The Effect Of Customer Relationship Management Practices On Customer Loyalty: A Case Of Awash Bank S.C Branches In Holeta City, West Shoa, Oromia Regional State, Etheiopia

Abstract

This study explores the role of Customer Relationship Management (CRM) practices in shaping customer loyalty at three Awash Bank branches in Holeta City, Ethiopia. The primary objectives were to assess the current state of CRM implementation, evaluate its impact on loyalty, and identify gaps between urban and rural service contexts. Employing a mixed‐methods explanatory sequential design, we first surveyed 400 bank customers analyzing data with SPSS 28 (descriptive statistics, Spearman’s correlation, ordinal logistic regression) and then conducted in‐depth interviews with 45 branch staff, which were thematically analyzed. Key findings indicate significant urban–rural disparities: urban branches achieved higher scores on Technology‐Based CRM (mean 4.5/5) and Key Customer Focus (mean 4.4/5), correlating with superior loyalty levels (mean 4.3/5), whereas rural branches lagged (technology mean 3.0; loyalty mean 3.2) due to infrastructure and process constraints. Ordinal logistic regression identified Technology‐Based CRM as the strongest predictor of loyalty (OR = 2.43, p < 0.001), followed by Key Customer Focus, Knowledge Management, and CRM Organization, all exerting significant positive effects. Qualitative insights corroborated these results, highlighting digital efficiency as a key driver of satisfaction in urban areas and emphasizing that connectivity gaps and manual record‐keeping undermine rural performance. In conclusion, our findings validate established CRM frameworks in a semi‐urban Ethiopian context and underscore the need for tailored strategies. We recommend that Awash Bank invest in offline‐capable CRM technologies, enhance staff training in rural branches, leverage data analytics for targeted customer services, and advocate for policies to improve digital infrastructure thereby bridging the urban–rural divide, strengthening customer retention, and fostering broader financial inclusion