THE EFFECT OF CUSTOMER SATISFACTION ON CUSTOMER LOYALTY (A STUDY OF ACCESS BANK, DIAMOND BANK, FIDELITY BANK, FIRST BANK AND ECOBANK)

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Product Code: 00007728

No of Pages: 50

No of Chapters: 1-5

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Abstract

 

Consumer satisfaction and loyalty represent a fundamental step in understanding how profitable organisations are. This work studies the determining factors of customer satisfaction and how loyal they remain to their various money deposit banks.  The study assessed customers’ satisfaction of selected money deposit banks ,taking into consideration the charges of services, relationship marketing, quality of services, and ATM service delivery of those banks. The population of study comprises of  customers of the selected banks  in Umuahia Metropolis who are 18yrs and above.. Method of data collection were questionnaires. Tables and percentages were also used in presenting and analyzing the data collected. The research found out that relationship marketing, charges of services and quick ATM service delivery are factors mediating against customer satisfaction and loyalty in the banking sector.

 

 

 


 

 

 

TABLE OF CONTENTS

 

TITLE PAGE

ABSTRACT

ACKNOLEDGEMENT

 

CHAPTER ONE………………………………………………………………………………………......1

INTRODUCTION…………………………………………………………………………………….......1

1.1 BACKGROUND TO THE STUDY……………………………………………………………………1

1.2 STATEMENT OF THE PROBLEM…………………………………………………………………...3

1.3 OBJECTIVES OF THE STUDY……………………………………………………………………....4

1.4 RESEARCH QUESTIONS……………………………………………………………………………5

1.5 RESEARCH HYPOTHESIS………………………………………………………………………….5

1.6 SIGNIFICANCE OF THE STUDY…………………………………………………………………..6

1.7 SCOPE OF THE STUDY...…………………………………………………………………………...7

1.8 DEFINITION OF RELATED TERMS……………………………………………………………….7

 

CHAPTER TWO………………………………………………………………………………………….8

2.0 INTRODUCTION…………………………………………………………………………………….8

2.1 REVIEW OF RELATED LITERATURE…………………………………………………………….8

2.1 CONCEPTUAL FRAMEWORK……………………………………………………………………..8

2.1.1 DEFINITION OF CUSTOMER LOYALTY……………………………………………………….8

2.1.2 DEFINITION OF CUSTOMER SATISFACTION………………………………………………..10

2.1.3 VARIABLES IN MEASURING CUSTOMER SATISFACTION………………………………...11

2.1.3.1 RELATIONSHIP MARKETING………………………………………………………………...12

2.1.3.2 CHARGES OF SERVICES………………………………………………………………………14

2.1.3.3 QUALITY OF SERVICES……………………………………………………………………….15

2.1.3.4 ATM SERVICE DELIVERY…………………………………………………………………….16

2.2 THEORITICAL REVIEW…………………………………………………………………………….17

2.2.1 CUE UTILIZATION THEORY…………………………………………………………………….17

2.2.2 STIMULUS ORGANISM RESPONSE THEORY…………………………………………………18

2.2.3 EQUITY THEORY…………………………………………………………………………………18

2.2.4 DISSONANCE THEORY…………………………………………………………………………..18

2.2.5 ASSIMILATION THEORY………………………………………………………………………...19

2.3 EMPIRICAL REVIEW……………………………………………………………………………….19

2.4 SUMMARY OF REVIEWED RELATED LITERATURE…………………………………………..21

 

CHAPTER THREE……………………………………………………………………………………...23

3.0 INTRODUCTION…………………………………………………………………………………….23

3.1 RESEARCH DESIGN………………………………………………………………………………...23

3.1.1 METHOD OF DATA COLLECTION……………………………………………………………...23

3.1.2 INSTRUMENT FOR DATA COLLECTION………………………………………………………24

3.1.3 SOURCES OF DATA COLLECTION……………………………………………………………..24

3.2 AREA OF THE STUDY………………………………………………………………………………24

3.3 POPULATION OF THE STUDY…………………………………………………………………….24

3.4 DETERMINATION OF SAMPLE SIZE……………………………………………………………..25

3.5 SAMPLING TECHNIQUE…………………………………………………………………………...26

3.6 VALIDITY AND RELIABILITY OF RESEARCH INSTRUMENT………………………………..26

3.7 METHOD OF DATA ANALYSIS……………………………………………………………………26

3.7.1 MODAL SPECIFICATION………………………………………………………………………...27

 

