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Department of Marketing
University of Dhaka

4th Year 1st Semester

BBA Program
Course # 412: Econometrics

Title: Research Paper on “Effect of Service Quality and Customer Satisfaction on Customer
Loyalty”
IDs Name

011 Shrabony Borna

107 Tahrima Tarannum Tahi
125 Toufic Anam Ovi
Date of Submission 13. 03. 2022

Disclaimer:
We write to confirm that there are no plagiarized contents in this paper.

………………………….
Signature of the Group Leader (On behalf of the group members)
To be completed by the instructor

Marks Obtained

Signature of Instructor
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“The Effect of Service Quality

and Customer Satisfaction
on Customer Loyalty”

Shrabony Borna, Tahrima Tarannum &Toufic Anam

Department of Marketing
University of Dhaka
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Table of Content
1. Executive Summary……………………………………………………………………..5
2. Introduction……………………………………………………………………………...5
A. Study Background……………………………………………………………………5
B. Statement of Problem………………………………………………………………...6
C. Statement of Hypothesis……………………………………………………………...6
3. Literature Review………………………………………………………………………..7
A. Service Quality……………………………………………………………………….7
B. The Concept of Customer Satisfaction……………………………………………….9
C. Components and Requirements of Customer Satisfaction…………………………...9
D. Customer Loyalty…………………………………………………………………….9
E. Relationship between Service Quality and Customer Loyalty……………………....10
F. Relationship between Customer Satisfaction and Customer Loyalty………………..10
G. Relationship between Service Quality, Customer
Satisfaction and Customer Loyalty………………………………………………….11
H. Empirical Review……………………………………………………………………11
4. Methodology……………………………………………………………………………11
A. Research Design……………………………………………………………………..11
B. Population of the Study………………………………………………………………12
C. Sampling Technique and Sample Size…………………………………………...…..12
D. Data Collection Instrument…………………………………………………………..12
E. Distribution of the Questionnaire………………………………………………...…..12
F. Data Analysis……………………………………………………………………..…..12
G. Validity and Reliability………………………………………………………………13
H. Ethical Consideration…………………………………………………………...……13
I. Proposed Conceptual Framework……………………………...……………………..13
5. Results and Discussion…………………………………………………………………..14
A. Background Characteristics of Respondents………..………………………………..14
B. Reliability Statistics…………………………………………………………………..14
C. Pearson’s Correlation Analysis………………………………………………...….….15
D. Linear Regression Analysis…………………………………………………….…….17
1. Model Summary…………………………………………………………….……...17
2. ANOVA…………………………………………………………………………….17
6. Conclusion and Recommendation……………………………………………………….19
A. Conclusion…………………………………………………………………...………..19
B. Recommendation…………………………………………………………..………….19
References……………………………….…………………………………………………20
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List of Tables, Figures

Figure 1 (Service Quality Model)…………………………………………..……………8

Figure 2 (Conceptual Framework)……………………………………………...………..13
Table 1 (Service Quality Dimensions)……………………………………..………….…9
Table 2 (Demographic Analysis of Respondents)………………………………………..14
Table 3 (Reliability Statistics)……………………………………………………………15

Table 4 (Pearson’s Correlation between Service Quality and Customer

Loyalty)…………………………………………………………………………….……..15
Table 5 (Pearson’s Correlation between Customer Satisfaction and Customer
Loyalty)……………………………………………………………………………….…..16

Table 6 (Pearson’s Correlation between Service Quality, Customer

Satisfaction and Customer Loyalty) ………………………..……………………….……16
Table 7 (Model Summary)………………………….……………………………….……17
Table 8 (ANOVA)…………………………………...……………………………..……..17
Table 9 (Coefficients)……………………………………………………………..………19
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Executive Summary:
The purpose of the research was to investigate the effects of service quality and customer
satisfaction on customers’ loyalty. Descriptive design was used to investigate the association
between service quality, customer satisfaction (Independent Variable) and customers’ loyalty
(Dependent Variable).Survey was conducted using Google form for data collection from 320
students of different institution who are also customers. Data from survey was analyzed with the
use of SPSS. The findings showed a significant positive relationship between service quality and
customer loyalty. The research also find a significant positive relationship between customer
satisfaction and customer loyalty. It was recommended that all the service firms should be thrived
to continue the delivery of quality service to ensure loyalty. This can be done by maintaining
consistent quality service performance. Also it is recommended that the service provider firms
should continue to endeavor to meet customer’s expectation as it engenders loyalty of customers.
Periodic research is important to help identify emerging need of customers to enhance the customer
loyalty.

