Abstract

The main aimed of this study is to determine the effect of service quality on customer satisfaction in Rural Investment Credit S.A in Mutengene Branch (RIC S.A), and how does service quality affect customer satisfaction, also what is the effect of service quality on customer satisfaction.

This study adopted an explanatory and descriptive survey research design with a total population of 20 respondents selected through the use of Purposive and convenient sampling technique. Data was collected through the used of questionnaire. Descriptive and inferential analysis was employed.

Furthermore, finding of the study revealed that Regression coefficient statistics shows that tangibles, assurance and empathy service quality dimensions have positive and significant relationship with service quality dimensions, significant relationship were also detected between service quality dimensions and customer satisfaction. Also, results of the study found that the causes of poor service quality in RIC Mutengene are poor personal attention to customers followed by safety in transaction, and tangible physical facilities of the institution. And there is a positive significant effect on service quality and customer satisfaction.

Therefore, the researcher recommended that RIC should Implementing modern systems automation like IPCC (Internet Protocol call center. This will help to provide prompt and error free service to customer. Also, RIC should implement different kinds of motivational schemes to quality agents which will encourage employees to provide appropriate service to customers which could increase customer satisfaction.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 Background to the study

Every business enterprise including banks exists to serve customers. The customer defines the business. Therefore, to satisfy the customer should be the mission and purpose of every business. In today’s highly competitive corporate environment, quality of services is an essential element for enhancing customer satisfaction. Customer satisfaction is thought about the essence of success in today’s highly competitive world of business. Thus, the significance of customer satisfaction and retention in strategy formulation for a “market oriented’’ and “customer focused’’ firm cannot be undervalued (Kohli and Jaworski, 1990).

Consequently, customer satisfaction is all the time more changing into a company goal as a progressively more firms attempt for quality in their product and services (Bitner and Hubbe,1994) Moreover, service sector such as banks have the responsibility to provide the best services to their customers in order to have sustainable competitive advantages. Due to the critical quality of service to business, it is difficult for service providers to measure the quality of services. The difficulty of measuring the service quality stems from its intangibility, diversity, and the difficulty of separation (Saghier and Nathan, 2013).

During the consumer decision making process, not only do customers make decisions regarding which service provider to choose but also decide whether to remain loyal to the current service provider. Satisfaction of customers is a deeply held commitment to re-buy a preferred product or service in the future despite situational influences and marketing effort having the potential to cause switching behavior. Today it is no longer sufficient for a business to simply satisfy a customer during a single transaction, rather it must try to retain the customer for life, that is, achieve customer retention.

There has been a rapid growth of micro-finance institutions which increase the competition level. Satisfaction of customers and retention has become vital to the long-range profitability and ultimate survival of MFIs. This can be done both primarily by maintenance of customers or getting new customers. Satisfaction of customers provides an indication of how successful the organization is at providing products and or service to the market.

The limited of knowledge on the relationship between service quality on customer satisfaction has led concern that managers in particular have little in terms of guidelines to design and manage their strategies to control or improve on satisfying its customers. For Rural Investment Credit to successfully gain and maintain its customers, it is important to understand the effect of service quality and its customer satisfaction.

1.2 Problem statement

It has been discovered that services are poorly rendered in RIC SA which interned have an effect on the satisfaction of customers. It was notice that, RIC SA does not offer prompt services, individual attention, and taking care of customer by providing customized services is not being provided by RIC and the physical facilities, equipment and personnel do not meets the expectations of customer. This research is attempting to find out the effect of service quality on customers satisfaction in case of MFIs institution in Mutengene, the case of Rural Investment Credit (RIC).

There is to argue that RIC S.A has lots of problems with its customers where most of them are dissatisfied with the services they are getting from RIC S.A customer service centers. These are discrepancies between perceived performance and expectation from customers point of view (perceived performance is less than expectation) that make them dissatisfied customer believes RIC S.A service quality cannot satisfy them even though customer satisfaction is the major issue for businesses that are providing services.

A service is any activity or benefit that one party can offer to another, which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product. ‘Kotler, Armstrong, Saunders and Wong ‘Services are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing about a desired change in – or on behalf of – the recipient of the service.’– Christopher Lovelock

1.3 Research Questions

1.3.1   Main research question

What is the effect of service quality on the satisfaction on customers in MFIs in Mutengene Branch?

1.3.2    Specific research questions.

1. How does Tangibles affect customer satisfaction in RIC S.A Mutengene?
2. In what way does Empathy affect customer satisfaction in RIC S.A Mutengene?
3. How does Assurance affect customer satisfaction in RIC S.A Mutengene?

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