The impact of customer relationship management practices on customer satisfaction in bidv cao bang branch

Lunghwa University of Science and Technology Department of Business Administration Thesis for a Master’s Degree The impact of customer relationship management practices on customer satis

Lunghwa University of Science and Technology Department of Business Administration

Thesis for a Master’s Degree

The impact of customer relationship management practices on customer satisfaction in BIDV – Cao Bang branch

Researcher: Luc Thi Phuong Hoa

Supervisor: Assoc Prof Chih-Chung-Chu

Co-Supervisor: Dr Nguyen Trung Hien

May 2018

Lunghwa University of Science and Technology

Approval Certificate of Master's Degree Examination Board

This is to certify that the Master’s Degree Examinations Board has approved the thesis The impact of customer relationship management practices on customer satisfaction in BIDV – Cao Bang branch published

by Ms Luc Thi Phuong Hoa in the Master Program of Graduate School of Department of Business Administration

Master’s Degree Examination Board

Board Members: Assoc.Prof.PhD.Kwannin Kuo

Dr Dao Tung

Dr Doan Thu Trang

Advisor Assistant Professor Chih-Chung Chu

Dr Nguyen Trung Hien

Chair

Date： ／ ／

ABSTRACT

Thesis Title: The impact of customer relationship management practices on customer

University：Lunghwa University of Science and Technology

Graduate School：Department of Business Administration

Date：May, 2018 Degree：Master

Graduate Student: Luc Thi Phuong Hoa

Supervisor: Assoc Prof Chih-Chung-Chu

Co-Supervisor: Dr Nguyen Trung Hien

Keywords: CRM, customer satisfaction, service quality, reality, impact

In the global economic integration trend, the competition in the Vietnamese banking industry is becoming tough and fierce This lead to financial institutions more interested

in building and maintaining a strong relationship with their customers in order to achieve an optimizing goal customer satisfaction For this reason, customer relationship management (CRM) has become an indispensable part of the service sector, especially

in banking industry Therefore thesis has focused on the CRM practices at Bank for investment and development of Vietnam JSC – Cao Bang Branch (BIDV- Cao Bang branch) to research the relationship between CRM practices and customer satisfaction in there Data used in making analysis was collected from conducting survey at BIDV- Cao Bang branch Based on 185 valid responses from customer, the study indentified three components – SERVICE QUALITY, CUSTOMER DATA BASE, and SOCIAL NETWORK INTERATION – which explain customers’ evaluation of perceived CRM practices at BIDV-Cao Bang branch The relationship between these CRM practices components and customer satisfaction is investigated through regression analysis As the result showed, these three components of CRM practices have positive relationship with employees’ motivation in which SERVICE QUALITY has the most significant impact on customer satisfaction level In addition, based on these findings, the thesis also gives some suggestions for BIDV-Cao Bang branch to further improve CRM practice and customer satisfaction level

ACKNOWLEDGEMENT

First of all, I would like to send my sincere thanks to the lecturers, especially to my supervisors Assoc Prof Chih-Chung-Chu and Dr Nguyen Trung Hien for their devoted attention, lessons and guidance, which have equipped me with key knowledge and essential skills throughout the course More importantly, everything I have learned here would undoubtedly help me tremendously in my work in the future

I would also like to thank International School - Vietnam National University, Lunghwa University of Science and Technology for useful supports during studying and researching to complete this paper This course has equipped and improved and added a lot of knowledge about the different areas In addition, the course also helps me to have

a relationship, have the opportunity to share information and learn from other students

in the program

I am pleased to gratitude leaders and my colleagues at BIDV-Cao Bang branch for their enthusiastic support and creating favorable conditions for me to have more useful information to complete thesis

In my thesis will not avoid the shortcomings I look forward to receiving comments from lectures and students so that I can add to complete this paper

Thank you!

Author

Luc Thi Phuong Hoa

TABLE OF CONTENTS

ABSTRACT i

ACKNOWLEDGEMENT ii

TABLE OF CONTENTS iii

LIST OF TABLES vi

LIST OF FIGURES vii

1 INTRODUCTION 1

1.1 Problem identification 1

1.2 Research objectives, questions and scope 2

1.2.1 Research objectives 2

1.2.2 Research questions 2

1.3 Research scope, objects and methods 2

1.3.1 Research objects 2

1.3.2 Research scope 2

1.3.3 Research methods 3

1.4 Contribution of the research 3

1.5 Structure of the thesis 4

2 THEORETICAL FRAMEWORK 5

2.1 Conceptual framework on Customer Relationship Management 5

2.1.1 Concepts of customer and types of bank customers 5

2.1.2 Concepts of CRM and CRM system 6

2.1.3 Characteristics of CRM 7

2.1.4 The role and benefits of CRM in banking sector 8

2.2 The major aspects of a CRM success 10

2.2.1 Service Quality 10

2.2.2 Employees Behavior 11

2.2.3 Customer Database 11

2.2.4 Conflict Handling 12

2.2.5 Physical Environment 13

2.2.6 Social Network Interaction 14

2.3 Customer Satisfaction and the effect of CRM 14

2.3.1 Customer Satisfaction 14

2.3.2 The Effects of CRM on Customer Satisfaction 15

2.4 Literature review 16

2.5 Research Model and Hypotheses 18

2.5.1 Research Model 18

2.5.2 Hypotheses 18

3 RESEARCH CONTEXT AND METHODOLOGY 20

3.1 Overview of Bank for investment and development of Vietnam JSC 20

3.2 About BIDV – Cao Bang branch 23

3.3 Research Methods 26

3.3.1 Designing questionnaires 26

3.3.2 Sample and Data Collection 28

3.4 Analyzing data plan 29

3.4.1 Reliability analysis by Cronbach’s alpha 30

3.4.2 Exploratory factor analysis 31

3.4.3 Regression analysis 32

4 ANALYSIS THE REALITY OF CRM PRACTICES IN BIDV – CAO BANG BRANCH AND SURVEY RESULTS 34

4.1 BIDV’s business results in the period from 2012-2016 34

4.1.1 The development reality of mobilization service 35

4.1.2 The reality of loaning and investment services activities 39

4.1.3 The reality of fee-base financial service activities 43

4.2 The reality of key dimensions of CRM activities in BIDV Cao Bang in the period from 2012-2016 44

4.2.1 Customer database system 44

4.2.2 Analyzing customer database 45

4.2.3 Selecting targeted customer 45

4.2.4 Developing customer relationship 46

4.2.5 Evaluating the reality of CRM performance in BIDV Cao Bang 48

4.3 Research results and analysis 49

4.3.1 Data description 50

4.3.2 Reliability analysis and scale 53

4.4 Exploratory Factor Analysis 57

4.4.1 Exploratory Factor Analysis of CRM Practices Scale 58

4.4.2 Exploratory Factor Analysis of Customer Satisfaction Scale 62

4.4.3 Research model – Version 2 63

4.5 Regression Analysis 63

4.5.1 Regression Analysis 63

4.5.2 Research model and hypotheses tested result 67

5 FINDINGS AND DISCUSSIONS 69

5.1 Assessment of perceived CRM practices in BIDV - Cao Bang Branch 69

5.2 The impact of CRM factors on customer satisfaction in BIDV - Cao Bang branch 70

5.3 Suggestions to improve CRM performance and customer satisfaction in BIDV - Cao Bang branch 70

5.3.1 Improve Service Quality and customer database components 70

5.3.2 Improve Social Networking Interaction component 70

5.3.3 Improve other components of CRM practices 71

6 CONCLUSION 72

REFERENCES 73

APPENDIXES 76

LIST OF TABLES

Table 1 Encoded Data 29

Table 2 Cronbach’s alpha values and internal consistency (George & Mallery, 2003) 31

