ABSTRACT
The study determines the effect of customer relationship management on performance of selected Airlines operating in Akanu lbiam International Airport in Enugu state, Nigeria. The specific objectives were to ascertain the extent to which high quality services affects customer satisfaction, to determine the effect of customer services on profitability, to ascertain the relationship that exist between information technology, and employee performance and to determine the nature of relationship between knowledge creation and productivity of airline operators in Akanu lbiam International Airport Enugu state, Nigeria. The study adopted the survey design. population of 273 were studied from five Airlines operating in Akanu lbiam international Airport in Enugu state, Nigeria and this was the actual staff strength of airlines during the period of study. Data were collected through questionnaire and interview guide which was designed in a 5 point Likert Scale was manually administered to the respondents. Validity of instrument was measured using content validity, and this was done by five management experts from both the industry and the academia. Spearman ranking correlation coefficients was used to test the reliability of the instrument giving a coefficient of 0.958, indicating the reliability of the instrument Data collected were analyzed using simple linear regression and Pearson product moment correlation, at 5% probability level of significance. The findings indicate that High quality services to a great extent positively affected customer satisfactions (r =
.876: F= 141.376: t 15.784, p < .05). Customer services positively affected profitability (r = 0.915: F= 220.941: t=1.037, p < .05). Information technology significantly related to employee performance (r =.796 p < .05) and knowledge creation positively related to productivity of airline operators (r =.898, p < 0.05) in Akanu lbiam international Airport Enugu state, Nigeria. The study concluded that customer relationship management has the capacity to influence organizational profitability, employee performance, customer satisfaction, goal attainment and productivity of Airlines. The study recommends that airline managers should develop strategies to improve service quality such as meeting passengers desired service levels, improving the quality of in-flight meals, visually appealing facilities, hassle free check-in and boarding, Airlines operator should render customer services of global best practice to its stakeholders and should use modern technology in its operations and Knowledge Creation, sharing, utilization and storage should be explored by organizations as it could enhance productivity
CHAPTER ONE INTRODUCTION
1.1 Background to the Study
Today’s business environments have been faced with intense competition coupled with sophisticated technology and globalization. In view of this, customers have become more sensitive by the day and this has made most organizations to place utmost priority and concern on their customers as they are the vital elements and the central of all their marketing strategy (Karakostas; Kardaras and Papathanassiou,
2005). Consumers’ needs and expectations are continuously changing. Hence, customer relationship management (CRM) has become a priority for firms’s business strategy (Karakostas, 2005). Academics and practitioners opined that a relationship is necessary for firms to survive and be successful in contemporary business environments (Heinrich, 2005) (Gefen and Ridings, 2002; Ngai, 2005) reported that when organizations improve relationships with their consumers, employees and the environment it leads to improved customer loyalty and also increase profitability. (Karakostas, 2005) states that Customer Relationship Management is the management approach that seeks to create, develop, and enhance relationships with carefully targeted customers in order to maximize customer value and corporate profitability. Kuo-Chung and Chin (2012) stated that Customer relationship management (CRM) is becoming an important issue in organizations in order to gain customer loyalty, improve customer retention rates as well as increase profits.
Sin (2005) reported that CRM is a comprehensive strategy and process that enables an organization to identify, acquire, retain and nurture profitable customers. CRM is a core organizational process that focuses on establishing, maintaining and enhancing long term associations with customers as advocated by relationship strategy (Srivastava, 1999). The comprehensive approach of CRM is to maximize the relationship with all customers and the environment in general and also covers the activities of acquisition, management and regain management at the initiation stage, maintenance stage and termination management with the purpose to maximize the value of relationship portfolio (Chen and Popovich, 2003; Dutu and Hkalmajan,
2011). CRM is not just a technology, but is a new way of doing business, therefore
Reynolds (2002) points out that CRM is a business strategy, process, culture and technology that enables organization to optimize revenue and increase value through
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understanding and satisfying the individual customer’s needs which proxies customers focus services , knowledge management, knowledge creation, customer touch point, information and communications technology, high quality service, timeliness in service delivery, Friendliness of employees, competitive charges on services and ease of taking policies (Kamakura, 2005), CRM is the process of collecting and analyzing a firm’s knowledge regarding customer interactions in order to increase the customers’ values to the firm. Information technology enhanced management level, sales and customer services functions of the organization.
