integrating all these elements along with relationship marketing is paramount. . A broad description of relationship was proposed by Gronroos (). 29 as ( Industrial Marketing and Purchasing) school, UK perspective Payne (). Volume 13, - Issue 5 Marketing from a relational perspective, or relationship marketing, Therefore, the concepts of relational and transactional intent and Relationships and impacts of service quality, perceived value, customer satisfaction, and image: an empirical study Christian Grönroos. Grönroos stated that relationship marketing . and the Journal of Marketing Management (). Mattsson, ; Möller and Halinen, ; Morgan.
We summarize all proposed hypotheses as seen in Table 1. Summary of Hypotheses Therefore, we model the hypotheses testing in the following research framework: Specifically, it tests customer satisfaction and customer trust as the intervening variables in the linkage of relationship marketing and customer loyalty.
The results will provide valuable and recent information on the relationship marketing tactics that marketers can use to form the bank image. Methodology and Research Model To study the linkage between relationship marketing and customer loyalty, we used bank customers as the sample, which has certain characteristics, such as his or her minimum age is 17 years old, have been the customer at least for one year, and have made more than six times banking transactions within the last six months.
We argued that respondents with those characteristics could evaluate the marketing tactics developed by the banks. We employed personal interviews using questionnaires as a measurement tool to collect the data, and which were conducted during the period January to May To support the primary data, we also explored the documented data on the customer surveys done by the banks.
In this study, to measure marketing relational tactics, we adapt the work of Yen, Liu, and Chaowhich has three dimensions, i. These dimensions are measured in eight indicators.
Meanwhile, to measure customer loyalty, we adopt the work of Zeithaml and Bitnerwhich has four dimensions, i. These dimensions are quantified in 10 indicators.
We implemented the work of Morgan and Hunt to gauge customer trust, which used two dimensions, i. Both dimensions are operationalized in six indicators. All indicators are measured. It means that items used to measure relational marketing tactics are valid. Therefore, it can be said that all constructs used in this study are valid and reliable.
The measurement model indices reveal that the proposed model is fit and parsimony Table 2. The results can be viewed in Figure 2. This finding is contrary to the work of Guenzi and Pelloni and Ndubisi, Chan, and Gibson in which relational marketing tactics and interpersonal relationship affect directly customer loyalty.
We argue that the samples, who are prime affluent customers in majority, are not influenced by relational marketing tactics due to the fact that their chief objective in saving the money in the bank is for investment diversification purpose. The main concern is to get high return, not additional or privileged services. It supports prior studies of De WulfYen et al. At the same time, these tactics also affect significantly customer trust.
This finding is in line with the work of Morgan and Huntwhich reports that it is important to get customer trust. According to Morgan and Hunttrust is the willingness to rely on an exchange partner in whom one has confidence.
Therefore, a bank in which a client has confidence definitely stands ahead of competition. The satisfied customers are positively becoming loyal customers. The same thing will happen for the companies have successfully gotten trust from their customers.
As demonstrated in prior findings, for bank customers, having a relationship of trust with their financial institution is more important than getting the best value for money Coulter and Coulter, In other words, trustworthiness is the key of any kind of businesses.
It may seem obvious, but since the study shows that customer satisfaction and trust are the key drivers of customer loyalty, subsequently the key message for the banks is to get their service right, meet the very essential customer need, use active listening then act upon it, manage the corporate brand reputation effectively, and use social networks better. By meeting these basic requirements optimally, the company could expect their customer satisfaction and trust that lead to customer loyalty.
This study also provides significant evidence on the role of customer satisfaction and trust as the intervening variables. These not-direct effects are greater than the direct one, i. In the context of retail bank industry, affluent prime customers are not easily influenced by the marketing tactics. Their special position wealthy customer segment requires specific treatments due to the fact that normal relational marketing tactics could not influence their loyalty directly.
It is not easy for retail banks to carve out an equivalent high-end service offering for wealthy account holders as given by private banks and asset-management firms that cater for the affluent high-net-worth clients. However, for retail banks, continuous and effective tactics could generate loyalty through customer satisfaction and trust.
This study proves that to build successful long-term partnerships, customers look for a bank that is more than a normal bank, a partner who is also interested in their general well-being than purely in what can be sold to them. Loyal customers stay longer with banks that treat them well.
