Abstract:
Customer retention is critically important for firms in today‘s business environment. In
competitive markets, retaining customers provides a strong competitive advantage, as loyal
customers are less likely to switch to competitors. However, many businesses fail to retain
customers and build lasting loyalty. The main purpose of this study is to identify the factors that
influence customer retention in the banking industry, specifically using Abyssinia Bank branches
in Gondar City as a case study. To achieve this objective, the study employed both descriptive
and explanatory research designs, allowing for the detailed description of current phenomena and
the analysis of relationships between multiple variables. Data were collected from customers of
Abyssinia Bank‘s Gondar City branches through self-administered structured questionnaires.
Once the data were gathered, they were reviewed for completeness, coded, and entered into a
computer for analysis. Descriptive and inferential statistics were used to analyze the data,
supported by SPSS software version 26. The study found that all the explanatory variables
significantly affected customer retention at the case organization. Among the included
explanatory variables, perceived quality defined as customers‘ perception of the service quality
provided by the bank was identified as the most important determinant factor. In conclusion, the
study recommends that Abyssinia Bank should focus on these key determinants to retain its
customers and remain competitive in the market. Specifically, the bank should prioritize
improving its service quality, as customer perception of service quality was found to be the most
significant factor in customer retention.