Index terms: Service Quality, Customer Satisfaction, Customers’ Loyalty, Service

Organizations

Introduction:
A. Study Background:
The heightened competition coupled with the persistent evolution in today’s business environment
has given service providers the cause to focus on offering quality service in order to satisfy
customers, and to induce loyalty. Wilson & Campbell and Ryall & Kruithof have defined quality
as “meeting customer expectations”. Zeithaml et al. defined service as “deeds, performances and
processes provided or co-produced by one entity or person for and with another entity or person”.
According to Hoffman & Bateson, service quality is the customer’s perception of the general
service performance of a company in a long-term setting. Also, Seth et al. view service quality as
“the ability to match expected service with perceived service to achieve customer satisfaction”.
Given the rise in the service economy, the success of service providers, to a large extent, depends
on their ability to provide customer-centered services. Thus, service quality has become significant
for the survival and sustainability of organizations in the face of vehement competition. In support
of Khan & Fash, Sureshchandar et al. posits that good service quality does not only result in
customer satisfaction but can also aid organizations to gain a successful competitive edge over
competitors. Hansemark & Albinsson and Kotler defined satisfaction “as an overall customer
attitude or behaviour towards a service provider, or an emotional reaction towards the difference
between what customers expect and what they receive, regarding the fulfillment of some desires,
needs or goals. Liu & Khalifa link service quality to organizations’ profitability, costs, repeat
purchase and customer satisfaction. Brophy et al. intimated that since consumers’ needs/wants and
expectations regarding their purchasing experiences keep evolving, service quality and customer
satisfaction must be considered indispensable in the service economy. Customer satisfaction has
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been defined as “the result of customers’ comparison of perceived quality and actual service
performance”. Johanson & Ström explained customer satisfaction as “a state of mind that a
customer has about a company when their expectations have been met or exceeded over the
lifetime of the product or service. In enumerating the benefits of Customer satisfaction, Zeithaml
et al. posited that customer satisfaction information can help organizations to evaluate their ability
in meeting customers’ needs and expectations effectively. Zairi is also of the view that attaining
customer satisfaction induces repurchase and customer loyalty. Hussain et al. equally explained in
their study that loyal consumers tend to spread a positive word-of-mouth, as well as frequently buy
new products that the organization produces, which are both positive consequences for the
organization. In the light of the aforementioned the firms providing service have sought to offer
service quality and customer satisfaction services to customers to customers to effectuate loyalty
service, dissatisfied customers might tell average 10 people about the organization an against 5
people by satisfied customers. It costs five times to attract a new customer than to maintain a
current customer.

This research therefore seeks to examine the effects of service quality and customer satisfaction
on customer loyalty.

B. Statement of Problem:

The service industry in Bangladesh is a thriving one. This industry in facing fierce competition, so
offering good quality service and customer satisfaction has been emphasized as a strategic
marketing tool by the service firm to induce customer loyalty. To the best knowledge of
researchers, this studies had been carried out in term of all the service sectors all over the world.
This study will suggest the scenario of service quality, customer satisfaction and customs loyalty
among the university going students mostly.

C. Statement of Hypothesis:

The following null hypothesis have been formulated:

1. Service quality will not have a positive relationship with customers’ loyalty.

2. Customer satisfaction will not have a significant positive relationship with customers’ loyalty.

3. Service quality and customer satisfaction will not have a significant positive relationship with
customers’ loyalty.
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Literature Review:
A. Service Quality:
According to Wisniewski, service quality has aroused considerable interest and debate in the
research literature because of the lack of general consensus regarding not only its definition but
measurement as well. It is interesting to note the existence of several definitions on the subject.
For instance, Parasuraman et al. defined service quality as “the overall evaluation of a specific
service firm that results from comparing that firm’s performance with the customer’s general
expectations of how firms in that industry should perform. Nitecki & Hernon defined service
quality in terms of “meeting or exceeding customer expectations, or as the difference between
customer perceptions and expectations of service.” Lewis & Mitchell defined service quality as
the extent to which a service meets customers’ needs or expectations. Arnauld et al. also defined
it as “an attitude formed by a long-term and overall evaluation of a performance”. Service quality
has been conceptualized as a function of consumer expectations towards the service situation and
process. Parasuraman et al. developed a conceptual model of service quality where the authors
identified five gaps that could impact consumers’ evaluation of service quality. These five gaps
are presented in Fig. 1

Gap 1: Customers expectation--customer perceptions: This refers to the gap difference between
customers’ expectations and customers’ perceptions. Customers’ expectations are what customers
expects according to available resources which are influenced by cultural background, family
lifestyle, personality, demographics, advertising, experience with similar products, information
available online etc.

Gap 2: The knowledge gap: This gap is the difference between customers’ expectations and
management’s perception. In most cases managers are not aware or have not correctly interpreted
customers’ expectation in relation to organization’s services or products.

Gap 3: The Policy Gap: This gap occurs as a result of the variance between management’s
perception and service quality specification. Such a gap reflects management’s incorrect
translation of the service policy into rules and guidelines for employees.
Gap 4: The Delivery Gap: This gap refers to the difference between service quality specification
and service delivery. Organizations with a delivery gap may specify the service required to support
consumers but have subsequently failed to train their employees and also not formulating good
processes and guidelines for implementation.

Gap 5: The Communication Gap: This gap is the variance between service delivery and external
communications. In some cases, the gap occurs when the promises made by organizations through
promotions do not match the actual service delivery.
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Words of mouth Past

Personal Needs
communication Experience

Expected
Service

Customer
Gap
Perceived
Service

CUSTOMER

MARKETER

Gap 1
Service Delivery External
Gap 4 Communication

Gap 3

Translation of perception into

service quality specification

Gap 2

Management perceptions
of customers’ expectation

Fig. 1: Service Quality Model

The authors also defined 10 service gap dimensions such as: tangibility, reliability, responsiveness,
competence, courtesy, credibility, security, communication, understanding and knowing the
customers. However, in 1988, these ten dimensions were broken down into five. These five
dimensions are presented in Table 1.
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TABLE 1: SERVICE QUALITY DIMENSIONS

Tangibles These include the appearance of the employees, physical
facilities offered, and equipment which form part of service
experience.
Reliability The way service being delivered, that is, the ability to deliver the
promised service precisely and consistently.
Responsiveness Willingness to help customers, respond to their queries, and also
to provide rapid service to them.
Assurance Understanding and courtesy of staffs and their capability to
inspire trust and confidence.
Empathy Helpful care about the customer’s requirements and the firm
provides individualized attention to its customers with
compassion.

B. The Concept of Customer Satisfaction

According to Hill et al. the concept of customer satisfaction has been in existence for a very long
time probably spanning over 200 years and its relevance has continued to receive immense
attention especially in the 21st century. Ofosu-Boateng & Samuel Dwamena attributed this to the
turbulent nature of the business environment which has made it near impossible for organizations
to survive without placing the customer at the center of their operations. Kaura et al. defined
customer satisfaction as “the physiological state of emotion associated with the conformity or
nonconformity of a consumer's perceived quality of service during and after service experience”.
Homburg & Giering posit that a satisfied customer often purchases more products/services on a
regular basis which can influence loyalty in the long run.

C. Components and Requirements of Customer Satisfaction

According to McColl-Kennedy & Schneider, the concept of customer satisfaction is composed of
several components from distinct sources. McColl-Kennedy & Schneider posited that customer
satisfaction starts with clear and operational definitions from both the customer and the
organization and that, understanding the motivations, expectations, and desires of both gives a
foundation to how best it is to assist the customer. This can as a matter of fact provide information
on making improvements in the nature of service delivery. Naylor & Greco call this as “the heart
of research into customer satisfaction”. The importance of clearly defining the key concepts and
elements of satisfaction provide a template by which information can be assembled about what is,
and what is not working.

D. Customer Loyalty
Customer loyalty has become a significant choice for organizations to survive the strenuous
competition in the business environment. It is about how organizations create and retain a
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relationship with their customers to enhance repeat purchases. Kim et al. defined customer loyalty
as “a combination of customers’ favorable attitude and the behavior or repurchases”. Customer
loyalty refers to a psychological tendency of customers to trust in the product/service and brand of
organizations and the repeat purchase after customer satisfaction. Gerpott et al. also defined it as
“customers’ repeated behavior to transact business with an organization or purchase the same
brand repeatedly” and according to Bansal & Gupta, customer loyalty has become indispensable
for sustainable competitive advantage. Generally, it is believed that loyal customers rarely respond
to overtures from competitors. At the very least, loyal customers will help consolidate existing
market, reduce marketing costs, enhance the core competitiveness and improve the long-term
business performance.

