UNIVERSITY OF GONDAR

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MARKETING MANAGEMENT

THE EFFECT OF CUSTOMER RELATIONSHIP MARKETING ON

CUSTOMER LOYALTY: COMPARATIVE STUDY OF PUBLIC AND
PRIVATE OWNED BANKS

A THESIS SUBMITTED TO THE DEPARTMENT OF MARKETING MANAGEMENT

FOR PARTIAL FULLFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF
DEGREE OF MASTERS‘ OF ARTS IN MARKETING MANAGEMENT

BY: SINTAYEHU TESFAYE

PRINCIPAL ADVISOR: FENTAYE KASSA (PhD)

CO –ADVISER: MR. TESFAYE GEDYON

June, 2019

GONDAR, ETHIOPIA

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 UNIVERSITY OF GONDAR
COLLEGE OF BUSINESS AND ECONOMICS
MA IN MARKETING MANAGEMENT
THE EFFECT OF CUSTOMER RELATIONSHIP MARKETING ON CUSTOMER
LOYALTY: COMPARATIVE STUDY OF PUBLIC AND PRIVATE OWNED
BANKS.

BY: SINTAYEHU TESFAYE

APPROVED BY Board of Examiners

______________________ _________________ ________________

Chairman, Department Signature Date

_______________________ _________________ _________________

Advisor Signature Date

___________________ ________________ _________________

External Examiner Signature Date

___________________ ________________ _________________

Internal Examiner Signature Date

June, 2019
Gondar, Ethiopia

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DECLARATION

I declare that, this paper prepared for the partial fulfilment of the requirements for Masters
of marketing management on the entitled ―the effect of customer relationship marketing
on customer loyalty: comparative study of private and government owned bank”, and
it is my original work and has not summated for requirements of a degree in any other
university. In additional, I certify that all sources of materials used for the study indicated
in the reference part of this thesis.

Name Sintayehu Tesfaye

Signature_________________

Date_____________________

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 CERTIFICATE

Here with I state that Sintayehu Tesfaye Hailu has carried out this thesis on the topic
entitled, “The Effect of Customer Relationship Marketing on Customer Loyalty:
comparative study of public and private Commercial Banks in Ethiopia”, under my
supervision. This work has not presented for a degree in any university and it is sufficient
for submission for the partial fulfillment for the award of Master of Arts in Marketing
Management.

Advisor: Fentaye Kassa (Phd) signature ---------------- Date--------------

Co- advisor: Tesfaye Gedyon (Ass. Professor) signature ------------ Date------

June, 2019

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ACKNOWLEDGMENTS

First and Above all, I would like to offer my deepest thanks to the almighty God and his
mother Virgin Mary for strength, abundant grace and for enabling me to accomplish this
task.

I would like to offer my great attitude to my principal advisor Fantaye kassa (Ph.D) and
co- advisor Mr. Tesfaye Gedyon (Assistance professors) for all their great treatment,
guidance, insightful comments, and good encouragement throughout the process of the
research. And also I thank Wendmhunegn Ezezew(PHD) for his suggestion and comment
during this research.

I also would like to thank commercial bank of Ethiopia, Dashen and Awash banks for
allowing me to conduct this research and for providing assistance in contacting the
customers. Special thanks go to branch managers and assistance managers of the above
banks for their willingness for interview.

Great appreciation is also extended to my friends and family who always gave a great
support during this research.

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TABLES OF CONTENTS

DECLARATION ................................................................................................................................ i
ACKNOWLEDGMENTS...................................................................................................................ii
TABLES OF CONTENTS ..................................................................................................................ii
LIST OF TABLE ................................................................................................................................v
LIST OF FIGURE .............................................................................................................................. vi
LIST OF APPENDIX ....................................................................................................................... vii
ABBREVIATIONS AND ACRONYMS ........................................................................................ viii
ABSTRACT ....................................................................................................................................... ix
CHAPTER ONE: INTRODUCTION ............................................................................................. 1
1.1. Background of the Study .............................................................................................................. 1

1.2. Background of the organization ................................................................................................... 3

1.2.1. Commercial Bank of Ethiopia (CBE) ....................................................................... 3

The Birth and Development of Banking Services in Ethiopia ............................................................ 3

1.2.2. Dashen bank (DB) .................................................................................................... 4

1.2.3 Awash international Bank (AIB) ............................................................................... 5
1.3. Statement of the Problem ............................................................................................................. 5

1.4. Research Question ........................................................................................................................ 7

1.5. Research Objectives ..................................................................................................................... 8

1.5.1. General objective ...................................................................................................... 8

The main objective of study was to determine the effects of customer relationship
marketing dimensions on customer Loyalty of Public and Private commercial banks in
Ethiopia, specifically in Gondar city. ................................................................................. 8
1.4.2 Specific objectives ..................................................................................................... 8
1.5. Hypothesis of the study ................................................................................................................ 8

1.7. Significance of the study .............................................................................................................. 9

1.8. Scope of the Study ....................................................................................................................... 9

1.9. Limitation of the study ............................................................................................................... 10

1.10. Organization of the Paper ......................................................................................................... 10

CHAPTER TWO: LITERATURE REVIEW .................................................................................. 12

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 2.1 Theoretical framework ................................................................................................................ 12

2.1.1 Customer Relationship marketing ........................................................................... 12

2.1.2. Relationship marketing in banking industry ........................................................... 14
2.1.3. Customer Relationship marketing Benefits in banking Industry ............................ 15
2.1.4. Dimensions of customer relationship marketing .................................................... 15
2.2. Customer loyalty........................................................................................................ 23
2.2.1. Customer loyalty in bank sector ............................................................................. 25
2.3. Relationship Marketing and Customer Loyalty ......................................................................... 26

2.4. Empirical review of the literature............................................................................................... 28

2.5. Conceptual framework ............................................................................................................... 29

CHAPTER THREE: RESEARCH METHODOLOGY .................................................................. 31

3.1. Description of the Study Area .................................................................................................... 31

3.2. Research Design ......................................................................................................................... 31

3.3. Research Approach .................................................................................................................... 32

3.4. Population and Sampling Design ............................................................................................... 33

3.4.1. Population ............................................................................................................... 33

3.4.2. Sampling Design..................................................................................................... 33
3.5. Source of Data ............................................................................................................................ 35

3.6. Data collection tools ................................................................................................................... 35

3.7. Validity and Reliability test........................................................................................................ 36

3.7.1. Validity ................................................................................................................... 36

3.7.2. Reliability test ......................................................................................................... 36
3.8. Data Analysis Methods .............................................................................................................. 36

3.9. Ethical Consideration ................................................................................................................. 38

CHAPTER FOUR: - RESULT AND DISCUSSION ...................................................................... 39

4.1 Introduction ................................................................................................................................. 39

4.2 Reliability test result.................................................................................................................... 39

4.3 Demographic information of respondent .................................................................................... 40

4.3.1 Gender of respondents ............................................................................................. 41

4.4. Descriptive statistics................................................................................................................... 46

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 4.5. Correlation.................................................................................................................................. 47

4.5.1. Correlation analysis between relationship marketing dimensions and customers

‗loyalty.............................................................................................................................. 48
4.6. Assumptions of parametric testing ............................................................................................. 50

4.6.1. Normality test ......................................................................................................... 50

4.6.2. Linearity test ........................................................................................................... 51
4.6.3. Homoscendasticity test ........................................................................................... 51
4.6.4. Testing Multi-co linearity ....................................................................................... 52
4.7. Regression analysis .................................................................................................................... 53

4.7.1 Multiple Regression Analysis of customer Relationship Marketing dimensions

and Customers‘ Loyalty.................................................................................................... 53
4.8. Comparative analysis between public and private owned using independent sample t- test ..... 55

4.9. Hypotheses testing ..................................................................................................................... 58

4.10. Discussion results of the interview data ................................................................................... 60

4. 11. Discussions .............................................................................................................................. 64

CHAPTER FIVE .............................................................................................................................. 70

5. CONCLUSIONS AND RECOMMENDATIONS OF THE STUDY.......................................... 70
5.1. Conclusions ................................................................................................................................ 70

5.2 Recommendations ....................................................................................................................... 71

REFERENCES ................................................................................................................................. 74
Appendix .......................................................................................................................................... 83

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 LIST OF TABLE

Table 1 Sample Quotas ....................................................................................................... 34

Table 2 Result of Reliability analysis for the questionnaire ............................................... 40
Table 3 customers of the all banks that included in the research........................................ 40
Table 4 genders of public and private owned banks respondent ........................................ 41
Table 5 Age of public and private owned banks respondents ............................................ 42
Table 6 Educational levels of public and private owned banks respondents ...................... 43
Table 7 occupation respondents of public and private owned banks ................................. 44
Table 8 monthly incomes of respondents of public and private owned banks ................... 44
Table 9 years of relationship respondents with public and private owned banks ............... 45
Table 10 type of account the respondents used in public and private owned bank ............ 46
Table 11 descriptive statistics of customer relationship marketing dimensions and
customer loyalty .................................................................................................................. 47
Table 12 correlation of relationship marketing and customer loyalty ................................ 48
Table 13 correlation between customer relationship marketing dimensions and customer
loyalty .................................................................................................................................. 49
Table 14 Descriptive Statistics of Dependent ..................................................................... 50
Table 15 levene‘s test for homoscendasticity ..................................................................... 52
Table 16 multi collinearly statistics .................................................................................... 53
Table 17 model summary result .......................................................................................... 54
Table 18 multiple regression for customer loyalty ............................................................. 54
Table 19 multiple regression result of customer loyalty..................................................... 55
Table 23 Group statistics for private and government owned bank regarding loyalty ....... 56
Table 24 independent sample t- test for customer loyalty .................................................. 57
Table 25 Group statistics for public and private banks regarding customer relationship
marketing dimensions .......................................................................................................... 57
Table 26 independent sample t- test for customer relationship marketing ......................... 58

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 LIST OF FIGURE

Figure 1 Framework Research Concepts ................................................................................ 30

Figure 2 map of study area ..................................................................................................... 31
Figure 3 normal Q-Q plot of loyalty ....................................................................................... 51

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 LIST OF APPENDIX

Appendix 1A English version................................................................................................. 83

Appendix 2B Amharic version ............................................................................................... 87
Appendix 3C interview questions .......................................................................................... 91
Appendix 4 normality test ...................................................................................................... 92
Appendix 5 linearity test ......................................................................................................... 92
Appendix 6 Demographic with customer loyalty correlation table 1 ..................................... 93
Appendix 7 Demographic with customer loyalty correlation table 2 ..................................... 94
Appendix 8 Residuals Statistics of regression analysis of general data ................................. 94
Appendix 9 model summary of commitment ......................................................................... 95
Appendix 10 model summary of empathy ............................................................................. 95
Appendix 11 model summary of responsiveness ................................................................... 95
Appendix 12 model summary of communication .................................................................. 96
Appendix 13 model summary of conflict handling ................................................................ 96

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ABBREVIATIONS AND ACRONYMS

CRM- Customer Relationship Marketing

RM- Relationship Marketing

CBE- Commercial bank of Ethiopia

DB- Dashen Bank

AIB- Awash international bank

SPSS- statistical package for social science

ANOVA – Analysis of variance

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ABSTRACT

Every business organizations without loyal customers and strategic customer relationship
marketing are bound to be unsuccessful. Customer loyalty is the behavior of customers
trying to keep their promises on the product, buy with a higher frequency. Customer
relationship marketing is a way of life of doing business, a strategic direction that focuses
on keeping and improving current customers rather than acquiring new customers. The
main purpose of this study is to determine the effect of Customer relationship marketing
dimensions on customer loyalty in case of private and government owned banks in Gondar
city. Customer relationship marketing has many dimensions but this paper used only six
dimensions. Qualitative and quantitative research methods with deductive and explanatory
approaches were used in this study. For conducting this study non-probability sampling
technique, specifically Purposive-and convenience sampling techniques were used.
Interview and structured questionnaire with five point Likert scale was used to collect the
data from the customers and managers and assistant manager of the banks that included in
this study. A total of 422 questionnaires were distributed to customers of both public and
private owned banks found in Gondar city, based on convenience sampling methods and
418(99.05%) were returned for analysis. SPSS version 20.00 software was employed to
analyze the collected data through the statistical tools used in this study, namely
descriptive analysis, correlation, multiple regression analysis and independent sample t-
test. Result of the study showed that 57.9% of customer loyalty was explained by
relationship marketing dimensions. Specifically trust, commitment, communications and
conflict handling have a positive and significant effect on customer Loyalty of commercial
banks in Ethiopia, however empathy and responsiveness have positive but insignificant
effect on customer’s loyalty. There is significance difference between private and
government owned banks. Based on the finding banks apply Customer relationship
marketing appropriately and should make the whole system on work with their customers.

Key words: customer relationship marketing, customer loyalty, Gondar, bank.

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CHAPTER ONE: INTRODUCTION

1.1. Background of the Study

The ultimate objective of the marketing progression is to hold presented customers, to

attract new ones and shift these customers into loyal ones and to keep and promote this
relationship. Every business organizations without loyal customers and strategic customer
relationship marketing are bound to be unsuccessful. Customer loyalty is not a new
concept in the business world. Customer loyalty is based on constantly positively affecting
experience, physical attribute-based satisfaction and supposed value of an experience,
which includes the product or services. Banks can increase levels of profitability by on
condition that secure products and services to the customers. So as to increase customer
loyalty, several banks have announced innovative products and services (Mishra et al.,
2011). Customer loyalty has been concern in banking to professionals because of serious
rivalry and higher client expectations. Customer loyalty is the desired expectation of a
company from its customer (Kotler and Keller 2012). With the present condition in which
the competition intensifies, banks compete against each other to improve their performance
by offering products and services (Mishra et al., 2011).

According to Kotler and Keller (2012) state that the main focus of customer loyalty is how
to keep customers so that they do not switch to other products or companies. To set up
customer loyalty, companies must build good relations between the company and its
products with the customers. On the other hand, Boohene and Agyapong (2011) argue that
customer loyalty is the behavior of customers trying to keep their promises on the product,
buy with a higher frequency, and re-purchase by recommending to others, as well as being
loyal to the brand in dealing with the company. Accordingly, loyal customers do not only
increase the value of the company, but also enable business to maintain costs lower than
those associated with attracting new customers enable. Moreover, loyalty rather than
satisfaction is becoming the number one strategic goal in today‘s competitive business
environment (Barroso and Martin, 1999).

Customer relationship marketing is not a very new concept in the business world. Since
the late 1960s, researchers acknowledged that attracting and retaining customers is the
main purpose of any business (Ahmad, Omar &Ramayah, 2010). The beginning of CRM

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has enabled the tracking, capturing and analysis of customer activities across different
contact points and led the shift from segment-centric to customer-centric focus, (Elkordy,
2014). Organizations that have practiced CRM are predictable to attract and retain
customers leading to profitability. Banks are fighting with each other to achieve a great
serving of the market share with a globalization effect. For that reason, the banks have to
look difficulties to meet the high growth of customer expectations (Hinnawi, 2011).
Newly, more than ever before, strong competition, fragmentation of markets, short life
cycles of products and rising customer awareness and difficulty are the big challenges to
the banking sector (Tsegay, 2011).

The development of relationship marketing has received a lot of attention in both academy
and practice areas in the last few decades. It was during the last decade of the 20th century
that relationship marketing began to govern the marketing field. During this period,
relationship marketing became a major trend in marketing and management of business
practical and practiced by many all over the world. Totally, Customer Relationship
Marketing (CRM) is a philosophy, which has recently become one of the most debatable
issues in the business field. CRM based on the belief that establishing a sustainable
relationship with customer is the root for obtaining loyal customers who are a great deal
more profitable than non- loyal. In this concern, the successful implementations of CRM
philosophy were of great benefit to the organizations. Adopting CRM, such organizations
can secure the benefit of increasing sales through better market segregation, modifying
products and services, attaining higher quality products, gaining access to information and
employee satisfaction, and above all, warranting ongoing customer-retention and loyalty
(Zablah, et.al 2004).

In the competitive marketing environment, CRM is critical to a company‗s profitability

and long-term success. Russell, (2000) become customer focused, all managers,
professionals and executives of marketing as well as employees of the organization must
understand how to build profitability relationship with each customer. In addition, to make
managerial designs ‗every day designed to increase the value of both the company and
customer that will grow their value from the customer based strategy (Peppers, & Rogers,
2016). CRM is to establish long-lasting relationship with most important customer and
generate increased customer satisfaction, retention, and loyalty. Therefore, developing a

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better understanding of existing customer allows companies to collaborate and respond
more effectively significantly to improve retention rate (Abera, 2016).

Currently; various companies begin to establish their network to new as well as existing
customer to increase ongoing log-term customer satisfaction by implementing the principle
of relationship marketing via strategic and technology-based CRM application. Customer
is the only source of the creating loyal customers is at the heart of every business (Keller
and Kotler, 2012). During the past decade, relationship marketing has seen as the
mainstream of thought in planning a marketing strategy both in industrial and consumer
marketing domains (Tseng, 2007).

The banking sector is becoming gradually more competitive around the world. So,
maintaining a sustainable long-term relationship with customer is a major factor of gaining
a competitive advantage in commercial banking sector (Shani, &Chalasani, 1992). In
several studies (OlyNdubisi, et. al G. C. 2007 and Reichheld and Sasser, 2010) and other
studies estimate that the cost of winning a new customer is higher than that of maintaining
an existing customer. The findings in Kenya and Ghana commercial banks also reveal
some measures of relationship marketing such as bonding, reciprocity, trust responsiveness
and empathy as a tool to enhance organizational performance of commercial banks
(Kuranchie, 2010)

1.2. Background of the organization

1.2.1. Commercial Bank of Ethiopia (CBE)

The Birth and Development of Banking Services in Ethiopia

It was in 1905 that the first bank, the ―Bank of Abyssinia‖, was established based on the
agreement signed between the Ethiopian Government and the National Bank of Egypt,
which was owned by the British. Its capital was 1 million shillings. In 1932 the Ethiopian
Government, under Emperor Haile Sellassie, closed the Bank of Abysinia, paid
compensation to its shareholders and established the Bank of Ethiopia which was fully
owned by Ethiopians, with a capital of pound Sterling 750,000. The Bank of Ethiopia
opened branches in Dire Dawa, Gore, Dessie, Debre Tabor and Harar.

3
In 1963, the State Bank of Ethiopia split into the National Bank of Ethiopia and the
Commercial Bank of Ethiopia S.C. with the purpose of segregating the functions of central
banking from those of commercial banking. The new banks started operation in 1964.
In 1974, CBE merged with the privately owned Addis Ababa Bank. Since then, it has been
playing significant roles in the development of the country. Pioneer to introduce modern
banking to the country. It has more than 1340 branches stretched across the country.

