

tools that lower service. CRM had improved customer loyalty using efficient tools that

lowered service. CRM had improved customer retention using efficient tools that lowered

service. CRM had improved customers profitability using efficient tools that lowered service.

Kim et al. (2008) also state that CRM will again improve customer satisfaction, loyalty,

retention, and profitability using efficient tools that lower service costs.

60

5.3.2 Challenges of Implementing CRM in Financial Institutions

The study showed that CRM system in the organization was normally used to count

customers rather than create. Brain (2007) summaries six reasons why CRM initiatives fail:

Counting vs. Creating Customers - The current crop of CRM systems are very useful for

large companies with thousands of customers that want to “count” them in interesting ways.

CRM in the organization measured the activities of prospects after they had “self-selected” in

some way by calling the office or filling-in forms. Brain (2007) further states that another fail

is in measuring the wrong thing - CRM measures the activities of prospects after they have

“self-selected” in some way by calling the office or filling in your form somewhere.

The study showed that the CRM system was very good at capturing and organizing

structured information, and also good at capturing and organizing unstructured. Brain (2007)

also notes that another challenge is in structured vs. unstructured data - CRM systems are

essentially databases with customer oriented forms built on top. They are very good at

capturing and organizing structured information, but are horrific at capturing and organizing

unstructured information.

CRM system in the organization was not complicated to use as it did not require the aid of

technicians to manipulate it. Brain (2007) also notes that ease-of-use is another challenge

since most CRM vendors say their product is "easy-to-use." The reality is it is easy to use if

you have dedicated “operations” people or a dedicated CRM IT person to figure out how to

do the hard/useful stuff.

CRM in the organization did not require end-users to take actions that were not part of their

natural work process in order to update the system. Brain (2007) states that feeding the

monster is another challenge where like many knowledge management initiatives; CRM

requires end-users to take actions that are not part of their natural work process in order to

“update” the system. CRM output was only as good as the input i.e. “garbage in, garbage out.

Brain (2007) further notes that CRM output is only as good as the input – “garbage in,

garbage out”.

61

The study showed that CRM would not be more useful for transactional (like call center)

types of companies than. Brain (2007) indicated that Transactional Systems vs.

Solution/Relationship Systems where today’s CRM is more useful for transactional (like call

center) types of companies than it is for small businesses who have client relationships that

are more solution oriented in nature.

The study showed that the company has a CRM value. Gerson (2009) on the article ‘CRM

Today’ identified three mistakes organizations make which impact negatively on their CRM

strategy. First is when a company has No CRM value proposition. This is because a value

proposition tells a client what distinguishes the company from other competitors, and why

they should do business with said company.

The organization had failed to match its CRM technology to the way their partners. Gerson

(2009) also states that failure to match CRM technology to the way associates’ work is a

challenge. Too many CRM implementations are technology led instead of being process or

performance led. CRM in the organization did not treat all customers. Gerson (2009) also

notes that treating all customers alike in the company’s CRM system actually has two parts.

The first is that firms think they actually know who their customers really are. The second is

that they treat every customer the same. The organization did not lack a proper CRM

guideline. Myron (2009) identified the following: lack of guidance as an organizational

challenge. According to Gartner Group (2004), more than 60% of companies that have

implemented CRM did not have mutually agreed upon goals for their projects prior to the

installation.

The study showed that customer information system (CIS) tools were not. Guru (2008)

reported that limited scope was a CRM challenge – he stated that many existing Customer

Information System (CIS) tools are very limited in scope, and do not support customer equity

management. He also notes a rise in complex technology as a challenge. The study showed

that CRM was not very complex to. The study showed that CRM was not very expensive to.

62

Guru (2008) also notes a rise in complex technology as a challenge. He states that technology

solutions sold by vendors have become very complex to use, expensive to maintain, and

contain irrelevant information for data mining.

CRM in the company contained irrelevant information for data. The existing data warehouses

lacked information on monetary. The existing data warehouses lacked information. Lack of

pertinent data is another customer management challenge as noted by Brain (2007) since

most of the existing data warehouses lack information on recency, frequency, and monetary

values. They also offer information that is insufficient for supporting predictive modeling

and predictive scoring.