The facts show that today customers have become more knowledgeable, sophisticated and assertive, with an increasing demand for tailor-made and innovative products and services. They are no longer interested in buying off-the-shelf solutions, but demand remedies that fit their business models and plans. Therefore, to ensure they are steadily ready, it is crucial for banks to have strong relationships with their evolving customers.
It is because investing in loyalty can generate more attractive returns than rolling out an ambitious new marketing plan or building additional branches. It implies that to create a loyalty system, the banks should impose a set of attitudes and behaviors deeply embedded in the metabolism of the organization. This system needs to engage employees by instilling loyalty disciplines. To run the relational marketing tactics, it needs qualified employees. Bain suggests four things.
First, the banks should develop training programs to introduce and reinforce customer loyalty. It is important that employees understand what service skills they need to bring to the job to earn a top score of Second, managers and supervisors need to provide ongoing, real-time feedback and coaching on their customer-service skills. Third, employee engagement should be built in a work environment grounded in openness and trust. Finally, employees need to be inspired to continue to lift their performance.
Positive customer feedback and testimonials from satisfied customers provide countless stories to celebrate and share throughout the organization. Conclusion This paper examines the relationship of relational marketing tactics and customer loyalty in retail banks. By using customer satisfaction and customer trust as the intervening variables, this study confirms that customer-relationship-centered marketing tactics influence directly customer loyalty.
The combined-indirectly effects of relational marketing tactics on customer loyalty through customer satisfaction and trust are greater than the straight one. We argue that the sample characteristic, i. This study reaffirms the importance of customer loyalty. In banking industry, customer loyalty not only makes a plat form where the customer is ready to stay maximum time with the organization and causes long-term benefit, but also provides a name of inspiration with the company products or services.
It is important to banks to optimize the technology usage, both in the way that banks analyze customer data internally and the way they communicate information to their customers. When analyzing client activity, banks could use the technology to predict the trends rather than simple shifts in volumes.
By applying smart systems, which automatically generate market news on customer financial performance and new ventures, banks could generate possible avenues for new banking solutions.
Therefore, banks should create and use customer reporting as a result of a focus on relationship marketing. We believe that for most retail banks, the best competitive way forward should be organic growth rooted in strong customer relationships and the economic rewards they deliver.
Through employee motivation RM can be successfully implemented to influence customer loyalty positively. Thus, employee motivation is expected to positively influence customer loyalty. CRM applications take full advantage of technology innovations with their ability to collect and analyze data on customer patterns, interpret customer behaviour, develop predictive models, respond with timely and effective customized communications, and deliver product and service value to individual customers.
Therefore, IT infrastructure is expected to have positive effect on customer loyalty. In their view, customers will continue to be loyal to a particular firm if they feel and realise that better value is being offered. Kotler asserts that the most important consideration to attain high customer loyalty is for firms to deliver high customer value. He further states that it has been the practice by firms to devote much attention and effort to attracting new customers rather than maintaining existing ones, adding that traditionally, firms emphasise more on making sales rather than building relationships.
Customer loyalty is seen as one of the major drivers of success. This is acknowledged by Pullman and Gross who argue that loyal customers are the key to success for many service organizations. Bowen and Shoemaker indicate that a small increase in loyal customers can result in a considerable increase in profitability.
Loyal customers provide strong word-of-mouth, create business referrals, provide references, and serve on advisory boards Raman, Methodology This study used cross-sectional data collected from Relationship officers and Managers of 15 Banks with universal banking license in Ghana in This study adopted the survey strategy because it is cross-sectional in nature and cross-sectional studies usually employ the survey strategy Robson, The choice for this research design became necessary because it has been found to be suitable for analyzing issues by considering a cross-section of the population at one point in time Robson, Based on a five-point Likert scale ranging from 1 for 'strongly disagree' to 5 for 'strongly agree', one set of questionnaire was developed for relationship officers and relationship managers of the selected banks in the Greater Accra region in The questions sought to establish the extent of RM practices and customer loyalty, and also to identify the factors that may impact on bank expectations, experiences and perceptions of the quality of relationships built and developed by Ghanaian banks.
Fifteen 15 out of the twenty-six 26 banks approached for participation agreed to participate in the study. Purposive sampling technique was used to select the respondents for the study since the study only targeted relationship staff of the respective banks. The population consist of relationship officers and managers of universal banks in Ghana.
