An international comparative study on the relationship marketing and customer retention of retail banks : lessons for South Africa

Despite the extensive research undertaken in the subject area of services marketing, much is still unknown to service providers of specific services in terms of firm-client relationships and how customer retention rates can be increased. This study attempts to address this limitation. The study revolves around the relationship marketing and customer retention of banks in South Africa, Canada and the United Kingdom (UK). Service firms, including banks, are vitally important to the economy of any country as they contribute to its Gross Domestic Product (GDP) (for example a 74 percent contribution in South Africa) and its employment rate. However, to survive in a complex, competitive business environment, service firms are required to focus on their clients’ needs. Banks can focus on their relationships with clients and measure their institutions’ success by considering their customer retention rates. When considering firm-client relationships and customer retention rates, it is important to gather and link the viewpoints of both clients and managers in order to ensure that firms perform according to clients’ needs. In order to establish the influence of selected variables on the relationship marketing and customer retention of banks, from the perspectives of both banking clients and managers, an empirical investigation was conducted. The primary aim of this study was to quantify significant relationships among selected variables; therefore the positivistic research paradigm was used. In addition, in designing the measuring instruments for the empirical investigation, the phenomenological paradigm was used. Thus, in order to use multiple sources of data, the strategy of methodological triangulation was adopted for this study. The samples consisted of banking clients and bank managers in South Africa, Canada and the UK. The empirical investigation conducted among banking clients revealed that significant positive relationships exist between six of the seven identified independent variables, namely communication, personalisation, empowerment, ethics, fees and technology, and banks’ relationship marketing. These relationships imply that, according to banking clients, if each of these aspects in banks improves, bank-client relationships would improve. The empirical investigation conducted among bank managers showed that managers only regard communication and fees as influencers of relationship marketing in banks. This result clearly indicated a difference in the viewpoints of banking clients and bank managers. In addition, the empirical investigation revealed that relationship marketing positively influences the customer retention of banks. This relationship implies that if a bank successfully maintains relationships with its clients, the bank’s customer retention rates will increase. Additionally, the empirical investigation revealed that the population group, education level and country of residence of banking client respondents exerted an influence on the perceptions clients have regarding banks’ relationship marketing and customer retention levels. If banking clients are African or are not educated with a qualification beyond secondary school level or are from Canada, they consider the relationship marketing of a bank to be more important and are more likely to be retained by banks. Generally, the study indicated that Canadian banking clients are more positive regarding the empowerment strategies and personalisation efforts of Canadian banks than South Africans are about those of South African banks. In addition, banking clients in the UK are more satisfied with the communication, fees and use of technology of UK banks than South Africans are about these aspects in South African banks. The study indicated that strategies to improve banks’ communication, personalisation, empowerment, ethics, fees and technology should be implemented by banks in ways to positively influence their relationship marketing and ultimately their customer retention. Strategies relating to each of these areas, successfully implemented by banks in Canada and the UK, are recommended to South African banks. In effect, these strategies will contribute to retail banks’ success, the competiveness in the banking industry, banking client benefits as well as the economic stability and prosperity of South Africa

The influence of customer relationship management on the service quality of banks

