CUSTOMER RELATIONSHIP MARKETING AND ITS EFFECT ON CUSTOMER RETENTION IN THE GHANAIAN BANKING SECTOR

Abstract

The Ghana Banking Survey (2008) has shown that the traditional banks are losing out as competition in the industry deepens, triggered by aggressive new entrants. Banks are now increasingly adopting a relationship-based approach to marketing to increase customer loyalty and retention due to increased competition, changing trends of customer demand and advancement in Information Technology (Gronroos, 1997; Chen &Popovich (2003). The basic philosophy underlying this move is that it costs more to attract new customers than to nurture and develop existing ones. Numerous studies have confirmed this assertion. For example, (Ndubisi, 2003;Rosenberg and Czepiel, 1983) have shown that the cost of serving one loyal customer is five to six times less than the cost of attracting and serving one new customer.