Table 3 BIDV’s key performance indicator in the period of 2012-2016 35

Table 4 BIDV’s growth rate and mobilized capital structure in the period of 2012-2016 36

Table 5 The growth rate and loan structure of BIDV in the period of 2012-2016 40

Table 6 Back payment and indicator of loan balances by quality 41

Table 7 Specific criteria for selecting each customer group 46

Table 8 Descriptive Analysis 50

Table 9 Gender distribution among 185 participants 51

Table 10 Reliability of scale 54

Table 11 Exploratory Factor Analysis of CRM practices 58

Table 12 Reliability statistics and exploratory factor analysis of CRM practice, 2nd time 60

Table 13 Exploratory Factor Analysis of Customer Satisfaction Scale 62

Table 14 Correlations 64

Table 15 Collinearity Statistics 65

Table 16 Regression analysis summary 66

Table 17 Regression analysis – the second time 67

Table 18 Hypotheses Tested Results 68

Table 19 Perception on main elements of CRM at BIDV - Cao Bang branch 69

LIST OF FIGURES

Figure 1 Research model 18

Figure 2 BIDV’s market share of mobilization capital period of 2012-2016 37

Figure 3 BIDV’s market share of gross loan in Vietnamese banking industry in the period of 2012-2016 42

Figure 4 Age distribution among 185 participants 52

Figure 5 Kind of services used by 185 participants 52

Figure 6 Research model – Version 2 63

Figure 7 Regression Standardized Residual 65

Figure 8 Research module result 68

1 INTRODUCTION

1.1 Problem identification

In today's competitive environment, customers are the most important assets of many businesses in general, of banks in particular Financial service providers aware their existence and development depend on the way they gain customers, satisfy their needs and maintain customers loyalty to the bank Customer-centric business strategy is becoming a top priority strategy for banks Hence, building a customer relationship management system to develop, maintains and strengthens relationships with both current and prospective customer groups will enable the banks to better satisfy customers needs, increase the value for them This is the effective competition determinant that brings the greatest benefit to the bank Bank for investment and development of Vietnam JSC (BIDV) is one of the largest commercial banks in the country with expanding scale and diversified services to meet an increasing demand of different customer groups The role of customer relationship management has been recognized by BIDV Vietnam in general, BIDV Cao Bang branch in particular as one of the main effective tools in competition with other commercial banks of Vietnam and financial institutions

Although the bank has a large number of customer but in local area recently appearance of many strong competitors makes BIDV Cao Bang unavoidable the risk of losing customers Rival banks such as Vietcombank, Vietinbank and Techcombank etc are both more modern and invested by foreign financial corporations Meanwhile, the customer relations management at BIDV Cao Bang in recent years is still limited Many old customers of the bank left while it has yet established a long-term relationship with its current customers In addition, in daily transactions, several customers are not really satisfied with the customer care services and staffs’ attitude of the bank It seems that BIDV Cao Bang branch is gradually missing the opportunity to maintain and develop close relationships with customers when it ignores many potential customers This is not only push up the cost of finding new customers, but cause difficulties in attracting and maintain current customers From these facts, the author has chosen the research topic

“The impact of CRM practices on customer satisfaction in BIDV - Cao Bang branch” to find solutions which help BIDV Cao Bang improve its customer satisfaction and CRM practices in the future

1.2 Research objectives, questions and scope

1.2.1 Research objectives

The paper focuses on determining the awareness and use level of CRM activities in achieving customer satisfaction in BIDV - Cao Bang branch and the major elements of CRM applied in there The study is also to examine the impact of customer relationship management on customer satisfaction in BIDV-Cao Bang branch Base on survey results and evaluating the relationship between CRM performance and customer satisfaction, the paper provided valuable suggestions and recommendations to the BIDV

- Cao Bang branch which can improve its customer relationship management practices and satisfaction

1.2.2 Research questions

To what extent do BIDV - Cao Bang branch apply the CRM concepts?

What are the main elements of CRM practices that can achieve customer satisfaction

in BIDV - Cao Bang branch?

What is the relationship between CRM practices and customer satisfaction in the BIDV - Cao Bang branch?

1.3 Research scope, objects and methods

1.3.2 Research scope

The study mentioned the CRM performance in BIDV - Cao Bang branch and the relationship between CRM practices and their customer satisfaction Therefore, it is not

only stopped at testing the theories regarding the customer relationship management, customer satisfaction and the research models used to measure CRM performance and customer satisfaction but further, it is the way for me to apply the knowledge, skills and

my experiences into the construction the CRM strategy for a specific enterprise, from that contribute the useful points in CRM activities of BIDV - Cao Bang branch where I

am working for In this paper, I will focus on research the information and figures related to the reality of the CRM activities of BIDV - Cao Bang branch in the period from 2012 to 2016

1.3.3 Research methods

In order to answer the three main research questions, the author uses following research methods:

Secondary data: figures were collected from financial statements, annual reports of

commercial banks, data published by Vietnam banking association, reports by independent organizations and actual data of retail banking business and CRM implementation at BIDV - Cao Bang branch

Primary data collection and analysis: collected data from investigation would be

processed by software SPSS version 21.0 with methods such as reliability test Cronbach Alpha, exploratory factor analysis, one-way ANOVA and multiple linear regression analysis The author found out solutions to attain the above objectives

1.4 Contribution of the research

Within the boundary of this thesis, the author aimed to explore the significant correlation between the CRM performance and customer satisfaction Base on assessed results the reality of CRM performance in BIDV - Cao Bang branch as well as the satisfaction level of its customer, the author proposed some solutions to improve CRM activities and improve customer satisfaction for BIDV - Cao Bang branch in the future Those solutions constituted setting up a process and procedures of solving customer complaint complaints and problems because effectively solving customer complaints is the best way to improve customer perceptions of BIDV's professionalism and integrity; building and conducting a customer-oriented culture; improving physical environment and upgrading information technology system infrastructure of which focus on deployment systems serve for retail banking activities

1.5 Structure of the thesis

Regardless of the introduction, conclusion, reference and appendices the thesis has four major parts as following:

Theoretical Framework

Research context and methodology

Analysis the reality CRM practices in BIDV – Cao Bang branch and survey result Findings and Discussions

