THE EFFECT OF CONSUMER RELATIONSHIP MANAGEMENT (CRM) ON EMPLOYEES PERFORMANCE IN THE BANKING SECTORS, LAGOS
This paper examines the effect of consumer relationship management (crm) on employee’s performance in the banking sectors, Lagos. The research addresses the major problem associated with the adoption of customer relationship management by Nigerian banks which eventually exposes banks and customers to intense competition. The study was carried out in Ojo Local Government Area of Lagos State, Nigeria and it was targeted a population of 150 employees and customers of selected banks. Survey research method was used and data from the study were drawn from both primary and secondary sources. A sample size comprising 50 employees and customers were selected using stratified sampling technique and random sampling techniques. Quantitative data from the study was analyzed through descriptive statistics. The result indicates that customer relationship management is an effective tool to measure banks performance. The finding also shows that CRM helps in increasing banks profitability and enhances improvement in banks market share. The research is of the opinion that banks should put in seasoned customer service officers with sense of direction towards satisfying customers in order to improve overall bank performance. The study recommends that adoption and management of CRM requires the involvement of everyone in the bank in order for it to succeed.
Keywords: Customer relationship management, competition, profitability, and customer retention.
CHAPTER ONE INTRODUCTION
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 profitabilit Furthermore, loyal customers can provide the foundation for growth which leads to competitiveness in the industry. Also, the belief that relationship management (RM) investment builds stronger, more trusting customers relationship (Morgan and Hunt, 2014) and improves financial performance (Schroder and Lacobulli 2021) has led to massive spending on customer relationship programme.
(Sheth, 2015) also opines that customer relationship management 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 management principles and design strategies to achieve and maintain close and long lasting relationship with the customers.
Customers has graduated from being the “king” to being the “business” which if ignored is at the bank peril, (Oladele 2019). Customers are the only reason facilities are built, employees are hired, meetings are scheduled, business activities are engaged and without customers there is no business because the purpose of a business is to create customers and banks have understood the need to capitalize on gaining advantage in the competition by exploiting their customer base, brand value and costly infrastructure investments in order to increase profits, as there is a direct link between the customer relationships management and bank growth, (Peppers and Rogers, 2019). Over the years, the Nigeria banking industry has been largely product oriented. Most customers were made to have the impression that they were privileged to enjoy the services of a bank. Until recently, customer care was grossly neglected in our banks. However, upon the deregulation of the sector in 2004 coupled with the wave of globalization. Bank customers in Nigeria now demand services value for their money.
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 management on bank performance that this study is being carried out.
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to investigate the effects of customer relationship management on bank performance in Nigeria. Accordingly, the specific objectives of the research are to:
1. Examine the use of applicability of customer relationship management in the banking industry.
2. Assess whether or not customer relationship management translates into customer satisfaction and profitability.
3. Examine whether customer relationship management techniques translate into customer retention for the banks.
4. To study if customer retention lead to increase in bank market share
1.4 RESARCH QUESTIONS
1. Is customer relationship management a useful tool to examine banks performance?
2. Does customer relationship management leads to increase banks profitability?
3. What significant effect does customer relationship have on banks market share?
4. To what extent has customer relationship strategy translate into customer retention for the banks?
1. Ho; customer relationship management does not have positive effect on bank performance. H1; customer relationship management has significant effect on bank performance.
2. Ho; customer relationship management does not lead to increase in banks profitability H1; customer relationship management leads to increase in banks profitability
3. Ho; customer relationship management does not translate to customer retention for the banks H1; customer relationship management does translate to customer retention for the banks.
1.6 SIGNIFICANCE OF THE STUDY
The focus of this research is on the evaluation of some banks in Lagos. The following sentences will describe the overall assessment of the study's importance. It will also contribute to the filling of a knowledge deficit in banking sectors where you can work. It has evolved into a secondary source of information for researchers, academics, and practitioners, as well as a set of guidelines for policymakers in the adaptation, formulation, and implementation of genuine urban development strategies, efficient urban management, migration policy, and bank establishment, among other things.
1.7 SCOPE OF THE STUDY
The scope of the study is based on the effect of consumer relationship management (CRM) on employee’s performance in the banking sectors, Lagos. Due to the availability of financial services, the banking industry is a significant industry in the business world and is having an increasing impact on all other economic sectors. Financial institutions were not excluded from this turbulent position because of how strongly the degree of competition, both locally and internationally, affects them.
1.8 DEFINITION OF TERMS
- CONSUMER: A person who purchases goods and services for personal use. a person or thing that eats or uses something.
- EMPLOYEES PERFORMANCE: What does employee performance mean? Employee performance is defined as how an employee fulfills their job duties and executes their required tasks. It refers to the effectiveness, quality, and efficiency of their output. Performance also contributes to our assessment of how valuable an employee is to the organization.
- BANKING SECTORS: Banking sector means all licensed financial institutions, financial holding companies and for the purposes of these Regulations, includes the Home Mortgage Bank.