A Project Report on CUSTOMER CHURN RATE IN AXIS BANK HUBLI

A RESEARCH ON CUSTOMER CHURN RATE IN AXIS BANK HUBLI

TABLE OF CONTENTS

List of Tables EXECUTIVE SUMMARY 7-14

1. INTRODUCTION 15-19

2. COMPANY PROFILE 20-35

3. RESEARCH METHODOLOGY 36

3.1 Significance of study 37

3.2 Research design 38

3.3 Sampling 38

3.4 Data sources 38

3.5 Research approach 39

3.6 Pilot study 39

3.7 Pre test 40

3.8 Tools of data collection 41

3.9 Scoring procedure 41

3.10 Statistical analysis 41

3.11 Limitations of the study 41

4. LITERATURE REVIEW 42

4.1 Competitive Advantage 43

4.2 Customer Satisfaction 44

4.3 Customer Perceptions of Value 45

4.5 Corporate Image 45

4.6 Switching Barriers 46

Babasabpatilfreepptmba.com Page 1


4.7 Consumers’ Behavioral Intention 46

4.8 Customer Loyalty 46

5. DATA ANALYSIS & INTERPRETATION 47-65

Results and Discussion Research Constructs6. FINDINGS 66-68

6.1 Recommendations 68-70

6.2 Conclusions 71

7. ANNEXURE 72

7.1 References 73

7.2 Questionnaire 74-76

7.3 Coding Sheet 77-78



EXECUTIVE SUMMARY

TITLE:

“A RESEARCH ON CUSTOMER CHURN RATE IN AXIS BANK

HUBLI”.

GEOGRAPHICAL AREA:

163/20 “Kalburgi Plaza”,

Despande Nagar,

HUBLI – 580029

PROLOGUE:Customer retention is an important element of banking strategy in today’s increasingly

competitive environment. Bank management must identify and improve upon factors that

can limit customer defection. These include employee performance and professionalism,

willingness to solve problems, friendliness, and level of knowledge, communication

skills, and selling skills, among others. Furthermore, customer defection can also be

reduced through adjustments in a bank’s rates, policies and branch locations.

Clearly, there are compelling arguments for bank management to carefully consider the

factors that might increase customer retention rates. Several studies have emphasized the

significance of customer retention in the banking industry (see Dawkins and Reichheld,

1990; Marple and Zimmerman, 1999 ;). However, there has been little effort to

investigate factors that might lead to customer retention... If retention criteria are not well

managed, customers might still leave their banks, no matter how hard bankers try to

retain them.



My research examines the impact of several retention-relevant constructs that influence

consumers’ decisions to stay with or leave Axis bank. These constructs were rated by

customers as having strong effects on loyalty to their banks. Demographic characteristics

(i.e. age, gender, educational level and income) were also assessed for their contribution

to intentions of staying with or finding alternative banks. Results suggest that the most

important constructs were reasons for stoppage of operations from Axis bank, about

charges, customer satisfaction, followed by switching barriers. There was also evidence

that customers’ age groups and level of education contributed to explaining respondents'

propensity to stay with their current banks.

SCOPE OF THE STUDYThe present research has concentrated to find out the level of churn rates and

reasons for the customer switch over and the study targets the employees of Axis Bank,

Hubli.

The study is based on the social and geographic variables like Geography/location, Type

of business, Position title, Sex, Age, Education level, to understand the socio

geographical condition of customers and a structured questionnaire related to the services

provided by Axis bank and the satisfaction level of customers related to the services and

analyzing the major reasons related to their switch over.

AIM OF THE STUDY The main aim of the present study is to assess the increasing customer churn rates

and satisfaction of customers related to services provide by Axis Bank in Axis

Bank, Hubli.

There have been several studies emphasizing the significance of customer

retention in corporate level but there has been very little empirical research

examining the constructs that could lead to customer retention in Home branches.

This research aims to analyze & find out possible strategies to reduce customer

churn in Axis Bank.



NEED FOR THE RESEARCH: In marketing, the most important strategy is to maintain current existing

customers and to attract new ones.

The cost of gaining new customers is approximately five times that of retaining

present ones.

Fierce competition has raised the cost of acquiring new customers, making it

imperative to determine which customers are likely to churn, so you can take the

necessary steps to prevent the latter from leaving.

Hence the research could analyze a need to work on Customer churn rates which

is found increasing at Axis Bank.

RESEARCH OBJECTIVES OF THE STUDY Customer Attrition Analysis to identify the prominent reasons for customer

churn/switch over.

Impact of Churn Rate in Axis Bank.

To analyze & develop some Retention strategies.

RESEARCH PLAN:RESEARCH DESIGN – Exploratory & Descriptive types.

DATA SOURCES-

Primary data was obtained through a survey sent to a sample of lost customers of

Axis Bank Hubli.

Secondary data sources were previous projects, websites, magazines, newspapers,

articles & textbooks

DATA COLLECTION METHOD:

Structured Questionnaire & Discussion

Data was obtained through a survey sent to a sample of lost customers of Axis

Bank Hubli.



The survey was designed according to the Dillman Total Design Method (1978),

which has proven to result in improved response rates and data quality.

SAMPLING UNIT- Lost Customers of Axis Bank

SAMPLE SIZE- 50

SAMPLING METHOD- Convenience Sampling.

ANALYSIS-SPSS Package, Cross Tabulation, Bar Chart, Pie Chart , Mean etc

FINDINGS Respondents were relatively less satisfied with banks' pricing. Many complained

about the high fees charged and expensive account maintenance costs.

76% of the respondents are happy in terms of customer service at Axis Bank.

42% of the respondents have a relatively negative impression of their bank

levying undue charges on them, which forced them to switchover to other banks

26% perceived that the other banks where providing better service than Axis Bank

revealing that respondents have a negative impression of their bank's competitive

advantage.

30% of the respondents feel annoyed due to the unresponsive nature of the

customer representative.

22% of the respondent feels annoyed when they don’t listen their problems

carefully.

44% of the respondents where dis-satisfied with waiting time in Axis bank.

32% of the respondents said that the Customer representatives were unable in

answering or handling their problems or questions.

26% of the respondents said that the customer executives where not so clear &

supportive in handling their problems.

72% of the respondents have clearly said that they are unaware about the different

charges charged in Banks

39% of the respondents complained that their are hidden charges involved.

27% of the respondents said that they where not informed about the different



charges.

20% of them said Axis bank is misleading in terms of charges levyed.

56% of the respondents have commented that the services have become worse

over a period of one year ,

36% perceived to be the same & the rest only 8% have said that it has become

better.

32% of the respondents feel that having flexibility according to the changing

customer needs will enhance Axis Bank competence. This suggests that

customers want their banks to monitor change in the financial environment, and

respond with products that add value to customers' accounts

28% of the respondents suggested to have a separate Grievance Redressal Forum

in Axis

26% of the respondents perceive that the other banks are providing better service

than Axis

Rest 20% of the respondents perceives that their current bank does not have any

Hidden charges

Alternatively research constructs have also found that having a good relationship

by bank personnel with customers contributes to reluctance to switch to

alternative providers.

70% of the current a/c respondents said that customer care executives where not

so clear & supportive in handling their problems.

71% of the respondents of the SB a/c holders felt satisfied about their ability to

handle their problems

RECOMMENDATION Respondents saw little advantage to switching, since they perceive that all banks

provide the same range of products and services. Furthermore, inconvenience, the disruption caused by switching, and having a good relationship with bank personnel contributed to respondents’ reluctance to switch to alternative providers.

Some of the respondents had not switched to another bank because they felt that



they would be no better off from switching. Such a finding emphasized that a bank should make an effort to distinguish itself from competitors through the generation of sustainable competitive advantage and distinctive bank image.

Separate Grievance Redressal Forum

A structured system needs to be built up, In order to make bank’s Redressal mechanism more meaningful and effective.

Axis bank can decide on the appointment of officials at various levels to handle complaints and grievances depending upon its administrative structure/ channels used for delivery of product and services.

In this study, it was found that many of the respondents do not use a variety of products from their current bank. This is an important issue for AXIS bank, as cross-selling is a critical element in increasing customer loyalty and revenue. Conversely, cross-selling may make switching an unacceptable inconvenience, as the customer must find a provider that can replace a broader range of products.

Bank managers should analyze every facet of the service delivery process and product attributes to ensure that it will not increase inconvenience for consumers. Furthermore, Axis Bank should regularly obtain feedback from consumers in order to work backwards toward designing new processes or products, so that these can be delivered effectively and efficiently.

Charges must be elaborated.

Convincing customers that they are getting high value from their bank should be a key advertising and promotion objective to create and strengthen Axis Bank image.

AXIS BANK needs to place more emphasis on personnel training to its staff.

Customer Representatives need to be trained on CRM practices.

Our results indicate that banks cannot rely upon price competition alone in order to be competitive; they must also strive to better inform consumers of the products and services they offer, and provide convenient, agreeable surroundings, as well as continue to emphasize the human interaction basis of service delivery.

