The Effects of Customer Relationship Management (CRM) and Customer Perceived Value Dimensions: A Proposed Conceptual Framework for Customer Loyalty

1.0 Introduction

Having efficient financial systems is considered indispensable to the growth of global economies. Particularly for Sub-Saharan African emerging economies, the financial sector is characterized by the implementation of liberalization policies targeted at speeding up economic growth processes (Kinda & Loening, 2010; Tweneboah-Koduah & Farley, 2016). In Ghana for instance, deregulating the financial sector have led to the influx of major players in the financial sector unto the Ghanaian banking industry and thereby increasing rivalry amongst players in the banking sector (Narteh & Kuada, 2014). The resulting increase in competition, not to mention improvements in information technology and growing access to information, have exposed consumers to several alternative choices, thereby threatening customers’ loyalty to their banks (Lewis & Soureli, 2006). The literature has however shown that losing loyal customers can be very costly for banks. Goodman et al. (2000) stressed that keeping loyal customers is about 20 times more economical than acquiring fresh customers. Similarly, Reichheld and Sasser (1990) emphasized that businesses could increase profitability by as much as 8% and 95% by reducing defection rates by 5% and increasing loyalty rates by 5% respectively. Besides these, improvements in customer loyalty has been linked to reduced customer price sensitivity and switching behaviours, improved profitability, positive word-of-mouth, increased referrals and superior competitive advantage (Blazevic et al., 2013; Brun et al., 2014; Evanschitzky et al., 2012; Oghojafor et al., 2012).

Surviving in the dynamic market place therefore means clearly establishing strategies that can survive the turbulent challenges in the competitive market environment (Zineldin 2005). Banks are therefore resorting to innovative strategies like customer relationship management (CRM) to deliver superior customer value to their customers, who according to the literature have become more value oriented in their search for products and services (Padmavathy et al., 2012). CRM involves building an organizational culture that is centered on individually understanding the needs of customers through the acquisition of valuable customer information (Bhat & Darzi, 2016). It involves identifying customers, creating customer knowledge, building relationships with identified customers and positively influencing the perceptions customers have of a firm and its products (Richards & Jones, 2008). By implementing CRM, banks are in pol position to strengthen long-term relationships with their customers (Kandampully, Zhang, & Bilgihan, 2015), create and deliver superior customer value (Lin et al., 2009), improve customer loyalty and commitment (Gazquez-Abad & Sanchez-Perez, 2009), increase profitability and firm performance (Evanschitzky et al., 2012), and increase switching cost for customers (So et al., 2013). Because of the cruciality of CRM in improving long term business survival in the face of the sophisticated forms modern competition has taken, multiple firms have embraced this strategy as one of the most important influencers of customer loyalty (Toufaily, Ricard, & Perrien, 2013). In fact, it was projected in the Garner report of 2016 that CRM investments globally could exceed $36.5 billion as of year-end 2017 (Gartner, 2016). A clear indication that, modern businesses view CRM as significant to improving customer loyalty, especially when customer loyalty is projected by the Forrester Wave Report to be a top priority for 82% of global marketing organisations (Collins, et al., 2016).