CHAPTER ONE

INTRODUCTION

1. BACKGROUND OF STUDY

The term customer experience is first conceptualized in marketing literature by Holbrook and Hirschman (1982) and became popularized in marketing literature by Pine II and Gilmore (1998) and Carbone and Haeckel (1994). But since then limited contribution from scholars on customer experience were made by scholars (Schmitt 1999, 2003) as it was being considered as an integral part of satisfaction. The concept started gaining increasing interest among academicians and practitioners, especially because of shift from service- based economy to experience- based economy (Kim et al. 2008; Verhoef et al. 2009; Pine II and Gilmore 1999). The customer experience as an emerging area of competitive advantage is clearly documented in the literature now (Johnston and Kong 2011; Pine II and Gilmore 1998). Pine II and Gilmore (1998, 1999) stated that ‘experience is marketing’ and experience stage represents the ‘greatest value and competitive differentiation’. To add, Walter and Ostrom (2010) remarked that to be competitive, service companies need to understand the uniqueness of their customers and what contribute to their value. Lanning (1998) further added that the experience lies at the very core of the value propositions, and value in experience is derived from the intensity of the experience and feelings of enchantment associated with it (Poulsson and Kale 2004). Seeing the significant role of customer experience, a number of organisations are centered now on the holistic design and delivery of total customer experience which consequently creates superior customer value (Haeckel et al. 2003). Even Kim et al. (2008) remarked in this context that it is important for companies to make memorable experiences and create the stage for greater economic value rather than simply making goods and delivering services. In addition to value proposition, scholars such as Haeckel et al. (2003) also remarked that competitive advantage cannot be achieved by looking at the traditional elements of price, quality and service but by focusing on customer experience (Johnston and Kong 2011; Pine II and Gilmore 1998). Very recently, Sirapracha and Tocquer (2012) in their writing stated that in order to differentiate the brands in the service dominated economy; service firms should deliver a compelling customer experience which is the key driver to customer loyalty. However, despite the vital significance of the customer experience, scholars like Johnston and Kong (2011); Verhoef et al. (2009); Frow and Payne (2007) have mentioned thin research on customer experience and that too, is integrated with service quality, satisfaction and loyalty in the literature. Even earlier, experts namely, Pine II and Gilmore (1999) contemplated that customer experience concept has gone largely unmeasured and there is a need for grounding the concept in terms of its distinct economic offering. Hence, there is a need to understand the progression of economic value, that is, how customising a good turns it into a service, customising a service turns into an experience and customising and experience turns into value and satisfaction. Verhoef et al. (2009) have published a detailed future research agenda on customer experience creation with focus on its determinants, dynamics and management strategies. They also remarked that customer experience has not been treated as a separate construct and hence needs to be explored for the theoretical underpinning. The authors’ further advised that it is imperative for researchers and practitioners to understand the dimensions of the customer experience as a construct vis-a`- vis their measurement and validation in different contexts. Frow and Payne (2007) in this context reflected on the need to undertake the relationship between co-creation of value and customer experience. They put forth that there is a need for appropriate measurement tool that can help to manage the delivery of the customer experience. Very recently Helkkula (2010) undertook a systematic review and analysis of how the concept of service experience has been characterised in the service marketing literature. Helkkula further remarked that the challenge for future studies is to develop a typology of the concept of service experience that is more multi-dimensional and can link the concept more closely with other important concepts in service marketing and management. The environment today is characterized by hyper competitive that affect every life aspect. In the era of Knowledge Economy, globalization and development of information and telecommunication technologies imposed on organizations to focus on customers who have become more aware of his needs, desires, preferences, and priorities (Ngambi & Ndifor, 2015).

