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The Impact Of CRM On Customer Satisfaction Of Commercial Banks In

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
Volume 7 Issue 4, April 2020 ISSN: 2394-4404

The Impact Of CRM On Customer Satisfaction Of Commercial

Banks In Mogadishu Somalia

Mohamed Abdirizak Ahmed Mehmet Sağlam

Master Student, Istanbul Commerce University, Social Asst. Prof., Istanbul Commerce University, Faculty of
Science Institute Business

Abstract: When banking institutions became extremely competitive, CRM came into power. Banks concentrate on
maintaining consumer relationships to reduce obstacles such as global Deposit competition, deposits, payment costs,
higher customer expectations, lower profit Margins, and the need to keep up to date. The purpose of this paper was to
study the impact of customer relationship management on customer satisfaction of commercial banks in the capital city of
Somalia. This study is a quantitative study, Questionnaires were distributed by online using Google form to customers in 5
commercial banks in Mogadishu Somalia. Measuring the questionnaire items, the study was used a five-point Likert
scale from one to five, rating from strongly disagree to strongly agree and SPSS 20 was used to analyze the data.
Reliability on the data obtained was made on a first basis. Descriptive statistics, Factor analysis, Correlation analysis and
regression analysis was conducted. The result of the study shows that customer relationship management has a
significant relationship between CRM and customer satisfaction and there is a positive impact of customer relationship
management to customer satisfaction. There is no research that has been done to the impact of CRM on customer
satisfaction in the banking industry in Mogadishu. The study results can be useful to managers in Mogadishu as well as
other parts of the country by adding to the existing body of business management knowledge.

Keywords: CRM, Commercial Banks, Banking industry, Customer satisfaction.

I. INTRODUCTION According to Gade,.(2005), Today, banks and other

financial institutions face a number of challenges, such as
Serving and maintaining good relations with the king global competition for deposits, loans, and underwriting fees;
(customer) is one of the most important challenges for any growing customer demands; declining profit margins; and the
organization. Customers used to be simple people, and they need to keep up with new technology. According to Onut et al.
were satisfied with whatever product or service they were (2006), the value of Customer Relationship Management
given. With the competition and technological improvements, (CRM) has been realized by banks and several other financial
customers have become fully aware of their rights over a service providers and it’s potential to assist them in acquiring
period of time and increased offers are soon expected to new customers, keeping existing ones and increasing their
become one. Marketing is no longer just about goods being lifetime value.
produced, marketed and delivered. It is often more concerned On the other hand, management of customer relationships
with establishing and maintaining long-term relationships with often requires strong cooperation between the bank's various
customers that are mutually rewarding. This growing market areas (such as IT, finance, service and support, and marketing
environment is characterized by increasing competition from departments). Banks are one of the most customer-based part-
economic liberalization, a very well-informed, high consumer service industries, so the most essential part is the services
choice and demanding customers who cares about purchasing they provide. Changing customer requirements and
quality and value (Kotler, 2002). preferences are the main reasons why the bank serves. For
example today, customers don't like waiting in long queues

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
Volume 7 Issue 4, April 2020 ISSN: 2394-4404

