ABSTRACT
Effects of customer
relationship management on brand appeals for their ability to support planning
and efficient management of resources and activities in manufacturing
organization. The main objective of this write up is to examine customer relationship management on
brand appeal in financial service industry in Lagos state, Nigeria. To evaluate
the relationship between customer acquisition and brand appeal in the financial service industry. To investigate the significant effect of
customer loyalty on brand appeal in financial service industry. The
research design is anchored on a quantitative approach to provide a reliable
result. The design is less time-consuming and less expensive. The reliability
test for the instrument as the measurement scales for the constructs produced
Cronbach alpha of 0.728, 0.705, 0.7.01, 0.700, and 0.813 for customer
acquisition, customer loyalty. A simple regression was run to
predict brand appeal (dependent variable) from customer expectation
(independent variable). The table 4.10 indicates that the independent variables
yielded a coefficient of determination (R2) of 0.807 accounting for
80.7%% of the proportion of variance in dependent variable that is explained by
the independent variables. The table 4.10, then, shows that the analysis of
variance for the simple regression data produced F-ratio value of 1068.575
which is significant at 0.05 (. i.e. F (1.350) = 1068.575, p < 0.05). In
table 4.10, the independent variable (customer expectation) has positive and
statistical significance on response variable (brand appeal). In Conclusion the study confirms the
effect of customer relationship management on brand appeal among financial
service companies in Lagos Nigeria. It was recommended that Financial services such as
banks and insurance companies are advised to move swiftly in their quest to
provide enlightenment on the need for theirs brands andBanks and insurance
companies are thus enjoined to continually drive brand appeal and awareness and
thus endeavour to increase their brand knowledge.
Keywords;
Customer
Relationship Management, brand appeals financial service industry
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1-8
1.2 Statement
of the problem 8-9
1.3 Objectives of the Study 9
1.4 Research Questions 9
1.5 Research Hypotheses 10
1.6 Scope and delimitation
of the study 11
1.7 Significance of the
Study 11
1.8 Operational Definition
of Terms 12
CHAPTER TWO: LITERATURE REVIEW
2.1 Preamble 13
2.2 Conceptual
Review 14
2.2.1 Concept of Customer Relationship
Management 14-15
2.2.2 Component of
Customer Relationship Management 15-16
2.2.3 Customer
Retention 16-17
2.2.4 Components of
Customer Retention 17-18
2.2.5 Benefits of
Customer Retention 18-19
2.2.6 Inertia as a
determinant of Customer Retention 19-20
2.2.7 High Switching
Costs Promotes Customer Retention 20-21
2.2.8 Customer
Satisfaction 21-22
2.2.9 Components of Customer Satisfaction: 22-23
2.2.10 The
relationship between Customer Relationship Management and Customer Satisfaction 23-24
2.2.11 The
relationship between Customer Relationship Management and Customer Retention 24-25
2.2.12 Customer
Relationship Management in the Banking Sector 25-
27
2.2.13 Customer Relationship
Management and the Factors that Affect Customer Loyalty 27-32
2.2.14 Definition and Importance of Brand/Branding 32-36
2.2.15 Meaning of Brand Appeal 36
2.2.16 Brand
Image, Customer Satisfaction, and Customer Loyalty 37
2.2.17 The
Impact of Brand Image on Consumer Buying Behavior 37-40
2.3 Theoretical
Review 40
2.3.1 Social
Representation Theory (SRT) 40-41
2.3.2 Brand
Relationships Theory (BRT) 41-42
2.3.3 Information
Integration Theory (IIT) 42
2.4 Theoretical
Framework 43-44
2.5 Empirical
Review 44-52
2.6 Gap
in the Previous Studies 52
2.7 Conceptual
Framework 52-54
CHAPTER THREE: METHODOLOGY
3.1. Preamble 55
3.2. Research
Design 55
3.3. Population
of the Study 56
3.4. Sampling
Techniques and Sample Size 56-57
3.4. Data Collection Instrument 57
3.5. Test
of Validity and Reliability of the Research Instrument 58
3.6. Method
of Data Analysis 59
3.7. Operationalisation
of Research Variables 59
CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND
INTERPRETATION
4.0.
