CUSTOMER RELATIONSHIP MANAGEMENT AND CUSTOMER LOYALTY (A STUDY OF AYODELE VISTAL LOGISTICS LIMITED)

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ABSTRACT

The research examine customer relationship management and customer loyalty with focus on Ayodele Vistal Logistics Limited. The study adopted descriptive survey research design. Simple random sampling technique is employed in selecting the respondents from the population. A sample of one hundred and twenty (120) was drawn from the population. Data were collected mainly through primary source with the aid of a well-structured questionnaire. The data gathered were presented on table using percentile and the formulated hypotheses where tested using chi square statistical analysis and pearson’s correlation coefficient analysis. The outcome of result of hypothesis 1 proofs customer relationship management has significant effect on customer loyalty, based on the result where the X2  = 27.735, and  p-value (.034). shows a significant association since the p-value (.034) is lesser than the standard alpha value (0.05). It was evident with the result of hypothesis 2 that Customer Relationship Management (CRM) has impact on customer satisfaction. The result shows X2  = 12.433, and  p-value (.014). shows a significant association since the p-value (.014) is lesser than the standard alpha value (0.05). The analysis of hypothesis 3 proofs that Customer Relationship Management practice has influence customer retention. The result shows strong positive correlation between Customer Relationship Management practice and customer retention. Also, 2-tailed significance value of the variables are less than the standard alpha value is < 0.05. The result of hypothesis 4 proved that use of technology and customer relationship performance in Ayodele Vistal logistics limited. This is based on the result where strong positive correlation between Customer Relationship Management practice and customer retention, moreso, 2-tailed significance value of the variables are less than the standard alpha value is < 0.05. It was concluded in the study that; customer relationship management has significant effect on customer loyalty in Ayodele Vistal logistics limited; Customer Relationship Management (CRM) has impact on customer satisfaction; Customer Relationship Management practice has influence customer retention; and use of technology and customer relationship performance in Ayodele Vistal logistics limited. It was recommended among other recommendations that management of the organisation should increase its level of commitment in developing a good relationship with the customer by adjusting and personalizing services to suit the needs of an individual customer, and ensuring flexibility in serving the needs of customers and when there are changes in services offering to customers.





TABLE OF CONTENTS

Front Page                                                                                                                               i

Certification                                                                                                                            ii

Dedication                                                                                                                              iii

Acknowledgement                                                                                                                  iv

Abstract                                                                                                                                  v

Table of Contents                                                                                                                   vi

 

CHAPTER ONE

INTRODUCTION

1.1       Background of the study                                                                                            1

1.2.      Statement of the Problem                                                                                           4

1.3       Objectives of the study                                                                                               5

1.4      Research Question                                                                                                       6

1.5      Statement of Hypotheses                                                                                             6

1.6       Significance of the study                                                                                            7

1.7       Scope of the study                                                                                                      8

1.8       Operational Definition of Terms                                                                                 8

References                                                                                                                              10

 

CHAPTER TWO

LITERATURE REVIEW

2.0       Preamble                                                                                                                     11

2.1       Theoretical Framework                                                                                               11

2.1.1 Social Exchange Theory                                                                                              11

2.1.2      Customer Service Theory                                                                                          14

2.2       Conceptual Framework                                                                                               15

2.2.1   Customer Relationship Management Concept                                                            16

2.2.2    Customer Loyalty Concepts                                                                                       20

2.2.3 Customer Satisfaction                                                                                            24

2.2.4   Customer Retention                                                                                               25

2.2.5 Technology Use                                                                                                             28

2.3       Empirical Literature                                                                                                    31

2.5       Gap in Literature                                                                                                         35

References                                                                                                                              37

 

CHAPTER THREE

METHODOLOGY

3.0       Preamble                                                                                                                     42

3.1       Research Design                                                                                                         42

3.2       Population of the Study                                                                                              43

3.3       Sampling technique / Sample Size                                                                              43

3.4       Data Collection Method                                                                                             44