and spending a lot of time in banking transactions. This B. RESEARCH OBJECTIVE

change in the expectation of the customer led the banks to
create a new form of supply services like ATM, telephone and  To determine the main customer relationship management
net banking. Many financial-sector business organizations, components that lead to customer satisfaction in
including commercial banks, have accepted the important role Mogadishu Somalia's commercial banks.
played by Customer Relationship Management CRM in  To examine the effect of technology and Trust of CRM on
enhancing the value of many financial-sector firms today rely Customer satisfaction of commercial banks in Mogadishu,
on CRM to retain customers and achieve business value. In Somalia.
this study, therefore, the researcher will examine the impact of  To examine the relationship between CRM on Customer
customer relationship management on customer satisfaction of Satisfaction of Commercial banks in Mogadishu, Somalia.
Mogadishu commercial banks.
C. RESEARCH HYPOTHESIS
A. PROBLEM OF STATEMENT
Four main hypothesis (H1:H4: were used and other
Most banks offer commercial services as well as retail discussions of the hypothesis follows below:
banking. Commercial banks are facing increasing competition H1: There is a positive impact of CRM on customer
from new players, including global banks and alternative satisfaction of commercial banks in Mogadishu Somalia
funding sources. In addition, they work harder to ensure that H2: CRM components have a significant effect on
customers feel appreciated and receive high-quality customer customer satisfaction of commercial banks in Mogadishu
loyalty services. Customer Relationship Management (CRM) Somalia.
system provides the structure and tools business banks need to H3: There is a positive impact of CRM on customer
adopt processes that optimize opportunities and customer satisfaction of commercial banks in Mogadishu Somalia.
satisfaction that separate them from competitors. H4: Customer satisfaction is expected to have a
With increasing competition in trade, rapid technological significant impact on technology and Trust of CRM in
changes, and increased power and product demand, success Commercial banks of Mogadishu Somalia.
will depend on the ability of companies to recognize and
respond kindly to customer expectations and values. The D. CONCEPTUAL FRAMEWORK
banking sector around the world is becoming more
competitive. Therefore, establishing a stable long-term The conceptual framework of thıs study ıs as shown ın
customer relationship is a major factor in achieving a Fıgure 1.
competitive advantage in the commercial banking sector
(Rahemi, 2012). In many studies (Rosenberg and Czepiel,
2004 and Reichheld and Sasser, 2010) and other studies report
that the cost of getting a new customer is estimated to be
higher than the cost of keeping a current customer. By
establishing a valuable customer relationship increases
customer loyalty, boosts repeat purchases, and attracts new
customers and the amount of bank deposits and credit
transactions will increase.
As banking institutions became more and more
competitive, CRM came into power. Banks have now
understood their customers ' value and this need pushes banks
to seek solutions through technology. Banks focus on Figure 1: Research Model
managing customer relationships to reduce challenges such as
global deposit competition, loans, underwriting fees, higher
customer demands, lower profit margins, and the need to II. CUSTOMER RELATIONSHIP MANAGEMENT
remain up for new technologies (Malik & Harper, 2009).
Companies must design and implement their CRM programs Customer relationship management is an idea that has
in order to improve the quality and magnitude of their been studied broadly and many researchers have described
companies (Soch & Sandhu, 2008). customer relationship management concepts in various ways.
In the banking sector, CRM has been implemented to For instance, CRM has been defined as an action plan that
improve the quality of service and the resulting customer emphasizes on adding value to shareholders by developing
satisfaction, increasing competition, customer retention, and suitable customer relationships (Saxena & Khandelwal 2011).
productivity. Despite the implementation of CRM programs Nguyen and Mutum (2012) argue that CRM involves building
by commercial banks to increase customer satisfaction, and developing sustainable relationships that in a company
customers stay dissatisfied with banking services Based on such as the overall organization and customers, both external
this discussion, a study on CRM System on Customer and internal stakeholders benefit. It leads to an increase in
Satisfaction of Commercial Banks in Mogadishu Somalia was sales and profits ' lifetime value. Dyché says (2002, p.4) CRM
needed. has been set up to provide consumers with loyalty by
encouraging them to remain loyal, which contributes to the
return of product or service purchases

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
Volume 7 Issue 4, April 2020 ISSN: 2394-4404