CHAPTER FOUR…………………………………………………………………………………….…28

FINDINGS AND DISSCUSION……………………………………………………………………...…28

4.0 INTRODUCTION…………………………………………………………………………………….28

4.1 DATA ANALYSIS……………………………………………………………………………………32

 

CHAPTER FIVE…………………………………………………………………….…………………..40

SUMMARY, CONCLUSION AND RECOMMENDATIONS……………………………………….40

5.1 SUMMARY OF FINDINGS………………………………………………………………………….40

5.2 CONCLUSION FROM FINDINGS………………………………………………………………......41

5.3 RECOMMENDATIONS……………………………………………………………………………...41

 

 

 


 

CHAPTER ONE

1.0     INTRODUCTION

1.1     Background to the Study

Financial institutions in Nigeria operate in a fierce and dynamic competitive business environment. Most times, they are faced with tough and perplexing competition, occasioned by the increasing rate at which financial institution sprouts on a daily basis. Therefore, in order to win and remain competitively vibrant amidst numerous competitors, financial institutions operating in the state must strive towards indentifying and profitably meeting the needs and expectations of their customers. This will no doubt result to effective customer satisfaction, a vital prerequisite for customer loyalty and continued patronage (Oliver, 2009).

Owing to the numerous benefits adequate customers’ satisfaction offer to any business organization, customer satisfaction has become an issue of pertinent concern to marketing managers or executives, especially those operating in services industries (Bennett and Rundle-Thiele, 2004). Moreso, if the customers are satisfied with a provided goods or a particular service, the probability that they will use the service again increases (East, 2007).

According to Oliver (2009), customer satisfaction is the perceived discrepancy between prior expectations of the customer and the actual performance of a product/service. It is how customer evaluates the ongoing performance of a product or service. From the above definition, it clear that customers get satisfied only when the actual performance of a product supercede the expectations they have prior the purchase of such products or services. Furthermore, Kim, Park and Jeong (2004), opined that Customer satisfaction is customers’ reaction to the state of satisfaction, and customer’s judgment of satisfaction level. A customer whose needs are satisfactorily met by any financial institution is propelled to remain loyal and this loyalty is displayed in the form of repeat purchase (Anyanwu, 2009).

Kotler (2002) defines customer satisfaction by giving details on the attributes of a highly satisfied customer. According to him, a highly satisfied customer stays loyal, linger, and buys more as the company introduces new products and upgrades existing products; talks favourably about the company its products and upgrade existing products; pays less attention to competing brands and is less sensitive to price, offers service or product ideas to the company and costs less to him than new customers because transactions are routine.

Oliver (2007) opines that customer loyalty refers to "a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause quick service. Moreso, Anderson and Jacobsen (2000) posit that "customer loyalty is actually the result of an organization creating a benefit for a customer so that it will maintain or increase their purchases from the organization. The above definition of customer loyalty points to the fact that customer loyalty is achieved through identifying and satisfactorily meeting the needs and expectations of customers.

Most financial institutions operating in the state that have experienced increased market share through customer loyalty have realized the importance of identifying and satisfying customer’s needs (Martin, 2009). No wonder in recent times, banks operating in Umuahia have devised various strategies geared towards improving the quality and reliability of their services through the establishment of customer compliant or feedback box, mobile banking system, staff friendliness, speed and accuracy in transaction and willingness to help customers.


1.2     Statement of the Problem

Customer satisfaction and customer loyalty are essential ingredients for the survival and growth of financial institutions in Nigeria (Oliver, 2009). However, limited knowledge has been provided by researchers and academicians on the determinants of customer’s satisfaction and various strategies financial institutions can adopt to ensure that customers needs are identified and profitably satisfied. As such, bank executives and managers in the state do not understand the various ways of identifying customer’s needs and how to ensure that these identified needs are satisfied with little or no complain from the customers. Many financial institutions in the state lose a large number of their customer due to the limited knowledge on customer satisfaction and loyalty.

Most financial institutions operating in the state have eroded the principle of marketing concept in dealing with their customers. Little or no time is spent by bank managers or executives to identify what the needs and wants of the target market are before coming up with new services. Their core concern is how to maximize profit through rendering of various services irrespective of whether the services meet the expectations of the consumers or not. This has resulted to increasing dissatisfaction among consumers of banking services in the state, which in most cases have propelled consumers that express some level of loyalty to refrain from carrying out financial transaction with such financial institutions.

