Modeling Customer Satisfaction and Loyalty Survey
Modeling Customer Satisfaction and Loyalty Survey
Modeling Customer Satisfaction and Loyalty Survey
net/publication/235320049
Modeling customer satisfaction and loyalty: Survey data versus data mining
CITATIONS READS
74 2,742
3 authors:
Suzan Burton
Western Sydney University
81 PUBLICATIONS 1,934 CITATIONS
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
Client Intimacy & Performance Advice: Determinants of Trust in the Public Accountant - SME Client Relationship View project
All content following this page was uploaded by Suzan Burton on 24 November 2015.
Access to this document was granted through an Emerald subscription provided by All users group
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service
information about how to choose which publication to write for and submission guidelines are available for all. Please visit
www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of
more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online
products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics
(COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation.
Abstract
Purpose – The loyalty literature has investigated the association between customer satisfaction and customer loyalty and revealed mixed results.
Some studies have indicated that the relationship is linear, whereas others have found it to be non-linear. This study examines the nature of this
association in retail banking, an issue that has not been tested empirically.
Design/methodology/approach – A survey study examined bank customers’ attitudes, perceptions, and behavior. Bivariate and multivariate testing
was applied to develop two loyalty models: one based only on variables typically known to a bank, such as demographics and recent consumer
behavior, and the other based on additional survey data.
Findings – A non-linear relationship between customer satisfaction and customer loyalty was found, and a model explaining 56.9 percent of the
variation in customer loyalty was developed. Predictors of loyalty beyond the attitudinal dimensions traditionally tested for their association with loyalty
were found to be associated with customers’ intentions to remain with their bank. In particular, market conditions such as switching costs and benefits
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
as well as recent consumer behavior were found to add explanatory power. Further, this study contrasted a full model explaining 56.9 percent of the
variation in loyalty with a model based only on variables known to banks, which explained only 8.4 percent. Profiling customers based on survey data
can thus provide additional explanatory power compared to data mining models
Originality/value – The models can be used by bankers to profile customers who are likely to remain loyal, allowing practitioners to implement
proactive marketing action to reward such loyalty. Customers least likely to defect have high satisfaction levels, perceive switching as an unattractive
option, and typically have a long-established banking relationship.
Keywords Customer satisfaction, Non-linearity, Customer loyalty, Segmentation, Consumer behaviour, Banking
An executive summary for managers and executive characteristics with customer loyalty measures has received
readers can be found at the end of this article. less attention in the marketing literature than the association
between customer satisfaction and loyalty, and thus warrants
further investigation.
1. Introduction This study measures customer loyalty as customers’
This study investigates the factors that help to explain behavioral intentions, specifically, intentions to remain long-
consumers’ behavioral intentions in retail banking. In term customers of their bank. A series of customer loyalty
particular, this research examines the associations between models are generated which include data typically readily
customer satisfaction, perceived service quality, recent and available to banks in customer records – for example,
demographic data such as age and gender, together with
current consumer behavior, and a customer’s long-term
additional data gathered by customer surveys. The resulting
intentions to remain a customer. Two factors, customer
models have strong managerial implications for bankers since
satisfaction and perceived service quality, have previously
they allow profiling of customers’ intended probability of
been found to be significantly associated with customer
defection.
loyalty. To these potential predictors of loyalty in retail
banking, this paper adds customers’ perceptions of market
conditions, such as perceived switching costs and benefits, 2. Literature review
and customer characteristics, such as demographic factors,
thereby extending the customer loyalty literature. The The issue of customer loyalty is becoming increasingly
association of market conditions and customer important given that the banking industry in most western
markets is suffering from limited growth, high fees, and the
substantial costs of winning new customers (Candler, 2005).
The current issue and full text archive of this journal is available at This situation follows a long period of cost cutting in the
www.emeraldinsight.com/0887-6045.htm
The authors would like to thank the JSM Editor, Professor Charles
L. Martin, and the anonymous reviewers for providing very useful
Journal of Services Marketing
26/3 (2012) 148– 157 suggestions for further developing this paper. An earlier version of the
q Emerald Group Publishing Limited [ISSN 0887-6045] paper was presented at the Western Decision Sciences Institute
[DOI 10.1108/08876041211223951] Conference, San Diego, CA, 18-22 March 2008.
