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EFFECTS OF CUSTOMER RELATIONSHIP MANAGEMENT ON

CUSTOMER RETENTION BY AGRIBUSINESS FIRMS IN ABA

METROPOLIS OF ABIA STATE, NIGERIA

BY

CHIEMELA, CHINEDUM . JACHINMA.

PG/M.Sc/12/64561

DEPARTMENT OF AGRICULTURAL ECONOMICS

FACULTY OF AGRICULTURE

UNIVERSITY OF NIGERIA NSUKKA

JUNEJULY, 20154

1

TITLE PAGE

EFFECTS OF CUSTOMER RELATIONSHIP MANAGEMENT ON CUSTOMER

RETENTION BY AGRIBUSINESS FIRMS IN ABA METROPOLIS OF ABIA STATE,

NIGERIA

BY

CHIEMELA, CHINEDUM .JACHINMA.

PG/M.Sc/12/64561

An M.ScC DISSERTATION SUBMITTED TO THE DEPARTMENT OF

AGRICULTURAL ECONOMICS, UNIVERSITY OF NIGERIA, NSUKKA IN PARTIAL

FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF MASTERS OF

SCIENCE (M.ScC) DEGREE IN AGRICULTURAL ECONOMICS

i

JUNEJULY, 2015414

APPROVAL PAGE

EFFECTS OF CUSTOMER RELATIONSHIP MANAGEMENT ON CUSTOMER

RETENTION BY AGRIBUSINESS FIRMS IN ABA METROPOLIS OF ABIA STATE,

NIGERIA

BY

CHIEMELA, CHINEDUM .J.

PG/M.Sc/12/64561

APPROVED BY:

_______________ ____________ ____________________ ____________

Dr. F.U. Agbo Date Prof. S.A.N.D. Chidebelu Date

(Supervisor) (Head of Department)

ii

CERTIFICATION

CHIEMELA, Chinedum .Jachinma. a postgraduate student in the Department of Agricultural

Economics, with registration number PG/M.Sc/12/64561 has satisfactorily completed the

requirements for the award of Degree of Masters of Science (M.Sc) in Agricultural Economics.

The work embodied in this dissertation, except where duly acknowledged, is an original work

and has not been previously published in part or full for any other Ddiploma or Ddegree of this

or any other University.

_______________ ____________ ____________________ ____________

Dr. F.U. Agbo Date Prof. S.A.N.D. Chidebelu Date

(Supervisor) (Head of Department)

________________ _____________

External Examiner Date

iii

DEDICATION

This piece of work is dedicated to God Almighty and My Parents,

Professor and Mrs. Emeka Joseph Otagburuagu for their endless Love..

iv

ACKNOWLEDGEMENT

My utmost gratitude goes to Almighty God for the precious gift of life and provisions

throughout the duration of this work. Words alone cannot express my immense gratitude to

innumerable friends, family, loved ones and colleagues who contributed in one way or the other

to the success of this work.

To mention but a few, my profound gratitude goes to my supervisor, Dr. F U Agbo for

his unreserved comments and directives throughout the duration of my work.

My deep gratitude goes to Prof. S.A.N.D. Chidebelu, the Head of Department who has

been a great source of academic inspirations. I would like to express my immense gratitude to

the former Head of Department, Prof. E.C. Okorji, for his fatherly roles he played as the Head of

Department to the greatest advantage of students of which I am a beneficiary.

My profound gratitude also goes to Prof. (Mrs.) A.I. Achike, Prof. C.J. Arene, Dr. A.A.

Enete, Dr. B. Okpukpara, Mr. P.B.I. Njepuome, Miss. S.N. Chude and other academic staff of

v

the Department of Agricultural Economics, University of Nigeria, Nsukka for their constructive

suggestions which had further helped a great deal to sharpen the focus of the study.the entire

postgraduate students of Agricultural Economics (2012/2014 set) especially those who have both

served as valuable classmates and close friends in person and to my best friend Chude Stella

Nwawulumaru.

Finally, I’m forever indebted to my parents Prof. and Mrs. E. J. Otagburuagu, my wife

Mrs. S.N Chiemela and my siblings Mrs. Adanna Wamah, Mrs. Nwamaka Nzotta, Barr. Emeka

Otagburuagu, Engr. Victor Otagburuagu, Engr. Obichi Otagburuagu and Chimanma

Otagburuagu. Thank you all for the love and support which you all have endlessly contributed in

my life.

ABSTRACT

The purpose of this research is to examine the effects of customer relationship management (CRM) on customer retention by agribusinesses in Aba Metropolis of Abia State. To achieve the aim of this study, fourteen agribusiness firms were randomly selected and from each firm, two staff and five customers were randomly selected. A total of 98 respondents were therefore used for the study. Data were collected from both primary and secondary sources. Primary data were collected using a well structured sets of questionnaire designed for the respondents. The data were analyzed quantitatively using descriptive statistics (means and standard deviations) and binary logit regression analyses. The results of the analyses showed that CRM strategies play major role in customer retention, and there are effective CRM strategies agribusiness firms use that are acknowledged by customers that has encouraged their retention in the various firms. More so, the results obtained showed that certain extents of these strategies of CRM were helpful in customer retention; however certain challenges facing these agribusiness firms were identified. Some socioeconomic characteristics of the customers were found as factors that could affect customer retention (p<0.05), on the contrary, the overall effect of the socioeconomic characteristics of customers and firms were found not to have any significant effect on customer retention (p<0.05). The study concludes that effective CRM strategies are valuable tools for

vi

customer retention. The incorporation of the findings of this research work in CRM strategies would serve as competitive edge to attract and retain potential customers by agribusiness firms.

Key Words – Customer Retention, Customer Relationship Management, Agribusiness Firms, Aba Metropolis

vii

ABSTRACT

In recent years, customer retention strategies have gained increased value among both goods and service providing firms. Although extensive researches exist on the retention and its measures and instruments, studies and research on how agribusiness firms retain their customers remain limited. Hence the purpose of this research is to examine the effects of customer relationship management (CRM) on customer retention by agribusinesses in Aba Metropolis of Abia State. To achieve the aim of this study, fourteen agribusiness firms were randomly selected and from each firm, two staff and five customers were randomly selected. A total of 98 respondents were therefore used for the study. Data was collected from both primary and secondary sources. Primary data was collected using a well structured questionnaires designed for the respondents. The data was analyzed quantitatively using descriptive statistics (means and standard deviations) and binary logit regression analyses. The results of the analyses showed that CRM strategies play major role in customer retention, and there are effective CRM strategies agribusiness firms use that are acknowledged by customers that has encouraged their retention in the various firms. More so, the results obtained showed that certain extents of these strategies of CRM were helpful in customer retention; however certain challenges facing these agribusiness firms were identified. Some socioeconomic characteristics of the customers were found as factors that could affect customer retention (p<0.05), on the contrary, the overall effect of the socioeconomic characteristics of customers and firms were found not to have any significant effect on customer retention (p<0.05). The study concludes that effective CRM strategies are valuable tools for customer retention. The incorporation of the findings of this research work in CRM strategies would serve as competitive edge to attract and retain potential customers by agribusiness firms.

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TABLE OF CONTENTS

Title Page i

Approval Page ii

Certification iii

Dedication iiiv

Acknowledgement iv

Abstract

v

Table of Contents vii

List of Tables viiix

List of Figures viiix

Abstract xi

CHAPTER ONE: INTRODUCTION

ii

1.1 Background Information- - - - - - - - 1

1.2 Problem Statement - - - - - - - - 5

1.3 Objectives of the study - - - - - - - - 8

1.4 Hypotheses - - - - - - - - 9

1.5 Justification of the study - - - - - - - 9

1.6 Limitations of the study 9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Concept of Customer Relationship Management - - - - 10

2.1.1 Relationship Marketing and Customer Relationship Management 12

2.1.2 Customer Relationship Management for Agribusiness - - - - 13

2.2 The Role of Customer Relationship Management Process in Customer Retention 16

2.3 Effects of Socio-Economic Characteristics on Customer Retention 16

2.3.1 Gender of Customers 16

2.3.2 Age of Customer 17

2.3.3 Income Levels of Customer 18

2.3.4 Educational Level of Customers 18

2.4 Effective CRM Strategies and Their Effects on Customer Retention - - 18

2.4.1 Strategies for Customer Relationship Management Initiatives - - - 19

2.5 Determine the Extent to Which Effective CRM CRM influence can lead To Customer

Retention 25

2.5.1 Effect of CRM on Customer Satisfaction - - - 26

2.5.2 Relating CRM and Customer Loyalty - - - - - - 27

2.5.3 Effect of CRM on Customer Loyalty - - - - - - 27

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2.5.4 Customer Retention - - - - - - - - 29

2.5.5 Effects of CRM on Agribusiness Firms- - - - - 30

2.6 Challenges and Benefits of using CRM in Agribusiness - - - - 31

2.6.1 Benefits of CRM in Agribusiness - - - - - - 32

2.7 Theoretical Framework - - - - - - - 35

2.8 Analytical Framework - - - - - - - 37

2.8.1 Likert rating scale - - - - - - - - 37

2.8.2 Binary Logit Model - - - - - - - - 38

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Study Area 39

3.2 Sampling procedures 39

3.3 Validity and Reliability Test Result 40

3.4 Data Collection 40

3.5 Data Analysis 41

3.6 Model Specification 41

3.6.1 Likert Rating Scale 41

3.6.2 Binary logit model 42

CHAPTER FOUR: RESULTS AND DISCUSSION


4.2 The Effects of Socioeconomic Characteristics of Both Customers and Firms on

Customer Retention 47

4.2.1 Effects of Socioeconomic Characteristics of Customers on Customer Retention 47

4.2.2 The Effect of Firms Characteristics on Customer Retention 51

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4.3 Effective Customer Relationship Management Strategies 54

4.4 The Extent to Which Effective CRM Can Lead to Customer Retention 55

4.5 The Effects Of CRM on Agribusiness Firms 56

4.6 The Challenges of agribusiness firms in their practice of CRM 58

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS AND

CONCLUSION

5.1 Summary of findings 60

5.2 ConclusionRecommendations

62

5.3 RecommendationsConclusion

63

REFERENCES

v

LIST OF TABLES

Table 4.1: Descriptive Statistics 46

Table 4.2.1: Dependent Variable Encoding 48

Table 4.2.2: Classification Tablea 48

Table 4.2.3: Model Summary 49

Table 4.2.4: Showing Socioeconomic Characteristics of Customers that could

have Effect on Customer Retention 50

Table 4.2.5: Hosmer and Lemeshow Test 51




Table 4.3.4: Showing Socioeconomic Characteristics of Firms that could have

Effect on Customer Retention 53






vi

LIST OF FIGURES

Figure 2.1: A six-step strategy of the CRM. 19

19

vii

ABSTRACT

In recent years, customer retention strategies have gained increased value among both goods and service providing firms. Although extensive researches exist on the retention and its measures and instruments, studies and research on how agribusiness firms retain their customers remain limited. Hence the purpose of this research is to examine the effects of customer relationship 4management (CRM) on customer retention by agribusinesses in Aba Metropolis of Abia State. To achieve the aim of this study, fourteen agribusiness firms were randomly selected and from each firm, two staff and five customers were randomly selected. A total of 98 respondents were therefore used for the study. Data was collected from both primary and secondary sources. Primary data was collected using a well structured questionnaires designed for the respondents. The data was analyzed quantitatively using descriptive statistics (means and standard deviations) and binary logit regression analyses. The results of the analyses showed that CRM strategies play major role in customer retention, and there are effective CRM strategies agribusiness firms use that are acknowledged by customers that has encouraged their retention in the various firms. More so, the results obtained showed that certain extents of these strategies of CRM were helpful in customer retention; however certain challenges facing these agribusiness firms were identified. Some socioeconomic characteristics of the customers were found as factors that could affect customer retention (p<0.05), on the contrary, the overall effect of the socioeconomic characteristics of customers and firms were found not to have any significant effect on customer retention (p<0.05). The study concludes that effective CRM strategies are valuable tools for customer retention. The incorporation of the findings of this research work in CRM strategies would serve as competitive edge to attract and retain potential customers by agribusiness firms.

1


2

CHAPTER ONE

INTRODUCTION

1.1 Background Information

Today, businesses follow different marketing strategies to survive in the highly

competitive world by identifying, acquiring and retaining most important and economically

viable customers as well as developing on-going and long-lasting relationship with them, (Roger,

2005). A business that wants to succeed in today’s global competitive market, where customers

are empowered and brand loyalty erosion is increasing, will have to move to customer

relationship management, (CRM). Customer relationship management enables organizations to

provide excellent real-time customer service through the effective use of individual account

information (Kotler and Keller, 2006). This requires a more complex approach. Organizations

need to investigate customer needs, and build relationships with both existing and potential

customers (Rootman, 2000).

Winner, (2001) noted that in a competitive environment, customer relationship

management is critical to a company’s profitability and long-term success. To become so

customer-focused, all managers, professionals and executives of marketing as well as employees

of the organization must understand how to build profitable relationship with each customer and

to make managerial decisions every day designed to increase the value of both the company and

the customer that will grow their value from the customer-based strategy, (Peppers and Roger,

1993). The broad application of CRM has led to a multitude of definitions. Berndt, (20059)

defined CRM as “an enterprise-wide commitment to identify the individual customers of an

organization, and to create a relationship between the organization and these customers as long

as the relationship is mutually beneficial. Customer Relationship Management evolved from

2

organization process such as relationship marketing (RM) and increased emphasis on improved

customer retention through effective management of customer relationships. The aim of

customer relationship management is to establish long-lasting relationships with the most

important customers and generate increased customer satisfaction, loyalty, and retention.

Roger (2005) observed that developing a better understanding of existing

customers allows companies to collaborate, respond, and communicate more effectively to

significantly improve retention rates of their customers. Currently, various companies begin to

establish their networks to new as well as existing customers to increase ongoing long-term

customer satisfaction, retention and loyalty. To be able to maintain this, some companies engage

in competition by implementing the principles of relationship marketing via strategic and

technology-based customer relationship management applications. Customer Relationship

Management is an important element of organization which helps them assess customer

satisfaction, loyalty, retention, and profitability in terms of repeat purchases, money spent, and

longevity, (Chen and Popovich, 2003).

The origin of CRM is from relationship marketing that is aimed at improving long

run profitability by shifting from transaction-based marketing that stresses new customers to

customer retention with effective management of customer relationships (Chen and Popovich,

2003). According to Chen and Popovich, (2003) CRM is a more complex and sophisticated

application that mines customer data pooled from all customer touch points, a single and

comprehensive view of a customer while uncovering profiles of key customers and predicting

their purchasing patterns. It also involves acquiring a better understanding of existing customers,

which in turn allows organizations to cooperate, respond, and communicate more effectively to

improve customer satisfaction and retention as much as possible (Roger, 2005).

3

The increase in competitive intensity is forcing marketers to be concerned with

customer retention since retaining customers is less expensive, and perhaps, has a more

sustainable competitive advantage than acquiring new customers. As several studies have

indicated, marketers are realizing that it costs less to retain customers than to compete for new

ones (Resenberg and Czepiel, 1984). For instance, it has been established that retention of five

additional percent of the company’s customers can increase profits by almost one hundred

percent, (Reichheld and Sasser, 1990). The goal of CRM is to create an effective customer

relationship as much as possible and develop future competences within the company.

Davis and Goldberg and Davis, (1957) viewed agribusiness as the total operations

involved in the manufacture and distribution of farm supplies, production activities on the farm,

storage, processing and distribution of farm commodities and items made from them. They went

on to add that agribusiness involves three sectors which include:

i The input sector which deals with the supply of inputs required by the farmers for raising

crops, livestock and other allied enterprises. Usually, the inputs in this regard include

seeds, fertilizers, chemicals, marketing, fuel etc.

ii The farm sector which aims at producing crops, livestock and other products.

iii The product sector which deals with various aspects like storage, processing and

marketing the finished products so as to meet the dynamic needs of consumers.

Therefore, agribusiness is the sum of all the operations or activities involved in the

business of production and marketing of farm supplies and farm products for achieving the

targeted objectives. Agribusiness in the context of this study will focus on the input sector that

deals with various aspects of supply of inputs required by farmers for raising crops, processing,

and marketing of finished agricultural product in the study area.

4

According to Tores et al,, (2007), developing effective marketing strategies and

anticipating the needs of current and future customers is one of the most significant challenges

faced by agribusiness firms. The drastic and rapid changes in the structure of farm sector compel

agribusiness firms to continually adapt their marketing strategies in order to remain competitive

and to attract and retain customers. Baran et al, (2008), noted that agribusinesses are

experiencing a trend towards closer relationship between buyers and sellers of agricultural

products in a bid to cope with the uncertainty of environmental changes due to globalization,

rapid technological advances and increasing consumer power. He went on to state that

agribusiness firms strive to achieve competitive advantage by moving away from the adversarial

buyer-seller interactions towards more cooperative long-term relationships that create value and

are difficult to duplicate. Value is created when the competitive abilities of the two trading

partners are enhanced by being in the relationship. It has become increasingly evident that for

agribusinesses to survive and grow, they must begin to meet and exceed the expectations of their

most important assets- their customers. It is only through the process of understanding the

customers’ needs and meeting those needs that agribusinesses can begin to keep and maintain

these customers. Winner (2001), is of the opinion that customer satisfaction and retention is all

about keeping the customer happy with the product and service offering provided. Customers do

not buy what companies sell but rather what those goods and services can do for them (Oliver,

1997).

