The Motivation of Customers - Essay Example

Motivation as essential tool in financial in Oman Insert Insert Insert Insert Acknowledgement My firstappreciation and thanks goes to Allah Almighty for the strength, power, and health He granted me during the period of writing this paper to its completion. I would like also to thank my financial manager for his unyielding financial support he granted me during this period. My sincere gratitude also goes to my supervisor for his professional guidance and advice he offered me during this time. He was a great source of motivation to me and an encouragement in the completion of this work and his timely feedback were critical to my work. Last but not least I would like to thank my family for their encouragement and provision of their sincere economic, physical and emotional support. Without these people this work would not have come to a smooth completion. May the Almighty Allah bless you all and protect you. Abstract Research findings have potent that customer motivation is an essential ingredient in the performance of a financial institution all over the world. It has been shown by business research that well satisfied customer’s guarantees at least 2% increment in business profitability by the end of every trading year. Customer satisfaction reduces the cost of business operations on advertizing by over 5% every year according to research findings. This is because a satisfied customer is an advertisement to a business by itself. This research study is aimed at finding the motivational tools used by financial institutions in Oman in achieving their financial objectives. The objective of this study is to evaluate customer motivation techniques in Oman banks and other financial institutions. It focuses on the influences of these motivations to the achievement of these institutions goals and objectives. Business experts have agreed to the fact that businesses that invest in customer motivation more often than not makes high profits than those that do not. Over a long time financial institutions have adopted the idea of treating customers as assets. This has therefore necessitated the need to measure the value of the customer and the value customer by financial institutions. This also has provided several institutions with the need to identify opportunities for the growth of the customer value and the return of investment on customer base and loyalty to an institution. Such findings often are seen as the basis of employee actions in the creation of the values that attracted and increased the customer base in an institution. The achievement of such objective requires the development of appropriate incentive structures to the customer in value creation. CHAPTER ONE: 1.0 Introduction The study of organizational behavior has incessantly tackled the issue of motivation and its relevance in organizations as a whole. The majority of findings from such studies have displayed a universal manifestation of the importance of motivation in the achievement of organizational goals and objectives. The study here is aimed at providing additional information to the study of organizational operations relating to motivation and effectiveness of the organization. The study establishes the relationship of customer motivation and the performance of an organization (Abdul, 2008). Motivation is also seen as a function of compensation and incentives. The need for multiplying the number of customers with the cash flow per customer results to the stability of the financial institution. The consideration of customer lifetimes enables for the estimation of long term values of customers. In the current financial markets, the key measurements of investments are retention and acquisition expenditures per customer. The distinction between acquisition, retention, cross-selling, and customer recovery activities is of essence in the analysis of customer motivation (Abdul, 2008). Over the decades, the Oman financial institutions have put up strategies which were product and transaction oriented. This strategy resulted into profitability focus on a transaction with a customer instead of a long term customer relationship. This led to poor customer performance which resulted to poor customer-institution relationships. This has resulted into adoption of customer relationships orientation values by the financial institutions in Oman. “The paradigm shift has been triggered by studies that have shown that a customer relationship orientation can greatly improve the overall profitability of an institution” (Bajaj, 2009). Current financial institutions in Oman are expected to put clear distinctive benefits for operating customer orientation procedures. Customer management has been seen as the marketing practice that aims at the implementation and profiting from a customer orientation theory. The management of customers is focused on the way it aids in customer retention and its aim in increasing the customer lifetime value and equity as well as the aggregate estimation of the life time value of present and prospective customers. The management approaches in the link between the customer and sales channels is of crucial benefit in the motivation of customers (Bajaj, 2009). The management of multiple marketing and sales channels has presented financial institutions with confusing array of choices and operational challenges. Decomposition and standardization of customer buying cycle provides the basis of developing decision support tools in the management of customer relationships. The support tool of decision provides the capacity to increase decision quality, and optimize customer management decisions and expand the industrialization of relationship in the financial institutions in the industry (Coltman, 2010). The discussion on whether strengthening customer loyalty in a financial institution can enable an institution to gain financial stability has resulted into mixed feelings. As a result, institutions have added a multiplicity of channels in the hope of increasing customer loyalty and base. The ability of institutions to command a large and loyal customer base would mean the strength of an institution in the industry (Coltman, 2010). 