Customer relationships are important for the organizations’ competitive advantage sustainability, and it has increasingly studied in marketing field. Depending on new technologies, business corporations use different tools and techniques to interact with prospector customers and clients in order to attract, satisfy, and retain them. Furthermore, employees should be more knowledgeable, courteous, customer-focused, and service-oriented (Mohsan et al., 2011, Long et al., 2013). Customer role has been increased over the prouder and/or the buyer roles and the single product is no longer the only choice of customer, this push top management to place more attention on customer as they are the cornerstone of all its marketing activities (Dominici & Guzzo, 2010). Consequently, strengthening the relationship with customers is mandatory; therefore, Customer Relationship Management (CRM) emerged as strategic tool for coping with competitiveness. The customer-life-cycle (starting from attracting, through developing and strengthening, and finally retention customers) needs to be fully and deeply understood and go further beyond their expectations especially their needs and desires to develop products, addition to be considered as cash cow in order to spend on entering new markets (Tekin, 2013). The pipeline of CRM is not only knowledge which is essential for gathering information about customers from different focal points but also the interaction between customers and organization that make top management developing marketing strategies to satisfy the wide-range of customers and bring their loyalty to both product and the organization. These by itself has no real value unless the organization has the necessary technological tools such as internet, effective call center, and customer database and information (Coltman, Devinney, & Midgley, 2010; Simonet, Kamdem, & Nguelefack, 2012). Several studies have identified the necessity of sustaining a strong relationship with customers. However, banking industry of Jordan adopts customer-centric strategies in order to fully maintain and enhance this relationship with existing customers for the survival of banks (Roy and Shekhar, 2010).

1. STATEMENT OF THE PROBLEM

Today, organizations have recognized the importance of customers in their lives so that they build and develop strong interactive relationships with customers. These relationships might alter organizational short-term and long-term strategies. Organisations must know its’ customers desires and expectations from one side and investigate environment especially the task and industry environment from another side to come up with not only new and innovative quality services delivered to its’ customers but also attract potential customers. Incredibly, technological developments, globalization, and competitiveness have increasingly tremendous effects on business marketing strategies in order to be more effectively to meet those challenges facing organizations, including banking sector. The more of tracing customers’ behavior evolution, the narrower the knowledge gap between the organization and its’ customers.

As an inevitable result, organizations realized that achieving high value-added and high-quality services does not only base on the product itself, its diversity and its properties, but also on the end-user of that product(s). It is necessary to focus on the most important element which is the customer and to understand their needs, desires, and perceptions through customer relationship management. This is basically based largely on the knowledge and how to integrate them into the philosophy of customer relationship management. Consequently, businesses face a huge challenge to attract new customers while working on retaining its current customers. Therefore, customers knowledge systems (or customer relationship management systems) is no longer effectively used and thus is highly recommended which allows the collection of data and information about current customers and potential customers, and it is easy to access and surfing by employees as well as top management to solve their problems quickly and enable organizational opportunities for growth and increasing revenue.

Generally, the major challenge facing organizations nowadays is that customers are becoming more aware of their needs, desires, and preferences than ever and it is not easy to satisfy them because they are more severe in their demands with too many choices that would satisfy them. Furthermore, the customer relationship management aim is to increase organization’s market share through integrating technology, procedures, and people (Shaon and Rahman, 2015). Banking sector in Nigeria has realized that the backbone of its activities and businesses is customers who have the power to affect its operations; therefore, they are in face-to-face with their customers in order to retain them.

1. AIMS AND OBJECTIVES

The main aim and objective of this research is to examine the effect of customer experience on customer relations in banks. Other objectives of this study include:

1. to determine the relationship between customer experience and customer relations in banks.
2. to examine customer relations and its effect on the banking industry.
3. to identify the challenges of customer relations in banks.
4. to proffer solutions to customer relations in banks.
   1. RESEARCH QUESTION

1. What is the relationship between customer experience and customer relations in banks?
2. What is the effect of customer relations on the banking industry?
3. What are the challenges of customer relations in banks?
4. What are the solutions to customer relations in banks?
   1. STATEMENT OF RESEARCH HYPOTHESIS

1. H0: customer experience has no significant effect on customer relations in banks.

2. H1: customer experience has a significant effect on customer relations in banks.

1. SIGNIFICANCE OF STUDY

The study will be of great importance to financial institutions in understanding customer experience and how it effect on their customer relations.

The study will also help the banking staffs on how well to manage their customers by having a better understanding of why their customers act the way they do as such tolerate them to keep a mutual relationship with them.

Furthermore, the study will enlighten bank management the effect customer experience has on customer relations and seek solutions to it. Lastly the study will contribute to the body of existing literature on the effect of customer experience on customer relations in banks

1. SCOPE OF STUDY

The study will cover the effect of customer experience on customer relations in banks.

1. LIMITATION OF STUDY

1. Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

2. Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1. DEFINITION OF STUDY

Effect: a change which is a result or consequence of an action or other cause.

Customer: a person who buys goods or services from a shop or business.

Experience: practical contact with and observation of facts or events.

Relations: the way in which two or more people or things are connected, or the state of being connected.

Bank:  A bank is a financial institution where customers can save or borrow money. Banks also invest money to build up their reserve of money.