CHAPTER TWO

LITERATURE REVIEW

2.1 Customer bonding

CLM is an acronym for Customer bonding. There is no generally accepted definition of CLM even though CLM is considered to be an essential business approach. Swift (2001, p. 12) viewed CLM as an “enterprise approach to understanding and influencing customer behavior through meaningful communications in order to improve customer acquisition, customer loyalty , customer loyalty, and customer profitability”.

Kincaid (2003, p. 41) defined CLM as “the strategic use of information, processes, technology, and people to manage the customer‟s relationship with your company (Marketing, Sales, Services, and Support) across the whole customer life cycle”.

Parvatiyar & Sheth (2001, p. 5) defined CLM as “a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value”.

Reinartz et al. (2004, p. 294) conceptualized CLM from the customer perspective as:

“[. . .] a systematic process to manage the customer relationship initiation, maintenance, and termination across all customer contacts points in order to maximize the value of the relationship portfolio”.

Padmavathy (2012, p.249) also defined CLM as “[. . .] a set of customer-oriented activities supported by organizational strategy and technology, and is designed to improve customer interaction in order to build customer loyalty and increase profits over time”.

The definitions above accentuate CLM as a complete set of approaches for administrating customer relations in terms of marketing, customer and support services.

The organizations can use information technology and information systems to combine CLM procedures to please customers. For the purpose of this study, CLM will be defined as organization of comprehensive information regarding customers through the use of complicated software and analytical tools to cautiously manage client contact points to maximize profit and retain the customers.

2.1.1 Component of Customer bonding

Kim et al. (2003) propose a framework of CLM from information processing view point in the aspects of relationship initiation, worth, positioning and commitment. The approach suggests that, customer information is crucial in administrating, attracting and retaining successful relations with customers across the developmental phases. The argument continues that, when organizations concentrate on their association with customers, some of the customers will be retain and provide value for the firm in terms of generating higher profits. Therefore, organizations can improve their relationships with customers by properly managing customer information. A related conceptual framework of CLM was anticipated to integrate business procedures, organizational arrangement, investigative structures and technology to represent customers view (Chan, 2005). Kim et al. (2003), in a different study developed a framework of CLME to consist of customer knowledge, interaction, value and satisfaction. The study declares that, business interactions are handled well only when CLM activities aims at satisfying the customers‟ personal and distinctive needs. Through incorporation of business processes and technology, organizations are able to sustain and improve the relations with customers. From functional and organizational capabilities perspective, Reinartz et al. (2004 ) offered a model for CLM processes based on three different levels of relationships namely; initiation, maintenance, and termination. Payne et al.

(2005) further studied the significance of business strategy in CLM implementation. The authors developed a model that assigned the business strategy with customer strategy to establish value for both firm and customers. By so doing, the lifetime value of advantageous clients is maximized.

Literature discuss above suggests that, when organizations implement CLM processes by considering business strategy, organizational motivation and information technology, then customer relations established can be retained. The integration of these elements permits firms to gain knowledge about profitable customers in order to achieve business performance increase.

2.2 Customer loyalty

Morgan& Hunt (1994) defined customer loyalty as the possibilities of a client to be retained by the organization.

Hall (1997) view customer loyalty as maintaining customers for life. The life span worth of a customer to any business can be appreciated in their financial performance. Some studies considered Customer loyalty from a behavioral perspective. Thus, the customer feeling belong and dedicated to the company. For instance, the customer recommends the company to others and willing to repurchase services or products from the organization (Diller, 1996; Diller & MuÈllner, 1998; Gremler & Brown, 1998;

Homburg et al., 1999; Oliver, 1999).

According to Keiningham et al. (2007, p 364), customer loyalty is defined as “customers‟ stated continuation of a business relationship with the firm. For Internet service providers (ISPs), it is continuing to use the same provider. For retail banks, it is continuing to maintain an account relationship with the bank. And for discount retailers, it is the continued repeat shopping with the retailer”.

For the purpose of this study, customer loyalty will be defined as the company‟s ability to maintain their obtainable customer base.