Introduction 60
4.1
Descriptive Analysis of Respondents Profiles 60-63
4.2. Dimensions of Customers Relationship Management 36
4.2.1. Customer Acquisition 63-64
4.2.2. Customer Loyalty 65-66
4.2.3. Customer Retention 67-67
4.2.4. Customer Expectation 68-72
4.3.
Hypothesis Testing and Discussion of
Findings 72-82
CHAPTER FIVE: SUMMARY
OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
5.0. Summary of Findings 83
5.1. Conclusion 84
5.2. Recommendations 84-85
5.3. Suggestions
for Further Studies 85
References 86-107
QUESTIONNAIRE 108-120
CHAPTER ONE
INTRODUCTION
1.1 Background
to the Study
The financial sector is the backbone of any economy in the
world. The success of financial institutions is highly correlated to the
success of an economy (Kaura, V. et al., 2015). There are different types of
financial institutions in the financial sector of a country such as banks
(public or private), insurance companies, leasing firms and other non-bank
financial institutions.
Among all these financial institutions, the banks are the
most important financial institutions in the financial sector in any country
(Kaura, V. et al., 2015). Relationships always play a significant role in our
personal and professional lives such as selecting career paths, being involved
in works, being engaged in the social activity and so on. In general, people
make most of the major decisions in their lives on the basis of the
relationships with persons and firms.
Likewise, customers make their purchase decisions not only
on the basis of comparison among goods or services available in the market but
also on the basis of the relationships they have with the companies or service
providers. Though membership relationship between service provider and the
customer is not needed, customers at times are willing to continue the
relationships with the service providers to lessen perceived risk while they
evaluate the services available in the market because of the intangibility and
credence characteristics of those services.
A service is a performance where the employees as service
providers play a significant role in delivering the service experience (Bitner,
1995). Besides, the physical setting in which the services are delivered is
important as well as favorable to the customers in building and maintaining
relationships with a service provider. Customers are the most important
resources for generating revenue and profit for a firm, so the relationship
management with customers is very crucial for each and every business
organization. It has been realized that banking sector is largely customer
oriented. For managing the successful relationship with customers, strategic
policies are required in the banks.
The core task of Customer Relationship Management [CRM] is
to manage customers in systematic ways. And, the final objective of CRM is to
make customers happy and loyal because they are the blood supplier for a bank
or any financial institution. In the 1980s, the concept of Customer
Relationship Management (CRM) was originated from the term "contact
management' which focuses on accumulating all relevant information about
customers whenever they come in touch with companies (Melnick, E. L. et al.,
2000). CRM consists of all steps and processes that organizations undertake to
manage their contacts with current and potential customers.
The aim of CRM is to build and maintain a long-term
successful relationship with current and prospective customers of the
organizations. In CRM, companies collect, store, retrieve and analyze
information about their customers for managing the successful relationship with
their customers. Hamid (2009) stated that most of the CRM related literature
indicates that CRM has high adoption and success rate in the financial sector
of developed countries such as United States of America, United Kingdom, and
Canada compared with developing countries. It has also been observed that these
studies contributed significantly towards the success of CRM in the financial
sector of developed countries. In Europe and the United States of America, the
banking industry was in the front in responding to opportunities delivered by
the computer and internet. And, these responses have come to a fulfillment
while the banks adopted customer-oriented strategies stemming from E-commerce.