2 THEORETICAL FRAMEWORK

This chapter will provide theoretical framework for the research It includes fundamental concepts on customer relationship management, its role and benefits in banking sector The characteristics, process of CRM and customer satisfaction will be presented too Furthermore, the major aspects of a CRM success as well as research model and its hypotheses were also mentioned in there

2.1 Conceptual framework on Customer Relationship Management

2.1.1 Concepts of customer and types of bank customers

The organization’s customer is a collection of individuals, groups or businesses whose demand to use the company's products and expect to satisfy their needs For a bank, customers involved in both the input supply process such as saving, exchange bills etc and the consuming output process when they borrow money from the bank A relationship between a bank and customers is a two-way relationship that facilitates co-existence and development The success or failure of the customer is the decisive factor for the existence and development of the bank vice versa bank's innovation in service products quality facilitates customer's business success Based on customers’ buying behavior they will be categorized into institutional clients or individual clients There are three main customer groups in banking sector consist of capital mobilizing customers, debit customers and customer related to the financial and monetary services, the bank's assets

Capital mobilizing customers might be come from business enterprises in the fields

of production, circulation and services, public administration sector or residents Business enterprises’ aim of money sending into the bank is payment transactions for their business operations For this capital resource, due to the bank has not paid interest

or low interest rates so it seems very beneficial for banks when using it to lend Moreover, the bank takes advantage of idle capital in the payment phase that is created

by banking services In operation process, several public agencies have got extra business activities that be allowed by laws or have got non-state funds such as gifts, rental space These funds will be sent to the bank under the form of a dedicated account

for interest When the economy grows, population classes will have income streams in the form of extra earning which is the significant capital mobilized source for the bank

Debit customers: Bank’s borrowers may be customers who use the loan for the

right purpose and payment both principal and interest as their commitment, but there are also several other customers who unable repay their loan In these cases, the bank should have a borrower selection method rely on financial indicators (such as payment ability, operating expenditure, self-financing ability, profitability, comply with financial report preparation and submission), and non-financial indicators including reputation in credit relations, assets assurance level, relationship level with banks For each indicator has a certain scale with a total score of 100 which is applied to divide customers into groups The bank identifies the target customer groups and then develops a relationship management strategy with these customer groups In general, banks have a lot of different customers so classification and good relationships management with target customers are not simple It requires the organization’s participation and directly instruction from the manager board

Customer related to the financial and monetary services, the bank's assets: this

customer group comes from individual consuming and institutional markets In individual consumption market, customers tend to buy bank’s service products for their living with small quantities so there is no binding relationship to the banks Moreover their buying behavior is influenced by many factors of psychological, social culture, and personal They are often no higher education and less knowledgeable than corporate clients Contrary, in institutional market customer usually buy on a large scale and quantities thus, the relationship between institutional customers and banks are often closer and interdependence each other Their purchasing mainly to business or perform some functions and they are more concerned with profits, cost reduction, price negotiation They require discount in certain cases or the ability to meet the working demands for example requirements on supply plans, quantity, quality, location etc so banks should base on customers’ expectations to meet the maximum their needs

2.1.2 Concepts of CRM and CRM system

Bodenberg (2001) defined customer relationship management as a comprehensive business strategy of which revenue, profit and customer satisfaction are achieved through organizing customer segmentation, nurturing customer satisfaction, and

executing customer centric processes CRM techniques should be focused on customers, enhancing approach, interact and integrate with customers more effectively through all channels and functional departments of the business

The CRM systems are designed to support businesses research, thoroughly understand customer demand and habits, approach and communicate with customers in

a systematic and effective way, manage their information to serve customers better Moreover this system allows bank staffs to edit customer information through various interaction channels including company’s website, telephone, live chat, post, email, marketing materials, and social media They also might be record or access detailed customer information such as personal account information, purchase history, buying preferences and concerns etc The value information provided by the CRM system can help promote a bank's overall business goals For example, if the sales consultants know the customer's certain needs they can provide right products and services that customer expect A CRM system consists of four main techniques components encompass customer data-store for communication, updating data source; tools for analyzing databases and identifying patterns of customer behavior; tool management strategy allow marketing department to define clearly communication method and convenience; common issues about environmental changes to maintain and update databases and media resources to send messages to customers Furthermore CRM system has got a big data and comprehensive that so staffs in different units could be access the same information

2.1.3 Characteristics of CRM

CRM are formed on 4 principles consist of customers should be managed as important assets; The customers benefits are always change and not all customers have the same desire; demand, desire, buying behavior of customers are change too; by the skills to understand customers and find out their benefits and the organization can meet their needs and maximize customer value in the organization's client portfolio CRM allows the bank to identify, attract and engage the best customers to achieve higher sales and profits It also builds lasting, meaningful, personal relationships with customers who will create income for the business in the future CRM develops and improves relationships with current customers by cross-selling and up-selling activities that bring the business closer to customers, to better understand each client, to deliver greater

value to him/her, and to make each person more valuable to the business If customers receive products and services that more convenience, value and satisfy from the bank, they are more willing to spend all their time and money to the bank than any competitor Building customer value increases the value of the demand chain, the business flow from the customer back to the retailer and then the manufacturer CRM involves behaving toward different customers in different ways When a company applies its client strategies to interact directly with each individual customer, s/he tells the company how s/he wants to be treated Based on this interaction, the company will adjust its behavior to him/her In essential, this is a one to one relationship (a customer with a business - customer input to the output of business for a particular customer) The CRM model becomes different in business and competition is due to the company's business strategy that achieves specific customer goals through activities toward specific customers CRM creates optimum investment efficiency by integrating personal customer information into each functional unit of the organization from customer service, production and logistics to channel management CRM is both an operational and analytical process in which operational CRM focuses on software settings and process changes that affect daily operations of the business Analytical CRM concentrates on the necessary strategic planning to build customer value as well

as culture, metrics, organizational changes to implement successful strategies The CRM objective is the profit growth by providing right products to right customers, right channel with suitable time and cost The overall business objective of this strategy is gradually increases the value of the customer base which increasingly profitable for business

2.1.4 The role and benefits of CRM in banking sector

Without a doubt, in the fiercely competitive environment of banking market, the decrease in customer loyalty and changes in customer trends have forced banks to seek solutions to attract and retain customers and increase revenue To understand, manage information and meet customer requirements, the role of CRM has been affirmed as instrumental to identify and capture the most profitable customers for the bank It combines between advance technology and manpower to create new business strategies that ensure the maintenance of a sustainable competitive advantage by satisfying existing clients and attracting new ones CRM helps the banks provide appropriate

services and cost saving to their customers, develop fit products and services for these clients, increase customer loyalty and long-term value In banking context, the functionality of CRM system enable the bank handle a large number of individual retail customers at the same time as well as control the rate of customer retention and cross-sell their products effectively CRM facilitates banks to implement data mining techniques to understand their customers, also determining prospects and the best way

to communicate and marketing their cross-selling products to potential customers Dealing with services by contact centers and online, CRM operations would save costs for the banks