Understanding customers’ problems and providing solutions too, help to make

customers profitable to the agribusiness firm and make them feel good about the transactions as

well (Tores, et al 2007). As agribusiness firms seek to fulfill the expectations of their specific

customers they can concentrate on providing consistent values that will increase the relationship

5

and retention of customers thereby increasing their chances of more purchases which will also

improve the economic conditions of the business.

1.2 Problem Statement

Customer Relationship Management is a business strategy which leads to the

value for customers, anticipating and managing their expectations, and demonstrating the ability

of and the responsibility to satisfy their needs, (Dominic and Guzzo, 2010). Qualities of services

are critical factors for the success of any business, (Gronroos, 1990). As Rootman ,(2000) points

out, enterprises exist because they have a customer to serve. The key for the achievement of

sustainable advantage lies in delivering high quality service that result in satisfied customers

(Shamham, 1998).

Sharma and Patterson (2000) argue that it is difficult for customers to evaluate

professional services and the benefits of making such investments. Consequently, customers

need to place higher confidence on professional service providers. The central characteristic of a

professional service is that it is a product of the interaction between the providers and the clients

(Thakor and Kumar, 2000). Hence, it becomes essential for firms to identify factors useful in

service conception, provider selection and customer behaviour prediction in such ways that are

satisfactory for both parties involved in the relationship .As a result, if one wants to study the

success and failure determinants of any relationship, the study of both partners’ behaviour in the

interactive process is necessary.

One of the main characteristics of a professional service is the high degree of interaction

that exists between the provider of goods/services and the customer and also the high degree of

uncertainty in terms of what is actually going to be delivered (Lowendahl, 1997). Maister (1993)

in Lowendahl (1997) argues that there are two major factors that make services interesting to

6

look at. The first factor is that quality services involve a high degree of customization. This

means that traditional management principles such as, for instance, standardization, and

supervision are difficult to apply. The second factor is the strong component of face-to-face

interaction with the client, which leads to major challenges in quality assurance, and requires

very special skills of top performers.

Jobber (2001) observedargues that not all service encounters have the potential for a long

term relationship and the service providers must raise the following questions before applying

any relationship marketing activities: “does the customer have an ongoing or periodic desire for

the service? Does the customer have any other alternatives? It is important for service providers

to understand why customers stay or leave and also what creates value for them. In other words,

firms need to identify those customers with whom they wish to create long term relationships.

Winner (2001),) observedargues that in building successful relational exchanges with the

customers, there is a need to understand customer behaviours and to focus on those customers

who can deliver long term profits to the firm. However, no firm can hold on to all its customers

and aim at full customer retention (Egan, 2004). This is due to several factors; one factor is for

example, the fact that in highly competitive markets, customers may switch either temporarily or

permanently to another product or service. Egan (2004), succinctly reiterates this fact in the

statement that firms must know when to ‘cut and run’. Hence, firms are turning more and more

towards seeing customer retention as a strategic tool. Further, Egan (2004) defines customer

retention strategies as strategies focusing on a firm’s existing customers with the aim of securing

a customer’s loyalty over time.

Erikson and Vaghult (2000), pointedargued that in order for firms to benefit from

customer relationships, they need to understand the mechanisms behind it by studying already

7

retained customers. They further argued that however, studying already retained customers is not

an easy task as customer retention is relative to a firm’s specific context. For instance, it is

complicated for a firm to know when the customer should be considered as being ‘retained’. In

some cases, a customer is considered as retained when the customer makes repeated purchase.

However; it then becomes complicated to evaluate how often this customer is expected to

purchase the product or service.

As today’s markets and industries are characterized by high competition, it is crucial for

firms in such environments to create new ways to gain competitive advantage over competitors

(Morgan and Hunt, 1994). Recent studies have shown that strong customer relationships may

provide such competitive advantages for firms. According to Bejou and Palmer (1998), for many

services the essence of marketing is the development of long-term and value-laden relationships

with the customers.

Despite the explosion in the practice of relationship marketing, many questions about

CRM practices continue to be debated in academic journals (Shugan and Sharp, 1997). Though

most CRM practices involve special treatment of a firm’s more valuable customers (Fournier,

Dobscha, and Mick, 1998; Winner, 2001; Rigby and Ledingham, 2004), should firms provide

special services early to increase the number of customers it attracts or later-on to enhance its

ability to keep the consumers already attracted?

Most industry analysts and academics recommend that firms focus on retention rather

than on acquisition (Thomas, Reinartz, and Kumar, 2004). They opinedargue that the cost of

retaining existing customers is considerably lower than the cost of acquiring new customers

(Hart, Heskett and Sasser, 1990; Reichheld and Sasser, 1990). However, systematic empirical

evidence of this is meager (Shuganarp and Sharp 1997; Reinartz and Kumar 2000; Dowling

8

2002). Blattberg and Deighton (1996), observedpoint out that in some industries the low intrinsic

retainability of customers makes retention strategies ineffective. Little or no research has been

done on the effects of CRM on customer retention in agribusiness therefore this study intends to

fill this knowledge gap. by answering the following research questions; what are the roles of

CRM processes in customer retention in the study area? What are the effects of socio-economic

characteristics of customers on customer retention? What are the effective CRM strategies and

their effects on customer retention? To what extent can effective CRM lead to customer retention

in the study area? What are the effects of CRM on agribusiness firms? What are the challenges

of agribusiness firms in their practice of CRM in the study area?

1.3 Objectives of the Sstudy

The broad objective of the study is to examine the effects of customer relationship

management (CRM) on customer retention by agribusinesses in Aba Metropolis of Abia State.

The specific objectives are to:

i. discuss the role of customer relationship management process in customer retention.

ii. examine the effects of socioeconomic characteristics of both customers and firms on

customer retention.

iii. ascertain effective customer relationship management strategies.

iv. determine the extent to which effective CRM can lead to customer retention.

v. ascertain the effects of CRM on agribusiness firms.

vi. examine the challenges of agribusiness firms in their practice of CRM.

[vii.]

[viii.]

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1.4 4 Hypotheses of the study

The following null hypotheseis wereill be tested:

Ho1 Socio-economic characteristics of customers have no significant effect on customer

retention.

Ho2 Firms characteristics have no significant effect on customer retention.

1.5 Justification of the Sstudy

The study will serve primarily as a bridge and springboard for further studies in the

field of customer relationship management (CRM), generally by agribusinesses, particularly

agribusiness firms which have been growing rapidly. The research findings are expected to be of

benefit to the corporate bodies (banks and insurance etc), academic and researchers in general.

The findings of this study has provided detailed record on the strategies of

customer relationship management and their positive effects on customer retention; this will

guide agribusiness firms on how to allocate and combine productive resources towards achieving

a successful customer relationship management strategies. study will focus on the CRM

practices among customers of agribusiness in Aba agricultural zone, and its effects on customer

retention. Therefore, To researchers and students this studythis w has provided ill give

practitioners clues to the important tools necessary to implement a successful CRM program so

as to acquire, maintain, serve and retain its customers and be profitable. The results of this work

can help the managers ofmanagers of agribusinesses as an input to evaluate performance status

of its CRM strategy, in decision making and take timely necessary actions.

1.6 Limitations of the Study

The following limitations were inherent in the study. In the course of carrying out this

research, the researcher was faced with the problem of regulating and tracking down the

11

respondents because of their busy schedules. This was overcome by the researcher going to the

business location of the agribusiness customers.Also, the researcher was faced with time

constraint and inadequate financial resources.

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CHAPTER TWO

REVIEW OF RELATED LITERATURE

The related literature of this study literature of this study was will be reviewed under the

following subheadings:

Concept of customer relationship management

The role of CRM process in customer retention

Socio-Economic characteristics of customers on customer retention

Effective customer relationship management strategies

Effects of CRM on agribusiness firms

Determine the extent or degree to which effective CRM can lead to customer retention

Challenges and benefits of using CRM in agribusiness

Theoretical framework

Analytical framework

2.1 Concept of Customer Relationship Management

Customer relationship management (CRM) as conceptualized by Oghojafor, Aduloju

and Olowokedjo (2011) is a process companies utilize to understand and react to customers’

evolving desires, utilizing detailed customer acquisition, satisfaction and profitability. Vavra

(1992) sees consider CRM only as seeking customer retention by using a variety of after-

marketing tactics that lead to customer bonding or staying in touch with the customer after a sale

is made. Another important facet of CRM is viewed as comprehensive strategy and process of

acquiring, retaining, and partnering with selective customers to create superior value for the

company and the customers. It involves the integration of marketing, sales, and the supply-chain

13

functions of the organization to achieve greater efficiencies and effectiveness in delivering

customer value (Parvatiyar and Sheth, 2001). From this definition, the aim of CRM is to improve

marketing productivity. Marketing productivity is achieved by increasing marketing efficiency

and by enhancing marketing effectiveness (Sheth and Sisodia, 1995). Berry and Gordon (1995),

in broader terms proposed that CRM be seen as attracting, maintaining, and enhancing customer

relationship in multiservice organizations. The Berry (1995), argument was in consonance with

Gronroos, (1990) ) Gummesonand Gummeson, (1987). For instance, Gronroos (1990) and

Gummeson (1987) maintained that relationship with customers be the focus and dominant

paradigm for marketing because marketing is to establish, maintain, and enhance relationship

with customers and other partners at a profit so that the objectives of the parties involved are

met.

In the view of Siomkos and Tsianes, (2006) CRM is essentially a two-way concept. The

task of the first stage is to master the basics of building customer focus, i.e. moving from product

orientation to a customer orientation and defining market strategy from outside in. This means

that the focus should be on customer needs rather than on product features. Thus there is the need

for companies to understand their customers and provide personalized customer services. The

task of the second stage involves moving beyond the basics by not resting on their laurels but

rather pushing the firms’ development of customer orientation by integrating CRM across the

entire customer experience chain through the use of technology to achieve real-time customer

management and by constantly innovating their value proposition to customers (Gronroos,

1990). The focus of CRM is on how to retain customer, (Lockard and Deighton, 1998) and

relationship development (Galbreath, 1998).

Kutner and Cripps, (1997) assert that CRM is established on four building tenets;

14

i Customers should be managed as important assets

ii Customers’ profitability varies and not all customers are equally desirable

iii Customers vary in terms of needs , preferences, buying behavior, and price sensitivity

iv By understanding customer drives and customer profitability, companies can tailor their

offerings to maximize the overall value of their customer portfolio.

Ueno, (2006) in an occasional paper for the US-Japan relations asserts that marketing

operations consist of two sets of activity: acquisition, and retention of customers. The acquisition

of customer is dominant in the world of target marketing and retention of customer is the focus

in the relationship marketing world. Hence, Gray and Byun, (2001) maintain that it is 5 to 10

times more expensive to acquire a new customer than to obtain repeat business from an existing

customer because as the needs of customer became diversified conventional promotions became

less efficient. It assumed that 20% of firms’ customers generate 80% of its profit.

The focuses of many studies on CRM have been on analyzing how customer acquisition,

retention, cross-selling, loyalty programs and order affect firm performance, (Reinartz, 2004).

The role of CRM can be effectively used, to leverage current product portfolio as well as

continuous innovation, (Ernest and Hoyer,, 2010).

2.1.1 Relationship Marketing and Customer Relationship Management

Customer relationship management evolved from the foundation of relationship

marketing and brand loyalty. The rise of the industrial era brought with it mass production and a

division of specialized corporate functions (Parvatiyar and Sheth, 1995), CRM also traces its

historical roots back to the pre-industrial era much of which was due to direct interactions

between producers of agricultural products and their customers, (Sheth and Parvatiyar and Sheth,

1995). According to Chen and Popovich, (2003) CRM is not a concept that is really new but

15

rather due to current developments and advances in information, it has become one of the most

dynamic topics of this present age marketing evolution. Sheth and Parvtiyar and Sheth, (2001),

has attributed the preponderance of CRM in recent times to the emergence of key drivers such as

rapid adoption of total quality management, the growth of the service sector, the existence of

hyper-competitive and empowerment of terms and individuals in organizational process. CRM

derives its roots from relationship marketing which has the objective of improving long term

profitability of customers by drifting away from product-centric marketing. Bose (2002), noted

that CRM was invented because customers differ in their preference and purchasing habits.

According to him, if all customers were alike there will be no need for CRM. Consequently, by

understanding customer drives and customer profitability, firms can better tailor their marketing

offering to maximize the overall value of their customers’ portfolio, (Chen and Popovich, 2003).

The attention of CRM is currently receiving across business is due to the fact that the marketing

environment of today is highly saturated and more competitive, (Chou,Ding and Unithain, 2003).

2.1.2 Customer Relationship Management for Agribusiness

Customer Relationship Management is the alignment of business strategies,

organizational structure and business culture, based on customer information, in order that all

contacts with clients meet their need and achieve business benefit or profit, (Hanic and Domazet,

2011). According to Lovreta, Berman and Petkovic, (2010) the success of an organization

depends on the elements necessary for the proper functioning of marketing in general. These

elements include basic strategic directions of development, and knowledge of business and

competition, knowledge of final customers and business customers, their needs and desires,

characterizing the impact of certain factors on their behavoiour, the actual marketing or market

way of thinking, understanding the role and importance of all persons involved in the process of

16

creating and delivering the value (customers, business partners and employees i.e. Organization),

organization acting is a whole an integrated approach to managing individual channels of

communication and sales, and monitoring of key data. A lot of attention is focused on CRM as a

process of management in order to enhance performance of the organization. However, to reach

high enterprise performance based on various types of benchmarking and other techniques, it is

necessary to develop a system of motivation, without which actions to improve efficiency will

not be sustainable ( Goncharuk, 2012). Also, it needs to be paid attention on the way how the

CRM programs are implemented and managed, and what influence they have on the performance

of agricultural firms. According to Tores et al,, (2007), six activities to include CRM programs

for agricultural business are as follows:

i. Customer Relationship Management objectives

ii. Types of accessible data about customers

iii. Use of customer data for management decision making

iv. Market approach

v. Tactics used to develop, retain and maintain relationship with customers

Assessment of the technological infrastructure that is currently used.

i. Customer Relationship Management Oobjectives; some of the main goals of agricultural

business which directly affect the performance of agricultural firms are; the maintenance of long-

term relationships with customers, gaining the reputation of farmers with customers, providing

value to customers, increase of customer loyalty, achieving mutual trust with customers,

increasing customer satisfaction for products and services.

ii. Access and collection of customer data; abilities, essential to the success of agribusiness

firms are collection of information on prices and customer life cycle. Most operational units of

17

agricultural firms do not collect access to information on prices of services. This is nothing

strange, because the data on the price of services is much more sophisticated data type than

names, addresses or email addresses of the customer. As such, it is very likely that the collection

or access to such data waste resources (money, people, and technology) so not all agricultural

firms are able to gather and assess information on the prices of customer services. The inability

to collect information on the price of customer service and access that information is denying

agricultural firms the opportunity to follow the prices of customer service and to assess whether

they spread too little or too much toward the customers. In contrast, collection or access to such

information puts the firm in a relatively better position to determine how resources are allocated

to individual customers and they can improve profitability and ability to achieve CRM goals.

iii. The use of customer data; the success of CRM in agribusiness firms depends on the extent

of how much their operational units use information about customers. Assessment of marketing

strategies for products and services and customer segmentation based on the value to agricultural

firms that each customer represents for organization is the key to the success of agricultural

firms. The use of customer data to analyze trends, analyze the impact of competition on

customer of operational units of the agricultural firm, evaluate marketing strategies for products

and services, create a product and customer service, and finally segment customers based on the

value that each has for the firm.

iv. Market approach; when approaching the market, agribusiness firms need to use strategies

such as; superior quality, superior service, product differentiation, innovation, customized offer

of products and services, as well as low price. The main principle to attract and retain customers

is centering on superior service and quality of products. Advanced agribusiness organizations

tend to focus on innovation- their position with regard on the effect may be a key factor for the

18

application of this market approach. However, these firms generally include large companies;

therefore their ability to attract more resources (money, people) can also have a strong effect in

their marketing approach in this way.

v. Tactics used to develop, retain and maintain relationship with customers; Customer

Relationship Management is primarily developed as a need to achieve close relationship with

customers. Using the CRM methodology, it is possible to generate a close relationship with

customers, and contribute to the success of the firm, (Milovic, 2012). Trust greatly affects the

success of CRM. According to Milovic, (2012) CRM is a strategy based on the focus on the

customer, customer knowledge, and on the goal to meet customer expectation. CRM involves

management based on customer’s dependent approach. Furthermore, effective CRM provides the

value as defined by the customer at any point in the customer life cycle and allows multi-channel

interaction.

