9
CHAPTER TWO
LITTERATURE REVIEW
2.0 INTRODUCTION
Long term survival and attaining competitive advantage can only happen through the
establishment of emotional bond with the customers. A literature review discusses
published information in a particular subject area, and sometimes information in a
particular subject area within a certain time period, it’s also discusses both simple
summary and synthesis of the subject. The summary is the brief discussion of the main
points whilst the synthesis is combining the point and element to a whole by reorganizing
and reshuffling them.
This chapter is aimed at knowing who a customer is, what customer retention means,
importance of customer retention, drivers of customer retention, strategies for customer
retention, customer satisfaction and barriers to customer retention.
2.1 CUSTOMER.
A customer is anyone who receives a product either goods or services from an
organization. In most situations the customer will have to pay an amount for the exchange
of the service that is being received. In general terms, defined a customer as ‘a person or
organization that a marketer believes will benefit from the goods and services offered by
the marketer’s organization’. This definition suggest that a customer is not necessary
someone who is currently purchasing from the marketer. In fact, customers may fall into
one of these groups of customers:
 Existing customers
Consist of customers who have purchased or otherwise used an organization’s goods or
services, typically within a designated period of time. Existing customers also represents
the best market for future sales, especially if they are satisfied with the relationship they
presently have with the marketer.
Getting this existing customers to purchase more is significantly less expensive and time
consuming than finding new customers mainly because they know and hopefully trust the
marketer, and if managed correctly, are easily to reach with promotional appeals.
 Former customers

10
This group consists of those who have formally had relationship with the marketing
organization typically through a previous purchase. However, the marketer no longer feels
the customer is an existing customer either because they have not purchased from the
marketer within a certain time frame or through other indications.(e.g. a forma customer
just purchased a similar product from the marketers competitor).
 Potential customer
This category consists of those who are yet to purchase but possess what the marketer
believes are the requirement to eventually become existing customers.
The oxford concise English dictionary (2004), defines a customer as a person or an
organization that buy something being it a product, service or idea from a shop, store or
business.
Harper (1998) in his book “marketing management; a strategic approach with a global
orientation’’ consider a customer to be both individuals and organization that seek out
goods and services obtained through exchange transactions.
2.2 TYPES OF CUSTOMERS.
There are two types of customers that an organization transacts with either profit
organization or non-for-profit organization. These are internal and external customers.
2.2.1 Internal customers.
These are the type of customers which are found within the organization. Members of staff
or outside suppliers that contribute towards the service provided to the external customers.
They include:
A. Colleagues.
B. Managers/supervisors.
C. Staff in other functional departments.
Good customer service to internal customers will help to establish good customer
relationships between colleagues, managers and staff teams. These relationships are
important if the business is to function effectively. For example, working in a pleasant
environment where staffs are supportive to each other can keep staff turnover and
absenteeism cost to a minimum.
2.2.2 External customers.
These types of customers on the other hand, are the people who the organization deals with
outside the organization, that is, the people who actually buy or use an organization’s

11
products and services. The external customers are usually the customers that come in mind
once we consider those that we serve. These external customers have a great influence on
the reputation of any organization they deal with. They can also bring to organizations new
businesses. Resellers and all physical distribution firms can also be classified as external
customers.
A key point to remember is that, there are many occasions in which a business comes into
contact with external customers. It is not just about the moment a transaction take place.
But point of customer takes place:
A. When a customer is enquiring about the product.
B. Taking a customer order or payment.
C. Delivering a product.
D. When handling a complaint or problem.
E. When making repairs or maintenances.
F. Providing after sale care.
2.3 CUSTOMER RETENTION
In today’s challenging economy and competitive business world, retaining their customers
contribute critically to the organization’s success. If they do not give their customers some
good reasons to stay, their competitors will give them a reason to leave. Customer
retention is the continuous trading relationships with customers over a long period of time.
Customer retention is about keeping the customers that the organization has spent money
to acquire. And if the organization is in the industry where the customers make multiple
purchases over for some years, then there is the need for the organization’s entire team to
focus on retaining those customers.
Lee (2006) states that few companies really devote enough amount of energy teaching
employees techniques to do a better job of retaining customers. It costs far more in
marketing costs to have to replace customers the company loses therefore the author
suggests that companies should invest heavily in training their employees how to hold on
the customers they have now. The author suggests the following fifteen ideas for
companies in order to improve their customer retention rates
1. Hire a professional to train the salespeople as well as all customer contact
personnel on how to deliver customer care.