2.2.1Components of Customer loyalty

Retaining customer relationships are viewed as one of the crucial possession for companies (Webster, 1992; Collier & Bienstock, 2006). Some previous studies affirms that, maintaining obtainable customers is mostly worthwhile than acquiring new customers (see Rosenberg & Czepiel, 1984; Vandermerwe, 1996). As a result, some researchers have developed interest in examining the strategies for attracting and sustaining good relationships with obtainable customers (Duncan & Moriarty, 1998; Gonza´lez et al., 2004). Finn (2005) suggests that, Relationship quality plays an important role in sustaining long lasting relationship. Researchers have studied relationship quality from customer‟s perspective (Crosby et al., 1990; Kumar et al., 1995). Sharing information sustains the quality of relationship. Information as a main resource can help organizations to appreciate their customers and reinforce their customer base against their competitors (McKean, 1999; Fruchter & Sigue´, 2005). Thus, distributing information with customers can make and retain the assurance of customers. Hence, sharing information often with customers can help organization to retain them (Crosby et al., 1990). One of the efficient way to attract prospects is through the assistance of retain customers who offers referrals (Johnson et al., 2003; Collier & Bienstock, 2006). A referral from existing customers permits the sales force of the organization to penetrate into markets which are untouchable (Boles et al., 2000).

However, this strategic business potential of referrals is disregarded by companies (Bachrach, 1999; Connors, 1998) and very little attention has been given to it academically (see Boles et al., 2000). Finn (2005) suggests that, keeping high quality relationship with clients seems to boost their readiness to offer referrals. This leads to achievement of retained relationship. As soon as clients expect continued dealings, the clients will be willing to respond by referring colleagues, family and friends to their companies (Johnson et al., 2003; Washburn, 1996). Noordewier et al. (1990), advocate that when a company expects a customer relationship to transcend, then the current interaction should be fostered. Continuous communication with the same service provider boosts customer willingness to refer others to their service providers. Base on the above academic literature reviewed, it is suggested that, when quality relationship exist between customers and their service providers, the relationship is sustain mainly by the distribution or sharing of information. Customers then feel close and part of the company which boost their moral to provide referrals to their service providers. This happens mainly because customers anticipate future interaction with their service providers. Therefore, the components of customer loyalty in this study are; relationship quality, information sharing, willingness to provide referrals and

anticipation of future interaction.

2.2.2 Benefits of Customer loyalty

Abratt and Russell (1999) identified several benefits customer loyaltyprovides to an institution. In reality, customer who stays with an institution or company for long is much more profitable than searching for prospects (Reichheld & Kenny, 1990; Rust & Zahorik1993). Numerous reasons such as reducing high cost of searching and catching the attention of prospects, expanding the volume of sales and profits, and advertising by customers through word of mouth. When customers understand clearly the services of the company, this influences the customer‟s willingness to stay with the institution hence customer loyalty . Furthermore, customer loyalty positively affects the organizations returns, productivity, reducing switching of customer to competitors and introducing fresh prospect (Felvey, 1982; Reinartz & Kumar, 2000). Reichheld and

Teal (1996), recommend that when a customer gets use to the company‟s dealings, they make very important business connections, purchase many products, and become less responsive to price of the products of the company.

In the midst of all these benefits, Kamakura et al. (1991) states cross selling as an important tool for ensuring quality relationship with customers. This leads to increase in product consumption by customers thus cross-selling merely supports customer loyalty which prevents customers from moving to competitors. When customers stay with the organization for long, it enables the company to appreciate the consumers purchasing behavior in terms of their choices of products and occasion.

According to Beckett et al. (2000), some customers pretend to be loyal to a particular service provider even though they despite their activities because of three main reasons below. Firstly, they are unable to distinguish amongst them. Secondly, customers are enticed by accessibility to the service provider. Thirdly, customers view the cost of changing to a competitor as high, and perceive the exercise tedious and useless.

2.2.3 Inertia as a determinant of Customer loyalty

This happens when a consumer constantly buy the same brand anytime shopping. The customer habitually buys the brand and this requires less effort (Solomon, 1994). The consumer does not see the need to waste time to go through the five steps of choosing new brand ; recognizing the need for the product, seeking for information, assessing substitutes, finally deciding to buy and after purchase behavior. It is obvious that, the purchasing processes begins long before real buying takes place and prolongs (Assael, 1998; Kotler & Armstrong 2011). Habitual buying behavior and Inertia can be used interchangeably in this work. Inertia is unconscious behavior, it is defined as particular measure of construct made up of “passive service patronage without true loyalty” (Huang & Yu, 1999). The term true loyalty means the possibility to buy frequently and constantly whiles the cause of inertia or habitual buying is obtaining inertly unconsciously in spite unconstructive thoughts about the brand and product (Chintagunta & Honore, 1996).

