DETERMINANTS OF CUSTOMER RETENTION IN CASE OF ABYSSINIA BANK GONDAR CITY BRANCH’S

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.