Effects of Customer Relationship Management on Market Performance: A Comparative Perspective

Abstract

Due to fierce competition in today’s business environment, many companies are required to build long- term profitable relationship with customers and to achieve better market performance. Therefore, CRM has become more and more important since the last decade of 20th century, especially in the service industry. As a result, this study is aimed to empirically investigate the influence of CRM (key customer focus, customer knowledge management, CRM organization and technology based CRM) on market performance in banking industry with reference to Wegagen bank, Dashen bank and Commercial Bank of Ethiopia (CBE). A theoretical framework was used as a guideline to test the influence of CRM on market performance. A quantitative research approach was implemented. Besides, a descriptive research design was used and a cross - sectional survey was chosen for this study. A questionnaire derived from previous studies and the relevant literature is completed by 116 employees of the selected commercial banks in Mekelle city. Correlation analysis assessed the relationship between CRM and market performance and multiple regression analysis assessed the influence of CRM on market performance. The findings confirm that all the independent variables (key customer focus, knowledge management, CRM organization and technology based CRM) have a positive and significant relationship with market performance in selected commercial banks. Moreover, the study explore that there is a positive and significant influence of CRM on market performance. Besides, it is found that customer knowledge management underpinning of CRM has the highest influence on market performance in Wegagen and CBE and key customer focus underpinning of CRM has the highest influence on market performance in Dashen bank. Therefore, the selected banks have to implement CRM appropriately and continuously, as an indispensable tool for gaining competitive advantage and building long – lasting and profitable relationships with its customers in order to achieve their market performance.