Content area
Deposit-taking Savings and Credit Cooperative Societies (SACCOS) in Kenya have faced significant challenges due to intense competition and declining customer numbers, which underscores the need for further investigation into relationship marketing strategies. A key research gap is the role of digital platforms in moderating the effectiveness of these strategies and their impact on customer loyalty. This study aimed to evaluate how digital platforms influence the relationship between relationship marketing (RM) and customer loyalty among SACCOs in Western Kenya. Using Relationship Commitment, Social Exchange, and Commitment Trust theories, the research focused on 23 SACCOs with 37,137 customers and surveyed 396 respondents, including prior pilot study. Descriptive and correlational research designs were used, with data collected via self-administered questionnaires and systematic sampling. Analysis with SPSS assessed validity and reliability, employing descriptive statistics and inferential methods such as Pearson's Correlation, Simple Linear Regression, and Hierarchical Regression Analysis. Assumption tests confirmed that the research data met normality, linearity, homoscedasticity, and multicollinearity criteria, with a response rate of 87.63% and significant correlations (p<0.05) among variables. Digital Platforms were found to contribute significant moderating role on the link between Relationship Management and Customer Loyalty (p<0.05), emphasizing features like interactivity, personalization, and trustworthiness. The results suggest that in order to enhance customer experience, SACCOs should allocate resources towards the development of user-friendly digital platforms, utilize data analytics in targeted marketing efforts, so as to enhance engagement with the community via online channels. Moreover, it is crucial for SACCOs to prioritize personalized service, establish trust, and strive for continuous improvement, while taking into account regulatory revisions, in order to maximize the effectiveness of digital platforms within the financial sector.
ABSTRACT
Deposit-taking Savings and Credit Cooperative Societies (SACCOS) in Kenya have faced significant challenges due to intense competition and declining customer numbers, which underscores the need for further investigation into relationship marketing strategies. A key research gap is the role of digital platforms in moderating the effectiveness of these strategies and their impact on customer loyalty. This study aimed to evaluate how digital platforms influence the relationship between relationship marketing (RM) and customer loyalty among SACCOs in Western Kenya. Using Relationship Commitment, Social Exchange, and Commitment Trust theories, the research focused on 23 SACCOs with 37,137 customers and surveyed 396 respondents, including prior pilot study. Descriptive and correlational research designs were used, with data collected via self-administered questionnaires and systematic sampling. Analysis with SPSS assessed validity and reliability, employing descriptive statistics and inferential methods such as Pearson's Correlation, Simple Linear Regression, and Hierarchical Regression Analysis. Assumption tests confirmed that the research data met normality, linearity, homoscedasticity, and multicollinearity criteria, with a response rate of 87.63% and significant correlations (p<0.05) among variables. Digital Platforms were found to contribute significant moderating role on the link between Relationship Management and Customer Loyalty (p<0.05), emphasizing features like interactivity, personalization, and trustworthiness. The results suggest that in order to enhance customer experience, SACCOs should allocate resources towards the development of user-friendly digital platforms, utilize data analytics in targeted marketing efforts, so as to enhance engagement with the community via online channels. Moreover, it is crucial for SACCOs to prioritize personalized service, establish trust, and strive for continuous improvement, while taking into account regulatory revisions, in order to maximize the effectiveness of digital platforms within the financial sector.
© 2024 by the authors. Licensee SSBFNET, Istanbul, Turkey. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Keywords:
Deposit-Taking SACCOs, Relationship Marketing, Customer Loyalty, Digital Platforms, Moderating Role
JEL Classification: О15
(ProQuest: ... denotes formulae omitted.)
Introduction
The practice of Relationship Marketing (RM), focused on building long-term connections with clients, has evolved internationally since the millennial age (Rosario & Casaca, 2023; Masika & Simiyu, 2019). According to Afifi & Amini (2019), the financial sector aims at boosting clients loyalty through endurance of relationships. Globally, RM is recognized as a key strategy aimed at improving customer relations, with improvements of operations among financial institutions being influence by IMF and World Bank standards and policies. These policies have focused on the need to instill strategic marketing with effective practices (Central Bank of Kenya, 2022).
The developed authorities including Canada, United States and United Kindlom have adapted advanced marketing strategies aimed at retaining marketing clientele (Masika & Simiyu, 2019). In Europe, RM factors including lifetime value of customers and among a number of loyalty programs, play a significant role in decision-making (Guerola-Navarro et al.,2022). In Asia, studies highlight the significant impact of RM on quality of service offered to customer in order to win their loyalty (Nguyen et al., 2021).
