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Managing Customer Relations in the Banking Industry. Customer Service

von Dr. David Ackah (Autor) Makafui R. Agboyi (Autor)

Forschungsarbeit 2014 46 Seiten

BWL - Bank, Börse, Versicherung

Leseprobe

Table of contents

1. INTRODUCTION
1.1 BACKGROUND TO THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVES OF THE STUDY
1.4 RESEARCH QUESTIONS
1.5 SIGNIFICANCE OF THE STUDY
1.6 SCOPE OF THE STUDY
1.6.1 VALIDITY AND RELIABILITY

2. LITERATURE REVIEW
2.1 HISTORICAL DEVELOPMENT OF BANKING IN GHANA
2.2 DEFINITION OF SERVICE
2.3 CHARACTERISTICS OF SERVICE
2.4 RELATIONSHIP MARKETING DEFINED
2.5 LEVELS OF CUSTOMER RELATIONSHIP:
2.6 GOALS OF MANAGING CUSTOMER RELATIONSHIP
2.7 MANAGING CUSTOMERS COMPLAINTS
2.8 BENEFIT OF GOOD RELATIONSHIP FOR CUSTOMERS
2.9 BENEFITS OF GOOD RELATIONSHIP FOR THE ORGANIZATION:
2.10 ACHEIVEMENT OF EFFECTIVE CUSTOMER RELATOIONSHIP IN THE SERVICE INDUSTRY:
2.11 BENEFIT OF SERVICE QUALITY RESEARCH METHODOLOGY

3.1 PRIMARY SOURCE
3.2 SECONDARY SOURCE
3.3 SAMPLING DATA ANALYSIS AND FINDINGS

4.1 ANALYSIS OF DATA COLLECTION FROM MANAGEMENT OF THE BANK
4.1.2 LENGTH OF SERVICE OF MANAGEMENT OFFICIALS OF THE BANK
4.1.3 MANAGEMENT RESPONDENTS RESPONSES ON WHETHER MEASURES ARE IN PLACE TO IMPROVE CUSTOMER RELATIONS
4.1.4 MANAGEMENT RESPONDENTS’OPINION ON THE TYPE OF MEASURES FOR IMPROVING CUSTOMER RELATIONS OF THE BANK
4.1.5 MANAGEMENT RESPONDENTS’ RESPONSES ABOUT IMPROVEMENT OF CUSTOMER RETENTION OF THE BANK.
4.1.6 MANAGEMENT RESPONDENTS’ VIEW ON WHETHER CUSTOMERS OFTEN COMPLAIN
4.1.7 MANAGEMENT RESPONDENTS; RESPONSES AS TO WHETHER THEIR RELATIONSHIP FAVOUR CUSTOMER RELATIONS OF THE BANK
4.1.8 MANAGEMENT RESPONDENTS ‘SUGGESTIONS ON HOW CUSTOMERS RELATIONS OF THE BANK COULD BE IMPROVED
4.2 ANALYSIS OF DATA COLLECTED FROM EMPLOYEES OF THE BANK
4.2.1 EMPLOYEE RESPONDENTS RESPONSES ON THE SEX OF STAFF OF THE BANK
4.2.2 LENGTH OF SERVICE OF EMPLOYEES OF THE BANK
4.2.3 EMPLOYEE RESPONDENTS’ OPINION ABOUT THE ENHANCEMENT OF CUSTOMER RELATIONS OF THE BANK
4.2.4 EMPLOYEE RESPONDENTS’ RATED OF REPEAT VISIT TO THE BANK
4.2.5 EMPLOYEE RESPONDENTS’ RESPONSES ON WHETHER CUSTOMERS SOMETIMES COMPLIMENT THEM FOR SERVICES OFFERED
4.2.6 EMPLOYEE RESPONDENTS’ RESPONSES ON WHETHER EMPLOYEE –MANAGEMENT RELATIONSHIP IS ADEQUATELY CORDIAL TO PROMOTE CUSTOMER RELATIONS OF THE BANK
4.2.7 EMPLOYEE RESPONDENTS’ VIEWS ABOUT HOW OFTEN CUSTOMER EXPRESSES DISSATISFACTION.
4.2.8 EMPLOYEE RESPONDENTS’ RESPONSES ON WHETHER THEY HAVE OBSTACLES HINDERING CUSTOMER RELATIONS ENHANCEMENT
4.3 ANALYSIS OF DATA COLLECTED FROM CUSTOMER TO THE BANK
4.3.1 NATIONALITIES OF CUSTOMERS RESPONDENTS WHO VISITED THE BANK
4.3.2 CUSTOMER RESPONDENTS RESPONSES RELATIVE TO THE PATRONAGE OF SERVICES OFFERED BY THE BANK
4.3.3 CUSTOMERS RESPONDENTS’ RESPONSES, WHETHER THEY ARE SATISFIED WITH SERVICES OF THE BANK
4.3.4 GUEST RESPONDENTS’ RESPONSES ON WHETHER THERE HAS BEEN ANY IMPROVEMENT IN EMPLOYEES’ATTITUDE
4.3.5 CUSTOMER RESPONDENTS’ VIEW ABOUT CUSTOMER-EMPLOYEE
4.3.6 GUEST RESPONDENTS ‘VIEW ABOUT PRICES OF THE BANK RELATIVE TO OTHER BANK
4.3.7 CUSTOMER RESPONDENTS’ SUGGESTIONS FOR CUATOMER –EMPLOYEE RELATIONSHIP ENHANCEMENT OF THE BANK SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 SUMMARY
5.2 CONCLUSIONS
5.3 RECOMMENDATIONS:

