MASTER'S THESIS

The impact of CRM on customer retention

in electronic banking
Case of Iranian banks
Alireza Nili
Master of Arts, Master programme
Electronic Commerce
Lule University of Technology
Department of Business Administration, Technology and Social Sciences
1



MASTER'S THESIS




The Impact of CRM on Customer
Retention in Electronic Banking:
Case of Iranian Banks



Supervisors: Dr. Abbas Keramati

Dr. Anis Chelbi


Prepared by:

Alireza Nili


International University of Chabahar

Lulea University of Technology

Department of Business Administration and Management

Division of Industrial Marketing and e-Commerce

MSc PROGRAM IN E-COMMERCE [Joint]




2010
2











I dedicate this thesis

with all my love

to my dear parents


Alireza Nili
December 2010



















3
Abstract

The purpose of this study is to investigate the impact of CRM on customer retention
in Iranian electronic banking. Iranian banks have used CRM more or less and
proceeded to this issue with different rates of success. However, there are not
available studies that investigated the impact of CRM in these banks especially in
electronic environment.

This study first reviews and analyzes the previous researches in the literature that
investigate the relationship between CRM and firm performance and customer
retention. Next, based on the RBV and process-oriented approach, we suggest a
process-oriented framework that links CRM to customer retention. In order to be able
to appropriately measure the extent of the usage of each of the research variables
across organization, suitable dimensions for each of the research variables are defined
based on the literature. In this regard, CRM resources are measured with five
dimensions which are operational CRM technologies, collaborative CRM
technologies, analytical CRM technologies, organizational, and human CRM
resources. CRM processes are studied on both operational and management
dimensions. Finally, customer retention programs of CRM are studied in four
dimensions including: customer service, customization, community of customers, and
loyalty programs. A questionnaire has been designed and used to collect data from
286 top bank managers of two governmental (Refah and Maskan) and two private
(Saman and Pasargad banks) banks branches in the province of Tehran. The gathered
data have been analyzed using quantitative methods based on a survey strategy. The
results of data analysis show the direct effect of all CRM resources including
technological and infrastructural resources on CRM processes and also the direct
effect of CRM processes on customer retention programs of CRM (loyalty programs,
customer service, customization, and creating community of customers) which
themselves have direct effect on customer retention. Another contribution of this
study is that it presents a comprehensive set of customer retention programs of CRM
and it studies the correlation between each of them and customer retention.

Keywords: Customer Relationship Management; CRM; customer retention;
electronic banking; Iran

4
Acknowledgement


Completion of this thesis would not have been possible without assistance and support
from many individuals during the process of writing. I would like to take this
opportunity to express my sincere appreciation and thanks to all of them.

I would like to express my gratitude and appreciation to Dr. Abbas Keramati for his
supervision, constant support and valuable guidance from the very early stage of this
research. I would also gratefully extent my acknowledgment to Dr. Anis Chelbi for
his intelligent advice, supervision, and support.

Special thanks also go to all the respondents in Refah, Maskan, Saman, and Pasargad
banks for their contribution and participation in this research.

I also would like to thank all of International University of Chabahar and Lulea
University of Technology faculty members for their support during this research.

Finally, I would like to deeply thank my dear family, especially my wonderful parents
for their never-ending love, encouragements and support throughout my entire life. I
am deeply and forever indebted to them.



Alireza Nili

December 2010



















5
Table of contents

Abstract......3
Chapter 1: Introduction
1.1. Background...10
1.1.1. Definition of Customer Relationship Management (CRM) and scope..10
1.1.2. Customer retention.12
1.1.3. The impact of CRM on customer retention ................................................... 13
1.1.4. Electronic banking..15
1.2. Research problem......16
1.3. Purpose of the research..18
1.4. Outline of the thesis...18

Chapter 2: Literature Review
2.1. Introduction...20
2.2. Customer Relationship Management (CRM)20
2.2.1. Goals of CRM....22
2.3. The impact of CRM on customer retention..23
2.4. Resource-based view and process-oriented approach in the CRM value creation
model.24
2.4.1. CRM and IT...24
2.4.2. Resource-based view of the firm....25
2.4.2.1. Technological CRM resources27
2.4.2.1.1. Communicational/collaborative CRM technologies27
2.4.2.1.2. Operational CRM technologies28
2.4.2.1.3. Analytical CRM technologies..28
2.4.2.2. CRM technological activities in e-banking.29
2.4.2.3. Infrastructural CRM resources....31
2.4.2.3.1. Human CRM resources....32
2.4.2.3.2. Organizational CRM resources32
2.4.3. Process-oriented approach..32
2.4.3.1 The CRM process.33
2.4.3.1.1 Operational CRM processes..36
2.4.3.1.2. Management CRM processes...36
2.5. CRM process capabilities..37
2.5.1. Customer retention programs of CRM ..38
2.6. Summary of studies linking CRM to customer retention..42

Chapter 3: Frame of Reference
6
3.1. Introduction...47
3.2. Resource-based View of the firm (RBV)..47
3.2.1. Technological CRM resources...48
3.2.2 Infrastructural CRM resources48
3.3. Process-oriented approach.48
3.3.1. CRM processes...49
3.4. Customer retention programs of CRM..49
3.5. Research model.....51

Chapter 4: Research Methodology
4.1. Introduction...52
4.2. Research approach.52
4.2.1. Qualitative versus Quantitative Approach.52
4.2.2. Deduction versus Induction Approach...53
4.3. Purpose of the Research....................................................................................53
4.3.1. Exploratory research 54
4.3.2. Descriptive research...54
4.3.3. Explanatory research .55
4.4. Research Strategy..55
4.5. Time Horizon....57
4.6. Data Collection method57
4.7. Sample Selection...58
4.7.1. Probability Sampling..59
4.7.2. Non-probability Sampling..60
4.8. Sample size61
4.9. Questionnaire Design63
4.10. Pilot Test.63
4.11. Data Analysis..64
4.12. Validity and Reliability..65
4.12.1. Validity ...65
4.12.2. Reliability65

Chapter 5: Data Analysis
5.1. Introduction..67
5.2. Descriptive Statistics68
5.3. Inferential Statistics..76
5.3.1. Exploratory Factor Analysis..76
5.3.1.1. The results of Exploratory Factor Analysis for the variable of
"technological CRM resources"76
7
5.3.1.2. The results of Exploratory Factor Analysis for the variable of
"infrastructural CRM resources"...80
5.3.1.3. The results of Exploratory Factor Analysis for the variable of "CRM
processes"..83
5.3.1.4. The results of Exploratory Factor Analysis for the variable of "customer
retention programs of CRM".87
5.3.1.5. The results of Exploratory Factor Analysis for the variable of "customer
retention"...92
5.3.2. Structural Equation Model for research Hypotheses Tests.95
5.3.2.1. Structural Equation Modeling Procedure.95
5.4. Lateral Analysis.103
5.4.1. Study of the correlation between each of the customer retention programs of
CRM and customer retention using Pearson correlation..103
5.4.2. Study of the difference between the governmental and private banks in
relation to the research variables.104
5.4.3. Study of the difference between the four banks (under study) in relation to
the research variables by using ANOVA106
5.5. Conclusion111

Chapter 6: Conclusion and Implications
6.1. Conclusion and implication...113
6.2. Theoretical Implications113
6.3. Managerial Implications115
6.4. Research limitations and suggestions for future research.118

References.120
Appendix A125
Appendix B127
Appendix C133
Appendix D137









8
List of figures

Figure 1.1 Outline of the thesis19
Figure 2.1 The emerged framework investigation of CRM activities in Iranian
banking industry (Keramati et al., 2009a, p. 213) .31
Figure 2.2 Getting more customer interaction (Winer, 2001, p. 93)35
Figure 2.3 CRM value generation process (Keramati et al., 2010, p. 1176)38
Figure 2.4 Customer Retention Programs (Winer, 2001, p. 98)..39
Figure 2.5 Influencing factors of customer loyalty (Adapted from: Juan & Yan, 2009)..40
Figure 3.1 CRM value generation process (Keramati et al., 2010, p. 1176)49
Figure 3.2 The research model.51
Figure 5.1 The distribution of the respondents' age.68
Figure 5.2 The distribution of the respondents' educational level...70
Figure 5.3 The distribution of the respondents' field of study.71
Figure 5.4 The frequency related to the respondents' job experience..72
Figure 5.5 The frequency related to type of the banks under study.72
Figure 5.6 The frequency related to the belonging to each bank.73
Figure 5.7 The general form of structural equation model..96
Figure 5.8 Symbolization97
Figure 5.9 The research conceptual model..98
Figure 5.10 Standard model.99
Figure 5.11 Diagram of significance..101

List of tables
Table 2.1 Summary of studies linking CRM to customer retention.43
Table 2.2 Analysis of studies linking CRM to customer retention..45
Table 4.1 Relevant situation for different research strategies (Yin et al., 1994, p.6)56
Table 4.2 Descriptive statistics in sampling.61
Table 4.3 The sample size for each bank.62
Table 5.1 The frequency of the respondents' age.....68
Table 5.2 the frequency of respondents' gender...69
Table 5.3 The distribution of the respondents' educational level69
Table 5.4 The frequency of the respondents' field of study.70
Table 5.5 the frequency related to the respondents' job experience71
Table 5.6 The frequency related to type of the banks under study..72
Table 5.7 the frequency related to each bank under study in the sample73
Table 5.8 The means of the four research variables for bank Refah...74
Table 5.9 The means of the four research variables for bank Maskan74
Table 5.10 The means of the four research variables for bank Saman75
Table 5.11 The means of the four research variables for bank Pasargad75
Table 5.12 The means of the four research variables for governmental and private banks..76
Table 5.13 KMO and Bartlett's Test.77
Table 5.14 Communalities............77
9
Table 5.15 Total Variance Explained..78
Table 5.16 Rotated Component Matrix79
Table 5.17 KMO and Bartlett's Test.80
Table 5.18 Communalities...80
Table 5.19 Total Variance Explained ..81
Table 5.20 The communalities after deleting the questions with little communalities.82
Table 5.21 Total variance explained after deleting the questions with little communalities82
Table 5.22 Rotated Component Matrix83
Table 5.23 KMO and Bartlett's Test.84
Table 5.24 Communalities...84
Table 5.25 Total variance explained before deleting the question..85
Table 5.26 The communalities after deleting the question with little communalities...86
Table 5.27 Total variance explained after deleting the question with little communality.86
Table 5.28 Component Matrix.87
Table 5.29 KMO and Bartlett's test..88
Table 5.30 Communalities...88
Table 5.31 Total variance explained before deleting the question.89
Table 5.32 The communalities after deleting the question with little communalities..90
Table 5.33 Total variance explained after deleting the questions with little communalities.91
Table 5.34 Rotated Component Matrix92
Table 5.35 KMO and Bartlett's Test92
Table 5.36 Communalities...93
Table 5.37 Total variance explained before deleting the question with little communality..93
Table 5.38 The communalities after deleting the question with little communality..94
Table 5.39 Total variance explained after deleting the question with little communality.94
Table 5.40 Component matrix.95
Table 5.41 Fit indices......100
Table 5.42 Pearson correlation values...103
Table 5.43 Group Statistics104
Table 5.44 Independent Samples Test105
Table 5.45 ANOVA......106
Table 5.46 Multiple Comparisons..107












11

1. Introduction

This chapter presents a research background regarding the concept of Customer
Relationship Management (CRM) and its impact on customer retention in the
electronic banking environment. It continues with problem discussion, the purpose of
the research and the outline of the thesis.


1.1. Background
This section presents the background of this study focusing on the central idea of
CRM and its impact on customer retention in electronic banking.

1.1.1. Definition of Customer Relationship Management (CRM) and
scope

In the mid-twentieth century, increased product availability for consumers by mass
marketing and mass production techniques, changed the purchasing process and
competition view for the firms. Based on Fickel (1999), Chen and Popovich (2003)
argue that as the customers have the ability to choose the items they want among the
wide variety of services and products, companies lost track of market needs. Today,
companies are trying to build better relationships to existing as well as new customers
to increase customer loyalty and long-term retention. Therefore, many of them are
trying hard to be more efficient in using technological resources and strategies of
customer relationship management (CRM). Researchers also point out that
technological applications of CRM link front office functions for example customer
service, marketing, and sales and back office ones such as operations, financial,
human resources and logistics with the customer touch points in the companies such
as call centers, sales, e-mail, fax, and pagers which most of the times are managed by
separate information systems.

Different authors have described CRM in several ways which reflect variety of
viewpoints about its definition. Some of them have described it as a philosophy or
strategy, others as a process to maintain profitable customers (Zablah et al., 2004).
However, according to Chan (2005) and Dimitriadis and Stevens (2008), most authors
11
consider CRM as the combination of information systems and strategies in order to
make the organizations more customer-centric. In this view, CRM is not considered as
only technology, but as a tool which enables the organizations to store and analyze the
data about companies and their customers (Keramati et al., 2008).

Customer relationship management is a comprehensive process and strategy for
customer retention and acquisition to create superior value for them and for the
company (Parvatiyar & Sheth, 2004). It can also be defined as a significant
competitive strategy companies can use to focus on their customer's needs in the
market and to integrate customer-centering path in the firms. Other authors regard
CRM as a discipline focusing on development and automation of business process
associated with management of relationships with the customers in management,
sales, customer support and service (Chatterjee, 2000 cited in Shahin & Nikneshan,
2008).

Based on Payne and Frow (2004) and Payne and Frow (2005), Dimitriadis and
Stevens (2008) considers that CRM creates long-term and profitable relationships
with stakeholders and customers by uniting the IT and appropriate strategies for
relationship marketing. It supplies companies with this chance to use data to realize
the customer's needs by cross-functional integration of operations, people, processes,
and marketing capabilities that is enabled through applications, technology, and
information. Regardless of the channel to interact with companies, CRM offers
convenience of transactions, and customization for the customers (Gulati & Garino,
2000).

According to Boulding et al. (2005, p. 156) and Dimitriadis and Stevens (2008), CRM
is the result of integration and evolution of marketing ideas and technological
resources, information, and organizational forms:

"Not only does CRM build relationships and use systems to collect and analyze data,
but it also includes the integration of all these activities across the firm, linking these
activities to both firm and customer value, extending this integration along the value
chain, and developing the capability of integrating these activities across the network
of firms that collaborate to generate customer value, while creating shareholder value
for the firm."
12
Dimitriadis and Stevens (2008) argue that all of the definitions stated underline that
the firm's operations and processes are affected by the implementation and design of
customer relationship management (CRM).

In the study done by Kassanoff (2000), he also points out that CRM applications help
companies assess the profitability and loyalty of their customers by some metrics like
the number of repeated purchases and help to answer questions such as: Which
products or services do the customers want? And how should the companies
communicate with them? Also by these applications, customers save time and money
as well as receiving better treatment, information, and efficient service regardless of
the channel to contact the firm such as call centers and Internet.

However, these strategies and applications are effective if possible risks such as
inadequate ROI and budgets are well thought out and the outcome is creating
competitive value for the customers and better quality of services and improved
profitability with more reasonable price in comparison with the ones competitors
offer. In this situation, one can say the organization is moving on the right path and is
capable to be in a better position of the market (Zineldin, 2006).

1.1.2. Customer retention

In the competitive environments, customer retention has been shown to be a very
important managerial issue in especially the markets with decreasing rate of acquiring
new customers. It is admitted as the first goal of CRM because of its capability in
delivering superior value for the customers and firms (Ahmad & Buttle, 2002).
Therefore, it can be considered as the primary goal of the organizations practicing
CRM strategies and applications (Ang & Buttle, 2006).

Although the meaning of customer retention varies between different companies and
organizations, they all have come to the conclusion that they can reach many
economical objectives by focusing on customer retention such as collecting data about
customers to better target and communicate or to customize the interactions with them
(Ang & Buttle, 2006).
As customers remain loyal, volumes of purchased items will grow and the costs of
relationship maintenance reduces because both suppliers and customers know each
13
other better than past. Also, these loyal customers pay higher prices than the new
ones, and are less likely to claim for discounts which we should offer to new
customers in order to acquire them. However, to increase the net present value of
these customers, all of the necessary conditions for CRM programs should be
combined effectively (Ang & Buttle, 2006).

Weinstein (2002, p. 259) argues that many firms spend most of their energy, time, and
marketing budgets to gain new customers. However, because the cost of acquiring
new customers is much more than the cost of retaining existing ones, customer
retention is very important to most banks and organizations. It can be [up to] ten
times more expensive to win a customer than to retain a customer and the cost of
bringing a new customer to the same level of profitability as the lost one is up to 16
times more (Lindgreen et al., 2000, p. 295; Ang & Buttle, 2006).

However, some organizational processes which can be associated with retaining the
customers include the processes for: planning, customer satisfaction measurement,
complaints-handling and quality assurance processes (Ang & Buttle, 2006). Finally,
to be successful in implementing this program, any company should consider the
related issues such as type of customers to be retained and the nature of product or
services sold (Ahmad & Buttle, 2002).


1.1.3. The impact of CRM on customer retention

Many authors describe the final goal of CRM as customer retention which is the key
to survive in competitive markets for any firm. Customer satisfaction and surviving in
today's competitive environments require a heart to understand the customers; a brain
to analyze; and hands to deliver the products to them (Ghahfarokhi & Zakaria, 2009).
These researches also explain that customers are the source of revenue because they
are the ones who pay the bills and generate profit. The role of customers is so vital for
organizations and that is why customer relationship management (CRM) is born
based on the recognition of the value customers have.

Today, customers are the most significant factor in management of businesses
because they are now able to choose the items they want from a variety of choices and
therefore change the strategies and programs firms have. Hence, having enough
14
information about customer's needs and marketplace is a vital factor to interact with
their unexpected behaviors and then act in such a way which is in the direction of
companies' objectives (Ghahfarokhi & Zakaria, 2009).

Now, firms know that absorbing and maintaining the customers is an art. They have
realized that to reach this purpose using appropriate programs such as CRM which is
a business philosophy that provides the organizations a vision to deal with their
customers better, is inevitable. A CRM strategy delivers this vision by giving shape to
customer service, marketing, and activities to analyze data and most organizations
view the final purpose of this vision, maximization of relationships with their
profitable customers by increasing the value of these relationships (Ghahfarokhi &
Zakaria, 2009).

Previous researches have shown that there is a strong dependency between customer
satisfaction and customer retention (Winer, 2001). Considering customer retention,
any firm needs to improve the relationships with its customers in a way that results in
more customer satisfaction and therefore increased profits (Dwyer et al., 1987; Becker
et al., 2009). CRM tries to retain the customers by its relationship programs whose
final goal is to deliver a high level of customer satisfaction. Therefore, if companies
want to retain their customers, they must develop and efficiently execute a
comprehensive set of relationship programs to deliver a targeted performance
customers expect. These programs include customization, customer service,
community building, and loyalty programs (Winer, 2001).

Based on CSO Insights (2006), Becker et al. (2009) add that most of the times, the
implementation of these programs affect each of the firm's goals in a different way
and may result in poor economical outcomes. For example, although many firms
engage consultants and project members to implement CRM technological systems
such as software applications and databases or to align the firms' structures and
organizations, they can not be sure that focusing on these activities will guarantee
reaching the final goal of CRM which is customer retention. In order to attain this
goal of customer retention, in addition to the investments for CRM technologies,
firms should consider their organizational and human resources and also relationship
between processes and people because they can determine the degree to which CRM
is adopted and supported.
15
1.1.4. Electronic banking

Electronic banking project was launched for the first time in the UK in the early
1980s but it failed to gain considerable acceptance among people. However, rapid
growth in electronic services generated renewed interest in them. For example, in the
1990s, UK banks made transactional e-banking services available for people. In fact
during that time, a quarter of the responding banks with fully operational online
systems provided e-services for their customers (Daniel, 1999; Ibrahim et al., 2006).

Daniel (1999) argues that increased competitions in financial institutions have
resulted in realizing the need to improve alternative delivery channels, the most recent
one being electronic banking. He defines electronic banking as the provision of
services or information for customers and the ability to buy products, gain access to
accounts, and executes transactions via TV, computer, telephone, ATM

He also points out that today; consumers have this ability to change banks only by
pressing of a button. They can access to online intelligent agents which enable them
to compare the services and conditions and therefore reduce the prices. In addition, he
states that numbers of alternative delivery channels are increasing which causes fall in
percentage of customers visiting bank branches. Besides, electronic banking has many
other advantages for customers such as:
- Convenience: Shopping, paying bills, buying, and transferring money from
anywhere at any time.
- Features: Electronic banking can be carried out at any time of the day or night.
- Attractive Rates and Incentives: Banks offer attractive interest rates that are opened
online. Many others also offer incentives, giveaways and special offers to customers
for opening accounts online.
- Consolidated Portfolio Interface: Most banks offer a seamless and consolidated
interface to customers.

Customers can use e-banking services 24 hours a day, without any limitation in
location and standing in lines. These services include Automated Teller Machines,
Personal Digital Assistants, Mobile Branches, Interactive voice recognition,
Internet Banking, Point of Sale Devices, and Cell Phone Banking.

16
Although electronic banking has many benefits both for banks and customers, there
are some problems in its implementation such as legal problems in digital signature
and problems occurring for security systems (Alikhanzadeh, 2008).


1.2. Research problem

The interest in focusing on long-term and profitable customers and the need to better
understand their behaviors have changed the view of marketers about the marketplace.
Traditionally, they have been trying to acquire new customers and the currently other
firm's customers, which needed heavy price-oriented promotions and mass
advertising. However, today, customers have access to a variety of services and
products and when they do not meet their needs easily; they can choose those
institutions that provide them with fast and high quality products or services.
Therefore, companies try to use unique strategies to retain their current customers
instead of customer acquisition which needs more investments. To reach this purpose
new and different tools and mindset are required (Winer, 2001). Also considering
human and organizational resources as much as technological capabilities is necessary
to manage good relationships with the customers (Keramati et al., 2008).

As it has been said above, many studies show that the cost of acquiring new
customers is 6 times much greater than the cost that firms pay for retaining current
ones. Other researches also show the same result such as slight increase in customer
retention rates results in substantial growth in income of firms. Also, other researches
argue that the profit loyal customers generate, is over twice more than the profit
generated by new ones (Winer, 2001).

Customer relationship management (CRM) is now adopted as a necessity and its
methods and experiences are applied in many industries because of its great role in
becoming more customer focused to deal with the competitions between companies
and to retain their current and loyal customers to gain more profit and reduce the costs
(Newell, 2000).

CRM is one of the most growing trends in banking industry these days, especially in
electronic environment and high investments have been spent on its technologies in
order to keep the customers satisfied. Also, it is considered as the top banks'
17
implementation programs priority which is today more seen in e-banking (Blery &
Michalakopoulos, 2006).

In today's competitive markets, an aggressive competition between banks is seen
more than in the past. They have realized that relationship with customers and its
management are significant factors to win this race especially in e-banking in which
face to face interactions does not exist. The applications of customer-centric strategies
and programs of customer relationship management (CRM) help banks to build long-
term relationships with customers and result in increasing their income. Therefore, in
the banking sector, CRM is of strategic significance because of the effects it has on
customer satisfaction and retention which is the final goal in any successful
businesses (Blery & Michalakopoulos, 2006).

Although many evidences show the strong positive impact of CRM on organizational
performance such as customer retention, there are many reports showing
disappointing results of applying CRM to retain existing customers and developing
relationships with them. By reviewing the previously published studies about CRM
and firm performance, we found out that to find the origin of this problem and to
propose an integrated framework from CRM investment to customer retention,
resource based view (RBV) of the organization is extended into it by some
researchers. In addition, some other authors have applied process oriented approach in
their studies to enhance and improve this path. In this thesis we have also used these
two approaches to gain insight about the real impact of CRM on customer retention
(Richards & Jones, 2008; Keramati et al., 2010)

Based upon the above discussion and on the limited amount of researches available
about CRM and its impact on customer retention in electronic banking especially for
Iranian banks, we have formulated the research problem of this thesis as follows:
"What is the impact of CRM on customer retention in electronic banking in Iranian
banks?"