The CRM system in the organization had multi-vendor tools and capabilities and was

overburdened by internal IT. Multi-Vendor Tools and Capabilities are a challenge noted by

Bibiano, Mayol and Pastor (2009). They state that, over the years, many major financial

organizations have developed data warehouses by purchasing diverse sets of software tools

and then building data warehouses in-house.

5.3.3 Successful Strategies for Implementing CRM

The organization explained the real business needs to vendors/partners before investing in

CRM. Hines (2012) expressed that organization should first tackle business issues before

choosing a technology, it is a must that they explain the real business needs to

vendors/partners before investing. The CRM project was carried out in phases during. Hines

(2012) further states that the whole project should be carried out in phases and its

enterprising identity are kept.

The organization allocated available resources to the components that were affected by CRM

that were people, processes and technology. Limayem (2007) maintains that the success of

any CRM strategy is dependent on how organizations allocate available resources to the three

components that include a mix of 70% people, 20% processes and 10% technology. The

organization focused its search for the most suitable solution to its CRM development. The

63

organization looked at how customer relationships were managed within the CRM period.

Sandall (2010) suggested a number of steps organizations can take to focus their search for

the most suitable solution to their CRM development. He maintained that such a company

should first analyze its business goals and objectives and look at how customer relationships

are managed within that period.

The company anticipated how business would change and grow down the road. The company

examined the short-and long-term fiscal implications of the CRM solution. Sandall (2010)

further suggests that a company should also anticipate how the business will change and

grow down the road. From various options, the company is to examine the short- and long-

term fiscal implications of each solution.

The study showed that CRM supported the existing business processes. CRM provided the

capability to improve business processes. CRM was easy to customize for the organizations

specific business application. CRM in the organization had intuitive user interfaces. CRM

integrated with existing systems within the company. Sandall (2010) also states that

companies who want to develop a CRM strategy should again compare the benefits and

drawbacks of available solutions to business needs. He further stated that any viable CRM

solution should provide the following minimum functionality; it should support existing

business processes and provide the capability to improve them.

CRM provided robust reporting. CRM provided forecasting capabilities. CRM was

analytical. CRM was scalable. CRM was flexible. Sandall further states that it should be easy

to customize but not an extensive customization for the organizations specific business

application; it should have intuitive user interfaces; it should integrate with existing systems

of the company; it should provide robust reporting, analytical, and forecasting capabilities

and above all it should be both scalable and flexible.

The organization understood its customer relationship problem before CRM implementation.

Band, Kinikin, Ragsdale and Harrington (2011) state that companies need to understand the

64

problem. Many businesses fail to pinpoint simple customer service problems. The company

built a team that was empowered to take on the CRM project. Band et al. (2011) also state

that companies need to build a team that is empowered to take on the project: Organizations

will need to resist the temptation to staff the team too heavily from the IT department. Select

personnel with business skills as well.

CRM project implementation was supported by the executive sponsorship. Band et al. further

state that companies need to win executive sponsorship: CRM applications are big-ticket

items. The cost for implementation is often double after the purchase of the software.

Resources should always available; Show how CRM will support the company’s vision.

After implementation, the company checked and assessed if the CRM systems were meeting

customer needs. Band et al. (2011) finally state that organizations need to measure, measure,

and measure: After implementation, companies are to check and assess if the CRM systems

are meeting customer needs. The company got key sponsors involved from the get-go and

made sure that the individuals involved made financial and time commitment. McCabe

(2013) state that organizations need to get key sponsors involved from the get-go and make

sure that the individuals involved can make the financial and time commitments to ensure

success.

5.4 Conclusion

5.4.1 Reasons for CRM Adoption by Financial Institutions

The study concludes that today’s playing field for financial institutions is both complex and

competitive and the financial laws and regulations vary globally and change continuously. It

can be stated that the internet has increased pressure to margins by enabling customers to do

their own comparison shopping before selecting a financial service provider and for

organizations to remain competitive in the industry, they have to rely on their ability to

leverage on their customers. The study concludes that CRM is used by organizations as an

integrated approach to managing customer relationships and CRM has reengineered customer

value through better service recovery and competitive positioning. CRM has improved

65

customer satisfaction, loyalty, retention, and profitability using efficient tools that lower

service costs for organizations.

