Exploring the relationship between determinants of customer relationship management practice

International Journal of Management (IJM)
Volume 11, Issue 3, March 2020, pp. 16–27, Article ID: IJM_11_03_003
Available online at />Journal Impact Factor (2020): 10.1471 (Calculated by GISI) www.jifactor.com
ISSN Print: 0976-6502 and ISSN Online: 0976-6510
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EXPLORING THE RELATIONSHIP BETWEEN
DETERMINANTS OF CUSTOMER
RELATIONSHIP MANAGEMENT PRACTICE
Tsegaye Mathewos Mena*
PhD Scholar, Faculty of Management, PIMR, Parul University, Waghodia, Vadodara,
Gujarat, India
Dr. Bijal Zaveri
Dean, Faculty of Management, PIMR, Parul University, Waghodia, Vadodara, Gujarat, India
*Corresponding Author Email:
ABSTRACT
Customer Relationship Management (CRM) is an enterprise strategy that attracts,
retains and elevates the clients. Proper implementation of this strategy will allow
organizations to carry out tasks at a lower cost (Bavarsad & Hosseinipour, 2013).
This study is undertaken to examine the determinants of the practice of customer
relationship management in the hotel industry in the case of Hawassa City, Ethiopia.
The study employed an explanatory research design with quantitative research
approach. The required data were collected from 257 selected hotel employees by
adopting a stratified random sampling technique. The collected data were analyzed
using both descriptive statistics (frequency, percentage, mean, and standard
deviation) and inferential statistics employing correlation and multiple linear
regressions. The findings of the study indicated that the practice of customer
relationship management at four star hotels was found to be moderate. The main
determinants that influence customer relationship management practice in the study

area were knowledge of customer relationship management, customer management
process, technology for supporting customer relationship management, and human
resource knowledge.
Keywords: Customer Relationship Management, Hotel industry, Tourism, Culture.
Cite this Article: Tsegaye Mathewos Mena and Dr Bijal Zaveri, Exploring the
Relationship between Determinants of Customer Relationship Management Practice,
International Journal of Management (IJM), 11 (3), 2020,pp. 16–27.
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1. INTRODUCTION
The highest significant achievement in any business sector is building strong customer
relations. Business companies have recognized that their most important assets are consumers
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Tsegaye Mathewos Mena and Dr Bijal Zaveri

and regard customer relationships as profitable transactions. CRM has become one of the
most controversial issues and a focal point in the business sector recently (Balaram &
Adhikari, 2010). According to Darrel (2010), CRM is among the developing tools vital to
organizational greatness, and the second best effective management tool after strategic
planning was rated from 2006 to 2010. For the tourism industry also the idea of CRM is very
relevant. According to world tourism organization (WTO, 2010), there were 1.3 billion
tourists traveled all over the world. When compared with global average of 7%, international
tourist arrivals to Africa increased by 8.6%.Similarly, the number of tourist flows in Ethiopia
is increasing from time to time. As a result, the Ministry of Culture and Tourism office of the
country has long term plan to triple the number of foreign visitors to be more than 2.5 million
by 2020.The hotel industry has the lion share for tourism attraction. Hawassa city has got a

variety of star hotels with attractive facilities. In order to get loyal customers, hotels should
have sustainable relationship with their customers. In this regard, CRM strategy is of great
benefit to the organizations. However, customer relationship management practice in the hotel
industry was not clearly known. Previous studies conducted on CRM focused on other service
sectors. For example, Solomon (2014) and Akroush et al. (2011) studied on banking service
sector, Bavarsad and Hosseinipour (2013) studied on petrochemical company, Naveed(2012)
studied on healthcare service sector, and Siriprasoetsin et al (2011) studied on academic
libraries. There is still a marked lack of research on CRM in hotel industry. Therefore, this
study tried to investigate the determinants of customer relationship management practice in
the hotel industry the case of Hawassa, Ethiopia.

2. LITERATURE REVIEW
CRM is a strategic approach that aims to create greater shareholder value through the creation
of effective customer relationships. CRM combines the potential of marketing relationship
strategies and IT to create profitable, long-term relationships with customers, and other key
stakeholders. CRM provides enhanced data and information utilization opportunities. That
requires a cross-functional integration of processes, people, operations and marketing
capabilities through information, technology and applications (Gebeyehu, 2014).
However, customer relationship management is a combination of people, mechanisms and
technology which helps the company better grasp its customers (Chen & Popovich, 2003).
CRM can also be seen as an integrative process that constructs and maintains successful
relationships with customers by delivering exceptional value and satisfaction to the
customers. The CRM strategy should therefore take into account the whole company and this
strategy should be regularly revised (Sen & Sinha, 2011). CRM can also be seen as a
consumer-centered corporate strategy integrating sales, marketing and customer service, and
helping the company build and increasing the customer loyalty (Chalmeta, 2006). CRM
knowledge is grappled with by individuals or organization administrators involved in policymaking and driving CRM to success. Administrators are required to have management
capacity; that is, they should know and understand CRM well. They are required to create
goals and lead the company by effectively representing CRM, assuming responsibility for
implementing CRM plans, and propelling implementation through some securities that help