Waiting Time should be reduced.



CONCLUSIONConsidering the competitive banking in Hubli, excellence in customer service is the most

important tool for sustained business growth. Customer complaints are part of the

business life of any corporate entity & if not dealt properly & on time it will lead to

customer churn. This is more so for banks because banks are service organizations. As a

service organization, customer service and customer satisfaction should be the prime

concern of any bank. The bank believes that providing prompt and efficient service is

essential not only to attract new customers, but also to retain existing ones.

The constructs investigated in this study all received some mixed marks by the

respondents as factors that would influence their decision to stay with or leave their

current banks. The most important construct were reasons for stoppage of operations,

Charges, customer service followed by switching barriers. These results lead to

suggestions for bank managers to consider as to how they might improve customer

retention in today’s competitive banking environment. According to the research

constructs the customer complaint arises due to;

a. The attitudinal aspects in dealing with customers

b. Inadequacy of the functions/arrangements made available to the customers

or gaps in standards of services expected and actual services rendered.

As my research was mainly concentrated to find out the level of churn rates and reasons

for the customer switch over and it targeted only the employees of Axis Bank, Hubli.

The research construct found that longer-term customers buy more and, if satisfied, may

generate positive word-of-mouth promotion for the company. Additionally, long-term

customers also take less of the company’s time and are less sensitive to price changes.

Results of this analysis have also shown that as the age of customers increases, so too

does the propensity to stay with their current banks. In addition, respondents with higher

education are most likely to switch banks perhaps because highly educated consumers

tend to have greater expectations of services. Gender and income appear not to have



significant association with the respondents’ intention to stay with or leave their service

providers.

The results further showed Axis Bank, have higher retention rates compared to the larger

banks. The smaller banks thus appear to be doing some things better than their larger

competitors. Since the results of this study are based on consumers’ perceptions only,

future research should investigate the congruence between consumers’ and service

providers’ perceptions. While this study found that customer satisfaction alone is not

effective in building customer loyalty. Consumers are more concerned about the

convenience issue such as location of branches, use of technology & consumers are more

focused on how bank delivers services. Given the importance of employee competence,

our research also examined the impact of employees’ behavior that could affect customer

retention.

Therefore, finally to conclude my project I can say that:

The research on customer churn has added a great value to my knowledge

undermining the different perceived facet of the customers who leaves/ left

the Bank.

This study & research has made me well verse about the different aspects of

the banking in specific & about Banking Industry as a whole.

Also it helped me to understand the attitudinal behavior & customers

perception about their Bank in various different circumstances.



SECTION 1



INTRODUCTION

The banking industry is highly competitive, with banks not only competing among each

other; but also with non-banks and other financial institutions (Kayak and

Kucukemiroglu, 1992; Hull, 2002). Most bank product developments are easy to

duplicate and when banks provide nearly identical services, they can only distinguish

themselves on the basis of price and quality. Therefore, customer retention is potentially

an effective tool that banks can use to gain a strategic advantage and survive in today’s

ever-increasing banking competitive environment.

Since banks offer nearly identical products. This carries the danger of creating a

downward spiral of perpetual price discounting -- fighting for customer share (Mendzela,

1999). One strategic focus that banks can implement to remain competitive would be to

retain as many customers as possible. The argument for customer retention is relatively

straightforward. It is more economical to keep customers than to acquire new ones. The

costs of acquiring customers to “replace” those who have been lost are high. This is

because the expense of acquiring customers is incurred only in the beginning stages of

the commercial relationship (Reichheld and Kenny, 1990). In addition, longer-term

customers buy more and, if satisfied, may generate positive word-of-mouth promotion for

the company. Additionally, long-term customers also take less of the company’s time and

are less sensitive to price changes (Healy, 1999).

These findings highlight the opportunity for management to acquire referral business, as

it is often of superior quality and inexpensive to obtain. Thus, it is believed that reducing

customer defections by as little as five percent can double the profits (Healy, 1999).

The key factors influencing customers’ selection of a bank include the range of services,

rates, fees and prices charged (Abratt and Russell, 1999). It is apparent that superior

service, alone, is not sufficient to satisfy customers. Prices are essential, if not more



important than service and relationship quality. Furthermore, service excellence, meeting

client needs, and providing innovative products are essential to succeed in the banking

industry. Most private banks claim that creating and maintaining customer relationships

are important to them and they are aware of the positive values that relationships provide.

While there have been several studies emphasizing the significance of customer retention

in the banking industry, but there has been little empirical research examining the

constructs that could lead to customer retention. This research examines the constructs

that impact consumers’ decision to stay with or leave their current banks. In addition, the

research explores whether there is any association between consumers’ demographic

characteristics (i.e. age, gender, educational level and income) and loyalty decisions.

The value of Retention Any business without a focus on customer retention is at the mercy of the market.

Without loyal customers, a competitor will eventually satisfy un-serviced desires, and

customers will begin to switch loyalties to the newcomer. Many companies which have

spent a lot of money getting hold of new customers seem to believe that it is not very

necessary to focus on existing ones. In such cases, customer loyalty is taken for granted.

This perception is slowly changing, and Indian companies have been forced to come to

terms with harsh reality.

Now that there is stiff competition in almost every product, service, and solution area,

customers have plenty of choices. They can simply walk away. As a management guru

once declared, “Dissatisfied customers don't complain. They just don't come back.”

A customer retention strategy has therefore evolved to become a very important aspect of

any company's business plans.

The need to better understand customer behavior and the interest of many

managers to focus on those customers who can deliver long-term profits has changed

how marketers view the world. Traditionally, marketers have been trained to acquire

customers, either new ones who have not bought the product category before or those

who are currently competitors’ customers. This has required heavy doses of mass

advertising and price-oriented promotions to customers and channel members. Today,



particularly for the company’s “best” customers, the tone of the conversation has changed

from customer acquisition to retention. This requires a different mindset and a different

and new set of tools. A good thought experiment for an executive audience is to ask

them how much they spend and/or focus on acquisition versus retention activities. While

it is difficult to perfectly distinguish the two activities from each other, the answer is

usually that acquisition dominates retention.

Metrics:

The increased attention paid to CRM means that the traditional metrics used by

managers to measure the success of their products and services in the marketplace have to

be updated. Financial and market-based indicators like profitability, market share, and

profit margins have been and will continue to be important. However, in a CRM world,

increased emphasis is being placed on developing measures that are customer-centric and

give the manager a better idea of how her CRM policies and programs are working.

Some of these CRM-based measures, both Web and non-Web based are the

following:

Customer acquisition costs

Conversion rates (from lookers to buyers)

Retention/churn rates

Same customer sales rates

Loyalty measures.

Customer share or share of requirements (the share of a customer’s purchases in a

category devoted to a brand).

All of these measures imply doing a better job acquiring and processing internal data to

focus on how the company is performing at the customer level.

The Future of CRM to reduce churn rates:

With the increased penetration of CRM philosophies in organizations and the

concomitant rise in spending on people and products to implement them, it is clear we

will see improvements in how companies work to establish long-term relationships with



their customers. However, there is a big difference between spending money on these

people and products and making it all work: implementation of CRM practices is still far

short of ideal. Everyone has his or her own stories about poor customer service and e-

mails sent to companies without hearing a response. Despite several years of experience.

We can expect that the technologies and methodologies employed to implement. It will

improve as they usually do. More companies are recognizing the importance of creating

databases and getting creative at capturing customer information. Real-time analyses of

customer behavior on the Web for better customer selection and targeting is already here

(e.g., Net Perceptions) which permits companies to anticipate what customers are likely

to buy. Companies will learn how to develop better communities around their brands

giving customers more incentives to identify themselves with those brands and exhibit

higher levels of loyalty.

One way that some companies are developing an improved focus on CRM is

through the establishment or consideration of splitting the marketing manager job into

two parts: one for acquisition and one for retention. The kinds of skills that are need for

the two tasks are quite different. People skilled in acquisition have experience in the

usual tactical aspects of marketing: advertising, sales, etc. However, the skills for

retention can be quite different as the job requires a better understanding of the

underpinnings of satisfaction and loyalty for the particular product category. In addition,

time being a critical scarce resource makes it difficult to do an excellent job on both

acquisition and retention. As a result, some companies have appointed a chief customer

officer (CCO) whose job focuses only on customer interactions.

The notion of customer satisfaction is being expanded to change CRM to CEM,

Customer Experience Management. The idea behind this is that with the number of

customer contact points increasing all the time, it is more critical than ever to measure the

customer’s reactions to these contacts and develop immediate responses to negative

experiences. These responses could include timely apologies and special offers to

compensate for unsatisfactory service. The idea is to expand the notion of a relationship

from one that is transaction-based to one that is experiential and continuous.



