Admas University

Faculty of Business

Department of Business Management

THE EFFECT OF CUSTOMER RELATIONSHIP

MANAGEMENT ON ORGANIZATIONAL SUCCESS IN
CASE OF ABAY BANK SC.

ADDIS ABABA, ETHIOPIA

2023

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 THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT
ON ORGANIZATIONAL SUCCESS

A Research Paper Submitted for the partial fulfillment of the

requirement for the Bachelor of art Degree in Business Management

Prepared by Id no.

Bezawet Birhanu ……………………………………………….0271/18

Besufikad Gorfu …………………………………………………1346/18

Gashaw Damtie…………………………………………………. 0930/18

Meron Tizazu ……………………………………………………..1037/18

Mitkie Masrie ……………………………………………………..1435/18

Advisor :- Demelash Shalo

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 Acknowledgement
First of all, we would like to thank our God for giving us wisdom and strength throughout our
study. our appreciation and thanks also go to our families who has been beside us and for their
unreserved support and encouragement during our study. We extended our deepest gratitude to
Mr. Demlash Shalo, who was advisor for this thesis, for all his continuous support and guidance.
We are also thankful to staffs and supervisors of Abay bank and customers of the bank who
helped us a lot during data collection

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Acronyms

ATM-Automated Teller Machine

CRM -Customer Relationship Management

POS -Point of sale

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 ABSTRACT
This thesis conducted on the title “EFFECT OF CUSTOMER RELATIONSHIP
MANAGEMENT ON ORGANIZATIONAL SUCCESS” in selected bank. The major objective
of the study was to assess the relationship between effective customer relationship management
practice and banking performance. The researcher selected one bank as a case study area and
employees and customers of the bank were identified as a target group 15 and 40 sample
respectively including one interview for the CRM manager of the firm. After selecting defined
target population, the researcher used judgmental (purposive sampling method) to gather all
necessary information to see the relationship between predictors and dependent variables. The
study utilized a descriptive research design to describe the overall customer relationship
management practice and banking customer relationship management performance situation. The
researcher used primary and secondary data as data source whereas, percentage is used to show
the distribution and frequency of variables. This research finding show there was strong positive
correlation between banking performance and effective CRM practice, compared with attracting
new customers the bank is given less attention to retain current valuable customers. process and
strategy has statistically significant unique contribution in explaining variance of banking
performance. To increase its performance the bank should focus on retaining current valuable
customers than attracting new customers because it enables to minimize organizational costs, and
to use technology as CRM process implementation tools the bank should give attention for both
technology infrastructure and architecture and the like were the major one.

Key words: Customer Relationship Management, Bank performance

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Contents
Chapter One: Introduction -2-
1.1 Background of the Study...........................................................................................- 2 -
1.2 Statement of the problem...........................................................................................- 3 -
1.3 Research Questions....................................................................................................- 5 -
1.4 Research objectives....................................................................................................- 5 -
1.5 Significance of the study............................................................................................- 5 -
1.6 Scope of the study.......................................................................................................- 6 -
1.7 Organization of the Study..........................................................................................- 6 -
1.8 Limitation of the study...............................................................................................- 6 -
Chapter two: Review of Related Literature - 7 -
2.1 Customer Relationship Management Definition.....................................................- 7 -
2.2 Significance of customer relationship management................................................- 8 -
2.3 Challenges...................................................................................................................- 9 -
2.4 Empirical review.......................................................................................................- 17 -
Chapter Three: Methodology of the Study - 18 -
3.1 Research design........................................................................................................- 18 -
3.2 Target populations...................................................................................................- 18 -
3.1. Data source and Type...............................................................................................- 19 -
3.3 Data collection method.............................................................................................- 19 -
3.4 Methodology of data analysis..................................................................................- 19 -
3.5 Ethical Consideration...............................................................................................- 19 -
CHAPTER FOUR :DATA PRESENTATION, ANALYSIS, AND INTERPRETATION - 21 -
4.1 Descriptive Analysis and Interpretation................................................................- 21 -
4.2 Employee’s background...........................................................................................- 22 -
4.3 Basic parameters of Customer Relationship Management practice...................- 23 -
4.4 4.3 customers profile................................................................................................- 30 -
4.5 An interview to managers........................................................................................- 35 -
CHAPTER FIVE:CONCLUSION AND RECOMMENDATIONS - 38 -
5.1 Summary...................................................................................................................- 38 -
5.2 Conclusions...............................................................................................................- 38 -

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 5.3 Recommendation......................................................................................................- 39 -
5.4 Limitation and Implication of Further Research..................................................- 40 -
References…………………………………………………………………………………….- 41 -
Appendix A ………………………………………………………………………………...- 43 -

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 Chapter One: Introduction

1.1. Background of the Study

In today’s the banking sector faces enormous amount of challenges regarding demand for vast
amount of customer, deposits, loans and the urge to keep up with the up to dated technologies.
The banking sector realized the cruciality of the CRM (customer relationship management) in its
acquisition of new customers and retain the existed ones
Many findings have been depicted the un-interwind relationship between the customer
relationship and its impact on the prosperity of the sector. CRM is increasingly important to
firms as they seek to improve their profits through longer term relationships with customers. In
recent years, many have invested heavily in information technology (IT) assets to better manage
their interactions with customers before, during and after purchase (Bohling et al., 2006). CRM
is one of the major sources of competitive advantage in banking sector. Furthermore, CRM is an
extensively accepted instrument that supports customer-oriented organizations’ decisions
(Mohammed, Rahid, & Tahir, 2014)
Customer relationship management is concerned with the creation, development and
enhancement of individual customer relationships with carefully targeted customers and
customer groups resulting in maximizing their total customer life-time value. Customer
relationship management is one of the strategies to manage as is focuses on understanding
customers as individuals instead of as part of a group [Lambert, 2010]
Having in mind that the above statement ABAY Sc. bank Bambis area branch has Customer
relationship management in its firm. Customer retention refers to the activities and actions of
companies and organizations to reduce the number of customer defections and making them
loyal. The goal of customer retention programs to help companies retain as many customers as
possible, often through customer loyalty and brand loyalty initiatives. It is important to
remember that retention begins with the first contact customer has with a company and continues
throughout the entire lifetime of the relationship (Anonymous, CRM, http://www.ngdata.com,
accessed in Nov,15,2022).
Building customer loyalty is creating a strong tight connection to customers. It is a dream of any
marketer and often the key to long term marketing success. [Kotler, 2009]. In order to build

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loyalty the company uses the following methods; - Fluent communication with customers:- it
incurs listen thoroughly list and respond appropriately which vital part of the CRM. Developing
loyalty programs:- to customer loyalty programs that companies can offer are frequency
programs and club marketing programs FP’s (frequency programs,[ Kotler, etal 2009].

1.2. Statement of the problem

In the sector even though there is a common understanding on the vitality of CRM for the
escalation of the organizational profitability there is a drawback when we come to
implementation of the CRM. And in fact, it has a lot of problem while practicing it.
The banking industry has grown over the past years in Ethiopia and the world at large. As a
country becomes more developed, there is greater need for banking service to facilitate the
peoples’ monetary transactions (MOFED, 2010). In today’s competitive business environment,
giving quality services to customers is a very critical exercise. Meeting customer expectation by
giving quality services is very important to loyal customers. CRM consists of a historical view
and analysis of all the acquired or to be acquired customer in the firm for a long time. If the
customers are satisfied, they will always be loyal to the firm and the business remains forward to
the development of its power. (http://www.managementstudyguide.com)
It has been found out that through maintaining customer service quality, customer satisfaction
can be attained. This leads to profitability and growth of the organization (Brown, 2000). Thus,
any bank that wishes to either grow in size of its banking operation or improve its profitability
must consider the challenges affecting its customer relationship (Ashok and Rajesh, 2009).
As Mishra etal,(2011),that the banking sector is facing enormous challenges of attracting the
new customers and retaining the existing ones. This specific include competition between banks,
increased customer’s demand and lack of knowledge to cope up with the new and emerging
technologies. This idea was supported by Oogarah-Hanuman, 2011) in today’s banking
environment it is becoming difficult to build and maintain strong and lasting relationships with
customers. Mainly problems in handling customers, lack of advanced banking technologies, less
emphasis to Customer relationship management in relation to marketing performance
(Ranson,2012), lack of enough knowledge about Customer relationship management.
A study conducted on imperatives of Customer relationship management in commercial banking
industry proves that customers have experienced challenges ranging from Daley, stock out, non-
availability of staff at service points, unprofessional conduct or redness by the staff of the bank,

