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Asian Journal of Business and Management Sciences Vol. 1 No. 12 [107-112]

DETERMINANTS OF CUSTOMER SATISFACTION AND RETENTION IN COMMERCIAL BANKS OF PAKISTAN Ms. Rukhsana Gul Gilal Research-Scholar Sukkur Institute of Business Administration Sukkur, PAKISTAN E-mail: rukhsanagulgilal@yahoo.com Dr Rehman Gul Gilal (Correspondence author) Assistant Professor Department of Business Administration Shah Abdul Latif University Khairpur, PAKISTAN E-mail: rehman.gilal@salu.edu.pk Dr Niaz Ahmed Bhutto Associate Professor Sukkur Institute of Business Administration E-mail: niaz@iba-suk.edu.pk ABSTRACT The purpose of this study was to examine the determinants of customer satisfaction and retention in commercial banks of Pakistan. To achieve this objective quantitative study was designed. The survey was conducted from customers of commercial banks of Pakistan. The data was analyzed by using descriptive statistical tools .The main findings of research revealed that the average waiting time for customer in bank premises are very high. Customer satisfaction level is not up to the customary there is too much lacking in core banking areas such as service quality, cost, intrest rates and personnels dealings, banking access and variety of products and find out very weak image of commercial banks of Pakistan. Therefore it is highly suggested that the commercial banks of Pakistan should adopt relationship marketing particularly internal marketing practices. Keywords: Relationship marketing, commercial banks, customer satisfaction, customer retention. 1. INTRODUCTION Today commercial Banks in Pakistan face toughest competition ever to achieve a well poised growth. Even the commercial Banks have to work hard and reorganized around the customer to capture more market share. Commercial Banks have made customer satisfaction and retention as institutional priority or critical success factor for profitability. Research has shown that that it cost five times more to magnetize new customer than to do a good job to retain the existing customers. (Barakay,1994, Reichheld, and Kenny,1990) .The renowned 20-80 rule says that the top 20% customer may create up to 80 percent of companys profit. High customer satisfaction is tool for sustainable companys growth.(Eugene W,1993).Effective relationship management leads to customer satisfaction and win over the customers so one of the strategy to achieve the customer satisfaction is good public relations.(Tandon,2001). 2. LITERATURE REVIEW Relationship marketing is a paradigm shift in service industry that views the customers as partners, maintain long term relationship by providing value added services (Massod. H.

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Asian Journal of Business and Management Sciences Vol. 1 No. 12 [107-112]

2010). The essence of service marketing is to provide high quality services that create customers satisfaction, ultimately it causes repurchase & long lasting relationship with key partners.( .(Massod.H 2010). Strong enticements of customer loyalty are customer satisfaction and conflict handling (Nelsun Oly Ndubisi 2009). Competence, communication and conflict are key drivers of customers satisfaction and loyalty. (Nelsun Oly Ndubisi, 2009) .It is cited that One of the tools for bankers to develop long-term relationship is competence because people are likely to develop the relationship with those who are knowledgeable and competent (Nelsun Oly Ndubisi, 2009) . Vavra, (1992) said that if a company is able to retain its existing customer, it not only saves it cost, as it cost five times more to attract new customer, but also it can make about 65 percent from existing customers. To attract new customers it will cost five to ten times more than to retain the existing customer (Rosenberg and Czepiel, 1983; Ndubisi, 2003). Effectively handling of complain is also crucial for developing the relationship with customer. Rendering effective service is critical issue not all services can be efficient , quality of services depend on who is providing the services, customers expectations and customers evaluation of management, discrepancy in any aspect causes customer defection so it creates need for effective management of complain (Masood 2010). Promising the customers and delivering the desired satisfaction is also a mild stone for relationship marketing (Reichheld and Sasser 1990). Satisfied customers are more likely to spread favorable word of mouth communication Richins (1983) and Singh (1988). Return on relationship is customer satisfaction and customer life time value.Gummesson (2004, p. 141) Research suggested that there is direct relation ship between the customer satisfaction and economic returns, if 1 percent increase in customer satisfaction caused NPV about 7.48 million for the period of five years. Loyal customer are important assets in enhancing the firms profitability. (Eugene W, 1994). Commercial Banks should try to focus on target market to effectively serve, as research suggests that there is inverse relationship between increase in market share and customer satisfaction. Event though when market share increases ,profitability of firm also increase , this can be ideal situation for short run but long run and long run can not run parallel. . (Eugene W, 1994). Literature shows that there is high importance of relationship marketing do exist in banking industry such as customer satisfaction, retention and effective complain handlings. Therefore The main objective of this study is to Understand how commercial banks can satisfy and retain their profitable customers. To measure the extent of customer satisfaction with products, service quality and personnel. To measure the extent of customer satisfaction with convenience and access of branch and ATMs. To understand and identify the reasons of customer defection in commercial banks. 3. RESEARCH METHODOLOGY For this research purpose primary data was collected from the bank customers. Both Convenience and judgmental sampling technique of non-probabilistic approach was adopted for this research study purpose. Total sample size consists of 200 respondents who are the customers of various commercial banks of Pakistan. The data was collected from major cities of Pakistan Including Karachi, Islamabad, Sukkur, Khairpur, Hyderabad and Mirpurkhas,. This study uses (G.Mihelis 2001) scale of customer satisfaction in the banking sector. The questionnaire consisted of two parts. The first part of the questionnaire contained 23 questions relating to measurement of customer satisfaction. The second part of the questionnaire contained 7 questions on demographic factors of the users. Apart from this data mixed research methodology that is both qualitative and quantitative techniques of data analysis will be applied.

