European Journal of Scientific Research ISSN 1450-216X Vol.45 No.2 (2010), pp.291-300 EuroJournals Publishing, Inc. 2010 http://www.eurojournals.com/ejsr.

htm

Analysis of Impact of Technology on Relationship Marketing Orientation and Bank Performance

Bright C. Opara Department of Marketing, Rivers State University of Science and Technology Port Harcourt, Nigeria E-mail: brightpara@yahoo.com Ayopo O. Olotu Department of Marketing,Rufus Giwa Polytechnic, Owo, Ondo State, Nigeria Darego W. Maclayton Department of Marketing, Rivers State University of Science and Technology Port Harcourt, Nigeria Abstract This study was set out to investigate technology impact on Relationship marketing Orientation (RMO) and Business Performance (BP) of the Nigerian banks. Quantitative and qualitative data were generated from 123 different bank branches in Port Harcourt, with 565 as target respondents. We employed SPSS statistical software packages in the analyses. The finding reveals that, technology exists as a moderating variable in the RMO-BP relationships of the Nigerian banks. We recommend that banks in todays business environment must be technologically compliant in order to have competitive edge and build a meaningful and lasting relationship with their customers.

Introduction
The functional activities of Nigerian banks like those of other countries is premised on the acceptance of deposits, lending, effect domestic and foreign payments and provide property management and trustee services among other wide range of financial services (Firpo, 2006:5). While, these services are rendered efficiently and with utmost trust and commitment in developed nations due to the relational and interactive approach adopted, same cannot be said of most banks operating in Nigeria before 2000. The Nigerian banks were bedevilled with corruption, money laundering, unethical practices, poor supervision due to the compromise of supervisory agencies and administrative interference by both family owners, and government. The Nigeria financial services industry has undergone major transformations in recent times, most especially with the introduction of reform programmes from 1999 to 2007. The N25 billion minimum recapitalisation reform programme reduced the total number of Nigerian banks from 120 unproductive, ailing and corrupt riding banks to 25 recapitalised strong banks that have free level and equal platform to operate. In an effort to survive and have a good percentage of the market share, the banks have acquired new technology among others; the business environment has become more competitive and complicated. The banks have also transformed their corporations and implemented or improved on their policies in order to strengthen their relationships with customers. This is one reason the financial service industry in Nigeria is chosen for this study. In this post

Analysis of Impact of Technology on Relationship Marketing Orientation and Bank Performance

292

consolidation era, banks are introducing new products, such as ATM, telephone banking, investment banking and actively participating in social responsibilities. All these were meant to influence relationships and thereby retain their customers at a profit and this can best be done through technology advancement as prevalent in todays global business environment. Organisational technology is defined as the information, equipment, techniques and processes required to transform inputs into outputs in an organization (Robbins, 1990:176). Therefore, this study is designed to appreciate the RMO-BP relationships and to investigate the influence of technology on the relationship between RMO and BP in Nigerian banks.

Review of Relevant Literature

Relationship Marketing and Technology Technology has tremendously impacted on marketing activities generally, and banking sector which is our area of study. Technology has even changed the course and definition of Relationship Marketing in todays business environment. The first and probably the most significant antecedent is the impact of the Internet and information technology (IT), especially in all situations where there is a direct account receivable (customer) relationship. The automation of sales and marketing by Siebel Systems, as well as cross-functional integration through enterprise resources planning (ERP) systems have shifted the focus to customer relationship management (CRM). As a consequence, marketing is once again not the driver, but marginalized as it happened during the popularity of TQM philosophy, which diffused the focus on customers away from the marketing department. It is believed CRM movement will continue to grow despite its early failure and shift in focus to tactical marketing such as loyalty programmes, affinity marketing and campaign management. Service technology helps to influence internal marketing where employees are trained in new technologies in order to acquire new knowledge and awareness to be able to relate positively with customers. The focus on technology is the unseen hand that mediates in supplierconsumer relationships. Hence, Cohen et al (2001:74) noted that technology affects behaviour. This therefore, culminated in the need for huge investments in banks technological advancement in Nigeria in the recent times. The influence of technology goes beyond isolated behavioural changes for the optimization of organizational productivity. It also, affects the culture prevalent in the organization. The impact of technology on business performance is revealed in Cohen (2001:632) work which he described as technological solutions to problems, technological changes and effects, technological adaptation and obsolesce, computer and information technologies and lastly, research and development.