SECTION II



ABOUT AXIS BANK:Axis Bank India, the first bank to begin operations as new private banks in 1994 after the

Government of India allowed new private banks to be established. Axis Bank was jointly

promoted by the Administrator of the specified undertaking of the Unit Trust of India

(UTI-I), Life Insurance Corporation of India (LIC) and General Insurance Corporation

Ltd. Also with associates viz. National Insurance Company Ltd., the New India

Assurance Company, The Oriental Insurance Corporation and United Insurance

Company.

Axis Bank in India today is capitalized with Rs. 232.86 Crores with 47.50% public

holding other than promoters. It has more than 200 branch offices and Extension

Counters in the country with over 1250 Axis Bank ATM proving to be one of the largest

ATM networks in the country. Axis Bank India commits to adopt the best industry

practices internationally to achieve excellence.

By the end of December 2004, Axis Bank in India had over 2.7 million debit cards. This

is the first bank in India to offer the AT PAR Cheque facility, without any charges, to all

its Savings Bank customers in all the places across the country where it has presence.

With the AT PAR cheque facility, customers can name Cheques payments to any

beneficiary at any of its existence place. The ceiling per instrument is Rs.50, 000/-.

The latest offerings of the bank along with Dollar variant is the Euro and Pound Sterling

variants of the International Travel Currency Card. The Travel Currency Card is a



signature based pre-paid travel card which enables travelers’ global access to their money

in local currency of the visiting country in a safe and convenient way.

Mission

Customer Service and Product Innovation tuned to diverse needs of individual and

corporate clientele.

Continuous technology up gradation while maintaining human values.

Progressive globalization and achieving international standards.

Efficiency and effectiveness built on ethical practices.

Core Values

Customer Satisfaction through

Providing quality service effectively and efficiently

Smile, it enhances your face value" is a service quality stressed on

Periodic Customer Service Audits

Maximization of Stakeholder value

Success through Teamwork, Integrity and People



OrganizationBasically an organization is a group of people intentionally organized to accomplish an

overall, common goal or set of goals. Business organizations can range in size from two

people to tens of thousands.

There are several important aspects to consider about the goal of the business

organization. These features are explicit (deliberate and recognized) or implicit

(operating unrecognized, "behind the scenes"). Ideally, these features are carefully

considered and established, usually during the strategic planning process. (Later, we'll

consider dimensions and concepts that are common to organizations.)

Types of organization

a. Formal organization.

b. Informal organization.

a. Formal organization:The formal organization or group exist in all organization .it is a group of the

people working together in all co-operation under the authority towards common

goal, objectives for the mutual benefit of the participants.

The formal groups are created to carry out some specific work to meet

some goals of the organization

b. Informal Organization:



The informal organization refers to relationship between peoples in the

organization based not on procedure and regulation laid down in the organization but

on the personal attitude friendship or some common interest which may or may not be

work related informal organization.

Departmentation:Departmentation is the process of dividing and grouping the activities of an enterprise

in the various units for the purpose of administration .the units for the purpose of

administration .the units are designated as departments’ division sector or branches.

Departmentation facilitates the benefits of specialization .it aims at

achieving units of directing, co-operation, co-ordination, control and effective

communication .it leads to effective performance of activities of the enterprise

ORGANIZATION CHART OF AXIS BANK

CHAIRMAN /CMD

DIRECTOR

CORPORATE BANKING

CORPORATE RETAIL BANKING

CORPORATE OPERATION BANKING

CORPORATE PROJECT AND PLANNING BANKING

CORPORATE FINANCE AND ACCOUNT BANKING

CORPORATE INSPECTION AND AUDIT BANKING

CORPORATE SUPPORT SERVICE BANKING



CORPORATE INFORMATION TECHNOLOGY BANKING

CORPORATE MARKETING BANKING


VICE - PRESIDENT

ASSISTANT VICE PRESIDENT

OPERATIONS, SALES MANAGERS AND CREDIT MANAGERS

OPERATIONS, SALES & CREDIT DEPUTY MANAGERS

EXECUTIVES

JUNIOR EXECUTIVES

SALES OFFICERS

SALES EXECUTIVES

NORTH ZONE

SENIOR VICE PRESIDENT

VICE - PRESIDENT

ASSISTANT VICE - PRESIDENT


OPERATIONS, SALES MANAGERS AND CREDIT DEPUTY MANAGERS

JUNIOR EXECUTIVES

SOUTH ZONE


EAST ZONE


VICE - PRESIDENT




JUNIOR EXECUTIVES

WEST ZONE


VICE - PRESIDENT




JUNIOR EXECUTIVES

EXECUTIVES EXECUTIVES EXECUTIVES

SALES OFFICERS SALES OFFICERS SALES OFFICERS

SALES EXECUTIVES

SALES EXECUTIVES

SALES EXECUTIVES


BANK PROFILE AXIS BANK BRANCH OFFICE HUBLI

AXIS BANK branch office Hubli started on 10 October 2003 this bank have five

departments all located in DESPANDE NAGAR.

Address: 163/20A”kalburgi plaza”, Despande Nagar, HUBLI – 580029

CONTACT NO: 0836 – 2356981/2

Organization chart of HUBLI branch


VICE - PRESIDENT

ASSISTANT VICE PRESIDENT


OPERATIONS, SALES & CREDIT DEPUTY MANAGERS


SOUTH ZONE


Axis bank has 5 departments1. Cash department

2. Credit department

3. Marketing department

4. Clearing department

5. Operation department

CASH DEPARTMENT:

It is mainly concerned with cash transactions of day to day activities these dept

have playing very much important role because more number of people are coming to

this dept.

this dept has 50% to 80% decision making power this dept has fully co-operate

with other dept performance of this dept will be appraised by the way of branch

performance based. This dept would have any plans for reaching its targets.

FUNCTIONS OF CASH DEPARTMENT:

1. Handling daily cash transactions.

2. balancing figure at the end of the day

3. maintaining cash levels of the branch

MARKETING DEPARTMENT:


EXECUTIVES

JUNIOR EXECUTIVES

SALES OFFICERS

SALES EXECUTIVES


It is concerned with achieving branch targets through creating new customers and

provides better service to these customers these dept has 50% to 100% decision making

power this dept has fully co-operate with other dept this dept performance can be

appraised through branch performance this is having following plans for reaching its

targets by

a) By obtaining some new customers

b) By generating new business through existing customers.

FUNCTIONS OF MARKETING DEPARTMENT

1. Achieving branch targets.

2. co-operating with sales executives

3. customer service

4. Opening of new accounts.

5. building new relations

OPERATION DEPARTMENT:

It is heart of the Axis bank this department has control the overall operations of the

Axis bank .This department has handling customer queries and giving proper information

to needy customers this department having 30% to 80% decision making power. This

dept is fully co-operate with other dept this dept performance can be appraised branch

performance and self appraised based .this dept also having plans to achieve its targets

They are gross selling plan, marketing and contribution to the branch target plans to reach

its objectives.

FUNCTIONS OF OPERATION DEPARTMENT

1. DD drafting

2. Out station cheques realigning

3. Attending customers query regarding day to day transactions.



4. Handling government business.

5. Handling RTGS (Real time gross settlements system).

6. Transfers

7. Remittances.

CREDIT DEPARTMENT:

Credit department has mainly concern with credit transactions of the bank like

giving loans, recovers loans etc are included in these department this department

performance can be appraised through giving targets. This department having 50% to

80% decision making power and this department has co-operated with other department

whenever other departments needed. This department different plans for reaching its

targets they are, credit appraised of balance sheet, financial strength and ratio analysis.

FUNCTIONS OF CREDIT DEPARTMENT

1. Screening of proposals.

2. Documentations.

3. Disbursements of loans.

CLEARING DEPARTMENT:

Clearing has mainly concerned with clearing cheques of the customers this

department having 20% to 30% decision making power this department performance can

be appraised through branch performance ,this department does not have any plans for

reaching targets .

FUNCTIONS OF CLEARING DEPARTMENT

1. Out stations of cheques.

2. Local’s cheques.

3. CBSS (software name used for giving information to the current account holders).

1. Basic services: basic services include

a) saving account



b) term deposit

c) recurring deposits

d) demat account

e) ATM’s

f) En cash - 24

g) Special savings account

h) Residence and foreign currency account

i) Easy access through channels

j) I connect

k) corporate I connect

l) 24 - hr tele banking

TYPES OF ACCOUNTS:1. Easy access account.

2. Salary account

3. Women’s savings account

4. Senior privilege account

5. Defense Salary account

6. Trust/NGO savings account

7. Azadi-no frills

8. RFC(D)

1. Easy access account

The Easy access Savings Bank account is an endeavor by the bank to understand the

customers needs & redefine banking to suit the customers requirements for a truly

anywhere anytime banking experience.

A-Accessibility

Wide network of branches & one of the largest ATM networks in India giving the

customers easy access to their account. The anywhere banking concept allows the

customers to access/transact their account from any branch of the bank.

C-Convenience



An International Photo-signature Debit Card with withdrawal limit of Rs.40, 000 per day,

facilitating transfer funds, deposits of cash/cheques & payment of insurance premium

[LIC]. The Debit Card also comes with a comprehensive insurance cover inclusive of

zero lost card liability, purchase protection & personal accident Insurance up to Rs.2

lacks.

