IMPROVING CUSTOMER SA TISFACTJON, LOYALTY AND RETENTION THROUGH RELATIONSHIP MARKETING: THE CASE OF BOTSWANA RAILWAYS M Mmusi Mini-Dissertation submitted for the Degree Master of Business Administration at the Mafikeng Campus of the North-West University 1111 111 11 11111111 11111 11111 111111111111111111111111111111111 060048657- North-West Umvers1 ty Maf1keng Campus Library Supervisor: Dr P M D J>HA TSHWANE November 2010 OECLARA T ION I Mmusi Mmwi declare that the mini-dissertation entitled Improving cus!omer sa li.~fac li o n . Loyally and re/enlion through Relationship J\4arkeling : the Case of Botswana Railways which r have submitlcd to the orth-West University as partial completion of the requirements set for the A!tw er t~{ Business Administration (MBA). is my own work and has not already been submitted to any other University. I fu lly understand that the copi es that are submitted lo r examination are the property of the University. Mmusi Mmusi 19'" ovcmber 20 I 0 a me Date ii .ABSTRACT Relationship marketing reduces emphasis on the sales focus that organizations traditionally place on profitability, shifting towards a campaign that emphasizes customer relations and retention. The aim of this study is to determine how relationship marketing can be used to assist Botswana Railways to address issues pertaining to customer satisfaction, loyalty and retention, and at assessing how customers currently perceive the quality of service rendered to them. The extant literature emphasizes that trust is the main pillar of a relationship between customers and service providers. This relationship is nurtured though constant communication to manage expectations as well as perceptions, including therein some consideration for the seven (7) P's which are central to most service marketing concepts. Data for this study was collected by means of self-admi nistered questionnaires which were completed by a broad spectrum of Botswana Railways customers. The questions were designed around a Likert scale techt1ique, with the data then being processed using the Statistical Program for Social Sciences (SPSS). The findings of the study reveal that although a reasonable number of customers are relatively satisfied with the service-delivery aspects they get from Botswana Railways, there was little to no communication between their businesses and Botswana Railways, and that the various aspects that are integral to the realization of relationship marketing do not exist in the organization. This is supported by the fact that most of the customers interviewed have revealed that there is no system of communicating carriage policies and informing them about new products. These findings suggest that a number of initiatives must be introduced to enable the organization to move from transactional­ based acti vi ties to relationship-based activities. iii ACKNOWLEDEMENTS This study could not have been completed without the support and encouragement of my wife, fami ly members and colleagues. PersonaiJy I feel so indebted to my supervisor Dr P. Phatshwane for her patience, valuable advice, and constructive criticism and above all for her belief in me which resulted in this piece of work. Once again, thank you. Your support is what kept me going. Special thoughts are expressed to my colleagues Mr Mooketsi Maiketso and Mr Patrick Chengeta who helped a lot with the administration of questionnaires to Botswana Railway customers, and also to Mr Godfrey Mohembere whose technological expertise did come handy when I was finalizing the document, I really appreciate your assistance. It would not be proper for me to not express my gratitude and appreciation to all those who took thei r valuable ti me to complete the questionnaires, you really have addt.:d !Some in!Sight!S to the stuJy. iv LIST OF ABBREVIATIONS BR : Botswana Rai lways SPSS: Statistical Program for Social Sciences WFP: World Food Program v LIST OF TABLES Table 4.1 (a): Di stribution of respondents in different types of business .......... ... ............ ........... 26 Table 4.2: Length of period in business .................................... .............................. ....... 28 Table 4.5: Respondents' views on attractiveness of facility ....... ............................................31 Table 4.6: C leanliness of employees ................... ....................... .................................... 3 1 Table 4.7: C leanliness of premises ...................................................... ........................ 32 Table 4.8: Doing things right the first time .......... .............................................................32 Table 4.9: Accuracy of records ......................... .......................................................... 33 Table 4.1 I: Customer confidence in employee behavior. .................................................... 35 Table 4. 12: Appreciation of dealings with BR ..... .................. ........................................... 35 Table 4.13: Convenience of BR operating hours ................................................................. 36 Table 4.14: Views of respondents on BR customer care ...................................................... 36 Table 4.15: views of respondents on BR customer interests .................................... .... ....... .3 7 Table 4.16: Use of modern equipment ... ................................................................. ....... 37 Table 4. 17: Communication of carriage policies to c ustomers .......................................... ..... .40 Table 4.18: BR systems of informing customers about their new products ....................... ......... .40 Table 4.19: Most dissatisfactory customer relations aspect .................................................. .41 Table 4.20: Year of occurrence of incidence ......................................................... .. ... .. .... 41 Table 4.21: Steps taken to deal with incidence ........ ... ..................... ................................. .42 Table 4.22: Reporting of incidence to management. ...........................................................42 Table 4.23: Satisfaction with incidence handling .............................................................. .43 Table 4.24: Aspect of most sati sfaction ............... .................. .........................................43 Table 4.25: Year of incidence .................................................................................... 44 Table 4.26: Reporting of incidence ...............................................................................44 vi LIST OF FIGURES Figure 4.1 (b): Types of business ..................................................................... ..........27 Figure 4.3: Usage of other modes by businesses ...................... .... ............ ..... .................29 Figure 4.10: Percentage of employees willingness to help .................. ............... .. .... ........ .34 vii TABLE OF CONTENTS Page Declaration ............. ................ ................................. .. .. ............... .. .... ............... ...... ii Abstract ................................... ................................................................... ... ...... iii Acknowledgements ................................... .......... ....................... ... .. ........................ iv CHAPTER ONE: INTRODUCTION AND BACKGROUND ..... ................. .. ............................. ......... 1 1.0. rntroduction ........................... ...................................................................... ........................... 1 1.1 Background ........................... ............... .............. ..................................................................... 1 1.2 Research problem ........................ .................................................................................................. 4 1.2.1 Specific objectives .................................................................................................................. 4 1.2.2 Research questions ............................................................................. ..................... ... .. .......... 5 1.3 Research method ........................................................................................................................... 5 1.4 Significance of the study ............... ................................................................... ............................. 5 1.5 Scope of the study ............ ....................................... .................................................. .................... 5 1.6 Organization of the study .............................................................................................................. 6 CHAPTER TWO: LITERATURE REV lEW .............................................................. .......... ................. 7 2. l Introduction ........................................................................................................................ ........... 7 2.1.1 Overview and conceptual frame work..... ........................ .. ..................................................... 7 2.1.2 Custon1er satisfaction ............................................................................................................. 8 2.1.3 Customer retention ............... ............ ...................................................................................... 8 2.1.4 Customer loyalty ...... .. ...................................... .. .............