Abstract

One of the core objectives of banks is to build its customer base by acquiring new customers and keeping existing customers loyal. The purpose of this study is to evaluate the effect of customer service on the customer loyalty of commercial bank customers in Kumba I Municipality. Three customer service variables are examined: client-worker relationships, time management and customer perceived value in order to obtain data for this study.

A total of 100 structured questionnaires were distributed based on a convenience sampling method and 100 were returned for analysis. Descriptive statistics was used to create a general overview of the data collected.

To investigate the relationship and effects of the variables in the specific objectives, Product Moment Correlation, and Regression Analysis were used as well as Cronbach Alpha reliability test used to test the reliability of instruments.

Results of the study showed that customer service measured by the constructs of perceived value, time management, and customer relationship management all have a significant statistical contribution to customer loyalty at the 0.05 level of significance.

Based on these findings, it is recommended that commercial banks should put in place customer service programs that aim at promoting better customer-worker relations, time management and perceived quality.

In addition, commercial banks should make use of Customer Relationship Management software and data analytics tools to effectively track interactions with customer and maintain a stable personal contact with the bank.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study.

Customer service is the process of offering assistance before, during and after a transaction. Today’s customers are becoming more discerning and demanding thus, the need to focus more on them. In the literature review on customer service proving that whatever be the type of organisation, improving customer service is a great tool to secure loyalty and a significant competitive advantage (Robson, 2013).

By competitive advantage here we mean, understanding customer needs is very important and should be taken into consideration when doing a market study of an organisation must be competitive. Therefore, companies and banks must leave from product centric to customer centric positions for customer loyalty to take place. It is very important to find out what causes customers to be loyal (Siadat, 2008).

Customer service started in the year 1760 during the industrial revolution with the formation of customer service teams. Alex (1976) discovered the telephone call center customer service where workers were train on good service on how to take care of customers before, during and after a transaction.

Narayandas (2005), posits that in business markets, customer service offers the company several advantages. To build customer loyalty which is a focal point would be to communicate the product benefits to the customers. He further points to the fact that business clients display their loyalty in a predictable manner.

Any organisation that has loyal customers has therefore increased customer base that is either they will make more sales consciously or unconsciously and therefore, increase economic profits. More reasons why, (Walker, 1992) initiated the celebration of the customer service week.

Customer loyalty is influenced by the type of service provided. Therefore, it is a measure of how products and services supplied by a company or banks meets or surpasses customer expectations. High levels of customer satisfaction bring several positive aspects to a company; it is believed that customer satisfaction has a positive relationship with economic profits (Anderson, Fornell, & Lehman, 1994).

Economics of e-commerce makes customer loyalty more important than ever, Loyalty is won through the delivery of consistent superior customer experience. Companies can ignite a spiral of economic advantages just by encouraging repeat purchase from profitable customers. This loyalty effect can therefore permit them to compensate their workers more generously, provide better cash flows for investors and plough back more aggressively (Reichheld & Schefter, 2000).

To have a clearer picture of the service provided, it is important to concentrate on the data about current customers (Ettore, 2001). Everyone in the bank or company is offering in one way or the other service and are thus customer facing agents (Kurtenbach, 2000), posits that those who are successful in customer service rank their customers experience as top priority. The quality of service provided determines the level of satisfaction of the customer.

Also, when comfortable with the service this will lower customer’s price sensitivity (Fornell, 1992), and contribute to the creation of customer loyalty which in turn implies stable future cash flows (Matzler, Sauerwein, Bailom, & Hinterhuber, 1996). It is however important that service industries provide quality service to customers so as to satisfy them make them loyal and retain them at the end.

There is a marked range of customer service challenges in within the African business ecosystem, mostly due to the lack of knowledge on how to offer excellent service (Chinunda, 2013). While multi-sensory experiences interwoven with artificial intelligence and tech-centric features are redefining customer experiences in the west, the picture of Africa is different as Africa is still battling with everyday challenges that stem from lack of infrastructure, poorly regulated services and corruption. These challenges shape the expectations of African consumers, and have kept brands operating in Africa nipping at the heels of their global counterparts (Pedro, 2019).