REFERENCES

ABSTRACT

The main aim of this study has been to identify the possible causes of customer dissatisfaction. The specific objectives of the study were examined , the degree of cordiality and adversity of the relationship between management and staff and how these influence positively or negatively customer relations of banking organizations, a case study of Sahel Sahara Bank. The study is to assist the management of banking organization towards ensuring improved customer relations by offering incentives, customers’ relations training for employees and organizing seminars and workshops to raise employees’ level of professionalism. The researcher employed the quota sampling technique to specifically make a selection of the groups of management, staff, customers and other users of the Bank to whom questionnaires were administered until the required numbers of respondents were reached. In all, sixty (60) questionnaires were distributed. Out of these, ten (10) were administered to the management of the bank, twenty (20) to its employees and thirty (30) to customers who had visited to transact business at the bank’s premises on those faithful days of questionnaires administration. The study revealed that management and customers to the Bank asserted that customer relation training were the best tool for building customer relations to provide the needed skills for quality service delivery. Employees were also of the opinion that monetary incentive or rewards though important might not do much in improving customer relations but rather receiving customer relations training would equipped them better. There is therefore the need for management of banking organizations particularly the Sahel Sahara Bank to integrate their roles and efforts towards the facilitation of the customer relations training since employees as well as customer to the Bank rated it as the most workable measure.

Key Word: Managing Customer Relations in the Banking Industry

1. INTRODUCTION

This Case Study focuses on how Sahel Sahara-Bank (Ghana) keeps its competitive edge by managing its customer relations. The chapter briefly introduces the concept under study. It clearly defines the case study based on extensive reviews from numerous writers and sets the ball rolling for an insightful study. It mainly highlights the methodology applied, objectives of the subject as well as setbacks hindering the actualization of this area under study.

In the first decades of business operation, most setups were deeply production oriented. Manufacturers stressed the production of quality commodities and then sought for people to purchase them. The prevailing attitude was that a good product (defined in terms of quality) would sell itself. In the decades of 1925 and the early 1935, production techniques became more sophisticated and output increased tremendously. The manufactures began to increase emphasis on an effective sales force with which they could find customers to patronize their output. The attitude towards marketing in this sale era was that creative advertising and personal selling are a panacea to consumers’ resistance and convince them to buy.

Time elapsed and this era gave way to the emergence of the Marketing Era. In the case of this era, managers pay attention to the markets for their products by incorporating the Marketing Concept by determining unmet consumer needs and designing a system of satisfying them. The marketing concept introduces the marketer at the beginning of the production cycle rather than at its end then integrates marketing into each phase of the business.

Fundamentally, the rules for the success of business are changing in a considerable manner. Forces such as globalization, technological changes and the rising power of the customer as far as the purchase of various products are stimulating markets to find new ways to retaining customers, satisfy and work with customers to satisfactorily meet their needs with products and services customized more accurately. One of the most reliable indicators of the success of a company is its ability to retain its customers.

