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Table of Contents
EXECUTIVE SUMMARY.........................................................................................................................3
INTRODUCTION.......................................................................................................................................3
RELATIONSHIP MANAGEMENT...........................................................................................................3
Objectives of Relationship management..................................................................................................3
Strategy of Relationship management.....................................................................................................4
Structure of Relationship management....................................................................................................4
Process of Relationship management......................................................................................................5
Define ‘The Best Customer’.................................................................................................................5
Value Parameters................................................................................................................................7
Customer Profitability Grouping..........................................................................................................8
Define ‘The Best Experience’...............................................................................................................8
KEY ISSUES FACED IN IMPLEMENTATION.....................................................................................10
Issues in financial evaluation.................................................................................................................10
Issues in marketing evaluation...............................................................................................................11
CUSTOMER PERSPECTIVE...................................................................................................................11
CONCLUSION.........................................................................................................................................12
APPENDIX I: INTERVIEWS WITH CUSTOMERS...............................................................................13
APPENDIX II: INTERVIEWS WITH BANK EMPLOYEES..................................................................................14

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INTRODUCTION

In today’s challenging and fast changing commercial world, quality and relevance of services
have become the main goal of most organizations. Customer satisfaction is one of the main
concerns for them. An effective Customer Relationship Management could be able to help a
company to compete in the market, acquire potential customers, retain profitable customers,
lower operational costs, and finally bring in a profit. With this as the main focus, HSBC Bank
has adopted CRM practices which propelled the bank to the forefront in the industry.

The HSBC Group is one of the world's largest banking and financial services organizations
headquartered in London. HSBC's international network comprises around 8,000 offices in 87
countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and
Africa. HSBC provides a comprehensive range of financial services to around 100 million
customers through four customer groups and global businesses:

 Personal Financial Services (including consumer finance)

 Commercial Banking
 Global Banking and Markets
 Private Banking

The Group's core lies in domestic commercial banking and financial services, which fund
themselves locally and do business locally. Highly efficient technology links these operations to
deliver a wide range of international products and services, adapted to local customers' needs. As
the largest domestic bank in Hong Kong, HSBC adopted the Customer Relationship
Management system in order to maximize customer convenience and provide anytime, anywhere
and anyhow banking. Moreover, it is revolutionizing customer empowerment and beating its
competitors in the market place.

HSBC's origin in India dates back to 1853 and it provides banking and financial services to over
2 million customers through its 54 branches and 155 ATMs across 29 cities

The Global Pillars of HSBC are

 Our Customers – Service Excellence

 Our Brand – The World's Local Bank
 Our Culture – The Best Place to Work
 Our Global Distribution – Our Global Advantage
 Our Businesses – Building for a sustained growth
 Our Technology and Process – Joining up the company
 Our Organization – Guidance with wisdom and delegation with confidence

The CRM proposition of HSBC is focus on long term, deeper relations with customers. CRM has
always been at the heart of HSBC Bank’s business. Over the years there have been many
approaches to CRM, an example being designated bank managers to each customer till the
1970’s. Although this provided a high level of personalized service, the cost implications were

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high. In 1999, HSBC introduced a new strategy called ‘Clearwater’ to coincide with its
rebranding. This strategy is designed to completely refocus the bank around the customer.

RELATIONSHIP MANAGEMENT

Objectives of Relationship management

The objective of HSBC’s relationship management is to manage value and to reduce the amount
of non-customer-contact time that the staff was spending throughout the bank. This has potential
benefits in cost-cutting also.

Other crucial objectives:

Define the best customer: By performing customer segmentation, the company can make
resource planning effectively and efficiently

Define the Best Experience: Find out the critical needs of and decisive stages in dealing
with the customers

Reason: Bank’s customer base was becoming more heterogeneous and difficult to manage. In
1999, the bank introduced a new CRM strategy, to coincide with the re-branding. This new CRM
effort was designed to completely re-focus it around customer. It was introduced by Bank’s CEO
and was implemented as an enterprise wide initiative to re-engineer every process and policy to
be customer centric. It aimed to provide added value to the customer in all tasks.

Technique: All tasks pass through the filter of “does it add value to customer or not”. In case it
does not, then it should not be done at all.

Strategy of Relationship management

HSBC adopted the CRM system in order to maximize customer convenience and provide
anytime, anywhere and anyhow banking. The primary premise of CRM strategy of HSBC is that
if any task doesn’t add value for the customer, the company or the stakeholders; then it shouldn’t
be done. Whilst this had an obvious potential benefit of cutting costs, the real aim was to reduce
the amount of non-customer-contact time staff was spending throughout the bank, enabling a re-
focus on customer-centric activities.