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poor standard of records or improper information, failed promises among other
(Ogbadu&Usman,2012). However, Customer relationship management is no a day new concept
to many organization.
A research conducted by Semunesh (2009) reveals that banks operating in Addis Ababa faced
difficulty in applying new strategy, lack of timely and organized data, and availability of huge
information gap between different stakeholders. Another study reveals banks have been
operating at less than their production frontier due to technical inefficiency and inefficiency
among the banks was varied and time variant (Tesfahun, 2014)
The research conducted by Semunesh and Tesfahun reveals that there is lack of timely and
organized data, technical inefficiency and hinderance in applying new strategies and give less
attention for customer and lack of prolonged customer relationship are the yardstick of poor
CRM.
Considering all the above statements customers are not satisfied by the services they are received
or the tardiness of the sectors not being able to meet their customers expectation and due the lack
of competitive spirit among the market banks failed to deliver high standard services to their
customers while the other face of the world enjoyed it for the CRM fruit.
The variables that we are used to measure Customer relationship management, have an impact
on customer loyalties and be able achieve organizational profitability from many perspectives.
These variables are. strategy, technology, people, process and customer.
Based on the literature gaps identified above, the research would attempt to measure the
contribution of customer relationship management practice on banking performance and forward
its recommendation based on the result.

1.3. Research Questions

 Is there a significant relationship between organizational performance and customer
relationship management?
 What Process aspects in banking CRM practice are key success factors for organizational
performance?
 How Technology utilization affect organizational performance in customer management?
 To what extent People aspect (top management, motivated employee and partners)
contribution is key success factor for organizational performance?

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  How is Strategy aspect of customer relationship management a key success factor for
effective banking performance

1.4. Research objectives

General objectives
The general objective of the research is to assess the importance of the Customer relationship
management and its impact on organizational success.
Specific objectives of the research
 To provide information on effects of customer relationship management on employee
satisfaction.
 To assess the strength and weakness of CRM practice while, implementing the strategy in
banking activity.
 To show the gap in applying effective customer relationship management practice.
 To assess customer loyalty, it’s importance to customer’s retentions.
 To analyze Customer relationship management would have contributions to CLV
(customer life time value)

1.5. Significance of the study

The study’s importance is to the bank under study by sowing the gap that have been observed in
the organization’s customer relationship management so as to maintain the defect and rendering
its service at its best as possible. In that way the company would achieve its organizational
success through giving outstanding services to its loyal customer and the new coming ones.
There for this research will benefit both parties.

1.6. Scope of the study

The scope of the study will be limited to the importance of Customer relationship management
and its impact keeping the customer loyal to the organization so as to achieve organizational
success in ABAY Bank Sc. Due to time, budget and information constraints the research
concentrate on Addis Ababa, Bambis area branch ABAY bank Sc. for obtaining the necessary
information which would help to make the research meaningful.

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1.7. Organization of the Study
This paper is organized in to five chapters. chapter one deals with introduction background of the
study, statement of the problem, objective of the study, significance of the study, scope of the
study, limitation of the study. Chapter two compromises the review of related literature. Chapter
three deals with research methodology, sampling technique, target population, sampling method,
source of data, data collection method, and method of data analysis. Chapter four is about data
analysis and presentation and finally chapter five include summary and conclusion, research
schedule and research budget, reference books.

1.8. Limitation of the study

Limitation of the study would be Unwillingness of respondents in giving the reliable information
especially on their income. Lack of well-organized documents (references) on the subject matter,
Unable to get painstakingly filled information from bank employees on the subject matters
because they were busy in their work, some respondents were not willing to fill in the
questionnaire completely in customers perspective.

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 Chapter two: Review of Related Literature

2.1. Customer Relationship Management Definition

There are a number of working definitions for CRM. In fact, the letters CRM have been used to
identify Continuous Relationship Marketing, Customer Relationship Marketing and Customer
Relationship Management. Each term represents the same process. CRM can be defined as a
process that maximizes customer value through on-going marketing activity founded on intimate
customer knowledge established through collection, management and leverage of customer
information and contact history. CRM is about perfecting relationships to maximize a customer’s
value over time (Rogrn B.,Chirstofer Z. and Michael Z. 2014).Customer Relationship
Management is a comprehensive approach for creating, maintaining and expanding customer
relationships(krisren A. and Carrol K. 2002).

Speaking about CRM, and before formulating some definitions given in the literature reviewed,
it is helpful initially to determine what it is not. It’s not just software or a program that a
company installs to improve its sales. The CRM requires a change of philosophy within the
company and the satisfaction of customer needs, as the cornerstone of its existence. If a company
wants to be competitive it has to shift its marketing strategy from the focus to product to
customer profitability management. Products are already easily copied by competitors and
therefore what is needed is focusing on customer relationship (Gade, 2005)

CRM offers sellers the opportunity to gather customer information rapidly, to identify the most
valuable customers over a time period, and to increase customer loyalty by providing customized
products and services. It may also facilitate cross selling by attracting loyal customers to
additional products and services, and make it easier to capture similar customers in the future
(strategic marketing 8th edition).

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2.2. Significance of customer relationship management

The achieved higher profit is the main benefit of CRM systems for proprietors, i.e.:

1. Costs decrease: increased total effectiveness, an automated process of sales, service and
marketing companies; decreased costs of customers’ management, automated routine work.

2. Income increase: greater quality of sales and services, management of customers’ possibilities
and problems (incidents, enquiries), better ratio of sales.

3. Benefit of CRM systems for a customer: to get an offer in an appropriate form when it is
necessary and what it is necessary, to be appropriately served, to feel important, to be informed
in time, a possibility to choose a service channel (self-service, full service).

4. Benefit of CRM systems for an employee: The system has to be a friend; it helps to fulfil more
activity during the same time, and a higher salary is related to it; the feeling of self-control, a
possibility to show oneself as leader and sound competition emerge (Urbanskienė et al, 2008).

There are significant business benefits which accrue from an effective, integrated Customer
Relationship Management approach. These include:

 Reduced costs, because the right things are being done (i.e., effective and efficient
operation)
 Increased customer satisfaction, because they are getting exactly what they want (i.e.,
exceeding expectations)
 Ensuring that the focus of the organization is external
 Growth in numbers of customers
 Maximization of opportunities (e.g., increased services, referrals, etc.)
 Increased access to a source of market and competitor information
 Highlighting poor operational processes
 Long term profitability and sustainability Forward thinking organizations understand the
vital need to maintain a strategic focus on CRM and to resource and manage it
appropriately (Gifford, N.A)

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2.3. Challenges

CRM systems operate at the customer–firm interface, and firms frequently use information from
customers to create and deliver valuable offerings to them. Customers are likely to be willing to
reveal private information if they derive “fair” value from exchanges with the firm. However,
firms may behave opportunistically (extracting all economic surplus), creating mistrust among
customers, so that they act strategically when they provide information or participate in
transactions with the firm (Boulding et al., 2005). For example, customers might retaliate against
perceived unfairness by providing inaccurate information, generating unfavorable word of
mouth, switching to the competition, or boycotting the firm. Consequently, successful
implementation of CRM principles requires that firms carefully consider issues related to privacy
and fairness (Boulding et al., 2005).

2.1.1 Requirements for effective CRM implementation

Corporate expenditures on CRM technology are running at very high levels across the world.
Estimated expenditures rose from $20 billion in 2000 to $46 billion in 2003, with signs of
continued growth. Nonetheless, the evidence of the performance of CRM systems has been
disappointing for many companies. The Gartner group concluded in 2002 that 55 percent of all
CRM projects do not produce results. (Strategic marketing 8th edition).

Indeed there have been several suggestions that high failure rates associated with CRM are
caused by managers under estimating the real organizational changes required for effective
implementation that unlocks the benefits of CRM., while the front end of CRM systems is
concerned with building data bases integrating customer data, providing better customer service
and establishing systems like automated call centers for enhanced responsiveness, achieving the
full potential of CRM requires change in companywide processes, organization structure, and
corporate culture(strategic marketing 8thed ).

