THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT PRACTICE ON BANKING SECTOR: A COMPARATIVE STUDY OF SELECTED PRIVATE AND PUBLIC BANKS IN MEKELEL CITY

Abstract

This research has studied customer relationship management practices (comparative study) in selected private and public banks in Mekelle city. Customer relationship management as a strategy has gained tremendous interest among researchers and practitioners in recent times. Thus, the study tries to assess the status and ways CRM has been put in to practice by selected Ethiopian private and public banks. In addition, this research considers different CRM dimensions such as trust, reciprocity, empathy, bonding and responsiveness. To achieve the objective of the study, primary data were collected through questionnaire from sample of 335 bank customers of Wegagen bank, Dashen bank and CBE bank, in Mekelle city, Tigray. These respondents selected using simple random sampling technique. The data collected through questionnaire were analyzed using descriptive statistical analysis method and STATA Software version 14 as a tool of data analysis. The result of the study indicated that, there are several loopholes; such as, lack of continuous supervision and monitoring in the quality of bank services, weakness in giving individualized attention to customers, heavy reliance on suggestion boxes to get feedback from customers, lack of technological advancement etc. In addition to the above findings, the common challenge of the selected banks is network interruption. The finding also suggests some measures which can be taken in to consideration in order to enhance CRM practices of the three selected banks. The study also clearly revealed that the five CRM dimensions are strongly related. Thus, from customers as well as management bodies of the three banks perspective, CRM has a significant influence on customer retention of the selected banks.