RELATIONSHIP MARKETING AND CUSTOMER LOYALTY IN GTBANK, ABAK ROAD, UYO,AKWA IBOM STATE
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Abstract
This study was carried out to examine relationship marketing and customer loyalty in Guarantee Trust Bank, Abak Road branch in Uyo, Akwa Ibom State. The objective of this study is to determine the relationship between relationship marketing and customer loyalty in financial institutions in Nigeria. To achieve the objective of this study, four (4) research questions and hypotheses were raised to guide the study. The researcher adopted survey research design and a sample size of (120) one hundred and twenty respondents from Guarantee Trust Bank in Uyo was used. The collected data were analyzed with tables and simple percentages to analyze the research questions. The study reveals that relationship marketing have a significant impact on customer loyalty and customer retention in Guarantee Trust Bank. Also, the banking industry in Nigeria is under immense pressure because currently customers switching is quite common but GT Banks are still trying to sustain their customer base by managing the customer loyalty program through effective customer relationship management. The study concludes that relationship marketing is an effective weapon to retain the existing customers in order to reap the benefits of customer loyalty. Based on these findings, it is recommended that Guarantee Trust Bank should focus on general points like branch variety and relationship marketing strategies to be able to achieve a long term customer loyalty.
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The banking sector is one of the backbone of every country, and Nigeria is not an exception. A functional financial institution is expected to deal with large number of individual customers. The profitability of financial institution is also based on number of customers and the number of transactions conducted by them. Therefore, the banking industry require a different set of relationship marketing approach to earn customer’s loyalty, as these customers have ample options to choose other banks and this options gives banks tough time to retain their customers. According to the RBI Report (2013), mergers and acquisitions in the banking sector are the testimony of the underperformance of the banks and the inability to retain and satisfy the customers. Most banks incur millions of naira to attract customers and retain them. With the intense competition and increasing globalization of the financial markets, building customer loyalty has become a critical strategy for most financial institutions. The banking industry must develop strong relationships with their customers in order to compete successfully in the competitive retail banking environment (Zhang, 2019).
Mudie and Pirrie (2016), defined relationship marketing as a “philosophy of doing business, strategic orientation that focuses on keeping and improving current customers rather than acquiring new customers”. This definition encompasses the planned action of a given organization to focus on building relationship with the existing customers than acquiring new ones. Relationship marketing is considered a crucial and imperative strategy, especially in the banking sector due to the increasing cost of acquiring new customers, increased customer expectations, and the increasing customer churn rate (Ndubisi, 2013). Relationship marketing is significantly related to customer’s loyalty as far as banking sector is concerned, Guarantee Trust Bank PLC is under immense pressure to manage the loyalty aspect in order to fight the competition and to meet the higher expectation of the customers (Hasanul and Naseef, 2020). To reduce customer defection, relationship marketing aims at retaining, enhancing and maintaining long term relationships with its customers.Clow and Kurtz (2013), stated that banks profitability is closely related with customer’s retention.
Customer retention is seen as a measure of continuous relationship and the consequence of it is customer loyalty (Liu and Wu, 2017). Customer retention, therefore, is the primary focus and loyalty is the outcome of the efforts to retain the customers (Cohen, Gan, Au Yong, and Chong, 2017). It is clear that customer is the only source of the companies’ present profit and future growth. Also creating loyal customers is at the heart of every business (Keller and Kotler, 2013). Customers are central to all marketing activities all over the world. Success and in turn profit is not unthinkable without customers. Alam and Khokhar (2016) state that customer loyalty is the foundational link and aspiration for the success, profitability and business performance of the organization. Chatterjee and Chaudhari (2015) state that customer loyalty is actually the major strategic goal in current business environment and the banks canenhance the customer loyalty by offering excellent services and products which can meet the requirement of customers.Murtaza (2013) mentioned that, loyal customersdo not only support the organization in increasing the value to the business but the organization also gets benefitted in lowering the cost of attracting the new customers.This study focused on the influence of relationship marketing on customer’s loyalty by considering Guarantee Trust Bank, Abak Road branch as a case study.
1.2 Statement of the Problems
The enormous proliferation of financial institutions in Nigeria create an avenue for customers to choose the banks they want. Today, the banking industry is faced with increased competition from upcoming new banks and micro finance institutions. As a result, fewer new customers are being pursued by an increasing number of financial institutions. The challenge here is that, relationship marketing should be directed towards all customers of the bank. Most Nigerian banks are characterized by having both profitable and unprofitable customers, where the former subsidize the latter. Therefore, retaining the profitable customers becomes increasingly difficult in a competitive environment where other financial institutions specialize in offering attractive services and prices to this rewarding segment. Under those circumstances, firm‘s resources must be devoted to present customers, making them satisfied, loyal and returning customers. As the financial marketplace becomes more dynamic and competitive, banks also need to focus on retaining existing clients through effective relationship marketing .Customers who have traditionally been reluctant to switch banks are now demanding for better services and are willing to switch banks if they are offered better services elsewhere (Farquhar, 2004; Lam and Burton, 2016). In view of the growing importance of relationship marketing and customer loyalty, this study attempts to review relationship marketing practices and customer loyalty and their linkages in the context of banking sector using Guarantee Trust Bank as a case study.
