ABSTRACT
The study examined the effect of customer service quality on marketing performance of United Bank for Africa Plc and Zenith Bank Plc in Aba, Abia State. The service quality dimensions such as (tangibility, reliability, empathy, communication, assurance and responsiveness) were used for the study. Marketing performance were measured by customer patronage, customer loyalty, brand preference, satisfaction, repeat business and customer turnover. The researcher adopted survey research design. The population of the study comprised bank customer above 18years of age (224,820) residing in Aba, Abia State. Taro Yamane formula was adopted to select sample size of 399. Proportionate, Judgmental and convenience sampling techniques were adopted to select customers in Aba who are banking with United Bank for Africa Plc and Zenith bank Plc. Questionnaire was the major instrument for relevant primary data collection. Cronbach Alpha value of 0.79 was realized which showed that the instrument was highly reliable. The data was analyzed with descriptive statistics such as frequency, percentage and mean. The hypotheses were tested with simple linear regression analysis model. The descriptive results, showed that 46.6% of the respondents strongly agreed that, availability of service facilities such as ATM, Cheque leaflets inspired them to the bank. 56.1% of the respondents strongly agreed that, confidentiality of information always induces them to remain loyal to the bank services. The empirical result showed that, tangibility of bank services have significant effect on customer patronage. Service reliability has significant effect on customer loyalty. Empathy during service delivery has significant effect on bank brand preference. Service communication has significant effect on customer satisfaction. Assurance of bank services has significant effect on repeat business with the bank. Service responsiveness has significant effect on customer turnover with the bank. In conclusion, customer service provision in United Bank for Africa and Zenith Bank Plc in Abia State and Nigeria at large should go beyond service delivery and satisfaction. Strategies that exceed customer expectations should be put in place to delight the customers. The researcher recommended that, for United Bank for Africa and Zenith Bank Plc to always stay ahead of the other banks there is the need to constantly carry out research on service dimensions and customer’s taste in order to develop corresponding products to suit these tastes.
TABLE OF CONTENTS
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables ix
List of Figures x
Abstract xi
CHAPTER 1: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 4
1.3 Objectives of the Study 7
1.4 Research Questions 7
1.5 Research Hypotheses 8
1.6 Significance of the Study 8
1.7 Scope of the Study 8
1.9 Operational Definition of Terms 9
CHAPTER 2: REVIEW OF RELATED LITERATURE
2.1 Conceptual Framework 10
2.1.1 The concept of customer service 11
2.1.2 Dimensions of customer service 13
2.1.3 Effect of tangibility of bank service on customer patronage 14
2.1.4 Effect of service reliability on customer loyalty 15
2.1.5 Effect of empathetic service delivery on bank brand preference 19
2.1.6 Effect of bank service communication on customer satisfaction 21
2.1.7 Effect of service assurance on repeat business 23
2.1.8 Effect of service responsiveness on customer turnover 24
2.1.9 Characteristics of customer service 26
2.1.10 Characteristics of good customer service 28
2.1.11 Importance of excellent customer service 30
2.1.12 Implication of poor customer service 34
2.1.13 Concept of banking services 35
2.2 Theoretical Framework 42
2.2.1 Expectancy-value theory Lewin (1938) and Tolman (1932) 42
2.2.2 Assimilation Theory Festinger’s (1957) 43
2.2.3 Contrast theory Hovland, Harvey and Sherif (1987) 44
2.2.4 Disconfirmation theory Szymanski and Henard (1980) 45
2.3 Review of Empirical Studies 45
2.4 Summary of and Gap in Literature 50
CHAPTER 3: METHODOLOGY
3.1 Research Design 52
3.2 Area of the Study 52
3.3 Population of the Study 53
3.4 Determination of Sample Size 53
3.5 Sampling Procedure and Technique 54
3.6 Method of Data Collection 55
3.7 Validity of the Instrument 55
3.8 Reliability of the Instrument 55
3.9 Method of Data Analysis 56
3.10 Model Specification 56
CHAPTER 4: RESULTS AND DISCUSSIONS
4.1 Questionnaire Administration 59
4.1.2 Demographic characteristics of the respondents 60
4.2 Data Presentation 62
4.3 Test of Hypotheses 69
4.4 Discussion of Results 76
CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary of Findings 79
5.2. Conclusion 80
5.3 Recommendations 80
5.4 Suggestions for Further Studies 81
5.5 Contribution to Knowledge 82
References 83
Letter 91
Appendix 1 (Questionnaire) 92
Appendix 2 (Results) 95
Appendix 3 (Reliability statistics) 101
LIST OF TABLES
3.1 Population of the study 53
4.1 Questionnaire administration 59
4.2 Demographic characteristics of the respondents 60
4.3 Effect of tangibility of bank service on customer patronage 62
