The research will examine the impact of service quality on customer loyalty. Given the limited size of the market and the increasing number of banks operating in the sector, aggressive competition is common place. The banking products proposed are similar with marginally different pricing while service level varies between banks based on their customer base, physical presence across the island and self-service platforms. Service quality is believed to be the main determinant of customer satisfaction which has a direct impact on customer loyalty.
The increasing number of educated and informed customers is influencing their capacity to bargain their loyalty for better services and advantages. The increased in the number of service related complaints received in-branch and on social Medias indicate the sensitivity of customers to service quality. The customer is at the heart of the banking business and banks are very attentive to their needs. At MCB, a number of initiatives have been put into place to improve service quality in view to increase customer satisfaction and thus retaining its customers.
The cost of acquiring a new customer is higher than the cost of retaining an existing customer. Thus, the research investigates how clients are being served and to what extent they are satisfied with the MCB level of service at Flacq branch and consequently brings into light the connection between Service Quality and client loyalty which may have been overlooked at the MCB. It further brings forward which service dimensions impact the loyalty of customers.
• To determine the current level of service quality at Mauritius Commercial Bank Limited;
• To establish how service quality dimensions affect customers’ loyalty at Mauritius Commercial Bank Limited; and
• To formulate recommendations in order to improve the overall service quality for enhanced customer loyalty at Mauritius Commercial Bank Limited.
6. RESEARCH QUESTIONS
• What is the current level of service quality at Mauritius Commercial Bank Limited?
• How do the service quality dimensions affect customers’ loyalty at Mauritius Commercial Bank Limited?
• What recommendations can be made to improve the overall service quality for enhanced customer loyalty at Mauritius Commercial Bank Limited?
7. SIGNIFICANCE OF THE STUDY
The banking sector in Mauritius is characterised by a high degree of competition with increased competitive offers from commercial banks based on price and product differentiation strategies as well as new entrants like insurance and leasing companies offering financial solutions which were until recently provided by banks alone. The slow erosion of MCB market share over the years raises the question of customer loyalty which was perceived two decades ago as being stable and secured. Thus, a clearer understanding of customer loyalty will enable the bank to better improve its quality standard with particular attention to those service dimensions which directly impact customer loyalty.
A number of surveys has been undertaken to assess customers’ satisfaction with regards to service quality at the MCB but no prior study examining the impact of service quality on customer loyalty has been carried out. The importance of this study is the emphasis placed on understanding customers’ expectations and needs in view of developing appropriate strategies to strengthen the bank’s relationship with its customers while improving its service quality standard for increased customer loyalty.
The study will represent an opportunity for the MCB retail strategic office as it will help to align business processes, product development, pricing policy and service quality with those dimensions which positively influence customer loyalty.
From a marketing perspective the study which focuses on nurturing customer loyalty will help in the promotion of the MCB brand as the number of loyal customer increases over time. The brand image will further strengthen the leadership position of the bank.
The study will provide critical information and insights to the management of the branch as it will identify areas of weaknesses and strengths in its approach to service quality. The allocation of resources at different customer touch points together with specific training to front liners and the formulation of key performance indicators will flow from the outcome of this study.
The MCB has pioneered most of the innovations in the local banking sector so far and the endeavour of this study to understand the relationship between service quality and customer loyalty will not only benefits the MCB Flacq branch but also the whole retail network. Through market intelligence the retail banking industry may use the findings of this study and hence help in taking the industry to new heights with regards to quality service and customer retention.
Lastly, the study will be of particular interests to academics who may use the analytical tools utilised in this research to further understand the dynamics.