In Africa, relationship marketing is recognized for its role in attaining business accomplishment, hence research studies carried out in Tanzania, Nigeria, Ghana, and South Africa emphasizing the necessity for Savings and Credit Cooperative Societies to fulsil the expectations of customers with the aim of enhancing financial sustainability (Chakiso, 2017; Boateng, 2019). According to Kiptoo & Wanjiru (2023)., within the Eastern African countries, including Kenya, Uganda, and Tanzania, there exist a change from shortterm to longer term strategies of customer relations, in which the focus is aimed at enhancing retention of customers. Despite efforts to improve customer retention, Kenya faces challenges with a significant proportion of customers leaving within their first year.
In the micro-finance industry, loyalty of customers is always considered fundamental because it is believed it's a key element to sustainability and continuous development. Such loyalty is always achieved through building of enhanced relationships alongside rust, genuine satisfaction, and customer-perceived value-for-money and other efforts, among members and an institution (Nguyen ef al., 2021). SACCOs, that are always more society-driven compared to conventional financial institutions such as banking sector, fo offer individualized services that embody participation. This is believed to strengthen unity of customers (Sebastian, 2022).
The era of digital transformation has changed the manner in which the marketing society looks at relationship marketing. Currently the key approach is to enable enabling personalized and targeted message, enhanced consumer engagement and practical loyalty (Nguyen et al., 2021). Digital tools including social media, platforms email based marketing, and a number of mobile phone applications enable businesses to interact with customers in real-time and analyze their behavior for improved marketing approaches (Gil-Gomez et al., 2020). Likewise, system automations also streamline marketing efforts, though the impact of these innovations on SACCOs are not adequately explored.
In Kenya, the micro-finance sector has rapidly expanded to over 19,600 small institutions and membership of more than fifteen million individual members. This makes a fundamental component of the financial players (Central Bank of Kenya, 2023). DepositTaking SACCOs (DTS) act similarly to banks and implement customer deposit services (SASRA, 2017). Notwithstanding this development, encounters similar to higher extents of non-performing loans does not go well with sustainability of the registered SACCOS (SASRA, 2017).
Relationship marketing can help address these issues by fostering member engagement and preventing loan defaults. Western Kenya, which has 24 registered deposit-taking savings and credit societies, experience challenges that entail lots of competition among financial institutions, coupled with low uptake of digital technological ventures (Jeruto et al., 2020; Masika & Simiyu, 2019). Many SACCOs still use manual systems, which are inefficient and costly (Jepkosgei, 2022). As such the influence of digitization on the institutions, moreso among rural industry players, calls for further investigation. Examining factors such as personalization, trust, communication, and continuous improvement can provide understandings on how to enhance loyalty of customer with the aim of sustaining SACCOs.
Financial regulators have documented unpredictable consumer volumes among SACCOs, suggesting potential declines in loyalty. The SASRA (2017) reported a decrease in customer satisfaction within the financial sector between 57% in the year 015 and 49% in the year 2021. This underscores the need for research into how RM strategies can impact customer loyalty in Deposit-Taking SACCOs, specifically among rural clients, and others and peri-urban settings of Western Kenya.
A critical gap in existing research is the role payed by digital platforms in moderating RM strategies and their fundamental impact on customer loyalty. While studies have explored aspects like satisfaction and retention in the contemporary banking institutions and small and micro-enterprises, there is limited focus on how digital tools - such as mobile banking apps, social media, and online customer service - effect RM within SACCOs. This study addresses this gap by examining how digital platforms can enhance personalization, trust, communication, and continuous improvement in SACCOs. The findings are likely to provide important understandings for SACCOs to improve their sustainability amidst technological advancements and competitive pressures, and may be applicable to other financial institutions as well. The main aim this study was to evaluate the moderating effect of digital platforms on the relationship between RM and Customer Loyalty, among Deposit-Taking Savings and Credit Societies in Western Kenya.
Objectives of the Study
The primary objective of this study was to evaluate the moderating effect of digital platforms on the relationship between relationship management (RM) and customer loyalty among Deposit-Taking Savings and Credit Societies (SACCOs) in Western Kenya. This examination aimed to understand how digital tools enhanced or altered the dynamics of RM strategies, ultimately affecting customer loyalty. The study sought to provide valuable insights into the role of technology in improving customer engagement and retention within the financial services sector.
Research Hypothesis
To address the study"s objectives, the following research hypothesis was proposed: H04: Continuous Improvement had no significant effect on customer loyalty among Deposit-Taking Savings and Credit Societies in Western Kenya. This hypothesis suggested that while continuous improvement practices were generally believed to enhance customer loyalty, the study aimed to empirically test this assumption within the specific context of SACCOs in Western Kenya. The results of this hypothesis would clarify the significance of ongoing improvements in relationship management strategies on customer loyalty.
