Customer Relationship Management Effect on Loyalty: A Study of Switching Cost Role as Mediator

Abstract

The research aims to examine the effect of customer relationship management on customer loyalty with its mediator switching cost in sharia banks. Despite Indonesia's predominance of Muslims, Sharia banks nevertheless have a little market share. The study also demonstrates that consumers of Sharia banks behave differently from customers of conventional banks since Sharia bank customers are driven not just by their necessities but also by their desire to uphold Islamic beliefs. Sharia banks have been emphasizing enhancing their customer relationship management (CRM) approaches to overcome these issues and boost client loyalty. 100 Sharia bank customers in Pekanbaru participated in the research using a quantitative methodology. Questionnaires that were manually given to respondents and then subjected to PLS-SEM analysis were used as the data gathering method. The findings show that customer relationship management affects loyalty and switching costs, whereas the third hypothesis is disproved since switching costs do not serve as a mediator of customer loyalty (P = 0.341). Overall, the results point to the possibility that Sharia banks can expand their market share and effectively compete in the services they offer clients by enhancing customer relationship management. The long-term success and expansion of Sharia banks in the banking sector can be attributed to their ability to comprehend customer needs and preferences through CRM and big data research. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2024.