Nelson (2012) stated that the core benefits of banking CRM are improving customer service and communication; value cross-selling to raise revenue; automating banking procedures; better control the quality of products and services; select customer information, and building marketing strategy He suggested that CRM information and analysis tools make the bank more concentrate customers and their satisfaction that create profits for these financial providers The bank's profitability has been seen in factors of better infrastructure, easy staff training, customer satisfaction and retention Integrates processes of customer information, products price, templates for proposals and marketing collateral etc are systematically centralized, which will help bankers manage easier and more understand their customers Bligh (2004) found that CRM allows the bank to separate customers into different segments that help them customize the services and create demand by multi-channel/waves campaigns The 360-degree views give bankers a multi-dimensional perspective on their customers It means transparent transactions through a single window to accelerate the cross-selling of different products to customers The CRM accelerates and consistent decision-making process based on the database and customer’s CRM perspective Risks in business operation can be reduced when a banker uses a CRM system to track and interact with customers through phone, fax, e-mail, online portals, wireless devices, ATMs, and face

to face contacts with bank staffs at transaction office The banking CRM benefits clients with convenience services such as internet banking, mobile banking, ATMs etc They receive bank’s feedback faster and get more information about beneficial products to them

2.2 The major aspects of a CRM success

Azzam (2014) defined that in the banking sector, customer satisfaction depend on their assessment on CRM through six elements including service quality, employee behaviors, customer database, conflict handling, physical environment and social network In this section I will study these factors as a theoretical background to build research scales and hypothesizes in next part

2.2.1 Service Quality

The American Society for Quality gave the definition of quality as “the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs” (Jay et al., 2009) We can define quality products as goods and services that are reliable in the sense that they do the job they were designed for and do

it well, which increases perceived value, but they are also differentiated by various attributes that customers perceive to have a higher value (Charle et al., 2004) Service quality can be defined as the difference between customer expectations of service and perceived service If expectations are greater than performance, then perceived quality

is less than satisfactory and hence customer dissatisfaction occurs (Parasuraman et al., 1985; Arash Shahin) In another way, service quality can be defined as the ability of a service to perform its functions including the overall durability, reliability, precision, ease of operation and repair, and other valued attributes (Kotler et al., 2005)

Banking service quality is intangible and estimated highly base on customers’ experience Most bank claim that the bank is in the financial industry; therefore, they tend to compete each other base on their financial capacity rather than service quality However, existence of any business including banking is due to customers who decide the amount of company’s sales based on their perceptions of service quality In other words, service quality will determine the bank’s profitability, and customers will determine how service quality should be In this thesis, banking service quality may be defined as the ability to satisfy the customer’s requirements and needs This ability includes everything that customers think they will be received from those services like accurate process, affordable price, on-time delivery, attitude of staffs, etc

2.2.2 Employees Behavior

The interaction between bank and customers is a mirror that reflects the bank’s service quality, image and brand and its employees are the image representatives for it Through communication with customers, bank staff’s image reflects the bank’s image Customer dissatisfaction will affect the bank’s prestige and vice versa a good image will

be recognized and disseminated if bank staffs satisfy clients Skilled employees knew that providing excellent customer service closely relate to their polite attitude, amiability and serve style attentive as well as other professional qualities For example -

a seller will not lie about bank product or service just for his/her attractive commissions S/he will give the customer a fully truth about the product/service honestly even s/he does not forget and sincerely thank customers for their interest and using the bank's products/services Direct bank clerk treats all customers equally, irrespective their business size S/he always responds and provides service fast, efficient and high quality

to all customers Moreover, in high-pressure situations such as complaints from customers about the bank's products/services, she still listens calmly and understands the customer's problems in order to find out the most appropriate solutions At the transaction offices, employees' positive attitudes can be reflected by their courtesy behavior and helpful even for customers who may not trade or deal with very small values In fact, banker probably never ensures that 'visitors' eventually become their biggest customers It seems that customers often consider organization’s employees behavior as the way the business owners operate their company An employee tries his best to help a customer solve a problem can create an image in consumer minds that a bank is helpful and efficient On the other hand, a customer who has to wait a long time for service and then be served by a cold or uninteresting employee, s/he might leave with a negative impression on the bank

2.2.3 Customer Database

Customer database is data of existing customers, potential customers and customers

no longer trade Data of exiting customer including prime information (personal information) that helps identify customers such as name, address, code, phone number etc this information might be changed so it should be update regularly; demographic characteristic including age, gender, marital status, education, income and number of family members are less changeable over time; behavior such as purchase frequency,

expenditures, changes in purchase types; attitude data which is often difficult to collect, quantify because they relate to emotions, praise comments and criticism of customers about the bank and their expectation; affecting factors on transaction decision encompass elements belong to enterprise such as product quality, price, type of product, customer service, long-term relationship etc and customer factors such as marriage, retired, internet access etc

For customer no longer trade: it is necessary to collect their data to find out corrective measures or appropriate interactions to attract customers back For these clients, beside their basic information, demographic characteristics, extra data to be collected consist of behavior that relate to former purchasing characteristics of customer and their expenditures to the business; time and method of customer transaction; the reason for customers to stop dealing with the bank

For potential customer database: their portfolio similar with existing customer however bank’s products have to meet their specific demand The banker might be use clusters and upgrades database to research and add information of this customer group

In short, customer database ensures effectively marketing operation, increases the business’s ability in enforcing profitable market segments by categorize customers into different groups to implement marketing programs effectively; keeping customers and encouraging repurchase and target potential consumers In customer relationships, the database is used to identify the most profitable customers, attract potential customers, send personalized messages related to products/services before and after purchase to consolidate, cross-selling, ensure effective communication with customers, improve the promotion results with the right orientation, personalize customer service, achieve confidential communication with customers

2.2.4 Conflict Handling

Naoui & Zaiem (2010) defined conflict as the process in which a party recognizes that his or her rights are either dissenting or negatively affected by another party Conflict can bring negative or positive results, depending on the nature and intensity of the conflict In fact, conflict in service business is unavoidable, so the manager’s concern is not whether or not but where the conflict is, what type and scale it belong to and its intensity to basis for the corresponding strategies and interventions Dwyer et al.,

(1987) suggested four steps that help employees solve conflicts with their customers effectively below:

Positive thinking: some staffs think that customers complain about company’s

product or service that is not good But if you look at another aspect, you will find that

it is a good thing, is company’s chance to constantly improve on its products and services Customers who are interested in your company, they will complain to you and give you the opportunity to modify and this is a challenge that you need to overcome If the customer does not complain but silently leaves to another company, you have no chance to correct the mistake

Help customers relieve frustration: when customers are angry, their highest

demands are often just to relieve discommode In such situations you should learn and use your listening skills Put yourself in the customer position to understand their feelings Let customers see you are on their side, be their friend

Find out information about the problem: everything happens with its own reason

No smoke, no fire that is the immutable principle of sales and customer service Making ingenious questions will make customers easy sharing their problems that help you find out the real problem the customer is experiencing

