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SERVICE QUALITY AND CUSTOMER SATISFACTION AMONG ACCOUNT HOLDERS IN DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES
IN NAIROBI CITY COUNTY, KENYA

BY

EVALIN A. ORUKO
D53/OL/CTY/26227/2015

A RESEARCH PROPOSAL SUBMITTED TO THE SCHOOL OF BUSINESS IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION (MARKETING) OF KENYATTA UNIVERSITY

AUGUST, 2018
DECLARATION
This research proposal is purely my original work and has not been presented for a defense in any other university.

Signature: Date:

Evalin A. Oruko
Reg No: D53/OL/CTY/26227/2015
Department of Business Administration

I confirm that this research proposal was done under my supervision and approve it for consideration.
Signature: Date:

Dr. Samuel Maina (PhD)
Department of Business Administration

DEDICATION
I dedicate this work to my late grandfather Pius Oruko who taught me discipline and hard work in whose footstep I have followed. To my husband Joseph Yatchman, goes special dedication who has continuously given me support in my academic achievements and to my children Owen Welemba and Mayah June who have made me smile inspite of the difficulties I went through in my quest for knowledge. I also appreciate the support that came from my parents Mr. & Mrs. Dedan Ouma and my sister Anastasia. May God bless you.

ACKNOWLEDGEMENT
I sincerely give thanks to God for the support I have received from my academic Supervisor Dr. Samuel Maina, Kenyatta University Library staff, colleagues, KUSCCO, SASRA and all the deposit taking SACCOs in Nairobi City County, Kenya who helped in the contribution of knowledge for the completion of the research proposal. May the Lord richly bless you even as you continue in your service to the people who yearn for knowledge for the development of the co-operative movement in Nairobi City County and the entire nation of Kenya.

TABLE OF CONTENTS
Declaration I
Dedication Ii
Acknowledgement Iii
Table Of Contents Iv
List Of Tables Vi
List Of Figures Vii
Operational Definition Of Terms Viii
Abbreviations And Acronyms X
Abstract Xi
Chapter One: Introduction 1
1.1 Background of the Study 1
1.1.1 Customer Satisfaction 3
1.1.2 Service Quality 4
1.1.3. DT SACCOs in Nairobi City County, Kenya 5
1.2 Statement of the Problem 6
1.3 Research Objectives 8
1.3.1 General Objectives 8
1.3.2 Specific Objectives 8
1.4 Research Hypothesis 9
1.5 Significance of the Study 9
1.6 Scope of the Study 10
1.7 Limitations of the study 10
1.8 Chapter Summary 10
Chapter Two: Literature Review 12
2.1: Introduction 12
2.2 Theoretical Review 12
2.2.1 SERVQUAL Model 12
2.2.2 European Consumer Satisfaction Index (ECSI) 14
2.2.3 Expectancy-Disconfirmation Paradigm 15
2.3 Empirical Review 16
2.3.1 Tangibility and Customer Satisfaction 17
2.3.2 Reliability and Customer Satisfaction 18
2.3.3 Responsiveness and Customer Satisfaction 20
2.3.4 Assurance and Customer Satisfaction 22
2.3.5 Empathy and Customer Satisfaction 24
2.4 Summary of Literature & Research Gaps 26
2.5 Conceptual Framework 32
Chapter Three: Research Methodology 33
3.1 Introduction 33
3.2 Research Design 33
3.3 Target Population 33
3.4 Sampling Frame 34
3.5 Sample Size 35
3.6 Sampling Techniques 35
3.7 Data Collection Procedure 36
3.8 Reliability and Validity 36
3.8.1 Validity 37
3.8.2 Reliability 37
3.9 Data Processing, Analysis & Presentations 38
3.10 Ethical Consideration 38
Appendix I: Letter of Permit 40
Appendix II: Member Questionnaire 41
Appendix III: Research Time Schedule 43
Appendix IV: Research Budget 44
Appendix V: Krejcie and Morgan’s Sample Size Estimation Table 45
References 46

LIST OF TABLES
Table 2.1: Summary of research gaps…………………………………………………………..26
Table 3.1: Sampling frame of DT SACCOs in Nairobi City County……………………………..34

LIST OF FIGURES
Figure 2.1: SERVQUAL model illustrating gaps in service quality 13
Figure 2.2: ECSI Model illustrating the drivers and results of customer satisfaction 5
Figure 2.3: Conceptual framework 32

OPERATIONAL DEFINITION OF TERMS
Service Quality: It is the fitness for use and conformance to requirements.
Customer satisfaction: It is the customers’ perception that compared their pre-purchase expectation with post-purchase perception.
Deposit Taking Sacco: Savings and credit cooperative society that accepts member’s deposits and conduct front office service activities
Savings and credit cooperative society: a private and cooperative financial institution where membership is open and voluntary.
Tangibility: Service quality dimension that measures physical facilities and appearance of personnel.
Reliability: The dimension measures the organization’s ability to perform promised service dependably and accurately.
Responsiveness: This measures the willingness to help customers and provide prompt services
Assurance: The dimension of service quality that measures the knowledge and courtesy of employees and ability to inspire confidence and trust.
Empathy: It measures the caring, individualized attention the firm provides to its customers.

ABBREVIATIONS AND ACRONYMS
KUSCCO : Kenya Union of Savings and Credit Co-operative
SASRA : SACCO Societies Regulatory Authority
ICT : Information Communication Technology
SACCO : Savings and Credit Co-operatives
SERVQUAL : Service Quality
DT : Deposit Taking
FOSA : Front Office Service Activity
ATM : Automated Teller Machine
FDs : Fixed Deposits
SPSS : Statistical Packages for Social Sciences
CBD : Central Business District
NBK : National Bank of Kenya
MBA : Master’s in Business Administration
NACOSTI : National Commission for Science, Technology and Innovation
ECSI : European Consumer Satisfaction Index
EDP : Expectancy Disconfirmation Paradigm
BBK : Barclays Bank of Kenya