1.3. Purpose of the research

From the discussions above, the aim of this thesis is to understand the relationship
between CRM resources, CRM processes, customer retention programs of CRM (as
18
the CRM process capabilities), and customer retention in electronic banking of Iranian
banks. Therefore, briefly, this study tries to investigate the impact of CRM on
customer retention in Iranian electronic banking based on RBV and process oriented
approach. Iranian banks have used CRM and its strategies more or less and proceeded
to this issue with different rates of success. However, there are not available studies
that investigated the impact of CRM on customer retention in these banks especially
in electronic environment. This research aims at getting a deeper insight to this issue
regardless of size and age of the banks.

1.4. Outline of the thesis

As it is presented in figure 1.1, this research is divided into six chapters. The first
chapter which is the introduction presents the background of the research, the research
problem, and research objectives. Chapter 2 which presents a literature review
provides the reader with an overview on the main previously published papers related
to CRM and customer retention. Chapter 3 deals with the frame of reference. It
presents the adopted models for the study, formulates the research hypothesizes, and
concludes the final research model. The fourth chapter presents the methodology. It
describes the methodological choices made in this work and it also examines its
validity and reliability.

Chapter 5 analyzes the empirical data which are collected by the means of
questionnaire to test the research hypothesizes. This study ends with chapter 6 in
which the conclusions related to the formulated hypotheses will be stated. This
chapter ends with managerial and theoretical implications and further research
perspectives within the area of customer relationship management in electronic
banking sector. Figure 1.1 presents the outline of the thesis.








19



























Fig. 1.1: Outline of the thesis



















Introduction

Literature Review

Methodology

Data Analysis
Data
Presentation

Conclusion
and
Implications
Frame of Reference

Chapter
1
Chapter
2
Chapter
3
Chapter
4
Chapter
5
Chapter
6
21

2. Literature Review


2.1. Introduction

In this chapter, based on the research problem presented in the introduction chapter,
we will review an essential part of the literature concerning CRM and its effects on
firm performance; especially, the 'customer retention'. In doing so, we start by
defining CRM and specifying its goals. Next, the two well known approaches namely,
the resource-based view (RBV) of the firm and the process-oriented approach, are
discussed. Then, we examine the CRM process and process capabilities as well as
customer retention programs of CRM. At the end, a summary of the literature linking
CRM to 'customer retention' is provided.

2.2. Customer Relationship Management (CRM)

Increased product availability and mass production techniques have given this chance
to customers to be able to choose the items they really desire among the variety of
products. Therefore, focusing on customers' expectations is the most important factor
for firms to survive in today market places. On the other hand, knowing customer's
needs and problems helps the companies to acquire and retain them easier and with
less cost (Dimitriadis & Stevens, 2008).

Customer relationship management is built on relationship marketing philosophy and
redefines the relationship between companies and their customers. Some researchers
have defined CRM as a competitive strategy companies adopt to focus on their
customer's needs, but others regard it as a discipline to concentrate on development
and automation of business process in companies. However, despite the variety of
definitions of CRM, they all intend to build customer relationship to create superior
value for both the customers and firms (Chatterjee, 2000 cited in Shahin &
Nikneshan, 2008).

Today, companies have realized that the cost of acquiring new customers is far greater
than the cost of retaining existing profitable customers. Therefore, with the help of
CRM strategies, they are trying to build better and customized relationships with
21
existing customers in order to increase customer satisfaction and build customer
loyalty (Ang & Buttle, 2006).

Based on Payne and Frow (2004) and Payne and Frow (2005), Dimitriadis and
Stevens (2008) emphasizes that CRM creates long-term and profitable relationships
with stakeholders and customers by uniting IT technologies and appropriate
strategies. Here, the outcome is a mutually beneficial relationship between company
and customers that leads to customer loyalty and therefore more profitability for the
companies.

Winer (2001) considers the customer retention as the final goal of firms practicing
CRM programs. He suggests that if firms want to deliver their customers the
performance they expect, a comprehensive set of relationship programs is a necessity.
He implies that these programs include customization, customer service, rewards
programs, community building, and loyalty programs.

Ghavami and Olyaei (2006) argue that CRM is one of the key processes in any
company and its implementation needs capital investments to integrate marketing,
strategy, and technology. Using CRM, companies can achieve competitive advantage
provided it is well implemented. In case it is not, customers may leave the company
and never come back again.

Now, a key question is: what are the elements of a successful CRM program?
To answer this question, based on Payne (2001), Ghavami and Olyaei (2006) explain
the following four elements:

1) Strategy assessment process
2) Value creation process
3) Multi channel integration process
4) Data repository process

The first process must be done for both business strategy and customer strategy. The
components of a business strategy include business vision and competitive
characteristics and the components of customer strategy include customer
characteristics, choice, granularity, and customers segmentation (Ghavami & Olyaei,
2006).
22
The second process consists in the value customers receive, the value organization
receives, and the customer segment life time value analysis. The values customers
receive from a relationship with a company include value proposition and value
assessment. Moreover, in a well planed and customized relationship with customers,
organizations receive the values of acquisition economics and retention economics
(Ghavami & Olyaei, 2006).

The third process is multi channel integration process. In this step, the components
which CRM tries to integrate and manage include e-commerce, m-commerce, direct
marketing, sales force, telephony, and outlets. Finally, the last process contains the
functions of data analysis, information systems, front office applications such as
customer service and back office applications such as human resources and logistics
(Ghavami & Olyaei, 2006).

2.2.1. Goals of CRM

Based on the study done by Swift (2001), Persson (2004, p.11), believes that by
implementing CRM strategies, firms can achieve many goals such as:

- Reducing costs of sales

Because the relationship with customers will be more efficient and current customers
become more responsive, the costs of sales reduce.

- Reducing costs of acquiring new customers

Because of savings on marketing, relationship programs, services, and so on, the cost
of acquiring new customers will be reduced.

- Increased customer satisfaction and profitability

- Decreasing the need to acquire so many new customers

The number of loyal customers increase, therefore the need to gain so many new
customers decreases.

- Evaluating profitability of customers
Companies can know the profitable customers and the ones who might become
profitable. This is a very significant factor, since any business must focus on
acquiring and retaining the profitable customers to generate profit and reduce costs.

23
- Higher customer retention rates


Customer loyalty and retention increases, therefore they will stay longer and generate
more profit for firms.

Based on Newell (2000), Persson (2004) discusses that a real value to a firm is the
value it creates for the customers as well as the value its customers deliver back to
that firm. It is necessary to say that this value lies in the customer knowledge and in
the way the firms use this knowledge in managing relationships with their customers.
If CRM is applied in the right way, it can be an efficient tool that generates profits for
firms. By transforming customer data into knowledge intended to build better
relationships with profitable customers, CRM creates more customer loyalty and
therefore more profits for companies. Ultimately, CRM is about creating mutual and
collaborative satisfying relationships between the company and its customers to
increase customer loyalty and satisfaction.

2.3. The impact of CRM on customer retention

Although many practitioners have provided evidences of the positive effects of CRM
on organizational outcome such as customer retention, there are many reports
showing disappointing and poor outcomes (Richards & Jones, 2008; Keramati et al.,
2010). To find the reason of this problem, many academicians and practitioners tried
to identify the origin of this situation and found two problems referred to the
performance of CRM. The first reason is that many firms view CRM as an IT solution
(Reinartz et al., 2004; Keramati et al., 2010). In this regard, academicians believe that
although it is easy to acquire IT in the industry, it does not lead to success in business
strategies and does not confer competitive advantage. This finding is the same with
CRM technology. Companies can buy the same CRM technologies which their
competitors use and not have the same results (Lawson-Body & Limayem, 2004;
Keramati et al., 2010).

The second reason is referred to the concept of CRM meaning that it should not be
considered only in the context of technology. According to Zablah et al. (2004), there
are five main concepts on CRM including technology, strategy, philosophy, process,
and capability which represent an important insight toward an integrated framework
linking CRM to organizational outcome. Indeed, many models have been developed
24
to propose how CRM affects the firm performances which are different in
conceptualization of key dimensions of CRM and the relationships among them
(Keramati et al., 2010).

By reviewing the IT and organizational outcome literature, we found out that in order
to explain the productivity paradox of IT and to propose an integrated framework
from CRM investment to customer retention in firms, some academicians have
emphasized on considering the resource based view (RBV) of the organization. Also,
some practitioners have applied process oriented approach in their studies to improve
and develop this path. Indeed, by using these two approaches, firms can be able to
identify important resources in the CRM processes implementations and can find the
appropriate mechanisms of CRM value creation for the firm. Therefore to find the real
impact of CRM on firm performance such as customer retention which is the most
important factor for firms to have better financial outcomes, the consideration of these
two concepts is necessary (Levesque & McDougall, 1996; Keramati et al., 2010).

2.4. Resource-based view and process-oriented approach in the CRM
value creation model

In this section, we discuss theoretical backgrounds as well as adoption and extension
of CRM and IT, resource based view of the firm (RBV), and the process oriented
approach.

2.4.1. CRM and IT

While many authors such as Keramati et al. (2010) consider CRM as a customer
orientation strategy, they all explain that core organizational IT capability is the basis
of CRM and have described IT as information-enabled relationship marketing. This
can be the reason of this problem that why many practitioners and managers have
seen CRM as only a technology solution (Keramati et al., 2010, p. 1171).

In many recent papers on CRM, we found evident emphasizes on accepting CRM as a
strategy. Payne and Frow (2005) and Keramati et al. (2010, p. 1171) describe CRM as
a continuum which "on the one side, is about the implementation of a specific
technology solution, and, on the other side, is a strategy for managing customer
relationships to create shareholder value". Therefore, CRM can be defined as a
25
marketing strategy to develop beneficial relationships between the company and its
customers with the help of IT.

As it has been mentioned before, to answer this question of why investments in
information technology do not lead to expected organizational outcome, some
theories such as a theory based framework which is referred to as the resource based
view (RBV) in the organizations have been developed (Keramati et al., 2010).

The attributes of RBV is relevant to CRM for some reasons. The first reason is that
CRM is rooted in information systems and marketing. Indeed, we can claim that RBV
has important roles in the both mentioned fields. First, in the field of IT, RBV has
been applied to investigate the ability of IT in providing competitive advantage for
organizations. Second, in the marketing field, using RBV, organizations are able to
assess the competitive advantage provided by the processes which transform the
resources to valuable results both for firms and customers. The second reason for the
relevance of RBV to CRM is that the people aspect has gained considerable
attention in the definition of CRM (Reinartz et al., 2004; Keramati et al., 2010) and
RBV also stresses the importance of people in the field of strategic human resources
management for which the most important components are employees' skills and
behavior in the organization. Finally, the third reason is that, the aim of CRM is
creation of superior value both for organizations (from economical aspect) and their
customers (Greve & Albers, 2006; Keramati et al., 2010). According to Keramati et
al. (2010, p. 1171), "The RBV combines the underlying principles of economics with
a management perspective".

2.4.2. Resource-based view of the firm

Resource-based view of the firm (RBV) emphasizes on the firm resources and views
them as valuable firm assets. As mentioned, technology can be easily purchased and
duplicated by any entrants in the industry; therefore it can not provide competitive
advantage for the organizations. Many relevant researches also imply that there is no
correlation between investments in technology and organizational outcomes, or if
there is a correlation, it is negative. This contention can be considered as a reason for
weak effect of CRM technology on firm's efficient and sustainable relationship
building with customers. On the other hand, recent researches such as the one done by
26
Keramati et al. (2010) confirm this idea and imply that if firms want to achieve
competitive advantage, they should compete on the basis of unique, rare and valuable
corporate resources. Through these researches, two main tangible and intangible
resources which are complementary to IT namely as human and organizational
resources are identified. Indeed, an efficient use of these resources can lead to firm
capabilities and therefore expected organizational outcomes. In this regard, we should
note that capabilities measure the organization's ability to assemble these resources
effectively to achieve a specific objective (Coltman, 2007; Keramati et al., 2010).

Is the RBV applicable in CRM strategies? Reinartz et al. (2004), Zablah et al. (2004),
Coltman (2007) and Keramati et al. (2010) conclude in their studies that the findings
below imply a positive answer to the mentioned question:

1) The overemphasis on technology investments addressed by the studies about the
applications of IT and CRM.

2) The concept of capability which refers to efficient use of all resources and as the
result firms will be able to form their performance toward customer-focus strategies
and sustainable competitive advantage.

3) In the view of RBV, a selective and path-dependent process can improve the firm
capabilities and this is consistent with the goal of CRM.

The above mentioned literature discusses the usefulness and application of RBV in
the study of CRM. However, to understand why the RBV is better to use than other
theories in this context, some researchers such as Keramati et al. (2010) argue that the
theory of RBV focuses on the main drivers of competitive advantage which is in the
direction of the main objective of CRM that is creation of superior value for the firm
and customers. In this regard, some other references view the RBV as a theory applied
in industrial organization economics. In these studies, RBV is compared with five
theories that have played an important role in the evolution of industrial organization.
These theories include Bain-type IO, neoclassical economics, transaction cost
economics, and the Schumpeterian and Chicago responses. RBV has at least one
similarity and one distinction with the mentioned theories, Keramati et al. (2010, pp.
11711172) say that the RBV reflects a strong cumulative IO heritage and is at the
same time unique in that it incorporates major departure from each of the five
27
theories. In addition to this reason, many other authors such as Lockstrm (2007)
have also based their study on the RBV because of its powerful logic and
comprehensiveness.

2.4.2.1. Technological CRM resources

CRM technologies are the medium and tools which enable the firms to get the
appropriate information to the right person at the right time (Massey et al., 2001).
Based on the firm strategy on CRM program, Keramati et al. (2009b) classifies
technological resources into:

- IT infrastructure including the electronic services across the company.
- The combination of hardware and software to implement business programs by use
of the infrastructure such as the electronic systems for sales and also the analysis
tools.

CRM technologies in themselves are classified into three classes of
communicational, operational and analytical technologies. As it has been said
previously, communicational technologies make interactions between the firm and its
customers and help driving the sales through communicational channels such as call
centers. Customer facing applications are related to operational segment which
automate customer service, marketing, and sales. And finally, analytical technologies
uses information sources in the best possible way for better gaining insight of
customer behavior patterns and then make more personalized communication with
them (Keramati et al., 2009b; Keramati et al., 2010).

2.4.2.1.1. Communicational/collaborative CRM technologies

Using communicational CRM, communication between the firm and the customers
become possible. This can be done via the e-services provided for customers to
contact the firm. It also enables suppliers to interact with each other effectively.
Moreover, it offers tools and knowledge to employees, partners and suppliers and
helps driving the sales through communicational channels (Keramati et al., 2009a).

The special features of communicational CRM include enabling the firm to
communicate with the customers at any time and any location. They also allow
28
solving customer's questions, fast service response to customer's requirements,
increase in quality of services, customer satisfaction and therefore retaining the
current customers (Keramati et al., 2009a; Reinartz et al., 2004).

2.4.2.1.2. Operational CRM technologies

A typical operational CRM is the contact center and its management. To interact with
customers, customer data should be collected through all possible touch points such as
contact center, web, and sales force. Then, these data must be stored in particular
databases. By this contact management system, tracking any information related to
contact with customers becomes easier and more efficient (Keramati et al., 2009a).

It is also established that by using a contact management system, operational CRM
improves marketing, customer services, sales force automation and so on. It
automates customer contact and customer-facing processes. In addition, it supports
their interaction in service, sales, and marketing. Ultimately, operational CRM is a
great help in personalizing relationships with customers and realizing their needs.
This has been improved by deploying Intranet and Extranet to distribute the
information within the organization and between the organization and all the partners
via all touch points (Keramati et al., 2009a; Keramati et al., 2010).

The functions of operational CRM include sales force automation (SFA) to focus
more on sales, customer service and support to provide better and personalized
services for the customers, and also enterprise marketing automation (EMA) to
evaluate profitability of customer segmentations (Keramati et al., 2009a; Deng, 2009).

2.4.2.1.3. Analytical CRM technologies

Academic researchers argue that to increase competitiveness of a firm and reach its
objectives, customer satisfaction is a necessity. To improve it, companies should
ensure customer's expectations are understood and met. Therefore, they need a
measurement system fed by data gained from electronic systems or directly from
customers. In the next step, to support identifying customer behavior and their loyalty
level, these stored data must be analyzed by specific analytical systems (Reynolds,
2002; Keramati et al., 2009a).

29
Globally, the most important goal of analytical CRM is to use information sources
properly to better gaining insight of customer behavior patterns and then have more
personalized communications with them. As a result, because customers are offered
more customized products that fit their buying profiles, they become more satisfied
and therefore more loyal to the company (Keramati et al., 2009a; Reinartz et al.,
2004).

Now a key question is the following: what is the relationship between these
characteristics: communicational, operational and analytical? To answer this
question we can say that for instance, without data gathered through operational
CRM, analytical CRM can not drive strategic and tactical decision making about
customer acquisition or maintenance. Therefore, if firms want to drive the customer
life cycle effectively, they must consider all the characteristics of CRM and the
available business intelligence at the same time (Keramati et al., 2009a; Keramati et
al., 2010).

2.4.2.2. CRM technological activities in e-banking

In the past few years, many banks in the world have applied data mining technologies
and data warehouses to provide clear information about interactions with their
customers and to realize what types of customers they are dealing with. In order to
target right groups of customers, these banks also have segmented their customers
based on their behavior patterns and loyalty (Keramati et al., 2009a).

Iranian banks have also undertaken different CRM aspects. A number of them are
using operational CRM while others use communicational one. Some of these
activities (e.g. check balances and accounts records) are for observation and some
other such as customer service are for account controls. The latter include ordering
checkbooks, changing the accounts, bill payments to third parties, sending messages
and paying credit-card bills, fund transfer, etc. (Keramati et al., 2009a; Reinartz et al.,
2004).

In general, the applications of CRM include management and automation of call
center, marketing activities, contacts, campaign, e-mails, field service, data
31
warehouses, SFA, knowledge management, and customization of the products and
services (Reynolds, 2002).

A considerable part of the customer data can be collected from the customers
interacting through different channels. This data is classified into two main parts
which are transactional data and non-transactional ones. The first part is about
transaction time, place and amount, but the second part is more about feedbacks
gained from customer's propositions or complaints. To communicate with customers
more efficiently, both of the mentioned parts should be combined into a customer data
profile (Keramati et al., 2009a; Kim et al., 2010).

Based on the discussion above, Keramati et al. (2009a) divides customer information
into the following three types:

Customer's information including their transactional and personal
information.

The information provided for the customers such as the product information
that customers perceived as useful.

Non-transactional customer feedback information such as customer's
suggestions, complaints and so on.

It should be noted that the collected information through different channels must be
integrated in a proper database. In the next step, with the help of operational CRM
and considering the gained feedbacks, analytical CRM creates various customer
segments to help designing proper customer strategies. All in all, to perform this
process efficiently, all of these activities should be arranged and conducted one after
another (Keramati et al., 2009a; Reinartz et al., 2004).

Using CRM techniques, banks can be more able to find the profitable customers who
have considerable current and future net value for them, know them and understand
their needs better, and retaining and improving the value of their business in a costless
and efficient way (Keramati et al., 2009a). As the final result, banks will be more
capable to improve their customer satisfaction and retention programs; therefore,
customers are more eager to have long-term relationship with them which results in
31
higher customer loyalty and profitability; reduced cost of sales; reduced costs of
acquiring new customers and decreased need to acquire so many of them; buying
more products and therefore increased long-term value (Keramati et al., 2009a; Greve
& Albers, 2006).

Keramati et al. (2009a, p. 213) summarize the emerged investigation of
communicational CRM, operational CRM and analytical CRM activities in the
context of electronic banking in Iran in figure 2.1.

Front office Back office






















Communicational
Operational Analytical

Fig. 2.1 The emerged framework investigation of CRM activities in Iranian banking industry
Reference: Keramati et al. (2009a, p. 213)


2.4.2.3. Infrastructural CRM resources

As mentioned before, CRM is a marketing strategy and technology is its non-strategic
aspect. On the other hand, the infrastructure of CRM in the organizations is formed
based on the non-technological CRM resources which are called the 'infrastructural
T
o
u
c
h

p
o
i
n
t
s





















-


C
a
l
l

c
e
n
t
e
r

a
u
t
o
m
a
t
i
o
n





















-


E
m
a
i
l

m
a
n
a
g
e
m
e
n
t





















-


A
u
t
o
m
a
t
e
d

t
e
l
l
e
r

m
a
c
h
i
n
e

(
A
T
M
)





















-


I
n
t
e
r
n
e
t

b
a
n
k
i
n
g


C
l
i
e
n
t
s

(
S
F
A
)

S
a
l
e
s

f
o
r
c
e

a
u
t
o
m
a
t
i
o
n

(
C
S
S
)

C
u
s
t
o
m
e
r

s
e
r
v
i
c
e

a
n
d

s
u
p
p
o
r
t


-


C
o
n
t
a
c
t

m
a
n
a
g
e
m
e
n
t




-


F
i
e
l
d

s
e
r
v
i
c
e

a
u
t
o
m
a
t
i
o
n



-


C
r
e
d
i
t

c
a
r
d


Enterprise marketing automation
(EMA)

- Personalized marketing
- Advise, peripheral services
- Cross selling

D
a
t
a

c
o
l
l
e
c
t
i
o
n


-


D
a
t
a

w
a
r
e
h
o
u
s
i
n
g




-

K
n
o
w
l
e
d
g
e

m
a
n
a
g
e
m
e
n
t

D
e
c
i
s
i
o
n

m
a
k
i
n
g

32
CRM resources' and are classified into human CRM resources and organizational
CRM resources (Keramati et al., 2009b; Keramati et al., 2010).

2.4.2.3.1. Human CRM resources

Human CRM resources consist of the employees' ability to work well with the
existing CRM programs. In addition, they are about customer facing and non-
customer facing employees' attitudes, technical skills, and ability to convert customer
data to knowledge (Keramati et al., 2009b; Keramati et al., 2010).

Reinartz et al. (2004) suggest that customers would rather communicate with
employees than electronic systems. This implies the reason why academic researchers
claim that among all CRM resources, human resources is the first priority to be
considered. Based on Rigby et al. (2002), Keramati et al. (2009b) confirm this idea by
mentioning that CRM can be implemented more efficiently simply by motivating
employees to be more aware of customer's expectations.

2.4.2.3.2. Organizational CRM resources

Based on Greenberg (2004), Keramati et al. (2009b) argue that many companies
consider CRM as a project of implementing IT technologies. They emphasize that
CRM is a program not a project because projects are implemented in limited time, but
for CRM there is no end.

These researchers add, to implement a successful CRM program, some elements are
required including setting CRM goals, defining incentive systems, having a customer
centric philosophy, training the employees, and top management commitment.

2.4.3. Process-oriented approach

According to Keramati et al. (2008), while several studies have adopted and applied
the RBV approach, it has some limitations, for example, it does not talk about how
and through which mechanism the resources should be applied and what the best
ways of managing them are. In this regard, the process-oriented approach examines
the impact of Information technology on intermediate business process. Mooney et al.
(1996) and Keramati et al. (2008, p. 1280) state that "to evaluate IT business value,
33
the key business processes within each core business area must be identified and the
linkages and contributions of IT to those processes should be defined".