Help customers choose the best solution: a perfect service must always consider the

customer’s problem as your problem Customers do not care how you will implement them, they only care about the problem and the results they receive Always show your customers how good your service quality by time and service quality Satisfying fastidious customers, you will have the absolute loyal customers for your enterprise because a few companies that can make them happy like your company

2.2.5 Physical Environment

The physical environment is the conditions, means, tools that serve the bank’s process of providing services to the customer It is reflected in aspects such as a interior decoration in the transaction office, parking, waiting areas, air conditioning, lighting, and catalogs, flyers introduce bank’s products and services and other available facilities for client’s convenience The bank’s physical environment is a CRM aspect that has a positive influence on the perceptions and satisfaction of service users towards service quality When customers assess positively on the physical environment of the business,

it also positively affects their satisfaction and their feeling of service is also appreciated

higher According to S.Wheelan (2002), the physical environment or tangible element

of the enterprise is an indicator for the "promise delivery good service" that will create credibility to the customer about the service provider

2.2.6 Social Network Interaction

The organizational purpose is combine social media network with customer relationship management (CRM) strategies to optimize the strength of social interaction

to come closer to customers By doing so, social network interaction facilitate business increased its revenue cost reduction and efficiencies Enterprises are rapidly take advantages of social networking to build virtual communities that they might be create innovative social commerce programs, improve customer care and easier investigate market feedback than ever before Businesses follow up clients from social networking website such as face book, twitter, linkedIn and many others which to be used as a sale channel because nowadays, customers like to use the social networks to share information about themselves and their interests However, these channels also generate many information gaps which are difficult for businesses to control them In fact, these vulnerabilities are gradually being filled by the applications of social CRM software and

it is also difficult to tight-fisted for businesses to acquire this advanced technology

2.3 Customer Satisfaction and the effect of CRM

in today’s highly competitive world of business (Vanniarajan et al., 2007) Lovelock et

al (1998) listed various virtues with respect to satisfaction Firstly, satisfaction is impeccable from customer loyalty and commitment factor with respect to the relationship Secondly, highly satisfied customers are more likely to spread positive word of mouth about the firm and its products and services to other potential customers, which in essence can turn into a major advertisement and promoting factor for the firm and its products and services Thirdly, customers who are highly satisfied are more likely to be forgiving for mistakes from the part of the firm, since if the customer was enjoying quality products and services from the firm in the past and happen to get under quality products or services for some reason, the person is more likely to come to the conclusion that it is just a onetime mistake Customer satisfaction is regarded as a major priority for banking industry sector since banking industry is generally characterized as the business industry segment which involves high rate of customer contact and providing industrialized service solutions thus giving much focus of research to customer satisfaction in banking sector It is also found that customer satisfaction is closely connected with interpersonal trust (Geyskens et al., 1996) In this research, customer satisfaction can be understood as psychological state of customers when service they received matches or exceeds what they expected

2.3.2 The Effects of CRM on Customer Satisfaction

Applying CRM to the retail banking market is one of the most effective ways to help banks deal with the facing difficulties Customers are the products consumers of businesses and also bring revenue to them When customers are satisfied with the bank's products quality they will continue to buy more products in a long time if the banker is always providing new products and improving existing products They will talk about their bank and products with compliments, also keeping their unconcerned to competitive brands that against bank’s products and even offering valuable suggestions and ideas about those products and services This will be a free-cost source of advertising information and extremely effective for the enterprise Through the CRM system, customer information will be updated and stored Based on this database, a bank can analyze and identify potential and long-term customers to create appropriate customer care strategies, build long-term customer relationships for their aim of optimal satisfaction Thus CRM has a positive impact on customer satisfaction if an enterprise has a good CRM strategy, customer satisfaction will automatically be increased

Conversely, the lacking of a good CRM strategy will lead to customer dissatisfaction When the more develop society, the increasing customers’ demand, they require higher quality and price They are always interested in the purchasing benefits but if the bank's capacity is not good enough to handle these requests, the conflict will be more likely to happen and it loss customers Rahman et al, (2014) argued that maintaining the desired level of customer satisfaction requires a proactive corporate responsiveness in approaching, building and retaining satisfied customers for sustainable competitive advantage in the market Therefore, the enterprise needs to take-care customers at the first and after purchase Enhancing take care customer after purchase give them respect, satisfaction and they are willingness to use or introduce others to use bank’s products or services the next time

In today's a retail banking model, applying philosophy well will contribute significantly in reducing the marketing cost of keeping existing customers and reach new potential customers This is also a right experience in the business culture because any service provider who knows smart customer relationship management will be customer-centered to meet customer needs and to improve awareness of the customer value Having many existing customers will attract more and more potential customers under the influence of the mass rule

2.4 Literature review

As mentioned in the sections above, CRM practices affect on customer satisfaction

in banking in many ways Many relationships between CRM practices and customer satisfaction were found in the CRM studies, but in this paper’s context, a few relevant relationships would be discussed Findings in Cho, et al (2013) study on the relationship between CRM elements and customer satisfaction and loyalty showed that employees’ behavior factor has impacted on customer satisfaction and loyalty more significant than other ones such as interaction management, service quality and relationship management Kocoglue (2012) conducted an investigation on CRM and customer loyalty in banking industry in Iran with a sample of 350 banking staffs The test results of major CRM variables pointed out customer database, understanding customer needs and complaints and providing specific solutions to them are positively related to customer loyalty He suggested that CRM implementing in an enterprise to decrease cost and raise company performance and profitability through customer

satisfaction and loyalty In order to obtain an overview of each client need, information should be collected from different sources This data would able to support the staff make decision accurately and in time to solve individual customer problems Moreover, customer perception and behavior contributed significantly in solving their problems with the bank The CRM purpose is to maintain and satisfy customers’ requirements and increase bank’s profits

Trang Le et al (2016) researched on the impact of CRM to the customer satisfaction towards the retail market in Can Tho city, Vietnam Based on the interviewing results of 130 customers at five supermarkets in Can Tho city, the researcher found that four factors of CRM including relationship development, staff behavior, products and services have considerable influence on customers’ satisfaction Among them, the most influential factor is relationship development She concluded that the managers should be more concern about customer opinions for supermarket It

is crucial information source to help the supermarkets identify clearly which elements need to be innovated to improve customer satisfaction Zineldin (2006) was built up a triangle strategy among quality, CRM and customer loyalty which is enhancing company competitive capacity He reveals that any changes of service and product quality could be utilized as an interaction indicator to determine extent to customer loyalty through a well-structured CRM strategy If these indicators and the product and process quality have positive correlated each others, they would help the researcher to find out what changes are requested in CRM strategy to improve customer satisfaction and loyalty There are also many studies on customer relationship management in Vietnam, but only focus on the reality of CRM performance at the company in the fields

of aviation, telecommunications, mobile communications, banking and insurance (Nguyen Huu Long, 2013, Chu Cong Tuoc, 2014, Vo Thi Thanh Tam, 2014, Do Giang Nam, 2015 cited in Trang Le’ paper [33]) These papers describe how an enterprise can attract, maintain, and extend customer relationships through programs that have been carried out in there Meanwhile, so far there is no study on the impact of CRM practices

on customer satisfaction in banking services Therefore, the research "the impact of CRM practices on customer satisfaction in BIDV-Cao Bang branch" is really necessary, thereby propose some solutions to improve customer satisfaction through the application of CRM practices into the retail banking market at BIDV Cao Bang