Organization of the Study
The study was organized into several key sections. The introduction provided background information, outlined the problem statement, and defined the study objectives. The literature review discussed key concepts and previous research on relationship marketing and customer loyalty. The materials and methods section outlined the research design and methodology used in the study. The findings and discussions section offered a detailed analysis of the pilot study results, including response rates, descriptive statistics, and correlation analyses. Finally, the conclusion summarized the key insights and implications for practice and future research. This structured approach facilitated a comprehensive exploration of the study's aims and findings, contributing to a deeper understanding of the relationship between digital platforms, relationship management, and customer loyalty in the SACCO context.
Literature Review
Introduction
The purpose of this literature review is to explore key theories and empirical studies related to Relationship Marketing (RM) and its impact on customer loyalty, particularly in the context of digital platforms. By integrating theoretical frameworks with empirical evidence, this review aims to establish a solid foundation for the study's hypotheses and provide insights into the dynamics of customer relationships in contemporary marketing.
Theoretical Framework
In exploring the dynamics of relationship marketing and customer loyalty, several foundational theories provide valuable insights into the mechanisms that drive customer behavior. This study examines three key theories: Relationship Commitment Theory, Social Exchange Theory, and Commitment Trust Theory. Each of these frameworks offers a distinct perspective on how relationships between customers and firms are formed, maintained, and ultimately impact customer loyalty.
Relationship Commitment Theory: Relationship Commitment Theory, introduced by Berry in 1990, is pivotal for understanding customer-firm dynamics and their impact on loyalty (Payne & Frow, 2017). This theory identifies three dimensions of commitment: affective commitment, which reflects the emotional bond that customers establish with a firm, stemming from positive experiences and a sense of belonging (Puspitasari ef al. 2017); calculative commitment, based on the perceived costs and benefits of maintaining the relationship, where customers evaluate whether the advantages of continued patronage outweigh any drawbacks (Payne & Frow, 2017); and normative commitment, which arises from social norms and moral obligations compelling customers to remain loyal to a firm (Gummesson, 2017; Enayat ef al., 2022). While this theory provides robust insights into long-term relationships, it may not fully address the nuances of transient interactions or the external factors influencing customer behavior (lesa et al., 2022). In the context of Deposit-Taking SACCOS in Western Kenya, Relationship Commitment Theory serves as a framework for analyzing the factors shaping customer loyalty through various relationship marketing initiatives.
Social Exchange Theory: Social Exchange Theory, proposed by Homans in 1961, conceptualizes social interactions as exchanges of resources among individuals or groups (Cropanzano et al., 2017). At its core, the theory posits that individuals engage in relationships driven by self-interest, seeking to maximize rewards while minimizing costs (Russell et al., 2017). Key concepts include reciprocity, which highlights the importance of balance in giving and receiving, and the roles of trust and commitment, which significantly shape relationship dynamics. While the theory has broad applications, it has been critiqued for its narrow focus on rational decision-making, often neglecting the emotional and cultural dimensions of human interactions. In this study, Social Exchange Theory provides a lens through which to analyze how perceived rewards, costs, trust, and commitment influence customer loyalty within SACCOS, enriching our understanding of relationship marketing strategies.
Commitment Trust Theory: Formulated by Morgan & Hunt in 1994, Commitment Trust Theory emphasizes the fundamental roles of commitment and trust in fostering strong interpersonal relationships. This theory asserts that commitment reflects the willingness of individuals to invest time and resources into a relationship, while trust pertains to the confidence in the other party's reliability and integrity. The theory posits that commitment and trust are mutually reinforcing; as commitment increases, trust is strengthened, leading to a deeper sense of reliance within the relationship. Despite its valuable insights, the theory has been criticized for overlooking contextual factors, such as power dynamics and cultural differences, that can influence the development and maintenance of commitment and trust (Masud et al., 2018; Moore, 2018). In the context of SACCOS, Commitment Trust Theory aids in understanding how relationship marketing strategies cultivate both commitment and trust, ultimately enhancing customer loyalty and contributing to organizational sustainability.
Conceptual Review
Key attributes identified in the literature for conceptual review include personalization (Muturi ef al., 2017; Nguyen et al., 2021), trust (Zahari et al., 2019; Mecha, 2018), communication (Kusa et al., 2021; Kumar et al., 2018), and continuous improvement (Chandra et al., 2019; Khan et al., 2018). These elements are crucial for enhancing customer loyalty. Additionally, the moderating role of digital platforms has been extensively explored. Research by Mukhtar and Chandra (2023), and Lim and Zhang (2022) indicates that digital marketing strategies can optimize RM approaches, improving customer satisfaction and loyalty.