ABSTRACT
The main reason why businesses are in operation and thrive is because of the customer. Organizations innovate products and services with an aim of satisfying their target market while also benefiting profitably. They do this through quality provision of products and services to address the needs of the customers. With intense competition, technological changes and market dynamics, organizations need to improve customer satisfaction to avoid losing them to the competitors where DT SACCO industry is not left behind. However, many SACCO members are withdrawing their membership while some opt for alternative banking products. Through improved service quality, DT SACCO industry will be able to acquire and retain more customers for the growth of the business. For this reason, the study seeks to establish the effects of service quality on customer satisfaction among account holders of DT SACCOs in Nairobi City County, Kenya. Theory of expectancy-disconfirmation, SERVQUAL model and European Consumer Satisfaction Index (ECSI) will guide the study. The study will use descriptive study design with cross-sectional approach. The target population will be DT SACCOs based in Nairobi City County generated from SASRA report of 2016 where a sampling frame will be drawn grouped in strata according to their asset base. A census survey will be done for all the 39 DT SACCOs with sample of 384 adopted from Krejcie and Morgan’s Sample Size Estimation Table where the members will be the respondents. Stratified sampling will be done proportionately to the three groups which will then be divided among the number of DT SACCOs within each group. Convenience sampling will then be used to identify respondents in the DT SACCO banking hall assisted by two research assistants. Demographic data will then be analyzed descriptively. Karl Pearson Correlation will be used to determine the relationship between variables and multi-variate regression will be used to establish cause and effect relationship between the variables. MS. Excel and SPSS will be used in computation. Report and presentation will be done through charts, graphs and tables.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Service quality and customer satisfaction are different concepts even though they are closely related. Tracy (2014), defines quality as the promise you make and the promise you keep. Crosby (1979) notes that service quality is conformance to requirements. It focuses on perception and expectation of a product or service that is based on customer experience or information about a product in the pre-purchase situation which is evaluated in the post-purchase to find out if the product has met the expectations given the cost of acquiring the product. If the expectations are high and perception low then it means the service quality did not meet the requirements.
On the other hand, customer satisfaction comes during the post-purchase of a given product or service when a customer evaluates the gain. When the gain is high due to high perception satisfaction occurs.
Customer satisfaction is defined as a consumer’s post-purchase evaluation and affective response to overall product or service experience, Lovelock and Wirtz (2007). Satisfaction varies from one consumer to another according to different expectations and perceptions of a given brand. Macharia (2014), posits that there is a clear link between service quality and customer satisfaction as when the customer is satisfied, he becomes happy and is able to do more business while providing referrals. Macharia suggests that timely service to the customers will go a long way creating a strong and positive impact on customer satisfaction. Owino (2013), observes a strong relationship between service quality of human elements and non -human elements with customer satisfaction in a university set up where reliability and responsiveness are strong links to customer satisfaction. Recommendations made by Oanda (2015), to the management aims at segmentation to improve customer satisfaction to specific customer groups. This is because when segmentation is done, resources are channeled efficiently and effectively to the target group that provides high satisfaction to the identified needs.
In the financial services, service quality is regarded high as it is a measure of performance and competitiveness. Many financial institutions are focusing on feedback collections in various platforms e.g. online surveys, recommendations, education forums and social media where customers are engaged in active discussions. The Deposit Taking Savings and Credit Cooperative Societies (DT-SACCOs) are continuously carrying out member education, delegate and staff training, adoption of technology, innovative and diversified products and services with an aim of improving service quality for more member satisfaction.
Customer is always right, selfish, ruthless and disloyal, Tracy (2014), making it very challenging for DT SACCOs to retain as they will always withdraw membership whenever they feel they are not being satisfied. The ability of the DT SACCOs to appeal to member desires and satisfy their wants and needs will determine its success. Masese (2018), Angore (2015), Sichangi (2017) and Ondiek (2017) observe that DT SACCOs are now restructuring through their strategic plans where they are involved in activities such as; land investment, customer service charter development, insurance agencies services, microfinance, employee training, diversified products, automated service delivery, creation of ICT platforms and member education forums. These aim to provide guidance on financial facilities that enable members to accumulate finances, plan investment and access credit to improve their livelihoods thus be more satisfied.
Due to long term contracts that DT SACCOs have with their members as a result of credit facilities, it is important to provide satisfaction during the term of the contract to provide more gain to DT SACCOs through retention, referrals, repurchase and re-instatement. Kermally (2003) suggests that all the results are on the outside where a customer converts the costs and efforts of the business into revenues and profits through his willingness to exchange his purchasing power for the products and services of the business. Sharma (2016) states that customer’s judge service quality as low or high depending with service performance towards their expectation which results in dissatisfaction or satisfaction. The extent of satisfaction is measured though SERVQUAL model in its five service quality dimensions developed by Parasuraman et al (1988).
1.1.1 Customer Satisfaction
Customer satisfaction is a measure of extent the existing organization is fulfilling the general expectations of a customer, Laxmi et al (2017). Kotler and Amstrong (1999) in Mageh and Ragavan (2013), define customer satisfaction as the customers’ perception that compared their pre-purchase expectation with post-purchase perception. Customer satisfaction is the feeling of happiness when service meets standard required. The study will adopt Kotler and Amstrong (1999) customer satisfaction definition linking it with DT SACCO member satisfaction.
Customers perceive service in terms of quality of the service and how satisfied they are overall with their experience which according to Williams (2014), organization should deliver its services and products in a way that allows the customer to access them in the most efficient, fair, cost effective and humanly satisfying and pleasurable manner possible. Lucas (2002), posits that when knowledgeable, capable and enthusiastic employees deliver products and services to customers in a manner that satisfies both identified and unidentified needs, satisfaction occurs. Huang (1998), in Mageh and Ragavan (2013), provides five factors used to evaluate customer satisfaction; product, service, staff, overall performance of products and closeness to expectation. Haaften (2017), states that customer satisfaction is affected by friendly employees who are courteous, knowledgeable and helpful, accuracy of billing, timelines and billing clarity, competitive pricing, good value and quick service.
Organizations that focus on accountability and responsibility towards fulfilling customer needs, will always satisfy the needs of their customers. University of Cambridge (2006), states that there are five basic needs that a customer is looking for to improve satisfaction; friendliness, empathy, fairness, control and information. Customers whose needs are met develop favorable attitude towards certain organizations which drive future behavior. Hill (2007), suggests that highly satisfied customers become loyal by buying more from trusted organizations and also give referrals.
In the retail banking, competitive interest rate and convenience are important determinants of customer satisfaction levels, Levesque and McDougall (1996) in Mageh and Ragavan (2013). It is noted that customer relations, confidentiality, clarification, loan default recoveries are some of the reasons causing dissatisfaction in savings and credit societies, Iruguthu (2014). The study further recommends that DT SACCOs should improve their processes, acquire modern technology and become competitive in the range of delivery channels to increase satisfaction to the members that will result in continued success, increased profits, higher job satisfaction, improved company morale, better team work and market expansion of services.
1.1.2 Service Quality
Quality is the lifeblood that brings increased patronage, competitive advantage and long-term profitability to organizations, Baron (2003). Sharma (2017), adds that as client sensitivity increases, competition expands and intensifies, service quality helps control the competitive position and consequently determines the market share and profits.
The DT SACCO industry is characterized by products of the same features. The only way to remain competitive is through distinctive service quality that will set DT SACCOs apart from their peers. The issue of evaluating how consumers perceive the quality of services and how those service perceptions affect customer satisfaction through consumer behavior and purchase decisions have become important. It is how the DT SACCO welcomes the member on admission, how it will keep its promise on loan provision, how it will recover the loan without making the member default, how it will handle a bereaved member, how it will give returns on deposits and how the staff treats the member and makes him feel special. SACCO Star (2018), report of different DT SACCOs’ performance for year 2017 provides explanations of how the DT SACCOs view service quality in terms of interest on deposit and dividend, absence of loan backlog and innovative products. Pereira (1993), examines service quality as the physical, technical specifications and interpersonal aspects of the service.
Service quality is measured through a SERVQUAL model developed by Parasuraman et al (1988). Gronroos (1984), states that quality of service consists of three key dimensions; functional, technical and image and that quality of service depends on two variables; the expected and perceived service. Through the model, there are five key areas that are used to assess the functional, technical and image of the service being provided by an organization; tangibility, reliability, responsiveness, assurance and empathy.
1.1.3 DT SACCOS in Nairobi City County, Kenya
The modern co-operative concept began in 1844 in Rochdale village, Manchester in England. It has since developed globally as a socio-economic movement with its own distinct identity, history and purpose.
In East Africa, it was introduced by the colonial administration during the first two decades of the 20th century. Their objective was to organize the producers of cash crops to counter trade monopolies held by commodity merchants. In Kenya, co-operative movement was introduced by white settlers in 1908 at Kipkelion- Rift Valley province and followed thereafter by similar groups in Central, Eastern, and Nyanza provinces. After independence, the national governments considered co-operatives as important tools through which rapid rural and community development could be achieved as it benefitted the small farmers and the colonial administration, Minishi (2014).
There are two types of Savings and Credit Cooperatives (SACCOs) in Kenya; financial and non- financial that deal with agricultural related services like marketing of members’ produce and services such as dairy, livestock, coffee, tea, and handicrafts. The financial SACCOs are further grouped into two; non-deposit taking that provide a limited range of savings and credit products and the Deposit Taking (DT) besides the basic savings provide other basic banking services like front office service activity (FOSA) and ATMs.
The DT SACCOs are regulated by the SACCO Society Regulatory Authority (SASRA) doing licensing, regulation and supervision. The DT-SACCOs have continued to play rightful roles of savings mobilization, access to credit facilities and improving financial deepening in the Kenyan economy.
The supervision report by SASRA (2017), provides the industry highlights with a total membership of 3.6 Million in 2016, out of whom about a half-million are reported to have been inactive with a market growth of 15%. The total asset base of the DT-SACCOs grew in 2016 to reach Kshs 393 Billion, as compared to Kshs 342 Billion recorded in 2015 fully funded by members’ deposit which also grew to reach Kshs 272 Billion in 2016 from Kshs 237 Billion recorded in the previous year. There are 424 DT-SACCO branch networks spread across the country, in addition to the 176 head office locations adding up to 600 physical office delivery channels in Kenya. Nairobi County has 40 DT-SACCOs head offices, and 23 different branch networks – making a total of 63 physical delivery channels.
1.2 Statement of the problem
The cooperative industry is growing fast in Kenya indicating the need for more financial solutions from the cooperative movement. The increase in market growth to 15% with a membership of 3.6 million distributed in 600 branch networks nationally indicates a vibrant economy where members have entrusted the DT SACCOs with 272 billion deposits to enable them secure loans at competitive rate.
DT SACCOs are in a financial industry where there are many players and all focus on the same customer. The recent government capping of the interest rate on bank products has made it easy to switch DT SACCO products where members have found alternatives with bank products despite the high switching costs. This is because members are concerned with the effort, speed and the quality they get from the offer which form a bundle of experience to the customers. Iruguthu (2014), examined customer satisfaction in Balozi SACCO-Kenya recommended that employees be more responsive and faster in their service provision as satisfaction was seen to be high when employees are more responsive to member needs. Omollo (2016), provided factors of customer satisfaction in aviation industry with a perfect positive relationship between perceived service quality and customer satisfaction. Ismaila (2017), did a study in Nigeria on interest based and non interest based SACCOs found that interest based SACCO members were not satisfied due to low quality service delivered.
Despite, the DT-SACCO having a regulator and other investments put in place to cater for the growth in membership, there are still public outcry from the members who are seeking refunds of deposit due to dissatisfaction. Some DT SACCOs charge high interest rate on loans while paying low dividends and interest on deposit, high default rate, non-compliance with the regulators requirements leading to de-registration of DT SACCOs which causes delays in refunds or lose of member savings, loan backlog making the members wait for long before maturity of their loan therefore not able to meet the member needs in time and sourcing funds from external sources leading to high cost to the members. SACCO Star (July 2018), notes the existence of high default rate due to lack of monitoring leading to high provision of loans granted. It is evident from SASRA (2017) report that there are over 500,000 in-active accounts out of the 3.6 million members from DT SACCOs. These are members who have withdrawn due to natural and competitive reasons. The regulator has since created a complain portal in its website to help address member complains and has strengthen its supervision.
Quality is one of the management’s top most competitive priorities and a prerequisite for sustenance and growth of firms, Suuroja (2003). This study focuses on the expectancy disconfirmation paradigm where perceived quality is viewed as the result of comparing particular performance with some kind of a standard.
Service quality is viewed as an aggregate of several dimensions. Parasuraman et al (1988, 1991, and 1993) in Suuroja (2003) provides five specific service quality dimensions being tangibles, reliability, responsiveness, assurance and empathy.
These clearly indicate a service quality gap in DT SACCOs leading to high dissatisfaction level. The study therefore seeks to investigate service quality and customer satisfaction among account holders in DT SACCOs in Nairobi City County.
1.3 Research Objectives
1.3.1 General Objectives
The study will seek to investigate the effects of service quality and customer satisfaction among account holders in DT SACCOs.
1.3.2 Specific Objectives
i. To assess the effect of tangibility and customer satisfaction among account holders in DT SACCOs.
ii. To establish the effect of reliability and customer satisfaction among account holders in DT SACCOs.
iii. To establish the effect of responsiveness and customer satisfaction among account holders in DT SACCOs.
iv. To assess the service assurance effects and customer satisfaction among account holders in DT SACCOs.
v. To determine the effect of empathy on customer satisfaction among account holders in DT SACCOs.
1.4 Research Hypothesis
H01: Tangibility does not affect customer satisfaction among account holders in DT SACCOs
H02: Reliability does not affect customer satisfaction among account holders in DT SACCOs
H03: Responsiveness does not affect customer satisfaction among account holders in DT SACCOs
H04: Service assurance does not affect customer satisfaction among account holders in DT SACCOs
H05: Empathy does not affect customer satisfaction among account holders in DT SACCOs
1.5 Significance of the study
The study findings will be of benefit to various stakeholders in the cooperative movement including staff, managers and members. To the management, the study findings will enumerate the service quality dimensions effects on customer satisfaction that will be used by management to improve service provision. It will also help the managers formulate standard operating procedures for service quality to improve customer satisfaction for retention and acquisition purposes.
Policy makers at various levels of government will be furnished with crucial information that leads to formulation of policies, rules and regulations to be pursued so that the interests of the members are enforced through the cooperative principles and customer service policies. The ministry of cooperative and the Sacco Society Regulatory Authority will use the findings to advice the cooperative movement.
The academic and business researchers will be able to borrow from the findings of the research to support their academic work through citations. The theories, models and methodologies will be used by would be researchers to build their cases and also generate new knowledge in the field of marketing. It will also provide an area for further research studies by future researchers.
1.6 Scope of the study
The study will focus on service quality and customer satisfaction among account holders in deposit taking savings and credit cooperative societies in Nairobi City County. The DT SACCOs will be based on SASRA 2016 supervisory report of asset base performance listed in three categories and registered with headquarters in Nairobi City County giving a total of 39. The members of the cooperatives will be used as respondents with a total of 384 participants. The year will be 2018.
1.7 Limitations
The respondents will be sampled through convenience sampling and therefore high chances of having unskilled respondents that may affect the quality of the response. The research assistants will assist the respondents which will cause more time.
The respondents’ free participation may also affect the study as some may offer to participate by taking the questionnaire but in the end fail to return the filled questionnaire thereby reducing the response rate. The study will rely on cooperative staff working with two research assistance to aid in data collection. This will cause some biasness as the staff may choose who to give and not to give the survey form.
Accessing certain DT SACCOs to request for participation may take time due to work commitment from the right people needed to initiate the process. This will delay the process hence likely to affect the sample collected.
The finances will pose a challenge to reach all the DT SACCOs in Nairobi City County, Kenya and therefore work with a small sample per DT SACCO to fit with the budget.
1.8 Organization of the Study
The study will be organized in five chapters; Chapter one provides a brief introduction of the various concepts of the study including service quality and customer satisfaction showing how they are different concepts but closely related. It also provides a background of cooperative movement globally while scaling down to Deposit taking savings and credit cooperative societies in Nairobi City County. It then looked at the problem statement, research objectives, hypothesis, significance, and scope and finished with limitations that are anticipated in the study.
Chapter two will present a detailed literature review on key study variables, identify gaps in the study and provide a conceptual framework highlighting the dependent and independent study variables.
Chapter three will examine the research methodology that will be adopted in the study, research design, target population, sampling procedure, data collection method, validity and reliability and ethical issues in the study.
Chapter four will provide data analysis and presentation where data will be subjected to internal consistency/reliability test. It will then be analyzed using descriptive statistics and multiple regression model
Chapter five will present a summary of findings, conclusions and make recommendations of the study.

