CHAPTER ONE
INTRODUCTION
- BACKGROUNDOF THE STUDY
The basic reason for an organization’s existence is to satisfy the needs of the customers and through that may way for repeat patronage which will open the avenue for increased profit making. One of the factors affecting the performance of an organization is customer relationship management, which is the main focus of study.
Customer Relationship Management concerns the relationship between the organization and its customers and asserted customers are the life-blood of any organization be it a global corporation with thousands of employees and a multi-billion turnover, or a sole trader with a handful of regular customers Beks, (2008). Customer Relationship Management is the same in principle for these two examples – it is the scope of CRM which can vary drastically.
The organization and the customers both have sets of conditions to consider when building the relationship, such as wants and needs of both parties; organizations need to make a profit to survive and grow customers want good service, a quality product and an acceptable price.
Thompson (2008) illustrated that customer relationship management is an effective tool for achieving positive organizational performance and which reflects an increase in profit, goodwill, better product and service delivery. In recent times, questions have been raised as regards the interactions between organizations and their customers. But the result is that many organizations have poor relationship with their customers and this will lead to loss of goodwill and low profit earning in the organization.
Customer relationship management looks at the whole process of what an organization is involved in, whether it is a product or a service driven organization and it must involve every aspect of what they do – from suppliers through to the end application, from their internal staff through to their customer’s customer Kim Jenner, (2008).
The ultimate purpose of CRM, like any organizational initiative, is to increase profit. In the case of CRM this is achieved mainly by providing a better service to customers than competitors do. CRM does not only improve the service to customers, a good CRM capability will also reduce costs, wastage, and complaints. CRM also reduces staff stress, because attrition – a major cause of stress – reduces as services and relationships improve. CRM enables instant market research as well: opening the lines of communications with your customers gives you direct constant market reaction to your products, services and performance, far better than any market survey. Good CRM also helps you grow your business: customers stay with you longer; customer churn rates reduce while referrals to new customers increase from the increasing numbers of satisfied customers; demand reduces on fire-fighting and trouble-shooting staff, the organization’s service flows and the teams work more efficiently and more happily.
Customer satisfaction is a vital CRM variable that must not evade our empirical scrutiny. Indeed, customer satisfaction is central to successful application of the marketing concept. Many company mission statements and marketing plans are designed around the goal of increasing customer satisfaction. (Claudia, et al 2001)
The concept of relationship is very complex because it relates to different disciplines but with regards to the topic at hand, relationship or business relationship can be viewed or described as being distinct from, but related to, concepts such as Enterprise relationship management, consumer behavior and customer relationship management
Customer relationship management seeks to provide a complete and holistic model of business relationships and business relationship value over time, in order to make the various aspects of business relationships both explicit and measurable (Parvatiyar et al 2000).
A mature CRM model will ultimately support both:
- Strategic business research and development efforts,
- Tools and techniques that implement CRM principles.
As a result of the effectiveness and intensity of the concept of CRM, customers would benefit from it through experiencing enhanced product delivery and organizations themselves would gain from it through increase in customer database, increase in performance and profitability.
1.1 STATEMENT OF THE PROBLEM
Since the main goal of an organization is to satisfy the needs of customers which will lead to increased profit. This indicates that without the existence of customers business activities will be futile. Business owners often concentrate on the improvement of their products, this is one of the basic features of the production concept. Often they ignore their customer care and relationship; as a result, many of their customers move their purchasing interests to organizations who can serve them better. The problem here is that they fail to understand that customers’ value, care and concern is far above the product quality. So organizations tend to try their best as much as possible to retain their customers and even attract more.
Organizations at times are faced with the problems of
– Effectively targeting customers
– Developing strategy to achieve target behaviors.
– Behavior maintenance.
– Segmentation of customers based on customer profile and customer life-cycle stage.
Various methods and strategies have been employed by organizations in order to make sure that they will achieve the above stated. But their efforts seem futile.
It is on this premise that this study wants to examine the impact or effect of customer relationship management on organizational performance.
1.2 RESEARCH QUESTIONS
- To what extent does customer relationship management enhance a high level of patronage in the organization?
- How does a good customer service affects the level of productivity in an organization.
- What class of customer or classes of customer should enjoy the benefits of managing a customer relationship?
- What strategies should organizations take in seeking to achieve a successful and effective customer relationship?
