Customer Relationship Marketing Practice And Performance Of Unity Bank Plc.

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Customer Relationship Marketing Practice And Performance Of Unity Bank Plc.


Abstract


The banking industry is an important sector in the business world which has a growing impact on all other sectors of the economy because of financial services provisions. Nigerian banks therefore need to develop effective technique to enhance the interaction of customers and the bank staff. The main objective of this study is to ascertain the impact of customer relationship marketing practice and performance of banks in Nigeria. This study established that customers relationship marketing affects banks performance which is supported by the fact that customers are used on a basis of security. The study establishes that customer relationship management via customer identification, retention and technology impact on banks market share performance. The success of bank’s future business performance will to to a large extent depend on the appreciation and application of these strategies, and the banks management ability to maintain, motivate, and train employees on customer relation management for business survival and growth.


Chapter One


Introduction

1.1 Background of the Study

Banking industry is an important sector in the business world which has a growing impact on all other sectors of the economy because of financial services provisions. In this volatile situation financial institutions were not left out as they are seriously affected by the level of competition both locally and internationally. The banking industry environment today is highly volatile; Nigerian banks therefore needs to develop effective technique to enhance the interaction of customers and the bank staff. The complexity in the banking industry has made bank managers to focus on how to create close affiliation with their customers. No wonder why Nigeria banks now create a separate department in the bank known as customers care unit to address customer issues and complaint in order to ensure that customers get value for their money thereby enhancing customer loyalty, building and maintaining customer’s cordial relationship in order to achieve an advantage that can lead to customer retention and increase profitability. Furthermore, loyal customers can provide the foundation for growth which leads to competitiveness in the industry. Also, the belief that relationship marketing (RM) investment builds stronger, more trusting customers relationship (Morgan and Hunt 1994) and improves financial performance (Schroder and Lacobulli 2001) has led to massive spending on customer relationship programme. Sheth (2005) also opines that customer relationship marketing would result into customers’ retention which has to do with creating relationship, Customers loyalty which has to do with developing relationship, and customer interaction may lead to customer retention. Considering the above arguments, Nigeria banks now adopt relationship marketing principles and design strategies to achieve and maintain close and long lasting relationship with the customers.

Customer relationship management has come to represent more balanced emphasis on continuing relationships rather than simply having individual transactions. The higher the rate an organization practices good customer relationship, the higher would be the rate of customer loyalty to its brands or products. Ragins and Greco (2003) noted that CRM offers organizations’ several advantages and benefits. They opined that a committed customer has an emotional attachment to the seller. These emotions can include trust, likings and believing in the organization’s ability to respond effectively and promptly to customer’s problem. A customer can be viewed as an organization’s asset because they are likely to be a source of favourable word-of-mouth referral. A new customer can only be made through a complex process of creating awareness of the existence of the firm’s products and channels of distribution (Achumba, 2004). Therefore an organization will improve sales, profit and market share by increasing customer’s identification and retention through effective and efficient CRM. Customer satisfaction has also been linked to increase in organizational financial performance and the practice of CRM (Teikomensah, 2014). Chi & Gursoy, (2009) in their studies similarly noted that there exist a relationship between customer satisfaction employee and a variety of company performance metrics at the firm level of analysis. They also found that although customer satisfaction has positive significance impact on financial performance, employee satisfaction has no direct significant impact on financial performance. Similarly, Anderson et al, (1994) and Ohaka (2015) identified strong positive relationship between customer satisfaction, market share and profitability. The outcome of this study will be useful to students, scholars and future researchers. Furthermore, it will encourage employers and employees and other stakeholders to appreciate the need for relationship management of customers, which will enhance the banks market share and impact positively on the attainment of the organization objectives


1.2 Statement of the Problem

Complexity experienced in banking industry today makes bank managers to be desperate such that ‘Bank A’ manager does not only see ‘Bank B’ manager as competitor but a branch manager of the same Bank sees each other as a competitor. This level of competition has made bank managers to focus on how to be in a close contact with their customers in order not to lose their active customer to their presumed competitors. Bank services are increasing in Nigeria, yet the level of failure in their services indicate that ineffective relationship with customers seems to be pronounced. Such a gap indicates that there is much to learn about how to develop close contact with customer using the appropriate relationship strategies. Banks generally today has become a chameleon in nature thereby changing from one service provision to the other, most time combining many services together relocating or establishing another branch so as to meet the needs of their customers and to show to the generality of public that their services are unique and better than the others. However, these services or branches established have not translated to customer satisfaction as customers’ experienced human traffic while trying to access these services. This has destabilized customers thereby forcing them to open more than one account across the banking industry in order to satisfy their financial need. This movement of customers from one bank to the other has created serious apprehension among the banks executives thereby leading to the provision of customers’ service point in most bank branches across the country for the purpose of having a relationship that can lead to a consistent patronage by their customers. It is on the basis of the inability of Nigerian bank managers to take cognizance of the impact of customer relationship marketing on bank performance in unity banks


1.3 Objective of the Study

The main objective of this study is to ascertain the impact of customer relationship marketing practice and performance of banks in Nigeria. But for the purpose of the study, the researcher intends to achieve the following objective;

  1. To ascertain the impact of customer relationship marketing on banks performance
  2. To investigate the effect of customer relation marketing on the growth of unity bank
  3. To ascertain the relationship between customer relation marketing and profitability of the banks
  4. To ascertain the effect of customer relation marketing on the efficiency of the banks

1.4 Research Hypotheses

For the purpose of the study, the following research hypotheses are formulated by the researcher;

  1. H0: there is no significant impact of customer relationship marketing on banks performance
    H1: there is a significant impact of customer relationship marketing on the performance of the banks.
  2. H02: there is no significant relationship between customer relationship marketing and the profitability of the banks
    H2: there is a significant relationship between customer relationship marketing and the profitability of the banks.

