ABSTRACT
This research project
critically explores customer relationship management and
marketing performance in the Nigeria banking industry.
Chapter one comprises
the background of the study, statement of research problems, aims and
objectives of the study, research hypothesis, significance of the study,
limitations of the study, historical background and definition of terms.
Chapter two involves
literature review and how the topic is being broken down to sub-topics that is
relevant to the success of the project and where the contribution of the
following authors, authentic are reviewed.
Chapter three consists
of the research design, population of the study, sample technique, sample of
the study, sources of data and method of data presentation and techniques of
analysis which is used for the reliability and validity of the research work.
Chapter four consists
the questionnaire administration, analysis of responses from questionnaire, and
test of hypothesis.
Chapter five, the final
chapter also concludes the Summary, Conclusion, and Recommendations of this
special assignment.
CHAPTER
1
INTRODUCTION
1.1
Background of the Study
The
banking sector is becoming increasingly competitive around the world. Today, many businesses such as banks,
insurance companies, and other service providers realize the importance of
Customer Relationship Management (CRM) and its potential to help them acquire
new customers, retain existing ones and maximize their lifetime value.
Customer
Relationship Management
is a sound business strategy to identify the bank’s most profitable
customersand prospects, and devotes time and attention to expanding account
relationships with those customers through individualized marketing, repricing,
discretionary decisionmaking, and customized service-all delivered through the
various sales channels thatthe bank uses.Further, the core and actual product
being offered to business customers could be considered reasonably homogenous.
Consequently, there is an increased need for banks to differentiate themselves
from competitors at the augmented product level. One way that this might be
achieved is to develop longer-term relationships with their key customers
(Heffernan et
al., 2008). The purpose of a business is
to create customers. This statement is predicated on importance of keeping
those same customers and growing the depth of their relationship with you.
Initially, new customers cost you money-money spent on advertising and
marketing and money spent learning what they want and teaching them how best to
do business with you.
Customer
relationship management (CRM) is currently under active consideration by
organizations across the globe, parading itself in the open market in the
disguise of new technology and software applications. Past market analyses
concluded and predicted that the CRM software market was set to grow by 700%
over the years 2001 to 2004 and generate total revenues of approximately $3
billion (Fox, 2001). This research works from the premise that the real purpose
of business is to create and sustain mutually
beneficial relationships, especially with selectedcustomers. With the main
proposition which assume thatsuccessful relationships is the two-way flow of
value(Christopher, M., et al., 2002). Trust key is a
componentof organizational relationships, and managementapproach to the issue
of trust is of academic and practicalsignificance. A rapidly growing body of
literaturerecognizes that trust represents a significant variable
thatinfluences organizational productivity (Kramer & Tyler,2006; Lewickiet al., 2008; Mayer et al., 2005; Mayer &Davis,
2009; Prusak& Cohen, 2010).
In competitive consumer markets, customer choice decisions are
at the root of business survival, focusing attention on the attraction and
retention of customers through personalized service. Rosenberg and Czepiel
(2004) estimate that the cost of winning a new customer is five times higher than that of maintaining
an existing
customer, while Reichheld and Sasser (2000) estimate that the
retention of an additional 5% of customers, can increase profit by nearly 100%.
Maintenance of the customer relationship is therefore cost-effective marketing,
and has become a key aspect of most firm’s business strategy, prompting
extensive deployment of Customer Relationship Management (CRM) systems (Morgan
& Hunt, 1994; Kim et al., 2003). The nature of CRM aims to maximize customer value in
the long term, by focusing business processes, marketing and customer service
on client relationship maintenance, through the coordinating agency of an
information technology (IT) system. Implementation of such a system is not a
panacea, and is not, of itself, sufficient to transform a production oriented
organization into a customer-oriented one (Kanji, 2002; Chang, 2005), which
will require a wide-ranging overhaul of organizational structures, employee
training and reward system, as well as appropriate IT support (Chen
&Popovich, 2003). This study therefore
examines the impact of
customer relationship management and bank performance in Rivers State, Nigeria.
1.2 Statement of the Problem
This
research work investigates the impact of customer relationship management on
the perceived performance in the banking sector. Customers are the major
products of every bank and the way these products are managed determine the
effectiveness and efficiency of the banks and ultimately their performance.
Nigeria Banks have fall short of the expectations of their customers in
recent time. Customers have experienced challenges ranging from delayment,
stock out, non-availability of staff at service points, unprofessional conduct
or rudeness by the staff of the bank, poor standard of records or improper
information, failed promises among others.
In
the words of Ogunnaike and Ogbari (2008), customer service in our banking
industry can be mistaken to mean customer delay and frustration. According to
the authors almost every Nigeria bank encounters similar problem in meeting
customers’ expectation of
services
and customer satisfaction.