 The leading African bank with assets of 565.5 billion Birr as on June 30th 2018.
 The first bank in Ethiopia to introduce ATM service for local users
 Currently CBE has more than 20 million account holders and the number of Mobile
and Internet Banking users reached more than 1,736,768 as of June 30th 2018.
Active ATM cardholders reached more than 5.2 million.
 It has strong correspondent relationship with more than 50 renowned foreign banks
like Commerz Bank A.G., Royal Bank of Canada, City Bank, HSBC Bank.
 CBE has a SWIFT bilateral arrangement with more than 700 others banks across
the world.
 CBE combines a wide capital base with more than 33,000 talented and committed
employees.
 Pioneer to introduce Western Union Money Transfer Services in Ethiopia early
1990s and currently working with other 20 money transfer agents like Money
Gram, Atlantic International (Bole), Xpress Money...
 CBE has opened four branches in South Sudan and has been in the business since
June 2009. (CBE, 2019)

1.2.2. Dashen bank (DB)

DB was established as per the intent of the new policy and the Ethiopian investment code.
It came into existence on September 20, 1995 according to the commercial code of
Ethiopia, 1960, and the licensing and supervision of banking business proclamation No.
84/1994.
Dashen bank (DB) is one of the largest private banks in Ethiopia.

DB Share Company provides various banking services. Among the given services, the
bank accepts deposits, which include current accounts, savings accounts, and youth
schemes while its loan portfolio comprises agriculture, manufacturing, import/export, trade

4
and services, building and construction, transport loans, overdraft for working capital, term
loans for short and project finance, letters of credit facility, advance on import bills,
revolving overdraft for export bills, merchandise loans, trade bills discounted, and export
credit guarantee schemes, as well as letters of guarantee comprising advance, performance
bond, bid bond. In addition, the bank offers local money transfer and wire transfer
facilities, which include mail transfers, telegraphic or telephone transfers, local drafts, and
cashier payment orders (Dashen bank, www.dashenbank.com, 2019).

1.2.3 Awash international Bank (AIB)

AIB established as the first private commercial bank on November 10, 1994 by 486
founder shareholders with a paid up capital of Birr 24.2million and started banking
operations on February 13, 1995, and one of the biggest private commercial banks in
Ethiopia in terms of capital. The Bank provides a wide range of financial services
including:-
operating savings accounts, time and demand deposits, including non-resident accounts for
eligible foreigners residing in Ethiopia, Non-Resident Ethiopian, Non-Resident of
Ethiopian Origin, short-term loans and overdraft facilities to all sectors of the economy
(trade, industry, construction, agriculture, transport and etc.), long-term finance for large
projects, letters of guarantee, domestic money transfer services.(awash bank, 2019)

1.3. Statement of the Problem

Customer relationship marketing is a contemporary issue and it used to create long-term

relationships with customers and the key to stability in an increasingly dynamic market.
Customer relationship marketing has become the main strategy to improve customer
loyalty.

Customer relationship marketing practice, particularly in the banking industry, has

Enormous problems. According to Mishra et al. (2011), the banking sector is facing
enormous challenges of attracting the new customers and retaining the existing ones
supports it. However, in today‘s banking environment, it is becoming difficult to build and
maintain strong and long lasting relationships with customers (Bogale, 2017).

As a competition in the banking industry becomes confused, it is hard for banks to keep
loyal customers who will contribute to the long term profit of the organization. Now days,

5
in Ethiopia the banking industry and their branches increases from time to time. And there
is high competition among banks in attracting the customers of one another and difficulties
in retaining the lost customers one from the other; as a consequence users have many
choices to prefer and consequently of this they are focusing on the quality of service. In
addition, many customers‘ voice concerns about inefficiency and lack of quality in the
banking sector (Gebre, 2010).

Payne, &Frow, (2006), stated that the implementation of CRM as a tool of competitive
advantage is increasing worldwide. However, there is no doubt that the real
implementation and resourceful practice of CRM is important to the successes of a firm.
They stated that the majority of the firms applying CRM were so far to well benefit of it in
terms of increasing profitability, expanding market share, enhancing sales volume,
satisfying customers, retaining customers and reducing customer defection by attracting
potential customers, because there are no ground guidelines and procedures on adoption;
implementation and practices. Mainly problems in handling customers, lack of advanced
banking technologies, and less emphasis to customer relationship marketing in relation to
customer loyalty in adding wealth to the shareholders of the selected three banks would be
assessed. This problem motivates the researcher to undertake the selected banks for the
study to address the observed problems in relation with their marketing performance and to
solve relationship among their customers to be loyal for lifetime. Creating loyal customers
has become more important due to significant increase in rivalry and concentrated markets.

In the global literature sense, a number of studies have done in the more developed
economies on the various dimensions of Customer Relationship Marketing (CRM).
However, in the developing countries like Ethiopia, a very little attention had paid to the
concept of Customer Relationship Marketing until recent times. Even in my empirical
reviews to the studies made in Ethiopia as the researcher observed the following gaps.

According to the researchers observed, there is no studding to determine the effect of

customer relationship marketing on customer loyalty both for private and public banks in a
single study. In addition, there is no works that studied to find if there are significant
differences of private and public banks in their orientation towards customer relationship
marketing and customer Loyalty. Still many studies discussed in other problem areas of the
banking industry, there are very few studies conducted on this issue in our country context
especially in the selected banking industries. Most of the studies considered only four or

6
five independent variables (dimensions) that is; trust, commitment, conflict handling and
empathy, which made them to be less inclusive.

Therefore, to overcome the above problems, the researcher study on the effect of CRM on
customer loyalty with regard to CBE, Awash International Bank and Dashen Bank in an
emerging market like Gondar city can be a fruitful pragmatic work. This study was to
bridge the above gaps and to contribute to literature on the effect of customer relationship
marketing on customer loyalty, by taking six explanatory variables representing trust,
commitment, empathy, responsiveness, conflict handling, and communication and
dependent variables represented by customer loyalty.

1.4. Research Question

Using the previous problem statement as a base, this study poses the following questions to
obtain a clear picture and correct answer about the applicability of customer relationship
marketing to achieve customer loyalty in the context of commercial banks in Ethiopia.
 What are the effects of trust on customer loyalty in the banking industry of
Ethiopia?
 What are the effects of commitment on customer loyalty in the banking industry of
Ethiopia?
 How empathy does affecting on customer loyalty in the banking industry of
Ethiopia?

 What are the effects of responsiveness on customer loyalty in the banking industry
of Ethiopia?

 What are the effects of conflict handling on customer loyalty in the banking
industry of Ethiopia?

 How does a communication affect customers‘ loyalty in the banking industry of

Ethiopia?

 Do public and private owned banks in Ethiopia statistically significant differ in

terms of their customer relationship marketing practices and their customer
Loyalty?

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1.5. Research Objectives

1.5.1. General objective

The main objective of study was to determine the effects of customer relationship
marketing dimensions on customer Loyalty of Public and Private commercial banks in
Ethiopia, specifically in Gondar city.

1.5.2 Specific objectives

 To determine the effect of trust on customer loyalty

 To determine the effect of commitment on customer loyalty
 To determine the effect of on customers loyalty
 To identify the effect of responsiveness on customer loyalty
 To identify the effect of conflict handling on customer loyalty
 To determine the effect of communication on customer loyalty
 To test statistically significant differences between public and private commercial
banks in Ethiopia, in terms of their customer relationship marketing practices and
their customer loyalty.

1.6. Hypothesis of the study

Based on the problem identified, so far under the statement of the problem and the
theoretical and empirical review of literature, the research paper would be prove the
following basic alternative research hypothesis.

H1: Trust has statistically a significant and positive effect on customer loyalty in banking
sector.
H2: Commitment has statistically a significant and positive effect on customer loyalty in
banking sector.
H3: Empathy has statistically a significant and positive effect on customer loyalty in
banking sector.
H4: Responsiveness has statistically a significant and positive effect on customer loyalty in
banking sector.

8
H5: conflict handling has statistically a significant and positive effect on customer loyalty
in banking sector.
H6: communication has statistically a significant and positive effect on customer loyalty in
banking sector.
H7: public owned and private banks in Ethiopia have significant differences in terms of
their customer relationship marketing and their customer Loyalty.

1.7. Significance of the study

One of the significance of the study was to provide current information on customer relationship
marketing and how its affect customer loyalty of commercial banks in Ethiopia especially CBE,
Awash international bank and Dashen bank of Gondar city. The study would also to inform the
significance difference between public and private banks in Ethiopia in their orientation towards
customer relationship marketing dimensions and customer Loyalty. The study also provide basic
data about relationship marketing and customer loyalty in banking industry in Ethiopia and
how to implement strategies that will meet their customers‘ needs and ultimately win their
loyalty. Besides, the findings of the study would be used for other similar studies in the
future. Therefore, this research could contribute a lot to the efforts made by commercial
banks in Ethiopia for the improvement of customer loyalty through provision of
appropriate service to the respected customers. Particularly, this research identify those
factors of customer relationship marketing that contribute and affect customer loyalty, and
give insight for decision makers of banks on how to attract retain and manage their
customers.
The study would also benefit both academicians and other practitioners as a documented
study in this area. Therefore, the findings of this research was contribute a lot to banking
service providers on how to implement strategies that will meet their customers‘ needs and
ultimately win their loyalty.

1.8. Scope of the Study

This research was delimited conceptually, geographically, and methodologically.

Conceptually: These studies focus on the effect of customer relationship marketing on

customer loyalty in case of banking industry, and also CRM practices are measured under

9
different dimensions, but for this study used only relevant dimensions those trust,
commitment, empathy, responsiveness, conflict handling, and communication only.

Geographically: there are 18 commercial banks in Ethiopia, but since it is impossible and
uncontrollable to include all banks in Ethiopia because of time and resource limitations the
study was delimited on the biggest and oldest government owned commercial bank which
is Commercial bank of Ethiopia and the two oldest and biggest private owned commercial
banks Awash International bank S.C and Dashen bank S.C would be conducted in Gondar
city. Even though, as it is well known CBE, Dashen and Awash bank has many branches in
different area; due to time and financial constraints the study would not undertake all
branches of there.

Methodologically: these studies are sample survey research i.e. based on the
representative sample conclusion for the population was made. Additionally, this study
used only non- sampling methods, and the main source of this data was questionnaires,
interview and secondary data.

1.9. Limitation of the study

The research has used convenience sampling technique in which a large degree of bias may
be introduced in to the sample estimates and therefore, this is also the other limitation of
the study. The good methods of dividing sample quota are based on their customer
numbers but this research used their branches to divided sample quota; this is other
limitations of this paper. And the study would be analysis only the selected banks such as
Commercial Bank of Ethiopia, Awash International Bank & Dashen Banks customers
located in Gondar city since it is difficult and unmanageable to include all banks due to
time and financial constraints, so this study would be limited to generalize all of the banks
customers.

1.10. Organization of the Paper

The paper would be organized into five chapters. The first chapter contains background of
the study, statement of the problem, Basic research questions, objective of the study,
hypothesis of the study, significance of the study, scope of the study, limitation of the

10
study and organization of the paper. And the second chapter deals with review of related
literature which is about customer relationship marketing, customer loyalty and conceptual
frame work.

The third chapter deals with the methodology of the research that includes research design,
Description of the Study Area ,determination of sample size, sampling design, techniques,
the research instruments, data gathering procedures and data analyzing method.
The fourth chapter also deals with result and discussion of the data gathered. The fifth
chapter deals with the conclusion and possible recommendation about the overall of study.

11
CHAPTER TWO: LITERATURE REVIEW

2.1 Theoretical framework

Today‘s banking industry is changing quickly. With the development of international

economy and competitive markets, banks are also exaggerated (Gilaninia et al, 2011).
Among banks at the international level, relationship marketing is taken into consideration
as the ideal way to create and maintain long-term relationships with customers; because
deliverable services in commercial banks is relatively identical and for the most part banks,
to differentiate services towards competition is difficult. Consequently many of the world's
banks are oriented the use of relationship marketing approach and implementation of its
fundamentals (Gilaninia et al, 2011).

2.1.1 Customer Relationship marketing

Marketing practices can trace back as far as 7000 B.C (Sharma, &Ranga, 2014). Around
the beginning of the 20th century, marketing as a distinct discipline was borne out of
economics. As the discipline gained momentum, and developed through the first three
quarters of the 20thcentury, the most important focus was on transactions and exchanges.
On the other hand, the development of marketing as a field of study and practice is
undergoing are conceptualization in its orientation from transactions to relationships
(Kotler1999).

The term relationship marketing is popularizing in the 1980s when the focus of marketers
started to switch from customer acquisition to customer retention. Relationship marketing
is a new approach in the banking industry to build close and long-term relationships with
its customers in order to provide an understanding of the customer and their satisfaction
considering the increasing competition. In the other hand, companies have found that the
cost of attracting new customers is five times more valuable than retaining existing
customers. Therefore, the loss of a customer, not only the loss of a sale item, but more
significant since the loss of total purchases that the customer is able to do in life (kotler,
1999). The relationship marketing is the process to identify and create new value for
customers, in which the mutual benefit has considered. This benefit shared with customer
during his life. Kotler and Keller (2009) indicated that relationship marketing was mainly

12
to match the customers ‗needs and the service promise, so that the customer loyalty would
increase Taleghani et.al. (2011).

The objective of a relationship is to build customer loyalty by creating and maintaining a

positive attitude toward the company. When a depository financial institution claims to be
practicing relationship marketing, it means that they have undertaken an organization wide
strategy to oversee and take care of their interaction with customers and sales expectations.
Relationship selling is present at every point in the system and not merely at the
relationship manager level or at the customer service point. Relationship marketing is the
biggest paradigmatic shift in marketing theory and exercise in existing world. Customer
Relationship marketing concerns attracting, developing and retaining customer relationship
(Parasuraman and Berry 1991).

Customer relationship marketing assists to build the good relationship between customer
and business organization. Every organization try to fulfil their customer required with
pleasure. The concept relationship marketing is use when referring to the strategies used by
those banks to establish and maintain relationships or permanent connections with their
profitable clients. ―Customer relationship marketing is business organizations performance
with the purpose of establishing, and just beginning competitive and profitable customer
relationship to the mutual benefit parties‖ (Hougaard and Bjerre 2009,). According to
(Assefa, 2017) recommend different levels of relationship period would result in different
levels of consumption experience, producing different results and loyalty with different
relationship marketing tactics. Compared with traditional marketing, relationship
marketing is more concerned about building customer relationships in order to achieve
long-term mutual benefits for all parties involved in the exchanges (Assefa, 2017).

According to (Eshetu, 2015) relationship marketing essentially means developing

customers as partners, where the approach is different from traditional transaction. Another
view of customer relationship marketing is that it deals with the analysis, planning,
realization and control of ways that initiate, become stable and reactivate business
relationships with the corporation‘s stakeholders and the formation of mutual value
(Shiferaw, 2011). In other words, RM is about mutually advantageous relationships
between customers and service providers. In the exchange process, its economic nature
manifested in goods, services, delivery systems, financial solutions, material
administration and the transfer of information (Gilbert and Choi, 2003).

13
Gummerson (1994) explains that the building of relationships is the key to accomplishment
and maintaining a successful market share. Gummerson defines the benefits as
preservation whereby learning related information about the customers such as; names,
habits, preferences and prospect one-on-one relations can formed and customers can be
kept pending back continuously; maybe even be converted into friends. In addition, with
IT, a feeling of intimacy can created with the customer, as no matter whom they meet, they
―know‖ them. Both parties adapting better to each other can attain the major benefit being
that once the relationship has taken form-increased profits. (Gummerson, 1994)

Since the final purpose of relationship marketing is to gain the maximal value of a
customer, customer loyalty should emphasize to achieve this goal. The benefits of
relationship marketing derive from the continuing patronage of loyal customers who as a
partnership are not sensitive to price cut over time (Eshetu, 2015). Interdependence and
assurance between provider and customer tend to be important in relationship marketing,
for itself whole relationship viewed as the key to competitive advantage (Hougaard and
Bjerre, 2009).

2.1.2. Relationship marketing in banking industry

At present competitive global financial world, relationship marketing advocated as an

exceptional way for banks to set up a unique long-term relationship with their customers.
Relationship marketing literature related to banking can trace back to the early 1980s. The
concept of relationship marketing first demonstrated and described by Berry (2005).
Relationship marketing focuses on making new and mutual value between banks and their
customers on a semi-permanent base. "Marketing is not a function; it is a way of doing
business; marketing has to be all pervasive, part of everyone's job description, from the
receptionist to the jury of directors" (McKenna). Customer relationship marketing (CRM)
is a business organization process in which customer relationships, and customer
loyalty built through marketing strategies and activities. CRM allows businesses to develop
long-term relationships with recognized and new customers while helping to make
efficient corporate performance (Berry 2005).

Eshetu, (2015) noted that the practice of a relationship approach is most appropriate when
the consumers require personal services and/or selling‗. This is certainly the case for a
range of the more complex products in financial services sector, where the majority of

14
customers still prefer to make buying decisions supported by the expertise of staff with
appropriate knowledge. Now, just having relationship with customers to have loyal
customers is not enough. The quality of this relationship is also of great importance. The
quality of relationship depends on customer perception and his evaluation of reaction with
staff and their behaviour in encountering with customers (Shiferaw, 2011).

2.1.3. Customer Relationship marketing Benefits in banking Industry

According to Sadek, et al. (2012) the emphasis of CRM focuses on keeping and
maintaining long-term relationship with customers, leading to customer satisfaction. Hence
creating business performance in the banking industry, and CRM if used properly would
enhance a bank‗s ability to achieve the ultimate goal of retaining customers in order to gain
a strategic advantage over its competitors. Customer relationships are becoming even more
significant for banks as market situation get harder. Competition is greater than ever,
boundaries are eroding, customers are becoming more demanding and the life cycles of
products and services are limited dramatically. All these forces make it essential for banks
to make stronger the relationship with their customers and offer them the services they
need via the channels they prefer. Companies that apply CRM make better relationships
with their customers, and achieve loyal customers, increased revenue and reduced cost
(Kotler and Keller 2009).

According to Wong & Shoal, (2002), well-implemented CRM system can offer a ―unified
customer interface‖, which means that at each transaction the relevant account details,
knowledge of customer preferences and past transactions or history of service problem are
at the fingertips of the person serving the customer. This can result in a vast service
improvement. The effective implementation of customer relationship marketing results
both in higher revenues and lower costs, making companies more effective and efficient,
effective in focusing the right customer base with the right services through the right
channels, and efficient in doing this at the lowest costs (Wong & Shoal, 2002).

2.1.4. Dimensions of customer relationship marketing

Researchers divide different mechanisms of customer relationship marketing into internal

and external programs (Ghafari et al., 2011). According to them internal programs
emphasize on organizational structure, culture and knowledge management while external

15
programs include interactive activities with customers. Thus, based on this the paper has
been focused on external programs of customer relationship marketing. This is, therefore,
although CRM practices are measured under different dimensions but for this study the
relevant dimensions are trust, Commitments, empathy, responsiveness, Conflict handling,
and communication

Trust: Trust is defined as a belief or conviction about the other party‗s intentions within
the relationship (Taleghani et. al., 2011). Moorman et al (1993) also define trust as ―the
willingness to rely on an exchange partner in whom one has confidence‖. The nature of
service offerings means that service consumers typically pay in advance to buy a firm‘s
promise and, therefore, must be willing to rely on the firm to deliver its promise (Berry,
2005). Trust thought to be an essential for loyalty, especially in the risk-dominated
cyberspace where transactions conducted at a distance (Taleghani et. al., 2011).

Good relationships and trust are built over time, with give and take on both sides, and not
too much pressure (Rigby et. al, 2003).The maintenance of consumer trust in the retail
banking industry is of considerable importance as it can influence the likelihood of
retaining existing customers and attaining new ones. Trust-indicates that each person of
relationship to what extent can consider other person promise and defined as the
willingness to trust and reliance to audience (Wong & Shoal, 2002). Furthermore, trust in a
bank can also be more important to a bank customer than price. Customer perception of a
firm‘s trustworthiness is valuable not only in terms of satisfying and in terms of retaining
existing customers but also in attracting new customers through word of mouth marketing
(Wong & Shoal, 2002).

We conceptualize trust as existing when one party has confidence in an existing partner‗s
reliability and integrity (Morgan and Hunt 1994). Therefore according to these authors,
trust permits firms to lessen or avoid dependence on expensive formal controlling
mechanisms to maintain their partnerships. In this study trust variable is measured by
factors such as bank security in transactions, bank service quality, reliability promises of
bank, staff behavior towards clients and the bank commitment to our customers. (Morgan
and, Hunt 1994)

Commitments are also an important element of relational exchanges. It specified as an

abiding desire to keep a valued relationship with customers. (Moorman, et al., 1992),

16
Inquiry suggests that relationship commitment is at the heart of all effective working
connections and that it is an indispensable element in successful long-term relationships,
including supplier–buyer relationships (Anderson and Lindestad, 1998). In the relationship,
marketing literature the idea of commitment assumes a key part; equally, it is a major
feature of relationship marketing models (Scanzoni, 1979).

As Scanzoni (1979), expressed commitment is the most developed period of accomplices'

relationship. In marketing-practice and research, it is concurred that mutual commitment
among accomplices in business connections produces huge advantages for organizations
(Farrelly& Quester, 2003). Morgan, et al, (1994) also defined commitment as ―an
exchange partner believing that a continuing relationship with one more is so important as
to guarantee maximum efforts at maintaining it‖. The same is supported by Parasuraman
and Berry (1991) who argue that ―relationships are built on the foundation of mutual
Commitment‖ (Parasuraman and Berry, 1991).

Commitment is the highest level in building the strength of a relationship and will provide
a long-term advantage for both parties related, while Bloemer et al., (2003) states that,
commitment is important and have influence in building relationships with consumers.
According to (Ndubisi, 2007), the commitment is an important factor in building customer
loyalty. To understand their trust and commitment between the customer with the company
in order to construct and maintain a relationship marketing-oriented long-term, it is
necessary to have effectual communication channels and harmony. With no commitment
there is no relationship, if it is to be cemented for a longer time. In this study commitment
will measured to compatible and consistent of bank services with customer needs and bank
flexibility towards the customer and change services. As cited by, (Peyman, Freyedon,and
Motreza 2013).

Empathy According to Ndubisi (2004) Empathy is the capacity to share and understand
another‘s state of mind or emotion. This author also pointed out that the basic idea of
empathy should characterized is that by looking expressions of the people facial or body
movement, or by hearing their tone of voice, which will have immediate sense on how they
feel. Empathy is the ability of a person to identify with the feelings or thoughts of another
person. Empathy is defined as seeking to understand somebody else desires and goals and
it is the ability to see a situation from another person‗s perspective (Taleghani, 2011)

17
Empathy is the ability to see a situation from another person‘s point of view (Wang, 2007).
It is defined as seeking to be aware of somebody else desires and goals. It involves the
potential of individual parties to view the situation from the other party‘s viewpoint in a
truly cognitive sense (Chattananon &Trimetsoontorn, 2009). Empathy has a number of
analogous meanings – the golden rule, the ethic of care and an ―others‖ orientation.
Empathetic marketers are not insensitive to the needs and concerns of the consumer.
Empathy should not be equated with sympathy; marketers can be empathetic while still
driving a hard negotiates with customers (Murphy et al, 2007).

If customers have special requests or problems, they want employees to understand the
problem from their point of view. Zeithaml and Bitner (2006) argued that it is difficult to
imagine an organization would deliver caring, individualized attention to customers
independent of its employees. According to these authors, empathy implies that employees
will pay attention, listen, adapt, and be flexible in delivering what individual customers
need. Sivesan and Achuchuthan (2012) stated that empathy can be viewed as the ability to
share, understand and feel another person‗s feelings in a relational situation. Empathy is
defined as seeking to understand somebody else desires and goals and it is the ability to see
a situation from another person‗s perspective (Taleghani, 2011).

Responsiveness is Willingness to help customers and provide prompt service (Kheng,

2010). Responsiveness is the willingness to support customers and provide them
immediate services right on demands. However, (Kheng, 2010) described that
responsiveness is the degree to which customers perceive service providers‘ readiness to
assist them promptly. Therefore, showing sincerity and willingness to help customers are
some of the key issues in responsiveness. Again what was tested in respect of
responsiveness included devoted time to customers and efficient services. Responsiveness
has to do with the degree with which the selected banks were able to respond to the needs
and wants of customers. For a firm to be responsive, it must gain deeper understanding and
profiling of customer behavior, real-time customer information and loyalty, and
management at Point of Service. (Kheng, 2010)

Conflict handling: - The most important definition of conflicts by Deutsch (2001), states
that a conflict exists when incompatible activities occur. This means that the action of one
group or person attempting to reach his or her goals prevents, obstructs, interferes with or
injures the action of another group or person, or makes the action less likely or less

18
effective, in attempting to reach his or her goals. Many theorists on conflict handling
literature agree with this explanation, although there are some differences. (Deutsch 2001)

Bickmore (2004), on the other hand, focuses on the divergent wishes or needs of the
conflicting parties, which lead to disagreements and problems. In general, many theories
emphasize the interference of actions, interests, needs between parties which cause conflict
to occur. Conflicts can occur within one-person, group or nation or between two or more
persons, groups or nations (Deutsch, 2001). Conflict most often perceived as involving two
or more parties. Conflict handling defined as cooperative supplier in minimizing negative
results from significant potential involvement (Ndobisi &Wah, 2005).

Conflict is a mutual activity in which the choices of each person affect the other person. A
person who is not dependent upon another person‘s actions or interests has no reason for
conflict with that other person. When the parties are interdependent, the differences in their
actions and interests cannot coexist if both want to achieve their goals.
In summation, conflict entails the following elements:
(1) There are incompatible actions, interests, wishes or needs which interfere with each
other; (2) it includes two or more parties;
(3) the parties are interdependent of each other; and (4) at least one of the parties perceives
the situation as to be a conflict, as a result, conflict can be characterized as a circumstance
in which no less than one of two or more associated parties sees meddling and inconsistent
activities, intrigues, wishes or needs between them. The definition of conflict handling
used in this thesis is similar to the one defined by Ndubsi et al. (2007). It described as the
bank service provider‘s capacity to minimize the negative results of contentions. How a
consultant handles conflicts reflected in one‘s ability openly discuss a solution when a
problem rises up, show concerns and resolve differences quickly and satisfactory (Ndubsi
et al. 2007).

According to Santos and Fernandes (2008), stated three dimensions often considered when
discussing conflict handling:
1) The distribution of fairness, which often-considered being in the form of replacement or
refund
2) procedural fairness, that is, the process that takes place when complaint arises, or the
flexibility, response speed, accessibility and acceptance of responsibility and

19
3) The fairness in interaction, which is how the employee treats and communicates with
the consumer when problem, arises. This last dimension includes honesty, empathy,
courtesy and offering explanation or an apology.
When conflicts between customers and companies and their management arise, it can lead
to loss of consumer trust in the company (Santos and Fernandes, 2008). Ndubsi et al.
(2007) propose that when fights between a client and a service provider arise, a customer
may respond in different ways, such as leave the company, voicing the problem or remain
loyal. They further define conflict handling as ―the supplier‘s ability to belittle the negative
effects of patent and potential differences‖. The way a client is touched on by conflicts
depends on prior satisfied with the relationship, how much one has endowed in the
relationship and on the other alternatives available for one to choose from (Ndubsi et al.,
2007).

To handle conflicts efficiently, there must be open, truthful and frequent interaction (Berry,
1995) until acceptable, satisfactory resolution reached. A conflict is constructive if the
participants are all satisfied with the outcomes and feel that they have gained because of it.
In reality, a conflict is rarely only destructive or constructive, but it seems preferable for
both conflicting parties to strive for constructive consequences as much as possible.
Conflict also distinguished according to the relationship between the objective state of
affairs and the state of affairs as perceived by the conflicting parties (Deutsch, 2001).
There are six different types of conflict which as veridical, contingent, displaced,
misattributed, latent, and false conflict. Veridical conflict, also called „true conflict‟, exists
impartially and is supposed accurately by the conflicting parties. (Deutsch, 2001)

It is not contingent winning an easily transformed feature of the environment. For example,
a child wants to read a certain book and another child wants to read that book at the same
time as well. When there is not an additional copy of the book available, the children have
a ―true conflict‖. A contingent conflict exists when the conflict depends on readily
rearranged circumstances, but these not recognize by the conflicting parties. The preceding
example of a veridical conflict will be classify as a contingent conflict when there is
actually another copy of the book available, so both children can read the book at the same
time. In displaced conflict, the parties are arguing about something else than the actual
conflict. This relates to manifest conflict and underlying conflict in which the experienced

20
conflict is a manifest conflict and the conflict that not directly expressed is the underlying
conflict (Deutsch, 2001).

The manifest conflict usually expresses the fundamental conflict in some form. In
misattributed conflict, the conflict is between the wrong parties because one or both of the
parties misattribute something to the other. As a result, the conflict is usually about the
wrong issues. Latent conflict is a conflict that should be occurring but is actually not, for
example, when a person is not yet consciously experiencing the situation as a conflict.
False conflict is the occurrence of a conflict when there is no objective basis for it, because
of misperception or misunderstanding (Deutsch, 2001). The most preferable way to solve a
conflict is through constructive conflict resolution, because then all the participants are
satisfied with the outcomes of the resolution and feel they have gained something because
of the conflict (Deutsch, 2001). In constructive conflict resolution, the conflict should not
harm, but create benefits and positive outcomes for the relationship between the parties. In
other words, the conflict should create a win-win solution (Farrelly, 2003). Win-win
solutions are often possible given the fact that most conflicts involve disagreements of
means rather than ends; the parties perceive the conflict to be ―my way‖ versus ―your
way‖, while both parties strive for the same thing (Farrelly, 2003).
There are three possible processes for conflict handling.
1. Negotiation,
2. Mediation
3. Attribution
Negotiation is a process in which persons who have shared and opposed interests want to
come to an agreement and try to work out a settlement (Farrelly, 2003). Negotiation can be
handling in a distributive or an integrative manner. The distributive approach is based on
the belief that you can only maximize your own gain at the expense of the other. In
integrative negotiations, both the goal that one wants to reach and the relationship with the
other party is highly valued. Therefore, the parties seek to reach an agreement that ensures
that both parties fully achieve their goals and that any tensions and negative feelings are
resolved. When the disputing parties cannot resolve the conflict by negotiating themselves,
mediation can be an option. Mediation is the process in which an unbiased third party (the
mediator) assists disputants to negotiate an integrative resolution to their conflict
(Bickmore, 2002).

21
A common form of mediation is peer mediation in which the mediator is a peer of the
conflicting parties. The peer mediator is responsible for guiding the resolution process, by
assisting peers to communicate with one another and to negotiate a solution to their own
problems (Bickmore, 2002). Arbitration is the submission of a dispute to a disinterested
third party who makes a final and binding judgment as to how the conflict will be resolved.
Arbitration is commonly use as a last resort when negotiation and mediation have failed to
resolve the conflict. Learning how to arbitrate is, not a means of conflict resolution. In
arbitration, the arbitrator decides who is right, who is wrong, and what the solution should
be. Arbitration is also not a constructive approach to conflict resolution because it is likely
that at least one of the disputing parties does not agree with the solution and feels that s/he
has lost because of the conflict. In this study conflict handling will measured with factors
such as to avoid conflict, trying to solve problems before they occur, the ability to solve
problems in time of problem. As cited by Peyman, Freyedon, and Motreza (2013).

Communication A new idea of communication is an intuitive dialog between the

organization and its customers, which takes place during pre-selling, consuming and part
consuming stages. It has also described that communication as formal and casual sharing
of significant and auspicious data between.Communication- is all-formal and informal
exchanges that make meaningful and timely information exchange between buyer and
seller. Empirical evidence suggests that communication increases the degree of confidence
between alliances (Anderson and Lindestad, 1998; Morgan and Hunt, 1994). Bilata, (2018)
Opined that communication is responsible for building awareness in the early stage,
developing customer preference, convincing and encouraging the customers to make the
decision to purchase. In general, communications helps build trust by providing partners
with a mechanism that can be use to resolve disputes. In addition, it improves partners‘
ability to align their expectations and perceptions (Bilata, 2018).

Communication is an indispensable attribute in successful alliances and has thus been

described as a core competence in alliance building (Rule and Keown, 1998). Hutt et al.
(2000) noted that communication among boundary-spanning personnel produces a shared
interpretation of expectations and goals, and a common understanding of the processes and
responsibilities necessary to achieve those goals. Communication, as conceptualized by
Mohr et al. (1996), "comprises a combination of relationship building communication
attributes‖. These contain communication frequency, bi-directionality, formality, and

22
influence activities. By highlighting shared interests and common goals, collaborative
communication can generate volitional compliance between partners and thus bolster
relationship performance (Farrelly& Quester, 2003).

In summation, it improves partners‘ ability to adjust their expectations and perceptions.

The real significance of communication is getting the receiver and the sender tuned
together for a specific message. Communication happens when one individual exchanges
some justifiable information to someone else. It additionally incorporates the exchange of
considerations, assessments, assumptions, truths, and data between two or more persons.
The fundamental elements of a viable communication framework are keys for profitable
communication. The chief principles or attributes of a viable communication framework
are as follows:
 Adequate instructions of the beneficiary
 Clearness and honesty of message to passed on
 Reliability and consistency of the message
 Proper response or feedback
 To know the principle reason for the message
 Accurate plan of objectives
 Use of fitting medium to pass on the message legitimately
In this study Communication will measured with factors such as timely and reliable
information, providing information on new services and promises and accuracy in
information. As cited by, Peyman, Freyedon, and Motreza (2013).

2.2. Customer loyalty

Customer loyalty is the most imperative goal of implementing relationship-marketing

activities. Oliver (1998) Customers are central to all marketing activities all over the world.
Success and in turn profit is unthinkable without customers. Moreover, companies incur
millions of dollars to attract customers and make them loyal. With the intense competition
and increasing globalization of the financial markets, building customer loyalty has
become a critical strategy for most financial institutions. A customer always wants
something and expects that the bank should come up to the level to fulfill those needs
(Mishra et al., 2011). Individual clients need, can be satisfied by customizing the banks
product, service and communication. It is supported by Berndt et al. (2005) customization

23
is carried out by the organization in order to ensure that customer needs are met, to address
the specific needs and profile the customer, and organization also makes use of
personalization as part of this process. This would not only ensure better customer relations
but also loyalty among them, which is very critical and important in today‘s competitive
world (Agarwal, 2009).

Banks serving private customers seek to reduce defections by building relationship Loyalty
is an emotional relationship between the customers and the company. Consequently,
loyalty is measured by the customer relationship strength. According to the traditional
banks principals of Relationship Marketing think the customers loyalty as its key goal, are
going to be changed in to customer-based ones. In such dynamic situation, producing &
setting strategies, which result in making customers loyal, is so important. Customer
loyalty expresses an intended behaviour related to the service or the company. This
includes the probability of future regeneration of service contracts, how expected it
is that the customer changes patronage, how likely the customer is to make available
positive word-of-mouth, or the likelihood of customers providing voice. If real alternatives
exist, low management discovers the organization‘s lack of ability to satisfy its customers
passing through two feedback mechanisms: exit and voice (Hirschman 1970).

According to Bloemer & Kasper (1995), loyalty defined as true loyalty more willingly than
repeat purchasing behaviour, regardless of commitment. Zeithaml et al. (1996) states
loyalty is a multi-dimensional build and includes both positive and negative responses. On
the other hand, a loyal customer may not necessarily be a satisfied customer. Colgate et al.
(1996) also noted that it is not always the case that customer defection is the inverse to
loyalty, although Levesque and Mc Dougall (1993) cited in Iddrisu, (2011) recommended
that, ―still a problem is not solved; but around half of the customers would stay behind the
firm‖. This may be due to switching costs, lack of perceived differentiation of alternatives,
location constraints on choice, time or money constraints, habit or inertia that are not
related to loyalty (Bitner, 1990).

Customer loyalty is the effect of consistently positive emotional experience-based

satisfaction, which customers get from product or services. Company effort to satisfy the
consumer is intended to get consumers loyalty to a product, brand or services. Creating
customer loyalty is fundamental for company to maintain permanence of their business
because loyal customers are foundation for stability and growth in market share. In this

24
study, loyalty refers to the continuing patronage of a particular bank by a customer over
time (Ladhari et al., 2011).

According to Caruana and Malta (2002), a bank customer often develops an attitude
towards a purchasing behavior that is based on past experience. It is this past experience
that affects customer retention of the purchase or his/her desire to switch. Bearden and
Teel (1983) state that customer satisfaction is important as it guarantees purchase repetition
and customer loyalty. When a customer is loyal to a bank, he/she will stay with the same
bank, continuously using it, making purchase of new services with the bank, and
recommending the bank‘s services to others. Customer loyalty is frequently interconnected
with the readiness of customers to repeatedly purchase a good or service that is
accompanied by business organizations and hold favourable attitudes toward the
organization supplying the goods or services (Ismail, &Yunan, 2016,).

2.2.1. Customer loyalty in bank sector

Customer loyalty in banking has been a major concern to practitioners as a result of

severe competition and higher customer expectations. Customer loyalty is considered as a
very important link and aspiration to organizational success, profit and business
performance (Oliver, 1997). The consumers that demonstrate the greatest levels of
loyalty toward the product, or service activity, tend to repurchase more frequently. As a
result, loyal customers do not only add to the value of the business, but also allow business
to maintain costs lower than these associated with attracting new customers (Barroso and
Martin, 1999).

In addition, loyalty rather than satisfaction is becoming the favourite strategic goal in
today‘s competitive business environment (Oliver, 1999). One of the ways to improve
customer loyalty in banking is by focusing on offering excellent services and meeting the
needs of customer. Banks need to have a good understanding of their customer
performance with the purpose that appropriate marketing strategies directed towards
relationship building can be just beginning. Accordingly, a great deal of research attention
has focused on the classification of effective methods of aggressively enhancing loyalty. In
any case, the absences of capacity of banks to keep up remarkable client agitate elements
that add to the capacity of banks to influence the future business development. In this

25
circumstance, consumer loyalty as a key element in keeping up long pull client
connections, practices considered (Assefa, 2017).

Along these lines, enhance consumer loyalty for banks ought to be a key element in
keeping up a long haul client. In the managing an account part, a key component of
consumer loyalty nature of the relationship in the middle of client and supplier of items
and administrations, for example, banks. As a result in both item benefit quality and
customer relationship marketing is as a rule as an essential for attractive and keep
profitable clients. Oliver‘s (1997) viewpoint proposes that loyal customers go away
through four stages. First is acognitive sense (belief). For example, sales promotion or high
quality products of a firm for first- IME purchase consideration attracts a customer. To be
loyal, the customer must consistently confirm that his or her expectations about the goods
or services met. Second is the affective sense in which consumers are repeatedly satisfied
from purchasing decisions. Third is the cognitive stage that consumers have a behavioural
intention– committed deeply to buy. Customers have the desire to raise above obstacles,
such as, attraction of competitors or price increase by a firm, to achieve the actual purchase
behaviour (Oliver, 1997).