Despite the benefits of CRM in business, adequate literature
is not available on the practice and evaluation of CRM systems in the financial
sector of developing countries as well as in Nigeria. In the financial service
industry, it is important for a firm to develop and maintain a superior
relationship with its customers in this competitive business environment. And,
banks are trying to achieve customer lifetime value instead of individual
transactions. It can be said that the continuous relationship between the
customers and the financial service providers is likely to be more stable, not
only because of the personal nature of the exchange but also because of the
risk reduction relating to switching to other firms. Eisingerich and Bell
(2007) stated that the financial requirements of the customers throughout their
lives and the nature of transactions or encounters indicate that a relationship
attitude is right for the banking industry. Thus, the financial service
providers especially banks should maintain a relationship with their customers
as many customers may wish to build and maintain relationships with their
providers.
The banking industry is appropriate for studying CRM because
their services are complex, customized and delivered over a continual stream of
transactions (Eisingerich and Bell, 2007). So, banking industry requires a
relationship appeal to customers because of the distinctive characteristics of
intangibility, variability, inseparability, complicacy, and involvement of
customers. The banking industry has also a lead in CRM and the way it serves
customers is highly relevant to CRM. Specifically, its transactions are
essentially IT-based and contain valuable customer knowledge that is beneficial
to make a better relationship connection with customers (Eid, 2007; Peppard,
2000; Ryals and Payne, 2001).
Consequently, the banks are becoming more customer-centric
willing to know how they are perceived by the customers. The most significant
area for banks is ensuring customer loyalty because they depend on lifelong
relationships with their customers. As the relationships with customers grow,
generally profits also grow, so loyalty of the customers ultimately increases
the profit of a bank. It has been observed from different studies that banks
having a long-term relationship with their customers are likely to produce more
profits than other banks. It has also been found that customers having
relationships with their banks for five years are more profitable than those
having relationships with their banks for one or two years. (Eid, 2007).
Customer Relationship Management (CRM) has gathered a lot of
interest recently from academicians and business people (Gruen, T. et al.,
2000; Rigby and Dianne,4 2004; Srivastava, et al., 1999; Thomas, et al., 2004),
and progressive companies, such as IBM and Boise Cascade, are increasingly
prioritizing their CRM investments (Kennedy and Michael, 2004). According to a
study on about 1,000 Chief Information Officers (CIOs) which was conducted by
Gartner Executive Programs (EXP), about two-thirds Chief Information Officers
consider Customer Relationship Management to be a high priority (Thomas, et
al., 2004). Many banks have adopted membership relationships in order to
develop customer loyalty. Here, the banks ought to recognize that they are
operating in a high contact business incorporating the nature of intensive
buyer-seller interactions and building a long-term relationship based on the
trust, confidence, and satisfaction which directly influence the retention of
existing customers and the acquisition of potential clients. The evolution of
marketing thoughts and practices has led to a shift from productoriented
approach to customer-oriented approach. The focus has been moved from selling
as many market offerings as possible to satisfying, delighting and growing as
many customers as possible. The reason behind the shift is the globalization of
competition and abundance of alternatives to the customers.
To keep pace with the rising complexity of competitions in
today’s business world, the marketing focus has been shifted from
“product-centric” to “customer-centric” (Bose, 2002; Shah, et al., 2006;
Parvatiyar, et al., 2001; Vargo and Lusch, 2008), from undifferentiated
marketing to micro marketing (Cravens and Piercy, 2009; Peppers and Rogers,
2011), and from an emphasis on discrete transactions to long-term relationships
with superior value creation for customers (Gummesson, 2002; Slater and Narver,
2000; Donaldson and O’Toole, 2007; Lusch, et al.,2010). Today’s banking
industry is extremely competitive, intricate, and highly dynamic. The
conventional productcentric financial institutions such as bank are becoming
customer-centric through achieving the loyalty of the customers which is the
main focus of the Customer Relationship Management (CRM).
From the relationship point of view, a long-lasting
relationship with current customers is beneficial to the company’s profits
because acquiring new customers is much more expensive than retaining existing
customers. It has been observed in different studies that the cost of a company
is from 2 to 20 times more to get a new customer than to hold an existing
customer (Peppers and Rogers, 2011). Successful firms do not just acquire new
customers; they bring their current customers back again and again. At present,
building relationships with existing customers is of the highest importance to
the companies. It is widely accepted that the more the viable and effective
strategies are involved in implementing CRM, the more successful the business
organization is. As a result, most of the business organizations like banks are
trying to apply different tools for maintaining CRM.