CHAPTER TWO
LITERATURE REVIEW
2.1. Introduction
This chapter will focus on the theories and models used in the study, the empirical studies and the gaps found in them and how the researcher will address the gaps in relation to the study. The chapter will also establish the research conceptual framework and show how they are related to each other in the study.
2.2. Theoretical Review
2.2.1 SERVQUAL Model
SERVQUAL model was developed by Parasuraman et al (1985). The model was originally used in financial services and has been recognized as the most eminent in attempting to systematize the concept of service quality, Foya, (2015). The model translates theories of customer satisfaction and service quality into management practice by defining service quality as the difference between customer expectation and perception of service received. The model demonstrates the existence of five gaps in service quality that occur when perception of service received is less than expected, Mill (2016).
Gap 1 (knowledge gap) is what the customer expects and what the company management perceives customer expects. Iruguthu (2014) asserts that the people rendering services to members should have attributes of knowledge and ability to inspire trust and confidence. Through knowledge of customer needs innovative products and services will be developed that match member needs to reduce the gap. Gap 2; (Policy gap) is the difference between management perception of consumer expectation and service quality specification. It occurs when management fails to design service standards that meet customer expectations.
Gap 3; (Delivery gap); is the difference between the service quality specification and service actually delivered which occurs when the company’s service delivery system fails to deliver specified standard. The DT SACCOs know in advance through member feedback what the member wants, but there is lack of full implementation causing service gap.
Gap 4 (communication gap); is the difference between the service quality and the communication to consumers about service quality which checks whether promises match service delivered. Gap 5: (service quality gap); this is the expected service and the perceived service gap that brings about satisfaction and dissatisfaction depending with the level of service received. In all the five dimensions of the SERVQUAL model, the service quality will be measured based on the existence of the gap.
Figure 2.1; SERVQUAL Model illustrating gaps in service quality

