The Effect of Service Quality on Customer Retention in the Banking Industry in Ghana: A Case Study of Asokore Rural Bank Limited

Abstract

Customer retention is essential for the success of service firms like bank. The quality of service has become an aspect of customer retention. Day by day it has been proven that service quality is related to customer retention. This study endeavors to discover the effect of service quality on customer retention in the banking industry in Ghana with specific reference to Asokore rural bank Limited. The five dimensions of SERVPERF model i.e. reliability, assurance, tangibility, empathy and responsiveness are considered as the base for this study. In order to achieve the objectives, both primary and secondary sources of data were used. The primary data were collected through administrating questionnaire. Convenient sampling procedure was used to obtain 100 responses from customers and 20 from employees of the bank. Correlation and multiple regressions were used to investigate the relationship between dependent and independent variables. The correlation results indicate that there is a positive correlation between the dimensions of service quality and customer retention. The results of the regression test showed that offering quality service have positive impact on overall customer retention. The research proves that empathy and responsiveness plays the most important role in customer retention level followed by tangibility, assurance, and finally the bank reliability. The research findings also indicate offering high quality service increase customer retention, which in turn leads to high level of customer commitment and loyalty. The study recommends that for Asokore rural bank Ltd. to be able to retain its customers, more attention should be placed on being empathetic and responsive in their service delivery.