A study on the importance of customer relationship management (CRM) capabilities in enhancing customer retention at Tien Phong Commercial Joint Stock Bank.

Phong Commercial Joint Stock Bank.

Student’sName: Do Thanh Dat Student’s ID: 2124761

Email: dtd2ocd@bolton.ac.uk Tutor: Dr David Ratcliffe

Supervisor: Dr Mathew Shafaghi Cohort:16

Word Count: 12663 Words

HO CHI MINH CITY, DECEMBER - 2022

University of Bolton

DECLARATION

The dissertation is a product of my independent investigation conducted with the support and guidance of my supervisor, Dr Mathew Shafaghi, as well as my colleagues at the Thao Dien branch of Tien Phong Commercial Joint Stock Bank (TPBank) All figures presented in this report are entirely accurate, and all citations have been diligently adhered to in accordance with regulatory guidelines In the event of any fraudulent activity, I accept full responsibility for the content of this report

Datt Đỗ Thành Đạt

ACKNOWLEDGEMENT

The topic of my dissertation examines the intersection between theory and practice, drawing on the scientific knowledge I have gained during my four years of study at the Banking University of Ho Chi Minh City I am grateful for the invaluable assistance of my teachers and friends in completing the project entitled "A Study on the Importance of Customer Relationship Management (CRM) Capabilities in Enhancing Customer Retention at Tien Phong Commercial Joint Stock Bank."

The completion of this research would not have been possible without the support and encouragement of my teacher, Professor Dr David Ratcliffe, who provided me with the opportunity to work and study under his guidance I am grateful to him for arranging several discussions to guide me in the right direction I extend my heartfelt gratitude to Professor Dr Mathew Shafaghi, who offered me the necessary guidance and motivation to persevere through this journey I am deeply grateful for his constant encouragement and valuable feedback to my dissertation It has been an honor to be mentored by such talented, dedicated, and supportive individuals throughout my academic pursuits

I would like to express my gratitude to all the participants, especially the interviewees, who generously contributed their time and insights to this study on CRM in the banking industry Lastly, I would like to thank my family for their unwavering support and encouragement throughout my studies Their unwavering dedication and love have been a constant source of inspiration for me Despite my best efforts, I acknowledge that this report may contain errors, given my limited time and knowledge

ABSTRACT

The importance of Customer Relationship Management for banks has increased as competition in the market intensifies Focusing on CRM plans banks' ability to accurately understand customers' current needs and behaviours, including past actions and future This practice enables banks to design CRM strategies based on individual customer preferences to meet their needs The implementation of CRM in the banking industry greatly depends on organizational factors such as human resources and systems Vietnam's banking industry currently benefits from advanced technologies, making it essential for organizations to investigate key competitive capabilities related, especially the use of current CRM systems

This study examines issues related to the overall system and policies of CRM in banks using both quantitative and qualitative research methods The study developed questionnaires and interview formats to collect necessary data from the field and focused on the case study method, choosing TPBank as a bank with strong technology development The survey results were analysed, compared, and discussed using an in-depth cross-case analysis method to identify strengths, weaknesses, and some issues related to CRM operations in the banking sector The findings suggest that although TPBank's system and CRM capabilities are optimized and developed compared to the market, a more refined CRM strategy is needed due to competition and convenience of customer service Furthermore, while CRM strategies are seen as value-added to some extent, these strategies have existed for many years and need to be updated and changed to help the bank meet current business challenges and priorities

LIST OF TABLES AND FIGURES Figure:

Figure 2.1 The three dimensions of CRM (Ocker and Mudambi, 2003) 23

Figure 2.2 The four dimensions of CRM (Sin at al., 2005) 24

Figure 2.3 Conceptual Model 31

Figure 3.1 Gantt chart of time scale 41

Figure 4.1 The bar chart responses to customer-question 8 57

Table: Table 4.1 The table of interview participants 47

Table 4.2 The demographic characteristics of the sample 50

Table 4.3 The Descriptive Statistics 52

Table 4.4 The table of responses to customer-question 1,2,3,4 54

Table 4.5 The table of responses to customer-question 5,6,7 55

Table 4.6 The table of responses to customer-question 9 58

Table 4.7 The table of responses to customer-question 10,11 58

Table 4.8 The table of responses to customer-question 12,13,14,15 59

Table 4.9 The table of responses to customer-question 16,17,18 61

LIST OF ACRONYMS

Bank

TABLE OF CONTENTS

Chapter 1: Introduction 10

1.1 Background to The Problem: 10

1.2 Statement of The Problem: 11

1.3 Introduction to Tien Phong Commercial Joint Stock Bank: 12

2.2 Theoretical Background of CRM in banking: 16

2.3 Conceptualization of Customer Relationship Management (CRM): 18

2.4 The Purpose of Customer Relationship Management: 19

2.5 Aspect of CRM Systems: 19

2.6 Customer Relationship Management Implementation: 20

2.7 The Drivers of CRM Capability: 22

2.7.1 CRM Technology: 24

2.7.2 Customer Orientation: 25

2.7.3 Service Capability: 26

2.7.4 CRM Organization: 27

2.8 The Functionality of CRM in the Banking Industry: 28

2.9 Findings from literature review: 29

3.8.2.2 The Survey Questionnaire: 43

3.9 The validity and reliability of research instrument: 44

4.3 Quantitative results and analysis: 49

4.3.1 A Description of The Study Sample: 49

4.3.2 Statistical Analysis: 49

4.3.3 Descriptive Statistics: 50

4.3.3.1 CRM Technology at TPBank: 53

4.3.3.2 Customer Orientation at TPBank: 55

4.3.3.3 Service Capability at TPBank: 56

4.3.3.4 CRM Organization at TPBank: 59

4.3.3.5 Customer Retention: 60

4.4 Critical Discussion: 62

Chapter 5: Conclusions 64

Chapter 6: Recommendations and Further Research 65

6.1 Recommendations: 65

6.1.1 Improve CRM technology: 65

6.1.2 Improve customer orientation: 66

6.1.3 Improve service capability and organization: 66

Chapter 1: Introduction 1.1 Background to The Problem:

Currently, there is a strong trend of globalization and world economic integration accompanied by rapid advancements in scientific and technical progress across all fields (Nam and Barnett, 2011) Ocampo nd n (2003) have further supported this notion by highlighting that technological innovations have resulted in unprecedented improvements in productivity, economic growth and international trade The liberalization of trade, financial flows and investment in developing countries, combined with the speed of liberalization, has emerged as a crucial factor in this phase of globalization These developments have led to the establishment of a new international banking network that facilitates financing of international trade (World Bank Group, 2011) However, while the global expansion and industry consolidation have had positive impacts on banks, it is important to question whether they can effectively deploy technology investments and developments on an industry-wide basis to achieve outstanding performance (Kamath et al., 2003) Moreover, according to Okin and Pfau (1999), a company that optimally leverages its intellectual assets, capabilities and resources will develop the most promising business opportunities

These trends highlight the growing significance of growth opportunities in the financial services industry in emerging Asian markets such as China, India and ASEAN countries (Kumar, 2014) Pham et al (2020) argue that a compelling case of a young and dynamic economy that has achieved significant success over the past 30 years is Vietnam, specifically in the ASEAN-5 economies of Indonesia, Malaysia, Philippines, Singapore and Thailand Le (2019) asserts that Vietnam's banking

system plays a leading role in the country's economy, contributing up to 18% to the Gross Domestic Product (GDP) annually (Stewart et al., 2016) Thus, as the banking industry occupies an important place in the economy, the Vietnamese banking industry must be continuously reformed in order to function effectively during the events of history Continuous innovation necessitates that necessitates that each Vietnamese commercial bank must adopt appropriate solutions to develop, enhance competitiveness, master the domestic financial market and expand to the international financial market (Dinh and Kleimeier, 2007) According to Akther and Rahman (2022), integration of digital transformation management systems is imperative to achieve optimal results for modern businesses, including commercial

banking

1.2 Statement of The Problem:

As a participant in the financial services sector providing analogous products to

banks of comparable or greater size, the competition is notably intense This competitive milieu has necessitated that bank management adopt the fundamental theory that customer relationships are a crucial asset within an organization, requiring effective development and management to enhance sales Nonetheless, a salient inquiry that managers frequently pose is how to efficiently manage customer relationships to perpetuate the continual develop of the bank's products and services Customer Relationship Management (CRM) is one of the widely adopted systems for managing customers In recent years, TPBank has achieved significant successes but to meet customers' expectations, it is imperative to implement effective methods in CRM Therefore, building and nurturing strong relationships with

The purpose of the foregoing is to present a summary of TPBank Thao Dien's customer relationship management capabilities, which constitutes the primary case study of this research This serves as the initial step towards identifying the bank's viability, a crucial aspect that this study aims to analyse and address Specifically, the study seeks to examine the efficacy of implementing a CRM capabilities, which aims to enhance customer retention, and sales, as part of TPBank's e-banking solutions Furthermore, the study endeavours to proffer more viable solutions and propose a viable CRM implementation strategy for TPBank in the future The implications of these findings are expected to shed light on the potential of customer relationship management in the broader context of Vietnam's banking industry, with TPBank serving as a particular case in point

1.3 Introduction to Tien Phong Commercial Joint Stock Bank:

Tien Phong Commercial Joint Stock Bank was established on May 5, 2008 through leveraging the support of domestic and foreign shareholders such as DOJI Jewellery Group, IFC International Finance Company (a member of the World Bank), FPT Technology Group, SBI Ven Holding Pte Ltd (Singapore), among others Currently, TPBank is expanding its transaction locations across the North, Central, and South regions of Vietnam The expansion includes over 65 branches and transaction offices distributed among 16 provinces and cities throughout the country TPBank's revenue has always grown by double digits year by year, specifically TPBank's revenue in 2022 has reached VND 15,567,189 million As a bank that is constantly at the forefront of digital innovation and continually expanding its product and service ecosystem with solutions that prioritize customer needs, TPBank has recently made

strides in accurately positioning and rapidly adapting to trends by launching personalized features that enhance the user experience (Anh, 2022)

