Success of The Banking Sector through Customer Longevity - Relationship Marketing

The new entrants have come into the market with various innovations such as online applications, branded products offering including cell phone banking and other digital solutions to attract unsatisfied customers, hence, the need for those that are already established to maintaining and nurture their customers. It is observed that, retention of old customers is cheaper because the institution does not pay overhead costs of recruiting new customers. This customer base can also be a marketing tool by referrals through a word of mouth. Additionally, the customers play a very critical role in corporate image building because of the positive messages shared with prospects.

Relationship Strategy

Ganesan and Hess (1997) cited that, brand loyalty is created through repeat customers who have seen benefits of being part of the bank because of the services and customer care it offers. This is alluded to by the levels of trust which are cultivated over a period of time resulting into commitment to a business relationship. This offers longevity and in the long term both the bank and customers reap benefits of the relationship. For the bank, it is the profits while, the customer it is enhanced service provision. This is done through mutual respect, communication, fairness, integrity and accountability. The banks are also offering personalized services, treating customers as individuals not statistics. They send them personalized birth day cards, new products and suggest smaller loans that can fit individual incomes. This relationship is vital because the bank gets a feedback on how customers are benefiting from new product offerings. That strengthens the relationships. (ibid)

There are three types of relationships; dating, connections and attraction. Dating involves the brand trying to know a bit more about the customer, while, connections are brands that speak the language of the customer, and attraction locks each other with the customers. (Doyle & Stern 2006). To build this relationship, the business needs to invest into its people, improve communication among staff and stakeholders.

Relationship Drivers

Literature has shown that, customer satisfaction is one of the key drivers of long term relationship. Business is

Additionally, corporate image is an embodiment of total customer care starting with the design of the branch, uniform of staff, the language to customers, the mission statement and promise.

supposed to invest into this through long term planning. The traditional marketing strategy was concerned with making money and making profit for shareholders; the relationship that existed between the business and customer was transactional and customers were mere statistics to bringing in revenue. (Kotler et al 2009)

However, we have seen a paradigm shift to nurture and maintain customers for as long as it takes. This has been done with the premise that it is 5 times more expensive to get a new customer than maintaining the older ones. In so doing the business needs the element of Trust and Corporate image. Trust has been described as willingness to take a risk on behalf of the other. Trust can be experienced at different levels in life; Personal, Social, Family and Professional. Therefore, Trust has been seen through the eyes of competence, honesty and benevolence. Understanding this further, trust has some elements of integrity, motives, skills, capability, style and knowledge. Additionally, corporate image is an embodiment of total customer care starting with the design of the branch, uniform of staff, the language to customers, the mission statement and promise. The customer care is critical in a way the bank responds to customers queries and request.

Accordingly, Morgan and Hunt (1994), came up with the scientific analysis of the foundation of relationship marketing theory. This was a contribution to the understanding of the importance of relationship marketing in the business environment in a red ocean. This is the bedrock of relationship longevity, it is intended for generic application in most business undertaking and observed by the explanatory relationship between marketing theory and Customer Partnership

The banking sector has a different view over customer relationship. This relationship is clarified as Creditor- Debtor. This implies that the money deposited in the bank by a customer means the bank has borrowed the money. This implies that the relationship is purely contractual. Because of the contractual nature of this relationship it is important for both parties to meet their obligations.

In my view, coming from the traditional business school and as cited by Scheneider (1980), it is very hard to change the banks because some names have been with them for a long time and fearing breaking new grounds. Instead, they demand from the banks to keep in pace with service delivery of the innovations that have been brought by the new technology. The older banks have kept their customers confidence with their robust financial performance. This is customer Longevity Relationship.

Finally, some banks have a deliberate policy to develop their base through business incubator programs and investing in the youth business skill development agenda. These are some initiatives that can make customers stay longer when they mature because of ‘PAY BACK’ and create customer loyalty. Customers are becoming busy and have little time to spend at one institution. Banking in Africa is characterized with spending too much time before seeing your customer service agent for a short meeting. However, with latest innovation of cell phone banking and monitoring of financial services on the customer’s palm, the customers are bound to stay longer. This of course should be coupled with customer services, attitude, honesty, integrity and communication