Wendy Mbatha, Thuthukile Mbokazi, Aaron Koopman, Priya Ramgovind
Abstract
The South African retail banking sector comprises 81 local and foreign-owned banking brands. Customers are increasingly demonstrating their preference for banking with more than one bank, making them less brand loyal. Due to the increasingly competitive retail banking sector, marketers are using loyalty programmes as part of their marketing strategy to retain existing customers. Based on the extent of resources required to develop these programmes, understanding its efficacy is paramount. This quantitative study collected data from 172 respondents through an online survey. The data was analysed using SPSS, and the hypotheses were tested using structured equation modelling (SEM). The study’s findings support seven of the eight stated hypotheses. Moreover, mediation tests were conducted to determine the mediation effect of satisfaction and trust. The results indicate that trust fully mediates the relationship between utilitarian benefits and loyalty, and symbolic benefits and loyalty. It also indicates that satisfaction fully mediates the relationship between utilitarian benefits and loyalty, and hedonic benefits and loyalty. This study contributes to the limited body of knowledge about loyalty programmes in the South African retail banking sector. Its strong practical contribution will be beneficial to marketing professionals in the banking industry, policymakers, investors and analysts.