MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HOCHIMINH CITY

Nguyễn Anh Đức

TESTING THE INFLUENCE OF
FACTORS OF CUSTOMER RELATIONSHIP MANAGEMENT
ON CUSTOMER LOYALTY
AT VIETCOMBANK DONG NAI BRANCH

MASTER THESIS

Ho Chi Minh City, 2011


MINISTRY OF EDUCATION AND TRAINING
UNIVERSITY OF ECONOMICS HOCHIMINH CITY

Nguyễn Anh Đức

TESTING THE INFLUENCE OF
FACTORS OF CUSTOMER RELATIONSHIP MANAGEMENT
ON CUSTOMER LOYALTY
AT VIETCOMBANK DONG NAI BRANCH
In Banking course: 17
Ology code: 60.31.12

MASTER THESIS

Supervisor:


Vietcombank Dong Nai and closed their accounts and moved to another banks.
Therefore, in order to keep the stable development and ensure the effeciency of
business, Vietcombank should soon find solutions to solve this problem. In other
words, Vietcombank Dong nai should build a customer base to form their loyalty.
This study attempts to examine the aspect of Customer Relationship
Management (CRM) at Vietcombank Dong Nai. Specifically, it tries to identify
independent variables of CRM which may influence on customer loyalty, which is
considered as an dependent variable. These independent variables includes: Twoway communication, Employees Attitude, Employees knowledge and the Efficiency
of banking services.
In order to gather data, a survey was conducted at Vietcombank Dong Nai, the
sample consists of customers there with sample sizes of 205, the responsive rate is
77.90%. The result of realibility testing Cronbach Alpha and factor analysis help to
affirm the comformity of measurement scales with the study objectives. By testing
hypotheses with multiple regression analysis, this study point out that there exists a
relationship between independent variables and dependent variable. In addition,
coefficient beta of independent variables help to determine the degree of influence
of each variables to customer loyalty.
From these findings in data analysis, this study also offers some
recommendation, that Vietcombank Dong Nai should spend more resources in order
to improve employees attitude and two-way communication in order to ensure
customer loyalty to the bank.


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TABLE OF CONTENTS
ACKNOWLEDGEMENT ........................................................................................... i
ABSTRACT ............................................................................................................... ii
TABLE OF CONTENTS .......................................................................................... iii
LIST OF FIGURES ................................................................................................. viii

2.4.2 The influence of employees’ attitude on customer loyalty ...................... 25
2.4.3 The influence of employees’ knowledge on customer loyalty ................ 26
2.4.4 The influence of the efficiency of banking services on customer loyalty 26
2.5 Conclusion ...................................................................................................... 27
CHAPTER 3: RESEARCH METHODOLOGY ...................................................... 28
3.1 Introduction ..................................................................................................... 28
3.2 Business research ............................................................................................ 29
3.3 Research design .............................................................................................. 30
3.4 Research objectives......................................................................................... 31
3.5 Generation of hypotheses................................................................................ 32


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3.5.1 Hypotheses of relationship between the independent variables and the
dependent variable .................................................................................. 33
3.5.2 Hypotheses of relationship between each independent variables and the
dependent variable .................................................................................. 34
3.5.3 Hypotheses of relationship between the biographic variables and the
dependent variable .................................................................................. 34
3.6 Data collection method ................................................................................... 35
3.7 Measurement instrument................................................................................. 35
3.8 Measurement scales ........................................................................................ 36
3.8.1 Items measuring Two way communication ............................................. 36
3.8.2 Items measuring Employee attitude ......................................................... 37
3.8.3 Items measuring Employees knowledge .................................................. 38
3.8.4 Items measuring Efficiency of banking services ..................................... 39
3.8.5 Items measuring Customer loyalty: ......................................................... 41
3.9 Pilot test .......................................................................................................... 41
3.10 Data analysis ................................................................................................. 42