Angela Hilton and Mike Worsam in their book “Effective Management for Marketing” (1996-1997) CIM workbook , have this to say “it is estimated that it cost between five to fifteen times as much to acquire a new customer relationship therefore becomes self-evident for various banking industries to reckon with . Equally, important, happy customers buy repeatedly. This makes their buying decision easier, and it increases the firm’s profit. Priority is gradually shifting away from product to people and processes aimed at creating delighted customers. Customers are now consciously realizing that every other organism exists in a feedback loop with its environment. This is an underlying theory of systems approach towards organizational behavior in recognition that every aspect of the system will have a corresponding effect on the other.

Firms must therefore satisfy customers or else they will continue to “vote” for that firm’s survival and success with their purchasing power (money). There has been a shift from transaction-focus to relationship -focus in marketing. Customers become partners and the firm must make a conscientious and long-term commitment in maintaining those relationships with quality services and innovative strategies.

1.1 BACKGROUND TO THE STUDY

In both business and practice, customer management has become the most discussed problems category. Due to the specifics of attracting new customers and retaining existing customers in service industries like banks, managing customers are central drivers of company value.

When investigating categories of consumer goods such as natural goods (e.g. forest, agriculture), industrial goods (e.g. shoes, cars, machines) and services (e.g. banking services, restaurant and management consultancies) emerged as the most important category during the second half of the of the twentieth century. Managing customers has become a major discipline in service industries especially banking.

Sahel Sahara Bank Limited always want to increase the banks value and one of the ways is by relating to its customers well so that the bank can successfully attract new customers and retain existing ones. Whether new customers can be attracted or not depends on the customer’s evaluation of the provider.

The Sahel - Sahara Bank value its customers and relate with them well, give them prompt service because , they have the concepts that freedom, security , or inner harmony that is good relation are more likely to affect its purchasing patterns.

From this perspective, the core of this book (research work) is the Managing Customer Relation which structures the value processes of a service firm like the banks.

1.2 STATEMENT OF THE PROBLEM

Many businesses or companies of the 21st century produce and sell regardless of how effectively they can manage their relationships with their customers.

The researcher therefore seeks to unravel the shortfall of businesses that often lose sight of the fact that managing customer relations in a proper manner is the basis of their continuous profitability and existence.

A customer, who patronizes the products of an organization especially a banking organization, should leave a reasonable level of satisfaction of service delivery. Many service organizations have failed to do this, causing them to lose their loyal customers to hospitality organization, hence the need to address the adverse situation. However, most banking organizations assume it is the sole responsibility of the Marketing or Sales Department to retain customers. If the Company fails in this direction, conclusion is drawn that the Marketing Department, is of less competency. Businesses to this end should therefore remain focused on managing a set of fundamental business process instead of semi- independent departments to impact favorable customer relations and satisfaction.

Growing competition has also become keener as far as the operations of banking industries are concerned. This has led to the collapse of weaker or smaller banking establishments. There is therefore the need for banking organizations as a whole , to rise to challenge of curbing this adverse occurrence towards business collapse to ensure that their business are not outwitted by ever-growing business canker.

1.3 OBJECTIVES OF THE STUDY

It has been recognized that effective customer service creates a niche for an organization in terms of customer satisfaction and retention amidst intense competition from others providing the same service.

The study emphasizes the various tools employed in executing customer relation programs. In most organizations, especially in the service industry, both profitability and un-profitability can be traced to the poor management of customer relation. The research study is therefore aimed at achieving the following:

- To identify measures by which customer relations could be improved upon toward retaining loyal customers of banking establishments.
- To examine the nature of customer service practices of Sahel Sahara Bank Limited
- To ascertain the causes of customer dissatisfaction in the banking industry.
- To examine how the cordial or adverse relationship of management and internal customers (employees) promotes or hinders customer relationship.
- To assist managements of other banking organizations to take favorable decision towards improving their customer relationships programmes.

