Effect of Service Quality on Customer Satisfaction in Commercial Bank of Ethiopia, Branches in Wolaita Sodo

Abstract

Nowadays, there is increased demand for higher quality services as consumers throughout the world in all sectors become more concerned with quality. Currently, quality in service is the main issue by which producers differentiate themselves from the competitor. The overall objective of this study was to investigate the effect of service quality on customers’ satisfaction in the case of Commercial Bank of Ethiopia branches in Wolaita Sodo town. For this purpose, 383 respondents were selected from target population using simple random sampling method and 22 item likert scaled SERVPERF instrument questionnaires were distributed and 344 valid responses were analyzed. The correlation analysis result indicated that there were positive and significant relationship between all service quality dimensions and customer satisfaction. Regression analysis which was performed to study the effect of service quality on customer satisfaction found that four service quality dimensions: namely, empathy, responsiveness, reliability, and assurance were positively and significantly affect customers’ satisfaction and the tangibles dimension was insignificant for analyses. Compared with other quality dimensions in SERVPERF instrument, empathy has high effect on customers’ satisfaction. It can be concluded that the service quality has significant effect on customer satisfaction in the bank. The bank is recommended to work hard in all quality aspects and give more personal attention to customers, understand the interest of customers, care for their customers, and give prompt service as these will result in customers’ retention, positive word of mouth and increased profitability.