Empirical Review
Jibril et al. (2019) investigated the role of mediation f contemporary social media-based brand communities and their possible influence on consumers' purchase attitudes toward brand loyalty. The primary aim in Central Europe was to examine how digital platforms influenced attitudes toward brand loyalty. An online survey captured the perspectives of 122 social media users affiliated with at least one online brand community. The study results, analyzed through partial least squares and structural equation modeling, revealed that digital platforms positively initiated consumer brand engagement and fostered user-brand relationships.
The decision-making implications of this research guide practitioners in leveraging social media platforms to enhance market share in the medium to long term (Jibril ef al., 2019). However, the analysis lacked a conceptual model linking various relationship management (RM) attributes to customer loyalty. This study aims to clarify the moderating influence of alphanumeric platform attributes - such as platform experience, feedback, and innovation/adaptability (Golgeci et al., 2020; Jain et al., 2021) - on customer loyalty.
Santa and Monero (2017) explored the impact of new information search trends on destination loyalty, emphasizing digital platforms and RM. Their extensive survey of 6,964 research tools across 17 European countries revealed that customers rely heavily on digital platforms for product information. Customer loyalty and satisfaction were found to be affected by the quality and strategies of these platforms, impacting behavioral, attitudinal, and horizontal loyalty. The study also examined the use of online and offline data sources regarding holidays.
While the insights from this research on digital platforms and customer satisfaction are valuable, their relevance to the current study's focus on digital platforms as a moderating variable in RM and customer loyalty may be limited. Hollebeek ег al. (2019) recommend that studies explore customer reliance on digital platforms without explicitly linking RM approaches to loyalty moderated by these platforms. Nevertheless, integrating insights from this research could deepen understanding of the dynamics of digital platforms in shaping customer behavior and loyalty within RM strategies (Sebastian et al., 2021; Mwirigi, 2018). Thus, this study specifies antecedents of digital platforms, including platform experience, feedback, and innovation/adaptability.
Boateng (2019) examined online RM and consumer satisfaction, focusing on how online technologies transform relationship-building processes. The study surveyed retail banks and utilized complex modeling methods, highlighting the significance of online involvement and interactivity in RM outcomes based on signaling theory. It concluded that banks should effectively communicate trust-promoting signals through their online activities to foster customer loyalty. However, there is limited emphasis on the connection between online RM activities and their impact on RM objectives (Boateng, 2019). Consequently, this study focuses on the relationship and influence among Relationship Marketing, Digital Platforms, and Customer Loyalty.
Nguyen & Hoang (2024) conducted a study to investigate the relationship between relationship marketing, consumer satisfaction, and consumer loyalty in the context of e-banking. The study was carried out in two phases, consisting of in-depth key informant interviews and a quantitative investigation. The participants were 690 individual and corporate e-banking customers in Vietnam. Findings discovered that customer satisfaction plays a mediating role in the influence of RM on consumer loyalty among individual clients.
Similarly, RM contributes directly to the loyalty of commercial customers, without the need for customer satisfaction (Nguyen & Hoang, 2024). The study also identified that the scopes of relationship marketing's effectiveness, for instance the banks' commitment, process-driven approach, customer experience, service reliability, and technology application- all have different effects on consumer satisfaction and loyalty across customer segments. To further understand this phenomenon, the study focuses on how relationship marketing impacts loyalty of customer among the Deposit taking SACCOs around Western region.
Chikazhe ег al. (2021) explored the attainment of customer satisfaction within the realm of computer-based mobile technological services, examining its impact on electronic word-of-mouth and how these relationships should be moderated by the technological advanced systems. They developed a research framework and empirically tested it by employing a number of online survey, employing structural equation modeling for analysis. Data was collected from several Uber customers in in the United Kingdom, UK. The study, just like Kumar ег al. (2018), identified and verified that trust, together with cost-reduction measures contribute to improved client satisfaction in Uber-business industry, subsequently leading to positive electronic word -of-mouth.
These findings underscore the significant influence of digital platforms on the interplay between marketing dynamics and customer loyalty, supporting Nguyen et al.'s (2021) recommendations. However, the study did not directly address the specific interaction between relationship management (RM) approaches and customer satisfaction being moderated by digital platforms. Therefore, its direct relevance to the current study, which focuses on digital platforms as a moderating variable between RM and customer loyalty, may be limited. Nonetheless, integrating insights from Chikazhe et al.'s (2021) study could provide additional context and enrich the discussion on how digital platforms shape customer behavior and satisfaction, thus contributing to a more comprehensive appreciation of the dynamics at play in the realm of digital promotion and consumer appreciation.