E. Relationship between Service Quality and Customer Loyalty

Service quality has been conceptualized as a function of consumer expectations and performance.
It measures how well the service level delivered meets customers’ expectations on a consistent
basis. Service quality is considered very important because it can lead to higher customer
satisfaction, profitability, cost reduction, customer loyalty and retention. This assertion is
supported by Zeithaml who explained that service quality creates an essential ingredient for
establishing and maintaining loyal and profitable customer base. Also, the study of Kumar et al.
revealed that a high quality of service will result in a high customer loyalty. Wong & Sohal in their
study found out that service quality has strong and significant relationship with customer loyalty.
However, in the study of Aydin & Ozer, the researchers found out that service quality is necessary
but insufficient to induce customer loyalty. Additionally, the study of Wong & Sohal revealed a
positive association between service quality and customer loyalty.

F. Relationship between Customer Satisfaction and Customer Loyalty

Customer satisfaction is the result of consumers’ expression of contentment with the general
experience of a purchase, which includes the service quality among other aspects of the purchasing
experience. Ciavolino & Dahlgaard defined customer satisfaction as “the overall evaluation of the
service performances or utilization”. Namkung views it as “the customers’ overall evaluation of
their purchase experience of a product or service. Customer satisfaction has been recognized as an
important factor to influence customer referrals and customer loyalty. In buttressing this, Shafei &
Tabaa is of the view that customer satisfaction does not only influence customer referrals and
repeat purchases but also impact positively on financial position of organizations. A study
conducted by Ofosu-Boateng & Dwamena Agyei found a strong positive relationship between
customer satisfaction and customer loyalty in the Ghanaian banking industry. However, the study
of Kwak et al. revealed that customer satisfaction does not have a direct inducement on customer
loyalty. Also, the study of Bowen & Chen argued that the customer satisfaction and loyalty
relationship becomes significant only when customers become extremely satisfied.
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G. Relationship between Service Quality, Customer Satisfaction and Customer Loyalty

The importance of service quality, customer satisfaction and customer loyalty are replete need for
organizations to understand them have become imperative for sustainable competitive advantage
due to the surging competition in the business environment. In support of this, Chingang Nde et
al. intimated that service quality and customer satisfaction has become important concepts which
organization need to understand in order to remain competitive in business. Service quality is thus
seen as an essential sign of customer satisfaction which in turn induces customer loyalty.
According to Mcdogall & Levesque and Negi, service quality leads to satisfaction which is a
potential tool to influence customer loyalty in the long run. A study conducted by Mahamad &
Ramayah showed a positive and meaningful relationship among all the service quality dimensions
with satisfaction and loyalty. Also, the findings of Gray & Boshoff revealed that the service quality
dimensions empathy and assurance impact positively on both customer loyalty and customer
satisfaction.

H. Empirical Review
Hennayake conducted a study on the impact of service quality on customer satisfaction of public
sector commercial banks in Sri Lanka. The study found a significant relationship between service
quality and customer satisfaction. Also, Naderian & Baharun found positive relationship between
service quality and loyalty in the hospitality industry in Malaysia. Ofosu-Boateng & Dwamena
Agyei carried out a study on effects of customer satisfaction and marketing communication mix
on customers’ loyalty in the Ghanaian banking industry. The study revealed a strong positive
relationship between customer satisfaction and customer loyalty. The study of Pereira et al.
revealed a positive and significant effect towards customer satisfaction and loyalty. Baker &
Crompton reported a positive relation between service quality and willingness to pay higher prices
and to customer loyalty.

Methodology:
A. Research Design
Research design can be thought of as the structure of the research. It is the glue that holds all the
elements of the study. This study is descriptive and cross-sectional in nature. Descriptive design
allows a researcher to conduct interviews or administer questionnaire to a sample of individuals or
respondents. Also, cross-sectional surveys make it possible for a group of respondents to be asked
a set of questions. In this research, questionnaire was administered to respondents through Google
form making the chosen research design appropriate for the study.
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B. Population of the Study

According to Opoku, a research population is generally a large collection of individuals or
objects that is the main focus of a scientific query. Castilo defines it as “the universal set of all
the existing people, units, items or events that contain characteristics of interest as well as all the
set of possible data values for a subject under study”. The population of the study comprises all
customers who are students from different institutions.