Customer Relationship Management (CRM) is one of the III. CUSTOMER SATISFACTION

strategies commonly used by banks to respond to competition
on the market. According to Payne and Frow, (2005) The success of every business organization depends on
Customer Relationship Management (CRM) is characterized customer satisfaction. Customers often come "first" when a
as a strategic approach to create enhanced shareholder value company is about to start, and then the income. Some
by developing effective relationships with key customers and companies that succeed in completely satisfying the customers
customer segments. CRM integrates IT and marketing will remain in the top spot in a market. The business company
partnership approaches in order to establish effective, long- of today has recognized that customer satisfaction is the key
term customer relationships and other key stakeholders. CRM component of the business success and at the same time plays
provides better incentives for both consumer awareness and a vital role in increasing the market value. Customers are
value creation through data and information. This requires a usually those people who buy consumer or company goods
cross-functional integration of IT-approved processes, and services that meet their needs and wishes. Customers buy
operations, people and marketing capabilities. goods to meet their money needs. Therefore, businesses will
decide their price with the product quality that attracts the
A. CRM IN BANKING INDUSTRY consumer and retains long-term relationships.
Customer satisfaction is generally defined as the total
Customer relationship management, or CRM, refers to the fulfillment of buying expectations. Customer satisfaction is a
tools that banks and other organizations can use to provide customer's thinking or mindset towards a product or service
customer service, generate sales, execute marketing efforts, after use. Customer satisfaction is a major result of marketing
and evaluate performance data. The importance of managing activity, serving as a link between the different stages of
customer relationships in banks lies in how to build better consumer buying behavior. Customer satisfaction is widely
customer relationships, automate common tasks, increase recognized as a primary factor in the customer's potential
sales, and make marketing efforts easier to target. Essentially, decision to purchase. Published marketing-related research on
these incentives allow banking staff to work more customer satisfaction is huge, though less so in comparison to
productively, retain customers, and improve the bottom line of the banking industry on customer satisfaction. The heart of the
the bank. feedback process is to equate what was expected with the
Bankers also understand the meaning of CRM and how it results of the product or service – this method has historically
functions. Nevertheless, not everyone recognizes the been defined as the process of 'confirmation/disconfirmation.
importance of CRM in banking and does not incorporate these First, consumers will shape the expectations before buying a
systems into their sector. It seems that even without CRM the product or service. The second product or service consumption
bank can be lucrative, but don't let yourself be misled as or perception creates a perceived quality level that is
customer-focused services significantly boost anything related influenced by expectations.
to the cycle of communication. We can define three of CRM's Customer satisfaction is influenced by particular products
primary utilities: or services characteristics and quality perceptions. Satisfaction
 To retain potential and existing clients. After a strong is also influenced by the emotional responses of customers,
promotion campaign, it would be distressing to neglect a their attributions their equity perception (Zeithal & Bitner.
customer, isn't it? CRM makes it easier for users to track 2003, 87-89). Improved customer satisfaction can provide
and remember all the leads such as phone calls, emails business benefits such as customer loyalty, improving a
and other user requests. customer's life cycle expanding customer purchase product life
 To control employees and set standards. Whereas bank and increasing positive mouth contact to customers. If the
employees without CRM handle different accounting customer is satisfied with the company's product or service,
methods such as Excel or even their own memory, all-in - the customer can make frequent purchases and recommend
one systems get rid of confusion and put everything products or services to potential customers. A business
together. Of course, this improves the efficiency. organization cannot expand if the company lacks or disregards
 To collect data and consolidate it. Unified databases are customer needs (Tao 2014).
developed by management tools that combine essential
information such as contacts and orders. For CRM, the
sales process can be measured and prepared more
precisely. A kind of guidance for bank holders provides
one of the benefits of CRM in the banking sector. When
you start the first company and don't know how to interact
with customers, it will suit ready packages. In this
situation, you are borrowing the dream of designers based
on best practices in the world and CRM principles.
Nonetheless, the best option for new managers and chief
executives is to work with professional development
departments. For all those who need advanced banking
Figure 2: Customer satisfaction analysis model (Adapted from
CRM, we recommend all-in - one systems. Complete
Tao 2014.)
analysis, consultations and full-stack design of
customized systems are available.

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
Volume 7 Issue 4, April 2020 ISSN: 2394-4404

