EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT ON PROFIT PERFORMANCE: A CASE STUDY OF DEVELOPMENT BANK OF ETHIOPIA

Abstract

Customer relationship management is an issue that every company, large or small, must tackle. Customers are the life-line of every business and the growth of every business depends on the relationship that the company has with its customers. This study examined the effect of customer relationship management (CRM) on profit performance of Development Bank of Ethiopia. The research was a blend of descriptive and causal research in design. A probabilistic sampling technique was employed to determine number of respondents. Hence, the data was collected from 250 employees of 10 districts offices and head office selected randomly by using a questionnaire. Both primary and secondary sources like annual report of the bank and magazine of the bank were also used. Statistical package for social sciences was used in running the outcomes of the study. After checking the normality of the data, inferences were later drawn from results of Pearson’s Correlation analysis to assess the relationship between independent and dependent variables. Furthermore, multiple regression analysis was employed to assess the relative influence of each CRM dimensions on profit performance. The responses of employees showed that the practice of CRM in the bank is poor. According to the finding a strong, positive and significant relationship was observed between all CRM dimensions and profit performance. Among the four dimensions (key customer focus, CRM organization, customer knowledge management and CRM based technology), CRM based technology was identified and concluded as the dimension with the highest influence on profit performance. Therefore, since the perception of the employees regarding CRM practice and the profit performance of the bank is not good the bank should focus on CRM dimension practice to increase its profit.