Final Thesis Rina

ST.
MARY’S UNIVERSITY
SCHOOL OF GRADUATE STUDIES
ASSESING CUSTOMER RELATIONSHIP MANAGEMENT PRACTICE

IN THE CASE OF WEGAGEN BANK OF ETHIOPIA
BY: RINA G/MICHEAL
JULY, 2018
ADDIS ABABA, ETHIOPIA

ST. MARY’S UNIVERSITY

IN THE CASE OF: WEGAGEN BANK OF ETHIOPIA
A THESIS SUBMITTED TO ST.MARY’S UNIVERSITY, SCHOOL OF

GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE
REQUIREMENTSFOR THE DEGREE OF MASTERS OF ART IN
MARKETING MANAGEMENT
BY: RINA G/MICHEAL
JULY, 2018
ADDIS ABABA, ETHIOPIA
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ST. MARY’S UNIVERSITY

IN THE CASE OF: WEGAGEN BANK OF ETHIOPIA
BY
RINA G/MICHEAL
APPROVED BY BOARD OF EXAMINERS
___________________________ _______________
Dean, Graduate Studies Signature
___________________________ _______________
Advisor Signature
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External Examiner Signature
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Internal Examiner Signature

ENDORSEMENT
This thesis has been submitted for examination with my approval as the university advisor.
Main advisor: ________________________________
Signature _________________________________
date____________________________
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DECLARATION
I Rina G/micheal declare that the thesis on the title assessing customer relationship management
practice in the case of: wegagen bank of Ethiopia, is my original work and that all sources that
have been referred to and quoted have been dully indicated and acknowledged with complete
references.
Name: _________________________________
Signature: ________________________
Date: _______________
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TABLE OF CONTENTS
ENDORSEMENT……………………………………………………………………………I
DECLARATION…………………………………………………………………………… II
TABLE OF CONTENTS………………………………………………………………....... III
LIST OF TABLES……………………………………….....………………………………. IV
LIST OF FIGURE…………………………………………………………………................ V
AKNOWLEGEMENT………………………………………………………………………. VI
ACRONYMS……………………………………………………………….........…………. VII
ABSTRACT……………………………………………………………………...........…….. VIII
CHAPTER ONE INTRODUCTION …………...……………………………….1
1.1 Background of the study………………………………………..………………………........1
1.2 Statement of the problem ……………………………..……..……………………………….3
1.3. Basic research questions…………………….………………………………………..……...4
1.4 Research objectives……………….………………………………...………..………………5
1.4.1 General objective…………………..........…………………………..…………….…….5
1.4.2 Specific objective…………………………………………………………………..…...5
1.5 Significance of the study. .…………………………………….……………………..……...5
1.6 Scope and limitation of the study……………………………………………………...…….6
1.7 Organization of the study…………..…………………………………………………...……6
1.8 Definition of terms…………………………………………………………………….……..5
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CHAPTER TWO REVIEW OF RELATED LITERATURES………….….. ………………7
2.1 Theoretical study……………………………..…...………………………………………...7
2.1.1 Definition of CRM……………………………………………………………….…...7
2.1.2 Characteristics of CRM………………………...…...…………………...………...…9
2.1.3 Importance of CRM ………………..………………….………..…………...…........10
2.1.4 CRM process………………………………… …..……………………………........11
2.1.5 In banking sector…………………………………………………..…..…..……........12
2.2 Empirical review…………………………………….……………………..………….........13
2.3 A conceptual frame work…………………...……………………………………..………..14
CHAPTER THREE RESEARCH METHODOLOGY……..……………………...……..….16
3.1 Research design…………………………………………..……………………..………..…16
3.2 Source of data……………………..…………………………………..…………………….16
3.3 Population of the study…………………….……………………………………..………....16
3.4 Sampling techniques…………..…………………………………………...………………..17
3.5 Sample size determination………………………………………………………..…………17
3.6 Methods of data collection……………………………………………………………….....17
3.7 validity and reliability………………..………………………………………….……….....18
3.7.1 Reliability………………………………………………………………………..…….18
3.7.2 Validity………………………………………….……………………………………..18
3.8 Methods of data analysis………….....……………………………………………………....19
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CHAPTER FOUR DATA PRESENTATION, ANALYSIS AND INTERPRETATION…..20
4.1. Employees respondents………………………………......………………………..……….20
4.1.1 Customers respondents…………………..…...………..……..………………………...21
4.2 Practice of CRM in wegagen bank………….………………………………………..……...22
4.2.1 The practice of the dimensions ofCRM– employees perception……….…………..….23
4.3 Discussion………………….……………………….……………...……………………......34
CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATION……...…....37
5.1 Summary of the findings……………………………..….......................................................37
5.1.1 Conclusion……………………………….……..…………………………..…………38
5.1.2 Recommendations…………………………..………………………………………....39
APPENDIX 1..........……..……………………………………………………..……...………..42
APPENDIX 2……….…………………………………………………..………………………45
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LIST OF TABLES PAGES
Table 3.1 Cronbach's for customer ………………………………………………..…….……..18
Table 3.2 Cronbach’s for empoloyees………………………………….……...…………..........18
Table 4.1 Background characteristics of the ‘employee questionnaire’ respondents ……..........21
Table 4.2 Background characteristics of the ‘customer questionnaire’ respondents………........22
Table 4.3 Practice of the dimensions of CRM - employee`s perception...……..………………..23
Table 4.4 The practice of the customer acquisition dimensions of CRM- employee’s
perception………………………………………………………………………………………...24
Table 4.5 The practice of customer response dimensions of CRM - employees perception….…..25
Table 4.6 The practice of the customer knowledge dimensions of CRM - employee’s
perception………………………………………………………………………………………...26
Table 4.7 The practice of the customer information system dimensions of CRM- employee’s
perception………………………………………………………………………………………...26
Table 4.8 The practice of the customer value evaluation dimensions of CRM - employee’s
perception………………………………………………………………………………………...27
Table 4.9 The practice of the customer information process dimensions of CRM- employee’s
perception………………………………………………………………………………………...28
Table 4.10 Practice of the dimensions of CRM - customer’s perception…………………....…....28
Table 4.11 The practice of the customer acquisition dimensions of CRM- customer`s
perception………………………………………………………………………………………...30
Table 4.12 The practice of the customer response dimensions of CRM- customer`s
perception…….………………………………………………………………………………......30
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Table 4.13 The practice of the customer knowledge dimensions of CRM - customer`s
perception…...……………………………………………………………………………………31
Table 4.14 The practice of the customer information system dimensions of CRM- customer`s
perception………………………………………………………………………………………...32
Table 4.15 The practice of the customer value evaluation dimensions of CRM- customer`s
perception.......................................................................................................................................33
Table 4.16 The practice of the customer information process dimensions of CRM - customer
perception………………………………………………………………………………………...34
LIST OF FIGURE PAGE
Figure 2.1 A conceptual framework of CRM practices on banks……………………………….14
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AKNOWLEGEMENT
First and foremost, I would like to thank Almighty God for giving me the strength, knowledge,
ability and opportunity to undertake this research study and to persevere and complete it
satisfactorily. Without his blessings, this achievement would not have been possible. In my journey
towards this study, I have found a teacher, an inspiration, a role model and a support in my Guide
Dr. Temesgen Belayneh , He has been there providing his heartfelt support and guidance at all
times. Without his able guidance, this study would not have been possible and I shall eternally be
grateful to him for his assistance.
Next my acknowledgement would be incomplete without thanking the biggest source of my

strength, my family. Dad and Mom this would not have been possible without your unwavering
and unselfish love and support given to me at all times. I’m always thankful for having a loving,
supportive, an amazing Dad and Mom like you Chichiye and Hiwotye.
Finally I would like to express my gratitude for Kiye and Wenday who have been so helpful and
cooperative in giving their support at all times to help me achieve my goal. Thank you (group six)
for giving me a wonderful atmosphere in the school you make it easier for me.
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ACRONYMS
CRM: Customer relationship management
(IT): Information technology
SMU: St. Mary’s University
SPSS: Statistical Package for Social Sciences
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ABSTRACT
The main objective of CRM is to retain current customers through increasing their loyalty and to
select new customers that provide higher profitability (Hansotia, 2002).
The objective of this study is to examine the practice of CRM application in Wegagen bank.
A quantitative approach was used with descriptive design. Both primary and secondary sources
were used to gather data’s based on the six dimensions of CRM (customer acquisition, customer
response, customer knowledge, customer information system, customer value evaluation and
customer information process). The study investigates customers and employees perceptions of
CRM practices of selected Wegagen bank in Addis Ababa. . The study data collected with the
Sample size of 109 with purposive sampling from tier 1 branches (Teklhaymanot branch, Beklobet
branch, Gofa branch, Bolebranch and Meskel square branch) of wegagen bank. The study shows
the practice of CRM application in wegagen bank is at the average level; the practice of
application of the customer knowledge dimension being the highest in achievement while the
customer information process practices are insufficient therefore ,Its suggested that wegagen
bank should keep working more on the customer knowledge and On the customer information
process the bank should have a system that can make easier for the customers to do a business
with the bank by using updated technologies that can make all processes easier also the bank
should use computer system for recording the customers ‘requests and service rendered in order
to bit the stiff competition and achieve its goals.
Keywords: CRM, customer acquisition, customer response customer, knowledge, customer information
system, customer value evaluation, customer information process.
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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
When we see customer relationship management it is a phrase that describes how your business
interacts with your customers. CRM involves using technology to gather the intelligence you need
to provide improved support and services to your customers. In other words, CRM is also about
what you do with that information to better meet the needs of your existing customers and identify
new customers, resulting in higher profits for you. CRM is a managerial philosophy that seeks to
build long term relationships with customers. CRM can be defined as the development and
maintenance of mutually beneficial long-term relationships with strategically significant
customers (Buttle, 2002).
The fundamental idea of Customer Relationship Management (abbreviated as CRM in the