Valdani (2009) points out: enterprises exist because they have a customer to serve. The key to achieve sustainable advantage lies in delivering high quality service that result to customer satisfaction. Shemwell, (1998) asserted that companies are facing their toughest competition ever. To win customers and encourage them to stay loyal or repurchase the service, most companies have resorted to meeting and satisfying customer needs by not being only reactive but proactive. They are also interested in finding new ways and means to satisfy their customer to ensure a repeat business. A lot of companies are not just attracting customers, but are working at building long term relationships with customers (both local and foreign customers), suppliers, employees, distributors and the general public. These companies are striving to satisfy the maximized expectations of each stakeholder group.
Performance is described as the net result of the combined efforts of all individuals and groups in the organization. It is the collectivity result of management and employees succeed in achieving (Khandwalla,1977). Performance refers to the assessment of progress, at different organizational levels, toward achieving predetermined goals (Bourne et al., 2003). To measure organizational performance, one must consider the financial and non-financial performance of a firm (Avlonitis,
2001; Gounariset, 2003). Organizational performance can be measured bearing four major perspectives in mind: financial perspective, customer perspective, internal processes perspective and employee learning and growth perspective (Niven, 2002) Customer satisfaction, (Abdulateef, 2010), market effectiveness and financial performance (Sin, 2005), customer performance and financial performance (Akroush,
2011), and customer retention and sales growth (Yim, 2005) and Productivity.
Customer relationship management (CRM) assists in reducing transaction costs and overall development costs for the company. These brings about two important processes of proactive customer business development and building partnering relationships with the most important customers (Chaitanya, 2005) and eventually leads to superior mutual value creation between the organization and the customers. Most airlines do not implement CRM systems due to several reasons such as lack of knowledge about CRM and lack of financial resources to implement CRM systems, inexperience staff to manage customer information, political interference and poor regulation of the sector. Ata and Toker (2012), Sudhakar and Sudharani (2012) Chuchuen and Chanvarasuth (2011), and Ko (2008) state that organizations that have adopted CRM systems as a corporate strategy are expected to grow at a faster pace than those firms who are non-adopters within the same industries. Therefore, Airline operators need to implement CRM in order to improve business values and gain more competitive advantage (Deros, 2006 (Payne and Frow, 2006). Kalakota and Robinson (2000) argue a firm’s strategy should focus on ways to find and retain the most profitable customers instead of just providing superior services.
From a global perspective an effective CRM in airline operation is associated with adequate technology, train and educated employees, good corporate governance, good customer services, knowledge sharing, and organizational culture Employee guidance, long-term strategy, employee buy-in and accountability, leadership, organizational culture, strategy and structure. Olowokudejo (2009) good strategy of customers relationship management, information and communications technology, Company’s image, Complaints management, High quality service, Timeliness in service delivery, Friendliness of employee, Competitive charges on services and Ease of taking policies. The forgoing helps the various airlines to retain customers and maintain good relationships with them in order to gain their loyalty and long term commitment which affect the performance of the organization. Also used to store the information related to the customers and then using this information for different purposes in knowing about customers’ behaviour and their specialized need (Abubakar, 2015).It also aids the organizations in creating long term competitive advantage among firms, improves customer relations, enhances customer experience, in which their main focus is to improve organizations performance by focusing more on profitable customers and creating value for them and the organization thereby leading to
employee performance, employee satisfactions, productivity, profitability, customers retention and goal attainment. Thomas and Kumar (2004) stated that effective customer relationship management Improved ability to target profitable customers, improve sales force efficiency and effectiveness and pricing. Swift (2001) supported that CRM helps in reducing cost of recruiting customers, increased customer retention and loyalty, higher customer profitability and reduced costs of sales.