293

Bright C. Opara, Ayopo O. Olotu and Darego W. Maclayton

Conceptual Framework on RMO and BP

Figure 1: Relationship Marketing Orientation and Business Performance Model.

Relationship Marketing Orientation

Stronger Relationships Bonding Communicationn Shared Value Reciprocity Sociality Weaker Relationships Trust Empathy

High Market Share Business Performance Technolog y High Customer Retention Cost Reduction

The diagram above show a relationship between RMO and BP with some variables showing stronger relationship (Bonding, communication, share value, reciprocity and sociality) and weaker relationship (trust and empathy) as represented by thick and broken arrows respectively. While business performance in the said diagram manifest high market, high customer retention and cost reduction. Similarly, technology is the intervening variable between the RMO and BP. Banks today are looking forward to creating more effective and efficient relationships with their customers, competitors and other players in the industry are seeking to establish their own financial service relationship with these customers. In achieving this, the marketing literature has theorised key virtues that underpin Relationship Marketing Orientation. This new concept of marketing is a multidimensional construct, with strong correlations that are positively associated with organizational performance (Yau, et al 2000:1115). All these led to the creation of favourable atmosphere for a better relationship to exist between RMO and BP which will ultimately lead to increased performance. Sin et al (2002:658) identified six dimensions of Relationship Marketing Orientation to include: Trust, Marketing communication, Empathy, Shared value, Reciprocity, Bonding. These identified variables are directly linked to and are capable of predicting customer loyalty. Berry and Parasuraman (1991:94) suggests that Relationship Marketing be exercised on multiple levels to gain customer loyalty and sustain a competitive advantage, this level include utilising structural bonds to solidify relationships in addition to social and financial bonds.

Analysis of Impact of Technology on Relationship Marketing Orientation and Bank Performance Analysis of Environmental Factors and Relationship Marketing Orientation

294

Central to any successful factors relationship and effective strategy implementation in the banking sector is an understanding and analysis of the broad environment. Underpinning the popular appeal of the environment-strategy relationship in marketing orientation is a deeply rooted concern that the essential character of the environment may be changing in ways that require new modes of thought and analysis (Ekelund, 2002:42; Roney, (1999:140). In the Nigerian business environment where the elements of the broad environment abound, yet there are other factors that pose threats and opportunity in the business environment (Adeleye, 2002:14). It is therefore necessary that companies interested in investing in Nigeria should do so in the context of new attitudes, a new orientation throughout the region and technological advancement prevalent in global business today. Balogun, (1996:308) noted that past mistakes have been acknowledged and are being remedied in such a way that the regions present situation which is deeply rooted in the past, is seriously trying to break with the past by exploiting the abundant opportunities of the modern environment. In order to attain maximum efficiency and reduced costs in all its ramifications, six business drivers for core systems agenda were introduced (IBM 2004:5). These are; Operational efficiency (doing more with less); flexibility to deliver the fast time-time-market demanded for new and innovative products (bringing differentiated new products to market rapidly and efficiently is essential); an integrated, realtime view of the customer i.e. cross-selling and up-selling are very important for banks seeking to reduce costs (customer centricity through database); Low-cost product manufacturing, processing and distribution required by transaction-intensive retail banks. Saleh, et al (2004:18) assert that banks have already begun the process of deconstructing their business through horizontal process outsourcing, involving two trends; deconstruction i.e., move away from monolithic organisations that undertake every activities towards networked models where a number of institutions (technology, communications) combine to deliver the overall offer to customers; centralisation or work across all segments, brands, and competence. Day (1990:68) similarly noted that where these trends come together, demand becomes real or manifest. Perspective of Business Performance The effectiveness of organizations in fulfilling its purpose can be described as Business Performance. While, some firms trade to return financial benefits to their shareholders, others have non-financial benefits as their returns. It is apparent to note that, in a competitive and dynamic environment, some organisations may compare their performance against competitors, while some measure success with usage and productivity. Epstein, (2004:10) argued that, performance can refer to either the ends (results) or the means (actions) that produce the end. De Waal, (2007:180) concluded that ends performance (e.g. profit) is necessarily historic in nature because it occurs before being reported. However, performance (e.g. production rate) describes current achievement at the time of reporting. Business performance helps to determine the status of an organisation as compared to its competitors. Most often subjective measures of performance are commonly used, while many of these studies used only a few measures to operationalise this construct (Yau et al, 2000:1117). Slater and Naver, (1994:22) used only ROI, sales growth and market share to proxy market performance. Yau et al (2000:1118) argued that the current business performance was operationalised by 12 items of (1) sales growth; (2) customer retention; (3) ROI; (4) market share; (5) getting important and valuable information ; (6) ability to obtain loan; (7) ability to obtain better terms in loan; (8) ability to obtain governmental approval; (9) shorten the time for governmental approval; (10) contact with important persons; (11) ability to secure local resources, like electricity and/or human resources; and (12) motivating employees. These business performance indicators were evaluated relative to major competitors. Otley, (1999:365) posits that companies that are market orientated display favourable organisational performance in order to weather the storm in a competitive environment.