3.5       Data Analysis Method                                                                                                            44

3.6       Test of Validity and Reliability of the Research Instrument                                      45

3.7       Model Specification                                                                                                    46


CHAPTER FOUR

DATA PRSENTATION AND ANALYSIS

4.0       Preamble                                                                                                                     48

4.1        Personal Characteristics of Respondents                                                                    48

4.2        Response of Respondents to the Problem Areas.                                                       50

4.3       Testing and Interpretation of the Hypotheses.                                                           61

4.3.1    Test of Hypothesis One                                                                                              62

4.3.2    Test of Hypothesis Two                                                                                              63

4.3.3    Test of Hypothesis Three                                                                                            64

4.3.4    Test of Hypothesis Four                                                                                             66

4.4       Discussion of Findings                                                                                               67

 

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary                                                                                               69

5.2       Conclusion                                                                                                                  69

5.3       Recommendations                                                                                                      70

5.4       Suggestions for Further Studies                                                                                 72

Bibliography                                                                                                                           73

Appendix A: Questionnaire Introduction Letter                                                                    79

Appendix B: Questionnaire                                                                                                    80

                                               

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1       Background of the study

Business Organization, either small or medium scale, has the main challenge of keeping and maintaining a good relationship with customers. It is now a known fact that customers in any organization are king because an organization can only stay and remains in business as long as the customers are happy to transact business with the organization. Customers determine and influence the growth and the viability of any business. And because the business environment has changed by the economic globalization and liberalization, the increasing competition, enlightened and demanding customers, and the emphasis on quality and value of purchase, make it imperative for business owners to move from the traditional way of marketing to the modern system of marketing. And this modern means of marketing includes the introduction of a value-added relationship with the customers in order to win their hearts and gain their loyalty.

Several organizations spend a significant part of their time, energy and resources on new business ideas. Growing business and expanding into new markets is important but one of the primary goals is to keep existing customers and enhance customer bonding (Weinstein, 2002). A firm’s primary strategic objectives are to minimize customer regress and to maximize customer intention rates to buy, as evidenced by the recent emphasis on customer relationship management. Thus, previously satisfied buyers may help firms both reduce marketing costs and develop more stable levels of sales when a large number of satisfied buyers are retained to purchase again in the future, this is what we call Customers’ loyalty.

Experience shows that an old customer with the company is much more likely to repurchase than a new customer – one cannot really determine which customers are profitable and should be retained. Although finding new customer is very important, the emphasis is shifting towards retaining profitable customers and building lasting relationship with them. Companies have also discovered that when a customer is lost, it means they are not just losing a single sale but also a life time’s worth of purchase and referrals. In effect, the double goal of marketing is to attract new customers by promising superior value and retain current customers by delivering satisfaction (Kotler & Armstrong, 2011).

“Customers are the center for all business activities this is as a result of increased competition for greater market share. Customers are becoming harder to please. They are smarter, more price-conscious, more demanding and less forgiving and are approached by many more competitors with equal or better offers.” (Kelly & Kotler, 2006: 146). Companies can only be distinguished based on effective customer relationship management (CRM). CRM has customer loyalty as its central concern. Customer satisfaction, which is the comparison of customers’ expectations with his or her perception of being satisfied, is the essential condition for retaining customers (Kracklauer et al., 2004). Therefore, customer loyalty is an effective and importance tool that can be used by both small and medium scale enterprises to gain a strategic advantage and survive in today’s ever-increasing logistics competitive environment.

CRM represents an activity to developed full-knowledge about customer behavior and preferences in order to initiate programs and strategies that encourages customers to continually enhance their business relationship with the company (Parvatiyar A & J. N. Sheth, 2001). Verhoef (2003), study demonstrates that, CRM positively affect customer loyalty. Verhoef & Donkers (2001), confirm that CRM allows small and medium enterprises to employ strategies with the help of customer databases in administrating personal customer bonding effectively towards retention. Customer bonding has typically been viewed as an important determinant affecting customer loyalty. The connection between customer bonding and customer loyalty is worth studying in the competitive market.

