THE IMPACT OF RELATIONSHIP MARKETING ON CUSTOMER LOYALTY IN BANKING INDUSTRY, THE CASE OF BANK OF ABYSSINIA S.C

Abstract

The purpose of this paper is to explore the impact of relationship marketing on customer loyalty in banking sector in the case of Abyssinia Bank SC. The study considered five construct dimensions of relationship marketing such as, Trust, Commitment, Communication, Conflict handling and competence, to measure the customer loyalty of Abyssinia Bank SC. The researcher used both qualitative and quantitative research design, where much emphasis has been given for the latter. Among the various quantitative methods, the researcher used explanatory study, where emphasis is given on studying a situation or a problem in order to explain the relationship between variables. twenty representative BOA, branches was selected out of the total population based on judge mental (purposive) sampling technique and customer of the Bank are selected based on convenient random sampling technique. 385 customers were selected based on statistical formula developed by Taro Yemane in (1967). The data collection instruments were adopted from some previous study Ndubisi & Wah (2005), which consists of 37 (Thirty seven) items. Validity and Reliability test was conducted to check the consistency and dependability of the instruments and accordingly, all the components of relationship marketing considered under the present study was proven to be reliable, scoring an Alpha value greater than 0.70. The Pearson correlation test conducted between customer loyalty and Relationship marketing components showed that, there is a significant positive association between them and the researcher also proved that the entire alternative hypothesis was well accepted. The regressions result confirmed that, the linear combination of all the components of relationship marketing considered under the present study was significantly contributed to the variance in the dependent variable customer loyalty. The ANOVA test result also confirmed that, the prediction powers of the RM components are found to be statistically significant. From the Beta coefficient result, the researcher obtained that, commitment is found to be the most important variable in predicting the dependent variable customer loyalty, followed by, Communication, trust , competence and conflict handling. Finally, the researcher concluded that in the case of Abyssinia Bank SC, components of relationship marketing has a significant positive impact on customer loyalty.