148
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
industry, the merger of some providers, and the focus of The relationship between satisfaction and loyalty was found to
banks on their internal processes and activities, which be non-linear with high correlations at high satisfaction levels,
arguably results in “little perceived difference between but low correlations at low satisfaction levels. These findings
financial institutions” (Candler, 2005, p. 287). Given this have led to suggestions of a curvilinear relationship (Heskett
fierce competition, further intensified by the global financial et al., 1997) between satisfaction and loyalty. Heskett et al.
crisis in 2008/2009, bankers need to better understand the (1997) described the extremes of customer loyalty as ranging
drivers of customer loyalty. In addition, there is conclusive from the so-called “evangelists” (i.e. customers in the “zone
evidence that commercial customers and private consumers of affection” who are close to 100 percent satisfied or
no longer just bank with one institution but are increasingly delighted and near 100 percent loyal) to the “terrorists”
using a number of banks at the same time and have thus (those customers who are very dissatisfied).
become “multi-banked” (Nielsen et al., 1998; Rowley and The association between customer satisfaction and
Dawes, 1999, p. 3; Trayler et al., 2000; Lam and Burton, various measures of loyalty has also been investigated in
2005). In this sense, “loyalty” is often directed towards the retail banking sector; for example, Hallowell (1996)
multiple banks and, equally, loyalty to one’s “main bank” (as found a positive association between satisfaction and word
measured in this study) can be regarded as a question of of mouth; Moutinho and Smith (2000) found a positive
“degree” (rather than “binary”). The motivators for multi- relationship between satisfaction and retention, and Methlie
banking may include the desire to spread risk (although in and Nysveen (1999) and Veloutsou et al. (2004) found a
Australia and most other developed countries such as the US, positive relationship between satisfaction and behavioral
Canada and most European countries, retail bank security is intentions.
de-facto “government-guaranteed”) and opportunism, in
addition to a range of structural explanations such as 3. Model development
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
149
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
150
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
Figure 1 Non-linear relationship between overall satisfaction and long-term behavioral intentions (BI)
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
long-term behavioral intentions values (i.e. the Y values) for was tested for model fit and no evidence of lack of fit was
each level of satisfaction. The results are shown in Figure 1, found (F value ¼ 294.436; df ¼ 6).
which shows the non-linear and additive effect of satisfaction The strongest single predictor of a customer’s long-term
on a customer’s long-term behavioral intentions, after intention to remain with the main bank was affective attitude
allowing for the effects of all the other variables in the model. towards the bank, followed by overall satisfaction. Both
This finding raised the issue of how many respondents were predictors have a positive association with intentions to
in the left-hand side of the chart since this group could remain a customer: the more positive a customer’s attitude
represent a problem segment to the bank. An additional test towards the bank and the more satisfied they are, the more
was conducted and found that the number of respondents in likely they are to report that they will stay for another five
this category was low. There were 93 customers (5.4 percent) years. Switching benefits and switching costs were also found
to be strong predictors of long-term behavioral intentions, but
who rated their level of satisfaction 23, 85 (5.0 percent) who
unsurprisingly, with opposite directions of association (i.e. the
rated it as 22, and 104 (6.1 percent) who rated it as 2 1.
effect of switching benefits was negative and that of switching
These low numbers are in marked contrast to the satisfied costs was positive). The negative association (b ¼ 2 0.220,
customers who intended to remain with the bank long term, p , 0.001) for switching benefits indicates that the less
e.g. 582 (or 34 percent) respondents rated their level of benefits that customers see in switching, the more they intend
satisfaction as þ2 on the seven point scale of minus three to to remain with their main bank in the long run. Switching
plus three. Although the dissatisfied segment is small, these costs, on the other hand, had a positive association with the
customers could still be important to the bank should they dependent variable (b ¼ 0.208, p , 0.001): the higher the
belong to a profitable segment, in which case the bank could perceived switching costs, the more likely that a customer
implement a retention strategy. intends to remain with their main bank in the long term.