C-Comfort

Internet Banking/ Telebanking- the ease of banking from home or office. Providing the

customer with the facility of online funds transfer, requests for

the customers new cheque book, Financial Advisory Services[FAS], shopping online &

information on mutual funds.

E-Earnings

Maximize returns on the account by availing the dual benefit of Flexi deposit. Any

balance in the customers account is in excess of Rs.10,000 or any higher limit specified

by the customer will be transferred automatically to high interest earning fixed deposit

account in multiplies of Rs.10,000.

S-Speed

‘At-Par’ cheque gives the customer the unique power to encash their cheque as a local

cheque at more than 143 centers where the bank has a presence at no extra cost.

S-Service

Service of the highest quality is rendered by an affable endearing & enthusiastic staff at

the branch.

2. Salary Account:The complete financial solution

Seeking a convenient way to pay your employees?

Salary Savings Account from Axis Bank will do the job for you. We know how important employee satisfaction is for an organization to grow to its full potential. Which is why we have tailored our Salary Savings Account not only to be a convenient way for you to manage salaries (across various centers, through our centralized database), but also provide your employees with a range of value added benefits.



Salary Savings Account comes with a host of facilities that give your employees access to the complete gamut of banking services (including overdrafts, loans and zero-balance requirements) on a preferential basis. Making it the perfect incentive for your employees.

Features

No minimum balance.

Banking available across the country.

Multi-city at par Cheque book.

Personal & accidental insurance cover up to Rs.2 lacs.

Joint account facility available.

2. Women’s Savings Account :

Features: Savings account designed for special needs for women.

Anywhere banking facility with Priority Debit card.

Enhanced cash withdrawal limit of Rs.40, 000 per day through ATM.

FREE Zero Balance Minor Account.

FREE financial advisory services.

FREE Demand Drafts & Pay orders.

FREE At Par cheque books.

FREE delivery of computerized statement of account.

FREE collection of outstation cheques only postage will be collected.

Critical illness benefit.

Dual benefit of Encash 24 scheme.

Children education bonus.

Specially designed International Debit Card.

Discounts on retail purchases.

Concessional rates for Personal & consumer loans.

All will come with Average Quarterly balance of Rs.10, 000 only.



Special feature: Zero Balance Account

No maintenance charges.

Debit card offered to the minor above the age of 12 years, who can sign

uniformly.

Daily withdrawal limit of Rs.1500 at ATM’s

Daily spend limits of Rs.1000 at merchant outlets.

Free monthly Statement clubbed with the statement of the smart privilege

account of the mother.

At- par cheque book at a nominal cost.

This account is a special feature to imbibe the significance of savings in your

child. The zero balance minor savings account is a unique feature that all account

holders can open for their children.

4. Senior Privilege Account:

Features: [For citizen above 60 years]

Free financial advisory services.

Free payable At-par cheques book.

Free Cash & cheque pick up facility.

Free demand drafts & pay orders.

Free collection of outstation Cheques only postage will be collected.

Free delivery of computerized statement of account. Free home banking

facility.

Critical illness insurance cover

All will come with average quarterly balance of Rs.10, 000 only.

5. Defense Salary Account: Defense Salary account is a product designed keeping in mind how tough a life in the

Defense forces is. Not only does it come to you absolutely free, no minimum balance is



required either. The defense personnel can also access the entire UTI bank network,

including more than 2300 ATM’s & 550 branch offices no matter where they are posted.

Banking Privileges: At-par cheques Facility

As a Defense personnel’s job involves transfers across the country. With the at-par

cheque facility it will no longer be necessary to set up new bank accounts with each

transfer.

Additional Debit Card

Along with a free International Debit Card, They also get a free card for the joint

account holder. This means that their child or spouse also enjoy the same benefits of

banking with Axis.

Financial Advisory Services

The solutions provide by the Axis bank meet the twin goal of meeting their

requirements& to diversify & spread the risk of their investment portfolio, so that

they can look forward to an comfortable & worry-free life.

The investment plan may include:

Mutual Funds: Debt and equity

Bonds

Axis Bank Fixed Deposits.

6. Trust/NGO Savings Account:

Axis Bank’s Trust Account is an effort to offer thoughtful banking for people who

spend their lives thinking of others. It is a complete solution for Trusts, Associations,

Societies, Government Bodies, Section 25 companies & NGO’s, so that the

organizations can devote all of their time to their noble cause.

Features: A Savings Account for their Trust with no minimum balance requirement.

A multi-city at-par cheque facility with no limit on clearing payments at centers

across the country wherever the is present.



Free Anywhere Banking across all the Axis branches & extension counters &

over all the Axis ATM’s.

Free Demand Drafts or Pay Orders as & when required by the Trust’s to remit

funds.

Free collection of cheques at outstation locations.

Monthly statement of account delivered at their doorstep.

Facility for collecting donations in the Trust’s account through the Axis Bank’s

network of branches & extension counters across the country, as well as through

iConnect-Axis’s Internet Banking facility.

Foreign Contribution Regulation Act[FCRA] Account: the FCRA account enables

approved organizations to receive foreign contributions for utilization in their

activities in India. The Bank will provide assistance in the process of

documentation & obtaining necessary approvals from the Ministry of Home

Affairs in New Delhi.

Free investment advice

Free Demat account.

Constituent Subsidiary General Ledger [SGL] account through which investments

in Government securities are carried out, it comes with a host of value added

services like concession in transaction & service charges.

An Axis Bank customer can donate funds to the Trust through the iConnect

internet facility. In such cases the Bank provides the details of the amount donated

& the donor’s name to the Trust so that they can issue the receipt to the donor.

7. Azadi- No Frills Account: It is a Savings Account that doesn’t require a minimum balance.

The specifications required for qualifying for an Azaadi account are:

The sum total of all credit in the customer’s account does not exceed Rs.1 lacc

during the financial year.

The customers do not intend to maintain an account balance higher than

Rs.50, 000 at any given instant.



The customer is unable to furnish full documentation as required ordinarily

for fulfilling of account opening norms.

Features: Zero balance savings account: No need to maintain a fixed, mandatory

amount in the account.

Instant Welcome Kit: Handed over to the customer at the time of account

opening, the kit will consist of their account number, debit card, debit card

PIN, internet banking Pin & phone banking PIN.

International Debit Card: Which gives the customer access to over 1800

ATM’s across the country, enabling the customer to make deposits or

withdraw cash at any time of day or night.

Phone banking & Internet banking: the customer’s can conveniently check

their balance, transaction details etc.anytime from anywhere over phone or

using the Internet, for no extra charge.

SECTION III



3. RESEARCH METHODOLOGY

INTRODUCTIONResearch methodology is a way to systematically solve the research problem as it

guides how research is done scientifically. It consists of different to study the research

problem along with the logic behind them.

The present chapter deals with the research methodology adopted in this study. It

discusses about the statement of the problem, aim and objectives of the study, research

design, universe and sampling, pilot study, pre-testing, tools of data collection used,

statistical application of data, problems encountered by the researcher and the limitations

of the study have been explained.



3.1 SIGNIFICANCE OF THE STUDYChurn is particularly problematic for firms for several reasons. First, the inability to

maintain customer loyalty makes for poor public relations. More immediately, customer

churn simply is expensive. Customer acquisition and account set-up and maintenance all

cost money, and the higher the level of churn, the lower a firm's overall profit margin is

likely to be.

Broadly speaking, the remedy for churn is "stickiness." Sticky services are those designed

to hook a customer, who will find the service too valuable to easily give up. Firms

implement strategies such as greater personalization of services, bundled services, or

other perks to create this stickiness whereby customers are induced to build loyalty to the

company. Differentiation is another tactic. In their efforts to simply get Web sites up and

running, firms often fail to take the time to create an online presence that distinguishes

itself from those of others, thus making it very easy for customers to switch without

feeling any negative impact.

Hence my research work would certainly help the organization to know the increasing

churn rates of customers at Axis Bank and measures could be adopted to maintain a

positive relationship with the existing customers and it would be a great learning

experience for my academic purpose.

3.2 RESEARCH DESIGN

A research design is the arrangement of conditions for collection and analysis of

data in a manner that aims to combine relevance to the research purpose with economy in

procedure.

The effort of the investigation is to provide descriptive profile of the respondents

on the dimensions namely Geography/location, Type of business, Position title, Sex, Age,

Education level, to understand the socio geographical condition of customers and a

structured questionnaire related to the services provided by Axis bank and the satisfaction

level of customers related to the services and analyzing the major reasons related to their



switch over of customer of Axis Bank, Hubli. Further the researcher has explored the

association between the various variables of the study. Hence for the study a

Convenience sampling method is used it was appropriate when the universe happens to

be large and a known characteristic of it is to be studied intensively.

UNIVERSE

The universe of the present study are the existing and switched over customers, of

Axis Bank, Hubli.

