CUSTOMER RELATIONSHIP MARKETING AND CUSTOMER LOYALTY IN DIAMOND AND FIRST BANK PLC SOUTH EAST NIGERIA

ABSTRACT

The study examined the effect of customer relationship marketing on customer loyalty in Diamond and First Banks domiciled in South East Nigeria. The objectives of the study were to determine the effect of organizational communication on customer loyalty, to determine the effect of staff cooperation on customers loyalty, to ascertain the effect of duration of relationship on customer loyalty in Diamond and First Banks and to determine the effect of customer trust on customer loyalty in the aforementioned banks studied. Stratified random sampling was used for the study. The population of study was 72, 947 which was gathered using questionnaire and interview scheduled. More so, 399 respondents comprising customers and staff of the aforementioned banks were sampled. Data collected for the study were presented and analyzed using descriptive and inferential statistics like percentage, mean and multiple regression analysis. Formulated hypotheses were tested. Findings reviewed the following, there was significant relationship between organizational communication and customer loyalty, there was significant influence between duration of relationship and customer loyalty in the banks studied etc. The study recommended that there is need to maintain good customer data base, to enhance customer relationship and loyalty. It also recommended that these banks should adopt philosophy of customer orientation in order to identify the needs of customers and improvement should be made in building customers trust, also a program of total quality management (TQM) should be adopted to enhance more cooperation and duration of relationship between stakeholders in the organization and customers.

TABLE OF CONTENTS

Title page i

Declaration ii

Certification iii

Dedication iv

Acknowledgements v

Table of Contents vi

List of Tables viii

Abstract   ix

 

CHAPTER ONE: INTRODUCTION

1.1     Background to the Study 1

1.2     Statement of the Problem   2

1.3     Objectives of the Study 3

1.4     Research Questions 3

1.5     Research Hypotheses 4

1.6     Significance of the Study 4

1.7     Scope of the Study 4

1.8     Limitations of the Study 5

1.9     Operational Definition of Terms 5

 

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1      Conceptual Framework 7

2.2     Theoretical Framework 19

2.3      Review of Empirical Literature 21

2.4      Summary of Literature Review 25

CHAPTER THREE: RESEARCH METHODS

3.1    Research Design 26

3.2    Area of Study 27

3.3    Population of the Study 28

3.4    Sample Size Determination 29

3.5    Sampling Technique 29

3.6   Method of Data Collection 30

3.7   Validity of Instrument 30

3.8   Reliability of Instrument 30

3.9   Method of Data Analysis 33

3.10 Model Specification 33

 

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 Questionnaire Administration 35

4.2 Sample Characteristics 35

4.3 Data Presentation 38

4.4 Analysis of Research Questions 38

4.5 Test of Hypothesis 45

4.6 Discussion of Findings 46

 

CHAPTER FIVE: SUMMARY, CONCLUSION, RECOMMENDATION  

5.1 Summary of major findings 48

5.2 Conclusion 48

5.3 Recommendations 49

5.4 Contributions of the Study 50

5.5 Suggestion for Further Study 50

References   51

Appendix

 

 

 

 

 

 

 

 

 

 

 

 

LIST OF TABLES

Population of the study 28

Reliability analysis of customer relationship marketing on customer loyalty 32

The administration of questionnaire 35

Age of the respondents 35

Marital status of the respondents 36

Designation of the respondents 36

Gender of the respondents 37

Gender representation of the respondents 37

Educational qualifications of the respondents 37

Responses on organizational communication 38

Responses on staff Cooperation 39

Responses on duration of relationship 40

Responses on customers trust 41

Responses on customers loyalty (CL) 42

Model summary of the effect of customers relationship marketing on

customer loyalty 43

Analysis of variance of the effect of customer relationship marketing on

customer loyalty 43

Regression model establishing linear relationship between customer

relationship and customer loyalty 44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER 1

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

In modern global economy, there is a paradigm shift from transactional marketing to customer relationship marketing (Warokka, Listawati and Risan, 2014; Gronross 1997). Over the past two decades, the concept of customer relationship marketing has continued to dominate as the main theme of discussion in marketing and management theory, practice, local and international seminars, conferences and workshops. Customer relationship marketing is becoming well known and accepted as a marketing strategy in most countries vis-à-vis organizations. Maintaining mutual beneficial relationship between organization and customers has always been relevant to the success of any business concern.( Leverin and liljander, 2006; Revald and Gronross 1996). Previously, it has been the conventional practice of banks to adopt all sorts of marketing gimmicks to ensure that their offer is patronized by customers. Such tools ranges from advertising, adoption of marketing concept and personal selling etc.

 

Due to proliferation of banks, competition in business environment is becoming intense such that most of the financial institutions are downsizing their work force, some are winding up due to their inability to withstand the intensity of competition. Sequel to this, the researchers sought to find out the effect of customer relationship marketing on customer loyalty in Diamond and first banks domiciled in South East Nigeria. We examined the influence of the following variables; organizational communication, staff cooperation, duration of relationship, and customers trust on customer loyalty in this work. Velnampy and Sivesan (2012), opined that relationship marketing involves establishing, keeping and improving customer relationship. They maintained that its goal is to build strong relationship and convert indifferent consumers to loyal ones (berry and Parassuraman (1991). This underscores Agbonifoh et al (2006), view that the objective of relationship marketing is to establish, maintain and enhance relationships with customers and other partners at a profit in order to actualize the goals of the stakeholders. This is actualized by mutual agreement and complying with promises. Armstrong and kotler (1994), posited that the key to building lasting customer relationship is to create superior customer value and satisfaction. Satisfied customers are more likely to be loyal customers and give the company a larger share of the business.

