SERVICE QUALITYON AND CUSTOMER LOYALTY IN COMMERCIAL BANK OF ETHIOPIA WEST ADDIS ABABA DISTRICT

Abstract

Service quality has attracted major attention from academic researches as well as marketers over the recent years due to its significant role in business performance and maintenance of customer loyalty. Delivering highest service quality and maintaining customer loyalty are the focus area of every business organization. In order to be competitive and profitable in the banking industry, the bank should offer premium quality services to its customers in order to maintain loyalty; also they should obtain a mechanism to attach importance to customer loyalty. The objective of this study is to examine the relationship between service quality and customer loyalty and sought to analyze customers’ views, thoughts and feeling on the quality of service offered by Commercial Bank of Ethiopia in WAAD. The study identified the possible expectations that customers have on the quality of service. In this study both descriptive and explanatory research method have been used to show the relationships among variables. Primary data is collected by survey questionnaire from 258 sampled bank customers as source. Multi-stage and purposive sampling technique is used to test and retest the parameters. The researcher engaged the statistical inferential analysis in correlation test. Finally, based on descriptive statistics, correlation analysis was used to analyze the data, hence; the results show that service quality and all its dimensionshave significant and positive association with customer loyalty. Finally, the conclusion from this study is that delivering premium and highest service quality can lead to higher rates of retention of high number of customers. Recommendations based on the findings were made to this bank which if implemented will enhance the satisfaction of the bank customers as well as improve customer retention rates and it will attract new loyal customers.