Impact of Customer Satisfaction on Customer Retention with the Mediating Role of Customer Loyalty in Banking Industry of Pakistan

Abstract

This study investigates the relationship between customer satisfaction, customer loyalty, and customer retention in banking industry of Pakistan. This study has considered customer satisfaction as independent variable, customer loyalty as mediating variable, and customer retention as dependent variable. However, banking industry of Pakistan has been the sector chosen to investigate the relationship between variables mentioned above. Quantitative research method was used as primary data was collected through adoptive structured questionnaire based on 5 Likert scale. The responses were recorded from 200 respondents (customers associated with public and private banks operating in Islamabad and Rawalpindi) through non-probability convenience sampling technique. Responses recorded were analyzed through statistical tests such as correlation, regression and mediation analysis by using SPSS Software. The results indicate that customer satisfaction and customer loyalty have positive impact on customer retention in banking industry of Pakistan. Whereas, customer satisfaction has positive impact on customer loyalty in banking industry of Pakistan. However, customer loyalty significantly mediates the relationship between customer satisfaction (independent variable) and customer retention (dependent variable) in banking industry of Pakistan