Since a lot of companies have perceived the significance of
being customer-centered in today’s competitive business environment, they are
adopting CRM as a basic business competency. Advantages associated with CRM
cover the aspects of customer benefits and the performances of the firms across
the different settings. Customer benefits include the creation of superior
customer value; customized offerings to fit customers’ needs, reduction of risk
associated with the purchase and enhanced customer satisfaction (Lin, et al.,
2009; Reimann, et al., 2010; Yao and Khong, 2012). The firm’s performances
refer to customer retention and loyalty (Chen, et al., 2009; Croteau and Li,
2003; Jayachandran, et al., 2005), market share, cost reduction, sales growth
rate and profitability (Battor and Battor, 2010; Coltman, 2007; Lee, et al.,
2010; Lancioni, et al., 2009; Krasnikov, et al., 2009; Reimann, et al., 2010;
Soliman, 2011; Wang and Feng, 2012) and enterprise competitive power.
Most of the renowned local and multinational companies are
practicing different CRM techniques to build and maintain a long-term
profitable relationship with the customers (Rahman, et al., 2006). The true
objective of CRM is to create the loyalty of customers. Presently, Customer Relationship
Management (CRM) gives emphasis on the loyalty of customers through identifying
target markets, acquiring new customers, holding and growing current customers
by building strong relationships with carefully selected customers. The
development of relationships with customers gives organizations competitive
advantage which leads the sustainability of the company in the end. Thus, the
success of a financial institution such as bank largely depends on the loyalty
of the customers to the bank. Therefore, banks are emphasizing building the
loyalty of the customer which is the main focus of Customer Relationship
Management (CRM).
There are some factors which determine the loyalty of the
customers to the bank. So, identifying the factors and understanding the
relationship among those factors are important for a bank to make its customers
loyal. In this study, CRM is a philosophy that shows the ways how a company can
work in order to build long-term successful relationships with their customers.
And, CRM comprises the process of getting, holding, and growing with carefully
targeted customers to produce superior value for the company, the customers,
and other stakeholders. Banks, an important industry for any economy, are
facing aggressive competition in the global financial turmoil. And, traditional
banking is no longer enough in today’s competitive business environment and
Customer Relationship Management (CRM) has become the key to the survival and
success of a bank. So, banks are undertaking substantial measures for their
survival in this competitive and uncertain business environment. Today, banks
as financial institutions have realized that managing relationships with
customers is an imperative factor for their successes.
CRM is a philosophy that can help the banks to develop
long-term relationships with their customers and to enhance their profits
through the appropriate approaches and the application of customer-centric
strategies. Therefore, CRM in the banking industry is of strategic importance.
Thus, the aim of this study is to explore the practices of CRM in the financial
service industry of Nigeria with a special focus on some selected commercial
banks and to develop a model of CRM which can be used by the banks to make
their brand appealing to their customers in Nigeria
1.2 Statement of the problem
The unprecedented growth in the
number of Banks in Nigeria is a laudable attempt in the development of the
financial sector in particular and the service industry as a whole. Most
bankers would like to believe that banks are in the finance industry, and not
in the service industry. As such they compete in terms of financial prowess
rather than service quality. People, resources, time, and systems are devoted
more to managing assets and cash rather than managing customers and service. In
fact most bank systems are designed to control customers rather than satisfy
customers. Products and procedures are set up for the convenience of the bank
rather than that of the customer. A big bank may have as many as three vice
presidents responsible for guarding its assets, but no one to take care of
customer service and complaints. Banks usually give customer service and
satisfaction very low priority, and accordingly assign it to a low level, if
not lowly paid manager. It must however be noted that, the lifeblood of any
business is its customers. Profit comes from sales minus cost. Customers decide
sales based on their perception of product and service quality. In short,
quality determines profits, and customers alone define and determine what that
quality is and should be. In every business organization an effective
implementation of a widespread CRM ensures positive returns on investment with
minimal wastage of valuable resources and cost reduction. Therefore, there is the
need to conduct a thorough study to assess the application of CRM in the
financial institutions in order to ascertain a way of effectively implementing
of customer relationship management within the banking sector.
