ABSTRACT

The study investigated the effects of customer relationship management on customers retention in Nigeria Banking Sector, a study of Fidelity 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 management and customer retention in Fidelity Bank PLC. The result showed that customers’ relationship management is positively related to customers’ retention. Some variables were taken which are Customer orientation, knowledge management and CRM technology to effects Customer retention in the study firm. Based on the responses (using the mean), all these variables’ effects customer retention above 75% respectively. The study concluded that the management is an essential strategic tool to gain a competitive advantage in the contemporary global business environment most especially in the service-oriented organizations. The study recommended that banks should improve on their relationship with their customers as this tends to be a more reliable way of retaining a good percentage of their customers.

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Today, businesses follow different marketing strategies to survive in the highly competitive world by identifying, acquiring and retaining most important and economically viable customers as well as developing on-going and long-lasting relationship with them, (Roger, 2015). A business that wants to succeed in today’s global competitive market, where customers are empowered and brand loyalty erosion is increasing, will have to move to customer relationship management (CRM). Customer relationship management enables organizations to provide excellent real-time customer service through the effective use of individual account information (Kotler and Keller, 2016). This requires a more complex approach. Organizations need to investigate customer needs, and build relationships with both existing and potential customers (Rootman, 2020).

Customer relationship management (CRM) has generated increased interest in recent times especially in the banking industry. According to Ong et al, (2017) the rationale behind the preponderance of interest in customer relationship management could be traced to some significant problems in the corporate environment. The workflow automation which is an element of CRM has significant implications on marketing performance (Wamba et al., 2017). As series of automated actions are being created for business processes in order to improve everyday business performance, teams spend more time on the actual work itself and less time on the processes that support them. This often weakens customer relationship if not properly managed CRM is primarily founded on the notion that building a long-term relationship with clients is the key to gaining loyal consumers who are far more profitable than non-loyal consumers (Mohammed and Rashid 2012). As a result, there is a growing awareness of the need for a new school of thinking in customer relationship management in the marketing profession.

Roger (2015) observed that developing a better understanding of existing customers allows companies to collaborate, respond, and communicate more effectively to significantly improve retention rates of their customers. Currently, various companies begin to establish their networks to new as well as existing customers to increase ongoing long-term customer satisfaction, retention and loyalty (Choudhury and Harrigan, 2014). To be able to maintain this, some companies engage in competition by implementing the principles of relationship marketing via strategic and technology-based customer relationship management applications. Customer Relationship Management is an important element of organization which helps them assess customer satisfaction, loyalty, retention, and profitability in terms of repeat purchases, money spent, and longevity, (Chen and Popovich, 2013).

The origin of CRM is from relationship marketing that is aimed at improving long run profitability by shifting from transaction-based marketing that stresses new customers to customer retention with effective management of customer relationships (Chen and Popovich, 2013). According to Chen and Popovich, (2013) CRM is a more complex and sophisticated application that mines customer data pooled from all customer touch points, a single and comprehensive view of a customer while uncovering profiles of key customers and predicting their purchasing patterns. It also involves acquiring a better understanding of existing customers, which in turn allows organizations to cooperate, respond, and communicate more effectively to improve customer satisfaction and retention as much as possible (Roger, 2015).

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, 2012; Kaynak and Kucukemiroglu, 2019).

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 are 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, 2015).

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 and Jeon, 2013) 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, 2012).

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, 2011). Several strategies have been attempted to retain customers. In order to increase customer loyalty, many banks have introduced innovative products and services (Alam & Khokhar, 2016). 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 (Choudhury and Harrigan, 2014). 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 effects in which Customer Relationship Management on retention can be established and provided (Opara and Simeon, 2019). In Fidelity 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

Customer Relationship Management is a business strategy which leads to the value for customers, anticipating and managing their expectations, and demonstrating the ability of and the responsibility to satisfy their needs (Dominic and Guzzo, 2020). Since the start of the banking industry in Nigeria, Customer Relationship Management 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, 2022). Customers gauge quality of service differently as they have different perceptions about the levels of service they receive from banks (Jobber, 2018).

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 (Opara and Simeon, 2019). 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 (Eichorn, 2018). 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 (Eichorn, 2018). For many years banks have been practicing customer service management 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 (Rahimi and Kozak, 2017). The banks politicize customers care as competitive tool into highly 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 (Eichorn, 2018). 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 effects of customer management in the performance of banking industry, a gap that this study sought to fill. This study assessed the effects of customer relationship management on customers retention in Nigeria Banking Sector.

1.3 Objectives of the Study

The broad objective of this study is to examine the effects of customer relationship management on customers retention in Nigeria Banking sector, a study of Fidelity Bank Plc, Lagos Nigeria while the specific objectives are to;

1. To examine the effects of customer orientation on customer retention in Fidelity Bank.

2. To evaluate the effects of knowledge management on customer retention in Fidelity Bank.

3. To determine the effects of technology-based CRM on customer retention in Fidelity Bank.

1.4 Research Questions

In carrying out this study, the following questions were formulated:

1. What is the effects of customer orientation on customer retention in Fidelity Bank?

2. What is the effects of knowledge management on customer retention in Fidelity Bank?

3. What is the effects of technology-based CRM on customer retention in Fidelity Bank?

1.5 Research Hypotheses

The following hypotheses were formulated in the null form which were tested

H0: There is no significant relationship between effects customer orientations on customer retention in Fidelity Bank

H1: There is significant relationship between effects customer orientations on customer retention in Fidelity Bank

H0: There is no significant relationship between the effects knowledge management on customer retention in Fidelity Bank

H2: There is significant the effects of knowledge management on customer retention in Fidelity Bank

H0: There is no significant relationship between the effects of technology-based CRM on customer retention in Fidelity Bank

H3: There is significant relationship between the effects of technology-based CRM on customer retention in Fidelity Bank

1.6 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 will focus on the banking industry generally and Fidelity Bank in particular. The scope of the study will be limited to the impact of Customer Relationship Management on customer retention a study of Fidelity Bank. Much emphasis will be raised on the performance of customer service relationship in the Bank.

1.7 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 management on what customers expect in terms of customer Relationship management as well as customers assessment of the quality of service provided. Management 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.

To researchers and students this study has provided clues to the important tools necessary to implement a successful CRM program so as to acquire, maintain, serve and retain its customers and be profitable. The results of this work can help the managers of the banking sector as an input to evaluate performance status of its CRM strategy, in decision making and take timely necessary actions.

1.8 Operational definition of terms

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 retention: Customer retention refers to the activities and actions companies and organizations take to reduce the number of customer defections

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, 2018).

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).

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