following) is to improve customer satisfaction degree by analyzing the customers’ detailed
information. Therefore, to improve the corporate competition ability (Wang, 2010) the nature of
CRM aims to maximize customer value in the long term, by focusing business processes,
marketing and customer service on client relationship maintenance by helping information
technology (IT) systems (Chang, 2007). The main objective of CRM is to retain current customers
Through increasing their loyalty and to select new customers that provide higher profitability
(Hansotia, 2002).CRM implementation is not an easy duty coined in the mid-1990s and heavily
promoted during the late 1990s, the term ‘CRM’ still means different things to different people
(Goldberg, 2002).
In reply to increasing competitiveness in the global market, businesses are looking for means to
manage their relations with customers more effectively over time. Consequently, customer
relationship management (CRM) has become a central part of most businesses and many
organizations are implementing CRM systems. CRM systems are a classification of
organizational information systems that enable organizations to provide services for customers,
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gather and analyze customer information and manage their relationships with customers more
effectively (Khodakarami, 2011).In a recent paper by Onut (2006), the authors describe that
using the CRM system into the banking industry helps businesses (using technology and human
resources) to gain insight into the behavior of customers and focus on the value of those
customers. If the CRM system works as hoped, the business can provide: better customer
service; make call centers more efficient; cross sell products more effectively; Help sales staff
close deals faster; simplify marketing and sales processes; discover new customers and; Increase
customer revenues.
In Ethiopia the banking sector is one of the core stones which plays its own role in the
development of the country. From these banks Wegagen Bank is one of the private bank in
Ethiopia established as a share company and started operation on June 11, 1997. Currently the
Bank has a network of 47 branches, out of which 21 are in Addis Ababa and the remaining 26
are spread across major towns in the country. The Bank has also a forex office inside Bole
International Airport terminal (Annex III). : Total Asset of the Bank stood at Birr 5.3 billion as
at March 31, 2009. The number of customers that maintain their account with the Bank grew to
over 168,000. The bank work with numerous correspondent Banks, banks with valid Swift
BKE (Annex I), which are 96 in number and 19 banks for Standard Settlement Instruction
(Annex II.) Wegagen bank of Ethiopia has a vision “To be one of the ten most reputable and
competent banks in Africa by the year 2025. The mission statement and values of the Bank are
stated below.
Mission Statement
“To provide a wide range of quality banking services through a dynamic workforce and up-to-date
IT solutions to satisfy the desires of all stakeholders”.
Values
 Outstanding customer services,

 Business integrity, honesty and loyalty,
 Effective, efficient and expanding operations,
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 Strong capital and liquidity position,
 Prudent lending,
 Reasonable cost control discipline,
 Fair & objective employment practices,
 Play a responsible role in aligning objectives with those of the local communities, and
 Commitment to comply with the spirit and letter of the Law.
The number of private banks in the country is increasing from year to year and this created a stiff
competition between the banks so applying a customer relationship management becomes a
solution to stay on the competition and have a good performance to compete. Most banks practice
the CRM but they don’t give attention how effectively they are practicing it so this lead to a poor
CRM practice and because of this the banks don’t meet customer’s expectation as needed but
understanding customer expectations with regard to how the service delivered successfully is
essential for establishing a long term symbolic value relationship. It’s vital for the banks to see
how effectively they are implementing the CRM to achieve their goals by fulfilling their
customer’s expectation so, this study focus on the practice of customer relationship management
application in Wegagen bank of Ethiopia. The application of CRM is a key to business success
because it expand their customer bases, enhance their competitive position and able to retain the
customers at increased satisfaction rate.
It is apparent from literatures that those banks that are able to implement all dimensions of the
CRM are more beneficial than those that implemented it in a fragmented manner Das , (2009) ,So
this study investigated how the Wegagen bank is practicing the CRM on the basis of this
dimensions .The dimensions are customer acquisition, customer response, customer knowledge,
customer information system, customer value evaluation, and customer information process which
explored by Lu and Shang ,(2007).
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1.2 STATEMENT OF THE PROBLEM
The banks in the present era are facing stiff competition and they are struggling to find a place in
the industry. They have realized the fact that CRM is a powerful tool to achieve success in their
business. CRM is an effective tool for the bankers to acquire new customers and to retain the
existing ones.
In the recent years, CRM has emerged as one of the most widely prescribed solutions for increasing
market chase and growth of many industries in general, banking sector in particular.
CRM`s successful implementation in an integrated and holistic manner have a positive impact in
the customer retention and satisfaction, reduction of costs and enhancement of competitive stand
in the market but in Ethiopia most of the bank sectors don’t give much attention how successfully
the CRM application is practiced because of not checking how they are practicing it they don’t
meet there customers’ expectation as required, So in order to see the occurrence of this loopholes
the researcher choose Wegagen Bank which is one of the private banks. Even if the researcher saw
the gaps occurring but he took 50 prominent customers from the 5 tier 1 branches of the Wegagen
and prepare a questions that are related with CRM practice to be very sure and to make clear the
study from a one person standpoint.
The questions were: does the bank give attention to the customer’s knowledge about the services,
does the Wegagen bank give the expected focus on the customer acquisition, does the bank give
fast response to the information you want to know, does the bank give the needed value to their
compliant customers as expected.
For the above questions the 60 % respondents answer that the bank doesn’t give the needed
attention to the customers knowledge about the services delivered, that the Wegagen bank doesn’t
give the expected focus on the customer acquisition, that the bank is slow in giving response to the
information they want to know, that the bank don’t give the needed value for their compliant
customers as they expected to be, so from their respond it’s clear that they aren’t satisfied by the
bank performance. The 10 % respondents were neutral and 30 % of respondents say that they are
satisfied with the service they get from the bank. From the respond of the 60% customers of
Wegagen bank the researcher understood that its essential to investigate the practice of CRM
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application in the bank to identify the components of CRM that are well implemented and those
in loose to influence them in the future.
The purpose of this study is to investigated the practice of CRM application in wegagen bank of
Ethiopia on the basis of the six dimensions; customer acquisition, customer response, customer
knowledge, customer information system, customer value evaluation, and customer information
process.
1.3 BASIC RESEARCH QUESTIONS
Based on the statement of the problem this study seek answers for the following questions
 To what extent is wegagen bank perform on acquiring new customers?

 To what extent is wegagen bank respond to its customers?
 To what extent is wegagen bank practicing customer knowledge application?
 To what extent is wegagen bank facilitate the information system application?
 To what extent is wegagen applying the value evaluation?
 To what extent is wegagen bank practicing customer information process application?
1.4 RESEARCH OBJECTIVES
1.4.1GENERAL OBJECTIVE
 To assess the practice of customer relationship management application in wegagen bank

of Ethiopia.
1.4.2 SPECIFIC OBJECTIVE
 To examine the performance of customer Acquisition application in Wegagen bank

 To examine the respond of Wegagen bank to its customers
 To examine the practice of customer knowledge application in Wegagen bank
 To examine the practice of customer information system application in Wegagen bank
 To examine the value evaluation application in Wegagen bank
 To examine the practice of customer information process application in Wegagen bank
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1.5 SIGNIFICANCE OF THE STUDY
Applying the CRM is a key to business success and important to improve customer life time
value. CRM application allows the bank to collect and to use information about their customers
in order to customize their offer for every client to increase their trust in the bank and to
coordinate their relationship with clients a lot more efficient in all market stages. The purpose
of this study is to assess the practice of CRM application in Wegagen bank of Ethiopia. This
study help the bankers to know that applying CRM application effectively plays key role to be
successful, for the bank to check how well they are practicing the CRM application and manage
customer interactions support them more effectively to maintain competitiveness in the present
economy. The successful application of customer relationship management help the customers
because there need understood by the bank, when there is a good relationship the customers can
have the confidence to tell what they lack from the bank .This study motivate other researchers
to study more on the application of CRM because this study show how effective application of
customer relationship management is important for a service to be successful.
1.6 SCOPE AND DELIMITATION OF THE STUDY
This study investigated the practice of CRM application in Wegagen bank branches. In this study
the sample was small and the results might not be generalizable afar the specific population from
which the sample is drawn, considering the massive number of branches of Wegagen bank in
Addis Ababa. Even if wegagen bank is doing its business all over the country, to include all
those it requires: experience, much time and huge amount of finance, because of this reasons
the study focused only on five tier 1 branches of Wegagen bank in Addis Ababa region,
1.7 ORGANIZATION OF THE STUDY
The study consist five chapters. The first chapter presented the introduction of the study where by
background of the study, problem statement, objectives of the study, research questions,
significance of the study, and definition of terms and scope and limitation of the study.
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The second chapter included reviewing related literatures and the third chapter discussed the
methodology that are used to undertake the study. In chapter four and five, the data analysis
&discussion of results and conclusions & recommendations are presented. Finally, references and
copy of the questionnaire annexed.
1.8 DEFINATION OF TERMS
Customer Relationship Management (CRM) :- is to improve customer satisfaction degree by

