EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT AND ORGANIZATIONAL PERFORMANCE IN THE BANKING SECTOR (A CASE STUDY OF ECO BANK, GTB, ZENITH, UBA AND FIRST BANK IN WARRI AND ASABA IN DELTA STATE)

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Product Code: 00010097

No of Pages: 125

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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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