THE IMPACT OF EFFECTIVE CUSTOMER RELATIONSHIP ON ORGANIZATIONAL PERFORMANCE (A STUDY OF FIRST BANK NIG. PLC, AKPAKPAVA BRANCH, BENIN CITY) ABSTRACT Banking today has become more innovative, competitive and attractive to other investors in the sector. The competitions as a result of high numbers of people who do not have bank accounts have driven more investors to obtain license to operate in the country. As strategies are developed day in and day out, ideas become archaic and that management of banks would have to be constantly developing ideas that will promote their services. This has therefore made it necessary for banks to be innovative in order to survive the ground. This study aims at identifying the effect of the customer relationship on organizational performance in the banking industry, with a case study of First Bank Nig. Plc, Akpakpava Branch, Benin City. This study adopted a descriptive survey method as research design. A sample of 120 respondents were selected and administered with questionnaires, and their responses were collected and analyzed. The chi-square statistical tool and simple percentages were used in analyzing the collected data, and testing of the research hypothesis. Questionnaires and interviews were used in collecting the data from the primary source. The findings obtained from the field were numerous, with areas under product knowledge, customer complaint handling as well as investment advice being areas of concern. The study showed that significant numbers of customers have an account with the bank under study as a result of her good customer relationship. CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Relationships are the soul of life. It is hard to think regarding any society or organization to survive without relationships. They are the imperceptible threads, which make a unique bond between the individuals and organizations. On the one side these bonds can be as strong as iron pillars lasting for lifetime, whereas on the other hand they are as delicate as feather which may be broken in no time. Controlling relationships is a very difficult phenomenon. Organizations understand the importance of the vital role played by relationships in achieving and maintaining the cutting edge at the market place. Previously Peter F. Drucker had suggested that the purpose of any business is to create customers, which gives an opportunity to the organization to serve them. The success of any organization mainly depends upon sustaining the customer advantage that is retaining the customers for lifetime. Rising of complexities and uncertainties at the market place along with intensifying global competition are forcing the business organization to invest in building customer relationships. Newly sophisticated marketing tool kits are being designed to satisfy and keep hold of customers to accomplish sustainable competitive advantage. Customer satisfaction is a business philosophy which tends to the creation of value for customers, anticipating and managing their expectations, and demonstrating ability and responsibility to satisfy their needs, (Dominici and Guzzo, 2010). Qualities of service and customer satisfaction are critical factors for the success of any business (Parasuraman et al., 1988). As Dominici and Guzzo, (2010), points out: enterprises exist because they have a customer to serve. The key to achieve sustainable advantage lies in delivering high quality service that result in satisfied customers. Companies are facing their toughest competition ever. To win customers and encourage them to stay loyal or repurchase the service, most companies have resorted to meeting and satisfying customer needs by not being only reactive but proactive. They are also interested in finding new ways and means to satisfy the customer. Most companies are aiming for good customer relationship which means better service to the customer thereby preventing the customer from being promiscuous. A lot of companies are not just attracting customers, but are working at building long term relationships with customers (both local and foreign customers), suppliers, employees, distributors and the general public. These companies are striving to satisfy the maximized expectations of each stakeholder group. Based on the nature of marketing, it involves voluntary “exchange” relationship where both sides must be willing parties. The parties must be able to communicate which could be through different instruments. Therefore, in today’s highly competitive environment, businesses need better understanding of their customers. This understanding meets different channels of which one is customer relationship management. 