Does Implementation of Customer Relationship Management (CRM) Enhance the Customer Loyalty? An Empirical Research in Banking Sector

Document Type : Research Paper

Authors

1 Head of the Department (Commerce), Trinity College for Women (Arts and Science), Namakkal, Tamilnadu, India

2 Research Scholar (Commerce), Periyar University, Salem, Tamilnadu, India

Abstract

Managing mutual relationship with the customer is a decisive task in every sector. Many earlier research outcomes evidenced this as a major drawback, particularly in the banking industries, as they are not using this asset as a competitive advantage for retaining their customers. Taking this as a core issue, this study concentrates on evaluating the consequence of customer relationship management practices on customer loyalty with 779 respondents who were the clients of public and private sector banks located in India and were selected using simple random sampling technique. Various quantitative techniques were carried out and the results emphasized that the CRM has a positive influence on loyalty through customer knowledge management, customer satisfaction, and customer trust, and all were all found as significant drivers to customer’s trustworthiness. This study recommends bankers to provide reliable services to their customers and make them satisfied, as it is the forerunner for creating loyalty.

Keywords

Main Subjects


Abbas, A., Chachar, A. A., & Bilal, A. (2017). Impact of customer relationship management dimensions on customer outcomes: Evidence from Pakistan. International Research Journal of Arts and Humanities, 45(45), 261-274.
Abdullah, S. S. S., & Siddique, A. M. R. (2017). Discriminating customers through practices of CRM with the application of discriminant function analysis. International Journal of Customer Relations, 5(1), 22-30.
Almasi, F., & Pirzad, A. (2017). The effect of intellectual capital and knowledge management on competitive advantage: Testing the mediating role of customer relationship management. International Journal of Economic Perspectives,11(3), 895-904.
Agrawal, S., Mittal, M. & Gupta, R. (2016). Service quality in public and private sector banks in India. International Journal on Customer Relations, 4(1), 34-43.
Agyer, J., Sun, S., Abrokwah, E., Penney, E. K., & Boafo, R. O. (2020). Influence of trust on customer engagement: Empirical evidence from the insurance industry in Ghana. Sage Open, January-March 2020, 1-18. https://doi.org/10.1177/2158244019899104.
Al-Queedi, A. A., Basem, M., Sadi, A. Y., Al-Azzam, Z. A. (2017). The impact of customer relationship management on achieving service quality of banking sector of Jordan. International Journal of Business and Management, 12(3), 180-190.
Attafar, A., Sadidi, M., Attafa, H., & Shahin, A. (2013). The role of customer knowledge management (CKM) in improving organization-customer relationship. Middle-East Journal of Scientific Research, 13(6), 829-835.
Azimi, H., & Amiri, V. (2018). Designing structural model of effective factors in loyalty of mobile banking customers by considering trust and satisfaction of customers. Journal of Economic & Management Perspectives, 12(2), 28-38.
Azzam, M. A. Z. (2014). The impact of customer relationship management on customer satisfaction in the banking industry – A case of Jordan. European Journal of Business and Management, 6(32), 99-112.
Bashir, N. (2017). Impact of customer relationship management on customer retention:A case of private banks of Sialkot, Punjab. International Journal of Scientific and Technology Research, 6(8), 293-305.
Bhatia,K., Chouhan, N. & Joshi, N. (2015). Comparative Study of Performance of Public and Private Sector Bank. International Journal Of Core Engineering & Management, 2(1), 306-317.
Bhat, A. S., Mushtaq, A.D, & Parrey, H.S.(2018). Antecedents of customer loyalty in banking sector: A mediational Study. VIKALPA: The Journal for Decision Makers, 43(2), 92–105.
Bompolis, G. C., & Boutsouki, C. (2014). Customer relationship management in the era of social web and social customer: An investigation of customer engagement in the Greek retail banking sector. Procedia - Social and Behavioral Sciences, 148, 67 – 78.
Chau, P. (1997). Re-examining a model for evaluating information center success using a structural equation modeling approach. Decision Sciences, 28(2), 309–333.
Chua, A. & Banerjee, S. (2013). Customer Knowledge Management via Social Media: The case of Starbucks. Journal of Knowledge Management, 17(2):237‐249.
Chaudhari, M.V. (2020). Role of CRM in Indian Banking Sector. International Journal of Engineering and Management Research, 10(1), 59-63. doi.org/10.31033/ijemr.10.1.11.
