Impact of Relationship Quality on Customer Retention –A Study with Reference to Retail Banking in India

Impact of Relationship Quality on Customer Retention –A Study with Reference to Retail Banking in India

The purpose of this research is to investigate the impact of relationship quality (RQ) on retention of customers in retail banking in India. Relationship quality refers to the customer’s perception of his or her overall relationship with the organization. Because of stiff competition in banking today, the retention of customers is critical to success. This study explores the association between relationship quality and customer retention and investigates the moderating effect of variables such as age, gender, duration of relationship, and type of bank on the association between relationship quality and retention. A structured questionnaire was designed and administered to a sample of 600 existing bank customers in Chennai, India. The study population was selected using the multi-stage random sampling method. Usable data from 413 respondents were then analyzed using partial least squares structural equation modeling. The results revealed that relationship quality has a significant positive impact on customer retention. The antecedent commitment displayed a stronger impact on relationship quality than two other antecedents; namely, satisfaction and trust. Furthermore, the variables age and type of bank were found to moderate the association between relationship quality and retention. This research can be used in the banking sector to better understand the retention behavior of customers. Retaining existing customers is one of the key strategies of banks to gain business advantage. In order to retain customers, managers should focus on increasing the quality of their relationship with bank customers.