THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT ON CUSTOMER RETENTION IN THE CASE STUDY OF COMMERCIAL BANK OF ETHIOPIA GONDAR CITY

Abstract

Customer retention is a critical factor for business success, particularly in the banking sector where competition is intense and service differentiation is limited. This study examines the effect of customer relationship management on customer retention in the case of the Commercial Bank of Ethiopia in Gondar City. Specifically, the research examines the effect of trust, communication, conflict handling, commitment, and bank brand image on customer retention. A mixed research approach was employed, combining both quantitative and qualitative methods. Primary data were collected through structured questionnaires using a five-point Likert scale, distributed to CBE customers across 24 branches, and supported with interviews conducted with bank management. A total of 343 valid responses were analyzed using descriptive statistics, correlation analysis, and multiple linear regression via SPSS 25 software. The findings indicate that trust, communication, conflict handling, and bank image have a positive and statistically significant effect on customer retention. However, commitment showed a positive but statistically insignificant effect. These results suggest that strengthening customer trust, improving communication, managing conflicts effectively, and maintaining a strong bank image are key strategies for enhancing customer retention. The study recommends that CBE prioritize these customer relationship management dimensions to maintain long-term customer relationships and reduce customer switching behavior.