Importance of customer relationship management in commercial banking

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ACKNOWLEDGEMENT

No words can express my appreciation and gratitude to my research advisor _______ through the course of this research, Professor _____has taught me numerous values that extend well beyond the realm of _________ (Your Subject Name). His emphasis on dedication to work and his valuable and practical insights of life are some of the major highlights of my education at The University _________. To Professor _____, I say with great respect, thank you very much.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for the academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

Signed __________________ Date _________________

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

CHAPTER 1 INTRODUCTION1

1.1 Background of the study1

1.2 Introduction7

1.3 Problem Statement8

1.4 Research Questions9

1.5 Proposed aim9

1.6 Objectives of the study10

1.7 Contribution of the study10

CHAPTER 2 LITERATURE REVIEW12

2.1 Historical foundations of CRM12

2.2 Customer Satisfaction and Customer Retention13

2.3 Customer Retention16

2.5 Service Quality19

2.6 Relationship marketing20

CHAPTER 3 METHODOLOGY23

3.1 Research design23

3.2 Population and sample23

3.2.1 Population23

3.2.2 Sampling procedure24

3.2.3 Sample24

3.3 Data collection methods24

3.4 Research instruments25

3.4.1 Questionnaires25

3.4.2 Secondary data collection25

3.5 Justification25

3.6 Limitations26

3.7 Layout of the research project26

REFERENCES28

CHAPTER 1 INTRODUCTION

1.1 Background of the study

One key concern that leaders face in the global market environment is service quality (Owusu-Frimpong, 2008: 105). Studies show that negative gaps in service quality affect customer loyalty and retention (Parasuraman, 2007: 75). Owusu-Frimpong (2008) posited that consumers switch from one competitor to another because of negative gaps in the quality of service. They further argued that the ability to attract and retain customers depends on the quality of service. Researchers have uncovered evidence that link service quality to the growth in shareholder value (Gumbus, 2005: 144; Lee & Hwan, 2005: 75; O'Regan, Ghobadian, & Sims, 2005: 135; Smith & Chang, 2009: 74). The growth in shareholder value, according to Al-Hawari (2006), is the responsibility of leaders in organizations. Reichheld (2002) argued that effective leadership style can facilitate service quality and customer satisfaction. Conversely, ineffective leadership style, according to Al-Hawari (2006), can lead to poor service quality and customer dissatisfaction.

Generally speaking, a company could increase its profits by acquiring new customers, augmenting profitability from existing customers by enhancing their one time purchase volume, and enhancing the duration of customer retention (Swailes & Dawes 2009: 205). In the past, most companies focused on the first two approaches. However, those strategies have been found not to be very effective and efficient in markets that are saturated. Recently, in both marketing theory (academia) and practice (industry), the emphasis in relationship marketing has shifted to long term customer relationship management (Reinartz and Kumar, 2009: 133; Al-Hawari, 2006: 148). Managers and researchers have emphasized the importance of customer retention, the dynamics of customer relationship, and customer lifetime value (Reinartz & Kumar, 2009: 306) for which customer retention is an important component (Gupta, Lehmann, & Stuart, 2009: 46). Customer retention has been suggested as an important antecedent to financial ...