TPBank currently serves over 7 million individual customers across the nation, among which 70% are young customers belonging to the Gen Z and Gen Y generations This figure implies potential opportunities for strengthening the relationship between the bank and its customers, provided that such opportunities are appropriately leveraged TPBank has declared its unwavering commitment to being the preferred service partner for its customers by leveraging advanced technologies that enable the provision of cutting-edge electronic services and solutions In the domain of management, TPBank has instituted various contemporary systems, among which is a Customer Relationship Management (CRM) system that substantially enhances its ability to cultivate customer relations, particularly through digitizing paperwork and swiftly processing customer records using Artificial Intelligence (AI) technology TPBank has accomplished notable growth and garnered a high level of customer trustworthiness over the previous years, largely due to the implementation of its advanced CRM system Within a year, the said system has increased customer satisfaction indices by 70%, augmented the conversion rate from potential customers to actual customers by 200%, and raised the successful cross-selling rate by 65%

1.4 Research Objectives:

1 To study the current CRM policies and systems at TPBank

2 To analyse the dimensions of the CRM capabilities and its impact on customer retention at TPBank

3 Thereby recommend a strategy to TPBank for successful implementation of CRM capabilities

1.7 Dissertation Structure:

Structure of the dissertation is as follows ( 6 Chapter):

Chapter one serves as an introduction to the study, providing background information and a statement of the research problem Additionally, it introduces the company and outlines the research objectives, research questions, and research scope that guided the research

Chapter two contains a detailed review of the relevant literature, addressing the research objectives by reviewing the literature on CRM policies and practices, dimensions of CRM capabilities

Chapter three presents the research methodology, which examines the techniques used to select the research sample, the data collection, and the methods used in data analysis and presentation

Chapter four analyses the data collected in the research methodology of chapter three, discussing the results obtained from the data to provide supporting results to draw conclusions

Chapter five outlines the conclusions drawn from the findings, with highlights from the previous chapters

Chapter six provides relevant recommendations for stakeholders, including areas for further research The study concludes with implications for managers and directions for future research

Chapter 2: Literature Review 2.1 Introduction:

This chapter centres on the important policies and practices related to the concept

of CRM that emerge throughout the adoption and implementation phases of the CRM process The main goal of this chapter is to develop a theory model of CRM capabilities and evaluate its impact on the banking sector The integration of four dimensions - CRM technology, customer orientation, service capability, and CRM organization, which provides organizational strengths to managers, enabling them to make informed decisions that enhance customer relationships However, according to Ferrari and Tran (2021), the literature on a bank's CRM capabilities is diverse and often produces conflicting results As a result, the review aims to establish the coverage of the literature in the banking sector and identify gaps by drawing on existing knowledge

2.2 Theoretical Background of CRM in banking:

In the current banking landscape in developing economies, two prominent phenomena form the central points for emerging theories and practices, namely Technology and Relationship Marketing (Singh and Rahul, 2010) The bank's marketing efforts have made strong breakthroughs thanks to the development of technology, especially it affects the entire interface in the digital banking sector (Dootson et al., 2016) Furthe mo e, Onețiu (2020) believes h n essen i l element in today's businesses is digital transformation as it takes advantage of new technologies, innovates management systems, digitizes products and services of customers Contrary to the previous researches, Johri and Kumar (2023) further

stated that transferring arguments in a bank can take a lot of time, money, and even loss of customer privacy against online intrusions In addition, the customer base is increasingly diverse and demanding with the increasing complexity of the business environment (Barnet al., 2004) According to Murray et al (2014), Financial institutions in the service industries must always be in a fierce competition with technological changes and developments having one of the biggest impacts on the industry

Regardless of the available argument of all these literatures, most developing countries are still exploiting technology-driven economies of scale to reach and build customer loyalty in banking sector (Dootson et al., 2016; Le et al., 2020; Kaur et al., 2021) Berry et al (2010) believe that creating a competitive advantage by innovating their capabilities to bring new benefits to existing customers, such as facilitating two-way communication with customers through social networks This has been further supported by Smith et al (2011) that customers can directly contact bankers via social media without queuing and following bank opening hours In addition, a large-scale study revealed that today's customers tend to expect freedom, time savings, ease of access and deeper personal relationships with their bank advisors (Pavithra and Geetha, 2021) Therefore, customer experience and interaction with digital banking has a positive relationship with customer retention in the current context

Hoehle et al (2012) observe that earlier research encountered obstacles that may have been constrained, incomplete, and inadequate in pinpointing customer-related concerns He substantiated and validated this assertion by conducting an empirical evaluation of "the real state" of the research Consistent with these theoretical

on CRM applications and its capabilities to develop to create value for customers (customer experience and interaction) in emerging markets

2.3 Conceptualization of Customer Relationship Management (CRM):

In recent years, the topic of CRM has garnered significant attention from scholars across various fields CRM is considered a dynamic topic, and is often seen as key to success for organizations seeking to improve their profitability through maintaining strong relationships with their customers in the current business climate (Coltman et al., 2011; Thakur, 2014) The effective utilization of CRM technologies can greatly enhance an organization's potential in managing a diverse customer base (Payne, 2005)