2.2 The Role of Customer Relationship Management Process in Customer Retention

Today, CRM plays the pivotal role for strategic position of any organization including

agribusiness firms. CRM focuses on the integration of customer information, knowledge for

finding and keeping customer, to grow customer lifetime value. It also has an important role to

help organization to keep their customers and to make them loyal. Organizations should know

the reasons for leaving customers and find the ways of keeping them, (Raghu Ramakrisman,

2005). Therefore, CRM role is more important in customer retention and by regarding the

importance of CRM, the analysis of CRM seems necessary.

2.3 Effects of Socio-Economic Characteristics of Customers on Customer Retention

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Socio-Economic characteristics of customers on customer retention are reviewed in

terms of their gender, age, educational background, income levels and marital status.

2.3.1 Gender of Customers

Customer characteristics such as gender have a great impact on the level of customer

satisfaction, loyalty and retention (Bryant and Jaesung, 1996; Mittal , Wagner and Kamakura,

2001; Akinyele ,and Ihuinmoyan, 2010). Researchers have shown that customers’

characteristics moderate outcomes of customer satisfaction such as repurchase intentions and

share of the wallet (Mittal 2001; Cooil 2007). Many studies have been carried out to evaluate the

difference between men and women on satisfaction, retention and loyalty levels. There are many

studies that have found customer satisfaction, retention and loyalty to be unrelated (Carmel,

1985; Limm, 1982; Akinyele and Ihinmoyan, 2010). However, many studies have found that

women report greater overall satisfaction (Buller and Buller, 1987). On the other hand, there are

studies that have identified men as being less satisfied (Chistick, 1997; Singh, 1990). It has been

found that there is discrimination in the treatment of customers with men getting precedence over

women, (Zinkhan and Stoidin, 1989). Male customers receive more positive expressions

(greetings and thanking) than female customers. Weimann Zinkhan, (19895) opines that male

customers use a more assertive manner in getting service providers. Women are more sensitive

to relational aspects encounter while men are more sensitive to core aspects and positive

relational abilities when the service heavily relies on interpersonal interactions, (Lacobucci and

Ostrom, 1994). Lim, and Kumar (19982008) concluded that women are influenced by service

quality more strongly than men whereas men are focused on perceived economic value in loyalty

decisions. Purchases by women are more influenced by interpersonal components of the service

interactions than men (Lacobocci and Oshtrom, 1993; Zeithamal, Rust and Lemon 2001 1985).

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2.3.2 Age of Customer

Age is another socio-economic characteristic that has attracted considerable research

attention. The work of East, Harms, Willson and Lomax (1995), added suggest that loyalty,

satisfaction and high customer retention is higher in older customers. The customer loyalty and

retention level was shown to be high in 25-44 age groups and was growing with the increase in

age.

2.3.3 Income Levels of Customer

Income level of customers is another socio-economic characteristics variable that has an

important effect on consumption and the volume of sales. If customers have more resources, they

tend to purchase more or spend more. This leads to higher sales and profits for firms and

companies (Hasty and Reardan, 1997). Several studies suggest that there is a link between

customer incomes, loyalty, satisfaction and customer retention (Homburg and Giering,

2001;Tate, 1961), although some studies did not find any associations between these four

variables.

2.3.4 Educational Level of Customers

Educational level of customers is another socio-economic characteristic that has effect on

customer purchasing pattern which on the long run increases customer loyalty, satisfaction and

customer retention and it is assumed that high level of education has a greater effect on customer

purchasing pattern, (Farley, 1964). Highly educated customers usually engage more in

information gathering and processing prior to the decision making process, ( Schninger and

Sciglimpughlia, 1981), and use more information prior to decision making while less educated

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Keep updating the customer profile

Approach them with a mix of innovative products/services, customer care and growth opportunities

Cover them with an IT architecture to feed their aspirations

Boldly choose the target customer for the first wave of CRM

Rank or cluster them in accordance with cost, revenue, profit potential and relationship intention

Calculate the lifecycle life of your customers

customers rely more on fewer information cues,( Capon and Burke, 1980; Claxton, Frey and

Bernard, 1974). Since better educated customers feel more comfortable when, dealing with and

relying on new information, (Homburg and Guering, 2001), they are more likely to base their

choice on the evaluation of information given to them.

2.4 Effective CRM Strategies and Their Effects on Customer Retention

Given the importance of the CRM business, it is a high-stake strategy and it is planned

carefully and holistically (Buttle, 1996; Boar, 1995; Brown, 1999). It is an orchestration of a

series of inputs and processes that must come right.

Figure 2.11 shows a six-step strategy of the Customer Relationship Management (Boar, 1995).

Effective CRM strategy needs to be customized for a business as a blind imposition will

only impede its profitability, (Peterson, 1999). As a rule, the CRM strategy is expected to vary

22

from one business to another and indeed from one segment to another, (Peppers and Rogers,

1996).

2.4.1 Strategies for Customer Relationship Management Initiatives

According to Gray and Byun, (2001) more than 57% of chief executives in a survey with

191 respondents believe that the major strategy of CRM initiatives is customer satisfaction and

retention. Keen (2004), states that one of the strategies of CRM is that companies provide

consistent and up-to-date customer catalog, order and inventory data across all their sales

channels. According Chye and Gerry (2002), one strategy of CRM is to change the organization

into becoming customer-centric with a major focus on customer profitability as compared to line

profitability. Again, they lamented that the understanding gained from CRM enables companies

or firms to estimate the profitability of individual accounts. They further add that organizations

are then able to differentiate their customers properly with respect to their profitability.

Organizations can then build predictive models to retain their best customers by identifying

symptoms of dissatisfaction and making sure that the customers who generate profit are retained.

Peppers (1999), summarized the following as the basic strategies of CRM initiatives:

Customers’ identification: The organization must be able to identify the customer via

marketing channels, interactions and transactions for a period of time in order to provide value to

the customer by serving his or her needs at the right time with a right product or service.

Customer differentiation: Every customer has his or her own needs and demands and therefore from the organizations’ point of view, customers have their own lifetime value.

Customer interaction: One of the most important strategies of CRM by an organization is to keep track of customer behavior and needs over time. This is because, from a CRM point of view, the customers’ long term profitability and relationship with the company is very important. This is the reason why a company should continue to learn about its customers and in a continous manner.

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Personalization: This can be defined as treating each customer differently or uniquely and that is

the major strategy of CRM.

According to Stone, Woodcock and Macthcyner (2000), there are two main objectives

that influence the need for CRM technologies to support the completion of CRM strategies.

These, according to Stone, Woodcock and Macthcyner, (2000) are as follows:

[i.] i The need for a higher quality in CRM in order to meet the need of the customers.

CRM systems according to Stone, Woodcock and Macthcyner (2000) are increasingly

being used to arrange companies’ resources in a proper order.

i. ii The need of greater productivity in CRM. CRM systems are giving the possibility to

automate work previously done by hand.

According to Thompson, (2004) the main CRM strategies are;

[ii.] iii To acquire customers

[iii.] iv To grow profitable customer relationship

[iv.] v To retain profitable customers

[v.] vi To create competitive advantage

According to Ryales and Knox (2001), the CRM strategies for service application

include:

1. Cost reduction and increase profitability: A profit center should be created out of a

service organization to generate more revenues and also operational and customer

information should be used to reduce costs.

2. The use of service to differentiate products: Organizations should use service to

distinguish business by offering service as a unique feature using multiple channel

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communication with customers, and having full enterprise and a wide view of customers’

information.

3. The use of service to delight customers: Organizations should provide and enhance

customer care and customer information management across the organization to improve

customer satisfaction and loyalty.

According to Deck (2004), the strategy of CRM is that it should help organizations to use

technology and human resources to understand the behavior of customers and the value of those

customers. If it works that way, an organization can:

i Provide better customer services

ii Make call centers more efficient

iii Cross- sell products more effectively

iv Help sales staff to close deals faster

v Simplify marketing and sales processes

vi Discover new customers

vii Increase customer revenues

Xu (2002), indicated that one of the strategies of CRM is to improve and increase

communication between a company and its customer as well as within the company and itself.

Also, they add that not only should competing departments such as sales and marketing,

accounting, customer service or support, and manufacturing of fulfillment within the customer be

enhanced. They further indicated that it should help in a fundamental shift in the information

flow within an enterprise from quantitative data to qualitative data.

Trepper (2000), indicated that there are three critical strategies that need to be fulfilled by

a CRM system. These are as follows:

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i. To enable the sales, marketing and the service staff to perform their duties more like a team

that will lead to a reduced cost and increased efficiency.

ii. To provide a complete view and consistent view of each customer for all customer

interactions by their firm.

iii. To provide the customer with complete view of the company, irrespective of how the

customer contacts the company.

According to Burnett (2001), CRM strategies can also be grouped under the following

categories:

i Increased profitability margins: by knowing the customers better, efforts can be made to

switch less profitable accounts to lower cost/ service delivery channels.

ii Decreased sales and marketing administrative cost: the decrease can occur if the

organization specifies and has good knowledge about its target segment customers. As a

result, the organization will use its resources better when no effort is a waste of money or

time.

iii Improved customer retention rate: the increase in customer retention rate will occur

because customers will find that the offer is more in line with customers’ specified needs

According to Xu, (2002) the strategy with CRM is to improve a customer’s experienced

value of how they interact with companies, which will create satisfaction, creates loyalty, and

thus bring more sales. He again states that, the value of interaction will be improved by

increasing the company’s capacity to understand a customer and its specific need.

Dyche (2001), argues that organizations adopt CRM based on the following strategies:

i Customer profitability and value modeling: Extensive processing and detailed data

combined with profitability modeling products have made it possible for organizations to

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know which of their customers are valuable and thus worth keeping. Now, organizations

can measure the customers who are price -sensitive, those who bring in small margins and

might never recoup their value, irrespective of their purchase volume; yet some customers

who are very low volume purchasers were nevertheless highly profitable. However,

profitability is only one area of revenue line. A customer can be unprofitable at the short

run but could have referred many high-value customers to the organization, thereby making

him very valuable. Again, some customers could be very profitable and valuable at the long

run.

ii Customer retention: Knowing and understanding that some customers have left the

company and knowing specifically who has left is even more important, and also knowing

why these customers left is not an easy task at all. The more customers leave, the revenue

to the company decreases, and hence the greater the loss of revenue. It is also difficult to

encourage customers to stay, but this is done based on the assumption that keeping an

existing customer is far more cost-effective than acquiring a new one.

iii. iii Cross-selling and up-selling: Cross selling and up selling is trying to know which

products can increase, rather than decrease a customer’s total profitability. Cross-selling is

selling a product to a customer based on another purchase the customer has already made.

Up–selling is also defined as motivating an existing customer to trade up to more profitable

products. Because of the assumption that selling more services to an existing customer is

less costly and also increases revenue, it has become very common these days. Cross-

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selling helps companies to sell the right product to the right customer at the right time. The

desire of many companies to do the cross-selling has made CRM very popular.

iv. Behavior prediction: This helps organizations to determine the next thing customers will

do as the future data mining techniques are used for behavior prediction based on the

customers’ history to foresee customers’ future behavior. By understanding the next action

to take, the organization can make so many marketing decisions based on that. The key to

this is to help you to actually know who your best customers are.

v. Personalization: This is the ability of a company to personalize or customize

communication, products and services based on knowledge, behavior, and preferences at

the interaction time.

Hoffman and Kashmeri (2000), state that the strategy of CRM was not just to be cost

reduction oriented but to them CRM means better management of customers and the relationship

with them that enable uniform flow, such as pricing, inventory and planning, in both directions.

According to Newell (2000), the fundamental strategy of CRM is to improve organizational

profitability through efficient and effective customer relations. Furthermore, he states that, the

strategy of CRM is to be able to identify all the customers groups, the top, the middle group and

the lower group and also be able to know the strategies to use to respond to this entire group to

serve them well. Also, he states that CRM strategies are effective if they deliver positive out-

comes and increase customer retention.

The application of CRM strategies will prove vital in the battle for customer retention in

the study area particularly in this era where customer retentions, loyalty, and satisfaction are the

main reason for being in business.

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2.5 Determine the Extent or Degree to Which Effective CRM can lead To Customer

Retention.

The importance of customers has been highlighted by many researchers and academics.

Zairi (2000), points out that “customers are the purpose of what we do and rather than them

depending on us, we very much depend on them. The customer is not the source of a problem;

we shouldn’t perhaps make a wish that customers should go away because our future and our

security will be put in jeopardy’. That is the main reason why organizations today are focusing

on customer satisfaction, loyalty, and retention.

According to Hansemark and Albinsson (2004), “satisfaction is an overall customer

attitude towards a service provider or an emotional reaction to the difference between what

customers anticipate and what they receive regarding the fulfillment of some need, goal or

desire”. Customer loyalty, on the other hand according Anderson and Jacobson (2000), “is

actually the result of an organization creating benefit for a customer so that they will maintain or

increase their purchase from the organization. Oliver (1997), notes that customer loyalty refers to

“a deeply held commitment to re-buy or re-patronize a preferred product or service consistently

in the future despite situational influences and marketing efforts and losing the potential is to

cause switching behavior”. True customer loyalty is created when the customer becomes

advocate for the organizations without incentive”. According to Hoyer and Maclnnis (2001),

customer retention is the “the practice of working to satisfy customers with this intention and it

can be defined as “as a commitment to continue to do business or exchange with a particular

company on an ongoing basis.

2.5.1 Effect of CRM on Customer Satisfaction

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Many researchers have looked into the importance of customer satisfaction. Kotler

(2000), defines satisfaction as: “a person’s feelings of pleasure or disappointment resulting from

comparing a products perceived performance (or outcome) in relation to his or her expectation”.

Hoyer and Maclnnis, (2001) opines that satisfaction can be associated with feelings of

acceptance, happiness, relief, excitement, and delight.

In the context of CRM, satisfaction is a cumulative effective and cognitive measure of

purchases and consumption experiences, (Anderson and Jacobson, 20004). To long-term

customers overall satisfaction is more important than satisfaction at a specific point in the

relationships with individual customer who has customized products and services through

effective relationship management. In such circumstances, customized offerings of firms are

very likely to fulfill customers’ actual needs thus, raising the perceived quality of the services

and subsequently satisfaction levels.

Morales (2005), also proposes that customer relationship management initiatives generate

gratitude-based exchange behavior thus resulting in improved firm performance. Bolton (1998),

notes that profitability of firms is dependent on strong relationship with customers therefore

customer satisfaction is seen as an indicator of business profit and business performance,

(Kaplan and Norton, 1996). In summary CRM seems to contribute to customer satisfaction.

2.5.2 Relating CRM and Customer Loyalty

Ogbadu and Usman, (2012) in their study examined the impact of customer relationship

management on customer loyalty. These study findings revealed that there is a positive

relationship between CRM and customer loyalty on firms’ profitability. However, it can be

deduced from their study that CRM is a viable competitive tool to enhance customer loyalty and

also to attain desired profitability. Kotler and Armstrong, (2008) posit that when organizations

30

provide their customers with satisfactory services, they are likely to be loyal customers and could

attract a large share of the market to the company. For CRM to work on customer loyalty,

marketers have adopted customer management orientation which emphasizes the importance of

customer lifetime value, and retention (Reinatz and Kumar, 2003). The rationale behind CRM is

that it improves business performance by enhancing customer satisfaction and driving up

customer loyalty.

2.5.3 Effect of CRM on Customer Loyalty

However, Bowen and Chen (2001), said that having satisfied customers is not enough,

there has to be extremely satisfied customers. This is because customer satisfaction must lead to

customer loyalty and retention. Bansel and Guptan (2001), on their own part assert that building

customer loyalty is not choice any longer for business: it is the only way of building sustainable

competitive advantage. Building loyalty with key customers has become a core marketing

objective shared by key players in all industries which cater for business customers. The strategic

imperatives for building a loyal customer base are as follows:

i. Focus on key customers

ii. Proactively generate high level of customer satisfaction with every interaction.

iii. Anticipate customer needs and respond to them before competition does.

iv Build closer ties with customers

v. Create a value perception

Sivadas and Baker-Prewitt (2000) state that “there is an increasing recognition that the

ultimate objective of customer relationship management will result in increased loyalty. Fornell,

(1992) says that “high CRM will result in increased loyalty for the firm and that customers will

be less prone to overtures from competition”. This view was also shared by Anton (1996), who

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notes that “CRM is positively associated with repurchase intention, likelihood of recommending

a product or service, loyalty and profitability”. Loyal customers would purchase from the firm

over an extended time, (Evans and Berman, 1997).

