Analysis of the Effect of CRM on Customer Loyalty; In the Case of Selected Banks in Ethiopia
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Date
2017-06
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Addis Ababa University
Abstract
Globalization and technology improvements have exposed companies to a situation with tough competition; Banking is one of the service industries characterized by high customer contact with individually customized service solutions where customer satisfaction has been an increasing focus of research (Molina et al., 2007). Customer loyalty is the top 10 most valuable performance measures (Davidson 1999) and is also considered as one of the 15 most commonly used measures according to Ambler and Puntoni (2003).Only few studies have investigated and measured CRM effect despite the practical relevance of operational zing and measuring CRM effect for business performance variables (Padmavathy et al., 2012).The general objective of the study was to investigate the possible relationship between Customer relationship management and customer loyalty in the banking industry in Ethiopia. More specifically, the study tried to see the relationship of CRM with Trust, Commitment, conflict handling, and Communication & Primary data was obtained through structured questionnaire from customers selected banks i.e. CBE and ZB. A convince non probability sampling technique was used to sample between banking firms. The researcher proportionally distributed 294 questionnaires to customers of the two selected banks and 267 of them were good for further analysis. The questionnaires were analyzed using SPSS version 20. Pearson Correlation and multiple regressions were used to establish the relationship between the independent and dependent constructs of the research. The findings revealed that the two independent variables (Conflict handling and Competence) are statistically important determinants of customer loyalty in the banking industry of Ethiopia whereas Commitment, Trust and Communication had positive relation with customer loyalty but not predictor of customer loyalty since they were not supported by the findings. A conclusion was drawn to the effect that since factor influencing customer loyalty have been established, banks should give appropriate focus to significant dimensions of CRM.
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Customer loyalty, Trust, Commitment