2.2.2 European Consumer Satisfaction Index (ECSI)
The European Consumer Satisfaction Index (ECSI) is an economic indicator that measures customer satisfaction. It is an adaptation of Swedish customer satisfaction barometer and compatible with American customer satisfaction index, Bayole (2000). The model is based on a structural model with seven latent variables which links customer satisfaction to its main drivers including company image, customer expectations, perceived quality, perceived value and its main consequences being loyalty and complaints. Customer satisfaction is the central variable of the model with drivers and consequences.
Before customer satisfaction, one has perceived quality which integrates product and service quality. Perceived quality corresponds to recent consumptions, experiences of products and associated services. Perceived value is the perceived level of product quality and the price paid which has a direct impact on satisfaction which can be positively affected by perceived quality.
Expectations include the information that customers have acquired in the past regarding products and services offered by the company which has a direct impact over satisfaction. The variable image embraces the global idea that customers have from the product or company. Image has a direct effect over customer satisfaction, loyalty and expectation. Complaints variable measure the complaints frequency and how the company manages these complaints which has a direct effect over customer satisfaction. Loyalty refers to the customer’s loyalty to the product or company leading to re-purchase and referrals, Ferreira (2010).
The model has been used in hospitality studies where it was used to measure the strength and direction of the determinants of customer satisfaction trust and re-purchase intentions, Kareh et al (2011), and in banking industry where it was used to determine employee satisfaction and commitment that affects customer satisfaction, Gupta, (2016).

Figure 2.2; ECSI Model illustrating the drivers and results of customer satisfaction

Source: Haaften (2017)
2.2.3. Expectancy-Disconfirmation Paradigm
The model of expectancy-disconfirmation paradigm (EDP) is the most promising theoretical framework for the assessment of customer satisfaction, Yuksel and Yuksel (2008). It implies that consumers purchase goods and services with pre-purchase expectations about the anticipated performance. Isac (2014), states that consumer belief about the service is determined by how well it measures up to their standard.
The theory presumes that customers make purchases based on their expectations, attitudes and intentions. The expectation level then becomes a standard against which a judgment is made about the product in the post purchase where the perception is compared with the expectations. If the outcome matches the expectation, confirmation occurs.
Disconfirmation occurs where there is a difference between expectations and outcomes where a customer is either satisfied or dissatisfied as a result of positive or negative difference between expectations and perceptions. Positive disconfirmation occurs when perception is higher than expectation leading to satisfaction. When service is as expected, there is confirmation leading to satisfaction whereas negative disconfirmation occurs when perception is lower than expectation. The theory has been used in hospitality and tourism industry, Barsky, (1992), Cho (1998), Danaher and Hadrell (1996) in Yuksel and Yuksel (2008). Using SERVQUAL model with the theory will lead to identification of gaps in service quality dimensions that lower perception in order to improve satisfaction.
When member outcome matches expectation of service received, it therefore signifies good understanding of DT SACCO member needs and incorporating them in the service delivery process with clear communication to them members. Many members join DT SACCOs due to their expectation of low interest rate charged on loans, high dividend and ownership with quick loan provision. Many of them are satisfied with the services and are able to engage in long term contracts with the DT SACCO as evidenced in the loans they take with long repayment periods.
However, the model is disadvantaged due to its reliance on expectations as a comparison standard given the dynamics nature of the expectation and its meaning which may be different from one member to another. Expectations may not have meaning to a customer who does not have experience with the DT SACCO product and services and therefore will rely on company communication materials and advertisement which may make expectations be weak. This will be felt after the service encounter where you will find that in the DT SACCOs, many members join and then leave almost immediately signifying lack of knowledge and experience in the pre-purchase.
2.3 Empirical Review
This section reviews various studies that are related to the service quality dimensions and their relationship to the research study.

2.3.1. Tangibility and Customer Satisfaction
Tangibles are physical evidence that include office layout, equipment, parking area, and staff appearance, Sharma (2016). Iruguthu (2014) considers people as the most tangible clue to customer perception of service quality through grooming and how employees present themselves that portray what to expect from the DT SACCOs. Awuor (2014) did a study in Kenya to determine the service quality and customer satisfaction in the banking sector using descriptive research design targeting 44 commercial banks in Nairobi CBD. Using stratified sampling technique with 338 sample, the study found out that bank customers were pleased with technology and equipment used. They also perceived employees to be smart and presentable.
The DT SACCO members are satisfied when the staff are more presentable, when there is adequate parking and space in the banking hall and also the equipment being used to serve the members are in good condition. The study recommended further research be done in other sectors of service provision with a focus on customer satisfaction. Awuor’s study was carried out in Nairobi CBD focusing on the banks which have invested heavily in technology that offer more convenience to customer’s hence high satisfaction. The current study will be carried in Nairobi City where the DT SACCO headquarters are not necessarily in CBD hence access by the members could be a problem resulting to dissatisfaction.
The DT SACCOs have not invested a lot in technology as compared to the bank hence affect satisfaction level. Singh (2015) did a study in India to determine customer satisfaction in urban cooperative banks using six banks to collect a sample of 302 respondents. The study found out that tangible factors like location of the bank, cleanliness, teller counter, suggestion/complaint box, customer meetings, seating arrangements, drinking water, security systems and parking space were highly regarded by customers. The study was done in India being an industrious country that is developed with more infrastructure than Kenya. The current study will be carried out in Nairobi City County where some DT SACCOs are faced with challenges of capital hence no good infrastructure to improve tangible factors. Even though some DT SACCOs are currently opening new branches, ATM machines, agency banking, introducing member cards, biometric customer identification and even television to reduce waiting time, SACCO Star (July 2018), not all have achieved good infrastructure development hence the level of satisfaction could be different from the Indian perspective to the Kenyan study.
Saeed (2014), did a study in Pakistan on the impact of service quality on customer satisfaction in Islamic banking using 191 respondents. The study found out that tangibility was important on customer satisfaction. The study was carried out in an Islamic set up where religion affects business operations in terms of design and non-interest products. The current study will be done in a set up that is not influenced by religious doctrines hence could affect the outcome of customer satisfaction. The current study will examine the tangible elements of the DT SACCO including; staff appearance, office furniture and layout, banking hall space, packing area, equipment used and sitting arrangement.
2.3.2 Reliability and Customer Satisfaction
Reliability is the ability of an organization to accurately achieve its services in the proper time and according to the promises made to clients, Mohammad & Alhamadani (2011). A study done in Malaysia by Hong (2014), to establish the relationship between service quality and customer satisfaction of Malaysian banking industry using a sample of 200 respondents, showed that service quality had a significant influence on customer satisfaction indicating how expectations of Malaysian bank customers on service quality were higher than their perceptions as their expectations were not met with large gap in reliability.
The expectancy-disconfirmation theory indicates that where customer’s expectation are higher than perception, dissatisfaction occurs. The study was carried in Malaysia where labor force is supplemented by immigrants from Asian countries. The language used in data collection could have been a challenge leading to inaccurate response signifying high dissatisfaction rate. Customers expect accuracy when it comes to products and services especially in the financial industry. The current study will be done in Kenya where Kenyans are majority in labor force with good understanding of national language which will influence the results. Omar (2015), did a study to determine the influence of reliability of service quality on customers’ satisfaction with a focus on Libyan E-commerce business using 384 respondents.
The study found out that there is a very strong relationship between quality of service and customer satisfaction using website in E-commerce business to fulfil orders correctly, deliver promptly and keep personal information secure. Financial institutions have adopted the use of technology to improve efficiency and convenience to their customers where mobile and internet banking have been adopted. The study focused on e-commerce in Libya examining website performance. The current study will be carried out on financial institutions in Kenya that use e-commerce to improve customer satisfaction using website, products, employees and other platforms to increase reliability.
A study done in Kenya by Watiki (2014), to determine service quality and customer satisfaction in Hotels in Nairobi used a sample of 358 respondents found that reliability had the highest impact and recommended that reliability dimension should be allocated more resources since it has the highest impact on customer satisfaction. Through reliability, products promised will be made and service processes would be designed to bring about prompt delivery of service.
Many DT SACCO members upon joining do have high expectations from their chosen DT SACCOs, to provide them with loan as and when they need. However, this has not been so as many DT SACCOs have loan backlog thereby causing delays in loan provision which leads to dissatisfaction to the members. The study will seek to find out the service promise including, the loan turn-around time, the accuracy of member statement, efficient and accurate online business and opening hours by DT SACCO in Nairobi City County, Kenya.