The model presented in Table II explained 56.9 percent of After allowing for the effects of all the other predictors in
the variation in long-term behavioral intentions. The model the model, length of relationship with the main bank was the
Table II Multivariate predictors of long-term behavioral intentions – multiple regression – based on all potential predictors
Unstandardized Standardized
Predictor coefficients Standard error coefficients (Beta) t P
Constant 2 0.523 0.065 2 7.993 , 0.001
Affective attitude towards the bank 0.311 0.034 0.319 9.234 , 0.001
Overall satisfaction 0.125 0.020 0.214 6.329 , 0.001
Switching benefits 2 0.219 0.021 20.220 210.373 , 0.001
Switching costs 0.204 0.018 0.208 11.262 , 0.001
Length of relationship 0.039 0.008 0.091 5.036 , 0.001
Overall satisfaction squared 0.024 0.006 0.078 4.054 , 0.001
Note: R2 ¼ 0.571; Adjusted R2 ¼ 0.569; F-value ¼ 294.436; df ¼ 6; n ¼ 1,333
151
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
fifth strongest predictor (b ¼ 0.091, p , 0.001). The longer a i.e. whether customers had recently closed an account with
customer had been banking with their main bank, the higher their main bank, was also significantly associated with the
their intentions to remain a customer for the next five years. dependent variable (b ¼ 0.067, p ¼ 0.011). Customers who
While these results are, perhaps, unsurprising, it does had recently closed an account had lower levels of long-term
highlight the importance of the customer’s emotional behavioral intentions. Lastly, residential location also revealed
connection to the bank. Collectively, variables based on the a significant association with long-term behavioral intentions
emotional connection to the bank (affective attitude, (b ¼ 0.062, p ¼ 0.018). Customers in urban areas have lower
satisfaction, empathy and assurance, and trust) overpower levels of long-term behavioral intentions than customers in
all other variables in explaining loyalty. Clearly however, the rural locations.
terms share much common meaning. The second group of The results of Table III, when compared and contrasted
factors seems to be the economic costs and benefits (fees, with those of Table II, highlight an important and difficult
charges, interest rates, and switching costs and benefits) challenge for management. Because those factors already
which will need to at least match those provided by known to management (shown in Table III) account for so
competitors. The combination of these two factors – little variance, the results in Table III highlight how difficult it
emotional connection and economic benefits – would is to understand, predict and thus manage these relationships.
appear to provide an impregnable “shield” for the customer After all, by the time the customer has opened an account
relationship and would defend against the customer with a competitor, it may be too late to preserve the
acquisition efforts of competitors. relationship. As the results of Table II demonstrate, loyalty is
The second model developed in this study was the one based overwhelmingly on the emotional connection and not
predicting long-term behavioral intentions based only on the on factors readily known to the bank. At the same time, the
factors known to the bank. A model was developed explaining “emotional” aspects identified in Table II go to the heart of
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
8.4 percent of long-term behavioral intentions (Table III). the relationship which the customer shares with the bank.
The model explained substantially less than the model based
on all predictors, which explained 56.9 percent (Table II). 6. Discussion
There is thus a substantial difference in the predictive power
of the two models. The results presented in the previous section offer an insight
The model presented in Table III shows that the variable into the associations between customer perceptions, perceived
“recently opened an account with the competitor” was the service quality, market conditions, and customer
strongest predictor of long-term behavioral intentions when characteristics (as independent variables) and a bank
only the factors known to the bank were tested for their customer’s intention to remain with their main bank in the
association with long-term behavioral intentions (b ¼ 0.144, long term, defined in this study as a five-year period (as the
p , 0.001). Customers who had not recently opened an dependent variable).
account with a competing financial services provider were During times of increased cost pressures and the financial
found to have higher levels of long-term behavioral intentions turmoil as a result of the 2008/2009 global financial crisis, it is
to remain loyal. Age also had a positive association with long- crucial for banks to better profile customers in order to
term behavioral intentions: the older the customer, the more improve customer satisfaction, relationship management
likely they were to intend to stay with their bank long term (CRM) and loyalty. This study finds that modeling based
(b ¼ 0.140, p , 0.001). Income, however, had a negative only on customer demographics and account openings and
association with the dependent variable, indicating that the closings explains roughly 8 percent, and thus has very limited
higher a customer’s income, the lower their intention to explanatory power in illuminating and predicting loyalty in
remain with their main bank long term (b ¼ 2 0.093, terms of a customer’s intention to remain or defect. In
p , 0.001). Even after allowing for the effect of age in this comparison, this study finds that, if loyalty is modeled based
model, the variable “length of relationship” was found to have on survey data, nearly 57 percent of customer intentions can
a significant association with long-term behavioral intentions. be predicted. While collecting satisfaction and market
The association was positive, i.e. the longer a customer had perception data such as switching costs and switching
been with their main bank, the more likely they were to intend benefits is expensive, the benefits should outweigh the costs
to stay with their main bank long term (b ¼ 0.081, of conducting the survey if the profiling of customers can be
p ¼ 0.003). The second of the recent behavior variables, substantially improved. It appears from these results that
Table III Multivariate predictors of long-term behavioral intentions – multiple regression – based on predictors known to the bank
Unstandardized Standardized
Predictor coefficients Standard error coefficients (Beta) t P
Constant 2 1.726 0.242 2 7.134 , 0.001
Recently opened account with competitor 0.358 0.066 0.144 5.453 , 0.001
Age 0.087 0.017 0.140 5.164 , 0.001
Income 20.060 0.017 2 0.093 23.545 , 0.001
Length of relationship 0.35 0.012 0.081 3.007 0.003
Recently closed account with main bank 0.222 0.087 0.067 2.562 0.011
Residential location 0.122 0.052 0.062 2.370 0.018
Note: R2 ¼ 0.088; Adjusted R2 ¼ 0.084; F-value ¼ 23.134; df ¼ 6; n ¼ 1,427
152
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
profiling can be used to detect customers with an intention to of a two-way relationship with the service supplier.
defect, and thus CRM may prove useful in attempting to Customers, quite reasonably, will increasingly expect to be
rescue the relationship. Also, a model explaining 57 percent of rewarded for their loyalty.
loyalty allows a bank to profile “attached” customers who are
not likely to defect, and to direct CRM retention strategies to 7. Conclusion
that segment. Personalized customer service can be directed
toward those segments determined to be of strategic This study modeled customers’ long-term intentions to
importance. Cost/benefit analyses of increased customer remain with their main bank, and contrasted the full model
service can be conducted for specific loyalty segments, and with one based only on factors known to the bank. It was
thus the likelihood of their reactions to CRM can be shown that the latter model had a much lower explanatory
associated with their level of profitability to the bank. power than the model based on all potential predictors. The
Resources can therefore be allocated to segments that are full model explained 56.9 percent of the variation in the
“attached” and profitable (retention) and also to the ones that dependent variable but the model based only on factors
are likely to defect, but are actually profitable to the bank known to the bank explained a modest 8.4 percent of the
(rescue strategy). Conversely, less attention and resources variation in loyalty intentions.
should be implemented for segments that are likely to defect, In testing a range of potential determinants of loyalty in
but which are also not profitable to the bank in the first place. retail banking, this study found that customer perceptions
This, in turn, will increase the returns on marketing such as overall satisfaction and affective attitude have strong
investments. associations with behavioral intentions. It was also
While this study provides an argument for profiling demonstrated that the association between satisfaction and
customers based on survey data as a basis for customer loyalty is of a non-linear nature.
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
relationship management, the study also models determinants The study also tested perceived market conditions as
for retention and defection. Both loyalty and disloyalty can be potential predictors of loyalty in retail banking. One of these
predicted based on a customer’s affective attitude, overall conditions, switching costs, was found to be a unique
satisfaction and perception of switching costs and benefits. predictor of long-term intentions to remain a customer. This
This study has found that customer satisfaction, while result suggests that switching costs contribute significantly to
undoubtedly important, is also quite complex. The customer loyalty. This may be particularly so in cases where
association between overall satisfaction and long-term switching is complicated, such as with debts, mortgages, loans
behavioral intentions was found to be non-linear in this and some high-yield deposit funds. Further, switching
study. Customers who are very satisfied with their bank have benefits, which also captured perceived market conditions,
an over-proportionately high level of intention to remain with was a unique negative predictor of long-term intentions to
their bank in the long run. More dangerously, Figure 1 shows remain with the bank, further supporting the hypothesis that
that customers who are very dissatisfied, and those who are perceived market conditions can be used and managed to
mildly dissatisfied are nearly equally likely to defect. predict customer loyalty.