Mcllroy and Barnett (2000), posit that “An important concept to consider when

developing a customer loyalty programme is CRM. Customer loyalty is a measure of how likely

a customer is to repurchase and engage in relationship activities.

Mcllroy and Barnett (2000), further argue that “in a business context, loyalty has come to

describe a customers’ commitment to do business with a particular organization purchasing their

goods and services. Anderson and Jacobson (2000), observe that customer loyalty is actually the

result of an organization creating a benefit for a customer so that they will maintain or increase

their purchases from the organization. They also agree with Oliver (1997), that true customer

loyalty is created when the customer becomes an advocate for the organization without incentive.

Mcllroy and Barnett went on to say that loyalty cannot be taken for granted. They argue that

loyalty will continue only as long as the customer feels they are receiving better value than they

would obtain from another supplier.

Anton (1996), states that “when you can increase customer loyalty, a beneficial

‘flywheel’ kicks in on the possible advantages of customer loyalty, powered by:

i. Increased purchases of the existing product

ii. Cross-purchase of your other products

iii. Price premium due to appreciation of your added-value services

iv. Reduced operating cost because of familiarity with your service system.

In other words, to ensure that there is a customer loyalty, firms must be able to anticipate

the needs of their customers, (Kandampully and Duffy, 1999).

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Finally, loyal customers cost less to serve, in part because they know the product and

require less information. They even serve as part-time employees. Therefore, loyal customers not

only require less information themselves, they also serve as an information source for other

customers.

2.5.4 Customer Retention

Customer retention is a challenge in contemporary organizations. Retained customers are

generally more profitable than newly acquired customers. Based on the 2nd edition of customer

relationship management, the major strategic purpose of CRM is to manage for profit, a

company’s relationship with customers through three stages of the customers’ life cycle,

customer acquisition, customer retention and development, (Buttle, 2009). A customer retention

strategy aims at keeping a high proportion of valuable customers by reducing customer

defections and a customer development strategy aims at increasing the value of retained

customers to the company.

Companies as well as agricultural firms should focus on retaining customers that

contribute value (Buttle, 2009). Improving customer retention is an important objective for many

CRM implementations. Its definition and measurement need to be sensitive to the sales,

profitability and value issues. It is important to remember that the fundamental purpose of

focusing CRM efforts on customer retention is to ensure that the company maintains

relationships with value-adding customers.

2.5.5 Effects of CRM on Agribusiness firms

Customer relationship management activities can have a major impact on an organization

by improving customer satisfaction and retention (Egan, 2004). One of the main reasons in CRM

has been the assertion of benefits that it can bring to an organization. These benefits have taken

33

many forms. For example, the cost of winning a new customer is about five times greater than

the cost of retaining an existing customer, retained customers buy more, may promote positive

word of mouth for the business, (Reichheld and Sasser, 1990). For most business enterprises,

CRM is emerging as an important tool and an inventive way to add their products and services,

enables customer-centric processes of identifying, acquiring, nurturing, retaining customers and

developing lifelong relationships with them by providing best possible services in the process of

achieving organizational goals, (Egan, 2004).

Effective CRM has become a strategic imperative for firms in virtually every business

sector. Companies are moving closer to their customers, expending more efforts in finding new

ways to create value for their customers and transforming the customer relationship into one of

solution-finding and partnering rather than one of selling and order taken”,(Ahmed, 2009).

(Ahmed, Ahmed and Nuwaz2009)

2.6 Challenges and Benefits of using CRM in Agribusiness

According to Myron, (2003) four barriers to CRM identified in firms include lack of

guidance, no long term strategy, lack of employee buy-in, and accountability. Failure to obtain

and maintain executive support for the CRM project is a major setback, (Polous, 2009). The most

important aspect of CRM problems is not its excellent ability to achieve customer retention but

its failure to do so. This is indirectly responsible for CRM collapse. Generally, one of the reasons

this happens is because most firms that actually employ CRM experience a lot of confusion

about its attributes and what it really is. The following are some other challenges of CRM

according to Newell (2000):

i Exorbitant costs: One of the problems with CRM is the huge investment needed to maintain

a customer database.

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ii Inadequate focus on objectives and ignoring overall business strategy: When hard times

hit, the organization loses sight of its goals and ultimately steers away from its CRM

implementation. At times, goals get interchanged and lose their importance. Companies find

themselves work at home directly towards goals that are less important and forgetting the

ones that really are.

iii Insufficient resources: Sometimes in phased implementation of CRM, if conditions worsen

within the firm or the firm starts reducing its budgets for the current phase because of fewer

funds only prioritized items on the budget may be funded and in this case, the cost

requirements for the implementation and success of CRM may not be met. Organizations fail

to utilize the necessary resources for the success and thus, result in failure.

iv No customer focus and misunderstanding customer needs: The organization needs to

motivate employees to be absolutely customer-centric. CRM challenges’ or problems

arise because of employee reluctance to be more customer-focused. The result is a highly

expensive customer strategy being adopted by the company in an effort to retain

customers with reluctance, unfocused and poorly trained employees implementing it.

According to May, Karugra and Ndokweni (2007), the lack of strategic focus and

incomplete data can be seen as a challenge, depending on the agricultural firm. However,

agricultural firms that had best performance had higher goals, they collected more sophisticated

customer data, used series of tactics to develop and maintain relationship with customers and

faced fewer challenges during the best use of customer data in information systems.

2.6.1 Benefits of CRM in Agribusiness

35

Early researchers had hypothesized that CRM benefits varied from industry to industry as

the process associated with CRM were tailored to specific industrial structures, (Zeithamal and

Lemon, 2001). However, findings in cross cultural, multi-industry study of CRM done by

Thomas, Ranartz and Kumar, (2004) supports the notion that desired CRM benefits do not vary

across industries or culture as stipulated by earlier thoughts. The latest findings were associated

with three components including relationship, value, and brand equity, (Richard and Jones,

2008).

According to Swift, (2001) companies gain many benefits from CRM. He states that the

benefits are commonly found in one of these areas:

i Reduced cost of sales: The cost regarding selling are reduced owing to that existing

customers are usually more responsive. In addition, with better knowledge of channels

and distribution, the relationships become more effective, and the costs for marketing

campaign is reduced.

ii Higher customer profitability: The customer profitability will get higher since the

customer-wallet share increases. There are increases in up-selling, cross-selling and

follow-up sales, and more referrals come with higher customer satisfaction among

customers.

iii Increased customer retention and loyalty: The customer retention increases since

customers stay longer, and buy more frequently. The customer also more often, takes

initiatives which increase the bonding relationship, and as a result the customer loyalty

increases as well.

According to Gray and Byun, (2001) the following are the main benefits of CRM:

i Improving the company’s ability to retain and acquire customers

36

Maximizing the lifetime value of each customer

ii Improve services without increasing the cost of such services

They go on to say that, for an organization to get these benefits, sales marketing and service

functions must work together.

Crosby, (2002) argues that, by using customer information wisely to deliver what the

customer needs, companies will create long-term, collaborative relationship with customers. He

further states that, this will bring many benefits since long-term customers are less costly to serve

and smooth- running relationships are less resource-intensive.

Bose (2002), argues that most organizations can use CRM to advantage. However he

goes on to say that there are some organizations that are more likely to get more benefits from

CRM than others. Furthermore, he states that those are the companies that accumulate huge

customer data when doing business and whose customer needs are differentiated. According to

Newell (2002), organizations should undertake CRM where they will get the best possible

returns and benefits. He goes on to indicate that companies should then focus on customers who

are already profitable and those who will become the company’s most profitable customers in

future.

Ragins and Greco, (2003) argue that intimate customer-relationship offers companies

many benefits and advantages. Fournier, Susan and David Gen Mick (1998), says that committed

customers of an organization could be viewed as assets who are likely to be a source of favorable

word of mouth referrals and are more resistant to competitors’ offers.

Wilson, Daniel, and McDonald (2002), argue that an organization can receive the

following benefits from their CRM initiative:

37

i. Higher customer profitability: increasing individual customer margins while offering the

right product at the right time.

ii. Creating value for the customer: acquiring the right customers base on customer

information and knowledge or learnt characteristics that drive growth and increased

margins

iii. Increasing customer retention and loyalty: the ability to retain loyal and profitable

customers will increase the profitability of the organization.

According to Polous (2009), benefits of successfully implemented CRM for agricultural

firms are numerous and include among others, increased sales, increased profitability, increased

expansion of product, increased customer satisfaction and loyalty, increased employee

satisfaction, reduced costs, increased retention of the existing customer base in time of economic

uncertainty, increased chances of obtaining new customers.

2.7 Theoretical Framework

A theory is a set of related statements that are formulated to explain, predict, and

understand phenomena and in many cases, to challenge an extant existing knowledge within the

limits of critically binding assumptions. Different theories apply to different areas of research.

This study is based primarily on the relationship marketing theory. According to Alderson

(1958), the roots of marketing and relationship marketing theory stem from economics and it

seeks to explain how the link between an organization and its customer help to promote

marketing. The American Marketing Association (2007), defines marketing as an organizational

function which seeks to create, communicate, and deliver value to customers and manage

customer relationship in ways that are beneficial to the organization. Therefore, the relationship

38

marketing theory is of great significance to our concerns in this study.The American marketing

association (2004), defines marketing as an organizational function which seeks to create,

communicate, and deliver value to customers and manage customer relationship in ways that are

beneficial to the organization. Therefore, the relationship marketing theory is of great

significance to our concerns in this study.

Harker (1999), notes that theoretically, relationship-marketing is the on-going process of

engaging in proactively creating, developing and maintaining committed, interactive and

profitable exchanges with selected customers (parties) over time and its effect on customer

retention is based on maintaining, enhancing relationships at a profit, so that the objective of all

parties involved are met, and this can be achieved by mutual giving or fulfillment of promises.

The ability to provide superior value to customers is a prerequisite when an organization

is trying to establish and maintain long-term customer relations. Relationship marketing theory is

not philanthropic, it is a means to an end and it is based on two economic arguments. One: it is

more expensive to win a new customer than it is to retain an existing one. Two: the longer the

association between a company and the customer, the more profitable the relationship becomes

for the firm.

A key theoretical basis for CRM research is the promotion of marketing through customer

retention. In this area it is theoretically held that building and managing ongoing customer

relationships delivers the essence of the marketing concept, (Webstar, 1992; Morgan and Hunt

1994). Another theoretical approach is the new institutional economic model, which uses

economic theory to explain the development and breakdown of customer-firm relationship. For

example, the transaction cost theory (TCT) comes within this approach (Rindflesicish and Heide

1997). The theory focuses on minimizing the cost of structuring and managing relationships

39

while maximizing the returns from them. Common to all theoretical approaches in relationship

marketing research is that managing relationships is beneficial to any organization or firm that

employs it.

Theodore Levitt (1960), once said that the job of marketing is to create and keep

customers. Historically, the focus has been on creating customers; less attention has been paid to

their retention. Relationship marketing attempts to reverse this emphasis. Alternatively, a

customer with high relationship orientation-one who both wants and needs a close relationship

represents the very best target for relationship marketing. These trends have enhanced the

salience of “relationship based loyalty” to sellers compared with the marketing-mix factors. It

has also increased the desire on the part of customers to share in the many unique characteristics

found in customer relationship marketing and this has in turn, led to customer retention, and

reduced perceived risk, higher trust, enhanced cooperation, and greater flexibility. Thus, in many

situations, both business firms and customers are becoming more interested in conducting

business transactions embedded in relationships, (Palmatier, 2007).

Consequently, the theories and approaches presented here are drawn from fields of

marketing and economics and are based on the understanding of customer relationship. A

relationship marketing calls for mutual benefit for both customers and organizations in the

marketing process and relies on customer satisfaction and retention which is the core issue in

CRM today.

2.8 Analytical Framework

Several analytical tools could be employed in carrying out analysis and the choice of

which techniques to be used according to Eboh (2009) is a function of the nature and purpose of

40

the study. Different evidence from literature shows that various forms of analytical techniques

have been applied by economists for data analysis. Simple and important analytical tools used in

the analysis of data are known as descriptive statistics. They include: tables, graphs, charts,

frequency distribution, percentages, means and standard deviation among others. However, some

specific objectives and quantitative data require in depth analysis, which may need more

complex analytical tools. It is often said that the choice of technique depends on factors such as

objectives of the study, availability of data, as well as time and budget. This study therefore will

employ descriptive statistical tools particularly, the likert scales as well as other analytical tools

like the binary logistic regression model.

2.8.1 Likert Scale

The likert scale named after Rensis Likert who developed it in 1932, is one of the most

widely used techniques to measure attitudes (Ary, Jacobs, Razavieh and Sorensen, 2006). They

inferred that Likert scale assesses attitude toward an issue by presenting a set of statements about

the issue and requesting respondents to indicate for each whether they are Sstrongly Aagree,

Aagree, are undecided, disagree, or strongly disagree. These various agree-disagree responses

are assigned a numeric value, and the total scale score is found by summing the numeric

responses given to each item, which represents the individual’s attitude toward the issue. This is

why the scale is called a Summated-rating scale (Anaekwe, 2007).

2.8.2 Binary Logit Model

Freedman (2009), added that bBinary logit model is a logistic regression which serve as

an alternative method for modeling discrete choice utilizing the maximum likelihood estimation

based on the logistic function as opposed to the ordinary least squares (linear probability

41

models).. According to Strano and Colosimo Malnar and Bailey (20069), binary logit model

measures qualitative (attributive) dependent variable and qualitative or quantitative

(measurement) independent variables. In binary response or logit model, there is always two

outcomes. For instance, retaining a customer or not retaining the customer. It normally assigns

one (1) to the response that necessitated the study, while, the other response which deals with the

opposite of the response that necessitated the research is always assigned zero (0) Bogard,

(2011). This binary logit model will be employed in this study to determine whether socio-

economic characteristics of respondents (customers and firms) were significant predictors of a

customer being retained by an agribusiness firm or not.

42

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Study Area

The study area is Aba Metropolis of Abia State. Aba Metropolis lies within latitudes 05 0

07’ N and longitudes 070 22’ E. It has a population of 423,852 (NPC, 2006) as of 2006 census. It

lies along the west bank of the Aba River and at the intersection of roads leading to Port-

Harcourt, Owerri, Umuahia, Ikot-Ekpene and Ikot-Abasi. The city is a collecting point for

agricultural inputs, a major urban settlement and the commercial center in a region surrounded

by small villages and towns. The indigenous people of the Aba are the Ngwa people.

Aba Metropolis is divided into two local governments areas namely: Aba south and Aba

north. Aba south is the main city center and the heart beat of Abia State, south east Nigeria. Aba

is made up of many villages such as: Umuokpoji Aba, Eziukwu Aba, Obuda- Aba, Aba Ukwu.

The people are known for farming and trading as their major occupations. The major cash crops

grown are palm produce, cocoa and rubber while food crops such as yam, cassava, plantain,

banana, maize and cocoyam are produced in large quantities. Mixed farming is a very common

practice among the farmers.

3.2 Sampling procedures

Aba Metropolis was selected for the study because the area is a highly productive

agricultural belt in the south east geo-political zone of Nigeria where agricultural products are

produced and marketed throughout the year. A simple random procedure will bewas employed in

the selection of respondents. Twenty two agribusiness firms thatwhich are engaged in the

following supply of inputs required by the farmers, storage, processing and marketing of finished

agricultural products were identified during a reconnaissance survey in the area. Fourteen out of

43

the twenty two agribusiness firms who will bewere engaged in marketing of finished agricultural

raw materials were randomly selected for the study. Two staff members and five customers

from each of the agribusiness firms will bewere randomly selected for the study. In Aba North

twenty five customers and ten staff members were selected while in Aba South forty five

customers and eighteen staff members were selected for the study.. A total of 98 respondents

will waswere therefore be used for the study.

3.2.13 Validity and Reliability Test Result

A validity test was conducted to show how valid the result of the questionnaire results of

the questionnaire werewould be. Fifty (50) respondents were used for the validity test.

distributed which represents twenty-five (25) respondents for firms and twenty-five (25) as well

for customers. After the distribution, only 120 and 30 sets of questionnaire from the firms and

customers respectively were collected as validfrom each of the two groups (40 in total) were

collected as valid. This was because some where poorly filled or not returned at all. Analyses

were done with these two sets of questionnaires using the Cronbach's Alpha reliability test

analyseis. From the customers validity tests, section A, B, C, D and E got their Crombach Alpha

figures as 0.854, 0.968, 0.948, 0.951 and 0.956 respectively. A total Cronmbach’s Alpha

reliability test result for customers wereanalysis was also done takingen all the questions

irrespective of section and the result was 0.933. Therefore, since the total value and the values

for the section were above 0.5 (that is 50%) this study can concluded that the results of thisher

analyseis in the next chapter wereill be reliable. T While the firms validity tests, section A, B and

C got theirhad Crombach Alpha figures asas 0.987, 0.859 and 0.654 respectively. A total

Cronmbach’s Alpha analyseis was also done for the firms takingen all the questions irrespective

of section and the result were was 0.824. Therefore, since the total value and the values for the

44

sections were also above 0.5 this study concludedes that the results of theher analyseis will

bwereeis reliable.