 

1.2 STATEMENT OF THE PROBLEM

Over the years, the banking sector of Nigerian Economy had operated like a monopoly. Nigerian banks traditionally laid more emphasis on attracting and prospecting for new customers rather than striving to retain old ones. However, due to the deregulation of the sector and effect of consolidation with their attendant competitive pressure, there was need for customer loyalty and retention, Ogungbangbe (2014). This underscores Chakisko (2015), view that as the financial market becomes more dynamic and competitive, there is need to retain existing customers which may be achieved through customers relationship marketing .consequently, the researcher observed that previous studies which were carried out on the effect of customer relationship marketing on customer loyalty in the banking industry did not cover much area in Nigeria, for instance works of Anyanwu (2014) and Ogungbagbe (2014), were done in Owerri and Umuahia. Some of these studies were carried outside the country like works of Chaikisko (2014) and leverin/liljander (2006). To bridge these knowledge gap, the researcher deemed it necessary to carry out this study on the effect of CRM on customer loyalty in Diamond and first banks domiciled in South Eastern States of Nigeria.

 

More so, few variables of customer relationship marketing were covered in the aforementioned works. Therefore the researcher investigated such proxies of customer relationship marketing like, customers trust, organizational communication staff cooperation and duration of relationship and their effects on customer loyalty in Diamond and first banks located in South East Nigeria.

Besides the impact of customer relationship marketing on customer loyalty has been studied over the years by researchers in manufacturing sub sectors of Nigerian economy, but fewer studies exist in the banking sector. Variables that have moderating effect such culture and technology were not included in those works this work exist to bridge this knowledge gap.  

 

1.3 OBJECTIVES OF THE STUDY

The general objective of this study was to assess the effect of customer relationship marketing on customer loyalty in Diamond and First banks located in South East Nigeria.

The specific objectives were to;

i. Determine the effect of organizational communication on customers loyalty in Diamond and first banks located in South East Nigeria.

ii. Determine the effect of staff cooperation on customer loyalty in Diamond and First banks located in South East Nigeria.

iii. Ascertain the effect of duration of relationship on banks customer loyalty.

iv. Finally to determine the effect of customers trust on banks customer loyalty.

 

1.4 RESEARCH QUESTIONS

The following research questions have been asked to further direct the study,

i. What is the effect of organizational communication on banks customer loyalty?

ii. What is the effect of staff cooperation on customer loyalty in the aforesaid banks understudy.

iii. What is the effect of duration of relationship on customer loyalty in Diamond and First banks located South East Nigeria.

iv. What is the effect of customers trust on banks customers loyalty?

1.5 RESEARCH HYPOTHESES

From the research questions stated above, the following null hypotheses will guide the study.   

H0₁: Organizational communication does not significantly affect customer loyalty in Diamond and First banks located in South East Nigeria.

H0_II: Staff cooperation does not significantly affect customer loyalty in the aforesaid banks located in South East Nigeria.

H0_III: Duration of relationship does not significantly affect customer loyalty In Diamond and First banks domiciled in South East Nigeria.

H0_iv:  Customers trust does not significantly influence customer loyalty in Diamond and firs banks located in South Eastern Nigeria.

 

1.6 SIGNIFICANCE OF THE STUDY

This study will be beneficial to researchers, financial institutions and other organizations including the public.  

 

To researchers it will serve as a reference material for further studies. To financial institutions like banks it will enable them to know the benefits inherent in CRM and how to utilize CRM strategies to survive in competitive business environment, then maximize profit. Other organizations and public will also benefit from this study after going through it by examining various CRM concepts and strategies and how to use it as a marketing tool to gain more market share and actualize their goal congruence’s.

 

 

 

 

1.7 SCOPE OF THE STUDY 

This study which is specifically designed to examine the effect of customer relationship marketing on customer loyalty was conducted in five states of South eastern part of Nigeria comprising of Abia, Anambra , Ebonyi, Enugu and Imo State.

The researcher elicited responses from employees and customers of Diamond and First Banks located in five states of the east basically the capital cities which are Umuahia, Awka,  Abakiliki, Enugu and Owerri . More so, the researcher studied and analyzed such construct like, staff cooperation, organizational communication, duration of relationship and customers trust in the course of his study.

 

1.8 LIMITATIONS OF THE STUDY

The study was limited by responses obtained from samples of the population studied only in five eastern states of Nigeria on the effect of customer relationship marketing on consumer loyalty in Diamond and First Banks. This will reduce generalization of the findings.

 

Responses on CRM proxies like customers trust, staff cooperation, organizational communication and duration of relationship have all limited the domain of the study: more variables of CRM should be studied in other states of Nigeria in order to get accurate and widely accepted results.

 

1.9 DEFINITION OF OPERATIONAL TERMS

To ensure easy comprehension, some ambiguous terms were explained as follows:

Customers trust. This is the confidence customers have on organizations products and services.

 

Staff cooperation: This involves members of an organization working together to ensure that the goals and objectives of the company are achieved.

Organizational communication: This is the exchange of information within and outside the organization.

 

Duration of relationship: This is the period of time the transaction or exchange lasted or will last.

 

Customer perceived value: This is the evaluation of the difference between the benefits and cost of a market offering relative to those of competing offers.  

 

 

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