ABSTRACT
The study examined how customers service affect customer patronage in First Bank of Nigeria Plc, Abia State. The researcher adopted the causal research design. All customers of the selected banks formed the population of the study, thus, convenience sampling method was used. All analyses were done according to the stated objectives. The research objectives and demographic characteristics of the respondents were analysed with descriptive statistics. The hypotheses were tested with linear regression analysis Statistical package for the social sciences (SPSS) software version of 20.0 was used for computation of data obtained through administration of questionnaire. Findings showed that customer care exerts positive and significant effect on customer patronage of First Bank Nigeria Plc in Abia State. This indicates that the higher the customer care of First Bank Nigeria Plc in Abia State, the higher they achieved increased customer patronage. Also, it was revealed that prompt service in first bank Nigeria Plc in Abia State exerts statistically significant influence on repeat business of First Bank Nigeria Plc in Abia State. This equally signifies that the higher the customers are satisfied with the timely service within the bank premises, the higher their patronage of first bank Nigeria Plc in Abia State. Employee commitment was equally found to be statistically significant and positively related to customer preference of First Bank Nigeria Plc in Abia State. This implies that an increase in employee commitment by first bank Nigeria Plc in Abia State will result in an increase in customer preference. It was recommended that First Bank Nigeria Plc, Abia State should always enquire from customers to know how they rate the level of satisfaction offered by the bank. This will help the bank identify the areas that require improvement to enhance service performance. It will also inform the bank on areas that have been given less attention, so that decisions can be made to upgrade those areas. Also, the use of commitment can be a strong marketing tool for First Bank Nigeria Plc in Abia State to boost their performance. The first Bank Nigeria Plc should check on the general behaviour of their employees and their knowledge level in answering questions of customers, in order to identify service failures and address them promptly.
TABLE OF CONTENTS
Title Page i
Certification ii
Declaration iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables ix
List of Figures xi
Abstract xii
CHAPTER 1: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 5
1.4 Research Questions 5
1.5 Research Hypotheses 6
1.6 Significance of the study 6
1.7 Scope of the Study 7
1.8 Limitations of the study 7
1.9 Definition of Terms 8
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 10
2.1.1 Description of service 10
2.1.2 Types of services 11
2.1.3 Characteristics of service 12
2.1.4 Service quality 13
2.1.5 Dimensions of service quality 14
2.1.6 Assessing service quality 16
2.1.7 Characteristics of good customer service 17
2.1.8 How to provide good customer service 18
2.1.9 Importance of good customer service 20
2.1.10 Managing customer expectations 23
2.1.11 Consequences of poor customer service 26
2.1.12 Banking services 27
2.1.13 Customers choice of bank 28
2.1.14 Customer patronage 29
2.2 Theoretical Framework 37
2.3 Empirical Framework 39
2.4 Summary of and Gap in Literature 41
CHAPTER 3: METHODOLOGY
3.1 Research Design 43
3.2 Population of the Study 43
3.3 Sampling Procedure and Techniques 44
3.4 Sources of Data Collection 44
3.5 Validity of the Instrument 45
3.6 Reliability of the Instrument 45
3.7 Method of Data Analysis 46
3.8 Model Specifications 46
CHAPTER 4: RESULTS AND DISCUSSION
4.1 Presentation of Data 48
4.1.1 Questionnaire administration 48
4.1.2 Respondents’ demographics 49
4.2 Data Presentation 51
4.3 Test of Hypotheses 55
4.4 Discussion of Findings 59
CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary of Findings 61
5.2 Conclusion 62
5.3 Recommendations 62
5.4 Suggestions for Further Studies 63
References 65
Appendix 68
LIST OF TABLES
2.1: SERVQUAL Dimensions 38
4.1 Distribution and return of questionnaire 48
4.2 Frequency distribution showing the gender of respondents in the studied
organizations 49
4.3 Frequency distribution showing the age group of respondents in the
studied bank 49
4.4 Frequency distribution showing the respondents’ number of years with
the studied bank 50
4.5 Frequency distribution showing the educational background of
respondents in the studied organizations 50
4.6 Frequency distribution showing the marital status of respondents
in the studied organizations 51
4.7 Responses on customer care in the studied bank 51
4.8 Responses on timely service delivery in the bank 52
4.9 Responses on the service commitment in the studied bank 52
4.10 Responses on service responsiveness in the studied bank 53
4.11 Responses on customer patronage in the studied bank 54
4.12 Simple regression analysis showing the influence of customer care on