The current study posits that personalization, as a key RM attribute, significantly enhances consumer reliability and is influenced by its sub-attributes-customer lifetime value, user satisfaction, and conversion rate-as noted by Muturi et al. (2017) and Nguyen et al. (2021). Additionally, the relationship between trust sub-variables, such as integrity, consistency, and compassion (Zahari et al., 2019; Mecha, 2018), is anticipated to be positively influenced by the use of digital platforms in various SACCOs. Furthermore, communication, recognized as crucial for operational success (Kusa et al., 2021), is believed to have its sub-variables-feedback effectiveness, speed and efficiency, and information transparency-enhanced by digital platforms. This exploration of RM attributes and their interactions with digital platforms sets the foundation for the hypotheses to be tested in the current research.
Research Methodology
Research Design
This study employed both descriptive and correlational research designs to examine how Relationship Marketing (RM) attributes impact customer loyalty. Descriptive research provided demographic details of the SACCO members, while correlational research analyzed the relationships between RM variables - personalization, trust, communication, and continuous improvement - and customer loyalty. Figure 1 illustrates the conceptual framework to understand the study variables
As depicted in the conceptual model above, independent variables were evaluated through indicators like Lifetime Value, User Satisfaction, and Conversion Rate Enhancement, using a 5-point Likert scale. The moderating variable, digital platforms, was assessed on experience, interactivity, and trustworthiness. Customer loyalty, the dependent variable, included behavioral loyalty, emotional attachment, and advocacy, also measured via a 5-point Likert scale. High loyalty levels indicated effective personalization and the successful use of digital platforms in building strong customer relationships.
Study Area and Population: The research was conducted in Western Kenya, specifically across five counties: Kakamega, Bungoma, Busia, Vihiga, and Trans Nzoia. The target population included over 37,000 individuals from 23 licensed deposit-taking SACCOs in the region.
Sampling Techniques: The study employed Systematic Sampling to select a sample of 396 respondents from a total population of 37,137 SACCO members and customers. This approach utilized a sampling factor of 0.010663 to ensure proportional representation across various SACCO categories. The sample size was determined using Yamane's formula, which is favored for its simplicity and effectiveness in social science research. Specifically, every 5' respondent was systematically selected during data collection to create a representative sample, ensuring that the selection process was unbiased and methodical.
Questionnaire Design: Primary data were collected through Structured Questionnaires, which were organized into three sections: demographic information of SACCO members, relationship marketing attributes (including personalization, trust, communication, and continuous improvement), and aspects related to digital platforms and customer loyalty. Likert scales were utilized to quantify responses, allowing for easy standardization and comprehensive coverage of the topics addressed.
Data Collection: Primary data were collected using structured questionnaires, which were designed to capture demographics, RM attributes, digital platforms, and customer loyalty. The questionnaire sections addressed specific study aspects. A pilot study with 38 participants ensured the validity and reliability of the research instruments, with construct-based approaches and Cronbach's Alpha used for assessment.
Data Analysis Procedures: Data analysis was conducted using SPSS software (version 27). Descriptive statistics summarized the collected data through percentages, means, and standard deviations. Inferential statistics involved Pearson's Correlation and Simple Linear Regression to examine the relationships among variables, including personalization, trust, communication, continuous improvement, and customer loyalty. This structured approach facilitated a thorough understanding of the moderating effects of digital platforms on the relationship between relationship management and customer loyalty.
Research Approval: Approval was obtained from the School of Business and Economics at Masinde Muliro University and a research permit from the National Council of Science, Technology and Innovation (NACOSTD).
Data Analysis: Data were analyzed using SPSS version 27, employing both descriptive and inferential statistics. Descriptive statistics (mean, percentage, standard deviation) summarized the data, while Pearson's Correlation and Simple Linear Regression assessed relationships between variables. Diagnostic tests were conducted to validate regression model assumptions.
Regression Models: To evaluate the influence of RM attributes on customer loyalty, Simple Linear Regression was applied. The models were:
...
Where Y represents customer loyalty, fo is the intercept, / to /4 are the coefficients for each independent variable, and € is the error term. The independent variables include personalization (X1), trust (Хэ), communication (Хз), and continuous improvement (Xa).
Moderating Effect of Digital Platforms
The study employed Baron and Kenny's moderation approach and criteria (reviewed by Memon et al., 2019; Mwirigi, 2018; and Mohamed, 2022) to evaluate the moderating possible effects of digital platforms on the link between relationship marketing and customer loyalty among deposit-taking savings and credit societies in Western Kenya.