1.1 Aim/Purpose of study The aim of this research is to understand, evaluate, and analyze the effects of motivation of customers as an essential tool in financial institutions in Oman. The study is trying the find out whether there exists a correlation between customer satisfaction and institutions performance. 1.2 Objectives of the study To investigate the customer motivation techniques in Oman banks and insurance company To examine the factors influencing customer motivating and profitability in banks and insurance company in Oman To examine the benefits of customer loyalty to Oman banks and insurance company To determine the roles of customer motivation initiative towards the profitability of a financial institution 1.3 Rationale of selection of topic A major attraction in the Oman economy is the tax-free income. Opening and running a bank account in Oman has become easy and an efficient activity. The paradigm shift from a product-focused to a customer-focused view is an indication that institutions have to consider the needs of their customers as a priority. The achievement of a competitive advantage in an organization requires the adoption of customer centered ways of conducting business (Corner, 2009). The adoption of such techniques entails risks and uncertainties that may hinder the success of an institution. Recent analysis have shown that there has been an increase in growth of business needs that has led organizations in developed countries to adopt customer oriented business actions. However, in light of modern concepts of business competitiveness which is a characteristic of Omani business, the adoption of customer motivation is considered important especially in the financial institutions (Corner, 2009). Given the significance of financial institutions in Oman and its impacts on many sectors, it is important to analyze the effectiveness of this sector in relation to the services to the customer. The importance of financial institutions in an organization cannot be overemphasized and as such, it is important to understand the operations of the institutions in the financial sector (Darke, 2011). CHAPTER TWO 2.0 Literature Review The quest for customer satisfaction has become an important issue in service industry. In recent years, services of banks and other financial institutions have changed their orientations, environment, rules and operations world wide. Bankers have identified of increasing customer base and limiting customer defection. Bankers in Oman have not only focused on customer satisfaction but have also in customer retention in the long run (SBFI 2009). Customer satisfaction is an important function of the performance of a financial institution. When the customer’s desires are satisfied by the service provider, the result would be customer loyalty. It has been shown that it is difficult to alter customer perceptions in the short term and retain them in the long run (SBFI 2009). Financial institutions have to take steps in building relationships with customers by providing awareness on various transactions that are of interest to the customer. The customer of today has become more aware of the kinds of services they expect from the service provider and will not hesitate to shift to another service provider incase of a dissatisfaction. As such customer motivation has become an important element of the banking strategy in the increasing competitive financial institution (Darke, 2011). There has been an increase in the concentration of factors of employee performance, professionalism, friendliness, level of knowledge, willingness to solve problems, communication, and sales skills in the banking sector. Customer satisfaction has also been increased through bank rates, policies, and locations of branches. The competition in the market today has increased among the bankers and even non financial institutions. This has called for an increase in customer bank relationships besides the provision of superior services (Darke, 2011). The Oman Arab Bank SAOC, a member of Arab Bank Group has had strong influence and presence in the Sultanate of Oman. Its establishment on 1st October 1984 as joint sock company has seen its tremendous rise in the customer loyalty and base due to superior services it offers to them. It acquired its operations after by establishing branches in the buying branches of Arab Bank, Plc., Jordan which had been in operation in Oman since 1973. The operations and expansion of the bank were further escalated through the acquisition of all retail branches of Omani European Bank in 1992. Currently the Arab Bank Plc holds 49% share while Omani Investment Company holds 51% of OAB. Currently the bank operates through a network of 50 branches with a staff head count of 750. It offers a range of services from corporate banking, trade, finance, retail banking, and investment banking. It provides technical managerial services through an agreement of management. It has access to Arab Bank’s network with 450 international branches in over 40 countries (Davids, 2013). The impacts of investments in customers by these institutions in customer’s mindset metrics through brand perception and word of mouth are measured by the level of customer satisfaction. The focus on key customer metrics by financial service institutions is based on the need to multiply the customer base. The institutions develop models to measure and analyze the interdependence among the key customer needs. Customer motivation has been found to be a function of customer loyalty. It has formed an important element in the banking strategy in the current competitive financial market. Several financial institutions have developed the strategic work plans aimed at hoeing and maintaining a stable customer base (Ebner, 2010). Today many banks across the world have tapped into the robust and active social media platform in order to enable interactive and frequent contacts with their customers. Through this they are able to collect substantial information with regard to their customer needs and attitudes. The common belief that customer satisfaction should lead to higher profitability may not hold water It calls for