customer patronage of first bank Nigeria Plc in Abia State 55
4.13 Simple regression analysis showing the influence of timely service
delivery on customers’ patronage of first bank Nigeria Plc in Abia State 56
4.14 Simple regression analysis showing the influence of commitment on
customers patronage of first bank Nigeria Plc in Abia State 57
4.15 Simple regression analysis showing the influence of responsiveness on
customers patronage of first bank Nigeria Plc in Abia State 58
LIST OF FIGURES
2.1 Good customer service attributes 18
2.2 Importance of customer service 22
2.3 Impact of bad customer service 27
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The banking sector which is a prominent and pertinent sector of the economy determines to a great extent the overall growth of the economy and the standard of living of their customers. The banking industry of any nation is the machinery which propels the development and growth of its economy. Many commercial banks have been established and thereby giving grounds to the competitive banking services that may bring about satisfactions to their customers. These services could vary depending on the patronage of the customers, their level of consumption and savings. The customer service unit has become important in many ways for most organizations, but the general view is that many organizations do not take it too seriously. Customer service varies by product, industry and customer. It however, assume important dimension in service delivery and sales of product. This is because service firms such as banks have to retain their customers and win new ones if they are to remain in the market.
Customers are psychological beings who become very rational whenever it has to do with making choices that lead to patronising products or services that provide chain of alternatives. Banking sector comprises firms rendering financial services to the populace. Service in the view of Parasuraman, Zeithaml and Berry (1994) referred to a set of characteristics and overall properties of the service which aims to satisfy the clients and meet their needs. Service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything (Kotler & Keller, 2006; Kotler, Armstrong, Saunders & Wong, 2002). The definition by Kotler and Keller (2006) clearly showed that service as a concept has certain features such as intangibility, inseparability, perishability, variability and lack of ownership which is peculiar to it.
Customers are the heart of every successful business and therefore businesses need to more concentrate more on customers more than ever. Except those who donate blood voluntarily, one is either selling a service or a product for a living. Politicians, bankers, clerks, messengers, bus conductors, mortuary attendant, ticket agents, market women and everyone who provides a trade or service has a customer. According to Scott (2002), Customer service is a series of activities designed to enhance the level of customer satisfaction, that is, the feeling that a product or service has met the customer expectation. The level of satisfaction can also vary depending on other options the customer may have and other products against which the customer can compare the organization’s products. Attention to service quality can differentiate an organization from others and lead to competitive advantage (Moore, 1987). Gan, Cohen, Clemes and Chong (2006) argued that, most banks in the financial service sector choose not to engage in price but rather make use of service as an effective competitive tool. Customer service may be provided by a person, group or by an automated means called “Self Service”. The customer service management is a compulsory section of the bank. Commercial banks form the largest and are the country’s most important group of financial institutions. With stiffer competition among domestic and foreign banks, therefore it is important for the commercial banks in Nigeria to improve the quality of their services. Zeithaml and Bitner (2003) defined customer service as a series of activities designed to enhance the level of customer’s satisfaction where that product or service has met customer’s expectation.
In this light, Service Quality as perceived by the customer has an effect on the perceived value of the service rendered. The success or failure of generating value is jointly determined by the relationship between the service events; the customer’s prior and post perceptions, perceived and actual quality of delivered service. Service quality is fast becoming an important determinant of customers’ choice of patronage in the market place. Meeting customers’ demands through delivering quality oriented services is a vital part of operational activities of today banking industry. This is because consumers all over the world have become more quality conscious and customers’ requirements for higher quality service have been on the increase in the recent past (Lee, 2000).