1.2 STATEMENT OF PROBLEM Considering the competitive nature of the banking industry, the question that comes to mind is how to develop good customer relations in order to create intimacy and a level of confidence that will promote sustainable growth and profitability. The problem is to develop a differential strategy to promote a consistent positive return on investment. It is against the background that all the competitors in the industry are offering very similar products and services. Technology also has consistently enhanced the service delivery system and by the nature of it, it only serves as a short term strategy to attain competitive advantage. It eventually becomes affordable with time and all other competitors adopt it to augment their service. The question again will be how banks could differentiate themselves from the competition and gain customer attention, patronage and loyalty. It cannot be over emphasized that in the service delivery system it is the people that makes the difference. Service from one person to another could vary even with the same product features. Therefore there is the need for an integrated service marketing approach that will seek to provide a uniform service as well as creating the convenient environment for customers to do business with the bank. The proper response to this problem will be in the area of customer relationship. Hence the study is to know the effects of customer relationship on performance and using it also as a differential advantage, how it can help promote good bank-customer relationship. 1.3 OBJECTIVES OF THE STUDY To identify the impact of effective customer relationship on organizational performance. To investigate the relationship between effective customer relationship and organizational performance. To identify customer relationship strategies used by most banks in Nigeria. To identify the issues involves in creating an effective customers relationship. 1.4 RESEARCH QUESTIONS Are there positive impacts of effective customer relationship on organizational performance? Are there significant relationship between effective customer relationship and organizational performance? What is the best customer relationship strategy that has been used by most banks in Nigeria? What are the issues involves in creating an effective customers relationship? 1.5 RESEARCH HYPOTHESES The following research hypotheses formulated will be empirically tested and result gotten will serve as a spring hoard for recommendations. HYPOTHESIS I Ho: There are no positive impacts of effective customer relationship on organizational performance. Hi: There are positive impacts of effective customer relationship on organizational performance. HYPOTHESIS II Ho: There is no significant relationship between effective customer relationship and organizational performance. Hi: There is a significant relationship between effective customer relationship and organizational performance. 1.5 SIGNIFICANCE OF THE STUDY This study will add to the academic research purposes of effective customer relationship on performance in banks as a strategy to sustain growth and profitability. It will also identify the preferences of customers as to which services they prefer doing with the banks. The study will also identify the various strategies that the bank is implementing. This will help to bring to fore the practical relationship marketing ideas that banks are adopting in the country. The study will also provide for further studies in the area of customer relationship. This is because further studies in this area will identify the areas covered and further dwell on the untapped fields of research. 1.6 SCOPE OF THE STUDY The research is limited to the impact of effective customer relationship on organizational performance; this is carried out within the context of large organization such as First Bank Plc. The area in which data were collected for the study is limited to First Bank, Akpakpava Branch, Benin City. 1.7 LIMITATION OF THE STUDY One of the major problems encountered by the researcher is the insufficient time to embark on a more elaborate research on the topic. Another problem is the monetary problem. There was no sufficient money to make the purchasing of all necessary materials for the research work. There was also the problem of meeting some personalities to get information from them. Because of that, the researcher found it difficult to collect all the necessary information. However, the researcher made do with the resources available for her research work. 1.8 DEFINITION OF TERMS Customer Relationship: this is simply the ways in which organization or company communicates and deals with existing customers. Customer relationship management (CRM): this is an approach to managing a company’s interaction with current and future customers. The CRM approach tries to analyze data about customers' history with a company, in order to better improve business relationships with customers, specifically focusing on retaining customers, in order to drive sales growth. Organizational performance: this comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives). ICRM: Institute for Customer Relationship Management. 1.9 HISTORICAL PROFILE OF FIRST BANK OF NIGERIA First Bank of Nigeria, sometimes referred to as First Bank, is a Nigerian bank and financial services company. It is the country's largest bank by assets As of June 2013, the bank had assets totaling approximately US$ 21.3 billion (NGN: 3.336 trillion). The bank's profit before tax, for the twelve months ending 31 December 2012 was approximately US$542.5 million (NGN: 86.2 billion). At that time, the bank maintained a customer base in excess of 8.5 million individuals and businesses. First Bank of Nigeria has solid short and long term ratings from Fitch, the Global Credit Rating Company, partly due to its low exposure to non-performing loans. The bank has strong compliance with financial laws and maintains a strong rating from the Economic and Financial Crimes Commission of Nigeria.
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