Analysis of the Effect of Customer Personality On Determinants of Customer Loyalty in the Banking Sector: A Survey of Banks in Homabay County, Kenya.

Abstract

Marketing management research has advocated for the establishment of determinants of customerloyaltyto improve customer retention and organization performance. Despite consumer behavior theory emphasizing the importance of customer personality in consumer decision makingprocess, establishing determinants of customer loyalty has been problematic. This study had a target population 845,000 and a sample size of 400 was selected from the population which included customers from Equity Bank, Kenya Commercial Bank, Barclays Bank and Cooperative Bank, to analyse the effect of customer personality on determinants of customer loyaltyin the banking sector in Homa Bay County. Specifically, the study established the effect of service quality, service features and complaint handling on customer loyalty and also establishedthe moderating effect of customer personality on determinants of customer loyalty. The study was guided by a conceptual framework involving concepts of customer loyalty and customerpersonality which are anchored on the theory of consumer behavior. The study used cross-sectionalsurvey design, banks were selected using stratified sampling and the customers werepicked using simple random sampling. Respondents were met at the ATM as they carry out their transactions. Data was collected using questionnaire and the reliability of the instrument was tested using split-half method while validity was tested by use of experts who were the supervisors of the researcher. Descriptive statistics, simple regression analysis, multiple regressionand moderated regression analysis were used to analyze data. The findings show that the independentvariables are significant determinants of customer loyalty among customers who had not changed their banks, that is, service quality (Fo=16.234>Fc=3.860), after moderation (Fo=8.355>Fc=3.020), service features (Fo=5.123>Fc=3.860) after moderation (Fo=3.545>Fc =3.020), complaint handling (Fo=7.579>Fc=3.860) and after moderation (Fo=4.714>Fc=3.020) and finally when all the determinants of customer loyalty were put together (Fo=14.218>Fc=2.620) after moderation (FolO.905>Fc=2.390). Among customers who had changed their banks, only service quality was a significant determinant of customer loyalty (Fo=5.556>Fc=3.960) after moderation (Fo=5.576>Fc =3.110) with others showing no such effect on customer loyalty. Service quality had the highest effect on customer loyalty. The study concluded that customer personality has a moderating effect on determinants of customer loyalty. The study recommends that bank managers should continuously train their staff on service quality and customer personality. The study may help the bank policy makers to predict customer loyalty using the models of customer loyalty.