3.34 Data Collection

The data for this study were as obtained using primary source and the data wereas

sourced from staff and customers of the fourteen selected agribusiness firms. Two sets of

questionnaires were used for data collection. The sets of questionnaires were developed for

completion by the staff of the agribusiness firms and customers respectively. The sets of

questionnaires provided information on CRM practices of the agribusinesses, the staff perception

and customers view on CRM. The sets questionnaires used to collect data from the customers

were made up of four sections. Section A dealts with the role of CRM on customer retention,

section B collecteds information on socio-economic characteristics of customers, section C also

collecteds information on the effective CRM strategies and their influence on customer retention

while section D dealts with information on the extent to which effective CRM can lead to

customer retention. For the staff, the questionnaire comprises three sections. Section A dealts

with questions on socio-economic characteristics of the firm, section B was oncomprises

information on the effects of CRM on agribusiness firms while section C lookeds at the

challenges faced by these firms in their practice of CRM.

3.45 Data Analysis

45

Descriptive statistics such as means and tables were used in realizing objective (i),

Objective ( ii) wasere realized using binary Logit model while objectives (iii), (iv) and (v) were

realized using Likert rating scale.

3.4.16 Model Specification

3.4.1.13.6.1 Likert Rrating Sscale

A likert scale is a psychometric scale commonly used in questionnaires, and is the

most widely used scale in survey research (Wuensch, 2005). When responding to a Likert

questionnaire item, respondents specify their level of agreement or disagreement on a symmetric

agree, disagree scale for a series of item statements. Thus, the scale captures the intensity of their

feelings. A 4-point rating scale wasill be used in this work to determine the effective CRM

strategies on customer retention; this will bewas graded as; Strongly Agree (SA), Agree ( A ),

Disagree (D) and Strongly Disagree (SD) with corresponding values of 4,3,2, and 1 respectively.

Also, a 4-point rating scale will bewas used for determining the extent to which effective CRM

can lead to customer satisfaction, customer loyalty, product repurchase and customer retention

while and the scaling will bewas graded as Strongly Agree (SA), Agree (A), Disagree (D) and

Strongly Disagree with corresponding values of 4,3,2 and 1 respectively, and finally a 4-point

rating scale will bewas as well used for determining the challenges and benefits of agribusiness

firms in their practice of CRM and the scaling will bewas graded as; Strongly Agree (SA), Agree

(A), Disagree (D) and Strongly Disagree (SD) with corresponding values of 4,3,2 and 1

respectively.

The mean score of respondents based on the 4-point rating scale will bewas computed as;

46

4+3+2+14

=104

=2.50

Based on this, any mean score below 2.50 will bewas taken as disagree while those items with

mean values of 2.50 will bewere considered as agree. A mean score greater than or equal to 2.5

indicates a strong customer response.

3.46.1.2 Binary logit model

In order to resolveanswer the two hypotheses in this study, the study adopted a Logit

model which were used to analyze data sets to reflect whether a customer is retained or not. The

model measured the effects of socio-economic characteristics of customers and firms’

characteristics on the possibility of the customer being retained by the agribusiness firm or not

being retained. The specifications according to Freedman (2009), helped us to define a

probability to monitor being retained or not.

The study therefore states its logit model as follows;

LogitP x= log [ P (Y=1 )1-P (Y=1 ) ]=∑ k=1

k α k X k………………...…….………………………….. (3.1)

The model above shows that there is a linear relationship between the logit px and the

vector of explanatory variables X. Therefore, the study can stated the probability of a customer

being retained as thus;

Pr(Y=1) =

∑ ek k=1 αk Xk

∑ ek k=1 αk Xk ………………………..….……………………….…………….. (3.2)

While the probability of not being retained (which is 1 minus the probability of being retained) is

specified thus;

47

Pr(Y = 0) =

1∑ e

k k=1 αk Xk …………………………………..……………….………….….. (3.3)

The logit model categorized customers into retained and not retained based on the questions in

the sets of questionnaires (that is for customers and firms) which permitted the respondents to

thick whether the firm they patronize have retained them or not and whether the firm thinks it

has retained most of her customers or not respectively for the hypotheses one and two

respectively and use it as the dependent variable for the two hypotheses in this study.

3.4.1.3 Model Specification for Hypothesis one:

Socio-economic characteristics of customers have no significant effect on customer retention.

Logit(P) = ln[P

1−p ] = ∝0+ X1 + X2 + X3 + X4 + X5 +X6 + X7 + X8 +ε .................................... (3.4)

where,

P = Probability of a customer being retained (P=1) or not being retained (P=0), based on the

previous question, can you consider yourself as a customer that has been involved in regular and

repeated transactions with the firm since you were first introduced to it?.

X1 = Age of the customer (years)

X2 = household size (number of persons)

X3 = Education level of customers (yearseducated)

X4 = Business size (large/small)

X5 = Gender of customers (male/female)

X6 = Income (Naira)

X7 = Marital status (single/married)

X8 = Marketing experiences (years in business)

3.4.1.4 Model Specification for Hypothesis two:

48

Firms’ characteristics have no significant effect on customer retention.

Logit(P) = ln[P

1−p ] = ∝0+ X1 + X2 + X3 + X4 + X5 +X6 + X7 + X8 +ε .................................... (3.5)

where,

P = Probability of a customer being retained (P=1) or not being retained (P=0), based on the

firms perception on retaining most of her customers or not

X1 = Location of the firm (beginning/end, center or outskirt)

X2 = Age of the firm (years)

X3 = Number of employees by the firm(number of persons)

X4 = Number of products produced by the firm

X45 = How do the firm reach out to customers? (Adverts, phone calls, emails or text messages)

X6 = Number of times customers purchase monthly

X7 = Education level of the manager.

While, the dependent variable in the first hypothesis wasere captured with question number 6,

under consumer personal data, which is, can you consider yourself as a customer that has been

involved in regular and repeated transactions with the firm since you were first introduced to it?

The customers that ticked “Yes” were the ones retained while the ones on “No,” were thewere

the ones not retained. Also, for hypothesis two, firms who ticked “Yyes” that they have retained

most of her customers over the years would be taken as retained while the ones that ticked “Nno”

wwereill be seen as not retained and the values will bewere used as the dependent variable for

the second hypothesis. Hence, the ones that accepted to be retained wereill be denoted with one

while the ones (1) that said no wereill be denoted with zero (0), this gaveives the 1 and 0 in the

binary logit model for this study.

49

The reason for the adoption of this model is based on the nature of both the study and

data to be collected for this study which the dependent variable is expected to be binary, that is a

customer being retained or not retained. Also, this approachmethodology has been used by many

such as Hosmer and Lemeshaw, (2000), Arifovica and Ramazan, (2001), Gevrey, (2003),

Bogard, (2011) and others to produce satisfactory results.

The logit model weremodels were used to estimate the two hypotheses in this study. The

study adopted a 5% level of significance in testing the hypotheses. What this means is that for a

variable (that is socio-economic characteristic) to be significant, it must be less than 0.05 level of

probability.

The aprori expectation of the socio-economic characteristics of customers’ retention are

as follows; Age, Household size, Education qualification, business size, Experience are expected

to positively affect customer retention while gender and income nature are expected to

negatively affect customer retention.

Also the aprori expectation for the socio-economic characteristics of firms on customer

retention. It is expected in this study that location of the firm will be negatively significant to

customer retention. Age of existence of firm, number of employee and reach out means of firm

are also expected to be positively significant on customer retention.?

50

CHAPTER FOUR

Results and Discussion

This study as stated in the previous chapter will adopt the mean and standard deviation to

tackle the five objectives in this study that has no hypothesis (objectives 1, 3, 4, 5 and 6). Hence

for these objectives, any mean which is less than the 2.5 cut-off mean stated in the previous

chapter will be rejected but any one that is higher than it will be accepted. The only objective

that has hypotheses (objective 2) will be addressed with a binary logistic regression. The level of

significant to be adopted will be 0.05 (5%). This means that any significant level that is higher

than the 0.05 level of significant means the acceptance of the null hypothesis while if it’s less

than it, the null hypothesis will be rejected.

4.1 TOBJECTIVE ONE: To determine the Role Ofof Customer Relationship

Management Process Inin Customer Retention.

52

Data in Table 4.1 shows the role of customer relationship management in customer

retention. All the items have its mean (2.9-3.4) higher than the stated 2.5 cut-off mean. The

standard deviations (0.54-0.93) of the posed questions were all less than 1.0 and by far less than

the mean. This is an indication that almost all the respondents’ individual scores about their

opinion and perception on the respective questions did not differ much from the mean score.

With the standard deviation supporting the mean values found to be above the cut-off mean, the

mean of the results should be accepted. This finding could imply that good customer relationship

management plays a key role in a firm retaining her customers.

Table 4.1 – Showing the Role of CRM in Customer RetentionDescriptive Statistics

Item description N Mean Std. Deviation

doDo you agree that this firm values you and welcomes your

complaints readily?70 3.3714 0.93517

Ddo you agree that management shows by its actions that everything

begins and ends with customers?70 2.9000 0.59344

Ddo you agree that the firm has formal complaints system which

covers both written and oral complaints?70 3.3714 0.85417

Ddo you agree that you were given an opportunity to let the

management know certain pieces of information regarding what you

deem to be improper in the system?

69 2.9420 0.59121

Ddo you agree that you talk freely with management about the quality,

quantity and many other issues about their products/ and or the firm?70 3.3714 0.81953

Ddo you agree that you receive birthday wishes and other good will

messages from your firm regularly?70 2.9429 0.56172

Ddo you agree that your firm collected your profile when you first

started business with them?70 3.4000 0.76896

Ddo you agree that you receive one or more extra package(s) as bonus

and other free gifts depending on your purchase quantity?68 2.9706 0.54555

53

Ddo you agree that the incentive(s) always entice you to come back for

repurchase?70 3.4000 0.76896

Ddo you agree that the few problems you encounter with firms are

handled quickly?70 2.9286 0.59761

Ddo you agree that you get good and trusted products from this firm? 70 3.3857 0.78561

Ddo you agree that availability of the products enhances their selling

power and customer retention?70 2.9429 0.56172

Ddo you agree that prompt attention is given to customers always? 70 3.3571 0.79920

Valid N (listwise) 67

Source: Field survey, 2014

Some of the Based on the analysis on table 4.1 above, it could be seen that all the items

has its mean higher than the stated 2.5 cut off mean, this means that good customer relationship

management plays a key role in a firm retaining her customers. This result is also supported by

the standard deviation, which were less than the one and by far less the means, hence the

deviation of the mean from the true mean is small, therefore the mean should be accepted. rSuch

roles played by CRM identified according to table 4.1were are valuing of the customers

complaints, management making customers by action see themselves as the kingmaking their

customers have the perception that they the customers are their priority, firm has formal

complaints system which covers both written and oral complaints for customers, sending

congratulatory messages to customers like on their birthdays, given them prompt attention

always, giving the customers bonuses among others (Table 4.1 above). From these roles, one can

infer that such roles and more need to be identified and adopted by agribusiness firms for

effective CRM thus enable customer retention. These findings corresponds to that of Raghu

(2005), that today, CRM plays the pivotal role for strategic position of agribusiness firms. CRM

focuses on the integration of customer information, knowledge for finding and keeping customer,

54

to grow customer lifetime value. It also has an important role to help organization to keep their

customers and to make them loyal. Therefore, CRM role is more important in customer retention

and by regarding the importance of CRM, the analysis of CRM seems necessary.

, as could be seen on table 4.1 above.

4.2 OBJECTIVE TWO: To examine the Effects oOf Socioeconomic Characteristics oOf

Both Customers aAnnd Firms oOn Customer Retention.

4.2.1 Effects of HYPOTHESIS ONE: Socioe-Economic Characteristics of Customers Of

Customers Have No Significant Effect On Customer Retention.

Table 4.2.1The logit analysis for the first hypothesis is presented in different tables under

table 4.2 (that is 4.2.1 to 4.2.5). Based on the analysis, table 4.2.1 shows the codes given to the

binary dependent variable which when a customer is not retained it gave it zero (0) and when

retained it assigned it one (1) as this study stated in the previous chapter where the binary logit

model was formulated.

Table 4.2.1 – Showing the Dependent Variable Encoding

Table 4.32.2 below shows the classification table. The overall percentage must be greater

than cut off value of 0.500 (check it under table 4.32.2) when converted to probability for the

case to be classified as yes (that is customer being retained) category, otherwise the reverse

becomes the case. Specifically, the probability of the overall percentage of 0.884 is higher than

55

Dependent Variable Encoding

Original Value Internal Value

No 0

Yes 1

the cut value of 0.500, the case could be addressed as customer being retained category case and

could be used for further analysis on customer retentions.

56

Table 4.32.2 – Showing the Classification Tablea Classification Tablea

Observed PredictedCcan you consider yourself as a customer that has been involved in a regular and repeated transactions with the firm since you were first introduced to it?

Percentage Correct

No Yes

Step 1

can you consider yourself as a customer that has been involved in a regular and repeated transactions with the firm since you were first introduced to it?

no 7 6 53.8

yes

2 54 96.4

Overall Percentage 88.4a The cut off value is 0.500

57

Source: Field survey 2014

The cut value is .500

To look at how the variations in dependent variable were by the model (usually done with R 2 in linear

multiple regression), the study will focus on table 4.42.3. Based on table 4.42.3 below, the linear

multiple regression R2 is replaced in logit regression with either Cox & Snell R Square or Nagelkerke

R Square. These two methods explain the variations of the dependent variable attributed to the

independent variables in the model (though they often have lower values than the linear R2 hence are

more like the pseudo R2 values. Specifically for this study, since the Nagelkerke R2 is the modified

version of Cox & Snell R2 , the study adopts the former and posits that 48.9% of the variations in the

retention of a customer by firms were explained by the selected socio-economic characteristics of the

customers (Table 4.42.3).

Table 4.42.3 - Model Summary

Model Summary

Step -2 Log

likelihood

Cox & Snell

R Square

Nagelkerke R

Square

1 41.842a 0.303 0.489

a. Estimation terminated at iteration number 20 because maximum iterations has been reached.

To ascertain the behavior of the independent variables, the study looked at table 4.52.4 which

captures specifically the variables in the equation. One could see from that table that all the

variables (at its various categorical capacities were not significant except experience of the

customer) as their significance value were greater than the 0.05 adopted level of significance,

58

which means that the effect of these socio-economic characteristics on customer retention were

not significant. The only significant predictor as posited below was experience of the customer.

Specifically, table 4.52.4 shows that the odds of a customer being retained is 20.254 (check the

Exp(B) column under experience on table 4.52.4 below) times greater for people with experience

of between 5 to 10 years to those with experience of 1 to 4 years. Furthermore, B column in still

Ttable 4.52.4 below shows whether there is correlation between the predictors and the dependent

variable. Based on thise table, increasing age, household size, business size, how often income is

received and experience of the customer were associated with an increasing likelihood of

customers being retained. While, an increasing education and gender disparity decreases the

likelihood of a customer being retained.

59

Table 4.52.4 – Showing Socioeconomic Characteristics of Customers that could have Effect on Customer Retention Item description B Sig. Exp(B)

Step 1a

Age 0.288age(1) 22.951 0.999 92745046242.319age (2) 3.795 0.059 44.484age (3) 2.299 0.207 9.968household size (hhsize) 0.753Household size(1) 0.864 0.497 2.373Household size(2) 0.198 0.900 1.218Education qualification (eduqua) 0.686Educational qualification (1) 0.371 1.000 1.449Educational qualification (2) -17.097 1.000 0.000Educational qualification (3) -18.986 1.000 0.000Educational qualification (4) -18.896 1.000 0.000business size (bizsize) 0.900Business size(1) 21.883 1.000 3187832086.824Business size (2) 0.488 0.647 1.629gender(1) -1.331 0.198 0.264income nature (1) 1.503 0.137 4.497experience 0.036experience (1) 3.008 0.011 20.254experience (2) 2.576 0.066 13.142Constant 14.172 1.000 1428203.033

Source: Field survey 2014

Finally, Ttable 4.62.5 below shows whether the overall effect of the socio-economic

characteristics is significant or not on customer retention. The chi square value of 4.157 and p

value (0.843) greater than 0.05, means that the null hypothesis stands, that is, the socioeconomic

characteristics of customers has no effect on their retention. Therefore, this study concludes that

the socioeconomic characteristics of customers have no significant effect on customer retention.

61

Table 4.62.5 - Hosmer and Lemeshow Test

Hosmer and Lemeshow Test

Step Chi-square Df Sig.