Eng (2004) argues that in the context of CRM, the applications of the process-oriented
approach and RBV are relevant. Keramati et al. (2010) confirm this idea stating the
following reasons:

First, a process management orientation is a necessity for a CRM program to be
successful; therefore, to ensure the efficient use of firm resources toward the creation
of expected firm performance, managers must focus on CRM processes effectively.
Second, firms are able to enhance their process capabilities by strategic approaches
and long-term view to their resources.

Mooney et al. (1996) and Keramati et al. (2010) compared organizations which
efficiently deployed IT with other ones to test the ways by which IT influences the
processes leading to process capability in firms. The result was that the firms which
absorbed and applied IT as a differentiated resource have enjoyed better process
capabilities and firm performance out of it. This research result implies the necessity
of aligning the process oriented approach with the resource based view of the firm
(RBV).

2.4.3.1. The CRM process

A process is the way we do a work and in businesses, it is linked sets of activities to
create value for customers. According to Dwyer and Tanner (2005) and Ghavami and
Olyaei (2006), a CRM process involves four steps including market segmentation,
designing a communication strategy, implementing the strategy, and finally the
evaluation of that strategy.

These authors explain that in the first step of a CRM process which is market
segmentation, companies segment and profile the similar groups of consumers and
then they customize the products meeting that group's expectations. Besides, when
segmenting the customer groups, firms should consider the way customers want to
contact them. For example, some buyers in a segment would rather order over the
web, but some others prefer to buy in another way (Dwyer & Tanner, 2005).

34
To understand which way of contact the customers in each segment prefer, companies
can track customers response to earlier contacts. This can be done by constructing a
database of information about the customers and then investigate which customers
responded well to which way of contact in the past. For example if some customers
have bought some items frequently online, they are more likely to buy in this way in
the future (Dwyer & Tanner, 2005; Ghavami & Olyaei, 2006).

According to Winer (2001), a business database should contain the following
information:

Customer Contacts: This includes all customers and the organization initiated
contacts.

Transactional information: This kind of information includes comprehensive
and detailed customers' purchase history.

Response to Marketing activities: to know whether or not the customers
responded to direct contacts.

Descriptive Information: This is more used for customer segmentation and
analyzing the collected information.

This author also argues that in data collection and creating a database, the biggest
challenge is to create opportunities for communication between firms and customers
especially when the firms use intermediaries such as physical stores that prevent
direct contact.

Winer (2001, p. 93) illustrates the general problems in creating a database in figure
2.2. For example, in this figure, banks have many direct communications with
customers; thus, creating a database is an easy for them. On the other hand, this job is
very hard for the lower right-hand quadrant due to the indirect communications these
firms have with their customers.








35

Customer Interaction

Direct Indirect



Airlines Banks

High Telecom Packaged goods

Retail Drugs
Interaction
Frequency

Personal
Computers Furniture
Low
Internet Autos
Infrastructure


Fig. 2.2 Getting more customer interaction


Reference: Winer (2001, p. 93)




The collected data in database should then be analyzed through statistical methods
such as cluster analysis or through "lifetime customer value" (LCV), click stream
analysis, etc. The purpose of these analyses, especially LCV, is that each customer
must be analyzed in terms of profitability to the company; therefore, companies can
realize which customers to target more efficiently (Winer, 2001, p. 94).

Different results can be gained through these analyses. For example, if purchasing
behaviors of the customers have been analyzed, the customers in the highest
purchasing rate are the first priority to focus in loyalty programs. The final goal is to
select long-term profitable customers among all existing ones (Winer, 2001).

In the next step, a strategy for communication with customers will be designed. In this
strategy, several different communication channels such as email and direct mail will
be used (Dwyer & Tanner, 2005).

Many academicians have suggested organizations to dialogue with their customers
through these communication channels rather than communicating with them through
mass media such as television or radio. Also, they say Internet can be deployed as a
technological tool to facilitate individual relationship building with customers.
36
Meanwhile, based on the customers' profiles and their buying behaviors, companies
should make offers such as purchasing discounts (Dwyer & Tanner, 2005).

In the third step, the strategy is implemented and then in the final step, it is evaluated.
Measures of performance are considered for evaluation. Customer satisfaction is the
most important one. Depending on the results, companies may change their customer
segmentations and strategies (Dwyer & Tanner, 2005).

Keramati et al. (2010) classify CRM processes into operational CRM and
management CRM processes. They explain that operational CRM processes include
the CRM's tasks in a firm's value chain, but management CRM processes are about all
CRM's tasks related to the administration, allocation, and control of all resources in
firms. By dividing CRM processes into these two main classes, organizations become
able to determine the CRM activities under each one more efficiently.

2.4.3.1.1 Operational CRM processes

According to Zablah et al. (2004) and Keramati et al. (2010), those customer
processes found at the operational level of the business are called operational CRM
processes which themselves are classified into operational knowledge processes and
operational interaction processes. The above authors explain that the first sub-process
involves the tasks associated to customer knowledge at the operational level.
Collecting customer data through different channels and disseminating customer
knowledge between the firms and their customers is an important example for this
process. On the other hand, the operational interaction processes consist of different
activities from the activities done in the first process. Based on the studies done by the
mentioned researchers, using these processes, firms consider the available intelligence
to establish and develop relationships with customers.

2.4.3.1.2. Management CRM processes

Based on Greve and Albers (2006) and Keramati et al. (2010), all the activities which
refer to the activities programmed to create market intelligence and improve decision
making in allocating the resources, developing new products, and so on are explained
in the context of management CRM processes. An important example of these
37
activities in this context is the realization of customer behavioral pattern which has
significant effects on decision making and therefore on the firm performance.

2.5. CRM process capabilities

Coltman (2007) and Keramati et al. (2010) argue that capabilities are intermediate
transformation ability between all the resources (technological and infrastructural)
and the organization's mission. Capabilities measure the organization's ability in
effective combination of resources to meet its goal; therefore, they approximately
reflect the concept of efficiency. The same authors believe that since capabilities have
mediating effect between firm's resources and performance, they are not observable;
therefore they become hard to imitate.

Process capabilities can also be regarded in the context of CRM. Keramati et al.
(2010, p. 1177) define the CRM process capabilities as: "the process abilities that are
gained by effectively applying CRM resources to CRM processes and that enable
firms to create superior value for their organization as well as their customers.".
Regarding this definition, we can conclude that the best level to assess the CRM
process capabilities is the process level. Like CRM processes, these capabilities are
classified as management CRM process capabilities such as new product development
capabilities and operational CRM process capabilities such as customer support
capabilities.

Keramati et al. (2010, p. 1176) summarize the relationship between CRM resources,
CRM processes, CRM process capabilities, and organizational performance in figure
2.3.








38


Fig. 2.3 CRM value generation process

Reference: Keramati et al., (2010, p. 1176)


As previously mentioned, process capabilities have mediating effect between firm's
resources and performance to meet a specific objective. This study investigates the
impact of CRM resources and processes on customer retention (as the organizational
performance); therefore, to attain this objective, firms should implement a
comprehensive set of relationship programs with their customers as their process
capability. Winer (2001) calls these programs as 'customer retention programs of
CRM'.

2.5.1. Customer retention programs of CRM

As it has been discussed before, the overall objective of relationship programs is
delivering a higher level of customer satisfaction than similar companies do.
Therefore, companies must measure their customers' satisfaction levels and improve
their relationship programs which help to deliver products and services beyond the
customer expectation (Winer, 2001; Farquhar, 2004; Arbore & Busacca, 2009) and
therefore contribute to retain the customers.

Winer (2001) believes that if firms want to efficiently retain their profitable
customers, they need to implement a comprehensive set of relationship programs
including: frequency/loyalty programs, customer service, customization, and
community building. He states these programs are determinants of customer
satisfaction which finally leads to customer retention (figure 2.4).





39
























Fig. 2.4 Customer Retention Programs

Reference: Winer (2001, p. 98)


Loyalty/Frequency Programs

Loyalty program which is also called frequency program provides rewards to targeted
consumers in order to encourage them to buy products repeatedly. These programs
have become competitive necessities for the firms in the marketplace especially those
with a decreasing rate of customer retention. Recent studies have also shown that the
most successful retailers in the top sectors such as department stores, grocery,
drugstores category, and mass merchandisers design these programs (Winer, 2001;
Verhoef, 2003; Juan & Yan, 2009).

Customer loyalty in service industry consists of three main dimensions including
affective loyalty, behavioral loyalty, and cognitive loyalty. Behavioral and affective
loyalties are formed based on cognitive loyalty which itself is influenced by
company's reputation, brand recognition, its public image and most importantly,
corporate social responsibilities. On the other hand, in the intermittent service
industry, customer satisfaction, service quality and customer perceived value (CPV)
Customer
Relationship
Management:
Satisfaction
Frequency/
Loyalty
Programs

Customization

Customer
Service

Community
Building

Rewards
Program
41
are the main factors affecting customer loyalty. Through the moderation of customer
satisfaction, both of CPV and service quality affect Customer loyalty indirectly
(Farquhar & Panther, 2008; Juan & Yan, 2009).

In descending order of significance, affective loyalty is influenced by customer
satisfaction, cognitive loyalty, customer perceived value, and service quality.
Moreover, determinants of behavioral loyalty include customer satisfaction, service
quality, affective loyalty, customer perceived value, and cognitive loyalty. And
finally, the only influencing factor of cognitive loyalty is the service quality (Juan &
Yan, 2009). Figure 2.5 illustrates the influencing factors of customer loyalty in
service industry.

















Fig. 2.5 Influencing factors of customer loyalty

Adapted from: Juan & Yan (2009, p. 68)


Many academicians believe that there are some considerable problems with loyalty
programs such as the need for high investments and the difficulty to correct mistakes.
There is confusion about whether these programs improve the customer retention or
average spending behavior, and most considerably, it is not easy to gain competitive
advantage by these programs. However, loyalty programs can work effectively if
firms increase the switching costs and build barriers to entry (Winer, 2001; Deng et
al., 2009; Juan & Yan, 2009).




Service Quality


Customer Satisfaction




Customer Perceived Value


Customer
Loyalty



Cognitive Loyalty



Affective Loyalty



Behavior Loyalty
41
Customer Service


Generally, a customer service encounter is defined as the contact or "touch points"
that a customer has with a company. It has the potential to improve customer strategy
or to have the opposite effect. Because the targeted customers are most valuable
customers to the companies and they are able to choose their favorite item among a
variety of products in the marketplace, customer service must be the first priority
within each company (Winer, 2001, p. 99; Venetis & Ghauri, 2004; Smith, 2006).

There are two types of services including Reactive and Proactive services by which
companies can enhance their customer service (Winer, 2001; Smith, 2006).

Reactive services are applied when a customer faces problem such as product failure
or question about a bill and contacts the firm to solve it or get more information about
it. Today, most organizations especially the banks have used the technology and also
trained their employee to deal with these situations through e-mails, faxback systems,
telephone, etc. Proactive services are the situations where the firms do not wait for
customers to contact them and are determined to hold a dialogue with their customers
prior to use reactive solutions such as complaint handling. This can be done well
where the sales force or other employees dealing with the customers are trained and
interested to realize customers' expectations (Winer, 2001; Venetis & Ghauri, 2004;
Smith, 2006; Arbore & Busacca, 2009).

A number of systems leveraging the Internet assist both of these two types of services.
For example, some Web-based service providers such as HumanCIick provide their
customers with the ability of real time interactions with service representatives
(Winer, 2001; Smith, 2006).

Community

Using the Web, both online and offline companies can build online networks of
customers in which they are able to exchange information about the products and also
can interact between themselves and the company easier and more personally. This
network of customers is called community. In this situation, the customer is
committed to the company and therefore he or she is less likely to leave the family of
customers. In addition, by creating these communities, companies can gain more
accurate information about specific products in a market and then make it with the
42
characteristics or the quality that customers expect (Stauss et al., 2001; Winer, 2001;
Guo et al., 2009).

Customization


Customization goes beyond communicating with customers and is also about the
creation of products for individuals. For example, some companies such as Dell and
Nike have established online processes for creation of customized and personal
products and services based on individual customer's taste. In this way, each customer
is able to choose a product from a list or order the item he or she really wants (Winer,
2001; Ahmad & Buttle, 2002; Farquhar, 2004).

Academicians call such customization, "versioning" which is easy and cheap to do.
The point that should be noticed is that versioning is easier to do for services and
intangible products than for physical products; however companies can use the
additional information gained from customers to tailor at least the appearance of
products (Winer, 2001; Farquhar, 2004; Smith, 2006).

2.6. Summary of studies linking CRM to customer retention

The coordination and integrity between different components of CRM have a
significant effect on CRM value creation for the organizations; therefore, to be able to
investigate the real value generation process of CRM, its different components should
be aligned and linked together.

Many researches have been conducted to empirically and theoretically examine the
value process of CRM such as its impact on firm performance. We have discussed the
concept of 'customer retention' and its importance for firms in the previous chapter
and also in the first part of this chapter. In this section, a summary of our literature
survey of studies linking CRM to customer retention (as the considered firm
performance in this study) is presented. Table 2.1 provides this review. Besides, table
2.2 exhibits the analysis of these studies based on addressed or not addressed
important issues from the viewpoint of this research. As it can be noticed, some of
these addressed issues are more technology-oriented while others are more strategic.
However, to have a broader view, the important issues which have not been addressed
in these studies are brought, too.
43
Table 2.1: Summary of studies linking CRM to customer retention









































Table 2.1: (continued)











Winer
(2001)

Reference CRM components Mediators Findings

Customer retention
programs of CRM:

- Loyalty programs
- Customization
- Customer service
- Community building

- Customer satisfaction

- Customer retention


- Each of the loyalty programs, customization, customer service,
and community building affects customer satisfaction
significantly.

- Customer satisfaction has a great impact on customer
retention.


- IT knowledge
- Inter-firm cooperation


- Customer-focusing
technology usage

- Organizational size




- There is a positive relationship between IT knowledge and
customer-focusing technology usage.

- Customer-focusing technology affects customer retention.

- The effect of Inter-firm cooperation on performance in large
banks is more than small banks.

- The association of organizational size with the relationship
between customer-focusing technology and customer
relationship outcome (such as customer retention) is negative.



Lneborg
and Nielsen
(2003)



Verhoef
(2003)

RMIs:

- Loyalty programs

Direct mailing -





- Customer retention


- Commitment has a significant effect on customer retention.

- RMIs (Loyalty programs and direct mailing) affect customer
retention.

Eng (2004)








- Industry attractiveness

- Resource advantage of
customer portfolio

- Long-term value of
customer portfolio


- The correlation between industry attractiveness and resource
advantage of customer portfolio is positive and considerable.

- There is a weak positive correlation between long term value
of customer portfolio and customer retention.


Reinartz et
al. (2004)

Customer-facing level
of CRM process:

- Relationship initiation
- Relationship
maintenance
- Relationship
termination





- CRM technology

- Organizational
alignment


- Only for initiation and maintenance level CRM process
implementation associates better customer retention.

- A CRM-compatible organizational alignment plays the role of
moderator between CRM processes and firm performances
(such as customer retention).

- Using large CRM technology proportion does not affect
customer retention as it is expected.

Wang et al.
(2004)







- Customer value
- Customer satisfaction



- Customer value (customer's perception) is a determinant of
customer satisfaction and customer loyalty.

- There is a positive relationship between customer satisfaction
and customer retention.

Roh et al.
(2005)


- Process fit
- Quality of customer
information



- Efficiency
- Customer satisfaction



- Among CRM initiatives, process fit is the only one that has
direct effect on performance.

- CRM elements influences efficiency and efficiency has
significant impact on customer satisfaction

- Customer satisfaction affects customer retention.

44
Table 2.1: (continued)






















































- CRM technology
- Top management
commitment
- CRM orientation
- Organizational
alignment
- Customer
heterogeneity
- CRM activities



Greve and
Albers
(2006)





- Use of CRM technology affects performance indirectly
(including customer retention).

- Top management commitment and customer orientation only
affect the retention performance.

- Except customer orientation and top management
commitment, all variables affect each of initiation, maintenance,
and retention performances directly.






Coltman
(2007)



- Superior CRM
capabilities



- Reactive and proactive
market orientation


- CRM capability affects customer retention.

- The relationship between CRM capability and customer
retention is partially mediated by proactive market orientation,
but reactive market orientation does not show a significant
mediation impact.







Keramati et
al. (2009b)

CRM resources:

- Technological
resources

- Human resources

- Organizational
resources

- CRM resources (Technological, human, and organizational
resources) positively affect CRM processes.

- The extent of affected CRM processes is directly associated
with improved CRM process capabilities.

- There is a positive association between CRM process
capabilities and firm performance.

Keramati et
al. (2010)

- CRM resources

- CRM processes

- CRM process
capabilities


- Firm performance
(such as customer
retention)

- Firm performance
(including customer
retention)


- Technological CRM resources affect organizational
performance (such as customer retention) when they are aligned
with infrastructural resources.

- Deployment of all CRM resources leads to better customer
retention.

- While the integration of organizational resources and
capabilities (analytical and operational capability, and
information resources) may impact retention process, they are
not enough to provide desired firm performance of acquiring
new customers and improving relationships with them.

- Implementation of
enterprise CRM

- Customer retention

- Relationship
expanding

- Organizational
resources

- Organizational
capability for CRM
implementation


Kim et al.
(2010)

- CRM implementation impacts customer retention only if the
appropriate company stakeholders support it adequately.

- Customer heterogeneity impacts customer retention rate
significantly.

- The effect of technological implementations with employee
support on performance is significant and positive for both the
initiation and the maintenance aspect.

- Customer acquisition

- Customer
maintenance and
retention

- Technological
implementation of
CRM

- Organizational
implementation of
CRM

Becker et
al. (2009)
45
Table 2.2: Analysis of studies linking CRM to customer retention



















































Lneborg
and
Nielsen
(2003)



- Measures significant IT related capabilities (for example
information analysis skills) from the view of RBV.

- Addresses two levels of organizational outcome. The
first level which is customer-focusing technology usage
measures these capabilities as market orientation and
frontline support.


- While investigates the relationship between adoption of
CRM and customer performance, it does not address the
way of relating this adoption to performance.

- Does not pay attention to CRM processes.

- Many human and organizational aspects are not
considered.

Reference

Addressed issues

Not addressed issues


Eng (2004)


- examines the effects of three significant strategic views
in attaining customer performance (including customer
retention).

- Emphasizes on the scales measuring the specified three
constructs.

- The variable of competitive characteristics is
examined as an important indicator of industrial view.


- It does not directly address CRM and its applications.


Reinartz et
al. (2004)


- Specifies and assesses the impacts of attractive three
stages of CRM processes at customer-facing level for
practitioners.

- evaluates the impact of technological CRM resources
on the relationship between CRM processes and
organizational outcome (including customer retention).

- Measures some company performances such as
customer retention.

- Considers industry as a control variable and say that
benefits of CRM such as customer retention are
approximately the same among different industries.



- Evaluates the relationship between CRM processes and
firm outcome (including customer retention) directly.
However, it does not address the benefits gained by CRM
which improve the customer retention.


Wang et al.
(2004)


Winer
(2001)

- Addresses the relationship between customer
satisfaction and customer retention.

- Specifies all the determinants of customer retention and
gives them in the form of a comprehensive set of
customer retention programs.

- Discusses CRM processes broadly.

- Focuses on suggesting a comprehensive set of customer
retention programs; As a result, the significance and priority
of each program have gone unnoticed.

- It does not say that which program affects customer
retention directly and which program affects it indirectly.

- Organizational resources are not addressed enough.





Verhoef
(2003)


- Investigates the impact of relationship marketing
instruments (RMIs) and customers relationship
perceptions (CRPs) on customer retention.
- Tries to find out whether different variables of RMIs
and CRPs affect customer retention.






- Human aspect of CRM especially employees are not
addressed.

- Management CRM processes are not considered.


Roh et al.
(2005)


- Focuses on behavioral variables of CRM performance and
does not mention how they are created and help to retaining
existing customers.


- Measures behavioral outcomes of CRM such as
emotional value from customer's view and relates them
to customer retention.



- The emphasis of the research is on the technological
resources of CRM and as it is obvious, the considered
efficiency aspects are only from technology perspective,
therefore, they are not enough to enhance the customer
retention.

- The study does not address the people aspect in CRM
programs.


- emphasizes on important aspects of CRM (for example
CRM systems and customer information).

- It argues why the CRM system affects profitability and
customer retention by considering efficiency aspects of
the CRM system.

46
Table 2.2: (continued)



















































- Assesses the impact of technological CRM resources
on organizational outcome.

- Moreover, it views top management commitment and
customer orientation as aspects of CRM.

- It measures CRM performance including customer
retention at three stages of CRM processes.



- Evaluates the resource capabilities of CRM based on
RBV.

- By considering the four perspectives of the balanced
scorecard, it assesses organizational outcome.

- Investigates the mediating effect of conversion
feasibility (i.e., the organization's capability in following
the specified path when the CRM resource capabilities
are built) on the benefits gained by CRM.


- It does not pay enough attention to human resources of
CRM. For example it does not consider employee
experiences.

- Determines the factors affecting customer retention, but
it does not say why these effects happen.



Greve and
Albers
(2006)


- Since it evaluates the CRM resources too broadly, some
of CRM aspects about customer retention (such as
efficiency) are not considered.

- CRM processes are not addressed directly.


Coltman
(2007)


- Proposes a framework to investigate the relationship
between CRM resources, CRM processes and process
capabilities, and firm performance based on RBV and
process oriented approach.

- Emphasizes on the importance of human and
organizational resources of CRM and aligning them to IT
and CRM technology.

- Evaluates the effect of all CRM resources on CRM
processes.

- Discusses CRM processes and CRM process
capabilities on both operational and management
processes.

- Customer facing level of CRM process is not discussed
directly.

Keramati et
al. (2009b)


- This study focuses on the role of CRM resources based
on RBV; therefore, it does not pay enough attention to
CRM processes.

- Investigates the role of technological, human, and
organizational resources of CRM on firm performance
including customer retention based on RBV.

- Addresses and discuses the important role of human
and organizational CRM resources and concludes that
without efficient use of these two resources, investments
and large use of IT and CRM technology can not lead to
expected performance.

Keramati et
al. (2010)

- It does not examine CRM and its applications directly
and deeply.






- Considers information resource and analytical
capability as the organizational resources and capabilities
and talks about the impact of integrating them on
customer retention.

- Addresses the technology, process, and people aspects
in implementing a successful customer retention strategy.

Kim et al.
(2010)


- This research emphasizes on the effect of technological
and organizational CRM resources on customer
retention, but does not pay enough attention to human
CRM resources.

- The capabilities of firm in CRM implementation is
discussed enough, but the CRM process capability is not
general discussed.


- Investigates what effect firms can expect CRM to have
on customer retention and how this effect can be
leveraged.

- Presents a conceptual model that tries to find the
relationship between organizational and technological
resources. Also, the impact of management and
employee support on CRM process-related outcome is
addressed.

- Measures performance in terms of the initiation,
maintenance, and retention of gained by CRM.

Becker et
al. (2009)

47





3. Frame of Reference

3.1. Introduction

In the previous chapter, we presented a literature survey of several studies linking
CRM to customer retention and elaborated on their important addressed and not
addressed issues from the viewpoint of this study. The two models presented by
Winer (2001) and Keramati et al. (2010) appear as the most suitable ones for this
thesis. In fact, in comparison with other studies, they enable the researcher to test all
CRM resources and comprehensive set of customer retention programs with regard to
firm performance and most importantly customer retention. Also these models are
found to be the best for collecting data from banks employees working in electronic
banking section in Iran. In addition, using these models, measuring the effectiveness
of CRM resources, processes, and retention programs on customer retention in the
mentioned environment becomes easier and more accurate. These models were fully
explained in the previous chapter. We will consider them as a reference to state our
research hypotheses. They are presented again in this chapter to be combined as the
final research model for this thesis.

