ABSTRACT
This paper seeks to determine the effect on customer relationship management has on performance of an organization. The study is considered crucial because the effective relationship of organizations and customers could enable banks to improve their profitability thereby generating more returns and increasing customer satisfaction using primary method of enquiry, the researcher collected the data of five selected zonal offices of banks in Warri and Asaba Delta state. The study adopts the longitudinal research design which was adopted for the study, four research questions were used which led to the formulation of four hypotheses for the study. There is no significant relationship between Human Resources management and organizational performance. There is no significant relationship between marketing and organizational performance. There is no significant relationship between sales force automation and customer retention and There is no significant relationship between customer service and organizational performance. A population size of 400 which is compromised of staffs in the bank. Thereafter the sample size was 200 determined by Taro yamani’s formula the research instrument used was questionnaires which was tested at 0.969 it as judged satisfactory and valid for the study. 200 copies of questionnaires was administered whereby out of 200 only 197 were returned and fully completed while 3 was not completed. Data’s from the questionnaires were then used for the analyses to test the formulated hypotheses whereby a combination of simple linear regression model and systematic random sampling technique were used. Therefore human resource management, marketing, sales force automation and customer service were used as proxies for customer relationship management while performance is measured by customer satisfaction, market share, customer retention and innovation. Findings of the study suggest that human resource management and sales force automation are significantly associated with performance, while marketing and customer service has no association with performance of an organization.
TABLE OF CONTENTS
TITLE PAGE ii
DECLARATION iii
CERTIFICATION iv
DEDICATION
v
ACKNOWLEDGEMENTS vi
CHAPTER ONE:
INTRODUCTION
1.1 Background to the
Study 1
1.2 Statement of
Problem 8
1.3 Objective of the
Study 10
1.4 Research Questions 11
1.5 Research Hypothesis
12
1.6 Significance of
Study 13
1.7 Scope of the Study 14
1.8 limitation of study 14
1.9 operational
Definition of Terms 15
CHAPTER TWO: LITERATURE
REVIEW AND THEORETICAL FRAMEWORK
2.1 Conceptual
Framework 33
2.2 the concept of
organizational performance 45
2.3 customer
Relationship Management and organizational performance 50
2.4 The Benefits Of CRM
to the banking industry
2.5 Challenges
associated with customer satisfaction in banking industries
2.6 strategies to
better CRM in banks
2.7 Theoretical
Framework
2.8 Empirical Review
2.9 summary of Gap in
literature Review
CHAPTER THREE: RESEARCH
METHODOLOGY
3.1 Research Design 56
3.2 Population of the
Study 57
3.3 Sample and Sampling
Techniques 57
3.4 Research instrument 58
3.5 Validity of
Research instrument 58
3.6 Reliability of
Research instrument 59
3.7 Method of Data
Collection 59
3.8 Method of Data
Analysis
59
3.9 variables and
Measurements
3.10 Model
Specification
CHAPTER FOUR: DATA
PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS
4.1 Data Presentation 60
4.2 Distribution of
Questionnaire 79
4.3 Demographic
characteristics of respondents
4.4 Descriptive
statistics on the Questionnaire items
4.5 Testing Of The
Hypotheses
4.6 Discussion Of
Findings
CHAPTER FIVE: SUMMARY,
CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings 80
5.2 Conclusion 80
5.3 Recommendations 93
References 95
Appendix 98
CHAPTER
ONE
INTRODUCTION
1.1
Background to 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 customers prospects, devotes time and attention to expanding
account relationships with those customers through individualized marketing,
repricing, discretionary decision making, and customized service-all delivered
through the various sales channels that the bank uses. Furthermore, 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 (Westgard and Nielsen, 2018). 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, 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 .
According
to (Grogan, 2018). Research works from the premise that the real purpose
of business is to create and sustain mutually beneficial relationships,
especially with selected customers with the main proposition which assume that
successful relationships is the two-way flow of value .(Freeman, 2019). Trust
is the key component of organizational relationships and management approach to
the issue of trust is of academic and practical significance. A rapidly growing
body of literature recognizes that trust represents a significant variable that
influences organizational productivity (Clarl and Kristensen, 2024, Lewicki et al. 2018,
Brunetto, 2019 M and Davis, 2009) 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. Amenssa and Drake (2014) estimate that
the cost of winning a new customer is
five times higher than that of maintaining an existing customer while
Farr-Wharton (2020) 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 and Hunt,
2023). 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 (Drydakis, 2020 and hammermesh, 2017) which will require
a wide-ranging overhaul of organizational structures, employee training and
reward system as well as appropriate IT support (Chen and Popovich, 2023). This study therefore examines the impact of
customer relationship management and organizational performance in Delta State,
Nigeria.
