Abstract Purpose – The purpose of this paper is to develop a multi‐item scale for measuring the customer relationship management effectiveness (CRME) in Indian retail banks and to examine its relationship with key customer response variable. Design/methodology/approach – This research adopts two different studies to develop and validate the scale for CRME. In study 1, responses obtained from 197 Indian retail banking customers were used to identify key dimensions of CRME. In study 2, nomological validity for the CRME scale was provided using a new sample of 261 actual bank customers. Furthermore, the relationship between CRME dimensions and customer behavioral outcomes such as customer satisfaction, loyalty and cross‐buying were examined. Findings – The results of factor analyses revealed five dimensions for CRME, namely, organizational commitment, customer experience, process‐driven approach, reliability and technology‐orientation. Organizational commitment, process‐driven approach and reliability were found to positively affect customer satisfaction. Reliability was found to have direct association with customer loyalty and both customer satisfaction and loyalty‐influenced cross‐buying. Research limitations/implications – The identification of the dimension will help bank managers to implement an effective customer relationship management (CRM) that enhances customer satisfaction, loyalty and provides opportunities for banks to cross‐sell other related and unrelated products to its customers. Originality/value – This paper provides a robust scale for measuring CRME in the Indian banking context. It examines the relationship between CRM efforts and relational outcomes of satisfaction, loyalty and cross‐buying.
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