2.3. Relationship Marketing and Customer Loyalty

Today's world is one where customers have many options of product vendors, which
makes for a very precise customer. This means that customers have an increasing rate of
prospect and a decreasing level of tolerance. These and other major factors like intense
competition, undifferentiated products have resulted in the need for relationship marketing.
A number of authors like Yavas et al, 2004; Lang and Colgate, 2003; Jamal and Naser,
2002, have investigated the imperatives of relationship marketing in the financial/banking
sector. Relationship marketing is a new paradigm shift in marketing theory and practice
used in a number of industries such as in service industry to acquire and retain customers
and most importantly to make and maintain client relationship and loyalty (Gronroos,
2004). CRM is principally supported the idea that establishing a property relationship
with customers is that the cornerstone for getting loyal customers UN agency square
measure way more profitable than non -loyal ones (Dowling, 2002).

26
The goal of relationship marketing is to satisfy the customer in such a manner that he
becomes loyal to the company and is unlikely to switch to competitors (Baral & Bihari,
2009. Thus, loyalty leads them to retain with the organization. Relationship marketing
is about to make a great relationship with customers in order to make them buy from
company again and also persuade others to do the same. Endacott, (2004) listed five key
elements of relationship marketing; developing a core service or product around which to
build a customer relationship, customizing the relationship to the individual customer,
augmenting the core service or product with additional edges, pricing in a manner to
encourage loyalty, and marketing to employees so that they will perform for customers.
The primary goal of relationship marketing is to build and maintains a base of committed
customers who are profitable for the organization. Relationship marketing recognizes that
it is more profitable to retain and grow business with existing customers than to keep
winning new ones and therefore has customer retention as its main objective. To build
customer loyalty, companies try to improve customer satisfaction, which strengthens bonds
by adding more value to the core product (the product quality is improved; supporting
services are included into the offering and so on.) (Endacott, 2004).

According to (Gronroos 2000) client satisfaction is one in all the foremost necessary
criteria for client loyalty. Customer satisfaction indicates how well a product use
experience compares to the buyers value expectations and the value expectations of
competitors. Customer loyalty through one on one-customer relationships is one in all the
foremost necessary real assets with measurable semi permanent worth for each giant and
tiny corporations In a study conducted by Gabarino and Johnson (1999), in a consumer
environment in which customers receive highly similar services, like in the banking sector,
the future intentions of low relational customers was found to be driven by overall
satisfaction, whereas the future intensions of the highly relational customers was found to
be driven by trust and commitment(Gabarino and Johnson 1999).

In today‘s hypercompetitive surroundings, call manufacturers should perceive the varied

aspects of relationship promoting, as they're imperative for the effective relationship
development between the firm and also the client, and for implementing effective
relationship marketing strategies (Dowling, 2002). Jamal and Nasser (2002) points out
that an increase in a retail bank‘s quality service results in an increased customer loyalty
and retention. Both product and service quality are essential for customer satisfaction and

27
retention. If organizations try to improve relationships with their consumers it can leads
to have more loyal interactions (Jamal and Nasser, 2002).

2.4. Empirical review of the literature

The following studies reviewed to familiarize the topic of customer relationship marketing
independently to demonstrate the originality of this study and to reveal the gap it will fill in
the customer‘s loyalty research. Shiferaw (2011) explored the impact of relationship
marketing on customer loyalty in the banking context. A survey of customers of bank of
Abyssinia conducted to determine the significance and influence of the underpinnings of
the relationship marketing such as trust, commitment, conflict handling, and empathy on
customers‟ loyalty in the banking sector. The relationship between the client and bank
influenced by the quality of the service the client receives from the banks they operate with
(Crosby et al., 1990). Much emphasizes is therefore placed on the need to maintain high
service levels since all the banks products are easily imitation and all the banks are
competing for the same customers. (Crosby et al., 1990)

Meseret (2015) cited kassa 2017 explored the impact of relationship marketing on
customer loyalty in commercial bank of Ethiopia. A survey of customers of the bank were
conducted to determine the significance and influence of the underpinnings of the
relationship marketing such as trust, commitment, conflict handling, and empathy on
customers‘ loyalty in commercial banks of Ethiopia. (kassa 2017)

According to Gronros (2000), relationship marketing is the ongoing process of identifying

and creating new value with individual customers and benefits of a lifetime of association.
In order to validate the result of the present study, the researcher also tried to include the
following empirical studies for customer relationship marketing:
According to study conducted by Sarwar, Abbasi, &Pervaiz, (2012) the result
shows that the customer trust have significant association with customer loyalty.
According to the study conducted by Sivesan and Achuthan (2012) showed that
trust dimension of RM is highly correlated with customer loyalty.
The study conducted by Shiferaw (2011), on the impact of relationship marketing
on customer loyalty in the case Abyssinia Bank, he also found that trust dimension

28
 has a significant positive relationship with the dependent variable customer
loyalty.(unpublished source from Addis Ababa University).
The study conducted by Sivesan and Achuthan (2012) showed that, commitment
dimension of RM is highly correlated with customer loyalty. Kurniati, Suharyono
& Arifin, (2015) also found the same result that, commitment positively related
with the dependent variable customer loyalty.
Peyman, Freyedon, Motreza (2013), according to their study on the impact of
relationship marketing on customer loyalty found that, communication as a
predictor variable significantly correlated with customer loyalty. Similarly the
study conducted by, Laith and Nahla (2010), showed that the two variables (i.e.
Customer loyalty and communication), are positively correlated at the significant
level.
The study conducted by Sivesan and Achchuthan (2012) showed that conflict
handling dimension of RM is highly correlated with customer loyalty. According to
Kurniati, Suharyono, &Arifin, (2015), stated on their result that, Conflict handling
positively related with customer loyalty at a significant level. In addition,Peyman J,
Freyedon, Motreza (2013), according to their study on the impact of relationship
marketing on customer loyalty found that, conflict handling as a predictor variable
significantly correlated with customer loyalty.
The many findings of the research indicated that, customer relationship marketing has
impact on customer loyalty. Build and maintain customer loyalty over a long period it is
necessary orientation to build and maintain the Relationship marketing. To build and
maintain Relationship marketing is necessary to support the level of trust, commitment,
empathy, responsiveness, conflict handling and communication that harmonious and
mutually beneficial among customers or business partners as well as for businesses.
Elements of the theoretical and empirical results of the study states there are linkages in
enhancing customer loyalty.

2.5. Conceptual framework

Nwokah (2012) explains that conceptual framework is an abstract representation,

connected to the research project‗s goal that directs the research design. The conceptual
framework indicates the vital process, which is useful to be evidence for the direction of
the study. The study shows the relationship between the six customer relationship

29
marketing dimensions (trust, commitment, empathy, responsiveness, conflict handling and
communications) and customer loyalty. Most studies confirm that there is a relationship
between customer relationship marketing and customer loyalty. Sin et al., 2002 support the
above argument as CRM and RM focused on individual buyer-seller relationships, accept
that these relationships are longitudinal in nature, and that both parties benefit in the
process.

Figure 1 Framework Research Concepts

Customer relationship
marketing dimension

Trust

Commitments
Customer
loyalty
Empathy

Responsiveness

Conflict handling

Communication

Source: trust, communication, commitment and conflict handling from Eshetu, (2015), and
also empathy, and responsiveness from Solomon, (2014).

30
CHAPTER THREE: RESEARCH METHODOLOGY

Research methodology is a systematic way to analyze a problem. It is a science of studying

how research too carried out. (S. Rajasekar, P. Philominathan, V. Chinnathambi, 2013).
The research design and methodology section was clearly define the Research Approach,
the research design, the sample and sampling techniques, sources and instruments that have
been utilized in collecting data, the procedure of data collection and finally the method of
data analysis were intensively presented.

3.1. Description of the Study Area

Gondar is a city found in Amhara region, located in the northern part of Ethiopia, at
12036‘24.9‖ N and 37027‘58.2‖ E and far away from Addis Ababa 732 km, Bahir Dar
180km and border of the Sudan 220km. It is situated at elevation ranges from1800 meters
above sea level around the Keha Rever to 220 at Goha Ridge. According to the 2007
population and housing census of Ethiopia the total population of Gondar city was 206,987
and According to the World Population Review in 2019 are about 324,000. Agriculture is
one of the dominant economic sectors in Gondar city. Trade based on wholesalers and
retailers business, is the second major economic activity in and around Gondar. The other
major economic activity in the area is tourism.
Figure 2 map of study area

Source: Gondar City Administration Culture and Tourism Office, 2018

3.2. Research Design

31
According to Chopra et al. (2012), research design is the conceptual structure within which
research conducted. The function of research design is to provide for the collection of
relevant information with minimal expenditure of effort, time and money (Kothari, 1985).
From different types of research designs descriptive and explanatory type of research
design was employed as a main research design for this study to the realization of planned
objectives.

Descriptive research looks at individuals, groups, methods and materials in order to

describe, compare, contrast, classify, analyze and interpret the entities and the events that
represent the a diversity of fields of assessment. It aims to describe the state of affairs, as it
exists. Explanatory research, also aims at establishing the cause and effect relationship
between variables. The reason behind using descriptive research design is because the
researcher is paying attention in describing the existing situation under study. (Creswell,
2009) stated that the descriptive method of research is a technique of gathering information
about the present existing condition.

The researcher tried to explain the effect of CRM dimension such as; trust commitments,
empathy, responsiveness, conflict handling, and communication with customer loyalty by
using multiple regression analysis. The reason also would be used explanatory research
design in this study was to explaining, understanding, predicting and controlling the
relationship between variables.

3.3. Research Approach

The most common Research Approachs are the quantitative and qualitative approaches.
According to Bryman & Bell (2003), stated the qualitative method is collecting, analyzing,
and interpreting data by observing the behavior of people, at the same time as quantitative
research is objective and measurable. The main purpose of the study was to determine the
effect of customer relationship marketing on customer loyalty in case of CBE, awash and
Dashen banks.In line with the objectives of the study, both qualitative and quantitative
research approaches would be applied.

32
3.4. Population and Sampling Design

3.4.1. Population

Schilndler (2003) cited William, Appiah, &Botchway, (2016) define population as the total
collection of elements that a researcher wishes to make some inferences. The study would
conduct on customers of commercial banks found in Gondar city. There are 18
commercial banks in Ethiopia including the two government banks, from these the
researcher was only focus on three banks. The selections of these banks utilized in this
study were one from the public bank and two from the oldest and the biggest privately
owned Banks. The target population for the study were those who are customers of CBE,
Dashen and Awash banks in Gondar city.

3.4.2. Sampling Design

Sampling design is a procedure used in selecting a balanced representation from the total
sample size that is the population under study. Due to constraints in time and financial
resources, sampling enables increased speed of data collection, lower cost and accuracy of
results. For this study, the researcher used non-probability sampling design.
3.4.2.1. Sampling Frame
A sampling frame is used to define a researcher‘s population of interest (Fowler, 2002).
Sample frame obtained from customers of CBE, Dashen and Awash banks of Gondar city.
A sample is a small proportion of the entire population that expected to represent the entire
population. It is difficult to get information from entire population and hence a sample was
necessary.
3.4.2.2. Sample Size and Sampling procedure
A sample size is a smaller set of the larger population. Due to geographical dispersion of
population, time constraints and resource limitations, sample drawn from the entire
population. Due to large number of customers or population, would be used the equation
developed by (Cochran, 1977) to determine the sample size of the population.
n = (Z2*p*q)/e2
Where n the total number of sample required
Z=the critical table value of the confidence level (z=1.96)
p=the population variability (p=0.5)
q=the probability of the population not to be occurred (q=1-p=0.5)

33
e =the maximum allowed error i.e. (e =0.05)
Therefore, the researcher will take the maximum allowed error as 5% at a confidence
interval level of 95% and the moderate population variability interval is 0.5(p=0.5) because
this allows the researcher a largest sample size and the minimum error(q=0.5).
n= (1.96)2*0.5*0.5)/0.0025 which is approximated 384 so; the researcher was distribute
384 +10% questionnaires to have a better sample size and to increases accrues rate.

Based on the data obtained from CBE, Awash and Dashen bank Gondar district which
shows number of branch each banks have in Gondar city, the researcher tried to give a
quota for banks based on their branch share related to the total banks selected for the study.
So, the total sample of 384+38 each bank has a quota based on their branch share which is
described in the table below.

Table 1 Sample Quotas

No Name of bank Year of No of branches Share of Population Sample

Establishmen in Gondar branches proportion quota
t (%) (100%=384)
1 Dashen bank 1995 5 23 23%= 97
2 Awash bank 1994 4 18 18%= 76
3 CBE 1963 13 59 59%= 249

Total 22 100 100% 422

Source: CBE, Awash and Dashen bank Gondar district

Population proportion example 100%=422 422*23 = 100X
23%=? X 422*23/100= 97similar for the other

3.4.2.3 Sampling Technique

Sampling technique is a process used to select elements from the entire population.
According to Creswell, (2009) Sampling technique is the way of drawing inference about a
population without studying the entire population under study. The researcher used a non-
probability sampling technique; specifically Purposive-sampling techniques to select the
three banks from all banks exist in Ethiopia. And also convenience sample technique was
applied to select elements from the population of interest. Convenience sampling is one

34
particular type of non-probability sampling method that relies on data gathering from
population members who are easily available to participate in the study.

3.5. Source of Data

Both primary and secondary data sources were used in order to gather relevant information
in the study. Primary method of data collection made through structured questionnaires and
interview, from customers of CBE, Awash, and Dashen Banks through questionnaires, and
collected from branch managers and assistant managers of the Banks by interview. The
secondary sources of data‘s were collected form related books, publications, articles,
journals and websites etc. are also used.

3.6. Data collection tools

Data collection is the procedure of gathering and measuring information related to

study variables in a recognized and systematic fashion that helps in answering
research questions, aid in testing hypotheses and evaluating outcomes (Konar,
2011). The researcher were used a structured questionnaire which contains close ended
items with five- point likert scale and interview‘s. A self-administered questionnaire is
the only way to draw out self-report on peoples‘ opinion, attitudes, beliefs and values
(Gall, Gall, & Borg, 2007). The questioner was prepared in line with the objectives of
the study mentioned above and it was organized in two sections. The first section was
designed to obtain the demographic information of the respondents and the overall the
existing customer relationship marketing practice in CBE, Dashen, and Awash banks.

The second section inquired how respondents perceive the customer relationship marketing
dimensions with customer loyalty and its effects. A five- point likert scale questionnaire
were distributed to customers ‗of CBE, DB, and AIB and interview was made to the
branch managers and assistance managers of theirs.

35
3.7. Validity and Reliability test

3.7.1. Validity

Validity defined as how much any measuring instrument measures what it intended to
measure. Bryman and Bell (2003) recommended that the very important issue of
measurement validity relate to whether measures of concepts really measure the concept or
not. Establishing the validity of the scores in a survey helps to identify whether an
instrument might be a good one to use in survey research (Creswell, 2009). To maximize
content validity, a comprehensive literature review was done in order to get an overall
comprehension on the effect of customer relationship marketing dimensions on customer
loyalty of customers more specifically. Validity was made certain by pilot testing the
questionnaire in order to track obscurities and inconsistencies and used questions already
validated in earlier research. All of the questions was based on well-grounded theory and
carefully worded in order to ensure that the vocabulary and formulation of the questions
would be correctly understood by the respondents. So, the instrument is valid and tested.

3.7.2. Reliability test

Cronbach‘s alpha is a measurement used to evaluate the reliability, or internal consistency,

of a set of scale or test items. In other words, Cronbach‘s alpha is one way of measuring
the strength of that reliability. Cronbach‗s alpha is an index of reliability associated with
the variation accounted for by the true score of the ―underlying construct (Nunnaly, 1978)
cited by Abera, (2016). In order to measure each factor‘s internal consistency reliability,
the Cronbach‗s alpha statistics was used. Cronbach alpha coefficient represents the average
of all possible split-half coefficients resulting from different ways of splitting the scale
items. Nunnaly (1978) has stated that 0.5 is a sufficient value, while 0.7 is a more
reasonable Cronbach‗s alpha. The results were extracted as table 4.1 and according to this
theory the results of all variables are more than 0.7, so all questions are reliable ones.

3.8. Data Analysis Methods

After the necessary data collected from the respondents by using questionnaires and
interviews are organized, filled, tabulated and coded, then the collected data has to be
changed and interpreted in to meaningful information, figure and statement. So, it was

36
analyzed, processed and interpreted according to the nature of data. Statistical Package for
Social Science (SPSS) version 20.00 software was employed to analyze and present the
data through the statistical tools used for this study, namely descriptive analysis,
correlation, multiple regression analysis and independent sample t-test.

A. Multiple Regression Analysis

Multiple regression analysis was used to investigate the effect of customer relationship
marketing dimensions (trust, Commitments, empathy, responsiveness, Conflict handling,
and communication) on customer loyalty.

Regression functions

The equation of multiple regressions on this study was generally built around two sets of
variable, namely dependent and independent variables. The basic objective of using
regression equation is to make the researcher more effective at describing, understanding,
predicting, and controlling the stated variables.

Regress customer loyalty on the customer relationship marketing dimensions

Y = β1 + β2X2 + β3X3 + β 4X4 + β 5X5 + β6X6+ β7X7

Where Y is the dependent variable- customer loyalty, trust =X2, Commitments =X3,
empathy=X4, responsiveness =X5, Conflict handling =X6, and communication=X7 are the
explanatory variables (or the regresses).

β1 is the intercept term- it gives the mean or average effect on Y of all the variables
excluded from the equation, although its mechanical interpretation is the average value of
Y when the stated independent variables are set equal to zero. β2, β3, β4, β5, β6, and
β7refer to the coefficient of their respective independent variable which measures the
change in the mean value of Y, per unit change in their respective independent variables.

B. Pearson Correlation analysis

Pearson's correlation coefficient is the covariance of the two variables divided by the
product of their standard deviations. The form of the definition involves a "product
moment", that is, the mean (the first moment about the origin) of the product of the mean-
adjusted random variables; hence the modifier product-moment in the name. In this study

37
Pearson‘s correlation coefficient was used to determine the relationships between customer
relationship marketing dimension (trust, Commitments, empathy, responsiveness, Conflict
handling, and communication) and customer loyalty.

C. Descriptive analysis

Descriptive statistics are very important because if we simply presented our raw data it
would be hard to visualize what the data was showing, especially if there was a lot of it.
Descriptive statistics therefore enables us to present the data in a more meaningful way,
which allows simpler interpretation of the data (Nicholas, 1990).

The descriptive statistical results were presented by tables, frequency distributions and
Percentages to give a condensed picture of the data. This was achieved through summary
of statistics, which includes the means and standard deviations values which are computed
for each variable in this study.