Research suggests that there are four (4) significant pitfalls to avoid in CRM initiatives.

Implementing CRM before creating a customer’s strategy success relies on making strategic
customer and positioning choices, and this outweighs the importance of the computer systems,
software, call centers and other technologies.

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Putting CRM in place before changing the organization to matches CRM affects more than
customer facing process it impacts on internal structures and systems that may have to change.
Assuming that more CRM technology is necessarily better, rather than matching the technology
to the customer strategy. Investing in building relationships with disinterested customers, instead
of those who value them. (Strategic marketing 8thed).

2.1.2 One to one marketing

Some of the ground work for customer relationship management was laid by Peppers and
Rogers, who outlined a four-step framework for one to one marketing that can be adapted to
practicing CRM marketing as follows.

Identify your prospects and customers: - do not go after everyone. Build, maintain and mine a
rich customer data base with information derived from all the channels and customer touch
points.

Differentiate customer’s interims of (1) their needs and (2) their value to your company spends
proportionately more effort on the most valuable customers (MVC’s). Apply activity-based
costing and calculate customer life time value. Estimate net present value of all future profits
coming from purchases, margin levels and referrals, less customer specific servicing costs.

Interact with individual customers: - to improve your knowledge about their individual needs and
to build stronger relationships formulate customized offerings that you can communicate in a
personalized way.

Customize products services and messages to each customer facilitate customer company
interaction through the company contact center and website.

Customer relationship management and strategic marketing

From the perspective of strategic marketing, there are several reasons why CRM is important and
why there should be marketing involvement in decisions about CRM.

Implementation

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 It is important that the adoption and implementation of CRM should be seen as more than
technology focused on efficiency.

Customer value

Operationally it is important not to assume that the drivers of value for all customers are the
same, or than CRM is the key to all important customer relationships.

Performance metrics

The availability of CRM data provides the opportunity to update the measures used by managers
to assess the success of products and services in the market place.

Competitive differentiation

If some customers are un profitable then rather than “firing” the customer, the competitive issue
may be how to change the route to market to make them profitable to the company CRM data
may provide one of the most powerful tools for identifying different customer on the basis of
their behaviors and other characteristics, to locate those whose needs have good fit with a
company’s capabilities. (David w. cravens Nigel F, Piercy (Strategic marketing 8thed.).

Increasing the value of the customer base

A key driver of shareholder value is the aggregate value of the customer base. Wining companies
improve the value of their customer base by excelling at strategies such as the following.

 Reducing the rate of customer defection: selecting and training employees to be

knowledgeable and friendly increases the likelihood that the inevitable shopping
questions from customers will be answered satisfactorily.
 Increasing the longevity of the customer relationship: the more involved a customer is
with the company, the more likely the customer will remain loyal. Some companies treat
their customers as partners especially in business to business markets soliciting their help
in the design of new productions improving their customer’s service.

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  Enhancing the growth potential of each customer by: increasing sales to existing
customers with new offerings and opportunities. Football clubs across Europe market
arrange of products including clothing, scarves, souvenir watches and credit cards.
 Making low profit customers more profitable or ceasing to deal with them. To avoid the
direct need for termination, marketers can encourage unprofitable customers to buy more
or in larger quantities forgo certain and travel agencies are all now charging for once free
services to ensure minimum customer revenue levels.
 Paying additional attention to high value customers: the most valuable customers can be
treated in a special way. Thoughtful gestures such as birthday greetings, small gifts or
invitations to special sports or arts events can send a strong positive signal to the
customer Volvo dealers, for example have had a long tradition of placing a bouquet of
flowers in every new car sold.
2.1.3 Attracting and retaining customers

Customers are becoming harder to please. They are smarter, more price conscious more
demanding, less forgiving and they are approached by many more competitors with equal or
better offers. The challenge according to Jeffrey Gitomer is not necessarily to produce satisfied
customer several competitors can do this. The challenge is to produce delighted and loyal
customers (Kottler Keller marketing management). Companies seeking to expand their profits
and sales have to spend considerable time and resources searching for new customers. To
generate leads the company develops advertisement and places them in media that will reach
new prospects it sends direct mail and makes phone calls to possible new prospects its sales
people participate in trade shows where they might find new leads it purchases names from list
brokers and soon. All this activity produces a list of suspects are people or organizations that
might conceivably have an interest in buying the company product or service, but may not have
the means or real intention to buy. The next task is to identify which suspects are really good
prospects customers with the motivation, ability and opportunity to make a purchase by
interviewing them checking on their financial standing and soon. (Kottler Keller (2006),
marketing management 12th ed.).

More companies now recognize the importance of satisfying and retaining customers. Satisfied
customers constitute the company’s customer relationship capital. If there company were to be

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sold, the acquiring company would have to pay not only for the plant and equipment and the
brand name but also for the delivered customer base, the number and value of the customers who
would do business with the new firm. Here are some interesting facts that bear on customer
retentions.

 Acquiring new customers can cost five times more than the costs involved in satisfying and
retaining current customers.
 The average company loses 10 percent of its customers each year.
 A 5 percent reduction in the customer defection rate can increase profits by 25 percent to 85
percent depending on the industry.
 The customer profit rate tends to increase over the life of the retained customer.

Markets can be characterized by their long-term buying dynamics and how easily and often
customers can enter and leave.

 Permanent capture markets once a customer always a customer (e.g.) nursing homes trust
funds and medical care.
 Simple retention markets customers can permanently be lost after each period (e.g.) telecom,
cable financial services, other service subscriptions
 Customer migration markets customer can leave and come back e.g. catalogs consumer
products retail and airlines.
2.1.4 Building customer loyalty

Improving loyalty

Creating strong tight connections to customers is the dream of any marketer and often the key to
long term marketing success. The Danish newspaper publishing company Dag bladder bores
increases customer loyalty through relationship marketing companies that want to form strong
customer bonds need to attend to a number of different considerations. One set of researches see
retention building activities as adding financial benefits, social benefits or structural ties (Philip
kotler 2009). The following sections explain four important types of market in activities that
companies are using to improve loyalty and retention.

Interacting with customers

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Listening to customer is crucial to customer relationship management. However listening is only
part of the story. It is also important to be a customer advocate and as much as possible, to take
customers side on issues, understanding their point of view (Kotler, Keller, Koshy, Jha (2009),
marketing management 13thed.

Developing loyalty programmers

Two popular customer loyalty programs that companies can offer are frequency programs and
club marketing programs. Frequency programs (FPS) are designed to provide rewards to
customer who uses frequently the bank service in substantial amounts.

Typically frequency programs (FPS) introduce in an industry gains the most benefit, especially if
competitors are slow to respond.

Companies have created club membership programs. Club member ship programs can be open to
everyone house a service or can be limited to an affinity group or those willing to pay a small fee
(kottler Keller ,(2009))

Personalizing marketing

Company personal can create strong bonds with customers by individualizing and personalizing
relationships.

In essence thoughtful companies turn their customers in to clients and then in to advocates.

An increasingly essential ingredient for the best relationship marketing today is the right
technology. Dell computer could not customize computer ordering for its global corporate
customers without advances in web technology. Companies are using email, websites, call
centers, data bases and data bases software to foster continuous contact between company and
customer.

Recapturing customers

Regardless of the nature of the category or how hard companies may try, some customers in
evitable become in active or drop out. The challenge is to reactive dissatisfied customers through

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win back strategies. It is often easier to re attract ex-customers (because the company knows
their names and histories) than to find new ones. The key is to analyze the causes of customer
defections through exit interviews and host customer surveys and win back only those who
strong profit potential.

Patronize or personalize

Customer relationship marketing professionals at the end of the day share to navigate the narrow
channel between earning customs favor and loyalty and irritating customers. They may be
tempted to seek efficiency (to them) at the cost of becoming in effective by irritating or
patronizing the customer. The challenge facing companies is to achieve the right balance
between efficiency and effectiveness, between direct human communication and CRM
automated systems. With banks in mind a frustrated customer might respond. CRM can work,
providing the goals are modest and there is some worthwhile benefits for customers. However,
its capacity to irritate and repel is massive so it needs to be carried out sensitively.

2.1.5 Building loyalty

How much should a company invest in building loyalty so that the costs do not exceed the gains?
We need to distinguish five different levels of investment in customer relationship building.

