Exploring the Impact of Customer Relationship Management on Customer Satisfaction in the Banking Industry

Abstract

Customer relationship management (CRM) has become increasingly important in the services sector, and particularly within the banking industry, as institutions compete to build and retain long-term customer relationships. This study examines the impact of CRM on customer satisfaction in the banking industry of Pakistan, with CRM as the independent variable and customer satisfaction as the dependent variable. CRM is operationalized through six sub-dimensions: service quality, customer database, relationship development, employee behavior, physical environment, and interaction management. Using an explanatory, quantitative research design, a structured questionnaire comprising 26 five-point Likert-scale items was administered to customers of banks operating in Pakistan, yielding 256 usable responses. Data were analyzed in IBM SPSS using reliability testing, descriptive statistics, correlation, and multiple regression analysis. The results show that all six sub-dimensions of CRM are positively correlated with customer satisfaction, and that CRM as a whole has a statistically significant, positive impact on customer satisfaction in the banking sector. Regression results indicate that service quality, customer database, employee behavior, and interaction management are significant predictors of customer satisfaction. At the same time, relationship development and physical environment are not statistically significant in this model. The findings suggest that banks should prioritize service quality and staff conduct, alongside efficient handling of customer problems, in order to strengthen customer satisfaction.