The moderation effect was evaluated using p-values and by examining changes in regression coefficients before and after introducing moderation to assess their significance. The regression model explains how the moderating influence was examined in this study. The moderation model was derived from a modified standard multiple regression model (Equation 3.6):
To assess the moderating effect of digital platforms on the relationship between RM attributes and customer loyalty, Baron and Kenny's moderation approach was used. The modified model included interaction terms:
...
Y = Customer Loyalty, Во = Constant Term, Bs...Bs= Beta Coefficient of independent and composite variable, X1= Personalization, X2 = Trust, Хз = Communication, X4 = Continuous Improvement, and DP = Digital Platforms with interacttion terms (i, ii, iii, iv - indicating different combinations with the independent variables).
According to Baron and Kenny (as reviewed by Mohamed, 2022), the decision criteria for determining a moderation effect are as follows: if the В coefficients for the independent variables are significant, and if the interaction terms are also significant, then it indicates that the moderating variable has a significant moderation effect. Conversely, if these conditions are not met, the moderation effect is not significant.
Test for Assumptions
Before conducting the regression model, diagnostic tests were performed to ensure compliance with the assumptions of being a Best Linear Unbiased Estimator, following the recommendations of Hoffmann (2021) and Wendler & Grôttrup (2021). The ShapiroWilk (W) test assessed the normality of the data at a significance level of p<0.05; values below this threshold indicated a nonnormally distributed dataset. The linearity of the relationship between dependent and independent variables was evaluated through visual inspection of plotted data, with a straight line pattern suggesting a linear relationship. To examine multicollinearity, Tolerance and Variance Inflation Factor (VIF) were utilized, with a VIF value exceeding 5 indicating potential overestimation of regression coefficient variance due to high correlations among predictor variables (Jepkoskei, 2022). Finally, homoscedasticity was assessed to ensure constant error variance across predictor levels, with a significance level of p<0.05 confirming homogeneity of variances, thus ensuring stable prediction errors.
Findings and Discussions
Results of Pilot Study
A pilot study with thirty-eight participants from Vision Afrika, a SACCO in Nakuru County, demonstrated strong reliability across all questionnaire variables, with Cronbach's alpha values ranging from 0.812 to 0.960. Validity testing yielded significant positive results, confirming the appropriateness of the items for the study.
Response Rate
The study gathered data from 396 distributed questionnaires, achieving an 87.63% response rate with 347 usable responses. The demographic analysis revealed a nearly equal gender distribution: 52.4% male and 47.6% female, with similar perceptions regarding relationship management and customer loyalty across genders.
Descriptive Statistics Descriptive statistics revealed key insights into factors influencing customer loyalty:
Findings
Descriptive statistics highlighted key factors influencing customer loyalty, as shown in the table. Personalization had a mean score of 3.8713 (SD = 0.9263), indicating moderate customization efforts. Trust scored 3.9475 (SD = 0.8517), emphasizing its importance for long-term loyalty. Communication was rated at 4.0903 (SD = 0.8967), reflecting its crucial role in customer engagement. Continuous improvement and digital platforms also showed strong scores, at 3.9515 (SD = 0.0421) and 4.3856 (SD = 0.9487) respectively. Overall, customer loyalty had a mean score of 3.8540 (SD = 0.9261).
Discussions
The findings indicate that personalization efforts, although moderate, are crucial for enhancing customer interactions, supporting previous research by Muturi et al. (2017). Trust is essential for building long-term customer loyalty, aligning with the studies by Zahari et al. (2019) and Mecha (2018). Communication stands out as a vital factor for customer engagement, consistent with Kusa et al. (2021). Additionally, the high scores for continuous improvement and digital platforms suggest that these elements significantly contribute to fostering customer loyalty, emphasizing the need for businesses to focus on these areas to strengthen customer relationships.
Correlation of RM Variables, Digital Platforms and Customer Loyalty
The correlation analysis, conducted using Pearson's Correlation and Simple Linear Regression, revealed significant associations among various relationship management (RM) variables - Personalization, Trust, Communication, and Continuous Improvement- and their relationships with digital platforms and customer loyalty.