Most policyholders in the SMEs hardly refer to the policies after purchase and usually fail to remember (Crosby & Stephens, 1987). Thus, if the insurer does not contact the client, the latter hardly follow up on the policy which in turn prevents termination of the policy. Therefore, it is believed that, the likelihood for a customer to continue a policy is greater if policy holder passively purchase the product.

2.2.4 High Switching Costs Promotes Customer loyalty

Specifically, switching cost is defined as charges associated with altering service with regards to time, financial cost and emotional reasons (Dick & Basu, 1994). It is possible to encounter switching cost when changing from present company to other in the SMEs (Williamson, 1979). Thus, it is likely to suffer charges during information search (concerning claim settlement and fiscal strength), and operational cost (attempting to negotiate for fair price on products and managerial charges) (Berger et al., 1989 ; Eckardt, 2008).Such charges forbid customers from switching insurers in effect exercising monopoly on the customers (Williamson, 1979). Consequently, when an SMEs company is chosen, switching to another insurer come along with some charges and that reduces the intent of clients to change (Dahlby & West, 1986; Schlesinger & Schulenburg, 1993). Due to the high charges associated with changing service providers, customers are at the mercies of these service providers (Morgan & Hunt, 1994). Since it is expected that switching cost raise, it is possible for customers to stick to the same service company (Ping, 1993; Jones et al., 2000; Ranaweera & Prabhu, 2003). As a result, the higher the switching cost, the service company is privileged to retain their customers.

2.3 Customer Satisfaction

Customer satisfaction is a recognized concept in many areas such as marketing, economics, consumer research and welfare economics. The various definitions of authors on satisfaction denote that, satisfaction is a sentiment resulting from appraising what have been delivered against what was anticipated, as well as the decision to buy to satisfy a need (Armstrong & Kotler, 1996; Bitner & Zeithaml, 2003; Boselie et al., 2002). According to Sureshchandar et al. (2002), satisfaction is mostly derived from feelings one experience after using a product or been rendered a service. Customer satisfaction is also defined as the level of total pleasure or delight experienced by the client, as a result of the capabilities of the service to meet the prospects request, wishes and dreams (Hellier et al.,2003).Customer satisfaction is the total pleasurable reaction

(Oliver, 1997). There are basically two types of customer satisfaction as Johnson (2001) anticipates. Initially, Oliver (1980) recommended that when measuring satisfaction, it should be related to a specific service or product transaction and the conditions that influenced the purchase decision. A further proposed dimension is assessing customer satisfaction depending on the consumer‟s collective knowledge on the company‟s product or service (Anderson et al., 1994; Garbarino & Johnson, 1999; Mittal et al. 1999).

Rai(2013, p. 105) defined satisfaction as “a buyer‟s emotional or cognitive response post-subjective assessment and comparison of pre-purchase expectations and actual performance subsequent to the consumption of the product or service, meanwhile evaluating the costs incurred and benefits reaped in a specific purchase even or over time in course of transacting with an organization”. The definition provided by Rai

(2013) would be adopted for this study.

2.3.1Components of Customer Satisfaction:

In service marketing, different authors have defined service quality from many perspectives. For instance, Berry view it as “the most powerful competitive weapon”,

Clave defined it as “the reviving blood for the organization” and Peters term it as “the magic bullet that provides the customer with less expensive services at lower prices” (Highlight et al, 2003). Customers expect a service to be desirable to meet their anticipation or good enough to be able to tolerant (Baglou & Zomorodpoush, 2009; Parasuraman et al., 1988). In the service industry, quality evaluation largely depends on customers‟ perception and effort to enhance it has led to high quality services which result in satisfaction in an aggressive market (Lewis 1993; Ioanna, 2002; Samavi et al.,

2008).