According to Wang and Feng (2012), CRM is a cross-functional organizational process that emphasizes the maintenance and strengthening of customer relationships In the banking sector, CRM allows modern banks to personalize services, messaging, and approaches for individual customers using customer information (Kotler and Keller, 2015), thereby aiding in a better understanding of customer needs and preferences However, based on various research papers, it is evident that managers often view CRM as a mere technological solution without proper consideration of its true nature, resulting in negative consequences for the organization and indirectly affecting customer satisfaction and retention (Lavender, 2004; Filip, 2013) Despite this, there is little information available on the mediating role of loyalty in CRM and its impact on the organization (Bhat and Darzi, 2016) This study argues that CRM is an organizational capability that enables a company to identify and leverage various customer loyalty-related and interdependent resources

2.4 The Purpose of Customer Relationship Management:

The primary objective of CRM is to enhance the efficiency of maintaining appropriate customer relationships in a selective manner in order to boost revenue for the organization Recent advancements in information technology have the potential to improve the development of customer relationships, as organizations now have access to an increasing number of databases, data technologies, and CRM applications (Chatterjee, 2019) Such applications can collect substantial amounts of customer data for analysis and interpretation, which can be utilized to yield positive results

Prior to employing CRM applications, organizations must assess their CRM capabilities in order to determine long-term goals for the organization This allows for the effective targeting of the most promising customer opportunities by CRM applications According to Mohamed (2012), the significance of CRM is growing across various industries In hospitals, CRM plays a critical role in facilitating patient requests for follow-up services, while banks rely heavily on CRM as the primary tool for updating customer data, building and maintaining customer relationships, and

marketing

2.5 Aspect of CRM Systems:

It is imperative to emphasize that CRM is not merely a tool, but a comprehensive system of business objectives that encompasses diverse aspects of the enterprise, such as software, services, support, and strategic goals Therefore, the CRM system employed by an organization should be crafted to support all of these functions to furnish customer insights In a banking context, the CRM system is typically

segregated into three fundamental segments, namely Sales, Marketing, and Service (Ngoc et al., 2021)

The CRM system serves as a vital tool for various departments within an

organization The sales department utilizes CRM to automate their sales force (SFA), provide customer response support, and manage supply chain operations Similarly, the marketing department benefits from CRM as a lead management tool that enables analysis of customer profitability, facilitates campaign management, and automates marketing endeavours In addition, the customer support services department employs CRM as an administrative aid for support services, hotline assistance, and on-site service management Within the context of a commercial bank, the CRM system is crucial in facilitating customer information exchange and evaluating the importance of customers within the organization Banks today employ CRM as a support tool to aid sales staff in searching, updating, and synchronizing data effectively Thus, the implementation of CRM in banks is deemed highly essential in the contemporary context It is regarded as one of the efficacious strategies for banks to augment their competitive capacity amidst the prevailing trends of globalization and integration

2.6 Customer Relationship Management Implementation:

The implementation of CRM can yield a broad range of strategic, tactical, and

operational benefits to organizations, including the standardization of new procedures (Vella and Caruana, 2012) Through the adoption of CRM, sales representatives become more closely aligned with management, and sales progress can be continuously monitored by managers To ensure the effective selection of a

control mechanism that is suitable for an organization's mission characteristics, it is imperative to highlight the strategic significance of CRM The benefits of implementing CRM vary depending on the nature of the business, its benefits extend beyond improving customer relationships, and also impact the operational, tactical and strategic level of management (Nguyen and Simkin, 2013) Some of the benefits include consistent and personalized customer service, up-to-date information on customers, better management of key account customers, increased profitability through the use of efficient channels However, the implementation of CRM strategies has a high failure rate, with more than half of organizations investing in CRM seeing the end result as a disappointment (Kim and Pan, 2006) The negative consequences associated with CRM implementation can be attributed to several factors, including a narrow perception of CRM as merely a technological solution, insufficient adoption of a customer-centric approach, inadequate recognition of customer value, inadequate top management support Consequently, the successful implementation of CRM is reliant upon the adoption of appropriate strategies encompassing cultural, policy, procedural, and attitudinal aspects in the whole banking system The following outlines a strategic framework that can facilitate the implementation of CRM

1 CRM is a strategic initiative: The concept of CRM encompasses diverse dimensions, leading to variations in implementation depending on the organizational objectives Thus, the implementation process involves the development of an organizational system that will serve as a long-term strategic initiative contributing to a planned sequence of activities aimed at fostering and cultivating customer relationships

2 Cultural change: CRM implementation requires a transformation in organizational culture regarding perceptions and practices The success of CRM hinges on securing the buy-in of all members of the organization and emphasizing the shared responsibility of each employee in the CRM process chain to deliver customer value Thus, organizational culture is a critical aspect that warrants careful consideration, as different cultures may respond differently to change Organizations should contemplate people, processes, and technology when implementing necessary changes (Woodcock et al., 2011).

