Effects of customer relationship management on market performance of selected banks in Mekelle city

Abstract

Due to fierce competition in today’s business environment, many companies are required to

build long- term profitable relationship with customers and to achieve better market

performance. Therefore, CRM has become more and more important since the last decade of

20th century, especially in the service industry. As a result, this study is aimed to empirically

investigate the influence of CRM (key customer focus, customer knowledge management,

CRM organization and technology based CRM) on market performance in banking industry

with reference to Wegagen bank, Dashen bank and Commercial Bank of Ethiopia (CBE). A

theoretical framework was used as a guideline to test the influence of CRM on market

performance. A quantitative research approach was implemented. Besides, a descriptive

research design was used and a cross - sectional survey was chosen for this study. A

questionnaire derived from previous studies and the relevant literature is completed by 116

employees of the selected commercial banks in Mekelle city. Correlation analysis assessed

the relationship between CRM and market performance and multiple regression analysis

assessed 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. Moreover, the study explore that there is a

positive and significant influence of CRM on market performance. Besides, it is found that

customer knowledge management underpinning of CRM has the highest influence on market

performance in Wegagen and CBE and key customer focus underpinning of CRM has the

highest influence on market performance in Dashen bank. 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 relationships with its

customers in order to achieve their market performance.