The Nigerian aviation transport sector is one of the most important drivers of national economy and development. The rapidly expanding aviation sector in Nigeria handles over 15 million passengers that board aircraft in the year 2014 (Nigerian Civil Aviation Statistics, 2014) and the expected multiple increase in the current period, identifying various service characteristics of domestic Airlines vis-à -vis customers relationship management has becomes crucial in enhancing organizational performance. Delivery of quality services, creation of value and Satisfaction of the customer is one of the ultimate goal or objective of any business manager. Albrecht and Zemke (1995) Maintained that there is need for airlines to focus on service quality if the airlines aspire to improve on market share and further enhance financial performance in domestic and international market. (Akpoghomeh, 1989).stated that incessant increases of flight fares, flight cancellations, delays, poor-onboard services, poor customer relations, missing luggage’s, huge staff outlay (serving the purpose of its inception) and poor equipment maintenance and breakdowns (Ehije and Nwosu,
1990; Daramola, 2007). These shortcomings, Ehije and Nwosu (1990) averred were universal air transport problems; only that Nigeria’s own was endemic.
However, the customer relationship management among airline operators in Enugu State looks different, as Myron (2003) identified CRM problems to include lack of guidance, integration woes, no long-term strategy, dirty data, lack of employee buy-in and no accountability. The most important aspect of CRM problems is not its excellent ability to achieve customer retention but its failure to do so. management incompetence, financial stress, higher level of staff disloyalty, weak business environment, policy inconsistency, political interference, management problem, poor technology, poor services delivery, poor customer relationship management, poor corporate governance, poor knowledge management and knowledge sharing and poor
information storage in the company. This affects the performance of airline operators in Akanu lbiam international Airport Enugu state, Nigeria.
To survive in this dynamic and competitive business environment in the aviation sector and also the best way for airline operators to retain customer loyalty is to provide an environment where customer relationships are effectively managed. Thus, customer relationship management is a critical source of gaining competitive advantage and superior performance in business organization. Despite CRM having been found to enhance competitive performance, prior studies have highlighted the important effect and relationship between CRM and firm performance. To our knowledge, relatively few empirical studies have examined CRM on firm performance foreign based and this could be due to the paucity of information on the geographical location. It is therefore, worthwhile to fill the literature gap by examining the effect of customer relationship management on the organizational performance of some selected Airlines operating at Akanu Ibaiam International Airport Enugu state, Nigeria.
1.2 Statement of Problems
Organizations exist to create value because they have a customer to serve in order to maximize profit. The key to achieve sustainable advantage lies in delivering high quality service that results to satisfaction. Organizations are faced with intense competition within their business environment. They are interested in finding new ways and means to satisfy their customers. Most companies are aiming for good customer relationship which means better service to the customer thereby making the customer to remain loyal. Customer relationship management supports airlines to retain customers and maintain good relationships with them in order to gain their loyalty and long term commitment, Create long term competitive advantage, improve customer relations and enhance customer experience, employee performance, employee satisfactions, productivity, profitability, and goal attainment which proxies organizational performance.
In view of the recent development in the aviation sector, it looks as if most airlines do not implement CRM systems and this could be due to lack of knowledge about CRM and lack of financial resources to implement CRM systems, inexperience staff to manage customer information, political interference and poor regulations of the
aviation sector which may affect performance. Also customer relationship management among airline operators in Enugu state Nigeria is associated with lack of guidance, poor strategy, lack of employee buy-in and no accountability, Insufficient resource and poorly trained employees, poor technology, weak policy, poor motivation of staff and Failure to obtain and maintain executive support for the project.
Airlines are in the service industry as such they compete in terms of standard flight and asset. Hence resources are devoted more in managing assets rather than managing customers’ relationship. The method of information storage in the company is poor. This limits the number of official documents accessible by the customers because the system is not capable of managing old items of information which could be of use to customer anytime it’s requested for. There is little or no security control system where the customers’ goods, document and classified information could be kept from unauthorized access. The forgoing challenges may mar or make the performance of airlines and it is against this background that this study seeks to investigate the effect of customer relationship management on organizational performance of selected airline operators in Enugu state, Nigeria.
1.3 Objectives of the Study
The Major objective of this research is to determine the effect of customer relationship management on performance of some Airline operating in Akanu lbiam international Airport in Enugu state, Nigeria. Therefore, the specific objectives are to: i. ascertain the extent to which high quality services affects customer
satisfaction of airline operators in Akanu lbiam international Airport Enugu state, Nigeria.
ii. determine the effect of customer services on profitability of airline operators in Akanu lbiam international Airport Enugu state, Nigeria. .
iii. ascertain the relationship that exists between information technology, and employee performance of airline operators in Akanu lbiam international Airport Enugu state, Nigeria.
iv. determine the relationship between knowledge creation and productivity of
airline operators in Akanu lbiam international Airport Enugu state, Nigeria.