12
2. Teach all employees how to most effectively deal with an irritated customer.
3. Set a standard within the company for customer response time and monitor how
well your people are doing against these standards.
4. Make it a policy to answer all phone calls on the third ring.
5. Install a policy to under promise and over deliver when making promises to
customers, without training, careful employees who are trying to please the customer will
often do just the reverse.
6. When a customer complaint is unresolved, keep the customer informed.
7. Call even if you have nothing to report giving customers before they call them
an update on the status of the complaint.
8. Give the employees the flexibility to change the rules to serve the specific needs
of individual customers.
9. Measure service! Measure in time delivery, backorders/fill rate, accuracy of
deliveries, accuracy of billing, etc. improve your company s credibility by using these
numbers to support your service claims.
10. Follow up with customers to check their satisfaction level, especially when a customer
is new to the company. Ask questions. Do not assume they are happy with your quality and
services.
11. Invest in quality people. When it comes to employees, you get what you pay for. Do
not hesitate because of cost when hiring customer contact personnel. The quality of your
people equals the quality of your company.
12. Empower your people to take whatever action is necessary to take care of a customer.
13. If you are going to spend money, spend it to improve your rate of customer retention.
14. Do not ask for business from a customer until you are convinced that your
company can meet his or her stated customer service expectations.
15. Make a list of each of the value added services your company offers. Ask each
employee to commit it to memory.
To retain customers, it is vital to keep a dialog going and keep the customers in control.
Using the web, a customer with a need can complete a form. Depending on how this form
is completed, the solution finder processes the request. Depending on the mode of
communication or need a customer gets a call back, a text message, or e-mail. Customers

13
enjoy being in control of their relationship. With the information the customer provides,
transactional information and a set of business rules, a company can choose various
methods of customer contact (like e-mail and messaging), the timing and the message that
is the most likely to connect to the customer.
2.4 COST OF LOSING A CUSTOMER
As a result of the increased expectations of customers and competition, customer service
providers are realizing the cost of losing a customer. When the customers are neglected,
shown disrespect and services of the company does not follow suit, they would be tempted
to make an exit .Certain problems occur when the customer refuse to do business a
company but with its competitors. These problems include;
I. Loss of reputation
When the customer speaks well of your organization, they increase public support as well
as a positive interest investors, future employees and the media. It must be noted that
words travel fast in this our information-based society. A lost customer may share his
experience with their clients and friends. This may result in lack of trust among an
organization`s current clients and potentials customer.
II. Loss of revenue
Organizations may lose their current revenue that the business partner they have lost will
bring. This may seem insignificant to begin with but can be very disastrous over the
period.
III. Loss of business
A final challenge of losing your customer to your competitor is loss of both future and
current business. stated that, once the customer thinks about y services to buy them, then
you are in business. Also when the customer stops placing orders your organization start to
die, regarding the fulfilment of some needs, goal or desire.
2.5 DRIVERS OF CUSTOMER RETENTION.
The reasons for which customers decides to be loyal to a specific company or brand over
time are not easy to determine. Some of this reasons may be intrinsic to the customer (e.g.,