Customer care for banks is thus complex and needs to be
managed on a case-by-case basis. In this context, regular 8. Implications for practice
monitoring of individual customers’ satisfaction levels would
make abundant sense. In practice, this would have to be This study has practical implications for bankers and service
conducted in a similar way to the airline industry that has providers in other industries, especially those based on
fine-tuned segmenting of their customers by officially “membership” or “subscription” relationships, such as
categorizing customers into standard, silver, gold and insurance products, frequent travelers, churches, charities,
platinum members. The same issues exist in valuing retail and professional associations. In other “non-subscription”
banking customers; however, the complexities in measuring businesses such as restaurants, resorts and casinos, the logic
banking relationships are not inconsiderable. For airlines, the of identifying “tiered” loyalty segments and matching “tiered”
value of a customer is driven overwhelmingly by ticket service offerings is equally relevant, and this study identifies
revenue over time. In banking, however, valuing a customer potentially generic drivers of customer loyalty (affective
relationship will necessarily need to include value of deposits, attitude, overall satisfaction, switching benefits and costs,
investments, debts and loans, transaction volumes and costs, and length of the relationships). While the specifics of the
credit card value and transactions, collateral relationships and model identified in this study may not be universal, this study
credit-worthiness. For airline customers, their status is delineates a “generic” process for identifying specific drivers
routinely communicated to consumers as part of their of loyalty across a broad range of service industry contexts.
frequent flyer programs; however, customers are typically Having identified “tiers” of customers in terms of their value
not made aware of their standing with their bank, unless they or “preferred” status, the challenge for organizations such as
fall into the “privileged” or “preferred” categories. Not restaurants, resorts and casinos next becomes that of
communicating the status may be beneficial for customers delivering matching “tiered” service offerings.
who have been categorized in a low-tiered (typically the “low The results of this study provide important justification for
value/high cost” segment), but customers in high value/profit the implementation of customer relationship management
tiers may not be aware of their “preferred” status. The clear programs, and have highlighted the drivers of loyalty and
implication of this process is that banks will seek to match switching. The task of “customer acquisition” is typically
service provision to the value of the relationship and to the performed within the marketing function as it relies on
customers’ needs, which may raise ethical issues that are attracting non-customers to the bank through the
beyond the scope of this paper. In any case, being part of a communication of a compelling, competitive product. This
loyalty program may be perceived by customers as some form task of prospecting for customers typically relies on a
153
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
combination of mass market communications (such as almost certainly true for many banking customers around the
television and press), and with more targeted mechanisms (developed) world.
such as targeted online advertising, direct mail and email. The In conclusion, this study found that customer perceptions,
difficulty which this study has identified is that profiling market conditions, and some customer characteristics were
customers based on demographic and limited activity data unique predictors of behavioral intentions. The models
seems to offer only modest predictive power. Moreover, developed in this study could assist banks to profile
successful capture of target customers also depends on a customers who are likely to defect or remain long term.
bank’s offering a competitive package in terms of fees, While explaining behavior is generally a challenging task, this
charges, interest rates, and account conditions. This study study demonstrates that nearly 57 percent of behavioral
provides clear indications of the likely profile of “switchers” intentions in retail banking can be explained. The challenge
who could be attracted to the bank – young, professional, for banks is to carefully manage the drivers of customer
high-income earners who are likely to be concerned with loyalty better than their competitors. As always, the dividend
“cost/benefit” considerations. At the same time, it should be for those banks which are successful is the long-term loyalty of
recognized that they may also defect from a bank for the same valuable, and valued, customers.
reasons.
In contrast to “acquisition”, customer “retention” relies on
the quality of the relationship and the experience which the Note
customer has with their bank. This imperative is primarily an
operational issue and should be the primary focus of customer 1 Customers do not typically “repurchase” in retail banking
service staff, personal bankers and customer relationship unless they apply for a new product, e.g. a new credit
managers. Creating satisfied, happy customers is crucial to card. Typically, accounts are used on a continuous basis.
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
154
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
Cronin, J.J. Jr and Taylor, S.A. (1992), “Measuring service McQuarrie, E.F. (1988), “An alternative to purchase
quality: a reexamination and extension”, Journal of intentions: the role of prior behavior in consumer
Marketing, Vol. 56 No. 3, pp. 55-68. expenditure on computers”, Journal of the Market Research
Derksen, S. and Keselman, H.J. (1992), “Backward, forward Society, Vol. 30, pp. 407-37.
and stepwise automated subset selection algorithms: Methlie, L.B. and Nysveen, H. (1999), “Loyalty of on-line
frequency of obtaining authentic and noise variables”, bank customers”, Journal of Information Technology, Vol. 14
British Journal of Mathematical and Statistical Psychology, No. 4, pp. 375-86.
Vol. 45 No. 2, pp. 265-82. Mittal, B. and Lassar, W.M. (1998), “Why do customers
East, R. and Hammond, K. (1999), “Satisfaction and switch? The dynamics of satisfaction versus loyalty”,
retention”, paper presented at the Australia and New Journal of Services Marketing, Vol. 12 No. 3, pp. 177-94.