There have been several
studies on the relationship between customer relationship management and
organizational performance. Scherer (2019) work was one of the earliest studies
in this area using Excellent Customer Satisfaction Survey (ECSS) as one
of the approaches to customer relationship management, he found out that low levels
of customer satisfaction were associated with large firms. Since then other
studies such as Shapiro (2010), Oluchi (2013) gave credence to this result.
Kaliski (2017) using Lifetime Customer Value (VCV) in determining the best
approach to use to improve or change its products or services to satisfy and
retain its customer. Grogan (2019) also used Customer Acquisition Cost (CAC) to
survey and examine customer relationship management and organizational
performance. He found out that regimentation in the work environment of the
larger firms leads to lower levels of customer satisfaction. Studies by Shapiro
(2020) also indicated less customer satisfaction in larger firms using Client
Satisfaction Tool (CST). Association of lower levels of customer satisfaction with
larger firm sizes was also reported in Britain (Locke, 2016). Used Customer
Retention Rate (CRR). However, a more recent study Marlow, et al.
(2018) reports the results of a survey which rejects
the negative relationship between customer satisfaction and
the firm size using Social Savvy Tool (SST) . And recently there is
evidence from other countries as well. Linz (2013), Hinks (2019) and Drydakis
(2010) investigated various aspects of customer satisfaction and organizational
performance using Prediction Analytic Tool (PAT). One of the recent studies is
by Hamermesh (2017) who studies the aspects of customer satisfaction using a
model of organizational performance with customer
satisfaction data. More recent studies include Hong (2016), Bender and Sloane (2018), Yousef (2018), Sloane and Ward (2011), Bender
and Haywood (2013), Vrbik (2018),
Bockerman and Ilmakunnas (2016) and Haile (2019). Gazioglu and Tansel (2016)
and Locke (2016) used British Data from Relation Survey (BDR) and Bureau of
Customer Protection and Policy respectively and also investigated
customer satisfaction with various individual and firm characteristics using
Cloud Base Data (CBD) However, the previous studies did not investigate the
impact of customer-management relationship and organizational performance which
is considered in the present study.
According to Clark
(2016) observed that customer relationship management are less satisfactory in
the large firms than in the small firms. He also observed that lower levels of
customer satisfaction in large firms. Less satisfactory in organization and
customer relationship management in the large firms may be a major source of
the observed lower level of customer satisfaction in them. These observations
have important policy implications from the point of view of the firm
management while achieving the aims of their organizations. Improving the
customer relationship management and organizational performance in large firms
will increase customer satisfaction in many aspects or through the following
ways good communication, transparent, consistent, genuine, listen, promises,
respect and treat them like Very Important Person (VIP).
It has been discovered
and well known that deposit money banks in Delta state plays an important role or function in the
development and growth in Nigeria. The principal role carried out by deposit
money banks is to ensure there is adequate flow of money to deficit sectors of
the economy and facilitate the movement of funds amongst economic units and
provide a good condition of service to its customers. In any organization
where management and customers have good relations and direct bearing on
organizational performance there will be high turnover for the organization and
customer fulfillment. This would be done and achieved by the organization
maintaining good relationship between customers and management in order to get
the best performance that will satisfy their customers. Good customer and
management relations encourages organizational harmony, foreign investment,
high workers morale, high productivity and peaceful atmosphere to settle
conflict if there is any and better human relations. A good customer
relationship management is necessary for the satisfactory organization and
performance of any firm and for the customers to feel engaged. This can affect
organizational productivity and customer satisfaction in any organization. For
this reason the customer relationship management and organizational performance
is important. It is against this background that this study examines the
customer relationship management and organizational performance in deposit
money banks in Delta state.
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. Nigerian Banks have low
expectations of their customers in recent time. Customers have experienced
challenges ranging from delay, 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 Oluchi (2013), customer service in our banking industry can be
mistaken to mean customer delay and frustration. According to the author almost
every bank in Nigeria 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 alert 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 or delay in process 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. Many academic works have been conducted to describe the corporate
banking relationships and the rapidly changing environment in this sector
throughout the globe.
