1.1 BACKGROUND TO THE STUDY
Companies are increasingly focused on
managing customer relationships because it explicitly recognizes the long-run
value of potential and current customers, and seeks to increase revenues,
profits, and shareholder value through targeted marketing activities directed
toward developing, maintaining, and enhancing successful company-customer relationships
(Berry, 1983; Morgan and Hunt, 1994; Gronroos, 1990). The activities involved
in customer relationship building require an in-depth understanding of the
underlying sources of value the firm both derives from customers and delivers
While retaining customer loyalty has been a sales
and marketing principle for quiet a long time, Customer Relationship is
actually a tremendous step forward in creating a system that can provide a
means for retaining individual loyalty in a world of about 6 billion population
(Croteau & Li, 2001). Greenberg (2001) stated that in order to understand how
to build a sustainable customer relationship, you must also understand the
changing nature of the customer because customers are not what they used to be.
Khalifa and Liu (2001) noted that, a survey of more than 1,600 businesses and
IT professionals conducted by the Data Warehouse Institute, found that, some of
the respondents have various methods of managing customer relationship. This
finding indicates that customer management is very important for organizations.
The Cap Gemini further added that, the average total investment in customer
management by 300 U.S and European companies was $3.1 million. More than 69% of
the companies surveyed spent less than $ 5 million and more than 13% of the
companies spent over $10 million (Sterne, 2000). This finding also indicates that
a great number of companies spend great amount of their budget on customer
management and therefore in the researcher’s opinion, it is believed that it is
important for various business organization to know the objectives of their customer
management initiatives and the type of benefits these organizations intend to
derive from them. A survey of 300 companies conducted at a customer management
conference concluded that customer management is not a cheap, easy, or fast
solution. Mooney (2000) further added that, more than two-thirds of customer
management projects end up in failure.
However, he went further to say that, the
successful third could obtain up to 75% return on investment.
Thompson (2004) found four broad factors that were
driving 72% of the return on investment (ROI) of customer relationship. They
were: Customer-centric strategy, frontline training and support, organization
change, and appropriate use of metrics. These findings again support the fact
that the actual objectives of customer relationship initiatives and the
benefits should be ascertained. This further support the statement by Balaji
and Alexander (2003) that the purpose of customer relationship is to identify,
acquire, serve and retain profitable customers by interacting with them in an
integrated way across a range of communication channels. Swift (2001) also
describes analytical electronic customer management as a four-step interactive
process consisting of collecting and integrating online customer data,
analyzing this data, building interactions with customers based on this data
are optimized, and measuring the effectiveness of these interactions in terms
of these performance. According to Thompson (2004) customer relationship is a
business strategy to acquire, grow and retain profitable customer
relationships, with the goal of creating a profitable organization.
1.2 STATEMENT OF THE PROBLEM
Evaluations of customer relationship
and business behavior often qualify these initiatives as both the greatest
force and the greatest weakness of companies. Skeptic people usually say that customer
relationships initiatives of companies has no real meaning; moreover, it is a
marketing trick. Optimistic people trust in improvement of companies’ behaviour
in relation to good customer relationships and environment requirements.
Consumers are increasingly ready to buy products of companies, which adopt better
customer relationships program, and to work for these companies.
However, the researcher is providing an overview on ways to build sustainable
customer relationship in an organization.
1.3 OBJECTIVES OF THE STUDY
following are the objectives of this study:
to build sustainable customer relationship in an organization.
identify the effects of sustainable customer relationship in an organization.
3. To determine the factors influencing
sustainable customer relationship in an organization
1.4 RESEARCH QUESTIONS
are the ways
to build sustainable customer relationship in an organization?
are the effects of sustainable
customer relationship in an organization?
3. What are the factors influencing
sustainable customer relationship in an organization?
1.6 SIGNIFICANCE OF THE STUDY
are the significance of this study:
outcome of this study will be a useful guide to various business organization
has it will educate on ways and approaches to sustainable customer relationship
with a view of increasing the organization customer base through better
research will also serve as a resource base to other scholars and researchers
interested in carrying out further research in this field subsequently, if
applied will go to an extent to provide new explanation to the topic.
OF THE STUDY
study on building a sustainable customer relationship in an organization will
cover the methods adopted by different business organizations in Nigeria. The
study will also cover the effect of sustainable customer
relationships on the performance of the organization.
LIMITATION OF STUDY
1. Financial constraint- Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
2. Time constraint- The researcher will simultaneously engage in this study
with other academic work. This consequently will cut down on the time devoted
for the research work.
Gronroos, Christian. (1990) Service Management and
the Moments of Truth in Service Competition Free Press/ Lexington Books, Lexington, MA.
Berry, Leonard L. (1983) “Relationship
Marketing.” In Emerging Perspectives on Services Marketing, ed. Leonard L. Berry, G.
Lynn Shostack, and Gregory Upah, pp. 25–28 Chicago: American Marketing Association.
Morgan, Robert M., and Shelby D. Hunt. (1994)
“The Commitment-Trust Theory of Relationship Marketing.” Journal of Marketing, 58 (3), 20-38.
Thompson, B (2004). Successful CRM: Turning
customer loyalty into probalility online. Available: www.crmguru.com. 10 November, 2004.
Swift, R (2001), Accelerating customer
relationship Using CRM relationship technology, Prentice Hall PTR, Englewood
(200): Customer service on internet, New Yorl: John Wiley and sons, inc.
(2000): CRM is costly, not managing it even more costly. Radio communication
& Liu, V. (2003): Determinants of satisfaction at different adoption stages
of internet based services. Journal of the association for information system.