The Effects of Customer Relationship Management on Customer Satisfaction and Loyalty in Some Selected Commercial Banks in Jimma Zone

Abstract

The purpose of this thesis is to investigate the effect of Customer Relationship Management on customer satisfaction and loyalty of customers of commercial banks in Jimma Zone. The study employed both descriptive and explanatory research design which is cross-sectional in nature. It pursued a mixed research approach (qualitative and quantitative methods). Both close- ended questionnaires and semi-structured interview were used to gather data for the study. The study examined the effect of CRM on the satisfaction and Loyalty of 400 customers who were selected through a stratified sampling technique. Both qualitative and quantitative methods of data analysis were employed to analyze the data. Accordingly, the quantitative data were analyzed using both descriptive and inferential statistics in Stata software version 14. Descriptive statistics including mean and standard deviation were calculated to provide respondents’ profiles and study variables. Pearson Correlation analysis was conducted to test the existence of significant relationship between the independent variables (i.e. customer relationship management dimensions such as Key customer focus, Knowledge management, CRM organization and Technology based CRM) and the dependent variables (customer satisfaction and loyalty). Then, regression analyses were conducted to determine by how much percent the independent variables (the four selected CRM dimensions) explain the dependent variables which are customer satisfaction and loyalty. On the other hand, the qualitative data from the semi-structured interview was analyzed using content analysis which involves grouping of common themes together so that results can be more meaningful. The findings of the study revealed that three of the four CRM dimensions addressed in this study, (KCF, KM and TBCRM) have a direct and positive relationship with customer satisfaction and customer loyalty. On the other hand, CRM organization has a positive effect on customer satisfaction but it has insignificant effect on customer loyalty. Therefore, it is advisable for the commercial banks that they need to emphasize these factors in order to increase customer satisfaction and loyalty.