THE EFFECT OF SERVICE QUALITY ON CUSTOMER RETENTION: THE CASE OF MULTICHOICE ETHIOPIA

Abstract

Customer retention is essential for the success of service firms like entertainment broadcasting industries. The quality of service and product has become an aspect of customer retention. Day by day it has been proven that service quality and product quality are related to customer retention. This study endeavors to discover the effect of service quality on customer retention in the entertainment industry in Ethiopia with specific reference to Multichoice Ethiopia PLC. The five dimensions of SERVPERF model i.e. reliability, assurance, tangibility, empathy and responsiveness and product quality dimensions durability, serviceability and perceived quality are considered as the base for this study. In order to achieve the objectives, both primary and secondary sources of data were used. The primary data were collected through administrating questionnaire. Convenient sampling procedure was used to obtain responses from sample customers. Among administered 432 questions, 380 valid responses are obtained. Correlation and multiple regressions were used to investigate the relationship between dependent and independent variables. The correlation results indicate that there is a positive and significant correlation between the dimensions of service quality, product quality and customer retention. The results of the regression test showed that offering quality service and product have positive effect on customer retention. The research proves that responsiveness and serviceability plays the most important role in customer retention. The study recommends that for Multichoice Ethiopia to be able to retain its customers, more attention should be placed on being responsive and providing serviceable products in their service delivery. In general, to ensure repeated purchase among customers, the company has to assess regularly the quality of service and products offered.