Factors Influencing Customer Loyalty among Commercial Banks in Kenya: A Case Study of Family Bank Kenya Limited

A Research Project Submitted by Karambu Kabira, to the Chandaria School of Business in Partial Fulfillment of the Requirement for the Degree of Executive Master of Organizational Development (EMOD).The purpose of the study was to establish the factors influencing customer loyalty at Family Bank Kenya Limited. To achieve this purpose, the study sought to answer these research questions: To what extent does customer satisfaction influence customer loyalty at Family Bank Kenya limited? To what extent does brand image influence customer loyalty at Family Bank Kenya limited? And To what extent does service quality affect customer loyalty at Family Bank Kenya limited? The study relied on insights drawn from its employees on their urge to continued banking with family Bank Kenya Limited. The research was conducted between the months of January- April 2015. The study adopted a descriptive research design which is concerned with finding out the what, where and how of a phenomenon. The population comprised of all 125, 847 account holders at Family Bank as at October 2014. A sample size of 166 respondents was selected. This research collected primary data using semi structured questionnaires. The questionnaire contained four sections each. Data analysis was done using Statistical Package for Social Sciences (SPSS). Measures of central dispersion including mean and standard deviation were used. The findings were presented in the form of tables and figures. From the findings, the study established that the ability of the bank to provide services as promised meets customers’ expectation of service affected their loyalty to a great extent. Further, the diverse financial products availed to customers by the Bank improved their intention to continue banking with Family Bank to a great extent. Good knowledge and understanding of family banks operations among staff improves customer loyalty to a great extent. On brand loyalty on customer satisfaction, the findings show that the respondents viewed Family Bank as a bank established to support people seeking individual growth opportunities. Regarding brand loyalty and customer satisfaction, the findings show that the respondents viewed Family Bank as a bank established to support people seeking individual growth opportunities. They noted that continued partnership with customers in their financial needs had promoted their loyalty levels to a great extent. The creativity of the Bank in credit administration, the Bank’s entrepreneurial development history and the Bank’s corporate colors motivate customers to remain loyal. In addition, the Bank’s Mission and Vision, overall culture, and positive reputation promoted customer loyalty to a great extent. In addition, the Bank’s corporate slogan and logo promoted customer loyalty to a very great extent because it brought about brand associations. Other things that promoted customer loyalty here included Bank’s reliability, service quality culture and the Bank’s strong client relation management. In seeking to establish the effects of service quality on customer satisfaction, the key variables as system reliability at Family Bank, responsiveness of Family Bank’s financial services to my financial needs, the exact fit of Family Bank products to my business needs, the flexibility of the Bank in dealing with my financial needs, the level of openness in reflecting entries on my account, the level of employee courteousness, which highly skilled employees, the ambience of Family Bank banking halls, the organization of service delivery in the Bank, high level of accuracy among staff, easy accessibility to Family Bank branches, effective customer complaints management system, good information management, clear communication channels and the flexibility affected the level of customer loyalty. The study recommends that the bank provides diversified products that will meet the needs and expectations of the different categories of customers at family bank. The study also recommends that the bank increases the number of communication channels by maintaining an active online presence as well as providing services such as SMS call centres so as to improve the communication channel problems that results from having to wait for customer care attendants while on hold. On the influence of Brand Image on Customer Loyalty, the study recommends that the bank strives to improve its image among the consumer by participating in various CSR projects that will enable them to offer support to people seeking growth opportunities. The study also recommends that the bank invests in its brandings such as through the corporate colours and its logo as to be attractive and entice customers. On the influence of service quality on customer loyalty, the study recommends that the bank develops products that are fit to the needs of its customers and other customers in the banking industry so as to gain a competitive advantage. The study also recommends that the bank maintains an open communication channel with its customer. The study also recommends that the bank should provide a conducive ambience for its customers so as to improve it’s the level of customer satisfaction