The Relationship between marketing programs and customer loyalty in the banking industry in Kenya

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Strathmore University
The development of sound and vibrant commercial banks is a crucial engine for economic growth in Kenya. Over the past decade, the commercial banks sector has not only undergone fundamental growth but the environment has become highly competitive. To this end, commercial banks have to adopt sound strategies that will enhance sustainable growth and profitability. Modem theories such as commitment-trust theory emphasize customer loyalty as a driver of sustained profitability and further purport that relationship marketing programs are vital for attracting and retaining profitable customers. The purpose of this study was to analyze the relationship between marketing programs and customer loyalty in the banking industry in Kenya. The study adopted four objectives. The first objective sought to identify a Descriptive research design that was used for analysis. Primary data was used for analysis. The Nairobi area was identified as the sample frame. Stratified-Random sampling was adopted, four large banks were identified as strata, and data were collected randomly from each bank. Ordinary Least square was used for analysis. Five main variables were identified including relationship marketing, innovative products, and loyalty program as independent variables and customer loyalty as the dependent variable. The results showed that the majority of customers were satisfied with the services offered by the bank. Descriptive statistics results confirm that the majority were loyal to the banks and further agreed that relationship marketing was an important factor that increased customer satisfaction. ANOVA results revealed that customers ranked innovative products differently across the four banks. Regression results showed that identified relationship marketing, innovative products, and loyalty programs were significant determinants of customer loyalty. Relationship marketing has a coefficient of 0.66 which means that a unit increase in relationship marketing increases customer loyalty by 0.66. Innovative products and loyalty programs had a coefficient of 0.396 and 0.35 respectively. It was recommended that banks should focus on strategies that improve relationship marketing. Secondly, product innovation was identified as a competitive driver. It was recommended that commercial banks should focus their resources on innovating products that may enhance their competitive edge and improve both customer needs and expectations.
Submitted to Strathmore University in partial fulfilment of the requirements for Master of Commerce at Strathmore University