4.4 Effect of service reliability on customer loyalty 63
4.5 Effect of empathy during service delivery on bank brand preference 64
4.6 Effect of service communication on customer satisfaction 65
4.7 Effect of service assurance on repeat business with the bank 66
4.8 Effect of service responsiveness on customer turnover 67
4.7 Marketing performance of commercial banks 68
4.8 Simple linear regression model result on effect of tangibility bank service
on customer patronage 69
4.9 Simple regression result on effect of service reliability on customer loyalty 70
4.10 Simple regression result on effect of empathy during service delivery
on bank brand preference 72
4.11 Simple regression coefficients result of effect of service communication
on customer satisfaction 73
4.12 Simple regression coefficients result of effect of service assurance on
repeat business with the bank 74
4.13 Simple regression coefficients result of effect of service responsiveness
customer turnover 75
LIST OF FIGURES
2.1 Conceptual framework 10
2.2 Good customer service attributes 32
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In this stir of globalization, competitions in financial service sector in terms of approaches, are fiercer than ever before (Scott, 2012); and the fast-tracked evolution in information technology in the wake of this twenty first century advanced an array of thinking, resulting to an unprecedented quest for change in the nature of services needed by customers in the banking sector. Thus, strategies needed for survival and in fulfilling customer’s expectation of service have raised eyebrows among management in order to enrich decision making and marketing performance (Igwe and Kalu, 2017). The banking sector is a prominent and pertinent sector of the economy which determines the overall growth of the economy and the standard of living of their customers.
Customer service quality has become so vital and significant especially in the financial business sector whether locally or globally. As banks continue to provide an increasing number of financial services and products, they face the challenge of integrating these disparate systems into a coherent, efficient infrastructure, while delivering the highest level of customer service and convenience without exposing their customers to the bank’s internal system integration problems. However, banks in Nigeria needs’ to improve and formalize its customer service and public relations programs. The customer service quality has become important in many ways for most organizations, but in general view, many organizations do not take it too serious. Customer service quality varies by product, industry and customer; and it is regarded as an important dimension in service delivery and sales of product, because service firms such as banks can only attract new customers and retain existing customers if excellent services are rendered (Osei-poku, 2015).
As stated by Ismail, Rose & Foboy (2016), Baldwin & Sohal (2003), Parasuraman, Berry & Zeithaml (1991, 1994), Wan Edura & Jusoff (2009), the customer service quality construct has been modified into five specific dimensions, namely tangible (physical facilities, equipment, and appearance of workers), reliability (ability to perform the promised service dependably and accurately), responsiveness (willingness to help customer and provide prompt service), assurance (knowledge and courtesy of workers and their abilities to inspire trust and confidence), and empathy (caring, individualized attention the organization provides its customers). The service dimensions splurged that service quality is an important outcome of comparison between customer expectations before and after their experience of the service (Gronroos, 2007). When customers view that their expectations for service performance conform their perceptions of the service, this situation may help to induce the notion of service quality.
However, in the banking sector, large percentage of the customers all over the world have become more quality conscious; hence there has been an increased customer demand for higher quality service. Service operations worldwide are affected by this new wave of quality awareness and emphasis (Lee, 2014). Therefore service-based companies like the banks are compelled to provide excellent services to their customers in order to have sustainable competitive advantage, especially in the current trend of trade liberalization and globalization. High patronage of services depends on the satisfaction customers derived from a service. Sales are directly related to customer satisfaction; sales increase requires improvement in the quality of service delivery to encourage continuous patronage (Shewhart, 1931 cited in Summers 2015). Generally, it is believed that services which continuously and consistently delight customers make them happy and satisfied. In such situation, they become loyal customers and will continue to demand for the service which in turn will result in profit and growth of an organization (Kondo, 2010).