1 4.157 8 0.843

The logit analysis for the first hypothesis is presented in different tables under table 4.2

(that is 4.2.1 to 4.2.5). Based on the analysis, table 4.2.1 shows the codes given to the binary

dependent variable which when a customer is retained it gave it zero (0) and when retained it

assigned it one (1) as this study stated in the previous chapter where the binary logit model was

formulated. Table 4.2.2 shows the classification table the overall percentage must be greater than

cut off value of 0.500 (check it under table 4.2.2) when converted to probability for the case to

be classified as yes (that is customer being retained) category, otherwise the reverse becomes the

case. Specifically, the probability of the overall percentage of 0.884 is higher than the cut value

of 0.500, the case could be addressed as customer being retained category case and could be used

for further analysis on customer retentions. To look at how the variations in dependent variable

were by the model (usually done with R2 in linear multiple regression), the study will focus on

table 4.2.3. Based on table 4.2.3 above, the linear multiple regression R2 is replaced in logit

regression with either Cox & Snell R Square or Nagelkerke R Square. These two methods

explain the variations of the dependent variable attributed to the independent variables in the

model (though the often have lower values than the linear R2 hence are more like the pseudo R2

values. Specifically for this study, since the Nagelkerke R2 is the modified version of Cox &

Snell R2, the study adopts the former and posits that 48.9% of the variations in the retention of a

customer by firms were explained by the selected socio-economic characteristics of the

customers. To ascertain the behavior of the independent variable, the study looked at table 4.2.4

62

which captures specifically the variables in the equation. One could see from that table that all

the variables (at its various categorical capacities were not significant (except experience of the

customer) as their significance value (as seen in the column of sig, on table 4.2.4) were greater

than the 0.05 adopted level of significance, which means that the effect of these socio-economic

characteristics on customer retention were not significant. The only significant predictor as

posited above was experience of the customer. Specifically, table 4.2.4 shows that the odds of a

customer being retained is 20.254 (check the Exp(B) column under experience on table 4.2.4

above) times greater for people with experience of between 5 to 10 years to those with

experience of 1 to 4 years. Furthermore, B column in still table 4.2.4 above shows whether these

correlation between the predictors and the dependent variable. Based on the table, increasing age,

household size, business size, how often income is received and experience of the customer were

associated with an increasing likelihood of customers being retained. While, an increasing

education and gender disparity decreases the likelihood of a customer being retained. Finally, the

last table (table 4.2.5) shows whether the overall effect of the socio-economic characteristics is

significant or not. Specifically, the chi square value of 4.157 and p value (0.843) greater than

0.05, this means that the null hypothesis stands. Therefore, this study concludes that the socio-

economic characteristics of customers have no significant effect on customer retention.

4.2.2 HYPOTHESIS TWO: The Effect of Firms Characteristics on Customer Retention.

Table 4.73.1 below shows the coding for the dependent variable where customer being retained

was assigned one (1) while not retained was assigned zero (0).

Table 4.83.1 - Dependent Variable Encoding Firms characteristics have no significant

effect on customer retention.

63

Table 4.3.1Dependent Variable Encoding

Original Value Internal ValueNo 0Yes 1

Table 4.3.2 presents the classification showing the overall percentage value of 94.4% which

when converted to probability it becomes 0.944. This 0.944 is greater than the 0.500 cut of value,

hence customer being retained becomes the reference category for the analysis.

64

Table 4.73.2 – Showing Classification Tablea Table 4.3.2

Classification Tablea

Observed

Predictedcan you say that this firm has retained most of her customers over the years?

Percentage Correct

No Yes

Step 1

can you say that this firm has retained most of her customers over the years?

No 4 1 80.0

yes 0 13 100.0

Overall Percentage 94.4a. The cut of value is 0.500Source: Field survey 2014

b. a. The cut of value is 0.500

Table 4.83.3 below captures the model summary (using Nagelkerke R2 based on what this study stated

in hypothesis one above) the table shows that 32.6% of the variations in a customer being retained

were explained by the independent variables (firms socio-economic characteristics).

Table 4.83.3 - Model Summary

Table 4.3.3 Model SummaryStep -2 Log

likelihoodCox & Snell

R SquareNagelkerke R

Square

1 2.773a 0.242 0.326

a. Estimation terminated at iteration number 20 because maximum iterations has been reached.

65

Table 4.93.4 (variables in the equation), shows under the significance column that none of the

socio-economic characteristics of the firm have any significant impact on the firm retaining her

customers. This is evident as all the variables used have their respective significance to be above

0.05, hence were not significant.

66

Table 4.93.4 - Showing Socioeconomic Characteristics of Firms that could have Effect on Customer Retention

Item description B Sig. Exp(B)

Step 1a

Location 1.000

location(1) -21.203 1.000 0.000

location(2) -21.203 1.000 0.000

Age 0.087

age(1) 63.609 0.099

421599965504568300000000000

0.000

age(2) 42.406 1.000260975878002839760

0.000

age(3) 63.609 0.979

421599965504577340000000000

0.000

age(4) 63.609 0.795

421599965504568300000000000

0.000

age(5) 21.203 0.755 1615474726.566

age(6) 63.609 0.764

421599965504574300000000000

0.000

age(7) 42.406 0.854260975878002837860

0.000Number of employee 1.000Number of employee(1) 0.000 1.000 1.000Number of employee(4) 0.000 1.000 1.000Reach out means 1.000Reach out means(2) 0.000 1.000 1.000

Constant -21.203 0.999 0.000

Source: field survey, 2014

69

Finally, using Ttable 4.103.5 below to know whether the overall effect of the

socioeconomic characteristics was significant or not on customer retention. Focusing on the

significance level which have a high value of 0.998 which is higher than the 0.05 maximum

significance level, it therefore shows that they were not significant. Hence this study accepts the

null hypothesis and conclude that the socio-economic characteristics of firms have no

significant effect on them retaining their customers.

Table 4.103.5 - Hosmer and Lemeshow Test

Table 4.3.5 Hosmer and Lemeshow Test

Step Chi-square df Sig.1 2.050 2 .998

Just like the study interpreted with respect to the tables in table 4.2, the study starts here

with table 4.3.1, which showed the coding for the dependent variable where customer being

retained was assigned one (1) while not retained was assigned zero (0). Table 4.3.2 showing the

classification table presents this study with the overall percentage value of 94.4% which when

converted to probability it becomes 0.944. This 0.944 is greater than the 0.500 cut value, hence

customer being retained becomes the reference category for the analysis. Table 4.3.3 which

captures the model summary (using Nagelkerke R2 based on what this study stated in hypothesis

one above) the table shows that 32.6% of the variations in a customer being retained were

explained by the independent variables (firms socio-economic characteristics). While, table 4.3.4

(variables in the equation), shows under the significance column that none of the socio-economic

characteristics of the firm have any significant impact on the firm retaining her customers. This

70

is evident as all the variables used have their respective significance to be above 0.05, hence

were not significant. Finally, using table 4.3.5 above to know whether the overall effect of the

socio-economic characteristics was significant or not. Focusing on the significance level which

have a high value of 0.998 which is higher than the 0.05 maximum significance level, it therefore

shows that they were not significant. Hence this study accepts the null hypothesis and conclude

that the socio-economic characteristics of firms have no significant effect on them retaining their

customers.

4.3 OBJECTIVE THREE:E To ascertain effective Customer Relationship Management

Strategies.

As could be seen in table 4.114 below, the mean (2.87-3.38) in all the items were higher

than the 2.5 cut-off mean, meaning that the respondents accepted that the customer relationship

management strategies of the firm they buy from were effective. This result is further supported

by the standard deviations (0.54-0.84) which are less than 1.0 and by far less than the mean

showing that the mean could be accepted.

71

Table 4.114 – Identified Effective Customer Relationship Management Strategies

Descriptive Statistics


Ddo you agree that the firm updates customer profile often? 70 3.3857 0.83913

Ddo you agree that the approaches customers with a mix of

innovative products and service opportunities?70 2.9286 0.54697

Ddo you agree that the firm chooses from the target customer for

the first wave of CRM?70 3.2000 0.84442

Ddo you agree that the firm keeps track of customer behavior and

needs over time?70 2.9143 0.63114

Ddo you agree that the firms treats each customer differently and

uniquely?70 3.2857 0.80114

Ddo you agree that the values its customers and welcomes

complaint?70 2.8714 0.58783

Ddo you agree that management shows that everything starts and

ends with the customer?70 3.3000 0.80488

Ddo you agree that the firm rewards customers and gives

concession since they are continuously buying from the firm?70 2.9000 0.61738

Ddo you agree that customer expectations are met by all

standards?70 3.2571 0.81090



These strategies identified by the respondents include updating customers’ profile,

innovations, treating each customer uniquely, valuing customers and their complaints, meeting

the expectation of customers, giving gifts and concessions to customers among others. This

could imply that agribusinesses need to identify and apply effective strategies in their CRM

approaches in our today competitive business environment in order to achieve the purpose of

customer retention. These finding corresponds with Xu (2002), who indicated that one of the

72

strategies of CRM is to improve a customer’s experienced value of how they interact with

companies, which will create satisfaction, create loyalty, and thus bring more sales.

As could be seen above on page 4.4, the mean in all the items were higher than the

2.5 cut-off mean meaning that the respondents accepted that the customer relationship

management strategies of the firm they buy from were effective. This result is further

supported by the standard deviation which is less than the one and by far less than the

mean showing that the mean could be accepted. These strategies are updating of customer

profile, innovations, treating each customer uniquely, valuing customers and their

complaints, meeting the expectation of customers, making the customers see themselves as

the king, giving them gifts and concessions among others.

4.4 OBJECTIVE FOUR: TTo determine the Extent To Which Effective CRM Can

Lead Toto Which Effective CRM Can Lead to Customer Retention

Based on Ttable 4.125 below, it could be posited that to a great extent, effective CRM

couldan lead to customer retention. This is because the means (2.97-3.32) of the items used to

address the objective were higher than the mean cut-off of 2.5 and the standard deviations (0.63-

0.88) were lower than 1.0 and by far lower than the mean. Hence, for agribusinesses to retain

their customers, they need to work on their customer relationship so that it will be customer

centric and friendly. The findings here corresponds to Zairi (2000), who points out that

“customers are the purpose of what we do and rather than them depending on us, we very much

depend on them.

.

73

Table 4.125 – Showing the Extent to Which Effective CRM Can Lead to Customer Retention

Descriptive Statistics Item description N Mean Std.

DeviationDdo you agree that you excellent customer care which gives satisfaction? 70 3.1857 0.83913

Ddo you agree that the products always meet your expectation? 70 2.9714 0.63637

Ddo you agree that if you were given the opportunity, you will

recommend your colleague to buy from the firm because of the quality

services and products they provide?

70 3.3286 0.77500

Ddo you agree that the firms charges are relatively low compared to

others that manufacture the same product?70 3.0286 0.65875

Ddo you agree that you were not intending to leave the firm? 70 3.2571 0.84589

Ddo you agree that customers enjoy buying from the firm? 70 2.9714 0.74155

Ddo you agree that customers purchase their products/goods from the

firm always?70 3.1857 0.88944

Ddo you agree that the firm services towards customers are wonderful? 70 3.0000 0.74211

Ddo you agree that CRM is the core policy for the existence of the firm? 70 3.2571 0.86285



Based on table 4.5 above, it could be posited that to a great extent, effective CRM

can lead to customer retention. This is because the means of the items used to address the

objective were higher than the mean cut-off of 2.5 and the standard deviation being by far

lower than the mean. Hence, for businesses to retain their customers, they need to work on

their customer relationship so that it will be customer centric and friendly.

4.5 OBJECTIVE FIVE: To ascertain the Effects Of CRM Onon Agribusiness Firms

Evidence from Ttable 4.136 below shows that customer relationship management affects

agribusiness firms. This is possible because the means (3.17-3.75) of the items used to tackle the

74

objective were higher than the 2.5 mean cut-off point and their standard deviation (0.39-0.47)

were by far less than the mean as none of the standard deviations was up to one.

.

Table 4.136 – Showing the Effects Ofof CRM on Agribusiness Firms


Item description N Mean Std.

Deviation

Ddo you agree that customer relationship management

increases sales and profitability of the firm?28 3.7500 0.44096

dDo you agree that customer relationship management

increases retention and loyalty of customers?28 3.1786 0.39002


improves services without increasing the cost of such services?28 3.7143 0.46004


improves the firm ability to retain and acquire customers?28 3.2143 0.41786


increases the firm capacity in terms of increase in production,

revenue and also brings about an increase in the number of

customers?

26 3.6923 0.47068


Source: Field survey, 2014.

Therefore the above result could imply that for an agribusiness to grow in terms of her

production, number of customers, income, sales, profitability, chances of retaining their

75

customers and reduce their cost of production, it must improve and make its customer relations

effective. The findings here corresponds to the findings of Polous (2009), who posited that

agricultural firms benefits of successfully from a well implemented CRM through increased

sales, increased profitability, increased expansion of product, increased customer satisfaction and

loyalty, increased employee satisfaction, reduced costs, increased retention of the existing

customer base in time of economic uncertainty, increased chances of obtaining new customers

among others.

Evidence from table 4.6 above shows that customer relationship management affects

agribusiness firms. This is possible because the means of the items used to tackle the objective

were higher than the 2.5 mean cut-off point and their standard deviation were by far less than the

mean as none of the standard deviations was up to one. Hence, for agribusiness to grow in terms

of her production, number of customers, income, sales, profitability, chances of retaining their

customers and reduce their cost of production, it must improve and make its customer relations

effective. The findings here corresponds to the findings of Polous (2009), who posited that

agricultural firms benefits of successfully from a well implemented CRM through increased

sales, increased profitability, increased expansion of product, increased customer satisfaction and

loyalty, increased employee satisfaction, reduced costs, increased retention of the existing

customer base in time of economic uncertainty, increased chances of obtaining new customers

among others.

76

4.6 TOBJECTIVE SIX: To examine the Cchallenges of agribusiness firms in their

practice of CRM

As could be seen in Table 4.147, the means (3.14-3.82) of the various items used for this

objective were higher than the cut-off mean of 2.5 and their standard deviations (0.35-0.62) were

less than these mean which shows that the respective means were higher than their respective

deviations from the true mean..

77

Table 4.147 - The Challenges of Agribusiness Firms in Their Practice of CRM



Ddo you agree that customer relationship management is too

expensive to run?28 3.8214 0.47559

Ddo you agree that poor implementation of customer

relationship management is often the cause of losses in the

volume of customers?

28 3.1429 0.35635

Ddo you agree that customer relationship management system

requires continuous maintenance and information?28 3.7500 0.44096

Ddo you agree that irregular customer profile hinders CRM

practice?28 3.2500 0.44096

Ddo you agree that customer relationship management are so

complex for agro based firms?28 3.6429 0.62148

Ddo you agree that customer relationship management

coordination is difficult to sustain?28 3.1429 0.52453

Ddo you agree that customer relationship management is labour

intensive and requires staff that can tolerate customers?28 3.6429 0.48795

Ddo you agree that not every firm has the expertise or skill to

manage customer relationship management very effectively?28 3.2500 0.44096

Ddo you agree that customer relationship management requires

a lot of time which most employees cannot afford?27 3.6667 0.62017



As could be seen above on page 4.7, the means of the various items used to answer

objective six were higher than the cut-off mean of 2.5 and their standard deviations were less

78

than these mean which shows that the respective means were higher than their respective

deviations from the true mean. Hence this study concludes based on Ttable 4.147 that high cost,

poor implementation, irregular customer profile update, information unavailability, complex

nature of CRM, difficulties in CRM coordination, labour-intensive nature of CRM, scarcity of

resources to employ experts to handle CRM and its consumes a lot of time and

patiencerequirement were the challenges agribusiness firms face in their practice of customer

relationship management. The findings corresponds to Newell (2000), who added that exorbitant

cost, inadequate focus on objectives and ignoring overall business strategy, insufficient

resources, no customer focus and misunderstanding customer needs are the challenges

agribusiness firms face. The findings here also contradict that by with May et al., (2007) that

founddiscovered that lack of strategic focus and incomplete data can be seen as a challenge were

the major challenges facing agribusiness firms in their customer relationship management

practice.

79

CHAPTER FIVE

SUMMARY, RECOMMENDATION AND CONCLUSION

5.1 Summary of findings

This study investigated the effects of customer relationship management on customer

retention by Agribusiness firms in Aba metropolis of Abia State, Nigeria. The study developed

six objectives which were structured to; determine the role of customer relationship management

process in customer retention, to examine the effects of socioeconomic characteristics of both

customers and firms on customer retention. This second objective was transformed into two

hypotheses which trieds to ascertain whether the effects of socio-economic characteristics of

customers and producers and marketers in the aAgribusiness firms in Aba metropolis of Abia

State have effects on customer retention. The third objective was to ascertain the effective

customer relationship management in agribusiness firms in Aba metropolis. While the fourth one

was to determine the extent to which effective CRM can lead to customer retention. The fifth

objective trieds to ascertained the effects of CRM on agribusiness firms. And finally, the study

examined the challenges of agribusiness firms in their practice of CRM.

