CUSTOMER RELATIONSHIP MANAGEMENT AND MARKETING PERFORMANCE IN THE NIGERIA BANKING INDUSTRY

CHAPTER ONE

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.

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.