14
propensity to switch or price sensitivity) whilst others may be extrinsic (e.g. competitors
actions). Some may be easy to be affected by the company, while some others may not. It
has been shown that a highly competitive market, such as the banking industry, only very
high satisfaction lead to loyalty. In non-competitive markets, even companies with low
level of satisfaction have high level of loyalty (Jones and Sassser, 1995). This suggests that
there are many factors that affect the decision of the customer to continue on a relationship
with a firm.
Allen Errol, an American internal customer service consultant, enumerated five (5) keys to
customer retention in his articles ‘customer retention is important to the long-term
successes’. The most effective way to grow your business is by retaining your customers.
Customer retention is important to the long-term success as the cos6t to gain a new
customer is anywhere from 5 to 10 times the cost of retaining an existing customer. Here
are five keys to customer retention that will turn your customer into low cost marketing
department:
 Determine what’s important to your customers
This is done during the initial contact with your customer. Assess what your customer
needs/wants and get agreement on what your customer expects to receive. This sets the
tone for relationship.
 Meet or exceed your customers’ expectations
Deliver what you agreed to deliver and what your customer expects you to deliver, you
must be consistence here if you hope to retain your customers. The inability to meet
customer expectations may results in a lost customer.
 Communicate regularly with your customers
Provide timely update and progress reports. Solicit performance feedback through
customer service surveyor phone calls. Your customer feels valued when you see out their
opinion. Advice of new offerings, upgrades or product/service enhancements that create a
better experience for your customers. Find way to say ‘Thank You’ on a regular basis.
 Empower your employees

15
Provide your employees with the proper ‘tools’ to serve you customers. The ‘tools’ include
product/service knowledge training and customer service skills training. Give your
employees options for resolving customer issues. Proper ‘tools’ create confident
employees who in turn create loyal customers.
 Value customer complaints
A complaining customer is your best friend. A complaining customer provides an insight
to areas of opportunities within your business before negative patterns develops,
positively resulting in a defection of customers. In bringing their dissatisfaction to your
attention, the complaining customer is providing you with the opportunity to your business
by correcting issues versus just silently disappearing and telling 10 to 20 others their
negative experience. Create database to monitor complaints by type and occurrence.
Develop corrective actions to insure that you are consistently providing a great customer
service experience.
According to Adam Ramshaw (2011), identifying drivers always start with outcomes, in
this case profit. Profits increases are driven by both increasing revenue (assuming positive
gross margin) and lowering overall cost (assuming no lost in revenue). This seems simple,
and it is, but it gives us the first two retention drivers: increased revenue per customer and
lower the cost per customer.
Examining each of these primary drivers, we also discover two secondary drivers. It is
reasonably obvious that preventing customer lost drives increased revenue. However, it is
also true that improving customer loyalty drives both increased revenue and lower cost
through the ability to get to know the customer better and align your company business
process to their needs.
THE RETENTIVE DRIVER FRAMEWORK
Loyalty
Increased customer
loyalty.
Loss prevention
Stop customers
fromleaving.
FIQ.1.0

16
Revenue
Increase per customer
revenue.
Cost
Lower per customer cost.
Profit
Increase profit.
Source: (Adam Ramshaw, 2011)
1. Improving Customer Loyalty
Firstly, there is customer loyalty. Improvement in loyalty can equate to significant
increases in profitability as customers stay longer with your company and it becomes more
difficult for your competitors to attract them away. Customer loyalty is driven mainly by a
combination of delighting your customers, educating them, having effective complaint
resolution and high service quality.

17
From a company perspective, this means that you need to deliver on your promises and
constantly try to delight your customers. This can be done by exceeding customer’s
expectations and occasionally rewarding them for their continued patronage.
2. Loss Prevention
Loss prevention is a critical element that is driven by attrition management and wins back
success. Attrition management entails anticipating when customers are likely to defect and
managing effective factors to stop the defection. This has a direct impact on preventing
revenue loss.
However, it needs to be implemented carefully; with a full knowledge of the customer’s
profit to the business and the costs of the save offer. Otherwise, you can spend more saving
a customer than they will affect8ifuture profits.
3. Cost Reduction
On cost reduction, managing customer touch points effectively is a key way to minimize
the costs to service and communicate with your customers. Managing touch points is the
process of examining the media and timing of customer contact to optimize it for impact
and cost.
Organizations that successfully manage touch points know when and how to contact their
customers so that they maximize each contact opportunity. As a result money is not wasted
on unnecessary contacts and the lowest cost applicable media is used.
4. Increase Revenue
Finally, there are the drivers that increase revenue. These are up sell and cross sell. When
customers are encouraged to take up more products through cross sell, or upgrade their
current product plans, revenue from these customers will increase.
2.6 IMPOTANCE OF CUSTOMER RETENTION.