1.5 Significance of the Study

It is believed that at the completion of the study, the findings will be of great importance to the managers of unity banks as the study will emphasized on the tremendous benefit of customer relationship marketing which the bank can take advantage off. The study will also be of great importance to the head of marketing unit in the banks, as the marketing technique adopted has to change from the traditional marketing technique to a more focus customer relationship driven so as to wear off competition from other banks, study will also be beneficial to researchers who intends to embark on study in similar topic as the study will serve as a guide to their study. Finally the study will be beneficial to academia’s students and the general public schools


1.6 Scope and Limitation of the Study

The scope of this study covers the customer relationship marketing practice and performance of unity banks. But in the cause of the study, the researcher encounters some constraint which limited the scope of the study;

(a) Availability of Research Material:

The research material available to the researcher is insufficient, thereby limiting the study.

(b) Time:

The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

(c) Finance:

The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover


1.7 Definition of Terms

Customer

A customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product or an idea – obtained from a seller, vendor, or supplier via a financial transaction or exchange for money or some other valuable consideration. An ultimate etymology of “client” may imply someone merely inclined to do business, whereas a purchaser procures goods or services on occasion but a customer customarily or habitually engages in transactions (historically: the collection of tolls or taxes – see the Wiktionary etymology of customer). Such distinctions have no contemporary semantic weight.

Marketing

Marketing is a form of communication between you and your customers with the goal of selling your product or service to them. Communicating the value of your product or service is a key aspect of marketing.

Banks

A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries.


1.8 Brief History of Unity Bank

Unity Bank commenced Operations in January 2006 following the Merger of Nine Financial Institutions with Competences in Investment, Corporate and Retail Banking. Today, Unity Bank is one of Nigeria’s leading Retail Banks with 240 business offices spread across the 36 States and Federal Capital Territory. We are Nigeria’s 7th largest bank by business locations.

Unity Bank is one of the largest employers of labour in Nigeria and a major contributor to its gross domestic product (GDP). The Bank employs over 2,000 people. We are driven by the Vision to be The Retail Bank of Choice for all Nigerians and this is at the core of all that we do.

Our new Head Office is located at Plot 42, Ahmed Onibudo Street, Victoria Island, Lagos with a Head Office Annex at 290A Akin Olugbade Street, Victoria Island, Lagos. Welcome to a Bank where Succeeding Together is how we do business


1.9 Organization of the Study

This research work is organized in five chapters, for easy understanding, as follows

  • Chapter one is concern with the introduction, which consist of the (overview, of the study), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study.
  • Chapter two highlight the theoretical framework on which the study its based, thus the review of related literature.
  • Chapter three deals on the research design and methodology adopted in the study.
  • Chapter four concentrate on the data collection and analysis and presentation of finding.
  • Chapter five gives summary, conclusion and also recommendations made of the study.

Chapter Five


Summary, Conclusion and Recommendation

5.1 Introduction

It is important to ascertain that the objective of this study was to ascertain the effect of customer relationship marketing practice and performance of unity bank plc.

In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of customer relationship marketing in banks


5.2 Summary

The study established that customers relationship marketing affects banks performance which is supported by the fact that customers are used on a basis of security. Security is associated with words like promises, honesty, trust, reliability, predictability, and stability, fear of being led down and reduction of uncertainty and risk. Customer relationship marketing reduces the rate at which customer switch from one bank to another (Buchanan and Gilles, 1990). A customer remains loyal to a particular bank in which he/she is being guided by moment of truth. CRM, assist banks in understanding customer psyche. Banks financial performance is also enhanced through improvement in customer retention. Also, customer relationship marketing translate into customer retention for banks thereby increase their market share (Akpan, 2005) Therefore, the appropriate way for banks to create effective customer relationship is to deliver high customer satisfaction by way of provision of high quality service delivery. This intimately helps banks in Nigeria to create customers to levels of clients, advocate and partner through close affiliation with prospective customers.


5.3 Conclusion

This study has established that customer relationship management via customer identification, retention and technology impact on banks market share performance. Hence, the success of bank’s future business performance will to a large extent depend on the appreciation and application of these strategies, and the banks management ability to maintain, motivate, and train employees on customer relationship management for business survival and growth. Furthermore, the stakeholders of banks need to create the understanding that it is the firms’ devotion towards customer relationship management that will translated into increased market share performance. It is therefore noted that banks will have better competitive advantage when all relevant stakeholders appreciate and demonstrate these customer relationship management strategies with a view of achieving the desired corporate objectives. This research provides a greater insight on the impact of customer relationship management on bank market share performance to Scholars, practitioners, students, banking sector employers, employees and other stockholders.


5.4 Recommendation

Based on the study, the objective of the study and the result of the findings, the following recommendations are made: Banks should ensure that well trained and experienced professionals should be in charge of customer service. The research discovered that majority of the customer service officers in Nigerian banks does not have sense of direction in handling customers issues. Some have personality problems in terms of the way they approach customers thus making customers aggrieved and not satisfied with the service rendered by the banks, thus not making customers get value for their money and this could make them switch to other banks. The adoption of customer relationship marketing requires the involvement of everyone in the bank from the customer service officers up to the top management staff should be part of those involved in establishing cordial relationship with customers of the bank. Banks should also ensure that their customer waiting line is effectively managed by reducing the number of hours spent in attending to customers issues. The research observed that aggrieved customers leaves the waiting line without being attended to and this may result to loss of active customers to competitors.


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