The effect of customer relationship management andrelationship quality on the value of customer s life cycle

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1 Technical Journal of Engineering and Applied Sciences Available online at 20 TJEAS Journal-20--S/ ISSN TJEAS The effect of customer relationship management andrelationship quality on the value of customer s life cycle Mohammad Hadi Ghani Yeganeh, Ali Sohrabian 2. MS of Industry Engineering, Islamic Azad University, Arak Branch 2. Graduate of Comercial Management, PayamNour University, Kabudarahang Corresponding Author Yeganeh.ie@gmail.com ABSTRACT: The aim of this research is to investigate the effect of customer relationship management through relationship quality on the value of customer s life cycle. The research method in terms of purpose is applied and in terms of nature and description method based on the survey. Statistical population of this research consists of the customers of Mellat and Agricultural banks in the Metropolis Ahvaz that by the use of a statistical formula related to the unlimited societies of individuals with a unprobablistic sampling method available as a sample were selected.for collecting data we have used the standard questionnaires of Ming and Chen Kenny (2002) for measuring customer relationship management, the standard questionnaire of Sanchez and Chakrabarty (2007) for measuring relationship quality and the standard questionnaire of MacDonald and Kim Vacha (2002) for measuring the value of customer s life cycle; their reliability coefficient is respectively equal to (8/0), (88/0) and (82.0) by Cronbach's alpha. The collected data were analyzed by the method of structural equation modeling and by the use of AMOS technique. Results of this research show that the customer relationship management system has a positive effect on the customers satisfaction and trust and a negative effect on customers commitment. The evidence suggests that the relationship quality has an effect on the amount of customer s use of the services, loyalty, verbal advertising and inclination to revisiting of customers. Keywords:customer relationship management, relationship quality, the value of customer s life cycle INTRODUCTION The customer relationship management systemwas used also in the banking industry so that by means of it the relationship between bank and its customers was improved.in this research, from perspective of customers of branches of Agriculture and Mellat banks of Ahvaz metropolis, wedeal with the investigation of the effect ofcustomer relationship management on the relationship quality factors such as customer satisfaction, trust and commitment and that wetherrelationship quality makesto improve thevalue factors of customer life cyclesuch as the amount of use of services, customer loyalty, the verbal advertising and inclination torevisiting. PROBLEM STATEMENT From the perspective of customers, whatthe impact has thecustomer relationship management considering the relationship qualityon the value of customers life cycle in banks? RESEARCH OBJECTIVES Investigating the effect of customer relationship managementon relationship quality; Investigating the effect of relationship quality on the value of customer life cycle; RESEARCH HYPOTHESES customer relationship management (crm) hasan effect on therelationship quality (rq). the relationship quality (rq) has an effect on the amount of customer's use of services. the relationship quality (rq) has an effect on the amount of customer loyalty.

2 Tech J Engin & App Sci., (S): , 20 relationship quality (rq) has an effect on the amount of verbal advertising. relationship quality (rq) has an effect on the customer's inclination to re-visiting. RESEARCH METHODOLOGY The collection methods: library and field Collection tools: questionnaire It should be mentioned that in this research was used to answer questionsthe Likert options scale. I strongly disagree Table. the measurement scale of answers to questions I disagree I don t have aidea I agree I strongly agree 2 4 Validity and reliability Alpha value calculated for 4 questions of the questionnaire is generally Table 2. Cronbach's alpha value related to each of the components and variables Variables Cronbach's alphavalue Customer Relationship Management 0/8 Customer Satisfaction 0/79 Confidence 0/94 Commitment 0/9 Relationshipquality 0/88 Amount ofuseofservices 0/74 Loyalty 0/7 verbal advertising 0/79 inclination to re-visiting 0/84 value of customer s life cycle 0/82 Analysis Gender Gender Man Woman Total Table. and relative of respondents by gender absolute relative 28 0/67 0/ / Figure. Bar diagram related to gender of the sample individuals Mariage Table 4. and relative of the respondents by marriage Marriage Absolute relative Married 22 0/6 0/6 Single 0/ total 40

3 Tech J Engin & App Sci., (S): , 20 Figure 2. bar diagram related to marriage of sample individuals Age Table. Frequency and relative of respondents by age Age Absolute relative Less than /20 0/20 Between 26 to 0 4 0/4 0/4 Between to 7 0/20 0/74 Between 6 to /0 0/84 Between 4 to /06 0/90 More than /0 Total a 0 Less Between than 2 Between 26 to Between 0 to Between 6 to More 40 4 to than 4 46 Figure. bar diagram related to the age status of the sample individuals Education Table 6. and relative of the respondents by education Education Absolute relative Diploma and under diploma 44 0/8 0/8 Associate Degree 92 0/24 0/62 Graduate 0/29 0/9 MAandhigher 6 0/09 total Education 0 diploma associate degree Bs Mr Figure 4. bar diagram related to education of the sample individuals 402