1.4 RESEARCH QUESTIONS

The research wanted to know how the study will help achieve its purpose by asking these questions:

- How will the research identify measures by which customer relations could be improved upon towards retaining loyal customer of banking establishment?
- What is the nature of customer attitude to Sahel Sahara Bank Limited’s banking services?
- In what ways will the research ascertain the causes of customer dissatisfaction in the banking industry?
- How will the research examine how the cordial or adverse relationship of management and internal customers (employees) promotes or hinders customer relationship?
- In what way will the research assist managements of other banking organizations to take favorable decision towards improving their customer relationship programmes?

1.5 SIGNIFICANCE OF THE STUDY

The research work will be of immense help to employees of service organizations especially banking organizations. The study will be of significance to the management of the bank under study, as it will enable them know areas they are falling short or excelling as far as their relationship with their operations are concerned. This will help improve their relationship with their customers, through their planning and implementation of effective policies.

It is also without doubt that the research undertaking will give an insight of customer relations to other banking organizations. Finally, it is hoped that this research work will serve as an academic reference material to Academic Institutions, which run Banking, Finance and other banking related courses such as Universities and Polytechnics; it will provide students with some of the information related customer relations especially in the banking industry.

1.6 SCOPE OF THE STUDY

Although there are 15 Sahel – Sahara Bank branches in Ghana this study focused on the Kumasi Branch. The proximity and time period allocated to this study would not allow for an extensive and detailed research into the topic. In spite of these limitations, it is hoped that, this work would provide very useful insights into the area of customer service and its importance in the bank.

Conscious efforts were made to get all relevant information. To be able to consider any sources as reliable it should have the ability to measure and obtain similar scores for the same object, trait or construct across different evaluators, or across the items forming the measure. (Churchill and Brown, 2004).

1.6.1 VALIDITY AND RELIABILITY

Churchill and Brown (2004) have research postulate in their book that describes the meaning of validity and reliability as “Any scales or other measurement instrument that accurately measure what it was intended to measure is said to have validity”. Validity refers to correctness whereas reliability insists on consistency.

The data for this thesis should therefore be valid and reliable. Because of this reliable data would be sorted from both primary and secondary data source.

2. LITERATURE REVIEW

This chapter reviews the existing studies related to the stated objectives of the study. The issues discussed include Historical Development of Banking in Ghana, Characteristics of Service, Definition of Customer Relationship, Levels of Customer Relationships, Goals of Managing Customer Relationship, and Managing Customer Complaints, Benefits of God relation for Customer and for Organizations .

2.1 HISTORICAL DEVELOPMENT OF BANKING IN GHANA

Banking in Ghana sprang up in the latter part of the eighteenth century and the early part of the twentieth century. Before the attainment of independence in 1957, the banking system in the country consists of only two commercial banks namely, the British Bank of West Africa now Standard Chartered Bank and Barclays Bank. The former was established in 1896 and the latter in 1917. Both were expatriate banks wholly owned and controlled by British Nationals.

The only other institution akin to a bank which started before these two aforementioned banks was a government established saving collecting outfit set up in 1818 within the structure of the Department of Post and Telecommunication and which passed under a variety of names control unit; it became known as Ghana Savings Bank at Independence in 1957, but was most commonly and popularly referred to as Post Office Saving Bank.

The first national bank, the Bank of the Gold Coast (now known as the Commercial Bank) was established in 1953 with the dual role of commercial and a Central Bank (Nuamah J. A.;” Banking in Ghana Competition and Co-operation” In journal of the Ghana Institute of Bankers V2 No. 6th June 1989 pg2.

However, after independence, it was broken up into two separate entities- The Ghana Commercial Bank and Bank of Ghana.

In order to provide an answer to the bold and ambitions, industrial and agricultural programmes envisaged for long term development financing was considered. The result was the creation of National Investment Bank (NIB) in 1963 and Agricultural Development Bank (ADB) in 1965 to provide reliable financial support for local industrial and agricultural development.

Since then, several types of banks have sprung up in the country in response to demand signals thrown up at various stages of the process of growth and development of the economy.

Also in 1970, the Ghana Co-operative Bank was set up by the Co-operative Movement of Ghana as a financial and intermediary for the various members” co-operative societies of the movement.

The Merchant Bank limited followed suit in 1971as a joint venture of the Ghana government and a member of local foreign financial institutions to engage in wholesale banking, corporate financing , acceptance credit and other specialized types of the merchant banking business to the benefit of the democratic economy.