In this chapter, by gaining insight from the RBV and the process-oriented approach,
we propose a framework to investigate the relationship between CRM resources,
CRM processes, customer retention programs of CRM (as the CRM process
capabilities), and finally customer retention as the result of these programs. Thus, in a
broad view, we will be investigating the impact of CRM on customer retention. The
dimensions of each of the constructs have been specified and the research
hypothesizes are formulated.

3.2. Resource-based View of the firm (RBV)

RBV emphasizes on all the firm resources and sees them as the specific and valuable
assets. According to many academicians if organizations want to achieve competitive
advantage, they should compete based on unique corporate resources. Thus, two
48
tangible and intangible resources which are complementary to CRM technology and
also not duplicable by competitors, namely as human and organizational resources are
introduced by researchers and practitioners (Keramati et al., 2010).

3.2.1. Technological CRM resources

As mentioned, CRM technologies are the tools enabling the firms to get the right
information to the right person at the right time and are divided into three parts of
communicational, operational and analytical technologies (Keramati et al.,
2010).

3.2.2 Infrastructural CRM resources

Based on Keramati et al. (2010), CRM is a marketing strategy and its infrastructure is
based on the non-technological CRM resources which academicians call
'infrastructural CRM resources'. They are classified into human CRM resources and
organizational CRM resources.

Human CRM resources


Human CRM resources consist of customer facing and non-customer facing
employees' attitudes, technical skills, and ability to convert customer data to
knowledge. Academic researchers claim that among all CRM resources, human
resources are the most important ones (Keramati et al., 2010).

Organizational CRM resources

Some researchers such as Keramati et al. (2010) emphasize that to implement a
successful CRM program, some changes in culture of firms are required. For
example, the firms must consider some elements including training the employees,
and top management commitment.

Our first hypothesis related to this aspect is the following:

H1. CRM resources have direct effect on CRM processes.

3.3. Process-oriented approach

The process-oriented approach examines the impact of information technologies on
intermediate business process. Indeed, a process management orientation is a
49
necessity for a CRM program to be successful; therefore, to ensure the efficient use of
firm resources toward the creation of expected firm performance, managers must
focus on CRM processes effectively (Keramati et al., 2010).

3.3.1. CRM processes

According to Keramati et al. (2010), CRM processes can be divided into operational
CRM processes and management CRM processes. They explain that operational
CRM processes include the CRM's tasks in a firm's value chain, but management
CRM processes are about all CRM's tasks related to the administration, allocation,
and control of all resources in firms. Based on this study, the following hypothesis can
be developed:

H2. CRM processes have direct effect on customer retention programs of CRM.

Figure 3.1 illustrates the CRM value creation process and also the relationship
between CRM resources, CRM processes, CRM process capabilities, and the
organizational performance.



Fig. 3.1 CRM value generation process

Reference: Keramati et al., (2010, p. 1176)


3.4. Customer retention programs of CRM

As it has been discussed in the previous chapter, process capabilities have mediating
effect between firm's resources and performance to meet a specific objective. This
research considers the customer retention as the final firm performance and
investigates the impact of CRM resources, processes, and customer retention
programs of CRM (as the CRM process capabilities) on customer retention (as the
51
organizational performance). Winer (2001) believes that if firms want to efficiently
retain their profitable customers, they need to implement a comprehensive set of
relationship programs including: frequency/loyalty programs, customer service,
customization, and community building.

Loyalty/Frequency Programs

These programs provide rewards to targeted customers in order to encourage them to
buy or demand for services repeatedly. However, loyalty programs can work more
effectively if firms increase customer switching costs and build barriers to entry
(Winer, 2001).

Customer Service

Customer services are two types including Reactive and Proactive services. Reactive
services are deployed by firms when a customer faces problem such as product failure
or question about a bill and contacts the company to inform and solve them. Proactive
services are used when the firms do not wait for customers to contact them and are
determined in holding a dialogue with their customers prior to use reactive solutions
such as complaint handling (Winer, 2001).

Community

Community is online network of customers that firms build it in order to enable their
customers to exchange information about the products or services and also interact
between themselves and the company easier and more personally (Winer, 2001).

Customization

Winer (2001) states that customization is about the creation of products and services
based on each customer's taste. In this way, each customer is able to choose a product
from a list or order the item with the favorite quality or characteristics. Therefore, the
final formulated hypothesis is the following:

H3. Customer retention programs of CRM have direct effect on customer retention.





51
3.5. Research model

Considering the above mentioned approaches, programs, and hypothesizes, figure 3.2
proposes the conceptual model for the impact of CRM on customer retention in
electronic banking of Iranian banks.















Fig. 3.2 The research model




























Technological
CRM
Resources

Infrastructural
CRM
Resources

CRM
Processes

Customer
retention
programs of
CRM


Customer
Retention
52





4. Methodology


4.1. Introduction

In this chapter, we present and describe the procedure and the methods that have been
used to conduct this work. The research purpose, research approach, and the research
strategy used in this thesis are also described and justified. Furthermore, the data
collection, sample selection, questionnaire design, the ways to evaluate the validity
and reliability of the obtained results will be discussed.

4.2. Research approach

4.2.1. Qualitative versus Quantitative Approach

According to Hair et al. (2007, pp. 151153), there are two types of research
approaches available to researchers, namely quantitative and qualitative. The data in
quantitative approach are numbers and lends itself to statistical analysis in order to
imply the characteristics of something. An important point to consider is that
structure, representativeness, and providing objectivity are important strengths of
quantitative research. This approach provides objectivity because the respondents are
the ones who provide the numbers; therefore researcher's opinion does not have any
impact on testing the hypothesis. In a general sense, this approach is used in
explanatory researches. Furthermore, it allows generalization and enables the
researcher to predict the future.

The data in qualitative approach is generally collected by observation or unstructured
interviews. They are usually in the form of words, phrases and pictures. It is important
to say that this approach provides a deeper understanding of the phenomenon the
researcher wants to find and therefore furnishes a holistic view. Also, because
judgment has an important role in this approach, it is difficult to replicate the findings.
Using this approach, the researcher can choose small sample sizes. Moreover, the
author will have less concern about the representativeness of the results (Hair et al.,
2007, pp. 151153; Saunders et al., 2009, p. 482).
53
From the above discussion and since the results are presented by digits and they are
analyzed by statistical methods, we can conclude that quantitative approach proves to
be suitable for this research.


4.2.2. Deduction versus Induction Approach

In another classification, there are two main approaches which are: deductive and
inductive approaches. In the deductive approach, the researcher develops a theory or
hypothesis and then designs a strategy to test it. This approach is more discussed in
natural sciences and scientific principals where the explanation, anticipation of
phenomena and the prediction of their occurrence are presented by laws. Deduction is
a highly structured approach in which there is the search to explain causal
relationships; the data are quantitative and they are collected through samples of
sufficiently large size to generalize the results. It is clear that in this situation, the
researcher is independent of the subject under study (Hair et al., 2007; Saunders et al.,
2009, pp. 124127).

In the induction approach, the collected data are analyzed and as a result, a theory will
be formulated and developed. This approach tries to gain a close understanding of the
concepts humans attach to events. Inductive researches use a more flexible structure
in which the researcher is a part of that research and collects the qualitative data
through a small sample size; therefore there is not much concern with the
generalization (Hair et al., 2007; Saunders et al., 2009, pp. 124127).

In the present work, we have developed some hypothesizes and designed a strategy to
test them. On the other hand, the data we used are quantitative and they were
collected through a large sample. Hence, we can say that the deductive approach is the
one used for this study.

4.3. Purpose of the Research

The way a researcher asks the research question would result in a descriptive or an
explanatory research, or both of them. Considering the research question, a researcher
definitely must think about the research purpose which is classified as exploratory,
descriptive and explanatory. However; Academicians believe that a research may
54
have more than one purpose which may change over time (Zikmund, 2000; Saunders
et al., 2009, p. 139).


4.3.1. Exploratory research


Exploratory research is useful when there is little information about the problem or
when the research questions are vague. This kind of research is also useful to discover
new patterns, ideas, relationships and so on; therefore this research is not appropriate
to test specific hypotheses. It should be mentioned that this design relies more on a
qualitative approach; however, usage of quantitative techniques is possible, too. The
great advantage of an exploratory study is that it is flexible. It means the researchers
using this design, can change their direction when a new insight occurs to them (Hair
et al., 2007, pp. 154155; Saunders et al., 2009, pp. 139140).

Based on Saunders et al. (2009, p. 140), there are three main principal ways to
conduct an exploratory research as. They include:


- Searching the literature;
- Interviewing focus group;
- Interviewing the 'experts'.


4.3.2. Descriptive research

Sounders et al. (2009, p. 140) state: "The object of descriptive research is to portray
an accurate profile of persons, events, or situations". Descriptive research is a useful
design to obtain the data describing the characteristics of something; thus the
questions starting with who, when, how, which, why, and what can be answered by
this research design. In this situation, the researcher should know the phenomena very
well before collecting the data (Hair et al., 2007; Saunders et al., 2009).

Using descriptive research, the researcher can test the hypothesis. Also the data is
usually collected through structured observation or interviews asking structured
questions. To analyze these data, descriptive research uses descriptive statistics which
include frequency counts, measures of central tendency, variations and so on. (Hair et
al., 2007, p. 155; Saunders et al., 2009, p. 140).



55
4.3.3. Explanatory research

Explanatory researches study a problem or a situation in order to finding out the
relationship between dependent and independent variables. Explanatory research is
the most appropriate design to test whether one variable causes or determines the
value of another. For example, does a change in variable X (CRM) cause a change in
variable Y (customer retention)? (Hair et al., 2007, p. 160; Saunders et al., 2009, p.
140).

Hair et al. (2007, p. 160) explain the four conditions a researcher looks for in testing
these relationships as:

1. The time sequence, which means occurring the cause before the effect.
2. Covariance: which means changing of cause is associated with changing
the effect.

3. Organization association: meaning that the relationship is true and is not
because of another variable affecting the dependent and independent variables.


4. Theoretical support: The existence of the relationship between variables is
supported by a logical explanation.

Hence, considering the purpose and the research question of the present work, we can
claim that this research is mainly explanatory. In addition, because the data is
collected through a questionnaire and is used to find out the relation between the
dependent and independent variables of this study, we can conclude that it is
explanatory.

4.4. Research Strategy

Research strategy is a plan showing the way how the research goes on and how the
research questions will be answered. Different research strategies can be used for
explanatory, descriptive, and exploratory researches. Also, some of them belong to
inductive approach, others to the deductive approach. However, researcher's choice of
a research strategy depends on the research question, available time and resources
(Zikmund, 2000; Saunders et al., 2009, p. 141).

56
Yin (1994) has identified five research strategies including experiment, survey, case
study, archival records, and history. He has distinguished these strategies according to
the three criteria: form of research question, the extent of control a researcher has on
actual behavioral events and also the degree of focus on contemporary events. These
conditions for each research strategy are illustrated in table 4.1.

Table 4.1: Relevant Situation for Different Research Strategies (Yin, 1994, p. 6)


Form of research Requires control Focuses on
Strategy question over behavioral contemporary events
events


Experiment How, Why Yes Yes


Who, What, Where, No Yes Survey
How many, How much


Who, What, Where, No Yes/No Archival
Analysis How many, How much


History How, Why No No


Case study How, Why No Yes




The purpose of an experiment strategy is to study the casual relationships. It tends to
be used in explanatory and exploratory research and can answer 'how' and 'why'
questions. The survey strategy is usually used in deductive approach and allows the
researcher to collect quantitative data. It is also the most popular strategy to answer
who, what, where, how many and how much questions. Thus, it tends to be used in
descriptive and exploratory research (Saunders et al., 2009, pp. 142145).

Another research strategy is 'case study'. Saunders et al. (2009, p. 145) state that case
study is: "a strategy for doing research which involves an empirical investigation of a
particular contemporary phenomenon within its real life context using multiple
sources of evidence". This strategy is very appropriate to answer the 'how' and 'why'
questions and very useful for exploratory and explanatory research.

57
Archival research is another research strategy which uses recent as well as historical
documents and records as the principal source of data. Archival research enables the
researcher to answer the research questions which focus upon the past and changes
over time, be they explanatory, exploratory or descriptive and tries to answer the
Who, What, Where, How many, and how much questions (Saunders et al., 2009, p.
150).

History is the final strategy which does not deal with contemporary events and there is
no need to control the behavioral events. It is also an appropriate strategy to answer
the 'how' and 'why' questions (Saunders et al., 2009).

Since in this study we want to investigate the impact of CRM on customer retention in
e-banking of Iranian banks from employee's perspective and also as the main question
of this research is the form of 'what', survey seems to be the best research strategy for
this study in which we are using a questionnaire.

4.5. Time Horizon

In planning a research, the following question is important 'is this research done in a
particular time or it is done over a given period'. According to Sounders et al. (2009,
p. 155), a study of particular phenomena taken at a particular time is a cross sectional
research. This study often employs the survey strategy; however, it may also be used
in qualitative approaches. On the other hand, those studies taking place over time are
called longitudinal studies. Their main strength is their capacity in studying change
and development (Saunders et al., 2009, p. 155).

Investigating the impact of CRM on customer retention in electronic banking is
conducted in a limited period of time; so we can conclude that this study is a cross-
sectional research.

4.6. Data Collection method

Zikmund (2000) and Sounders et al. (2009, p. 256) say there are two classifications
for collected data which are: primary and secondary data. Primary data can be
collected for instance through interview, observation, and questionnaire. On the other
58
hand, secondary data is the information collected from the studies done before and
can be collected from the Internet or libraries.
Sounders et al. (2009, p. 360) state that questionnaire is one of the most widely used
techniques to collect data within the survey strategy and since each respondent
answers the same set of questions, it is an efficient technique of gathering responses
from a large sample. For this study, primary data seems to be the most suitable one
and because our research strategy is survey and also the sample is large, we used the
questionnaire as the instrument to collect the primary data in this research. Our
questionnaire has been distributed to the top managers in each selected bank branch.
To increase the response rate, meeting was the first method to give the questionnaires.
Due to the time and accessibility limitations, some of the respondents received the
questionnaires by e-mail along with an explanation letter.

4.7. Sample Selection

Ideally, a researcher would like to obtain the data from all members of the population.
However; it is almost impossible; therefore a small subset of the population which
must be representative of all the members in that population is drawn. This subset
which mirrors the characteristics of population is called sample (Zikmund, 2000; Hair
et al., 2007, p. 170).

According to Hair et al. (2007, p. 171), a set of well defined procedures to obtain a
representative sample is as follows:

1. Defining the population under investigation (The complete group of elements
relevant to the research).

2. Determining the appropriate sample frame (a complete list of all the elements in
that population).

3. Sampling method selection.

4. Calculation of the sample size.

5. Implementation of the sampling plan.

There are two broad categories of sampling methods available including probability
and non-probability methods. Both of these methods are explained in details below.

59
4.7.1. Probability Sampling

According to Hair et al. (2007, p. 175) and Saunders et al. (2009, p. 214), drawing a
probability sample is based on this premise that each element in the population has a
known and nonzero probability of being selected. Also, in this method selected
samples are usually large to be representative of the population; therefore, with a
specified level of confidence, the findings can be generalized to the population under
investigation. Probability sampling methods are classified as Simple random
sampling, Systematic sampling, Stratified sampling, Cluster sampling, and Multi-
stage sampling.

Simple random sampling


In the simple random sampling (sometimes called just random sampling), all the
elements in the population have equal chances of being selected. In this method, the
resulting sample is representative of the population if its calculated size is sufficiently
large. It is also an appropriate method for a geographically dispersed area if the
researcher uses an alternative data collection technique such as telephone interviewing
or online questionnaires (Hair et al., 2007, pp. 175176; Saunders et al., 2009, p.
222).

Systematic sampling


In systematic sampling, an initial starting point on a list is randomly selected and after
that, the researcher selects every n
th
element in the sampling frame. Thus, to draw the
sample, we should first calculate the sample size and the sampling interval. This
method is useful for geographically dispersed cases only if face to face contact in not
required. Also, using this sampling method, the researcher can obtain representative
data (Hair et al., 2007, p. 177; Saunders et al., 2009, p. 226).

Stratified sampling


To use this method, the sampling frame must be divided into distinct and relatively
homogeneous subgroups which are called strata. This is usually done by the
researcher's past experience or specified by the client. Then the researcher determines
the size of total sample and the size for each individual strata. The composite of the
samples taken from the strata shapes the stratified sample and to select the elements of
this sample, systematic or simple random samples of the strata of the population must
61
be drawn. The strength of this method is that it helps increasing the accuracy of the
sample information (Hair et al., 2007, p. 178).

Cluster sampling


In this method, the researcher views the population as made up of heterogeneous
groups, each of them is called a cluster. A cluster group can be for example
geographic areas, households, firms, and so on. It should be noted that cluster
sampling can produce representative data if it is done properly. It is important to say
that in this method the sampling frame is the list of clusters rather than a list of
individual elements in the population. In order to increase the representativeness of
the sample, the researcher must increase the number of sub-areas (Hair et al., 2007, p.
180; Saunders et al., 2009, p. 230).

Multi-stage sampling


Multi-stage sampling which is also called Multi-stage cluster sampling is a
development of cluster sampling method. This method is useful when the population
is a large geographical region and face to face contact with the elements is needed or
it is hard to construct a sampling frame for that region; however, it can be used for not
geographically based discrete groups (Hair et al., 2007, p. 181; Saunders et al., 2009,
p. 231).


4.7.2. Non-probability Sampling

Hair et al. (2007, pp. 181182) explain that in this technique, the probability of each
element in the population is not known and the selected sample is not necessarily
representative of the population statistically. In this situation, to select the elements in
the sample the researcher uses expert judgment, experience, and convenience.
Therefore, unlike probability samples, the results can not be generalized to the
population (Hair et al., 2007, pp. 181182). These authors also discuss that the most
common types of non-probability sampling techniques include Convenience
sampling, Judgment sampling, Snowball sampling, Self selection sampling, and
Quota sampling.

As it has been mentioned before, the population of this survey is all Iranian banks'
managers (the top manager in each branch). However, because of the time limitation,
61
we limited this population to all the top banks' mangers in the province of Tehran
which is the heart of financial activities. In addition, according to Bank and Insurance
Manifest agency of Iran (2010), it has the highest rate of e-banking usage. In the next
level, among all of the mentioned banks, we selected four of them including two
governmental and two private banks. Among governmental banks, bank Refah and
bank Maskan and among private banks, bank Pasargad and bank Saman have been
chosen. We chose these banks because they are old and in comparison with other
banks they are more pioneering in e-banking. In addition, they have the greatest
number of branches in Iran and have been recognized as the most effective banks in e-
banking context in Iran.

In the final level, we used simple random sampling to choose the branches of each
bank to distribute the questionnaires to the respondents with equal chances of being
selected. Therefore, according to the definitions of each sampling method in the
previous section, we have used a probability stratified sampling method.

4.8. Sample size:

Determining an efficient sample size is of great significance in any research. This is
because too small samples may lead to inaccurate results, while samples that are too
large may waste time and resources (Hair et al., 2007, p. 182). According to Azar and
Momeni (2005), research populations are divided into two kinds: restricted and
unrestricted. Since banks have restricted number of managers, our research population
will be restricted. Therefore, we have used restricted sampling formula (see below) to
calculate the sampling size. Table 4.2 presents the descriptive statistics in sampling.
In this research, first we run 30 questionnaires (shown with N in table 4.2) and then a
sample size is calculated.

Table 4.2: Descriptive statistics in sampling

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation Variance
TOTAL 30 4.65 6.55 5.3626 .62062 .385
Valid N (listwise) 30



62
According to this table, the calculated value for standard deviation () is .62062 and
the value for variance is .385. These values are very important for calculation of
suitable sample size using the formula presented by Azar and Momeni (2005) (see
below).

In this formula, n is the total sample size for this research. Also total population is
shown by N. In this research, the total population is sum of the numbers of all banks'
branches under study. The number of the branches of each bank is presented in table
4.3. Thus, as it can be vividly seen, N is equal to 553. Also, it should be said that, for
the 95% level of confidence, z value is 1.96.

2
2
2 2
2
2
2
) 1 ( o c
o
o
o
+

=
z N
z N
n


286
86 . 2
817.90
0.62062) ( 96 . 1 ) 05 . 0 )( 1 553 (
0.62062) ( 96 . 1 553
2 2 2
2 2
~ =
+

= n

Therefore, the total sample size based on the formula for this research is equal to 286.
Table 4.3 presents the sample size for each of the four banks (Refah, Maskan,
Pasargad, and Saman). In this table, the sample size for each bank is calculated as
follows:

(The percentages of units in the research population) * (the total sample size) = the
sample size for each bank


Table 4.3: The sample size for each bank


The sample size
for each bank

The total
sample size
based on the
formula

The percentages
of units in the
research
population


Number of
the branches
of each bank



Sampling
method
0.266 * 286 = 76

286
0.266

Refah:147



Stratified
0.333 * 286 = 95 0.333 Maskan: 184
0.287 * 286 = 82 0.287
Pasargad:
159
0.114 * 286 = 33 0.114 Saman: 63
286 286 100 553

Total


63
4.9. Questionnaire Design

The main measure instrument used in this study is the questionnaire. In this section,
we describe how the questionnaire is designed and developed. Scales for this survey
were developed through the literature reviews and the research model. Appendix A
exhibits the resources from which the scales were drawn.

The questionnaire includes two types of questions. The first type consists of
demographic questions about the top managers in each branch and the second type
includes the different questions concerning their attitude about the impact of CRM on
customer retention in e-banking in the branch they are working in. These questions
are classified into questions about technological CRM resources, Infrastructural CRM
resources, CRM processes, customer retention programs of CRM, and customer
retention. All of the scales in the second type were measured using 7-point Likert
scales (strongly agree, agree, somehow agree, neutral, somehow disagree, disagree,
and strongly disagree).

In the next step, in order to improve the validity and reliability of the data, the first
version of the questionnaire has been modified after submitting it to eight academic
and bank experts as a pilot test. The final English version of the questionnaire is
shown in appendix B and its Farsi version in appendix C.

4.10. Pilot Test

We conducted a pilot test in order to evaluate the respondent' comprehension of the
questionnaire and estimate the average time to complete it. To do this, first we
translated the questionnaire to Farsi. This version of the questionnaire was distributed
to eight decision makers in banking industry of Iran from Refah bank, Maskan bank,
and Saman bank.

From the results, we realized that there were some modifications that should be
performed for some questions. In addition, the wording and relevancy of questions
were checked and based on that, some other questions were modified, too.




64
4.11. Data Analysis

In order to make effective decisions in the business world, managers and decision
makers must be able to use statistical data analysis techniques and methods (Zikmund,
2000). In this research, data analysis is done in two parts by descriptive and
interferential statistics. In the first part, the demography of statistical sample is
investigated and the results are shown in frequency tables and diagrams. However, in
the inferential part, the data are analyzed using a series of steps which have to be
followed. To do so, the first step is doing Kaiser-Meyer-Olkin and Bartlett's test
(Momeni, 2006) to measure the adequacy of the sampling. After that, the exploratory
factor analysis will be performed. Indeed, when using factor analysis the researcher
can gain better results when applying confirmatory factor analysis and structural
equation model. This is because the numbers of factors, total variance explained, and
communalities of the questions can be gained from factor analysis. Thus, the
researcher can delete the questions with little communalities. The final step consists in
studying and testing the research hypothesizes using Structural Equation Model
(Confirmatory Factor Analysis). To do so, the following steps will be followed:

1. Model expression
2. Model estimation
3. Correction of the model (if needed)
4. Hypothesis test

In the structural model we want to understand whether the relationships between the
latent traits which are taken from the theory are confirmed by data collected from the
sample or not. After defining the latent and evident variables (gained after doing the
factor analysis), the research conceptual model will be presented. After that, we will
study the accuracy of the measuring model by its indices and correct the model if it is
needed (Kalantari, 2009). Studying the significance of the relationships with t-value
and studying the correlation are the next steps.