Through the CRM system, HSBC can also know who their main customers are. HSBC has
provided a special banking service for its HNI customers, called HSBC Premier. The HNI
customers will be able to obtain premium financial services wherever they are in the world. The
HNI customers have their own Relationship Manager or dedicated executive team, ready to help
and suggest financial solutions to meet their needs.

The strategy focused on revolutionizing customer empowerment and beating its competitors in
market place. 

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Structure of Relationship management

The CRM initiatives of HSBC can be classified into two broad categories:

 HSBC Premier
 HSBC Advance

HSBC Premier:

HSBC Premier is the group's premium financial services product for those individuals who
maintain a minimum average quarterly balance of Rs. 25, 00,000. This balance can include a
combination of deposits and investments.

The HSBC Premier customers are provided with a dedicated Premier Relationship Manager,
global 24 hour access to call centers, free banking services and preferential rates. Under the
“Banking without Boundaries” value proposition, a HSBC Premier customer receives the HSBC
Premier services in all countries that offer HSBC Premier, without having to meet that country's
qualifying criteria.

HSBC Advance:

HSBC Advance is the group's product aimed at working professional. The advantages to the
Advance customers include day-to-day banking services included but not limited to Platinum
Credit Card, Advance ATM Card, Current Account and Savings Account, Protection plans and
Financial Planning Services. A HSBC Advance enables the customer to open accounts in another
country and transfer their credit history.

Comparison between HSBC Premiere and Advance: Product & Services

HSBC Premier HSBC Advance

The Relationship Value
>= Rs. 25 Lakh. This is
subdivided into
Eligibility
 CAT A ( >25 lakhs)
 CAT B ( >15 lakhs)
 CAT C (>10 lakhs)
Dedicated Relationship
Personalized Attention manager, Wealth Manager
and a Service Manager
Rendezvous for new and old
Lifestyle Events customers, Quarterly
Magazine on Lifestyle
Total Relationship Balance
>= Rs. 1 Lakh (combination of
savings account balances, TD,
De-mat and Insurance)
OR Mortgage >= Rs. 15 Lakhs
OR Monthly Salary Credit >= Rs.
50000
Branch RM with access to a team
of Wealth Managers
No

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 Separate area for Advance within
Separate Center in the Bank Separate Premier Branch
the Branch

Service managers present in the

Service Management Dedicated Service Manager
Advance area in the branch

Branch Relationship Manager

Complaint Ownership Relationship Manager
with a team of Wealth Managers

International Services High Yes

 Process of Relationship management

The delivery of CRM follows the following process in HSBC:

Define ‘The Best Customer’

By performing customer segmentation, the company desires to make resource planning
effectively and efficiently. Precise customer segmentation requires a huge amount of customer
information and sales figures for analysis. To perform this, the company first categorizes its
existing customers into active or inactive accounts. In addition, company also captures both the
‘prospective’ customers whom the company's sales team has information on and
communications with and the ‘possible’ customers with whom the company does not have direct
communications. 

The customer pyramid model is one of the helpful tools for performing customer segmentation.
It is the foundation of the 3C method. Below is the typical Customer pyramid which contains
customer groups of Top, Big, Medium, Small, Inactives, Prospects and Suspects. 

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HSBC Personal Banking categorized customers by their "Total Relationship Value". To make it
simple, it is the total amount of money flowing between the bank and the customer, including
money deposits, investments, insurance, etc. 

From the above Customer Pyramid, the customer categories of HSBC Personal Banking are as
follow: 

1. Top - this is the customer segment the customers of which are those who have a total
relationship value of over INR 25,00,000. They are HSBC's Premier Customers, and are the top
5% of highly valuable customers of HSBC Personal Banking. 

2. Big - this is the customer segment of those who have a total relationship value of over INR
10,00,000. They are HSBC's Premier Customers as well and are in the next 15% of highly
valuable customers 

3. Medium - this is the customer segment of those who have a total relationship value of over
INR 1,00,000. They are the Advance Customers of HSBC. They are the largest group amongst
the customer segments, and make up 60% of HSBC's Personal Banking customers.

4. Small - this is the customer segment of those who have a total relationship value below INR
1,00,000. They are the normal customers of HSBC Personal Banking. 20% of HSBC Personal
Banking customers fall into this segment. 

5. Inactives - those customers whose account status is "Dormant" or "Closed". Accounts with a
dormant status are those accounts that have not been in operation for a long period of time, say 2
years. Accounts with a closed status are those that have been formally closed by the customers.