analyzing the customers’ detailed information, therefore, to improve the corporate competition
ability (Wang at al., 2010).
Information technology (IT) systems:- Is a software system to capture ,transmit, store, retrieve,
manipulate, or display information, thereby supporting people, organization, or other software
systems.
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CHAPTER TWO
REVIEW OF RELATED LITERATURES
2.1 THEORETICAL STUDY
2.1.1 DEFINITION OF CRM
Customer Relationship Management (CRM) begins with the concept relationship marketing
introduced by Berry in 1983 to attract and to maintain the relationships between customers and
organizations. Discussion about relationship marketing begins in the 1960s where the authors
studied on consumers' brand loyalty and store loyalty. Later, in the late 1970s researchers focus on
industrial marketing and marketing channel to develop a framework and the theories are based on
two groups of relationships; as buyer and seller Moller and Halinen, (2000).
The evolutions of marketing philosophy in the relationship between customers and organizations
change the term relationship marketing to Customer Relationship Management (CRM). In
literature, many definitions were given to describe CRM. The main difference among these
definitions is technological and relationship aspects of CRM. Some authors from marketing
background emphasize technological side of CRM while the others consider IT perspective of
CRM.
From marketing aspect, CRM is defined by Couldwell, (1998) as “a combination of business

process and technology that seeks to understand a company’s customers from the perspective of
who they are, what they do, and what they are like”. Technological definition of CRM was given
as “The market place of the future is undergoing a technology-driven metamorphosis” Peppers and
Rogers (1995). Consequently, IT and marketing departments must work closely to implement
CRM efficiently. Meanwhile, implementation of CRM in banking sector was considered by
Mihelis, (2001). They focused on the evaluation of the critical satisfaction dimensions and the
determination of customer groups with distinctive preferences and expectations in the private bank
sector. The methodological approach is based on the principles of multi-criteria modeling and
preference disaggregation modeling used for data analysis and interpretation. Yli-Renko, (2001)
have focused on the management of the exchange relationships and the implications of such
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management for the performance and development of technology-based firms and their customers.
Specifically the customer relationship of new technology- based firms has been studied.
Cook and Hababou, (2001) were interested in total sales activities, both volume-related and non-
volume related. They also developed a modification of the standard data envelope analysis (DEA)
structure using goal programming concepts that yields both a sales and service measures. (Beckett-
Camarata , (1998) have noted that managing relationships with their customers (especially with
employees, channel partners and strategic alliance partners) was critical to the firm’s long-term
success. It was also emphasized that customer relationship management based on social exchange
and equity significantly assists the firm in developing collaborative, cooperative and profitable
long-term relationships. Yuan and Chang (2001) have presented a mixed-initiative synthesized
learning approach for better understanding of customers and the provision of clues for improving
customer relationships based on different sources of web customer data.
Brown (2000, pp.8) defined; CRM as a process of acquiring retaining and growing profitable
customers and business strategy that aims to understand, anticipate, manages the needs of an
organization's current and potential customers. Customer relationship management (CRM) has
been called an inevitable—literally relentless—movement because it represents the way customers
want to be served, and offers a more effective and efficient way of conducting business Peppers
and Rogers (2004, p. 6). From the perspective of Coldwell, CRM is a combination of business
process and technology that seeks to understand a company’s customers as to who they are, what
they do, and what they are like.
According to Ryals and Payne (2001), CRM is a management approach that use information
technology (IT) to build a long term relationship with their customers and at the same time channel
more profits to the organizations.
Chen and Ching (2004) described CRM as a long term relationship that use customer database to
identify which customer can give more profits to the organizations. Mylonakis (2009) recognized
CRM as an innovative process to create a long term relationship with customers in order to get
trust from customers towards organizations. CRM is a comprehensive strategy and process which
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focus to establish, maintain and enhance relationship with customers and to create value for the
organizations (Jham, 2008).
CRM offers a lot of benefits to the organization in terms of improved sales, market share
profitability ,customer satisfaction and reduced customer turnover, service cost and time Jain
,(2003) Furthermore, CRM is not only a solution but also a strategy which can provide enormous
competitive advantage if implemented in a co-operative environment Kotorov, (2003). Therefore,
organizations whether small or large have to adopt CRM in order to build more effective
relationship with respective customers and also to increase business profitability Ngai, (2005).
Thus, CRM is a must for most organizations to survive in the market. “Do nothing” or “wait and
see” are not viable options: “CRM should be the center of your universe…The best way to organize
the information you use.”(Allen Bonde, analyst with the extraprise group, quoted in Colkin,
(1999).
Peeru Mohamed and Sagadevan, (2005) Managing relationship with customer and making
customer delightful has become a necessity in this present globalization. Customer delightment is
not only the key to success but also very excellent method of approach for the organization.
Blery and Michalis, (2006) Identified that the expected areas to generate future value for the banks
are customer segmentation, distance sales/outbound, delays and human capital management.
Brink, (2006) defined CRM as a definite marketing activity by which the institution prepare its
customers to use its resources to produce and market a valuable product for them. CRM aims at
two goals: supporting the social cause and improving the marketing performance.
Kumar, (2006) stated that CRM is merely a strategic process by which the institution's more
profitable customers are chosen, and interactions between this institution and these customers is
determined, in order to achieve the goal of maximizing the present and future values for customers.
Leverin, (2006) found that the implementation of relationship marketing strategy in a retail bank
did not result in the increase of loyalty with respect to the most profitable customer segment.
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2.1.2 CHARACTERISTICS OF CRM
CRM as compared to traditional marketing involves series of transactions, regular and continuous
interactions beyond simple exchange process, long term objectives, bonds involving investment
of time and energy to produce positive interactions, investment by the parties, some switching 7
barriers, elastic and permeable boundaries, holistic approach and systematized offers. In India
CRM have deep roots in the practices of business.
The business men used to establish bondages with customers at emotional level, especially in small
towns and villages. However, in modern corporate world, CRM has appeared as a new concept in
the mid-1990s, more as a technology that would change dramatically the way corporations
managed their networks and interaction points with customers Kotorov, (2003). Thus the modern
CRM, in its early stages, was deployed as a technology solution: a software package that was
bought and installed to facilitate or automate some marketing functions. The terms “sales-force
automation”, “campaign automation”, “customer support automation” were often equivocated
with CRM, even though they stand only for different components of the enterprise-wide CRM
strategy. Shortly after the deployment of such packages it became evident that they were not used
as planned and remained as show pieces.
Albert Stroucken, CRM, (August 2002). As the technology/project approach failed, discussion on
strategic approach took place with a need to focus on customer and consider technology only as a
tool.
In mid-1990s, it was thought that merging customer data collected from the field by sales force
with call center interactions would result in more informed interactions with the customers. The
concept resonated with user organizations. Soon mergers and acquisitions gave rise to a host of 8
software vendors, all claiming to have an integrated set of capabilities that became known as CRM.
On a parallel track, internet-based tools such as ecommerce, internet marketing Yang and Fang,
(2004), personalization Jun and Cai, (2001) and self-help Walters and Lancaster, (1999);
Parasuraman , (2005) were evolving. Owing to the newness of the technology, these products
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Competed outside of the CRM sphere and were referred to as “e-business”. When the concepts of
CRM and e-business molded together Light, ( 2003) ; Fjermestad and Romano, (2003) ; Bull,
(2003), there was a short period where vendors talked about e-CRM. Similarly, ERP vendors
realized that the 360- degree view of the customer had to include transaction data, so they
developed an integrated package with CRM capabilities. Thus, from a technology perspective,
CRM consists of a set of applications that address the needs of customer-facing functions that in
turn feed a common database that is supported by business analysis tools.
2.1.3 IMPORTANCE OF CRM
Parvatiyar, (2001) Observed that the CRM is a comprehensive strategy and process of acquiring,
retaining and partnering with selective customers to create superior value for the company with
the customers.
Ryals and A.Payne (2001) imparted that customer relationship management has become important
topic in marketing. They further disclosed the uses of information technology which helps to
starting relationship marketing strategy.
Pisharodiet, (2003) found that a process oriented strategic approach to connect the operational,
informational and the organizational components of the CRM are critical for the success of the
CRM application.
Reinartz& Kumar, (2003) CRM refers to all business activities directed towards initiating,
establishing, maintaining, and developing successful long-term relational exchanges.
2.1.4 CRM PROCESS
Framework of CRM process has been surveyed by many authors Parvatiyar and Sheth (2001);
Rababah, (2011). Rababah defined CRM processes as "the activities performed by the organization
concerning the management of the customer relationship where activities are clustered according
to a longitudinal view of the relationship". Rababah , (2011) explored CRM process based on four
levels as: Customer-facing level, Customer oriented level, Cross-functional level and Macro-level
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Customer- facing level: This level aims at maximizing value of relationship portfolio via
managing customer relationship initiation, maintenance, and termination.
i. Customer relationship initiation involves process of activities before and/or immediately after
phase of relationship for example identification of potential customers.
ii. Maintenance process incorporates activities that represent normal customer relationships, like
cross-selling, up-selling, or retention programs.
iii. Termination process involves activities in finding and settling bad relationship for instance,
ending the relationship with low value customer.
Customer-oriented level: The customer-oriented level take in account all activities executed to
satisfy customer need or to solve customer problem Rababah , (2011). They further identified and
differentiated among three kinds of customer-oriented CRM processes;
i. CRM delivery processes includes all process of direct contact with customer like campaign
management process, sales management process, service management process, and complaint
management process.
ii. CRM support processes are processes taking care of maintaining purposes through research
process in market and loyalty management process.
iii. CRM analysis processes focus attention on integrating and examining customer’s information
collected in other CRM processes.
Cross-functional level
The cross-functional CRM process involves several functions as the name implied „cross-
functional‟. Among the functions involved are; strategic planning, value creation, information
management, multi-channel integration and process of measuring performance.
13
2.1.5 CRM IN BANKING SECTOR
Over the last few decades, technical evolution has highly affected the banking industry. For more
Than 200 years, banks were using branch based operations. Since the 1980s, things have been
really changing with the advent of multiple technologies and applications. Different organizations
got affected from this revolution; the banking industry is one of its Sherif, (2002).In this
technology revolution, technology based remote access delivery channels and payment systems
surfaced.
ATM displaced cashier tellers, telephone represented by call centers replaced the bank branch,
internet replaced the mail, credit cards and electronic cash replaced traditional cash transactions,
and interactive television will replace face-to-face transactions Sherif, (2002).
In recent years, banks have moved towards marketing orientation and the adoption of relationship
banking principles. The key motivators for embracing marketing principles were the Competitive
pressure that arose from the deregulation of the financial services market particularly In India. This
essentially exposed clearing banks and the retail banking market to increased competition and led
to a blurring of boundaries in many traditional product markets Durkin, (2004).
The bank would need a complete view of its customers across the various systems that contain
their data. If the bank could track customer behavior, executives can have a better understanding,
a predicative future behavior and customer preferences. The data and applications can help the
bank to manage its customer relationship to continue to grow and evolve Dyche, (2001).
According to Stone , (2002) most sectors of the financial services industry are trying to use CRM
techniques to achieve a variety of outcomes. In the area of strategy, they are trying to: Create
consumer-centric culture and organization; Secure customer relationships; Maximize customer
profitability; Integrate communications and supplier – customer interactions across channels;
Identify sales prospects and opportunities; Support cross and up-selling initiatives; Manage
14
customer value by developing propositions aimed at different customer segments; Support channel
management, pricing and migration.
2.2 EMPERICAL REVIEW
McKenna, (1999); Ngai, (2005); Payne, (2006); Vavra, (1993); Wilson &Vlosky, (1997) agree on
the relevance of managing the relationship between organizations and its customers. Thus the
adaptation of the organizational capacity to detect opportunities in the market and the constant
effort of companies on establishing long term relationships with its business partners, especially
With its customers, has been established as a priority on enterprises Demo and Ponte, (2008), this
indicates that implementation of CRM in organizations help to beat the stiff competition and make
them achieve their goals.
According to Hassan and Parves (2013), Shang and Lu (2012) it’s found that a positive relationship
existing among CRM and organizational performance. Shang and Lu are the one who identify six
factor dimension of CRM in Freight Forwarder Service. The dimension consists of:
Dimension 1 (Customer Acquisition): The bank has flexible measures for customers' urgent
requirements; the bank has different marketing mix for target customers; the bank would use
customer information to develop a new market; the bank would apply customer information to
marketing planning; the bank provides a variety of service items and information; the bank
provides sales rebates for customers; and the bank provides solitary services to meet customers'
requirement.
Dimension 2 (Customer Response): The bank uses phone calls, e-mails, and personnel visits to
communicate with customers; the bank rapidly responds to customers' problems, suggestions, and
complaints; the bank would initiatively understand customers' service requirements and
expectations; and the bank has good reputation, therefore, customers would initiatively enquire
about bank's services.
Dimension 3 (Customer Knowledge): The bank is knowledgeable about how to obtain main
customers; the bank understands main customers' service requirements; the bank has fruitful
15
capabilities to obtain new customers; I often introduce other customers to purchase bank's product
and services; and I often insist on using bank's services and product.
Dimension 4 (Customer Information System): The bank is capable of using their computer system
to categorize targeted markets; the bank's computer system is capable of organizing classifying
interactions between sale representatives and customers; the bank has a computer system sufficient
to handle customers' information; and the bank has a management system to check transactions
and customer relationships.
Dimension 5 (Customer Value Evaluation):