5.4.2 The Challenges of Implementing CRM in Financial Institutions

The study concludes that CRM systems in the organization are normally used to count

customers rather than create customers and it normally measures the activities of prospects

after they have “self-selected” in some way by calling the office or filling-in forms

somewhere. Study clearly shows that the CRM system is very good at capturing and

organizing structured information, and also good at capturing and organizing unstructured

information and most of the systems are not complicated to use and do not require the aid of

technicians to manipulate it. The study concludes that Chase Bank has a CRM value

proposition and it has successfully matched its CRM technology to the way their partners

work. CRM in the organization does not treat all customers alike and the organization has

proper CRM guideline system. The CRM system used in the organization was not limited in

scope and it did not have irrelevant information for data mining. Finally the CRM system in

the organization had multi-vendor tools and capabilities and was not overburdened by

internal IT formation.

5.4.3 Strategies which Facilitate Successful Implementation of CRM

The organization had a good implementation strategy as seen in the study. The company

explained the real business needs to vendors/partners before investing in CRM, and the

project was carried out in phases during implementation. It can be concluded that the

organization allocated available resources to the components that were affected by CRM and

it focused its search for the most suitable solution to its CRM development. The organization

looked at how customer relationships were managed within the CRM period and it also

anticipated how business would change and grow down the road. The company examined the

short-and long-term fiscal implications of the CRM solution and it ensured that CRM

supported the existing business processes. CRM provided the organization with the capability

to improve business processes and it was easy to customize for the organizations specific

business application. The organization understood its customer relationship problem before

66

CRM implementation and it built a team that was empowered to take on the CRM project.

The project implementation was supported by the executive sponsorship and after

implementation, the company checked and assessed to determine whether the systems were

meeting customer needs.

5.5 Recommendations

5.5.1 Recommendations for Improvement

5.5.1.1 Reasons for CRM Adoption by Financial Institutions

Financial institutions must pay attention to focus on the main customers, as it was found to

have a direct, strong, positive and statistically significant correlation with the marketing

performance. Therefore, the researcher recommends that the financial institutions do the

following: exert more effort in order to discover the needs of the main customers; pay heed to

providing services in line with the needs and specializations of the main customers; the

administrations of the financial institutions must cooperate together to adapt the service that

the main customers require to adapt; financial institutions must continue discussions with

each main customer in order to provide services that suit each and every one of them; and it

is important that all individuals in the financial institutions deal with great care with the main

customers to gain their loyalty.

5.5.1.2 The Challenges of Implementing CRM in Financial Institutions

It is necessary to pay attention to the assessment of the employee performance and to reward

them on basis of their ability to satisfy the needs of the customer and succeed in servicing

them. The organization should put efforts to enhance the skills of the employees to efficiently

use CRM systems by designing qualifying training programs. It is necessary to take care of

the accurate design of the organizational framework related to the financial institution in

order to facilitate effectiveness of the system. It is necessary to assign clear goals related to

company objectives and goals and align them to the CRM system. The organization needs to

assign standards of performance and monitor them in all the stages of the CRM system.

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5.5.1.3 Strategies which Facilitate Successful Implementation of CRM

Attention must be paid to the presence of information systems, so that they are supported

with all information related to customers in order to support decision-making. It is necessary

to promulgate the culture of marketing through relationships based on the presence of long-

term relationships with the customer through the commitment to satisfy his/her needs and the

great concern about quality on the part of each individual in the financial institution. The

organization must ensure that customer-orientation through understanding the market and

directing the resources of the financial institution towards achieving the desires and the needs

of the customers and measuring the ability to provide a value for the customer.

5.5.2 Recommendations for Further Studies

The researcher suggests some researches that the academics and the researchers can conduct

in the future: studying the scope of the effect of CRM on the general performance of the

financial institution in other banks within the country; studying the degree of the integration

of the financial institution in the light of CRM; assessing the performance of the Kenyan

financial institutions in the light of CRM (comparative study); and studying the role of CRM

in supporting information systems and the effect of this support on the quality of the

organizational decisions taking.

68

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APPENDICES

APPENDIX I: COVER LETTER

DORA WARON LODIONG,

UNITED STATES INTERNATIONAL UNIVERSITY,

P.O. BOX 14634-00800,

NAIROBI.