CRM like personnel, working environment, time and technology. The managers should be
able to mitigate the issues, so that they do not achieve the goals they anticipated (Combe,
2004). The staff must be familiar with and appreciate the CRM and organizational approaches
and goals, as well as be knowledgeable about the values of customer-oriented services and the
implications of establishing and maintain good relations between customers and organization
(Greenberg, 2001).Corporate culture emerged from and accrued from all supporters ' views,
aspirations, behaviours and shared values All these aspects result in co-operative learning,
acceptance and implementation to achieve the organizational goals and are moved from one
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Exploring the Relationship between Determinants of Customer Relationship Management Practice

generation to the next (Wheelen, & Hunger, 2000). As far as CRM administration is
concerned, it can be said that the most difficult factors to achieve are organizational culture
and communication, since the administrators need to change attitudes and make staff accept
new concepts in CRM. In addition, this involves building a key working culture, establishing
cooperation agreements, building teamwork consisting of people from different disciplines
with different roles, integrative cooperation and effective communication, all of which require
the involvement of staff at all levels, from administrators to operators (Mendoza et.al., 2006;
Stone, Woodcock, & Machtynger, 2001). The staff must be familiar with and appreciate the
CRM and organizational approaches and goals, as well as be knowledgeable about the values
of customer-oriented services and the implications of establishing and maintain good relations
between customers and organization (Greenberg, 2001).The processes of customer
management are the most important factors supporting the introduction of CRM in
organizations. The process commences from getting to know customers and building good
relationships with customers based on the behaviors of targeted groups (Nykamp, 2001). An

organization needs to make a customer inventory as the foundation for relationship building
through the construction of complete customer databases that are accessible by the
organization. Each customer account should be analyzed in order to understand his or her
need and attitudes, which are the basis for good relationship building and ongoing
relationships maintenance (Stefanou, Sarmaniotis, & Stafyla, 2003). The customer
management processes cover recording and registering customer accounts, analyzing
customer accounts for improved customer understanding, providing services to library
customers, preparing for expected customers, interacting continuously with customers, and
arranging other activities (Ho & Chuang, 2006; Mendoza et al., 2006). Nowadays information
technology and communication are used as the tool for organizational communication,
knowledge management, and strategies (Laudon, & Laudon, 2002). Likewise, CRM
technology is the important strategic tool of an organization to attain success in CRM
application (McKie, 2001; Stefanou, Sarmaniotis, & Stafyla, 2003) owing to the basic
structure of information technology and information from customers databases (Torres, 2004).
Primarily, the customer management strategy requires a center to store all customers' news
and information. This center must have efficient information technology architecture that is
adjustable according to the changing environment (Buttle, 2004; Combe, 2004). It must
contain a systematic CRM in order to communicate with customers through direct dispatching
of information to customers, a strategy for retaining customers with the organization (Steffes,
2005). Besides, the quality of information sent to customers also affects the building of good
relationship with customers. In this respect, application of technology can upgrade the
information qualities (Zablah, 2005).
Ferrel and Hartline (2005) observe that employees are central to an effective CRM and as
such companies have to manage their relationships with their employees if they have any
hope of fully serving customer needs and this is particularly important in companies where
employees are customer's eyes. Consequently, Ferrel and Hartline emphasized that it is the
importance of this that Bill Cooney, Deputy CEO of USAA, American property and casualty
insurance company with a portfolio of over $60 billion asset management with almost 100%
customer retention, and consistently ranked among the 100 best companies to work for in the
United States, remarked that: "If you don't take care of the customers, they're about to take

care of them. We're giving employees everything they need to be happy and absolutely
thrilled to be here. If they're not happy, in the long run we won't have satisfied customers. If
we don't we're in the wrong business, we have to have love for customers. Simns (2003) is
similarly of the opinion that the success of the CRM initiative depends on the involvement of
staff in designing it at an early stage, rather than simply imposing it on them.. The following
conceptual framework has been constructed based on the literature review to show the

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Tsegaye Mathewos Mena and Dr Bijal Zaveri

relationship between dependent and independent variables of the study. Accordingly, there are
five independent which were included. These are knowledge of customer relationship
management, organizational culture, customer management process, technology for
supporting customer relationship management, and human resource knowledge. The
dependent variable of the study is customer relationship management practice.