The bank would analyze individual customer's profit contribution; and the bank would analyze
customer types and behaviors to identify customer value.
From there result among the six factors “Customer Knowledge” dimension has high Loading factor
than others.
Hassan, (2013) Also explain the importance of CRM by saying that in the current trends of CRM
in Tesco and Sainsbury retail stores CRM is a determinant of profitability and business growth.
They also used, loyalty card scheme‟ as a key prominent feature of CRM, the effect of CRM on
Malaysian hotel industry performance.
Mohammed ,(2014) even though their studies focus on internal environment (RBV model), but
they found a significant and satisfactory result showing positive and direct relationship between
CRM technology and organizational performance of Malaysian hotel industry and found that
marketing capabilities (planning and implementation) fully mediates the association.
In another study of Zaman K,(2012) discover that satisfied internal customer also increase
organizational Customer relationship management and firm performance via internal marketing.
When we see on the bank sector Kirmaci, (2012) investigated the relationship between banks‟
CRM in Turkey and customer loyalty where he found the ability of banks to retain their current
customers and gain new customers depend on CRM.
16
Ampoful, (2012) found CRM to accommodates customer loyalty and retention of customers
leading to increased sales, profit and reduce cost of acquiring customer, the author also see the
effect of CRM on profitability in Barclays Bank in Ghana having a positive relationship between
CRM and profitability, where Staff of the bank agreed that customer retention was the key to the
bank's success. Nwankwo, (2013) also found empirically a direct positive and significant
relationship existing between CRM and customer retention in Nigerian insurance company.
2.3 A CONCEPTUAL FRAME WORK
The conceptual framework in this study will be based on Lu and Shang (2007)
Figure 2.3.1. A conceptual framework of CRM practices on banks
customer
value
evaluation
customer customer
information information
process system
CRM
dimensions
customer customer
response acqusition
customer
knowledge
The study was based on Lu and Shang (2007) who identify the six CRM dimensions making up
thirty CRM attributes under customer acquisition, customer response, customer knowledge,
customer information system, customer value evaluation, and customer information process. In
this study, we are going to use the six CRM dimensions to apply in banking sector.
17
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 RESEARCH APPROACH AND DESIGN
The study employs a quantitative data with the purpose to assess the practice of CRM in Wegagen
Bank. This study used descriptive approach to describe the practice of six dimensions of CRM and
it provides simple summaries about the sample and the measures.
3.2 SOURCE OF DATA
The Primary data for the purpose of the study were gathered from the Customers and employees
of the Wegagen bank with a close ended questions for both. The Secondary data were collected
from internet sources and journals.
3.3 POPULATION OF THE STUDY
The population in this study consisted of employees from five branches (Bole branch, Meskel
square branch, Gofa branch, Beklobet branch and Teklhaymanot branch) of the bank and
prominent customers of the five tier 1 branches of the Wegagen Bank of Ethiopia found at the area
of Addis Ababa. The reason to choose this branches is because the five branches are tier 1 branches
which provide diversified services that involve huge volumes of transaction so using this higher
grade branches enable the researcher to get the needed data for the research.
3.4 SAMPLING TECHNIQUES
As it was impractical to assess all branches of Wegagen bank found in Addis Ababa so a purposeful
non-probability sampling was found to be the most appropriate for this case. The Wegagen bank
grade its branches. The grading system categorizes branches from tier 1 to tier 4 based on number
of accounts, number of transaction deposit, hard currency and loan, the use of higher-grade
branches is presumed to enable access to multiple portfolios of customers and employees of the
Bank as the branch rating criteria enable the identification of branches where it provides diversified
18
services that involve huge volume of transactions because of all this reasons the researcher
purposely focused only on tier 1 branches to get the necessary data for the study so the researcher
selected five tier 1 branches.
3.5 SAMPLE SIZE DETERMINATION
Employees that work in the customer relationship management areas and prominent customers
from the five tier 1 branches of Wegagen bank were included in the sample which were 150.
N = 150
n = N/1+N(e)(e)
n = 150/1+150(0.05)(0.05)
n = 109 the no of population for the sample taking was 109.
3.6 METHODS OF DATA COLLECTION
The study used questionnaire which contains statements that are specifically designed to measure
CRM practices of firms in relation to the six dimensions (customer acquisition, customer response,
customer knowledge, customer information system, customer value evaluation, and customer
information process) of CRM which are explored by Lu and Shang (2007) to collect data’s. The
questionnaire was adapted from Lu and Shang (2007).
The items were measured using a five-point, Likert Scale with the following anchors: Strongly
Disagree (1), Disagree (2), Neutral (3), Agree (4), and Strongly Agree (5). The questionnaire
designed for both the employees and customers for the five tier 1 branches of Wegagen bank in
Addis Ababa. The questionnaires were composed of two sections. The first section contained
questionnaire items on the five point Likert Scale to assess the CRM practices of wegagen bank
while the second section collected data on the profile of respondents.
3.7 VALIDITY AND RELIABILITY
3.7.1 RELIABILITY
To assess the reliability of the CRM scale, Jöreskog’s rho was computed. Chin (1998) recommends
that acceptable scores for the Jöreskog’s rho should be higher than 0.7.
19
Reliability was computed using Cronbach`s coefficient alpha for the entire set of CRM best
practice statements and The result for the employees was.901 and for the customers was .747,
Presenting = excellent for the employees and acceptance level for the customers.
Table 3.1 Table 3.2

