Employee Loyalty, Customer Centricity, Loyalty and Banks Performance in Nigeria: The Service – Profit Chain Model

Abstract

Abstract

There has been a decline in the performance of the Nigerian banking industry in recent times. Whereas literature is replete on the macroeconomic, global and environmental factors affecting banking performance, not so much have been done in analyzing the influences of sociological, psychological and behavioral factors such as employee loyalty, customer satisfaction/loyalty and customer centricity. From the theory of consumer preference and demand dynamism, these factors could bear on financial non-inclusion, decrease in demand for banking products and ultimately, financial performance of the banking sector. This study therefore investigates the interrelation amongst employee loyalty, customer centricity, customer loyalty and financial performance of Nigeria Banks. Developing metrics of these variables in the service-profit chain model, in a survey of customers, employees and managers sampled from 120 branches of the top ten banks in Nigeria based on their assets, across the six geo-political zones and employing Generalized Method of Moments (GMM) technique of data analysis, the study finds; (1) employee loyalty enhances the implementation of customer centricity (2) Bank customer centricity enhances customer loyalty (3) Customer loyalty has positive effects on banking performance (4) Female managers enhanced profitability more than their male counterparts (5) Banks located in the southern part of the country are likely to be more profitable than those in the North. Therefore, bank managers should consciously and continuously pursue employee strategic engagements and training to becoming customer-centric for increased customer loyalty and ultimately guaranteeing enhanced performance.

Keywords: Employee Loyalty, Customer Centricity, Loyalty, Bank Performance