2.3.3 Responsiveness and Customer Satisfaction
Mohammad & Alhamadani (2011), define responsiveness as tendency and willingness of service providers to help clients and satisfy their need, immediately reply to their enquiries and solve their problems as quickly as possible.
A study done in Uganda by Musoke (2016) to evaluate the relationship between service quality and customer satisfaction in microfinance institutions used a sample of 10 selected SACCOs. Service quality was measured in terms of giving adequate sizes of loan, giving services other than savings and credit, effective communication with stakeholders, speedy delivery systems and competent staff who are responsive to customer needs. The study found out that service quality is an important factor of customer satisfaction which is an essential requirement for the survival and growth of any business. The study also found that effective communication with all stakeholders was rated high as contributing more to customer satisfaction.
The study used 10 selected SACCOs with no clear distinction if the sample was for DT or non DT SACCOs. This is because the DT SACCOs have embraced other banking products with advanced technology enabling them be more efficient than non DT SACCOs. By focusing on 39 DT SACCOs in a different environment would produce different results thus the current study would aim to produce new results.
Cheserek et al (2015), did a study of quality financial services on customer satisfaction using five commercial banks in Kabsabet town. The study found out that responsiveness was having a high mean score with recommendations that the bank should concentrate on responsiveness. It is through communication that the DT SACCO would be able to identify the gaps in the SERVQUAL model, to understand the needs of the members well and translate the needs into a product that would offer more value.
Communication reduces complains as the member is responded to as and when he/she needs. The study was done in a metropolitan town where the response rate could be affected by the culture of community living in Kapsabet. It was also focusing on banks with more advanced technology as compared to the DT SACCOs. The current study will be done in Nairobi which is cosmopolitan therefore having a mix of response that is likely to change the outcome of the study.
Aga (2007) did an empirical investigation of service quality and customer satisfaction in professional accounting firms in North Cyprus using SERVQUAL model to determine the applicability of the model in professional accounting business while exploring the service quality dimensions. Using a sample of 100 companies that span all industries from foods, real estate, construction and tourism industries where the study found that responsiveness had a higher mean score meaning that clients from accounting firms need more responsiveness.
The study focused in professional accounting business and included 100 different companies from different industries. This could produce different results as the customer satisfaction is different from one to another. The current study focuses on one industry and is not based on accounting firms. Because of one industry experience, the results will not be the same as the environment is not also the same.
A study carried out by Iruguthu (2014), on factors that influence customer satisfaction in savings and credit cooperatives in Kenya, focusing on Balozi SACCO used 108 respondents. The study showed that customer satisfaction in SACCOs is high when employees are responsive to customer needs. The study used only one DT SACCO with 108 respondents. The current study will use 39 DT SACCOs with 384 respondents. The higher the sample the more the accuracy and response rate. Customer satisfaction in different DT SACCOs will be tested and generalize for the 176 DT SACCOs thus more accurate results than the use of small sample and one DT SACCO.
The current study will focus on communication aspects including; responding to member calls in time, calling back, email response, online social media attention and waiting time in the banking hall focusing on DT SACCOs in Nairobi City County, Kenya.
2.3.4 Assurance and Customer Satisfaction
Assurance describes impressions by the service providers that convey a sense of security and credibility, Wolfinbarger & Gilly (2003), in Marete et al (2014). It communicates reliable transactions which provides protection and a feeling of relief to the customers. Mohammad & Alhamadani (2011) define assurance as the feeling of trust and confidence with the organization which is reflected in the workers knowledge and experience and their ability to build self-confidence as well as confidence in the customers.
Ismaila (2017), did a study in Nigeria on comparative analysis of service quality and customer satisfaction of interest and non interest based co-operative societies using 180 respondents. The study concluded that there is a difference between service quality and levels of satisfaction received by members of interest and non interest based cooperative societies as it was higher in non-interest based cooperative societies than in the interest based societies.
The results further showed that assurance has the highest contribution to members’ satisfaction. The study was carried in Nigeria that has a higher population of Muslims than Kenya therefore more SACCOs with non-interest products. The study was also doing a comparison study between non-interest and interest SACCOs. The current study will not be a comparative study but focus on interest based DT SACCOs thus offer more insight in the industry based in Kenya.
DT SACCOs offer long term products and services to their members that need assurance of the safety of the money both online and offline. Some online business organizations even offer product guarantee as a commitment and confidence in the quality of products and services to improve the assurance dimension of the service quality, Chappatte (2018).
The DT SACCOs also offer an insurance rider that comes with a package of promise to refund all the savings less liability to the member upon withdrawal. To the diseased beneficiaries, the rider boosts the deposit by a half or twice depending with one DT SACCO to another. This is an assurance that they would not lose their money and therefore provides security and confidence to the members. The regulator SASRA is also mandated to check the performance and operations of the DT SACCO by looking at monthly reports, the qualification of the senior management and performs integrity test on key positions to improve assurance level of the service quality.
Marete (2014), study emphasized more on assurance significance by evaluating e-banking services on customer satisfaction focusing on National Bank of Kenya. The study found that assurance influenced customer satisfaction whereby there was feeling of relief of customer to transact e-banking in NBK as it was better than expected hence the reason they had adopted it. The study concluded that assurance is given high priority by customers when engaging in online transactions of e-banking. The study used one bank to focus on e-banking. The current study will use 39 DT SACCOs within Nairobi with a focus on e-banking, loan products and employee skills. The diversity in the current study population will yield diverse results leading to new findings.
San et al (2013), did a study on the relationship between service quality ; customer satisfaction; an empirical study in banking industry in Malaysia. The study found that assurance had a positive effect on customer satisfaction making it the most significant to be given priority to improve bank customer satisfaction. However, the questionnaire development was done in English language that needed a lot of explanation thus more time, low response and inaccuracy in data due to poor understanding of the language.
The study recommended future study be done in Malay and Chinese language also and a coverage in other locations. The current study will improve in questionnaire development written in national language being English and the use of two research assistants to help in interpreting to the respondents who will have challenges with the English language. Oanda (2015), did a study on service quality dimension ; customer satisfaction in Barclays Bank of Kenya. The study concluded that assurance scored highest where customers felt safe in their transactions. The study was carried in Nairobi Kenya focusing on BBK comparative study of customer segments among affluent, mass and business markets with a sample size of 50 giving low response rate with too much information on the questionnaire resulting into poor response.
The current study will be done with a population of 39 and 384 sample size that will increase response rate. The questionnaire will also be precise and to the point to allow more understanding and less time to complete for more participation. The current study will not be a comparative study of segments but different DT SACCOs thus diversified results hence more reliable. The current study will focus on employee skills and knowledge that inspire confidence and trust, m-banking application and usage, website, loan disbursement and ATM application and usage.
2.3.5 Empathy and Customer Satisfaction
Empathy is understanding the customer needs, taking care of them individually and showing them affection by being friendly and considering them as distinguished clients, Mohammad ; Alhamadani (2011). A study done in India by Sharma (2017) on customer satisfaction and service quality focusing on banking sector in India, used convenience sampling with a sample of 50 respondents. The study indicated that empathy resulted in customer satisfaction.
The study was done in India with a small sample of 50. The current will be done in Kenya with a sample of 384 that will increase reliability. Minh (2015), did a study in Vietnam on service quality and customer satisfaction focusing on hotel industry. The study used 33 three star hotels with a sample of 500 respondents. The results indicated that empathy had significant impact on customer satisfaction. The study was focused on hotel industry, the current one will focus on financial industry thus yield different results.
A study done in Malaysia by Ismail (2009), to explore the relationships among service quality features, perceived value and customer satisfaction in selected public institutions of higher learning in Malaysia used a cross-sectional research design to integrate service quality literature, in-depth interviews, a pilot study and actual survey to carry out the study. The study results indicated that perceived value increased the effect of empathy on customer satisfaction. The study was done in Malaysian public institutions of higher learning with survey and interview in data collection.
The current study will be done in Kenyan DT SACCOs adopting survey in data collection. It will also focus on the staff friendliness to the members, the caring attitude of the staff, individualized, personalized attention, greetings and address to the member, talking while looking at the member in the eye, listening attentively and how staff handle complains.

