EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT ON MARKET PERFORMANCE (INCASE OF PUBLIC AND PRIVATE BANKS IN BATU)

Abstract

Customer relationship management (CRM) is widely acknowledged as a powerful tool gaining market performance in banking sector. The purpose of this study is a comparative study to examine effects of CRM on market performance with a special reference to selected private and public banks in Batu town. For this study, CRM is evaluated by key customer focus, customer knowledge management, technology based CRM and CRM organization. Market performance is assigned through indicators such as market share, profitability, customer satisfaction and customer retention. To achieve the objective this study used primary and secondary data where primary data was collected from managers and employees of Cooperative bank of Oromia (CBO), commercial bank of Ethiopia (CBE) and awash international bank (AIB). Structured questionnaires were distributed to the samples of 110 employees. Quantitative and qualitative research approaches were implemented. Besides, a descriptive and explanatory research design was used and cross-sectional survey design was chosen for this study. Correlation analysis was done to see the relationship between CRM and market performance and multiple regression analysis used to measure the influence of CRM on market performance. The findings confirm that all the independent variables (key customer focus, knowledge management, CRM organization and technology based CRM) have a positive and significant relationship with market performance in selected commercial banks. Besides its found that key customer focus underpinning of CRM has the highest influence on the market performance in CBE and Awash also customer knowledge management has the highest influence in CBO. Therefore, the selected banks have to implement CRM appropriately and continuously as an indispensable tool for gaining competitive advantage and building long lasting and profitable relationship with its customers in order to achieve their market performance