The effect of service quality on customer loyalty: evidence from commercial bank of Ethiopia in Jimma city

Abstract

Service quality has attracted major attention of 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 was examined the effect of service quality on customer loyalty of commercial bank of Ethiopia in jimma city. To achieve this objective, the study adopted an explanatory research design and quantitative research approach. Also, the study used data collected from customers of commercial bank of Ethiopia in Jimma city. More specifically, descriptive and multiple regression analysis were employed to analyze the effect of independent variables on dependent variable. Primary data was collected by survey questionnaire from 344 sampled bank customers as source. Convenience sampling technique is used to test and retest the parameters. Findings of the study revealed that Tangibility, Reliability, Assurance and Responsiveness have a positive and significant impact on customer loyalty Whereas, Empathy has a negative effect and insignificant for customer loyalty. This study forwarded recommendation to the Commercial Bank of Ethiopia managers to give emphasize to tangibility, reliability, assurance and responsiveness of the service quality dimensions in maintaining and keeping the customers to satisfied & become loyal to the bank