for customers for employees
Cronbach's N of Cronbach's N of
Alpha Items Alpha Items
.747 19 .901 18
3.7.2 VALIDITY
Validity is concerned with whether findings are really about what they appear to be Saunders
(2003). It is defined as the extent to what data collection method or methods accurately measure
what they were intended to measure Saunders, (2003). In this study the questionnaire has been pre
tested before starting the survey using 15 persons who have the knowledge on how to prepare a
questionnaire for a research. This makes the researcher to be guarantee about the research validity.
3.8 METHODS OF DATA ANALYSIS
The study was designed to see how the Wegagen bank of Ethiopia is applying the six dimensions
of the CRM. The data were analyzed using the Statistical Package for Social Science (SPSS)
version 24.0 descriptive statistics Mean and standard deviation. The analysis was done by
calculating the mean score for each dimension in the respective respondent groups.
Based on the results of this score the achievement of Wegagen bank in each dimension was ranked
for the respective employee and customer respondent groups. The Grand mean score of CRM
perceived by employees and customers was discussed.
20
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
In this chapter, the collected data from the employees and customers of the five branches of
Wegagen bank were summarized and analyzed in order to realize the ultimate objective of the
study. Accordingly, the demographic profile of the two respondent groups and the CRM practice
of Wegagen bank as perceived by its employees and customers are discussed. At last, summary of
the findings are presented.
In order to collect data, 109 questionnaires were distributed to purposely selected employees and
customers of the Wegagen bank. From the distributed questionnaires, a total of 94 completed
questionnaires were returned giving a response rate of 86%. From the 94 returned questionnaires
52 of them were completed by the employees five were not returned at all and 42 were completed
by the customer and ten questionnaires were not returned at all.
4.1. EMPLOYEE RESPONDENTS
Table 4.1Presents the summarized characteristics of respondents of the ‘Employee questionnaire’

that are mainly involved in customer relationship management activities of Wegagen bank .The
male respondents constitute the largest share of the gender composition representing 65.4 % of the
respondents while 34.6 % were female employees. In terms of educational level 3.8 were diploma
holders while 96.2 % were first degree holders. The degree holders are large in number which
implies the questionnaire was filled by employers who have more knowledge and experience so
this will help to get strong answers for the questions raised.
Branch managers that were involved in the study were 17.3 % , Customer service Manager were
26.9 % involved in the study while the Customer Relationship Officer constitute the largest
share53.8 % followed by Customer relationship Manager that represent 1.9 %.
Finally, the respondent distribution shows that 57.7% of the respondents were highly experienced
in the banking sector being in the industry from 4 - 10 years. Accordingly, the employees with job
experience of less than 20 years but greater than 11 years were 32.7 % respondents while those
who are less experienced from 1-3 Years in the business arena constitute 3.8 % of the respondent’s
profile and those More than 20 years were 5.8 %.
21
Table 4.1Background characteristics of the ‘employee questionnaire’ respondents
Variable Categories Frequency Percent

Male 34 65.4
Gender Female 18 34.6
Total 52 100.0
Diploma 2 3.8
Educational level Degree 50 96.2
Total 52 100.0
Branch manager 9 17.3
Customer service Manager 14 26.9
Job Title Customer Relationship Officer 28 53.8
Customer relationship Manager 1 1.9
Total 52 100.0
1-3 Years 2 3.8
4-10 Years 30 57.7
Job Experience in
11-20 Years 17 32.7
Wegagen bank
More than 20 years 3 5.8
Total 52 100.0
4.1.1 CUSTOMER RESPONDENTS
The summarized profile of customer respondents is shown in table 4.2 below. As observed from
the table the gender composition of the respondents was dominated by male respondents, which
constituted 66.7 % of the respondents while the rest 33.3 % was attributed to female respondents.
47.6% respondents from age 33-39 participate and were the dominate age group from the rest who
respondents while from 40-49 years group of respondents were the least with 9.5 %. The rest were
42.9 % from 20 -32 years participated. Degree holder customers that involved in the study were
64.3 % which are the largest share while the MA holders were the least that involved with 7.1 %
and the rest 28.6 % were the diploma holders. From the type of employers that involved in the
study self-employed were the largest share with 50% while the government / agency were the least
found with 21.4 % and the rest was the private type of employers with 28.6 %. Respondents that
are customers from 4 to 7 years of the wegagen bank were 45.2 % with the largest share while that
are customers of the bank for < 1 year were the least with 2.4 %.
22
The rest were from 7 to 10 years with 33.3 %, from 1 to 4 years with 11.9 % and the last one > 10
years with 7.1 %.again here most of the respondents were degree holders which help to get a strong
answers.
Table 4.2 background characteristics of the ‘customer questionnaire’ respondents
Variable Categories Frequency Percent

Male 28 66.7
Gender Female 14 33.3
Total 42 100.0
20-32 years 18 42.9
33-39 years 20 47.6
Age 40-49 years 4 9.5
Total 42 100.0
Diploma 12 28.6
Degree 27 64.3
level of educations
MA 3 7.1
Total 42 100.0
Private 12 28.6
self- employed 21 50.0
Type of employers government /public agency 9 21.4
Total 42 100.0
<1 years 1 2.4
1-4 years 5 11.9

how long have you
4-7 years 19 45.2
been customer of this
7-10 years 14 33.3
bank
>10 years 3 7.1
Total 42 100.0
4.2 PRACTICE OF CRM IN WEGAGEN BANK
The main objective of the study was to determine the practice CRM in Wegagen bank as measured
by the six dimensions (customer acquisition, customer response, customer knowledge, customer
value evaluation, and information system and customer information process).
23
To do so, both employees and customers of wegagen bank were asked to rate the practices CRM
on a Likert scale of 1 through 5. The questionnaires were distinguished based on the heading given
for each of them either “employee questionnaire” or “customer questionnaire”.
In the following section the data collected is analyzed in two sections, devoted for each group of
respondents, so as to explore their perception as to wegagen bank practice of the six dimensions
of the CRM.
4.2.1 THE PRACTICE OF THE DIMENSIONS OF CRM – EMPLOYEES PERCEPTION
The data was collected to ask the perception of employees that work under the title of customer
relationship manager, customer relationship officer, customer service manager and branch
manager as to Wegagen bank practice of CRM measured using the six dimensions. Accordingly,
the resultant output is shown in table 4.3 in which the practice of CRM application in Wegagen
bank was demonstrated by the mean score achieved by each dimension under consideration.
Table 4.3 practice of the dimensions of CRM - employee`s perception
Dimensions N Mean Std.Dev.
Customer Acquisition 52 3.72 0.52
52 3.80 0.41
customer Response
52 3.64 0.50
Customer Knowledge
Customer Value evaluation 52 3.81 0.47
0.49
Customer Information system 52 3.87
Customer Information process 52 3.95 0.42
Grand mean and Std. deviation 52 3.22 0.61
24
As clearly seen from the table 4.3 above, Customer information process dimension has got the
highest Grand Mean (3.95) as compared to the other five dimensions standing first in the group
followed by the Customer information system, customer value evaluation, and customer response
and customer acquisition dimension. On the contrary, the Customer Knowledge dimension
achieved the least Mean score, which evidently puts it in the fifth order rank among the group.
Hence, its employees perceive Wegagen bank as a company that gives a focus for their customer’s
knowledge while its performance on customer knowledge is perceived to be unsatisfactory
regarding the application of CRM as compared to the other dimensions used to assess the
application of CRM as a whole.
The collected data is used to assess the practice of CRM to which the employees working in
Customer relationship management areas, perceive Wegagen bank focused on Customer
Acquisition , customer response , customer knowledge, customer value evaluation, customer
information system and customer information process. A one-sample statistics that shows the
mean and standard deviation for the responses given in a five point Likert Scale was calculated
using SPSS. The highest mean figures represent the high level of agreement with the item under
consideration while the lowest signify high level of disagreement with the scale item.
Table 4.4 the practice of the customer acquisition dimensions of CRM- employee’s
perception
N Mean Std. Deviation

