D.Com. (Marketing Management) / The size of South Africa's banking industry grew from R398 billion in 1995 to R471 billion in 1996 while banking transactions totalled R58 634 billion during 1996. Like most other service companies, the banking industry also experiences customer turnover. During the period March 1995 to February 1996 customer switch, which refers to the closing of an account at one institution and the opening of a new account at another institution, by clients of all banks amounted to 4,9 percent. Mutual interaction between a service provider and a client is a very important determinant of customer satisfaction with a service. It is therefore important for the company to focus on the retention of customers because it is more profitable to retain a customer rather than recruiting new customers. Customer switching can damage the future stream of income of a company. The loss of a customer therefore, is not only one transaction, the company looses a life long stream of income. Customer satisfaction therefore influences the primary source of future income of most companies directly. Quality service is of utmost importance for the success and survival of companies in today's competitive environment. To be successful it is necessary for each department within the company to operate effectively and to be client orientated. Companies believe that they will be more profitable if a marketing orientation is established within the company. Employees must therefore, understand their role in the total service chain. A client's perception of a service becomes reality when he/she experiences the service during a service encounter where interaction between the customer and the company takes place with the employee as intermediary.