A. CUSTOMER SATISFACTION IN BANKING customer relationship. The dependent variable of this

INDUSTRY study consists of 15 items, on the Services Offered by the
bank, and the Satisfaction of Bank clients on
Most commercial banks are implementing customer their Banking Experience. Şen, Z. (2013) and (Mwrigi, R.
satisfaction programs. Retail Banking is a management of the 2010).
service industry that relies on money from customers. A major
component that strongly drives customer satisfaction in the C. DATA ANALYSIS
banking sector is the comfortable filling factor related to the
characteristics of a bank and its staff. Rust and Zahorik All data obtained and analyzed through the use of IBM SP
(1993), Krishnan et al (1999) conducted various studies and SS 20. Reliability on the collected data was made on a first sca
suggested that satisfaction with the perceived quality of the le. Desribtive statistics was performed over the data, followed
product was the primary driver of customer satisfaction. by a factor analysis and correlation analysis,
Banking is one of the many industries where customer then the regression analyze was done.
satisfaction has become increasingly important. The happiness
of both customers and banks is a great importance. Banks are D. RELIABILITY
making frank efforts to give their customers high-quality
products and services. Indeed, consumers want the best value Alpha reliability is considered to be a measure of the inter
for their money and make no effort to select the best products nal reliability of the mean of the items at the time the question
and services (Strategic Direction, 2007). It will take some time naire was conducted.
for companies to grab or persuade them to turn to them once Variables Items Cronbachs
consumers are happy and have a positive image or feelings Alpha
about a particular company. Components of Customer 9 0.765
releationship management
Technology and Trust 10 0.796
IV. RESEARCH METHODOLOGY
Customer satisfaction 15 0.874
A. SAMPLE METHOD Table 1: Cronbachs Alpha
The Cronbach’s Alpha of independent variables
Component of CRM and Technology&Trust as shown in the
The survey is made up of consumers who use the five table 0.765 and 0.796 respectively and the Dependent
major commercial banks in Mogadishu Somalia. The study Variable, the Cronbach’s Alpha is 0.874, which indicates high
collected data from 115 user of commercial bank accounts, reliability in the items.Therefore, all variables were internally
103 of which were found suitable for further analysis. consistent and accurate, as such variables are considered ready
for further analysis.
B. RESEARCH INSTRUMENT

This study is a quantitative study, which used a V. RESULTS

questionnaire survey to evaluate the conceptual framework
and. The questionnaires were distributed by online using DEMOGRAPHIC ANALYSIS
google form to customers in 5 commercial banks in
Mogadishu Somalia. Measuring the questionnaire items, the Variable Frequency Percentage
Gender
study was used a five-point Likert scale from one to five,
Male 71 69
rating from strongly disagree to strongly agree. Which include
Female 32 31
the fallowing variable:
Total 103 100
 DEMOGRAPHIC VARIABLE: Variables such as Gender,
Martial Stutus
age, education, income and which bank they are using
Single 68 66
will be asked to the participants.
Married 35 34
 COMPONENTOFCRM: Variable includes the amount of
items used to calculate the impact of CRM on customer sa Total 103 100
tisfaction of commercial banks and the nine items were as Age
ked.These nine(9) questions come from the two main ele 18-26 58 56
ments of CRM: Customer care and HRM. 27-35 21 20.4
 TECHNOLOGY AND TRUST: Variable of Customer 36-44 10 9.3
Relationship Management consists of ten (10) element 45-53 7 6.8
scales used to calculate the effect of customer relationship 54-62 5 4.9
management on bank clients. These items focusing about Over 63 2 1.9
Privacy and also Ease of access. (Chowdhury, R. 2015). Total 103 100
 CUSTOMER SATISFACTION The dependent Variable of Educational Level
this study is actually with One (1) Item scale with Five Primary Level 1 1
Likert Scale option, which addresses on several aspects of High level 9 8.7

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
Volume 7 Issue 4, April 2020 ISSN: 2394-4404

