THE APPLICATION OF CUSTOMER RELATIONSHIP MANAGEMENT IN COMMERCIAL BANK OF ETHIOPIA

Abstract

Customer relation management plays a key role in the improvement of firm’s performance. The importance of CRM is growing due to the challenging business faced by organizations throughout the world today. The purpose of this study was to examine the application of customer relation management in commercial bank of Ethiopia. In this study quantitative approach was employed. The study used primary and secondary sources to gather data. Primary data were collected through structured questionnaire. The population of the study is employees and customers of the selected branches. The sample size is 256 where 111 of them were employees randomly selected from four branches which are Urael, Gofa Sefre, Mexico and Head office and 154 of them were customers. The study utilized both quantitative and qualitative data analysis techniques. Descriptive statistics is employed to describe the given data. Inferential statistics such as correlation and ordinary least square (OLS) model is employed. Furthermore, STATA version 13 was employed for the purpose of encoding analyzing the data. The finding of the study revealed that the effectiveness of customer relation management depends on a combination of different service aspects and primarily it comprises analysis of the different perception of customers, collaboration with important stakeholders and enhancement of front office operations in the bank. In addition, this study concludes that the majority of customer relationship management systems are that they enhance organization learning, leads to better organization performance and enhance the market productivity and effectiveness of organizations. Furthermore, the entire success and failure of an organization depends on customer acquisition and retention. It is for this reason that technology has become important to the concept of CRM. Therefore, the findings of the study concluded that apart from indicating the importance of CRM practice, the CRM practice should be well organized and it should be technology based. Electronic customer relationship management (E-CRM) is the application of Internet-based technologies such as emails, websites, chat rooms, forums and other channels to achieve CRM objectives. It is a well-structured and coordinated process of CRM that automates the processes in marketing, sales and customer service. An effective E-CRM increases the efficiency of the processes as well as improves the interactions with customers and enables businesses to customize products and services that meet the customers‟ individual needs. CRM is not a new technology; it was a standard business process long before people used the Internet to communicate. The phrase “customer relationship management” is used to mean the strategy used by a business to interact with anyone it conducts business with. CRM systems define the way a business handles its existing customer relationships and forming new ones. It was evident that the Internet changed the way businesses are conducted. The onset of Web-based communications and electronic commerce (e-commerce) changed not only how business was conducted but also the way in which a business could communicate with its customers. This change required a business to invest in new hardware, systems and Web applications. There was a need to develop new processes to manage customer relations using the Web for those business processes. The terminology was updated to Electronic Customer Relationship Management (ECRM) to reflect the new hardware and systems required by a business to make use of new v Web-based technologies, such as self-service customer support, email and online sales. Generally The lines that once defined CRM and ECRM as two different business strategies barely exist now, leaving the names themselves to be the biggest difference. ECRM was a popular term when the shift to e-commerce and Web-based customer self-service applications was on the horizon, but today, many industry experts believe that ECRM as a separate term is not necessary. This is because ECRM implies processes that are a natural evolution of CRM. Most industry experts and CRM vendors today do not use ECRM to describe systems, but rather use CRM which in newer systems incorporates ECRM strategies, tools and applications