Investigating the Effect of Trust, Empathy, Satisfaction and Communication on Customer Loyalty: Evidence from Banking Industry in Nekemte Town, Ethiopia

Abstract

The banking industry in Ethiopia is highly competitive, so banks must consider various strategic options and plans to survive and develop. One of the strategies is Customer Relationship Marketing. This study was aimed to investigating the effect of trust, empathy, customer satisfaction and communication on customer loyalty of commercial banks in Nekemte town. Researchers use probability and non-probability sampling techniques to select a sample of respondents from the total population of this study. Data were collected through the five point’s likert scales of questionnaires and used mixed research approach was used. To achieve the objective of the study, questionnaire was physically distributed to 404 respondents of selected Commercial Banks in Nekemte town. Out of 404 customers 375 (92.8%) of customers were completed and returned. Descriptive and inferential statistics were used to analyze the collected data by using SPSS software version 24 and questionnaires reliability was estimated by calculating Cronbach’s Alpha. Descriptive analysis tools such as frequency, percentage, mean and standard deviation. Inferential statistical analysis tools such as correlation coefficient was worked out and used to explore the relationships between variables. And multiple linear regression analysis was performed to study the effect of independent variables on dependent variable. A research finding indicates that there were statistically significant relationships between all independent variables on customer loyalty. Therefore it is reasonable to conclude that customer loyalty can be created, effective and retained by marketing plans aimed at building trust, communicating with customers in a timely and reliable, proactive fashion to handling communication barriers efficiently, paying attention to customer satisfaction, improving the empathetic and build up the abilities of the employee, and developing strong network between buyers and sellers. Therefore it is advisable to consider that, enhancing to establish, develop and also they expected to invest more to attracting new customers and retaining the existed ones with regard to customer relationship marketing to increase customer loyalty.