THE EFFECT OF CUSTOMER RELATIONSHIP MARKETING ON CUSTOMER LOYALTY: COMPARATIVE STUDY OF PUBLIC AND PRIVATE OWNED BANKS

Abstract

ABSTRACT

Every business organizations without loyal customers and strategic customer relationship marketing are bound to be unsuccessful. Customer loyalty is the behavior of customers trying to keep their promises on the product, buy with a higher frequency. Customer relationship marketing is a way of life of doing business, a strategic direction that focuses on keeping and improving current customers rather than acquiring new customers. The main purpose of this study is to determine the effect of Customer relationship marketing dimensions on customer loyalty in case of private and government owned banks in Gondar city. Customer relationship marketing has many dimensions but this paper used only six dimensions. Qualitative and quantitative research methods with deductive and explanatory approaches were used in this study. For conducting this study non-probability sampling technique, specifically Purposive-and convenience sampling techniques were used. Interview and structured questionnaire with five point Likert scale was used to collect the data from the customers and managers and assistant manager of the banks that included in this study. A total of 422 questionnaires were distributed to customers of both public and private owned banks found in Gondar city, based on convenience sampling methods and 418(99.05%) were returned for analysis. SPSS version 20.00 software was employed to analyze the collected data through the statistical tools used in this study, namely descriptive analysis, correlation, multiple regression analysis and independent sample ttest.

Result of the study showed that 57.9% of customer loyalty was explained by relationship marketing dimensions. Specifically trust, commitment, communications and conflict handling have a positive and significant effect on customer Loyalty of commercial banks in Ethiopia, however empathy and responsiveness have positive but insignificant effect on customer’s loyalty. There is significance difference between private and government owned banks. Based on the finding banks apply Customer relationship marketing appropriately and should make the whole system on work with their customers.