Dear Respondent,

RE: REQUEST FOR YOUR PARTICIPATION IN MY RESEARCH PROJECT.

I wish to request you to kindly participate in a research study that I am currently undertaking

as part of my Executive Master of Science Degree program at USIU. My EMOD research

study seeks to investigate the effect of customer relationship management systems in

financial institutions with a focus on the Chase Bank Kenya Ltd.

The study will be driven to: determine the reasons for CRM adoption by financial institutions

in; examine the challenges of implementing CRM in financial institutions; and determine the

strategies which facilitate successful implementation of CRM in financial institutions.

The information you provide will strictly be used for academic purposes and will not be

disclosed to third parties. The identity and information you offer will be treated with strict

confidentially.

Yours Sincerely,

DORA WARON LODIONG.

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APPENDIX II: QUESTIONNAIRE

This study seeks to establish the effect of Customer Relationship Management systems on

customer loyalty with a key focus on Chase Bank Kenya Ltd. The following questionnaire

has been developed to help the researcher gather information necessary to meet the research

objectives that have been highlighted above.

SECTION A: DEMOGRAPHIC INFORMATION

1. Please state your gender?

Male [ ] Female [ ]

2. What is your education background?

Primary [ ] Secondary [ ] Certificate [ ] Diploma [ ] Degree [ ]

Other [ ] specify……………………………….

3. How long have you worked with the bank?

1-5 Years [ ] 6-10 Years [ ] 11-15 Years [ ] 16-20 Years [ ]

21 and Above [ ]

SECTION B: REASONS FOR CRM ADOPTION BY FINANCIAL INSTITUTIONS

4. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the financial

institution environment your bank operates in.

Statements 5 4 3 2 1

Today’s playing field for financial institutions is both complex and

competitive

There fewer new customers in the market to pursue and more banks

are pursuing them

The financial laws and regulations vary globally and change

continuously

The internet has increased pressure to margins by enabling

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customers to do their own comparison shopping

Remaining competitive in the industry hinges on the ability to

understand and leverage on the customers

5. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the impact

of CRM on the organizations business process re-engineering.

Statements 5 4 3 2 1

CRM is used in our organization as an integrated approach to

managing customer relationships

CRM in our organization has reengineered customer value through

better service recovery and competitive positioning

Our CRM combines our business process reengineering and

technology in order to understand our customers from the

perspective of who they are, what they do, and what they are like

Our CRM creates value to customers through using Information

and Technology as an enabler for achieving quantum improvements

6. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the impact

of CRM on the organizations operations and analytical aspects.

Statements 5 4 3 2 1

Our operational CRM is centered in supporting business processes

which includes customer contact (sales, marketing and service)

Our CRM sends the resulting data to users since it is required to

carry out the activities related to the commercial area

Our operational CRM supports sales force automation (SFA)

Our operational CRM supports customer support and service

Our operational CRM supports enterprise marketing automation

Our analytical CRM collects and analyzes data related to customer

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and marketing

Our analytical CRM provides value information for decision taking

support and strategic directions in the sales area

Our collaborative CRM supports the relations between users across

the organizational structure

Our collaborative CRM aids in the actions of operational CRM

7. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the benefits

of CRM to your organization.

Statements 5 4 3 2 1

CRM in the organization has resulted in an increase in data

accuracy

CRM has ensured that all departments within the organization are

working with the same data

CRM has improved customer satisfaction, loyalty, retention, and

profitability using efficient tools that lower service costs

CRM has improved customer loyalty using efficient tools that

lower service costs

CRM has improved customer retention using efficient tools that

lower service costs

CRM has improved customers profitability using efficient tools

that lower service costs

By adopting CRM, our organization has complied with the privacy

and security requirements of the current regulatory environment

CRM has eliminated inefficiencies with a solution that not only

customizes but also integrates the company’s roles and workflow

CRM has enabled the organization to reduce cost on sales when

evaluating customers profitability

CRM has enabled the organization to reduce in the cost of

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recruiting customers when evaluating customers profitability

CRM has simplified the company’s infrastructure as a result of the

internal organization’s focus turned towards customers

SECTION C: CHALLENGES OF IMPLEMENTING CRM IN FINANCIAL

INSTITUTIONS

8. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the flaws

and assumptions needs of CRM in your organization.