2.5 Research Model and Hypotheses

2.5.1 Research Model

Base on the reviewed literature and the study objectives, this paper proposes a research model which depends on the structural variables in key factors of CRM practices to create customer satisfaction These various CRM dimensions as shown in figure 1, as an independent variables represented on the left side of the model with six main elements encompass services quality, employee’s behavior, customer database, conflict handling, physical environment and social network interaction of the bank On the right side of the model the dependent variable is represented by customer satisfaction

Figure 1 Research model,

Adapted from Z.A.Mohmmad Azzam (2014)

H1: The services quality and customer satisfaction have a positive relationship That means the higher/lower customer evaluate the service quality factor, the higher/lower level of customer satisfaction

H2: The customer database availability and customer satisfaction have a positive relationship That means the higher/lower customer evaluate the customer database factor, the higher/lower level of customer satisfaction

H3: The availability of conflict handling and customer satisfaction have a positive relationship That means the higher/lower customer evaluate the conflict handling factor, the higher/lower level of customer satisfaction

H4: The behavior of bank employees and customer satisfaction has a positive relationship That means the higher/lower customer evaluate the employees’ behavior factor, the higher/lower level of customer satisfaction

H5: The physical environment and customer satisfaction have a positive relationship That means the higher/lower customer evaluate the physical environment factor, the higher/lower level of customer satisfaction

H6: The social network interaction and customer satisfaction have a positive relationship That means the higher/lower customer evaluate the social network interaction factor, the higher/lower level of customer satisfaction

3 RESEARCH CONTEXT AND METHODOLOGY

This chapter has given an overview description of BIDV in general and Cao Bang branch in particular where the research was conducted In addition, it would also provided detail research method from preparing for collecting data to analyzing data

3.1 Overview of Bank for investment and development of Vietnam JSC

 The establishment and development: Bank for investment and development of

Vietnam JSC (BIDV) was established in 1957 under the name of Bank for Construction

of Vietnam and being one of the first commercial banks of Vietnam During 60 years of building and development, BIDV has got three different names and tasks to meet the country’s requirements in each historical stage namely Bank for Construction of Vietnam (1957 – 1981), Bank for Investment and Construction of Vietnam (1981 – 1990) and Bank for Investment and Development of Vietnam (1990 – 2012) It was equitized and renamed Joint Stock Commercial Bank for Investment and Development

of Vietnam (BIDV) in April, 2012 BIDV has affirmed position as a leading commercial bank, holding a vital role in Vietnam’s monetary market Currently, BIDV

is one of three largest banks in terms of credit share that accounted for 13,6% domestic market share It is the best retail bank and also the bank pays the biggest corporate income tax in Vietnam By the end of 2016, total assets of BIDV reached 1.006.404 billion dong, chartered capital came up to 43.633 billion dong, shareholders' equity gained 44.144 billion dong Together with development process, BIDV set clear vision, mission and core values for themselves (BIDV’s website)

 Vision: To become the leading bank in Vietnam for quality, efficiency and reputation

 Mission: BIDV always accompanies customers to provide the best and modern financial - banking services; committed to bringing the best value to shareholders, creating a professional and friendly working environment as well as career development opportunities and benefits for all employees; and being the pioneer bank in community development activities

 Core values: Customer Orientation-Renovation and Development Creation and Professionalism-Social Responsibility-Quality and Reliability

 The activities of BIDV comprise these following business lines:

Banking: BIDV has a wealth of experience in Vietnam, providing a full range of

modern and convenient banking products and services including

- Fund Mobilization in the form of Term Deposits for Retail and Corporate clients

Insurance: BIDV provides life and non-life insurance product bundles, tailored to

the needs of individual customers

Securities: BIDV provides a wide range of brokerage services, investment

consultancy with the ability of quickly developing a system of order receiving agents nationwide

Financial investment: BIDV contributes capital to establish companies for

investment in key national projects and takes the lead in a number of significant projects such as Vietnam Aircraft Leasing Company

 The strength of BIDV is reflected in the following aspects:

 It has got the third largest network in Vietnamese banking system (after Agribank and Vietinbank) spreading all over country Its branch network comprised of Head Office located at BIDV tower, 35 Hang Voi Street, Hoan Kiem District, Hanoi;

191 local branches and 1000 transaction offices in 63 cities and provinces across the country; 06 Representative Office in Malaysia, Lao, Russia, Singapore, United State and Cambodia In addition to the extensive network, BIDV has established correspondent relationship with over 1,000 financial institutions of more than 90 countries and territories worldwide BIDV also has got 13 subsidiaries, associated companies include BIDV Financial Leasing Company Ltd-BLC, BIDV Asset Management Company-BAMC, BIDV Securities Joint-Stock Company-BSC, BIDV Insurance Corporation-BIC, BIDV International Holdings Limited –BIDVI, Bank for

Investment and Development of Cambodia Plc – BIDC, Lao – Viet Insurance Joint Venture Company – LVI etc

 Being an official member of: Vietnam Banking Association (VNBA); Asian Bankers' Association (AABA); Southeast Asia Bank Association; SWIFT Interbank Financial Telecommunication Association; Issuing and paying visa card, international master card; Vietnam Chamber of Commerce and Industry; Association of financial institutions APEC loans for SME; Vietnam SME Association

 Awards and accolades: BIDV was voted as the best retail bank from 2015

to 2017 by ASIAN banker It achieved Best Domestic Trade Finance Bank in Vietnam

2017 by Euromoney magazine for the second time; Best Credit Card and Best Card Payment Service POS/ATM by the International Finance Magazine; National brand by Ministry of Industry and Trade; Bank with Excellent Performance in Swift Payment certified by key correspondent banks: Citibank, HSBC, Bank of New York Mellon, JP Morgan Chase and Standard Chartered Bank (annually); the first bank in Vietnam to achieve ISO 9000 in management quality; top of Vietnam ICT index (readiness indicator for development and application of IT); top 10 CIO South East Asia (2010, 2013); Best Overall Domestic Cash Management Services in Vietnam; BIDV has received a lot of noble honors and rewards from the Party and State for its contributions including First-class and third-class Independence Medals; First-class, second-class and third-class Labor Medals, Labor Hero in the renovation period, Ho Chi Minh Medal, etc

BIDV was honored to be in the list of 10 strongest trademarks in Vietnam for the 12th consecutive year This award recognizes local companies with outstanding results

in their business performance, service quality, tax contribution, in innovative solutions and technology to protect the environment as well as in ensuring the rights of employees This award also honors BIDV for active participation in social activities BIDV is proud of their tailored digital banking solutions that provide our customers with a simple, fast and secure access to key banking services on their digital devices Our three innovative digital products including BIDV iPay Mobile App, BIDV eFAST Mobile App and Early Warning System (EWS) for credit risks proudly received the

