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Abstract
Since the adoption and implementation of Customer relationship management (CRM), service firms are engaged in evaluating the performance output of the same to seek justification behind the enormous cost involved in its implementation and structural and behavioural modification that was done at the firm's architectural level. For the academicians, researchers, and business analysts the impact of CRM performance on customer satisfaction level has emerged as an area of profound interest while there has been adequate literature support for satisfaction-retention link. However, impact of switching cost and relationship inertia on CRM performance-customer satisfaction-retention link in the context of Indian banking industry remained inconclusive. The purpose of this paper is to propose and justify a customer satisfaction - customer retention model in a CRM ecosystem with an insight into the probable impact of moderating variables namely relationship inertia and switching cost. The study was carried out on the State Bank of India involving certain specific branches in southern part of West Bengal, India. Multivariate statistical procedures were applied which included a double regression analysis and exploratory and confirmatory factor analysis followed by structural equation modeling to justify the factor constructs of the proposed model. The study revealed a positive link between CRM performance, customer satisfaction and retention with relationship inertia and perceived switching costs significantly influencing the link between the three major variables.
Key words: Customer relationship management, satisfaction, retention, inertia, switching cost, performance, bank
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In the era of relationship marketing, retention of customers has been factor critical for the service industries. Researchers have found empirical evidence that customer satisfaction is an important determinant to customer retention (Oliver, 1980; Fornell, 1992; Anderson and Sullivan, 1993, Terblanche, 2006, Hsu, 2008). Researchers found that when customers were involved in satisfied transaction habit for a prolonged period with a specific firm, they would like to continue with the momentum of relationship (Ouellette and Wood, 1998) and become reluctant to find an alternative (Colgate and Danaher, 2000). This phenomenon was subsequently nomenclated as relationship inertia. Studies were also made to explain the defection behaviour of the customers on the basis of perceived switching costs. The switching costs were estimated not only on the basis of pure monetary value involved in the switching process...