Academic journal article International Journal of Marketing Studies

How to Retain a Bank Customer: A Qualitative Study of Jordanian Banks Relational Strategies

Academic journal article International Journal of Marketing Studies

How to Retain a Bank Customer: A Qualitative Study of Jordanian Banks Relational Strategies

Article excerpt

Abstract

This paper studies how banks in Jordan promote long-term strategies in an effort to attract and retain loyal customers. An exploratory qualitative study was undertaken in order to develop a clearer understanding of background issues relating to the research problem. An in-depth interviewing technique was used, experts from nine different Jordanian banks participated in the data collection, the interviewees consisted of marketing directors, managers and executives as well as senior relationship managers and direct banking managers. Content analysis was used to analyze textual information from interviews in order to draw conclusions from them. Findings revealed Relational strategies, tactics, and tools used to achieve customer retention used by banks and benefits of customer retention, it also showed how retention is linked with customer profitability, findings showed that internal marketing is important for achieving retention. A number of drivers were found to be critical in banks efforts toward fulfilling relational strategies; trust, satisfaction, loyalty, commitment, closeness, communication, transparency, confidentiality, privacy, culture, customer acquisition, and reputation. However this study should be carried out in a different context. Further study is needed to explain how these constructs are linked in order to develop a model of customer retention.

Keywords: relationship marketing, customer retention, banking sector, Jordan

1. Introduction

In an industry that is characterised by intensive competition; Jordanian banks are struggling to keep their customer. This paper studies how banks in Jordan promote long-term strategies in an effort to attract and retain loyal customers. Banks are trying to reduce costly customer defections through applying relational strategies aiming at continuing patronage with their customers due to the positive effects that can result from customer retention.

2. Jordanian Banking Industry

Jordanian banking system is relatively small. Nevertheless, the Jordanian banking industry is one of the fastest growing industries in the Middle-East. A free market economic policy led to the emergence of diverse types of banks competing freely in the market. The Jordanian banking sector is important to the local economy, contributing an estimated 20% to the Jordanian GDP (Dwairi et al., 2007). This booming industry has developed markedly in terms of electronic services and operations, information technology and communications that led to the introduction of new banking services.

All of this is reflected on the financial performance of many Jordanian banks that moved up in the list of top banks and financial institutions in the Middle East region (ASSOCIATION OF BANKS IN JORDAN, 2009). The banking sector is one of the most important sectors in the Jordanian economy. Privately owned banks provide capital for industry, construction, and trade. The banks are also the most heavily traded securities on the Amman Financial Market (Al-Shammari and Salimi, 1998).

The Jordan government is helping banks to supply adequate credit to businesses and consumers at reasonable and competitive prices. However, lending is quiet in Jordan (Siam, 2007). Banks in Jordan are learning to become conservative in their lending due to past experiences of other banks that have become bankrupt, this may positively affect the banks tendency towards the development of relational strategies aimed at achieving customer retention. Therefore, studies about Jordanian banking industry are important from the view point of investors, creditors, researcher and the government.

3. Literature Review

Recent environmental changes, especially the rapid growth of competition and the changing consumer landscape, increased customer choice. Due to these changes businesses have witnessed a strategic move away from "offensive marketing" aimed mostly at getting new customers to "defensive marketing" focused on customer retention (Lee-Kelley et al. …

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