3.3 SAMPLING

SAMPLING UNIT- Lost Customers of Axis Bank

SAMPLE SIZE- 50

3.4 DATA SOURCES- Primary data was obtained through a survey sent to a sample of lost customers of

Axis Bank Hubli.

Secondary data sources were previous projects, websites, magazines, newspapers,

articles & textbooks.

3.5 RESEARCH APPROACH- the approach made was through Survey method,

since exit customer list were huge in number and it would be easy to reach all the

customers in list and identified customers through sources.

3.6 PILOT STUDYAs part of the pilot study I made a visit to the selected field at Axis Bank, Hubli to

get a comprehensive idea about the possibility of undertaking the study. I had a

discussion with the Centre Head of Axis bank, to get permission as well as about the

study. The Centre Head was very co-operative to know about the study. Preliminary

information was collected about the working hours; problems faced by the employees as

well as customers, list of existing as well as churn customers. I also discussed about the



questions to be put forth towards the churn customers of Axis Bank with reference to the

dimensions such as service satisfaction, time management, hospitality, interest rates and

general activities at Axis bank. Based on this, the sample size, mode of collection using

questionnaire method was ascertained.

3.7 PRE-TESTBefore finalizing the questionnaire, the researcher conducted a pre-test with 5

respondents in order to determine the efficacy of the tool. The details of the answering

mode were explained to the respondents and they were answered of confidentiality.

During the pre-test I found that some questions were repeated and so it was avoided from

the questionnaire.

3.8 TOOLS OF DATA COLLECTION

Socio geographic and demographic ScheduleThis tool elicits the social geographic details of the sample. This was framed by

the investigator himself in accordance with the need of the present study. It explored the

personal profile of the respondents and elicited information of the respondents regarding

their age, sex, educational qualification, nature of the place of residence etc.

Structured Questionnaire set up after a deep discussion with my project guide related to

churn customers putting in consideration the security aspects of data collected.

Data Collection

Data was obtained through a survey sent to a sample of lost customers of Axis

Bank Hubli.

The survey was designed according to the Dillman Total Design Method (1978),

which has proven to result in improved response rates and data quality. The

questionnaire gathered information on consumers’ perceptions of their banks, the

reasons they remain with their banks, and reasons why they have switched to



other banks.

Likert-format items were presented with 5-point scales, where 1 = "strongly

disagree," 3 = "neither disagree nor agree," and 5 = “strongly agree."

The sampling procedure was based on the recommendations of Malhotra (1999)

and Proctor (1997).

Names and addresses for the survey were systematically drawn from Axis Bank

Hubli Branch.

The sample size (n = 100) was computed, and a skip interval of 73 was calculated

from the listing provided.

Potential respondents were selected and questionnaire was administered. A total

of 50 useable surveys were returned from the initial administration, representing a

useable response rate of 28%.

Budgetary constraints forced the elimination of follow-up procedures.

3.9 SCORING PROCEDURESThe scale consisted of 19 questions, which are related to the services, transaction

and charges offered or considered by Axis Bank. The data would be analyzed as per the

customer response, and analysis would be made through a generalized process using

SPSS software.

DATA COLLECTIONThe researcher collected the data from the respondents during the months of July

2007 using questionnaire method. He took nearly ten days for the data collection.

3.10 STATISTICAL ANALYSISThe end result of the data collection is the accumulation of raw data into a quantitative

form. Such data are then summarized and subjected to statistical analysis. Standard

scoring procedure was adopted and data was analyzed statistically by using the SPSS

ANALYSIS- ,Cross tabulation, Bar Chart, Pie Charts



3.11 LIMITATIONS OF THE STUDY Data was collected only from the branch of Axis Bank Hubli, Karnatak.

There are many other branches over all. So the findings cannot be

generalized.

Most of the respondents were reluctant during the data collection.

A detailed study was not possible because of the time limit with in which

the study should be completed.



SECTION IV

4. LITERATURE REVIEW

Previous studies have identified the benefits that customer retention delivers to an

organization. For example, the longer a customer stays with an organization the more

utility the customer generates (Reichheld and Sasser, 1990). This is an outcome of a

number of factors relating to the time the customer spends with the organization. These

include the higher initial costs of introducing and attracting a new customer, increases in

both the value and number of purchases, the customer's better understanding of the

organization, and positive word-of-mouth promotion.



Apart from the benefits that the longevity of customers brings, research findings also

suggest that the costs of customer retention activities are less than the costs of acquiring

new customers. For example, Rust and Zahorik (1993) argue the financial implications of

attracting new customers may be five times as costly as keeping existing

customers. .Banks loses satisfied customers who have moved, retired, or no longer need

certain services. As a consequence, retaining customers becomes a priority.

Clearly, there are compelling arguments for bank management to carefully consider the

factors that might increase customer retention rates. However, there has been little

empirical research that investigates the constructs leading to customer retention.

Examples of constructs are competitive advantage, customer satisfaction, switching

barriers, corporate image, and bank services characteristics. There have been few, if any,

attempts to link them to customer retention. This is curious, for if retention criteria are

not well managed, customers might still leave their banks, no matter how hard bankers

try to retain them.

4.1 COMPETITIVE ADVANTAGE

In a highly competitive market, the shortest route to differentiation is through the

development of brands and active promotion to both intermediaries and final consumers

(Parasuraman, 1997). In the long run, however, branding, targeting and positioning would

all be much more effective if the supplier had some tangible advantage to offer

consumers (Baker, 1993). This is evident in the banking industry, where many banks are

providing more or less the identical products for nearly the same price. Unless a bank can

extend its product quality beyond the core service with additional and potential service

features and value, it is unlikely to gain a sustainable competitive advantage (Chang,

Chan, and Leck, 1997). Thus, the most likely way to both retain customers and improve

profitability is by adding value via a strategy of differentiation (Baker, 1993) while

increasing margins through higher prices.

Today’s customers do not just buy core quality products or services; they also buy a

variety of added value or benefits.



4.2 CUSTOMER SATISFACTION

In businesses where the underlying products have become commodity-like, quality of

service depends heavily on the quality of its personnel. This is well documented in a

study by Leeds, who documented that approximately 40 percent of customers switched

banks because of what they considered to be poor service. Leeds further argued that

nearly three-quarters of the banking customers mentioned teller courtesy as a prime

consideration in choosing a bank. The study also showed that increased use of service

quality/sales and professional behaviors (such as formal greetings) improved customer

satisfaction, reduced customer attrition.

Ioanna (2002) further proposed that product differentiation is impossible in a competitive

environment like the banking industry. Banks everywhere are delivering the same

products. For example, there is usually only minimal variation in interest rates charged or

the range of products available to customers. Bank prices are fixed and driven by the

marketplace. Thus, bank management tends to differentiate their firm from competitors

through service quality. Service quality is an imperative element impacting customers’

satisfaction level in the banking industry. In banking, quality is a multi-variable concept,

which includes differing types of convenience, reliability, services portfolio, and

critically, the staff delivering the service.

4.3 Customer Perceptions of Value:

Today, customers are more value oriented in their consumption of services because they

have alternative choices. Researchers explain how customers make purchase decisions

between competing providers. They argued that customers buy on value; they do not

simply buy products. Interestingly, it was observed that customers learn to think

objectively about value in the form of preferred attributes, attribute performance, and

consequences from using a product in a use situation (Woodruff, 1997). Thus, banks must

be able to provide “up-close” personal service for customers who come with high

expectations. For customers who value convenience most, banks must offer the latest



product such as electronic banking, touch-tone phone account access and internet

banking. Clearly, customer value can be a strong driver of customer retention. Customer

satisfaction is merely a response to the value proposition offered in specific

products/markets. By this view, banks must determine how customers define value in

order to provide added-value services.

4.4 CORPORATE IMAGE Today’s consumers have more choices for their financial needs than ever before.

Technology, globalization, increased competition and increased consumer mobility have

dramatically changed the way people bank (Harwood, 2002). Many financial institutions

are looking at branding techniques to differentiate themselves. It is very critical that

banks have a comprehensive knowledge of customers’ values, attitudes, needs and

perceptions of various services the bank offers and the image which customers have of

the bank itself. Accordingly, bankers must be able to build and manage their bank’s

image in order to clearly define the differences between their bank and its competitors.

Services are highly intangible and are, therefore, high in experience and credence

qualities. As a consequence, brand reputation is important as a

Potential competitive advantage.

4.5 SWITCHING BARRIERS Switching barriers have been used as marketing strategies to make it costly for customers

to switch to another organization. Such barriers include search costs, transaction costs,

learning costs, loyal customer discounts and emotional costs .These barriers provide

disincentives for the customer to leave the current organization. High switching costs are

an important factor binding the customer to the service organization. Even with relatively

low levels of satisfaction, the customer continues to patronize the service provider

because repurchasing is easier and more cost effective than searching for a new provider

or sampling the services of an unknown provider.