C. Sampling Technique and Sample Size

Sampling Technique
According to Panneerselvam, sampling technique is the means of ascertaining or selecting a unit
from a group of population of a study by way of assembling data collection about their individual
characteristics. There are two broad types of sampling thus, probability and non-probability
sampling. In this study, the non-probability sampling particularly convenience sampling technique
was used.

Sample Size
Since it was a questionnaire to all the students of different institutions, a sample was drawn to
make inferences about the entire population. In this regard, a sample size of 320 was selected to
represent the entire population of the study

D. Data Collection Instrument

The study used online survey to solicit data. Questionnaire was the main instruments for data
collection. According to Panneerselvam, a questionnaire involves a set of well-formulated
questions which helped to probe and obtained response from the respondents. Therefore,
questionnaire using Google form was administered to solicit responses to achieve the objective of
the study.
E. Distribution of the Questionnaire
The administering of questionnaire hadn’t taken longer because of being an online survey.
Approximately 7 days was used to administer the questionnaire and getting all data. Each
respondent spent about a minutes on average in answering the questionnaire.

F. Data Analysis
The main instrument for data analysis was Statistical Package for the Social Sciences (SPSS)
version 20. A Cronbach’s alpha (α) coefficient analysis was used to ascertain the internal
consistency of the responses solicited. The Pearson’s correlation was employed to investigate the
strength of relationship between the independent variables (service quality, customer satisfaction,
service quality and customer satisfaction) and the dependent variable (customer loyalty). Also, the
linear regression was run to determine how the increase/decrease of the independent variable
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affects the dependent variable percentage wise. For easy reading, the findings are presented in
tables with accompanied succinct commentary.

G. Validity and Reliability

Saunder et al. defined validity as “the extent to which data collection methods accurately measures
what they were intended to measure”. To ensure validity, the questionnaire was pre-tested using
respondents with similar characteristics of the study. Panneerselvam, defines pre-testing of
questionnaires as a “means of obtaining information to improve its content, format and sequence.
Reliability on the other hand examines the extent to which a scale produces consistent results if
repeated measurements are made. Morse et al. referred to it as “a precondition for validity”. To
ascertain the internal consistency of the results received from respondents, the Cronbach’s alpha
coefficient analysis was employed.

H. Ethical Consideration
The main ethical concerns regarding this study were consent and anonymity. Kök & Fisher
regarded informed consent as a key issue in research ethics. Therefore full consent of participants
was sought before the commencement of the study. Also, anonymity of participants was ensured.

I. Proposed Conceptual Framework

In order to test the stated hypotheses i.e. the relationship between service quality, customer
satisfaction, service quality and customer satisfaction (independent variables) and customer
loyalty (dependent variable), the study developed a construct as shown in Fig. 2.

Service Quality

Customer Satisfaction Customer Loyalty

Service Quality &

Customer satisfaction

Figure 2: Conceptual Framework

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RESULTS AND DISCUSSION

A. Background Characteristics of Respondents

The demographic analysis of gender was sought. Out of the 320 population, 150 (46.9%) were
female whilst 170 (53.1%) were male. The statistics demonstrates that male customers dominate
the female customers in the selected sample. The results of the study showed the dominance of
age groups 22-24 (80%) or 256 in number and in age group 25-27 the number was 64 (20%). The
findings showed that customers with certificates of bachelor were 288 (90%) and master’s degree
were 32 (10%). The results are presented in Table 2.