3 Policy: It is imperative for the bank's policy to ensure that all levels of staff comprehend the bank's policies and vision for CRM, and effectively communicate customer, market, and profitability data to model the bank's CRM process

4 Training: Training at all levels should focus on the CRM philosophy, its applications in banking, newly implemented processes, staff roles in customer service, along with the use of new technology Additionally, behavioural training in reinforcing customer-centered attitudes and behaviours is necessary

2.7 The Drivers of CRM Capability:

The previous section's CRM approach reinforces the view that CRM is viewed as a strategic-based capability and it applies the most appropriate theoretical framework to evaluate the impact on organizational performance The concept of CRM capabilities originates from an organization's processes and reflects their skills to attract new and potential customers to build competitive advantage (Morgan et al., 2009) According to Castelao et al (2015), current performance in a dynamic

competitive environment will greatly depend on whether the organization is equipped with CRM capabilities

Based on recent trends in the resource-based view (RBV) literatures, the researchers suggest that there are many important models for different dimensions of CRM capabilities Coltman (2007) hypothesized that CRM capabilities will prevail in an organization when there are three factors: technical, human and business capabilities Wang and Feng (2012) have argued that service firm resources such as customer orientation, customer centric management systems, and the right CRM technology setup can boost superior CRM capabilities and achieve competitive advantage According to Ocker and Mudambi (2003), the three basic aspects of CRM capabilities are the intellectual dimension, the social dimension and the technological dimension

Figure 2.1.The three dimensions of CRM (Ocker and Mudambi, 2003)

Sin et al (2005) developed that CRM dimension model that four major behavioural dimensions includes: key customer focus, CRM organization, technology-based CRM and CRM knowledge management

Figure 2.2.The four dimensions of CRM (Sin at al., 2005)

In summary, most of the models mentioned above agree on the importance of 4 main dimensions of CRM: CRM technology, customer orientation, service capability and CRM organization Therefore, consistent with these research backgrounds in this context, this study will use these four dimensions to further improve and enhance the understanding and application of CRM capabilities in banking sector

2.7.1 CRM Technology:

The advent of the 21st century has witnessed a significant development in two-way service and interaction channels between organizations and customers (Sangle and Awasthi, 2011) This has led to improvements in the quality of channel interactions, collaboration and enhanced customer experience, facilitated by the effective use of customer data and knowledge (Trainor et al., 2014) For an organization to achieve competitive advantage, technology is a crucial resource in the successful implementation of CRM (Lindgreen et al., 2006) Therefore, the capabilities of CRM technology enable organizations to understand and interact with customers in the most effective way to serve their needs

CRM technology capability is a multidimensional structure that includes information technology-based resources for enabling the business and human resources of the organization (Coltman, 2007; Chuang and Lin, 2013) A CRM system is based on technology such as the analysis, storage, and sharing of information about current and potential customers, leading to improvements in products, processes, and marketing activities (Navimipour and Soltani, 2016) Furthermore, Deszczynski (2022) study argues that organizations must have an existing mechanism of CRM technology to develop customer relationships Based on the previous discussions, this study concludes that enhancing technological capabilities can provide a competitive advantage for an organization in the banking context Therefore, it can be hypothesized that:

H1: There is positive relationship between CRM technology and Customer Retention

2.7.2 Customer Orientation:

Organizational culture provides implicit values and beliefs based on accepted behavioral norms, which serve as the foundation for customer orientation (Bentum and Stone, 2005) Research by Deshpande et al (1993) has also suggested that an organization's commitment to putting the customer's interests first is essential for success in the market The role of customer orientation is to establish its influence on CRM results, which in turn leads to increased customer retention (Moreno and Meléndez, 2011)

Customer orientation requires the organization to have a deep understanding of its customers and a high level of commitment to developing strategies that link

functional actions with each other (Narver and Slater, 1990) To successfully implement customer-oriented CRM activities, the most critical factor in customer orientation is the service staff They act as representatives in the customer's mind, as they are the first point of contact and can most easily orient and create perceived value for the customer (Pijls et al., 2021) As a result, the attitude of employees in the organization is crucial for the successful implementation of customer-oriented CRM activities, which ultimately leads to the development of long-term customer relationships

Sin et al (2005) have found that customer orientation is a dominant factor in CRM capabilities and directly affects the relationship with customers, which brings differentiated competitiveness for banks Based on the above discussion, it can be concluded that customer orientation is an essential dimension of CRM capabilities, which promises to contribute to an organization's competitive advantage Hence, the following hypothesis has neem formulated:

H2: There is positive relationship between Customer Orientation and Customer Retention

2.7.3 Service Capability:

In today's volatile business environment, Spohrer et al (2007) and Chesbrough (2011) assert that the service system is the largest and most important factor in any organization worldwide Creating value for customers by offering favourable conditions to benefit the organization without incurring specific costs and risks is considered a service (Chou et al., 2015) Therefore, service capability plays a crucial role in creating and maintaining competitive advantages for organizations

