THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) ON CUSTOMER SATISFACTION A STUDY OF SELECTED COMMERCIAL BANKS

ABSTRACT

The primary objective of the study was to examine the effect of customer relationship management on customer satisfaction in three commercial banks in Lagos State Nigeria. The study explored the ways in which customer satisfaction can be achieved with the use of customer relationship management. The study adopted the descriptive survey research design.  The data for the research was collected through a well design and structured questionnaire. 208 questionnaire were administered to the respondents out of which 197 were completed and returned. The study employed both descriptive and inferential statistics to analyze the data retrieved from the questionnaire. The study was guided by four research questions and hypothesis. Among the findings reveals by the study were customer participation and involvement have positive and significant effect on customer satisfaction, customer service support have positive and significant effect on customer satisfaction. The study recommend that effective customer relationship management is a reliable tool to increase customer satisfaction. Hence, Nigeria commercial banks should ensure customer satisfaction at all time. Management of the banks should always seek customer opinion before taking decision that is binding on the customers. The study conclude that there is a direct relationship between customer relationship management and banks customer satisfaction. The banks management is therefore encourage to pursue customer relationship management programmes with rigor so that they can survive in the present competitive business environment.

 

 

 

 

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Customers are important and are said to be the driving source to the success of a business and a good business is one which considers customer’s interest (Mithas, Krishnan, & Fornell, 2005). In the light of the aforementioned, customer satisfaction is therefore key and a subject to be addressed. Although, customer satisfaction can be weighed on individual customer interests but the sampling of varying interests from customers would give an estimate of the average customer value and satisfaction.

Concepts which later developed into full-fledged working system such as the Customer Relationship Management (CRM) system comprising of people such as business marketers, relationship officers, liaison officers and managers, processes and technology that work together for a common goal have been dedicated to cater for customer needs in a bid to improve satisfaction (Chen, 1997). Well, it is evident that customers’ response to such systems are debatable.

According to (Zainurrafiqi, Sukoharsono, & Hamid, 2012), there are varying direct and indirect effects of customer relationship management (CRM) to customer satisfaction. An analysis of the perception, value and the resultant effect to the customer forms the motive for this research work. If the customer value assessment can be studied, more findings to customer satisfaction would be revealed and value can be determined through proper study of business markets which can be represented with strategies that relate to Customer Relationship Management (CRM) (Anderson, Jain, & Chitanguata, 1992).

 

Commercial banks in Nigeria are excelling in this form of customer appreciation through promotion, digital marketing, social media presence, customer involvement and other customer-oriented business strategies. Popular methods revolve round support services and channels encouraging customer involvement. These methods have enabled the businesses done to be solution based focusing on customers’ needs. Healthy competition can be found among these banks on Customer Relationship Management (CRM) but the question is how effective are the approaches being used?

Customer involvement was studied in over 259 firms and the empirical results reveal that this has brought about effects in the innovation capabilities of customer service (Ngo & O'Cass, 2013). This shows that there is a relationship between customer involvement and customer services including customer support services. Because of the strong ties between this two variant but identical variables, we intend to measure the individual results and compare their effectiveness in regards to customer satisfaction.

Incentives also are known to be one of the best ways for positive reinforcement and behavioral psychology re-engineering (Robinson & Berridge, 2001). Customer behavior sometimes stems from present emotions such as anger, happiness etc. (Grandey, Dicter, Sin, & Sin, 2004). But incentives on the other hand, creates a bridge that separates possible resultant actions from current emotional state. Beyond customer satisfaction, incentives through various innovative services may be used to win back an angry customer (Griffin & Lowenstein, 2001). In other words, to study the effects of Customer Relationship Management (CRM) on customer satisfaction, we should also consider measures that can reverse customer dissatisfaction and its effect for proper understanding.

Part of the mechanism to implement the use of incentives is the accommodation of customer involvement and customer participation. With the integration of incentive oriented marketing strategies through customer participation, there is an opportunity available for customers to appreciate product value and add their input to the business activities.

There is a close bond between these Customer Relationship Management (CRM) concepts: Customer involvement and participation; Customer support services; Incentives. This forms the basis of this project and the motivation behind the scaling down of the dependent variables namely customer involvement, support services and incentives and their effect to customer satisfaction. At the end of the project, the empirical values of each variable would have been ascertained considering the sampling of customers’ opinion of three different Nigerian banks and conclusions can thereby be drawn.

1.2       Statement of the Problem

Researches on the effect of Customer Relationship Management (CRM) on customer satisfaction has been on for a long period of time (Zainurrafiqi, Sukoharsono, & Hamid, 2012). There have been diverse operational variables to measure Customer Relationship Management (CRM) from lack of trust to partnerships, empowerment etc. Contemporary Customer Relationship Management (CRM) problems have evolved from just customer attitudinal study or mentality to the perception of services offered by businesses in relation to Customer Relationship Management (CRM). A major concern is how effective incentives, support services and customer involvement is to customer satisfaction as this sort of research leads the forefront of contemporary Customer Relationship Management (CRM) questions.

Presence of an extensive customer relationship might also be argued to be operationally cost ineffective and might not worth a lot of investment but it may be profit inclined (Krasnikov, 2009). A common argument that follows this ideology is the debunking of claims that customers are always right (Grandey, Dicter, Sin, & Sin, 2004). This surrounding claims even further reiterate that if customers are giving more privileges than they ought to have, the insatiable nature of customers may be continually harnessed (Grandey, Dicter, Sin, & Sin, 2004).