The analysis revealed that Personalization was significantly correlated with Trust (r = 0.747, p < 0.01) and Communication (r = 0.541, p < 0.01), suggesting that personalized interactions enhance both trust and communication with customers. Trust showed strong positive correlations with Communication (r = 0.555, p < 0.01), Continuous Improvement (r = 0.595 to 0.634, p < 0.01), and Digital Platforms (т = 0.535 to 0.570, р < 0.01). Effective Communication also correlated positively with Trust (т = 0.555, р < 0.01), Continuous Improvement (г = 0.526, р < 0.01), and Digital Platforms (т = 0.538, р < 0.01). Continuous Improvement was positively correlated with Trust (г = 0.595, р < 0.01), illustrating its impact on enhancing trust and loyalty.
Discussions
These findings underscore the critical role of personalization in enhancing trust and communication, indicating that tailored interactions significantly influence customer relationships. Trust emerged as a central element, essential for effective communication and continuous improvement, highlighting its importance in customer engagement strategies. The positive correlations among RM variables suggest they collectively contribute to stronger customer loyalty, reinforcing insights from Boateng (2019), who emphasized online relationship marketing's role in fostering loyalty through personalization. Hollebeek ег al. (2019) noted that customer engagement in digital environments is pivotal for building trust, while lesa et al. (2022) identified key determinants of customer loyalty, further supporting the significance of trust and continuous improvement. Overall, these insights align with GuerolaNavarro et al. (2022), affirming that effective relationship management requires a diverse range of interconnected strategies to cultivate long-term customer relationships.
Test for Moderation (Digital Platforms)
The study utilized hierarchical regression model (Equation 3.5) to explore how Digital Platforms, defined by attributes like Platform Experience, Feedback Mechanisms, Innovation, and Adaptability, impact the relationship between RM practices and loyalty of customers. Findings are as escribed in the table below:
Results of regression analysis reveals a strengthening relationship between predictor variables and customer loyalty, with Digital Platforms serving as a moderator in the RM - Customer Loyalty link. The R=Square values consistently increase across models, indicating improved explanatory power as more predictors are included. Specifically, the R Square values range from 47.3% in the first model to 54.6% in the fourth model, demonstrating a substantial enhancement in the model's ability to explain customer loyalty. Notably, the Adjusted R-Square values follow a similar pattern, affirming the enhanced model accuracy. These findings underscore the significant moderating functional role of Digital Platforms as a means of understanding and enhancing customer loyalty within RM strategies.
The regression analysis (Table 6) confirmed that Digital Platforms served as a significant moderator in the relationship between RM and Customer Loyalty (CL).
From table 6, the increasing R-squared values across successive models indicated that Digital Platforms contributed significantly to explaining the variance in CL, beyond the influence of RM alone. These findings underscored the key importance of Digital Platforms in shaping the dynamics of customer loyalty in respect of RM strategies. The coefficients table (Table 7) of the hierarchical regression model below illustrates the influence of Digital Platforms about the link between key RM variables (Personalization, Trust, Communication, and Continuous Improvement) and Customer retention and loyalty.
From the hierarchical model (Table 7), Personalization significantly affects customer loyalty (В = 0.527, р < 0.05, in Model 1). This finding implies that organizations should prioritize personalized interactions to foster customer loyalty effectively. The moderating role of the Digital Platform (B = 0.399, p < 0.05) enhances this effect by strengthening these personalized interactions through digital tools, suggesting that leveraging technology is crucial for enhancing customer engagement.
Trust also significantly drives customer loyalty (B = 1.374, p < 0.001, in Model 2), indicating a strong relationship. The positive effect of Trust is amplified by the Digital Platform (B = 0.239, p < 0.01), highlighting the necessity for organizations to cultivate trust through transparent and consistent digital interactions.
Effective Communication (B = 0.277, p < 0.05, in Model 3) is shown to influence customer loyalty, and the Digital Platform's moderating effect (B = 0.489, p < 0.01) further enhances this impact. This suggests that organizations should invest in effective communication strategies supported by digital platforms to strengthen customer loyalty.
Continuous Improvement demonstrates a marginal influence on customer retention and loyalty (В = 0.100, р < 0.05, in Model 4), indicating that organizations can benefit from using digital tools to implement data-driven enhancements that ultimately support customer satisfaction and loyalty.
Discussions
The findings indicate that personalization, trust, effective communication, and continuous improvement are crucial for enhancing customer loyalty. The significant impact of personalization emphasizes the importance of tailored interactions, suggesting that organizations should leverage digital platforms to offer customized experiences that resonate with customers. This aligns with research by Jain ef al. (2021), who highlight the transformative power of hyper-personalization in customer engagement. Trust emerges as a vital driver of loyalty, reinforced by the capabilities of digital platforms, highlighting the need for organizations to cultivate trust through transparent and consistent digital interactions, in line with insights from Guerola-Navarro ег al. (2022) on the significance of trust in reinforcing customer relationships. Effective communication is shown to be essential in fostering loyalty, further supported by the moderating effect of digital platforms, consistent with the findings of Sebastian (2022), which underscore the importance of communication in fostering loyalty. Continuous improvement, while showing a more marginal influence, indicates that organizations can benefit from using digital tools to implement data-driven enhancements that ultimately support customer satisfaction and loyalty (Hollebeek et al., 2019; Kiptoo & Wanjiru, 2023; Mwirigi, 2018).