295

Bright C. Opara, Ayopo O. Olotu and Darego W. Maclayton

In our study, we have considered market share, cost reduction and customer retention as indicators of business performance in the new Relationship Marketing Orientation (RMO) paradigm in the Nigeria financial sector. This is because, ultimately, organisational performance refers to firms ability to attract and retain the best mix, quantity and quality of stakeholders. Interestingly, it is pertinent to measure the performance of the firm using available indicators in order to be sure of the effectiveness and efficiency of the tools employed. Customer retention is a performance indicator that has the tendency of a customer to stick with a brand above and beyond the objective and subjective assessments (Sorce, 2002:10). Marketers have considered the inadequacies of the classical/traditional approach (marketing mix) in determining emerging marketing management phenomena from the service marketing perspective. Customer retention appears to offer significant benefits to organisations in saturated markets. Dawes and Swailes, (1999:36) posits that successful customer retention circumvents the costs of seeking new and potentially risky customers, and allows organisations to focus more accurately on the needs of their existing customers by building relationships.

Market Share
As expressed in QuickMBA, (2007) sales figures do not necessarily indicate how a firm is performing relative to its competitors. Rather, changes in sales simply may reflect changes in the market size or changes in economic conditions. The firms performance relative to competitors can be measured by the proportion of the market that the firm is able to capture (Neely, 1998:5). Market share according to the financial technology group, is the percentage or proportion of the total available market or market segment that is being serviced by a company. Mack (1996:32) stated that there are three steps to follow while retaining the customers and increase market share; tailor products, prices and packaging for major customer segments; the management structure of the organisation must change so that regional executives play a larger role in responding to local markets and major customer segments; And separate brand families while distribution models are deployed to serve specific segments of the markets. Market share as an organisational performance indicator is achieved only through customer satisfaction, retention and relationship profitability.

Cost Reduction
Datta et al (2007:6) argued that, the longer customers are retained by an organisation, the more obvious benefits will accrue. Most especially, as Reichheld and Kenny (1990:20) observed that, it could cost five times more to obtain a new customer than to keep an existing one. The costs of retention and this inequality are particularly in evidence in the service sector (Ennew and Binks, 1996 and Reichheld and Sasser, 1990). Meanwhile, IBM (2004:4) observed that banks are facing ever-greater competitive threats from foreign entrants. Banks are therefore compelled to actively seek out new revenue streams while defensively adopting a renewed focus on efficiency and costs through Relationship Marketing Orientation. In order to attain maximum efficiency and reduced costs in all its ramifications, six business drivers for core systems agenda were introduced (IBM 2004:5). These are; Operational efficiency (doing more with less); flexibility to deliver the fast time-time-market demanded for new and innovative products (bringing differentiated new products to market rapidly and efficiently is essential); an integrated, real-time view of the customer i.e. cross-selling and up-selling are very important for banks seeking to reduce costs (customer centricity through database); Low-cost product manufacturing, processing and distribution required by transaction-intensive retail banks.