2.1. Hypothesis
H1: Knowledge of CRM has significant effect on customer relationship management.
H2: Organizational culture has significant effect on customer relationship management.
H3: Customer management process has significant effect on customer relationship
management.
H4: Technology has significant effect on customer relationship management.
H5: Human resource knowledge has significant effect on customer relationship management.

3. RESEARCH METHODOLOGY

The study employed descriptive and explanatory research design. This research was based on
quantitative research method which deals with summarizing and examining the customer
relationship variables and its determinants. Stratified sampling technique was used to select
representative sample of employees from each hotel. Hawassa city had five four-star hotels
and the target groups of the study were hotel employees. Accordingly, Central international
hotel had 250 employees, Ker-awud hotel had 60 employees, Lewi hotel and resort had 120
employees, Haile resort had 180 employees, and South Star hotel had 110 employees. There
searcher used Yamane’(1967)formula to calculate sample size and the representative sample
size of the study from a total population of 720 was 257.
 257

Where, n = the sample size
N = the total population
e = margin of error

Table 1 Number of permanent employees in selected hotels
No.
1
2
3
4
5

Four-star hotels
N
Central international hotel
250
Kerawud hotel
60
Lewi hotel and resort

120
Haile resort
180
South star hotel
110
Total
720
Source: Human Resource Office Report from Respective hotels, 2019

n
89
22
43
64
39
257

This study employed both opened and closed ended questions as an instrument for data
collection. A five-point scale, ranging from strongly disagree (1) to strongly agree (5) was
used in designing the questions. Finally, the data were analyzed using both descriptive and
inferential statistics. Descriptive statistics such as frequency and mean, as well as inferential
statistics such as correlation and multiple linear regression were applied to achieve the
research objective.

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Exploring the Relationship between Determinants of Customer Relationship Management Practice

4. RESULT AND INTERPRETATION
This section presents the results of the study and its interpretation relating to customer
relationship management and its determinants among hotel based on the data collected from
four star hotels employees in of Hawassa city, Ethiopia. The data were collected through
questionnaire, analyzed by the help of SPSS software, and the results were presented using
tables and figure.

4.1. Descriptive Summary of Study Variables
Under this topic, the questions that were collected using Likert scale items were analyzed. To
make the analysis easy, the researcher used Al-Sayaad, Rabea and Samrah (2006) proposed
techniques of mean score ranges. The ranges of values were presented as disagreeing if the
mean score is between 1.00 and 2.60, neutral if the mean score is between 2.60 and 3.40 and
agree if the mean score is above 3.4. Based on these classifications, the interpretations of both
the dependent and independent variables of the study were presented as follows:
Table 2 Descriptive Summary of Study Variables
Variables
Minimum
Knowledge of CRM
1.60
Organizational culture
1.17
Customer management
process
1.57
Technology for
supporting CRM
1.00
Human resource

knowledge
0.67
CRM practice
1.50
Source: Own survey, 2019

Maximum
5.00
5.00

Mean
2.9074
2.9183

Std. Deviation
0.71479
0.59805

5.00

2.9128

0.58432

5.00

2.5894

0.84376

5.00
5.00

4.0856
2.9056

1.52554
0.56906

As Table 2 shows, respondents have a neutral response on knowledge of CRM (M =2.91,
SD = 0.715), organizational culture (M =2.92, SD = 0.598), customer management process
(M =2.91, SD = 0.584), and CRM practice (M =2.91, SD = 0.569). Other respondents were
tended to the idea of disagreement on technology for supporting CRM (M =2.59, SD = 0.844)
and tended to the idea of agreement on human resource knowledge (M =4.09, SD = 1.526).

4.2. The Relationship between Study Variables
The possible values of correlation coefficients range from –1 (a perfect negative relationship)
to +1 (a perfect positive relationship) or a direct relationship between two variables. A value
of 0 indicates no linear relationship between two variables (Kothari, 2004). In this section, the
independent variables were analyzed one by one using correlation analysis in order to identify
their individual relation with the dependent variable before conducting the regression
analysis.
Table 3 Correlation Analysis Result
Variables
KCRM
ORC
CMP
TCRM
HRK

KCRM
1
.343**
.518**
.499**
.311**

ORC

CMP

TCRM

HRK

1
.414**
.135*
.531**

1
.628**
.479**

1
.043

1

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CRMP




Tsegaye Mathewos Mena and Dr Bijal Zaveri
CRMP
.615**
.425**
.873**
.685**
.755**
**Correlation is significant at the 0.01 level (2-tailed) Source: Own survey, 2019

