Preliminary communication
https://doi.org/10.30924/mjcmi.30.2.2
Effect of customer orientation on customer retention through the mediating role of satisfaction and service quality
Dagnu Haile Tessema
orcid.org/0009-0004-0795-1738
*
Figen Yesilada
Hayford Asare Obeng
orcid.org/0009-0005-8678-4903
Japheth Nuhu Ahmed
* Corresponding author.
Abstract
In a dynamic and uncertain environment, the banking sector must adapt to maintain a sustained competitive advantage. In emerging economies such as Ethiopia, there is a notable gap in empirical research on the implementation of customer orientation (CO), service quality (SQ), customer satisfaction (SAT), and customer retention (RET), particularly within the private banking sector. The impact of CO on SQ in achieving higher SAT in the banking business, particularly in emerging countries, has not been adequately addressed in the marketing literature. Thus, the main goal of this study is to investigate the influence of CO on RET directly and through the mediating role of SAT and SQ in Ethiopia’s private banking sector.
Data were collected through a structured survey of 350 customers from selected private banks in Addis Ababa, Ethiopia, using convenience sampling. A quantitative research design was employed, and the data were analyzed using SPSS and AMOS 26.
The findings reveal that CO significantly and positively influences RET both directly and indirectly through the mediation role of SAT and SQ in the selected private bank context in Addis Ababa, Ethiopia. The study reveals enhanced service quality and customer satisfaction as critical drivers of customer retention. Furthermore, SAT and SQ significantly mediate the relationship between CO and RET. The study recommends broader future research encompassing more private banks in Ethiopia and other developing economies. In addition, future studies could include a moderator to assess the impact of factors such as the bank’s age and word-of-mouth.
From a management perspective, the findings suggest that the management should use innovative approaches to improve CO, such as establishing user-friendly channels for addressing complaints. The study highlights the need to understand customers’ requirements of private banks in Ethiopia in order to identify specific market segments and provide excellent service. The study suggests that the management of private banks should allocate resources to improve service quality by promoting customer satisfaction.
Keywords
Customer orientation; Customer satisfaction; emerging economy; Consumer behavior
Hrčak ID:
336253
URI
Publication date:
25.9.2025.
Visits: 427 *