Other than switching costs, cross-selling is another critical variable driving customer

retention. Cross-selling is the bank’s effort to sell as many different products and services

as they can to a particular customer.

4.6 CONSUMERS’ BEHAVIOURAL INTENTIONS

To compete successfully in today’s competitive marketplace, banks must focus on

understanding the needs, attitudes, satisfactions and behavioral patterns of the market.

Consumers evaluate a number of criteria when choosing a bank. Banking market

discovered that customers choose their banks because of convenience, long association,

recommendations of friends and relatives, and accessibility to credit.

4.7 CUSTOMER LOYALTY

Customer retention improves profitability principally by reducing costs incurred in

acquiring new customers. A prime objective of retention strategies must therefore be

“zero defections of profitable customers”. There is, however, a distinction between

customers who are simply retained and those who are loyal. The concept of consumer

inertia implies that some customers are only being retained, rather than expressing

loyalty. Truly loyal customers are usually portrayed as being less price-sensitive and

more inclined to increase the number and/or frequency of purchases.



SECTION V

DATA ANALYSIS & INTERPRETATION: Research Constructs

Table 1: Demographics of Respondents

Demographic Frequency Valid

Percent

Cumulative

Percent

Panel A: Age Group

18-30 years old 8 8.4 8.4

31-40 years old 22 17.9 26.3



41-50 years old 15 24.2 50.5

51-60 years old 6 24.2 74.7

61-70 years old 5 12.9 87.5

71 yrs old & above 4 12.5 100

Total 50 100

Panel D: Income Level (Monthly)

Less than 10,000 0 9.8 9.8

10,000-19,999 23 15.9 25.7

20,000-29,999 21 12.2 38.0

30,000-39,999 4 16.3 54.2

40,000-49,999 1 15.3 69.5

50,000- Above 1 8.0 77.5

Durability of Relationships

The length of time that customers have been with their banks was also measured. As

noted above, there is a distinction between mere retention and the more desirable

outcome of loyalty. However, durability of a bank-customer relationship is a necessary

indicator of both.

Perceived Durability figures appear to demonstrate overall contentment with banking

services. Nearly eighty percent of the (78.9%) reported LOS at greater than two years.

Figures for the other LOS categories are generally small, perhaps reflecting low defection

rates or a small number of first time accounts. Given the preponderance of customers in

the greater than five years categories across banks.

Switching Barriers The switching barriers index was composed of seven items. The overall mean was 3.79,

implying that these impediments have a moderate degree of influence on the respondent’s

intention to stay. The strongest contributor to this construct was banks’ ability to provide



products and services that meet respondents’ needs. In addition, the respondents saw little

advantage to switching, since they perceive that all banks provide the same range of

products and services. Furthermore, inconvenience, the disruption caused by switching,

and having a good relationship with bank personnel contributed to respondents’

reluctance to switch to alternative providers.

However, in this study, it was found that many of the respondents do not use a variety of

products from their current bank. This is an important issue for bankers, as cross-selling

is a critical element in increasing customer loyalty and revenue. Indeed, Jones 16 and

Farquhar (2003) demonstrated that lower levels of cross-selling may also lead to the loss

of market share and decreasing profitability. Furthermore, increased competition and on-

going development of new delivery channels are leading to commoditization of bank

products as these are relatively easy for competitors to copy. This might lead to a higher

propensity to switch providers, as consumers may be able to purchase similar products

and services for better prices elsewhere. Conversely, cross-selling may make switching

an unacceptable inconvenience, as the customer must find a provider that can replace a

broader range of products.

Table: Mean Scores of Respondents’ Perceived Switching Barriers (α =

Consumers do not feel like switching

because….

Mean Std. Deviation

Their banks are able to provide products

and services they need

4.05 1.001

They see little advantage in switching 3.98 1.094

Switching would be too disruptive 3.96 1.052

They have good relationships with their

banks

3.89 1.060

Switching is too inconvenient 3.85 1.125

They use a variety of products from

their banks

3.65 1.070

They receive incentives from their

banks

3.14 1.244



Mean Perceived Switching Barriers 3.79

Customer Loyalty The index of customer loyalty was composed of six items. The mean score for the index

was 3.35, implying that most of the respondents have an intention to stay loyal with their

banks. It has been documented that the respondents tend to stay loyal with their service

providers if they have excellent relationship with its staff.

Another crucial variable is respondents’ perception of difficulty in changing banks. In

today's banking environment, it would not be unusual for a customer to have many

automatic payment orders to a wide variety of different firms, such as electricity and

telephone companies. Notification and subsequent changes to billing details or other

difficulties would be time consuming. Thus, it might not be worth the effort and

inconvenience, unless the respondent had a very bad experience with the current bank.

Thus, the respondents’ focus on inconvenience in changing banks is still a prevalent

concern.

However, if mistakes are made by the bank, then bankers must be able to handle service

recovery efficiently. In this study, most of the respondents appeared unhappy with the

services of Axis Bank. There were complaints, & the respondents commented that their

banks are unable to resolve. Nevertheless, to ensure customer satisfaction, contact

personnel should be empowered to deal effectively and courteously with problems when

opportunities for service recovery arise. For the business, service recovery represents an

opportunity to know the customer better and is a chance to impress them. If Axis Banks

tries to solve the problems customers face, then customers would derive more value from

the service and thus will be more loyal to the bank.

Furthermore, staying loyal is also accentuated by the overall feeling in which respondents

perceive that alternative banks were providing the same quality as their present bank.

Some of the respondents had not switched to another bank because they felt that they

would be no better off from switching. Such a finding emphasized that a bank should

make an effort to distinguish itself from competitors through the generation of sustainable

competitive advantage and distinctive bank image.



Analysis Made On questionnaire

Axis provides good customer service

Customer service was measured using a five-item index. Customer Satisfaction.

Respondents were relatively less satisfied with banks' pricing. Some complained about

the high fees charged and expensive account maintenance costs. Financial institutions

know the key to retaining customers is more than just providing “satisfaction” or

competitive pricing. This view is confirmed by responses to the satisfaction items. Our

results indicate that banks cannot rely upon price competition alone in order to be

competitive; they must also strive to better inform consumers of the products and services

they offer, and provide convenient, agreeable surroundings, as well as continue to

emphasize the human interaction basis of service delivery.

32% of the respondents have expressed the customer service at Axis Bank as

satisfactory. However combined 76% of the respondents are happy in terms of customer

service at Axis Bank & the rest only 24% respondents were relatively dis satisfied with

banks customer service. In this study, most of the respondents appeared happy with the

services their banks have performed. There were minor complaints, but the respondents

commented that their banks are able to resolve them. Nevertheless, to ensure customer

satisfaction, contact personnel could be empowered to deal effectively and courteously

with problems when opportunities for service recovery arise. For the business, service

recovery represents an opportunity to know the customer better and is a chance to

impress them. If bankers are able to solve the problems customers face, then customers

would derive more value from the service and thus will be more loyal to the bank.



Customer service

9 18.016 32.013 26.08 16.04 8.0

50 100.0

strongly agreeagreeneutraldisagreestrongly disagreeTotal

Frequency Percent

8.0%

16.0%

26.0%

32.0%

18.0%

strongly disagree

disagree

neutral

agree

strongly agree



Reasons for Exit/Stopping the operations from Axis Bank

Seven items were used to assess the reasons for stopping the operations in Axis Bank.

The construct index signifies that 42% of the respondents have a relatively negative

impression of their bank levying undue charges on them, which forced them to

switchover to other banks & 26% perceived that the other banks where providing better

service than Axis Bank revealing that respondents have a negative impression of their

bank's competitive advantage. Service quality may be the only sustainable form of

differentiation in such a highly competitive and homogenous industry. However bank

managers should bear in mind that delivering superior service is not enough. In effect,

they should deliver services that are better than consumers’ expectations in order to

enhance satisfaction and maintain a positive image.

6.0%

6.0%

4.0%

8.0%

8.0%

26.0%

42.0%

career change

relocation move

5

Conflict with other

Commute

Other banks providin

Charges



Qualities of the customer service representative irked (annoyed)

The qualities of the customer service representative which annoyed the respondents

were measured using a five-item index.

30% of the respondents feels annoyed due to the unresponsive nature of the customer

representative , 22% of the respondent feels annoyed when they don’t listen their

problems carefully & 18% feels annoyed because they seems to be unfriendly with

the customers. Customer service representative should be properly trained for

handling complaints. We are dealing with people and hence difference of opinion and

areas of friction can arise. With an open mind and a smile on the face we should be

able to win the customer’s confidence. It would be the responsibility of the Branch

Head to ensure that internal machinery for handling complaints/grievances operates

smoothly and efficiently at all levels.

Annoyed / Irked

5 10.0

11 22.0

9 18.015 30.010 20.050 100.0

Not enthusiasticDint listencarefullyunfriendlyUnresponsiveNoneTotal

Frequency Percent



20.0%

30.0%

18.0%

22.0%

10.0%7

Unresponsive

unfriendly

dint listen carefull

not enthusiastic

TRANSACTION SATISFACTION

Waiting time

The transaction satisfaction index i.e. the waiting time was composed of three

parameters. More than half of the respondents had a neutral positive response on the

waiting time in Axis bank & 44% of the respondents where dis satisfied with waiting

time in Axis bank.