Moreso, the lackadaisical and nonchalant attitude exhibited by most bank officials in the process of rendering services to customers have been identified as a one of the key factors responsible for customer’s dissatisfaction (Ndubuisi, 2013). This has lead to a reduction in the number of those patronizing the service of money deposit banks in the state, resulting to customer disloyalty, because dissatisfied customers will always look for alternative means or ways of satisfying their needs and wants.    

Martin (2009), posits that the advent of ATMs has increased the service delivery of financial institutions in Nigeria. Customers do not have to spent huge amount of time in the bank waiting for cashier over the counter to carry out transaction rather certain minor transactions can be conducted without visiting the bank where the customer opened the account. Unfortunately, the poor level of technological development of most developing nations and dilapidating nature of infrastructural development has hampered the efficiency of the ATM’s machine. Hence, customers have to battle with issues like; issuer switch, out of service, unable to dispense cash amongst others. These acts of disappointment results to customers’ dissatisfaction which in most cases lead to customer disloyalty.

 

1.3     Objectives of the Study

The main objective of the study is to assess the effect of customer satisfaction on customer loyalty among customers of selected money deposit banks in Umuahia Metropolis. However, the specific objectives of the study are to:

i.               ascertain the effect of charges of services rendered by money deposit banks on customer loyalty;

ii.             determine if any relationship between relationship marketing and customer loyalty;

iii.           access the relationship between quality of service and customer loyalty;

iv.           find out if any relationship exists between ATM service delivery and customer loyalty.


1.4     Research Questions

The following research questions will guide the researcher in the course of the study, which are:

i.               do the charges of services have any effect on customer loyalty?

ii.             does any relationship exist between relationship marketing and customer loyalty?

iii.           does any relationship exist between quality of service and customer loyalty?

iv.           does any relationship exist between ATM service delivery and customer loyalty?

 

1.5     Research Hypotheses

H01:   The charges of services rendered by money deposit banks do not have any     significant effect on customer’s loyalty;

H02:   Relationship marketing does not have a significant relationship with    customer’s loyalty;

H03:   Quality of service does not have any significant relationship with    customer’s   loyalty;

H04:   There is no positive relationship between ATM service delivery and           customer loyalty;

 

1.6     Significance of the Study

The significance of this research work which centred on the effect of customer satisfaction on customers loyalty among customers of selected money deposit Banks in  Umuahia metropolis, could be discussed under the following sub-heading:

      i.         Money Deposit Banks: Through the study, various money deposits banks that operate in Nigeria will get a detailed and unambiguous understanding of the factors that determine customer’s satisfaction and how these factors inturn influence customers loyalty. This will ensure that commercial banks and other financial institutions in the country are more attuned to the needs and expectations of their target market in order to ensure that customers remain loyal.

    ii.         Customers/Stakeholders: This research work will provide detailed and comprehensive information on the various strategies adopted by banks geared towards satisfactorily meeting the needs of their customers and how to improve in service delivery.

  iii.         Academic institutions: The study will add to the existing knowledge on the determinants of customer satisfaction. It provides the basis for further research to be carried out by potential researchers who may desire to explore other elements that influence customer satisfaction and ensure customer loyalty. 

  iv.         Management of business organizations: Marketing policy makers will find the result very useful in planning programme that will ensure the survival of the organization and meet the needs and requirement of both depositors and stakeholders of the organization.


1. 7    Scope of the study

This study is on customer satisfaction and loyalty of selected money deposit bank operating in Umuahia, Abia State. The subjective scope is consumer’s behaviour, geographical scope is customers of Access Bank, Diamond bank, Fidelity bank, First bank and Ecobank in Umuahia metropolis.


1.8     Definition of related terms

      i.         Bank: A financial establishment that uses money deposited by customers for investment pays it out when required, makes loan at interest and exchange currency.

    ii.         Satisfaction: Satisfaction is defined as customer’s level of approval when comparing a product’s perceived performance with his/her expectations.

  iii.         Customer: Customer is an individual that purchases the goods and services produced by a business or firm.

  iv.         Service: These are valuable action, deed or effort performed to satisfy a need. It is the payment of interest or loan installment, dividends as scheduled.

    v.         Quality: Quality has been defined as conforming to requirement or lead down specification.

 

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