An Appraisal of the Role of Word-of-Mouth in Retail Banking Customer Acquisition: A Case Study of Fidelity Bank, Kogi State.
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Background of the Study:
Word-of-mouth (WOM) remains one of the most influential forms of communication in shaping consumer behavior, particularly in the retail banking sector. In Kogi State, Fidelity Bank has recognized the power of personal recommendations and customer testimonials in driving customer acquisition. WOM marketing, characterized by the informal exchange of opinions among consumers, is considered more credible and persuasive than traditional advertising methods. Fidelity Bank’s efforts to leverage WOM involve encouraging satisfied customers to share their positive experiences through various channels, including social media, community events, and direct referrals (Adejumo, 2023). This approach not only enhances the bank’s visibility but also builds trust among potential customers, who are more likely to consider a bank recommended by a friend or family member.
In a competitive market where customers are inundated with information, the authenticity of WOM communication plays a critical role in differentiating a bank’s services. Fidelity Bank’s customer-centric approach, which emphasizes personalized service and community engagement, is designed to stimulate positive WOM. By actively monitoring and responding to customer feedback, the bank aims to reinforce its reputation and attract new customers organically. However, the effectiveness of WOM is influenced by various factors, including the quality of customer service, the bank’s responsiveness, and the overall satisfaction of existing customers. This study seeks to appraise the role of WOM in the customer acquisition strategies of Fidelity Bank in Kogi State, assessing how personal recommendations impact consumer decisions and contribute to the bank’s growth (Ibrahim, 2024).
Statement of the Problem:
Despite the acknowledged influence of word-of-mouth, Fidelity Bank in Kogi State faces challenges in harnessing its full potential for customer acquisition. Inconsistencies in service quality and occasional lapses in customer support have resulted in mixed WOM messages, with negative feedback sometimes overshadowing positive testimonials. The decentralized nature of WOM makes it difficult for the bank to monitor and control the spread of information, which can lead to reputational risks. Additionally, the rapidly changing dynamics of consumer communication, amplified by social media, present challenges in ensuring that positive WOM translates into sustained customer growth (Chinwe, 2023). The bank also struggles with quantifying the impact of WOM on new customer acquisition, making it challenging to develop targeted strategies that effectively leverage this medium. This study aims to identify the factors that hinder the effective utilization of WOM in driving customer acquisition, explore the channels through which WOM is most effective, and propose measures to enhance the credibility and reach of positive customer testimonials (Olaitan, 2024).
Objectives of the Study:
• To assess the impact of word-of-mouth on customer acquisition for Fidelity Bank in Kogi State.
• To identify the key factors that influence the effectiveness of WOM communication.
• To recommend strategies to optimize WOM for enhanced customer growth.
Research Questions:
• How does word-of-mouth influence customer acquisition in the retail banking sector?
• What factors enhance or hinder the effectiveness of WOM communication for Fidelity Bank?
• What strategies can be implemented to improve the impact of WOM on customer acquisition?
Research Hypotheses:
• H₁: Positive word-of-mouth significantly increases new customer acquisition.
• H₂: Inconsistencies in service quality negatively affect the credibility of WOM.
• H₃: Targeted strategies to enhance WOM communication lead to higher customer growth.
Scope and Limitations of the Study:
This study focuses on Fidelity Bank’s customer acquisition strategies in Kogi State, emphasizing the role of word-of-mouth. Data is gathered from customer surveys and social media analysis. Limitations include potential self-reporting biases and difficulties in isolating WOM effects from other marketing influences.
Definitions of Terms:
• Word-of-Mouth (WOM): Informal communication between consumers regarding their experiences with a product or service.
• Customer Acquisition: The process of attracting new customers to a business.
• Retail Banking: Banking services provided directly to individual customers.
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