Peris Njoki Mburu

(Catholic University of Eastern Africa, Nairobi, Kenya)

 

 

Abstract: Customers have become the lifeblood of any organization. Without customers, organizations would not exist let alone survive in this competitive global environment. Banks depend on sufficient and sustaining profitability to survive in the global business world. Customers are the source of banks’ profitability. By satisfying the customer, the bank is able to retain the customer and reap maximum benefits from the relationship which ultimately leads to higher profitability. Customer satisfaction has therefore evolved as a strategic business initiative which banks cannot ignore and retention of the bank customer has become one of the most important objectives of the overall marketing strategy of any bank. In Kenya, the term “customer service” has developed from the early 1990’s when banks started acquiring customer service departments and call centres to handle customer complaints. There have been other initiatives by banks to improve customer satisfaction such as rebranding and loyalty programs. In spite of these initiatives, attrition rates of the bank customers continue which means that the customer is far from satisfied. From studies reviewed, there are many factors that affect customer satisfaction. Most of the factors point to service levels and other bank related factors. In Kenya, studies on the banking industry are few and currently there is no study which has attempted to establish the correlation between demographic variables and customer satisfaction and retention creating a knowledge gap. This study sought to fill that gap. In order to achieve this aim, structured questionnaires were issued to 2000 customers in the 43 banks in Kenya. The study examined the correlation between demographic variables including age, gender, educational level, incomes, marital status and employment status with customer satisfaction and retention. The findings demonstrated a correlation between some of the demographic factors with customer satisfaction and retention in the Kenyan banks.

 

 

Key words: customer satisfaction; retention; demographics; banking; Kenya

JEL codes: M310