Abstract:
In today’s highly competitive business environment, customer loyalty has become a critical
determinant of organizational performance. This study examines the significant effect of
customer loyalty on organizational performance, focusing on Abay Bank’s branches in Debark
City. The research highlights key dimensions of customer loyalty, including customer retention,
trust, and resistance to switching, and establishes their substantial influence on organizational
performance. A descriptive and explanatory research design is adopted, employing a quantitative
approach to investigate the relationships between these variables. Data is collected from a sample
of 318 customers and selected bank managers through structured questionnaires, and multiple
linear regression analysis confirms that all dimensions of customer loyalty have a significant
positive impact on organizational performance. Based on the findings, the study recommends
that Abay Bank prioritize initiatives that strengthen customer retention by improving service
quality, enhancing trust through transparent communication, and reducing switching behaviors
by offering competitive benefits. These strategies are vital for sustaining and boosting
organizational performance. The insights gained from this research provide practical guidance
for Abay Bank and the broader Ethiopian banking sector, equipping them with actionable
strategies to enhance customer loyalty and thrive in an increasingly competitive market.