At a point where there are varying point of views in the effects of Customer Relationship Management (CRM) on customer satisfaction, it is paramount we conduct a research sampling the Customer Relationship Management (CRM) methods of three commercial banks in Nigeria, one of which is an old generation bank and coming to a consensus on whether the effects tends to the positives or the negatives on customer satisfaction in order to discover the truth. The research would not only measure these effects but also consider each effect in a bid to proffer a sustainable solution to the problem stated.

1.3       Objectives of the Study

The main objective of this project is to consider the effects of customer relationship management (CRM) on customer satisfaction. The specific objectives entails:

        i.            To investigate the effect of customer involvement and participation on customer satisfaction.

      ii.            To determine the effect of customer support services on customer satisfaction.

    iii.            To ascertain the effect of incentives on customer satisfaction.

    iv.            To determine the joint effect of CRM elements on CS

1.4       Research Questions

The research questions pertinent to the project study are as follows:

        i.            What is the effect of customer involvement and participation on customer satisfaction?

      ii.            What effects do customer support services have on customer satisfaction?

    iii.            Does incentives to customers have an effect on customer satisfaction?

    iv.            Does the joint of CRM elements have an effect on CS?

1.5       Research Hypotheses

The hypotheses developed for this project are as follows:

Hypothesis one

H0:  Customer involvement and participation has no significant effect on customer satisfaction.

H1: Customer involvement and participation has a significant effect on customer satisfaction.

Hypothesis two

H0:  Customer support services has no significant effect on customer satisfaction.

H1: Customer support services has a significant effect on customer satisfaction.

Hypothesis three

H0:  Incentives has no significant effect on customer satisfaction.

H1: Incentives has a significant effect on customer satisfaction.

Hypothesis four

H0The joint of CRM elements has significant effect on CS.

H1: The joint of CRM elements has no significant effect on CS.

1.6       Significance of the Study

Conclusion from this project would help businesses realize the effect of customer relationship management on customer satisfaction. Furthermore, the suggestions proffered by this project would help companies in developing strategies or maybe performing an overhaul in the customer relationship management approaches being used.

It would also be significant to the customer in appreciating customer relationship management with the suggestions it recommends and also in attaining satisfaction.

Furthermore, employees and people who are involved in the system that manages customer relationship would be able to understand better the needs of the customer in regards to satisfaction and proffer sustainable solutions.

1.7       Scope of the Study

Three Nigerian banks would be considered for this project namely: Wema, Zenith and the United Bank of Africa (UBA). Observations show that these banks have a working system of Customer Relationship Management (CRM). Customer participation and support services are also a priority to these banks. Considering this condition, these banks were most suitable for the research adding to the fact that the banks are of close proximity to where the research is going to be carried out. For this project, there would be no extension of study to other customer relationship management variables except customer involvement and support services.

1.8       Operationalization of Variables

Keeping in mind the aim of the study which is to consider the effects of customer relationship management (CRM) on customer satisfaction, the mathematical expressions can therefore be presented as follows:

 

Y=f(X)

Y= Dependent variable

X= Independent variable

Y represents Customer Satisfaction (CS)

X represents Customer Relationship Management (CRM)

The mathematical model can therefore be expressed as:   CS=f (CRM)

Where:

Customer Satisfaction =f (Customer Relationship Management)

 

Y*= (y1,y2,y3)

y1=Customer repurchase behavior (CRB)

y2=Expectation from product (CP)

y3=Loyalty (LT)

 

However, we are considering 3 variables on Customer Relationship Management (CRM) which are:

X1= Customer Involvement and Participation (CIP)

X2= Customer Support Services (CSS)

X3= Incentives (IN)

 

So therefore:

CS= f(CIP)....obj1

CS = f (CSS)....obj2

CS= f(IN)....obj.....3

 

CS=f(CIP, CSS, IN)...combined effect of CRM elements on CS....obj 4

1.9       Definition of Terms

Customer: This is a person who patronizes a business or shop, buying its products and possibly engaging in further dealings.

Customer Satisfaction (CS): This relates to the measure in which customer’s expectation of a business product is realized or surpassed.

Customer Relationship Management (CRM): It is a concept that explains the various technologies, processes, strategies and people involved in maintaining a relational framework for the customer over a specified duration.

Customer Support Services (CSS): This is a Customer Relationship Management (CRM) technique that caters for the effective use of business products sold to customers.

Customer Involvement (CI)): It is an aspect and also an extended form of Customer Relationship Management (CRM) that engages the customers in contributing to business success through suggestions, participations, marketing etc.

Incentives (IN): This is an extra service or gain given to a customer by a firm which is usually done in form of a promise and it is usually dependent on a particular effort by a customer. It is done to encourage and motivate customers.

Customer Repurchase Behavior (CRB): This is the consumer's actual behaviour resulting in the purchase of the same product or service on more than one occasion.

Expectation from Product (CP): Customer satisfaction reflects the expectations and experiences that the customer has with a product or service. Consumer expectations reflect both past and current product evaluation and user experiences.

Loyalty (LT): Customer loyalty is both an attitudinal and behavioral tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand.

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