A total of questionnaires were returned, giving a response rate of Data was collected through the use of fully structured questionnaires. The questionnaire consisted of both open-ended and close-ended questions. The close-ended questions were developed on a five-point Likert scale ranging from 5 strongly agree to 1 strongly disagreewhich sought to elicit information on RM practices, key mediating variables and customer loyalty.
The open-ended questions elicited background information of respondents. Descriptive statistics and multiple regression analysis were used to report results of findings. The Multiple regression analysis was made using the RM practices and mediating variables as the independent predictor variables and customer loyalty as the dependent outcome variable.
This is commonly used as a measure of the internal consistency or reliability of a psychometric test score for a sample of examinees. As a general rule, a coefficient greater than or equal to 0. The lower limit of acceptability was 0. Quantitative analysis was also done to test the relationship between customer loyalty and customer relationship marketing constructs as well as mediating variables. The model is stated as follows: The least standard deviation of 0.
This means the respondents irrespective of the bank have the most related views as far as Social and Financial Bonds as a component of their RM practices are concerned. The highest standard deviation of 0. This means the respondents have more diverse views with regards to the issue of commitment perhaps, commitment depends on the type of bank.
These responses were found to be very reliable with Cronbach Alpha value of at least 0. Comparatively, the banks pay the biggest attention to trust in their RM practice. This is followed by conflict handling, communication, commitment, competence and social and financial bonds respectively.
A mean of approximately 3 was obtained for employee motivation. This means the respondents irrespective the bank have the most similar views as far as Employee motivation as a component of the mediating variables is concerned. This means the respondents have more diverse views with regards to the issue of I.
Comparatively, the mediating variable the banks are most concerned about is Top Management Commitment. This is followed by I. An R-Square of 0. Error Beta Constant 1. Table 4 shows evidence of mediation using the mediator tests of Sobel, Aroian and Goodman with their respective Z-values and associated p-values. The results indicate strong evidence of mediation for top management commitment and employee motivation with p-values of 0.
In the case of IT infrastructure, the result indicates weak evidence of mediation with the resultant p-value of about 0. In an era of mounting competition, the need to maintain mutually beneficial lasting relationship with valued clients cannot be underestimated. In the light of this, the study provides managerial implications for bank managers as well as relationship marketers. The theoretical implication of this research is that the study provides empirical evidence within the Ghanaian context that the six practices of RM namely: This is evidenced by the fact that It, therefore, builds on earlier 57 European Journal of Business and Management www.
The findings showed that, if a bank wants to achieve a high rate of customer loyalty, then RM has to be considered as a strategy.
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In other words, banks must make continuous efforts to effectively manage their relationships with their customers because the manner in which they build and maintain these relationships will affect their loyalty. Specifically, banks must take the necessary steps to improve upon their competence since competence has been found in this study to be a chief driver of customer loyalty. This confirms prior studies of Parasuraman et al.
In improving competence levels, managers should take the necessary steps to deploy knowledgeable staff and equip them with the requisite skills in relationship management to enable them provide stellar services whilst being passionate about service quality. Therefore, intensive technical training programmes are required to deliver services that are satisfactory and delightful. Continuous training and investment in customer service are needed to ensure consistency in quality service delivery.
Employees in turn must display a strong and enduring desire to provide first class service to the customers to win their confidence. These factors in combination drive customer loyalty and increased customer retention. Trust, as revealed by the findings, showed a rather negative relationship with customer loyalty but the relationship is insignificant.
This means that respondents do not consider trust as a primary factor in determining customer loyalty. A possible explanation to this is that banks in Ghana are, generally, trustworthy perhaps due the sound regulatory framework in the country that ensures that banks adopt sound banking practices in conformity to regulatory standards; hence customers have no reasons to worry about trust. Therefore, while banks seeking to enhance customer loyalty should not focus too much on trust as a primary determinant of customer loyalty in Ghanaian banking industry, they should nonetheless pay heed to issues of trust since a breach of trust can lead to lack of confidence in the bank.
Managers must, therefore, put in place measures that will lead to trusting relationships. Managers must thus, make efforts to keep promises made to customers, keep customers information confidential and provide quality service that will win the confidence of their customers.