6. Prospects - those customers who are using HSBC products other than Personal Banking, such
as Corporate Banking. The bank has some data about them, and has already established
communications with him/her through their use of that product.

7. Suspects - the customers of other banks. HSBC has collected some data about them, but has
not yet established communications with them. 

Customer segmentation allows for more in-depth analysis of customer performance to point out
where those 20% of profitable customers are located.

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Value Parameters
According to the customer pyramid of HSBC Personal Banking, the customer groups for Top,
Big, Medium and Small have been figured out. However, in order to find out their profitability,
there are some more customer value parameters that have to be looked into.

 High profitability, multi-product packages usage - There are many personal banking
products at HSBC. Investment and insurance are classified as high profitability so that
HSBC will try its best to cross sell and up sell for its customers to buy more. On the other
hand, money deposits are one of the low profit products. 

 Transaction amount per transaction - Transaction amount per transaction is the amount of
money involved in every single transaction. If a customer always has a high transaction
amount per transaction, the relative operational cost for serving that particular customer
will be small, which means he or she is more profitable. 

 Relationship over time - Relationship over time can show the levels of customer loyalty.
The longer a customer stays with HSBC, the higher the level of customer loyalty that can
be attributed to them. 

 Referral record - Referral record is concerned with the number of customers that is
brought in by an existing customer. It also pertains to the willingness of the customer to
refer HSBC products to his/her friends. 

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Customer Profitability Grouping
Now, the customer profitability grouping can be derived as follows: 

1. High profitability customers - they are the customers in the Top and Big categories. They
use the high profitability, multi-product packages. They have a high transaction amount
per transaction. They have a long relationship over time with HSBC. They have plenty of
referral records. 

2. Sustainable profitability customers - they are the customers in the Medium category.
They use the medium profitability, multi-product packages. They have the medium
transaction amount per transaction. They have a relationship over time with HSBC but
not for very long. They have some referral records. 

3. Negative profitability customers - they are the customers in the Small category. They
seldom use the high profitability, multi-product packages. They have a small transaction
amount per transaction. They have a short relationship over time with HSBC. They
seldom have referral records. 

One of the main purposes of implementing a CRM program was to retain the profitable
customers. Customers are only retainable when they are loyal to the products and services
provided, and are satisfied with the features of the products, and the prices of the products and
services offered. Below, by using Customer Experience Management, HSBC is going to retain
its Personal Banking customers, especially the high profitability customers, by finding out and
fulfilling their critical needs.

Define ‘The Best Experience’

There are two Customer Relationship Management principles about customer loyalty, customer
satisfaction and customer experience: 

 Only very satisfied customers will be very loyal to a company. 

 Customer Satisfaction equals Customer Experience minus Customer Expectations

From the above two principles, customers can become very loyal if they are very satisfied. And,
customer satisfaction can be achieved if they offer a better (i.e. higher level of) customer
experience or meet with low customer expectations. As customer expectations are more or less
uncontrollable, increasing customer satisfaction by increasing the quality of customer
experiences is a big topic in Customer Relationship Management. 

By performing the Customer Experience Management (CEM), the company finds out the critical
needs of and decisive stages in dealing with the customers; make resource planning, marketing,

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as well as company strategies effectively and efficiently. Under CEM, customer critical moments
are defined accordingly under each part of the customer process cycle, which are the PRE-
purchase/consumption, AT-purchase/consumption, and POST-purchase/consumption. Each
customer process cycle will have its own customer multi-channel touch points, and for
simplification, they are grouped into "Physical Touch", "Call", "Internet" and "Others". 

Here is the CEM critical moment spreadsheet which lists the critical moments of HSBC Personal
Banking customers in their customer process cycle of Pre-Purchase, At-Purchase and Post-
Purchase: 

KEY ISSUES FACED IN IMPLEMENTATION

Without proper performance metrics to evaluate CRM efforts, it would be hard to make objective
decisions regarding continuation, modification, enhancement, or termination of CRM programs.

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Issues in financial evaluation

CRM initiatives are company-wide endeavors and have become more elastic and abstract
because of this. Consequently, assessing costs is not as simple as checking the price tags on
CRM software. Predicting costs must be done through a unique look at every case.

CRM leads to better cooperation with the customer. However co-operative and collaborative
relationship with the customers is treated as an intangible asset of the firm and it is difficult to
assess its economic value.

CRM programs lead to loyal customers who are more willing to do more business with the bank.
However measuring the satisfaction level and its effect on the bottom-line is difficult to assess.