1

The results of Table 3 shows that knowledge of customer relationship management has a
positive and statistically significant association with the customer relationship management
practice (r = 0.615, p<0.01). This indicated that the knowledge of customer relationship
management has a significant relationship with the customer relationship management
practice. Likewise, organizational culture has positive and statistically significant relationship
with customer relationship management practice (r = 0.425, p<0.01). In the same manner,
customer management process has positive and statistically significant relationship with
customer relationship management practice (r = 0.873, p<0.01). Similarly, technology for
supporting customer relationship management has positive and statistically significant
relationship with customer relationship management practice (r =0.755, p<0.01). Equally,
human resource knowledge has positive and statistically significant relationship with
customer relationship management practice (r =0.471, p<0.01). The result implies that the

independent variables have weak and moderate correlation to each other, but they have
moderate, strong, and very strong relationship to the dependent variable.

4.3. Determinants of Customer Relationship Management
In this study, multiple linear regression analysis was applied since it facilitates the evaluation
of the level of effect that multiple independent variables that cause on a particular dependent
variable. Before applying regression analysis to test the determinant factors affecting
customer relationship management practice, normality and multicollinearity tests are made for
identifying misspecification of data if any so as to fulfill research quality as follows:
4.3.1. Normality Test
The important diagnostic test conducted in this paper is the normality assumption. Normality
test is used to determine whether a data set is modeled for normal distribution or not.

Figure 1 Frequency Distribution of Standardized Residual
Source: Own survey, 2019

The result of Figure 1 presentsa histogram showing the shape of a normal distribution.
Although there are some residuals (e.g., those occurring around 0) that are relatively far away
from the curve, many of the residuals are fairly close. Moreover, the histogram is bell shaped
which lead to infer that the residual (disturbance or errors) are normally distributed. Thus, no
violations of the assumption normally distributed error term.

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Exploring the Relationship between Determinants of Customer Relationship Management Practice

4.3.2. Multi co Linearity Test
The other important diagnostic test conducted in this paper is the multi co linearity
assumption. Under this section multicollinearity test were checked using variance inflation
factor (VIF) and tolerance in Table 4
Table 4 Multi co linearity results on the variable
Model
1

R
R Square
a
.935
.873
Co linearity Statistics
Independent variables
Tolerance
VIF
Knowledge of CRM
.636
1.571
Organizational culture
.668
1.498
Customer management process
.384
2.603
Technology for supporting CRM
.465
2.152
Human resource knowledge

.554
1.804
Source: Own survey, 2019

Adjusted R Square
.871

One of the information included in Table 4. is collinearity statistics, which are associated
with the extent of correlation between independent variables. If there is a high correlation
between two independent variables, the regression model assumes redundancy of one of these
variables that the significance of it becomes too low and its coefficient also be negatively
affected. As a rule of thumb, a tolerance of >.10 and a VIF < 10 are considered as good
enough to minimize the effect of multicollinearity (Miller and Whicker, 1999). Thus, the
result implies that the regression model is not affected by higher correlation between two
independent variables.
According to the model summary of multiple linear regression analysis, the R value of the
model as per Table 5 was 0.935 which shows the highest degree of relationship between
independent and dependent variables. The adjusted R2 value of the regression model was
0.871, indicating that 87.1% of variance in customer relationship management practice was
accounted by knowledge of customer relationship management, organizational culture,
customer management process, technology for supporting customer relationship management
and human resource knowledge. The remaining 12.9% of variance in customer relationship
management practice accounted by other factors not stated in this study.
Table 1 Results of ANOVA Output
Model
Sum of Squares
Regression
72.409
Residual
10.491

Total
82.899
Source: Own survey, 2019
1

df
5
251
256

Mean Square
14.482
.042

F
346.488

Sig.
.000b

The result of the ANOVA table (Table 5) answers the question whether the multiple linear
regression model itself is statistically significant or not significant. Since the F-test found in
the ANOVA table measures the probability of chance departure from a straight line
(F=346.488, p<0.001), the overall model is significant. This indicated that the regression
model is statistically significant when knowledge of customer relationship management,
organizational culture, customer management process, technology for supporting customer
relationship management and human resource knowledge were included.
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Std.


