EFFECTS OF CUSTOMER RELATIONSHIP MANAGEMENT ON CUSTOMER RETENTION (IN CASE OF BUNA BANK)

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 customer retention. 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 effect of CRM (key customer focus, customer knowledge management, CRM organization and technology based CRM) on customer retention in banking industry with reference to Buna Bank. A theoretical framework was used as a guideline to test effects of CRM on customer retention. 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 simple random sampling selected 57 employees of the selected Buna banks in Gondar city. Correlation analysis assessed the relationship between CRM and customer retention. And multiple regression analysis assessed the effect of CRM on customer retention. The findings confirm that three independent variables have a positive and significant relationship with customer retention in selected Buna banks. Moreover, the study explores that there is a positive and significant effect of CRM on customer retention. Besides, it is found that underpinning of CRM has the highest effect on customer retention in Buna bank Therefore, the selected branches 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 customer retention.