1.3 Objectives of
the Study
This study is aimed at
examining customer relationship management and organizational performance in
deposit money banks in Delta state. The following are the specific objectives
formulated to guide this study:
i. To ascertain if human resource management (HRM) affects
organisational performance.
ii. To examine the effect of marketing on organisational
performance in banks.
iii. To determine the relationship between sales force automation
and organisational performance.
iv. To examine the relationship between customer service and
organisational performance.
1.4 Research
Question
This study is aimed at
examining customer relationship management and organizational performance in
deposit money banks in Delta state. The following are the specific research
question guiding this study:
i. Does human resource management (HRM) affect organisational
performance?
ii. what is the relationship between marketing and organisational
performance?
iii. what is the relationship between sales force automation
and organization performance?
iv. what is the effect of customer service on organisational performance?
1.5 Research Hypotheses
The purpose of achieving
the study objectives, the following hypotheses were formulated in line with the
research objectives.
H01: There is no significant relationship between human resource
management and organisational performance.
H02: There is no significant relationship between
marketing and organizational performance.
H03: There is no significant relationship between
sales force automation and organisation
performance.
H04: There is no significant relationship between
customer service and organisational performance.
1.6 Significance of the Study
The
study on the relationship between CRM and organizational performance is very
important because CRM leads to the rapid growth of business through retention
of the profitable customer segment, increase in profit of the bank due to low
cost of managing customers (Shapiro, 2010). Therefore this study will add new
knowledge to bankers in Warri and Asaba, Delta state regarding the extra value
banks can earn through implementation of CRM.
Moreover
the study will enlighten 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 Delta state, but
also to other service sectors in Nigeria
as a whole. The study will again be a source of secondary data to other
researchers who wish to conduct studies on related issues. Finally, it will 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 the Study
The general scope of
this study covers customer relationship management and organizational
performance. The geographical scope is Warri and Asaba Delta State of Nigeria. The study will be limited to Eco bank, GTB,
Zenith bank, UBA and First bank in Warri and Asaba Delta state.
According to Wargborn
(2018) and Shaw (2017) Customers have
become crucial for every organization due to the competitive environment.
Customer relationship management is one of the business strategy for
organizations. Banks can benefit by focusing and concentrating on Customer
Relationship Management to achieve organizational performance. This study is
limited to customer relationship management and organisational performance
in deposit money banks in Delta state . The variable used for this study are
HRM , marketing , sales force automation and customer service (Independent
variable) , customer satisfaction, market share, customer retention and
innovations (Dependent variable). The researcher will study the relationship
between customers and management as it affects organizational performance and
how the relationship affects customer satisfaction and customer retention will
also be examined.
1.8 Limitation of the
Study
No research work is not devoid of
limitations. This study is no exception. It therefore suffered the following
constraints.
There is the lack of
funds to collect relevant data through possible means available such means
include existing literature relevant to the chosen problem.
In addition to the above
limitations is the problem of the respondents negative attitude to the
questionnaire. The respondents are not willing to give their best answers due
to of lack of knowledge or fear of job termination.
1.9 Operational
Definition of Terms
For the purpose of
clarity and avoidance of conceptual ambiguity, some basic definitions of terms
and concepts that will be used in this study.
Customer Relationship Management: is an approach to manage a company's
interaction with current and potential customers.
Customer Service: is the provision of rendering services before
and after the purchase of a product.
Customer Satisfaction: is defined as the measurement that determines
how happy customers are with which a company's products, services and
capabilities.
Customer Retention: refers to the ability of a company or product
to retain its customers over some specified period.
Human Resource
Management: Is the process or practice of hiring and developing competent
staff who make the organization achieve it's targeted objectives.
Innovation:
it the creation, development and
implementation of a new product, process, services the aim of improving
efficiency and effectiveness or competitive advantage..
Market Share: it refers to an organization's portion of sales within the entire
market in which it operates.
Marketing: refers to activities a company undertakes to promote the buying and
selling of a product or services.
Organisational
Performance: refers to the effectiveness of an
organization to fulfill its purpose of goal achievement and satisfaction of
it's customers in return.
Sales Force Automation: it is when part of sales process are automated
by software tool.
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