There is a need for businesses to maximize customer value which is to cultivate long-term customer relationships which can only be achieved when customers are satisfied. “Customer Relationship Management is the process of managing detailed information about the individual customer and carefully managing all customer touch points to maximize customer loyalty.” (Aturu et al, 2017). Customer loyalty is as a result of the programs of customer retention. Although the marketing manager’s primary concern is maintaining and increasing brand loyalty, there is no guarantee for loyal buyers, because today’s buyers might not be so in the future since loyalty is considered so transient. Loyalty is very complex. Javalgi & Moberg, (1997), defines loyalty concept as being an extremely difficult task. The American Marketing Association over-simplifies the concept by defining it as “the situation in which a consumer generally buys the same manufacturer-originated product or service repeatedly over time rather than buying from multiple suppliers within the category” (Moisescu & Vũ, 2011). Moreover, Aaker (1991) defines brand loyalty as a reflection of how likely a consumer is to switch to another brand, especially when that brand makes a change in price, product features, communication, or distribution programs. Nevertheless, loyalty is much more than just repeat purchases, as a consumer who keeps buying a certain brand may be doing it because of inertia, indifference, switch or exit barriers and other motives, rather than actual loyalty (Reichheld, 2003). 

 

1.2.      Statement of the Problem.

Customer Relationship Management is growing in importance due to the challenging business environment faced by organizations throughout the world today. It is therefore a means of address increasing competition, changing economic conditions and promotional dependence through the use of intimate customer knowledge, gained through relationship development and past marketing programs. CRM is increasing in prominence because it focuses on current users.

Organizations realize that they don’t just focus on transactions; they turn them towards opportunity to sell products with good service experiences to established long term one to one relationship with each customer. In recent years, organizations had to quickly decide the right way to build the long-term relation with customer through different tools and techniques. Customer Relationship Management (CRM) was also a tool having different techniques to attract, acquire, retain and build a strong relationship with customers. Customer Relationship Management was a dual creation process in which information was captured, integrated, accessed then exchanged to create value for future customer from current customer (Boulding, Staelin, Ehret, & Johnston, 2005).

CRM aims at establishing new relationships and developing them to best serve the interest of the company and shareholders through profitability, and the interest of the customer through value added. CRM creates long-lasting relationships by combining modern technology with modern way of thinking. Thus, CRM enables companies to really focus on one or several groups of customers, which isn’t possible in traditional marketing. The current trend is that customers no longer stay in one company but easily switch to another. They have triggered a new era of creating competitive advantage through customer orientation. Customer retention is one part of CRM where the most profitable, or in some other way valuable relationships are being focused on. (Payne 2005, 4–38.)

CRM is a way of building a long-term relationship with customers to nurture its stability in today’s blooming market. Customers’ expectations are now not only limited to get best products and services, they also need a face-to-face business in which they want to receive exactly what they demand and in a quick time. CRM is a business strategy directed to understand, anticipate and respond to the needs of an enterprise's current and potential customers in order to grow the relationship value. (Aturu-Aghedo, et al, 2017)

Customer relationship management was not only associated with technology. It was combination of Human, technology and process at the same time. Some organizations think that customer relationship management was only sale force or technological driven software fail to implement customer relationship management and this is because they do not fully understand customer relationship management. To understand CRM and its capabilities fully is the key to business performance. Customer relationship management has a great influence on business performance positively. Competition intensity was also enhancing the relationship between customer relationship management capabilities and business performance. (Roger, Christopher &

Michael, 2011)

 

1.3       Objectives of the study

The objective of this study is to find out how Customer Relationship Management and Customer Loyalty impact or influence business performance in a logistics business world using Ayodele Vistal logistics limited as a case study. The specific objectives include:

i.                    Evaluate the customer relationship experience with customer loyalty; 

ii.                  Identify the interrelationship that exists between Customer Relationship Management (CRM) and customer satisfaction;

iii.                Determine if Customer Relationship Management practice has effect on customer retention in Ayodele Vistal logistics limited;

iv.                Examine how the use of technology influence customer relationship performance in Ayodele Vistal logistics limited.