Statements 5 4 3 2 1

CRM ignores the reality that many customers do not want to

engage in relationships

We lack a clear and generalizable empirical support for the

expected return from CRM investments as an organization

Our CRM raises questions regarding the most appropriate mix of

capabilities to effectively exploit the investment

It is difficult to capture and properly attribute the direct or indirect

value generated from our CRM system

The business value generated by CRM depends on a combination

of complementary technical, organizational and human resources

9. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the reasons

why CRM has failed in the organization.

Statements 5 4 3 2 1

Our CRM system is normally used to count customers rather than

create customers

Our CRM measures the activities of prospects after they have “self-

selected” in some way by calling the office or filling in your form

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somewhere

Our CRM system is very good at capturing and organizing

structured information, but are horrific at capturing and organizing

unstructured information

Our CRM system is complicated to use, it requires the aid of

technicians to manipulate it

Our CRM requires end-users to take actions that are not part of

their natural work process in order to update the system

Our CRM output is only as good as the input i.e. “garbage in,

garbage out”

The CRM would be more useful for transactional (like call center)

types of companies than our bank

10. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about places where

the organization has failed on adopting CRM.

Statements 5 4 3 2 1

Our company has No CRM value proposition

Our organization has failed to match its CRM technology to the

way our partners work

Our CRM treats all customers alike

Our organization lacks a proper CRM guideline system

Our organization suffers from a lot of dirty and inaccurate data

Our CRM system suffers a lot from lack of employee buy-in

attitude

11. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about CRM failure

on customer information and management.

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Statements 5 4 3 2 1

Our customer information system (CIS) tools are very limited in

scope

Our CRM is very complex to use

Our CRM is very expensive to maintain

Our CRM contains irrelevant information for data mining

Our existing data warehouses lack information on monetary values

Our existing data warehouses lack information frequency

Our existing data warehouses extends time in the market

Our CRM system has multi-vendor tools and capabilities and is

overburdened by internal IT formation

SECTION D: SUCCESSFUL STRATEGIES FOR IMPLEMENTATION OF CRM

12. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the

organization’s CRM strategy.

Statements 5 4 3 2 1

The organization explained the real business needs to

vendors/partners before investing in CRM

The CRM project was carried out in phases during implementation

The organization allocated available resources to the components

that were affected by CRM that were people, processes and

technology

All affected parties were involved before the CRM project was

rolled out

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13. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the

organization needs of CRM and its functionality.

Statements 5 4 3 2 1

The organization focused its search for the most suitable solution to

its CRM development

The organization looked at how customer relationships were

managed within the CRM period

The company anticipated how business would change and grow

down the road

The company examined the short-and long-term fiscal implications

of the CRM solution

Our CRM supports the existing business processes

Our CRM provides the capability to improve them

Our CRM is easy to customize for the organizations specific

business application

Our CRM has intuitive user interfaces

Our CRM integrates with existing systems within the company

Our CRM provides robust reporting

Our CRM provides forecasting capabilities

Our CRM is analytical

Our CRM is scalable

Our CRM is flexible

14. Using the following key: 5=strongly agree, 4=agree, 3=not sure, 2=disagree and

1=strongly disagree; how would you rate the following statements about the

organization’s implementation of the CRM strategies.

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Statements 5 4 3 2 1

The organization understood its customer relationship problem

before CRM implementation

Our company built a team that was empowered to take on the CRM

project

Our CRM project implementation was supported by the executive

sponsorship

After implementation, the company checked and assessed if the

CRM systems were meeting customer needs

The organization developed corporate wide CRM engagement from

key stakeholders

The company got key sponsors involved from the get-go and made

sure that the individuals involved made financial and time

commitment

The company determined as well as prioritized CRM drivers and

requirements

The organization used developed CRM roadmap

The organization created a short list to check out prospective

vendors’

The organization kept everyone involved in the loop

The company offered flexible training options to help

accommodate different schedules as well as learning preferences

for employees

The company motivated users to accept the application

The company motivated users to use the application

The CRM system was broken down into smaller manageable pieces

with small milestones during implementation

The company has learnt to adjust to the CRM system

THANK YOU