3.9. Ethical Consideration

The researcher maintained scientific objectivity throughout the study, recognizing the
limitations of his competence. The aim of this research was investigated the effectiveness
of customer relationship marketing on customer loyalty of commercial banks in Ethiopia in
case of CBE, dashen and awash banks in Gondar town. To maintain the confidentiality of
the information provided by the respondents, the respondents were instructed not to write
their names on the questionnaire and assured of that the responses would be used only for
academic purpose and kept confidential. Brief descriptions of the fundamental objectives
or purpose of the study was clearly given in the introductory part of the questionnaire so as
to motivate them and participate in the study and provide relevant information about the
company under study. Finally, respondents were included the study was based on their
own free will, and also text belonging to others authors that have been used in any part of
this study have been fully referenced with reference page.

38
CHAPTER FOUR: - RESULT AND DISCUSSION

4.1 Introduction

The primary focus of the study is to evaluate the effect of customer relationship marketing
on customer loyalty: comparative study of public and privet owned banks in Gondar city,
such as Awash bank, and dashen bank from privet and commercial bank of Ethiopia from
public. For this reason, the study followed both quantitative and qualitative research design
as its plan of action. Therefore, this chapter presents the analysis for the responses that
were received from the questionnaires distributed to customers of the selected banks and
interview from managers of the selected banks on their customer relationship marketing
and customer loyalty practices. The researcher was able to get back four hundred eighteen
(418) out of four hundred twenty two (422) questionnaires administered to the customers
of the sampled banks giving a 99.05% response rate, this which increased the quality as
well as the generalizing of the study. Four (4) questionnaires were not returned at all and
thus not included in the analysis. At the end of the editing, all the returned questionnaires
were successfully processed for the analysis.

The questionnaire were developed in five scales ranging from previously suggested and
validated measures in many researches and carefully restated to reflect the characteristics
of customer relationship marketing and customer loyalty in banking sector, five to one;
where 5 represents strongly agree, 4 agree, 3 neutral , 2 disagree, and 1 strongly disagree.
To analysis the collected data in line with overall objective of the research undertaking,
statistical procedures were official using SPSS 20.00.

4.2 Reliability test result

Reliability analysis helps to test the internal consistency of the measures before distributing
the questionnaire to the respondents using Cronbach‘s alpha as it is the most frequently
used reliability measure by researchers to test the internal consistency instruments.
Cronbach‘s alpha is a reliability coefficient that indicates how well the items in a set are
positively related to one another. It is computed in terms of the average inter correlations
among the items measuring the concept. Reliability is calculated in such a way that it
represents the reliability of the mean of the items, not the reliability of any single item.

39
This coefficient can hold a value of 0 to 1 and the result of 0.7 and above implies an
acceptable level of internal reliability (Shifera, 2011). The result of reliability test for the
questionnaire is shown in the following table. The result in table 2 below revealed that, the
Cronbach‘s alpha for the seven customer relationship marketing variables is 0.954, and the
test result of individual variables are between 0.708 and 0.931.Therefore, this indicated
that the data is reliable and acceptable, so can be used for further analysis.
Table 2 Result of Reliability analysis for the questionnaire

No Item Number of item Cronbach‘s Alpha

1 Trust 8 0.852
2 Commitment 5 0.776
3 Empathy 3 0.708
4 Responsiveness 5 0.838
5 Communications 8 0.872
6 Conflict handling 5 0.863
7 Customer loyalty 9 0.931
8 Overall reliability analysis 43 0.954

Source: SPSS analysis result based on questionnaire survey, 2019

4.3 Demographic information of respondent

In this section characteristic of respondents is summarized to know the general

demographics of the respondents based on Gender, Age group, educational background,
Account type they have, Sector of the bank they are using, their income level, occupation
and Year of banking relationship.

Table 3 customers of the all banks that included in the research

In which Bank do you have an account?
Type of the bank Frequency Percent Valid Percent Cumulative Percent
Commercial bank of
247 59.1 59.1 59.1
Ethiopia
Dashen bank 96 23.0 23.0 82.1
Awash bank 75 17.9 17.9 100.0
Total 418 100.0 100.0
Source: SPSS analysis result based on questionnaire survey, 2019
40
4.3.1 Gender of respondents

The female respondents of government owned banks constituted the largest share of the
gender composition 136(55.1%) and 111(44.9%) were males, however, in private owned
banks the male respondents constituted the largest share of the gender composition
109(63.7%) and 62(36.3%) were females. This result shows the increasing of women‘s
participation in the country‘s economy in general and in business activities in particular,
and also shows majority of females use government owned banks more than private owned
banks when compare the collected data.

Table 4 genders of public and private owned banks respondent

Variables Category Frequency Percentage Cumulative percentage

Genders of public male 111 44.9 44.9

female 136 55.1 100.0

Genders of private male 109 63.7 63.7

female 62 36.3 100.0

Source: survey data, 2019

4.3.2. Age of respondent

The table 5 shows that majority of respondents were in the age category of 18-28 years old
representing the highest percentages among respondents with 191(77.3%) and 73(42.7%)
whereas followed by respondents at the age between 29-39 years with 32(13.0%) and 46
(26.9%) and 12(4.9%) & 21(12.3%) were between 40-50 years old. The remaining of the
respondents 8(3.2%) and 25(14.6%), 4(1.6%) and 4(2.3%), finally 0% and 2(1.2%) were
below 18 years old, 51-60 and above 61 years old respectively.

This indicates that the majority of respondents were in the effective age bracket of the
population has more banking usage culture, which may have implication to the banks that
it has a lot of young people who may continue to do business with the bank for a long time
if they are satisfied with the banks‟ relationship marketing efforts.

41
Table 5 Age of public and private owned banks respondents

Variables Category Frequency Percentage Cumulative percentage

Age of public Below 18 4 1.6 1.6
owned 18-28 191 77.3 78.9
respondents 29-39 32 13.0 91.9
40-50 12 4.9 96.8
51-60 8 3.2 100.0
Age of private Below 18 4 2.3 2.3
owned 18-28 73 42.7 45
respondents 29-39 46 26.9 71.9
40-50 21 12.3 84.2
51-60 25 14.6 98.8
Above 61 2 1.2 100.0

4.3.3. Educational level of respondents

As regards of educational level of respondents, the large proportions of respondents118

(47.8%) and 58(33.9%) are first degree holders, 69(27.9%) and 40 (23.4%) diploma,
25(10.1%) and 19 (11.1%) masters and above, 19(7.7%) and 35(20.5%) are secondary
school completed, 8(3.2%) and 10(5.8%) were certificate holder and the least were primary
school completed 6(2.4%) and 6(3.5%) followed by informal schooling 2(0.8%) and
3(1.8%).

This indicates that, Majority of respondents is literate, an educated person is more aware of
his surroundings. So, this high literacy level of respondents helped the researcher in getting
good quality, knowledgeable and quality responses from respondents. And also, this
suggests that, the effect of customer relationship marketing on customer loyalty can better
be assessed because of information collected from this kind of customers were more
reliable. This may have implication to the banks that it has a lot of educated people who
may continue to do business with the bank for a long time if they are satisfied with the
banks‟ relationship marketing efforts and they get high treatments.

42
Table 6 Educational levels of public and private owned banks respondents

Variables Category Frequency Percentages Cum. Percentages

Educational Informal schooling 2 0.8 0.8
level of public primary 6 2.4 3.2
owned secondary 19 7.7 10.9
respondents Certificate 8 3.2 14.2
Diploma 69 27.9 42.1
Degree 118 47.8 89.9
Masters and above 25 10.1 100.0
Educational Informal schooling 3 1.8 1.8
level of private primary 6 3.5 5.3
owned secondary 35 20.5 25.8
respondents Certificate 10 5.8 31.6
Diploma 40 23.4 55.0
Degree 58 33.9 88.9
Masters and above 19 11.1 100.0
Source: survey data, 2019

4.3.4. Occupation of the respondents

Table 7 shows almost half of the respondents‘ occupations is students which is

122(49.4%), followed by 92(37.2 %) and 20(22.1%) of the respondents are working in
Government sector and Private sector respectively, whereas 13(5.3%) of the respondents
were having their own business in government owned banks. Also the table demonstrates
that 49 (28.7%) were respondents ‗that have their own business followed by government
and private sectors employees the rest 40(23.4%) were students in private owned banks.

43
Table 7 occupation respondents of public and private owned banks

Variable Category Frequency Percentage Cum. Percentage

Occupations of Students 122 49.4 49.4
public owned Government sectors 92 37.2 86.6
respondents Private sectors 20 8.1 94.7
Own business 13 5.3 100.0
Occupations of Students 40 23.4 23.4
private owned Government sectors 41 24 47.4
respondents Private sectors 41 24 71.4
Own business 49 28.7 100.0
Source: survey data, 2019

4.3.5. Monthly income of the respondents

As table 8 shows 152(61.5%) of the respondents had income of below 2500 birr and
36(14.6%) had income of between 2500-4000 followed by 34(13.8%) and 25(10.1%)
respondent had between 4000-6000 and above 6000 respectively in public owned banks.
However, 53 (31%) of the respondents had incomes of above 6000 birr followed by 52
(30.4%) of the respondents earn an income range of between 4000-6000 monthly, and the
rest 45(26.3%) and 21(12.3%) earn an income of below 2500 and between 2500- 4000
respectively in private owned banks.

Table 8 monthly incomes of respondents of public and private owned banks

Variables Category Frequency Percentages Cum. Percentages

Monthly income Below 2500 152 61.5 61.5
of public owned
respondents 2500-4000 36 14.6 76.1
4000-6000 25 10.1 86.2
Above 6000 34 13.8 100.0
Monthly income Below 2500 45 26.3 26.3
of private owned
2500-4000 21 12.3 38.6
respondents
4000-6000 52 30.4 69.0
Above 6000 53 31 100.0

Source: survey data, 2019

44
4.3.6. Years of relationship respondents with the bank

As it is shown in the table 9, 20(8.1% ) and 18(10.5%) of the respondents have been
customers of the banks below 1 year, 106(42.9%) and 53(31.0%) have been customer of
the bank for about 1 -4 years, 74(30.0%) and 40(23.4% ) have been customer of the banks
for about 5-7 years, 24(9.7%) and 42(24.6. %) of the respondents have been customer of
the bank for about 8-10 years and the rest 23(9.3%) and 18(10.5%) of the respondents are
above 10 years.
Almost more than half of the respondents have more than 5 years‘ service relationship with
the banks, which gives a good contribution to the objectives of the study in reflecting
loyalty.

Table 9 years of relationship respondents with public and private owned banks

Variables Category Frequency Percentage Cum. Percentages

For how many Less than 1 year 20 8.1 8.1
years you have 1-4 106 42.9 51.0
used the Bank
5-7 74 30.0 81.0
services? For
public owned 8-10 24 9.7 90.3
Above 10 years 23 9.3 100.0
For how many Less than 1 year 18 10.5 10.5
years you have 1-4 53 31.0 41.5
used the Bank
5-7 40 23.4 64.9
services? For
private owned 8-10 42 24.6 89.5
Above 10 years 18 10.5 100.0
Source: survey data, 2019

4.3.7. Type of account the respondents used

As it is shown in the table 10, majority of respondents were saving account holders
170(68.8) and 120 (70.2%) followed by the respondents that were have current account
holders 59 (23.9%) and 32(18.7%), and the remaining 18(7.3%) and 19(11.1%) of
respondents have fixed accounts.

45
Table 10 type of account the respondents used in public and private owned bank

Variables Category Frequency Percentage Cum. Percentage

What type of account Saving account 170 68.8 68.8
do you have with your Current account 59 23.9 72.7
bank? For public Fixed account 18 7.3 100.0

What type of account Saving account 120 70.2 70.2

do you have with your Current account 32 18.7 88.9
bank? For private Fixed account 19 11.1 100.0
Source: survey data, 2019

4.4. Descriptive statistics

In this section analysis is done using the descriptive statistics by computing the grand mean
and Standard Deviation score of each dimension. The below table is shows the descriptive
statistics of independent and dependent variables.

As shown from the below table 11, the dimension trust has superior value in relation to the
other six dimensions, by the mean score of 3.97(Std. Deviation 0.795). This indicates that
most of the respondents highly agreed that the banks are good in trustworthiness.
Commitment as a dimension has scored 3.63 grand mean (Std. Deviation 0.841), which
indicated that most of the respondents agree on the commitment and flexibility of the
banks in serving customer need for a continuous relationship. Empathy and communication
dimension display the list score in relation to other variables with mean value 3.58 (Std.
Deviation of 1.066) and mean value 3.59 (Std. Deviation of 0.907) respectively implying
that the average respondents agreed on the good practice of the banks in empathy and
communications with their customers.

Concerning to the responsiveness and conflict handling has the mean 3.698 (Std. Deviation
0.955) and mean value 3.645 (Std. Deviation 0.948) respectively, this shows that good
number of respondents agreed on the statements that indicate banks give a good attentions
to their customers, always try to understand customers‟ feeling and solve their problems
without any conflicts and give response in short time to their customers. Mean value 3.577

46
(Std. Deviation of 1.045) of the dependent variable, Loyalty, indicated that majority of
respondents are loyal to their bank according to the collected data.

Table 11 descriptive statistics of customer relationship marketing dimensions and

customer loyalty
Descriptive Statistics
N Minimu Maximu Mean Std. Skewness Kurtosis
m m Deviation
Stati Statistic Statistic Statistic Statistic Statistic Std. Statist Std.
stic Error ic Error
trust 418 1.00 5.00 3.9680 .79500 -1.208 .119 1.347 .238
commitment 418 1.00 5.00 3.6311 .84143 -.724 .119 .232 .238
empathy 418 1.00 5.00 3.5829 1.06598 -.692 .119 -.370 .238
responsiveness 418 1.00 5.00 3.6986 .95543 -.848 .119 .081 .238
communication 418 1.00 5.00 3.5900 .90732 -.606 .119 -.355 .238
conflict
418 1.00 5.00 3.6445 .94786 -.826 .119 .058 .238
handling
customer
418 1.00 5.00 3.5771 1.04534 -.879 .119 -.276 .238
loyalty
Valid N
418
(listwise)

Source: SPSS analysis result based on questionnaire survey, 2019

4.5. Correlation

Based on the questionnaire which was filled by the customers of Dashen bank and Awash
bank from private bank and commercial bank of Ethiopia (public bank), the following
correlation analysis was made. Correlation is a statistical technique that can show whether
and how strongly pairs of variables are related. To examine the relationship between
dependent variable (customer loyalty) and the independent variable (trust, commitment,
empathy, responsiveness, communication and conflict handling), Pearson correlation
coefficients were calculated. The level of association as measured by Pearson‗s coefficient
falls between -1.0 and +1.0, which indicates the strength and direction of association
between the two variables. The interpretation of the result as follows; a correlation result
between 0 to 1 implies positive relationship, 0 for no relationship, 1 for perfect positive

47
 relationship, 1 for perfect negative relationship and between 1 to 0 show the existence of
negative relationship (Berndt et. al., 2005).

General rule of thumb concerning r value; if r values between 0.00-0.19 indicate ―very
weak‖ correlation, between 0.20-0.39 ―weak‖ correlations, between .40-.59 ―moderate‖
correlations, between 0.60-0.79 ―strong‖ correlations and between 0.80-1.0 indicate ―very
strong‖ correlations (Evans,1996).
As indicated table 12, the results of the correlation between these variables are shown a
strong correlations and positive relationship between relationship marketing and customer
loyalty, and the test is significant at the 0.01 level (r=0.738, p<0.01)

Table 12 correlation of relationship marketing and customer loyalty

Correlations
customer customer relationship
loyalty marketing
Pearson Correlation 1 .738**
customer loyalty Sig. (2-tailed) .000
N 418 418
Pearson Correlation .738** 1
customer relationship
marketing Sig. (2-tailed) .000
N 418 418
**. Correlation is significant at the 0.01 level (2-tailed).

4.5.1. Correlation analysis between relationship marketing dimensions and customers

„loyalty

As can be observed from the below table 13 the Person correlation result, the correlations
between the dependent and independent variables were statistically significant. In addition,
the statistical evidence depicted that empathy, and responsiveness have moderate positive
correlation with customer loyalty with Person correlation coefficient of 0.580, and 0.592
with p<0.01 respectively. The others variables namely; trust, commitment, conflict handling
and communications also have strong correlations with customer loyalty with person
correlation coefficient of 0.614, 0.605, 0.689 and 0.665 with p<0.01 respectively. These
indicate that all relationship marketing dimensions under this study have moderate and
strong positive associations with customer loyalty in commercial banks of Ethiopia. So, a

48
 positive improvement with regard to trust, commitment, empathy, responsiveness,
communication, and conflict handling by the banks also increase customers‟ loyalty.

Table 13 correlation between customer relationship marketing dimensions and customer

loyalty
Correlations
trust commit empa responsive conflict customer
ment thy ness communica handling loyalty
tion
Pearson
1 .685** .612** .640** .624** .634** .614**
Correlation
trust
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
Pearson .685
** 1 .657** .581** .605** .574** .605**
Correlation
commitment
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
Pearson .612
** .657** 1 .746** .726** .586** .580**
Correlation
empathy
Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
Pearson .640
** .581** .746** 1 .743** .606** .592**
responsivenes Correlation
s Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
Pearson .624
** .605** .726** .743** 1 .713** .665**
communicati Correlation
ons Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
Pearson .634
** .574** .586** .606** .713** 1 .689**
conflict Correlation
handling Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
Pearson .614
** .605** .580** .592** .665** .689** 1
customer Correlation
loyalty Sig. (2-tailed) .000 .000 .000 .000 .000 .000
N 418 418 418 418 418 418 418
**. Correlation is significant at the 0.01 level (2-tailed).

Source: SPSS analysis result based on questionnaire survey, 2019

49
4.6. Assumptions of parametric testing

A few of the most common assumptions in statistics are normality, linearity, and
Homogeneity of variances.

4.6.1. Normality test

The variables in the multiple regressions models must follow normal distributions. In order
to confirm the normality of the data collected, descriptive statistics were formed. There are
several tests for assessment of normality and shape of a data distribution such as skewness
and kurtosis test which were used in present study. Skewnees and kurtosis were used to
check normality of the data.

Skewness is a measure of symmetry of distribution. A positive value indicates that the

distribution has a greater tendency to tail to the right (positively skewed), and a negative
value indicates a greater tendency of the distribution to tail to the left (negatively skewed).
Kurtosis is a measure of the shape of a distribution. A positive value indicates that the
distribution has longer tails than the normal distribution; while a negative value indicates
that the distribution has shorter tails. While, a normal distribution has both skewness and
kurtosis values equal to zero (Field, 2009; cited by Muzaffar, 2016), for psychometric
purposes, skewness and kurtosis values between -2 to +2 and -7to +7 respectively is
acceptable (George & Mallery, 2010; cited by Muzaffar, 2016).
It can be noted form the Table 16 that values of skewness and kurtosis fall within the
acceptable range of -2 to +2 and -7 to +7, indicating that the data is fairly normal and the
basic assumption of parametric testing is fulfilled. The result is presented on table 16 and
the by histogram on appendix 4.1.

Table 14 Descriptive Statistics of Dependent

Skewness Kurtosis
Variable Number of the Statistics Std. Error Statistics Std. Error
respondent

Customer loyalty 418 -0.879 0.119 0.276 0.238

Source; SPSS analysis result based on questionnaire survey, 2019

50
Figure 3 normal Q-Q plot of loyalty

Source: SPSS analysis result based on questionnaire survey, 2019

4.6.2. Linearity test

The Regressions model can be expressed in linear way. Linearity refers to the
shape of the values formed by the plot. Checking the linearity between variables
can be done by plotting the independent variables against the dependent variable. As
appendix 4.2 shows the relationship of independent variables with the dependent variable
is linear.

