Modeling the factors that explain customer loyalty in retail banking
-
DOIhttp://dx.doi.org/10.21511/im.17(3).2021.11
-
Article InfoVolume 17 2021, Issue #3, pp. 135-143
- Cited by
- 739 Views
-
284 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Literature suggests that achieving adequate customer loyalty is a significant determinant of growth and profitability. However, in South Africa, there is no evidence of a validated customer-loyalty-in-retail-banking scale. Thus, this study aimed to contribute to the literature by validating customer loyalty in retail banking as a six-factor structure comprising customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction, which practitioners can use as a marketing guide to better understand customer loyalty. Data was collected from one sample only once, and the sample size was selected (N = 400). Descriptive and confirmatory factor analyses were undertaken to achieve the study’s objective. Confirmatory factor analysis results validated customer loyalty in retail banking as a six-factor structure that includes customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction. The results show no serious multicollinearity between the latent factors and that acceptable internal-consistency reliability was returned for each factor. Moreover, the measurement model returned acceptable composite reliability together with construct, convergent and discriminant validity. Moreover, IFI, TLI, CFI, SRMR and RMSEA model fit index values suggest a good fitting model. Thus, the results concluded that this six-factor model is a reliable and valid instrument of customer loyalty in retail banking and is the first validated customer loyalty scale within the retail-banking context of South Africa. Retail banks are encouraged to use this instrument as a marketing guide in their quest to provide excellent banking services to their market segments, as well as build solid bank-customer relationships.
- Keywords
-
JEL Classification (Paper profile tab)M31
-
References52
-
Tables3
-
Figures0
-
- Table 1. Sample
- Table 2. Descriptive, reliability, correlation and collinearity statistics
- Table 3. Measurement model estimates
-
- Anderson, E., & Weitz, B. A. (1989). Determinants of continuity in conventional industrial channel dyads. Marketing Science, 8(4), 310-323.
- Berry, L. L., Parasuraman, A., & Zeithaml, V. A. (1988). The service-quality puzzle. Business Horizons, 31(5), 35-43.
- Berry, L. L., Parasuraman, A., & Zeithaml, V. A. (1994). Improving service quality in America: lessons learned. Academy of Management Perspectives, 8(2), 32-45.
- Bettencourt, L. A., & Brown, S. W. (1997). Contact employees: Relationships among workplace fairness, job satisfaction and prosocial service behaviors. Journal of retailing, 73(1), 39-61.
- Clemes, M. D., Gan, C., & Zheng, L. Y. (2007). Customer switching behaviour in the New Zealand banking industry. Banks and Banks System, 2(4), 50-66.
- Cronin, J. J., & Taylor, S. A. (1992). Measuring Service Quality: a reexamination and extension. Journal of Marketing, 56(3), 55-68.
- Cronin, J. J., & Taylor, S. A. (1994). SERVERF versus SERVQUAL: reconciling performance based and perceptions minus expectations measurement of service quality. Journal of Marketing, 58(1), 125-33.
- Debab, N., & Yateem, H. A. (2012). Assessing the Factors that Influence Trust in the Bahraini Retail Banking after the Financial Crisis. International Journal of Business Management & Economic Research, 3(3), 546-565.
- Du Toit, G., Burns, M., Johnson, B., & Sidebottom, P. (2012). Customer loyalty in retail banking: global edition.
- Gurău, C. (2012). A life-stage analysis of consumer loyalty profile: Comparing generation x and millennial consumers. Journal of Consumer Marketing, 29(2), 103-113.
- Haenlein, A., Kaplan, A. M., & Beeser, A. J. (2007). A model to determine customer lifetime value in a retail banking context. European Management Journal, 25(3), 221-234.
- Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2010). Multivariate data analysis: A global perspective. New Jersey: Pearson Prentice Hall.
- Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2014). Multivariate data analysis: Pearson new international edition (7th ed.). Harlow: Pearson.
- Han, S., & Baek, S. (2004). Antecedents and consequences of service quality in online banking: An application of the SERVQUAL instrument. Advances in Consumer Research, 31, 208-214.
- Harris, L. C., & Goode, M. M. H. (2004). The four levels of loyalty and the pivotal role of trust: a study of online service dynamics. Journal of Retailing, 80, 139-158.
- Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the Academy of Marketing Science, 43(1), 115-135.
- Hoffman, K. D., & Bateson, J.E.G. (2006). Service marketing: concepts, strategies & cases. New York: Thompson South Western.
- Iacobucci, D. (2016). Marketing Management. Boston: Cengage.
- Jarvinen, R. A. (2014). Consumer trust in banking relationships in Europe. International Journal of Bank Marketing, 32(6), 551-566.
- Jones, M. A., Mothersbaugh, D. L., & Beatty, S. E. (2002). Why customers stay: measuring the underlying dimensions of services switching costs and managing their differential strategic outcomes. Journal of Business Research, 55(6), 441-450.
- Kiser, E. K. (2002). Predicting household switching behavior and switching costs at depository institutions. Review of Industrial Organization, 20(4), 349-365.
