impact of service quality on satisfaction and loyalty case of two public sector banks
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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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Literature ReviewLiterature Review
Customer Satisfaction
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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Literature ReviewLiterature Review
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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Literature ReviewLiterature Review
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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Literature ReviewLiterature Review
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
Customer Satisfaction
Note.- The Conceptual Model with Hypothesized Relationships.
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Customer Loyalty
H1 H2
H3
MethodologyMethodology
Participants 150 customers
Research Site Sikar District in Indian
• State Bank of Bikaner • Jeypore and Punjab National Banks
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MethodologyMethodology
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).
MethodologyMethodology
Instrument
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Customer Satisfaction
One item
(Cronin & Taylor, 1992).
Customer Loyalty
One item
(Zeithaml et al., 1996).
MethodologyMethodology
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
Physical Evidence 2 .867
Physical Evidence 3 .862
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.