2.4 Summary of literature and research gaps
This section will summarize various empirical studies in form of a table.
Table 2.1 Summary of Research Gaps
Previous studies Focus Key findings Knowledge gaps Addressing knowledge gaps in current study
Awuor (2014) Service Quality ; Customer Satisfaction focusing on perception, expectation and service quality dimension in Banking Sector in Nairobi, Kenya: Bank customers were pleased with technology and equipment used.

They were also happy with employees who were perceived to be smart and presentable. Focused on 44 commercial banks in Nairobi CBD that is easily accessible therefore more convenient to the customers.

Have invested in more technology and office design as compared to the DT SACCOs

Recommended similar study in other sectors of service provision.
The study will focus on DT SACCOs’ sector in Nairobi County both on CBD and outside the town which may not be easy to access hence causing discomfort to the members.

The technology used by the DT SACCOs are not high tech as some are not doing internet banking due to challenges with resources.

A new study will be done on the same topic but with different population that will change the result.
Singh (2015) Customer Satisfaction in Urban Cooperative Banks, India Tangible factors like location of bank, cleanliness, teller counter, suggestion/complaint box, customer meetings, seating arrangements, drinking water, security systems and parking space were highly regarded by customers. India is an industrious economy that is developed with more infrastructure than Kenya hence tangibility element is improved more than in Kenya affecting customer satisfaction positively.
The challenges faced by infrastructure development in Kenya will be captured in the study of DT SACCOs’ tangible elements. The different strata in the study with large tier SACCOs are likely to have advanced technology hence more satisfaction.

Saeed, (2014) Impact of service quality on customer satisfaction in Islamic banking in Pakistan. The study found out that tangibility affects customer satisfaction. Pakistan is an Islamic nation where religion affects business operations in terms of the design and non-interest financial products which customers identify with. Current study will be carried out in Kenya where religion does not influence business operations financial products design. By having DT SACCOs as population with no Islamic touch, the outcome will be different.
Hong, (2014) The Relationship between service quality ; customer satisfaction of Malaysian banking industry. Malaysian bank customers’ expectation was higher than perception as they were not met with a big gap in reliability.
The study was carried in Malaysia with well capitalized banking system and deep capital markets. The labor force is supplemented with immigrants from Asian countries leading to language barrier. This could have affected response rate and accuracy of data.

Recommended further research in a different context.
Will be done in Kenya focusing on DT SACCOs with less immigrants and the use of national language that majority are conversant with leading to understanding of the questionnaire.

Will fulfill recommendations of the past study by carrying out a research in Kenya.
Omar (2015) Service Quality on Customer Satisfaction on Libyan E-commerce business Reliability had a direct positive impact on perceived service quality & customer satisfaction on e-commerce business. The study was carried out on Libyan e-commerce business focusing on website performance to increase customer satisfaction.

Only technology was used to understand service quality. The current study will be done in Kenya examining e-commerce platforms, loans, records and opening hours of the DT SACCOs’ therefore having a broader look at service quality.
Watiki (2014) Service Quality ; Customer Satisfaction in Hotels, Nairobi, Kenya. Reliability had the highest impact on Customer Satisfaction. The study was carried in Nairobi focusing on Hotels where service is felt immediately as compared to DT SACCO where there are long term contracts with the customers. The current study will be done in Nairobi focusing on DT SACCOs where long terms products will also be evaluated according to service quality thus bringing a mix of one time service and long term service.
Musoke, (2010) The Relationship between Service Quality ; Customer Satisfaction in Microfinance Institutions in Wakiso District Uganda. The study found that responsiveness was high in customer satisfaction. The study was carried out in Uganda’s micro-finance with 10 SACCOs with no clear distinction if the SACCOs were DT or non DT as the DT SACCOs have embraced other banking products and invested in more advanced technology than non DT SACCOs.

This could affect the outcome. The environment conditions also could have impact on the results.
The current study will focus on DT SACCOs that have embraced the banking products, invested in technology and using the Kenyan context, the results will be different.
Cheserek et al (2015) The Effect of quality financial Services on Customer Satisfaction by Commercial Banks in Kapsabet Town, Kenya The study found that responsiveness improves customer satisfaction. The study was done in Kapsabet town which is metropolitan where the response rate could be affected by the culture of the community. The five banks have also invested a lot in terms of infrastructure and technology thus more customer satisfaction results. The current study will be done in Nairobi which is a cosmopolitan thus have variations in customer satisfaction.

It will also focus on 39 DT SACCOs that are challenged with financial resources hence no much investment in technology and infrastructure. This will produce different results.
Aga, (2007) Service quality and Customer Satisfaction in professional accounting firms from North Cyprus. The study found that responsiveness was regarded high by customers from accounting firms. The study used 100 different service firms from different industries that could have different customer satisfaction level hence different study results. It was also done in North Cyprus focusing on accounting firms, The current study will focus on DT SACCOs in Kenya where there is no diversity in customer satisfaction as the products are the same. This will produce different results.
Iruguthu (2014) Factors that influence Customer Satisfaction in Savings & Credit Cooperatives in Kenya; A case of Balozi Sacco The study found that SACCO members are satisfied when employees are responsive, courteous and professional.
The study was done in Nairobi Kenya focusing on one DT SACCO and 108 respondents. The small sample could have impact in accuracy and response rate hence not represent well the other 176 DT SACCOs
The current study will use 39 DT SACCOs with 384 sample that is large hence accuracy and high response rate.

The experience of customer satisfaction from different DT SACCO participants will also add more weight on the study as the infrastructure and technology is different from one DD SACCO to another hence different results.

Ismaila et al (2017) Comparative Analysis of Service Quality & Customer Satisfaction of Interest and Non Interest Based Co-operative Societies in Ilorin Emirate, Nigeria. Customer satisfaction level is higher in non-interest based members than interest based cooperators. The study was carried in Nigeria on comparative study between interests and non-interests cooperatives.

The current study will not be a comparative study but focus on interest based 39 DT Cooperative societies based in Nairobi thus more insight on interest based cooperatives.

