Customer relationship management strategies and profitability of commercial banks in Kenya.

Abstract

ABSTRACT Customer Relationship Management (CRM) is a business strategy focused on building and maintaining long-term relationships with customers. CRM strategies can be implemented through various techniques, including data mining, customer segmentation and customer service. This research investigates the effects of CRM strategies on the profitability of commercial banks, focusing on three specific aspects: the technological aspect of CRM, the SERVQUAL aspect and the service culture aspect. The study adopted a descriptive research design and targeted employees in the customer service and finance departments of 42 commercial banks in Kenya. A purposive sampling technique was employed to select two senior employees from each organization, resulting in a total of 84 respondents. Data was collected using a survey questionnaire administered to the selected respondents. Both quantitative and qualitative methods of data analysis were used, with data analyzed using the Statistical Package for Social Sciences (SPSS). The results were presented in tables and figures. Multiple regression analysis was conducted to establish the relationships between the study variables. The findings indicated that the profitability of commercial banks is significantly influenced by CRM dimensions. Notably, service culture and service quality emerged as the most dominant factors affecting profitability. A limitation of the study was the use of purposive sampling, which, while ensuring relevant expertise, may limit the generalizability of the results to a broader population. To mitigate this, the sample was selected from a diverse range of commercial banks across Kenya to enhance representativeness. The study recommends that commercial banks prioritize the development of a strong customer-centric service culture and invest in continuous improvements in service quality while leveraging technological tools to gain customer insights and streamline service delivery.