1. Basic marketing: _the employees simply deliver the services.

2. Reactive marketing: _the employees simply deliver the service and encourage the customer
to call if he or she has questions, comments or complaints.

3. Accountable marketing: _ the employees of the bank phones to the customer to cheek
whether the service is meeting expectations. The employees also ask for service
improvement suggestions and any specific disappointments.

4. Proactive marketing: the employees contact the customer from time with suggestions about
improved services or new technology.

5. Partnership marketing: the company works continuously with its large customers to help
improve their performance. An increasingly essential in gradient for the best relationship

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 marketing today is the right technology, companies are using email, websites call centers,
data bases and data base software to foster continuous contact between company and
customer, here is how one company used technology to build customer value.

2.1.6 Reducing customer defection

There are five main steps accompany takes to reduce the defection rate first the company must
defines and measures its retention rate, for a magazine the renewal rate is a good measure of
retentions, for a college it could be the first to second year retention rate, or the class graduations
rate (kotler keller (2006) .

Forming strong customer bonds

“marketing memo” forming strong customer bonds often some tips on connecting with
customers, there are three retention building approaches, adding financial benefits, adding social
benefits, and adding structural ties.

Adding financial benefits: - two financial benefits that companies can offer are frequently
programs and club marketing programs. Frequency programs (fps) are designed to provide
rewards to customers who use the service frequently frequency programs (fps) are designed to
provide rewards to customers who use the service frequently frequency programs are seen as a
way to build long term loyalty with these customers. Potentially creating cross selling
opportunities in the process.

Adding social benefits: - company personal work on cementing social bonds with customers by
individualizing and personalizing customer’s relationships.

Adding structural ties

The company may supply customers with special equipment’s or computer links that help
customers manage orders.

The suggestions for creating structural ties with the customer

 Create long term contracts; a newspaper subscription replaces the need to buy a newspaper
each day.

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 Charge a lower price to consumers who use the services frequently in the company.

2.4. Empirical review

Different Empirical studies examining the success of CRM technology have failed to alleviate
this skepticism as investigations to date span a limited range of activities and are noticeably
silent on the extent to which CRM investment contributes to firm performance (Boulding et al.,
2005). It also raises questions regarding the most appropriate mix of capabilities to effectively
exploit investment in CRM empirical work in IT has sought to examine the direct connection
between investment in IT and firm performance. However, the findings from this work have
been mixed some (Weill, 1992; Powell & Dent-Micallef,1997; Mendelson & Pillai, 1998) report
a negative relationship between IT investment and aspects of firm success, while others have
demonstrated a positive relationship between IT investment and firm performance. The lack of
consistency in these findings is independent of whether performance is defined as financial,
productivity driven, process-related or the degree of organizational learning (Ray et al., 2005).
Although this research provides evidence of a general relationship our knowledge of the specific
IT infrastructure and organizational factors driving these general results remain limited
(Coltman). Research finding shows positive effects appear when the strategy of CRM is carried
out in a highly skillful way, resulting in enhancing the customer's satisfaction and loyalty, while
the negative effects appear when the execution of such strategy is deficient, resulting in the
customer's dissatisfaction and disloyalty (Colgate & Danaher, 2000). The study showed that both
the customer's desire to extend his/her relationship with the institution and his reliance on the
customer-loyalty programs positively affect customer retention and the growth of the customer's
share (Verhoef , 2003). The study concluded that the customer's desire to purchase extra products
from the same institution and not to switch to the competitors hinges on his/her previous
experience of the services which the institution provides, the advantages he expects when he
buys the products of that institution and his/her confidence in the ability of the institution to
provide high-quality services (Ngobo, 2004). The research result concluded that the
distinguished abilities to apply CRM lead to the improvement of performance.

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 Chapter Three: Methodology of the Study

1. Introduction

This chapter presents the methodology of the study, research methodology is part of the study
that will be used to discuss research approach & design, sample & sampling techniques, source
of data collection, data collection instruments, reliability & validity of the study and the method
of data analysis.

3.1. Research design

Research design is a master plan specifying the methods and procedures for collecting and
analyzing the needed information. John, A. et al. (2007) stated that research design is the
blueprint for fulfilling research objectives and answering research questions Therefore, research
design is a detailed plan for how a research study is to be completed-operationalizing variables
so they can be measured, selecting a sample of interest to Study, collecting data to be used as a
basis for testing hypotheses, and analyzing the results.

The research has chosen the descriptive research design to answer the problem statement and
meet the research objectives on this study. The research described demographic facts or
characteristics of respondents using descriptive research design. The research prefers descriptive
research as it is convenient for model testing and description of the correlation of CRM and
loyalty. According to Kothari (2004) the main characteristic of descriptive method is that the
researcher has no control over the variables; he/she can only report what has happened or what is
happening.

3.2. Target populations

Ranjit Kumar (2011) described Sampling as the process of selecting a few (a sample) from a
bigger group (the sampling population) to become the basis for estimating or predicting the
prevalence of an unknown piece of information, situation or outcome regarding the bigger group.
Therefore it is necessary to survey a sample of the population as an alternative in order to
formulate predictions about the entire population. The target population for this study
encompassed customers employee and manager of Abay bank Sc., Bambis area branch. On the
top of that the research would use convenience non probability sampling method. Total
population of the study for the customer is not known for certain because it varies all the time.

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3.3. Sampling technique
the sampling target in the study comprises of the manager of the CRM team of the bank,
employees that are assigned in CRM and more importantly the customer who came frequently to
the bank. The data collection process from the bank the researcher uses interviews for the CRM
manager and questionnaires for the customers. To collect the data the researcher selects 15
respondents from the employees and 40 from the customers. The sampling techniques were
based on non-probability sampling methods. These techniques are selected because: - It enables
the researcher to freely select only respondent that think best fit to the questions, it is convenient
to use, and It consumes less time.

3.4. Data source and Type

There are two types of sources when collecting data; primary and secondary data sources. The
researcher collected primary data using structured questionnaires directly from customers who
are selected for this study purpose and interviews for the manager and CRM assigned personnel.
Moreover, secondary data which has already been gathered by someone else like books,
websites, various published journals and annual reports are used on this study.

3.5. Data collection method

According to Cohen (2011) questionnaire is a set of questions designed to produce the statistical
information from the respondents in order to accomplish research objectives. It allows the
researchers to collect the relevant information necessary to address research question or model
hypothesis testing. Questionnaire method is used as a method of data collection under this study.
The questionnaire is contained statements that are specifically designed to measure the effect of
CRM on customer loyalty through the four behavioral dimensions of CRM-Key Customer
Focus, CRM organization, Knowledge Management and Technology-based CRM. Interview
were used to get better and crucial information.

3.6. Methodology of data analysis

In this section the research would describes how to organize, analyze and interpret data. The
analyzed the data using tabulation and percentage method.

3.7. Ethical Consideration

Before respondents proceed on filling out the questionnaires, they are briefed about the purpose
of the study genuinely and respondents are asked to fill out the questionnaire based on their free

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will. Assurance has given to respondents that their personal information shall be kept
confidentially and will be used only for this specific study.

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 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS, AND INTERPRETATION

The major purpose of this chapter is to present, analyze, and interpret the raw data which
collected from the respondents. The researcher collected raw facts from the respondent to
investigate the effect of customer relationship management practice for banking performance.
mainly the researcher focused in two areas descriptive analysis (mean, and standard deviation) of
the data and relationship analysis (correlation) to convert this data in to information. After
grouping of the response, the researcher also tried to show the implication of the data to the user
in the interpretation part next to each table and graph.

4.1 Descriptive Analysis and Interpretation

This section of the research provides the overall insight of Customer relationship management
practice, the banks overall performance in implementing the strategy and general description of
the organization. The researcher used to describe the situation. This section provides general
insight to the reader about the organization selected for the study. In this section name of the
company, year of establishment, types of ownership, and number of branches/ department
managers participated in this study were reviewed

Table 4.1 general information of the company

Questionnaire Questionnaire Interview Interview Response

distributed responded executed responde rate in(%)
Name of the
d
organization custome Employee Customer Employee Ques. Inte.
r
Abay Bank 40 15 34 15 1 1 89.1 100
Sc.

Total 55 49 1

Source :-own survey(2023)

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Table 4.1 shows that among the distributed questionnaire 89.1% of it were filled correctly and
form the interview that been conducted responded 100%.

Table 4.2 Demographic characteristics of employees

employee’s background

No of item Descriptions No of respondents Percentages

Sex Male 9 56.3%

Female 7 43.7%

Total 16 100%

1. Age 20-25 3 18.75%

26-35 10 62.5%

35-45 3 18.75%

>65 - -

Total 16 100%

2. Education Diploma 2 12.5%

Degree 12 75%

Degree & above 2 12.5%

Secondary complete - -

Total 16 100%

3. Work experiences 1-7 14 87.5%

7-14 2 12.5%

Above - -

Total 16 100%
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 Source: own survey (2023)

Table 4.2 revealed, 56 percent of the respondents of the bank were male while the remaining 44
percent of the respondents were female. This indicate the bank uses proportional gender ratio. On
the other hand, 18.75 percent of the respondents of the bank were found in the age interval of 20-
25 years, the remaining 62.5and 18.75 percent were found in the age interval of 26 to 35 and 36-
45 years respectively. As the data fed us both the desk employees and the Manager are young
and middle aged. This indicates that as majority of bank managers are middle age, they can
easily implement the CRM practice through their experience. On the other hand, they may not be
communicating with all kind of customers and customers cannot order them easily. From this
data the researcher can conclude that majority of the respondents in the two banks were fall in
the age range of 20 to 45 years. From this we infer that the bank has the number of young and
productive age group.

Table 4.2 also depicts educational background and 75 percent of the respondents of the bank
were BA degree holders, 12.5 and 121.5 percent were Master’s degree and Diploma holders.
Like According to all the respondents to this study they have diploma certificate as their
minimum level of qualification. Therefore, through their experience and educational background
they can play a key role to the organization in implementing CRM.

In the work experience perspective 87.5 percent of the respondents of the bank have 1 to 7 years
of working experience, and 12.5 percent of the respondents have 7 to 14 of years working
experience and since the majority of the employees comprises of 1-7 years of work experience
which shows the bank gives chances for new graduates and the one that are comprises fewer
portion of it are on the top so they can mentoring and managing with their years of experience.

4.2.1. Basic parameters of Customer Relationship Management practice

This section gives an implication on factors affecting customer relationship management practice
and performance indicator of better operation in customer relationship management practice. To
show these variables the researcher organized in independent variable (strategy, process, people,

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 technology and customer) are factors that affect customer relationship management and
dependent variable is banking performance. The researcher tried to identify different attribute
that describe the major variables and included in questionnaire. The response for the
questionnaire and the question asked for respondent included in table as follows.

Table 4.2.1: strategy implementation for customer relationship management practice

Statements Descriptions Total number Percentage

of respondents in respect
v. high high neutral low v.low
to their
sequence

Compared with previous years, there is a 6 9 - - - 40%,60%

greater effort to attract new customer

Customer Relationship Management 15 - - - - 100%

strategy is included as long term focus in
your corporate strategy

Compared with previous years, there is a 5 10 - - - 33.3%,66.7

greater emphasis to retain current
valuable customer.

Based on data gathered, processed, 10 5 66.6%,33.3

stored and retrieved information, your %
company understands the future needs
of the main customers.

Over all activity of strategy 15 57.13%

Source :- own survey (2023)

The researcher raised four questions to check the applicability of the strategy in the view of these
three factors. As indicated by table 4.2.1 Customer strategy (Focusing for long term relationship,
including in corporate strategy), value creation (focusing on retain the valuable customers, and
customer interaction (attracting new customers, resource allocation) are the major classifications.

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 And regarding the effort that has been made attracting new customer is 40% very high and 60%
high this shows that the organization put robust effort to outnumber its customer, when it comes
to planning the CRM as long term rated 100% very high, the effort been made to retain the
existed one rated 53.3% very high and 46.7% high and at last about gathering and retrieving
information for the sake of the customer rated 66.6 very high and 33.3 high. From the date that
has obtained showed us that the organization works at their best to have a better strategy toward
CRM.

Table 4.2.2: Technology Utilization for customer relationship management practice

Statements Descriptions Total Number Percentage

of respondents in respect
v.high High neutral Lo v.low
to their
w
sequence

Your customers have a tendency to use 7 8 3 46.6%,53.3

new technology. %,20%

Your company uses sales force 11 4 73.3%,26.7

automation to support business %
operational processes

Your company uses automated tools of 15 100%

business operational processes by using
internet for servicing the customers to
facilitate interactional processes with
customers

There is strong information system 6 9 40%,60%

integration with purpose of better
support of business processes

Over all activity of Technology 52.48%

Source :- own survey (2023)

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 Customer relationship management involves using technology to organize, automate, and
synchronize business processes—principally sales activities, but also those for marketing,
customer service, and technical support. The overall goals are to find, attract, and win new
clients, nurture and retain those the company already has, entice former clients back into the fold,
and reduce the costs of marketing and client service (Customer Relationship Management,
2012). Clark and Smith (as cited in Soeini et al., 2012) argued that IT is regarded as an enabler
for CRM strategy.

The researcher needs to show the level of technology utilization in the day to day banking
activities and its role for the organizational performance. To measure the level of technology
utilization in banking the researcher raised questions that considered the two sub factors of
information technology (information technology infrastructure and information technology
architecture). about being their customer using automation for business activity its rated 73.3%
V. high and 23.7% high. About the use of automated tool for daily based activity rated 100% V.
high and high on the question that inquire if the organization have strong MIS its rated
40%V.high and 60% high .from having all the data in mind the organization striving to be up-to
date to compete and to satisfy its customer.

Table 4.2.3: People participation for Customer relationship management practice.

Statements Descriptions Number of Percentage

respondent s
v.high high neutral low v.low

Your Customers are likely willing to 5 7 2 33.3%,46.6

uncover private information because of %,13%
the “trust” from exchanges for value
creation with the organization

Your Customers actively play a key role in 1 3 9 2 6.6%,20%,

order to improve the system by giving 60%,13.3%
feedback.

Your customers’ relationship with the 9 6 60%,40%

bank depends on whether they are

32 | P a g e
satisfied with the service delivered by the
bank.

Your customers established long term 11 4 73.3%,26.6

relationship with your firm. %

The over all activity of customer 35.7%

Source :- own survey (2023)

This research shows the overall role of people for the success of customer relationship
management practice in banking sector. People can be divided in to three based on their function
in order to apply and run smoothly customer relationship management in the banking sector. Top
manager, partner and motivated employee are the major actors in practicing effective CRM
practice. The result of this research shows in the above table 4.2.3 about the trust between the
two parties its rated 43.6% V.high,33.3% high and 20% of neutral and the role of customer on
giving feed back so as to improve the system the rated 6.6 V.high,20 high 60 neutral and 13.4%
low at this section the data showed that the organization not taking seriously the feedbacks that
are coming from the customers.

Table 4.2.4 Contribution of Process for Customer Relationship Management Practice.

Statements Descriptions Number of Percentage

respondent s
v.high high Neutra Lo v.low
l w

There is pre established milestone to 13 2 86.6%,14.4

measure against and audit your results in %
order to evaluate the success of CRM
practice

Your organization helps employees to 9 6 60%,40%

make a successful relation with customers
enhancing through trainings for working
with Customer Relationship Management
tools

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There is integrated Customer 12 3 80%,20%
Relationship Management system into
other processes of an enterprise

The over all activity of process 50.2%

Source :- own survey (2023)

Table 4.2.4 shows the role of effective process for the smooth functioning of customer
relationship management strategy. The researcher tried to raise question regarding the best
indicators for customer relationship management platform.

As indicated by table 4.2.4 above the data shows that having a mile stone to measure the CRM
its rated 86.6%V.high,14.4% high and the support of the organization on maintaining smooth
relationship with the customer have been found60% V. high,40% high the integrated system of
CRM on other sectors of the bank have found to be 80%V.high,20% high. the data showed that
the organization give a better place for the whole CRM processes and it takes painstakingly.

Table 4-5: The overall performance of customer relationship management practice

Statements Descriptions Number of Percentage

v.high high Neutra low v.low

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 l respondent s

In your company Increased number of 14 1 93.33%,6.6

satisfied customers after Customer %
Relationship Management
implementation

There is employees’ efficiency (number of 13 2 86.6%,14.6

done tasks) with a specified time period %
after Customer Relationship
Management implementation

Increased the number of loyal customers 10 5 66.6%,33.3

after loyalty program after Customer %
Relationship Management
implementation

Increased Growth rate of retained 11 4 73.3%,26.7

customers after Customer Relationship %
Management implementation

The over all activity of Bank performance 50.1%

Source :- own survey (2023)

Table 4.2.5 shows the role of effective process for the smooth functioning of customer
relationship management strategy. The researcher tried to raise question regarding the best
indicators for customer relationship management platform. To measure the effectiveness of the
platform the following indicator variables used (information and knowledge sharing potential,
integrating all process, system evaluation, effort building potential, interaction of stakeholder
with system) are the major indicator of the existence of good customer relationship management
platform

In this research as we can see Table 4.2.5 above there are four questions raised to determine the
contribution of customer relationship management practice in banking sector. The aim of the

35 | P a g e
 researcher is to measure banking performance from tw6 dimensions (customer satisfaction,
process improvement ).and regarding with increasing satisfied customer rated 93.33%
V.high,6.6% high employee’s efficiency after CRM implemented rated 86.6%V.high,14.6% high
regarding loyalty of customer have found 66.6%V.high,33.3% high and top up the existed one
73.3%v.high,26.7% high.as the data depicted practice of CRM has vital role in increasing and
retaining customers.

4.3 customers profile

Table 4.3 general back ground of the customers respondents

Profile Descriptions Number of Percentages

respondents

1. sex Male 21 61.7%

Female 13 38.3%

Total 34 100%

2. age 20-35 18 52.9%

35-55 13 38.23%

>55 3 8.82

Total 34 100%

3. educational status Diploma 7 20%

Degree 9 26.47%

Degree and above 2 5.88%

Primary grade 1 2.94%

Secondary grade 15 44.1%

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 Total 34 100%

4.length of time using bank’s 1-4 years 13 38.2%

service
5-10 years 19 55.8%

>10 years 2 5.8%

Total 34 100%

Source : own survey (2023)

As it shown in the above table that first item indicates respondent’s sex. As it clearly shown 61.7
percent are male and 38.3 percent are female respondents in the above questions this shows that
most of respondents are male compared to female. The second part of the table indicates age
variation of the customers accordingly and 52.9 percent a relies age between 20-35, years, 38.23
and 8.82 are relies between 35-55 and above 55 respectively. The last category depicted the
educational background of the respondents and 27 percent have diploma,26.47 percent have
degree,5.88 percent have degree and above,2.94 percent primary education complete and 44.1
percent are secondary school complete. And from the above data we can say that the data
comprised of all class.

Table 4.3.1 customer handling and communication of the bank

Statement Description Number of Percentage

v.high High Neutral low v.low

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 respondents

This bank 9 21 4 26.5%,61.7%,11.8%

effectively
communicates to
customers

The bank is co- 8 25 1 23.5%,73.5%,2.9%

operative with its
customers in
handling their
request

I am satisfied 19 15 55.8%,44.1%
with the bank’s
customer
handling
procedure.

Source: own survey (2023)

The above table 4.3.1 shows that the communication and customer handling that the bank
provide for their customer and about effective communication provided rated 26.5% V.
high,61.7% high,11.8% neutral. Bank’s cooperativeness rated 23.5% V.high,73.5% high,2.9%
neutral, the customer satisfaction in regard of the customer handling service provided by the
bank rated55.8%V.high,44.1%high.from the table indicated the banks tries to communicate
effectively with its customer and it brings satisfaction for the customer which in return create a
loyal customer for it.

Table 4.3.2 the bank service delivery period to the customer

Statement Description Number of Percentage in respect

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 respondents to their sequence

v.high High Neutral low v.low

This bank delivers 14 14 6 41.2%,41.2%,17.6%

services at the earliest.

Conducting 23 11 267.6%,32.4%
transactions correctly
and rapidly is very
common with this
bank.

I am satisfied with the 33 1 97.1%,2.9%

speed of the service
delivery.

Source: own survey (2023)

Time what is matter the most in the perspective of both parties and the researcher take in to
consider this factor and tried to show in the table 4.3.2 ab6ut meeting deadlines to provide
services rated41.2%V.high,41.2% high,17.6% neutral, and conducting service in rapid and
erroneous free rated 41.2%V.high,41.2% high,17.6% neutral and satisfaction regarding the speed
of service 97.1%V.high,2.9% high. And from the data obtained the bank tries to provide
erroneous free service with deadlines and it create a good satisfaction for their customer.

Table 4.3.3 providing up to dated technology-based services to the customer

Statement Description Number of Percentage

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 respondents

v.high high neutral lo v.low

w

The Bank 20 11 3 58.8%,32.4%,8.8%

provides
customized
services and
products to
its key
customers.

The Bank 5 18 10 1 14.7%52.9%,29.4%,2.9%

strives to
constantly
surprise and
delight its key
customers

This bank 24 9 1 14.7%52.9%,29.4%,2.9%

uses latest
technology
(ATMs,
mobile
banking, and
internet
banking) to
offer quality

Source:
It’s ownthat
known survey (2023)world any organization cannot afford the risk of not providing an up-
in today’s
to-dated technology for its fellow customers and the researcher tried to question if the
organization provided updated technologies to have them as loyal. And about providing tailored
size service to its customer rated 58.8%V. high,32.4% High,8.8% Neutral, about its effort to get
acquainted its customer new up comings have found 14.7%V. high,52.9%high,29.4%
neutral,2.9% low. regarding to providing ATM, mobile banking and so on have found14.7%V.

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high52.9% High,29.4%neutral,2.9%low.rthe result indicated that tries to ran at the world’s pace
to keep up its customer with technologies.

Table 4.3.4 customer satisfaction on quality embraced service

Statement Description Number of Percentage

respondent
v.high high neutral Low v.low

I am satisfied with the 19 16 55.9%,44.1%

services provided by the
bank

I am satisfied with the 22 12 64.7%,35.3%

quality of services
provided by this bank.

Source: own survey (2023)

Quality service brough satisfaction toward who ever had received it and the researcher tried to
show if the organization provided quality services to keep satisfied its customer and table 4.3.4
shows as follows the satisfaction of the customer about the service received is
rated55.9%V.high,44.1% high, and about the quality that consist while delivering the service
rated t64.7%V.high,35.3% high. And form the data that gathered the customers are well satisfied
by the current service that they have been receiving.

4.4 An interview to managers

Dear respondent: this interview is prepared for manager of Abay bank Sc. Of Bambis branch and
the study to be conducted to the effect of customer relationship management on customer on
organizational success. we sincerely request you to provide genuine information. Thank you for
your cooperation.

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The questions are responded as followed.

Q. Is your bank use customer relationship management activities to retain customers?

Ans. The manager answered, “Yes the bank been using and it will in order to retain customer and
to get new ones.”

Q. What does loyal customers mean?

Ans. The manager answered, “loyal customer means customers who frequently comes are loyal
customers to the organizations, the loyal customers have a deep knowledge about customers
relationship management and they are not afraid to comment on the defects they saw and
compliment on the good services they received. These customer are in contact with the bank
through repeated transactions, and deeper levels of involvement and customers does not never
shifts to other banks are loyal customers.

Q. Do you prepare FAQ (frequently asked questions) to customers?

Ans. The manager answered, “they we do prepare FAQ(frequently asked questions) because it
help us to know the customers need”

Q. Is there any training give to employees to develop their skill and knowledge about banking
service?

Ans. The manager answered “ yes, there are a number of opportunities given to the employees to
enhance their skill and knowledge through giving training on ‘how they to deploy their
responsibilities effectively’ training alike this is undoubtedly strengthen the organization and
able us to give quality assured service for our customers. The trainings are could be on job or off
job, which some of them are took about a year if the trainee sent oversees said. We do it because
we strongly believed updated trainings are worth in the long run.

Q.How does the bank attain knowledge about customers?

Ans. “In this perspective” said the manager “ we get information about our services from their
suggestion box. Though, this may not be sufficient sources of information, so we some times try
to look in to some researches done on our banks by some high profiled researchers we too
distribute questionnaires by our selves.”

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Q. What are the factors that affect implementation of customer relationship management?

Ans. The manager answered, “lack of telecommunication, lack of employee’s awareness about
customer relationship management, negative attitudes of employees, absence of clear customer
relationship management strategy, lack of experience for employees, unavailability of internet
service and lack of knowledge regarding customer relationship management could be taken as
means of poor implementation of customer relationship management.”

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 CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

This chapter mainly deals about the summary, study findings, conclusions and recommendations
based on the analysis conducted in the previous chapter.

5.1 Summary

The ultimate objective of the study is to examine the effect of CRM on organizational success
for the case of Abay bank. Descriptive approach was used for this study purpose and 55
questionnaires were distributed to Abay bank in Addis Ababa, Bambis branch. Out of the total
distributed questionnaires 49 were returned being properly filled out by the bank customers and
employee. The respondents were asked to assess the banks’ CRM practice and their intentions to
be loyal in customers perspectives, and the service that the bank provide to keep customer
satisfied in perspectives of employees. Demographic profiles such as gender, age, education
qualification, and length of time the Customers’ uses the bank’s services and the length of time
that the employees rendering service to the customer are used to know the general profile of the
respondents of both groups.

With respect to the demographic information of the respondents table 4.2 of employee
respondents (56.3 %) were males and (45.7.6 %) were females and it also shows that majority of
the respondents were middle age (at the age between 26-35 years old). Moreover table 4.2
indicates majority of respondents (75. %) were degree holders and (12.5 %) of the respondents
were master’s holders. As table No 4.2 also illustrates majority of the respondents (87.5%) have
1-7 years working experience, (12.5%) have 7-14 years of working experience. And table 4.3 of
the customer respondent’s majority of them (61.7%) were male and (38.3%) were female and the
age 20-35(52.9%) dominate the rest of groups.

As the findings of the study indicated respondents of the bank agreed with the dimensions of
CRM by giving the higher rate scale to CRM based strategy, Technology, followed by process,
customer and people with average mean of 57.13%,52.48%,50.2%,50.1% and 37.5%
respectively.

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Conclusions

The major objective of this chapter is to present the main point of the research and to draw some
conclusions about the practice and effort of the bank in applying customer relationship
management practice based on the fact presented in previous chapter. In addition to primary data
the researcher included points from literature when necessary to support the primary data.
Strategy is among one of independent variable used to measure the banking performance. The
major strength in applying CRM strategy in the bank is setting clear objectives and strategies for
key customers and greater emphasis on retaining the valuable customer. Whereas, the bank gave
less attention to retain current valuable customers compared with attracting new customers.
Customer relationship management involves using technology to organize, automate, and
synchronize business processes. The bank has strength in using technology like core banking,
ATM and POS machine individual. On the other hand, the bank has relatively weak in customer
tendency to use new technology and automated tools of business operation process. The
contribution of customer for effective customer relationship management process is vital.
Customer’s involvement is high in establishing long term relationship with banks, desire for
product or service differentiation, and customer activity play a key role in order to improve the
system by giving a feedback. The banking performance is dependent variable for this research.
As the data shows among the major measurement of banking performance after CRM
implementation there is employees’ efficiency with a specified time period, increase growth rate
of retained customers, and increases number of satisfied customers after CRM implementation.
In people factor employee’s contribution, motivation, and involvement is low when
implementing customer relationship management practice the five dimensions (Strategy,
Technology, People, Customer, and Process) independently and jointly affect bank performance.
In general customer relationship management practices of the bank has an effect on its
performance.

5.3. Recommendation

In this section the researcher tried to indicate some directions in order to apply customer
relationship management successfully. The Bank is relatively weak in applying people variables
like collecting feedbacks and tries using the information to improve the drawbacks and empower
the good sides using as tools for long term plan and for resource allocation between customer

45 | P a g e
acquisition and retention. peoples’ participation for CRM practice should be more customer
centered and expected to obtained more information from the customer and must be willing to let
them to be part of the CRM process if it is desired to get concrete success. The bank also should
have specific budget for specific objectives if the bank not to do so there is chance to attract new
customer at the cost of existing customers. If the bank has specific budget allocation to retain and
attract customers there is a chance to increase the number of loyal customers. The Bank should
focus on retaining current valuable customers than attracting new customers because it enables to
minimize organizational costs as different research result shows that retaining current valuable
customer is cheaper than attracting new customers. To attract current valuable customers’ the
bank should have to select the profitable customers and maintain long term relationship with
them. The bank has better strength in using technology like CORE banking, ATM and POS
machine individual. On the other hand, relatively, most banks are weak in customer tendency to
use new technology and companies weak in automated tools of business operational processes by
using Internet. To use technology as CRM process implementation tools bank should give
attention for both Technology infrastructure and architecture. So that, the banks should do
additional tasks to use balanced and integrated technology tools to bring change in effective
technology utilization. The result of this study shows that there is strong positive correlation
between effective customer relationship management parameter and banking performance
measurement. This indicates if the bank revises their customer participation to establish long
term relationship with customers, use integrated information technology infrastructure and
information technology architecture it enables for sustainable development. The major tasks that
need betterment are using CRM data as resource allocation between customer acquisition and
retention. And also, the bank should keep up the previous effort in attracting new customers and
greater emphasis on retaining the valuable customers.

5.4. Limitation and Implication of Further Research

The study focused only in one branch Bambis branch, Addis Ababa. Therefore, additional
research is necessary on this research area to determine to other Banks through relative studies
considering more banks. As far as the study identified limitations there is an opportunity to
create for future research in this area. By examining these effects, these future studies would add
value to the present knowledge in this area. This future research also may replicate this study in

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other service sectors other than banking. This study focused only on five CRM dimensions
(Strategy, Technology, People, Customer, and Process). However, there could be some other
relevant factors that may be perceived as important.

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 References

Ashok K.M. and Rajesh R. (2009). “Whether today’s customers are satisfied? A study with
Banks”, Indian Journal of Marketing, Vol. XXXIX, No 9.

Boulding, W. R. (2005). A CRM roadmap: What we know, potential pitfalls, and where to go.
Journal of Marketing, 69 (4), 155–166.

Brown, S. (2000) “From customer loyalty to customer dependency.” Customer relationship

management, pp. 69-86. New York: John Wiley & Sons Canada, Ltd.

Colgate, M. A. (2000). Implementing customer relationship strategy science. Journal of the

Academy of Marketing Science, 28 (3).

Coltman, T. R. (2007). Can superior CRM capabilities improve performance in Banking.

Journal of Financial Service Marketing, 12 (2), 1-42

John .A, Hafiz .K, .Robert. R, and David .W( 2007) Research methods for graduate business and
social science student. California, Saga publication Inc.

Kotler, P. (2000). Marketing Management, the Millennium Edition. New Jersey: Prentice-Hall.

Kotler, P. &Keller, K.L. (2012) Marketing Management.15th Edition, New Jersey: Pearson
Prentice Hall.

Kotler Philip (2006) principles of marketing 12th ed prentice hall

Ngobo, P. (2004.). Drivers of customers' cross – buying intention. European Journal of

Marketing, Vol.38, No. 9/10, 2004. , 38 (9), 45.

Rajnish, J, Sangeeta, J. and Upinder, D. (2003) Measuring customer Relationship management,

Journal of Services Research, Vol. 2, No. 2

Ranjit Kumar(2011)Research Methodology- step-by-step guide for beginners:London,SAGA

publisher

Ray, G. M. (2005). Information technology and the performance of the customer service process
resource-based analysis. Management Information System, 29 (4), 631-632.

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Urbanskienė, R.,& Ž. D. (2008). The model of creation of customer relationship management
(CRM) system. Journal of engineering and economics, 3 (58), p69.

Verhoef, P. (2003). Understanding the effect of customer relationship management efforts on

customer retention and customer share development. Journal of marketing, 67 (4). Webster, F. J.
(1992).The changing role of marketing in the corporation. Journal of Marketing, 56.

Weill, P. (1992). The relationship between investment in information technology and firm
performance: A study of the valve manufacturing sector, information systems research. Journal
of Information Systems, 312

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Appendix A

Research Topic: Effect of Customer Relationship Management on organizational success of a

selected Banks in Addis Ababa.