- Should customer relationship management be included in telecommunication industry?
1.3 OBJECTIVES OF THE STUDY
GENERAL: The objective of this study is to find out if there is any link or relationship between customer relationship management and patronage.
SPECIFIC: The specific objectives this study is aimed at are stated as below:
- To find out what propels customer patronage;
- To bring out the distinction between customer relationship and organizational performance;
- To show that customer relationship management is a tool for acquiring high organizational performance.
- To determine the role customer service relation plays in every organization
1.4HYPOTHESIS OF THE STUDY
Below is the hypothesis that will guide the researcher in making assumptions and analysis.
Hypothesis 1
H0: Customer relationship management has no significant effect on organizational performance.
H1: Customer relationship management has a significant effect on organizational performance.
Hypothesis 2
H0: Good customer relations/service does not have positive impact on organizational performance.
H1: Good customer relations/servicehave positive impact on organizational performance.
1.5 SCOPE OF THE STUDY
This research work focuses on ! Customer Relationship Management And Patronage In Service Industry (A Study Of Hotel) .A good CRM system is very vital and of utmost importance in every business organizations, but for the purpose of this research, the concern of the researcher is been geared towards the Impact of Customer Relationship Management in the telecommunications sector of the economy.
1.6 JUSTIFICATION OF THE STUDY
This research study will be useful for consumers, producers, managers and government. This work is carried out because recent research findings show that customers still complain of ill-treatment by company attendants and those entangled in service deliveries. This means that in some organizations, the customer is not yet the king as the saying goes that “the customer is always the King”.This study intends to show the effect of customer relationship management on organizational performance so that the aims and objective of the organizations can be achieved with minimum error.
1.7 LIMITATIONS OF STUDY
In carrying out this research there are possible constraints which may occur which pose little hindrance to the effective and successful completion of the project work by the researcher. Such constraints are highlighted as follows; financial constraint i.e, there is limited finance available in harnessing research materials such as foreign journals, publications, e.t.c. because the cost of getting research journals were quite enormous to be used in the research work. Also, the stress of getting respondents to fill questionnaires being administered to them right on time were some of the challenges being encountered by the researcher.
1.8 DEFINITION OF UNFAMILIAR TERMS
- ORGANIZATIONAL PERFORMANCE
Organizational performance comprises the actual output or results of an organization as measured against its intended outputs (or goals and objectives).
Specialists in many fields are concerned with organizational performance including strategic planners, operations, finance, legal, and organizational development.
- CUSTOMER LOYALTY
This is defined as the degree to which customers are predisposed to stay with the product or service and resist competitive offers. Having a loyal customer base translates into lower costs, higher margins and greater profits.
- CUSTOMER PROFILING
This is the analysis and classification of customers based on personal information such as shopping habits or behavioral patterns e.t.c. The principle behind customer profiling is to gain customer loyalty at minimal cost by designing marketing plans that appeal to a larger percentage of target customers and initiate them into taking desirable action.
- CUSTOMER CENTRICITY
This can be said to be a set of disciplines and practices that allows companies to treat different customers differently, thereby gaining strategic advantage leading to expansion of revenues and increase in profitability.
- CUSTOMER STRATEGY
Customer strategy involves examining the existing and potential customer base and identifying which forms of segmentation are most appropriate.
- CUSTOMER SEGMENTATION
This refers to the process of dividing customers into mutually exclusive groups, presumably because customers within each group are more similar to each other than to others.
- CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
CRM is a strategic approach that is concerned with creating improved shareholder value through the development of appropriate relationships with key customers and customer segments.
- ELECTRONIC CUSTOMER RELATIONSHIP MANAGEMENT (ECRM)
Electronic customer relationship management (E-CRM) is a comprehensive business and marketing strategy that integrates people, process, technology and all business activities for attracting and retaining customers over the internet and mobile phone to reduce costs and increase profitability by consolidation the principles of customer loyalty. Therefore, the results of electronic customer relationship management performance are repeat purchase, word of mouth, retention, cross buying, brand loyalty and customer satisfaction.
- CUSTOMER SATISFACTION
This refers to the benefits derived by a customer after using a particular products or services over a certain period of time.
CUSTOMER RELATIONSHIP MANAGEMENT AND PATRONAGE IN SERVICE INDUSTRY A STUDY OF HOTELS IN NIGERIA