Waitin Time

2 4.026 52.022 44.050 100.0

satisfiedaveragenot satisfiedTotal

Frequency Percent



Waitin Time

not satisfiedaveragesatisfied

30.0

20.0

10.0

0.0

22.0

26.0

2.0

Ability to handle problems or questions

Characteristics of banks' customer service representatives can have a significant impact

on the behavioral intentions of customers. Four items representing such characteristics

were included in the questionnaire. Complaint has to be seen in the right perspective

because they indirectly reveal a weak spot in the working of the bank. Complaint

received should be analyzed from all possible angles. Specific time schedule may be set

up for handling complaints and disposing them at all levels. Branch manager should try

to resolve the complaint within specified time frames, decided by the bank.

Communication of bank’s stand on any issue to the customer is a vital requirement.

Complaints received which would require some time for examination of issues involved

should invariably be acknowledged promptly. 32% of the respondents said that the

Customer representatives were unable in answering or handling their problems or



questions, 26% of the respondents said that the customer executives where not so clear &

supportive in handling their problems, 14% said the customer representatives should still

spend more time in elaborating & the rest 28% where satisfied that their problems or

questions where dealt accordingly.

Handle Problems

13 26.0

16 32.0

7 14.0

14 28.050 100.0

Customer careexecutives were notso clear & supportiveProblems & questionsnot clearly answered

Info have to be stillmore elaboratedothersTotal

Frequency Percent

28.0%

14.0%

32.0%

26.0%others

info have to be stil

problems & questions

Customer care execut

CHARGES:

Awareness about the charges in Axis Bank was measured using a two-item index. 72%

of the respondents have clearly said that they are unaware about the different charges

charged in Banks. Hence there is a great need for a banker to educate or make awareness



about the charges, as constructing on this will greatly enhance the customer satisfaction

or loyalty.

Aware Of Different Charges

14 28.036 72.050 100.0

YesNoTotal

Frequency Percent

Unaware of the charges due to

The respondents unawareness about the charges was measured using a four-item

index.39% of the respondents complained that their where hidden charges involved,

27% of the respondents said that they where not informed about the different charges,

20% of them said that they are misleading as & when initially they where no charges &

all of sudden some charges crops up in middle without proper intimation & the rest 14%

said that due to their ignorance they do not know about the different charges.. Research



Constructs & the customers of Axis Bank recognize that customer’s

expectation/requirement/grievances can be better appreciated through personal

interaction with customers by bank’s staff. Thus structured customer meets, say once in a

month will give a message to the customers that the bank cares for them and values their

feed back/suggestions for improvement in customer service. Research findings

constructed that complaints arise on account of lack of awareness among customers about

Axis bank services and such interactions will help the customers appreciate banking

services better. As for the bank the feed back from customers would be valuable input for

revising its product and services to meet customer requirements.

Unaware

5 14.07 20.0

14 39.010 27.0

IgnoranceMisleadingHidden chargesNot informed

Frequency Percent

unaware

not informedhidden chargesmisleadingignorance

16

14

12

10

8

6

4

2

10

14

7

5



Tracking Dimensions:

Three items were used to assess the customer service at Axis bank as compared to one

year ago. The construct table above signifies that overall, respondents have a relatively

negative impression of their bank as regards to service compared to one year ago.56% of

the respondents have commented that the services have become worse over a period of

one year , 36% perceived to be the same & the rest only 8% have said that it has become

better.

Tracking

4 8.028 56.018 36.050 100.0

BetterworsesameTotal

Frequency Percent



Tracking Dimension

tracking

sameworsebetter

Und

efin

ed e

rror

#60

868

- Can

not o

pen

text

file

"sps

s.er

r": N

o su

ch fi

le30

20

10

0

18

28

4

What must AXIS BANK do to improve a specific product or service?

Improvement & gaining competitive advantage was measured using a four-item index.

Excellence in customer service is the most important tool for sustained business growth.

Customer complaints are part of the business life of any corporate entity & if not dealt

properly & on time it will lead to customer churn. This is more so for banks because

banks are service organizations. As a service organization, customer service and

customer satisfaction should be the prime concern of any bank. The bank believes that

providing prompt and efficient service is essential not only to attract new customers, but

also to retain existing ones. The above construct is signifying that overall, respondents

have a relatively negative impression of their bank. Of the individual items, the highest

i.e. 32% was to have flexibility according to the changing customer needs. This suggests

that customers want their banks to monitor change in the financial environment, and



respond with products that add value to customers' accounts. It also suggests that banks

that offer new or refine current products in a proactive manner may enhance their

customer relationships. 28% of the respondents say that a separate Grievance Redressal

Forum should be there & 20% of them say charges charged must be properly

communicated.

These respondents suggested that Axis Bank should aim at minimizing instances of

customer complaints and grievances through proper service delivery and review

mechanism and to ensure prompt Redressal of customer complaints and grievances. The

review mechanism should help in identifying shortcomings in product features and

service delivery. Customer dissatisfaction spoils bank’s name and image.

Hence Axis Bank should frame a policy on grievance Redressal on some principles, as

noted below-

Customers be treated fairly at all times

Complaints raised by customers should be dealt with courtesy & on time

Customers should be fully informed of avenues to escalate their

complaints/grievances within the organization and their rights to alternative remedy, if

they are not fully satisfied with the response of the bank to their complaints.

Bank will treat all complaints efficiently and fairly as they can damage the

bank’s reputation and business if handled otherwise.

The bank employees must work in good faith and without prejudice to the

interests of the customer.

Improving

10 20.0

16 32.0

10 20.0

14 28.0

50 100.0

current products &services are satisfactoryHave to be flexibleaccording to customerneedsCharges charged mustbe still more reasonableseperate grievancredressal forumTotal

Frequency Percent



Improving

seperate grievanc re

Charges charged must

Have to be flexible

current products & s

17

16

15

14

13

12

11

10

9

14

10

16

10

What best services were you attracted from the current bank

The switching barriers index was composed of four items.

The strongest contributor to this construct was other banks’ ability to provide products

and services that meet respondents’ needs & offers lower charges. In addition, the

respondents saw little advantage to switching, since they perceive that all banks provide

the same range of products and services. Furthermore, inconvenience, the disruption

caused by the banker is the only factor leading them to switchover, and as the above table

& construct shows 26% of the respondents perceived that the other banks are providing

better service than Axis, rest 20% of the respondents perceives that their current bank

does not have any Hidden charges. Alternatively we have also found that having a good

relationship with bank personnel contributed to respondents’ reluctance to switch to




Best services

21 42.013 26.0

6 12.0

10 20.0

Low chargesBetter serviceBetter response

No Hiddencharges

Frequency Percent

Best services

No hidden Charges

better response

better service

low charges

30

20

10

0

10

6

13

21

Type of product & Customer Service

Count

6 5 9 5 253 11 4 3 4 259 16 13 8 4 50

CurentSB A/C

Type ofproduct

Total

strongly agree agree neutral disagreestronglydisagree

Customer service

Total

Relationship between Customer satisfaction & the type of a/c holding was measured using a cross tab construct table. Relatively the construct showed that there is no much correlation between these two variables. Moreover the respondents are satisfied with the overall performance of customer service being offered to both types of account holders.



Type of product

SB A/CCurrent a/c

12

10

8

6

4

2

Customer service

strongly agree

agree

neutral

disagree

strongly disagree

4

3

5

4

9

11

5

3

6

Type of product * Handle problems Crosstabulation

Count

9 10 2 4 254 6 5 10 25

13 16 7 14 50

CurentSB A/C

Type ofproduct

Total

Customercare

executiveswere not

so clear &supportive

Problems &questionsnot clearlyanswered

Info have tobe still moreelaborated Satisfied

Handle problems

Total



Type of product

SB A/CCurrent a/c

12

10

8

6

4

2

0

Handle problems

Customer care execut

ives were not so cle

problems & questions

not clearly answere

Info have to be stil

l more elaborated

Satisfied

10

4

5

2

6

10

4

9

Relationship between Customer problems & the type of a/c holding was measured using

a cross tab construct table. 70% of the current a/c respondents said that customer care

executives where not so clear & supportive in handling their problems. 62% of the

current a/c respondents said that their problems & questions where not clearly answered

whereas more than 71% of the respondents of the SB a/c holders felt satisfied about their

ability to handle their problems.



SECTION VI

FINDINGS Respondents were relatively less satisfied with banks' pricing. Many complained

about the high fees charged and expensive account maintenance costs.

76% of the respondents are happy in terms of customer service at Axis Bank.

42% of the respondents have a relatively negative impression of their bank

levying undue charges on them, which forced them to switchover to other banks

26% perceived that the other banks where providing better service than Axis Bank

revealing that respondents have a negative impression of their bank's competitive



advantage.