 

1.4      Research Question

In order to achieve the purpose of this research study, the study will attempt to provide answers to the following research questions:

i.                    Do customer relationship management correlate with customer loyalty in Ayodele Vistal logistics limited

ii.                  How do Customer Relationship Management (CRM) impact customer satisfaction;

iii.                To what extent does Customer Relationship Management practice influence customer retention in Ayodele Vistal logistics limited;

iv.                Do relationship exist between the use of technology and customer relationship performance in Ayodele Vistal logistics limited.

 

1.5      Statement of Hypotheses

The following are the hypotheses tested in the course of the study:

Ho1:      Customer relationship management has no significant effect on customer loyalty; 

Ho2:      Customer Relationship Management (CRM) does not impact customer satisfaction;

Ho3:      Customer Relationship Management practice has no influence customer retention;

Ho4:      There is no significant relationship exist between the use of technology and customer relationship performance in Ayodele Vistal logistics limited.

 

1.6       Significance of the study

The study is expected to contribute to the study of CRM practices, on the effect of customer relationship management and the various motivational factors which could be harnessed to motivate customers to retain them to increase and sustain productivity. 

The study will also help to know of the CRM that are properly done and the ones that need to be improved on for successful implementation of CRM and their effect on customer loyalty. In addition, this paper will give insights to other researchers who want to assess the level of the application of CRM and its effect on loyalty in the Logistics industry.

1.      Academic:

2.      Practitioners:

3.      Industry:

4.      Government:

The study which focuses extensively on Ayodele Vistal Logistics Limited as a case study will contribute to the existing knowledge on customer relationship management and customer loyalty. The study will serve as a foundation for future research work to be conducted in this area and other Logistic Service Providers as inducing factors to customer loyalty and the importance of CRM in everyday activities.

 

1.7       Scope and limitations of the study

The scope of this study is premised on customer relationship management and the loyalty of the customer with focus on logistic industry. The study covers staff and customers of Ayodele Vistal Nigeria Limited in Lagos State. The choice of logistic industry is because no research in logistic industry has been carried out on customer relationship management and customer loyalty. Also Lagos State was focus of the study because logistic business is fast growing in the state.

The major limitation of the study was non readiness of customers to partake in the survey. Administering the questionnaire took more time as customers’ were persuaded to fill the questionnaire. 

 

1.8       Operational Definition of Terms

KEY CUSTOMER: The crucial customer that provide a means of company’s achievement.

CUSTOMER RELATIONSHIP:  Customer relations is the company-wide process of nurturing positive relationships with your customers — the sum of all customer interactions and experiences.

CUSTOMER SATISFACTION: When customers are pleased with the goods or services offered them.

COMMUNICATION: Exchange of information between the business, employees and customers.

LOYALTY:  Faithfulness to commitment, allegiance or support.

KNOWLEDGE MANAGEMENT:  Fact, Information and skill acquired. Customer knowledge management refers to acquiring, sharing, and developing the customer knowledge among employees for making profit to the organization and customers.

INFORMATION TECHNOLOGY:   Refers to the information-based technologies that utilize information technologies for creating relationships with customers. Technology Development of every organization in information technology area improves its capability in collecting, saving, analyzing, and sharing knowledge about customer.

VALUE: The importance, worth, or usefulness of something.

PROCESS:  A series of actions or steps taken in order to achieve a particular end.

CUSTOMER SERVICE:  The way companies behave towards their customers. Supports or care offered to customers’ needs before and after they buy product and use products or services.

QUALITY SERVICE: Service quality that meet or exceed customer expectation while remaining economically competitive

STRATEGY: plan/action designed to achieve a long-term or overall aim.

COMPETITIVE ADVANTAGE: Factors that helps to distinguish a business from competitors.

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