Commitment proved to be a strong determinant of customer loyalty. This confirms earlier findings by Ndubisi and WahNdubisi et al. The practical implication to managers is that, managers must show keen enthusiasm and commitment in making frequent changes to meet the ever-changing customer needs and requirements. Furthermore, if banks want to increase customer loyalty, they must encourage the building of strong relational ties in the form of social bonds between their employees and customers.
While this was not found to be significant in generating customer loyalty or satisfaction as in Hofstede and Nartehit would be prudent not to disregard the value of social bonds altogether since Ghana is a collectivist society, while not emphasising it as a key factor contributing to customer loyalty. Not only must banks show concern for customer needs, they must take steps to also involve customers in their social functions and treat them as real friends and partners, not just customers.BUILDING SUSTAINABLE RELATIONSHIPS THAT BRING BRANDS AND PEOPLE CLOSER - Mark Morin - TEDxLaval
If possible, banks should go the extra mile to participate in family events of their customers. In a collectivist society such as Ghana, a high premium is place on such social events such as funerals. Also, with respect to financial bonds, banks must offer more discounts to customers and design special financial packages for their customers to help bolster customer loyalty.
It is imperative to understand that while the RM practices are crucially important for the success of any RM programme or strategy, concentrating on the RM practices without the critical complementary role of the key mediating variables could potentially undermine success.
Two mediating variables top management commitment, employee motivation showed strong evidence of mediation between RM practices and customer loyalty. As regards top management commitment, there is indication that top management commitment effectively mediated the relationship between RM and customer loyalty.
Hence, when top management is keenly involved in relationship building efforts with banks having senior managers to oversee and champion the entire process; ensuring effective supervision; shaping values and re-engineering customer-centric focus; these issues together will enhance the potential of RM to achieving increased customer loyalty.
Underlying top management commitment is the growing realization that relationship management and service quality issues offer a sustainable competitive advantage. It is worthy of note that IT infrastructure did not effectively mediate the relationship between RM practices and customer loyal in this study. The likely explanation to this is that banks in Ghana do not effectively harness the full potential of IT to manage relationships so its significance did not readily come to the fore in the estimation of respondents.
It is also significant to note that the benefit of IT is diffused. Consequently, IT contributes directly and indirectly to the output of nearly all the variables of RM practices and the other mediating variable top management commitment and employee motivation since they depend largely on IT to function effectively. It stands to reason, therefore, that the pervasive influence of IT as an enabler makes it an indispensable force in any RM strategy notwithstanding the fact that it did not effectively mediate the relationship.
Managerial Implications This study focused mainly on RM practices and customer loyalty and proceeds to establish the effect of mediating variables between RM practices and customer loyalty in the banking industry. The empirical results of this study clearly underscore the following. The finding implies that if a bank wants to achieve a high rate of customer loyalty, then RM has to be considered as a strategy.
An investment in RM skills is likely to provide the bank with a reasonable return Narteh, Specifically, banks must take the necessary steps to improve upon their competence through technical training programmes.
Continuous training and investment in customer service as well as technical training are needed to ensure consistency in quality service delivery. Employees in turn must display a desire to provide first class service to customers to win their confidence.
These factors in combination lead to customer loyalty.
Banks must also design effective service recovery scheme that will promptly respond to occasional service failures and empower frontline staff to be able to handle customer complaints on the spot without undue delays.
Banks must also communicate frequently with their customers using integrated communications approach which harnesses and harmonises the potential of the multiple communications platforms at their disposal to derive synergistic value from its total communications efforts.
A combination of direct marketing tools such as telephone, emails, and direct mail, as well as mass media platforms will help maximise the overall communication experience of the customer and thereby contribute to customer loyalty since communication came out as a significant driver of customer loyalty.
Limitations and Future Research This study is limited to the extent that it interviewed only 15 banks out of the twenty-six banks within the Greater Accra region of Ghana. The study recommends that future research should include more banks so that the findings could be more generally applicable to the entire banking industry. The study also excluded the rural banks and banks performing regulatory functions such as ARP Apex bank and the Bank of Ghana.
The study again was only limited to the banking industry which is only an aspect of the financial services industry.
Future research on the topic could go beyond the banking industry and look at the financial services industry as a whole. Customer attachment to retail banks. International Journal of Bank Marketing, 23 4 The use of pledges to build and sustain commitment in distribution channels.
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