Analysis of Impact of Technology on Relationship Marketing Orientation and Bank Performance

296

Methodology
We employed survey method in the choice of 123 banks branches randomly selected from the 189 bank branches operating in Port Harcourt. Since our level of analysis was the individual workers of the banks branches, the population was 4,552 employees with a sample size of 565, using the Krejcie and Morgan (1970) sampling determination method. Stratified random sampling method was also used to select the respondents and structured questionnaire employed to generate quantitative data. The usable returned questionnaire was 409 (72%); See table1 below for details.
Table 1: Questionnaire Distribution and Retrieval
No Retrieved 163 177 82 422 Acceptable Number 161 173 75 409 % of success 28 31 13 72%

Bank staff No Administered Managers 214 Marketers 246 Tellers 105 Total 565 Source: Desk Research Data

The in-depth interview (IDI) method and observation were used so as to generate relevant qualitative data to shed more light on issues already contained in the questionnaire.

Data Analysis
Scale reliability Analysis: Table 2, reports the reliability of the scales of the constructs under study based on Cronbachs Coefficient Alpha (Nunnally, 1978 and Ahiauzu, 2006).
Table 2:
S/No 1 2 3 Source:

Reliability Test Results

No of items 23 9 3 Cronbachs Alpha .868 .752 .771

The Variables Relationship Marketing Orientation (RMO) Business Performance (BP) Contextual Factors (Technology) SPSS Output

Table 2 reveal an overall Cronbachs Alpha Coefficient of 0.9 for RMO, 0.8 for BP and 0.8 for Technology as a contextual factor and were all higher than the 0.7 set standards. Also considering the reliability coefficient of the six sub-scales, they are positive (Table 4). Validity Test: The validity analysis was carried out through the SPSS software package, using the Confirmatory Factor Analysis to test for the Multicollinearity, construct and contents validity of the data. Table 3, revealed that there was no Multicollinearity, because no variable correlated too high. The study determinants of RMO, BP and OF is greater than 0.0001 and none of the correlation matrix value is greater than 0.8, thus no need for elimination. The result revealed a very high KMO which is more than 0.50 to 1 and as such, we are confident that our sample is appropriate for this study and the data adequate (Kaiser, 1974).

297
Table 3:

Bright C. Opara, Ayopo O. Olotu and Darego W. Maclayton

Confirmatory results of factor analysis on RMO and BP
Initial 1.000 1.000 1.000 1.000 1.000 1.000 Initial 1.000 1.000 1.000 Initial 1.000 Extraction (Coefficient) .515 .633 .708 .567 .531 .605 Extraction (Coefficient) .703 .767 .556 Extraction (Coefficient) .633 Eigenvalues 1.266 (63.296%) KMO .500 Determinant .929 Test of Sphericity .000 Eigenvalues 1.726 (57.547%) KMO .542 Determinant .595 Test of Sphericity .000 Eigenvalues 3.159 (52.654%) KMO .829 Determinant .142 Test of Sphericity .000

Dimensions of RMO Trust Bonding Communication Shared value Empathy Reciprocity Dimensions of BP Market share Customer retention Costs reduction Dimensions CF Technology Source: Research Data

KEY: KMO= Kaisser-Meyer-Olkin (Measure of adequacy)

