The Effect of Relationship Marketing on Customer Retention (Case Study of Commercial Bank of Ethiopia and Dashen Bank S.Co.)
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Date
2017-06-08
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Addis Ababa University
Abstract
Today, with growing economic problems in various countries and more competition between
domestic and foreign banks retention of customers more and more has become the key to
survival of banks. The concept of relationship marketing has attracted considerable attention
from marketing researcher recently. The main and fundamental advantage of this approach is
claimed to build stronger relationship with customer which its performance results include
increased sales, profits, market share and customer retention. This research examines the
effect of the components of relationship marketing (trust, bonding, responsiveness, empathy,
and reciprocity) on customer retention in order to first determine that if relationship marketing
has any effect on customer retention and second, if so, which aspect has greatest impact on
customer retention. The study is based on information collected from both primary and
secondary sources of data. The sample for this study is taken from customers of Commercial
Bank of Ethiopia and Dashen Bank located in Addis Ababa. The method used for sampling was
convenience and non-probability sampling and questionnaires were used for collecting data
which were distributed and collected randomly in various days, locations (different bank
branches) and hours for more generalizability of the resulted findings and the results of data
analysis obtained by using SPSS version 22 software show that the components of relationship
marketing have positive effect on the level of customer retention. Data analyses were done
using frequencies, percentages, means, standard deviations, cross-tabulations, and tables
followed by discussions. Moreover, inferential statistics of bivariate correlations and simple as
well as multiple regressions were used. Based on the overall study, customer relationship
marketing is positively associated with customer retention in the context of both CBE and
Dashen Bank S.Co. And also, dimensions in the CRM as trust, bonding, empathy, reciprocity and
responsiveness have the significant relationship with customer retention. Therefore, banks
competitiveness and profitability will depend on their ability to build strong relationship
marketing strategy with their customers continuously. Furthermore, future research directions
were also suggested on this study
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Keywords
sampling, sales, profits