As stated by Saravan and Rao (2017), quality customer service remains critical in the service industries, as businesses strive to maintain a competitive advantage in the marketplace and achieving customer satisfaction. The financial services, particularly banks, compete in the marketplace with generally undifferentiated products; therefore excellent customer service becomes a primary competitive weapon (Stafford, 2016). This is because, providing excellent service to customers retains them, attracts new ones, enhances corporate image, lead to positive referral by word of mouth, and above all guarantees survival and profitability (Negi, 2009; Ladhari, 2009).
Gan, Cohen, Clemes and Chong (2016) 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 quality 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 (Kondo, 2010). 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 (2013) posited that, customer service quality is a series of activities designed to enhance the level of customer’s satisfaction where that product or service has met customer’s expectation.
Exceptional service according to Parasuraman, Zeithaml and Bitner (1994) refers 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. In this light, service distinction as perceived by customers 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. Outstanding service is fast becoming an important determinant of customers’ choice of patronage in the market place. Meeting customers’ demands through delivering excellent oriented services is a vital part of operational activities of today banking industry.
Owusu-Frimpong (2009) posited that factors which customers are looking for in a high customer service can be divided into two broad groups as tangible and intangible factors. The tangible factors may concern performance, quality, reliability, cost of services and convenience. The intangible factors may be reputation, sense of caring, courtesy, willingness to help, problem solving ability of staff, etc. The tangible and the intangible factors primarily drive home the point about customer’s perception about how he/she is being treated by a bank. Is the bank being fair to him/her in matters of interest rates, penalties, service charges and that customer has nothing to fear about any hidden costs and charges at a later date. Further, the customer also draws comfort from the fact that customers are not being discriminated against vis-à-vis a new customer; poor or rich.
1.2 STATEMENT OF THE PROBLEM
In spite of the importance of customer service, evaluating bank service might be seen as a complex process, primarily because it is a service, and services are intangible, which prevents evaluation before an interface or an encounter. More so, it is worth knowing that, there is no publicly recognized standard measurement instrument to assess the perceived excellence of bank services (Bahia and Nantel, 2010). Indeed, the available measurement scales are either developed by specific banks exclusively, or are developed to measure service quality in different services organizational settings, in general. Therefore, customers’ perceptions of service quality are of major concern to managers of financial service firms and other stakeholders.
The current globalization in the financial market has made financial institutions to maintain contacts with both current and prospective customers as part of their daily business activities and a way to remain competitive. This is because customers’ expectation in this post-consolidation era in the Nigerian banking sector is very high. This is justified by the belief that, consolidation exercise had swallowed up incompetent banks and left only those which are able to compete in both domestic and global marketplace (Owusu-Frimpong, 2009). However, in recent times, it appears some Nigerian banks have fallen short of this expectation due to inability to offer excellent service, maintain cordial relationship with their customers, prompt sales follow-up and reliable service delivery. Customers have experienced challenges ranging from delayed transaction notification, stock out, non-availability of staff at service points, unprofessional conduct or rude behaviours by the staff of the banks, poor recording standard or improper information dissemination channels, failed promises and inability to connect with customers as at when due (Adesoji, 2016).
Ogunnaike and Ogbari (2008) opined that service delivery in Nigerian banking industry can be mistaken to mean customer delay and frustration. Almost every Nigerian banks encounters similar problem in meeting customers’ expectation of services and customer satisfaction. For instance, the issue of delay in posting transactions, such as money transfer and payments made between customers is a major problem that customers of Nigerian banks have experienced which might lead to loss of trust from the customer. In most cases, the customer hardly receives the notification that an account has been credited or debited immediately due to ineffective communication system; and the account holder may have to wait endlessly before seeing the notification or in worse cases, may have to visit the bank to confirm such transaction which might urge customers to make negative comments against the bank. Also, the long queues and large crowds in the banking halls can be highly devastating and discouraging, especially when the weekend is near. Most times, these long queues are as a result of the breakdown of the networks on the computers used for operation, and in most cases most of the bank staff might not apply empathy in dealing with some special customers who requires urgent attention but rather, they might be requested to join the queue irrespective of the situation which is detrimental to marketing performance.
