EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT ON PERFORMANCE OF SELECTED AIRLINES OPERATING IN AKANU IBIAM INTERNATIONAL AIRPORT IN ENUGU STATE NIGERIA

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.

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