4 Tech J Engin & App Sci., (S): , 20 Employment Table 7. and relative of the respondents by employment Employment Absolute relative Employed 299 0/88 0/88 Unemployed 86 0/22 total employ ment 0 0 employed unemployed Figure. bar diagramrelated to the employment of the sample individuals Table 8. and relative of the respondents by work experience work experience Absolute relative Less than 97 0/2 0/2 Between 6 to 0 0 0/4 0/66 Between to Between 6 to 20 Between 2 to 2 More than /4 0/06 0/07 0/07 0/70 0/06 0/9 Total work experi 20 0 Less than Between 6 to 0 Between to Between 6 to 20 Between 2 to 2 More than 26 Figure. bar diagram related to the work experience of the sample individuals 40

5 Tech J Engin & App Sci., (S): , 20 Table 9. description of the data statistical parameters for each variable Variables number ofquestions average maximum value Minimum value Standard deviation, Customer Relationship Management Customer Satisfaction Confidence /69 4/9 8/ /2 2/67 2/6 Commitment 7/ /97 Relationshipquality 4 0/ /9 Amount ofuseofservices Loyalty /67 8/6 2 2/6 2/9 verbal advertising 4 4/ /7 Inclination to revisiting The value of customer life cycle /07 6/ /2 / Inferential analysis of data The test of normality of data distribution by Kolmogorov Smirnov Variable Customer Relationship Management Relationshipquality The value ofcustomer life cycle Table 0. Result of Kolmogorov Smirnov test Average level of significance Value of calculated statistics 47/69 0/079 /07 0/8 6/2 0/76 0/067 0/8 /02 Data distribution is normal,because the significance level for all variables is greater than α=0.0. H0:The score average after X less than or equal to the meanlimit H:The score average after x is higher than mean limit variable Customer Relationship Management Relationshipquality The value ofcustomer life cycle Table. The single-sample average test The value confidence interval 9% under test Index number The significance for each average lower level variable upper limit limit multiplied by 2/ 6 /7 47/ /2 /6 8/9 0/62 0/8 6/2 Degree of freedom Statistics t 44/ 7/8 42/8 For all variables the value of significance level is close to 0.000that is less than 0.0. This means that average of variables hasasignificant difference with the theoreticalmean number. Hypothesis : "customer relationship management (crm) has an effect on relationship quality (rq)." H0:Customer relationship management (crm) has not an effect on relationship quality (rq). H:Customer relationship management (crm) has an effect on relationship quality (rq). Table 2. the result of linear regression for the effect of customer relationship management on relationship quality Regression coefficient Significance level Calculated Determinatio Correlation F n coefficient coefficient B 0/02 /7 0/0 0/8 0/8 4/89 0/04 404

6 Tech J Engin & App Sci., (S): , 20 The regression coefficient value which indicates the intensity of impact of the customer relationship management on the relationshipquality is 0.8.And since the level of significance (0.02) is less than the error level (0.0),therefore we can say that the hypothesis is confirmed. Figure 7. the result of structural equations modeling for impact of the customer relationship management on relationship quality Intensity of the impact of customer relationship management on the relationship quality based on structural equation modeling was 0.4and since the value K2 for model equal to 46.7 has a significance level 0.000,therefore the model is suitable pattern to show the effect of customer relationship management on the relationship quality. Hypothesis 2: "the relationship quality (rq) has an effect on amount of customer's use of services." H0:Relationship quality (rq) dose not have effect on amount of customer s use of service. H:Relationship quality (rq) has effect on amount of customer s use of service. Table. the result of the linear regression test for the effect of relationship quality on amount of customer's use of services Regression coefficient Significance level Calculated F Determination coefficient Correlation coefficient B 0/0 7/2 0/029 0/04 0/04 2/26 0/0 The value of regression coefficient is And since the significance level (0.0) is less than the error level (0.0),therefore it can be said that the hypothesis is confirmed. Figure 8. the result of structural equations modeling for the effect of relationship quality on amount of customer's use of services Intensity of the impactrelationship quality on amount of customer's use of services based on structural equation modeling was 0.0, andsince the value K2 for modelequal to isthe significance level 0.00,therefore the model is the suitable pattern to show the effect ofrelationship quality on amount of customer's use of services. Hypothesis : "Relationship quality (rq) has an effect on customer loyalty." H0:Relationship quality (rq) has not an effect on customer loyalty. H: Relationship quality (rq) has an effect on customer loyalty. 40

