EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT ON CUSTOMER RETENTION; CASE OF THE COMMERCIAL BANK OF ETHIOPIA BOLE DISTRICT

Abstract

Customer relationship management is a strategic approach that businesses adopt to effectively manage and nurture their relationships with customers. It encompasses a range of practices, technologies, and strategies aimed at understanding customer needs, enhancing customer satisfaction, and driving long-term loyalty. The main objective of the study is to investigate how customer relationship management (CRM) affects customer retention at the Commercial Bank of Ethiopia, Bole District. A mixed-methods approach combining descriptive and explanatory research designs was employed to achieve the research objective. A basic random sampling method was used to select samples from different CBE Bole district branches. A structured questionnaire was distributed to 384 customers, and 342 questionnaires were collected and analysed using the statistical package for the social sciences (SPSS). The findings of the study demonstrated that all three CRM components (social network interaction, customer responsiveness, and customer recognition) that were used for this study have a positive and significant impact on customer retention. However, there are areas for improvement, such as responding to customer requests in a timely manner and handling customer issues effectively. The study recommended that it is important to address customer complaints promptly, take them seriously, and provide specialized products and services to meet their needs. Additionally, it is crucial to improve staff availability and willingness to assist customers with their questions. The study also showed that CRM components can be used to predict and explain customer retention. Overall, the Commercial Bank of Ethiopia has adopted CRM parameters to retain customers, which not only improves customer retention but also enhances the bank's competitive advantage and productivity.