MBA

Thesis
On
Evaluation Of Perceived Benefits Of Loyalty Program
And Their Influence On Customer Satisfaction In Case
Of Commercial Bank Of Ethiopia
By
ABENET MELKAMU
 
ADVISOR: IDRIS M (ASST. PROF)
1 Addis Ababa, Ethiopia
 Background of the Study
 Loyalty programs as a marketing strategy designed to encourage customers
to continue using the services of a business.
 Loyalty programs have emerged in many organisations and nowadays they
often play an important role in overall marketing strategy.
 The benefits of the loyalty program must have perceived value, because
only the benefits which customers desire might empower the loyalty
program to work
 CBE Star is a loyalty program designed by the Commercial Bank of
Ethiopia (CBE) to reward customers as they use its products and services.
 Customers face the challenge of loyalty program structure, which would
have perceived value. .
The main purpose of this research was to measure the influence of perceived
2benefits of loyalty program on the customer satisfaction in CBE.
 Statement Of The Problem
 The degree of competition in the financial sector matters for efficient production of
financial services, quality of financial products, and degree of innovation in the sector.

 Customer satisfaction is the key factor in determining the success of an organization in

customer relationships; hence it is very important to determine if and to what extent the
perceived benefits of loyalty programs are related to it.

 This, study, therefore, was attempted to fill this research gap by investigating the major
benefits of loyalty program perceived by customers and scope of the program provided by
Ethiopian banking through CBE.
 There was no previous empirical research is undertaken on the perceived benefits of loyalty
program and their influence on customer satisfaction in Commercial Bank of Ethiopia.
Thus, I wants to know to generate empirical evidences that may bridge the
3 gap and provide some insight in the area .
 Objectives Of The Study

General objective Specific objective

 The general To examine the association between
objective of the customer satisfaction and
study was to 1.monetary savings benefits of loyalty
evaluate of program
perceived benefits 2. convenience benefits of loyalty program
of loyalty program 3. exploration benefits of loyalty program
and their influence
4. entertainment benefits of loyalty program
on customer
satisfaction in case 5. recognition benefits of loyalty program
of CBE. 6. Social benefits of loyalty program in CBE
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 Research questions
1. What is the association between monetary savings benefits of loyalty
program and customer satisfaction in CBE?
2. What is the association between convenience benefits of loyalty program
and customer satisfaction in CBE?
3. What is the association between exploration benefits of loyalty program
and customer satisfaction in CBE?
4. What is the relationship between entertainment benefits of loyalty program
and customer satisfaction in CBE?
5. What is the relationship between recognition benefits of loyalty program
and customer satisfaction in CBE?
6. What is the association between Social benefits of loyalty program and
customer satisfaction in CBE?
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 Conceptual
Framework

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 3.RESEARCH METHODOLOGY

Research Approach Research Design

 Quantitative research approach  Both Descriptive and Explanatory
which is deductive in nature. research

 DA was used to analyze the primary

 It was emphasizes quantification data about respondents’ demographic
in the collection and analysis of profile.
data.(why)
 EA was also used to test the
hypothesis and analyze the r/ship b/n
the dependent and independent
variables of the study.
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 Population And Sample
 The selection is basically centered on the CBE employees.
the selected eight are districts has a total of 9884 employees
Sample Size
 For the study calculated according to the formula suggested by
Yamane‟s (1967) with 95% confidence and 5% acceptable sampling
error. Among 9884 population; the sample scope was calculated using
the following formula.
 𝒏 =𝑵/𝟏+𝑵(𝒆𝟐 ) =400

 From 80 branches using a method developed by Carvalho (1984).

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 Sampling Technique
 Both Probability and Non-probability sampling technique (Multistage
sampling technique was employed) Were used to select respondents of
the study.
Sampling Unit Sample Size Determination Sampling Techniques
Central region all Eight district - Purposive
Number of sample branches Carvalho (1984) -
Selection of branches from each district - Simple Random sampling
Number of sample branches in each district - Quota Sampling

Number of sample customers 𝒏 =𝑵/𝟏+𝑵(𝒆𝟐 ) -

Selection of respondents from sample - Convenience sampling
branches

Number of sample respondents in each - Quota Sampling

9 branch
 Data Source And Instruments Of Data
Types Collection

 Both primary and secondary

sources of data was used in this  The instrument that will be used
study . for this study will be a close-
ended questionnaire that was
adapted from the review of
 The primary data were collected
related literature .Close-end,
from sample respondents using
mainly Likert-scale.
survey questionnaire .
 Secondary data were also
employed from relevant
literatures.
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 Method Of Data Analysis
 Analyzed through SPSS 25 Version.
 Descriptive analysis- was used to describe the characteristics of the
respondents and demographic comparison.

