CUSTOMER RELATIONSHIP MANAGEMENT AND COMPANY PERFORMANCE IN THE NIGERIAN FOOD AND BEVERAGES INDUSTRY

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CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

It is observable that a number of organizations are excellent at appearing or pretending to care for their customers. Some companies only pay “lip service” to their customer satisfaction. Others are remote from their customers and do not listen to them, while still some other companies believe that because they have a customer service department or a customer service manager, they automatically have become customer-driven. The employees on their part behave in such a way that suggests that they are not empowered to satisfy the customers in terms of rendering excellent customer service.

Some food and beverages firms in Nigeria could be traced under some or all of these conditions. It is, therefore, suspected that most of them have not efficiently and effectively adopted Customer Relationship Management which may have resulted in their unsatisfactory Company performance. In the Nigerian Bottling Company Plc, Nwokah and Maclayton (2006) observed that the company in introducing new products such as Fanta Chapman and Black Current, which suddenly failed in the market place was not customer centric but competitive centric resulting to the failure of these products in the Market place at the test marketing stage of product development process. Nwokah (2008) further noted that these products as cited from their bulletin were subsequently replaced with Fanta Pineapple and Lemon. Companies are now more than ever focusing on high customer retention and maintaining good long term customer relationships. Customer relationships management (CRM) is a highcustomer retention strategy. It is very important toknow more about customers’ needs and offercustomized products and services in order to improve

customer satisfaction and loyalty.

Two main strategies, collecting customers’ profiles and promoting customer participation, are used to probe customers’ needs. Customer Relationship Management (CRM) has attracted an expanded attention of practitioners and scholars. More and more companies are adopting customer-centric strategies, programs, tools, and technology for efficient and effective customer relationship management. They are realizing the need for in-depth and integrated customer knowledge in order to build close cooperative and partnering relationships with their customers. The

emergence of new channels and technologies is significantly altering how companies interface with their customers, a development bringing about a greater degree of integration between marketing, sales, and customer service functions in organizations. It is observable that a number of organizations are excellent at appearing or pretending to care for theircustomers. Some companies only pay “lip service” to their customer satisfaction. Others are remote from theircustomers and do not listen to them, while still some other companies believe that because they have a customerservice department or a customer service manager, they automatically have become customer-driven. Theemployees on their part behave in such a way that suggests that they are not empowered to satisfy the customersin terms of rendering excellent customer service.

In Nigeria, some food and beverages companies seem to have embraced CRM and its capabilities because of the greater competition in the industry. Large sums of money may have been invested in the promise of this CRM. Despite the fanfare and large expenditures, CRM may not have fulfilled its promise. While some executives view CRM as a technological solution, they often even focus myopically on installing the latest computer system and overlook critical business issues. According to Nnabuko (2004), companies that view CRM as a technological “silver bullet” fail to develop a comprehensive strategy while neglecting to build a business case for CRM. In the food and beverages industry, the technology or some other variables may have produced little operational improvements and so the dimensions of their marketing performance over the years seem not to be significant (Nwokah, 2009). When an investment fails to meet expected return, it may probably not be because the resources failed to perform as specified but because the customer’s need may not have been defined upfront and the wrong decisions and plans chosen. Smith (2007) declared that many firms have failed to create value from CRM and dissatisfaction is growing.

Customers are the most important factors for the success of any  business but less attention has been given by many organizations in this regard. This paper aims to evaluate the effects of CRM on Company performance in the context of food and beverages firms in Nigeria.

1.2   Statement of Problem

Nigeria food and beverages industry are increasing in Nigeria, yet the level of failure in their services indicate that ineffective relationship with customer seems to be pronounced. Some of the manufacturing firms, especially the food and beverage companies that are still in business and are listed in Nigeria stock exchange find it difficult pay dividend to their shareholders. Notable example include Champion Breweries which has not paid dividend

since1988, Golden Breweries has not paid since 1997 (salandeen, 2001). Some Nigeria workers were forcefully disengaged from their services, example Ajaokuta steel industry reduced their staff from five thousand to one thousand in 2007, despite the above scenario, the companies post huge figures of their accounts receivables. It is as a result of the above problem that the researchers deemed it necessary to examine the effect of receivables management on corporate profitability of food and beverages manufacturing firms quoted on the Nigerian stock exchange.

