SERVICE QUALITY AND CUSTOMER RETENTION
In the early 1900s, businesses primarily focused on product manufacturing and sales. However, with the advent of industrialization, mass production, and increased competition, companies began recognizing the importance of customer satisfaction (Alshamsi, Alshurideh, Kurdi, & Salloum, 2021). This led to a growing emphasis on customer service, as businesses realized the need to address customer concerns and provide better support (Salamah et al., 2022). Following World War II, the quality movement gained traction, driven by thought leaders like W. Edwards Deming and Joseph M. Juran, who highlighted the significance of quality control in manufacturing (Chee & Husin, 2020).
In the 1970s and 1980s, frameworks for measuring and managing service quality were developed. One notable model, SERVQUAL, introduced by Parasuraman, Zeithaml, and Berry, identified five key dimensions of service quality: reliability, assurance, tangibles, empathy, and responsiveness (Chee & Husin, 2020). Businesses began to understand that service quality was not only essential for meeting customer expectations but also a crucial driver of customer satisfaction and retention (Othman, Weijun, Huang, Xi, & Ramsey, 2020).
With the rise of CRM systems, companies were able to collect and utilize customer data to personalize services and cater to individual preferences (Al-Gasawneh & Dalain, 2023). The advent of the internet and digital technologies in the 21st century further revolutionized the service landscape, as online platforms, social media, and e-commerce created new opportunities for businesses to engage with customers (Eresia-Eke, Ngcongo, & Ntsoane, 2020). This shift led companies to focus more on proactive customer experience management, using data analytics to deliver personalized and anticipatory services (Maladi, Nirwanto, Firdiansjah, Arifin, & Manan, 2019). Social media also empowered customers to shape business reputations through instant feedback, making service quality, customer satisfaction, and retention more interconnected in the customer-centric era (Al-Gasawneh & Dalain, 2023).
In today’s competitive environment, where products and services are often interchangeable, retaining existing customers has become more critical than acquiring new ones (Ahmed, Naseer, Asadullah, & Khan, 2020). Loyal customers not only ensure consistent revenue but also promote businesses through word-of-mouth recommendations (Tienne & Westwood, 2019). Service quality, defined as how well a service meets or exceeds customer expectations, plays a fundamental role in customer retention (Bahri-Ammari & Bilgihan, 2019). Extensive research has explored this relationship, with businesses striving to enhance both service delivery and customer loyalty (Almohaimmeed, 2019).
Technological advancements and evolving consumer expectations have further emphasized the importance of understanding how service quality influences customer retention (Larsson & Broström, 2020). As businesses shift from traditional brick-and-mortar models to digital platforms, customer interactions have changed, and the criteria for evaluating service quality now include factors like online user experience, responsiveness, and personalization (Bahri-Ammari & Bilgihan, 2019). SERVQUAL and similar models help dissect and measure the various dimensions that shape customer perceptions of service quality, which is vital for organizations aiming to excel in today’s service-oriented marketplace (Alkitbi, Alshurideh, Al Kurdi, & Salloum, 2020).
The theoretical foundation of customer retention is rooted in relationship marketing and customer relationship management (CRM) concepts. As marketing has evolved from transactional to relational, the focus has shifted to building long-term, mutually beneficial relationships with customers (Simanjuntak, Putri, Yuliati, & Sabri, 2020). This transition requires not only the delivery of high-quality services but also the implementation of effective customer retention strategies, such as loyalty programs, personalized communication, and customer feedback mechanisms (Boadu & Achiaa, 2019).
As businesses face intense competition, economic uncertainty, and changing customer expectations, there is a pressing need to explore the intricate dynamics of service quality and its impact on customer retention (Alshamsi, Alshurideh, Kurdi, & Salloum, 2021). This research aims to contribute to the existing knowledge by identifying key factors influencing customer retention and providing insights to help businesses develop effective strategies for fostering customer loyalty in today’s dynamic and competitive landscape (Hawkins & Hoon, 2019).