18
From the third series of articles published by Leigh Wallinger (2005), it’s looked at the
importance of customer retention, why it is critical to develop long-term customers, how
you can keep customers and what happens to your profitability if you do not keep them.
Leigh el at pointed out the following benefits that can be derived from good customer
relationship.
2.6.1 It helps to improve your customer relations.
It is known that unhappy customers talk about your company much more than your
satisfied customers do, and this is not good news. By investing time and energy into the
relationship with your customers and being attentive to the things that your customers rate
as important, you will make them feel that they and their business is important to you, they
will become long-term customers.
2.6.2 Some customers will always be hard to please.
As you work to improve the way you interact with your customers, their negativity will
start to reduce and you will find that you can address 80% of the issues quite quickly.
Therefore the impact of this new policy is also quite marked. Be ready to accept, though,
that there will remain a few of your customers who don’t respond to this approach. In fact,
they don’t respond to very much at all and might be referred to as “serial negatives”. These
are the customers that you will never please, no matter how hard you try. When you
identify a “serially negative” customer, one of the best strategies to develop is one which
encourages this customer to transfer their business to your main competitor.
2.6.3 High intention to continue to do business with you.
Customers can only be retained if they are loyal and motivated to resist competition. When
customers are merely satisfied with the service they receive, they may still “walk”. This
will not encourage long term transaction with the business.
2.6.4 High willingness to recommend your business to others.
Through the satisfactions that will be derived from the organization’s product or service,
they will be willingly to recommend the business to the other people who does not transact
with your business, this will in turn increase your market share as well as your

19
profitability. Having a repeat customer also has the potential to open up another channel to
advertise your business that is, word of mouth. Word of mouth advertising or
recommendations are the most important outcome of having a satisfied customer
2.6.5 Reduces cost for customer acquisition.
Acquiring a customer has certain associated cost. These includes the cost associated with
advertising, follow up, sales demos, travel and meeting cost etc. having a repeat customer
means that the customer is already aware of your processes and can predict a certain
quality of output, thus minimizing the cost involved in a new customer acquisition.
2.7 STRATEGIES OF CUSTOMER RETENTION.
According to an article publish by Roderick Dunne, there are five best customer retention
strategies proven to increase sales, these techniques includes:
2.7.0 Welcome the complaints you receive.
Your starting point for customer retention techniques is to understand why you are losing
your existing customers. Most lost customers don not actually complain but just simply
walk away. Analyze those complains that you do receive for trends in why you are losing
customer loyalty then make appropriate changes.
2.7.1 Investigate loyalty programs
Provide your frequent customers with money-off coupons or other loyalty programs as part
of a simple customer retention strategy. You will benefit from plenty of repeat purchasing
from your business.
2.7.2 Send out questionnaires and surveys to existing customers.
All the best customer retention strategies require constant feedback from the customer to
establish what is working and what is not working. Surveys, questionnaires and customer
loyalty research are the perfect way of doing this.
2.7.3 Check for repeat sales often in other to instil your Company’s brand.