To check whether the model is a proper one (accuracy of the measuring model) or not,
some indices including chi-square relative to its degree of freedom, root mean square
error of approximation (RMSEA), p-value, goodness of fit index (GFI) and also
adjusted goodness of fit index (AGFI), comparative fit index (CFI), and normed fit
index (NFI) will be studied. To investigate the mentioned issues, the standard model
65
will be presented. In the next step, we study the significance of the results in the
model. After completing the all mentioned stages in presenting the model, the primary
conceptual model is hereby confirmed. Finally, paying attention to the model with
significant numbers and standard estimation model, the research hypothesizes will be
studied.

4.12. Validity and Reliability

In conducting a research the researcher always tries to minimize the measurement
error. This error is reduced when the variables accurately and consistently represent
and measure the concept. Accuracy is related to the term 'validity' while consistency
is referred to 'reliability' (Hair et al., 2007, p. 240).

4.12.1. Validity

The extent to which a construct measures what it is intended to measure is called
'validity'. No measurement error occurs when the construct has perfect validity (Hair
et al., 2007, p. 246). To ensure the validity of this research the approaches mentioned
below have been adopted:
- To make sure that the measurement scales were adapted appropriately, the
questionnaire has been translated into Farsi.
- The questionnaire has been reviewed by the supervisors of this work and banks
experts to remove and correct the potential problems before sending it to the
respondents (content validity).
- To check the construct validity of the questionnaire and also to find out if all
indicators of each variable (construct) measure what is expected, 'exploratory
factor analysis' (calculated in next chapter) has been used. The calculations for this
section lead to satisfactory results.

4.12.2. Reliability

According to Hair et al. (2007, p. 241), if the repeated application of a survey
instrument results in consistent scores, we can consider it reliable. They also state:
"reliability is concerned with the consistency of the research findings". In other
66
words, a research can be considered reliable, if its measuring procedure yields the
same results on repeated trials (Saunders et al., 2009, p. 156). In this research,
Cronbach's alpha has been used to measure the reliability of the items. As it is shown
below, the calculated Cronbach's alpha is equal to .970 which is a very good result.
The calculations for this section are brought in appendix D.



Reliability statistics
Cronbach's Alpha N of Items
.970 63
























67


5. Data Analysis

5.1. Introduction

In order to analyze the collected data, we should convert them into valuable
information by using statistical tests. Indeed, in any research, data analysis constitutes
one of the most important parts. It is of great significance in studying the accuracy of
hypothesizes. This chapter is drawn up in two parts: descriptive and interferential
statistics. In the descriptive part, the demography of statistical sample is tackled and
in the inferential part the following issues are studied:

1. Kaiser-Meyer-Olkin and Bartlett's test to measure the adequacy of the sampling to
use for exploratory factor analysis (EFA).

2. Exploratory factor analysis for deleting the questions with little factor load and
communalities (for more preparation to do the confirmatory factor analysis).

3. Study and test the research hypothesizes using Structural Equation Model
(Confirmatory Factor Analysis)

4. Lateral Analyses:

- Investigating the correlation between each of the four customer retention programs
of CRM and customer retention by using Pearson correlation.

- Two-sample t-test with independent samples to study the difference between the
respondents' point of view in the two groups of banks (private and governmental
banks)

- Analysis of variance or comparing the means of some communities to investigate
the difference in respondents' point of views in the four groups of banks (for each of
the research variables)

It should be noted that the software packages SPSS 17 and Lisrel 8.5 have been used
to perform the calculations mentioned above.


68
5.2. Descriptive Statistics

In this section we have studied the variables of respondents' gender, age, educational
level, field of study, and also the type of the banks and the belonging to each bank in
the research sample. The obtained results have been represented by frequency tables
and graphical methods. In addition, a primary comparison of the four banks under
study in relation to the research variables is done.

Age:

Table 5.1 represents the frequency of the respondents' age. As shown, 0.7% of the
respondents are between 21 to 30, 13.3% are between 31 to 40, 31.8% are between 41
to 50, and 54.2% are over 51. Figure 5.1 illustrates these results.


Table 5.1: The frequency of the respondents' age


Frequency Percentage
Cumulative
Percentage
Valid
21 to 30 2 .7 .7
31 to 40 38 13.3 14.0
41 to 50 91 31.8 45.8
x>=51 155 54.2 100.0
Total 286 100.0





Figure 5.1: The distribution of the respondents' age



69
Gender:

Table 5.2 represents the frequency of respondents' gender.


Table 5.2: the frequency of respondents' gender


Frequency Percentage
Cumulative
Percentage
MALE
286 100.0 100.0


As it can be clearly seen, all the respondents are male.

Educational level:

Table 5.3 represents the distribution of the respondents' educational level.


Table 5.3: The distribution of the respondents' educational level

EDU
Frequency Percentage
Cumulative
Percentage
Valid
Diploma 23 8.0 8.0
A.D 59 20.6 28.7
BA 191 66.8 95.5
MSc 13 4.5 100.0
Total 286 100.0



As it can be seen in table 5.3, 8% of the respondents have high school diploma, 20.6%
have Associate degree (AD), 66.8% have Bachelor degree, and 4.5% have Master
degree (MSc). Figure 5.2 shows the distribution of the educational level of the
respondents.










71




Figure 5.2: The distribution of the respondents' educational level


Field of study

Table 5.4 shows the frequency of the respondents' field of study. As we can vividly
see, 1.7% of the respondents' fields of study are banking, 4.9% are economics, 37.4%
are management, 11.5% are accounting, 3.8% are computer engineering, and 40.6%
are other fields such as statistics and electronic engineering.



Table 5.4: The frequency of the respondents' field of study


Frequency Percentage
Cumulative
Percentage
Valid
banking 5 1.7 1.7
economic 14 4.9 6.6
management 107 37.4 44.1
accounting 33 11.5 55.6
computer 11 3.8 59.4
other 116 40.6 100.0
Total 286 100.0







71
Figure 5.3 shows the distribution of the respondents' field of study.



Figure 5.3: The distribution of the respondents' field of study


Job experience

According to table 5.5, %28.7 of the respondents' job experience is under 5 years,
15.7% are between 6 to 10 years, 9.8% are between 11 to 15 years, 14.3% are
between 15 to 20 years, and 31.5 are over 21 years.


Table 5.5: the frequency related to the respondents' job experience


Frequency Percentage
Cumulative
Percentage
Valid
X<=5 82 28.7 28.7
6 TO 10 45 15.7 44.4
11 TO 15 28 9.8 54.2
15 TO 20 41 14.3 68.5
X>=21 90 31.5 100.0
Total 286 100.0



Figure 5.4 illustrates these findings.


72


Figure 5.4: The frequency related to the respondents' job experience


Type of the bank

Table 5.6 represents the frequency related to type of the banks under study and figure
5.5 illustrates these results.


Table 5.6: The frequency related to type of the banks under study


Frequency Percentage
Cumulative
Percentage
Valid
Gov 171 59.8 59.8
private 115 40.2 100.0
Total 286 100.0








Figure 5.5: The frequency related to type of the banks under study


Having looked at figure 5.5, we can easily perceive that about 59.8% of the
respondents are working in governmental banks and about 40.2% are working in
private banks.
73
The belonging to each bank

Table 5.7 represents the frequency related to each bank in the sample. As this table
reveals, 26.6% of the respondents are working in bank Refah, 33.2% in bank Maskan,
11.5% in bank Saman, and 28.7% are working in bank Pasargad. Figure 5.6 shows
these results.


Table 5.7: the frequency related to the belonging to each bank


Frequency Percentage
Cumulative
Percentage
Valid
refah 76 26.6 26.6
Maskan 95 33.2 59.8
Saman 33 11.5 71.3
Pasargad 82 28.7 100.0
Total 286 100.0





Figure 5.6: The frequency related to the belonging to each bank

A primary comparison of the four banks under study in relation to the
research variables

- Means of the four research variables for bank Refah:

The means of the four research variables for bank Refah are represented in table 5.8
(the scores are out of 7)


74
Table 5.8: The means of the four research variables for bank Refah

Descriptive Statistics
Refah
N Minimum Maximum Mean Std. Deviation
CRM resources 76 4.62 5.13 4.8995 .11671
CRM processes 76 5.33 6.07 5.6390 .18309
Retention
programs of CRM
76 4.57 5.39 5.0170 .15592
Customer
retention
76 5.67 6.67 6.2237 .22698
Valid N (listwise) 76




Means of the four research variables for bank Maskan -

The means of the four research variables for bank Maskan are represented in table 5.9
(the scores are out of 7).


Table 5.9: The means of the four research variables for bank Maskan

Descriptive Statistics
Maskan
N Minimum Maximum Mean Std. Deviation
CRM resources 95 4.00 4.49 4.2935 .11625
CRM processes 95 4.53 5.63 5.0274 .20369
Retention
programs of CRM
95 3.74 4.65 4.2756 .19030
Customer
retention
95 5.00 6.00 5.3123 .26547
Valid N (listwise) 95




- Means of the four research variables for bank Saman

The means of the four research variables for bank Saman are represented in table 5.10
(the scores are out of 7).








75
Table 5.10: The means of the four research variables for bank Saman

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation
CRM resources 33 5.77 6.18 5.9393 .10263
CRM processes 33 4.33 5.33 4.9000 .22608
Retention
programs of CRM
33 4.60 5.34 4.9801 .15371
Customer
retention
33 5.00 6.33 5.5859 .33365
Valid N (listwise) 33



- Means of the four research variables for bank Pasargad

The means of the four research variables for bank Pasargad are represented in table
5.11 (the scores are out of 7).


Table 5.11: The means of the four research variables for bank Pasargad

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation
CRM resources 82 5.56 6.24 5.8612 .13220
CRM processes 82 5.60 6.47 6.1024 .20176
Retention
programs of CRM
82 5.67 6.30 6.0525 .12710
Customer
retention
82 6.00 7.00 6.4756 .26205
Valid N (listwise) 82



- Means of the four research variables for the two groups of governmental and
private banks

The means of the four research variables for the two groups of banks (governmental
and private) are represented in table 5.12 (the scores are out of 7).






76
Table 5.12: The means of the four research variables for governmental and private banks

Group Statistics
Bank type N Mean Std. Deviation Std. Error Mean
CRM resources
gov 171 4.5628 .32357 .02474
private 115 5.8836 .12897 .01203
CRM processes
gov 171 5.2992 .36146 .02764
private 115 5.7574 .58456 .05451
Retention
programs of CRM
gov 171 4.6051 .40898 .03128
private 115 5.7447 .50547 .04714
Customer retention
gov 171 5.7173 .51769 .03959
private 115 6.2203 .49340 .04601


Since all of the scales in the questionnaire were measured using 7-point Likert scales
and all of the scores in table 5.12 are more than the average score (4), we can
conclude that both the governmental and private banks are in favorable condition
concerning the four research variables.

5.3. Inferential Statistics:

5.3.1. Exploratory Factor Analysis

Factor validity is a form of construct validity gained through factor analysis. Factor
analysis is a statistical technique with lots of usage in humanities. In fact, it seems that
usage of factor analysis in the researches in which test and questionnaire are used is
essential (Kalantari, 2009). It should be noted that since number of factors, total
variance explained, and communalities of the questions can be gained from factor
analysis, in this part of the research, we aim at calculating the communalities and
deleting the questions with little communalities. Indeed when using factor analysis;
the researcher can gain better results when applying confirmatory factor analysis and
structural equation Model.

5.3.1.1. The results of Exploratory Factor Analysis for the variable of
"technological CRM resources"

Table 5.13 represents the result of KMO and Bartlett's test for the data related to the
variable of 'technological CRM resources'.
77
Table 5.13: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .958
Bartlett's Test of Sphericity Approx. Chi-Square 5.580E3
df 171
Sig. .000

Since KMO is greater than 0.7 and Bartlett's test significance number is less than 0.05
(sig<0.05), we can say that the data is proper for doing factor analysis. Table 5.14
shows the communalities of the questions related to 'technological CRM resources'.




Table 5.14: Communalities

Initial Extraction
col1 1.000 .627
col2 1.000 .726
col3 1.000 .810
col4 1.000 .764
col5 1.000 .770
col6 1.000 .856
col7 1.000 .808
col8 1.000 .820
col9 1.000 .833
op1 1.000 .880
op2 1.000 .851
op3 1.000 .712
op4 1.000 .615
op5 1.000 .748
anal1 1.000 .871
anal2 1.000 .895
anal3 1.000 .804
anal4 1.000 .733
anal5 1.000 .786
Extraction Method: Principal
Component Analysis.

78
Since the numbers of communalities in table 5.14 are greater than 0.05, all the questions
related to the variable of 'technology' are proper in the process of factor analysis; therefore,
no question is deleted. The total variance explained is presented in Table 5.15.


Table 5.15: Total Variance Explained
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 10.483 55.176 55.176 10.483 55.176 55.176 6.465 34.027 34.027
2 3.408 17.936 73.112 3.408 17.936 73.112 4.963 26.121 60.148
3 1.018 5.359 78.471 1.018 5.359 78.471 3.481 18.323 78.471
4 .534 2.812 81.284

5 .483 2.541 83.824

6 .361 1.898 85.722

7 .339 1.785 87.507

8 .331 1.742 89.250

9 .294 1.547 90.797

10 .268 1.411 92.208

11 .228 1.201 93.409

12 .216 1.139 94.548

13 .194 1.023 95.570

14 .189 .994 96.564

15 .161 .848 97.412

16 .150 .788 98.200

17 .133 .701 98.901

18 .107 .565 99.466

19 .101 .534 100.000

Extraction Method: Principal Component
Analysis.


The total variance explained in table 5.15 shows that these questions totally form
three factors and these three factors explain and cover about 78.47 % of the variance
of 'technology'. This number indicates the very good power of explanation of research
questions for 'technology'. Later, we will deal with factor loads and naming each
79
component (factor loads greater than 0.5 are acceptable). Table 5.16 presents the
Rotated Component Matrix.


Table 5.16: Rotated Component Matrix
a


Component

Analytical
Operationa
l
collaborativ
e
col1 .353 .108 .700
col2 .746 .407 .667
col3 .660 .352 .500
col4 .778 .307 .552
col5 .243 .754 .678
col6 .686 .585 .596
col7 .303 .653 .538
col8 -.051 .901 .671
col9 .761 .178 .571
op1 .268 .548 .712
op2 .138 .739 .535
op3 -.017 .747 .393
op4 .149 .766 .077
op5 .184 .571 .623
anal1 .921 -.040 .147
anal2 .946 -.034 .001
anal3 .742 .162 .476
anal4 .625 .186 .555
anal5 .842 -.067 .271
Extraction Method: Principal Component
Analysis.
Rotation Method: Varimax with Kaiser
Normalization.
a. Rotation converged in 6 iterations.





81
5.3.1.2. The results of Exploratory Factor Analysis for the variable of
"infrastructural CRM resources"

The result of KMO and Bartlett's Test for the data related to the variable of
'infrastructural CRM resources' is shown in table 5.17.

Table 5.17: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .892
Bartlett's Test of Sphericity Approx. Chi-Square 1.321E3
df 55
Sig. .000


According to table 5.17, the data is proper for doing the factor analysis. This is
because KMO is greater than 0.7 and Bartlett's test significance number is less than
0.05 (sig<0.05). The communalities of the questions for the variable of 'infrastructural
CRM resources' are presented in table 5.18.

Table 5.18: Communalities

Initial Extraction
HR1 1.000 .384
HR2 1.000 .592
HR3 1.000 .558
HR4 1.000 .686
HR5 1.000 .446
org1 1.000 .757
org2 1.000 .643
org3 1.000 .512
org4 1.000 .649
org5 1.000 .478
org6 1.000 .645
Extraction Method: Principal
Component Analysis.


81
Table 5.18 shows the inadequacy of some questions because of a lack of harmony
with the other questions within the process of factor analysis (the first and the fifth
questions of human CRM resources and the fifth question of organizational CRM
resources). As we can clearly see, the communalities of the mentioned questions are
less than 0.50. Total variance explained is brought in table 5.19.



Table 5.19: Total Variance Explained
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 4.915 44.683 44.683 4.915 44.683 44.683 4.752 43.201 43.201
2 1.435 13.045 57.728 1.435 13.045 57.728 1.598 14.527 57.728
3 .829 7.538 65.265

4 .763 6.935 72.201

5 .655 5.953 78.154

6 .585 5.317 83.471

7 .528 4.802 88.273

8 .393 3.573 91.845

9 .361 3.286 95.131

10 .305 2.774 97.905

11 .230 2.095 100.000

Extraction Method: Principal Component Analysis.



The total variance explained in above table (before deleting the questions with little
communalities) shows that these questions totally form two factors which explain and
cover about 57.72 % of the variance of 'infrastructural CRM resources'. After deleting
the questions with little communalities (less than 0.5), we will deal with the
mentioned issues again. Table 5.20 represents the communalities of the questions
after deleting the questions with little communalities.






82
Table 5.20 Communalities of the questions after deleting the questions with little communalities

Communalities

Initial Extraction
HR2 1.000 .610
HR3 1.000 .736
HR4 1.000 .693
org1 1.000 .769
org2 1.000 .663
org3 1.000 .536
org4 1.000 .702
org6 1.000 .691
Extraction Method: Principal
Component Analysis.


Since the numbers of communalities in table 5.20 is more than 0.5, these questions (the
remaining questions) are suitable in the process of factor analysis. Table 5.21 represents the
total variance explained after deleting the questions with little communalities.

Table 5.21: total variance explained after deleting the questions with little communalities
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 4.170 52.120 52.120 4.170 52.120 52.120 3.923 49.036 49.036
2 1.231 15.382 67.502 1.231 15.382 67.502 1.477 18.466 67.502
3 .679 8.488 75.990

4 .576 7.202 83.193

5 .398 4.973 88.166

6 .373 4.661 92.827

7 .332 4.147 96.974

8 .242 3.026 100.000

Extraction Method: Principal
Component Analysis.



The total variance explained in table 5.21 (after deleting the questions with little
communalities) shows that these questions totally form two factors and these two
83
factors explain and cover about 67.5% of the variance of 'Infrastructural CRM
resources'. Comparing the two 'total variance explained' tables, it can be easily
perceived that after deleting the questions with little communalities, the powers of
explanation of the questions have risen. This result would be very useful in
confirmatory factor analysis. Later we will deal with factor loads and naming each
component. Table 5.22 shows the Rotated Component Matrix.


Table 5.22: Rotated Component Matrix

Rotated Component Matrix
a


Component

Organizational HR
HR2 .433 .651
HR3 .050 .856
HR4 .796 .784
org1 .853 .804
org2 .803 .138
org3 .649 .338
org4 .830 .110
org6 .785 -.272
Extraction Method: Principal
Component Analysis.
Rotation Method: Varimax with
Kaiser Normalization.
a. Rotation converged in 3
iterations.


5.3.1.3. The results of Exploratory Factor Analysis for the variable of
"CRM processes"

Table 5.23 shows the result of KMO and Bartlett's test for the questions related to the
variable of 'CRM processes'.





84
Table 5.23: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .801
Bartlett's Test of Sphericity Approx. Chi-Square 966.344
df 45
Sig. .000


Since KMO is greater than 0.7 and Bartlett's test significance number is less than 0.05
(sig<0.05), we can say that the data is suitable for doing the factor analysis. The
communalities of the questions for the variable of 'CRM processes' are represented in
table 5.24.



Table 5.24: Communalities

Initial Extraction
okp1 1.000 .340
okp2 1.000 .670
okp3 1.000 .771
oip1 1.000 .599
oip2 1.000 .747
mp1 1.000 .688
mp2 1.000 .685
mp3 1.000 .666
mp4 1.000 .685
mp5 1.000 .752
Extraction Method: Principal
Component Analysis.


The above table shows the inadequacy of the first question among the above questions
because of a lack of harmony with other questions within the process of factor
analysis. As it can be clearly seen, the communality of this question is less than 0.50.
Table 5.25 represents the total variance explained before deleting the mentioned
question.




85
Table 5.25: Total variance explained before deleting the question
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 3.577 35.773 35.773 3.577 35.773 35.773 2.700 27.000 27.000
2 1.977 19.773 55.546 1.977 19.773 55.546 2.084 20.836 47.836
3 1.049 10.489 66.035 1.049 10.489 66.035 1.820 18.198 66.035
4 .797 7.968 74.003

5 .580 5.799 79.802

6 .540 5.401 85.203

7 .476 4.757 89.959

8 .399 3.993 93.952

9 .321 3.210 97.163

10 .284 2.837 100.000

Extraction Method: Principal
Component Analysis.



The total variance explained in table 5.25 (before deleting the questions with little
communalities) shows that these questions totally form three factors and these three
factors explain and cover about 66.03% of the variance of 'CRM processes'. After
deleting the questions which there communalities are less than 0.5, we will deal with
the mentioned issues again. Table 5.26 shows the communalities of the questions after
deleting the question with little communalities.











86
Table 5.26: Communalities of the questions after deleting the question with little communalities

Communalities

Initial Extraction
okp2 1.000 .698
okp3 1.000 .777
oip1 1.000 .602
oip2 1.000 .757
mp1 1.000 .686
mp2 1.000 .735
mp3 1.000 .674
mp4 1.000 .688
mp5 1.000 .752
Extraction Method: Principal
Component Analysis.

Since the numbers of communalities of the questions in table 5.26 are acceptable (higher
than 0.5), these questions are suitable in the process of factor analysis. Table 5.27 presents
the total variance explained after deleting the mentioned question.




Table 5.27: Total Variance Explained after deleting the question with little communality
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 3.422 38.025 38.025 3.422 38.025 38.025 2.504 27.827 27.827
2 1.906 21.181 59.206 1.906 21.181 59.206 2.044 22.710 50.537
3 1.041 11.568 70.774 1.041 11.568 70.774 1.821 20.237 70.774
4 .582 6.463 77.237

5 .541 6.010 83.247

6 .488 5.425 88.671

7 .402 4.470 93.142

8 .333 3.701 96.843

9 .284 3.157 100.000

Extraction Method: Principal
Component Analysis.

87
The total variance explained in table 5.27 (after deleting the question with little
communality) shows that these questions totally form three factors and these three
factors explain and cover about 70.77% of the variance of 'CRM processes'.
Comparing the two 'total variance explained' tables, it can be easily perceived that
after deleting the question with little communality, the powers of explanations of the
questions have been raised. This result would be very useful in confirmatory factor
analysis. Later, we will deal with factor loads and naming each component. Table
5.28 shows the component matrix.


Table 5.28: Component Matrix
a


Component

Management
processes
Operational
knowledge
processes
Operational
interaction
processes
okp2 .617 .505 -.250
okp3 .245 .832 -.158
oip1 .406 .644 .650
oip2 .782 .323 .604
mp1 .586 .206 .548
mp2 .752 -.220 -.348
mp3 .687 .199 .403
mp4 .533 -.402 .492
mp5 .735 -.385 -.251
Extraction Method: Principal Component
Analysis.
a. 3 components extracted.


5.3.1.4. The results of Exploratory Factor Analysis for the variable of
"customer retention programs of CRM"

Table 5.29 presents the results of KMO and Bartlett's test for the data related to the
variable of 'customer retention programs of CRM'.