4.6.3. Homoscendasticity test

Homoscedasticity means that the variance of errors is the same across all levels of the
variable. To test for homogeneity of variance, there are several statistical tests that can be
used. These tests include: Hartley‘s Fmax, Cochran‘s, Levene‘s and Barlett‘s test. Several
of these assessments have been found to be too sensitive to non-normality and are not
frequently used. Of these tests, the most common assessment for homogeneity of variance
is Levene‘s test. The Levene‘s test uses an F-test to test the null hypothesis that the
variance is equal across groups. This test suggests that all data should have same or
similar variances. For checking this assumption in this study, researcher employed
Levene‘s Test for equality of variance. If the p-value is more than .05(p-value >0.05), then

51
researchers have met the assumption of homogeneity of variance and can conduct a
parametric test (Muzaffar, 2016).

In this study, the result of levene‘s test shows P- value of 0.148 and F- value of 1.226
which indicate that, the researchers met the assumption of homogeneity of variance and
can conduct a parametric test.

Levene's Test of Equality of Error Variancesa

Table 15 levene‘s test for homoscendasticity

Dependent Variable: customer loyalty

F df1 df2 Sig.
1.226 345 72 .148

Tests the null hypothesis that the error variance of the dependent variable is
equal across groups
a. Design: Intercept + trust + comitment + empathy + comitment * empathy

Source; SPSS analysis result based on questionnaire survey, 2019

4.6.4. Testing Multi-co linearity

Multi- co linearity is states of very high inter-correlations or inter-associations among the

independent variables. It is therefore a type of disturbance in the data, and if present in the
data the statistical inferences made about the data may not be reliable (Kothari, 2004).
Multiple regressions assume that the independent variables are not highly correlated with
each other. This assumption is tested by using Tolerance or Variance Inflation Factor (VIF)
values. Some papers argue that a VIF<10 is acceptable, but others says that the limit value
is 5.
- "10" as the maximum level of VIF (Hair et al., 1995) - "5" as the maximum level of
VIF (Ringle et al., 2015)

In this study, the result of collinearity statistics analysis shows variance inflation factors
(VIF) value ranges from 2.168 to 3.225. Tolerance value ranges within the value of 0.310
to 0.461 which indicated that there is no multicollinearity problem in this study. The
independent variables also have significant relationship with the dependent variable.

52
 Table 16 multi collinearly statistics
Coefficientsa
Model Unstandardized Standardized T Sig. Collinearity
Coefficients Coefficients Statistics
B Std. Beta Tolerance VIF
Error
(Constant) -.241 .178 -1.353 .177
trust .154 .066 .117 2.339 .020 .406 2.461
commitment .210 .059 .169 3.563 .000 .456 2.195
1 empathy .025 .041 .028 .603 .547 .461 2.168
responsiveness .060 .059 .055 1.023 .307 .358 2.796
communications .224 .066 .195 3.387 .001 .310 3.225
conflict handling .364 .054 .330 6.735 .000 .428 2.337
a. Dependent Variable: customer loyalty
source : SPSS analysis result based on questionnaire survey, 2019

4.7. Regression analysis

Regression analysis is a powerful statistical method that allows you to examine the
relationship between two or more variables of interest. Regression analysis is a reliable
method of identifying which variables have impact on a topic of interest. The process of
performing a regression allows you to confidently determine which factors matter most,
which factors can be ignored, and how these factors influence each other (Ben, 2018). The
results of regression analysis are the following.

4.7.1 Multiple Regression Analysis of customer Relationship Marketing dimensions

and Customers‟ Loyalty

In this study multiple regression analysis was employed in ordered to examine the effect of
customer relationship marketing on customer loyalty by taking customer loyalty as
dependent variable and customer relationship marketing dimensions (trust, commitment,
empathy, responsiveness, communications, and conflict handling) as independent variables
in banking sector. While running the regression analysis, statistical significance was given
outstanding at p value of 0.05.
The result of regression analysis against customer loyalty was seeing in below table 17.
The result shows that the relationship marketing has the power to explain customer loyalty.
In this case the results of correlation of relationship marketing and customers‘ loyalty and

53
R Square (0. 579) are taken into consideration. The regression analysis model summary
indicates that relationship marketing which is entered into the regression model on SPSS
has relationship with customer loyalty with coefficient of 0.761. Therefore, it is critically
out that 57.9% of relationship marketing can explain the dependent variable that is
customer loyalty.
According to table 18 shows that ANOVAs result are tells the independent variables
statistically significantly predict the dependent variable (customer loyalty), F (6,411)
=94.025 p<0.05. These indicate that the regression model is a good fit of the data.

Table 17 model summary result

Model Summaryb
Mode R R Adjusted Std. Error Change Statistics Durbin-
l Squar R Square of the Watson
R Square F df1 df2 Sig. F
e Estimate
Change Change Change
1 .761a .579 .572 .68358 .579 94.025 6 411 .000 1.825
a. Predictors: (Constant), conflict handling, empathy, commitment, responsiveness, trust,
communications
b. Dependent Variable: customer loyalty
source: survey data, 2019

Table 18 multiple regression for customer loyalty

ANOVAa
Model Sum of Squares Df Mean Square F Sig.
Regression 263.617 6 43.936 94.025 .000b
1 Residual 192.053 411 .467
Total 455.670 417
a. Dependent Variable: customer loyalty
b. Predictors: (Constant), conflict handling, empathy, commitment, responsiveness, trust,
communications

Source: survey data, 2019

Table 19 shows multiple regression result of relationship marketing and customer loyalty
helped us to understand which variables among the six independent variables are
significant and most important in explaining the variance in customers‘ loyalty. If we can
see the Beta column under standardized coefficients below, we can understand that the

54
highest number in the beta is conflict handling, as it indicated in the table; high beta value
shows that it is significant in explaining the dependent variable (Customer Loyalty). 0.330
for conflict handling is the leader driver of customer loyalty, followed by communication
(0.195), commitment (0.169), trust (0.117), responsiveness and (0.055) empathy (0.028)
respectively on customer loyalty.

Table 19 multiple regression result of customer loyalty

Coefficientsa
Model Un standardized Standardized T Sig. 95.0% Confidence
Coefficients Coefficients Interval for B
B Std. Error Beta Lower Upper
Bound Bound
(Constant) -.241 .178 -1.353 .177 -.591 .109
trust .154 .066 .117 2.339 .020 .025 .284
commitment .210 .059 .169 3.563 .000 .094 .326
1 empathy .025 .041 .028 .603 .547 -.057 .107
responsiveness .060 .059 .055 1.023 .307 -.055 .175
communications .224 .066 .195 3.387 .001 .094 .355
conflict handling .364 .054 .330 6.735 .000 .257 .470
a. Dependent Variable: customer loyalty

Source: survey data, 2019

The multi regression model of this study is like the following:

Y (loyalty) = -0.241 (constant) + 0.154 (trust) + 0.210 (commitment) + 0.025 (empathy) +0.060
(responsiveness) + 0.224 (communication) + 0.364 (conflict handling) + 0.05(error term)

4.8. Comparative analysis between public and private owned using independent
sample t- test

Independent sample t- test compares two sample means from different populations
regarding the same variable to determine whether the difference between the two means is
statistically significant or occurred by chance alone. Independent sample t- test is
applicable in the statistical assurance of any significant difference between the means of

55
trust, commitment, empathy, responsiveness, communication, conflict handling and
customer loyalty in the two banks.

In the below group statistics table, the mean of customer loyalty for public is 3.21 with std.
Deviation of 1.145 and the mean of private owned is 4.11with std. Deviation of 0.543. The
numbers of participants (N) are 247 for public and 171 for private owned bank.

Table 20 Group statistics for private and government owned bank regarding loyalty
Group Statistics

In which Bank do you N Mean Std. Deviation Std. Error Mean

have an account?

public owned 247 3.2060 1.14472 .07284

customer loyalty
private owned 171 4.1131 .54333 .04155

Source: survey data, 2019

Table 24 displays the inferential statistics of the output from the independent sample t- test.
The table has two rows: we use the first row when variances are equal and the second
when are not. In this case equal variances not assumed to be as the F- value is significant
(p= 0.001). As p- value 0.001is less than the significance level 0.05 we need to read the
values from the second row of the below table. The significance level tells us the
probability that the results have occurred by chance or not. So, as indicated in the below
table 24, the sig. value is 0.000 which is less than 0.05 and this means that the customer
loyalty in the two banks are significantly different.

56
 Table 21 independent sample t- test for customer loyalty

Levene's Test t-test for Equality of Means

for Equality of
Variances
F Sig. t Df Sig. (2- Mean Std. Error
tailed) Difference Difference
Equal
variances 161.014 .000 -9.635 416 .000 -.90703 .09414
customer assumed
loyalty Equal
variances not -10.817 374.729 .000 -.90703 .08385
assumed
Source: survey data, 2019

Form table 25, we shows the means of public 3.33 with 0.763 std. Deviation and the mean
of private owned 4.22 with 0.418 std. Deviation. The numbers of participants (N) are 247
for public and 171 for private owned bank. To find out whether this observed difference
between mean values is statistically significant or not, we need to look at table of
inferential statistics.

Table 22 Group statistics for public and private banks regarding customer relationship
marketing dimensions
Group Statistics
In which Bank do you N Mean Std. Std. Error
have an account? Deviation Mean
customer relationship public owned 247 3.3250 .76320 .04856
marketing dimensions private owned 171 4.2168 .41825 .03198
Source: survey data, 2019

Table 26 displays the inferential statistics of output from independent sample t- test. The
table has two rows: we use first row when variances are equal and the second use when
they are not equal. In this case the variance cannot be assumed equal, as the F- value is
significant (P= 0.001). As the p- value 0.001 is less than the significance level 0.05 we
need to read values form second row of table 26. If the p- values greater than 0.05 we
reject our hypothesis, but if the p-values smaller than 0.05, we accept the hypotheses,
which that there are difference between the two groups. Accordingly the p- value labeled
as sig. (0.001) under t-test for equality of means from table 26 is less than the significance
57
 level 0.05. Therefore there is significance difference between public bank and privately
owned banks on customer relationship marketing.

Table 23 independent sample t- test for customer relationship marketing

Levene's Test for Equality of Variances

F Sig. T Df Sig. (2- Mean Std. Error

tailed) Difference Difference

Equal variances
72.209 .000 -13.899 416 .000 -.89172 .06416
assumed
customer relationship
marketing dimensions
Equal variances
-15.335 397.486 .000 -.89172 .05815
not assumed

Source: survey data, 2019

4.9. Hypotheses testing

The researcher initially asserted seven hypotheses to be tested on this research and out of
this six of them are checked by regression model, whereas the seventh one is tested by
independent sample t- test. As it is indicated on the table 19, β values for all predictors
(independent variables) are positive and it implies that independent variables have a
positive relationship with customer loyalty.

H1: Trust has a positive relationship and significant effect on customer loyalty in
banking sector.

As can be seen form the result of regression analysis, the relationships between trust and
customer loyalty is positive and significant (β=0.117, p< 0.05). The β value of Trust
variable shows that a one unit increases in trust will increase customer loyalty by 11.7 %.
The ρ value is less than 0.05, so H1 is accepted in this study.

58
H2: commitment has a positive relationship and significance effect on customer
loyalty in banking sector.

The result of regression analysis which is showed in table 19, commitment has a Positive
relationship and statistically significant effect on customer loyalty at p value less than 0.05
and β= 0.169. Therefore, the study fails to reject H2 rather it accept H2.

H3: Empathy has a positive relationship and significance effect on customer loyalty in
banking sector.

The output of regression analysis of empathy with customer loyalty showed that the
significance level of empathy is greater than 0.05 (p= 0.547) and its β = 0.028, so the study
fails to accept H3 rather it reject H3.

H4: Responsiveness has a positive relationship and significance effect on customer

loyalty in banking sector.

The regression result of responsiveness with customer loyalty showed that insignificant
level of effect at β = 0.055 and sig. value of 0.307. Therefore, the study fails to accept H4
rather it reject H4.

H5: conflict handling has a positive relationship and significance effect on customer
loyalty in banking sector.

The output of regression analysis of conflict handling with customer loyalty show that
conflict handling has a positive relationship and significant effect on customer loyalty with
sig. level of 0.000. When there is a single unit change in conflict handling, customer
loyalty will be affected by 33.0%. This beta value is the highest among the other variables,
so we can say that conflict handling is the highest affecter of customer loyalty than the
other variables. Due to this result, the studies accept H5.

H6: communication has a positive relationship and significance effect on customer

loyalty in banking sector.

The regression analysis result shows that communication has a positive relationship and
significance effect on customer loyalty (0.001) with beta value (β) of 0.195. When there is

59
a single unit change in communication, customer loyalty will be affected by 19.5%. This
result shows the acceptance of the six (6) hypotheses.

H7: public and private owned banks in Ethiopia have significant differences in terms
of their customer relationship marketing and their customer Loyalty.

For these hypotheses, t-test used to determine whether to test or not there is difference
between the means of public and privately owned banks‘.

The independent sample t-test

The t-test assesses whether the means of two groups, or conditions, statistically different
from one the other. They are reasonably, influential tests used on data that is parametric
and normally distributed. Therefore, the researcher used independent t-test to test
hypotheses seventh (H7) as the hypotheses testing involves comparison of Government
owned and privately owned banks‘ in their customer relationship marketing and customer
loyalty mean value. SPSS produces the exact significance value of t, and we are interested
in whether this value is less than or greater than 0.05. So, as indicated on table 24 and 26 p
value of customer loyalty and customer relationship marketing are 0.001 for both, which
are less than 0.05, and so we would have to conclude that there was significance difference
between the means of customer loyalty and customer relationship marketing for public
and privately owned banks‘.

4.10. Discussion results of the interview data

In ordered to support the questionnaire survey, primary data was also obtained through
Interviews were also conducted with 8 branch managers and assistant branch managers of
the bank considered in this study, four from the public and the remains are from private
owned banks. The interviews consisted of seven (7) structured questions.

The first questions forwarded to them was about the customer relationship marketing
practices of their respective banks as compared to their rivals, and how to differ your banks
from the others bank. In this regard, interviewees from each branches responded as
follow:-

60
From private owned: -
 In the bank there are the concepts of relationship marketing to attract and increases
their loyalty. But it hasn‘t independently established officer. It is under marketing
department. According to the manager of DB says, Dashen bank is ongoing to
establish independently, and also awash bank manager says, AIB have one
customer officer in each branch, and this persons care the customer according to
their wants. AIB managers added this point that they have suggestion box,
customer handling logo, face to face discussion, collecting data and read and
providing lastly solution to customers comment. In addition, according to the
interviewee, they differ from their competitors since they provide individual
customer focused services and also give door to door services.

Form the public bank (CBE):

 Customer relationship marketing practices in the bank is efficient and provides
quality services with on time response, working collaboration with customers and
minimum delay practice domestic and international banking services. In addition,
according to the interviewees, they differ from their competitors since they provide
individual customer focused services specially business customers or premium
clients, the bank gives individual attention to its customers and also the bank
arranges special care to special customers, and also the bank open additional
branches to near their customers
The second questions forwarded to the interviewees are ―How can you describe the
importance of relationship marketing in securing the loyalty of customer in your bank?”
the managers of the selected banks came up with almost similar responses. According to
their managers says, no business can exist without customers and hence it is a must for
Banks to focus on its relationship marketing activities so that it can attracts the hearts and
minds of their customers.

According to them, in now a day‘s banking industry in Ethiopia, where there is a strong
and fierce competition among players to share the customer‘s wallet, it‘s only through
developing a strong relationship marketing strategy that CBE, AIB and DB should
withstand the competition and maintain the loyalty of its customers, by technology and
distributing their branches. According AIB managers says that the government cannot give
equal support for private and government owned banks, this is the biggest challenges of

61
privately owned banks, for example all government organization salaries paid through
government banks only, this increases customers for public banks.

The third interview question asked was ―How does the bank attain knowledge about
customers?‖ In this regard, the both banks managers and assistance managers replied that
they get information about their services their suggestions box and by face to face
discussions. In addition, the AIB manager says to get more information about our customer
by give door to door services.

The fourth interview question was regard to the CRM strategies the bank applies to their
customer satisfied. The private bank managers replied to this question ―our major strategy
is shifting all services in to electronics to serve our customers in simplest ways‖. In
additions to this, the AIB managers says, we can‘t ask their account book, if the customers
has ID we serve by their ID cards as their account book and we give service in satisfaction
ways. But this kind of service is not given in public bank (CBE).

The fifth interview questions are about the CRM dimensions such as trustworthiness,
commitment, empathy, responsiveness, communication and conflict handling of the
selected banks. Regarding the trust, all interviewees of the selected banks replied that they
are trustworthy in keeping customer record safely as well as confidentially and by keeping
their security. In addition to this, private owned bank (Awash and Dashen) bank managers
replied as the following: the Bank has worked hard towards developing trust in the minds
of the customers through keeping their promise, very much concerned with the security of
their transaction and fulfilling its obligation. The public bank (CBE) Regarding to trust, all
interviewees of the selected branches replied that they are trustworthy in keeping
customers transactions record safely, provide consistence quality service, calculating
charges, cash payment as well as serve all customer confidentiality.

Regarding to commitment, the interviewees of the government owned managers replied

that to serve our customer with commitment we open a new branch in all area of the
country to near for all customers. The private owned bank (Awash and Dashen) managers
replied that to serve the customer with commitment, the bank give training to the new
employees about the customer taking technique and about rule and regulations of the
organizations. To fulfill their wants we imitate new technology form developed countries

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 especially in this conditions Dashen bank is the leader one According to information I get
from managers.

Regarding to empathic relationship with their customers, among this question the mangers
of all selected banks came up almost similar responses. All interviewees of the selected
branches replied that employees and management bodies of the bank work extra time to
satisfy their customers and front officers transfer the question of their customers to back
sitter officials, if it is beyond their capacity to serve customer on time. In additions,
responsiveness is one kind of interview question for the study. As private owned banks
replied, customers are our kings so; our all employees accept this idea and have
willingness to help customers and also trying to provide promote customer focused serves.
However, managers of CBE responded that employees and management bodies of the bank
committed to response to the questions of all customers.

With regard to communications, all interviewees‘ response in similar ways that they
replied that the all business major functions are to increases its profit, so for banking sector
their profit depend on their customer loyalty, and customer numbers, to increases loyalty of
their customer and numbers of customer good communication with customers are
important. All interviewees tells that we communicate our customers in all transaction and
about new technology that to solve their problem. In addition, all interviewees of the banks
admitted the importance of conflict handling in banking sector to improve loyalty of the
customers.

The sixth interview question is ―How do you describe the awareness of employees on the
concept as well as practice of CRM.‖ In this regard, private owned (Awash and Dashen) bank
managers replied that they create awareness among their employees through continues
training and by sharing experience from senior employees. They said also that their
employees are in a good ethics of conduct towards understanding customer‘s individual
character, needs and wants. Government owned (CBE) replied that the awareness is created
by looking senior employee‘s day to day service practices. In addition all branch managers of
this bank said that, the bank give training for all fresh employees for one month on customer
handling and rules and regulations of the organizations‘.