20
Your existing customer base will be more loyal as they more purchase. Improve sales
performance by providing newsletters and regular communications to make sure they are
informed of new product lines, offers, related products and etc.
2.7.4 Reactivate dominant customers.
Customers that purchased from you previously are more likely to come back and purchase
more. Try contacting customers you have not heard from for a while to see of any of your
current offers will suit them. Basic customer training tips always states that holding onto
existing customers is much easier than gaining new once. So you should start treating
former customers due to their greater potential.
2.8 SWITCHING BARRIERS.
Switching barriers have been used as marketing strategies to make it costly for customers
to switch to another organization. Such barriers include search costs, transaction costs,
learning costs, loyal customer discounts and emotional costs (Fornell 1992).
These barriers provide disincentives for the customer to leave the current organization.
Curasi and Kennedy (2002) have shown that customer satisfaction does not predict the
continuation of the relationship. High switching costs are an important factor binding the
customer to the service organization. Even with relatively low levels of satisfaction, the
customer continues to patronize the service provider because repurchasing is easier and
more cost effective than searching for a new provider or sampling the services of an
unknown provider (Curasi and Kennedy 2002).
Other than switching costs, cross-selling is another critical variable driving customer
retention. Cross-selling is the bank’s effort to sell as many different products and services
as they can to a particular customer (Daniell 2000). One aspect of loyalty is the impact of
cross-selling, which forms a critical element in increasing revenue. Profitability could, as a
consequence, be threatened not only by loss of market share but also by diminished
opportunities for cross-selling. Furthermore, the more products or services you sell to a
customer, the less likely it is that they will sever the relationship (2000).
2.9 CUSTOMER SATISFACTION.

21
Customer satisfaction refers to the extent to which customers are happy with the product
and service provided by a business. Customer satisfaction level can be measured using
survey techniques and questionnaires. Gaining high level of satisfaction is very important
to a business because satisfied customers are more likely to be loyal and to make repeat
orders and also to use a wide range of service offered by a business and finally retention.
Ensuring customer satisfaction has therefore become a big challenge no matter how big or
rich the company is, they still face the problem of how to maintain the customers.
Customers are becoming more sophisticated as a result of education and increase
technology. This means that customers will not only purchase but will rather seek product
or services that will meet their needs and expectations. Interestingly, satisfied customers
will be more convinced with the quality and value of an organizational products or services
and will take a lot of considerable efforts to revive their loyalty to the company. Kotler
(2003) consider customer satisfaction to be the feeling of pleasure or disappointment as
result of the comparison between perceived product performance and expectation.
Customer satisfaction therefore seeks to appreciate the difference between customer’s
expectation, perception, demands and more importantly the extent to which these desires
can be meted out.
Studies carried out by Argos and Cadburys company ltd (UK) have found very high level
of customer satisfaction. It is not surprising because these companies focus on market
research and marketing as the tools to find out what customers want. Knowing what your
customers want and then make all effort to please them in everything you do. Examples
includes providing the goods the customers want, in the packaging that they want, in retail
outlets that are convenient to use and well placed. There are many factors which lead to
high customer satisfaction including:
 Products and services which are customer focused and also provide high level of
value for customers.
 Customer service giving personal attention to the needs of individual customers.
 After sales service, that is following the original purchase with after sales support
such as maintenances and updating of any other new offers.

22
According to David (2010), the importance of customer satisfaction diminishes when a
firm has increase bargaining power. For example cell phone planned providers, such as
AT&T and Verizon, participate in an industry that is an oligopoly, where only a few
suppliers of a certain product or service exist.
As such, many cell phone planned contracts have a lot of fine print with provision that
they will never get away if there were, say, a hundred cell phone providers, because
customers satisfaction will be way too low, and customers will easily have the option of
leaving for a better offer.
2.9.1 THE CONCEPT OF CUSTOMER SATISFACTION
Customer satisfaction has for many people perceived as the key determining why
customers leave or stay with organization. Organization need to know how to keep their
customers even if they are satisfied
An unsatisfied customer may decide not to switch to another company because they may
think that they will not receive better service elsewhere .Additionally a satisfied customer
may look for other provides because they may believe that that they might receive better
service from them.
Literature on customer satisfaction suggest that satisfaction is an overall post purchase
evaluation by the customer .The most common interpretation obtain from the various
authors reflect the notion that satisfaction is a felling which result from a process of
evaluating what has been received against what was expected including the purchased
decision itself and the needs and wants associated with it Armstrong and Kotler (1996)
Harris (1996) in his book “customer service as a practical approach defines customer
satisfaction as the overall felling of contentment with a customer interaction .This means
that customers satisfaction realizes the difference between the customer s expectation and
perception .
Lamb et al (1998) also define customer satisfaction as the felling that a product has met or
exceeded the customer s expectation of that product.
Kotler (1999) said that customer satisfaction is the level of a person “s full state resulting
from the level comparing a product perceived performance or outcomes in relation to the
Person’s expectations. This satisfaction that a customer’s derives from a purchase will
depend on the product performance relative to the buyer’s expectations.

