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IMPACT OF SERVICE QUALITY ON CUSTOMER RETENTION IN THE NIGERIAN BANKING SECTOR

CHAPTER ONE

INTRODUCTION

Background Of The Study

The ability of businesses to build customer satisfaction and brand loyalty is unquestionably important to their success (Iddrisu, Nooni, Fiankoc & Mensah, 2015). This is especially true in service businesses, where maintaining a strong connection with clients is crucial to beat competitors and excel at service delivery. The heart of marketing, among many other services, is the development of long-term, value-added connections with clients (Agbemabiese 2015). In order to maintain long-term profitability and produce high financial returns, businesses must acknowledge the critical role of client retention through exceptional service. According to Kemp and Rotmans (2005), reliability and quality in business organizations has evolved into a standardized indicator for how effectively the service delivered matches the consumers’ expectations. As a result, businesses have realized that in order to increase profitability, they must focus on the quality of services they provide to their customers. In order to provide acceptable quality service, it is critical to understand the wants of the clients. Customers and front-line personnel engage customers to generate service in a service-oriented firm (Rita, 2008). The abilities of front-line service employees, as well as the processes themselves, determine effective interaction (Kotler and Armstrong (2012), cited in Ivanauskiene) (2014). The banking industry’s full range of operations and income creation relies on customers. Customers are picky, therefore obtaining and keeping them has become a top priority. Banks, according to Siew-Peng and Sedigheh (2015), must cultivate positive relationships with their clients in order to retain, protect, and promote their long-term interests. Service quality is a success factor, the most effective and competitive instrument, and the strength of top service businesses, according to Berry, Parasuraman, and Zeithaml (1988), referenced in Siew-Peng et al. (2015). In order to retain consumers, banks must evaluate the quality of their services in light of rising competition in the financial sector. As a result, the impact of service quality on customer retention in Nigeria’s banking sector will be investigated in this study.

Statement Of The Problem

One of the most important trends in Nigeria’s banking system today is the gradual and incremental shift from traditional orientation to aggressive push. As a result, management is forced to leave their shells or enclaves in order to service the different needs of customers and share the vast market. Customer pleasure and service quality are inextricably related, it’s important to remember. According to Jayaraman, Shankar, and Hor (2010), the higher the level of customer satisfaction, the higher the service quality supplied by a firm.

As a result of the foregoing, banks in Nigeria are under a lot of stress as a result of increased competition in the business (Evangelos, 2014). As a result, several customer retention methods are designed with the goal of boosting service quality. In the banking industry, service quality is critical since it promotes high client satisfaction, making it a key to competitive advantage. When customer service is poor, client satisfaction and willingness to refer the service to a friend plummet. Each consumer considers each component differently when it comes to service excellence (Ahmad & Kyriaki, 2009). Furthermore, service providers’ and consumers’ judgments of service quality may differ greatly. If banks are to compete in providing great service to clients, they must first understand their customers’ perceptions and expectations (Siew-Peng & Sedigheh, 2015).

 Objective Of The Study

In general, the purpose of this research is to look into the impact of service quality on customer retention in the banking industry. The study will particularly; in order to do this;

1. Determine the extent to which Nigerian banks provide consumers with high-quality services.

2. Determine the significance of high-quality services in the banking industry.

3. Determine whether service quality has a substantial impact on client retention.

4. Determine the elements that influence the quality of service provided by Nigerian banks.

 Research Question

The following question will direct the investigation:

1. To what extent do Nigerian banks provide consumers with high-quality services?

2. In the banking industry, how important is great service?

3. Is there a link between client retention and the level of service provided?

4. What variables influence the quality of service provided by Nigerian banks?

Significance Of The Study

Fintech companies and digital currencies have arisen in Nigeria’s financial sector during the last few decades. As the financial sector becomes more competitive, this new development has had a significant impact. As previously stated, quality service has the potential to retain customers; therefore, this study will re-energize the need for service improvement and the continuous provision of high-quality service to customers in the banking industry, which must not be treated casually if customers are to be retained.

This study will also be used as a literature review by future scholars. This means that other students interested in conducting research in this field will be able to access this work as available literature that may be critically reviewed. Invariably,

Scope Of The Study

This research will look into the impact of service quality on customer retention, especially in the banking industry. The research will also look into determining the extent to which Nigerian banks provide quality services to their customers, the importance of quality services in the banking industry, whether service quality has a significant relationship with customer retention, and the factors that influence service quality in Nigerian banks. In this regard, the research would be conducted at a number of First Bank Plc. branches along the Aba-Owerri Road in Aba, Abia State.

 Limitation Of The Study

The researcher ran into some minor roadblocks while conducting the research, as with any human endeavor. Insufficient funds hamper the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection process, which is why the researcher chose a small sample size. Furthermore, the researcher was working on this study while also doing other academic work. As a result, the time spent on research will be cut in half.

 Definition Of Terms

Quality Service: This is a comparison of a service’s perceived expectations and its actual performance.

Customer satisfaction is a metric that measures how satisfied customers are with a company’s products, services, and capabilities.

Customer Retention: This refers to a company’s or a product’s capacity to keep customers for a set amount of time.

Reference

Agbemabiese, Nyanyofio, Agbemabiese, Agbemabiese, Agbemabiese (2015). In Ghana’s banking industry, service quality and client happiness are important.

L. Ahmad and A. Kyriaki (2009). Effects of individual dimensions of service quality in creating and enhancing customer loyalty.

Evangelos,(2014). Cultural influences on service quality and customer satisfaction in Greek insurance.

Ibojo, B. O. (2015). Impact of Customer Satisfaction on Customer Retention: A Case Study of a Reputable Bank in Oyo, Oyo State.

 

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