Customer Satisfaction and Customer Loyalty: A Causal Model

This study examined the major factors that determine customer loyalty. Specifically, the study established the following: (1) association between the customer satisfaction and product availability and location; (2) association between customer loyalty and product availability and location; and (3) a causal model explaining customer loyalty. This descriptive-correlational study used a survey questionnaire distributed to 402 respondents chosen randomly. Descriptive statistics, Pearson r, regression analysis, and path analysis through Structural Equation Modeling using AMOS 4.0 of SPSS version 20 were used for the statistical processing of the data. The causal model generated in this study revealed that customer loyalty was determined by customer satisfaction, location, and product availability. Customer loyalty was influenced by customer satisfaction brought about by customer service and product quality, location, and product availability. This causal model explains what grocery retail business owners can do to engender customer loyalty.

Keywords: Customer satisfaction, loyalty, micro-enterprise, level of capitalization