The final question, asked the interviewees, is about their banks strength and weaknesses
related to maintaining good relationship with their customers. Regarding their strength all

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interviewees of all selected banks spoken that they are strong in new technology and in
expanding the branches in all area of the countries. However, form their weakness, all
interviewees raised internet interruption problem. These internet interruptions affect their
services. In addition, to the above problem CBE managers said that the bank has the problem
of serving customer on time, and from privately owned banks, has problem of availability in
all areas of the countries specifically in rural areas.

Generally, from the interview the researcher understands that problem affect customer loyalty
in banking sector.

4. 11. Discussions

This discussion is important to provide more clarifications about the above results. This
research is related with the dimensions of customer relationship marketing towards
customer loyalty and comparative study of public and private owned banks, especially
CBE and form private Dashen and Awash Banks. The objective of this study is to
determine the effect of customer relationship marketing on customer loyalty in commercial
banking sector of Ethiopia by analyzing the relationship of every construct in the
theoretical framework. Demographic factors such as gender, age, education qualification,
occupation, monthly income and years of relationship the customers have with the bank‘s
services have been used to know the general characteristics of the respondents.

Based on this research results, relationship marketing is correlated with customer loyalty.
The finding shows that relationship marketing activates can explain 57.9% customer
loyalty in public and private owned banks sector in Ethiopia. This shows that the other
dimensions of customer relationship marketing that is excluded in this research will be
explain 42.1% customer loyalty in Ethiopian bank industry. Relationship marketing
dimensions particularly conflict handling, communications and commitment have greater
effect on customer loyalty by 33%, 19.5% and 16.9% percent respectively and it is more
important in shaping what customer prefer about the bank.

The research used 220(52.6%) of male and 198(47.4%) of female as respondents. When
we see individual in private and public bank, public (CBE) used 111(44.9%) of male and
136(55.1%) of female and private owned (Awash and Dashen) used 109(63.7%) of male
and 62(36.3%) of female as respondents. In terms of age the majority of respondents are

64
between 18-28 years old which was accounted 264(63.2%) followed by age between 29-39
years old which was accounted 78(18.7%).

When we see the education qualification of the respondent the majority are first degree
holders‘ 176(42.1%), which is followed by diploma holders that accounted to 109(26.1%).
when we see individual in private owned and public banks, private owned banks accounted
to degree holders 37(33.9%) and diploma holders equally 40 (23.4%) and public (CBE)
accounted to degree holders‘118(47.8%) and 69(27.9%) diploma holders. These suggest
that customer relationship marketing can well assess form this kind of customer through
questioners. With regard to occupation of the respondents, most of them are students
162(38.8%) followed by the government sector 133(31.8%). In terms of monthly income
of the respondents, the majority had income of less than 2500 birr which accounted to 197
(47.1%) followed by respondent that have more than 6000 which accounted to 87 (20.8%).

When we look at the years of relation of customers uses the banks services, most of the
customers used the banks services for 1-4 years accounted 159 (38%) followed by
customers used bank services for 5-7 years which accounted 114 (27.3%). In terms of type
of account the customers used, the majority of the respondent used saving account which
accounted 290(69.4%). When we see demographic factors, age of the respondent,
education level of respondent, occupation of the respondent and income of the respondents
were correlated with customer loyalty significantly. The other factors, such as years of
service usage, and gender have no correlation with customer loyalty (appendix 6 and 7).

In today‘s competitive environment, banks should build and maintain good relationship
with the target customers in order to be successful and survive. To maintain good
relationship with customer‘s relationship marketing is an important tool. In this case, the
bank must prepare invaluable information to build strong relationship with the customers
for the purpose of gaining their loyalty and preventing customers from switching to other
banks. Customers can be remaining loyal towards a bank for a numbers of reasons. This
paper has identified six dimensions of relationship marketing that will be affect customer
loyalty in banking industry particularly CBE, AIB and DB namely trust, commitment,
empathy, responsiveness, communication, and conflict handling.

Based on results from this research, relationship marketing is positively correlated with
customer loyalty on the person correlation test of correlation result (r= 0.738). The finding

65
shows that the relationship marketing can explain 73.8% loyalty in banking sectors. From
relationship marketing dimensions particularly conflict handling and communications have
greater effect on customer loyalty and it is more important in shaping what customers
prefer about the bank.

Based on the person correlation test of correlation results, trust dimension positively
correlated with customers loyalty (r= 0.614). In other words, if customers trust the bank,
they will be loyal to their banks otherwise they will not be loyal to their banks. Because of
this result the bank should be able to promise and deliver what it promised is important to
encourage repeat purchase by the customers and to establish strong relationship. In
addition, trust only exists if a customer has confidence in banks‘ ability to perform
adequately. As result, trust has the power to determine the loyalty of customers. Customer
trust has a significant role in building long-term relationship and achieving customer
loyalty (Berry, 1983). So, the finding of Berry et.al (1983) is similar with the results of this
study.

Customer perception of a firm‘s trustworthiness is valuable not only in terms of satisfying

and in terms of retaining existing customers but also in attracting new customers through
word of mouth marketing (Wong & Shoal, 2002). Therefore, also the finding of Wong and
shoal (2002) is similar with the result of this study. Customer trust has a significant role in
building long-term relationship and achieving customer loyalty (Assefa, 2017; shiferaw,
2011). So, the finding of Assefa (2017) and shiferaw (2011) is similar with the results of
this research. When customer trust the bank, they will leave all the activities to be
performed by the bank and they will talk freely about the banks strengthens and
weaknesses. Because of this reason, all customers feel that they are responsible for the
banks action. So, it is best for the banks to be trusted by the whole customers. The
regression analysis of trust and customer loyalty indicates that 37.8% of the variance R
squares in customer loyalty has been significantly explained by trust. The finding of
Ndubisi (2007), Shiferaw (2011) and Assefa (2017) showed that trust is an important
ingredient in firm-customer relationships and ultimately in the development of loyalty.
And also the finding of Morgan and Hunt (1994) accomplished that customers with trusts
in service providers‘ capacity would probably be willing to commit to a service
relationship for meeting their expectations. Therefore, the result of this study on trust

66
dimension is similar with the above findings that trust has the power to increase customers‘
loyalty.

Commitment was another dimension of relationship marketing that taken into account to
explain customer loyalty. Based on the correlation result, as it shown by Pearson
correlation test, commitment positively correlated with customer‘s loyalty. It has also
positive and moderate relationship with customer loyalty. The correlation coefficient
between commitment and customer loyalty was r= 0.605. The commitment of the bank
will help to retain customers by improving the services of the bank. By having committed
employees, banks can continue retaining existed customers and attracting new customers to
generate more profit. Therefore, banks are expected to have committed employees to offer
suitable services and treat the customers as they want. This result is supported by the study
of Assefa (2017). According to this thesis, commitment has a strong positive effect on
customer loyalty.

With regard to the regression analysis of commitment dimension and customers loyalty,
36.6% of the variance R square in customers loyalty is significantly explained by
commitment. Morgan and Hunt (1994) viewed that a committed partner wants the
relationship to endure indefinitely and is willing to work at maintaining it. Assefa (2017)
research‘s also recommended that committed customers are not just expected to maintain
current purchasing activities, but to increase both the level and proportion of their
purchasing activities over time. Therefore, the result of this thesis on commitment
dimension is similar with the above findings that commitment has the power to increase
customer loyalty.

The other element that is included in the dimensions of relationship marketing was
empathy. The correlation coefficient between empathy and customer loyalty was 0.533.
Empathy is one of the important tools to create long term relationship with customers in
service provider organizations. Almost all customers wanted to be treated as they want to
be treated by the banks employees. If this is the case, banks have the responsibility to treat
customers as they want to be treated to have loyal customers and generate a profit. When
the customers are treated in good way they become satisfied and loyal to their banks. As
result, empathy has power to create lasting relationship with customers and shaping the
minds of the existed customers to talk favorably about the banks to other customers. Then,

67
banks need to understand their customers‘ needs and wants and continuously evaluate their
services to satisfy and attract customers in the better way.

With regarding to regression analysis of empathy and customer loyalties, 28.4% of the
variance R Square in customer‘s loyalty is significantly explained by empathy when see by
individually regressions. The finding of Zeithaml and Bitner (2003) cited by shiferw
(2011) showed that it is difficult to imagine an organization would deliver caring,
individualized attention to customers independent of its employees. As it is mentioned by
Assefa (2017) empathy is one of the important elements to measure the service quality in
service industries area. So, the result of this research on empathy dimension of relationship
marketing not supports the above findings. When compare to other dimensions empathy
has insignificant power to make customers‘ loyalty. Due to methodological difference, this
dimension does not supported by above findings.

The fourth factors that included in the relationship marketing dimensions were
responsiveness. As it was indicated in the correlation analysis responsiveness has positive
and moderate relationship with customer loyalty. The Pearson correlation coefficient
between responsiveness and customer loyalty is 0.592. Responsiveness was tested in
respect of responsiveness included devoted time to customers and efficient services
Responsiveness is willingness to help customers and provide prompt service (Ananth,
2010; Kheng, 2010). The regression analysis of responsiveness and customer loyalty
indicates that 35% of the variance R square in customers loyalty has been significantly
explained by responsiveness when see by individual regressions. Therefore, responsiveness
has the power that to determine the loyalty of customers and increases the profit of the
organizations. The effects of responsiveness in this research are insignificance when
compare with the other dimensions included in this study, as result the banks improve their
responsiveness to generate more profit and to achieve higher level of customer loyalty.

As it is indicated in the correlation analysis, communication has positive and high

relationship with customer loyalty. The Pearson correlation coefficient between
communication and customer loyalty was 0.665. Communication is one of the important
tools to create long term relationship with customers in service provider organizations.
As it is mentioned by Bilata, (2018) communication is responsible for building awareness
in the early stage, developing customer preference, convincing and encouraging the
customers to make the decision to purchase. With regard to regression analysis of

68
communication and customers‘ loyalty, 44.2% of the variance R square in customers
loyalty significantly explained by communication. It is the second highest of all correlation
and regressions results of relationship marketing elements in this research. Empirical
evidence suggests that communication increases the degree of confidence between
alliances (Anderson and Lindestad, 1998; Morgan and Hunt, 1994). Therefore, the result of
this research on communication is similar with the above findings and communication has
the power to increases customer loyalty and profit of service provider organizations when
the organizations‘ used appropriately.

The last but not least factor included in relationship marketing dimensions in this research
was conflict handling. Based on the correlation result as it is shown by Pearson correlation
test, conflict handling is positively and highly correlated with customers‘ loyalty. The
correlation coefficient between conflict handling and customers‘ loyalty is the highest of
all correlation results of relationship marketing dimensions which is 0.689. This shows that
conflict handling is a major determinant of customers‘ loyalty and customers will critically
evaluate the conflict handling methods of the bank employees towards the services gained
from the bank. When banks have good conflict handling measures and solving the
manifested problems successfully, the customers express their complaints or any feelings
they have freely and will become loyal customers ( Assefa, 2017).

In order to encourage customers to complain when there is problem, banks are responsible
to aware and inform in advance how and where to complain. Generally, appropriate and
acceptable conflict handling procedure will create strong relationship with customers
(shiferaw, 2011). The regression analysis result for conflict handling and customers‘
loyalty shows that 47.4% of the variance R square in customers loyalty has been
significantly explained by conflict handling. The result of Ndubusi (2007) indicated that
customers tend to be loyal to banks that handle customer complaints which will always
happen and other conflicts adequately. Therefore, the result of this thesis on conflict
handling is similar to the above findings and this thesis shows form the other dimensions
used in this thesis conflict handling procedures are the major element that affects customer
loyalty of the banks customers.

Generally, when we see regression analysis result for all variables against customers‘
loyalty it is assured that all independent variables can explain customers‘ loyalty in
Ethiopian government owned and private owned commercial banks.

69
CHAPTER FIVE

5. CONCLUSIONS AND RECOMMENDATIONS OF THE STUDY

5.1. Conclusions

The purpose of this study is to investigate the effect of customer relationship marketing on
customers‘ loyalty in case of commercial banks in Ethiopia and to determine how each
relationship marketing dimensions (i.e. trust, commitment, empathy, responsiveness,
communication and conflict handling) affect customer loyalty in both public and private
owned banks.

Thus, the above dimensions were used as illustrative variables for the purpose of this study
and the effect of these variables on customer loyalty were the main concern of this paper.
Following this, 422 questionnaires were distributed to customers of both public and private
owned banks. Among the distributed questionnaires, 418 were collected and the data was
added on the SPSS program. And the process of analysis was done using statistical tools
like descriptive analysis, correlation and regression models.

Cronpach alpha was used to measure the reliability of the independent variables stated to
explain the dependent variable; customer loyalty, which was found to be well above the
threshold level at 0.954. Correlation analysis, regression analysis, and an independent
sample t- test were run to test the acceptance or rejection of the hypotheses that were put
forward by this thesis. The findings support the view points that relationship marketing
dimensions can improve the quality of a customer‘s-services provider relationship and in
turn increase customer loyalty.

The power of the independent variables in explaining customer loyalty of commercial

banks in Ethiopia has found that the dependent variable was positively explained (57.9%)
by the six dimensions of customer relationship marketing which are known, for all uses
and purposes of this study, as independent variables. All customer relationship marketing
dimensions included in this work, namely trust, commitment, empathy, responsiveness,
communication and conflict handling have a positive and moderate and strong correlation
with customer‘s loyalty. The findings of hypotheses one up to sixth were verified by

70
running a multiple regression analysis, which then showed that four the dimensions (trust,
communication, commitment and conflict handling) of customer relationship marketing
have a positive and significant effect on customer loyalty of commercial banks in Ethiopia.
But when we see the effect of Empathy and responsiveness on customer loyalty, it can be
concluded that empathy and responsiveness has positive but insignificant effect on
customer loyalty of commercial banks in Ethiopia. The findings of the seventh hypothesis
were verified by independent sample t-test which then showed that government and private
owned commercial banks in Ethiopia have significant differences in terms of their
customer relationship marketing dimensions and Customers‘ Loyalty.

5.2 Recommendations

According to the findings of the thesis, the following possible recommendations are
recommended as being important to government and privately owned banks in Ethiopia
especially in Gondar town, for improving their relationship marketing activities to reassure
customer loyalty.

 Based on this thesis result, conflict handling, communications, trust, and

commitment dimensions of relationship marketing in banking sectors have
significant effect on customer loyalty. As a result, it is recommend that banks
should apply effective conflict handling practices, communicate with their
customers permanently, creating and developing customer trust, and demonstrate
commitment in order to be successful in gaining more profit and loyalty of
customers more than their competitive.

 There is significance difference between the public and privately owned banks. The
customer relationship marketing practices and customer loyalties of private owned
banks are better than that of the government owned banks. So, now a day, it is
difficult for banks to exist in business without developing their strategies of
customer handling. As a result, the government owned banks (CBE) have to
improve their customer relationship marketing practices and loyalty of their
customers.

71
  In Ethiopia, the growing number of banks leads to increment in the competition of
banking industry. Therefore, to win the competitions, a bank must be well aware of
the wants and needs of their customers; this comes through their excellent customer
relationship marketing practices. Nowadays, customers are demanding more not
only based on the service but they demand the way they are treated. So, it is
advisable for banks to have strong connections with their customers in order to
create and maintain customer loyalty and keep customers from switching to other
competitors.

 One best method of attracting and increasing loyalty level of customers in this
competitive world, especially in banking industry is giving excellent service, like
door to door service, on time service, all services in one windows and so on. So, I
recommend for all banks to use this kind of service to get higher profit and also to
gain loyalty from their customers.

 According to the findings, services provided by private banks are better than
government owned banks; however, the number of customers in government
owned banks is greater. The reason is that government owned banks are available
in all area of the countries. Therefore, I recommend private owned banks to expand
their branches throughout the country to gain more customers.

Generally, I recommend banks to apply customer relationship marketing appropriately and

should make the whole system on work with customers. As it is well-known, customers are
the reason for the survival of a bank. So, banks are expected to invest more on attracting
new customers and retaining the existing ones.

Recommendations to other researchers

 This study was conducted only in Gondar city CBE, Dashen, and Awash banks, so
the researcher was using a cross-sectional survey design to determine the effect of
customer relationship marketing on customer loyalty. Therefore I would
recommend to the next researchers, this research can be further explored by adding
more relationship marketing dimensions like value, bonding, cooperation, and
others which could affect customer loyalty, and also by increasing study area.

72
 This study focuses on only the banking industry; such concentration could limit
generalization of the findings to the whole service industry. This drawback creates
an opportunity for future researcher in this area. The future researches may
duplicate this study in other service sectors other than banking, for example
telecommunications, tourism, hospitality, Ethiopian airlines, health care, education,
etc. So, future research strength to generalize the model developed in this study to
other services.

 This study was conducted with cross-sectional survey, but other researchers would
study with a longitudinal design.

 The researcher have used nonrandom sample, specially purposive and convenient
sampling technique to select sample branches and respondents; however these
sampling techniques have the opportunity for bias to confuse the results of the
study. As results, I would recommend to the next researchers, to get more
information may use random sampling methods.

73
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 Appendix

Appendix 1A English version

University of Gondar
College of business and economics
Department of marketing management
Dear respondents:
I am currently pursuing Masters of Marketing Management program at University of
Gondar College of Business & Economics. As partial fulfillment towards the completion of
my postgraduate degree, this research titled as the effect of customer relationship
marketing on customer loyalty: comparative study of a private and government owned
bank.
Objective: The effects of customer relationship marketing dimensions on customer Loyalty
of Public and Private commercial banks in Ethiopia.
Hence, I kindly request you to fill this questionnaire while assuring you that the information
that you provide will be treated with confidentiality and shall only be used for the purpose of
this academic research. Your fair and impartial feedback will make this research a very
successful one.
The information that you offer me with questionnaire will be used as a primary data in my
Research I need your help and would appreciate your sparing 20 minute to complete the
attached questionnaire and answer the questions related to relationship marketing practices in
your bank that you are customer to. Results will be used to help and expand our knowledge
and understanding of any major shift in relationship marketing practices. All answers will be
kept
strictly confidential and only aggregate results will be reported.

