ABSTRACT
The
topic assessed the impact of customer service relationship marketing on
customer retention and the main objective of this study is to examine the impact
of Customer Relationship Marketing(CRM) on customer retention a study of
Guaranty Trust Bank Plc, Lagos Nigeria.
In
gathering the data, the research method used was both quantitative and
qualitative research method, in which questionnaires were administered.
Further, the data were analyzed through descriptive statistics with the aid of
Statistical Package for Social Science (SPSS)to adequately verify the data
collected for this study. The descriptive and inferential statistics was used
to test the hypothesis of the variables that were involved in this study in
order to analyze the data.
This
study investigated the relationship between customer relationship marketing and
customer retention in Guaranty Trust Bank PLC. The result showed that
customers’ relationship Marketing is positively related to customers’
retention. Some variables were taken which are Customer orientation, knowledge Marketing
and CRM technology to impact Customer retention in the study firm. Based on the
responses (using the mean), all these variables impact customer retention above
75% respectively.
The
marketing is an essential strategic tool to gain a competitive advantage in the
contemporary global business environment most especially in the service
oriented organizations.
Keywords:
Customer Relationship Management, Customer Retention, Customer Orientation.
CHAPTER ONE
1.0
Introduction
1.1 background of Study
The main objective of business organizations is to maximize
profit. Using the same resources (Men, Material, Machine and Money) for the
more produce or to reduce available resources for the same produce. Every
organization that is willing to survive on the long run should make the needs
and requirement of Men (Labour) being a major part of factors of production its
priority (Babatunde &Olukemi, 2012).
Meeting the needs and the requirements of the customers will
not only ensure the survival of the organization but also allow into flourish
of the most important stakeholders in any organization because without them, organizations
are not likely to succeed. Hence, marketers emphasize on research in the area
of consumer behaviour and particularly behavioural intention (Babatunde
&Olukemi, 2012). Knowledge of consumer behavior will go a long way in ensuring
effective marketing policies towards the interest of customers which will eventually
facilitates positive customer attitude towards the organisations. More especially,
since customer behavioural intention is a strong indication of his actual behavior
(Babatunde &Olukemi, 2012).
Considering the boom experienced by the banking sector in
Nigeria in the 1980s as a result of its liberation banking business is highly
competitive, with banks not only competing among each other but also competing
with non-banks and other financial institutions (Hull, 2002; Kaynak
&Kucukemiroglu, 2009).
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 satisfaction
and 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. One strategic focus that banks can implement to remain competitive
would be to retain as many customers as possible (Ro King, 2005).
Banks are making tireless efforts to attain high customer
satisfaction level and retain their current customers rather than spending
additional cost to attract potential new customers. Therefore, the
significantcontributionoftheservicesindustryandspecificallybankingsector in
Nigeria can never be overemphasized and warrant investigation so as to enhance
the growth of the banking sector which will in turn result in better economic
development (Sabir, Ghafoor, Akhtar, Hafeez&Rehman, 2014).
Loyalty to a bank can be thought of as continuing patronage
over time. The degree of loyalty can be gauged by tracking customer accounts,
over defined time periods and noting the degree of continuity in patronage (Yi
&Jeon, 2003) During the past decades the financial service sector has
undergone drastic changes, resulting in a market place which is characterized
by intense competition, little growth in primary demand and increased
deregulation (Chaudhuri &Halbrook, 2002).
In the new market place, the occurrence of committed and
often inherited relationships between a customer and his or her bank is
becoming increasingly scarce (Lee &Feick, 2001). Several strategies have
been attempted to retain customers. In order to increase customer loyalty, many
banks have introduced innovative products and services (Alam & Khokhar,
2006). Marketing success requires understanding and frequently monitoring the
product and service attributes which increase loyalty and share of wallet.
Producers and marketers tried to keep their customer satisfied
so that they may become band loyal and in the way companies can get maximum
share in the market. This study is an attempt to explore the impact of customer
service relationship on customer retention. This will contribute to the growth
of banks as banks can seek guidance to improve their service quality in order
to retain their customers and seek competitive advantage by getting more loyal
customers.
As the producers and marketers keep to satisfy customers in
terms of their service and the way it is been managed, this has been a deep and
common problem face by many organization, industries, companies, ministries etc
therefore, there is a need to enlighten and unleash the ideas which has been on
hold for the past many years, these research therefore is looking at bringing
out the information behind the impact in which Customer Relationship Marketing on
retention can be established and provided. In Guaranty Trust Bank PLC, Nigeria,
there is a need to examine problems faced by the company and how it can be resolved
relating to customers satisfaction.
1.2
Statement of the Problem
Since the start of the banking industry in Nigeria, Customer
Relationship Marketing has been an aspect of consideration as it relates to the
provision of quality service in the banking industry. CRM has been considered
the tool for ensuring customer satisfaction, hence, customer retention (Kotler,
2010). Customers gauge quality of service differently as they have different
perceptions about the levels of service they receive from banks (Jobber,
2007).
