ABSTRACT
This study was conducted to examine the effects of customer
relationship management on the performance of Nigerian commercial banks using First
Bank Plc. as a case study. In order to achieve this broad objective, three (3)
research questions were raised and three (3) hypotheses were formulated. Using
a survey design method of research and a self-structured questionnaire, 300
staff from the bank and 300 bank customers were randomly selected to make the
sample for the study. The study used both descriptive and inferential
statistics to analyse the data obtained
in the course of the study. The findings of the study revealed that there is no
significant relationship between customer relationship management and bank
performance, that there is a significant relationship between customer
relationship management and customer loyalty and that there is a significant
relationship between customers’ satisfaction and bank profitability.Based on
the findings of the study, it was recommended among others that First Bank
Plc., must understand the importance of customer relationship management in
improving the organizational performance of the banks and should ensure
customer satisfaction at all time.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The
market condition and business environment of the 21st century is witnessing
rapid change and the banking sector is becoming increasingly competitive around
the world. Business often must respond to this rapidly changing environment.
Environmental change has been a business focus for decades. Now, a
well-established new comer is changing the traditional business environment
even more: information technology; the internet and the electronic commerce are
the new players disrupting the business environment. Even more critical is the
development of entirely new business (Ogbadu& Usman, 2012). Given these
changes, businesses have rediscovered that, more than ever, in the face of
increased competition, matured market, and ever demanding customers, treating
existing customers well is the best source of profitability and sustained
growth (Hair etal, 2006).
Today,
companies have realized that customers are the life blood of the business;
business survival is largely depended on the customers. The realization of this
fact has made it possible for companies to have a better chance to outperform
competition. Customers are therefore, better satisfied through a competitive
superior product and services beyond their expectation. Satisfying the customer
eventually graduate into a relationship where the company sees the customer as
part of the business and business decision making by continuously seeking customers
opinion. According to Kotler and Keller (2006:139) as cited by Ogbadu&
Usman (2012), marketers must connect with customers, informing, engaging, and
may be even energizing them in the process.
Having
every detail of organization’s customers gave birth to the marketing concept
known as customer relationship management (CRM). Customer relationship
management as an improvement upon the data base marketing of 1980’s, which was
simply a catch phrase to define the practice of setting up customer service
groups to speak individually to all of a company’s customers. The 1990’s was
the advances in customer relationship management (CRM), which also became
popular at this period. At this time, instead of gathering dataalone, it was
used to give back to the customers not only in terms of improving
customers’services, but in terms of incentives, gifts and perks for customer
loyalty. This saw thebeginning of the flyer programmes, bonus and hosts of
other resources that are based onCRM tracking of customer activity and spending
patterns. CRM is being used as a way toincrease sales passively as well as
through active improvement of customer service aided by technology. The key to
building lasting customer relationships is to create superior customervalue and
satisfaction. In their view, Kotler and Armstrong (2008) state that satisfied
customersare more likely to be loyal customers and to give the company a larger
share of theirbusiness. Targeting, acquiring, and retaining the right customer
is at the core of manysuccessful business firms. Once a firm has won customer
it sees as desirable, the challengeshift to building relationship and turning
them into loyal customers who will generategrowing revenue for the firm in
future. Customer Relationship Management (CRM) is concerned with customer data management
that is, managing detail information aboutindividual customers, and carefully
managing customer touch points in order to maximizecustomer loyalty, is now
being focused on the overall process of building and maintainingprofitable
customer relationships by delivering superior customer value and satisfaction.
Onut
etal, (2007) saw CRM as a business strategy to identify the banks
mostprofitable customers and prospects, and devotes time and attention to
expanding accountrelationships with those customers through individualized
marketing, reprising,discretionary decision making, and customized service all
delivered through the varioussales channels that the bank uses. Nigerian banks
are often making efforts to satisfying big premium services. While small saver
with low balances are considered unprofitable, and areleft to get cold.
Accounts average balance, account activity, service usage, branch visits
andother variables are being used to assess profitable and non-profitable
customers (Ogbadu& Usman, 2012).
Having
realized the importance of customer relationship management, and itspotential
to help acquiring new customer, retain existing ones and maximize their
lifetimevalue, Onut etal (2007) suggest that, IT and marketing should have a
proper coordination toprovide a long term retention and selection of customers.Ojiri
(2016) observed thatthe growth in the number and variety of financial
institution as well as the financial instrument and operative during this
period attest to the grave relevance of the sector in the National Economy
Development. The structural readjustment in the financial sector which
commenced in 1986 was directed towards enhancing the Banks efficiency through
increased competition, strengthened thesupervisory
role of the Regulatory authorities and streamlined public sector relationship
with the financial sector. Thus, since the early ‘90s’, the phenomenal growth
of the Banking industry in Nigeria following the Deregulation of the industry
has generated interest and enthusiasm amongst top notch stakeholders and
institutions in the industry stressing the urgent need for strategic decisions.
Significantly in the year 2002, the central Bank of
Nigeria dismantled the divide between commercial and investment banking a
culmination of a process commenced 7 years earlier with the Government’s
approval of the conversion of themerchant
to commercial Banks. Thus, Banks with a view of survival can no longer rely on
their “efficient personal” solely but must synchronize personnel capabilities
with appropriate systems and structures in order to wade the storm of
competition, survive the tide of changing emerging technology, shifting several
old economy business practices towards organizing by customers segments rather
than by-products, focusing on customers
lifetime value, instead of transactions alone, focusing on stakeholders and not
through advertising alone, focusing on customer acquisition, retention and
satisfaction.
