Examining the Impact of Reciprocity on Customer Loyalty in The Small and Medium Enterprises Sector

Abstract

Small and Medium-sized Enterprises (SMEs) face tough competition in the market; therefore, they need to create and build their loyal customer base for growth and sustainability. The main objective of this study was to assess reciprocity influence on customer loyalty in SMEs in Tanzania. The study used Reciprocity Theory and Behaviourist Theory to assess the influence of reciprocity on customer loyalty in SMEs in Tanzania. Customers from bars, hair salons, and kiosks participated in the survey because these SMEs contribute significantly to the growth of the Tanzanian economy. 288 customers drawn from bars, hair salons, and kiosks in Dodoma Urban City participated in the survey. Convenience sampling was used to obtain the sample size of 300. Regression analysis was employed to test the study hypotheses. The study found that reciprocity is a significant factor influencing customer loyalty. The study therefore concludes that the application of reciprocity improves customer loyalty in SMEs in Tanzania. The study recommends that SMEs wishing to develop customer loyalty should treat customers nicely.