FACTOR AFFECTING CUSTOMER LOYALTY - IN CASE OF AWASH BANK IN ADDIS ABABA

Abstract

Customer loyalty has been a real concern in banking industry, because making customer loyal is potentially an effective tool that banks can use to gain a strategic competitive advantage and voluntary user solution for a long time to build relationships. The main initiative force for this paper was the large number of inactive accounts in the bank and lack of studies in customer loyalty in Ethiopia specifically in Awash bank. This research is more of explanatory research conducted on factor affecting customer loyalty, with objective of assessing the influence of factors on customer loyalty in Awash bank, by taking a sample of 375 customers with non-probability sampling from selective four branches in Addis Ababa city. The study used customer loyalty as dependent variable and customer satisfaction, commitment, switching cost, trust and service quality as independent variables. Data were collected through questioners analyzed by using SPSS and multiple regressions and correlation analysis was used to test the hypothesis developed and to show the relationship among the dependent variable and the independent variables. The study found that four variables of customer loyalty (customer satisfaction, commitment, trust and service quality) have positive and significance influence on customer loyalty but the influence of switching cost is insignificance. Therefore, this research suggested to Awash bank to keep their focus on the variables affecting customer loyalty and take them into consideration in formulating strategies for developing and improving customer loyalty.