Issues in marketing evaluation

HSBC has multitude of customer interfaces that it manages in today’s context. The challenge
was to develop an integrated CRM platform that collects relevant data input at each customer
interface and simultaneously provides knowledge output about the strategy and tactics suitable to
win customer loyalty and support. If call center personnel cannot identify or differentiate high
value customer and does not know what to up-sell or cross sell to him then it would be a
tremendous loss of opportunity for the company. Although most CRM software solutions based
on relational databases are helping share customer information, they still do not provide
knowledge output to the frontline personnel.

CUSTOMER PERSPECTIVE

HSBC conducts customer survey with the help of Value Notes-a marketing research company.
To generate feedback they observe the clients in the branch or talk to them directly. HSBC also
has SMS – Center of excellence which sends a sms immediately after complaint resolution to get
feedback on the quality of service.

To gain insights into customer perception about HSBC Premier Services, we conducted both
primary & secondary research. Primary research was carried out by the telephonic interviews
which were conducted by us and sample transcript of which is attached in the Appendix I of our
report.

The telephonic interviews that we conducted had customers who had diverse background. For
instance- person who has been relocated to different part of the country; father being able to
transfer money to his daughter studying in foreign B-school; NRI is selecting & purchasing
property in India and similar situations.

Based on the responses that we received following were the factors which worked in favour of
the services that HSBC is currently offering to its customers:

 Variety of Products Offered by the bank was good- Wide services offered in both
personal & business domain.

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  Time taken to process transactions is minimum
 Personal Attention provided by the bank is excellent: Managers anticipate needs and
provide end-to-end solution to its customers
 Problems in handling complaints/grievances attribute is rated high amongst its customers
 Ease of operation and technologically advanced services- features like internet banking
and quick reply of call or email have made the customers care free.
 Value added services like specialist services a guaranteed warm welcome across the
globe is the promise which customers have experienced and find it highly satisfactory.
 Safety of transactions

Overall HSBC Premier Customers are very satisfied with the services that they offer and value
they deliver. Most have recommended the service to their peers and friends, and have also
converted them into one of the customers.

CONCLUSION

 The HSBC Group's core lies in domestic commercial banking and financial services, which fund
themselves locally and do business locally. Hence the importance of CRM is all the more, as is
the case with any consumer banking firm. With changing strategic intent implemented through
“Clearwater” initiative, HSBC adopted the CRM system in order to maximize customer
convenience and provide anytime, anywhere and anyhow banking.

HSBC Personal Banking categorized customers by their "Total Relationship Value", and hence
added value to its operations by cutting on costs that do not result in strengthening this
relationship and that do not offer value to the customer. The strategy clearly focused on
revolutionizing customer empowerment and beating its competitors in market place and we have
observed that HSBC has been quite successful in its endeavors.

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APPENDIX I: INTERVIEWS WITH CUSTOMERS

We have interviewed 5 customers who are currently availing HSBC Premier Service. Below is
the transcript of one such customer whose identity we cannot disclose due to privacy issues.

Interview Transcript

Question: Can you tell us about yourself and describe your relationship with HSBC bank

I am a university lecturer in Mumbai and will be retiring in 3 years. My daughter is doing her
PhD in History & son is doing engineering .I’ve been with HSBC for 5 years and been using
Premier Service for about 4 years.

Question: What to do you like about this service?

I think it provides me one stop service which does lot of things. Education fees and other
financing which is needed for my children always concerned me but with HSBC the fact that I
own a primary account with the bank actually provides protection for my children. It is very
reassuring for a parent like me and who is about to retire to have such a service.

Question: Please share your thoughts on the level of personalized service which HSBC
Premier Service offers to its customers.

Sure, I and my wife visited my daughter who is studying in US couple of years back.
Unfortunate thing happened during the visit, I had left my credit card at home and obviously I
was panicking after this. We had checked-in in a hotel and had made other plans, but needed
credit card to make all the payments. Once I called my RM, she immediately responded by
getting me a new card in US within one and half day and this I felt was just amazing.

Question: So what do you think about their employees, your Relationship Managers?

I will have to say that they know exactly what you want and how you want it to be. They
obviously employ and train the right people.

Question: How did you like their online banking feature?

For me online banking is the biggest asset. Life becomes much simpler and most importantly
one’s biggest concern is safety and in my experience with the bank I’ve found it to be completely
safe and secure transactions.

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Question: Any areas of improvements you would like to suggest to the bank

I am very satisfied customer as of now, and I trust they will continue to deliver better service. I
cannot think of any weakness.

APPENDIX II: INTERVIEWS WITH BANK EMPLOYEES

Chanda Rizvi- CSM, HSBC branch- Andheri (E)

How long have you been working at HSBC?