- Objectives of the Study
The main aim of this study is to examine relationship marketing and customer loyalty in Guarantee Trust Bank, Abak road branch. The specific objectives are;
- To investigate the existing relationship between conflict handlingand customers’ loyalty in Guarantee Trust Bank, Abak Road branch, Uyo.
- To determine the degree to which trust influence customer’s loyalty in Guarantee Trust Bank.
- To find outifinnovationhas a significant and positive effect on customers’ loyalty in Guarantee Trust Bank, Abak Road branch, Uyo.
- To find out if commitment of management influence customers’ pay loyalty in Guarantee Trust Bank, Abak Road branch, Uyo.
- Research Question
The following research questions will act as a guide in the course of this study:
- To what extent does conflict handlings influence customer’s loyalty in Guarantee Trust Bank,Abak Road branch, Uyo?
- To what degree does trust influence customer’s loyalty in Guarantee Trust Bank,Abak Road branch, Uyo?
- What is the level of relationship that exist betweeninnovation and customers’ loyalty in Guarantee Trust Bank,Abak Road branch, Uyo?
- To what extent does commitment of management influence customers’ loyalty in Guarantee Trust Bank,Abak Road branch, Uyo?
1.5 Research Hypotheses
The following research statements will be tested in the course of the study;
H0: Conflict handlings does not influence customer’s loyalty in Guarantee Trust Bank, Abak Road branch, Uyo.
H1: Conflict handlings do influence customer’s loyalty in Guarantee Trust Bank, Abak Road branch, Uyo.
H0:Trust does not influence customer’s loyalty in Guarantee Trust Bank, Abak Road branch, Uyo?
H2: Trust do influence customer’s loyalty in Guarantee Trust Bank, Abak Road branch, Uyo?
- Scope of the Study
This study examines examine relationship marketing and customer loyalty in Guarantee Trust Bank, Abak road branch in Uyo, Akwa Ibom State. As such, the scope of this study is limited customers in Guarantee Trust Bank, Abak road branch in Uyo metropolis.
1.7 Significance of the Study
Every researcher’s aim and goal is to add to the knowledge of the already existing work, to fill the gap and also serve as a solution to a given problem. Therefore, this research will be of immense significance to the following; branch managers and management boards of banking industries whose responsibility is to ensure that customer relationship is properly managed to better improve the firm’s performance. This study would also contribute to existing empirical studies on relationship marketing and customer loyalty, it would provide quantitative-based recommendations for policies and programs required to reposition customer relationship marketing adopted by branch managers in managing banking industries.It is also expected that this research can contribute a lot to the efforts made by Guarantee Trust Bank PLC for the improvement of customer loyalty through provision of appropriate service to the respected customers. This research work will be useful to future researchers and students because it would be a source of reference for materials with regards to relationship marketing and customer loyalty in banking industries. Finally, the findings of this study will contribute a lot to banking service providers on how to implement strategies that will meet their customer’s needs and ultimately win their loyalty.
1.8Limitation of the Study
This study is limited by its time scope, available literature on the subject matter and other geographical factors. A longer duration would have given the researcher time to study a broader cross-section of relationship marketing and customer loyalty in different firms and sectors of the economy. Also, some funding would have enabled the researcher to travel extensively to interview other branch of GT Banks outside the state to get a better insight on the topic of the study.
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 background to the study, statement of the problem, objectives of the study, research questions, research hypotheses, significance of the study, scope of the study etc. Chapter two being the review of the related literature presents the theoretical framework, conceptual framework and other areas concerning the subject matter. Chapter three as the research methodology covers the research design and methods adopted in the study. Chapter four concentrate on the data collection, data analysis and presentation of findings. Chapter five presents the summary, conclusion, and recommendations of the study.
1.10 Operational Definition of Terms
Relationship Marketing: Relationship marketing is a form of marketing developed from direct response marketing campaigns that emphasizes customer retention and satisfaction rather than sales transactions.
Customer Loyalty: Customer loyalty describes an ongoing emotional relationship between you and your customer, manifesting itself by how willing a customer is to engage with and repeatedly purchase from you versus your competitors. Loyalty is the byproduct of a customer’s positive experience with you and works to create trust.
Banking Sector: The modern banking industry is a network of financial institutions licensed by the state to supply banking services.The principal services offered relate to storing, transferring, extending credit against, or managing the risks associated with holding various forms of wealth.
GTBank: Guaranty Trust Bank Plc is a leading African Bank that offers Online/Internet Banking, Retail Banking, Corporate Banking, Investment Banking and Asset.
Trust: This is a firm belief in the reliability, truth, or ability of someone or something.Trust plays a pivotal role in building a relationship between the customer and the bank.
Conflict Handlings: Conflict management is the process of limiting the negative aspects of conflict while increasing the positive aspects of conflict.
Innovation:Innovation is the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services.Innovation is a key to avoid customer defection and customers feel bored with the same product
Commitment:this is an enduring desire to maintain a valued relationship.It may be an affective commitment or calculative commitment. The customer is affectively committed when he is emotionally attached to the bank and desires to sustain the relationship with the bank for a longer time.
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