Despite the extensive research undertaken in the subject area of services marketing, much is still unknown to service providers of specific services in terms of service delivery concepts. This study attempts to address this limitation. The study revolves around the customer relationship management and service quality of banks. Service firms, including banks, are vitally important to the economy of any country, as they contribute to its Gross Domestic Product (GDP) and employment rate. However, to survive in a complex, competitive business environment, service firms are required to focus on their clients’ needs. Specifically, banks can focus on their relationships with clients and levels of service quality. In order to establish the influence of selected variables on the customer relationship management (CRM) of banks and the influence of CRM on the service quality of banks, an empirical investigation was conducted. The aim of this study was to quantify significant relationships among selected variables; therefore the positivistic research paradigm was used. The sample consisted of banking clients in the Nelson Mandela Metropolitan area. The sample size was 290, with a response rate of 91.03%. The empirical investigation revealed that significant positive relationships exist between both the knowledgeability, and attitude, of bank employees and a bank’s CRM. These relationships imply that more extensive knowledgeability of bank employees and bank employees with more positive attitudes lead to improved, maintained relationships between a bank and its clients. In addition, the empirical investigation revealed that CRM positively influences the service quality of banks. This relationship implies that if a bank successfully maintains relationships with its clients, the bank’s level of perceived service quality would increase. Additionally, the empirical investigation has shown the relationship between a banking client’s age and the CRM of a bank. The higher the age of a banking client, the more that client considers the CRM of a bank to be important. There exists a relationship between a banking client’s education level and the perceived service quality of a bank. If a banking clients’ education level increases, the importance of their bank’s service quality decreases and, conversely, a banking client with a lower level of education regards the service quality level of a bank as more important than higher qualified clients. The study indicated that strategies to improve, specifically, the knowledgeability and attitude of bank employees can and should be implemented by banks in ways to positively influence their CRM and ultimately their service quality. In effect, this will increase client satisfaction and ensure client loyalty to the bank. Ultimately, this will contribute to the bank’s success, which will ensure economic stability and prosperity for a country

Research in financial services: professing a way forward

Outline: What do we know about financial services research? What is the current state of financial services in South Africa? Professing the way forward for financial services research

Research in financial services: professing a way forward

Outline: What do we know about financial services research? What is the current state of financial services in South Africa? Professing the way forward for financial services research

Determining consumers' intention to use unit trusts

The savings rate among South Africans is too low, and increasing the savings rate is critical for the financial wellbeing of citizens and for the country. Many South Africans do not make use of formal savings products, including unit trusts. However, there is a need to increase the use of unit trusts and thus the savings rate, and ultimately the financial wellbeing of consumers. Unit trusts are well-designed savings/investment vehicles, allowing for small investment amounts with affordable cost structures catering for consumers with different risk profiles. Therefore this study will focus on investigating consumers’ perceptions of unit trusts by identifying the factors which influence consumers’ intention to use unit trusts as an investment vehicle. A quantitative study was employed and for the empirical investigation a convenience sample of 509 respondents completed a self-administered, structured questionnaire. The data was quantitatively analysed and the main results showed that the Accessibility and Benefits of unit trusts are the most important factors influencing consumers’ Intention to use unit trusts. The strategies explained in this study may assist financial service providers in encouraging consumers to use unit trusts as an investment vehicle. This may increase the country’s savings rate and ultimately improve the financial wellbeing of South Africans

Adapting SMME business functions during economic turmoil

Purpose: The purpose of this study is to investigate how SMMEs should adapt their business functions to improve business performance during times of economic turmoil. Problem investigated: SMMEs are important contributors to the economy as these firms provide employment opportunities and create economic wealth. However, many SMMEs fail due to reasons such as the influence of economic factors (low sales and growth prospects) as well as the lack of finance, managerial skills and expertise. SMMEs could possibly increase their chances of success if they adjust aspects in their firms which the owners and managers of the SMMEs can control. Business functions are regarded as internal forces influencing a firm and SMME owners and managers can control these functions. These business functions include general and strategic management, purchasing management, production management, marketing management, financial management, human resources management, business communication management and information management. It is important to investigate how SMMEs can adapt their business functions, during difficult economic times, to improve their business performance. Methodology: A self-developed, self-administered and structured questionnaire was distributed to 300 SMMEs in the Eastern Cape and the Garden Route area. A total of 250 usable questionnaires were received, therefore a response rate of 83% was obtained. Findings and implications: The findings of this study revealed that all eight of the business functions require adjustments during difficult economic times to improve the business performance of SMMEs. Respondents regarded the financial management function as the area in SMMEs that needs the most focus and adjustments, during challenging economic times to improve business performance. Following financial management is the purchasing- and information management business functions. Originality and value of the research: This study specifically focussed on how SMMEs should adapt their business functions during economic turmoil to improve business performance. This type of study has never been conducted in South Africa. The results and recommendations contribute to SMMEs understanding of how to change their business functions to improve business performance, especially during difficult economic times. The implementation of these recommendations may lead to improved business performance and higher levels of success among SMMEs in South Africa, which will be beneficial to the economy

