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IMPACT OF CUSTOMER SATISFACTION
STRATEGIES ON CUSTOMER RETENTION IN FIRST BANK NIGERIA PLC
ABSTRACT
The study examines the effect of customer
satisfaction strategy on customer retention in First Bank. Out of the total population of
138, 70 persons were selected as the sample size. To determine the sample size
the simple random sampling technique was used. Questionnaire design by the
researcher in five likert scale constitute the research instrument. The mean
scores was used to analyze data. The analysis indicates that First bank
Nigerian plc customer retention program are design to offer unique and
distinctive products as well as excellent services that will enhance customer
satisfaction. As such it was recommended that Complete “paradigm shift” in
managerial thinking, in terms of service quality delivery through continuous
education and training of staff in field such as customer satisfaction and
customer.
CHAPTER ONE
INTRODUCTION
1.1 Background
to the Study
Customer
Satisfaction Strategies in most banks are framework design to attract
customers. Most banks do not formulate strategy that would attract and retain
customers. This is the reason why most of their sales promotions are done on a
short term basis. Most banks, in this regard do not have customer relationship
management department which tackles customer complaint on the spot (Egbe,
2007).
The banking
industry is highly competitive with bank not only competing among each others,
but also with non-banks and other financial institutions. As such most bank
product developments are easy to duplicate and when banks provide nearly
identical services, they can only distinguish themselves on the basis of price
and quality. Therefore, customer retention is potentially an effective tool
that banks can use to gain a strategic advantage and survive in today’s ever
increasing banking competitive environment (Okoh,2008).
Therefore,
customer retention is an effective and importance tool that banks can use to
gain a strategic advantage and survive in today’s ever increasing banking
competitive environment. The Subject of customer retention and loyalty is
relatively global issue. It is more rational and economical to keep customers
instead to looking for new ones. The costs of acquiring customers to replace
those who have been lost are high. This is because the expense of acquiring
customers is incurred only in the beginning stages of the commercial relationship.
In addition, old customers buy more and, if satisfied, may create positive
image for company by word-of-mouth promotion. Additionally, long-term customers
also take less of the company’s time and are less sensitive to price changes.
These findings highlight the opportunity for management to save customers as a
competitive advantage. Thus, it is believed that reducing customer defections
by as little as five percent can double the profits ( Egbe,2003).
The main factors
influencing customers’ selection of a bank include the range of services,
rates, fees and prices charged. It is clear that superior service, alone, is
not sufficient to satisfy customers. Prices are essential, if not more
important than service and relationship quality. Therefore, service excellence,
meeting client needs and also providing innovative products are essential to
earn success in the banking industry. Most private banks claim that creating
and maintaining customer relationships are important to them and they are aware
of the positive values that relationships provide.
This is so
because it is more economical to keep customers than to acquire new ones. The
cost of acquiring customers to “replace” those who have been lost are high. But
inspite of the importance of customer retention in the banking industry,
formulation and implementation of customer retention strategy is complex sequel
to the problem of duplication of banks’ product by other banks which hinder
product differentiation that can add value to services of bank. This makes
customer retention services in banks to be complex. However, there has been
little empirical research examining the construct that could lead to customer
retention. Hence the need to assess the impact of customer satisfaction strategy on customer
retention in First bank Nigerian plc.
1.2 Statement
of the Problem
First
Bank is not very diversified in terms of the products and services they offer.
This is so because banks in Nigeria offer nearly identical products. This
carries the danger of creating a situation where banks fight for customers
using all kinds of “unethical strategies”. As such, it becomes apparent that
one strategic focus that banks can implement to remain competitive would be to
retain as many customers as possible through
satisfying their customer.
But
the question is, how do banks retain their customers when they offer identical
services that encourages customer deflecting from one bank to another? The
inability of banks to provide innovative and unique products that will meet
individual client needs as against providing similar services like other bank
impede against customer loyalty in no small ways and makes customer retention
through satisfaction in bank complex and
difficult. Hence the need to assess the impact of customer satisfaction
strategies on customer retention in First bank Nigerian plc.
1.3 Objectives
of the Study
The
main objective of the study is to assess the impact of customer satisfaction
strategies on customer retention in First bank Nigerian plc.
i.
Identify the types of customer
satisfaction strategies used in retaining customers in First Bank.
ii.
Find out the effectiveness of customer retention
strategies in First Bank Plc.
iii.
Evaluate whether customers of First Bank
are delighted with the quality of services provided to them.
1.4
Research
Questions
To achieve the
objective of the study, the question below was answered:
i.
What type of customer satisfaction
strategies is used in Customer retention in First Bank?
ii.
How effective are the strategies used in
retaining customers in First Bank?
iii.
Are the customers of First Bank
delighted with the quality of services provided to them?
1.5 Statement
of Research Hypotheses
For this study the hypotheses below are
formulated and tested:
Hypothesis
One
H01:
Customer satisfaction strategy is used to retain customers in First Bank.
H02:
Customer satisfaction strategy is not used to retain customers in First Bank.
Hypothesis Two
H01: customer satisfaction strategies of First
Bank are effective in customer retention.
H02:
customer satisfaction strategies of First Bank are not effective in customer
retention.
Hypothesis Three
H01:
customers of First Bank are delighted
with the quality of services provided to them.
H02: customers of First Bank are not
delighted with the quality of services provided to them.
1.6 Significance
of the Study
The
study will be significant to corporate organization especially commercial banks
as they utilize the finding of this research in policy formulation as regards
to customer retention strategies.
The
study may also contribute to the existing body of knowledge in customer
retention on strategy. The study will be a good reference material to students
who may wish to use this study as a springboard to undertake their own
research.
1.7 Scope
of the Study
The
scope of this study will cover the empirical examination of customer retention
strategies used by First Bank in customer’s retention as well as the reasons
why customer stay or leave First bank Nigerian plc. The time frame for this
study covers a time from 2006 – 2011.
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