Identifying the necessary elements in audit quality for customer retention

Abstract

Purpose – This study aims to analyze the relationship between perceived audit quality and client loyalty from a service-oriented perspective. It seeks to validate previous findings on this relationship and, critically, to identify the specific quality dimensions that are essential for ensuring client loyalty in auditing services. Design/methodology/approach – A quantitative study was conducted using data from 234 Spanish firms subject to mandatory auditing. A combination of Partial Least Squares Structural Equation Modeling (PLS-SEM) and Necessary Condition Analysis (NCA) is employed to evaluate the impact of perceived quality, assessed through the SERVPERF scale, across five dimensions: tangibles, reliability, responsiveness, assurance, and empathy. Findings – Results confirm that perceived quality significantly influences client loyalty. However, not all dimensions are equally important; reliability, responsiveness, assurance, and empathy are identified as necessary conditions for loyalty, while tangibles do not emerge as critical. This highlights the need for audit firms to ensure that these dimensions of quality are adequately perceived by clients to maintain long-term loyalty. Practical implications – The study provides insights for audit firms aiming to enhance client loyalty through targeted quality management strategies. It is suggested that firms should follow a holistic approach regarding quality whilst avoiding overinvestment in certain dimensions. Originality/value – By integrating PLS-SEM with NCA, this research provides a novel approach to distinguishing between necessary and sufficient conditions for client loyalty. The findings contribute to the literature on audit quality management and offer valuable guidance for practitioners seeking to enhance client retention through improved service quality.