The Effect of Customer Relationship Management on Customer Retention In Commercial Bank of Ethiopia Dire Dawa District

The objective of this study was to examine the effect of customer relationship management on customer retention in Commercial Bank of Ethiopia Dire Dawa District. The study used both quantitative and qualitative research design and it employed Explanatory research method. The researcher used behavioral components of CRM i.e. Key customer focus, Knowledge management, CRM organization, and Technology based CRM as independent variables to examine its effect on retention. To achieve the objectives of the study, the primary data were collected by using 5-Point Likert-Scale questionnaire distributed to the customers of the bank and semi-structure interview conducted with customer relationship officers and branch managers of the bank. A total of 400 questionnaires were distributed and 354 of them are returned. These respondents were selected by using probability sampling methods; especially cluster sampling were used. The researcher collected data from Ten branches of CBE found in Dire Dawa city to asses customers’ and employees’ level of agreement regarding CRM practice in their branches. The collected data was analyzed using statistical package for social science (SPSS) version 22.00. The descriptive statistics (Mean, Standard deviation and frequency) and inferential statistics (correlation and regression) were used to describe demographic facts, to test hypothesis and to answer the research questions. The statistical result showed that customer relationship management which is represented by four behavioral components has a positive and significant influence on customer retention. The researcher suggested that CBE has to pay attention to Technology based CRM dimension as it has highest influence on customer retention.