ASSESSING THE EFFECT OF SERVICE QUALITY ON CUSTOMER LOCALITY: A CASE OF SELECTED BRANCHES OF COMMERCIAL BANK OF ETHIOPIA IN ADDIS ABABA

Abstract

Above 13.3 million people of the country are customers of Commercial bank of Ethiopia in which 4,183,195 customers are from Addis Ababa. Since CBE has this amount of customer base, this study tried to indicate the effect service quality has on its customer’s loyalty. How does customer of the bank feel towards the service quality they get from the bank and to what point those customers are loyal to the bank is the central point the researcher want to address. This study was conducted on five branches of commercial bank in Addis Ababa. The selection of those branches was purposively in order to address four districts in Addis Ababa. Simple random sampling technique was used to collect data from respondents in branches under the study. The five point SERVQUAL model was used to determine customers’ sensitivity of service quality and depending on that the researcher try to know the extent of their loyalty. The collected data was analyzed by using statistical tools regression and correlation. The findings on correlation and regression analysis of service quality of the bank against customers’ expectation reveal that they are not meet. Among the five dimensions Reliability, Assurance and responsiveness shows a strong gap with customers’ loyalty and customers are not satisfied with current service the bank is providing while customers have better service on tangibility and empathy. This study recommend the organization to be more reliable, assuring and responsive than it has been before because in today’s competing world without a loyal customer it’s difficult to live long in the business so the researcher recommend organizations to focus on what their customers need and gain a loyal customer.