FACTORS AFFECTING CUSTOMERS’ SATISFACTION AND LOYALTY IN SHARIA FINANCING FOR SMALL AND MEDIUM ENTERPRISES

Abstract

This paper aims to investigate the variables that influence satisfaction and loyalty in the SME segment. Specifically, this paper will study the effect of service quality, fairness in financing schemes, and religiosity in Islamic financing services to SME owners as their customers. This study uses a survey method with 127 SME owners as respondents. The questionnaire consisted of 20 questions covering five variables with Likert’s five scale response types. Researcher processed the questionnaire output with the path analysis approach using SPSS software version 24.0. Service quality, fair schemes, and religiosity have a positive and significant effect on customer satisfaction in sharia financing for SMEs both individually and simultaneously. However, only customer satisfaction individually has a positive and significant effect on loyalty. In addition, service quality, fair schemes, religiosity, and satisfaction simultaneously have a significant effect on costumer loyalty. The study contributes to marketing efforts related to building customer satisfaction. This research provides insight into the most significant factors affecting customer satisfaction and loyalty, especially in Islamic Financing for the SME segment. Therefore, the management of Islamic Banks can use this insight to prioritize their customer relationship strategies.