In view of different perceptions, services provided by banks
have also been viewed differently in the extremes of measures of quality
between high and poor quality. This situation has posed difficulties in the
planning and implementation of the service among banks. Therefore, instead of
being the tool for customer satisfaction, retention and competitive edge for
service providers, CRM has become the great challenge to service providers in
the entire process of service provision.
The challenge is true in that given severe competition among the players
in the industry; it has been very difficult to design customer service that is
very unique and not imitable one.
There are existing researches about customer service in the
banking industry around the world, but there are no clear conclusions as to the
most important customer service dimensions and strategies for satisfying bank
customers in order to retain them (Owusuah, 2012). The customer service unit of most banks in
Nigeria is more effective than in all other organizations of the economy. It is
increasing evidence that despite all resources invested in promotion of
customer’s loyalty effort is not yielding any positive effect. Banks still have
a long way to go in order to satisfy their customers and make them remain with
the banks for a reasonable period of time if not forever.
On the other hand the major focus of instituting customer
care is reduction of cost of operations through paid form of marketing
communication mix mainly advertising and promotion which is deemed essential
methods for customer capture and retention as it obvious that it very difficult
to capture new customers than retaining the current ones. For many years’ banks
have been practicing customer service Marketing as an instrument of company
performance but players in the industry have continuously been complaining of
shrinking of their performances.
The effect of the same is high commitment of big amount of
resources in provision of customer services with expectation of high results in
customer satisfaction and retention. The banks politicize customers care as
competitive tool into high competitive edge in the industry, only to realize
shrinking returns. On the other hand, the shrink of banks performance has
impact on the growth of the national economy. This is true in that poor bank
performances demonstrate poor revenue collections by the government. The same
results in poor social service provisions which ultimately lead to poor living
standards of the people.
In view of the above, a number of studies have been carried
out to examine the problem under study. The studies did not cover exactly the impact
of customer marketing in the performance of banking industry, a gap that this
study sought to fill. This study assessed the effectiveness of customer relationship
marketing in the performance of banking industry.
1.3 Objectives of the Study
The broad objective of this study is to examine the impact
of Customer Relationship Marketing(CRM) on customer retention a study of
Guaranty Trust Bank Plc, Lagos Nigeria
while the specific objectives are to;
1.
to examine the impact of customer
orientation on customer retention in Guaranty Trust Bank;
2.
to evaluate the impact of knowledge Marketing
on customer retention in Guaranty Trust Bank; and,
3.
to determine the impact of technology
based CRM on customer retention in Guaranty Trust Bank.
1.4 Research Questions
In carrying out this
study, the following questions were formulated:
1.
What is the impact of customer
orientation on customer retention in Guaranty Trust Bank?
2.
What is the impact of knowledge Marketing
on customer retention in Guaranty Trust Bank?
3.
What is the impact of technology based
CRM on customer retention in Guaranty Trust Bank?
1.5 Research Hypothesis
The following hypotheses were formulated in
the null form which were tested
H0:
There is no significant relationship between impact customer orientations on
customer retention in Guaranty Trust Bank
H1:
There is significant relationship between impact customer orientations on
customer retention in Guaranty Trust Bank
H0:
There is no significant relationship between the impact knowledge marketing on
customer retention in Guaranty Trust Bank
H2: There is significant the impact of
knowledge marketing on customer retention in Guaranty Trust Bank
H0:
There is no significant relationship between the impact of technology based CRM
on customer retention in Guaranty Trust Bank
H3:
There is significant relationship between the impact of technology based CRM on
customer retention in Guaranty Trust Bank
1.6 Significance of the Study
The study provides empirical information to stakeholders of
marketing professionals, and policy makers of the bank. The study also provides relevant information
to the Bank Marketing on what customers expect in terms of customer
Relationship Marketing as well as customer’s assessment of the quality of
service provided. Marketing can learn from the study how to guide in their
strategic decisions on customer acquisition, customer satisfaction management,
and customer retention. Shareholders and directors of banks may also use such
information as justification for their service quality decisions and policies.
1.7 Scope of the Study
This study will be carried out within Ogba area in Lagos where
the organization selected for this study is located. The study focus on the
banking industry generally and Guaranty Trust bank in particular. The scope of
the study will have limited to the impact of Customer Relationship Marketingon
customer retention a study of Guaranty Trust Bank. Much emphasis will be raised
on the performance of customer service relationship in the Bank
1.8 Definition of Terms
Customer
retention: Customer
retention refers to the activities and actions
companies and organizations take to reduce the number of customer
defections
Performance:
The accomplishment of a given task
measured against preset known standards of accuracy, completeness, cost, and
speed. In a contract, performance is deemed to be the
fulfillment of an obligation, in a manner that releases the performer from all
liabilities under the contract (Owusuah,
2012).
Bank:
An establishment authorized by a
government to accept deposits, pay interest, clear cheques, loans, act as an
intermediary in financial transactions, and provides other financial services
to its customers
Customer
Service: Customer service is the direct one-on-one interaction
between a customers’ making a purchase and a representative of the company that
is selling it. Most retailers see this direct interaction as a critical
factor in ensuring buyer satisfaction and encouraging repeat business. (Jobber,
2007).