 Correlation analysis and regression analysis: it was conducted to analyze the

strength and direction of the linear relationship between the variables. Pearson
correlation coefficients had been calculated to determine the relationships
between perceived benefits of loyalty program and their influence on customer
satisfaction in case of CBE.

Reliability
 The researcher tested the result with statistical tool called Cronbach's Alpha.

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 4. RESEARCH RESULT, ANALYSIS
AND DISCUSSION
Response Rate
 A total of 400 questioners were distributed
 360 questionnaires were completed and used in data analysis which represented
90 % of response rate.
Demographic Profile of Respondents
 Majority, 201(55.8%) of the respondents were male and 159(44.2%) of the
respondents are female.
 Majority of respondents’ age group were, the age of 25-35 years (141) which is
about 39.2% and under age of 25years accounts 103(28.6%), 101(28.1%) were
with age group of 35-55years and >55 years 15(4.2%)
 The marital status seeing that 162(45%) of respondents were single, 185 (51.4%)
of them were married 7 (1.9%) were divorced and 6(1.7%) were widow orderly
 The survey demonstrates majority of respondents were first degree graduate
12 constitutes 64.4%.
 Summaries of Major Findings

 The results of the descriptive statistical analysis pointed out that Customer
satisfaction with perceived benefits of loyalty program was mainly determined
by Social Benefit, Recognition Benefit and Exploration Benefit with the mean
value of 3.95, 3.87 and 3.79 followed by Monetary Savings Benefit,
Convenience Benefit and Entertainment Benefit with the grand mean value of
3.144, 3.138, and3.03 consecutively.
 The correlation matrix indicates that the six independent variables were
positively and moderately correlated with consumers bank selection by scoring
a Pearson Correlation Coefficient “R-value”
of .361**, .304**, .716**, .281**, .611** and .706**respectively with 95%
confidence interval & at (p>0.05) 2tailed.
 From the Rsquare value it is demonstrated that 65.6% of variation in perceived
benefits of loyalty program is explained by the independent variables.
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 CONCLUSIONS
 It is revealed that there  Exploration benefit and perceived benefits of loyalty program (r
is strong positive and = .716**, p < 0.05) had strong correlation
moderate significant  Social benefit and perceived benefits of loyalty program (r
relationship or = .706**, P < 0.05) had strong correlation
correlation between  Recognition benefit and perceived benefits of loyalty program (r
customer satisfaction .611**, P < 0.05) had strong correlation
with perceived benefits  Monetary savings benefit and perceived benefits of loyalty
program (r =.361**, , p<0.05) had moderate correlation
of loyalty program and
the selected
 Convenience benefit and perceived benefits of loyalty program
(r =.304**, p<0.05) had moderate correlation &
explanatory variables
 entertainment benefit and perceived benefits of loyalty
 Supported by previous program (r =. .281**, p<0.05) had weak correlation value but it
researches. has a positive correlation

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 RECOMMENDATIONS
 The banks should work towards providing further monetary incentives features into its
loyalty program CBE STAR  
 Convenience benefits; such as making joining a (CBE STAR) CBE loyalty program easier,
more convenient and redeeming awards easily does influence customer satisfaction with
the loyalty program. Accordingly the bank had to boost the Convenience of the program.
 The bank should realize Exploration benefits through offering opportunities to try new
products, making promotional offers, and organizing competitions where customers are
able to collect and redeem points.
 Commercial bank of Ethiopia should pay attention in improving Entertainment benefits to
get competitive advantage
 CBE should take better care, distinguish and treat with more respect its premium customers
than other walking customers in order to maintain and boost better relationship with them.
 the bank should focus on Social benefits arena to experience closeness of the brand to its
customers
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