First Bank commenced business in 1894, in what was then British colony of Nigeria, as the Bank of British West Africa. The bank originally served British shipping and trading agencies in Nigeria. The bank primarily financed foreign trade, but did little lending to indigenous Nigerians, who had little to offer as collateral for loans. In 1957, Bank of British West Africa changed its name to Bank of West Africa (BWA). After Nigeria's independence in 1960, the Bank began to extend more credit to indigenous Nigerians. At the same time, citizens began to trust British banks since there was an 'independent' financial control mechanism and more citizens began to patronise the new Bank of West Africa.
Managers continually plan in an attempt to control its influence on Patronage but frequently the effect of a specific design or design changes on ultimate users of the facility is not fully understood. This therefore will constitute our point of departure which anchored on the knowledge gap between Customer Services on Customer Patronage First bank of Nigeria Plc.
1.2 STATEMENT OF THE PROBLEM
Generally, a user of a service has a few characteristics and attributes in mind that he or she uses as a basis for comparison among alternatives. Lack of one attribute may eliminate a specific service firm from consideration. Service quality is difficult to measure and evaluate. Therefore, customers’ perceptions of service quality are of major concern to both business managers and researchers. This was corroborated by Palmer (1995) who opined that practitioners and academics alike are keen on accurately measuring service quality in order to better understand its essential antecedents and consequences, and ultimately establish methods for improving quality to achieve competitive advantage and build customer satisfaction. Service sector such as the banks are therefore obliged to provide excellent services to their customers in order to have sustainable competitive advantage (El-Saghier & Nathan, 2013). Banks and other financial institutions operating in Nigeria are consequently put under intense pressure to develop quality services as a strategy to retain their present customers and to win over competitors’ customers in the market.
It is a known fact that customers are rational whenever alternatives are available in making their choice for patronage, the onus is upon the firm to ensure that it positions itself as the right choice among other competitors. The capability to do this is mostly absent with many of the banks, which usually make them lose even their existing customers to rival firms. Existence and survival of firms in any industry (including that of the banking industry) depend to a large extent on the choices that are made by existing and prospective customers to begin or continue to patronise the firms. This decision can be enhanced with product differentiation, queuing convenience, aesthetic beauty, courtesy of staff and customer relationship management. Insensitivity to this has made many banks go into extinction today in the Nigerian banking industry when their customers panicked and took the choice of absolute withdrawal rather than patronage (Sokefun, 2011). The review of the extant literature on the subject revealed that there is dearth of studies that have examined the effect of customers’ services on customers’ patronage in First bank of Nigeria Plc. Therefore, the paucity of works in this new area of banking services stimulated the interest for the current study. It is on this basis, the study seeks to pursue the following objectives:
1.3 OBJECTIVES OF THE STUDY
The main objective of the research was to examine the effect of customers’ service quality on customer patronage in First bank of Nigeria Plc. However, the specific objectives were to:
i. examine the influence of customer care on customer patronage in First bank of Nigeria Plc.
ii. ascertain the influence of prompt service delivery on repeat business in First bank of Nigeria Plc.
iii. determine the influence of employees commitment on customer patronage in First bank of Nigeria Plc.
iv. examine the influence of employees responsiveness on customer preference in First bank of Nigeria Plc.
1.4 RESEARCH QUESTIONS
The following research questions guide the study:
i. how does customer care affect customer patronage in First bank of Nigeria Plc?
ii. how does prompt service delivery affect repeat business in First bank of Nigeria Plc?
iii. how does employees’ commitment affect customer patronage in First bank of Nigeria Plc?
iv. how does employees’ responsiveness influence customer preference in First bank of Nigeria Plc?
1.5 RESEARCH HYPOTHESES
The following hypotheses stated in their null form were tested in this study:
Ho1: customer care does not have any significant influence on customer patronage in First bank of Nigeria Plc.
H02: prompt service delivery does not have any significant effect on repeat business in First bank of Nigeria Plc.
Ho3: employees’ commitment does not have any significant influence on customer patronage in First bank of Nigeria Plc.
