Building Customer Loyalty among SMEs in Uganda: The Role of Customer Satisfaction, Trust, and Commitment

In the marketing arena, the last two decades have been characterised by increased attention towards the subject of Relationship Marketing (RM). Both academics and practitioners today increasingly recognize RM as one of the main marketing strategies that is necessary to keep companies visible and competitive in the eyes of their customers. However, what we observe is that inspite of increased interest in the subject, we know quite little, from an empirical perspective, about the manner in which Small and Medium Enterprises (SMEs), especially those in developing countries, use RM to build and enhance long-term relationships with their customers and thus remain competitive. The purpose of this article is to examine the role of customer satisfaction, trust and commitment in the formation and enhancement of long-term customer relationships among SMEs in the service sector in Uganda and to suggest practical tools that policy makers in developing countries can use to enhance SME competitiveness. We obtained the required data for the study from SME owner-managers, customers, and frontline employees of SMEs operating in two service sectors in Uganda, namely the restaurant sector and the travel-agency sector. Our findings indicate that customer satisfaction, trust and commitment all play a significant role in the building and enhancement of long-term customer relationships among SMEs in Uganda. However, their role varies between different SME sectors. The findings also show that in general, those SMEs whose RM practices customers were more satisfied with had higher levels of customer loyalty compared to those SMEs whose RM practices customers were less satisfied with. This study has increased our awareness about the processes that SMEs in developing countries go through to build customer loyalty and thus long-term competitiveness. In this way, the study has helped to narrow the gap in current literature about the RM practices of SMEs in developing countries.