our bank accept different approaches to 52 3.86 0.56
attract our targeted customer
our bank uses customer information to 52 3.84 0.50
attract new customer’s
our bank adapt different measure to meet our 52 3.46 0.50
customer urgent requirement
Valid N (listwise) 52
3.72 0.52
Grand mean and Std. deviation
25
As it can be seen in the above table, employees of the Wegagen bank rate the Customer
Acquisition dimension practice of CRM with a Grand mean of 3.72 which was above the average
scale. Moreover, each attribute of the Customer acquisition dimension are positively perceived by
the employees of Wegagen bank. This shows the bank has the facility to acquire new customers.
One of the attributes under the customer acquisition dimension, our bank adapt different measure
to meet our customer urgent requirement was rated with a mean score of 3.46 which is near to the
average scale.
Table 4.5 the practice of customer response dimensions of CRM - employees perception
3.80 0.52
our bank users varied communication channels 52
our bank offer a wide range of credit facilities 52 3.50 0.54

to meet our customer requirement
Our bank offer products that reflect our
customer earrings and wealth 52 3.98 0.24
our bank offers useful on line product and
service 52 3.92 0.33
Valid N (listwise)
52
Grand mean and Std. deviation 3.80 0.41
As it can be observed in table 4.5, the customer response dimension was perceived by the
employees of Wegagen bank with a Grand mean of 3.80 which was above the average scale. In
addition to this, there is attribute under the customer response dimension with the lowest
perception result. The statement that bank offer a wide range of credit facilities to meet our
customer requirement with a mean score of 3.5. In order to retain the existing or attract a new
customer’s one bank should offer a credit facilities as required otherwise the customers will move
or choose other banks who offer better. As a result, the lowest perception rating of the above one
attribute by employees may have effect on the bank performance.
26
Table 4.6 the practice of the customer knowledge dimensions of CRM - employee’s
perception

our bank offers comphernsive rang of
investment products 52 3.78 0.53
our bank offers innovation loan service 52 3.30 0.54
our bank has clear objective and strategies to

meet customer need and the performance of 52 3.82 0.43
bank customer relationship
As it is seen in table 4.6, compared to the previous dimensions’ results customer knowledge has
the lowest Grand mean result which was 3.64. From table 4.6 it is evident that employees of the
Wegagen bank perceive that the bank offers innovative loan service which is found under the
customer knowledge dimension unsatisfactory with a 3.30 rate. This shows the Wegagen bank has
a gap in offering loan service to its customers.
Table 4.7 the practice of the customer information system dimensions of CRM- employee’s
perception

our bank use modern equipment and
technologies 52 3.86 0.44
our bank adapted new technologies to
improve communication with customer 52 3.84 0.50
our bank ensures proper security system to

protected customers transaction 52 3.92 0.55
For Customer information system dimension the grand mean was 3.87. It was notably above the
average scale.
27
When we see the ratings of each element under the Customer information system dimension, all
of them are considerably perceived by the employees of the Wegagen bank positively. This shows
the Wegagen bank is performing well on providing technologies that can accelerate the work plus
that can fulfill its customer’s requirement.
Table 4.8 The practice of the customer value evaluation dimensions of CRM - employee’s
perception

our bank offered a service which develops
good impression 52 3.88 0.42
our bank rendered service that attract our
customer 52 3.82 0.47
our customer relaxed using the banking
services 52 3.73 0.52
In the above table, the customer value evaluation perceived by the Wegagen bank with a Grand
mean of 3.81 that was significantly above the average scale. Therefore, in this regard it can be seen
the bank is performing better. All the items under this dimension are perceived by employees with
greater mean score. From this result the bank has to continue on offering a service that develops
good impression, on rendering services that attract there customers and on making its customers
relaxed on using the services in order to achieve its goals.
Table 4.9 the practice of the customer information process dimensions of CRM- employee’s
perception

our bank uses technology to automate sale and 52 3.94 0.36
service functions
every bank transactions are computerization 52 3.96 0.48
28
In contrast to other dimension’s result, customer information process has the highest Grand mean
of 3.95 as perceived by the employees of the bank which implies the bank is using modern
technologies in delivering what individual customers need. The two items our bank uses
technology to automate sale and service functions and every bank transactions are computerization
which are found under customer information process dimension are perceived by employees
positively existing with high mean score so this shows the bank has working good on using modern
technologies that cop up with the current situation.
4.2.2 THE PRACTICE OF THE DIMENSIONS OF CRM – CUSTOMERS PERCEPTION
The data was collected to ask the perception of customers that are prominent customers of the
Wegagen bank as to Wegagen’s bank practice of CRM measured using the six dimensions.
Accordingly, the resultant output is shown in table 4.10 where the practice of CRM application in
Wegagen bank is demonstrated by the mean score achieved by each dimension under
consideration.
Table 4.10 practice of the dimensions of CRM - customer’s perception
Dimensions N Mean Std.Dev.
Customer Acquisition 42 3.73 0.48
42 3.82 0.42
Customer Response
Customer Knowledge 42 4.06 0.40
Customer Value evaluation 42 3.79 0.35
Customer Information system 42 3.88 0.34
Customer Information process 42 3.30 0.56

Grand mean and Std. deviation 58 3.22 0.61
29
As clearly seen from the table above, Customer knowledge dimension has got the highest Grand
mean with 4.06 as compared to the other five dimensions standing first in the group followed by
the Customer value evaluation, customer response, customer information system and customer
acquisition dimension. On the contrary, the Customer information process dimension achieved the
least mean score with 3.30, which evidently puts it in the fifth order rank among the group. Hence,
its customer expect Wegagen bank as a company that has a great performance on the customer
information process while its performance is perceived to be insufficient regarding the application
of CRM as compared to the other dimensions used to assess the application of CRM as a whole.
The collected data is used to assess the practice of CRM to which the prominent customers of the
Wegagen bank perceive focused on Customer Acquisition , customer response , customer
knowledge, customer value evaluation, customer information system and customer information
process. A one-sample statistics that shows the mean and standard deviation for the responses
given in a five point Likert Scale was calculated using SPSS. The highest mean figures represent
the high level of agreement with the item under consideration while the lowest signify high level
of disagreement with the scale item.
Table 4.11 The practice of the customer acquisition dimensions of CRM- customer`s
perception

my bank provides a variety of service items
and information 42 3.85 0.35
my bank actively provides me a total
financial access(credit, bid bond) 42 3.52 0.55
my bank staffs show sincere interest in
solving my problems 42 3.83 0.53
The customer acquisition dimension consist of items that are associated with the services provided
by the bank used to acquire its customers by fulfilling the customer’s needs. The customer’s
perception about the customer acquisition dimension of the Wegagen bank was considerably above
the average scale with a Grand mean of 3.73.
30
In addition to this, each item under the customer acquisition dimension is rated with a mean value
above the median but one item is near to the median that is my bank actively seek to provide me a
total financial with a rate 3.52. Therefore, this clearly indicates the bank has not focused well on
giving the financial service and its staffs sincerely solve its customer’s problems.
Table 4.12 the practice of the customer response dimensions of CRM- customer`s perception

my bank provides me enough information 4.02 0.41
about different product and service 42
my bank staffs are sufficiently empowered to 3.54 0.50

solve different banking problems 42
my bank takes action for my erroneous

transaction 42 3.90 0.37
Grand Mean and Std. deviation

3.82 0.42
As it can be observed in table 4.12, the customer response dimension was perceived by the
customers with a Grand mean of 3.82 which was above the average scale; when it is compared
with other dimensions relatively it is found on the slightly high level. In addition to this, there are
attributes under the customer response dimension near to the median score particularly, the item
my bank staffs are sufficiently empowered to solve different banking problems was rated by the
prominent customers of the wegagen bank with a mean score of 3.54. This makes the item the
lowest rated attribute among the other items that are found under the customer response dimension.
This specify the bank has a problem on its staffs solving the customer’s problem as expected which
may severely erode the customers’ perception towards on practicing the customer’s response of
the bank.
31
Table 4.13 The practice of the customer knowledge dimensions of CRM - customer`s
perception

my bank understands my individual need and 42 3.59 0.49
circumstances
my bank often insists me in using the bank 42 4.04 0.37

service and products
my bank operating hours are convenient to me 42 4.66 0.52
my bank doesn't misuse my knowledge 42 3.95 0.21
As it is seen clearly in the above table, Compared to the previous dimensions result customer
knowledge dimension has the highest Grand mean result which was 4.06. From table 4.13, it is
evident that prominent customers of the Wegagen bank perceive all the elements under the
customer knowledge dimension positively. This represents that the bank is striving and willing to
help customers and provide prompt service.
Table 4.14 The practice of the customer information system dimensions of CRM- customer`s
perception

my banks information system allow me
performing my banking needs 42 3.97 0.15
my bank proved tel- banking and other
interned banking facilities 42 3.73 0.44
Atm machines are available at convenient
place 42 3.66 0.47
32
The Grand mean for the customer information system dimension was 3.79 which notably was
above the average scale. When we see the ratings of each element under the customer information
system dimension, one item is considerably high perception score with 3.97, on the contrary there
is a score with 3.66 which is near to the median and there is also slightly high with 3.73 score. This
shows the bank has a gap in providing the ATM machines for its customers on suitable areas.
Table 4.15 The practice of the customer value evaluation dimensions of CRM- customer`s
perception

my bank always delivers superior service 42 3.88 0.32
my bank provides high quality service 42 3.85 0.35
my bank provides good infrastructural service 42 3.88 0.39
I enjoy my bank service 42 3.90 0.29