Some other factors also influence customers‟ satisfaction; offering variety of desire products, accessibility, fair charge, and additional benefits (Baumann et al., 2005). Higher price payment (cost of service) leads to greater perceived utility of the purchased products or services (Bolton & Lemon, 1999). Consequently, customers are likely to stay with the organization due to the notion that, higher cost of service signifies quality service or product. Therefore, cost of service (premium charge) should have positive effect on customer satisfaction (Bolton et al., 2000; Varuki & Colgate 2001).Contrary to this assertion, Ioanna (2002) states SMEs have set charge for their products in the marketplace since they are selling similar products. As a result, insurers distinguish their activities from their rivals by enhancing their quality of service and not the cost of service (premiums charged for the policy).

Previous studies showed that in assessing customer satisfaction (in both service and product categories), overall satisfaction should not be neglected (Fornell, 1992; Fornell et al., 1996). From literature, overall satisfaction and overall evaluation are used interchangeably and it is built up over time. Satisfaction usually mediates the effects of product quality and service quality on Loyalty (Bolton and Lemon, 1999; Fornell et al., 1996). The components of customer satisfaction are; service quality, cost of service, and overall satisfaction.

2.4 The relationship between Customer bonding and Customer

Satisfaction

From literature, Customer bonding practice can impact on customer satisfaction in three main means. Firstly, CLM permits organizations to modify their services to suit every customer. Customer satisfaction is achieved when product or services are customized to the taste of the customer. Hence, CLM influence customer satisfaction as a result of perceived service or product quality. Secondly, CLM practices allow organizations enhance the consistency of meeting customers‟ request on time as well as managing customers‟ information. Thirdly, CLM practices also enable organizations to control the three main stages (starting, continuing and exiting) of customer relations successfully (Swift, 2001; Mithas et al 2005; Parvatiyar et al., 2001;

Kincard, 2003; Reinartz et al., 2004; Anderson et al., 1994; Crosby et al., 1990). According to Fornell et al. (1996), product manufacturing industries are able to achieve higher customer satisfaction as compared to the service companies. As a result, effectively managing client relations is paramount to customer satisfaction. In addition, Khedkar (2015) states that, CLM join together the heads of various customer groups and organizations to efficiently run business. The research findings show that, the application of CLM in any business firm will produce success, increase income and ultimately meet the desires of customers. CLM offers customer satisfaction to the fullest. Effectively managing CLM results in achieving customer satisfaction will compel customers to witness positively about the company. Information technology and information systems help in combining CLM process to satisfy the needs of the customer (Chen & Popovich, 2003; Ngai, 2005). However, changes in the course of time in the relationship established through CLM may affect customer satisfaction. Thus, information gathered from the various interactions with the company may positively or negatively impact on customer‟s satisfaction levels (Mazursky & Geva 1989; Mittal, et al., 1999).

2. 5 The relationship between Customer bonding and Customer

Loyalty

The establishment of profitable and long lasting relationship with customers is very essential in service industry (Christopher et al., 1991; Bejou & Palmer, 1998; Berry, 1995). Service providers who practice CLM efficiently gain competitive advantage over their competitors and are able to retain their customers (Uppal, 2008; Speier & Venkatesh, 2002; Bhattacharya, 2011; Sharma et al., 2011). Further studies discovered that, retained customers are very crucial business property for companies and this asset cannot be duplicated by competitors. Therefore, there must be strong integration among customer related strategies (acquisition, Loyalty and add-ons) through CLM strategies (Webster, 1992; Kalakota & Robinson, 1999; Kotler et al., 2011; Winder, 2001; Blattberg et al., 2001; Thomas, 2001; Reinartz et al., 2004; Collier & Bienstock, 2006). In Addition, McKim & Hughes (2001) studies classified customer acquirement and customer loyalty as the main purpose of CLM. West (2001) & Kincaid (2003) findings show that CLM provides a comprehensive set of strategies for managing those relationships with customers that relate to the overall process of marketing, sales, service, and support within the organization. Bradshaw et al., 2001; Massey et al., 2001 defined CLM as a management approach that involves identifying, attracting, developing, and maintaining successful customer relationships over time in order to increase Loyalty of profitable customers. In accordance with literature, many organizations invest greatly in customer bonding (CLM) strategies to create and cultivate long lasting and beneficial relations with customers.

2.6 Overview of SMEs in Nigeria

Rejda (2008) believes SMEs cannot be defined particularly. The researcher opines SMEs is the transfer of a risk from the insured to the insurer in exchange for premium for a specific period of time. To consider a risk insurable, it must meet six elements; the exposed units should be large, the damage must happen by chance, and involuntarily, the damage should be quantifiable and determinable, the dent should not be disastrous, the possibility of the loss must be assessable and the premium charge must be reasonable (Rejda 2008).