In 1972, the Ghana Savings Bank was transformed into an autonomous financial institution and empowered to add commercial banking service to its traditional savings, collecting functions as a way of enhancing and improving upon its financial effectiveness as a saving mobilization entity.

However, this was followed by the establishment of Bank for Housing and Construction in response to the growing demand for mortgage and other constructional finances during a period when the nation was experiencing housing boom.

Three years later, another batch of banking institution sprang; the first was Rural Bank in 1976 and the Social Security Bank in 1977. Now! A lot of private banks are on the banking scene which performs a blend of merchant and commercial banking business.

2.2 DEFINITION OF SERVICE

“Service is all actions and reactions that customers perceive they have purchased,” Lovelock (1984). In other words, service is an intangible experience of performance that the customer receive along the tangible side of the product purchased. For example in the banking industry, service is performed for the customers by employees such as cashier (teller) pays cheques or a banker issuing a statement and account balances. Here emphasis is placed on the customer. Service offers the most opportunity to differentiate one product from another.

Host Consult (2000), also has this to say about service: “Service can be conceived as drama where service personnel are “actors”, service customers are the “audience”, physical evidence of the service is the “setting” and the process of service delivery is the “performance”. From the foregoing, service may be thought of all acts associated with attending to the needs of customers such as a banker in the banking industry offering a customer exactly what the customer requested from the banker. Examples of services include:

- Banks and non- banks financial institutions services
- Real Estate
- Legal, educational and social service
- Hotels and lodging places
- Communication
- Retail trade
- Transportation and public utilities
- Auto repairs service and parking
- Wholesale trade
- Personal service etc

2.3 CHARACTERISTICS OF SERVICE

The services have unique characteristics which make them different from that of goods. These are:

- Intangibility
- Heterogeneity
- Inseparability
- Perishability

Intangibility

The most basic and universally cited difference between tangible goods and services is INTANGIBILITY. Because services are performances rather than objects, they cannot be seen, felt, tasted or even touched in the same manner as we feel, taste, and touch tangible goods.

Heterogeneity

Services are performances, frequently produced by humans and for that matter no two separate services offered will be precisely the same. The employees delivering the service frequently are the services in the customer’s eyes and people may differ in their performance from day to day. Based on this, customers can never be sure that the services they would receive be just like the successful experiences with which their neighbours were so pleased. Service is highly variable or heterogeneous. Their quality depends on who provides them, where and when they are provided. The variability or lack of consistency in services offered by banking industries and other service companies constitute customer disappointment. The safe custody of customer’s goods, the air condition, television and all other facilities of banking industries may all be perfect but it is the people interacting with the customers who will make the difference a favorable and unfavorable perception of the bank.

Inseparability

Whereas most tangible goods are produced first, sold and then consumed, most intangible goods, services are sold first, produced and consumed simultaneously. Closely related to this feature of service is the fact that a service cannot be separated from its provider. For example, interest rate of a bank may be moderate but the service provider that is the cashier (teller) has a poor attitude or provides inattentive service; the customer will downgrade the overall bank experience. Depending on the skill and professionalism of employees and the attitude, cooperation and so on, be brought to the service encounter, the results can be good or bad, but in any event , they are hard to standardize. Another interpretation of the inseparability feature refers to the fact that in most banking industries, the services delivered to customer are inextricably tied to particular individual service provider such as securities, tellers’ operational manager and other associates of service delivery. As a result, most successful service delivery firms, example, banks invest huge sums of their profits accrued and a great deal of their time and effort on human resources activity revitalization and training.

Perishability

In addition, a distinguishing feature of service and goods is their time dependence. Perishability refers to the undisputable fact that services cannot be saved, stored, or resolved. Any time during which service delivery capacity sits idle represents revenue-earning potential that is lost forever. For example, a banking industry, which happens to have some of its money (capital) not given out as loans, cannot be made use of after a lapse of time. If service-providing industries need to maximize revenue, they must engage capacity and demand since what they offer (service) cannot be carried forward as unsold inventory. Periods of peak demand cannot be prepared for in advance, by providing and storing services, nor could they be made up for a period after the act. Not all this can be practicalized because of the perishability characteristic of service delivery.