I have been associated with HSBC close to 10 years now. I was a Relation Manager in HSBC
Power vantage department for the first 3 years. I then moved to RM in HSBC Premier
Department which is personal banking for HNIs. This is a very demanding job and requires you
to serve the customer any time any day. I worked with this department for about 6 years. For the
past one year I am working as Customer Service manager in Andheri mall of HSBC.

What is your role as Customer Service Manager?

As a CSM I assist customers in fulfilling their banking needs. The person at ‘MIHY – May I
Help You’ desk assigns the customers to any of the 5 CSMs depending on the requirement of the
customer and the availability of the CSM. My work includes tasks like opening new accounts,
consolidating account statements and resolving customer complaints. During the interaction I
also try to cross-sell and up-sell other bank products like insurance, loans etc.

Do you feel CRM program is important for HSBC?

Initially I didn’t think CRM would make much difference. I treated it just like another good-to-
have’s concepts without much on-the-ground impact. However after working with the CRM I am
a transformed person now. CRM has definitely been a very important step for HSBC.

What are some of the initiatives under CRM program of HSBC?

Some of the major initiatives under CRM are:

Customer Survey: Customer survey is done by ValueNotes, a marketing research company. To

generate feedback they observe the clients in the branch or talk to them directly. ValueNotes is
also responsible to find out the value proposition of other banks by using techniques like mystery
shopping or direct contact with the customers.

HSBC also has SMS – Center of excellence which sends a sms immediately after complaint
resolution to get feedback on the quality of service.

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Lifestyle Events: An initiative, 100 sourcing, was started with the aim of attracting 100 new
customers in Premier segment. Events such as Yoga, Wine n Cheese parties, Movie screening
and organizing alumni meets (e.g. Alumni meet for IIT-Bombay for the batch of 1975) were
conducted.

Magazines: A quarterly magazine on lifestyle is sent which is prepared by the marketing team.

On-boarding initiatives: After the introductory call, Rendezvous is organized. The best RMs in
the bank, the new customers and some existing customers are called. Only after this event, is the
pitching started for the products.

Rendezvous details: This event can either be for new customers or old. The frequency is
generally 1 per qtr. and depends on cluster (e.g. Delhi, Mumbai) profitability. Menu cards are
prepared which consist of tentative plans and RM’s have to decide which menu card would serve
the best for his clients. The RMs invites not just the customers of the banks but also the referrals.
Schedule:

 Morning – Yoga or some other light event.

 Afternoon – Asset allocation procedure conducted by the fund house.
 Evening – Explanation of banking structure (RM/SM allocation)
 Grand event – Movie screening, Ghazals, Khatak etc.

Can you mention some of the issues you faced during implementation of CRM at HSBC?

HSBC has multiple touch-points through which a customer interacts with it. It was one of the
first ones to launch online banking. Phone-banking, internet banking, ATMs, self-service
computer panels and malls are some of the major touch-points. Consolidating the data from the
various units was a massive task and required coordination with many other departments. There
were issues regarding the structure and evaluation of the CRM program.

How did you adapt to the CRM program?

The bank has been very supportive throughout the roll-out. We were involved in the
implementation right from the beginning. So we understood the objective and strategy behind
implementing CRM at the organizational level. All customer supporting staff underwent
specialized training sessions to understand the intricacies of CRM program apart from the soft-
skills and communication training. The importance of customer satisfaction and customer loyalty
was also emphasized during the sessions. This helped us in adapting to the CRM program.

How has it impacted your work as CSM?

The program has definitely made me more conscious of how I treat my customers. The
centralized database helps me in knowing my customer better and also helps me in up-selling
and cross-selling since I am able to suggest the right kind of product to the customer.

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However I would like to narrate a very funny incident which happens in our mall every day. As
part of CRM, the bank maintains a sitting space in all its malls for the customers and also serves
refreshments there. There is one particular customer who visits the branch daily with his
grandson, takes a cup of coffee, reads the newspaper and leaves. He maintains a savings account
at the bank and hence the bank can’t deny the services. However it is clearly visible that it is not
getting any ROI from serving this customer.

Can you narrate some incident where CRM helped you in delighting a customer?

There have been many such incidents. One of our customers was visiting abroad and lost all his
belongings at some station. He had lost his passport and other identification papers too. He was
our premier customer and he immediately called me. It was a Sunday here, however after
knowing his status I immediately went to office and got in touch with our branch in that city.
Both of us coordinated, got him in touch with the Indian embassy and helped him out. He was
extremely delighted with our quick action when he was in need. His entire family now banks
with us and he is one of our best ambassadors.

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