The study adopted mean and standard deviation with the mean-cut off point set at 2.5 to

resolveanswer the five objectives that has no hypothesis namely (objectives 1, 3, 4, 5 and 6).

While a binary logistic regression was used for objective two which captures the two hypotheses

in this study. The binary logistic model was chosen over others due to the binary nature of the

dependent variablesriables for the dependent variables (customer being retained or not being

retained from the point of view of customers and the firm).

The study showeddiscovered that the roles of customer relationship management process

in customer retention includes valuing of the customers complaints, making their customers

80

priority in their decision makingmanagement making customers by action see themselves as the

king, firm has formal complaints system which covers both written and oral complaints for

customers, sending congratulatory messages to customers like during their birthdays and other

events, given them prompt attention always, giving the customers bonuses among others.

Experience of a customer was found to have effect on customer retention however, no

explanatory variable of the firms was found to have effect on customer retention. On the overall

effect of the socioeconomic characteristics of both customers and firms on customer retention,

this study accepted the null hypotheses which posited that both customer and firms’ socio

economic characteristic have no significant effect on customer retention in the agribusiness in

Aba metropolis.

Furthermore, it was This study identifieddiscovered that thate effective customer

relationship management strategies of Agribusiness firms in Aba metropolis use were frequent

updating of customer profile, innovations, treating each customer uniquely, valuing customers

and their complaints, meeting the expectation of customers, making the customers see

themselves as “the king”, giving them gifts and concessions and many more. On determining the

extent to which effective CRM can lead to customer retention, the study showeddiscovered that

to a very high extent, an effective customer relationship management can bring about an increase

in customer retention in the agribusiness industry firms in Nigeria.

More so, theThe study showed discovered that CRM affectsfor an agribusiness firms’ to

grow and as well survive in our competitive business environment of today in relation of

quantity of production, number of customers, income, sales, profitability, and chances of

retaining their customers and reducing e their cost of production, it must improve and make its

customer relations effective. Furthermore, this study showeddiscovered some of the challenges

81

facing agribusinesses in Aba metropolis of Abia State in CRM application. Theseis challenges

include its perceivedthe that high cost, poor implementation, irregular customer profile update,

information unavailability, complex nature of CRM, difficulties in CRM coordination, labour-

intensive nature of CRM, scarcity of resources to employ experts to handle CRM and it

consumes a lot of time and patienceits time demanding nature. were the challenges agribusiness

firms face in their practice of customer relationship management were the challenges of

agribusiness firms face in their practice of CRM in Aba metropolis of Abia State and Nigeria at

large

After the analyses for the hypotheses to address the second objective of this study, the

study discovered that both the socio economic characteristic of customers (for the first

hypothesis) and socio economic characteristic of firms (for the second hypothesis) have no

significant effect on customer retention in the agribusiness in Nigeria. Hence on both occasions,

this study accepted the null hypotheses which posited that both customer and firms’ socio

economic characteristic have no significant effect on customer retention in the agribusiness in

Aba metropolis.

.

5..332 Recommendations

82

In a turbulent business environment, retaining customers becomes a priority and there

are convincing arguments for service managers to carefully consider the factors that would

increase customer retention rates, the fact that a good customer relationship management leads to

increase in the number of customers retained by a firm, this study therefore recommends that

firms should work hardseriously on their relationship with their customers as this is a more

reliable and sustainablesure way of them retaining most of their customers if not all.

AFirms including agribusiness firms should train its staff members to be more

optimistic particularly on interpersonal and business relationship such as complaint handling,

devoting enough time to help and understand the dynamic individual customer needs and extend

customer life time.

Firms should improve and extend its working hours to minimize customer waiting

time, as most business runners and employed clients are too busy. This might provide the firm a

competitive edge to attract and retain potential customers.

Finally firms including Aagribusiness firms must work effectively on business

relationship and understanding the actions and reactions of customers as it is the key for a long

term business relationship, also agribusiness firms should go into innovations that will help them

to always give their customers surprises as this will help them retain their customers over time

because customers are the reason and purpose of what theywe do and rather than customersthem

depending on themus, thwey (firms) should very much depend on customersthem (Zairi 2000).

83

5.3 Conclusion

This study explored the effect of customer relationship management on customer

retention by agribusiness firms in Aba metropolis of Abia State Nigeria. It emphasizes on how

the customers are treated and whether such treatment fosters their long term commitment in

patronizing the firms that is customer retention.

The rationale of customer relationship management is to offer what the customer

requires, not what the organization can make or has to offer. It has come to a strategic stage

everyone in agribusiness firms should place customers at the leading position of their minds. In

the face of the competitive marketplace of today, customer retention presents increased

profitability and sustainable protection against competitive inroads. To achieve this goal means

considerable effort of agribusiness firms. Management has to make strong commitment to the

process, setting the right environment and focus on navigating the dynamic environment of

customer needs, expectations and competitive choices.

This study further explores the effect of customer relationship management on

customer retention by firms particularly agribusiness firms in Aba metropolis of Abia State

Nigeria. It emphasizes on how the customers are treated and whether such treatment is important

or not to retain customers.

The agribusiness firms is a source of success, able to establish long lasting

partnership and works collaboratively with existing customers. This enables it to maintain a

competitive advantage on retaining customers over its rivals, since old customers reduce cost of

acquiring new customers.

84

The result of the analyses in this study suggests that an effective customer relationship

management leads to increase in the number of customers who are retained by agribusiness

firms.Al Even though agribusiness firms may have challenges in implementing an effective

customer relationship management like cost of going into it, it is better for firms to continue with

it as it leads to an increase in customer retention and profitability of the firm in Aba metropolis.

Finally, the analyses further discovered that the socio-economic characteristics of customers and

firms have no significant effect in the retention of customers, except for the business experience

of the customer which has significant effect on customer retention from the point of view of the

customers. Finally, the results of the analysis in thise work indicate that customer relationship

management is a key variable affecting that would affect customer retention that iswith its

essentialessentiality for the survival of agribusiness firms in the study area. Therefore, this

implies the need for proper planning for effective utilization of required resources to use

effective CRM strategies to ensure retention of customers by agribusiness firms.

85

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Gummesson, E. (1987). The New Marketing: A Developing Long-Term Interactive Relationships Long Range Planning, 20 (4), pp. 10-20.

Gummesson, E. (1998), Implication Rrequires Relationship Marketing Paradigm. Journal of the Academy of Marketing Science 26(3), 242-9.

Gupta, S, Donald, R. Lehmann, and Jennifer Ames Stuart (2004), “Valuing Ccustomers”, Journal of Mmarketing Rresearch 41(1), 7-18.

Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. & Tatham, R.L. (2006),. Multivariate Data Analysis (6th edition). Upper Saddle River, NJ: Pearson.

Hair, J.F., Bush, P.R., and Oftinau, D.J. (2004). Marketing Research: within a Changing Iinformation Eenvironment, (2nd edition.). McGraw-Hill: New York.

Hanic H., and Domazet, I.,(2011), Managing Customer Relationship within Financial Organization. Polisti Journal of Management Studies 2011, vol.4.

Hansemark, O.C. & Albinson, M., (2004). Customer Satisfaction and Retention: The Experience of Individual Employees, Managing Service Quality, 14 (1), pp.40-57.

Harker, Michael John (1999), “Relationship marketing defined? An examination of current relationship marketing Ddefinitions”. Journal Marketing intelligence planning 17(1),pp 13-20.

Hart, Christopher W.L., James L. Heskett and W. Earb Sasser J. (1990). The Pprofitable Aart of semi recovery. Harvard business review 68(4) July-August 148-156.




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Lovreta, S., Berman B., and Petkovic G.(2010), (Customer relationship management), Beograd: data: Ekonomski Fakultet Beograd, 2010.


Maister P .(1993), In Lowendahl, B.R.(1997), Professional service firms, 3rd edition. Coperhagen business school press.

Malhotra, N., Hall, J., Shaw, M., and Oppenheim, P. (2006),. Marketing research: An applied orientation. (3rd edn). Prentice Hall: New South Wales.

May J., Karugra J, Ndokweni, M., (2007), Information and communication technology and agricultural development in sub-saharan Africa transformation and employment generation. African economic research consortium (AERC) May 25, 2007.

Mcllroy & Barnelt (2000),. Building customer relationship: do discount cards work? Managing service quality 10(6), pp.347-355.

Milovic B., (2012),Application of CRM strategy. International conference on technology and business management March 26-28, 2012.

Mittal , V., Wagner, A., and Kamakura,W.A (2001),. Satisfaction repurchase intent and repurchase behavior investigating the moderating effect of customer characteristics. Journal of Marketing Research, 38(5):131-142.

Morales, A.C. (2005), Giving firms an ‘E’ for effort: Consumer responses to high-effort firms. Journal of consumer research, 31 (March), 806-812. http://dxdoi.org/10.1086/426615.

Morgan, Robert M. and Shelbyy D. Hunt (1994), The commitment-trust theory of relationship marketing. Journal of marketing. 58(July) 20-38.

Myron D. (2003), “6 barriers to CRM success and how to overcome the destination CRM, www.destinationcrm.com/articles/editorial/magazine/6_barners_to_CRM_success_and_and_how_to_overcome_them_44805.asp. Retrieved 2013

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Newell, F. (2000),. Loyalty.com; customer relationship management in the new era of internet marketing. New York: McGraw-Hill.

Ogbadu, E.E, and Usman, A. (2012), Imperative of CRM in Nigeria. Banking industry. Kuwat chapter of Arabian. Journal of businessiz and management review 2(1), 59-72.

Oghojafor, B.E.A., Aduloju S.A, and Olowokedjo, F.F (2011),. Information technology and customer relationship management (CRM) in some selected insurance firms in Nigeria. Journal of Economics and international finance, vol.3(7), pp.452-461.





Parvatiyar .A, & Sheth J, (1995),. “The evaluation of relationship marketing” International Bbusiness Rreview, pp.397-418.


Patton , S,. (2001). The truth about CRM. cio magazine. online available: www.cio.com/archives 10th January 2005.


Peppers, D. & Rogers, M. (19963),. The one to one future: Building relationships one customer at a time New York: Harper & Row.


Peppers, Rogers, DM. & Dorf, B. (1999),. Is your company ready for one-to-one marketing? Harvard business review.

Peterson, Glen S. (1999), CRM systems: POS results and measurements, strategic sales performances, New York.March.

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Raghu Ramakrishnan, (2005), Perspectives workshop: Data mining: The next generation, http://drops.dagstuhl.dc/opus/voltexte/201405/270. Retrieved 2013.



Reichheld , F.(1996),. The Loyalty effect. Boston MA, Harvard Business School Press.


Reinartz , W., Kraft, M., and Hoyer, W.D. (2004),. The Customer relationship management process: its measurement and impact on performance. Journal of marketing research, 41, 293-305.

Reinartz, W.J. & Kumar, V. (2000), On the profitability of long lifetime customers: an empirical investigation and implication for marketing. Journal of marketing 64(4), 17-35.

Richard, K.A. 7 Jones, E. (2008),. Customer relationship management: Finding value drivers. Industrial Mmarketing Mmanagement, 37:http/dx.doi.org. Retrieved 20122, 120-30 http//dx.doi.org/10.1016/j.indmarman 201306.08.005.

Rigby, D.K., Feichheld, F.F. and Schefler, P. (2002), avoid the four perils of CRM. Harvard business review 80(2), 101-9.





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Rosenberg , L. & Czepiel, J. (1984), “A marketing approach to customer retention”. Journal of consumer marketing, Vol 2 pp. 45-51.

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Sharma, N., & Patterson, D.G. (2000), Switching costs, alternative attractiveness and experience as moderating of relationship commitment in professional, consumer services; International journal of service industry management, 11(5), pp.470-490.

Sheth ,J.N & Sisodia, R.S. (1995),. Improving marketing productivity. International Journal of Halbrum (Ed), Encyclopedia of marketing in the year 2000. Chicago, IL: American Marketing Association/ NTC Publishing.

Shugan, Byron and Anne Sharp (1997), Loyalty programs and their impact on repeat-purchase loyalty patterns. International journal of research in marketing 14(5) 473-486.

Singh, J. (1990),. A multifaceted typology of patients satisfaction with a hospital Journal of Health Care Market, 10 (4):8-21.

Siomkos , G.J and Tsianes, I.S. (2006),. Analytical CRM technologies in financial service institutions. International Journal of financial services management,1(213), 215-231.

Sivados, E. & Baker-Prewitt, J.L. (2000),. An examination of the relationship between service quality, customer satisfaction, and store loyalty, International journal of retail and distribution management, 28(2), pp.73-82.


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Uncles, M., Dowling, G. & Hammond, K. (2002), “Customer loyalty and customer loyalty programs. Journal of consumer marketing pp.294-316.



Webster, A.L. (1998),. Applied statistics for business and economics: An essential version (3rd




Winner, R. (2001), A framework for customer relationship management. California management review 43(4), 89-105.


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Zeithaml, V.A., Rust, R.T., & Lemon, K.N. (2001),. The customer pyramid: creating and serving profitable customers. California management review 43(4), 118-142.

Zinkham, G.M., Stoidian, L.F (1984),. Impact of sex role stereotypes in service priority in department stores. Journal of Applied Psychology, 69(11): 691-693..


Freedman, A.D., (2009). Statistical Models: Thoery and Practice. Cambridge University Press. P128.


Ahmed, M., Ahmed, Z., Ahmed, I, & Nuwaz, M. (2009) Comparative significance of the four perspective balanced Scorecard.


Alderson, W., (1958). “Dynamic marketing behaviour: A functionalist theory of marketing, Homewood, Richard D. Irwin, Inc.

Anaekwe ,M.C. (2007). Basic Research Methods and Statistics in Education and Social Sciences. 2nd ed., Onitsha: Sofie Pubilicity and Printing Limited.

Anderson , E.W (1994). Customer satisfaction, market share, and possibility: findings from Sweden. Journal of marketing, 58(3), 53-66.



Andrich, D. (1978). A rating formulation for ordered response categories. Psychometric, 4(3), 357-374.

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Banseal, S. & Gupta, G. (2001). Building customer loyalty business-to-business commerce. In J.N. Sheth, A. Parvatiyas and G. Shainesh, Edo; Customer relationship management. New Delhi, Tata McGraw-Hill, 2001, pp.3-25.

Baran ,R.J, & Galka R.J, Strunk D, P., (2008). Principles of customer relationship management. Mason: Thomson Western.




Berry, M & Gordon, L. (1995). Mastering Data mining: The art and science of customer relationship management, Wiley New York.

Blattberg, Robert and John Deighton (1996) Manage marketing by the customer equity test. Harvard business review. July-August 136-144.


Bolton, R.N. (1998) A dynamic model of the duration of the customer’s relationship with a continuous service provider. The role of satisfaction journal of marketing, 17(1), 45-65. http://dx.doi.org/10.1287/mksc.17.1.45

Bose, R. (2002) Customer relationship management: key components for IT success, industrial management and data system, 102(2), 89-97.




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Buttle ,F. (2009). Customer relationship management, Burlington, MA: Elsevier.

Buttle, F. (1996). Relationship marketing: Theory and practice, eds; Paul Chapman publishing

Capon, Noel and Marian Burke, (1980). “Individual, Product Class and Task-Related Factors in Consumer information” Journal of Consumer Research, 7(December), pp, 314-26

Carmel, S. (1985).Satisfaction with Hospitalization: A Comparative Analysis of Three Types of Service. Soc. Sciences Med, 21 (5): 375-388.

Chen, I. and Popovich, K. (2003) Understanding customer relationship management (CRM): people, process and technology”, Business process management journal, Vol. 9, No.5, pp.672-88.

Chisick, M.C. (1997). Satisfaction with active duty soldiers with family dental care. Mil.Med (2196): 1243-9.

Chou, C.D., Ding, M., & Unithan, C. (2003) Organizational transformation through CRM implementation: a descriptive case study. School information system, Deakin university.


Claxton, John D., Frey Joseph N. and Bernard Portis, (1974). “Journal of Consumer Research, pp.35-42


Crosby, L.A. (20020). Exploring some myths about customer relationship management. Management service quality, vol.(12) pp.271-277.


Daniel, E and McDonald, M,. (2002) factors for success in CRM systems. Journal of marketing management vol. (18) pp.139-219.




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Dowling, G. (2002) Customers relationship management in BZC markets, often less as more. California management review 44(3), 87-104.


Dzopalic M., Zubovic K., Bradic Maitinovic A., (2010) Effective implementation of E-CRM strategy. Polisti journal of management studies 2010. Vol.1.