On the other hand, Bartletts measure of sphericity test shows significance less than 0.05 meaning that there exist relationships between the variables. Testing construct validity requires a summary test on Nomological and Convergent test. Nomologically, there was positive and significant association between the two main constructs, also, there was evidence of convergent validity in the RMO and BP scale as the scales showed correlation among them and converge on the common constructs. The analysis of the frequencies on our organizational factor which is represented by technology with its item questions showed very high impact of moderation. Electronic and telephone banking as well as, computerization of services are claimed to have greater influence as confirmed with a mean score of 4.56. Also, ICT most especially, communication and information greatly influence the relationships as supported by a weighted mean score of 4.53. This therefore implies that technology is highly influential when practicing RMO in the banking sector in other to achieve business performance.
Table 4:
Variables RMO

Results of Contextual Factor (Technology) Influence on RMO and BP

Statistical index Zero order partial correlation Technology (Ho) BP .642 .602 -

Control BP Control Source: survey data and SPSS output window version 15.0 Note: It is significant at 2-tail level.

.184 .271

Technology as moderating variable partially correlates RMO and BP with 0.602 and significant at 2-tailed level. This means that technology actually influences the relationship between RMO and BP

Analysis of Impact of Technology on Relationship Marketing Orientation and Bank Performance

298

variables. In this instance, the moderating variable technology has lower correlations than the simple correlation of 0.642, which is the Spearman Correlation between RMO and BP. This implied that technology is a mediating variable that partly explains the correlation between RMO and BP.
Table 5: Correlations between RMO and BP
Customer Retention .222** .519** .421** .521** .337** .470** Cost reduction .121** .417* .376** .383** .188** .269**

RMO Scales Market Share Trust .304** Bonding .351** Marketing Communication .397** Shared Value .433** Empathy .396** Reciprocity .429** **Statistically significant at the .01 level *Statistically Significant at the .05 level

Discussions, Conclusions and Recommendations This study revealed that electronic internet, telephone banking and computerization of services as components of technology have greatly influenced RMO to yield an increased Business Performance. This was confirmed by Zineldin (2000:12) when he claimed that, the advent of computer, internet and other IT have revolutionized every facet of business life through the creation and development of effective and efficient marketing relationship. Aligning with this argument, we observed the recent transformation in the Nigerian banking operations, shortly after the reformed programmes. There was the introduction of electronic banking, ATM, telephone and computerization of services which eventually led to trust, confidence, commitment and loyalty on the part of the customers. This study also found that efficient information about communication systems enhances the practice of RMO in the banking industry. Glazer (1991:8) similarly remarked that companies go electronic to communicate with their customers and create awareness of their product and services. Consistent with these findings, Hatch (1998:662) posit that service firms realized that, what matters most is the brain power and commitment of their employees to build trust, empathy, communication and bond with customers in order to woo their loyalty, commitment and advocacy. The place of technology in banking operations is further appreciated by McCollum (1997: 9) submission that, the benefits of RMO-BP correlations was moderated by technology and led to reduced costs, efficiency, customer satisfaction and increased customers. This view is consistent with our findings which show strong, positive and significant correlation experienced between RMO and Business Performance as represented by increase in Market share due to advocacy; high Customer retention due to efficient services supported with technology and Cost reduction, through the use of Component Based Model and electronic banking. The influence of technology goes beyond structural relationships, but also affects the culture prevalent in the organization. We conclude that, to enhance desired value from both quality products and quality services of the Nigerian banks, technology is needed to offer improve quality services to customers in order to meet their needs and put smiles on their faces. This studys academic contribution hinge on the fact that it offers a significant advancement to the body of the current literature of Relationship Marketing Orientation most especially, in the Nigerian banking sector, as it reveal technology as a moderating factor, and appreciate its (technology) importance in influencing RMO for enhance performance.

