Effects of relationship marketing on commercial banks' performance in Kenya
Njoka, Margaret Njoki
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In today world of banking, banks are facing a lot of stiff competition both from within the sector and outside. The customers are now more informed and their demands vary in complexity and time. This intense competition has resulted in little or no differentiation among the products being offered due to product imitation thus no bank can claim a substantive competitive edge over another. Service quality is therefore very Key in order to create and sustain worthy relationships with customers and also to keep abreast with their changing needs and behaviour. Many commercial banks have therefore adopted relationship marketing in order to remain competitive. The purpose of this study was to establish the effects of relationship marketing on the commercial banks' performance in Kenya. The study aimed at understanding how customer care management, employee empowerment and information technology affects the performance of commercial banks in Kenya, it adopted a descriptive survey research conducted among the commercial banks in Kenya. The study obtained data from 95 relationship managers from the five (5) commercial banks that were purported to have had a relatively richer experience in relationship marketing due to their large size and customer base. Collection of primary data was through self-administered questionnaires with closed and open-ended questions. Secondary data included bank publications, journals, and periodicals. Quantitative and qualitative data analysis was employed to analyze the data collected. A research model was used in predicting the relationship between relationship marketing and performance of commercial banks in Kenya. The findings indicated a strong relationship between relationship marketing and banks performance as all the variables were significant in explaining the relationship. The study thus concludes that relationship marketing as measured by customer care management, employee management and adoption of information technology has enhanced bank performance and thus the three pillars of relationship management are Key if a bank has to perform. This is in line with Gillespie and Hennessey (2007) who argued that good relationship management as a result of relationship marketing leads to committed and loyal customers, thus increasing the purchases, which in turn increase the profits of the company.