Abroad SMEs dominated Nigerian SMEs market before the era of independence. Their headquarters were situated mainly at United Kingdom and ran policies mostly intended to protect British nationals living or doing business in the then

Gold Coast. Local knowledge, experience and involvement were very scanty. However, Gold Coast SMEs Company was established in 1955 as the initial Nigerian SMEs company to execute non-life policies.

Afterwards, the state in 1962 formed State SMEs Corporation (SIC) and the government enabled the SIC to enjoy control over all national businesses and import SMEs for companies trading in Nigeria by enacting laws to enhance the Nigerian SMEs. However the laws not effectively enforced (Ansah-Adu et al., 2011).

Later, the Nigeria Re-SMEs Organization (GRO) came into been and lawfully, all licensed SMEs had to concede not less than 20 percent of premiums of their general business to it with no commission. Also, not less than 5 percent of every abroad general business contracts needed to be conceded to the organization. This organization only had the authority to award a certificate to any insurer in transacting any reSMEs overseas. Further restrictions forced foreign SMEs to have partnership with Nigerians by assigning about 40 percent ownership to Nigerians. Finally, majority of the overseas companies extracted entirely from the SMEs (Ansah-Aduet al., 2011).

From January 2009, SIC and GRO could not totally control the SMEs market due to restriction made in the 2006 SMEs law enacted (Act 724) as well as the philosophy of international Association of SMEs Supervisors (IAIS). In the act, it is not permissible to merge SMEs. As a result, all merged SMEs had to divide into life and non-life (general business and life) companies in December 2008. The act still gives National SMEs Commission (the industry regulator) authority to function in the industry. By July 2009, the industry was divided into 21 general / non-life, 18 life, 2 reSMEs, 38 brokerage, 1 reSMEs broking and 1 loss adjusting companies, and 986 agents. The industry has 12 of life and non-life companies working in Nigeria which had foreign involvement. The participation of overseas companies indicates the unexploited opportunities in the country regardless of affirmation by some Nigerian insurers that the business is drenched. Currently, the number has increased to 48 life and non-life (general business) SMEs industries in Nigeria and dominated by the non-life, which represents 49 percent of 2013 total premiums received; followed by life SMEs with a share of 44 percent (Ansah-Adu

et al., 2011).

For some time now, there have not been major changes in non-life companies despite their competitiveness. SMEs such as SIC, Star, Enterprise, Metropolitan now Hollard, and Vanguard represents about 50 percent of the SMEs market gross as calculated by the gross premium received in 2014. It must be noted that, non-life SMEs businesses in Nigeria do not compulsorily renew and it renewal mainly depends on the customer. Correspondingly, aside the aggressive competition in the life section as at 2014, SIC Life, Enterprise life, Star Life and Glico Life more than 70 percent of the market share based on the gross premium received (National SMEs Commission Annual Report, 2014) Currently, Enterprise Life holds the largest market share and still advancing (Nigeria National SMEs Commission 2014 Annual report).

2.7 HYPOTHESES DEVELOPMENT

Figure 2.1 below is the conceptual framework developed for this study. Four main hypotheses (H1:H4) were propounded and further discussions of the hypothesis follows below.

H1: There is a positive effect of customer bonding on customer loyalty in SMEs in Nigeria.

H2:customer satisfaction is expected to have a significant effect on customer loyalty in the SMEs in Nigeria.

H3: There is a positive effect of CLM on customer satisfaction in the SMEs in Nigeria.

H4: Customer satisfaction mediates the effect of customer bonding on customer loyaltyin the SMEs in Nigeria.

Figure 2.1: Conceptual Frame work

2.7.1 Path 1: Customer bonding and Customer loyalty in the SMEs

The indulgence and practice of CLM are crucial for organizations to promote customer loyalty (Yim et al., 2004). In a related manner, Faed (2010) declared that the purpose of CLM is to improve customer loyalty level. Thus, the study affirms that, CLM practices impact on customer loyalty . Izquierdo et al., (2005) studied the effects of CLM on customer loyalty . They discovered that, customer who is satisfied about the service rendered (car repair and maintenance) is likely to build a long lasting relationship with the service provider which can improve the organizations fiscal growth.