Marete et al (2014) Evaluation of E-Banking Services on Customer Satisfaction of National Bank of Kenya. The study found that assurance was given high priority by customers engaging in online transaction of e-banking as it made them feel safe to transact online. The study used one bank focusing on e-banking only. The current study will done in Nairobi with 39 DT SACCO focusing on both e-banking, loan products and employee skills thus more findings in the study.

San et al (2013) The Relationship between Service Quality & Customer Satisfaction; an empirical study in banking industry in Malaysia The study found that assurance had a positive effect on customer satisfaction making it the most significant to be given priority to improve bank customer satisfaction. The study was done among Malaysian commercial banks.

Questionnaire was written in English that was not well understood by Malaysian respondents therefore lead to unreliability of the data, low response rate, too much time in interpretation.

The study recommended future study be done in Malay and Chinese language for more insight and also coverage in other locations.

The current study will be done in Kenyan DT SACCOs to fulfill the recommendation of the study in other areas.

The questionnaire will be written in national language -English which is understood by majority thus increase understanding leading to high accuracy, response rate and reduce time taken in data collection.
Oanda, (2015) Service Quality Dimension & Customer Satisfaction in Barclays Bank of Kenya. The study found that assurance scored highest where customers felt safe in their transaction. The study was carried in Nairobi Kenya focusing on BBK comparative study of customer segments among affluent, mass and business markets.

Sample size was 50 giving low response rate with too much information on the questionnaire resulting into poor response. The current study will be done in Kenya-Nairobi DT SACCOs therefore not comparative study of business products segments.

The sample will be 384 from 39 DT SACCOs therefore provide high response rate and will be precise in questionnaire for convenience to the respondent.
Sharma (2017) Customer Satisfaction & Service Quality of Banking Sector in India The study found that empathy resulted in customer satisfaction The study was done in Indian banking sector with a small sample of 50.
The current will be done in Kenya with a bigger sample of 384 that would increase reliability of the study thus different results.
Minh (2015) Service Quality & Customer Satisfaction; A case study of Hotel Industry in Vietnam. The study found that empathy had significance impact on Customer Satisfaction. The study was done in Vietnam focusing on 33 hotels with 500 sample. The current study will be done in Kenya focusing on 39 DT SACCOs with 384. This being in a different environment and industry will produce different results.
Ismail (2009) The Relationship Among Service Quality Features, Perceived Value & Customer Satisfaction In Selected Public Institutions of Higher Learning – Malaysia The study found that perceived value increased the value of empathy on customer satisfaction The study focused on institutions of higher learning with data collection techniques being in-depth interviews and survey.
The current study will focus on financial institutions in Kenya with survey as the mode of data collection.
Source: Various Literature Reviewed, 2018

2.5 Conceptual Framework
The conceptual framework will show the relationship between the variables under study.
Figure 2.3: Conceptual framework

Figure 2.2 Conceptual Framework
Source: Research, 2018
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This topic will focus on the research design and methodology that will be used to carry out the research. It begins with the study design, population, sample size, sampling procedure, data collection and analysis and ethical considerations.
3.2 Research Design
Quantitative research study designs require that the measurement and classification of the information gathered be more structured, rigid, fixed and pre-determined in their use to ensure accuracy in measurement and classification, Kumar (2011). Descriptive research design describes the state of affairs as it exists at present, Kothari (2004). Awuor, (2014) and Al-Azzam, (2015) used descriptive survey where quantity data was collected and analyzed to describe specific phenomena in their studies.
Cohen (2002) in Nayak (2015) states that descriptive research is a social research that employs empirical methods and statements about what is the case in real world. The study will adopt descriptive design which will be cross-sectional in nature as data will be collected on more than one case at a single point in time having a single contact with the study population. The study design was chosen due to its simplicity, easy analysis and not expensive as data is collected once.
3.3 Target Population
All items in any field of inquiry constitute a universe or population, Kothari (2004). The target population is DT SACCOs in Nairobi City County-Kenya which by the end of 2016, were 40 fully compliant with regulatory requirement and registered with head offices in Nairobi, SASRA (2017). However, Taqwa DT SACCO was not listed in the asset base performance for the year 2016. The study therefore will use 39 listed in the report. The study will adopt census survey as the population of DT SACCOs in Nairobi City County is small hence need to use all 39 to represent 176 DT SACCOs nationally.
3.4 Sampling Frame
A sampling frame contains a list from where the sample will be drawn. The study will construct a sampling frame from SASRA registered DT SACCOs in Nairobi City County, Kenya using 2017 supervisory report. The DT SACCOs will then be distributed according to their asset base being small below 1 billion, medium, 1-5 billion, and large over 5 billion, SASRA (2017).
Table 3.1 Sampling frame of DT SACCOs in Nairobi County
Large (5 billion and above) Medium (1-5 billion) Small (Below 1 billion)
1. Mwalimu National 1. Shirika 1. Telepost
2. Kenya police 2. Mwito 2. Miliki
3. Harambee 3. Ukristu na Ufanisi 3. Comoco
4. Stima 4. Waumini 4. Airports
5. Afya 5. Shoppers 5. Ufanisi
6. United Nations 6. Sheria 6. Nafaka
7. Ukulima 7. Safaricom
8. Unaitas 8. Nation
9. Kenya Bankers 9. Nassefu
10. Hazina 10. Nacico
11. Maisha bora
12. Magereza
13. Jamii
14. Elimu
15. Chuna
16. Chai
17. Wanaanga
18. Nyati
19. Arthi
20. Kenvarsity
21. Kenpipe
22. Asili
23. Wanandege

Source: Adopted from SASRA report 2016-DT Asset Base Performance
3.5 Sample size
The size of the sample should neither be excessively large nor too small but be optimum to fulfill requirements of efficiency, representativeness, reliability and flexibility (Kothari C. , 2004). The sample size will be large enough to minimize errors and give room for attrition due to non-response, Somek, (2011). It will then use Krejcie & Morgan (1970) sample size estimation table as used by San et al (2013), to come up with the required sample size where a population with 100,000 items and above should have a sample of 384. This was adopted as total membership of DT SACCOs in Nairobi City County are more than 100,000.
3.6 Sampling Techniques
The study will use probability sampling technique as this will give equal chance to all the items to be selected. The researcher would then use stratified sampling technique to group the DT SACCOs according to their asset base in terms of large, medium and small distributed proportionately.
Stratified sample formula = size of entire sample x strata size
Population size
Large SACCOs 99
Medium SACCOs 226
Small SACCOs 59
The sample will then be distributed equally according to the DT SACCO numbers in each strata. Convenience sampling as used by Sah, (2013) and Al-Azzam, (2015) will then be used to select respondents in the banking hall assisted by two research assistants and cooperative staff.
3.7 Data Collection Procedure
The study will use both secondary and primary data in the research. Secondary data will be collected from previous research studies, libraries, magazines, periodical reviews, reports, books and newspapers. These will be obtained from the internet, libraries, expert websites and recommendations from colleagues and friends.
Primary data will be collected through structured self- administered questionnaire which will be made clear and easy to understand with two parts; demographic profile having 6 questions and service quality questions having 22. The researcher will obtain a research authorization letter from Kenyatta University Graduate School which will be forwarded to National Commission for Science, Technology and Innovation (NACOSTI) to allow use of secondary data from SASRA and individual Sacco’s websites and other experts. Research Assistants will help with the fieldwork collection of data in DT SACCOs banking hall where self-administered questionnaire will be given to walk-in members.

