The effect of customer relationship tactics toward customer loyalty in banking industry

Masrul Hayati Kamarulzaman,Siti Nur Shahira Dahari,Nurain Farahana Zainal Abidin

doi:10.24289/ijsser.428486

Masrul Hayati Kamarulzaman, Siti Nur Shahira Dahari + Show 1 more

Open Access

https://doi.org/10.24289/ijsser.428486

Copy DOI

Abstract

The purpose of this study is to examine the effects of how Customer Relationship Marketing Tactics (CRMTs) on customer loyalty in banking industry specifically the credit card users. Through data from credit card users of MBB and CIMB, we discuss five elements of CRMTs which are direct mail, preferential treatment, interpersonal communication, tangible rewards and membership and their influence on credit card users’ loyalty towards their main banks. The credit card industry in Malaysia has been shrinking since the intervention from Bank Negara Malaysia in 2009 which has led to greater competition among credit card issuers. One reason being, customers nowadays are not loyal to their providers as they tend to switch to other substitute services and to other banks. Therefore, to retain the customers, successful Relationship Marketing can be achieved by considering customers’ attitude towards their service provider through CRMTs. This will encourage both parties to appreciate the involvement in the relationship. This research findings’ support that all CRMTs have significant relationship with credit card users’ loyalty. Through multiple regressions, it was found that the most significance in contributing to credit card users’ loyalty was membership and direct mail. Therefore, the outcome of this research provides a guide for MBB and CIMB and also other financial institutions in charting strategic actions to maintain and retain their existing customers.

Highlights

According to Ahmed, Ismail, Sohail, Tabsh and Alias (2010), Malaysia first introduced credit cards in the mid-1970s
Based on descriptive statistic result, there are certain areas that need to be improved by the management of MBB and CIMB due to lower rating
The area that needs to be improved by the MBB and CIMB were both banks has less effort of utilized social media medium in order to communicate with credit card user

Summary

Introduction

According to Ahmed, Ismail, Sohail, Tabsh and Alias (2010), Malaysia first introduced credit cards in the mid-1970s. Credit card issuers have been on an increasing trend. In 2009, there were 24 credit card issuers in Malaysia and by 2018; a total of 27 credit cards issuers are available. Within this number, 25 of them are banks while 2 of them are non-banks (Bank Negara Malaysia, 2018). The increasing number of credit cards issuers has encouraged a greater number of applicants and competition among issuers. Banks are very much attracted to the credit card business as it is one of the most profitable services even if it is highly competitive (Sheng and Wah, 2011).

Objectives

Methods

Findings

Discussion

Conclusion