The issue of customer retention is an important one for service organizations. Ndubisi (2003) has related superior service with customer perceived mutualism (in customer-firm interaction), which is associated with customer support, which outcomes are increasing market share and/or profits. The study also related poor service with customer perceived commensalism and parasitism, which lead customer resistance, and in turn erosion of profits and/or market share. It has also been suggested that service quality has a direct effect on organizations' profits, since it is positively associated with customer retention and customer loyalty (Baker & Crompton, 2000; Zeithaml & Bitner, 2000). Studies have shown that it costs six times more to attract new customers than to retain the existing ones (Rosenberg & Czepiel, 1983). Reports have also shown that the net increase of the present value of profits that results from 5 percent increase in customer retention varies between 25 percent and 95 percent over different industries (Oliver, 1999). Ndubisi (2003) and Zeithaml et al., (1996) proposed different models of the behavioral consequences of service quality. Ndubisi suggested that customers perceive their relationship with the firm in three different lights (i.e. mutualism, commensalism, and parasitism) depending on whether (in the customer's eyes) value was created and delivered or not, and these perceptions will predict the kind of response (either support or resistance) customers give to services providers, each having different implications on the firm's profits and/or market share. Zeithaml et al. proposed that perceived service quality was related with positive behavioral intentions, which could be viewed as signals of retention or defection. According to the latter model, behavioral intentions are a multi-dimensional concept, consisting of word-of-mouth (WOM), purchase intentions, price sensitivity, and complaining behavior. Fishbein and Ajzen (1975) and Ajzen and Fishbein (1980) suggested that behavioral intentions, when properly measured, could to a large degree predict actual behavior. Since then, a number of research has used intention to predict behavior (e.g. Davis 1989; Davis et al., 1989; Mathieson 1991; Taylor & Todd 1995; Venkatesh 2000), while others have seriously questioned intention as a predictor of actual behaviour (Straub et al. 1995; Bentler & Speckart 1979; Songer-Nocks 1976). Nonetheless, Baker and Crompton (2000); Bloemer et al., (1999) applied Zeithaml et al.'s (1996) model and found evidence for its usefulness in predicting elements of customer loyalty. All three studies indicated a need for further research on the relationship between service quality and behavioral intentions, in a variety of service sectors.
In view of the practical value of research on customer retention, combined with the limited published research on Malaysia banking services, the current work aims to evaluate the degree to which service quality dimensions can predict the multi-dimensional model of behavioral intentions, as suggested by Zeithaml et al. (1996) among bank customers in Malaysia.
Perceived service quality has been defined as a global judgment or attitude relating to the superiority of a service (Zeithaml and Bitner, 2000). The majority of research on service quality has been built around the SERQUAL (Parasuram et al., 1988) methodology. The SERVQUAL model suggests that service quality can be measured by identifying the gaps between customers' expectation and perceptions of the performance of the service. Parasuraman et al. (1988) also suggested that service quality was a many-sided concept consisting of five dimensions: reliability, assurance, tangible, empathy, and responsiveness. Reliability refers to the ability to perform the promised service dependably and accurately; assurance refers to the knowledge and courtesy of employees and their ability to convey trust and confidence; tangible refers to the appearance of the physical facilities, equipment, personnel and communication materials; empathy refers to the provision of caring, individualized attention to customers; and responsiveness refers to the willingness to help customers and to provide prompt services. …