3.8 Reliability and validity of data collection instrument
Pre-testing a research instrument entails a critical examination of the understanding of each question and its meaning as understood by a respondent. This would be carried out under actual field conditions on a group of people similar to study population. This will help identify problems that potential respondents might have, Kumar (2011). A pilot study of 10 Iruguthu, (2011), members from one DT Sacco will be conducted with an aim of familiarizing research assistants with the area of study to create more clarity in the research study. The study would also seek opinion of experts and academicians in questionnaire development, Mohammad, (2011). This would help improve editing of research questionnaire to increase precision.
3.8.1 Validity
Validity is the ability of an instrument to measure what it is designed to measure. It is the degree to which the researcher has measured what she has set out to measure, (Kumar (2011). It examines whether or not the item actually elicits intended information. It also refers to the way a study conceptualizes the idea and the data collected to support the idea. Njoka (2013) defines validity as the extent to which the measurement is done and the data obtained is free from error.
The study will collect data from Sacco literature materials, service quality and customer service books. It will obtain primary data from Sacco members who have first-hand experience with DT Sacco’s external customer service. Pilot study will be done to achieve clarity of questionnaire content. The questionnaire will contain items that measure objectives in the search study.
3.8.2 Reliability
Reliability is the degree of accuracy in the measurements made by a research instrument. According to Shanghversy (2003) quoted in Mogaka (2014), reliability is the consistency of measurement which is frequently assessed using test-retest method. It is increased by including many similar items on a measure by testing a diverse sample of individuals and by using uniform testing procedures. It is concerned with the question of whether results of a study are repeatable and consistent. The respondent’s lack of knowledge, fatigue, negative attitude and the researchers ‘mood and physical setting may affect reliability. The study will use Cronbach’s alpha methodology to check internal consistency by measuring items and their correlation.
3.9 Data Processing, Analysis and Presentation
Data analysis is a process of gathering, modelling and transforming data with an aim of retrieving useful information, suggesting conclusions and supporting decision making, Wallingman (2011), in Odhiambo (2015). Data will be edited, coded, classified and tabulated for analysis to make it error free with the help of Ms. Xcel and SPSS.
Descriptive statistics will be used to enable the researcher to summarize and organize demographic data. Karl Pearson’s Correlation will be done to determine the degree and direction of relationship between service quality and customer satisfaction.
Multiple regression will be used to analyze the five independent service quality variables to understand their effect on customer satisfaction and to find out which dimension has the most significant effect on customer satisfaction. Inferential statistics will then be used to make generalizations of observations to the larger population, Nayak & Singh (2015).
3.10 Ethical Consideration
Ethics refer to the moral principles or values generally governing the conduct of a group of individual. The morals are described as bad or good, right or wrong. The researcher will take responsibility for all procedures and ethical issues related to the project.
The study will be done without bias and in a competent fashion using qualified research assistants. It will comply with the standards, laws and regulations, Sing & Nayak (2015) and adhere to ethical consideration of the stakeholders who are the respondents, the society and the researcher, Foya, (2015). On the part of the society, the researcher will be concerned with the value the research will give to the co-operative movement with a promise to share the results with the participating DT Saccos to enable them make change or improve their strategies on service quality to their members. On the respondent, the researcher will respect their right to agree or not to participate in the survey. This will ensure informed consent from the respondent giving letter of introduction and oral communication indicating research intention to gain trust from the respondent. Confidentiality will be observed. The researcher will adhere to integrity, honesty, objectivity and will avoid plagiarism by providing citations and a list of reference to acknowledge the work and contributions of others in the research studies.

APPENDICES
Appendix I
LETTER OF PERMIT

Evalin A. Oruko,
P.O.Box 21775-00100,
Nairobi.

20th August 2018

Mr./Mrs./Ms.
DT SACCO_____________________,
Nairobi County.

Dear Sir/Madam,
REF: PARTICIPATION IN RESEARCH
I am a post-graduate student at Kenyatta University (City Campus) pursuing my master’s degree in Marketing. In striving for a better and more efficient cooperative service, service quality is key in DT SACCOs in order to member satisfaction.
I am carrying out a study on service quality and customer satisfaction of account holders among DT SACCO’s in Nairobi City County, Kenya and make proper recommendations on strategies that will improve service quality to drive SACCO financial performance while also improving member satisfaction.
I kindly request you to participate in this research by way of responding to the guiding questions voluntarily and as honestly as possible.
Any information obtained from you will be treated with utmost confidentiality and will be used solely for the purpose of this study.
Your voluntary participation will be appreciated.

Yours faithfully,
Evalin A. Oruko
D53/OL/CTY/26227/2015

Appendix II

MEMBER QUESTIONNAIRE

PART A: GENERAL INFORMATION (SELECT BY TICKING THE BRACKET)

1. Gender: Male ( ) Female ( )
2. Age in years: 18-25 ( ) 25-35 ( ) 35- 45 ( ) 45-55 ( ) 55 and above ( )
3. Level of education: Form Four ( ) Diploma ( ) Degree ( ) Post graduate ( )
4. Kindly indicate your SACCO
5. How long have you been a member of the Sacco?
Below 1 year ( ) 1-3 years ( )
3-5 years ( ) 5-10 years ( )
Over ten years ( )
6. What is your income range?
Below Kshs 20,000 ( ) Kshs 21,000 -50,000( ) Kshs 51,000-100,000 ( )
Kshs 101,000 – 150,000 ( ) Kshs 151,000-200,000 ( ) over 201,000 ( )

PART B: SERVICE QUALITY AND CUSTOMER SATISFACTION SURVEY
DIRECTIONS: This survey examines your perception (How you feel) about the services of your SACCO based on the service you have received. As a SACCO member show your opinion by circling one of the five (5) numbers that reflects your opinion.
Notes: 1=Strongly disagree, 2= Disagree, 3= Neutral, 4=Agree, 5=Strongly Agree

Service Quality Dimension Item 1 2 3 4 5
T1 Staff appearance is appealing 1 2 3 4 5
T2 Furniture and equipment used are of good quality. 1 2 3 4 5
T3 The office layout and sitting arrangement is neat 1 2 3 4 5
T4 There is enough banking hall space 1 2 3 4 5
T5 There is enough packing area 1 2 3 4 5
REL1 Loan turn-around time is quick 1 2 3 4 5
REL2 Member records and statement are accurate 1 2 3 4 5
REL3 The website provides accurate information 1 2 3 4 5
REL4 The opening hours are prompt 1 2 3 4 5
RES1 Employees respond to member calls quickly 1 2 3 4 5
RES2 Employees respond to member emails in time 1 2 3 4 5
RES3 Employees respond to members on social media in time 1 2 3 4 5
RES4 Employees attend to members in the banking hall quickly 1 2 3 4 5
AS1 Employees understand their work 1 2 3 4 5
AS2 M-banking apps is efficient and secure. 1 2 3 4 5
AS3 The website content is updated frequently 1 2 3 4 5
AS4 Loan is disbursed accurately as applied 1 2 3 4 5
EM1 The staff are friendly to members 1 2 3 4 5
EM2 The staff have positive attitude towards members 1 2 3 4 5
EM3 The staff provide personalized service to members 1 2 3 4 5
EM4 The staff greets the members warmly 1 2 3 4 5
EM5 The staff is attentive to member needs. 1 2 3 4 5

Thank you.

Appendix III: Project Time Schedule
Activity Nov 2016-Feb 2017 March 2017-July 2018 Aug 2018 Sept 2018 Oct 2018
Concept development
Proposal development
Proposal presentation
Data collection
Analysis and Reporting

Appendix IV: Research Budget
Item Unit cost Total cost (Kshs)
Concept development
Typing and printing of 5 pages 30 150
Binding 50 50
Transport 200
Total 400
Proposal development
Typing of 63 pages 20 1,260
Printing of 6 books with 63 pages 630 3,780
Binding of 6 booklets 50 350
Travelling expenses – 10,000
Library expenses 100
Internet expenses 10,000
Total 25,490
Data collection & analysis
Field work transport 3 * 200*10 200 6,000
Field officers allowance 2*500*10 days 500 10,000
Data analysis 10,000
Typing of 30 pages 20 600
Printing of 6 books with 93 pages 930 5,580
Binding of 6 books 50 350
Miscellaneous expenses 3,000
Total 35,530
Grand total 61,420

Appendix V: Krejcie and Morgan’s Sample Size Estimation Table

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