Microsoft Word 2007 ichrie conference Proceedings Final-Final 06-06-07. doc

Customer Service Quality and Customer Retention 
ervice quality is considered to be a critical success factor for the service industry, just like hotels, because; 
first, it has service differentiation and competitive advantage to attract new customers as well as contribute to market 
share and second, it is viewed as a factor for customer retention. Service quality has an effect on the potential start of 
a relationship. Since it has a positive effect on customers’ repurchase intentions, it leads to more interactions. 
Service excellence enhances customers’ preference to buy more, to buy again, become less price sensitive and to 
look for other services (Venetis and Ghauri, 2004).
Different kinds of relationships was identified by Jackson (1985) ranging from transactional relationships 
to relational exchange relationship. For transactional relationship, a customer’s first priority is price. He/she also 
uses multiple sources of supply and switches suppliers frequently over time. Exchange relationship occurs when a 
buyer and a supplier develop a long-term relationship. Even though the relationships are more than a plain sequence 
of transactions over time can be illustrated relationships in service markets they don’t mean that a “real” relationship 
is created (Dywer, Schurr and Oh, 1987).