2.4 RELATIONSHIP MARKETING DEFINED

Relationship marketing as defined by A Zeithaml and Jo Bitnen is the philosophy of doing business, a strategic orientation that on keeping and improving current customers rather than on acquiring new customers.

According to Philip Kotler, James Makens in their book “Marketing for Hospitality and Tourism” relationship marketing involves creating, maintaining and enhancing strong relationships with customers and stakeholders. With the definition by AZeithaml and Jo Bitnen, this philosophy assumes that customers prefer to have an on-going relationship with one organization than to change continuously among service delivery establishments in their search for a value. Building on this assumption and the fact that it is usually much cheaper to retain current customers than to attract new ones, this has made it relevant for various banks and other service delivery organization to incorporate in their day- to -day marketing operations the concepts of relationship marketing.

With the definition of Philip Kotler , James Makens , it means that increasingly, marketing is continuing to move away from trying to maximize the profit on each individual transaction to mutually –beneficial relationship with customers and other parties such as manager, teller, operation manager to mention but few. It involves further relationship building at many levels –economic, social, technical and legal resulting in high customer loyalty. The operating assumption here is the following: Building Good Relationships and Profitable Transaction Will Follow.

2.5 LEVELS OF CUSTOMER RELATIONSHIP:

The justification for customer’s relations comes from the need to retain customers of various establishments. There are in all five different levels of customer relationship. These are:

1. The Basic Level

In the basic level, the service provider provides the service without any further contract with the customer being served.

2. The Reactive Level:

The service person offers the services and encourages the customer to call back whenever he or she has any inconveniences arising.

3. The Accountability level:

The service provider calls the customer shortly after the transaction is made. The service provider then solicits from the customer improvement suggestions and any specific disappointments. This information helps the banking organization in question to continuously improve its service offering. There are two forms of accountability level and these are:

a. The proactive level:

The service provider and other colleagues in the organization contact the customer on a regular basis with suggestion about improvements made or about other creative suggestions for future events.

b. The partnership level:

The service provider and the customer work together to effect customer savings. Partnership sourcing implies that patronizes of service work more closely to their providers to ensure that all aspects of the deal suit the need of both parties not just for that deal but those expected in future.

2.6 GOALS OF MANAGING CUSTOMER RELATIONSHIP

The primary goal of managing customer’s relationship is to build and maintain a base of customers who are committed and profitable for the organization. To achieve this goal a banking organization will focus on the attraction, retention and enhancement of customer relationship.

1. ATTRACTION

First the organization will seek to attract customers who are likely to have long-term relationship with the organization. Through market segmentation, the establishment can come to understand the best target markets for building lasting customer relationships, as the number of these relationships grow, the loyal customers themselves will frequently help to attract new customers ( through word-of mouth) with similar relationship potential .

2. RETENTION

The main idea behind managing customer is to establish strong relationship with them in order to retain them instead of concentrating efforts on recruiting new ones.

Once they are attracted to begin a relationship with the organization, customers will be more likely to stay in the relationship if consistently they are offered with quality services and good value over time. They are less likely to be pulled away from the organization by competitors if they feel the company understand their changing needs and seem willing to invest in the relationship by constantly improving and evolving its service mix (people, process and physical evidence).

Factors that influence customer retention:

- High – quality services to encourage repeat visits
- Customers need to feel valued to be loyal, and excellent customer service can only create this
- Take a long-term marketing decision for example, continuous improvement or innovation to keep ahead of customer needs.
- Frequent customer contact to establish customer profiles in order to ensure accurate customer targeting of services and information.

Leonard Berry developed a framework for understanding types of retention strategies. The framework suggests that retention marketing can occur at different and that each successive level of strategy bind customers a little closer to the organization. At each successive level, the potential for sustained competitive advantage is also increased. Building on four types of retention strategies, which are discussed in the following sections:

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Details

Seiten
46
Jahr
2014
ISBN (eBook)
9783668705852
ISBN (Buch)
9783668705869
Dateigröße
732 KB
Sprache
Englisch
Katalognummer
v284720
Institution / Hochschule
Atlantic International University – School of Business and Economics
Note
B
Schlagworte
managing customer relations banking industry service

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Titel: Managing Customer Relations in the Banking Industry. Customer Service