the understanding of interactions between different customer attitudinal matrixes. The emergence of financial intermediaries on electronic credit marketplace has placed a challenge to bank’s traditional consumer credit business. As such these measures have ensured the increase of customer belief and trust in these institutions. On these markets, financial intermediaries have emerged as leaders of groups performing functions of commercial banks including risk evaluation and analysis. This has led to the operations of competitiveness in the management of customer base and loyalty (Wright, 2011). There has been an increase in the lending market place for private customers as an additional customer’s attraction effort. The examination of whether this market place adds to customer motivation is under consideration in terms of customer base growth. Applications and technologies considered as “Web 2.0” spreads on the internet with an upsurge on retail banks have began to influence customer relations. There has been an increase in customer acquisition through affiliate programs which enhances the effectiveness of affiliate marketing for customer acquisition. Affiliate-programs have effectively used the network to refer customers to various bank’s website where they can get quick help and answers to their problems. The increase in information flow between the institutions and there customers has increased customer motivation through trust building and quick service provision (Parimal, 2011). The need by firms to increase productivity and efficiency in service provision has led to expansion knowledge in the area of motivation over the years. Scholars have developed keen interests in trying to find out the factors responsible for stimulating the will to customer loyalty. Motivation as a result has become an important issue of concern for scholars, practioners, and personnel managers. The orientation of every institution is towards a goal and all efforts are therefore channeled towards the achievement of the goals. Service provider’s institutions’ major goal is the attainment and satisfaction of the customer. Banks and insurance institutions all of over the world have continued to put in place mechanisms that will enable customer attraction and retention in there institutions (Parimal, 2011). Financial institutions in Oman have increased their innovations into products that fit both international and local customers. In the banking sector it is acceptable for any person both foreign and nationals to obtain bank products and have an account so long as one has the recommended travel and stay documents. They for provide their services in a multilingual basis thereby increase their customer base and attraction. It has been documented that for any institution to have any degree of meaningful success in pursuit of its goals and aspirations, it must posses an ability to create motivation enough to provide incentives to the loyal customers. Such motivators do come in various forms to both employees and customers such as good training policies, provision of incentives, status symbol, and promotion (Rajeev, 2009). Environmental, institutional, and individual changes should be put in mind while implementing motivational tools. This therefore calls the urgency, flexibility, and dynamics in the application of such tools. When applying motivational tools both staffs and customers should be taken into confidence, subordinates should be respected and honored; workers should be equipped with the right tools for proper provision to the customer. The institution should be keen to avoid personal and demoralizing influences since they disrupt the creative potential of employees resulting to poor customer service (Mathauer, 2012). It has been noted that the greatest fear in the world of business is not the fear of the unknown but the fear of change. Institutions should prepare for change in there actions and service provisions to their customers in order to be inconformity with the current changing trends in customer needs. Due to stiff competition, there has been an increased need for customer retention in financial institutions and as a result these institutions have facing and conforming to the inevitability of change. It has become a common practice in these institutions to renew everyday their approaches to customers in order to remain relevant and competitive (Wright, 2011). Banks and insurance institutions have today put in place human resource development training systems geared towards the understanding of a customer. They have employed various practices including training and development, selection, job rotation, job analysis, performance appraisal, job enrichment, job evaluation, and merit rating. All these are for reaching the ultimate goal of customer satisfaction in terms of employee service provision through employee workforce revitalization. It has noted that in order to motivate customers, first employees must be motivated since it through them that the customers are served. Therefore, apart from training and wage allowance increases for employees, they should also be allowed to be their own bosses. An institution should adopt positive motivational tools as part of its culture for its employees. The workforce cannot be motivated by delegating responsibility alone, Authority and responsibility should be delegated as well (Mathauer, 2012). It is therefore held as true the argument of Douglas McGregor that, “The human side of enterprise is all of a piece and the assumption management holds a bout controlling its human resources determine the whole character of the enterprise.” This implies that the success of an enterprise is a function of customer loyalty and customer base level as such it behooves institutions to ensure customer satisfaction as a means of customer motivation. The accumulation of knowledge on means of customer motivation has led to the shift in managerial practices towards customer orientation (Rajeev, 2009). CHAPTER THREE 3.0 Research Methodology The study method involves the use of questionnaire and interview. This will ensure the determination of the level of motivation among the customers in the Oman financial