7 Tech J Engin & App Sci., (S): , 20 Table 4. the result of linear regression test for the effect of relationship quality on customer loyalty Regression coefficient Significance level Calculated F Determination coefficient Correlation coefficient B 0/00 0/09 0/24 0/ 0/ 2/48 0/7 The value of regression coefficient is 0..And since the significance level (0.0) is less than the error level (0.0),therefore we can say that the hypothesis is confirmed. Figure 9. the result of structural equation modeling forthe effect of relationship quality on amount of customer loyalty. Intensity of the effect of relationship quality on amount of customer loyalty based on structural equation modeling was 0.27,and since the value K2 for the model equal to 8.22 hasthe significance level 0.000,therefore the model is suitable pattern to show the effect of relationship quality on amount of customer loyalty. Hypothesis 4: "Relationship quality (rq) has an effect on amount of verbal advertising." H0: Relationship quality (rq) has not anyeffect on amount of verbal advertising. H:Relationship quality (rq) hasan effect on amount of verbal advertising. Table.The result of linear regression test for the effect of relationship quality on amount of verbal advertising Regression coefficient Significance level Calculated F Determination coefficient Correlation coefficient B 7/946 0/00-0/ -0/ /247-0/29 The value of regression coefficient is And since the significance level (0.000) is less than the error level (0.0),therefore we can say that the hypothesis is confirmed. Figure 0. the result of structural equations modeling forthe effect ofrelationship quality on amount of verbal advertising Intensity of the effect of relationship quality on the verbal advertising based on structural equations modeling was -0.and since the value K2 for the model equal to 6. has a significance level 0.000,therefore the model is suitable patternfor showing the effect of relationship quality on the amount of verbal advertising. Hypothesis : "Relationship quality (rq)hasan effect on consumer s inclinaton to revisiting." H0: Relationship quality (rq)hasnot any effect on consumer s inclinaton to revisiting. H: Relationship quality (rq)has impact on consumer s inclinaton to revisiting. Table 6. the result of linear regression test for the effect of relationship quality on customer's inclinaton to revisiting. Regression coefficient Significance level Calculated F Determination coefficient Correlation coefficient B 0/026 4/27 0/00-0/08-0/08 2/490-0/

8 Tech J Engin & App Sci., (S): , 20 The value of regression coefficient is and since the significance level (0.026) is less than the error level (0.0), therefore we can say that the hypothesis is confirmed. Figure. The result of structural equations modeling forthe effect of relationship quality on customer's inclinaton to revisiting. Intensity of the effect of relationship quality on customer's inclinaton to revisiting based on structural equations modeling was 0.0and since the valuek2 for model equal to 24. has a significance level 0.00,therefore the model is suitable patternfor showing the effect of relationship quality on customer's inclinaton to revisiting. secondary findings Table 7. results of comparing the situation of three variables including the customer relationship management,relationship quality and value of customer s life cycle based on demographic characteristics relationship quality value of customer s life cycle customer relationship management Statistic value of Statistic value of significance level Statistic value of significance level significance level type of bank -/77 0/002 -/08 0/647-0/47 Gender 0/48-0/699 0/80-0/24 0/227 -/207 Marriage 0/446-0/76 0/426-0/796 0/8 0/46 Age 0/8 2/24 0/97 /6 0/28 6/22 Education 0/22 4/64 0/7 2/009 0/2 2/247 Employment 0/827-0/28 0/79 0/ 0/606-0/6 Work experience 0/02-2/8 0/78 -/2 0/7-2/86 Mann-Whitney s test results show thattheindividuals views for the variable of customer relationship management are not different from each other.in the case of variable ofrelationship quality and value of customer s life cycle, it is noteworthy that value ofthesevariables are not equal just only based on the type of bank.but the result ofkruskal-wallis test for comparing the values of three variables including the customer relationship management, relationship quality and value of customer s life cycle based on age, education level and work experience shows thatonly the average ofvariable of value of customer s life cycle based on individuals work experience in different groups is different. first hypothesis second hypothesis third hypothesis fourth hypothesis fifth hypothesis Table 8. test results of hypotheses based on the sample of Agricultural Bank significance level 0/00 0/00 0/004 Statistic value 6/24 /24 7/269 9/79 2/4 Regression coefficient 0/42 0/02 0/24 0/0-0/062 Table 9. the results of test of hypotheses based on the sample of Mellat bank first hypothesis second hypothesis third hypothesis fourth hypothesis fifth hypothesis significance level 0/002 0/08 Statistic value 2/24 4/624 0/27 8/267 /004 Regression coefficient 0/266 0/08 0/66-0/4-0/0 407

