Academic journal article Asian Social Science

The Role of Long-Term Orientation and Service Recovery on the Relationships between Trust, Bonding, Customer Satisfaction and Customer Loyalty: The Case of Nigerian Retail Banks

Academic journal article Asian Social Science

The Role of Long-Term Orientation and Service Recovery on the Relationships between Trust, Bonding, Customer Satisfaction and Customer Loyalty: The Case of Nigerian Retail Banks

Article excerpt

Abstract

In spite of consolidation of Nigerian retail banks, the industry is still embattled by customer complaints, lost of customer confidence and loyalty erosion. Extant literature has amply reported the associations between relational dynamics of trust, bonding, customer satisfaction and customer loyalty. However, these reports are contradictory and thus, inconclusive. Meanwhile, literature has argued extensively on the influence of cultural values on customer decision making and buying behaviour. Yet, very little is known of the interaction effect of long-term orientation on the link between trust, bonding and customer satisfaction in retail banking sector. Similarly, while several studies have documented the significant effect of customer complaints on customer loyalty, there is no noticeable research evidence on the intervening effect of service recovery on the relationship between the independent and the dependent variables. To fill these gaps, this conceptual paper is written.

Keywords: banking industry, customer complaints, customer loyalty, customer satisfaction, long-term orientation, relationship marketing, service recovery

1. Introduction

In the last three decades, service marketing scholars and researchers have made concerted efforts to find a viable solution to the marketing challenges posed by stiff competition, technological advancement and cultural diversity, and have identified relationship marketing (RM) as the most strategic approach to the issues (Berry, 1995; Gronroos, 1990b; Gummeson & Gronroos, 2012; Morgan & Hunt, 1994). The notion of RM hinges on classical social exchange theory (Coelho & Henseler, 2012; Hunt, Arnett, & Madhavaram, 2006; Morgan & Hunt, 1994). The basic assumption of Social exchange theory is that parties voluntarily enter and maintain relationships on the expectation that such relationships will pay back both economically and socially (Blau, 1960; Thibaut & Kelley, 1959). RM is defined as all marketing activities directed towards establishing, developing and maintaining successful relational exchanges (Morgan & Hunt, 1994).

Social exchange and RM theories emphasize building and maintaining long-term relationship between sellers and buyers for sustainable competitive advantage and sustainable value added products in favour of the firm and its customers respectively (Gronroos, 1990a). The key outcome of RM is customer loyalty with its attendant efficiency and profitability enhancements (Gronroos, 1994; Gummeson, 1994). Due to the anecdotal and empirical evidence of the strategic role of marketing in banking, the global banking community have embraced marketing tools and techniques such as product positioning in Australia (Kaynak & Whiteley, 1999), market segmentation in US (Kaynak & Harcar, 2004), branding in UK (Papasolomou & Vrontis, 2006) and deposits security in Germany (Hoffmann & Binbrich, 2012) among others.

In response to global trends, the Nigerian authorities in 2004, introduced banks consolidation (Soludo, 2006). The initiative has succeeded in raising the total assets of the banks from $28.24 billion to $49.88 billion in the first year alone (Ernest, 2012) and by 2011, the assets figure stood at $117 billion and is projected to reach $168 billion by the year 2015 (KPMG 2013). Taken together, consolidation has improved the running efficiency of Nigerian retail banks through mergers and acquisitions (Ernest, 2012). However, consumer related issues of the industry are far from been resolved (Ezioha, 2007; KPMG, 2012) which suggest the application of RM tactics (Kantsperger & Kunz, 2010). Industry reports and empirical research findings describe the Nigerian banking landscape as undergoing shift in consumer confidence and tmst with the attendant loyalty erosion (Adebayo, David, & Samuel, 2012; KPMG, 2012; Sanusi, 2012) occasioned by customer dissatisfaction, frustrations and unresolved conflicts (KPMG 2012, 2013; Ogbadu & Usman, 2012; Ogunnaike & Olalekan, 2010). …

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