The effect of relationship marketing on customer loyality in private banking industry: the case of dashen bank, jimma distrct

Abstract

The existence of any organization depends on its customers. Customers are the source of profits to be earned by a profit making organization. Due to the more and more fierce competition in today’s business, many companies are required to build long-term profitable relationship with customers and to achieve customer loyalty. Therefore, relationship marketing has become more and more important since last decade of 20th century, especially in service industry. There are many different relationship marketing dimensions implemented for retaining customers’. Therefore, this study is aimed to explore the impact of relationship marketing (trust, commitment, conflict handling, and empathy) on customer loyalty, by focusing on the Dashen Bank Jimma District. Theoretical framework was used as a guideline to test the relationships between relationship marketing dimensions and customer loyalty. A quantitative method which is crosssectional study with deductive approach and qualitative approach also chosen in this research to used. In order to collect primary data, a self-completed questionnaire was designed and was randomly given to the customers of the district. In addition to questionnaire, semi- structured interview questions were prepared to get information from the organization which is analyzed qualitatively. The SPSS version 16.00 for windows was used to process the primary data were collected through questionnaire. The findings show that relationship marketing dimensions have impact on customer loyalty. All the independent variables are positively and directly related to customer loyalty particularly in Dashen Bank Jimma District and in general in banking industry. The relationship between relationship marketing and customer loyalty is significant. Therefore, the bank branches should make the whole system work with customers, not in opposite of customers. And also they are expected to invest more on attracting new customers and retaining the existed ones with regard to relationship marketing to increase customer loyalty.