Testing the influence of factors of customer relationship management on customer loyalty at vietcombank dong nai branch

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HOCHIMINH CITY

Nguyễn Anh Đức

TESTING THE INFLUENCE OF

FACTORS OF CUSTOMER RELATIONSHIP MANAGEMENT

ON CUSTOMER LOYALTY

AT VIETCOMBANK DONG NAI BRANCH

MASTER THESIS

Ho Chi Minh City, 2011

MINISTRY OF EDUCATION AND TRAINING

UNIVERSITY OF ECONOMICS HOCHIMINH CITY

Nguyễn Anh Đức

TESTING THE INFLUENCE OF

FACTORS OF CUSTOMER RELATIONSHIP MANAGEMENT

ON CUSTOMER LOYALTY

AT VIETCOMBANK DONG NAI BRANCH

In Banking course: 17

Ology code: 60.31.12

MASTER THESIS

Supervisor:

Professor, Ph.D, Nguyễn Đông Phong

Ho Chi Minh City, 2011

i

ACKNOWLEDGEMENT

I would like to express my sincere gratitude to following people for their

contribution to my thesis:

My academic advisor Professor, Ph.D. Nguyen Dong Phong for his help, advice and

knowledge.

Ph.D. Tran Ha Minh Quan for his guideline in study.

Mr. Dang Huu Phuc for his assistance with the data processing.

All of my classmates in Banking course 17 for supporting and corporating with me

during this course.

My colleagues at Vietcombank Dong nai for their great support in collecting data.

Respondents, without them, my thesis could not have been done.

My family and friends, for supporting and motivating me.

Thanks again for above all, who gave me the strength and courage to complete this

thesis.

ii

ABSTRACT

The rapid development of Vietcombank Dong Nai in recent years has raised

several problems, customers complain more about banking services, employees

attitude and employees knowledge. And as a result, some of them have left

Vietcombank Dong Nai and closed their accounts and moved to another banks.

Therefore, in order to keep the stable development and ensure the effeciency of

business, Vietcombank should soon find solutions to solve this problem. In other

words, Vietcombank Dong nai should build a customer base to form their loyalty.

This study attempts to examine the aspect of Customer Relationship

Management (CRM) at Vietcombank Dong Nai. Specifically, it tries to identify

independent variables of CRM which may influence on customer loyalty, which is

considered as an dependent variable. These independent variables includes: Two￾way communication, Employees Attitude, Employees knowledge and the Efficiency

of banking services.

In order to gather data, a survey was conducted at Vietcombank Dong Nai, the

sample consists of customers there with sample sizes of 205, the responsive rate is

77.90%. The result of realibility testing Cronbach Alpha and factor analysis help to

affirm the comformity of measurement scales with the study objectives. By testing

hypotheses with multiple regression analysis, this study point out that there exists a

relationship between independent variables and dependent variable. In addition,

coefficient beta of independent variables help to determine the degree of influence

of each variables to customer loyalty.

From these findings in data analysis, this study also offers some

recommendation, that Vietcombank Dong Nai should spend more resources in order

to improve employees attitude and two-way communication in order to ensure

customer loyalty to the bank.

iii

TABLE OF CONTENTS

ACKNOWLEDGEMENT ........................................................................................... i

ABSTRACT ............................................................................................................... ii

TABLE OF CONTENTS .......................................................................................... iii

LIST OF FIGURES ................................................................................................. viii

LIST OF TABLES ..................................................................................................... x

CHAPTER 1: INTRODUCTION TO THE STUDY ................................................. 1

1.1 Introduction ....................................................................................................... 1

1.2 Research background ........................................................................................ 1

1.3 Overview of Vietcombank Dong Nai ............................................................... 3

1.4 Research Problem ............................................................................................. 7

1.5 Research questions ............................................................................................ 8

1.6 Problem statement ............................................................................................. 8

1.6 Study scope ....................................................................................................... 9

1.7 Research methods ............................................................................................. 9

1.8 Structure of the study ........................................................................................ 9

CHAPTER 2: LITERATURE REVIEW.................................................................. 11

2.1 Introduction ..................................................................................................... 11

