The role of customer satisfaction in mediating the influence of product quality and service quality on customer loyalty: A study on XYZ company in Bali

Decreasing numbers of long-term repeat customers and rising customer complaints remain a major problem impacting corporate retention performance in the competitive synthetic rattan furniture industry. This study aims to examine the effect of product quality and service quality on customer loyalty and examine the role of customer satisfaction as a mediating variable in the private manufacturing sector. This study employed a quantitative causal-associative approach with a survey of 105 customers at XYZ Company in Bali. Data were gathered through a structured questionnaire and analyzed using Partial Least Squares - Structural Equation Modeling (PLS-SEM). The results showed that product quality and service quality have a positive and significant effect on customer loyalty and customer satisfaction. Customer loyalty is positively and significantly impacted by customer satisfaction as well. Additionally, it was demonstrated that the association between customer loyalty and both product and service quality is somewhat mediated by customer satisfaction. These findings indicate that superior product features and highly responsive services encourage strong relational fulfillment, which ultimately raises customer loyalty. The results of this study offer theoretical insights and real-world applications for marketing and operations managers looking to promote effective customer relationship management strategies in the workplace.