88
Table 5.29: KMO and Bartlett's test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .896
Bartlett's Test of Sphericity Approx. Chi-Square 3.475E3
df 171
Sig. .000


Since KMO is greater than 0.7 and Bartlett's test significance number is less than 0.05
(sig<0.05), it can be said that the data is acceptable to do the factor analysis. The
communalities of the questions for the mentioned research variable are presented in
table 5.30.


Table 5.30: Communalities

Initial Extraction
cust1 1.000 .748
cust2 1.000 .466
cust3 1.000 .857
loy1 1.000 .811
loy2 1.000 .785
loy3 1.000 .756
loy4 1.000 .669
cs1 1.000 .732
cs2 1.000 .671
cs3 1.000 .250
cs4 1.000 .702
cs5 1.000 .728
cs6 1.000 .284
cs7 1.000 .452
cs8 1.000 .585
cs9 1.000 .474
com1 1.000 .824
com2 1.000 .840
com3 1.000 .710
Extraction Method: Principal
Component Analysis.

89
Table 5.30 shows the inadequacy of the five (colored) questions among the above
questions because of a lack of harmony with the other questions within the process of
factor analysis. As we see, the communalities of these questions are less than 0.50.
Table 5.31 presents the total variance explained before deleting the question.



Table 5.31: Total variance explained before deleting the question
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 5.327 30.773 30.773 5.327 30.773 30.773 4.206 20.516 20.516
2 2.339 15.792 46.565 2.339 15.792 46.565 3.022 21.063 41.579
3 2.329 15.492 62.057 2.329 15.492 62.057 3.012 21.062 62.641
4 2.318 14.307 76.364 2.318 14.307 76.364 3.837 13.723 76.364
5 .822 4.328 73.944

6 .698 3.674 77.618

7 .612 3.223 80.840

8 .568 2.990 83.830

9 .429 2.257 86.087

10 .393 2.068 88.155

11 .372 1.959 90.115

12 .340 1.789 91.904

13 .321 1.689 93.593

14 .307 1.616 95.209

15 .225 1.182 96.391

16 .220 1.158 97.549

17 .199 1.050 98.599

18 .142 .749 99.348

19 .124 .652 100.000

Extraction Method: Principal
Component Analysis.




The total variance explained in table 5.31 (before deleting the questions with little
communalities) shows that these questions totally form four factors and which explain
about 76.364% of the variance of 'customer retention programs of CRM'. After
91
deleting the questions with little communalities (less than 0.5) we will deal with the
mentioned issues again. Communalities of the questions after deleting the questions
with little communalities are shown in table 5.32.


Table 5.32: Communalities of the questions after deleting the questions with little communalities




Since the numbers of communalities of the questions in table 5.32 is higher than 0.5, these
questions are acceptable for the process of factor analysis. Table 5.33 presents the total
variance explained after deleting the questions with little communalities.















Communalities

Initial Extraction
cust1 1.000 .766
cust3 1.000 .856
loy1 1.000 .813
loy2 1.000 .809
loy3 1.000 .778
loy4 1.000 .701
cs1 1.000 .744
cs2 1.000 .715
cs4 1.000 .731
cs5 1.000 .763
cs8 1.000 .631
com1 1.000 .839
com2 1.000 .855
com3 1.000 .735
Extraction Method: Principal
Component Analysis.
91
Table 5.33: Total Variance Explained after deleting the questions with little communalities
Component
Initial Eigenvalues
Extraction Sums of Squared
Loadings
Rotation Sums of Squared
Loadings
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
Total
% of
Variance
Cumulative
%
1 6.227 32.773 32.773 6.227 32.773 32.773 4.506 23.716 23.716
2 3.399 17.892 50.665 3.399 17.892 50.665 4.002 21.063 44.779
3 2.309 17.992 68.657 2.499 17.992 68.657 4.102 22.063 66.839
4 2.218 14.307 64.972 2.718 14.307 64.972 3.837 20.193 87.032
5 .822 4.328 73.944

6 .698 3.674 77.618

7 .612 3.223 80.840

8 .568 2.990 83.830

9 .429 2.257 86.087

10 .393 2.068 88.155

11 .372 1.959 90.115

12 .340 1.789 91.904

13 .321 1.689 93.593

14 .307 1.616 95.209

15 .225 1.182 96.391

16 .220 1.158 97.549

17 .199 1.050 98.599

18 .142 .749 99.348

19 .124 .652 100.000

Extraction Method: Principal Component Analysis.



The total variance explained in table 5.33 (after deleting the question with little
communality) shows that these questions totally form four factors and these four
factors explain and cover about 87.032% of the variance of 'customer retention
programs of CRM'. Comparing the two 'total variance explained' tables, we can
conclude that after deleting the question with little communality, the powers of
explanation of the questions have been raised. Later, we will deal with factor loads
and naming each component. The results of Rotated Component Matrix are presented
in table 5.34.


92
Table 5.34: Rotated Component Matrix
a


Component

Customization
Loyalty
programs
Community
Customer
service
cust1 .730 .874 -.041 .407
cust3 .841 .246 .298 .145
loy1 .407 .805 -.015 .652
loy2 .145 .842 .282 .327
loy3 .652 .557 .206 -.425
loy4 .327 .762 .113 -.320
cs1 -.425 .743 .105 .849
cs2 -.320 .085 .778 .779
cs4 .849 -.030 -.093 .885
cs5 .779 .251 -.306 .849
cs8 .756 -.022 .244 .551
com1 -.024 .114 .908 -.024
com2 .485 .191 .764 .485
com3 .259 .026 .816 .485
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 5 iterations.


5.3.1.5. The results of Exploratory Factor Analysis for the variable of
"customer retention"


Table 5.35 presents the results of KMO and Bartlett's test for the data related to the
variable of 'customer retention'.


Table 5.35: KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .675
Bartlett's Test of Sphericity Approx. Chi-Square 235.081
df 6
Sig. .000


93
Since KMO is between 0.5 and 0.7 and Bartlett's test significance number is less than
0.05 (sig<0.05), it can be said that the data is partially suitable for doing the factor
analysis. The communalities of the questions for the mentioned research variable are
presented in table 5.36.


Table 5.36: Communalities

Communalities

Initial Extraction
CR1 1.000 .120
CR2 1.000 .727
CR3 1.000 .529
CR4 1.000 .709
Extraction Method: Principal
Component Analysis.


Table 5.36 shows the inadequacy of the first question among the above questions
because of a lack of harmony with other questions within the process of factor
analysis. As we can vividly see, the communality of this question is less than 0.50.
Table 5.37 presents the total variance explained before deleting the mentioned
question.



Table 5.37: Total Variance Explained before deleting the question with little communality
Compo
nent
Initial Eigenvalues Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 2.084 52.103 52.103 2.084 52.103 52.103
2 .965 24.113 76.216

3 .574 14.342 90.558

4 .378 9.442 100.000

Extraction Method: Principal Component Analysis.




The total variance explained in table 5.37 (before deleting the question with little
communality) shows that these questions totally form one factor which explains and
covers about 52.103% of the variance of 'customer retention'. After deleting the
94
question with little communality (less than 0.5), we will deal with the mentioned
issues again. Table 5.38 represents the values of communalities of the questions after
deleting the question with little communality.


Table 5.38: Communalities of the questions after deleting the question with little communality

Communalities

Initial Extraction
CR2 1.000 .717
CR3 1.000 .572
CR4 1.000 .730
Extraction Method: Principal
Component Analysis.


According to table 5.38, the numbers of communalities of the questions are more than 0.5;
therefore, these questions are proper for the process of factor analysis. Table 5.39 presents
the total variance explained after deleting the question with little communality.



Table 5.39: Total Variance Explained after deleting the question with little communality
Compo
nent
Initial Eigenvalues Extraction Sums of Squared Loadings
Total % of Variance Cumulative % Total % of Variance Cumulative %
1 2.019 67.286 67.286 2.019 67.286 67.286
2 .598 19.930 87.216

3 .384 12.784 100.000

Extraction Method: Principal Component Analysis.



The total variance explained in table 5.39 (after deleting the question with little
communality) shows that these questions totally form one factor and this factor
explains and covers about 67.28% of the variance of 'customer retention'. Table 5.40
presents the component matrix for the questions related to the variable of 'customer
retention'.





95
Table 5.40: Component Matrix

Component Matrix
a


Component

1
CR2 .847
CR3 .756
CR4 .854
Extraction Method:
Principal Component
Analysis.
a. 1components extracted.




5.3.2. Structural Equation Model for Research Hypotheses Tests

One of the most suitable and the most powerful methods of analysis in the field of
social sciences is the multi-variable analysis. This is because the nature of these
researches is multi-variable, and cannot be solved by two-variable methods in which
an independent variable is considered with one dependent variable in each time.

Multi-variable analysis is attributed to a series of analysis methods whose main
characteristic is the ability to analyze K independent variables and N dependent
variables simultaneously. It should be said that the covariance structures analysis or
Structural Equation Model is one of the main methods of analyzing complex data
structures.

5.3.2.1. Structural Equation Modeling Procedure:

The process of covariance structures analysis includes a series of steps which have to
be followed. These steps include:

4. Hypothesis test

3. Correction of the
model (if needed)

2. Model
estimation
1. Model
expression





96
Figure 5.7 shows the general form of the structural equation model.



















































































































































































































































Figure 5.7: The general form of structural equation model



In this model Y1 to Y4 and X1 to X7 are observed variables and Ksi1 to Ksi3 and Eta1 to
Eta2 are Latent variables. Ksi1 to ksi3 are exogenous and Eta1 to Eta2 are
endogenous.

In the structural model it is tried to make clear whether the relationships between the
latent traits which are taken from the theory are confirmed by data gathered from the
sample or not. The relationships between the variables in structural equation model
are divided into two general areas: 1) the relationships between hidden and evident
variables and 2) the relationships between hidden variables and hidden variables. The
first group is called measuring model and the second is called structural model
(Kalantari, 2009). The symbolization of the presented path gained by Lisrel software
is also shown in figure 5.8.


X1
X2
X3
X4
X5
X6
X7
Ksi1
Ksi3
Ksi2
Eta1
Eta2
Y1
Y2

Y3

Y4

Measurement
component

Construct
component
Measurement
component
97


Figure 5.8: Symbolization


According to what has been said above, the sign oval indicates the main variables
(latent variables) and rectangular signs indicate the research dimensions (evident
variables). In this figure, the one-way arrow from the latent variable (oval) to evident
variable (rectangular) indicates a correlation and two-way arrow between latent
variables shows the relationship between variables which is known as () in the
structural equation model (Kalantari, 2009)

In the conceptual model of the research there are four latent variables (oval)
including: CRM resources, CRM processes, customer retention programs of CRM,
and customer retention. The evident variables are the research dimensions which have
been gained after doing the factor analysis. The research conceptual model is
presented in figure 5.9.














98



Figure 5.9: The research conceptual model



In this section the following steps will be followed:

1. Studying the accuracy of the measuring model by its indices

2. Correction of the model if it is needed (Kalantari, 2009)

3. Studying the significance of the relationships with t-value (if they are not
significant, a special number will be determined)

4. Studying the correlation

The first basic question which is raised after modeling is whether the model is a
proper one (accuracy of the measuring model) or not. To check this, some indices
should be used including chi-square relative to its degree of freedom which should be
less than 3, root mean square error of approximation (RMSEA) whose value should
be less than 0.08, p-value which should be less than 0.05, goodness of fit index (GFI)
and also adjusted goodness of fit index (AGFI) which should be more than 0.9. The
standard model presented in figure 5.10 investigates the mentioned issues to find the
accuracy.



99



Figure 5.10: Standard model


The mentioned indices indicate the suitability of the measuring model of the related
variables. Indeed, chi-square relative to its degree of freedom is 2.79 (less than 3),
RMSEA is less than 0.08, and the p-value is less than 0.05. The other fitness indices
of the model are presented in table 5.41.

















111
Table 5.41: Fitness indices


Fit
ness
indices
result


Value
Recommended
value

Indices

Row


suitable


2.79


/df < 3
2
_


chi-square
relative to its
degree of
freedom


1
suitable 0.00

p-value< 0.05


p-value

2
suitable 0.078
0.08 > 0.05<RMSEA


root mean
square error of
approximation


3
suitable 0.90 GFI > 0. 9

goodness of fit
index


4

fairly
suitable
0.89 AGFI > 0. 9

adjusted
goodness of fit
index


5

suitable

0.92 CFI> 0.9
comparative fit
index
6

suitable

0.92 NFI > 0.9
normed fit
index
7



Having looked at table 5.41, it can be easily perceived that the fitness of the model is
suitable. In the next step, using the diagram of significance presented in figure 5.11,
we study the significance of the results in the model.




























111



Figure 5.11: Diagram of significance


It should be noted that since we are looking for hypothesizes test with a level of
confidence of 0.95, the numbers that are significant are not between -1.96 and 1.96
(Kalantari, 2009). In the significance model, all the relationships are significant;
therefore, the research hypothesizes can be studied.

Hence, the primary conceptual model is hereby confirmed. Now, paying attention to
the model with significant numbers and standard estimation model, the following
hypothesizes will be tested.

Hypothesis 1:

CRM resources have direct effect on CRM processes.

H0: CRM resources do not have direct effect on CRM processes.
H1: CRM resources have direct effect on CRM processes.

Based on the significance diagram, the gained number indicates the significance of
the effect of CRM resources on CRM processes (they are not between -1.96 and
1.96). The standard diagram indicates that CRM resources have explained 79% of the
112
changes in CRM processes; therefore, the hypothesis H0 is rejected and the
hypothesis H1 which states that CRM resources have direct effect on CRM processes
is accepted. The remaining 21% is related to the factors other than CRM resources
that are not studied in this research.


Hypothesis 2:

CRM processes have direct effect on customer retention programs of CRM.

H0: CRM processes do not have direct effect on customer retention programs of
CRM.

H1: CRM processes have direct effect on customer retention programs of CRM.

Based on the significance diagram, the gained number indicates the significance of
the effect of CRM processes on customer retention programs of CRM (they are not
between -1.96 and 1.96). The standard diagram indicates that CRM processes have
explained 95% of the changes in customer retention programs of CRM; therefore, the
hypothesis H0 is rejected and the hypothesis H1 which states that CRM processes
have direct effect on customer retention programs of CRM is accepted. The remaining
5% is related to the factors other than CRM processes that are not studied in this
research.

Hypothesis 3:

Customer retention programs of CRM have direct effect on customer retention.

H0: Customer retention programs of CRM do not have direct effect on customer
retention.

H1: Customer retention programs of CRM have direct effect on customer retention.

Based on the significance diagram, the gained number indicates the significance of
the effect of customer retention programs of CRM on customer retention (they are not
between -1.96 and 1.96). The standard diagram indicates that customer retention
programs of CRM explain 95% of the changes in customer retention; therefore, the
hypothesis H0 is rejected and the hypothesis H1 which says customer retention
programs of CRM have direct effect on customer retention is accepted. The remaining
5% is related to the factors other than customer retention programs of CRM that are
not studied in this research.
113
5.4. Lateral Analysis

5.4.1. Study of the correlation between each of the customer retention
programs of CRM and customer retention using Pearson correlation:

H0: There is no positive and significant correlation between each of the customer
retention programs of CRM and customer retention

H1: There is positive and significant correlation between each of the customer
retention programs of CRM and customer retention


Table 5.42 presents the values gained after calculating the Pearson correlation.

Table 5.42: Pearson correlation values


RETENTION

Customization
Pearson Correlation .802
**

Sig. (2-tailed) .000
N 286
Loyalty
programs
Pearson Correlation .815
**

Sig. (2-tailed) .000
N 286
Customer
service
Pearson Correlation .877
**

Sig. (2-tailed) .000
N 286

Community
Pearson Correlation .858
**

Sig. (2-tailed) .000
N 286

According to Hair et al. (2007), the most common measure of correlation is Pearson's
correlation which its value ranges between -1 and +1. It measures the degree of
association between two variables. Indeed, a positive value for the correlation implies
a positive association, but if its value is negative, it implies an inverse association.
They also say that a correlation value above 0.80 is considered pretty high.
114
Regarding the significance numbers which all equal to 0.000 (Sig < 0.05), hypothesis
H0 is rejected and hypothesis H1 is accepted. Thus, it can be said that all the
relationships are significant. On the other hand, all the numbers gained by SPSS
software in table 5.42 are positive and above 0.80. It means that there is a positive and
significant correlation between each of the customer retention programs of CRM
(customization, loyalty programs, customer service, and community) and customer
retention. The results in table 5.42 also reveal that the correlation between customer
service and customer retention is the most significant one.
5.4.2. Study of the difference between the governmental and private
banks with respect to the research variables

H0: There is no significant difference between the governmental and private banks
with respect to the research hypothesizes

H1: There is significant difference between the governmental and private banks with
respect to the research hypothesizes

Table 5.43 and table 5.44 present the results of group statistics and the independent
samples test respectively.

Table 5.43: Group Statistics
Type of the bank N Mean Std. Deviation Std. Error Mean
Resources gov 171 4.5628 .32357 .02474
private 115 5.8836 .12897 .01203
Processes gov 171 5.2992 .36146 .02764
private 115 5.7574 .58456 .05451
Retention
programs
gov 171 4.6051 .40898 .03128
private 115 5.7447 .50547 .04714
Customer
retention
gov 171 5.7173 .51769 .03959
private 115 6.2203 .49340 .04601




115
Table 5.44: Independent Samples Test

t-test for Equality of Means

t df
Sig.
(2-
tailed)
Mean
Difference
Std. Error
Difference
95% Confidence
Interval of the
Difference

Lower Upper


CRM
Resources
Equal
Means
assumed
-41.590 284 .000 -1.32080 .03176 -1.38331 -1.25829
Equal
Means not
assumed
-48.009 239.850 .000 -1.32080 .02751 -1.37500 -1.26661


CRM
Processes
Equal
Means
assumed
-8.186 284 .000 -.45817 .05597 -.56833 -.34801
Equal
Means not
assumed
-7.496 172.516 .000 -.45817 .06112 -.57881 -.33754


Retention
programs
Equal
Means
assumed
-20.990 284 .000 -1.13963 .05429 -1.24650 -1.03276
Equal
Means not
assumed
-20.146 209.274 .000 -1.13963 .05657 -1.25115 -1.02811

Customer
retention
Equal
Means
assumed
-8.208 284 .000 -.50294 .06127 -.62355 -.38233
Equal
Means not
assumed
-8.286 252.484 .000 -.50294 .06070 -.62248 -.38340


Considering significance number, hypotheses H0 is rejected and hypothesis H1 is
accepted. This means that there is significant difference between the two groups of
private and governmental banks with respect to the research variables from the
respondents' points of view. In addition, since the value of both of the upper and
lower limits are negative, we can conclude that M1-M2<0 ;thus, M1<M2 which
116
means that the respondents have assessed the situation of private banks better than
governmental banks in relation to the research variables.

5.4.3. Study of the difference between the four banks (under study) in
relation to the research variables by using ANOVA

H0: There is no significant difference between the four banks (under study) with
respect to the research hypothesizes

H1: There is significant difference between the four banks (under study) with respect
to the research hypothesizes.

Table 5.45 and table 5.46 present the results of ANOVA and the multiple
comparisons respectively.


Table 5.45: ANOVA

Sum of Squares df Mean Square F Sig.
CRM
resources
Between Groups 135.600 3 45.200 3.151E3 .000
Within Groups 4.045 282 .014

Total 139.645 285

CRM
Processes
Between Groups 64.252 3 21.417 532.276 .000
Within Groups 11.347 282 .040

Total 75.599 285

Retention
programs
Between Groups 139.571 3 46.524 1.799E3 .000
Within Groups 7.292 282 .026

Total 146.863 285

Customer
retention
Between Groups 71.093 3 23.698 340.725 .000
Within Groups 19.613 282 .070

Total 90.706 285




Considering the significance number (Sig < 0.05), hypothesis H0 is rejected and
hypothesis H1 is accepted. This means that there is significant difference between the
four banks (under study) with respect to the research hypothesizes.


117
Table 5.46: Multiple Comparisons
Tukey HSD

Dependent
Variable
(I) bank (J) bank
Mean
Difference (I-J)
Std. Error Sig.
95% Confidence Interval
Lower Bound Upper Bound






CRM
resources
Refah
Maskan .60601
*
.01843 .000 .5584 .6536
Saman -1.03982
*
.02497 .000 -1.1043 -.9753
Pasargad -.96171
*
.01907 .000 -1.0110 -.9124
Maskan
Refah -.60601
*
.01843 .000 -.6536 -.5584
Saman -1.64583
*
.02420 .000 -1.7084 -1.5833
Pasargad -1.56773
*
.01805 .000 -1.6144 -1.5211
Saman
Refah 1.03982
*
.02497 .000 .9753 1.1043
Maskan 1.64583
*
.02420 .000 1.5833 1.7084
Pasargad .07810
*
.02469 .009 .0143 .1419
Pasargad
Refah .96171
*
.01907 .000 .9124 1.0110
Maskan 1.56773
*
.01805 .000 1.5211 1.6144
Saman -.07810
*
.02469 .009 -.1419 -.0143






CRM
processes
refah
Maskan .61167
*
.03087 .000 .5319 .6914
Saman .73904
*
.04182 .000 .6310 .8471
Pasargad -.46340
*
.03194 .000 -.5459 -.3809
Maskan
refah -.61167
*
.03087 .000 -.6914 -.5319
Saman .12737
*
.04053 .010 .0226 .2321
Pasargad -1.07507
*
.03024 .000 -1.1532 -.9969
Saman
Refah -.73904
*
.04182 .000 -.8471 -.6310
Maskan -.12737
*
.04053 .010 -.2321 -.0226
Pasargad -1.20244
*
.04135 .000 -1.3093 -1.0956
Pasargad
Refah .46340
*
.03194 .000 .3809 .5459
Maskan 1.07507
*
.03024 .000 .9969 1.1532
Saman 1.20244
*
.04135 .000 1.0956 1.3093


Customer
retention
programs of
CRM
Refah
Maskan .74138
*
.02475 .000 .6774 .8053
Saman .03695 .03352 .689 -.0497 .1236
Pasargad -1.03549
*
.02560 .000 -1.1017 -.9693
Maskan
Refah -.74138
*
.02475 .000 -.8053 -.6774
Saman -.70444
*
.03249 .000 -.7884 -.6205
Pasargad -1.77688
*
.02424 .000 -1.8395 -1.7142
118
Saman
Refah -.03695 .03352 .689 -.1236 .0497
Maskan .70444
*
.03249 .000 .6205 .7884
Pasargad -1.07244
*
.03315 .000 -1.1581 -.9868
Pasargad
Refah 1.03549
*
.02560 .000 .9693 1.1017
Maskan 1.77688
*
.02424 .000 1.7142 1.8395
Saman 1.07244
*
.03315 .000 .9868 1.1581






Customer
retention
Refah
Maskan .91140
*
.04059 .000 .8065 1.0163
Saman .63783
*
.05498 .000 .4957 .7799
Pasargad -.25193
*
.04199 .000 -.3604 -.1434
Maskan
Refah -.91140
*
.04059 .000 -1.0163 -.8065
Saman -.27358
*
.05329 .000 -.4113 -.1359
Pasargad -1.16333
*
.03975 .000 -1.2661 -1.0606
Saman
Refah -.63783
*
.05498 .000 -.7799 -.4957
Maskan .27358
*
.05329 .000 .1359 .4113
Pasargad -.88975
*
.05437 .000 -1.0303 -.7492
Pasargad
Refah .25193
*
.04199 .000 .1434 .3604
Maskan 1.16333
*
.03975 .000 1.0606 1.2661
Saman .88975
*
.05437 .000 .7492 1.0303
*. The mean difference is significant at the 0.05 level.



- Comparing the four banks from the aspect of applying CRM resources:

Comparing banks Refah and Maskan (using table 5.46), the two upper and lower
bounds are positive; therefore, M1-M2>0 which is equivalent to M1>M2. Thus, we
can conclude that bank Refah has applied CRM resources better than bank Maskan.
But, comparing bank Refah with banks Pasargad and Saman, the two bounds are both
negative; therefore, M1-M2<0 and M1<M2. This means that from the aspect of
applying CRM resources, banks Pasargad and Saman are better than bank Refah.

Comparing bank Maskan with the other three banks, both the lower and upper bounds
are negative; therefore, M1-M2<0; thus, M1<M2 which means that banks Refah,
Pasargad, and Saman have applied CRM resources better than bank Maskan.

Comparing bank Saman with the other three banks, both the upper and lower bounds
are positive; thus, M1-M2>0 which is equivalent to M1>M2; therefore, we can say
119
that from the aspect of applying CRM resources, the performance of bank Saman has
been better than the performance of the other three banks.

Comparing bank Pasargad with banks Refah and Maskan, both the upper and lower
bounds are positive; therefore, M1-M2>0 (M1>M2); Thus, we can conclude that bank
Pasargad has applied CRM resources better than banks Refah and Maskan. But,
comparing bank Pasargad with bank Saman, the two bounds are both negative;
therefore, M1-M2<0 (M1<M2) which means from the aspect of applying CRM
resources, bank Saman is better than bank Pasargad.

- Comparing the four banks from the aspect of applying CRM processes:

Comparing bank Refah with banks Maskan and Saman, both the upper and lower
bounds are positive; thus, M1-M2>0 which is equivalent to M1>M2; therefore, we
can conclude that bank Refah has applied CRM processes better than banks Maskan
and Saman. On the other hand, comparing bank Refah with bank Pasargad, the two
bounds are both negative. This means M1-M2<0 (M1<M2); thus, from the aspect of
applying CRM processes, bank Pasargad is better than bank Refah.

Comparing bank Maskan with bank Saman, the two upper and lower bounds are
positive; therefore, M1-M2>0 (M1>M2).So, we can say that bank Maskan has applied
CRM processes better than bank Saman. But, comparing bank Maskan with banks
Refah and Pasargad, the two bounds are both negative; therefore, M1-M2<0
(M1<M2). This means banks Refah and Pasargad have applied CRM processes better
than bank Maskan.

Comparing bank Saman with the other three banks, both the upper and lower bounds
are negative; therefore, M1-M2<0 which is equivalent to M1<M2. Thus, it can be said
that from the aspect of applying CRM processes, the other three banks are better than
bank Saman.

Comparing bank Pasargad with the other three banks, both the upper and lower
bounds are positive; thus, M1-M2>0 (M1>M2); therefore, we can conclude that bank
Pasargad has applied CRM processes better than the other three banks.

111
- Comparing the four banks from the aspect of applying customer retention
programs of CRM:

Comparing bank Refah with bank Maskan, both the upper and lower bounds are
positive; therefore, M1-M2>0 which is equivalent to M1>M2; Thus, we can conclude
that bank Refah has applied customer retention programs of CRM better than bank
Maskan. But, comparing bank Refah with bank Saman, the lower bound is negative
and the upper bound in positive; therefore, M1=M2 and sig = 0.689 (sig > 0.05); thus,
we can say that there is no significant difference between these two banks in relation
to applying customer retention programs of CRM. On the other hand, comparing bank
Refah with bank Pasargad, both the upper and lower bounds are negative; therefore,
M1-M2<0 (M1<M2). This means that from the aspect of applying customer retention
programs of CRM, bank Pasargad is better than bank Refah.

Comparing bank Maskan with the other three banks, both the upper and lower bounds
are negative; thus, M1-M2<0 (M1<M2). Therefore, we can conclude that the other
three banks have applied customer retention programs of CRM better than bank
Maskan.

Comparing bank Saman with bank Refah, the lower bound is negative and the upper
bound is positive; therefore, M1=M2 and also sig = 0.689 (sig > 0.05); thus, we can
say that there is no significant difference between these two banks in relation to
applying customer retention programs of CRM. On the other hand, comparing bank
Saman with bank Maskan, both the upper and lower bounds are positive; therefore,
M1-M2>0 which is equivalent to M1>M2; thus, we can conclude that bank Saman
has applied customer retention programs of CRM better than bank Maskan. But,
comparing bank Saman with bank Pasargad, both the upper and lower bounds are
negative; thus, M1-M2<0 (M1<M2) which means that from the aspect of applying
customer retention programs of CRM, bank Pasargad has a better performance than
bank Saman.

Comparing bank Pasargad with the other three banks, both the upper and lower
bounds are positive; therefore, M1-M2>0; thus, M1>M2. This means that bank
Pasargad has applied customer retention programs of CRM better than the other three
banks.
111
- Comparing the four banks from the aspect of customer retention:

Comparing bank Refah with banks Maskan and Saman, both the upper and lower
bounds are positive; therefore, M1-M2>0; thus, M1>M2. So, we can conclude that
from the aspect of customer retention, bank Refah is better than banks Maskan and
Saman. But, comparing bank Refah with bank Pasargad, the two bounds are negative;
thus, M1-M2<0 (M1<M2). This means that the rate of customer retention in bank
Pasargad is more than the rate of customer retention in bank Refah.

Comparing bank Maskan with the other three banks, both the upper and lower bounds
are negative; therefore, M1-M2<0 that is equivalent to M1<M2. Thus, it can be said
that customer retention in the other three banks is better than customer retention in
bank Maskan.

Comparing bank Saman with bank Maskan, both the upper and lower bounds are
positive; therefore, M1-M2>0 (M1>M2). Thus, we can say that customer retention in
bank Saman is better than customer retention in bank Maskan. But, comparing bank
Saman with banks Refah and Pasargad, both of the upper and lower bounds are
negative; therefore, M1-M2<0; so, M1<M2 which means that from the aspect of
customer retention, banks Refah and Pasargad are more successful than bank
Maskan.

Comparing bank Pasargad with the other three banks, both the upper and lower
bounds are positive; therefore, M1-M2>0; thus, M1>M2. This means that from the
aspect of customer retention, bank Pasargad is more successful than the other three
banks.

5.5. Conclusion

In this research, data analysis is done in two parts by descriptive and interferential
statistics. In the descriptive part, the demography of statistical sample is investigated
and the results were shown in frequency tables and diagrams, but in the inferential
part, the data is analyzed using a series of steps. To do so, first of all we did the
Kaiser-Meyer-Olkin and Bartlett's test to measure the adequacy of the sampling. Next,
the exploratory factor analysis for deleting the questions with little factor load and
communalities was done. Finally, to study and test the research hypothesizes we used
112
structural equation model (confirmatory factor analysis). To do so, model expression,
model estimation, correction of the model (if needed), and hypothesis test were
followed respectively. The final results of hypothesis test show that all the formulated
hypothesizes in the third chapter are accepted. Therefore according to the first
hypothesis, all the CRM resources including technological and infrastructural CRM
resources have direct effect on CRM processes. The second hypothesis confirms the
direct effect of CRM processes on all customer retention programs of CRM (loyalty
programs, customer service, customization, and creating community). Also, based on
the third (the last) hypothesis, all of these programs have direct effect on customer
retention.

After testing the research hypothesizes, we did some lateral analyzes. The first one
was investigating the correlation between each of the customer retention programs of
CRM and customer retention. The results of Pearson correlation for this analysis show
that there is a positive and significant correlation between each of the customer
retention programs of CRM (customization, loyalty programs, customer service, and
community) and customer retention. These results also reveal that the most significant
correlation is between customer service and customer retention.

Next, two-sample t-test with independent samples was done to study the difference in
each of the research variables in the two groups of private and governmental banks.
According to this test, we can say that there is significant difference between the two
groups of private and governmental banks with respect to the research variables from
the respondents' points of view. Indeed, the respondents have assessed the situation of
private banks better than governmental banks in relation to the research variables.
Finally, to investigate the difference in each of the research variables in the four
groups of banks, analysis of variance or comparing the means of some communities
was done. The results show the significant difference between the four banks (under
study) with respect to the research variables. The detailed results of this analysis are
shown in the previous section.




113


6. Conclusion and Implications


6.1. Conclusion and Implications

This study first emphasized on the fact that the resource based view of the firm (RBV)
and the process-oriented approach can be applied in the context of CRM. Then, it
reviewed and analyzed the previous researches in the literature that investigate the
relationship between CRM and firm performance and customer retention. Next, based
on the RBV and process-oriented approach, we suggested a framework that links
CRM to customer retention. This framework shows that if organizations want to attain
a sustainable competitive advantage through CRM, they should efficiently apply all
the CRM resources to create CRM process capabilities which are unique and can not
be copied by other organizations (Keramati et al., 2010). The way we reviewed the
literature, determined the research variables and dimensions, collected data, and
analyzed them are discussed in section 6.2 which also provides the theoretical
implications related to the conclusions provided by the data analysis in previous
chapter. This chapter continues with managerial implications as well as research
limitations and suggestions for future research.

6.2. Theoretical Implications

The purpose of this study has been to investigate the impact of CRM on customer
retention in Iranian electronic banking based on RBV and process oriented approach
and from employees' perspective. Iranian banks have used CRM more or less and
proceeded to this issue with different rates of success. However, there are not
available studies that investigated this impact in these banks especially in electronic
environment. Thus, in this research we have aimed at getting a deeper insight into this
issue.

To propose a process-oriented framework for investigating the impact of CRM on
customer retention, we reviewed previous studies linking CRM to firm performance
such as customer retention. CRM, e-Banking, customer retention, and model, were the
most used keywords to search the needed literatures. To find the appropriate theories
114
and models for this study we used a two-stage process of classifying the searched
literatures. First, we selected the articles related to the effects of CRM on customer
retention by reviewing their titles and abstracts. Then, we extended our research and
found studies done with different views about the impact of CRM on customer
retention in banks and other firms.

Deep interviews with the experts and supervisors of this work were also conducted
during the search through the papers. This was done to distinguish different factors
among several factors some of which had the same concept, but were only given
different titles. In the next step, the research variables were determined; however, in
order to be able to measure the extent of the usage of each of the research variables
across organization precisely, appropriate dimensions for each of the research
variables are defined based on the literature. In this regard, CRM resources are
measured with five dimensions including operational CRM technologies,
collaborative CRM technologies, analytical CRM technologies, organizational, and
human CRM resources. CRM processes are studied on both operational and
management dimensions. Finally, customer retention programs of CRM are studied in
four dimensions including: customer service, customization, community of customers,
and loyalty programs. After determining the variables of the research and their
dimensions, we designed the research model. A questionnaire was also designed, pre-
tested, and distributed to the top manager in each selected branch of two
governmental (Refah and Maskan) banks and two private (Saman and Pasargad)
banks in Tehran province. When all the data were gathered, Kaiser-Meyer-Olkin and
Bartlett's test was done to measure the adequacy of the sampling. Next, we used
exploratory factor analysis for deleting the questions with little factor load and
communalities. Finally, to study and test the research hypothesizes structural equation
model (confirmatory factor analysis) was done. To do so, model expression, model
estimation, correction of the model, and hypothesis test were the steps which were
followed respectively. The final results of hypothesis tests show that all the
formulated research hypothesizes in the third chapter are accepted.

One of the most important implications of this study is to align different studies that
address the CRM value generation process and its impact on customer retention in a
simple integrated framework. In doing so, we considered different views about CRM
115
and gained insight from the resource-based view (RBV) of the firm and the process-
oriented approach.

The results of the first research hypothesizes test reveal that all CRM resources
including technological and infrastructural resources have direct effect on CRM
processes. The second hypothesis confirms the direct effect of CRM processes on all
customer retention programs of CRM (loyalty programs, customer service,
customization, and creating community). Also, based on the third (the last)
hypothesis, all of these programs have direct effect on customer retention.

In addition, in this study, we tried to find out by which CRM resources customer
retention is mostly affected. We also proposed a process-oriented framework showing
the path in which CRM affects customer retention of Iranian banks in e-banking.

Finally, although there are some studies which link CRM to firm performance such as
the rate of success in financial aspects or customer satisfaction, in this study we have
investigated the effects of CRM on customer retention. To do this, on one hand, we
have presented a complete path from investments on CRM resources to customer
retention; on the other hand, we presented a comprehensive set of customer retention
programs of CRM and investigated the effect of each of them on customer retention.
After that, we studied the correlation between each of these programs and customer
retention that led to find the most effective retention programs.

6.3. Managerial Implications

The findings reported in this research have led to a number of managerial implications
for the organizations interested in leveraging their spending on CRM. First, managers
should note that the findings of this study are applicable to any other industry. This
result is the same as the result of multi-industry research done by Reinartz et al.
(2004), which implies that the benefits of CRM are approximately the same across
different organizations.

The second main result that managers should consider is that CRM is a
multidimensional phenomenon that should be considered in all levels of the firm;
therefore, if organizations are going to get the most out of value that can be created by
CRM, they should design a suitable organization-wide customer strategy with specific
116
goals. According to Zablah et al. (2004) and Keramati et al. (2010), not all the
customers are interested in specific relationships; therefore, if a firm tries to apply the
same relationships as the other ones do, the result can even be a negative rate of
customer retention. As a result, since all the companies can not act based on the same
customer strategies, using the mentioned strategy is the most important step to have a
competitive advantage.

When the customer strategy is designed, managers should commit themselves to it.
Indeed this commitment leads to at least two important results. The first and most
important one is that managers will provide the technological and human resources
properly and at the right time; secondly, when the employees see that their managers
are completely committed to the designed customer strategy, they adopt and apply it
easier and faster.

Third, as it has been previously mentioned, organizations can develop their customer
retention programs of CRM by path-dependent processes. In this research we
suggested a path through which firms can develop their capability in customer
retention. In addition, based on the theory of production, a certain level of output can
be achieved by different combinations of inputs. Therefore, if organizations want to
use CRM to improve their rate of customer retention, they should leverage their
spending on a proper combination of technological, human, and organizational CRM
resources and put them properly in place.

The fourth point is that for designing customer retention programs of CRM, CRM
processes are the prerequisite which use all CRM resources (CRM inputs). Therefore,
to design effective customer retention programs of CRM, companies should organize
specific management and operational CRM processes. When applying both kinds of
processes, managers should control the procedure to ensure that they are working as
designed.

Fifth, in assigning the CRM resources, technology is the last one to consider. Indeed,
organizations should first consider what CRM goals they want to reach, what
processes they want to use, and what benefits they are going to gain and in the next
step, they can provide the proper technological resources.

117
The sixth point is that managers should note that among all CRM resources, the
human part is the most important one. Indeed, to manage a CRM program and achieve
its goals including customer retention, technical and behavioral skills and experience
are required. To do so, they need people with the mentioned characteristics; therefore,
they should train their available experts; otherwise, they can provide experienced and
skilled people by employing them from outside the organization. Besides, by showing
the importance of CRM programs to these skilled employees, designing incentive
systems to motivate them, and defining the roles of each one clearly, managers can
implement and control the CRM processes more efficiently.

Seventh, the calculated means in tables 5.8 to 5.12 show that from the respondents'
point of view, all the four considered banks have applied all the research variables
(CRM resources, CRM processes, customer retention programs of CRM, and
customer retention) more than the average scale (4). However, the performance of
private banks (Pasargad and Saman) is better than governmental ones (Maskan and
Refah) for all of these variables. Therefore, a very important point that managers of
governmental banks should notice is that since they have not been successful in
applying CRM resources, CRM processes and programs as much as private banks,
they should improve these variables to have a better performance in customer
retention and therefore a better competitiveness. Also, we realized that between the
two private banks, the performance of Pasargad bank is a little weaker than Saman
bank in applying CRM resources, but for the rest of the research variables, the
situation of Pasargad bank is better than the other three banks and has the highest rate
of customer retention.

The last point is that the results of Pearson correlation suggest that there is a positive
and significant correlation between each of the customer retention programs of CRM
and customer retention. However, these results also reveal that among the four
customer retention programs of CRM, the most significant correlation is between
customer service and customer retention and the lowest belongs to customization and
customer retention. Therefore, we can conclude that to have a higher rate of customer
retention, it is recommended that among the studied customer retention programs of
CRM in this research, banks should invest and focus more on customer service to
improve and develop it.
118
6.4. Research limitations and suggestions for future research

This research like any other research has its own limitations from which future
research could start. First, due to the time limitation and since there is a huge number
of bank branches in Iran; we limited the population (all Iranian banks) to all the banks
in Tehran province and then among them two governmental (Refah and Maskan) and
two private banks (Saman and Pasargad) were chosen. Finally, a random sample of
these 4 banks was chosen. Consequently, future researches can focus on different
samples from different Iranian governmental and private banks in different provinces.

The second restriction of this study is that the questionnaires were only sent to the
senior bank managers; therefore other banks' managers' such as IT managers and
marketing managers' views can be considered in future studies. In addition, since the
benefits of CRM are perceived by both the organizations and their customers, this
limitation is related to inaccessibility to the customers' opinions. Therefore,
investigating the customers' views about CRM in e-banking will enable the future
researchers to get more accurate findings.

The correlation between each of the customer retention programs of CRM and
customer retention is studied in this research; however, since on one hand, we have
studied and presented a comprehensive path of CRM value generation in the area of
customer retention; and on the other hand we have studied all the customer retention
programs of CRM, we did not sufficiently focus on the correlation between each of
these programs and customer retention. Therefore, another suggestion for future
researches can be focusing more on these correlations.

Another important limitation for this thesis is that e-commerce and e-banking are
young fields in Iran. Thus, if the knowledge about the applications of e-commerce in
businesses increases, the researches done in this field can gain more and better
findings.

As mentioned before, CRM is an evolving phenomenon whose processes,
characteristics and benefits may change over time. Thus, future researches can help to
recognize these changes.

119
As mentioned before and according to Reinartz et al. (2004), the findings of CRM
researches such as this research's findings do not vary greatly among industries; thus,
our findings can be generalized in other organizations in different industries; however,
since future studies enable the researchers to further test the validity and reliability of
this research, it is better that they consider other industries, too.

As a final suggestion, since each governmental and private bank has many branches
allover the country, and the number of most Iranian banks branches' employees is
under 185, another suggestion for future studies is that they can investigate the results
of this research in other enterprises which are located and more integrated in fewer
places. These enterprises are mostly big; however, since, there are fewer managers,
gathering the opinions of all of them is an easier, cheaper, and less time consuming
work.



























121

References:

Ahmad, R & Buttle, F 2002, Customer retention management: a reflection of theory
and practice, Marketing Intelligence and planning, vol. 20, no. 3, pp. 149161.

Alikhanzadeh, A 2008, Electronic banking, Olume Rayaneh, Babol.

Ang, L & Buttle, F 2006, Customer retention management processes: A quantitative
study, European Journal of Marketing, vol. 40, no. 1/2, pp. 8399.

Arbore, A & Busacca, B 2009, Customer satisfaction and dissatisfaction in retail
banking: Exploring the asymmetric impact of attribute performances, Journal of
Retailing and Consumer Services, vol.16, pp. 271280.

Azar, A & Momeni, M 2005, Statistics and its application in management, 2
nd
edn,
Samt, Tehran.

Bank and Insurance manifest agency 2010, Bank and Insurance manifest agency,
Tehran, viewed 6 September, 2010, <http://www.bima.ir/view-6918.html>.

Becker, JU, Greve, G & Albers, S 2009, The impact of technological and
organizational implementation of CRM on customer acquisition, maintenance, and
retention, Intern. J. of Research in Marketing, vol. 26, pp. 207215.

Blery, E & Michalakopoulos, M 2006, Customer relationship management: A case
study of a Greek bank, Journal of Financial Services Marketing, vol. 11, no. 2, pp.
116124.

Boulding, W, Staelin, R, Ehret, M & Johnston, WJ 2005, A customer relationship
management roadmap: what is known, potential pitfalls, and where to go, Journal of
Marketing, vol. 69, pp. 15566.

Chan, JO 2005, Toward a unified view of customer relationship management, The
Journal of American Academy of Business, pp. 3238.

Chaudhuri, A & Shainesh, G (2004), Implementing a technology based CRM
solution: the ICICI experience, in Sheth, J.N., Parvatiyar, A. and Shainesh, G. (Eds),
Customer Relationship Management: Emerging Concepts, Tools and Applications,
5th ed., Tata McGraw-Hill Publishing, New Delhi.

Chen, IJ & Popovich, K 2003, Understanding customer relationship management
(CRM) People, process and technology, Business Process Management Journal, vol.
9, no. 5, pp. 672688.

Coltman, T 2007, Why build a customer relationship management capability?,
Journal of Strategic Information Systems, vol. 16, no. 3, pp. 301320.

Daniel, E 1999, Provision of electronic banking in the UK and the Republic of
Ireland, International Journal of Bank Marketing, vol. 17, no. 2, pp. 72-82.
121

Deng, Z, Lu, Y, Wei, KK & Zhang, J 2009, Understanding customer satisfaction and
loyalty: An empirical study of mobile instant messages in China, International
Journal of Information Management, vol. 30, no. 4, pp. 289300.

Dimitriadis, S & Stevens, E 2008, Integrated customer relationship management for
service activities An internal/external gap model, Managing Service Quality, vol. 18,
no. 5, pp. 496511.

Dwyer, FR, Schurr, PH & Oh S 1987, Developing buyer-seller relationships,
Journal of Marketing, vol. 51, no. 2, pp. 1127.

Eng, TY 2004, Does customer portfolio analysis relate to customer performance? An
empirical analysis of alternative strategic perspective, Journal of Business &
Industrial Marketing, vol. 19, no.1, pp. 4967.

Farquhar, JD 2004, Customer retention in retail financial services: an employee
perspective, The International Journal of Bank Marketing, vol. 22, no. 2, pp. 8699.

Farquhar, JD & Panther, T 2008, Acquiring and retaining customers in UK banks:
An exploratory study, Journal of Retailing and Consumer Services, vol.15, pp. 921.

Dwyer, FR & Tanner, JrFT 2005, Business Marketing Connecting Strategy,
Relationship and Learning, 2nd edn. McGraw Hill Irwin. ISBN: 0-07-241063-9

Ghahfarokhi, AD & Zakaria, MS 2009, The impact of CRM on customer retention in
Malaysia in Proceedings of the International Conference on Electrical Engineering
and Informatics, Selangor, pp. 309313.

Ghavami, A & Olyaei, A 2006, The impact of CRM on customer retention, MSc.
thesis, Department of Business Administration and Social Sciences, Lulea University
of Technology.

Greenberg, P 2004, CRM at the speed of light: Essential customer strategies for the
21
st
century, 3rd edn. : McGraw Hill.

Greve, G & Albers, S 2006, Determinants of performance in customer relationship
management Assessing the technology usageperformance link, in Proceedings of
the 39th Hawaii International Conference on System Sciences, Hawaii, USA.

Guo, L, Xiao, JJ & Tang, C 2009, Understanding the psychological process
underlying customer satisfaction and retention in a relational service, Journal of
Business Research, vol. 62, no. 11, pp. 11521159.

Hair, Jr JF, Money, AH, Samouel, P & Page, M 2007, Research methods for
Business, John Wiley and Sons Ltd. Chichester, UK.

Ibrahim, EE, Joseph, M & Ibeh, KIN 2006, Customers perception of electronic
service delivery in the UK retail banking sector, International Journal of Bank
Marketing, vol. 24, no. 7, pp. 475493.
122

Juan, L & Yan, L 2009, Dimensions and influencing factors of customer loyalty in
the intermittent service industry, Front. Bus. Res. China, vol. 3, no. 1, pp. 6378.

Kalantari, KH 2009, Structural equation modeling in social-economic researches
(using Lisrel and Simplis), Tarh va Manzar, Tehran.

Kassanoff, B 2000, Build loyalty into your e-business,in Proceedings of DCI
Customer Relationship Management Conference, Boston, MA, 27-29 June.

Keramati, A, Mehrabi, H & Mojir, N 2010, A process-oriented perspective on
customer relationship management and organizational performance: An empirical
investigation, Industrial Marketing Management, vol. 39, no. 7, pp. 11701185.

Keramati, A, Mehrabi, H & Mousakhani, M 2008, The role of human, organization
and technology in building competitive advantage with CRM: the case of Iranian
internet service industry, in Proceedings of the IEEE International Conference on
Industrial Informatics (INDIN 2008), DCC, Daejeon, Korea, pp. 12791284.

Keramati, A, Farshid, M, Salehi-Sangari, E & Toufighi Zavareh, J 2009 a, Customer
relationship management activities in e-banking: the case of Iranian banks, Int. J
Electronic Customer Relationship Management, vol. 3, no. 3, pp. 207235.

Keramati, A, Mehrabi, H, Mojir, N & Mousakhani, M 2009 b, Customer relationship
management and performance, a resource-based view of Iranian internet service
industry, Int. J. Electronic Customer Relationship Management, vol. 3, no. 2, pp.
103120.

Kim, HS, Kim, YG & Park, CW 2010, Integration of firm's resource and capability
to implement enterprise CRM: A case study of a retail bank in Korea, Decision
Support Systems, vol. 48, pp. 313322.

Lawson-Body, A & Limayem, M 2004 The impact of customer relationship
management on customer loyalty: The moderating role of web site characteristics,
Journal of Computer-Mediated Communication, vol. 9. no. 4, viewed 21 July, 2010,
<http://onlinelibrary.wiley.com/doi/10.1111/j.1083-6101.2004.tb00295.x/full>.

Levesque, T & McDougall, GHG 1996, Determinants of customer satisfaction in
retail banking, International Journal of Bank Marketing, vol. 14, no. 7, pp. 1220.

Lindgreen, A, Davis, R, Brodie, RJ & Buchanan-Oliver, M 2000, Pluralism in
contemporary marketing practices, International Journal of Bank Marketing, vol. 18,
no. 6, pp. 294308.

Lockstrm, M 2007, Low-cost country sourcing: Trends and implications, 1th edn
Wiesbaden: Deutscher Universitts-Verlag.

Lneborg, JL & Nielsen, JF 2003, Customer-focused technology and performance in
small and large banks, European Management Journal, vol. 21, no.2, pp. 258269.

123
Massey, AP, Montoya-Weiss, MM & Holcom, K 2001, Re-engineering the customer
relationship: leveraging knowledge assets at IBM, Decision Support Systems, vol. 32,
no. 2, pp. 155170.

Momeni, M 2006, Statistical analyses using SPSS, Ketab no, Tehran.

Mooney, JG, Gurbaxani, V & Kraemer, KL 1996, A process oriented approach for
assessing the business value of information technology, Database, vol. 27, no. 2, pp.
6881.

Newell, F 2000, Loyalty.com: Customer Relationship Management in the New Era of
Internet Marketing, McGraw-Hill, New York, NY.

Parvatiyar, A & Sheth, J 2004, Conceptual framework of customer relationship
management.

Payne, A 2001, Developing a strategic approach to CRM. Key issues in creating a
customer centric postal. Key issues in creating a customer Key issues in creating a
customer centric postal, Nov. 2001, pp. 79.

Payne, A & Frow, P 2005, A strategic framework for customer relationship
management, Journal of Marketing, vol. 69, pp. 167176.

Payne, A & Frow, P 2004, The role of multichannel integration in customer
relationship management, Industrial Marketing Management, vol. 33, no. 6, pp.
527538.

Persson, P 2004, Customer Relationship Management: how a CRM system can be
used in the sales process, MSc. thesis, Department of Business Administration and
Social Sciences, Lulea University of Technology.

Reinartz, W, Krafft, M & Hoyer, WD 2004, The CRM process: its measurement and
impact on performance, Journal of Marketing Research, vol. 41, no. 3, pp. 293313.

Reynolds, J 2002, Practical Guide to CRM: Building More Profitable Customer
Relationships, CMP Books, Gilroy, CA, USA.

Richards, KA & Jones, E 2008, Customer relationship management: Finding value
drivers, Industrial Marketing Management, vol. 37, no. 2, pp. 120130.

Rigby, DK, Reichheld, FF & Schefter, P 2002, Avoid the four perils of CRM. ,
Harvard Business Review, vol. 80, no. 2, pp. 101109.

Roh, TH, Ahn, CK & Han, I 2005, The priority factor model for customer
relationship management system success, Expert Systems with Applications, vol. 28,
no. 4, pp. 641654.


Saunders, M, Levis, P & Thornhill, A 2009, Research methods for business students,
5
th
edn, Prentic Hall, Harlow.
124

Shahin, A & Nikneshan, P 2008, Integration of CRM and QFD, A novel model for
enhancing customer participation in design and delivery, The TQM Journal, vol. 20,
no. 1, pp. 6886.

Smith, A 2006, CRM and customer service: strategic asset or corporate overhead?,
Hand Book of Business Strategy, pp. 8793.

Stauss, B, Chojnacki, K, Decker, A & Hoffmann, F 2001, Retention effects of a
customer club, International Journal of Service Industry Management, vol. 12, no. 1,
pp. 719.

Swift, R 2001, Accelerating customer relationships using CRM and relationship
technologies, Prentice-Hall, Inc. New York.

Venetis, KA & Ghauri, PN 2004, Service quality and customer retention: building
long-term relationships, European Journal of Marketing, vol. 38, no. 11/12, pp.
15771598.

Verhoef, PC 2003, Understanding the effect of customer relationship management
efforts on customer retention and customer share development, Journal of Marketing,
vol. 67, pp. 3045.

Wang, Y, Lo, HP, Chi, R & Yang, Y 2004, An integrated framework for customer
value and customer-relationship management performance: a customer-based
perspective from China, Managing Service Quality, vol. 14, no. 2/3, pp. 169182.

Winer, RS 2001, A framework for customer relationship management, California
Management Review, vol. 43, no. 4, pp. 89105.

Yin, RK 1994, Case study research: design and methods, 2
nd
edn, Sage Publications,
Thousands Oaks, CA.

Zablah, AR, Bellenger, DN & Johnston, WJ 2004, Customer relationship
management implementation gaps, Journal of Personal Selling & Sales
Management, vol. XXIV no. 4, pp. 27995.

Zikmund, W 2000, Business research methods, 6
th
edn, The Dryden Press.

Zineldin, M 2006, The royalty of loyalty: CRM, quality and retention, Journal of
Consumer Marketing, vol. 23, no. 7, pp. 430437.






125
Appendix A

References related to the questions in the questionnaire


References related to questions in the questionnaire


References

Measurement
criterions
(indicators)



Model
constructs



Massey et al., 2001; Reynolds,
2002; Greve and Albers, 2006;
Coltman, 2007; Keramati et al.,
2009b; Keramati et al., 2010


Collaborative
technologies





Technological
CRM
Resources




Reynolds, 2002; Zablah et al.,
2004; Greve and Albers, 2006;
Keramati et al., 2009b; Keramati et
al., 2010


Operational
technologies


Reynolds, 2002; Reinartz et al.,
2004; Greve and Albers, 2006;
Keramati et al., 2009b; Keramati et
al., 2010


Analytical
technologies


Rigby et al., 2002; Reinartz et al.,
2004; Keramati et al., 2009b;
Keramati et al., 2010


Human
resources



Infrastructural
CRM
Resources



Greenberg, 2004; Greve and
Albers, 2006; Keramati et al.,
2009b; Keramati et al., 2010

Organizational
resources

Mooney et al., 1996; Winer ,2001;
Eng, 2004; Dwyer and Tanner,
2005; Keramati et al. ,2008;
Keramati et al., 2009b; Keramati et
al., 2010


Operational
knowledge
processes









CRM Processes



Winer, 2001; Eng, 2004; Reinartz
et al., 2004; Dwyer and Tanner,
2005; Keramati et al., 2008;
Keramati et al., 2009b; Keramati et
al., 2010


Operational
interaction
processes


Mooney et al., 1996; Winer, 2001;
Eng, 2004; Dwyer and Tanner,
2005; Greve and Albers, 2006;
Keramati et al., 2010



Management
processes







126
Appendix A (Continued)



References related to questions in the questionnaire


Winer, 2001; Ahmad & Buttle,
2002; Farquhar, 2004; Smith,
2006; Coltman, 2007; Keramati et
al., 2010


Customization









Customer Retention
Programs of CRM



Winer, 2001; Verhoef, 2003;
Coltman, 2007; Farquhar &
Panther, 2008; Juan & Yan, 2009


Loyalty
programs

Winer, 2001; Venetis & Ghauri,
2004; Smith, 2006; Coltman, 2007;
Arbore & Busacca, 2009;
Keramati et al., 2010



Customer
service


Stauss et al., 2001; Winer, 2001;
Coltman, 2007; Guo et al., 2009

Community

Winer, 2001; Lneborg and
Nielsen; 2003; Verhoef, 2003;
Eng, 2004; Reinartz et al., 2004;
Wang et al., 2004; Roh et al.,
2005; Greve and Albers, 2006;
Coltman, 2007; Keramati et al.,
2010



_




Customer Retention
























127
Appendix B


English Questionnaire




Personal information:

Gender: Male Female

Age: Under 20 20-30 31-40 41-50 51 and over

Educational level: Diploma Associate degree Bachelor degree

Master degree Ph.D

Field of study: Banking Economics Management Accounting

Computer engineering others

Information on the bank:

Name of the bank you are working in: Refah Maskan Saman

Pasargad

What is the type of your bank? Governmental Private

Your years of experience: Under 5 years 5-10 11-15 16-20

21 and over










128

Appendix B (continued)

Please indicate the extent to which the following technologies have been used by your
bank. Use a 17 scale: 1 = not at all; 4 = to some extent; and 7 = strongly.



Code Scales



CRM-TECH Technological CRM resources

TECH-V1 Collaborative CRM technologies


Col 1 1. Telephone banking

Col 2 2. Automated teller machine (ATM)

Col 3 3. POS

Col 4 4. Pin Pad

Col 5 5. Internet banking

Col 6 6. Email Management

Col 7 7. Mobil banking (mobile banking, SMS banking)

Col 8 8. Help desk

Col 9 9. Call center

TECH-V2 Operational CRM technologies


Op 1 1. Information systems in sales activities
(e.g., online distributions, transaction systems)

Op 2 2. Information systems in marketing activities
(e.g., personalized marketing, offerings product information)

Op 3 3. Information systems in customer service and support
activities (e.g., customer satisfaction tracking, customer service)

Op 4 4. Customer database

Op 5 5. Credit cards

TECH-V3 Analytical CRM technologies

Anal 1 1. Tools for customer data collection

Anal 2 2. Tools for customer data storage

Anal 3 3. Tools for knowledge management in customer data
analysis

Anal 4 4. Tools for analyzing customer data

Anal 5 5. Tools for decision making in customer strategy




129


Appendix B (continued)

Please indicate the extent to which you agree with the following statements. Use a 1
7 scale: 1 = strongly disagree; 4 = neither agree nor disagree; and 7 = strongly agree.



Code Scales


CRM-INFRA Infrastructural CRM resources

INFRA-V1 Human resources

HR 1 1. Your employees have shown their commitment to your
customer strategy (later deleted)

HR 2 2. Your employees are well trained in using customer
related technologies

HR 3 3. You have marketing and sales expertise to have a
desired CRM

HR 4 4. You have qualified technical staff to provide technical
support for use of technology to build satisfactory relationships with customers

HR 5 5. In general, your employees accept the changes in your
organization readily (later deleted)

INFRA-V2 Organizational resources

Org 1 1. The employees performance are measured and the
employees who meet customer needs and successfully serve the customers are
rewarded

Org 2 2. You have specific programs to improve your
employees skills on CRM strategies

Org 3 3. There is a good synergy between all departments in
your bank

Org 4 4. The information flow between the front office and the
back office in your bank has been examined.

Org 5 5. You have a clear customer strategy with defined goals
(later deleted)

Org 6 6. Your organizational structure is designed based on
your customers situations








131


Code Scales


CRM-PRO CRM processes

PRO-V1 Operational knowledge processes

Okp 1 1. Providing your customers with proper information about
your products and services (later deleted)

Okp 2 2. Continuous collection of customer data in order to
recognize them (e.g., to recognize valuable customers)

Okp 3 3. Customers tracking when they contact your bank through
the touch points
Appendix B (continued)


Please indicate the extent to which the following CRM processes have been
influenced by CRM resources in your bank Use a 17 scale: 1 = no effect; 4 =
moderate effect; and 7 = extreme effect.
















PRO-V2 Operational interaction processes

Oip 1 1. Welcoming the new customers


Oip 2 2. Different treatment with your customers based on their
value to your bank

PRO-V3 Management processes

Mp 1 1. Studying about the products or services your customers
Need

Mp 2 2. Segmenting customers (e.g., based on their needs)

Mp 3 3. Analyzing your customer data

Mp 4 4. Studying your existing customers' behavioral patterns
(Purchasing behavior, contacting behavior, satisfaction and loyalty, retention and
defection patterns)

Mp 5 5. Tracking your customer satisfaction level














131
Appendix B (continued)


Please indicate the extent to which the following customer retention programs of
CRM have been improved in your bank. Use a 17 scale: 1 = no improvement; 4 =
moderate improvement; and 7 = extreme improvement.










































Code Scales


CUS-RET-PROG Customer retention programs of CRM

RET-PROG-V1 Customization

Cus 1 1. Individualization of marketing messages to the customers

Cus 2 2. Customization of products and services for the customers
(later deleted)

Cus 3 3. Communicating with customers based on the way they desire

RET-PROG-V2 Loyalty programs

Loy 1 1. Offering rewards to motivate customers to request and
make next purchase

Loy 2 2. Offering rewards to long term customers

Loy 3 3. Offering more rewards for more investments

Loy 4 4. Giving some free complementary products or services


RET-PROG-V3 Customer service

Cs1 1. Educating customers about how they can use (or better use)
the products or services

Cs 2 2. Handling the customers complaints responsively

Cs 3 3. Handling customers requests or problems with the product
or services (later deleted)

Cs 4 4. Providing the customers with the ability of real time
interactions with service representatives through proper touch points

Cs 5 5. Holding a dialogue with the customers prior to use a
reactive solution such as complaint handling

Cs 6 6. Safe and error free transactions (later deleted)

Cs 7 7. Providing clear instructions in use of the services (later
deleted)


132

Code Scales


CUS-RET Customer retention
Appendix B (continued)


















Please indicate the extent to which your bank has improved over the previous two
years on the following statements. Use a 17 scale: 1 = no improvement; 4 =
moderate improvement; and 7 = extreme improvement.








CR 1 1. Customers' loyalty to your bank (later deleted)

CR 2 2. Customers have trusted on the e-banking services you
have provided for them.

CR 3 3. Overall customer satisfaction from the e-banking
services you have provided for them

CR 4 4. Overall customer retention














Cs 8 8. Providing user friendly website for the customers

Cs 9 9. Your e-services (such as the website for internet banking)
are easy to use (later deleted)

RET-PROG-V4 Community

Com 1 1. Building online customers networks through which they are
able to exchange information about the products and also can interact between themselves
and your bank easier and more personally.

Com 2 2. Building online customers networks through which they are
able to give their opinions about bank performance.

Com 3 3. Building online customers networks for e-learning purposes.








133
Appendix C:
Farsi Questionnaire



.

.
.

:



.



:

: 21 31 - 21 41 - 31 51 - 41 51

:

:

:

:

: 5 11 - 5 15 - 11 21 - 16 21


.



. 1 7 ( 1 =
2 = 3 = 4 = 5 = 6 =
7 = .)


7

6

5

4

3

2

1

1 .



2 . ( ATM )



3 . ( (POS



4 . ( Pin Pad )



5 . ( )



6 .



7 . ( SMS )



8 . help desk ( )...


134


. 1 7 ( 1 =
2 = 3 = 4 = 5 = 6 =
7 = .)


7

6

5

4

3

2

1

9 . call center



11 . (
)



11 . (
)



12 . (
)



13 . (data base)



14 .



15 .



16 .



17 .



18 .



19 .






.
1 7 .

7

6

5

4

3

2


1



1 .
. ( )



2 .
.



3 . .



4 .
.



5 . . ( )



6 .
.



7 .
.



8 . .



9 . .


135

.
1 7 .

7

6

5

4

3

2


1



11 .
. ( )



11 . .







1


2


3


4


5




6







7





. 1 7
( 1 = 2 = 3 = 4 = 5 =
6 = 7 = .)












1 . ( )









2 .









3 .










4 .









5 .









6 .











7 . (
)















8 .

9 . (
)










11 .






. 1 7 .


7


6

5

4

3

2

1

1 .



2 . ( )



3 .
( SMS )...

4 .




5 .




6 .


1
136


. 1 7 .


7


6

5

4

3

2

1

7 .



8 .




9 .



11 . ( )



11 .




12 .



13 . ( ) ( )


14 .
( ) ( )

15 .


16 . ( )



17 .
.



18 .
.



19 .





. 1 7 .


7

6

5

4

3

2

1

1 . ( )



2 .



3 .



4 .













1
137
Appendix D
Reliability calculation

To calculate the reliability of the items, 30 questionnaires (N=30) have been
distributed to the respondents. After collecting all the questionnaires, we calculated
the Cronbach's alpha for the items. As it is shown below, the calculated Cronbach's
alpha for 63 items is equal to .970. Then, we deleted the first item and calculated the
Cronbach's alpha again. This is done for the second, third, and all of the items
respectively. The results show that in each of the mentioned steps there is no change
in the value of Cronbach's alpha. Therefore, we can conclude that the designed
questionnaire can be considered reliable.


Case Processing Summary

N %
Cases Valid 30 100.0
Excluded
a
0 .0
Total 30 100.0
a. Listwise deletion based on all variables in the
procedure.


Reliability Statistics
Cronbach's Alpha N of Items
.970 63


Item Statistics

Mean Std. Deviation N
col1 5.8000 .76112 30
col2 6.4333 .67891 30
col3 5.3333 .92227 30
col4 6.3333 .47946 30
col5 5.4333 1.10433 30
col6 4.6000 1.19193 30
col7 4.5667 1.19434 30
col8 4.3667 .80872 30
col9 5.0667 1.04826 30
op1 4.5333 1.40770 30
138
op2 4.6667 1.06134 30
op3 3.8667 .93710 30
op4 4.6000 .96847 30
op5 5.5000 1.07479 30
anal1 5.5667 1.13512 30
anal2 5.6667 1.06134 30
anal3 5.6333 1.12903 30
anal4 5.5000 1.16708 30
anal5 5.4333 1.19434 30
HR1 6.3000 .53498 30
HR2 5.6667 .66089 30
HR3 5.5667 .56832 30
HR4 5.1667 1.01992 30
HR5 5.3667 .66868 30
org1 5.3000 .83666 30
org2 5.7333 .78492 30
org3 5.4333 .85836 30
org4 5.3667 .92786 30
org5 6.0333 .76489 30
org6 5.9333 .86834 30
okp1 5.8333 .64772 30
okp2 5.0000 .74278 30
okp3 5.1667 1.05318 30
oip1 6.0667 .78492 30
oip2 5.8333 .69893 30
mp1 5.9000 .66176 30
mp2 5.4333 .72793 30
mp3 5.6667 .75810 30
mp4 5.0667 .78492 30
mp5 5.6333 .66868 30
cust1 3.8333 1.74363 30
cust2 5.1333 1.10589 30
cust3 4.9667 1.06620 30
loy1 5.0000 .90972 30
loy2 5.7000 .83666 30
loy3 4.9333 .86834 30
139
loy4 5.5333 .57135 30
cs1 5.6667 .60648 30
cs2 6.6000 .49827 30
cs3 6.4667 .50742 30
cs4 5.9000 .80301 30
cs5 5.9000 .75886 30
cs6 6.2333 .43018 30
cs7 6.4333 .56832 30
cs8 5.8667 .68145 30
cs9 5.4333 .50401 30
com1 4.3000 1.93248 30
com2 4.5333 1.87052 30
com3 3.7667 1.92414 30
CR1 6.3333 .47946 30
CR2 5.8333 .53067 30
CR3 5.7667 .50401 30
CR4 5.8000 .61026 30


Item-Total Statistics

Scale Mean if Item
Deleted
Scale Variance if
Item Deleted
Corrected Item-
Total Correlation
Cronbach's Alpha
if Item Deleted
col1 336.5000 1205.431 .616 .969
col2 335.8667 1214.120 .507 .969
col3 336.9667 1192.792 .705 .969
col4 335.9667 1224.654 .408 .970
col5 336.8667 1181.568 .735 .969
col6 337.7000 1168.631 .841 .969
col7 337.7333 1167.375 .855 .968
col8 337.9333 1225.857 .213 .970
col9 337.2333 1186.185 .710 .969
op1 337.7667 1160.461 .794 .969
op2 337.6333 1178.792 .805 .969
op3 338.4333 1183.909 .834 .969
op4 337.7000 1193.666 .657 .969
op5 336.8000 1179.062 .790 .969
141
anal1 336.7333 1175.444 .794 .969
anal2 336.6333 1176.723 .834 .969
anal3 336.6667 1184.368 .681 .969
anal4 336.8000 1177.200 .749 .969
anal5 336.8667 1177.223 .731 .969
HR1 336.0000 1218.483 .530 .970
HR2 336.6333 1210.930 .591 .969
HR3 336.7333 1237.444 .020 .970
HR4 337.1333 1185.844 .736 .969
HR5 336.9333 1245.030 -.147 .971
org1 337.0000 1210.897 .463 .970
org2 336.5667 1197.771 .739 .969
org3 336.8667 1202.395 .595 .969
org4 336.9333 1188.340 .772 .969
org5 336.2667 1201.237 .693 .969
org6 336.3667 1189.068 .814 .969
okp1 336.4667 1219.223 .418 .970
okp2 337.3000 1212.976 .484 .970
okp3 337.1333 1187.499 .688 .969
oip1 336.2333 1201.495 .670 .969
oip2 336.4667 1226.533 .236 .970
mp1 336.4000 1214.455 .513 .969
mp2 336.8667 1245.913 -.153 .971
mp3 336.6333 1200.171 .720 .969
mp4 337.2333 1196.806 .758 .969
mp5 336.6667 1230.161 .170 .970
cust1 338.4667 1140.602 .806 .969
cust2 337.1667 1168.833 .906 .968
cust3 337.3333 1180.023 .784 .969
loy1 337.3000 1206.631 .492 .970
loy2 336.6000 1223.559 .244 .970
loy3 337.3667 1197.964 .663 .969
loy4 336.7667 1219.564 .468 .970
cs1 336.6333 1222.654 .366 .970
cs2 335.7000 1227.872 .299 .970
cs3 335.8333 1239.247 -.026 .970
141
cs4 336.4000 1210.524 .490 .970
cs5 336.4000 1245.145 -.134 .971
cs6 336.0667 1239.789 -.047 .970
cs7 335.8667 1231.016 .181 .970
cs8 336.4333 1235.771 .049 .970
cs9 336.8667 1225.292 .369 .970
com1 338.0000 1115.103 .928 .968
com2 337.7667 1120.530 .915 .968
com3 338.5333 1116.533 .920 .968
CR1 335.9667 1214.240 .721 .969
CR2 336.4667 1214.326 .648 .969
CR3 336.5333 1216.740 .613 .969
CR4 336.5000 1220.672 .411 .970


Scale Statistics
Mean Variance Std. Deviation N of Items
3.4230E2 1.239E3 35.19321 63