2016 Khue Star Award for outstanding digital solutions

3.2 About BIDV – Cao Bang branch

Beginning to expand network activities covering North provinces, BIDV officially opened and operated Cao Bang branch at No.46, Xuan Truong street, Cao Bang city, Cao Bang province in 1957 It was one of branches established at the earliest in the BIDV system, with the initial name of the Capital Construction Investment Division and directly managed by Cao Bang Financial Company It performs monetary and banking business functions in accordance with the Law on Credit Institutions including is the legal representative that operate under the charter of BIDV Vietnam; is a financial contractor in accordance with the financial regulations of the BIDV General Director; assigned quota, calculated, approved and paid salary according to the its income BIDV Cao Bang's organizational structure is quite compact with one director, three deputy directors, eight professional departments and four transaction offices They are divided into 5 blocks:

i) Customer Management Block:

+ Business Department

+ Individual Customer Department

ii) Operational Block:

+ Customer Transaction Office

+ Credit Management Office

+ Management team and vault service

iii) Risk Management Block: Risk Management Office

iv) Internal Block:

+ Administrative Office

+ Financial Planning Office

v) Subsidiaries Block:

+ Hoa An Transaction Office

+ De Tham Transaction Office

+ Kim Dong Transaction Office

+ Xuan Truong Transaction Office

BIDV Cao Bang has constantly grown in all aspects consist of maintaining high speed growth, safe and effective which contributed practically for the socio-economic development of the locality continuously for many years BIDV Cao Bang branch has got a total assets scale of over VND 1,400 billion, average growth of capital

mobilization achieved up 25% per year and average outstanding loans was more than 20% per year In recent years, it has not only provided working capital significantly for Cao Bang enterprises, produce and business households but also took part in capital investing in key projects and constructions of the province in the fields of hydropower, mineral exploitation, capital construction, transport business and trade With a network

of 1 branch head office, 4 transaction offices, 2 savings funds, 6 ATMs and 9 POS machines, BIDV - Cao Bang branch currently serves approximately 25,000 individual customers who did transaction regularly The growth rate of this customer group has achieved over 15% per year The number of customers using ATM, BSMS and other retail banking services has got an average annual rate of over 20%

 Offered Services:

Card services: The card services are various from the debit card E-Partner (G-card, C-card, S-card, Pink-card, the 12 zodiac animals card) to the international payment credit cards such as Visa, Master Cerium, Visa Platinum,

Oversea Remittance services: With the advantages of being a leading commercial bank in Vietnam, maintaining the relationship with more than 1000 correspondent banks and remittance companies worldwide as well as possessing modern technology system and nationwide network of 191 branches, over 1000 transaction offices; BIDV - Cao Bang branch provides the remittance service from foreign countries to Vietnam in two ways:

Transfer through the bank systems: Use the SWIFT system, BIDV can receive payment messages from all banks worldwide

Speed Remittance Service through Western Union: BIDV cooperates with Western Union in provide the customers with the speed remittance service worldwide

Internet banking services: using the BIDV Ipay service, the customer can carry out the transaction with BIDV on their account via internet and mobile which is ensure by two security layers using the transaction confirmation OTP (One Time Password) BIDV Ipay meets customers’ requirements with three major options: information query (request for the banking information or account information, financial transaction (giro, online saving, normal pay or pay for the credit card), send the loan application online In addition, other banking services are also provided for individual customers namely SMS Banking, Mono

Account services: accounts opened with BIDV will be managed safely, precisely and securely while earning attractive interest rates The accounts for individual include payment deposit account; saving deposit account without term; deposit account in term and the deposit products: saving, bond, certificate of deposit; other deposit account Wire transferring: BIDV provides the wire transferring domestic as well as oversea Domestic VND wire transfer services: implement all legal transferring orders (transferring to relatives and domestic friends, or pay the bank interest, pay for the services and goods ) for the customers (all status in the society including the foreigner coming to Vietnam) to every province on nationwide according to the transferring orders Customers could order to transfer cash or use payment instrument

Overseas wire transfer services: Thanks to the network of more than 800 agency banks worldwide, BIDV can meet requirement for the transferring demand of the customer to any where for different purposes such as studying, treating, paying salary, payment for the import contract, as well as supporting the customers in receiving the money safely, precisely and securely

Foreign currency trading: the foreign currency trading products in BIDV include

- Could mortage the savings, bonds, time bills

- Automatically receive due interest into the original amount and calculate the due interest for the next term

- To be able to transfer ownership of savings; to bequeathed, authorize another person on their behalf to receive and send to other people

- Attractive interest rates, flexible in each period, each type of savings

Loans: BIDV is willing to offer the loans for the financial purposes of individual as follows:

- Study aboard

- Bank guarantee

- Car loans

- Loans to buy houses in housing projects

- Loans to staffs working aboard

- Loans to business in the market

- Loans for BIDV Staff

- Consumption loans guaranteed by the saving account;

- Advances for the sale of securities

- Normal consumption loan

- Normal business loan

- Loans to buy houses including using land right, to construct and repair house Securities: BIDV, represented by the BIDV Stock Company provides the security services such as brokerage; agency, issuance guarantee; securities investment consultancy, corporate financing advisory, listing, equitization advisory, consulting for enterprise transformation, consulting mergers and acquisitions business (M&A); custody

3.3 Research Methods

This part has presented the used methods to carry out the survey that compose of designing questionnaires, selecting sample and data, analyzing data plan Data processing was conducted by softwave SPSS 21.0 consist of Cronbach’s Alpha confidence coefficient analysis, exploratory factor analysis and multiple linear regression analysis

3.3.1 Designing questionnaires

Designing questionnaire referred to element of CRM practices and quality measurement scales used in previous research such as “The Impact of Customer Relationship Management on Customer Satisfaction in the Banking Industry – A Case

of Jordan” by Z.A.Mohmmad Azzam (2014), “Impact of CRM Factors on Customer Satisfaction and Loyalty” by Choi Sang Long et al (2013) Besides, measurement scale

in this research was adjusted in order to be suitable for CRM practices in BIDV – Cao Bang branch Questionnaire was designed in Vietnamese, and divided into two main parts:

- Part I included questions about demographic variables which regarding customers’ basic information to classify participants encompassed customer’s time to use banking services, gender, age, transaction forms and questions relate to which services they used and their impress on BIDV - Cao Bang branch

- Part II was designed to collect assessments from customers about perceived CRM practices of BIDV - Cao Bang branch and their satisfaction level

This part comprised 28 variables in total Assessing perceived CRM practices included 26 variables to measure 6 above components while the research used 2 variables to measure customer satisfaction This measurement based on a 5-point rating scale which corresponding to 1 = strongly disagree, 2 = somewhat disagree, 3 = neither agree nor disagree, 4 = somewhat agree, 5 = strongly agree Customers gave points for