Chiguvi, D., & Guruwo, P. T. (2015). Impact of customer satisfaction on customer loyalty in the banking sector. International Journal of Scientific Engineering and Research, 5(2), 55-63.
Chiu, M. C., Huang, Y. H., Weng, C. Y., & Chen, F. C. (2017). The roles of customer – Brand relationships and brand equity in brand extension acceptance. Journal of Electronic Commerce Research, 18(2), 155-175.
Cooley, J. S. V., Ma, X., Reeves, P., Burt. W., Rainey, J. M., & Yuan. W. (2012). Data- informed decision-making on high-impact strategies: Developing and Validating an instrument for principals. Journal of Experimental Education, 80(1),pp. 107- 135)
Cvijovic, J., Stankovic, K. M., & Reljic, M. (2017). Customer relationship approach in banking industries- Modern appraoch. Industrija, 45(3), 151-165.
416 Gopalsamy & Gokulapadmanaban
Duwailah, A. F., & Hashem, N. T. (2019). The impact of knowledge management on CRM approaches. Management and Organizational Studies, 6(1), 20-30.
Foss, B., Stone, M., & Ekinci, Y. (2008). What makes for CRM system success or failure? Database Marketing & Customer Strategy Management, 15(2), 68-78.
Gayathry, S. (2016). Customer relationship management model for banks. Journal of Internet Banking and Commerce, 21(S5), 1-12.
Gozali, S., Shokri, Z., Rajabion, L., Asghari, S., & Ghasvari, M. (2019). A new model for assessing the impact of cloud computing on customer retention. Int. J. Electronic Customer Relationship Management, 12(2), 124-142. DOI:10.1504/IJECRM.2019.104020.
Hajiyana, H., Aminbeidokhtib, A. A., & Hemmatiana, H. (2015). The effect of customer relationship management on customer loyalty: Evidence from banking industries. Management Science Letters, 5, 993–998.
Hasanat, W. M., Hoqueb, A., & Hamid, A. B. A. (2019). Effect of customer relationship management in digital marketing for customer satisfaction and loyalty. International Conference on Business, Accounting, Finance and Economics, University Tunku Abdul Rahman,Kampar, Perak, Malaysia.
Hassan, S. R., Nawaz, A., Lashari, N. M., & Zafar, F. (2015). Effect of customer relationship management on customer satisfaction. Procedia Economics and Finance, 23, 563 – 567
Hawari, A. A. M. (2015). How the personality of retail bank customers interferes with the relationship between service quality and loyalty. International Journal of Bank Marketing, 33(1), 41-57.
Hooper, D., Coughlan, J., & Mullen, M. R. (2008). Structural equation modelling: Guidelines for determining model fit. The Electronic Journal of Business Research Methods, 6(1), 53– 60.
Hoyle, R. H. (2004). Confirmatory factor analysis. Encyclopedia of Social Science Research Methods, 1, 169-175.
Kebede, M. A., & Tegegne, L. Z. (2018). The effect of customer relationship management on bank performance: In context of commercial banks in Amhara Region. Ethiopia Cogent Business & Management, 5, 1-9.
Krishna, S. K., & Murthy, S. Y. (2015). A study on customer relationship management in commercial banks. International Journal of Advanced Research in Science and Engineering, 4(8), 217-226.
Lam, C. Y. A., Cheung, R., & Lau, M. M. (2013). The influence of internet-based customer relationship management on customer loyalty. Contemporary Management Research, 9(4), 419-439.
Lee, C. M. (2014). Customer relationship management and knowledge management enhancing on innovation competence: A case study. Council for Innovative Research, 10(1), 1784-1800.
Lomendra,V., Sharmila, P., Roubina, J. T. D., Ganess, D., & Zabeen, M. N. S. (2019). Assessing the impact of service quality dimensions on customer satisfaction in commercial banks of Mauritius. Studies in Business and Economics, 14(1), 259-270.
Marolt, M., Zimmermann, D. H., Znidarsic, A., & Pucihar, A. (2020). Exploring social customer relationship management adoption in micro, small and medium-sized enterprises. Journal of Theoretical and Applied Electronic Commerce Research, 15(2), 38-58.
Mirzagoli, M., & Memarian, E. (2015). The effects of demographic factors on customer satisfaction from ATM (case study: Mellat bank in mazandaran state). Science Journal (CSJ), 36(3), 2049-2056.
Mishra, M. (2016). Customers' perspective towards customer relationship management with reference to service quality: A study of Indian public and private sector banks. IOSR Journal of Business and Management, Special Issue, 37-42.
Munaiah, J., & Mohan, K. G. (2017, October). Customer relationship management in banking sector.In … (Eds.), National Conference on Marketing and Sustainable Development, (pp. 13-17).
Murugan, M., & Kumar, S. A. (2011). Customer relationship management in banking sector ( An Empirical study wth reference to Banks in Tiruvannamalai District, Tamilnadu). International Journal of Enterprise and Innovation Management Studies, 1(3), 126-132.
Nautiyal, G. (2014). Impact of service quality on the customer satisfaction in the retail banking sector. Global Journal of Commerce and Management Perspective, 3(3), 77-80.
Nguyen, N., Leclerc, A., & LeBlanc, G. (2013). The mediating role of customer trust on customer loyalty. Journal of Service Science and Management, 6, 96-109.
Paidi, S., Kaltum, U., & Helmi, A. (2018). Image of Indonesian life insurance companies by the client’s trust. Academy of Strategic Management Journal, 17(2), 1-9.
Iranian Journal of Management Studies (IJMS) 2021, 14(2): 401-417 417
Rao, S. & Patel, J. (2018). CRM the most valuable component of banking. IOSR Journal of Computer Engineering, (18), 17-23.
Ramaj, A. C. (2015). Customer relationship management (CRM) in banking sector in Albania. European Journal of Economics and Business Studies, 1(2), 136-143.
Renuga, V., & Durga, D. (2016). Customer relationship management in banking sector. International Journal of Engineering Science and Computing, 6(8), 2769-2770.
Rizan, M., Warokka, A., & Listyawati, D. (2014). Relationship marketing and customer loyalty: Do customer satisfaction and customer trust really serve as intervening variables? Journal of Marketing Research and Case Studies, 1-12.
Saberi, M., Hussain, O. K., & Chang, E. (2017). Past, present and future of contact centers: A literature review. Business Process Management Journal, 23(3), 574-597.
Schober, P., Stat, M. M., Boer, C., Schwarte, A. L. (2018). Correlation coefficients: Appropriate use and interpretation. Anesthesia & Analgesia, 126(5), 1763-1768.
Siddiqi, T., Khan, A. K., & Sharma, M. S. (2018). Impact of customer relationship management on customer loyalty: Evidence from Bangladesh’s banking industry. International Journal of Business, Economics and Law, 15(5),92-101.
Simanjuntak, M., Putri, E. N., Yuliati, N. L., & Sabri, F. M. (2020). Enhancing customer retention using customer relationship management approach in car loan business. Cogent Business & Management, 7(1), page. 1.
Sugiarto, D., Mardianto, I., Dewayana, T. S., & Khadafi, M. (2017). Design of customer knowledge management system for Aglaonema Nursery in South Tangerang, Indonesia. IOP Conf. Series: Materials Science and Engineering, 277, 1-6.
Sun, J. (2005). Assessing goodness of fit in confirmatory factor analysis. Measurement and Evaluation in Counseling and Development, 37, 240-256
San, P. L., & Hardjono, B. (2017). Customer relationship management implementation and its implication to customer loyalty in hospitality industry. Jurnal Dinamika Manajemen, 8(1), 92-107. Shanab, A. E., & Anagreh, L. (2015).Impact of electronic customer relationship management in banking sector. International Journal of Electronic Customer Relationship Management, 9(4), 254-270. Srivastave, S. V., Chandra, B., & Sinha, A. P. (2018). Effectiveness of knowledge management on customer relationship management in hotel business performance. Journal of Environmental Management and Tourism, 9(6), page.17.
Tehrani, S. N., Javadizadeh, B., & Nadi, M. (2015). The relationship between customer knowledge management, customer relationship with organizational innovation and customer loyalty (case study: Consumers and manufacturers of protein industry in Isfahan province). International Journal of Business and Management Invention, 4(2), 59-67.
Trejo, M. J., Gutierrez, S. J., & Guzman, M. G. (2016). The customer knowledge management and innovation. Contaduriay Administracion, 61,456-477.
Upamannyu, K. N., Gulati, C., Chack, A., & Kaur, G. (2015). The effect of customer trust on customer loyalty and repurchase intention: The moderating influence of perceived CSR. International Journal of Research in IT, Management and Engineering, 5(4), 1-31.
Vanitha, E. & Velmurugan,R. (2015). Customer Satisfaction of Public Sector Banks. Global Journal for Research Analysis, 4(4),1-3.
Velnampy, T., & Sivesan, S. (2012). Customer relationship marketing and customer satisfaction: A study on mobile service providing companies in Srilanka. Global Journal of Management and Business Research, 12(8), 1-8.
Wahab, S., Momani, A. K., & Noor, M. A. N. (2010). The relationship between e-service quality and ease of use on customer relationship management (CRM) performance: An empirical investigation in Jordan mobile phone services. Journal of Internet Banking and Commerce, 15(1), 1-15.
Yadav, K.B, & Singh,A. (2014). Analyzing the Influence of Customer Relationship Management on Firm Performance: A Study of Hotel Industry in India. International Journal of Customer Relationship Marketing and Management,5(3), 69-97.