Full Project – Impact of customer relation management (CRM) on the efficiency of service oriented organization

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CHAPTER ONE                              

INTRODUCTION

1.1    Background to the Study

Generally speaking, all businesses and particularly financial institutions have been affected to some degree in what is happening in the global market place, not only the organizations aim to satisfy the customers but they attempt to do this more efficiently and effectively than their rivals in the competitive market place in order to attain their goals, (Zakaria 2014). Banking industry is facing an ever increasing level of competition around the world as the dynamics of the business change, technology, complexity, innovation and globalization forever change the face of banking in Nigeria, (Joyner 2002).

Customers have graduated from being the “king” to being the “business” which if ignored is at the bank peril, (Oladele 2009). Customers are the only reason facilities are built, employees are hired, meetings are scheduled, business activities are engaged and without customers there is no business because the purpose of a business is to create customers and banks have understood the need to capitalize on gaining advantage in the competition by exploiting their customer base, brand value and costly infrastructure investments in order to increase profits, as there is a direct link between the customer relationships management and bank growth, (Peppers and Rogers 1995).

Over the years, the Nigeria banking industry has been largely product oriented. Most customers were made to have the impression that they were privileged to enjoy the services of a bank. Until recently, customer care was grossly neglected in our banks. However, upon the deregulation of the sector in 2004 coupled with the wave of globalization. Bank customers in Nigeria now demand services value for their money.

The 1990’s witnessed advances in CRM practice in Nigeria banks, which goes beyond gathering customer information to include improvements in customer services, maintaining viable long term customer relationships with a view to courting customer’s loyalty and minimizing customer lifetime value. It is a business strategy to identify a firm’s most profitable customers and prospects in order to develop and expand relationship with those customers through individualized marketing, (Onut, Erdem and Hosver, 2007).

Hence, today, due to the competitive pressure and full deregulation of the financial sector in the Nigerian economy, there exist a vast array of goods and services, prices or suppliers, such that the customer is not in any way limited by the number of available options to choose from. Thus, any form of negligence of the customers by any banking institution in a competitive economy like Nigeria will yield a disastrous end for such organization. As businesses enter the 21st century, customer services have become a fundamental factor for business success and profitability.

It is important also to note that designing and managing effective customer relationship is not only limited to “caring for the customers” it includes “care for the employees” as well (Eastern, 2009). Good “customer care” comes only by providing for good “staff care”. For Nigerian banks this will make it possible for every individual within an organization to make significant impact, not only on the customer experience, but also on the organizational service reputation in the market place.

Given the competitive dynamics in the Nigerian banking sector, and the shift towards Customer Relationship Management (CRM), this study intends to examine the effect of  customer relation management on  the performance of deposit money banks.

1.2    Statement of Research  Problem

Recently, the Nigerian banking sector had operated like a “monopoly”. The bottom-line figure was on profit maximization while customer satisfaction was secondary. Thus banks saw their existence and services as a priviledge to their customers, (Anuforo, Opara & Simeon, 2015). Most Nigerian banks traditionally laid more emphasis on attracting and prospecting for new customers rather than striving to retain old ones as well as charging their customers unnecessarily, (NTA, 2016).

However, it has become clear that the deregulation of the sector in 2004 and the attendant competitive pressure have shifted the emphasis towards customer loyalty and retention. The industry is therefore, in urgent need to reposition itself towards the customer oriented doctrine in order to achieve positive growth. Consequently Nigerian banks are now re-strategizing to meet current customers expectations and possible exceed such expectation through robust Customer Relationship management (CRM) policies and programmes to remain in business, brain (2011). Raza and Hanif (2013) and Ali and Raza (2015) had emphasized that the marketing concept teaches us that “to succeed in any business the customer must be the centre piece of organizational activities.

Today’s customers are becoming harder to please, smarter, more price conscious, more demanding, less forgiving and are being approached by many competitors with equal or even better offers at cheaper prices. The challenge therefore, is not to provide satisfied customers, but to produce delighted and loyal customers (Kotler and Armstrong, 2010).in the face of all these challenges the researcher choose to embark on this topic.