1.3 Objectives of the Study
The major aim of this study is to examine
customer relationship management on brand appeal in financial service industry
in Lagos state, Nigeria.
- To evaluate the relationship between
customer acquisition and brand appeal in the financial service industry
- To investigate the significant effect of
customer loyalty on brand appeal in financial service industry
- To determine the influence of customer
retention on brand appeal in the financial service industry
- To find out the relationship between
customer expectation and brand appeal in the financial service industry
1.4 Research Questions
In light of the above objectives, undertaking
of this research project will examine the following research questions:
- What
is the relationship between customer acquisition and brand appeal in
financial service sector?
- To what extent has consumer loyalty
affected brand appeal in financial service sector?
- Of what influence is customer retention on
brand appeal in financial service sector?
- What is the relationship between customer
expectation and brand appeal in financial service sector?
1.5 Research Hypotheses
In the course of this study, the following
hypotheses will be tested:
- H0: There is no significant relationship
between customer acquisition and brand appeal in financial
service industry
- H0: Customer loyalty has no significant effect
on brand appeal in financial service
industry
- H0: Customer retention has no significant
difference on brand appeal in the financial service industry
- H0: Customer
expectation has no relationship with brand appeal in the financial service industry
1.6 Scope and delimitation
of the study
The scope of this study is premised on the
relationship between customer relationship management and brand appeal. The
specific variables of interest are customers’ acquisition, customer loyalty,
customer retention, customer expectation, and brand appeal. The study cover banking and insurance
services industry in Lagos state, the choice of Lagos is because many of the
banks and insurance companies are domicile in Lagos state. [Central bank of
Nigeria bulletin 2019, Nigeria Insurance Association 2019].The study will also
be limited to be perception of customers of these selected financial
institutions.
1.7 Significance of the
Study
This is because further studies in this area
will identify the areas covered and further dwell on the untapped fields of
research. The
results of this research would add to the scarcely available information on the effect of
Customer relation management on brand appeal in financial service industry.
This study will form a strong foundation for future researchers who would like
to pursue a study in the area of Customer relation management on brand appeal in
financial service industry. This study will therefore be of great
significance as it will add to the already existing literatures. It is
anticipated that the analytical,
conceptual and empirical studies will enhance the understanding of
significant issues in Customer relation management on brand appeal. It would also be useful to university
students like students of Lagos State University when doing a likely research.
The study would be significant to policy makers and policy implementers, as
they would make use of the findings and recommendations of this study.
1.8 Operational Definition
of Terms
Customer Acquisition: Customer acquisition is the process of
acquiring new customers for business or converting existing prospect into new
customers.
Customer Loyalty: Customer loyalty is an ongoing
positive relationship between a customer and
a business. It's what drives repeat purchases and prompts existing customers to choose your company
over a competitor offering similar benefits.
Customer Expectation: Customer expectations refers to the perceived value or benefits that
the customers seek when purchasing a good or availing a service. They are the
result of the ‘learning’ process and can be formed very quickly because even
first impressions matter a lot. Once established, these expectations can hold
significant influence in decision-making processes and can be very hard to
change.
Customer Retention:
Customer retention refers to the ability of a company or product to retain its
customers over some specified period. High customer retention means customers
of the product or business tend to return to, continue to buy or in some other
way not defect to another product or business, or to non-use entirely.
Customer: This is defined as a regular buyer of
a firm’s market offering.
Brand: This is a
mechanism for gaining competitive advantage through differentiation.
Click “DOWNLOAD NOW” below to get the complete project material
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment