CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Companies are increasingly focused on managing customer relationships because it explicitly recognizes the long-run value of potential and current customers, and seeks to increase revenues, profits, and shareholder value through targeted marketing activities directed toward developing, maintaining, and enhancing successful company-customer relationships (Berry, 1983; Morgan and Hunt, 1994; Gronroos, 1990). The activities involved in customer relationship building require an in-depth understanding of the underlying sources of value the firm both derives from customers and delivers to them.
While retaining customer loyalty has been a sales and marketing principle for quiet a long time, Customer Relationship is actually a tremendous step forward in creating a system thatcan provide a means for retaining individual loyalty in a world of about 6 billion population (Croteau & Li, 2001). Greenberg (2001) stated that in order to understand how to build a sustainable customer relationship, you mustalso understand the changing nature of the customer because customers are not what they used to be. Khalifa and Liu (2001) noted that, a survey of more than 1,600 businesses and IT professionalsconducted by the Data Warehouse Institute, found that, some of the respondents have various methods of managing customer relationship. This findingindicates that customer management is very important for organizations. The Cap Gemini further added that, the average total investment in customer managementby 300 U.S and European companies was$3.1 million. More than 69% of the companies surveyed spent less than $ 5 million and more than 13%of the companies spent over $10 million (Sterne, 2000). This finding also indicatesthat a great number of companies spend great amountof their budget on customer management and therefore in the researcher’s opinion,it is believedthat it isimportant for various business organization toknow the objectives of their customer management initiatives and the type of benefits these organizations intend to derive from them. A survey of 300 companies conducted at a customer management conference concluded that customer management is not a cheap,easy, or fast solution. Mooney (2000) further added that, morethan two-thirds of customer management projects end up in failure.
However, he went further tosay that, the successful third could obtain up to 75%return on investment.
Thompson (2004) found four broad factors that were driving 72% of the return on investment (ROI) of customer relationship. They were: Customer-centric strategy, frontline training and support, organization change, and appropriate use of metrics. These findings again support the fact that the actual objectives of customer relationshipinitiatives and the benefitsshould be ascertained. This further support the statement by Balaji and Alexander (2003) that the purpose of customer relationship is to identify, acquire, serve and retain profitable customers by interacting with them in an integrated wayacross a range of communication channels. Swift (2001) also describes analytical electronic customer management as a four-step interactive process consisting of collecting and integrating online customer data, analyzing this data, building interactions with customers based on this data are optimized, and measuring the effectivenessof these interactions in terms of these performance. According to Thompson (2004) customer relationshipis a business strategy to acquire, grow and retain profitable customer relationships, with the goal of creating a profitable organization.
1.2 STATEMENT OF THE PROBLEM
Evaluations of customer relationship and business behavior often qualify these initiatives as both the greatest force and the greatest weakness of companies. Skeptic people usually say that customer relationships initiatives of companies has no real meaning; moreover, it is a marketing trick. Optimistic people trust in improvement of companies’ behaviour in relation to good customer relationships and environment requirements. Consumers are increasingly ready to buy products of companies, which adopt better customer relationships program, and to work for these companies. However, the researcher is providing an overview on ways to build sustainable customer relationship in an organization.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1.4 RESEARCH QUESTIONS
1.5 STATEMENT OF RESEARCH HYPOTHESIS
H0:good customer relationship does not have any effect on the organizational performance
H1:good customer relationship has significant effect on the organizational performance
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study on building a sustainable customer relationship in an organization will cover the methods adopted by different business organizations in Nigeria. The study will also cover the effect of sustainable customer relationships on the performance of the organization.
LIMITATION OF STUDY