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Asian Journal of Business and Management Sciences Vol. 1 No. 12 [107-112]

Fig.1 The Fig.1 Shows targeted sample and working activities of Customers. The intention of this segment analysis is to identify the cluster of people with unique need and preferences 4. ANALYSIS AND RESULTS Based on the survey results here in this section analysis and results are presented.

Fig.2 Customer Satisfaction Indices This analytical result shows critical success factors and improvement areas. The finding shows that 58% satisfactions do exist with respect to access of branch network and ATMs. 31.5% satisfaction exists among customers with respect to service provided by commercial banks of Pakistan. 66% satisfaction levels do exist with respect to products offered by the banking industry in Pakistan. 43% satisfaction level exists among the customers with respect to cost and service charges. For interest 40% satisfaction index rates which is very low. And about 60% of satisfaction exists from personnel and their dealings.

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Asian Journal of Business and Management Sciences Vol. 1 No. 12 [107-112]

Fig3. Fig.3 finding shows that 15% of the customers who are involve in trade business have very good image for commercial banks and 37% have good image banking industry in Pakistan. 12% of service sector customers are very good image of commercial banks whereas 52% of customers have only good image about banks. In addition to that 11% customers who are engaged in educational profession have very good image whereas 28% customers have good image toward commercial banks of Pakistan.

Fig 4 The finding shows very surprising results average waiting time to be served by banking personnel. 71.5% of customers are in the opinion of that the average waiting time is more than 15minutes which immensely oppsosite to international standard. Whereas 19.5% customers are served between 5-15minutes. In addition to that 9% customers wait only less than 5 minutes.

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Asian Journal of Business and Management Sciences Vol. 1 No. 12 [107-112]

Fig5 The finding revealed very astonish results that 53.3% customers said that the sometimes system is failed such ATMs network and technology . whereas 31% customers said the system is often failed to serve customers. In addition to that only 15.5% customers said the system is rarely failed.

Fig 6 The results show that only 15% of customers said that they receive the complete information from bankers in pakistan. And 42.5% of customers said they receive suffient information brom bankgers whereas 36% of customers cry for getting complete information from banking personnel. 5. MANAGERIAL IMPLICATIONS The study concludes various core finding about diterminanats of customers satisfaction and retention in pakistan .The results revealed average waiting time for customer in bank premises are very high which is immensely opposite to the international standards. The

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Asian Journal of Business and Management Sciences Vol. 1 No. 12 [107-112]

banking industry of Pakistan should use this body of knowledge to keep and retain and enhance customer and their satisfaction level. Research also suggested that overall customer satisfaction level is not up to the customary there is too much lacking in core banking areas such as service quality, cost , intrest rates and personnels dealings, banking access and variety of products. Therefore the banking industry in Pakisean may use this body of knowledge to redesign the strategies and critical success factors . The research suggested very weak image of commercial banks of Pakistan The very few targeted sample shows just good image in their mind regarding commercial banks. Considerable number of customers grasp low image in their minds about the banking industry in Pakistan. The research revealed that personnel working in bank are not providing the complete information to the customers, it is suggested that banks should focus on internal marketing because satisfied employee will serve the customers well. REFERENCES Nelsun Oly Ndubisi, N. K. (2009). Relationship Marketing,customer satisfaction and loyality:A Theoritical and Empirical Analysis From Asian Perspective. Journal Of International Consumer Marketing , 13. Vavra, T. G. 1992. After marketing: Hope to keep customers for life through relationship marketing. Homewood, IL:Business One Irwin. Rosenberg, L. and Czepiel, J. (1983).A marketing approach for consumer retention, Journal of Consumer Marketing1 (2):4551. Reichheld, F. E. and Sasser,W. E. Jr. 1990. Zero defections: Quality comes to service. Harvard Business Review 68(5):105111. Richins, M. 1983. Negative word-of-mouth by dissatisfied consumers: A pilot study. Journal of Marketing47 (1):6878. Singh, J. 1988. Consumer complaint intentions and behavior,definitional and taxonomical issues. Journal of Marketing 52(1):93107. Gummesson, E. 1999. Total relationship marketing, rethinking marketing management:From 4Ps to 30Rs.Oxford, England: Butterworth-Heinemann.(n.d.). Eugene W, A. (1994). Customer Satisfaction,Market Share and profitabilty:Findings From Sweden. Journal Of Marketing , 1-15. Masood.H.2010 An analytical study of complaining attitudes: With reference to the banking sector;from Journal of Targeting, Measurement and Analysis for Marketing Vol. 18, 2, 119137

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