Improving client trust and client retention through e-banking

The evolution of the Internet has changed the way in which business is being conducted, particularly in the banking industry. Electronic banking (e-banking) is an important method of delivering banking services to clients and banks can gain a competitive advantage from the implementation of e-banking. Prior research has indicated that South African banks in particular, pay more attention to and allocate more resources to the acquisition of new clients instead of focusing on retaining clients. It is important to identify how certain ebanking aspects can assist banks in retaining their clients, as the literature investigation has revealed the many benefits that can accrue to banks for retaining clients. Therefore, this paper discusses how e-banking can be used as a mechanism for improving client trust in e-banking facilities and ultimately increasing clientretention in the banking industry. A total of 220 individuals with banks accounts from the Nelson Mandela Bay area were approached to be respondents in an empirical investigation. 186 usable questionnaires were subjected to various statistical analyses, such as exploratory factor analyses and multiple regressionanalyses to examine the relationships between e-banking aspects, client trust and client retention. The empirical findings revealed that the e-banking aspects with the most significant influence on client trust and ultimately client retention is Convenience and Fees. Finally, the paper presents recommendations regardinge-banking and client retention to bank managers

How do small business managers influence employee satisfaction and commitment?

Purpose : The purpose of this research is to scrutinise motivational factors that may influence the levels of satisfaction and commitment of small business employees. Problem investigated : An unmotivated workforce leads to dissatisfaction and low commitment levels among employees. Possible consequences of these unproductive trends include higher costs, business closures and a negative effect on a country's economy. Employee satisfaction and employee commitment are thus vital for the success of any business. It is essential for business managers to keep their employees satisfied and committed to the business. In order for business managers to motivate their employees to keep them satisfied and committed, they need to know how to motivate employees. A number of factors influence employee satisfaction and employee commitment, which include working conditions, managerial abilities, employee participation, company policies, recognition and feedback, as well as job interest and job importance. Managers should know how to apply each of these factors to ensure that employees are satisfied and committed. Methodology : A quantitative research approach was followed using a self-administered questionnaire. This measuring instrument consisted of three sections covering the biographical information of respondents, statements on motivational factors, and statements about satisfaction and commitment. A five-point Likert-type scale, ranging from strongly disagree to strongly agree, was applied. Simple random sampling was used to elicit the responses of 444 respondents from small businesses in the Nelson Mandela Metropole in South Africa. Cronbach Alpha coefficients were calculated to measure the internal consistency and reliability of the measuring instrument. Descriptive statistics, Pearson correlation coefficients and simple linear regression analyses were used to analyse the data. Findings and implications : The research revealed that significant positive relationships exist between all the motivational factors and satisfaction, as well as with commitment. The strongest positive relationships exist between the independent variable job interest and importance and both the dependent variables. The weakest relationships exist between the independent variable rewards and both the dependent variables. Levels of satisfaction and commitment should continually be developed and improved through management training about the application of motivational factors. Small businesses should implement the motivational factors discussed in this research in creative ways, in order to have a positive effect on the satisfaction and commitment levels of employees. Originality and value of the research : This research focused on what small business managers should concentrate on when motivating their employees. Small business managers should also realise that motivation cannot be separated from employee satisfaction and commitment. The value of the research is that when small business managers pay more attention to these factors as identified in this study, it may lead to better business performance in the long run. With regard to the originality of this research, previous research has focused mainly on motivational theories without reaching a conclusion or highlighting possible strategies that could be used by small businesses to motivate employees