Customer satisfaction towards customer retention in the private banking sector: A study on selected private sector banks in Vavuniya district of Sri Lanka

This research study aimed to investigate how far the customer satisfaction leads to the customer retention in the Private Banking Sector in Vavuniya District. The major objectives of this study are to measure the customer satisfaction in different Private Sector Banks and to identify the bank which satisfies more customers which will lead to the retention. A structured questionnaire was equally distributed among 300 respondents who were selected on a random sampling basis and broken into four groups based on their occupation. SPSS version 16.0 has been used for analyzing the data. The findings derived from the descriptive statistics, correlation analysis and regression analysis highlight that the Commercial Bank of Ceylon is in the leading position to satisfy the customers and retain them in their bank. Approximately 55% of Private Sector customers contributed to this finding. The Hatton National Bank is in the second position and the self employed people and farmers contributed the maximum of 44% among all the categories of customers. In the regression analysis, the Beta value shows that the independent variable customer satisfaction 43.6 percent impacts on the dependent variable customer retention. It points out that the Customer Satisfaction is not only the determinant for the Customer retention and there are other factors that influence the retention. Therefore, it is recommended that the Private Sector Banks should understand those factors and adopt appropriate strategies to retain their customers and sustain competitive advantage.