THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT (CRM) ON THE PROFITABILITY OF COMMERCIAL BANK OF ETHIOPIA:- A CASE STUDY OF SELECTED CITY BRANCHES.

Abstract

In this competitive industry, setting an effective and efficient CRM has a great impact on the overall of profitability of an organization this study aimed to explain the effect of customer relationship management in the profitability of CBE by taking a case of selected city branches. A conceptual framework used as a guidance to test the relationship between the CRM dimensions consisted in the profitability. The study is descriptive in nature in that it collects data from one or more target groups, and analyses it in order to describe the present condition. More specifically, a survey data on the four dimensions of the CRM collected both from the customers and from employees of CBE (Branch managers, Customer relationship managers, customer relationship officers and customer service managers) to determine the extent of CRM application in the Bank. A quantitative approach used in the research. Questionnaire is designed and distributed to the total sample size of 300 customers of four selected city branches based on the service provided and number of transactions made per day as well as branch grades which, is grade I-IV. The portion of questionnaire distribution goes on as branch grade the largest portion distributed to the higher-grade branches and the lower goes to the lower grade branches and 63 employees of CBE with different job titles. Mostly managerial level with the exceptions of commercial credit employees and customer relation officers in randomly selected city branches and head office organs to collect a primary data. Therefore, the data were obtained from two sources namely, primary and secondary sources in primary Regression, t-test, one sample t-test ANOVA multicolinarity test was conducted. The finding showed that customer focus, knowledge management and technology based CRM of CBE have not significant but positive effect on profitability by staff respondents and the rest organizational dimension have insignificant and negative effect on the profitability of CBE the same is true for key customer focus. Therefore, it is essential for CBE to pay more attention for the CRM dimensions by considering their significant effect on profitability. Moreover, CBE should reconsider its strategy since the study results insignificant contribution in influencing the profitability of the organization.