Bachelor 51 49.5 customer of the bank for 1-3 years. The rest 16.1%
Master 37 35.9 respondents have been costumer of bank for below 1 year.
PhD 5 4.9
Total 103 103 B. FACTOR ANALYSIS
Income
Under 1,000 64 62.1 TOTAL VARIANCE EXPLAINED
1,000-10,000 24 23.3
10,000-50,000 11 10.7 No Components Total Varience Of
50,000-100,000 4 3.9 Variables
Total 103 100 1 Components of CRM 58.445
Which bank do you use 2 Technology and Trust 53.805
Salaam bank 35 34 3 Customer Satisfaction 60.774
Premier bank 32 31.1 Table 3: Total Variance
IBS bank 12 11.7 From the Tables 3 it can be seen that the three
components in the Table, possess that the Percentage of
Amal bank 14 13.6
Variance for the component of CRM is 58.445, Technology
Dhabshiil bank 100 9.7
and Trust is 53.805 And Customer satisfaction is 60.774. It
Total 103 100
can be estimated and indicated that component matrix can be
Table 2
used to identify and analyze the factors, since the scale is more
Table 2 shows that the gender was the first demographic
unidimensional.
variable in which the respondents were asked to classify
themselves as either males or females, out of 103, 71, or 69% SAMPLE ADEQUACY
were males compared to 31 females, or 32% this indicates a
male domination of the study, but it is understandable since
The below table shows the Kaiser-Meyer-Olkin
the survey was targeting the literate Somali population, and
Measurement of Sample Adequacy, which is known to be a
there are cultural issues in the country that allow male to method for assessing the adequacy of samples.
outnumbers females in the schools. And also the table
illustrates that the frequency and percentage distribution of
KMO TEST OF VARIABLES
age of the respondents of this research. The age group is
categorized into 6 groups in this research.
Kaiser-Meyer-Olkin Measure of Sampling .721
The largest group of respondents falls into the age group
Adequacy of Components of CRM.
of 18-26 years. It represents 56% of the total sample of this
Kaiser-Meyer-Olkin Measure of Sampling .837
research. Secondly, the respondents aged 27-35 years
Adequacy Technolgy and Trust of
represent 20.4% of the total sample. Thirdly the respondents
aged 36-44 years. And it represents 9.3% of the total sample. Kaiser-Meyer-Olkin Measure of Sampling .744
Adequacy of Customer Satisfaction
Next, respondents aged 45-53 years and it represents 6.8% of
the total sample. Also respondents aged 54-62 years. And it Table 3: KMO Test
represents 4.9% the total of the sample. Finally, respondents According to Anastasiadou (2011), values below 0.50 are
aged 63 years and over represent only 1.9% of the total considered to be inappropriate, 0.50 values are considered to b
sample. The educational level of the respondent’s looks like e bad, 0.60 values are considered as middling, 0.70 values are
what is shown in above table. As it can be seen from the table considered to be middling, so the value of KMO of Sampling
49.5% of the respondents hold Bachelor degree. 55.5 % of Adequacy of the three variables of this study were found. first
them are Master holders. 29.6 of them are secondary school Component of CRM is 0.721, Technology and Trust is 0.744
14.6 of them are primary school the rest 7.8% have got their and Customer satisfaction is 0.837 which suggests that that
postgraduate and others. Finally the table indicates that the factor analysis of this research is reliable and great, since the
largest groups of respondents have the income level Under smallest KMO is greater than 0.50.
1,000 USD. It represents 62.1% of the total sample of this
research. Secondly, respondents with a monthly income of COMPONENT MATRIX
1,000-10,000 USD represent 23.3% of the total sample. Next,
Questions Component one Component Component
respondents with monthly income 10,000-50,000 represent Components of Two Three
10.7%, respondents with a monthly income above 50,000-100, CRM Technology and Customer
000 USD represent 3.9% of the total sample respectively. The Trust Satisfaction
last part of the table 2 shows that the most respondents were ComCRM 2 0.678
ComCRM 5 0.668
Salaam bank customers 34%. 31.1% respondents were ComCRM 3 0.632
Premier bank clients And 11.7% percentage of respondents ComCRM 1 0.622
were IBS bank users. Next distributions of respondent’s have ComCRM 6 0.578
been customer of the bank. Out of 267 respondents surveyed ComCRM 9 0.55
in this research, accordingly 31.5% of the respondents have ComCRM 7 0.519
TTrust 3 0.719
been customer of bank for above 5 years. While about 27.3%
TTrust 9 0.701
respondent’s customer of bank for 3-5 years, 25.1 of them are TTrust 4 0.682

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
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TTrust 5 0.635 D. REGRESSION ANALYSIS