- Knox, S. D., & Denison, T. J. (2000). Store loyalty: its impact on retail revenue, an empirical study of purchasing behaviour in the UK. Journal of Retailing and Consumer Services, 7, 33-45.
- Lamb, C. W., Hair, J. F., & McDaniel, C. (2011). Essentials of marketing. Cengage Learning.
- Lazarevic, V. (2012). Encouraging brand loyalty in fickle generation Y consumers. Young Consumers, 13(1), 45-61.
- Levy, S. (2014). Does usage level of online services matter to customers’ bank loyalty. Journal of Services Marketing, 28(4), 292-299.
- Lewis, B. R., & Soureli, M. (2006). The antecedents of consumer loyalty in retail banking. Journal of Consumer Behaviour, 5, 15-31.
- Loonam, M., & O’Loughlin, D. (2008). Exploring e-service quality: a study of Irish online banking. Marketing Intelligence & Planning, 26(7), 759-780.
- Malhotra, N. K. (2010). Marketing research: An applied orientation (6th ed.). New Jersey: Pearson Prentice-Hall.
- Markert, J. (2004). Demographics of age: generational and cohort confusion. Journal of Current Issues and Research in Advertising, 26(2), 11-25.
- Mayer, R. C., Davis, J. H., & Schoorman, F. D. (1995). An integrative model of organizational trust. Academy of Management Review, 20(3), 709-734.
- Moorman, C., Deshpande, R., & Zaltman, G. (1993). Factors affecting trust in market research relationships. Journal of Marketing, 57(1), 81-101.
- Morgan, R. M., & Hunt, S. D. (1994). The commitment-trust theory of relationship marketing. Journal of Marketing, 58(3), 20-38.
- Ngo, V. M., & Pavelková, D. (2017). Moderating and mediating effects of switching costs on the relationship between service value, customer satisfaction and customer loyalty: investigation of retail banking in Vietnam. Journal of International Studies, 10(1), 9-33.
- Oliver, R. L. (1997). Satisfaction: a behavioral perspective on the consumer. New York: McGraw Hill.
- Oliver, R. L. (1999). Whence customer loyalty? Journal of Marketing, 63, 33-44.
- Pallant, J. (2010). SPSS survival manual: A step by step guide to data analysis using SPSS. England: Open University Press.
- Pallant, J. (2013). SPSS survival manual: A step by step guide to data analysis using the IBM SPSS (5th ed.). Berkshire: McGraw-Hill.
- Parasuraman, A., Zeithaml V. A., & Berry, L. L. (1985). A conceptual model of service quality and its implications for future research. Journal of Marketing, 49, 41-50.
- Patterson, P. G., & Spreng, R. A. (1997). Modeling the relationship between perceived value, satisfaction and repurchase intentions in a business-to-business, services context: an empirical examination. International Journal of Service Industry Management, 8(5), 414-434.
- Paulssen, M., Roulet, R., & Wilke, S. (2014). Risk as moderator of the trust–loyalty relationship. European Journal of Marketing, 48(5, 6), 964-981.
- Redda, E. H., & van Deventer, M. (2020). Antecedents of trust in retail banking: evidence from South Africa. Acta Universitatis Danubius. Œconomica, 16(4), 125-138.
- Sahin, A., & Kitapci, H. (2013). Why customers stay: the role of switching costs on the satisfaction-trust-commitment chain. International Review of Management and Business Research, 2(4), 908-916.
- Sheth, J. N., & Rajendra, S. S. (2006). Does Marketing Need Reform? New York: M.E. Sharpe, Inc.
- Statistics South Africa. (2020). Mid-year population estimates 2020.
- Torres, M., Summers, T., & Belleau, D. (2001). Men’s shopping satisfaction and store references. Journal of Retailing and Consumer Services, 8, 205-212.
- Twenge, J. M., & Campbell, S. M. (2008). Generational differences in psychological traits and their impact on the workplace. Journal of Managerial Psychology, 23(8), 862-877.
- Van Deventer, M. (2018). Modelling the factors that explain attitudes towards personal financial planning. International journal of Business and Management Studies, 10(2), 183-193.
- Van Deventer, M., & Redda, E. (2018). Mediating Effect of Switching Cost on Generation Y Customers’ Bank Commitment. Acta Universitatis Danubius. Œconomica, 14(6), 24-39.
- Veloutsou, C., Daskou, S., & Daskou, A. (2004). Are the determinants of bank loyalty brand specific? Journal of Financial Services Marketing, 9(2), 113-125.
- Wong, A., & Sohal, A. (2003). Service quality and customer loyalty perspectives on two levels of retail relationships. Journal of Services Marketing, 17(5), 495-513.
- Yang, Z., & Peterson, R. T. (2004). Customer perceived value, satisfaction, and loyalty: the role of switching costs. Psychology & Marketing, 21(10), 799-822.
- Young, L. (2005). Marketing the professional services firm. New York: John Wiley.