Perception as a mediator between service quality, customer satisfaction, and customer loyalty: evidence from savings and credit cooperatives (SACCOs) in Uganda

Savings and Credit Cooperatives (SACCOs) in Uganda continue to face challenges in fostering and sustaining member loyalty despite ongoing improvements in service quality. Persistent member turnover, limited trust and weak relational bonds raise questions about how service quality and satisfaction translate into enduring loyalty. This study examined the mediating role of customer perception in the relationships among service quality, customer satisfaction and customer loyalty in Ugandan SACCOs. Guided by Expectation Confirmation Theory (ECT), a cross-sectional quantitative design was employed using 384 distributed questionnaires, of which 196 were valid. Data were analyzed using correlation, hierarchical regression and mediation techniques. Results revealed significant positive associations among all key variables and confirmed that customer perception partially mediates the effects of both service quality and satisfaction on loyalty, accounting for 27.9% of the variance in the outcome variable. These findings highlight that while service quality directly influences loyalty, much of its impact operates through members’ cognitive evaluations of fairness, value and trust. The study contributes to the service quality–loyalty literature by positioning perception as a critical cognitive mechanism in cooperative finance. In practice, it proposes a perception-centered framework for strengthening trust and loyalty through transparent communication, responsive service delivery and technology-driven solutions, including mobile banking and digital service platforms, to enhance the member experience and institutional resilience.