FACTORS INFLUENCING CUSTOMER LOYALTY IN THE COMMERCIAL BANKS IN BENIN CITY ABSTRACT This study was carried out with the aim to examine the factors influencing customer loyalty in the Nigeria commercial banks. The specific objective of the study were to determine the extent to which bank technology, account packages, customer services response, bank security influence customer’s loyalty in the Nigerian baking sector. To achieve this objective, a total of eighty (80) questionnaires were administered to the respondents. Out of which seventy-seven (77) of the questionnaires were properly filled and returned. The data gathered from the administered questionnaires were analysis involves two methods, the use of simple percentages, tables and the Ordinary Least Squared (OLS) econometric method, with the goal of providing estimated coefficients that are valid enough to test the hypothesized relationships in the study. The hypotheses of this study were tested using Ordinary Least Square (OLS) regression technique. The findings from analysis revealed among other things that there is a relationship between bank technology, account packages, customer services response and bank selection in Nigeria. The findings also showed that there is no relationship between bank security and bank selection. In line with the findings, we recommend that banks management should pay attention to factors that have significant effect on the choice of banks. Specifically, they should also increase the branch network by establishing more branches across the country, adopt appropriate strategic plan aimed at enhancing reputation of the bank. They should also improve personal security of customers, and make bank location more convenient and easily accessible to customers. TABLE OF CONTENT CHAPTER ONE: INTRODUCTION Background to the Study Statement of the Research Problem Research Questions Objectives of the Study Research Hypothesis Scope of the Study Significance of the Study Limitations of the Study CHAPTER TWO: LITERATURE REVIEW Introduction Concept of Customer Loyalty Factors Influencing Customer Loyalty Types of Customer Loyalty Measurement of Customer Loyalty Empirical Evidence CHAPTER THREE: METHODOLOGY OF THE STUDY 3.1 Introduction 3.2 Research Design 3.3 Population, Sample and Sampling Procedure 3.4 Instrumentation and Administration of Instrument 3.5 Model Specification 3.6 Validation and Reliability of Instrument 3.7 Method of Data Analysis CHAPTER FOUR: EMPIRICAL ANALYSIS 4.1 Introduction 4.2 Background Information 4.3 Regression Analysis CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION 5.1 Summary of Findings 5.2 Recommendations 5.3 Conclusion Bibliography Appendices CHAPTER ONE INTRODUCTION Background to the Study Banks are very important for every nation’s economy, because no growth can be achieved except savings are well directed into investment. In fact individual recognizes the importance of bank once he or she begins to understand the role of money as a medium of exchange. Financial sector has experienced a lot of challenges over years, particularly in the area of intense competition, financial crisis and global economy. Financial institution managers are under pressure not only to maintain customer satisfaction while sustaining lower costs, but also to maintain market leadership, which focuses on customer loyalty (Megdadi, Aljaber and Alajmi, 2013). A success marketing component requires a better understanding and frequently monitoring product and service attributes which increase customer loyalty. Customer loyalty to bank products comes out over time of continuity in patronage such as service quality and satisfaction (Megdadi, et al., 2013). Mukhiddin, Dileep and Jalal (2012) see loyalty as an extremely held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviour. Customer loyalty is the certain attitude and behavior that customers show. Customer loyalty can be obtained if companies listen to their clients and understand customer needs and make right decisions in this regard to please them. Banks should offer to customers more than their expectations, and anticipate their needs and fulfill them (Köksal and Dema, 2014). According to Afsar, Rehman, Qureshi and Shahjehan (2010) loyalty to a bank can be thought of as continuing patronage over time. The degree of loyalty can be determined by tracking customer accounts, over defined time periods and noting the degree of continuity in patronage. The role and importance of customers in commercial banks cannot be overemphasized and underestimated. This is due to the direct effect which these customers have on the growth and survival of the banks. The need for customer satisfaction is understood and accepted philosophically. In this regard, all organizational units have a tendency toward customers and therefore work towards customer satisfaction (Molaee, Ansari and Teimuori, 2013). In this regards, the study examines factors influencing customer loyalty in the commercial banks in Benin City. Statement of the Research Problem During the past decade, the financial service sector has undergone drastic changes, resulting in a market place which is characterized by intense competition, little growth in primary demand and increased deregulation. The recapitalization and deregulation exercise recently carried out in the banking sector has further increased the competition and complexity among the banks. So, putting