Service capability is conceptualized as a process of providing products that create added value for customers (Liu and Lyons, 2011) The role of service capabilities is to personalize, maintain, and progressively develop the quality of products/services to meet customer needs (Yang, 2012) Organizations with good service capabilities can better satisfy and retain customers, generating positive word of mouth to attract new potential customers (Janda et al., 2002; Kang and James, 2004) Additionally, it helps to reduce operating costs, increase market shares, and improve financial performance (Duncan and Elliott, 2002) Based on the literature review and arguments discussed above, service capability should be supported by organizational commitment at all levels Service capabilities can also be viewed as an essential dimension of CRM capabilities Thus, it can be hypothesized that:

H3: There is positive relationship between Service Capability and Customer Retention

2.7.4 CRM Organization:

Through the above arguments by different researchers, there are arguments that CRM capabilities can be achieved by different factors of CRM capabilities In this study, CRM requires effective operational processes to succeed in the banking sector that is not solely dependent on technology, services or customer-oriented behaviours Ultimately, it also depends on the CRM organization factors because all the company's resources need to be integrated for a successful CRM implementation

As organizations align their management structure and processes with market objectives, they will become more successful in meeting their customers, leading to

the success of CRM depending on the organization (Reinartz et al., 2004) Furthermore, Moreno and Meléndez (2011) have found that organizational factors in the form of financial or marketing forecasting completely mediate the implementation of other CRM capabilities such as CRM technology, service capability and customer orientation is known as CRM Organization

Organizational structures such as support, incentive, resource allocation, and financial control management that enable building and maintaining customer relationships are known as CRM Organizations (Sin et al., 2005; Bhat and Darzi, 2016) In addition, the role of it supports cross-functional communication and coordination, for example employee training programs tailored to customer needs lead to higher quality of relationships, thereby developing a competitive advantage for the company (Chang, 2007) According to the above discussion, the following hypothesis has ben formulated:

H4: There is positive relationship between CRM Organization and Customer Retention

2.8 The Functionality of CRM in the Banking Industry:

On the basis of awareness of the business environment, CRM refers to the various tools, techniques, and strategies that banks employ to manage their interactions with customers effectively These tools encompass a variety of software platforms, data analytics, and customer service protocols that allow banks to gather and analyze customer data, enhance communication and engagement, and customize their products and services to better meet the needs of their clients The data collected from the CRM system is subsequently utilized to create personalized marketing campaigns, develop bespoke product offerings, and optimize customer service

protocols Additionally, CRM functionality can enable banks to enhance their sales and marketing efforts by identifying potential leads and tailoring relevant offers to them By leveraging customer data, banks can segment their customer base and devise targeted marketing campaigns that are more likely to resonate with specific customer groups, leading to higher conversion rates and greater levels of customer engagement

2.9 Findings from literature review:

CRM is consider as a catalyst enabling enables organizations to monitor their customers and devise more efficient and effective marketing strategies Presently, organizations have integrated CRM practices into their business processes to better comprehend their customers' needs, develop useful products, and enhance sales, cross-selling opportunities, and customers loyalty Through the acquisition of data that identifies customer buying habits, preferences, and information, CRM systems provide businesses with a closer understanding of their customers' wants and needs, enabling them to offer improved customer service solutions As a consequence, customers are more likely to make repeat purchases when they receive quality products and exceptional service and are also more likely to recommend these products and services to others Additionally, CRM provides business owners and department heads with a comprehensive range of data that facilitates targeting of specific consumers with marketing strategies customized to their purchasing patterns and behaviours However, CRM adoption may have some limitations, primarily when implemented with a focus on software without paying attention to process, sales force interaction, organizational structure, and culture within the organization, with technology as the enabler As a result, CRM implementation impacts the entire organization as it necessitates changes in process, technology, and people

2.10 Conceptual Framework:

The aforementioned passage provided a comprehensive insight into the concept related to CRM, encompassing its origins, development, definition, role, purpose, and various aspects Furthermore, the dimensions of CRM capabilities elucidated the application of CRM in the banking industry, emphasizing its strategic and competitive advantages, particularly with regard to product and service development, cross-selling, and the cultivation of positive customer experiences The dimensions of CRM capabilities will cover a range of CRM capabilities, including CRM technology, customer orientation, service capability, and CRM organization These capabilities will be incorporated into a conceptual model for the purpose of measurement, as demonstrated in Figure 2.3 The size of this conceptual model serves as a powerful metric for evaluating customer retention Ultimately, based on the findings, the study aims to evaluate and recommend suitable CRM strategies to TPBank, which can have a positive influence on customer retention Additionally, the hypotheses have been developed through a review of relevant literature However, although they are pertinent, they are simplistic in nature and obvious Therefore, this study will instead concentrate on examining the factors that are linked to the implementation of Customer Relationship Management

Figure 2.3 Conceptual Model

Customer Retention

CRM Technology

Customer Orientation

Service Capability

CRM Organization

Sale Force Automation

Sales team management

Reporting and analytics

Communication and marketing Interaction

Customer Retention CRM Technology

H4

Chapter 3: Research Methodology 3.1 Introduction:

The chapter provides an overview of how research should be conducted In order to

demonstrate the feasibility of conducting a study, it should include the research philosophy, research design, and research methods used to select participants It then explores research methods for data collection, techniques used to present and analyse the collected data Finally, it considers other issues such as validity and reliability that are important to the accuracy of the study

3.2 Research Design:

In order to get an overview of the structure and direction of investigation within the framework of research methods, the research design is considered as the blueprint for this development Research design is defined as the general plan of how a study is to be conducted to answer the research questions posed in the literature review chapter (Saunders et al., 2019) It includes the methods and procedures used to conduct the research Consistent with the research factors outlined in the above introduction, the Research Onion framework designed by Saunders et al (2019) will

be use in this study in order to ensure more valid research results In addition, as a

way to relieve the different views on qualitative and quantitative research in previous studies, both qualitative and quantitative approaches will be incorporated into the design of this study The mixed method design in this study is considered suitable for collecting qualitative data from a quantitative method

Consistent with the ways of building research methodology based on theoretical concepts, the Onion framework proposed by Saunders et al (2019) will be used in

this study to ensure more valid research results The Onion research provides a detailed description of the key stages that need to be completed in order to form an effective methodology Research methodology starts with outlining the research philosophy, choosing an approach, then formulating the method and strategy, and defining the timing, all of which factor into the research design, and finally, the main techniques and procedures will be data collection and analysis (Figure 3.1)

Figure 3.1 The Research Onion Framework by Saunders et al., (2019)

3.3 Research Philosophy:

Saunders et al (2019) defines research philosophy as referring to a system of beliefs and assumptions about the development of new knowledge in a research topic Based on the relevant literature in view of Coltman (2007), he used different dimensions of superior CRM capabilities to improve bank performance Additionally, according to Bhat and Darzi (2018), they concluded that the dimensions of CRM capabilities can determine an organization's competitive advantage It is from these

two aspects that this study addresses the concept and assumptions about the relationship CRM capabilities have a positive impact on customer relationship and loyalty Therefore, research philosophy will play an important role in underpinning research methods and assumptions

In this study, the study will examine three main philosophical research methods in

academic research: positivism, interpretivism, and pragmatism Each method in this research process will have a different impact on the assumptions and approaches to the problem

3.3.1 Positivism:

Positivism is one of the main research philosophies within the framework of operational research According to Gartrell and Gartrell (2002), positivism is the study of the social world using the scientific method It focuses on creating overarching laws about the dynamics of the social universe To make it simple, positivism focuses on data and observations using various tools such as structured questionnaires to obtain reliable data in order to draw conclusions In other words, it is widely used in research design based on the hypothetical deductive approach that derives a hypothesis from an existing theory Positivism applies an explicitly quantitative approach to the investigation of hypotheses, as opposed to interpretivism, which aims to explore in-depth hypotheses from a qualitative perspective (Crossan, 2003)

3.3.2 Interpretivism:

Saunders et al (2019) states that interpretivism is also one of major types of research philosophy It is based on the assumption that society is shaped by human actions and behaviour The purpose of interpretive research is to understand relationships between variables through qualitative approach Therefore, predictions in interpretive research can be rather weak and require empirical evidence from quantitative approach Interpretivist research is used to deepen a phenomenon by directly experiencing that phenomenon in a realistic situation to interpret the complexity of the research branches The different branches of interpretivism emphasize how to do this in practice, so researchers focus on the life experience of participants about those experiences Interpretive theory holds that knowledge is subjective, influenced by culture, language, time, context, and values In contrast, positivism holds that knowledge is of an absolute nature and is based on laws

3.2.3 Pragmatism:

Pragmatism asserts that it attempts to reconcile both objectivism and subjectivism based on rigorous and precise facts and values as well as different contextual experiences (Saunders et al., 2019) It does this by testing theories, ideas, hypotheses, and research findings with tools of thought and action, as well as their practical consequences in specific contexts Most pragmatic studies by scientists consider the most important determinant of research design and strategy to be the research problem statement they will attempt to solve based on the research question posed Saunders et al (2019) asserts that positivism and interpretation are mutually exclusive, pragmatism is another philosophy of study that is more flexible in

actually different ways of interpreting and conducting research to investigate, and that the combination of these different ways of investigation may provide a broader understanding of the phenomena being investigated Pragmatism is the most suggested philosophy for mixed methods research in the literature (Biddle and

Schafft, 2014)

3.2.4 The stand of philosophical research method:

All research methods have different advantages and disadvantages depending on the research objectives and types of research questions that the researcher can choose and apply to his research The outermost layer is the philosophy of research, which is the philosophy of pragmatic research The decision to adopt a pragmatic research philosophy is based on the rationale that CRM capabilities can be seen as a fact of impact on customer retention built with insights from the results of a social perspective In addition, a pragmatic research philosophy can yield better research results with the opportunity to use a combination of different methods in research This is explained by the fact that it uses both quantitative and qualitative approaches to clarify the objectives in this study