23
Zeithaml and Bitner (2000) further explained customer satisfaction as the consumer’s
fulfilment response. It is judgment that a product or service feature or the product or
service itself provides a pleasurable level of consumption related to fulfilment .This
definition simply means that ,satisfaction is the customers evaluation of product or service
in terms of whether that product or service has meet their needs and expectation.
According to Albinson (2004) satisfaction is an overall customer attitude towards a service
or product, or an emotional reaction to the differences between what customers anticipate
and what they receive regarding the fulfilment of some need, goals or desire. From these
various definition given by the various authors customer satisfaction can be simply be
explain as the difference between the customers expectation of a service or product
performance and the actual service or performance received.
2.9.2 MEASUREING CUSTOMER SATISFACTION
Harris (1996), as organizations strive to provide customers with good customer service,
customers` satisfaction must be periodically assessed. In the attempt to measure
satisfaction customers` expectations and perceptions must be considered. It is important to
ask relevant questions that provide an opportunity to generate helpful information. In
measuring customer satisfaction effectively management must look at the customers`
situation from their perspective.
Organization must gather accurate information about customers in other to measure their
level of satisfaction. Some of the means of gathering information for measuring customer
satisfaction;
I. Customer satisfaction surveys
Most dissatisfied customers do not bother to complain but however they simply switch to
another supplier. This results in most companies needlessly losing their customers.
Companies that are very responsive do wait for this to happen but however they take direct
measures of customer’s satisfaction by conducting customer satisfaction surveys. These
surveys can provide an insight about what customer like and dislike.
II. Customer defection analysis
Most organizations also contact customers who have stopped purchase or those who have
defected to a competitor to learn how this happened. Carefully questioning defecting
customers yields two important benefits.

24
Firstly, it identifies the problem with the organization`s product or service that is causing
customers to switch or defer to an organization`s competitors.
Secondly, it creates an opportunity to make a last ditch effort to keep the customer. Often
companies find out that they can recover a substantial proportion if lost customers simply
by contacting them, listening to their concern s and making a sincere effort to correct the
problems.
III. Discussions with internal customers
Employees often have information about what the customers are interested in, likes and
dislikes; this is because they have direct contact with these customers. Therefore if internal
customers are not ask what external customers have told them, they may never have the
opportunity to share their valuable information . Internal customers usually know what is
not working well for external customers and where snags in the system exist.
IV. Ghost shopping
This is also another useful way of assessing the level of customer satisfaction .With this
approach the organization hire people to pose as potential buyers and these people will
report their experiences in buying the organization and it’s competitor’s products or
services. These ghost shoppers can even put company personnel to the test and know how
they will respond to difficult situation. Some managers can even enter their company
especially where they are unknown to try and experience the kind of treatment given to
customers.
V. Changes in sales
Just like historical data, sales can also help companies determine the levels of customer
satisfaction. Sales normally do not show emotions but rather they depict what the
customers are currently doing. If customers are increasing or decreasing orders it will
definitely reflect in sales. Sales can therefore be a good indication of customer satisfaction.
However this cannot be used alone and as such there is the need to use this information in
association with other source of information.
2.9.3 CONCEPTUAL FRAMEWORK.