Keaveney (1995) categorizes the causes of changing service providers into eight; High and deceptive pricing, inconvenience of the service provider,service procedure failures, unsuccessful service encounters, reaction to service futile by company, fierce contest, service provider acting illegally and in unethical manner, and involuntary switching which result from customer moved or the service provider. The strategies of customer bonding are anticipated to curtail occurrence of service failures that motivate customer to switch in the SMEs (Crosby et al., 1990; Jones &Farquhar, 2003; Best, 2002; Mithas et al., 2005; Uppal, 2008; Sharma et al., 2011).

Furthermore, Verhoef (2003) studies demonstrated the impact of CLM on Customer

Loyalty. The finding shows that, CLM positively affect customer loyalty . Verhoef & Donkers (2001) confirm that, CLM allows SMEs to employ strategies with the help of customer databases in administrating personal customer relationships effectively towards Loyalty. Dewhurst et al. (1999) indicated that the essence of the customer orientation is through the deployment of sophisticated customer management systems. Hellier (1995) tested a customer loyalty model in the SMEs services sector and found relationships among perceived quality, switching costs and repurchase intent (Loyalty). The link between CLM and customer loyalty is widely accepted. Clearly employing CLM practices in the SMEs can lead to customer loyalty . Based upon the above discussion, the following hypothesis is proposed: H1: There is a positive effect of customer bonding on customer loyalty in SMEs in Nigeria.

2.7.2 Path 2: Customer Satisfaction and Customer loyalty in SMEs

industry

According to Sheth & Sisodia, (1999), when customers are satisfied, this can enhance the likelihood of maintaining the customer. Theoretically, higher satisfaction should diminish the perceived benefits of switching service providers, thus produce higher customer loyalty (Anderson & Sullivan, 1993).Ravald & Gronroos, (1996) declares many service providers implement strategies to improve customer satisfaction with the goal of strengthening ties with customers and increasing customer loyalty .

Many other studies have revealed customer loyalty is certainly affected by customer satisfaction (Jones et al., 2000; Bolton, 1998; Oliver, 1980; Kannan & Bramlett, 2000; Tsoukatos & Rand, 2006). Fornell (1992) studied Sweden consumers and concluded that, customer satisfaction is a key factor in determining customer loyaltyin service industries such as banks, SMEs, and mail order.

In spite of the obvious lack of an empirical link between customer satisfaction and customer loyalty in the SMEs in Nigeria, other studies from different researchers in the SMEs confirm that, customer satisfaction effects customer loyalty (Joseph et al., 2003; Crosby et al., 1990; Reichheld, 1996).Their studies further suggest that, the SMEs must frequently observe customer satisfaction of clients by engaging in usual interaction with them since majority of clients expect their insurers to identify them in person and interact accordingly. Customers aim to maximize their benefits from specific service provider (Oliver & Winer 1987). When this is done, the possibility for the customer to stay is greater.

Thus, based on these studies, it can also be hypothesized that;

H2:customer satisfaction is expected to have a significant effect on customer loyalty in the SMEs in Nigeria.

2.7.3 Path 3: Customer bonding and Customer Satisfaction in the SMEs

A substantial study in marketing has examined the impacts of CLM on Customer satisfaction.CLM practices allow organizations to gather data on customers from the various points of contacts in order to customize services to suit customer‟s personal needs and desires. This improves customer‟s discernment of perceived quality and influence satisfaction (Mithas et al., 2005).

In a retail environment, Srinivasan et al., (2005) used a multi-method approach to examine the impact of CLM investments on satisfaction. The findings portrayed that, organizations commitment to CLM investments and capabilities were absolutely linked with satisfaction. Also, Ndubisi & Wah (2005) studied multibank and established that, some customers are satisfied whiles others are not on main relationship marketing elements such as interaction, quality relationship, capabilities and handling of conflicts. In addition, Molina et al. (2007) portrayed that, banks that practice well established relationship marketing policies perform better than the banks that do not. They used customer satisfaction to measure this finding.

