CUSTOMERS EXPERIENCE MANAGEMENT AND LOYALTY IN THE BANKING INDUSTRY

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

In the business environment today, loyal customers are considered to be the pivot behind the success of many service businesses especially the banking sector of Nigeria; this goes to other organization under the service sector like the insurance, hospitality industry etc.

The assumption is that with customer satisfaction; loyalty, retention and profitability will automatically follow. The current thinking is that the relationship between satisfaction and loyalty is more complex than was originally proposed, however. As commoditization of many service offerings continues, new sources of competitive differentiation/advantage will come from focusing on the management of customer experiences. Because loyalty is so very important to the survival and profitable growth of a company, measuring it becomes all the more important. Existing approaches to the measurement of loyalty have not proved to be very effective in this   task.

For any organization, loyalty is considered as the key of success and which ultimately becomes the reason for the survival of that organization (Pullman. and Gross, 2003;Rahman, 2006). And a minor change in the number of loyal customers affects the growth and the over-all profitability of the organization ( Heskett et al., 2000;Rahman, 2006)

The ultimate outcome of creating the loyalty is something that is to develop the brand, advocates that brand and repeat patronage for the brand. It has been generally identified that customer achieves low level of satisfaction in this sector. Hence the quality of service and customer satisfaction can become frontier to attain the competitive advantage in the banking sector (Rayport et al. (2004); Jones and Farquhar (2003); Knights et al. (2004);Rahman (2006)

Realizing customers as experience creators, organizations should find out various ways to enhance customer experience. Knowing about customer experiences, whether favourable or otherwise, could help the firms in achieving customer satisfaction, and with satisfaction come loyalty, retention and profitability (Rahman, 2006). The customer as an experience creator could also assist the firm in developing and customising its offerings; tailored according to the nature of the customer.

Satisfied and loyal customers tend to spend more money and purchase repeatedly, are less price sensitive, have higher intention to refer others, and are more economical to maintain (Duncan and Moriaty, 2008;Reichheld and Sasser, 2000;Yin, 2009).

Hence, loyal customers are vital to the survival and success of many service industries, especially in the hospitality, insurance, and financial sectors (Rahman, 2005). A slight change in the percentage of loyal customers is said to bring about a huge change in profits and also the overall value of the company (Rahman, 2005).

Hence, loyal customers are vital to the survival and success of many service industries, especially in the hospitality, insurance, and financial sectors (Rahman, 2005). A slight change in the percentage of loyal customers is said to bring about a huge change in profits and also the overall value of the company (Rahman, 2005). Marketers are hence eager to understand the key to building strong, long-lasting customer relationships.