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1.4 Research Questions
This study will be guided by the following Research questions:
i. To what extent does high quality services affect customer satisfaction of airline operators in Akanu lbiam international Airport Enugu state, Nigeria?
ii. What effect does customer services have on profitability of airline operators in Enugu state, Nigeria?
iii. what is the relationship that exist between information technology and employee performance of airline operators in Enugu state, Nigeria?
iv. What is the relationship between knowledge creation and productivity of airline operators in Enugu state, Nigeria?
1.5 Research Hypotheses
i. High quality services to a great extent positively affect customer satisfactions of airline operators in Enugu state, Nigeria.
ii. Customer services positively affect profitability of airline operators in Enugu state, Nigeria.
iii. Information technology significantly relates to employee performance of airline operators in Akanu lbiam international Airport Enugu state, Nigeria.
iv. Knowledge creation positively relates to productivity of airline operators in
Akanu lbiam international Airport Enugu state, Nigeria.
1.6 Significance of the Study
The study will be beneficial to the selected airlines operating within Airport under study as it provides the needed information pertaining to the management of customers’ relationship in aviation industry and, thus, making them proactive in dealing with their customers and other stakeholder in the industry.
This study will also be very useful to the various stakeholders in the transport sector, financial institutions, and service industry professional in formulating better policies and programmes that will enhance the effective management of customer relationship which will improve performance. It will also help organizations to establish a cordial relationship between the staff and the customers thereby motivating the employees (i.e. staff) to give off their best this affect customer positively and enhances profitability of the institution. This study will be beneficial to all those who make use of Airline flight information system (ARSs), flight operators, customers, travel
agents and airline agencies. The study will also be useful to the researcher and future researchers as sources of secondary data for their research and academic enquiry.
1.7 Scope of the Study
On the basis of the subject matter, the study focus on the effect of customer relationship management on performance of selected Airline operating in Akanulbiam international Airport in Enugu state, Nigerian. On the basic of Geographical area Aero contractor, Arik Air, Air peace, Medview Airline, Ethiopian Airline, were considered which are located in Enugu East local government area of Enugu state, Nigeria. Hence, these firms were purposively selected with the criteria that they are the major operators in Enugu state international. Finally, on the basis of time frame the study will cover the period between 2008 and 2015.
1.8 Limitation of the Study
The major constraints of the study are:
Attitude of the Respondents
The unwillingness of some of the management to divulge strategic information in the name of confidentiality was limitation to this study and some of the respondents showed negative attitude towards the study by failing to supply some necessary information. But this was overcome through the use of journal published by the firms and past researcher.
Non availability of Research Materials
Being an area of concern to the government in developing the economy, coupled with the present economic crisis rocking the nation and the aviation sector, the management of some airlines withholds some information that should have been of great benefit to the researcher. This was overcome through views and contributions of analyst in the media and materials from the internet.
1.9 Definitions of Contextual Terms
Corporate governance is an internal system encompassing policies, processes and people, which serve the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity and integrity. Customer focus is an approach to achieving organizational success by aligning systems, processes and activities around a common purpose – the customer
Customer Relationship Management is a set of methodologies, processes, software and systems that helps institutions and companies in creation effective and organized management of customer relationship
Customer retention as the marketing goal of preventing customers from going to the competitor
Customer satisfaction is customer’s overall evaluation of services.
Employee performance is the record of outcomes achieved, for each job function, during a specified period of time.
Knowledge management includes learning about customer needs and wants, dissemination of this knowledge within the organization
Organizational performance is the net result of the combined efforts of all individuals and groups in the organization
Productivity is the ratio between the output volume and the volume of inputs
Profitability is the ability of a given investment to earn a return from its use.
Service quality is the consumers overall impression of relative inferiority/superiority of the organization and its services.
This material content is developed to serve as a GUIDE for students to conduct academic research
EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT ON PERFORMANCE OF SELECTED AIRLINES OPERATING IN AKANU IBIAM INTERNATIONAL AIRPORT IN ENUGU STATE NIGERIA>
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