SERVICE QUALITY AND CUSTOMER RETENTION
In the early 1900s, businesses primarily focused on product manufacturing and sales. However, as industrialization progressed and competition intensified, companies began to recognize the importance of customer satisfaction (Alshamsi, Alshurideh, Kurdi, & Salloum, 2021). The concept of customer service gained prominence as businesses acknowledged the need to address customer concerns and provide improved assistance (Salamah et al., 2022). After World War II, the quality movement, led by pioneers like W. Edwards Deming and Joseph M. Juran, emphasized the importance of quality control in manufacturing (Chee & Husin, 2020).
During the 1970s and 1980s, frameworks for measuring and managing service quality began to emerge. A key development was the SERVQUAL model, introduced by A. Parasuraman, Valarie Zeithaml, and Leonard Berry in the 1980s, which identified five dimensions of service quality: reliability, assurance, tangibles, empathy, and responsiveness (Chee & Husin, 2020). Businesses soon realized that service quality was not only about meeting customer expectations but also critical to driving customer satisfaction and retention (Othman, Weijun, Huang, Xi, & Ramsey, 2020).
The introduction of Customer Relationship Management (CRM) systems allowed companies to collect customer data, enabling the personalization of services and customization of experiences (Al-Gasawneh & Dalain, 2023). The rise of the internet and digital technologies in the 21st century further transformed service quality and customer retention strategies. Online platforms, social media, and e-commerce opened new channels for engaging customers (Eresia-Eke, Ngcongo, & Ntsoane, 2020). Businesses shifted from reactive customer service to proactive customer experience management, using data analytics to anticipate customer needs and deliver personalized services (Maladi, Nirwanto, Firdiansjah, Arifin, & Manan, 2019). Social media empowered customers to shape business reputations through instant feedback, making service quality, customer satisfaction, and retention increasingly interconnected in the customer-centric era (Al-Gasawneh & Dalain, 2023).
In today’s competitive landscape, where products and services are often interchangeable, retaining customers has become more critical than attracting new ones (Ahmed, Naseer, Asadullah, & Khan, 2020). Customer retention now plays a vital role in business success, as loyal customers not only ensure consistent revenue but also promote businesses through word-of-mouth (Tienne & Westwood, 2019). Service quality, defined as a customer’s perception of how well a service meets or exceeds expectations, has emerged as a key factor influencing customer retention (Bahri-Ammari & Bilgihan, 2019). Extensive research has explored the link between service quality and customer retention, as businesses strive to improve service delivery and foster loyalty (Almohaimmeed, 2019).
Technological advancements and changing consumer expectations have further emphasized the need to understand the relationship between service quality and customer retention (Larsson & Broström, 2020). As companies transition from traditional brick-and-mortar operations to digital platforms, customer interactions have evolved, expanding the criteria for assessing service quality to include factors such as online user experience, responsiveness, and personalized service (Bahri-Ammari & Bilgihan, 2019). The multidimensional nature of service quality is often measured using models like SERVQUAL, which dissects and evaluates various components—tangibles, reliability, responsiveness, assurance, and empathy—crucial for understanding their impact on customer satisfaction and retention (Alkitbi, Alshurideh, Al Kurdi, & Salloum, 2020).
The theoretical basis for customer retention draws from relationship marketing and CRM concepts, highlighting the shift from transactional to relational marketing. This shift underscores the importance of building long-term, mutually beneficial customer relationships (Simanjuntak, Putri, Yuliati, & Sabri, 2020). It also emphasizes the need for effective retention strategies such as loyalty programs, personalized communication, and customer feedback mechanisms (Boadu & Achiaa, 2019).
As businesses navigate intense competition, economic challenges, and evolving customer expectations, understanding the intricate dynamics of service quality and its influence on customer retention becomes essential (Alshamsi, Alshurideh, Kurdi, & Salloum, 2021). This research aims to contribute to the existing body of knowledge by exploring the key factors that significantly impact customer retention and offering insights to guide businesses in developing strategies to foster customer loyalty in a dynamic marketplace (Hawkins & Hoon, 2019).