TABLE 2: DEMOGRAPHIC ANALYSIS OF RESPONDENTS

Characteristics Frequency Percent %
Gender (N=320)
Female 150 46.9
Male 170 53.1
Age in years (N=320)
22-24 256 80
25-27 64 20
Educational Background (N=320)
Bachelor’s degree 288 90
Master’s degree 32 10

B. Reliability Statistics
The reliability of a measure shows the degree to which the measure is without bias (error free) and
hence offers consistent measurement across time and across different items in the instrument.
According to Sekaran, a measure with reliability less than 0.6 is considered poor, it should be at
least 0.70 or above. In this study, the Cronbach’s Alpha (α) test carried out on the responses
received recorded a higher internal consistency (0.886) which is higher and above 0.70 and
therefore considered valid. The result is presented in Table 3.
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TABLE 3: RELIABILITY STATISTICS

Cronbach’s Alpha (α) Number of Items

0.876 3
SOURCE: Google form survey, March, 2022

C. Pearson’s Correlation Analysis

The correlation analysis shows the relationship between the independent variable (service quality)
and the dependent variable (customer loyalty). The correlation between the two variables shows
r=0.523 and p=0.0001. The strength of the relationship can be said to be positive in that a unit
increase in service quality will result in 0.523 increases of customer loyalty. Table 4 presents the
result.

TABLE 4: PEARSON’S CORRELATION BETWEEN SERVICE QUALITY

AND CUSTOMER LOYALTY

CL SQ
Customer Loyalty Pearson Correlation 1 .523**
Sig. (2 tailed) .0001
N 320 320
Service Quality Pearson Correlation .523** 1
Sig. (2 tailed) .0001
N 320 320
**Correlation is significant at the 0.01 level (2 tailed)
***CL donates Customer Loyalty whist SQ donates Service Quality
SOURCE: Google Form Survey, March, 2022

The statistics shows the strength of the relationship between the independent variable (customer
satisfaction) and the dependent variable (customer loyalty). The strength between the two variables
is shown to be positive r=0.523 and p=0.0001. The findings imply that a unit increase in customer
satisfaction will result in .426 increases in customer loyalty. Table 5 presents the results.
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TABLE 5: PEARSON’S CORRELATION BETWEEN CUSTOMER

SATISFACTION AND CUSTOMER LOYALTY

CL CS
Customer Loyalty Pearson Correlation 1 .426**
Sig. (2 tailed) .0001
N 320 320
Service Satisfaction Pearson Correlation .426** 1
Sig. (2 tailed) .0001
N 320 320
**Correlation is significant at the 0.01 level (2 tailed)
*** CL donates Customer Loyalty whist CS donates Customer Satisfaction.
Source: Google form survey, March, 2022

The findings show the strength of the relationship between the independent variables (service
quality, customer satisfaction and the dependent variable (customer loyalty). The results
demonstrate a positive relationship between the variable as shown r=0.684 and p=0.0001. This
implies that a unit increase in both service quality and customer satisfaction will result in .684
increases in customer loyalty. Table 6 presents the results.

TABLE 6: PEARSON’S CORRELATION BETWEEN SERVICE QUALITY,

CUSTOMER SATISFACTION AND CUSTOMER LOYALTY

CL SQ and CS
Customer Loyalty Pearson Correlation 1 .684**
Sig. (2 tailed) .0001
N 320 320
Service Satisfaction Pearson Correlation .684** 1
service quality and Sig. (2 tailed) .0001
N 320 320
**Correlation is significant at the 0.01 level (2 tailed)
*** CL donates Customer Loyalty whist SQ donates Service Quality and CS donates Customer
Satisfaction.
Source: Google form survey, March, 2022
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D. Linear Regression Analysis

1. Model Summary
The entire summary of findings with the use of regression analysis was determined where R
square shows the variation in the independent variables (service quality, customer satisfaction
and service quality and customer satisfaction) and the dependent variable (customer loyalty). The
R square value of .622 implies 62.2% influences of the independent variables (service quality,
customer satisfaction and service quality and customer satisfaction) on the dependent variable
(customer loyalty). The result is presented in Table 7.
TABLE 7: MODEL SUMMARY
Model R R Square Adjusted R Std. Error
Square of the Estimate
1 .568 .622 .484 .74294
a. Predictors: (Constant), Service Quality Customer Satisfaction and Service Quality and
Customer Satisfaction.
b. Dependent Variable: Customer Loyalty.

2. ANOVA
The acceptance or otherwise of the level of significance was determined by the use ANOVA. The
findings demonstrate a significant level of 0.000a which obviously is less than .05 indicating
acceptance and demonstrates a strong inducement of service quality, customer satisfaction and
service quality and customer satisfaction on customer loyalty. Table 8 presents results.