The Nigerian banking industry is at the threshold of
change as to completely alter the fabric of business and indeed lives, this
change being rooted in the competitive nature of the industry which
incidentally is expected to intensify as new players of local and Global scope
permeate the market and as the competitive terrain becomes more challenging to
navigate due to the ever-changingcustomers’
expectations and preferences , the challenges being churned up in the operating
environment, and expectations of the regulatory bodies, competitors In the
industry will indeed need to adopt new technologies redesign processes and
excellently manage their manpower in order to secure a competitive advantage.
Banking industry is an important sector in the
business world which has a growing impact on all other sectors of the economy
because of financial services provisions. In this volatile situation financial
institutions were not left out as they are seriously affected by the level of
competition both locally and internationally. The banking industry environment
today is highly volatile; Nigerian banks therefore needs to develop effective
technique to enhance the interaction of customers and the bank staff. The
complexity in the banking industry has made bank managers to focus on how to
create close affiliation with their customers. No wonder Nigeria banks now
create a separate department in the bank known as customers care unit to
address customer issues and complaint in order to ensure that customers get
value for their money thereby enhancing customer loyalty, building and
maintaining customer’s cordial relationship in order to achieve an advantage
that can lead to customer retention and increase profitability.
Furthermore, loyal customers can provide the
foundation for growth which leads to competitiveness in the industry. Also, the
belief that relationship marketing (RM) investment builds stronger, more trusting
customers relationship (Morgan and Hunt 1994) and improves financial
performance (Schroder and Lacobulli 2001) has led to massive spending on
customer relationship programme. Sheth (2005) also opines that customer
relationship marketing would result into customers’ retention which has to do
with creating relationship, Customers loyalty which has to do with developing
relationship, and customer interaction may lead to customer retention.
Considering the above arguments, Olawale,
Folarin&Yusuph (014) argued that Nigeria banks now adopt relationship
marketing principles and design strategies to achieve and maintain close and
long lasting relationship with the customers. This study is therefore aimed to
examine the effect of customer relationship management on the performance of
Nigerian Commercial Banks.
As
a result of complexity in the Banking industry today, Bank managers in a
particular Bank see other Banks as competitors, this has made them focus on how
to be in a close contact with their customers In order not to lose active customers
to other competitors.
Customers on their own part have experienced
challenges ranging from non-availability of staff at theservice point, poor standard of records or improper information, failed
promises among others .in the words of Ogunnaike and Ogbari (2008) almost every
Nigerian Bank encounters similar problems in meeting customers expectation of
services and customer satisfaction.
Other issues include delayed money transfer fund,
unnecessary deductions without prior information, short staffed, Automatic
Teller Machine (ATM) issues, long queues and huge crowds in the banking halls
can be highly devastating and discourage
most times, especially during weekends.
The long queues are as a result of thebreakdown of the computers used by cashiers or
cashiers pushing duty to one another as to who is to attend to the customer.
These and more destabilizes customers, thereby forcing them to open more than
one account across the banks in order to satisfy their financial needs.It is on
the basis of these inabilities in the banking industry that this study is
carried out to examine the effect of customer relationship management on the performance
of Nigerian commercial banks.
The objective of the study is to examine the effect of
customer relationship management on the banking industry.
Specifically, the study will:
1.
examine
the relationship between customer Relationship Management and Bank performance
2.
determine
the contribution of effective customer Relationship Management to customer
loyalty.
3.
ascertain
whether customers satisfaction can increase Bank profitability
1.
Is
customer relationship management a useful tool in determining bank performance?
2.
What
are the contributions of effective customer relationship management to customer
loyalty?
3.
Does
customer satisfaction lead to increase in Bank Profitability?
1
There
is no significant relationship between customer relationship management and
bank performance.
2
There
is no significant relationship between customer relationship management and
customer loyalty.
3
There
is no significant relationship between customers’ satisfaction and bank
profitability.
Customers’ relationship management is an important
business approach because it can enhance a company’s ability to achieve the
ultimate goals of retaining profitable customers and gain a competitive advantage over its competitors. In
principle, customers’ relationship management focuses on building long-term and sustainable customers’
relationship that add value for both customers and the company. It is regarded
as a process of computerizing a staff’s knowledge about his or her customers
because customers’ relation staff would normally need to remember their
client’s requirements, behaviours, tastes
and preferences in a usual business process
This research work will examine ways of improving and
enhancing customer relationship management in Nigeria Banking sector. Customers
are viewed as an important element in
organizational performance and productivity of Banks. When the relationship with customers is poorly managed.
This can lead to competitive advantage for the bank. This study is important
for customers, employees, banks, academia and even government. Customers will
have access to better and qualitative services from the banks. Employees can
also have improved conditions of services due to better organizational
performance. Banks can gain in terms of superior performances. This research
can also benefit the academia in terms of adding to knowledge.
This study focused on the effect of customer relationship management on
the performance of Nigerian commercial banks. The study is limited to FIRST
BANK Branches across Delta State.
Automation:The
act or process of converting, controlling a machine or device to a more
automatic system, such as computer or electronic controls
Customer: One
who purchases or receives a product or service from a business (bank) or
intends to do so.
CRM: A
system for managing a company’s interactions with current or future customers,
it often involved using technology to organize, automate and synchronize sales,
marketing, customer service and technical support.
Management: The
process or practice of managing, it’s a judicious use of means to accomplish an
end.
Productivity:The
state of being productive or efficient.
Profitability: The capacity to make profit
Relationship:Connection
or association, the condition of being related toward achieving a goal.
Satisfaction:The
fulfillment of a need or desire, the
pleasure obtained by such fulfillment.
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Item Type: Project Material | Attribute: 94 pages | Chapters: 1-5
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