How Does Relationship Marketing Affect Customer Retention in Banking Essay

How Does Relationship Marketing Affect Customer Retention in Banking - Essay Example The researcher states that traditionally there were few government regulated nationalized banks, so banks did not compete to grab customers. The customers were loyal to the banks they went to and it carried on for generations. However, with the increasing number of private banks, the competition in the market has increased. The private banks are offering lucrative financial products along with basic banking facilities. The services are prompt, the procedure is short and fast, which has reduced the problems and increased the operational efficiency of the banks. The concepts of relationship marketing would be discussed in the context of the banking industry. Now the major objective of this study is to identify the significance of relationship marketing, its application, and usage in case of the banking industry. This will assist in informing the readers about the relationship marketing approaches that banks utilize to retain the customers. Since customers have more options, so they kee p switching from one bank to another for short-term profits. The banks now do not depend on customer loyalty; rather they wish to focus on customer retention through customer satisfaction. Keeping in mind the research hypothesis and the objectives of the study, a critical review of the literature would be done, which would assist in understanding the role relationship marketing and technology in the banking industry because technology has acted as a catalyst for relationship marketing to grow in the country.... ature would be done, which would assist in understanding the role relationship marketing and technology in the banking industry because technology has acted as a catalyst for relationship marketing to grow in the country (Bergstrom and Bresnahan, 1996). Literature Review Relationship Marketing Relationship marketing can be defined as a way of marketing that can be developed through direct marketing campaigns, as this will assist in focusing on customer satisfaction and their retention, rather than just concentrate on sales. Relationship marketing is somewhat different from other types of marketing strategies because it considers having long-term relationship with the customers, which will extend beyond the level of general promotion (Bharadwaj, Varadarajan, and Fahy, 1993). As the name suggests, relationship marketing deals with relationship building. In the present times, advancement of technology and growth of mobile and internet platforms has assisted relationship marketing to evo lve and collaborate with the social communication channels. There are many tools which are applied by organizations to maintain strong relationship with the customers (Chang, Chan, and Leck, 1997). In the banking industry, the marketing environment has undergone tremendous change. This is primarily due to changing government policies. The advancing technology has also intensified the competition. These factors have resulted in development of new challenges and behaviours. The loyalty of the customers towards a particular bank has declined due to the increasing level of competition in the industry (Ennew, and Binks, 1996). Nowadays the customers get more number of options and better offers, and the other reason is that the customers prefer to use more than one financial institution in order