(Niba, 2011) explains that many commercial banks in Cameroon now have customer service as one of the pillars on which the banks operate, and how commercial banks through loans and credit affect the Gross Domestic Product of Cameroon which has a positive impact on the Economic Growth of Cameroon. The commercial banks in Cameroon include: Afriland First bank, Atlantic Bank of Cameroon, Banque Internationale du Cameroun Pour L’epargne et le Credit (BICEC), BGFI Bank  Cameroun, SCB Cameroun, CCA Bank, Citibank, Commercial Bank of Cameroon, Ecobank Cameroon, National Financial Credit Bank (NFC), Société Générale Bank (formerly SGBC), Standard Chartered Bank, Union Bank of Cameroon and  United Bank of Africa (UBA), (BEAC, 2019) of these 14 main commercial banks 6 have branches in the Kumba I  Municipality.

Kumba which is the biggest town in the South West Region of Cameroon has branches of 7 of these commercial banks mainly Ecobank, Société Générale, BICEC, NFC, CCA, SCB and Union Bank of Cameroon. Kumba is the capital city of the Meme Division. The town has an estimated population of 400,000+ (as of 2015), has an elevation of 240m (790ft).

The N8 and N16 highways meet in Kumba making it a junction town that attracts allot of tourist and business people. The main town is known for its heavy production levels of Cocoa, palm oil, rubber and timber (Kumba City Council, 2019). Kumba has 3 sub divisions, Kumba I (that covers Kumba town and Buea road areas), Kumba 2 (that covers Kosala, Hausa quarters and Fiango zones) and Kumba 3 (the covers from 3 corners, Mambanda and another part of Buea road). Each of these sub divisions has a mayor and an overall government appointed Government Delegate (Kumba City Council, 2019).

Nico (2017), posits that the progressive investments and development in Cameroon today cannot be achieved without a secured legal and commercial environment. With globalisation tremendously affecting the banking sector in Cameroon.

The banking industry in Cameroon is governed by international conventions, custom laws, ordinances, presidential decrees, ministerial orders, circulars and court decisions. However, key instruments regulating Banks in Cameroon include, Ordinance No. 85/002 of 31 August 1985 relating to the establishment of credit institutions and loan houses, law No. 88/006 of July 1988 and No. 90/019 of August 10, 1990 repealing the practice of only persons of Cameroonian nationality heading banks in Cameroon, ordinance No. 90/6 of October 26, 1990, and COBAC text of 17 January 1992 harmonising banking activities in the six member states of BEAC.

1.2 Statement of the Problem

Dicipio (2017) asserts that organisations that deliver poor customer service damage their reputation, kill the conversion of their leads, see their customer lifetime value drop and also increase the risk of them losing their best employees.

This can be further justified by a Forego report which found that poor customer service is costing financial institutions 10 million dollars in revenue per year (Forego, 2019). These figures are red flags that necessitate the need for sustainable customer loyalty programmes in banks. According to (Canel, Rosen, & Adnerson, 2000), society is now in the service economy.

Business organisations who understand the concept of effective customer service will excel in today’s business environment. Getting people at the door is a key to success but an even bigger challenge is to keep customers coming back (Joseph, 2019). He goes further to state that good customer service generates repeat business and improves organisational reputation. According to (Osbornebooks, nd), 68% of businesses lose customers because they are unhappy with the service that they were given and therefore decide to go elsewhere.

According to (Fomunyuy, 2017) Cameroon has had a lot of disgruntled customers in the domain of commercial bank services. These are as a result of the studies he carried out showing that customers want to be heard, pampered and nurtured.

That is, the customer has needs, expects the needs to be well communicated and receives a positive feedback in the shortest possible amount of time. Unfortunately, all of these expectations have been neglected leaving customers wanting and abandoned, leading to high levels of dissatisfaction and consequently dissatisfaction.

The creation of many commercial banks in the Kumba I Municipality, has abandoned customers who face difficulties in understanding the roles of the banking systems such as; absence of an effective Customer Service Department, an absence of expected customer feedback, poor expression of issues to customers especially in the value of using bank products and services, communicating and updating problems encountered in any affairs of the banks and congestion in banks.

It is for this reason that the researcher is passionately seeking to find out if the commercial banks collect these data on customer’s real needs and challenges, integrates them and boost the loyalty of these commercial bank customers in the Kumba I Municipality.

1.3 Research Question

Following the background and the problem statement that arises is the effect of customer service on customer loyalty in commercial banks in the Kumba I Municipality?

1.3.1 Specific Research Questions

1. How does client-worker relationship affect customer loyalty in the commercial banks in the Kumba I Municipality?
2. To what extend does perceived quality affect customer loyalty in the commercial banks in the Kumba I Municipality?
3. How does time management impact customer loyalty in the commercial banks in the Kumba I Municipality?