THE EFFECT OF CUSTOMER RELATIONSHIP MANAGEMENT PRACTICES ON CUSTOMER LOYALTY: THE CASE OF ETHIOPIAN AIRLINES, ADDIS ABABA

Abstract

This study was conducted with an overarching objective to investigate the relationship between customer relationship management and customer loyalty of Ethiopian Airlines in Addis Ababa. Six explanatory variables (key customer focus, technology based CRM, knowledge management, CRM organization, ease of use and Convenience) were identified to analyze the association between customer relationship management and customer loyalty. For this purpose, thirty-three observed items of customer relationship management clustered into six independent variables and eight items of customer loyalty bunched into a single dependent variable were used. A cross-sectional data with a total of 381 sample units and convenience sampling technique were used and these samples were analyzed through descriptive analysis and OLS regression. This study adopts cross-sectional study design and uses quantitative approaches (techniques) for data collection (quantitative data) and analysis. Moreover, the study uses a combination of descriptive and explanatory designs to answer the research objectives. Six regressors are included in the OLS estimation. From six proposed hypotheses, three hypotheses were accepted while three hypotheses were rejected as they show the significance level above 5%. The study concluded that the customers of the Airport have satisfied with half of the customer relationship management variables (dimensions) and insatiable the remaining three variables. That is; key customer focus, technology based CRM and ease of use have a positive and significant association with customer loyalty. However, the other three variable knowledge management, CRM organization and Convenience were found statistically insignificant. The study concluded that the Ethiopian Airlines should focus on improving these customer relationship management variables in order to retain its loyal customers. In the research finding, ease of use variable has the highest positive impact on customer loyalty. Thus, Ethiopian Airlines should be very conscious in improving this customer relationship management dimension as it contributes to customer loyalty and retention.