Moderating effects of CRM performance: Relationship Inertia and Switching Cost in Banking Industry

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 the satisfaction-retention link. However, the impact of switching cost and relationship inertia on the CRM performance-customer satisfaction-retention link in the context of the 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 the 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.