TTrust 10 0.628
TTrust 6 0.621
TTrust 1 0.561
Regression analysis was performed to see how much the
TTrust 2 0.506 dependent variable describes. It is often used to see how well
CSatisfation 12 0.674 each independent variable (Component of CRM, Technology
CSatisfation 15 0.664 &Trust) explains the dependent variable, which is the
CSatisfation 4 0.655 satisfaction of customers. The regression model shows how
CSatisfation 13 0.643
much of the variation in customer satisfaction calculation is
CSatisfation 9 0.641
CSatisfation 14 0.635 explained by the underlying dimensions of CRM; Customer
CSatisfation 2 0.630 satisfaction of Mogadishu commercial banks was used as the
CSatisfation 8 0.620 dependent variable, while the dimensions of customer
CSatisfation 6 0.604 relationship management were used as the independent
CSatisfation 11 0.602 variables.
CSatisfation 10 0.585
CSatisfation 5 0.584 ANOVA
CSatisfation 7 0.547
CSatisfation 1 0.514 Model Sum of Df Mean F Sig.
Table 3: component matrix Squares Square
Table 3 displays the component matrix chart for all the Regression 5385.278 2 2692.639 50.062 .000b
variables, the independent variable CRM 1 Residual 4786.929 89 53.786
Comprises Two sub-variables and the dependent variable Total 10172.207 91
customer satisfaction comprises stands alone. It can be shown a. Dependent Variable: Customer Satisfaction b. Predictors:
that the percentage of Cumulative rate and the percentage of (Constant), CRM, Trust&Technology.
variance for the dependent variable Customer satisfaction a:predictors constant:(CRM)
based on the two factors of independent variables and one Table 6: Regression (Generated by SPSS)
variable of Customer satisfaction and all these variables are
greater than 0.40. We had five variables which are less than E. MODEL SUMMERY
0.40 and we left them.
The table indicates that the value of R is 0.728. The R val
C. CORRELATION ANALYSIS ues mean that 73% of the variance of Customer Satisfaction ca
n be predicted by an independent variable Customer Relatio M
From the results shown in tablebelow, each variable is per anagement (CRM). According to Zygmont & Smith (2014), a
fectly associated with a strong coefficient value. The associati minimum variance of at least 60% is considered to be a good f
on between all independent variables and the dependent variab it.
le has been shown to be positive and important, which means t Coefficients
hat the increase in some or more of the independent variables r Model Unstandardized Standardized T Sig.
esults in an improvement in Customer Satisfaction. Coefficients Coefficients
Relationship Management is have a very strong and B Std. Error Beta
positive correlation with Customer Satisfaction. The (Constant) 10.893 4.302 2.532 .013
correlation coefficients or Pearson’s (r) is Components of Customer
CRM (r = 0.694) and Technology Trust (r=0.631). This means relationship
.721 .145 .493 4.982 .000
that changes in any one of these variables are strongly 1 management
correlated and positive relationship to Customer Satisfaction.
Technology
Components Technogy & Customer .442 .147 .297 3.006 .003
&Trust
Of CRM Trust Satisfaction
a)Dependent Variable: Customer satisfaction Table 8 –Regression
(Generated by SPSS)
Pearson
1 .688** .694** Table 7: Regression (Generated by SPSS)
Components Correlation
Of CRM Sig. (2-tailed) .000 .000 Since the significance value of F statistics indicates a
N 102 99 93 value of 50.062 and a value of p(.000), which is less than
Pearson
.688** 1 .631**
p<0.05, the model is important. This means that the variability
Technology Correlation displayed by the model is not due to chance.
And Trust Sig. (2-tailed) .000 .000
N 99 99 92
According to Table above, the regression standardized
Pearson coefficients of these independent variables, i.e. component of
.694** .631** 1
Customer Correlation CRM variable and Technology &Trust with beta value
Satisfaction Sig. (2-tailed) .000 .000 0.493&0.297 respectively. Their significance levels are 0.13 &
N 93 92 94 0.003 respectively, which are less than 0.05. This indicates
**. Correlation is significant at the 0.01 level (2-tailed). Table significant relationship between them and the dependent
5, Correlation (Generated by SPSS) variable (customer satisfaction).
Table 4

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 International Journal of Innovative Research and Advanced Studies (IJIRAS)
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VI. CONCLUSION AND RECOMMENDATION Banking Industry of Malaysia”, Masters of Business

Administration. Anglia Ruskin University.
There is a connection between customer relationship [7] Cronin, J. J., Jr., & Taylor, S. A. (1992). Measuring
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If a company wants to use the CRM program, they must [10] Dudovskiy, j. (2013) “A Brief Literature Review:
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