Mean and Std. deviation 3.88 0.34
As it is realized in the above table, Compared to the previous dimension’s result customer value
evaluation has the second highest Grand mean result of 3.88. It is apparent that prominent
customers of the bank perceive all the elements under the responsiveness dimension positively.
All the items found under the customer value evaluation are in a high score so from this it’s clear
the bank is performing well on giving value to its customers by providing good service to fill its
customers need.
33
Table 4.16 The practice of the customer information process dimensions of CRM-
Customer’s perception

my bank has a system to make it easier for 42 3.52 .55
me to do business with the bank
my bank has a computer system for 42 3.09 .57
recording my purchases and service
Compared to other CRM dimensions, Customer information process was perceived as the lowest
by respondents with a Grand mean of 3.30. This dimension is concerned with the performance of
the bank on using technologies to accelerate works and make the service easier to use by its
customers, Since performing well on the Customer information process on banks makes the bank
preferable by the customers because nowadays the technologies are changing from time to time.
Therefore, having relatively low perception rating in this dimension may cause customers to lose
confidence and develop bad thought about the customer information process dimension practices.
4.3 DISCUSSION
Here the dimension of the CRM result found in the study discussed with the support from the
scholars who previously explore about the CRM dimensions.
 Customer acquisition in this study perceived by the employees positively which the Grand
mean was 3.7243 and the customers perceived it with 3.7380 found on the average scale
which show the bank has a potential to acquire new customers .according to Sheik
Abdullah ,( 2016) Customer acquisition is one of the processes of Relationship marketing,
it bring new customers to the marketer. From the category the employee’s response about
their bank addressing the customer’s requirement shows there is a weakness on the bank.
Sheik Abdullah ,(2016) found that customer acquisition initiatives should provide adequate
requirements to the customers.
34
 The other dimension is customer response perceived by the employees with a Grand mean
of 3.8029 and customers perceived it with 3.8254 which was above the average scale. From
the categories the employees were not satisfied about the bank offer a wide range of credit
facilities. As Shahroodi,(2012) stated Customer response indicates organization
responsibility towards customers’ needs and demands. In the study customer’s perception
about the category, the bank staffs are sufficiently empowered to solve different banking
problems shows the bank didn’t arrange the employee’s position carefully which
discourage the customer’s confidence on the bank about solving their problems. According
to the scholar an organization have to react for the queries and activities of the customer.
Dealing with these queries intelligently is very important. Success totally depends on
understanding and interpreting these queries to provide the best solution. During this
situation, if the supplier wins to satisfy the customer by properly answering his/her queries,
he/she succeeds in explicating a professional and emotional relationship with him/her.
 Customer Knowledge has the lowest Grand mean perceived by the employees with a
Grand mean of 3.6410. Sheik Abdullah (2016) discovered that Customer knowledge is
the essential one, who aims to adapt their processes, products and services to their
customers' needs in order to build a healthy and profitable customer relationship. The
employees perceive the category about the bank offer innovative loan service
unsatisfactory. The scholar explain about the banking companies gather information and
the insight they need will build stronger customer relationships. Their customer
knowledge may not be sufficient and should set up the necessary processes and systems
in order to collect more information and data on who the customers are, what they do and
how they think from the financial point of view. In this study the customers perceived the
dimension exists with 4.0654 Grand mean which shows the customers are satisfied on the
bank practicing customer knowledge dimension.
 For Customer information system dimension the Grand mean perceived by the customer
was 3.8782 which one can clearly see the bank is practicing the dimension well all the
categories under the dimension were positive for the employees. As stated a good CRM-
Information system will help a business to attract, and win new customers, retain those the
35
company already has, as well as reduce the costs of marketing and customer service. When
we come to the customers the dimension perceived positively with a Grand mean of 3.7936
which was far from the median value. The category about providing ATM machines for its
customers on suitable areas they were unhappy from how they rate it.as the author describes
complete information will leads to customer satisfaction and Customer information system
in banks adopts recent innovative technologies to attract also systematic transparent
information should be read out by the customers.
 The customer value evaluation perceived by the employees with a Grand mean of 3.8141,
by the customers with a Grand mean of 3.8809 and all the categories perceived positively
by the two respondents which clearly specify the bank practice this dimension greatly.
Sheik Abdullah (2016) emphasized that Customer value Evaluation is essential part of
Customer Relationship Management dimension. Based on this the bank is practicing the
very important dimension which can help it to achieve its goals.
 When we see the last dimension customer information process perceived by the employees
with a 3.9519 Grand mean which was very far from the average scale and this specify the
employees are satisfied with the practice of this dimension but the reverse is for the
customers, they perceived it with a Grand mean of 3.3095 which was low. The same as
the findings of this study ZulianaZulkifli and IzahMohd Tahir (2012) found that Customer
Information process was dropped due to low loading factor in his study.
36
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF THE FINDINGS
The previous two sections presented in detail about the practice of CRM dimensions application
in Wegagen bank as perceived by the employees and customers of the sampled branches. In this
section, the finding from the two groups of respondents is presented in a summarized and
instructive manner.
Both respondent groups were asked to assess the practice of CRM in a five point Likert scale where
the practice of its application is derived from the assessments made on the six dimensions therein.
Accordingly, in the previous section the resultant sample statistics for both groups of respondents
shows that wegagen bank practice of application in customer acquisition dimension is at the
slightly high stage. As to the customer knowledge dimension, the Grand mean for the two groups
of respondents significantly different, employees perceive the wegagen bank practice of this
dimension less favorably than the customers resulting with a Grand mean of 4.0654 and 3.6410,
the customer knowledge Grand mean score perceived by the customer is the highest relatively to
the other dimensions the reverse happens for customer information process dimension, that is the
employees perceive the wegagen bank practice of customer information process is highly
favorable than the customers resulting with a Grand mean of 3.9519 and 3.3095, the score of the
customer information process dimension rated by the customers is the lowest score from the rest
five dimension which shows there is a clear gap in practicing this dimension in the bank. When
we come to the customer response dimension the mean score perceived by both the employee and
customers are closer with a Grand mean of 3.8254 and 3.8029 which are found on slightly high
score , the same for customer value evaluation which are closer with a Grand mean for employees
perception 3.8809 and customer perception 3.8141 .The other dimension is the customer
information system the Grand mean perceived by the employees is bit higher than the customers
perceive it which is 3.8782 and 3.7936 both are found on slightly high score. From all the
dimensions the customer information process perceived by the prominent customers of wegagen
bank has the lowest Grand mean value with 3.3095 which indicates the customers are very
unsatisfied with the bank performance on this dimension.
37
5.1.1 CONCLUSION
Based on the findings presented in the previous chapter, this chapter provides the conclusions
reached as to the practice of CRM application in wegagen bank.
The main purpose of this study was to assess the practice of CRM application and to identify which
CRM dimensions are well practicing currently in the bank. The CRM practices in the wegagen
bank has been assessed from six dimensions where both employees and customers of the selected
sample tier 1 branches are included.
 Wegagen bank has a good customer acquisition performance but the service on replying
urgent requirement like; foreign trade support basically import is weak.
 With respect to the customer response the bank has a gap on offering a wide range of credit
facilities to meet its customer’s requirement and also it has a weakness on arranging its
employee’s power which makes it hard to solve the problems faced by the bank.
 When we see the customer’s knowledge: the way the bank understands individual
customer’s interest is poor. This may drive the customers to see their surroundings and find
another bank that can treat them better.
 about the customer information system and customer value evaluation both are
implemented very well this implies the bank is giving attention on providing technologies
that can accelerate the work to fulfil the customers’ requirements and also gives value to
its customers by providing relatively good service to satisfy the customers need and want.
 On The customers' information process the bank's systems aren’t easy for its customers to
do business with it. Since there is a stiff competition on banks this may lead the customers
to look for other banks that can offer better services with simple and clear banking systems.
 Hence, it is confident to conclude the practice of CRM application in wegagen bank is at

the average level; the practice of application of the customer knowledge dimension was
being the highest in achievement while the customer information process practices are
insufficient.
38
5.1.2 RECOMMENDATIONS
From the conclusions the following possible remedies are suggested:
 Concerning the customer acquisition, the bank should strictly work on the improvement of
the customer’s urgent requirements with respect to providing financial access by making
them to be changed in short, fast, and clear way, by providing credit facilities such as
preshipment loan, over draft loan, and term loan.
 Regarding the customer’s response the bank should give a focus on the arrangement of its
employees to work on their level of power to solve any problems occur in the bank so as
the customers can have a confidence on the staffs solving their problems in any case.
 As to the customers knowledge aspect the bank should give attention on giving individual
need and circumstances of its customers, since there is a stiff competition on banking
sectors the bank may lose its customers.
 With respect to customer information system and value evaluation the bank is doing very
well but still it needs to work hard to make it the best one by placing the ATM machines
available at convenient places, by using modern equipment and technologies.
 On the customer information process the bank should have a system that can make easier
for the customers to do a business with the bank by using updated technologies that can
make all processes easier, the bank need to use computer system for recording the
customers ‘requests and service rendered.
 More over the bank should create an Access on its, web site where customers can directly
fill forms for their enquiry and also their comments about the bank's service to make the
customer confident to use the bank with no doubt.
39
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44
APPENDIX 1
EMPLOYEE QUESTIONNAIRE
PURPOSE OF THE QUESTIONNAIRE
This questionnaire is prepared to solicit primary data from the employees of wegagen bank to
assess the Customer Relationship Management (CRM) practice in wegagen bank- for the
partial-fulfillment of MA in Marketing Management from St. Mary’s University.
The responses are to be kept confidential and will be used for academic purpose only. In addition,
all personal data shall be treated collectively rather than on personal levels.
PART A. CRM BEST PRACTICES SCALE