H04: employees’ responsiveness does not have any significant effect on customer preference in First bank of Nigeria Plc.
1.6 SIGNIFICANCE OF THE STUDY
The results of this study are significant in various respects. First, from the findings the researcher will be able to evidently put up the glaring gaps in specific reference to effects of customer services on customer patronage of First Bank Plc, Umuahia Branch. On the basis of the analysis the researcher will recommend set of alternative courses of actions to be considered to enhance the level of services and patronage of the customers towards the bank. Second, this study seeks to contribute to the development of conceptual framework that integrates service quality, corporate image, price, customer satisfaction, and customers’ patronage. Third, the implications for further research will be set and it will be used as a stepping stone for similar research works. Fourth and most important, the approaches and the experiences that will be applied in the research can be disseminated to other banks and financial institutions undertaking similar activities.
The study is believed to trigger the importance for undertaking further research on the area as the customer satisfaction and service loyalty are not researched well in Nigeria. Besides, the researcher on the course of the research undertaking has enhanced his knowledge and skills on research methodology and the title in question.
Furthermore, this work would contribute to knowledge in the area of product range and whether customers are satisfied with the product available at the bank. However, despite strive for perfection in customer service against its competitors, the stiff competition from others have taken over. This study would help establish the framework for policy direction to rake in more customers in First bank Nigeria Plc.
1.7 SCOPE OF THE STUDY
This study is focused on the effects of customer services on customer patronage of First Bank Nigeria Plc, Umuahia Branch. The variables considered under customer services were; customer care, prompt service delivery, employees commitment. The effect of these customer service variables on customer patronage, repeat business, customer preference was considered. Geographically, the study was limited to First Bank Nigeria branches in Umuahia, Abia State. The bank has robust branches in the city of Umuahia and customers of these branches were studied. Savings and current account holders of the bank are thus the unit of analysis in this study, while the geographic coverage is Abia State.
1.8 LIMITATION OF THE STUDY
All research has its limitation and this study is no exception. One is, the survey was only conducted in First Bank of Nigeria Plc, Umuahia Branch, and in strict sense the results pertain only to First Bank Nigeria Plc. Though the sample provided a substantial number of customers in the bank that facilitated a study of this nature, one cannot generalize the results in other banks not included within the study. Such generalizations to a wider population or industry should be done with caution. But, the researcher handled this by sampling large number of First Bank of Nigeria Plc customers in the study area.
Another limitation was on the scope of the study. From a theoretical point of view, the framework of this research was restricted to First Bank Nigeria Plc. The researcher addressed this challenge by visiting more than 7 branches of First Bank Nigeria Plc in Abia State. More so, further studies should include other banks in the sample frame and increase the scope of coverage beyond Abia State.
1.9 DEFINITION OF TERMS
Customer: There is no statutory definition of the term “customer” hence reliance is placed on case law definitions which to make a person a customer of a bank he/she must either be operating a current account or deposit account or some similar relationship. The relationship begins as soon as money or cheques is paid in, and the bank receipts it. So the customer is the person wishing to make purchasing of physical product or accept service regularly.
Service refers to any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
Customer service is a series of activities designed to enhance the level of customer satisfaction, that is, the feeling that a product or service has met the customer expectation.
Repeat business is an act by which customer shops with or patronize a particular company repeatedly.
Customer Patronage is the desire to be committed to an organization either based on its service quality or perceived service qualities.
Banking refers to the business of receiving money and collecting drafts for customers, subject to the obligation of borrowing cheque drawn upon them time to time by the customers, to the extent of the amount available in their current account.
A commercial bank can be defined as a monetary institution owned by either government or private businessmen for the purpose of profit. It is a bank which offers full banking services to commence, industry and other sectors of the economy. This full service implies the current, deposits account and saving account.
Responsiveness as the speed and timeliness of service delivery. This includes the speed of throughput and the ability of the service provider to respond promptly to customer service requests, with minimal waiting and queuing time.
Service Commitment means the period of time for which customer is committed to pay for services of an organization.
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