Eboh, E.C. (2009), Social and Eeconomic Rresearch: Pprinciples and Mmethods. 2nd ed.Enugu: African institute for applied Economics,pp.77-79

Egan, J. (2004), Relationship Mmarketing; Eexploring Rrelational Sstrategies in Mmarket 2nd

edition. Pearson Press: Stockholm

Eriksson, K. & Vaghult, L.A. (2000), Customer retention, purchasing behaviour and Rrelationship Ssubstance in Pprofessional Sservices. Industrial Mmarketing Mmanagement, 29. Pp.363-372.

Ernest ,H., Hoyer, D.W.,(2010) CRM and Ccompany Pperformance-the Mmediating Rrole of Nnew Pproduct Pperformance. Journal of A academy of Mmarketing Sscience. 39(2), 290-306.

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Gronroos, Christian (1997), “Value-driven Rrelation Mmarketing: Ffrom Pproducts to Rresources and Ccompetencies”. Journal of Mmarketing Mmanagement 13 (4), 407-419.

Gummesson, E. (1987). The Nnew Mmarketing: A Ddeveloping Llong-Tterm Iinteractive Rrelationships Llong Rrange Pplanning, 20 (4), pp. 10-20.

Gummesson, E. (1998), Implication requires a relationship marketing paradigm. Journal of the academy of marketing science 26(3), 242-9.

Gupta, S, Donald, R. Lehmann, and Jennifer Ames Stuart (2004) “Valuing customers”, Journal of marketing research 41(1), 7-18.

Hair, J.F., Black, W.C., Babin, B.J., Anderson, R.E. & Tatham, R.L. 2006. Multivariate Data Analysis (6th edition). Upper Saddle River, NJ: Pearson.

Hair, J.F., Bush, P.R., and Oftinau, D.J. (2004). Marketing research: within a changing information environment, (2nd edition.). McGraw-Hill: New York.

Hanic H., and Domazet, I., Managing customer relationship within financial organization. Polisti journal of management studies 2011, vol.4.

Hansemark, O.C. & Albinson, M., (2004). Customer satisfaction and retention: The experience of individual employees, managing service quality, 14 (1), pp.40-57.

Harker, Michael John (1999), “Relationship marketing defined? An examination of current relationship marketing definitions”. Journal Marketing Iintelligence Pplanning 17(1), 13-20.

Hart, Christopher W.L., James L. Heskett and W. Earb Sasser J. (1990). The profitable art of semi recovery. Harvard business review 68(4) July-August 148-156.

113









Kaplan, R.S., & Norton, D.P. (1996), Using the balanced score and as a strategic management system. Harvard business review (Jan-Feb), 75-85.








114





Levitt, T. (1960) “Marketing Myopia” Harvard Business review (January-February)

Limnn, L.S (1982). Burn patients evaluation of emergency department care. Ann. Emerg. Med 11:255-9


Lovreta, S., Berman B., and Petkovic G. (Customer relationship management), Beograd: data: Ekonomski Fakultet Beograd, 2010.



Maister P .(1993) In Lowendahl, B.R.(1997), Professional service firms, 3rd edition. Coperhagen business school press.

Malhotra, N., Hall, J., Shaw, M., and Oppenheim, P. (2006). Marketing research: An applied orientation. (3rd edn). Prentice Hall: New South Wales.

May J., Karugra J, Ndokweni, M., (2007) Information and communication technology and agricultural development in sub-saharan Africa transformation and employment generation. African economic research consortium (AERC) May 25, 2007.

Mcllroy & Barnelt (2000). Building customer relationship: do discount cards work? Managing service quality 10(6), pp.347-355.

Milovic B., (2012)Application of CRM strategy. International conference on technology and business management March 26-28, 2012.

Mittal , V., Wagner, A., and Kamakura,W.A (2001). Satisfaction repurchase intent and repurchase behavior investigating the moderating effect of customer characteristics. Journal of Marketing Research, 38(5):131-142.

115

Morales, A.C. (2005) Giving firms an ‘E’ for effort: Consumer responses to high-effort firms. Journal of consumer research, 31 (March), 806-812. http://dxdoi.org/10.1086/426615.

Morgan, Robert M. and Shelbyy D. Hunt (1994) The commitment-trust theory of relationship marketing. Journal of marketing. 58(July) 20-38.

Myron D. (2003) “6 barriers to CRM success and how to overcome the destination CRM, www.destinationcrm.com/articles/editorial/magazine/6_barners_to_CRM_success_and_and_how_to_overcome_them_44805.asp. 2013

National Population Commision, (2006). Preliminary 2006 census figures. Available online: http://www.population.gov.ng/pop/figure.pdf

Newell, F. (2000). Loyalty.com; customer relationship management in the new era of internet marketing. New York: McGraw-Hill.

Ogbadu, E.E, and Usman, A. (2012) Imperative of CRM in Nigeria. Banking industry. Kuwat chapter of Arabian. Journal of biz and management review 2(1), 59-72.

Oghojafor, B.E.A., Aduloju S.A, and Olowokedjo, F.F (2011). Information technology and customer relationship management (CRM) in some selected insurance firms in Nigeria. Journal of Economics and international finance, vol.3(7), pp.452-461.





Parvatiyar .A, & Sheth J, (1995). “The evaluation of relationship marketing” International business review, pp.397-418.


Patton , S. (2001). The truth about CRM. cio magazine. online available: www.cio.com/archives 10th January 2005.


116





http://dxdoi.org/10.1086/426615

Peppers, D. & Rogers, M. (19963). The one to one future: Building relationships one customer at a time New York: Harper & Row.



Peppers, Rogers, DM. & Dorf, B. (1999). Is your company ready for one-to-one marketing? Harvard business review.

Peterson, Glen S. (1999), CRM systems: POS results and measurements, strategic sales performances, March.

Polous N. (2009) Changing the game in agribusiness. Retrieved August 1, 2012, fromwww.crmcampuss.com. http://www.crmcompass.com/ihdex.plp?ophon=comcontent&view=article&id=6:changing_the_game_inagribusiness-crm&catid=2:blog_

Raghu Ramakrishnan, (2005), Perspectives workshop: Data mining: The next generation, http://drops.dagstuhl.dc/opus/voltexte/201405/270.



Reichheld , F.(1996). The Loyalty effect. Boston MA, Harvard Business School Press.


Reinartz , W., Kraft, M., and Hoyer, W.D. (2004). The Customer relationship management process: its measurement and impact on performance. Journal of marketing research, 41, 293-305.

Reinartz, W.J. & Kumar, V. (2000) On the profitability of long lifetime customers: an empirical investigation and implication for marketing. Journal of marketing 64(4), 17-35.

Richard, K.A. 7 Jones, E. (2008). Customer relationship management: Finding value drivers. Industrial marketing management, 37:2, 120-30 http//dx.doi.org/10.1016/j.indmarman 201306.08.005.

117





Rigby, D.K., Feichheld, F.F. and Schefler, P. (2002) Avoid the four perils of CRM. Harvard business review 80(2), 101-9.






Rosenberg , L. & Czepiel, J. (1984) “A marketing approach to customer retention”. Journal of consumer marketing, pp. 45-51.

Ryales , L. & Knox, S. (2001) Cross-functional issues in the implementation of the relationship marketing through customer relationship management. European Management Journal, vol (19) 5 p. 534-542.


Schaninger, C.M., and Sciglimpughiaglimpalia D., (1981), “the influence of cognitive personality traits and Demographics on Consumer Information Acquisition” Journal of Consumer Research, 8(2), pp. 208-216.



Sharma, N., & Patterson, D.G. (2000) Switching costs, alternative attractiveness and experience as moderating of relationship commitment in professional, consumer services; International journal of service industry management, 11(5), pp.470-490.

Sheth ,J.N & Sisodia, R.S. (1995). Improving marketing productivity. International Journal of Halbrum (Ed), Encyclopedia of marketing in the year 2000. Chicago, IL: American Marketing Association/ NTC Publishing.

118

Shugan, Byron and Anne Sharp (1997) Loyalty programs and their impact on repeat-purchase loyalty patterns. International journal of research in marketing 14(5) 473-486.

Singh, J. (1990). A multifaceted typology of patients satisfaction with a hospital Journal of Health Care Market, 10 (4):8-21.

Siomkos , G.J and Tsianes, I.S. (2006). Analytical CRM technologies in financial service institutions. International Journal of financial services management,1(213), 215-231.

Sivados, E. & Baker-Prewitt, J.L. (2000). An examination of the relationship between service quality, customer satisfaction, and store loyalty, International journal of retail and distribution management, 28(2), pp.73-82.



Thakor, M.V., & Kumar, A. (2000), What is a professional service? A conceptual review and bi-national investigation. Journal of services marketing, 14(1).



Trepper, C. (2000, 15 May). Customer care goes end-to-end. Information week.

Uncles, M., Dowling, G. & Hammond, K. (2002) “Customer loyalty and customer loyalty programs. Journal of consumer marketing pp.294-316.



Webster, A.L. (1998). Applied statistics for business and economics: An essential version (3rd



119

Winner, R. (2001) A framework for customer relationship management. California management review 43(4), 89-105.





Zeithaml, V.A., Rust, R.T., & Lemon, K.N. (2001). The customer pyramid: creating and serving profitable customers. California management review 43(4), 118-142.

Zinkham, G.M., Stoidian, L.F (1984). Impact of sex role stereotypes in service priority in department stores. Journal of Applied Psychology, 69(11): 691-693..

Hosmer, D.W., Lemeshow,S.(2000). Applied Logistic Regression (2nd edition) New York Wiley.

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Freedman, A.D., (2009). Statistical Models: Thoery and Practice. Cambridge University Press. P128.


Ahmed, M., Ahmed, Z., Ahmed, I, & Nuwaz, M. (2009) Comparative significance of the four perspective balanced Scorecard.


Alderson, W., (1958). “Dynamic marketing behaviour: A functionalist theory of marketing, Homewood, Richard D. Irwin, Inc.

Anaekwe ,M.C. (2007). Basic Research Methods and Statistics in Education and Social Sciences. 2nd ed., Onitsha: Sofie Pubilicity and Printing Limited.

Anderson , E.W (1994). Customer satisfaction, market share, and possibility: findings from Sweden. Journal of marketing, 58(3), 53-66.



Andrich, D. (1978). A rating formulation for ordered response categories. Psychometric, 4(3), 357-374.



Banseal, S. & Gupta, G. (2001). Building customer loyalty business-to-business commerce. In J.N. Sheth, A. Parvatiyas and G. Shainesh, Edo; Customer relationship management. New Delhi, Tata McGraw-Hill, 2001, pp.3-25.

Baran ,R.J, & Galka R.J, Strunk D, P., (2008). Principles of customer relationship management. Mason: Thomson Western.

121






Berry, M & Gordon, L. (1995). Mastering Data mining: The art and science of customer relationship management, Wiley New York.

Blattberg, Robert and John Deighton (1996) Manage marketing by the customer equity test. Harvard business review. July-August 136-144.


Bolton, R.N. (1998) A dynamic model of the duration of the customer’s relationship with a continuous service provider. The role of satisfaction journal of marketing, 17(1), 45-65. http://dx.doi.org/10.1287/mksc.17.1.45

Bose, R. (2002) Customer relationship management: key components for IT success, industrial management and data system, 102(2), 89-97.

Bowen, J.T. & Chen, S.L., (May 2001). The relationship between customer loyalty and customer satisfaction. International journal of contemporary hospitality management, pp.213-217.




Buttle ,F. (2009). Customer relationship management, Burlington, MA: Elsevier.

Buttle, F. (1996). Relationship marketing: Theory and practice, eds; Paul Chapman publishing

Capon, Noel and Marian Burke, (1980). “Individual, Product Class and Task-Related Factors in Consumer information” Journal of Consumer Research, 7(December), pp, 314-26

Carmel, S. (1985).Satisfaction with Hospitalization: A Comparative Analysis of Three Types of Service. Soc. Sciences Med, 21 (5): 375-388.

122


Chen, I. and Popovich, K. (2003) Understanding customer relationship management (CRM): people, process and technology”, Business process management journal, Vol. 9, No.5, pp.672-88.

Chisick, M.C. (1997). Satisfaction with active duty soldiers with family dental care. Mil.Med (2196): 1243-9.

Chou, C.D., Ding, M., & Unithan, C. (2003) Organizational transformation through CRM implementation: a descriptive case study. School information system, Deakin university.


Claxton, John D., Frey Joseph N. and Bernard Portis, (1974). “Journal of Consumer Research, pp.35-42


Crosby, L.A. (20020). Exploring some myths about customer relationship management. Management service quality, vol.(12) pp.271-277.


Daniel, E and McDonald, M,. (2002) factors for success in CRM systems. Journal of marketing management vol. (18) pp.139-219.





Dowling, G. (2002) Customers relationship management in BZC markets, often less as more. California management review 44(3), 87-104.


123


Dzopalic M., Zubovic K., Bradic Maitinovic A., (2010) Effective implementation of E-CRM strategy. Polisti journal of management studies 2010. Vol.1.


Eboh, E.C. (2009), Social and Eeconomic Rresearch: Pprinciples and Mmethods. 2nd ed.Enugu: African institute for applied Economics,pp.77-79

Egan, J. (2004), Relationship Mmarketing; Eexploring Rrelational Sstrategies in Mmarket 2nd

edition. Pearson Press: Stockholm

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TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION

1.1 Background Information- - - - - - - - 1

1.2 Problem Statement - - - - - - - - 5

1.3 Objectives of the study - - - - - - - - 8

1.4 Hypotheses - - - - - - - - 9

1.5 Justification of the study - - - - - - - 9

1.6 Limitations of the study 9

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Concept of Customer Relationship Management - - - - 10

2.1.1 Relationship Marketing and Customer Relationship Management 12

2.1.2 Customer Relationship Management for Agribusiness - - - - 14


2.3 Effects of Socio-Economic Characteristics on Customer Retention 16

2.3.1 Gender of Customers 16

2.3.2 Age of Customer 17

2.3.3 Income Levels of Customer 18

2.3.4 Educational Level of Customers 18

2.4 Effective CRM Strategies and Their Effects on Customer Retention - - 18

2.4.1 Strategies for Customer Relationship Management Initiatives - - - 19

2.5 Determine the Extent to Which Effective CRM can lead To Customer Retention 25

2.5.1 Effect of CRM on Customer Satisfaction - - - 26

2.5.2 Relating CRM and Customer Loyalty - - - - - - 27

2.5.3 Effect of CRM on Customer Loyalty - - - - - - 27

134

i

2.5.4 Customer Retention - - - - - - - - 29

2.5.5 Effects of CRM on Agribusiness Firms- - - - - 30

2.6 Challenges and Benefits of using CRM in Agribusiness - - - - 31

2.6.1 Benefits of CRM in Agribusiness - - - - - - 325

2.7 Theoretical Framework - - - - - - - 35

2.8 Analytical Framework - - - - - - - 37


2.8.2 Binary Logit Model - - - - - - - - 38

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Study Area

3.2 Sampling procedures

3.3 Validity and Reliability Test Result

3.4 Data Collection

3.5 Data Analysis

3.6 Model Specification

3.6.1 Likert Rrating Sscale

3.6.2 Binary logit model

3.1 Study Area - - - - - - - - - 39

3.2 Sampling Procedure - - - - - - - - 39

3.3 Data Collection - - - - - - - - - 40

3.4 Data Analysis - - - - - - - - - 41

3.5 Model Specification - - - - - - - - 41


3.5.2 Binary logit model - - - - - - - - 42

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CHAPTER FOUR: DATA ANALYSIS PRESENTATION AND INTERPRETATIONRESULT AND DISCUSSION

4.1 TOBJECTIVE ONE: To determine the Role Ofof Customer Relationship Management Process Inin Customer Retention .

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4.2 OBJECTIVE TWO: To examine the Effects oOf Socioeconomic Characteristics oOf Both Customers aAnnd Firms oOn

Customer Retention

4.2.1 Effects of HYPOTHESIS ONE: Socioe-Economic Characteristics of Customers Of Customers Have No Significant Effect on Customer Retention

4.2.2 HYPOTHESIS TWO: The Effect of Firms Characteristics on Customer Retention

4.3 OBJECTIVE THREE:E To ascertain effective Customer Relationship Management Strategies .

4.4 OBJECTIVE FOUR: TTo determine the Extent To Which Effective CRM Can Lead Toto Which Effective CRM Can Lead to Customer Retention

4.5 OBJECTIVE FIVE: To ascertain the Effects Of CRM Onon Agribusiness Firms

4.6 TOBJECTIVE SIX: To examine the Cchallenges of agribusiness firms in their practice of CRM

CHAPTER FIVE: SUMMARY, RECOMMENDATION AND CONCLUSION

5.1 Summary of findings

5.2 Recommendations

5.3 Conclusion

Interpretation Procedure 45

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary of findings 61

5.2 Conclusion 63

5.3 Recommendations 63

REFERENCES

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LIST OF TABLES





Table 4.2.4 49





Table 4.3.4 53






LIST OF FIGURES

Figure 1: A six-step strategy of the CRM. 19

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