Factors influencing customer loyalty to family businesses in the Eastern Cape, South Africa

In today’s competitive business environment, ensuring customer loyalty and the building and maintaining of relationships with customers is important to all businesses, especially family businesses. In South Africa approximately 80% of all businesses have family ownership involvement and more than 60% of all listed companies on the Johannesburg Stock Exchange (JSE) Ltd are family
businesses. In South Africa. Family businesses are in a unique position to leverage relationship building into a sustainable competitive advantage associated with positive customer referrals, repeat purchases and ultimately, increased profitability. Despite the benefits of building customer relationships, South African businesses are known for poor customer service. Additionally, limited research exists investigating customer loyalty in South African family businesses. Therefore, this paper investigates the factors influencing customer loyalty of family businesses in the Eastern Cape, South African. The sample consisted of customers that purchased a product or service from a family businesses that operate in the boundaries of the Eastern Cape. The statistical analysis was undertaken on 194 usable questionnaires. Factor analysis was undertaken and Cronbach alpha coefficients were calculated to assess the validity and reliability of the measuring instrument. Multiple regression analysis was utilised to investigate the relationships between the independent variables in this study, namely: Trust, Commitment, Two way communication and Conflict handling and the dependent variable Customer loyalty. The empirical findings revealed that Trust, Commitment and Two way communication have a positive significant influence on Customer loyalty. Finally, recommendations based on the findings of the study, are presented to family businesses owners/managers.