Impact of service quality on satisfaction and loyalty case of two public sector banks

Impact of Service Quality on Satisfaction and Loyalty: Case of Two Public Sector Banks

Impact of Service Quality on Satisfaction and Loyalty: Case of Two Public Sector Banks

Presenter: Chih-Lei Cheng Instructor: Dr. Pi-Ying Teresa

HsuMarch 3 , 2014

CitationCitation

Kaura, V., & Datta, S. K. (2012). Impact of Service Quality on Satisfaction and Loyalty: Case of Two Public Sector Banks. Journal of Management, 9(2), 65-76.

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ContentsContents

IntroductionI

Literature ReviewII

MethodologyIII

ResultsIV

ConclusionV

Critiques and SuggestionsVI

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ContentsContents

IntroductionI

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Background and Motivation

Purpose of the Study

IntroductionIntroduction

Background and Motivation

Financial institutions are facing challenges of intense competition and increased customers’ expectations over the last few years

(Cheng et al., 1996).

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IntroductionIntroduction

Purpose of the Study

This study attempts to know the relationship between service quality, customer satisfaction and customer loyalty through two public sector banks in Sikar district of Rajasthan.

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ContentsContents

Literature ReviewII

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Service Quality

Customer Satisfaction

Customer Loyalty

Hypotheses

Gap Areas

Literature ReviewLiterature Review

Service Quality

Service quality can be assessed in terms of interaction with service personnel, technology interface and physical evidence (Lenka, Suar and Mohapatra, 2009).

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Kotler (2000) expresses that satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

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Customer Loyalty

Customer loyalty is defined as repeated purchasing and referring a company to other customers (Heskett et al., 1997) and generating positive and measurable financial results (Duffy, 2003).

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Hypotheses

H1: Service quality has a positive impact on customer satisfaction.

H2: Satisfaction has a positive impact on customer loyalty.

H3: Service quality has a positive impact on customer loyalty.

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Gap Areas

Most of the studies have used service quality as antecedent of customer satisfaction and ignored process through technology aspect of service quality.

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ContentsContents

MethodologyIII

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The Conceptual Model

Participants and Research Site

Instrument

Reliability and Validity

MethodologyMethodology

Conceptual Model

Service Quality•People •Process•Physical Evidence


Note.- The Conceptual Model with Hypothesized Relationships.

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Customer Loyalty

H1 H2

H3


Participants 150 customers

Research Site Sikar District in Indian

• State Bank of Bikaner • Jeypore and Punjab National Banks

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Instrument

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Service Quality

People3 items

(Sureshchandar et al., 2002).

Process4 items

(Zhu et al., 2002).

Physical evidence

3 items

( Sureshchandar et al., 2002).


Instrument

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One item

(Cronin & Taylor, 1992).

Customer Loyalty

One item

(Zeithaml et al., 1996).


Reliability All values are above 0.69, which may be

considered as reliable (Nunnaly, 1978).

Validity Factor analysis High loading on one factor and no cross loading

reveal convergent and discriminant validity respectively.

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ContentsContents

ResultsIV

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Demographic Background

Factor Analysis

Correlation Analysis

Regression Analysis

ResultsResults

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Demographic Background

Variable N %

Age

21-25 74 49.3

26-30 47 31.3

Above 30 29 19.3

Gender

Male 53 35.3

Female 97 64.7

Year of Transaction

Less than 2 46 30.7

2-5 60 40

More than 5 44 29.3

ResultsResults

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Factor Analysis Component

1 2 3

Physical Evidence 1 .873



People 1 .831

People 2 .702

People 3 .693

Process 3 .864

Process 2 .747

Process 4 .726

%Variance explained 27.32 49.48 71.48

• These three factors explained 71.48% of total variance.

ResultsResults

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Correlation AnalysisPhysical Evidence

People Process

Pearson Correlation

Satisfaction .339* .506* .142*

Physical Evidence

People Process

Pearson Correlation

Loyalty .366* .443* .224*

Loyalty

Pearson Correlation Satisfaction .729*

Note.- *p<.05

• There is a significant correlation among service quality, customer satisfaction and customer loyalty at 5% significance level.

ResultsResults

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Regression Analysis

Unstandardized Coefficients Standardized Coefficient

t Sig.

B Std. Error

Beta

(Constant) .805 .247 3.264* .001

Satisfaction .842 .065 .729 12.966* .000

R² .532

Adjusted R² .529

F .168.127* .000

• R² indicates that 53.2% change in customer loyalty is due to customer satisfaction.

ContentsContents

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ConclusionV

Academic Contribution

Practical Contribution

ConclusionConclusion

Academic Contribution

Findings revealed that improved people, process and physical evidence aspect of service quality help in increasing customer satisfaction.

These results confirmed past research results.

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ConclusionConclusion

Practical Contribution

Efficient interpersonal interactions between customers and employees can improve customer satisfaction.

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ContentsContents

Critiques and SuggestionsVI

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Critiques

Suggestions

Critiques and SuggestionsCritiques and Suggestions

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Critiques

This study is restricted to Sikat district only and sample size is also small.

Critiques and SuggestionsCritiques and Suggestions

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Suggestions

1.It will be advisable to increase sample size and include more districts to have a better insight into present customers of banks.

2.More antecedents of customer satisfaction like, price and value should be considered in future research studies.

Impact of service quality on satisfaction and loyalty case of two public sector banks

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