3.4 Research approach:

The next layer in research onion is research approaches, there are three main types

of research approaches, namely induction, deduction, and abduction However, the inductive approach and the deductive approach are taken as this fits with the pragmatist research philosophy This is due to both inductive and deductive reasoning serve research with specific purposes and then combine to form general

conclusions Inductive reasoning aims to develop a theory while deductive reasoning aims to test an existing theory As a result, for this research, deductive reasoning begins with a general hypothesis, which is then tested against data and only if found to be true leads to a specific conclusion Next, inductive reasoning considers a series of specific observations to arrive at a general conclusion (Streefkerk, 2023)

3.4.1 Deductive approach:

The deductive approach is a type of investigation used in quantitative research approach to explain the statistical relationship between variables within the research scope (Saunders et al., 2019) Deductive reasoning is purely based on quantitative research, which aims to test existing theories using a specific set of data collected from samples The deductive approach plays an important role in developing the relationship between variables with methods based on objectivity in data evaluation of observations (Yu, 2015) For this study, it will provide the necessary observations to form an opinion on the results in order to address the research objectives This is through conducting research with the use of structured questionnaires to build understanding in solving research problems

3.4.2 Inductive approach:

On the other hand, Saunders et al (2019) state that the inductive method uses

qualitative research approach to develop a deeper understanding of the underlying phenomenon Inductive reasoning is called inductive logic by drawing conclusions from the specific to the general The purpose of inductive reasoning is to develop new theories using observation and analysis of phenomena from various angles In

contrast to the deductive approach is based on objectivity in the assessment of the observations, the inductive approach would have relied on subjectivity in the evaluation of the observations to support the results of the research (Rafale, 2016) For this study, based on the approach and data analysis of the deductive method, the inductive approach can draw on these results to give different perspectives and thereby explain theories related to the research problem statement This helps these studies to gather information in a clearer and more precise quantity to make accurate analyses and to be able to devise effective strategies

3.5 Research Methodological Choice:

The next layer of the research onion is the research choice Recently, there are

signs of strong growth in the use of mixed methods research in many academic fields such as the social sciences and business management (Grootel et al., 2010) Also, the pragmatic philosophy is a common view applied in research to combine quantitative methods with qualitative methods (Morgan, 2007; Feilzer, 2010; Johnson et al., 2017) Thus, a mixed method used with the use of qualitative and quantitative research methodology is considered the applied research method to be consistent with this pragmatic research philosophy The mixed methods approach to research offers researchers the opportunity to design a study that can address both subjective experiences and measurable variables This approach allows researchers to investigate the nature of a phenomenon from the participant's perspective, while also examining the relationship between measurable factors (Williams, 2007)

Williams (2007) states that the quantitative research methods are often used to test theories and variables related to problems of a phenomenon by collecting of

numerical data and statistically analysing them Researchers can use questionnaire studies to varying degrees to uncover statistical correlations between variables depending to some extent on those characteristics (Leedy and Ormrod, 2014) Quantitative research is consistent with the deductive research approach in this study However, the limitation of this method is that it is difficult to clarify human behaviours because of their subjective factors and depends heavily on statistical data with limited data sources and the survey can take a lot of time Instead, the qualitative research method in the study is described as a comprehensive model in a natural setting that allows the researcher to develop the phenomenon in detail from the interviews The qualitative research method relies on the collection of qualitative data, obtained by the methods such as case study, ethnographic, action research, grounded theory, narrative inquiry (Saunders et al., 2019) The qualitative research has been generally coupled with the inductive approach (Mitchell, 2018)

3.6 Research Strategy:

Prior to initiating a research strategy, the researcher must establish the purpose, appropriate research type, and required information for making informed strategic decisions (David and David, 2016) After identifying the objectives and necessary information in the preceding sections, a case study approach was chosen for this study This method enables the researcher to conduct an extensive and in-depth investigation of an organization, specifically the banking industry in this case

Saunders et al (2019) explain that a case study strategy is particularly appropriate for research questions that demand a comprehensive comprehension of social or organizational processes, owing to the wealth of context-specific data gathered

Within the present research context, the understanding of organizational processes refers to the current use of CRM by TPBank Meanwhile, the social processes pertain to the way in which banking customers cooperate and interact with one another utilizing the CRM system

The study aimed to investigate objectives using a structured quantitative questionnaire and a qualitative senior management interview with primary research responses Stated differently, the fundamental idea underlying this mix method is to obtain feedback from senior managers through the interview pertaining to the bank's CRM prior to distributing the survey questionnaire, followed by deploying a structured quantitative questionnaire to customers It allows the study to identify the phenomena through both quantitative and qualitative methods without spending much time reaching out to a large number of customers As a result, it ensured that the study had a deeper assessment of the results and stronger findings

3.7 Time Horizon:

The time horizon represents the final layer in the research onion, distinguishing

between two types of research: cross-sectional and longitudinal research As described by Saunders et al (2019), cross-sectional research is concerned with examining samples or phenomena at a specific point in time, whereas longitudinal research involves the study of samples or phenomena over a defined period, ranging from short to long term In this study, a cross-sectional design was employed, as it was carried out over a period of approximately 20 weeks (equivalent to 5 months), with the activities for each month presented in Figure 3.2