Rastghalam et al., (2014) studied the effects of CLM on customer satisfaction with respect to the entire customers of Moallem SMEs company in Isfahan province (India). Their research measured customer satisfaction by the following constructs; service quality, technological services, charge of service, and employees respond to clients. The study concluded that, CLM presents a holistic view of the customer which helps organizations to capitalize on to establish a successful relationship, have access to market opportunities to increase sales and finally provide customer satisfaction (Maleki &Darabi 2010).Hou et al. (2008) discovered that, CLM positively influenced customer satisfaction in the SMEs. Thus, through CLM strategies, customers daily problems related to SMEs are addressed at any time and promptly.

From the above discussions, it is established that, a good customer bonding practice in the SMEs can lead to customer satisfaction. As a result, it can be hypothesized in this studies that,

H3: There is a positive effect of CLM on customer satisfaction in the SMEs in Nigeria.

2.7.4 Path 4; Mediation role of Customer Satisfaction in the relationship between Customer bonding and Customer loyalty in the SMEs

Customer satisfaction and customer loyalty are vital elements of CLM program (Ness et al., 2002). Many studies have confirmed this assertion that, CLM practice permits organizations to establish efficient management relations so that the activities (designing, producing, marketing and delivering) of the various departments in the organization aim at satisfying and retaining customers (Kotler et al., 2011; Kassanoff,

2000; Creighton, 2000; Uppal, 2008; Anton, 1996; Goldenberg, 2003; Sharma et al.,

2011; Vasiliu, 2012; Hasan et.al., 2012). Additionally, Couldwell (1998) describes CLM as integration of business process and technology aimed at evaluating customers from individuals‟ perspective in order to meet their expectations and retain them.

Other studies result shows the positive impact of CLM on satisfaction and Loyalty towards firm performance (Hooley et al., 2005; Payne et al., 2006; Plakoyiannaki et. al., 2008; Kolis &Jirinova 2013). Reichheld (1996) noted that, customer satisfaction and customer loyalty have been used to measure the efficiency of CLM in organizations. Best (2002) & Mithas et al., (2005) indicated that CLM practices are intended to bring customer satisfaction and Loyalty in service industry reflecting in the company‟s revenue. The literature suggests that the existence of relationships among customer-orientation, and CLM will enhance the implementation of customerrelated strategies, and of customer loyalty and satisfaction programs, as well as impacting positively on their success (Vries & Brijder, 2000; Stefanou et al., 2003; Jun et al., 2004; Khalighet al. 2012; Kim et al., 2003.

Hassan et al. (2015) with regards to his studies on Shell Pakistan proposed that, CLM significantly impact on customer satisfaction and customer loyaltyand all variables positively relates.The study concludes that, the implementation of CLM grows a company‟s market size, enhances outputs, and establishes long lasting customer relationship due to the customer in-depth knowledge gain.

Lombard (2012) discovered that, a unit increase in CLM positively affects customer satisfaction and customer loyalty in the SMEs organization. Literatures suggest SMEs has never been able to exceed customer expectation even though it serves as reference for assessment. Therefore, there is the need to understand customer expectation in order to retain them (Sherden, 1987; Toran, 1993; Walker & Baker, 2000; Siddiquiet al., 2010). Martey (2014) suggested that, when CLM is practiced successfully, organizations are able to meet customer expectations which automatically promote customer loyalty in the restaurant industry in Nigeria. Abu (2011) studied CLM as a strategic tool for competitive advantage: a case study of SIC in Nigeria. Findings of the study shown that, SIC hardly practice CLM strategies and this explains why customer satisfaction is low and this ultimately affects customer loyalty . Surprisingly, SIC premium income increases aside the lack of CLM practices which has impacted negatively on satisfaction and Loyalty. Based on the preceding discussion, this study proposes the following hypothesis:

H4: Customer satisfaction mediates the effect of customer bonding on customer loyaltyin the SMEs in Nigeria.

2.8 Chapter Summary

The mediating effect of customer satisfaction on the customer bonding against customer loyalty in the SMEs in Nigeria has been examined. In addition, management of organizations must integrate technology, process and people to achieve a successful customer bonding. Specifically, the urgency an SMEs company attach to the handling of customer complaints by CLM strategies satisfies the customer. As a result, the customer perception about the SMEs company increases and the possibility for the SMEs company to retain the customer is greater. Chapter three will discuss the methodology to be used to empirically study the mediating effect of customer satisfaction on customer bonding against customer loyalty in the SMEs in Nigeria.