institution. The interview will be allotted to the manager who deliberately implements the customer motivation strategies. The secondary sources from the print media will be used to obtain the data of the influence of customer motivation on the performance of financial institutions in Oman. 3.1 Data Collection Primary and secondary data will be the main sources of information used in the study. The primary data will be obtained by interviewing customers on the reasons for their loyalty to some institutions and their motivations. Managers will be interviewed through questionnaires which will be structured and the questions will be given on the mail for uniformity. Customer interview will be done on a face to face basis. A long with quantitative data, qualitative data will be collected by interviewing the managers of financial institutions to know the future prospects of customer motivation and retention in their institutions. The questions will be based on the current motivational tools being used in the wider market of banking and insurance. In addition, the interview will decode the expected results from managers and determine if the results are synchronized in the real outcome. The data collected will be analyzed in order to determine effective means of customer motivation that have worked in different institutions. It will also aim at analyzing the impact of customer loyalty and motivation in the performance of a financial institution like banks and insurance service providers in Oman. The data from face to face interviews of customers will be used to measure the influence of institutional models of operations on the customers’ attitudes and mindsets towards the institutions. 3.2 Tool Analysis The statistical tools for analysis that will be used to determine the relevance of these study findings will be Statistical Package for Social Scientists (SPSS) new version. This is because of its tools in the measurements of central tendency (mean, mode, and median) as well measures of dispersion such as standard deviation on customer behavior, correlations, as well as the variances in the customer reactions with and without customer motivation. 3.3 Limitation of Data The limitation of the study is that the data collected will be considered in absolute terms and the reactions of customers in an interview cannot be considered as absolute truth. The secondary sources of data used may not represent the actual situation in the current market trends. They may not therefore give the correct trends of customer and institutions relations. A customer is a dynamic business stake and is prone to change with changes in the market place and for that reason the results in this research may only be relevant for a short while depending on the rate of changes in the market place. References Abdul Khadar,A. Credit Cards – An analysis of users benefits and problems, University ofmadras, 2008, page no.109. Bajaj M.K, Customer relations management – Article, Indian Bank Association Bulletin, September 2009, Pp.23-25. Coltman, T. 2010. ‘Can superior CRM capabilities improve performance in banking’? Journal of Financial Services Marketing, 12: 102–114. Corner, I. and Hinton, M. 2009. ‘Customer relationship management systems: implementation risks and relationship dynamics’. Qualitative Market Research: An International Journal, 5 (4), 239-251. Darke, P, Shanks, G and Broadbent, M. 2011. ‘Successfully completing case study research: combining rigour, relevance and pragmatism’. Information Systems Journal, 8(4):273-290. Davids, M. 2013. “How to avoid the 10 biggest mistakes in CRM”. Journal of Business Strategy, 20(6):22-11. Dyche, J. 2008. CRM resurrection [Online]. http://www.intelligententerprise.com [Accessed 13/08/2006]. Ebner, M., Hu, A., Levitt, D and McCrory, J. 2010. ‘How to rescue CRM’. McKinsey Quarterly, 4: 49-57. Parimal Vyas, “Measurement of customer satisfaction of Information Technology adoption in Banking services”, Prestige Journal of Management and research, April 2011, Vol.8, Pp.29. Rajeev Kumra, IIM, Indore A Study on Internet Banking Usage A customer’s perspective,Business and Travel Times, January 2009, Pp30-33. Mathauer, I., & Imhoff, I., (2012) “Staff Motivation: The Impact of Non-Financial Incentives and Quality Management Tools, A Way to Retain Staff?” Accessed 02 June 2010, from http://www2.gtz.de/migration-and-development/download/mathauer.pdf SBFI, (2009) “State Board of Financial Institutions Annual Accountability Report – FY 2008-2009”, http://www.scstatehouse.gov/reports/aar2009/r23.pdf Wright, B., (2011) “Public-Sector Work Motivation: A Review of the Current Literature and a Revised Conceptual Model”, Journal of Public Administration Research and Theory, Vol. 11, No. 4. www.arabbank.com www.oman-arabbank.com QUESTIONNAIRE SECTION A: CUSTOMER 1. Do you hold any bank account in Oman? YES NO 2. Which banking institution are you an account with? 3. Are you happy with the services they provide you with? YES NO 4. How frequent do you visit the bank to deposit or withdraw in a month? ONECE, TWICE, THREES, 5. What does your bank do to you that makes happy? 6. Given an opportunity to open an account, which bank would you chose and why? 7. A part from depositing and withdrawing money, what else do you in the bank? 8. Does your bank engage you in community activities? YES, NO, 9. What would you like your bank to do that they haven’t done yet to the customer? 10. What do you consider motivational that your bank has done to you? SECTION B: MANAGER 1. What is the total customer base in your bank? 2. On average, how many new customers join your bank on monthly basis? 3. What initiatives have you put in place to ensure customer retention? 4. Is there a positive relationship between profitability and customer base? 5. Do you offer community services to your customers? YES, NO, 6. What measures do you employ in ensuring customer satisfaction in Oman? 7. In this City how many branches does your bank have? 8. How often do you bring on board new employees to your bank? 9. In terms of customer base and profitability, what position do you think you hold in Oman? 10. What is your future plan for your bank and customers? Read More