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.
Description:
The banking industry in Ghana is constantly changing in terms of service delivery with the purpose of improving the quality of customer service and satisfaction. Trade liberalization has intensified the competition, with banks not only competing among each other; but also with non-banks and other financial institutions (Kaynak and Kucukemiroglu, 1992; Hull, 2002). Production of identical services due to imitation of product development has necessitated banks to differentiate themselves on quality and price. Customer retention is another potentially effective tool that banks can use to gain strategic advantage and survive in this increasing banking competitive environment
