Management Dynamics

Sabeeha Fatma ¹

Affiliations
1 Amity Business School, Lucknow, IN

Abstract

Customer retention has become a Herculean task in today's turbulent business environment. The situation has often been compared with a bucket in which water is being filled but the problem is that the bucket has got a hole in the bottom, thus although the bucket is getting filled, water is percolating out as well. The condition is even more difficult in service sector, where the main driver of customer retention, quality is hard to define and measure. India has witnessed many changes in last few decades. Opening of economy was one such turning point in history of India. It affected one and all; banking sector was too not an exception. While a number of opportunities were thrown open to banks, in form of flexibility and freedom from government interference, many challenges also arose, which required to be addressed tactfully. One such challenge is to attract and retain the customers. The availability of a number of choices and ease of switching over adds to the challenges before banks. Another remarkable phenomenon was emergence of tier 2 and tier 3 cities as centre of economic activity. Despite vast expansion of banking network, banking penetration still remains relatively low. Therefore in order to penetrate the Indian market banks needs to explore tier 2 and tier 3 cities. Although there is ample of studies on banks located in Tier 1 cities, there seems to be dearth of such studies in tier 2 and tier 3 cities. The research paper is an attempt in this direction whereby the perception of service quality of banks is explored amongst the customers of a tier 2 city, Lucknow.

Keywords

Service Quality, Tier 2 City, Banking Sector, CRM, Factor Analysis.

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