Factors affecting customer retention in the Ethiopian Banking Sector (Study on Commercial Bank of Ethiopia customers in Addis Ababa)
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Date
2025-12-01
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A.A.U
Abstract
This study looked at how customer experience and quality service affect customer retention in the
Ethiopian banking sector. It focused on the mediating roles of customer satisfaction, trust,
customer loyalty, and corporate image. The study aimed to address ongoing challenges in customer
retention that banks face, even with service improvements and growing competition.
A quantitative, explanatory research design was used with a cross-sectional survey approach.
Researchers collected data from 389 bank customers through structured questionnaires, using
simple random sampling. They analyzed the data with descriptive statistics, correlation analysis,
and multiple regression techniques. They performed mediation analysis following the Baron and
Kenny method, along with Sobel tests to check the significance of indirect effects.
The findings revealed that customer experience and quality service has a significant and positive
effect on customer retention. Furthermore, customer satisfaction, trust, customer loyalty, and
corporate image were found to significantly mediate the relationship between customer experience
and customer retention, indicating both partial and full mediation effects across the proposed
pathways. These results highlight the importance of managing not only service delivery but also
relational and perceptual factors to enhance long-term customer relationships.
The study adds to the existing literature by expanding customer experience and relationship
marketing theories through a detailed mediation framework in the Ethiopian banking context. It
offers practical insights for bank managers and policymakers, highlighting the need for overall
customer experience strategies and quality service to boost customer retention and maintain a
competitive edge. The study also suggests future research directions, especially in using
longitudinal designs and comparing different sectors.
Keywords: Customer Experience, Quality service, Customer Retention, Customer
Satisfaction, Trust, Customer Loyalty, Corporate Image, Ethiopian Banking Sector