Dear Respondent, I would like to express my deep appreciation for your generous time, honest
and prompt responses. This questionnaire is designed to collect data about the Effect of
Customer Relationship Management on organizational success. The information you provide in
response to the items in the questionnaire will be used as a primary data in our case study which
we are conducting for the partial fulfillment of the requirements for the degree of Business
management at Admas University under the School of Graduate Study. Therefore, this research
is to be evaluated in terms of its contribution to our understanding of Customer Relationship
Management and its Effects on organizational Performance and its contribution to improvements
in the area. This questionnaire contained questions related to CRM practices in your organization
and it will be expected to take approximately 25 to 30 minutes to complete. we assure you that
the information you provide will be used only for academic purpose and kept confidential.

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Instructions:

1. No need of writing your name.

2. Please tick (√) or (x) mark on the space provided in front of each question (statement).

3. You are kindly being requested not to leave any item unanswered or incomplete.

Part I. Respondents general information 1. Sex: Male Female

Age

20-25  26-35  36-45  46-55  56 and above 

3.. Working experience in years 1-5 6-10 11 -15 16-20 21-25 Above 25

4.Educational qualification: Diploma Degree Masters and above

5. Name of the bank……………………………………………….

6. Year of establishment……………………………………………

7. Forms of ownership: Private (S.C) state

PART II: Please state your degree of agreement each given statement using the following
scales:

1 = Strongly Disagree, 2 = Disagree 3 = Not sure, 4 = Agree, 5 = Strongly Agree

No. Perception of respondents towards Level of agreement

the effects of CRM on Banking
performanc

Strongly Not Agree Strongly

Disagree(1) Disagree(2 sure(3)
) (4) Agree
(5)

A. Questions about Strategy

1 Compared with previous years, there is a

greater effort to attract new customer

2 Customer Relationship Management

strategy is included as long term focus in
your corporate strateg

3 Compared with previous years, there is a

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 greater emphasis to retain current
valuable customer.

4 Based on data gathered, processed,

stored and retrieved information, your
company understands the future needs
of the main customers.

B. Questions about Technology

1 Your customers have a tendency to use

new technologe

2 Your company uses sales force

automation to support business
operational processes

3 Your company uses automated tools of

business operational processes by using
internet for servicing the customers to
facilitate interactional processes with
customers

4 There is strong information system

integration with purpose of better
support of business processes

5 Your organization enables for customer

to transact/interact by using POS
machine

C. Questions about Customer

1 Your Customers are likely willing to

uncover private information because of
the “trust” from exchanges for value
creation with the organization

2 Your Customers actively play a key role in

order to improve the system by giving
feedback.

3 Your customers’ relationship with the

bank depends on whether they are
satisfied with the service delivered by the

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 bank.

4 Your customers established long term

relationship with your firm.

D. Questions about Process

1 There is pre established milestone to

measure against and audit your results in
order to evaluate the success of CRM
practice

results in order to evaluate the success of

Customer Relationship Management
practice

2 Your organization helps employees to

make a successful relation with

customers enhancing through trainings

for working with Customer

Relationship Management tools

3 There is integrated Customer

Relationship Management system into
other processes of an enterprise

4 All departments exchange information

consistently and clearly communicate the
desired results, processes and plans.

E.Performance Indicators

1 In your company Increased number of

satisfied customers after Customer
Relationship Management
implementation

2 There is employees’ efficiency (number of

done tasks) with a specified time period
after Customer Relationship
Management implementation

3 Increased the number of loyal customers

after loyalty program after Customer

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 Relationship Management
implementation

4 Increased Growth rate of retained

customers after Customer Relationship
Management implementation

5 Increased Cross/ up customer (customer

expansion) after Customer Relationship
Management implementation

Thank you!

Part 1: Demographic characteristics of respondents

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ክፍል 1: አጠቃላይ የመላሾች መረጃ

1.Sex: ጾታ

Male(ወንድ) ] ⃞ Female(ሴት)] ⃞

2. Age in year: እድሜ

⃞ 18-25 year ⃞ 26-39 year ] ⃞ 40-59 year ] ⃞ above 60 years

3. Level of Education: የት/ት ደረጃ፡

Diploma(ዲፕሎማ) ⃞ First degre(የመጀመሪያ ዲግሪ) ⃞ Master’s degree(ማስተርስ ዲግሪ)] ⃞

4. Relationship with this bank: ከባንኩ ጋር በደንበኝነ የቆዩበት ግዜ

Less than 1 year(1 አመት) ⃞ 1-4 years(1-4 አመት ) ⃞ 5-7 years(5-7 አመት) ⃞ 8 – 10
years(8-10 አመት ) ⃞ More than 10 years(ከ 10 አመት በላይ) ⃞

5. The Service/s you use from the bank? (you can select more than one service) ባንኩ ከሚያቀርባቸው
አገልገሎቶች ዉስጥ የተጠቀሙት(እየተጠቀሙ ያሉት) የቱን ነው?(ከአንድ በላይ መምረጥ ይችላሉ)

Saving Current account(የቁጠባ አገልግሎት) ⃞ Loan Money transfer(የብደር አገልግሎት) ⃞

Forex ATM(የ ኤ.ቲ.ም) ⃞ E-Banking (የዲጂታል ባንኪንግ) Mobile Banking ⃞(የ ሙባይል
ባንኪንግ)

Part II. Questions Related to Customer Relationship Management

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Please indicate the extent to which you agree/disagree with the following statements.

Strongly disagree represents the least weight of 1, while strongly agree is for the highest weight
of 5. Please put (√) mark according to your choice.

ክፍል ሁለት፦ እባክዎን ከስር ለተዘረዘሩት ጥያቂዎች መስማማት ወይም አለመስማማትዎን ከጥያቄው ጎን ባለው ሳጥን ዉስጥ
በማድረግ ይተባበሩን።በጣም እስማማለሁ የሚለው 5 ነጥብ ፣በፍጹም አልስማማም የሚለው 1 ነጥብ፣እስማማለሁ 4 ፣
ምንም አይልም 3 ፣ አልስማማም የሚለው ደግሞ 2 ነጥብ ይይዛሉ።

Description Strongly Agree 4 Neutral Disagree Strongly

Agree (እስማማለሁ) 3(ምንም 2(አልስማማም Disagree 1
ጥያቄዎች (በጣም አይልም) ) (በጣም
እስማማለሁ) አልስማማም
)

This bank effectively

communicates to
customers

ባንኩ ለደንበንኞችን በስነ-

ስረአት መረጃ
ይሰጣል(ይቀበላላ)

The bank is co-operative

with its customers in
handling their request

ባንኩ የደንበኞችን ጥያቄ

ያስተናገዳል

This bank assesses

customer satisfaction
regularly

ባንኩ የድንበኞችን እርካታ

ይገመግማል

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 This bank delivers
services at the earliest.

ባንኩ ያለምንም ማጉላላት

ደንበኞችን ያገለግላል

Conducting transactions
correctly and rapidly is
very common with this
bank.

ገንዘብ ማጣትም ሆነ
ማስገባት ያለምንም
መጉላላትና ስህተት
እንዲሁም ፍጥነት ይሰራል

The Bank provides

customized services and
products to its key
customers.

ባንኩ የትለያዩ አሰራሮችን

እና አገልግሎቶችን
ለድንበኝቹ ያቀርባል

The Bank strives to

constantly surprise and
delight its key customers.

ባንኩ ሁልጊዜ ለማስደሰት

እና ለማስገረም ይተጋል

This bank uses latest

technology (ATMs,
mobile banking, and
internet banking) to offer
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quality services.

ባንኩ እጅግ ጥራት ያለው

ገልጋሎት ለደንበኝዕቹ
ለመስጠት በጣም ዘመናዊ
እና የተሻሻሉ
ቴክኖሎጂዎችን ይጠቀማል

I am satisfied with the

services provided by the
bank.

ባንኩ በሚሰጠው
አገልግሎቶች ደስተኛ ነኝ

I am satisfied with the

bank’s customer handling
procedure.

ባንኩ ደንበኞችን ለምይያዝ

በሚከተለው ደስተኛ ነኝ

I am satisfied with the

quality of services
provided by this bank.

ባንኩ በሚሰጣቸው ጥራት

ያላቸው አገልግሎቶች
ደስተኛ ነኝ

I am satisfied with the

speed of the service
delivery.

በባንኩ ስራን የመከወን

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ፍጥነት ደስተኛ ነኝ

Thank you!

እናመሰግናልን!!!

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