30% of the respondents feel annoyed due to the unresponsive nature of the

customer representative.

22% of the respondent feels annoyed when they don’t listen their problems

carefully.

44% of the respondents where dis-satisfied with waiting time in Axis bank.

32% of the respondents said that the Customer representatives were unable in

answering or handling their problems or questions.

26% of the respondents said that the customer executives where not so clear &

supportive in handling their problems.

72% of the respondents have clearly said that they are unaware about the different

charges charged in Banks

39% of the respondents complained that their are hidden charges involved.

27% of the respondents said that they where not informed about the different

charges.

20% of them said Axis bank is misleading in terms of charges levyed.

56% of the respondents have commented that the services have become worse

over a period of one year ,

36% perceived to be the same & the rest only 8% have said that it has become

better.

32% of the respondents feel that having flexibility according to the changing

customer needs will enhance Axis Bank competence. This suggests that

customers want their banks to monitor change in the financial environment, and

respond with products that add value to customers' accounts

28% of the respondents suggested to have a separate Grievance Redressal Forum

in Axis

26% of the respondents perceive that the other banks are providing better service

than Axis

Rest 20% of the respondents perceives that their current bank does not have any

Hidden charges



Alternatively research constructs have also found that having a good relationship

by bank personnel with customers contributes to reluctance to switch to


70% of the current a/c respondents said that customer care executives where not

so clear & supportive in handling their problems.

71% of the respondents of the SB a/c holders felt satisfied about their ability to

handle their problems

RECOMMENDATION Respondents saw little advantage to switching, since they perceive that all banks

provide the same range of products and services. Furthermore, inconvenience, the disruption caused by switching, and having a good relationship with bank personnel contributed to respondents’ reluctance to switch to alternative providers.

Some of the respondents had not switched to another bank because they felt that they would be no better off from switching. Such a finding emphasized that a bank should make an effort to distinguish itself from competitors through the generation of sustainable competitive advantage and distinctive bank image.

Separate Grievance Redressal Forum

A structured system needs to be built up, In order to make bank’s Redressal mechanism more meaningful and effective.

Axis bank can decide on the appointment of officials at various levels to handle complaints and grievances depending upon its administrative structure/ channels used for delivery of product and services.

In this study, it was found that many of the respondents do not use a variety of products from their current bank. This is an important issue for AXIS bank, as



cross-selling is a critical element in increasing customer loyalty and revenue. Conversely, cross-selling may make switching an unacceptable inconvenience, as the customer must find a provider that can replace a broader range of products.

Bank managers should analyze every facet of the service delivery process and product attributes to ensure that it will not increase inconvenience for consumers. Furthermore, Axis Bank should regularly obtain feedback from consumers in order to work backwards toward designing new processes or products, so that these can be delivered effectively and efficiently.

Charges must be elaborated.

Convincing customers that they are getting high value from their bank should be a key advertising and promotion objective to create and strengthen Axis Bank image.

AXIS BANK needs to place more emphasis on personnel training to its staff.

Customer Representatives need to be trained on CRM practices.

Our results indicate that banks cannot rely upon price competition alone in order to be competitive; they must also strive to better inform consumers of the products and services they offer, and provide convenient, agreeable surroundings, as well as continue to emphasize the human interaction basis of service delivery.

Waiting Time should be reduced

CONCLUSIONConsidering the competitive banking in Hubli, excellence in customer service is the most

important tool for sustained business growth. Customer complaints are part of the

business life of any corporate entity & if not dealt properly & on time it will lead to

customer churn. This is more so for banks because banks are service organizations. As a

service organization, customer service and customer satisfaction should be the prime



concern of any bank. The bank believes that providing prompt and efficient service is

essential not only to attract new customers, but also to retain existing ones.

The constructs investigated in this study all received some mixed marks by the

respondents as factors that would influence their decision to stay with or leave their

current banks. The most important construct were reasons for stoppage of operations,

Charges, customer service followed by switching barriers. These results lead to

suggestions for bank managers to consider as to how they might improve customer

retention in today’s competitive banking environment. According to the research

constructs the customer complaint arises due to;

a. The attitudinal aspects in dealing with customers

b. Inadequacy of the functions/arrangements made available to the customers

or gaps in standards of services expected and actual services rendered.

As my research was mainly oriented to find out the reason for high churn rate in Axis

Bank and reasons for the customer switch over and was targeted only to the lost

customers & the employees of Axis Bank, Hubli. The research construct found that

longer-term customers buy more and, if satisfied, may generate positive word-of-mouth

promotion for the company. Additionally, long-term customers also take less of the

company’s time and are less sensitive to price changes.

Results of this analysis have also shown that as the age of customers increases, so too

does the propensity to stay with their current banks. In addition, respondents with higher

education are most likely to switch banks perhaps because highly educated consumers

tend to have greater expectations of services. Gender and income appear not to have

significant association with the respondents’ intention to stay with or leave their service

providers.

The results further showed Axis Bank, have higher retention rates compared to the larger

banks. The smaller banks thus appear to be doing some things better than their larger

competitors. The results of this study are based on consumers’ perceptions only. While

this study found that customer satisfaction alone is not effective in building customer

loyalty. Consumers are more concerned about the convenience issue such as location of

branches, use of technology & consumers are more focused on how bank delivers



services. Given the importance of employee competence, our research also examined the

impact of employees’ behavior that could affect customer retention.

Therefore, finally to conclude my project I can say that:

The research on customer churn has added a great value to my knowledge

undermining the different perceived facet of the customers who leaves/ left

the Bank.

This study & research has made me well verse about the different aspects of

the banking in specific & about Banking Industry as a whole.

Also it helped me to understand the attitudinal behavior & customers

perception about their Bank in various different circumstances.



ANNEXURES

REFERENCES

R. H. Schaffer: “Job satisfaction as related to Need Satisfaction in Work”,

Derek R Allen: “Customer satisfaction Research Management”.

S.B.Nageswara Rao& C. Madhavi: “Customer Service Excellence”.



Susan & Derek Nash “ Deliver Outstanding Customer Service”

Bharadwaj, S. G., Varadarajan, P. R and Fahy, J. “Sustainable Competitive

Advantage in Service Industries”: A Conceptual Model and Research Propositions.

Colgate, M., Stewart, K and Kinsella, R. Customer Defection

Dawkins, P. M and Reichheld, F. F. Customer Retention as a Competitive Weapon.

Healy, T. J. Why You Should Retain Your Customers.

Marple, M and Zimmerman, M. A Customer Retention Strategy.

Parasuraman, A.. Reflections on Gaining Competitive Advantage through Customer

Value.

Reichheld, F. F. Learning from Customer Defections. Harvard Business Review.

Reichheld, F. F and Kenny, D. The Hidden Advantages of Customer Retention.

Reichheld, F. F and Sasser, W. E. Zero Defections: Quality comes to Services.

Rust, R. and Zahorik, A. Customer Satisfaction, Customer Retention and Market

Share.



QUESTIONNAIRE

1. Geography/location …………………………………………………………

2. Type of business …………………………………………............................

3. Position title …………………………………………………………………

4. Types of product(s)/Service(s) used…………………………………………….

…...

5. Sex: ………….

6. Age:………

7. Education level: ……………..

8. Years of Service Obtained through Axis Bank …………….

SERVICES AT AXIS BANK:

9. Axis provides good customer service………………………

(Strongly agree, Agree, Neutral, Disagree, Strongly Disagree)

10. Tick the below reasons for your Exit/Stopping the operations from Axis Bank?

Charges Other banks providing better service Commute (Transfer) Conflict with other employees Conflict with managers Relocation/Move Career Change Other ………………..

11. What qualities of the customer service representative irked (annoyed) you?

Not patient Not enthusiastic Didn't listen carefully



Unfriendly Unresponsive Others specify……………. None

TRANSACTION SATISFACTION

12. Waiting time

[ ] satisfied [ ] average [ ] not-satisfied If not satisfied- at which Desk……………………..

13. Ability to answer or handle your problems or questions

Customer care executives were not so clear and supportive

My problems or questions were not clearly answered by the related officer

Information about different accounts & services has to be still more

elaborated.

Others please mention

…………………………………………………………………

14. CHARGES:

Are you aware about the different charges Unaware of the charges

b) Unaware of the charges due to

Ignorance Mis Leading Hidden Charges Not informed

15. Tracking Dimensions:

Compared to one year ago, is Axis bank’s customer service ……………… (Better, Worse, Same)

16. What must we do to improve a specific product or service?

Your current services and products are satisfactory



Customers’ current needs and desires must be considered

Charges charged must be properly communicated

Others.……………..…………………………………….

17. Present Bankers…………………………

18. What best services were you attracted from the current bank?

Low charges Better Service Better response Others………………………………

19. Any Suggestions………………………………………………………

Thank you


Documents

A Project Report on CUSTOMER CHURN RATE IN AXIS BANK HUBLI