2.2 Customer loyalty ............................................................................................. 11

2.2.1 Customer loyalty to bank ......................................................................... 12

2.2.2 Measuring customer loyalty ..................................................................... 13

iv

2.3 Customer Relationship Management .............................................................. 13

2.3.1 Defining Customer Relationship Management ........................................ 14

2.3.2 Benefit of Customer Relationship Management ...................................... 15

2.3.3 The components of CRM ......................................................................... 17

2.3.3.1 Two-way communication ..................................................................... 18

2.3.3.2 Employees’ Attitude ............................................................................. 19

2.3.3.3 Employees’ knowledge ......................................................................... 20

2.3.3.4 Efficiency of banking services .............................................................. 21

2.4 Relationship between CRM and customer loyalty ......................................... 24

2.4.1 The influence of two-way communication on customer loyalty ............. 25

2.4.2 The influence of employees’ attitude on customer loyalty ...................... 25

2.4.3 The influence of employees’ knowledge on customer loyalty ................ 26

2.4.4 The influence of the efficiency of banking services on customer loyalty 26

2.5 Conclusion ...................................................................................................... 27

CHAPTER 3: RESEARCH METHODOLOGY ...................................................... 28

3.1 Introduction ..................................................................................................... 28

3.2 Business research ............................................................................................ 29

3.3 Research design .............................................................................................. 30

3.4 Research objectives ......................................................................................... 31

3.5 Generation of hypotheses................................................................................ 32

v

3.5.1 Hypotheses of relationship between the independent variables and the

dependent variable .................................................................................. 33

3.5.2 Hypotheses of relationship between each independent variables and the

dependent variable .................................................................................. 34

3.5.3 Hypotheses of relationship between the biographic variables and the

dependent variable .................................................................................. 34

3.6 Data collection method ................................................................................... 35

3.7 Measurement instrument................................................................................. 35

3.8 Measurement scales ........................................................................................ 36

3.8.1 Items measuring Two way communication ............................................. 36

3.8.2 Items measuring Employee attitude ......................................................... 37

3.8.3 Items measuring Employees knowledge .................................................. 38

3.8.4 Items measuring Efficiency of banking services ..................................... 39

3.8.5 Items measuring Customer loyalty: ......................................................... 41

3.9 Pilot test .......................................................................................................... 41

3.10 Data analysis ................................................................................................. 42

3.10.1 Sampling ................................................................................................ 44

3.10.2 Sample size ............................................................................................. 45

3.11 Conclusion .................................................................................................... 45

CHAPTER 4: DATA ANALYSIS AND FINDINGS .......................................... 46

4.1 Introduction ................................................................................................... 46

vi

4.2 Description of collected samples ................................................................... 46

4.2.1 Sex of respondents ................................................................................... 47

4.2.2 Age group of respondents ........................................................................ 47

4.2.3 Years of being customer of Vietcombank Dong Nai ............................... 48

4.2.4 Education level of respondents ................................................................ 49

4.3 Assessing measurement scale ........................................................................ 49

4.3.1 Reliability of Two-way communication items ........................................ 50

4.3.2 Reliability of Employees attitude items ................................................... 51

4.3.3 Reliability of Employees knowledge items ............................................. 51

4.3.4 Reliability of Efficiency of banking services items ................................. 52

4.3.5 Reliability of Customer loyalty items ...................................................... 53

4.4 Exploratory factor analysis ............................................................................. 54

4.4.1 Analyzing independent variables ............................................................. 54

4.4.2 Analyzing dependent variable - Customer loyalty ................................... 59

4.5 Multiple regression analysis .......................................................................... 60

4.5.1 Testing the conformity of research model ............................................... 60

4.5.2 Detecting multicollinearity phenomenon ................................................. 61

4.5.3 Testing hypotheses of relationship between the independent variables and

the dependent variable ............................................................................ 62

4.5.4 Analysis of variance test of biographic variables and customer loyalty .. 64

vii

4.6 The empirical model ...................................................................................... 66

4.7 Conclusion ..................................................................................................... 67

CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS ...................... 69

5.1 Introduction ..................................................................................................... 69

5.2 Summary of study ........................................................................................... 69

5.2.1 Summary of factor analysis and testing hypotheses results ..................... 70

5.2.2 Findings and recommendations of the study............................................ 71

5.3 Study limitations ............................................................................................. 73

5.4 Areas for future research................................................................................. 74

5.5 Final conclusions ............................................................................................ 74

LIST OF REFERENCES ....................................................................................... 75

APPENDIX - Questionaires (Vietnamese version) .............................................. 78