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4.6 The empirical model ...................................................................................... 66
4.7 Conclusion ..................................................................................................... 67
CHAPTER 5: CONCLUSIONS AND RECOMMENDATIONS ...................... 69
5.1 Introduction ..................................................................................................... 69
5.2 Summary of study ........................................................................................... 69
5.2.1 Summary of factor analysis and testing hypotheses results ..................... 70
5.2.2 Findings and recommendations of the study............................................ 71
5.3 Study limitations ............................................................................................. 73
5.4 Areas for future research................................................................................. 74
5.5 Final conclusions ............................................................................................ 74
LIST OF REFERENCES....................................................................................... 75
APPENDIX - Questionaires (Vietnamese version).............................................. 78


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LIST OF FIGURES
Figure 1.1: The outline of Chapter 1 .......................................................................... 1
Figure 1.2: Vietcombank Dong Nai overview ........................................................... 3
Figure 1.3: Deposit and Debt outstanding from 2007 to Nov, 2011 .......................... 4
Figure 1.4: Export and Import turnover from 2007 to Nov,2011............................... 4
Figure 1.5: Number of ATM cards from 2007 to Nov, 2011 ..................................... 5
Figure 1.6: Number of credit cards from 2007 to Nov, 2011 ..................................... 5
Figure 1.7: The business result from 2007 to Nov, 2011 ........................................... 6
Figure 1.8: Structure of the study ............................................................................. 10
Figure 2.1: The outline of Chapter 2 ........................................................................ 11
Figure 2.2: The components of CRM ....................................................................... 17

Table 4.7: Cronbach’s Alpha of Efficiency of banking services ............................. 52
Table 4.8: Cronbach’s Alpha of Efficiency of banking services if item deleted ..... 53
Table 4.9: Cronbach’s Alpha of Customer loyalty items ......................................... 54
Table 4.10: Cronbach’s Alpha of Customer loyalty if item deleted ........................ 54
Table 4.11: KMO and Bartlett's Test........................................................................ 55
Table 4.12: Total Variance Explained ...................................................................... 56
Table 4.13: Rotated Component Matrixa .................................................................. 58
Table 4.14: Component Matrixa ............................................................................... 60


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Table 4.15: Model Summary .................................................................................... 61
Table 4.16: Table ANOVAb ..................................................................................... 61
Table 4.17: Coefficientsa .......................................................................................... 62
Table 4.18: Coefficientsa .......................................................................................... 63
Table 4.19 : ANOVA test between SEX and LOY .................................................. 64
Table 4.20 : ANOVA test between AGE and LOY ................................................. 65
Table 4.21 : ANOVA test between YEARS OF BEING CUSTOMER and LOY .. 65
Table 4.22 : ANOVA test between EDUCATION and LOY .................................. 65
Table 4.23: Descriptives between AGE and LOY ................................................... 66
Table 5.1: Remaining loading items ......................................................................... 70
Table 5.2: Testing hypotheses results ....................................................................... 71
Table 5.3: Coefficientsa ............................................................................................ 72


1

CHAPTER 1: INTRODUCTION TO THE STUDY
1.1 Introduction

Vietnamese banks are trying their best effort in marketing activities to attract new
customers as well as to retain their current customers. Unfortunately, traditional
marketing which was seen before as providing the right product at the right place
and at the right time was not suitable for the current situation. However, a new
concept of marketing and customer service has emerged, which focuses on
customer needs and their preferences (Christopher, Payne & Ballantyne, 1993:5).
This approach is much more complex and requires more works to do, i.e.
investigating customers needs; building relationships with customers and potential
customers; and satisfying their needs. In other words, banks have to listen to their
current and potential customers and build relationships with them (Duhan, Johnson,
Wilcox & Harrell, 1997). The needs and perceptions of banks customers must
therefore be studied so that service delivery of banks can be accommodated and
improved to meet their requirements.
Moreover, in order to exist in a such fiercely competitive environment, banks
nowadays require a loyal customer base which can be achieved through sufficient


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customer relationship management strategies in order to increase customer loyalty.
The concept of CRM, its variables and customer loyalty will be further discussed in
Chapter 2.
1.3 Overview of Vietcombank Dong Nai
Vietcombank is one of the largest state-owned commercial banks in
Vietnam. This bank was previously owned by the Government and was equitized in
2007 and now the Government still owns the largest proportion of its shares.
Among the Vietnamese commercial banks, Vietcombank have significant
advantages and a very good base for stable development in the future. They are
scale, brand name, customer base, technical infrastructure system, personnel,
contributed capital at big economic organizations.


