Customer Retention Strategy of a Service Organization: A Study on Agrani Bank Ltd.
Customer Retention Strategy of a Service Organization: A Study on Agrani Bank Ltd.
Once Mhamta Gandi told, “A customer is the most important visitor on our premises. He is not depending on us. We are depending on him. He is not an interruption on our work. He is the purpose of it. He is not an outsider on our business. He is a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so.”
The banking industry is highly competitive, with banks not only competing among each other; but also with non-banks and other financial institutions. Most bank product developments are easy to duplicate and when banks provide nearly identical services, they can only distinguish themselves on the basis of price and quality. Therefore, customer retention is potentially an effective tool that banks can use to gain a strategic advantage and survive in today’s ever-increasing banking competitive environment.
In Bangladesh 57 listed banks are operating there operations. Most of the banks are local private, some are Govt. owned and rests are MNCs. The majority of Bangladeshi banks are not very diversified in terms of the products and services they offer. This suggests that the banking industry has reached the maturity phase of the product lifecycle and has become commoditized, since banks offer nearly identical products. This carries the danger of creating a downward spiral of perpetual price discounting--fighting for customer share. One strategic focus that banks can implement to remain competitive would be to retain as many customers as possible.
The key factors influencing customers’ selection of a bank include the range of services, rates, fees and prices charged. It is apparent that superior service, alone, is not sufficient to satisfy customers. Prices are essential, if not more important than service and relationship quality. Furthermore, service excellence, meeting client needs, and providing innovative products are essential to succeed in the banking industry. Most private banks claim that creating and maintaining customer relationships are important to them and they are aware of the positive values that relationships provide.
“In the past, many companies took their customers for granted. Customers often did not have any alternative suppliers, or the other supplies were just as poor in a quality and services, or the market was growing so fast that the company did not worry about fully satisfying its customers. A company could loses 100 customers a week, but gain another 1000 customers and consider its sales to be satisfactory. Such a company, operating on a ‘leaky bucket’ theory of business, believes that there will always be enough customers to replace the defecting ones. “(Kotler - p. 405)
Managing customer relationship effectively and effectively boots customer satisfaction
and retention rates. Organizations have discovered and research studies have shown that retaining current customers is much less expensive than attempting to attract new ones. Companies have come to realize that in order to develop successful long-term, relationship with customers they should focus on the “economically valuable” customer, while keeping away and eliminating the “economically invaluable” ones. Proper Customer relation management practices can potentially impact customer satisfaction rating and can potentially lead to increase customer retention.
This general objective of the study is to indentify customer’s satisfaction level and know about the factors of influencing customer satisfaction level with some specific objectives such as ways to maximizing customer satisfaction level, reasons behind the current customer’s quit and path for retaining dissatisfied customer.
The findings of the study are based on the quantitative sources of data. The data is collected through the structured questionnaire. Convenience sampling technique is used when collected the data from the respondents. The questionnaire gathered information on consumers’ perceptions of their banks, the reasons they remain with their banks, and reasons why they might switch to a rival. Likert-format items were presented with 5-point scales, where 1 = "strongly disagree," 3 = "neither disagree nor agree," and 5 = “strongly agree." The sample size of the study is limited to 50 and the respondents are solely from Barisal Metropolitan City area.
The constructs investigated in this study all received negative marks by the respondents as factors that would influence their decision to stay with or leave their current banks. The most important construct (by mean score) was customer satisfaction, followed by corporate image and switching barriers. These results lead to suggestions for bank managers to consider as to how they might improve customer retention in today’s competitive banking environment- a long way to go for retaining the customers.
The only positive sign for Agrani Bank Ltd. is there convenience location and branch location. But the performance form other factors is so vague to draw positive sign from this. In order to compete in the market, you have to retain your customers because customers are king and queen of any business. To retain them is a very tough task because they always searching for better option. Many study proved that attracting new customers is very costly than retaining current customers. Currently, Agrani Bank Ltd is facing serious problem in retaining the customers and it will continue until the bank takes necessary steps to attracting and retaining the customers.
When customer are asked to report perceived satisfaction they reported that for the case of accuracy of records and transactions they are not fully satisfied as the mean value of them is around 3.25. But when they are asked about to rate the electronic transactions it’s quite frustrated for the customers because banks are not able to provide them electronic method of transactions. So, the bank official should take necessary steps to use electronic systems which will save the customers valuable times and ensures security. Also, the bank has severe crisis in serving their customers- approach of the staff and efficiency of the staff is questionable dictates by the mean value around 2. We are living in world where most people want modern amenities but the appearance of the Agrani bank branches is so obsolete. To compete in the market perfectly the branches should be modernized.
The bank is known by all- proved by having a mean value more than 4. But in case of reliability, trustworthiness, and unique services compared to others the bank is facing very poor result. They have huge coverage in the market- wide area network but customer can’t rely on the bank, can trust the bank and don’t have any unique features. How long customers will maintain their account in the bank???? So, for changing the alarming situations the bank officials need to be sincere in serving customers and try to innovate something for the customers.
Agrani bank has no clear competitive advantage over competitors. Do not have excellent service quality (1.36), do not use latest technology, no clear message to the market i.e. advertisement (1. 32). How long customer will tolerate this??? So, the bank authority should take some immediate steps to improve service quality by training officers, promoting technology, making better ads, promoting cards, and overall availability of ATM can change the scenario.
From the study it is quite clear that the bank has no clear retention programs. At such a condition, to compete in the market the authority has come up with some immediate steps. Steps like removing bureaucracy from the systems, zero tolerance on corruption, officers should be trained, promoting technology based banking systems and change of mind is obviously necessary. Because it is mind game- all the officials of here think that customers are bound to come there bank and it is a huge mistake. All the problems of Agrani Bank can be solved by changing the mind and thinking only. Because-
“The only value your company will ever create is the value that comes from customers-the ones you have now and the ones you will have in the futures. Businesses succeed by getting, keeping, and growing customers. Customers are the only reason you build factories, schedule meetings, lay fiber optic lines, or engage in any business activity. Without customers, you don’t have a business.” - Martha Rogers
Writers:
Shaikh Rashed Al Imran and Shakila Islam Evana
Can be reached at rashed_imran@outllook.com and shakilaevana@gmail.com