The
issue of money transfer in banks is one major problem that customers of certain
banks have been made to experience. In most cases, the customer hardly receives
the payment of the money transferred in his account immediately. Also, the long
queues and huge crowds in the banking halls can be highly devastating and
discouraging most times, especially when the weekend is near. Most times, this
long queues are as a result of the breakdown of the computers used by these
cashiers, sometimes it occurs as a result of the cashier pushing duty to one
another, as to who is to attend to the customer or not. Consequently, there is
a problem of customer loyalty and profitability of the bank.
Customers
have experienced challenges ranging from delayment, stock out, non-availability
of staff at service points, unprofessional conduct or rudeness by the staff of
the bank, poor standard of records or improper information, failed promises
among others. Many academic works have been conducted to describe the corporate
bankingrelationships and the rapidly changing environment in this sector
throughout the globe.
1.3 Purpose of the Study
The main
purpose of this study was to investigate the relationship between Customer
Relationship Management and Marketing Performance in the Nigeria Banking
Industry. The specific objectives are as the follows:
1.
To examine the Customer Focusand
Marketing Performance in the Nigerian Banking Industry.
2.
To examine the Customer Relationship
Management Organization and Marketing Performance in the Nigerian Banking
Industry.
3.
To examine the Knowledge Management
and Marketing Performance in the Nigerian Banking Industry
1.4
Research Questions
The following
research questions have been formulated and will be answered at the completion
of this work.
1.
To what extent does Customer
Focusenhance Marketing Performance in the Nigerian Banking Industry?
2.
To what extent does Customer
Relationship Management Organization enhance Marketing Performance in the
Nigerian Banking Industry?
3.
To what extent does Knowledge
Management enhance Marketing Performance in the Nigerian Banking Industry?
1.5
Research Hypotheses
An attempt to
make our final answers not to look like mere assumption the hypotheses of this
study will be stated as follows:
Ho1: There is no significant relationship between
Customer focus and Market share in Nigerian Banking Industry.
Ho2:
There is no significant relationship between Customer Relationship Management
Organization and Market Share in Nigerian Banking Industry.
Ho3: There is no significant relationship between
knowledge management and Sales Growth in the Nigerian Banking Industry.
Ho4: There is no significant relationship between
Customer focus and Sales growth in Nigerian Banking Industry.
Ho5:
There is no significant relationship between Customer Relationship Management
Organization and Market Share in Nigerian Banking Industry.
Ho6: There is no significant relationship between
knowledge management and Sales Growth in the Nigerian Banking Industry.
Conceptual frameworks of Customer
Relationship Management and Marketing Performance in the Nigerian Banking Industry.
Source:
Conceptualized from literature, 2015
1.6 Significance of the Study
The study on the relationship between
CRM and bank performance is very important because CRM led to rapid growth of
business through retention of the profitable customer segment, increase in
profit of the bank due to low cost of managing customers(Sharma, 2011).
Therefore this study will add new knowledge to bankers in Nigerian regarding
the extra value banks can earn through implementation of CRM. Moreover the
study will in light bankers on factors that are important to be considered when
designing and implementing CRM in their organization so as to avoid excessive
investment in CRM without getting significant reward in return.
This
study will be of benefits and interest not only to banks in Nigeria, but it
will be valuable to other service sectors in Nigeria as a whole. The study will
also be a source of secondary data to other researchers who wish to conduct
studies on related issues. It will
again
act as mainstream for generating, keeping and maintaining customers.
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 service due to better
organizational performance. Banks can gain in terms of superior performance.
The research can also benefit the academia in terms of addition to knowledge.
1.7
Scope of Study
The general scope of this study covers Customer relationship management
and company performance. The geographical scope is Rivers State of
Nigeria. The study will be limited to (Gtbank, Eco bank, Skye bank, Uba, Fidelity bank andZenith
bank) in Port Harcourt.
1.8 Limitation of the Study
No research work is devoid of limitations. This study in
that wise, is no exception. It therefore suffered the following constraints.
Lack of Finance: Finance was the major problem
encountered in this study by the researcher. Money to travel and source for
materials: Also, typing, making photocopies, binding the project work
constituted a problem to the researcher.
Time Constraint: The time available for this study was
not enough for me as I had to read, do assignments, write term papers I tests
engage in my private activities and prepare for my final year examinations.
1.9 Definition of Terms
Customer
Relationship Management: is a systemic managerial
process for creating, maintaining, and developing relationships with customers
in every position in order to maximize relationship value.
Marketing
performance: refers to the improvement of the
organizational status in the market (market share), improvement of the
customers’ perception of organization and its products, and increase in their
loyalty toward organization
Customer
knowledge management: refers to acquiring, sharing, and
developing the customer knowledge among employees for making profitto the
organization and customers
Sales growth: The increase in sales over a specific period of time, often but not necessarily annually.
Profitability:
is the ability of a business to earn a profit.
Customer
Loyalty: customer loyalty is defined as the commitment of
customers to purchasing products and services from a specific business and
unrest the activities of rivalry companies attempting to attract their
patronage.
Profitability: This
is a function of customer satisfaction with the firms produce or service
offerings.