299

Bright C. Opara, Ayopo O. Olotu and Darego W. Maclayton

References
[1] [2] Adeleye, A. (2007), Insurers Want Escrow Account Found Released Nigerian TribuneBanking and finance, Monday 30th April: 14 Callanghan, M., Mcphail, J., Yau, O.H.M. (1995), Dimensions of Relationship Marketing Orientation, Proceedings of the Seventh Biannual world Marketing Congress, Melbourne: 236-238. Cohen, D., Gan C. Young H. and Choong E. (2006), Customer Satisfaction: A Study of Bank Customer Retention in New Zealand, Discussion Paper March No. 109 : 146-149 Crosby, L., Evans, K., and Cowless, D. (1990), Relationship Quality in Services Selling: an Interpersonal Influence Perspective, Journal of Marketing vol. 54 (3): 68-81. Datta P.R., Cuong T, Nguyen, H.T., Nguyen H. (2007), Relationship Marketing and its effect on Customer Retention, ABR and TLC Conference Proceedings: 6 Day, G. (1990), Market-Driven Strategy: Processes for Creating Value, The Free Press, New York: 68. Egan, J. (2001), Relationship Marketing: exploring relational strategies in marketing Harlow, Financial Times: 12-15 Ekelund, C. (2002), How to govern Relationships and Established commitments: A Study of Standardised Products in Mature Industrial Markets. Doctorate thesis no. 23 Copenhagen Business School, Copenhagen: 42. Epstein, M.J. (2004), The drivers and measures of success in high performance organizations, in Epstein, M.J., Manzoni, J.F. (Eds), Performance measurement and Management Control: Superior Organizational Performance, Elsevier, Amsterdam, Studies in Managerial and Financial Accounting, Vol. 14: 10-14. Evans, J. R. and Laskin R. L. (1994), The Relationship Marketing Process: a Conceptualisation and Application Industrial, Marketing Management 23: 438-452. Firpo, J. (2006), Banking the Unbanked: Technologys Role in Delivering Accessible Financial Services to the poor, SEMBA Consulting: 5. Mack, T. (1996) Growing Relationship Marketings Fund Within Renault UK Managing Service Quality Vol. 6 No. 4 pp. 32-35. Morgan, R.M. and Hunt, S.D. (1994), The commitment-Trust theory of Relationship Marketing, Journal of Marketing Vol. 58 (1): 20-38. Ndubisi N. O. and Chan, K. W. (2005), Factorial and discriminant analyses of the underpinnings of Relationship Marketing and customer satisfaction, International of Bank Marketing. Vo. 23 No. 3: 542 -57 Neely, A. (1998), Measuring Business Performance why, what, and how, London, The Economist books :5. Osuala, E. C. (1987), Introduction to Research Methodology Owerri Africana FEP Pub. Ltd: 23-67. Otley, D. (1999), Performance management: a framework for management control systems research, Management Accounting Research, VOL. 10 No. 4: 363-82. QuickMBA (2007), Market Share. QuickMBA.com Reichheld, F. F. and Kenny, D. W. (1990), The Hidden Advantages of Customer Retention, Journal of Retail Banking. Vol. 13, No. 4, Winter: 19 23. Saleh, T., Hallsworth J, and Lund, V. T. (2004), From Banks to Banking 11: The Journey has begun, IBM Business Consulting Services, May : 3-8. Shani, D. and Sujana, C. (1992), Exploiting niches using Relationship Marketing, Journal of Services Marketing, Vol. 6, Fall, 43-52. Sheith, J. N. and PaIvatiyar, A. (1995), The evolution of. Relationship Marketing, International Business Review, Vol. 4 No. 4: 397-418.

[3] [4] [5] [6] [7] [8]

[9]

[10] [11] [12] [13] [14]

[15] [16] [17] [18] [19] [20] [21] [22]

Analysis of Impact of Technology on Relationship Marketing Orientation and Bank Performance [23]

300

[24] [25]

Sin, L. Y. M., Tse, A. C. B., Yau, O. H. M. et al (2002), The Effect of Relationship Marketing Orientation on Business Performance in a service-oriented economy, Journal of Services marketing vol. 16. No.7: 656-676. Slater, S.F. and Narver, J.C. (1994), Market orientation, customer value, and superior performance, Business Horizons, Vol. 37 (2), March-April: 22-8. Yau, O. H. M, McFetridge, P. R. Chow, R. P. et al (2000), Is Relationship Marketing for Everyone?, European Journal of Marketing vol. 34. No. 9/l0: 1111-1127.