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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 that can 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 must also 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 professionals conducted by the Data Warehouse Institute, found that, some of the respondents have various methods of managing customer relationship. This finding indicates that customer management is very important for organizations. The Cap Gemini further added that, the average total investment in customer management by 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 indicates that a great number of companies spend great amount of their budget on customer management and therefore in the researcher’s opinion, it is believed that it is important for various business organization to know 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, more than two-thirds of customer management projects end up in failure. However, he went further to say 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 relationship initiatives and the benefits should 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 way across 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 effectiveness of these interactions in terms of these performance. According to Thompson (2004) customer relationship is 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.   To examine ways to build sustainable customer relationship in an organization.

2.   To identify the effects of sustainable customer relationship in an organization.

3.   To determine the factors influencing sustainable customer relationship in an organization

1.4     RESEARCH QUESTIONS

1.   What are the ways to build sustainable customer relationship in an organization?

2.   What are the effects of sustainable customer relationship in an organization?

3.   What are the factors influencing sustainable customer relationship in an organization?

1.6   SIGNIFICANCE OF THE STUDY

The following are the significance of this study:

1.   The outcome of this study will be a useful guide to various business organization has it will educate on ways and approaches to sustainable customer relationship with a view of increasing the organization customer base through better customer-organization interaction 2.   This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.

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

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).
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.

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