1.3    Objectives of the Study

The main objective of this study is to examine customer relationship management and the performance of deposit money banks. Specific objectives are:

1. To examine whether customer relationship management have positive impact on the performance of Deposit money banks.
2. To determine whether customer relationship management can enhance customers loyalty and retention of Sterling Bank Plc.
3. To evaluate if there is a significant relationship between customer relationship management and customer satisfaction.

1.4    Research Hypothesis

Hypothesis is a tentative solutions to problem under investigations. Hypothesis is a conjectural statement, a postulation on a preposition about the assume relationship between two or more variables.

1. Null hypothesis (Ho:) it state that a population parameter is equal to a value. It refutes the assumptions asserted in the alternative hypothesis.
2. Alternative hypothesis (Hi:) it states the population parameter is different from the value of the population parameter in the null hypothesis. Is the direct positive assumption with respect to the causes and solution to the problem under investigation. On the basis of the problem identified the researcher has developed the following hypotheses.

Hypothesis 1

Ho: Customer relationship management does not have positive impact on the   performance of deposit money bank

Hi: Customer relationship management does not have positive impact on the   performance of deposit money bank

Hypothesis 2

Ho: Customer relationship management does not enhance customer loyalty and retention  in  Sterling Bank Plc.

Hi: Customer relationship management enhances customer loyalty and retention  in  Sterling Bank Plc.

Hypothesis 3

Ho: There is no significant relationship between customer relationship management and customers satisfaction in sterling bank plc.

Hi: There is significant relationship between customer relationship management and customers satisfaction in sterling bank plc

1.5    Significance of the Study

This study will add to the academic research purposes of relationship marketing in banks as a strategy to sustain growth and profitability. The study is expected to increase customer satisfaction from the service rendered by the banking sector.

It is also expected to build a good customer loyalty and retention for the organization of  Sterling bank plc.

The study will equally provide for further studies in the area of relationship marketing. This is because further studies in this area it will identify the areas covered and further dwell on the untapped fields of research.

It will be of great importance to the banking sector because it help them to provide better services to customers.

The study will also benefit the customers as it will help to build their confidence in the banking sector.  It will add to the existing material for future researchers.

• Scope of the Study

The focus of this study is on the customer relationship management and the performance of deposit money banks with particular reference to Sterling  Bank Plc, Lokoja.

1.7     Limitation and Constraints of the Study

In the course of carrying out this research work, the researcher encountered several problems. In the first instance, the researcher did not have enough time to actually go into subject matters as planned. This is because this project work was done with other class work.

In addition to the above problem, the researcher did not have enough money needed to visits the place of case study on a regular basis.

Also, the respondents to the questionnaires did not help the issue as they were reluctant to provide the necessary Information.

1.8    Definition of  Key Terms

Banking System: Banking system can be regarded as the framework or structure of laws regulating the operations and practice of banking and flow of financial resources in an economy (Oladele, 2016).

Banking Sector: Is a driving force of multiple economic activities through the transmission functions by allocating funds from the surplus sector to the deficit sector of the economy ( Metiboba, 2009).

Customer Loyalty:  Is a person’s willingness to interact with and buy  from  a specific  company on an ongoing basis.  (Goggle, 2022)

Customer Relationship: Rowley (2015) defines customer relationship as the intangible connections between a customer and the company and constructs customer relationship from customers’ basic needs.

Customer Relationship Management: Oghojafor  et al., (2011) conceptualized CRM as a process companies utilize to understand and react to customers evolving desires, utilizing detailed customer acquisition, loyalty, satisfaction and profitability

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. ( Goggle 2022).

Management: these is the process of effectively and effective handling the customer by satisfying their needs through quality service and retaining and increasing the customer base thus creating a profitable customer relation.

Organisation: this is the process of coordinating individual efforts to accomplish a common objective. It is also a group of people working together in some type of concerted or coordinated effort to attain objectives (Zakaria, 2014).

Organization’s Performance : Can be said to be how effective and efficient the organization fulfils its purpose or objectives which could either be inform of a financial or non-financial benefit (Asiegbu et al, 2011).

Service: This is the relevant activities rendered to the satisfy customer’s needs and want which is not attached to physical product( Goggle 2022).

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Full Project – Impact of customer relation management (CRM) on the efficiency of service oriented organization