FACTORS AFFECTING CUSTOMER LOYALTY IN SMALL AND MICRO ENTERPRISES ENGAGED IN THE PRODUCTION OF HOME AND OFFICE FURNITURE: EVIDENCE FROM SMALL AND MEDIUM ENTERPRISES IN ADDIS ABABA

Abstract

aving a devoted customer base is essential for profit-oriented businesses to remain competent enough in today’s highly competitive market. In light of this, the purpose of this study was to examine factors influencing customer loyalty in small and micro businesses that produce furniture for homes and offices. This study used quantitative approach and explanatory research design. Data were gathered from 384 customers using structured questionnaire. The researcher used descriptive and inferential statistics (correlation and regression analyses) to analyze survey data. The result of descriptive statistics revealed that customers are loyal to organization (x=4.22), have good perception about product quality (x=4.34), satisfied with the products (x=3.39), positive perception about the company image (x=3.83), trust the company (x=4.26), and remain committed with the organization (x=4.04). Furthermore, the result of regression analysis showed that trust has caused a significant positive effect on customer loyalty (B=0.590, P<0.05) followed by perceived product quality (B=0.335, P<0.05) and customer commitment (B=0.205, P<0.05). However, switching cost and customer satisfaction didn’t cause statistically significant effect on customer loyalty. Therefore, in order to build customer loyalty, furniture manufacturing firms are recommended to build trust, improve product quality, and foster commitment. It is also recommended that businesses should invest in marketing research to determine the exact needs and preferences of their customers and to offer products and/or services that will satisfactorily and profitably satisfy those needs. Furniture manufacturing firms must differentiate their brands from those of their competitors in the dynamic and competitive business climate.