the long-rage profitability and ultimate survival of the bank into consideration becomes imperative. This can be done both by retaining or keeping the existing customers or having new ones. In this research we try to find the factors that influence customer loyalty in the commercial bank in Benin Cityin order to help this key industry to have a wider look for supporting their customers and finally having more loyal ones. Nowadays, banks encounter numerous problems in retaining their customers and keeping loyal ones. Some of these problems according to Chakrabarty (2006) are satisfaction with branch (privacy, fast services, employees approach to customers and opening hours); economic satisfaction (bank charges and interest rates), remote access satisfaction (quality of e-banking) and presence of automated teller machines (ATMs). To the best of the researcher’s knowledge, in Nigeria, the issue of customer loyalty has not attracted much empirical studies especially in the commercial banks in Nigeria. This study therefore comes in to fill the void by examining the factors influencing customer loyalty in the commercial banks in Nigeria. In the light of this, the following research questions are raised: Research Questions Is there any relationship between bank technology and customers loyalty? To what extent do account packages influence customer’s loyalty? What is the relationship between customer services and customers loyalty? What is the relationship between bank security and customers loyalty? Objectives of the Study The broad objective of this study is to examine the factors influencing customer loyalty in commercial banks in Benin City. The specific objectives for this study are to: examine the relationship between bank technology and customer’s loyalty. ascertain the extent to which account packages influence customer’s loyalty. find out the relationship between customer services and customer’s loyalty. ascertain the relationship between bank security and customer’s loyalty. Research Hypothesis The following null hypothesis is stated in this study: H01: There is no relationship between bank technology and customer’s loyalty. H02: There is no relationship between account packages and customer’s loyalty. H03: There is no relationship between customer services and customer’s loyalty. H04: There is no relationship between bank security and customer’s loyalty. Scope of the Study The research study centers on factors influencing customer loyalty in commercial banks in Benin City. The population of study consists of all the registered commercial banks in Nigeria, while the sample of interest involves eighty (80) respondents which were conveniently selected from five (5) major bank operating in Benin City, Edo State. Significance of the Study This study will be of great significance to the followings stakeholders: Policy makers in the banking industry that needs to identify the most appropriate policies that will lead to the realization of the desired objectives of the banking sector in terms of factors influencing customer loyalty in the banking sector. The study will help the management of banks to be acquainted with the relevance of customer loyalty so as to maximize their customer base and thereby increase their profitability. Also, this study will be of immense importance to academicians who are undergoing various courses of discipline in tertiary institutions such as; Banking and Finance, Business Administration, Accounting, and other related discipline. The study is also expected to be of greater importance to future researchers who may want to broaden their knowledge on the subject under review. Limitations of the Study A study of this nature cannot be carried out without constraints. The limitation which is likely to be experienced from this study would be majorly from the retrieval of data. The sample size and the inability to obtain a completely random sample is also a limiting factor to this research work. The low response rate from respondents is also a limiting factor including the imprecise measurement of variables. REFERENCES Afsar, B., Rehman, Z. U., Qureshi, J. A. &Shahjehan, A. (2010). Determinants of customer loyalty in the banking sector: The case of Pakistan, African Journal of Business Management, 4(6), 1040 – 1047. Elkana, C. R. (2015). Factors influencing customer loyalty in the banking sector a case of commercial banks in Mombasa Kenya, International Journal of Research in Management & Business Studies, 2(1), 9 – 12. Köksal, Y. D. D. Y. &Dema, O. (2014). An investigation of the essential factors on customer loyalty in banking sector: a case of Albanian retail bank, YönetimVeEkonomi, 2(1), 357 – 368. Megdadi, Y. A. A., Aljaber, J. R. A. &Alajmi, K. S. (2013). An examine proposed factors affecting customer loyalty toward the financial services of Jordanian commercial banks: empirical study, International Journal of Business and Social Science, 4(10), 142 – 149. Molaee, M., Ansari, R. &Teimuori, H. (2013).Analyzing the impact of service quality dimensions on customer satisfaction and loyalty in the banking industry of Iran, International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(3), 1- 9. Mukhiddin, J., Dileep, K. M.& Jalal, R. M. (2012).Impact of relationship marketing on customer loyalty in the banking sector, Far East Research Centre, 36 – 55.
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