28 following opinions (see appendix):

 Service quality:

- Bank provide services quickly, timely increases customer satisfaction

- The bank keeps secrets of customer information and transactions

- Accuracy is essential for customer satisfaction in banking services

- The bank always keeps credibility to customers and considers customers’ interests at first

- Spreading bank’s branches is important for customers satisfaction

 Customer database:

- Availability of bank customer database is essential for effective marketing performance

- Upgrading customer database is effective to customer satisfaction

- The bank can get any information about customers when needed

- Customer’s all necessary information is easily obtained by officer to satisfy customers

 Employee’s behavior:

- Employees conduct professional transactions, accurately and quickly that makes customer happy with the bank

- Employees are willing to help customers

- Employees always pay attention to customers’ needs

- Employees provide full and easy-to-understand customer procedures

 Conflict handling:

- Banks deals effectively with customer problems

- Bank review complaints periodically

- Employees behave courteously, politely, considerate, willing to guide, consult and answer questions efficiently

- Customers give greater attention to bank reaction toward complaints offered

 Physical environment:

- Interior decoration in the bank is attractive to customer

- Transaction office location convenient, spacious parking

- The bank has got beautiful space, modern equipment and machinery, full facilities (chairs, books, newspapers, drinking water etc.)

- The bank’s website has got full information, clear and eye-catching products and services

- Employees wear uniform, polite and impressive

 Social network interaction

- Sending e-messages to customers

- The bank offers promotions to encourage customers to use its online services

- Providing e-information is essential for customer

- Applications of website give competitive advantage to the bank

 Customer satisfaction:

- You are very satisfied with CRM practices at BIDV - Cao Bang branch

- In the future, you will continue to use BIDV - Cao Bang branch’s services

3.3.2 Sample and Data Collection

According to statistic from Customer Transaction Department of BIDV - Cao Bang branch, there are about 250 customers coming to there every working day Most customers are young people who come to open bank account or card Many others come

to give savings or represent for their company to make payment transactions This study has 28 variables in totals According to Hair et al, (1998) the sample size should be at least 5 respondents per 1 observed variable In order to collect at least 5 respondents per

1 observed variable, the study need to collect at the minimum sample size of 140 respondents To get this sample size, 200 questionnaires were given to customers Method to collect data was conducting surveys with customers who come to make transactions in BIDV - Cao Bang branch Questionnaires were provided to customers

who have free time and be ready to answer survey questions It took each customer about 10 to 15 minutes to answer the questionnaire Survey process was carried out from April 15th 2017 to April 24th 2017

3.4 Analyzing data plan

At first, data will be input and screened to identify missing samples After rejecting all invalid samples, data will be encoded as in Table 1

Table 1 Encoded Data

N0 Label Explanation

SERVICE QUALITY

1 SQ 1 Bank provide services quickly, timely increases customer satisfaction

2 SQ 2 The bank keeps secrets of customer information and transactions

3 SQ 3 Accuracy is essential for customer satisfaction in banking services

4 SQ 4 The bank always keeps credibility to customers and considers customers’

7 CD 2 Upgrading customer database is effective to customer satisfaction

8 CD 3 The bank can get any information about customers when needed

9 CD 4 Customer’s all necessary information is easily obtained by officer to satisfy

customers

EMPLOYEE’S BEHAVIOR

10 EB 1 Employees conduct professional transactions, accurately and quickly that

makes customer happy with the bank

11 EB 2 Employees are willing to help customers

12 EB 3 Employees always pay attention to customers’ needs

13 EB 4 Employees provide full and easy-to-understand customer procedures

CONFLICT HANDLING

14 CH 1 Banks deals effectively with customer problems

15 CH 2 Bank review complaints periodically

16 CH 3 Employees behave courteously, politely, considerate, willing to guide,

consult and answer questions efficiently

17 CH 4 Customers give greater attention to bank reaction toward complaints

offered

(Continued on the next page)

Table 1 Encoded Data (Continued)

N0 Label Explanation

PHYSICAL ENVIRONMENT

18 PE 1 Interior decoration in the bank is attractive to customer

19 PE 2 Transaction office location convenient, spacious parking

20 PE 3 The bank has got beautiful space, modern equipment and machinery, full

facilities (chairs, books, newspapers, drinking water etc.)

21 PE 4 The bank’s website has got full information, clear and eye-catching

products and services

22 PE 5 Employees wear uniform, polite and impressive

SOCIAL NETWORK INTERATION

23 SNI 1 Sending e-messages to customers

24 SNI 2 The bank offers promotions to encourage customers to use its online

services

25 SNI 3 Providing e-information is essential for customer

26 SNI 4 Applications of website give competitive advantage to the bank

CUSTOMER SATISFACTION

27 SATIS 1 You are very satisfied with CRM practices at BIDV - Cao Bang branch

28 SATIS 2 In the future, you will continue to use BIDV - Cao Bang branch’s services

The data collected would be cleaned and processed by software SPSS 21.0 Some methods of processing data used in this study were as following:

3.4.1 Reliability analysis by Cronbach’s alpha

Cronbach’s alpha is a common measure of internal consistency (reliability) of a test

or scale Internal consistency describes the extent to which all the items in a test measure the same concept or construct and hence it is connected to the inner-relatedness

of the items within the test (Tavakol et al., 2011) Cronbach’s alpha is most commonly used when researcher has multiple Likert question in a survey or questionnaire that form

a scale and the researcher wishes to determine whether the scale is reliable (Laerd statistics) The value of alpha (α) may be between negative infinity and 1 However, only positive values of alpha have meaning In general, alpha coefficient ranges in value from 0 to 1, and the increase of this value means that the correlations between the items increase (Amit Choudhury, 2010) Therefore, this processing data method helps analyst

assess the reliability of scale through Cronbach’s alpha coefficient A commonly accepted internal consistency using Conbach’s alpha as in Table 2

Table 2 Cronbach’s alpha values and internal consistency (George & Mallery, 2003)

Cronbach’s alpha Internal consistency

α ≥ 0.9 Excellent 0.9 > α ≥ 0.8 Good 0.8 > α ≥ 0.7 Acceptable 0.7 > α ≥ 0.6 Questionable 0.6 > α ≥ 0.5 Poor

in the same scale; the higher correlation value, the better correlation between that item and the others Variables have item-total correlations > 0.3 will be accepted; the others which have item-total correlations < 0.3 will be eliminated from analysis data

3.4.2 Exploratory factor analysis

Exploratory factor analysis is a statistical approach for evaluating convergence and discriminant values of scales EFAs are interdependence techniques that do not have independent and dependent variables but rely on interrelationship among variables It is used to abbreviate a set k of observational variables into a set F of more meaningful factors This reduction is based on the linear relationship of the elements to observational variables At first, it is necessary to test the sampling adequacy of factor analysis base on Kaiser-Meyer-Olkin (KMO) Measure In case of KMO has value between 0.5 and 1.0 and Sig < 0.5, factor analysis is more appropriate factor analysis