9 Tech J Engin & App Sci., (S): , 20 The individuals view of the sample of Agricultural Bank inthe first hypothesis is more favorable than Mellat bank,but in the rest of hypotheses themellat bank is closer to the general result except in the last hypothesis that this hypothesis has not been confirmed from the viewpoint of the Mellat bank s customers. CONCLUSION The research first hypothesis was confirmed.in fact, the results of this research showed that factors affecting the customer relationship quality in the bank are providing the updated service to customers by the bank, attention to the attitudes and views of customers, the suitable website, providing services through diverse channels and low-cost of services. The research second hypothesis was confirmed.the intensity of the regression coefficient showed that to 6% of the changes in the amount of use of customer service depends on the relationship quality. The research third hypothesis was confirmed.results of this research showed that customers of agricultural bank branches and Mellat bank in metropolis Ahvaz believe that satisfying the expectations of customers, staff s convenient behavior, trust to the services provided by the bank, the accuracy of banking operations, attention to new proposals and assisting customers in unexpected situations are the essential factors of customer loyalty; they draw the customers attention. The research fourth hypothesis was confirmed. Of course,the results of the analyses showed that there is a negative and inverse relationship between relationship quality and verbal advertising and its intensity is also about 0. to 0.. The research fifth hypothesis was confirmed.the intensity of the regression coefficient showed that to % of changes in the amount of inclination to reuse depends on the relationship quality. REFERENCES Almotari, mohammad,(2008). "crm success factors taxonomy.european and mediteranean conference on information system. Alvandi, Mohsen and Karimi, Mohammad (2009), "Comparative study of customer relationship management ofthree Iranian banks with SWIFT model approach", Journal of Development and Evolution management, no., pp Anderson,E.,Weitz B,(99). The use of pledges to build and sustain commitment indistribution channels. Journal of marketing research 29 (February), pp.8-4. Crosby, l.a.,evan s,k. R.,cowls.d,(990). relationship quality in services selling :an interpersonal influence perspective. Journal of marketing 4(),pp Day,g. S.,van den bulte,c,(2002). superiority in customer relationship management :consequences for compectitive advantage and performance.working paper. Wharton school of economics university of Pennsylvania. Dick,a.,and basu,k,(994). customer loyality toward an intergratedcocetual frame work. Journal of the academy of marketing sience,22(2), pp.99-. Doney, P. M.,cannon,j.p,(9997). anexamination of the trust in buyer seller relationship. Journal of marketing 6(april),-. Dwyer f.r,(989). customer lifetime valuation to support marketing decision making.journal of direct marketing (4),8-. Elahy, Shaban and Heidari, B. (2008), Customer Relationship Management, Tehran, commercial publishing company. Falk,m,(2004). ICT linked firm reorganization and productivity gains".wifo working papers,no 26,pp.-44. Feinberg,R.A.kadam,R.hokam,L and kim, I,(2002). the state of electronic customer relationship management in retailing.international journal of retail distribution management,0(0), pp Garbarino,e.,Johnson,m.s,(999). the different roles of satisfaction,trust,and commitment in customer relationship. Journal of marketing 6(april), Kumar,n.,scheer,l.k.,steenkamp,j. B,(99). the effects of supplier fairness on vulnerable resellers.journal of marketing research 2(),pp.4-6. Moormam,c.,deshpande,r.,zaltman,G,(99). factors affecting trust in market research relationship.journal of marketing 7(),8-0. Morgan,r.m,hunt,s.d,(994). the commitment trust theory if relationship marketing.journal of marketing 8(),pp Najafi, Masoumeh (202), "Review and the explanation of the factors influencing customer loyalty in electronic banking: Case of electronic customers of MellatBank ", Lorestan University master's thesis. Nazmy, Jamshid;Jafari, Pejman;Hashemi, Hamed (202), "Exploring the characteristics of customers of micro banking by the use of data mining techniques", Journal of Marketing Management, no. 4, Spring 20, pp. -6. NejhadAmiri M.&Madhoushi, Mehrdad (2006), "providing a comprehensive model for calculating the value of customer s life cycle (clv)", the fourth International Management Conference, Tehran. Ngai,e.w,xiu,li and chau,d.c,(2009). application of data mining techniques in customer relationship management :a literature review and classification.expert system with application,vol 6,pp Oliver,r.l.,rust,r.t.varki,s,(997). customer delight :foundations,findings and managerial insight.journal of retailing 7(),