(Source: Build from Annual report of Vietcombank Dong Nai)
Figure 1.6: Number of credit cards from 2007 to Nov, 2011
(Unit: piece)


6

(Source: Build from Annual report of Vietcombank Dong Nai)
Figure 1.7: The business result from 2007 to Nov, 2011
(Unit: billion VND)

(Source: Build from Annual report of Vietcombank Dong Nai)
With the characteristics of a wholesale commercial bank, its main customers
are enterprises, especially big corporations. Too much concentration on a small
number of big customers brings high profit but low stability. The loan portfolio is
not diversified so it has a higher potential risk. Therefore, in recent years,


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Vietcombank’s policy has changed to expand into the retail market, enhanced
granting loans, services to small and medium enterprises, and individuals and
household customers.
At the current time, Vietcombank Dong Nai has a relatively small market
share of retail banking. One of the reasons is due to the characteristic of the region
focusing on many industrial parks with strongly developed manufacturing sectors so
there are many big corporations. In the long run, Vietcombank Dong Nai is focusing
on expanding retail banking, SME and individuals customers.
1.4 Research Problem

factors of CRM influencing customer loyalty at Vietcombank Dong Nai?
• Second research question: How do these factors of CRM influence on
customer loyalty at Vietcombank Dong Nai?
• Third research question: How can Vietcombank Dong Nai adapt certain
variables in order to improve their customer relationship management and
customer’s loyalty?
• Forth research question: Do the biographic variables (sex, age, years of
being customers and education level) influence customer’s loyalty at
Vietcombank Dong Nai?
1.6 Problem statement
More formally, the purpose of this study is to identify the impact of
independent variables of customer relationship management influence on an
dependent variable at Vietcombank Dong Nai. The dependent variable in this study
is customer loyalty, which refers to the perceptions of customers regarding the
loyalty with Vietcombank Dong Nai. The possible influence of the selected
variables in customer relationship management on customer loyalty will be
discussed in more detail in the next chapter.


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1.6 Study scope
As time and sources for the study are limited, therefore this study was
conducted at the main branch Vietcombank Dong Nai and at six sub branches,
which are located at Bien Hoa, Tan Phong, Cho Sat, Ho Nai, Trang Bom, Long
Khanh.
1.7 Research methods
This study will be conducted at Vietcombank Dong Nai and its sub branches
located in Dong Nai province. The main method used for this work are survey
which will be carried out by sending questionnaires to a number of customers to

The outline of this chapter is shown below:
Figure 2.1: The outline of Chapter 2
Chapter 2: LITERATURE REVIEW

2.1 Introduction

2.2 Customer loyalty

2.3 Customer management relationship

2.4 Relation between CRM and Customer loyalty

2.5 Conclusion

2.2 Customer loyalty
Acquiring a new customer is always more expensive because costs are higher
in the acquisition of a customer than in retention customers as it happens only when
customers have repeatedly purchased the products and services and the volume of
purchases increases. The firms do not must invest in attracting the loyal customers
towards their products and services. These findings prompted business decision
makers and executives to search for new innovative strategies to keep their existing
customers loyal towards their products and services, and also to further increase the


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base of loyal customers (Darrell K. Rigby, Frederick Reichheld & Chris Dawson,
2003).
Prus & Randall (1995) stated that customer loyalty is a composite of a
number of qualities. It is driven by customer satisfaction, yet it also involves a