Impact of Service Quality on Customer Retention

Abstract

The present study is aimed to assessing the present scenario of service quality prevailing in the existing Indian banking structure along with their impact on various constructs like customer satisfaction and customer retention. In order to attain the objectives of the study, a well-structured questionnaire has been prepared during the study to ascertain the outlook of the customers on the services of selected banks. Non-probability sampling method has been followed in order to achieve research objectives. A total of seven hypotheses were formulated in the study. Data were subjected to various tools like one way ANOVA, Independent Sample T-Test, Paired T-Test, Linear Regression, Multiple Regressions and various indexes used to address the research aim, question and objectives. Reliability analysis was conducted in order to determine the internal consistency of the research instrument used in the study. It was found that composite reliability of scale is 0.928 which reflects the reasonable degree of reliability and fit for analysis. The SERVQUAL score of private sector bank is less for all service quality dimensions when compared with the score of public sector bank. This finding proves that customers of private sector were more satisfied. Significant differences have emerged among the SERVQUAL score of selected banks. The actual perceptions of customers do not match the level of expectations. There is a need to revisiting the service structure of selected banks in order to meet the expectation level of customers. Value of coefficient of determination for public and private sector indicates that private sector service quality is a strong predictor of customer retention as compared with public sector banks in the study. Hence it can be concluded that service quality dimensions has significant impact on customer retention. Summary of mediation analysis shows that assumed mediating variable, customer satisfaction has significantly impact the relationship of first independent variable, service quality with dependent variable customer retention. Various indexes indicate that private sector bank is more proficient to match the expectation level of customer when compared with public sector banks. The thesis concludes with suggestive measures for improvement in existing service structure in banks, recommendations for further research, limitations and concluding remark for the study. newline