Evidence from the literature suggests that employee‟s compensation plays a key role in any organisation because it is at the heart of the employment relationship and of critical importance to both employees and employers. Employees typically depend on wages, salaries, and so forth to provide a large share of their income and on benefits to provide income and health security. Relying on Vroom (1999) expectancy theory, several researches have confirmed positive relationship between rewards system and performance.

However, a recent study by Aberdeen Group (2008) reveals there is still much confusion on how to do it right observing a general lack of visibility into many compensation programs being created, and a lot of bad habits being brought into the process. Empirical evidence as to the perceived influence of compensation plan on the performance of food and beverage firms in a developing economy like Nigeria thus becomes imperative. This study remains germane by investigating the influence of compensation plan on the performance of selected employees in the Nigerian quoted foods and beverages industry.

1.3   Purpose of the Study

The general purpose is to examine the Customer Relationship Management and Company Performance while the specific sub-objectives are:

1. To examine the relationship between Trust and Company Performance in the Nigerian food and Beverages Industry.
2. To examine the extent to which Empathy influences Company Performance in the Nigerian food and Beverages Industry.

3      To examine extent to which Communication influences Company Performance in the Nigerian food and Beverages Industry.

1.4   Research Questions

1. To what extent does Trust influence Company Performance in the Nigerian food and Beverages Industry?
2. To what extent does Empathy influence Company Performance in the Nigerian food and Beverages Industry?

3      To what extent does Communication enhance Company Performance in the Nigerian food and Beverages Industry?

1.5   Research Hypotheses

The following null hypotheses are formulated from the above specific objectives:

H_01:   There is no significant relationship between Trust and market share in Nigerian food and Beverages Industry.

H_02:   There is no significant relationship between Trust and Customer retention in Nigerian food and Beverages Industry.

H_03:   There is no significant relationship between Empathy and Market Sharein Nigerian food and Beverages Industry.

Ho₄:  There is no significant relationship between empathy and customer retention in Nigerian food and Beverages Industry.

Ho₅:  There is no significant relationship between communication and market share in Nigerian food and Beverages Industry.

H0₆: There is no significant relationship between communication and customer retention in Nigerian food and Beverages Industry.

1.6   Significance of the Study

This study will be of benefits and interest not only to Nigerian Food and Beverages in Nigeria, but it will be valuable to other service sectors in Nigeria as a whole. The study will also be a source of secondary data to other researchers who wish to conduct studies on related issues. It will again act as mainstream for generating, keeping and maintaining customers.

The research also provided the management of Nigerian Food and Beverages in Nigeria with a better understanding of the CRM concept and assisted them to improve their own service quality.

Students, Lecturers, Academia, bank Management Staff, Researchers, and the general public will avail themselves of wealth of knowledge offered by this study. The study will also serve as a useful reference material for students, academicians, institutions, corporate bodies and corporate managers who are interested in the subject of Nigerian Food and Beverages in Nigeria.

1.7   Scope of the Study

The general scope of this study covers Customer relationship management and company performance. The geographical scope is Rivers State of Nigeria. The units of analysis covers randomly selected Nigerian Food and Beverages Industry in Rivers State.

1.8   Limitation of the Study

No research work is devoid of limitations. This study in that wise, is no exception. It therefore suffered the following constraints.

Lack of Finance: Finance was the major problem encountered in this study by the researcher. Money to travel and source for materials: Also, typing, making photocopies, binding the project work constituted a problem to the researcher.

Time Constraint: The time available for this study was not enough for me as I had to read, do assignments, write term papers I tests engage in my private activities and prepare for my final year examinations.

1.9   Definition of Terms

Customer Relationship Management: Customer relationship management (CRM) is a term that refers to practices, strategies and technologies that companies use to manage and analyze customer interactions and data throughout the customer lifecycle, with the goal of improving business relationships with customers, assisting in customer retention and driving sales growth.

Empathy: the provision of caring, individualized attention to customers

Customer Retention:Customer retention is the activity that a selling organization undertakes in order to reduce customer defections. Successful customer retention starts with the first contact an organization has with a customer and continues throughout the entire lifetime of a relationship.

Profitability: This is a function of customer satisfaction with the firms produce or service offerings.

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