Abstract

This study investigates the effect of service quality on customer retention within the banking industry in Nigeria, focusing on United Bank for Africa Plc, Makurdi. Guided by Assimilation Theory, the research employed a survey design, collecting data from 105 respondents through a census sampling technique. The data collection instrument, a questionnaire, was validated using expert content validity and factor analysis, with reliability estimated by a Cronbach Alpha coefficient of 0.848. Binary logistic regression was utilized to analyze the data and test the hypotheses. The results show that Network Service (NWS) does not significantly predict customer retention, as indicated by a coefficient of -1.333 and a non-significant p-value of 0.270. In contrast, Value-added Service (VAS) with a coefficient of 4.367 and a p-value of 0.021, and Customer Service (CUS) with a coefficient of 4.038 and a p-value of 0.038, both significantly contribute to customer retention. The constant in the model, with a coefficient of 1.615 and a non significant p-value of 0.207, suggests that when all predictor variables are zero, the odds of customer retention are substantially higher. The findings underscore the pivotal roles of VAS and CUS in enhancing customer retention, suggesting that improving these aspects can significantly benefit United Bank for Africa Plc. The research concludes that while Network Service does not significantly impact customer retention, Value-added Service and Customer Service are crucial in improving customer retention rates at United Bank for Africa Plc. It was recommended among others that United Bank for Africa Plc should invest in enhancing their Value-added Services, including personalized banking solutions, loyalty programs, and additional financial products tailored to customer needs. The bank should also prioritize and improve Customer Service operations, ensuring staff are well-trained to be responsive, empathetic, and efficient, and implementing feedback mechanisms to continually monitor and enhance service quality.