TABLE 8: ANOVA
Model Sum of df Mean F Sig.
Squares Square
Regression 62.426 2 18.892 44.270 .000a
Residuals 14.772 824 .684
Total 77.198 826
a. Predictors: (Constant), Service Quality Customer Satisfaction and Service Quality and
Customer Satisfaction.
b. Dependent Variable: Customer Loyalty.
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Hypothesis 1: Service quality will not have a significant positive relationship with customer
loyalty.
The findings show a positive relationship between the independent variable (service quality) and
the dependent variable (customer loyalty) with beta value of .524. The .524 beta value which is
equal to (52.4%) depicts an increase in customer loyalty which is influenced by service quality.
The relationship between the two variables is said to be significantly positive therefore, the null
hypothesis of the study H0: service quality will not have a positive relationship with customer
loyalty was rejected whist we conclude that a significant positive relationship exists between
service quality and customer loyalty. The result of the study is consistent with the work of Liat et
al. [68] who found out that service quality has a significant and positive direct relationship with
customer loyalty. It also in consonance with the study of Allan who found out that service quality
positively affects loyalty. Table 9 presents the results.

Hypothesis 2: Customer satisfaction will not have a significant positive relationship with customer
loyalty.
The results obtained from the statistics demonstrate a significant positive relationship between
Customer satisfaction (independent variable) and customer loyalty (dependent variable). The
findings revealed a beta value of .475 implying that (47.5%) increases in customer loyalty is as a
result of customer satisfaction. Therefore, the null hypothesis of the study H0: customer
satisfaction will not have a significant positive relationship with customer loyalty was rejected
whilst we conclude that there is a significant positive relationship between customer satisfaction
and customer loyalty The findings of the study support the work of Liu et al. whose study revealed
a strong correlation between customer satisfaction and customer loyalty. The result is presented in
table 9.

Hypothesis 3: Service quality and customer satisfaction will not have a significant positive
relationship with customer loyalty.
The results obtained from the regression analysis showed significant positive relationship between
service quality and customer satisfaction and customer loyalty. This is evident in the beta value of
.689. The .689 beta value (68.9%) implies an increase in customer loyalty which occurred is as a
result of both service quality and customer satisfaction. Therefore, the null hypothesis of the study
H0: service quality and customer satisfaction will not have a significant positive relationship with
customer loyalty was rejected whist we conclude that both service quality and customer
satisfaction have a significant positive relationship with customer loyalty. The findings of the study
corroborate the study of Joudeh & Dandis in Amman, Jordan. Table 9 presents the results.
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TABLE 9: COEFFICIENTS
Model Unsolicited Coefficients Standardized T Stg.
B Std. Error Coefficients Beta
Constant .482 .421 .686 .525
Service Quality .634 .382 .524 22.14 .001
Customer
Satisfaction .422 .462 .475 24.20 .025
Service Quality
& Customer
Satisfaction .812 .344 .689 24.12 .000

Dependent Variable: Customer Loyalty

CONCLUSION AND RECOMMENDATIONS

A. Conclusion

The statistics showed a significant positive relationship between service quality and customers’
loyalty. This is demonstrated by the beta value of (52.4%). By implication, the given beta value
implies that service quality has a significant of 52.4% influence on customers’ loyalty whist the
remaining which is equal to 47.6% are influenced by other variables.
The findings revealed a significant positive relationship between customer satisfaction and
customers’ loyalty. The beta value of (47.5%) demonstrates this relationship. By implication, the
given beta value shows that customer satisfaction has a significant 47.5% influence on customers’
loyalty whist the remaining which is equal to 52.5% are influenced by other variables.
The results showed that both service quality and customer satisfaction have a significant positive
relationship with customers’ loyalty with a given beta value of (68.9%). The given beta value
implies that both service quality and customer satisfaction have a significant of 68.9% influence
on customers’ loyalty whist the remaining which is equal to 31.1% are influenced by other
variables.

B. Recommendation

It was recommended that the service firms should strive to continue the delivery of quality service
to ensure customers’ loyalty. This can be done by maintaining consistent quality service
 20

performance.
The study recommended that the service firms should continue to endeavor to meet customers’
expectation since it engenders loyalty. Periodic market research is imperative to help identify
emerging needs of customers so as to enhance the loyalty.
Furthermore, it was recommended that both service quality and customer satisfaction must not be
toyed given that the customer has become sophisticated with continuous evolving needs.

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