General Instructions
There is no need of writing your name.
In all cases where answer options are available please ticks (√) on the space provided.
Thank you for your cooperation and assistance.
Part I: Demographic or General information
Choose the suitable answer.
1. Gender Male  Female
2. Age below 18 years 18-28 29-39 years 40-50 years 51-60

83
61 years and above

3. Educational Background Informal schooling Primary School completed

Secondary school completed Certificate Diploma Degree
Masters and above
4. Occupation Student Government sector  Private Sector 
Own Business Others

5. Monthly income below Birr 2500  2500- 4000 Birr  4000-6000 Birr 
6000 Birr and above
6. In which Bank do you have an account? Commercial bank of Ethiopia
Dashen bank awash international bank
7. For how many years you have used the Bank services.
Below 1 year 1-4 year 5-7 year
8-10 year above 10 years

8. What type of account do you have with your bank?

Saving account Current account Fixed account

Part II
Please, indicate your opinion by marking the appropriate box on the five point scale
where: tick (√) in the box given for each question
1 = strongly disagree 2 = disagree 3 = Neutral 4 = Agree 5 = strongly agree

Trust 1 2 3 4 5
1. I feel safe in all of transactions with the bank
2. The bank provides consistent quality services at different time.
3. I am confident on the financial status of the bank
4. personal behavior of the staffs are excellent that the customer Can trust
5. The bank has the ability to meet its promises
6. The bank is trustworthy during cash payment process and on calculating
charges
7. staffs have adequate knowledge to serve customer
8. Employee of the bank show respect to customers

84
Commitment
1. The bank offers personalized services to meet customers need
2. My relationship with the bank is one that I am very committed to
continuing it
3. The bank promise always to provide good and fair banking Practices

4. The bank makes certain that, the ethical principles are based on integrity
and transparency.
5. The Bank‘s commitment to its customers is always focus on providing
easy and speedy procedures.
Empathy
1. Employees of the bank understand my feelings.
2. The bank gives individual attention to its customers.
3. The bank shows a truthful interest in solving your problem.
Responsiveness
1. Employees of the bank are always willing to help customers.
2. All staffs of the bank devote time to reply to any of your questions.

3. The bank arranges special care to special customers.

4. Employees of the bank give to the customer‘s fast and efficient service

5. The bank reacts quickly when things go wrong with your transaction

Communications
1. The bank takes customer feedback seriously and replies to you.
2. I can show my discontent towards the staff of the bank through
communication
3. The staffs in the bank frequently communicate to me.
4. I freely express my opinions to the staff of this bank.
5. Employees give genuine and detailed information about all the conditions
of the service
6. When there is a change in any relevant issue, the staff in the bank
communicates to me in time.
7. The bank gives Adequate and timely information to you.

8. The bank clearly communicates its policy to customers (about customers‘

85
 right, responsibility, and other related issues)

Conflict handling
1. The bank listens to customers‘ problems.
2. The bank has the ability to openly discuss solutions when problems arise

3. The bank tries to solve obvious conflicts before the customers create
problems
4. The bank clearly communicates to you about how and where to complain
in case of problems happens
5. The bank gives a prompt response for complaints
Customer Loyalty
1. What makes this bank different from its rivals is that it can make
successful relationships with its customers.
2. The Bank is your first bank choice among other banks in the area; and the
bank that first comes to my mind when making purchases decision on bank
services
3. I do not like to change to another bank because this bank sees my needs
4. Overall, I am satisfied with the bank services provided and I intend using
other products and services of this bank

5. I am confident of giving positive word of mouth testimonies to others about

this bank.
6. As compared to other banks, I am loyal with this bank
7. If I have to open a different account, it will be with this bank.
8. Even if close friends recommended another bank, my preference for this
bank would not change
9. My intention to use the services of this bank would not be changed

Source: adopted from, Eshetu, (2015), (Ravichandran et.al, 2010 and Frank Kojo
Kuranchie); cited by Solomon, 2014 and edited by the researcher.

86
 Appendix 2B Amharic version
ጎንደር ዩኒቨርሲቲ
ቢዝነስና ኢኮኖሚክስ ኮሌጅ
የገበያ አስተዳደር ትምህርት ክፍል
የድህረ ምረቃ ፕሮግራም
ለባንክ ተጠቃሚ ደንበኞች የተዘጋጀ መጠይቅ

የተከበራቹ ደንበኞች እኔ በጎንደር ዩኒቨርሲቲ ቢዝነስና ኢኮኖሚክስ በገበያ አስተዳደር

ትምህርት ክፍል የድህረ ምረቃ ተማሪ ስሆን የመመረቂያ ጥናቴንም በኢትዮጵያ ንግድ ባንክ፤

በአዋሽ ባንክ እና በዳሽን ባንክ በጎንደር ከተማ ውስጥ ባሉ ቅርንጫፎች ላይ “የገበያና የደንበኞች

ግንኙነት በደንበኞች ታማኝነት ላይ የአለው ተፅእኖ ” በሚል ርዕስ ጥናቴን እየሰራሁ እገኛለሁ፡፡ የዚህ

መጠይቅ አላማ ለመመረቅያ ጥናት የምጠቀምበትን መረጃ ከደንበኞች ለመሰብሰብ ነው፡፡ ስለዚህ

ውድ ከሆነው ግዜዎ የተወሰኑ ደቂቃዎች ወስደው ጥያቄዎቹን እንዲመልሱልኝ በትህትና እየጠየቅኩኝ

የሚሰጡኝ መረጃ ሚስጥራዊነቱ የተጠበቀ ከመሆኑ በተጨማሪ ለትምህርታዊ አላማ ብቻ የሚውል

ስልሆነ መረጃው በአጠቃላይ እንጂ በተናጠል የማይታይ መሆኑን ላረጋግጥሎት እወዳለሁኝ፡፡

ስለዚህ የሚመስሎት መልስ በጥያቄዎች ትይዩ በቀረቡት ሳጥኖች የ”√” ምልክት በማድረግ እንዲገልፁ

ስጠይቅ ለሚያደርጉልኝ ትብብር በቅድምያ በማመስገን ነው፡፡

ክፍል አንድ፡- አጠቃላይ መረጃ

ሀ. ፆታ፡- ወንድ ሴት

ለ. ዕድሜ፡- ከ18 አመት በታች 18-28 29-39 40-50 51-60

61 እና ከዛ በላይ

ሐ. የትምህርት ደረጃ፡- መደበኛ ትምህርት አልተማርኩም አንደኛ ደረጃ ሁለተኛ ደረጃ

ሰርቲፍኬት ዲፕሎማ የመጀመርያ ዲግሪ ሁለተኛ ዲግሪና ከዛ በላይ

መ. የስራ ሁኔታ ተማሪ የመንግስት ስራ የግል መስረ ቤት የንግድ ስራ

ሰ. የወር ገቢ ከ2500 ብር በታች ከ2500-4000 ብር ከ4000-6000ብር

ከ6000 ብር በላይ
87
 ረ. የዬትኛው ባንክ ደንበኛ ነዎት? ኢትዮጵያ ንግድ ባንክ አዋሽ ባንክ ዳሽን ባንክ

ሠ. የባንኩ ደንበኛ ከሆኑ ስንት ጊዜ ሆነዎት? ከ1 አመት በታች 1-4 አመት

5-7 አመት 8-10 አመት ከ10 ዓመት በላይ

ሸ. የሒሳቡ ዓይነት የቁጠባ ሂሳብ ተንቀሳቃሽ ሂሳብ

ወለድ አልባ ቁጠባ ሂሳብ

ክፍል ሁለት፡-ከዚህ በታች ለተዘረዘሩት ሀሳቦች የግልዎን ሚዛን በሃሳቦቹ ትይዩ በተቀመጡት አምዶች

የ”√” ምልክት በማስቀመጥ እንዲገልፁ በትህትና ስጠይቅ አማራጮቹ ከበጣም አልስማማም(1) ጀምሮ

እስከ በጣም እስማማለሁ (5) ድረስ መሆናቸውን እገልፃለሁኝ፡፡ 1= በጣም

አልስማማም 2=አልስማማም 3= ገለልተኛ 4=እስማማለሁ 5= በጣም እስማማለሁ

መተማመን 1 2 3 4 5

1. ከባንኩ ጋር ያለኝ እንቅስቃሴ በተመለከተ ምንም አይነት ችግር አጋጥሞኝ አያውቅም

2. ባንኩ በተለያዩ ጊዜያት ተመሳሳይ ጥራት ያለው አገልግሎት ይሰጣል

3. በባንኩ ፋይናንሲያዊ አቅም እተማመናለሁ

4. የሠራተኞቹ ባህሪ ደንበኞች እምነት እንዲኖራቸው ያደርጋሉ

5. ባንኩ ሁል ጊዜ በገባው ቃል መሰረት ይፈጽማል

6. ባንኩ በሚያስከፍለው የአገልግሎት ክፍያ እና በገንዘብ አከፋፈል ሂደቱ ታማኝ ነዉ::

7. ሠራተኞቹ ደንበኞችን ለማስተናገድ በቂ እዉቀት አላቸው

8. የባንኩ ሠራተኞች ለደንበኞቻቸው ክብር ይሰጣሉ

ዝግጁነት 1 2 3 4 5

1. ባንኩ የደንበኞችን ፍላጎት ለማሟላት ግላዊ አገልግሎት ይሰጣል::

2. ከባንክ ጋር ያለኝ ግንኙነት አንዱ እኔን ከባንኩ ጋር በቆራጥነት እንድ ቀጥል

የሚያደርገኝ ነው
88
3. የባንኩ ቃል ኪዳን ምንጊዜም መልካም እና ፍትሀዊ የባንክ አስራሮችን ለማቅረብ ነው

4. የባንኩ ሥነ-ምግባር መርሆዎች በአንድነት እና ግልጽነት ላይ የተመሰረቱ ናቸው.

5. ባንኩ ሁልጊዜም ለደንበኞቹ ቁርጠኝነት ያለው ቀላል እና ፈጣን አሰራሮችን ለመስጠት

ይተጋል

ሀሳቢነት 1 2 3 4 5

1. የባንኩ ሰራተኞች ስሜቴን ይረዱልኛል::

2. ባንኩ ለእያንዳንዱ ደንበኛ ልዩ ትኩረት ይሰጣል::

3. ባንኩ የእርሶን ችግር ለመፍታት እዉነተኛ ፍላጎቱን ያሳያል::

መልስ ሰጭነት 1 2 3 4 5

1. የባንኩ ሰራተኞች እርሶን ለማገዝ ፍቃደኞች ናቸዉ::

2. የባንኩ ሰራተኞች የእርሶን ጥያቄ በአግባቡ ለመመለሰ የሚያስችል በቂ ጊዜ አላቸዉ::

3. ባንኩ ለተለዩ ደንበኞች የተለየ እንክብካቤ ያደርጋል::

4. የባንኩ ሰራተኞች ለደንበኞች በብቃት እና በቅልጥፍ ና አገልግሎት ይሰጣሉ::

5. በአገልግሎት( በግብይት) ላይ ስህተት ሲያጋጥሞት ባንኩ በፍጥነት መልስ ይሰጣል::

ግንኙነት 1 2 3 4 5

1. ባንኩ የደንበኛ ግብረመልሱን በኣፅንኦት ተቀብሎ ተመልሶ ለደንበኛው ያሳውቃል::

2. ለባንክ ሰራተኞች በመግባባት አማካኝነት የእኔን ቅሬታ ማሳየት እችላለሁ

3. በባንኩ ውስጥ ከአሉ ሰራተኞች ጋር በተደጋጋሚ እንነጋገራለን

4. የእኔን አስተያየት ለባንኩ ሰራተኞች በነፃነት እገልጻለሁ

5. ሰራተኞች ስለ ሁሉም የአገልግሎቱ ሁኔታዎች ትክክለኛ እና ዝርዝር መረጃ ይሰጣሉ

6. በማንኛውም ጉዳዩ ውስጥ ለውጥ ሲኖር በባንክ ውስጥ ያሉ ሰራተኞች በጊዜ ሂደቱን

ይነግሩኛል

7. ባንኩ በቂና ወቅታዊ መረጃ በጊዜ ይስጣል

8. ባንኩ የባንኩ መመሪያ ለደንበኞች በግልጽ ያሳውቃል (ስለ ደንበኞች መብት፤ ኃላፊነት

እና ሌሎች ተዛማጅ ጉዳዮች)

የግጭት አፈታት 1 2 3 4 5

1. ባንኩ የደንበኞቹን ቅሬታ ለማዳመጥ ፈቃደኛ ነው::

2. ችግሮች በሚከሰቱበት ወቅት ባንኩ የመፍትሄ ሃሳብን የማቅረብ ችሎታ አለው

3. በደንበኞች ችግር ከመፍጠሩ በፊት ባንኩ በግልጽ ግጭቶችን ለመፍታት ይሞክራል

89
4. ችግሮች በሚከሰቱበት ጊዜ ባንኩ እንዴት እና የት መፍታት እንደሚቻል በግልጽ

ያነጋግርዎታል

5. ባንኩ ለተነሱ ቅሬታዎች ፈጣን ምላሽ ይሰጣል

የደንበኞች ታማኝነት 1 2 3 4 5

1. ይህ ባንክ ከሌሎች ተፎካካሪ ባንኮች የሚለየው ነገር ቢኖር ባንኩ ከደንበኞቹ ጋር የተሳካ

ግንኙነት መፈጠሩ ነዉ::

2. የባንክ አገልግሎት በምትፈልግበት ጊዜ ባንኩ ምን ጊዜም ቢሆን ከሌሎች በተለይ

የመጀመሪያ ምርጫህ ነው

3. ከዚህ ባንክ በማገኘው አገልግሎት ምክንያት እና ባንኩ ፍላጎቴን ስለሚጠብቅልኝ ወደ

ሌላ ባንክ ለመቀየር አልፈልግም::

4. ከሁሉ በላይ ባንኩ በሚሰጠው አገልግሎት በጣም ደስተኛ ነኝ እና ሌሎች የዚህ ባንክ

ምርትና አገልግሎቶች ለመጠቀም እቅድ አለኝ::

5. ይህን ባንክ በሚመለከት ጥሩ መሆኑን ምስክርነቴን ስሰጥ በልበ ሙለነት ነው::

6. ከሌሎች ባንክ ይልቅ የዚህ ባንክ ታማኝ ደንበኛ ነኝ::

7. ሌላ ሂሳብ ለመክፈት እንን ብፈልግ የምከፍተው ደግሜ እዚህው ባንክ ነው ::

8. ምንም የቅርብ ጓደኞቼ እንኳን ሌላ ባንክ እድጠቀም ቢመክሩኝም, የዚህ ባንክ

ምርጫዬ አልተቀየረም

9. የዚህን ባንክ አገልግሎቶች የመጠቀም ሀሳቤ በቀላሉ አይቀየርም

ለአደርጉልኝ ትብብር ከልቤ እጅግ በጣም አመስግናለሁ!!!

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 Appendix 3C Interview questions
University of Gondar
College of business and economics
Department of marketing management

Structured interview conducted with top management members of private and

government owned banks.

Hello sir/madam! My name is Sintayehu Tesfaye and I am currently pursuing my Masters of

marketing management at college of business and economics, University of Gondar. I kindly
request you to ask a few set of questions regarding Customer relationship marketing practices
to improve customer loyalty in your bank. Shall I proceed?

Thinking over your entire experience in the position you have hold now, would you please
give me your genuine response to the following questions?

1. Can you describe the Customer Relationship Marketing (CRM) practice of your bank? In
what way does it differ from other banks?
2. How can you describe the importance of relationship marketing in securing the loyalty of
customer in your bank?
3. How does the bank attain knowledge about customers?
4. What are the CRM strategies that your bank applies to make customers satisfied?
5. How do you appraise the trustworthiness, commitment, empathy, communication,
responsiveness, and conflict handling of your bank customers?
6. How do you describe the awareness of employees on the concept as well as practice of
CRM?
7. Would you tell me any strength and weakness of the bank related to maintaining good
relationship with customers?

THANK YOU FOR YOUR COOPERATION!!!

91
Appendix 4 normality test

Histogram of customer loyalty to test normality

Appendix 5 linearity test

Scatter plot for Customer Loyalty

92
Appendix 6 Demographic with customer loyalty correlation table 1
Correlations

age of education level occupation of customer

responden of the respondent loyalty
t respondent

Pearson
1 -.393** .583** .129**
Correlation
age of respondent
Sig. (2-tailed) .000 .000 .008
N 418 418 418 418
Pearson
-.393** 1 -.375** -.104*
education level of the Correlation
respondent
Sig. (2-tailed) .000 .000 .034
N 418 418 418 418
Pearson
.583** -.375** 1 .106*
occupation of Correlation
respondent
Sig. (2-tailed) .000 .000 .030
N 418 418 418 418
Pearson
.129** -.104* .106* 1
Correlation
customer loyalty
Sig. (2-tailed) .008 .034 .030
N 418 418 418 418
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).

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 Appendix 7 Demographic with customer loyalty correlation table 2
Correlations
customer gender of income of the Years of used
loyalty respondent respondent the Bank
services?
Pearson
1 .039 .105* -.001
Correlation
customer loyalty
Sig. (2-tailed) .432 .031 .988
N 418 418 418 418
Pearson
.039 1 -.208** -.192**
Correlation
gender of respondent
Sig. (2-tailed) .432 .000 .000
N 418 418 418 418
Pearson
.105* -.208** 1 .445**
Correlation
income of the respondent
Sig. (2-tailed) .031 .000 .000
N 418 418 418 418
Pearson
-.001 -.192** .445** 1
Years of used the Bank Correlation
services? Sig. (2-tailed) .988 .000 .000
N 418 418 418 418
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).

Appendix 8 Residuals Statistics of regression analysis of general data

Residuals Statisticsa
Minimum Maximum Mean Std. Deviation N

Predicted Value 1.0150 4.9461 3.5771 .79510 418

Residual -2.42270 2.36300 .00000 .67864 418

Std. Predicted Value -3.222 1.722 .000 1.000 418

Std. Residual -3.544 3.457 .000 .993 418

a. Dependent Variable: customer loyalty

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Appendix 9 model summary of commitment

Model Summaryb
Mo R R Adjusted Std. Change Statistics Durbin-
del Squar R Error of R F df1 df2 Sig. F Watson
e Square the Square Chan Change
Estimate Change ge
239.8
1 .605a .366 .364 .83353 .366 1 416 .000 1.801
53
a. Predictors: (Constant), commitment dimensions of CRM
b. Dependent Variable: customer loyalty

Appendix 10 model summary of empathy

Model Summaryb
Mo R R Adjusted Std. Change Statistics Durbin-
del Squar R Square Error of R Square F df1 df2 Sig. F Watson
e the Change Chang Change
Estimate e
165.2
1 .533a .284 .283 .88542 .284 1 416 .000 1.931
33
a. Predictors: (Constant), empathy dimensions of CRM
b. Dependent Variable: customer loyalty

Appendix 11 model summary of responsiveness

Model Summaryb
Mo R R Adjusted Std. Change Statistics Durbin-
del Squar R Square Error of R Square F df1 df2 Sig. F Watson
e the Change Chang Change
Estimate e
224.4
1 .592a .350 .349 .84349 .350 1 416 .000 1.873
62
a. Predictors: (Constant), responsiveness dimensions of CRM
b. Dependent Variable: customer loyalty

95
Appendix 12 model summary of communication
Model Summaryb
Mo R R Adjusted Std. Change Statistics Durbin-
del Squar R Error of R F df1 df2 Sig. F Watson
e Square the Square Chan Change
Estimate Change ge
329.8
1 .665a .442 .441 .78165 .442 1 416 .000 1.902
11
a. Predictors: (Constant), communications dimensions of CRM
b. Dependent Variable: customer loyalty

Appendix 13 model summary of conflict handling

Model Summaryb
Mo R R Adjusted Std. Change Statistics Durbin-
del Squar R Error of R F df1 df2 Sig. F Watson
e Square the Square Chan Change
Estimate Change ge
374.9
1 .689a .474 .473 .75900 .474 1 416 .000 1.774
92
a. Predictors: (Constant), conflict handling dimensions of CRM
b. Dependent Variable: customer loyalty

96