Please indicate the extent to which you agree/disagree with the following statements. Strongly
Disagree carries the least weigh of 1 while Strongly Agree carries the highest weight of 5. Please
put √ mark accordingly.
Strongly Disagree Neutral Agree Strongly

Item Disagree Agree
(1) (2) (3) (4) (5)
Customer acquisition dimension
1.Our bank accept different approaches to

attract our targeted customers
2. our bank uses customer information to
attract new customers
3. our bank adapt different measures to meet
our customers urgent requirements
Customer response dimension
45
1. our bank uses varied communication
channels
2. our bank offers a wide range of credit
facilities to meet our customers’ requirements
3. our bank offers products that reflect our
customers earnings and wealth
4. our bank offers useful online products and
services
Customer Knowledge Dimension
1. our bank offers comphernsive range of

investment products
2. our bank offers innovative loan services
3. our bank has clear objectives and strategies

to meet customers’ needs and the performance
of bank customer relationships
Customer information system dimension
1. our bank use modern equipment’s and

technologies
2. our bank adapted new technologies to

improve communication with customer
3. our bank ensures proper security system to
protect customers transaction
Customer value evaluation Dimension
46
1..our bank offered a service which develops
good impression
2. our bank rendered services that attract our
customers
3. our customers feel relaxed using the banking

services
Customer information process
1. our bank uses technology to automate

marketing , sales and service functions
2. every bank transactions are computerization
PART B. GENERAL AND DEMOGRAPHIC INFORMATION
1. Please indicate your gender.
Male Female
2. Please indicate your highest level of education.
Diploma Degree
MA PhD
3. Please indicate your job title in wegagen Bank.
Branch Manager
Customer Relationship officer
Customer Relationship Manager – Business and Corporate Customers
47
Customer Service Manager
Customer Relationship Manager – Commercial Customers
4. Please indicate your years of job experience in wegagen bank.
1-3 years 11-20 years
4-10 years >20 years
Thank you for your cooperation.
48
APPENDIX 2
CUSTOMERS QUESTIONNAIRE
PURPOSE OF THE QUESTIONNAIRE

This questionnaire is prepared to solicit primary data from the customers of wegagen bank to assess
the Customer Relationship Management (CRM) practice in wegagen bank- for the partial-
fulfillment of MA in Marketing Management from St. Mary’s University.
The responses are to be kept confidential and will be used for academic purpose only. In addition,
all personal data shall be treated collectively rather than on personal levels.
PART A. CRM BEST PRACTICES SCALE
Please indicate the extent to which you agree/disagree with the following statements. Strongly
Disagree carries the least weigh of 1 while Strongly Agree carries the highest weight of 5. Please
put √ mark accordingly.
Strongly Disagree Neutral Agree Strongly

Item Disagree Agree
(1) (2) (3) (4) (5)
Customer acquisition dimension
1.my bank provides a variety of service

items and information
2. my bank actively seeks to provide me
a total financial
49
3. my bank staffs show sincere interest in
solving my problems
Customer response dimension
1. my bank provides me enough

information about different product and
services
2. my bank staffs are sufficiently
empowered to solve difficult banking
problems
3. my bank takes actions for my
erroneous transaction
Customer Knowledge Dimension
1. my bank understands my individual

needs and circumstances
2. my bank often insists me in using the
banks services and products
3. my bank operating hours are

convenient to me
4. my bank doesn’t misuse my
knowledge
Customer information system
dimension
1. my banks information system allows

me performing my banking needs
50
2. my bank provides tele - banking and
other internet banking facilities
3. ATM machines are available at
convenient places
Customer value evaluation Dimension
1..my bank always delivers superior

services
2. my bank provides high quality services
3. my bank provides good infrastructural

services
4. I enjoy my bank services
Customer information process
1. my bank has a system to make it easier

for me to do business with the bank.
PART B. GENERAL AND DEMOGRAPHIC INFORMATION
1. Please indicate your gender.
Male Female
2. Age
< 20 years 20-32 years
33-39 years 40-49
>50 years
3. Please indicate your highest level of education.

51
Diploma Degree
MA PhD
Please sepecify-------------------
4. type of employers
Private self- employed
government/public agency
5. how long have you been customer of this bank?
< 1 year 7-10 years
1-4 years >10 years
4-7 years
Thank you for your cooperation.
52

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ST.

SCHOOL OF GRADUATE STUDIES

ASSESING CUSTOMER RELATIONSHIP MANAGEMENT PRACTICE

BY: RINA G/MICHEAL

ADDIS ABABA, ETHIOPIA

SCHOOL OF GRADUATE STUDIES

ASSESING CUSTOMER RELATIONSHIP MANAGEMENT PRACTICE

A THESIS SUBMITTED TO ST.MARY’S UNIVERSITY, SCHOOL OF

BY: RINA G/MICHEAL

ADDIS ABABA, ETHIOPIA

ASSESING CUSTOMER RELATIONSHIP MANAGEMENT PRACTICE

APPROVED BY BOARD OF EXAMINERS

Dean, Graduate Studies Signature

External Examiner Signature

Internal Examiner Signature

Main advisor: ________________________________

TABLE OF CONTENTS………………………………………………………………....... III

CHAPTER ONE INTRODUCTION …………...……………………………….1

1.1 Background of the study………………………………………..………………………........1

1.2 Statement of the problem ……………………………..……..……………………………….3

1.3. Basic research questions…………………….………………………………………..……...4

1.4 Research objectives……………….………………………………...………..………………5

1.4.1 General objective…………………..........…………………………..…………….…….5

1.4.2 Specific objective…………………………………………………………………..…...5

1.5 Significance of the study. .…………………………………….……………………..……...5

1.6 Scope and limitation of the study……………………………………………………...…….6

1.7 Organization of the study…………..…………………………………………………...……6

1.8 Definition of terms…………………………………………………………………….……..5

2.1 Theoretical study……………………………..…...………………………………………...7

2.1.1 Definition of CRM……………………………………………………………….…...7

2.1.2 Characteristics of CRM………………………...…...…………………...………...…9

2.1.3 Importance of CRM ………………..………………….………..…………...…........10

2.1.4 CRM process………………………………… …..……………………………........11

2.1.5 In banking sector…………………………………………………..…..…..……........12

2.2 Empirical review…………………………………….……………………..………….........13

2.3 A conceptual frame work…………………...……………………………………..………..14

CHAPTER THREE RESEARCH METHODOLOGY……..……………………...……..….16

3.1 Research design…………………………………………..……………………..………..…16

3.2 Source of data……………………..…………………………………..…………………….16

3.3 Population of the study…………………….……………………………………..………....16

3.4 Sampling techniques…………..…………………………………………...………………..17

3.5 Sample size determination………………………………………………………..…………17

3.6 Methods of data collection……………………………………………………………….....17

3.7 validity and reliability………………..………………………………………….……….....18

3.8 Methods of data analysis………….....……………………………………………………....19

4.1. Employees respondents………………………………......………………………..……….20

4.1.1 Customers respondents…………………..…...………..……..………………………...21

4.2 Practice of CRM in wegagen bank………….………………………………………..……...22

4.2.1 The practice of the dimensions ofCRM– employees perception……….…………..….23

CHAPTER FIVE SUMMARY, CONCLUSION AND RECOMMENDATION……...…....37

5.1 Summary of the findings……………………………..….......................................................37

Table 3.1 Cronbach's for customer ………………………………………………..…….……..18

Table 3.2 Cronbach’s for empoloyees………………………………….……...…………..........18

Table 4.1 Background characteristics of the ‘employee questionnaire’ respondents ……..........21

Table 4.2 Background characteristics of the ‘customer questionnaire’ respondents………........22

Table 4.3 Practice of the dimensions of CRM - employee`s perception...……..………………..23

Table 4.10 Practice of the dimensions of CRM - customer’s perception…………………....…....28

LIST OF FIGURE PAGE

Figure 2.1 A conceptual framework of CRM practices on banks……………………………….14