The effectiveness of customer retention in commercial banks in Tanzania: the case of CRDB Bank PLC, BARCLAYS and NMB Bank

Customer retention and loyalty is one of the most considered factors while making strategic decisions intoday’s increasingly competitive market. As the financial industry grows and becomes more competitive, firms are most likely to focus on retaining current customers to maintain their market share. Customer retention has been advocated to be a more reliable and easier source of superior performance in the competitive market. A descriptive research design was used where by three financial banks were studied namely CRDB, Barclays and NMB. Ninety Bank customers and thirty Bank officials were interviewed and their responses were analyzed using SPSS with Chi- square tests to determine the association between variables. The results indicate that satisfaction levels of customers are very important in customer retention and they also provide an indication that improvements in the areas of interpersonal communication, service performance and complaint handling are likely to increase customer retention in financial Institutions. The results also suggest that the most important constructs were customer satisfaction, followed by corporate image and changing barriers. There was also evidence that customers’ age groups and level of education contributed to explaining respondents propensity to stay with their current banks.