Result of Hypothesis Test
This study aimed to evaluate the null hypothesis that digital platforms do not significantly influence the relationship between relationship marketing (RM) and customer retention (loyalty) among deposit-taking SACCOs in Western Kenya. The results indicate a significant influence of digital platforms on this relationship, leading to the rejection of the null hypothesis at the p < 0.05 level. All moderated variables showed significance, confirming the crucial role of digital platforms in shaping customer relationships. Changes in regression coefficients demonstrate that digital platforms not only facilitate but actively moderate and enhance the effects of relationship-building initiatives on customer retention (loyalty) within the SACCO environment.
These findings support previous research on the impact of digital platforms on consumer behavior, engagement, and loyalty, underscoring their significance in enhancing customer-brand engagement (Jibril et al., 2019; Boateng, 2019). By examining how digital platforms perform moderation, particularly in the context of RM strategies, this study contributes to a deeper understanding of the relationship between technology, relationship marketing attributes, and customer retention or loyalty in the financial services sector of Western Kenya. It illustrates the need for SACCOs to strategically integrate digital platforms into their relationship -building efforts to nurture and sustain customer loyalty in an increasingly digitized landscape.
Conclusions and Recommendations
Summary of research findings
Data was analyzed data from 347 respondents revealed that all these factors significantly drive customer loyalty, with Digital Platforms playing an important part in enhancing their effectiveness. Correlation analysis showed that Personalization positively affected Trust and Communication, while Trust was central to customer engagement. Effective Communication also improved Trust, Continuous Improvement, and Digital Platforms. Regression analysis confirmed that RM attributes (Personalization, Trust, Communication, and Continuous Improvement) all expressively impacted Customer Loyalty (p < 0.05). Furthermore, Digital Platforms were found to significantly mediate the link amongst RM and Customer Loyalty, emphasizing their importance in strengthening this connection.
Conclusions
This study established that Digital Platforms significantly influence the relationship between Relationship Management (RM) and customer loyalty within deposit-taking savings and credit societies in Western Kenya. The working hypothesis-that Digital Platforms enhance customer loyalty through effective RM-was supported. The findings contribute to the understanding of how digital interactivity, personalization, trust, convenience, community engagement, feedback mechanisms, integration, innovation, and reputation play essential roles in fostering customer loyalty. However, it is important to acknowledge that this study faced limitations, including potential biases in self-reported data and the dynamic nature of digital platforms, which may evolve over time.
Recommendations
Future research should focus on exploring the long-term impacts of these Digital Platforms on customer loyalty, particularly in varying socio-economic contexts. Additionally, examining the effects of regulatory changes, such as data privacy and consumer protection laws, on the utilization and effectiveness of digital platforms within financial institutions is essential.
Institutionally, SACCOs should prioritize investments in user-friendly digital platforms that promote interactivity, personalization, and trustworthiness. By understanding customer preferences through data analytics, SACCOs can implement targeted marketing strategies and customized services. Increasing public participation through online forums and social media can also enhance customer retention. Management practices should emphasize personalized service delivery, trust-building initiatives, effective communication, and continuous quality improvement. These actions are vital for driving long-term success and adapting to the evolving digital landscape in financial services.
In conclusion, the integration of Digital Platforms into Relationship Management strategies not only influences customer loyalty but also has broader implications for economic and financial policies within the sector, suggesting a need for ongoing evaluation and adaptation to maintain relevance in a rapidly changing environment.
Acknowledgement
Author Contributions: Conceptualization, V.A., D.W., E.J.S.; Methodology, V.A., E.J.S.; Data Collection, D.W.; Formal Analysis, V.A., D.W., E.J.S.; Writing- Original Draft Preparation, V.A.; Writing-Review and Editing, V.A., D.W., E.J.S. All authors have read and agreed to the published the final version of the manuscript.
Institutional Review Board Statement: Ethical review and approval were waived for this study, due to that the research does not deal with vulnerable groups or sensitive issues.
Data Availability Statement: The data presented in this study are available on request from the corresponding author. The data are not publicly available due to privacy.
Conflicts of Interest: The authors declare no conflict of interest.
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