25
In the banking industry, the study of customer retention has been undertaking for several
times, for example by David (2006); they focused on customer loyalty, consumer
behavioural intention, how to retain customers in the banking industry. They concluded
that the factors that can ensure customer retention include, customer satisfactions, followed
by corporate image and switching barriers.
In the study of customer retention in the banking sector by Mustafa et al(2010), they
indicated customer retention and loyalty regarding to banking strategies in today’s
competitive market. They focused on competitive advantage, customer satisfactions,
customer perception of value, corporate image, changing barriers, etc. They also measured
the length of time customers spent with their banks. They found that, durability of a bank
customer relationship is a necessary indicator of the length of stay.
Cohen et al (2006) conducted a research on customer retention in the banking industry of
New Zealand and came to a conclusion that, the age of customers increases, so too does the
propensity to stay with their current banks. In addition, respondents with higher education
are most likely to switch banks perhaps because highly educated consumers tend to have
greater expectations of services. Gender and income appear not to have significant
association with the respondents’ intention to stay with or leave their service providers.
They also indicated that, ASB Bank, Kiwi bank and banks under ‘other’ categories have
higher retention rates compared to the larger banks such as Westpac, ANZ, BNZ and
National Bank. The smaller banks thus appear to be doing some things better than their
larger competitors. Thus, the large New Zealand banks may gain by benchmarking their
performance against the smaller institutions.
According to Boahong et al (2001), marketing efforts does not translate directly overall
satisfaction. Different customers have different sensitivities to different marketing effort.
Customer satisfaction for services is based on many service components that require
human interaction and that it is very important for service providers to know the right way
of improving satisfaction for different customers. In their research they also add that,
overall satisfaction does not translate directly to retention. Switching cost plays an
important role in determining customer retention and undermines the importance of
satisfaction on retention. They also identified that it is only customers with enough time to

26
shop around, who are risk averse or who have higher learning abilities are more likely to
retain when they are more satisfied with the service provider.
Liang et al (2010)also did a study on the impact of service quality on customer loyalty in
the banking sector of Malaysia and in their study they found out that each of the five
elements of service quality ( tangible, reliability, responsiveness, assurance and courtesy)
had different impact on the level of customer retention. Their analysis showed that;
Tangibles had no significant impact on customer loyalty. It was observed that there is a
changing trend and respondents did not treat tangibles as an important measure anymore
due to availability of self-service terminals.
Reliability was found to have a positive relationship with customer loyalty and that
customer may stay with an organization even if they are dissatisfied because they
perceived they have no choice.
Their finding also indicate that the relationship between responsiveness and loyalty was
insignificant and this because customers who use a particular bank`s service, considers
switching bank as a threat. However their hypothesis testing showed that responsiveness
had a positive relationship with customer satisfaction. Empathy was however identified to
have a significant positive relationship with customer loyalty and that friendship between
customers and particular service employees has a major influence on customer`s decision
to stay with or leave an organization.
Their study finally showed a significant relationship between assurance and customer
loyalty. In their study, assurance was found to be a significant prediction of customer
satisfaction in the Malaysian banking sector.
2.9.4 SUMMARY.
Looking at the studies done by various researchers about customer retention, a vivid
conclusion can be deduced that ensuring customer satisfaction has a positive impact on the
level of customer retention. However, satisfaction alone does not translate to customer
retention but also there are other factors such as, improving customer loyalty, preventing
customer loss, increasing total revenue and switching cost also determines the level of
customer retention.

27
Considering the study done by various researchers about the customer satisfaction, service
quality and customer retention, it could be deduced that quality service and ensuring
satisfaction have positive impact on the level of customer retention but however as
identified by Boahonget (2001), satisfaction alone does not translate to customer retention
but also there are other factors such as switching cost which also determines the level of
customer retention.