Tsegaye Mathewos Mena and Dr Bijal Zaveri

Table 2 Results of Multiple Linear Regression Analysis
Unstandardized
Coefficients
B
SE
.243
.079
.083
.022
.049
.026
.456
.035
.266
.022

Standardized
Coefficients
Beta

t
Model
1

(Constant)
3.080
Knowledge of CRM
.104
3.703
Organizational culture
.052
1.876
Customer management process
.469
12.939
Technology for supporting
.395
11.979
customer management
Human resource knowledge
.064
.011
.170
5.646
Note: B= Regression coefficient (Estimate), Std. Error = Standard Error, Dependent variable =
Customer Relationship Management Practice
Source: Own survey (2019)

Sig.
.002
.000
.062
.000
.000

.000

As can be seen from the results of Table 6, out of five variables which were included in
the model, four predictors have found to be a significant effect on the customer relationship
management practice. These are knowledge of customer relationship management, customer
management process, technology for supporting customer relationship management and
human resource knowledge.

4.4. Knowledge of Customer Relationship Management
According to the results of Table 6, knowledge of customer relationship management has a
positive and significant effect on customer relationship management practice. The results of
the regression coefficient (   0.104, p  0.001) indicates that a one unit increase in the
knowledge of customer relationship management, brings a 0.104 the customer relationship
management practice. This indicated that having knowledge of customer relationship
management increase the customer relationship management practices.

4.5. Customer Management Process
In line with this variable, Table 6 shows that customer management process has a positive and
significant effect on the customer relationship management practice. The results of the beta
coefficient (   0.469, p  0.001) indicates that a one unit increase in the customer
management process, leads a 0.469 unit increase customer relationship management practice.

4.6. Technology for Supporting Customer Relationship Management
In connection to this variable, Table 6 shows that technology for supporting customer
relationship management has a positive and significant effect on customer relationship
management practice. The results of the beta coefficient and p-value (   0.395, p  0.001)
increases that a hotel increase its customer relationship management practice by 0.395 as a
result of a one unit increase in the technology for supporting customer relationship
management. The values of the beta coefficient indicated that for every unit increase in
technology for supporting customer relationship management, a 0.395 unit increase in

customer relationship management practice is predicted.

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Exploring the Relationship between Determinants of Customer Relationship Management Practice

4.7. Human Resource Knowledge
In line with this variable, the result of Table 6 shows that human resource knowledge has a
positive and significant effect on customer relationship management practice. The result of
the beta coefficient also indicates that a one unit increase in the knowledge of human
resource, leads a 0.170 unit increase in the customer relationship management practice (
  0.170, p  0.001) .

5. CONCLUSION
The practice of customer relationship management at the four-star hotels in Hawassa City has
been no to norm. Key determinants affecting customer relationship management practice in
the study area were expertise in customer relationship management, customer service process,
technology to help customer relationship management and human resource expertise.
Knowledge in customer relationship management strengthens the management of customer
relationship business. Knowledge of the hotel and knowledge of customer relationship
management systems, customer preferences and behaviors will help improve management
practices for customer relations. Accepting and supporting the use of customer relationship
management as well as having a clear vision and mission to use customer relationship
management in the hotel's strategic plan helps with their appropriate practice. Direct exposure
to the customer service process further improves management practices for the customer
relationships. Tracking and identification of consumer profiles, consumer review, customer

recognition, individual customer service preferences, current customer engagement and
customer-oriented practices affect customer relationship management practices. Similarly, the
main tool for customer relationship management practices are customer service support
systems such as communication technology, information technology, and operational support
technology. Likewise, knowledge of human resources affects the practice of managing
customer relations.

6. IMPLICATONS TO PRACTITIONERS
In order to meet the standards of customers’ relationship management, the researcher hereby
suggests the following recommendations.
 Hotel staff knowledge about CRM influences customer relationship management
practice. Hotels should therefore enhance employee awareness about customer
relationship management by offering reliable training on how to use customer
relationship management and properly maintaining the customer database.
 Customer management process is described as a significant factor influencing
customer relationship management practices. Hotels should therefore enhance the
cycle of customer management by constantly improving services and benefits,
partnering with key customers, increasing the ability to meet their customer needs,
fulfilling commitments, offering consistent quality services and continuously
delivering superior and added value to key customers. The hotel managers should also
engage in more dialog and discussions with key customers to determine where their
needs lie in order to provide them with a tailor-made deal.
 Customer management support technology is a factor which affects customer
relationship management practices. Hotels should therefore enhance technology-based
CRM by maintaining robust customer records to develop their services and integrating
the required hardware and software facilities to meet customers ' evolving need for

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Tsegaye Mathewos Mena and Dr Bijal Zaveri

advancement technologies, by retaining the right technical staff to support the use of
computers and device technologies. Awareness of human resources is found to be a
significant factor impacting customer relationship management practices. Hotels will
concentrate on improving employee awareness about customer relationship
management by taking care of them and providing adequate training prior to using the
program.

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