The banking industry in Nigeria is facing challenges of fluctuating demand and stiff competition. This is because, the competitive environment in the banking industry is widely recognized as being complex, dynamic, and highly segmented, which makes customers’ maintenance and retention an uphill task. In Nigeria, most of the financial institutions are interested in searching for new customers than maintaining the old ones; as banks offer loans and advances to customers and may not care to know how the intended loan prospect is doing for effective returns. In specific terms, some of the financial institutions always forget to follow-up services rendered to customers due to busy schedules; although they may have intention of calling prospects but, get caught up in business.
Practically, banking firms’ believes that, good services rendered to the customer will automatically bring customers back; believing that there is no need to integrate excellence in service delivery. Hence, the banking industry continues to go through turmoil, and the pressure continue to build up on all sides. Beyond regulatory scrutiny and competitive stress from both inside and outside the industry, customer demands are not letting up. Driven by today’s digital, on-demand, anytime world, customers are more likely to have financial relationships with multiple providers and often less likely to engage in face-to-face interactions with their bankers. Even so, just like in the world of retail, the expectation for a personal, positive marketing performance has tilted. However, as important as customer service excellence is, banking firms believes that, customer service responsibility ends with rendering and maintaining good business relationship with customers and little or no effort is made toward understanding why commitment, loyalty, satisfaction, empathy and trust leads to repeat purchase and a higher profitability. As a result, this study examined the effect of customer service quality on marketing performance of United Bank for Africa Plc and Zenith Bank Plc in Aba, Abia State.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study was to examine the effect of customer service quality on marketing performance of United Bank for Africa Plc and Zenith Bank Plc in Aba, Abia State. The specific objectives were to:
i. examine the effect of tangibility of bank services on customer patronage;
ii. determine the effect of service reliability on customer loyalty;
iii. examine the effect of empathy during service delivery on bank brand preference;
iv. examine the effect of service communication on customer satisfaction.
v. determine the effect of service assurance on repeat business with the bank;
vi. determine the effect of service responsiveness on customers turnover with the bank.
1.4 RESEARCH QUESTIONS
The key research questions for this study include:
i. how does tangibility of bank service affect customer patronage;
ii. how does service reliability affect customer loyalty?
iii. how does empathy during service delivery affect bank brand preference?
iv. how does service communication affect customer satisfaction?
v. how does service assurance affect repeat business with the bank?
vi. how does service responsiveness affect customers turnover with the bank?
1.5 RESEARCH HYPOTHESES
The hypotheses of the study are stated in a null forms as follows:
H01: Tangibility of bank services have no significant effect on customer patronage;
H02: Service reliability has no significant effect on customer loyalty
H03: Empathy during service delivery has no significant effect on bank brand preference;
H04: Service communication has no significant effect on customer satisfaction
H05: Service assurance has no significant effect on repeat business with the bank;
H06: Service responsiveness has no significant effect on customers turnover with the bank.
1.6. SIGNIFICANCE OF THE STUDY
The study would be of immense benefit to the banking sector, customers, general public and students:
Banking sector: Results and recommendations from this research would aid banking firms in Nigeria to come up with dynamic and excellent customer service approaches which will aid sales demonstration and commitment to customer service, builds customers’ loyalty and helps generate repeat sales.
The study would be of immense benefit to bank customers and the general public, because the findings and recommendations will help customers to understand the concept of customer services. It would also help bank customer care team to build ongoing sales relationship with customers and encourage them to refer business from others.
Students: This study may also serve as a reference material for researchers and students on customer service quality as related studies on marketing performance of banks.
1.7 SCOPE OF THE STUDY
The study focused on effect of customer service quality on marketing performance of United Bank for Africa Plc and Zenith Bank Plc in Aba, Abia State. Specifically, the study examined the effect of tangibility of bank service on customer patronage; determined the effect of service reliability on customer loyalty; examined the effect of empathy during service delivery on bank brand preference; examined the effect of marketing communication system in banks on customer satisfaction; determine the effect of service assurance on repeat business with the bank; and determine the effect of service responsiveness on customers turnover with the bank. Geographically, the study covered two (2) commercial banks (United Bank for Africa Plc and Zenith Bank Plc) in Aba, Abia State Nigeria.
1.9 OPERATIONAL DEFINITION OF TERMS
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.
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 commerce, industry and other sectors of the economy. This full service implies the current, deposits, domiciliary and savings account.
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