Factors Influencing Customer Loyalty In Savings And Credit Co-Operatives In Uasin Gishu County, Kenya

Abstract

Diverse and uncertain environments have forced organizations to restructure themselves in order to enhance their chances of survival and growth. Restructuring efforts have included, among others, the emergence of relationship marketing. Relationship marketing acknowledges that a stable customer is a core business asset, which is achieved through customer loyalty. This study was designed to assess factors that influence customer loyalty in savings and credit co-operative societies (Saccos) in Uasin Gishu County, Kenya. Studies have shown that companies are losing customers at a staggering rate, without really hearing from most of them. Each year the average company loses 10-15% of its customer base, "84% of customers, who leave, do so because of poor service” and a typical business only hears from 4% of its dissatisfied customers, the other 96% leave, 91% for good. Co-operatives in Kenya are also facing a similar challenge and reports have shown that their customer base is declining and with it the financial base which constitutes share capital and deposits. Businesses today are faced with stiff competition (Beerli et al, 2004) and in the case of Co- operatives; this comes from banks, micro- finance institutions, and self-help groups/ welfare organizations among others. This study therefore sort to find out the factors attributed to decline in customer base in co-operatives and was guided by five specific objectives, namely, to determine the extent to which quality service delivery, satisfaction, perception of switching costs, trust and corporate image influence customer loyalty. The study was based on the social exchange theory which indicates that individuals are willing to maintain relationships because of that expectation that to do so will be rewarding. To achieve these objectives; data was collected from a sample of 174 respondents using structured questionnaires with close ended questions. Questionnaires were administered to individual members of Sacco societies. The data was analyzed quantitatively with the use of descriptive statistics to present the profile of the respondents and inferential statistics method specifically correlation and multiple regression were used to establish the relationships of the variables. The results shows that trust (p< 0.001), service quality (p <0.01), switching cost (p < 0.05) and image (p < 0.05) all significantly affect the customer loyalty. The results further indicated that the most important predictor variables that affected the customer variables are trust followed by service quality but satisfaction was found not to be significantly associated with customer loyalty. It is recommended that since trust is a major concern for customers in Saccos, deliberate efforts should be made to build it by improving service quality and the overall image of these organizations. The costs of the Sacco products should be kept at reasonable levels so that the customer’s stay in the Sacco is by choice and not out of fear of losing shares or deposits built over a long period of time.