Zealand Marketing Academy Conference, University of Mooradian, T.A. and Olver, J.M. (1997), “I can’t get no
New South Wales, Sydney. satisfaction: the impact of personality and emotion on
Eklof, J.A., Hackl, P. and Westlund, A. (1999), “On postpurchase processes”, Psychology and Marketing, Vol. 14
measuring interaction between customer satisfaction and No. 4, pp. 379-93.
financial results”, Total Quality Management, Vol. 10 Nos 4/ Moutinho, L. and Smith, A. (2000), “Modelling bank
5, pp. S514-22. customer satisfaction through mediation of attitudes
Fornell, C. (1992), “A national customer satisfaction towards human and automated banking”, International
barometer: the Swedish experience”, Journal of Marketing, Journal of Bank Marketing, Vol. 18 No. 3, pp. 124-34.
Vol. 56 No. 1, pp. 6-21. Nielsen, J.F., Terry, C. and Trayler, R.M. (1998), “Business
Garland, R. and Gendall, P. (2004), “Testing Dick and Basu’s banking in Australia: a comparison of expectations”,
customer loyalty model”, Australasian Marketing Journal, International Journal of Bank Marketing, Vol. 16 No. 6,
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
155
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
Rust, R.T. and Zahorik, A.J. (1993), “Customer satisfaction, Fraser University (SFU) in Canada as an MBA Alumni and
customer retention, and market share”, Journal of Retailing, research collaborator. Prior to academia, Chris spent several
Vol. 69 No. 2, pp. 193-215. years in the Swiss banking industry. Chris Baumann is the
Shively, T.S., Allenby, G.M. and Kohn, R. (2000), “A corresponding author and can be contacted at:
nonparametric approach to identifying latent relationships [email protected]
in hierarchical models”, Marketing Science, Vol. 19 No. 2, Greg Elliott is Professor of Business (Marketing) in the
pp. 149-62. Department of Marketing and Management at Macquarie
Sivadas, E. and Baker-Prewitt, J.L. (2000), “An examination University. Prior to taking up this appointment he was Head
of the relationship between service quality, customer of the Department of Business in the Division of Economic
satisfaction, and store loyalty”, International Journal of and Financial Studies at Macquarie University. He has also
Retail and Distribution Management, Vol. 28 No. 2, held academic positions at a number of other Australian and
pp. 73-82. overseas universities. His current research interests are in the
Spreng, R.A., Harrell, G.D. and Macjoy, R.D. (1995), fields of financial services marketing, cross-cultural marketing
“Service recovery: impact on satisfaction and intentions”, (with an emphasis on China), country-of-origin effects and
Journal of Services Marketing, Vol. 9 No. 1, pp. 15-23. social marketing. He currently teaches marketing
Söderlund, M. (1998), “Customer satisfaction and its management, strategic marketing and services marketing.
consequences on customer behaviour revisited: the impact He has also had extensive experience in management
of different levels of satisfaction on word-of-mouth, education and training in Australian and Asia for major
feedback to the supplier and loyalty”, International Journal international and local companies.
of Service Industry Management, Vol. 9 No. 2, pp. 169-88. Suzan Burton is a Professor of Marketing at the University
Taylor, S.A. and Baker, T.L. (1994), “An assessment of the of Western Sydney, Sydney Australia. Dr Burton has extensive
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
relationship between service quality and customer consulting experience in the public and private sectors in the
satisfaction in the formation of consumers’ purchase design and implementation of marketing strategy, particularly
intentions”, Journal of Retailing, Vol. 70 No. 2, pp. 163-78. in the area of customer feedback and information systems.
Trayler, R., Nielson, J. and Jones, R. (2000), “How small She is the co-author of the top selling marketing textbook in
business firms select a bank: comparisons between the Australia, the co-editor of an edited book, Surviving Your
United States and Australia”, Journal of Financial Services Thesis, and the author of over 80 refereed journal articles and
Marketing, Vol. 5 No. 1, pp. 73-85. conference papers. Dr Burton has received teaching awards
Veloutsou, C., Daskou, S. and Daskou, A. (2004), “Are the from Macquarie University (the Macquarie University Award
determinants of bank loyalty brand specific”, Journal of for Teaching Excellence) and from the Australian and New
Financial Services Marketing, Vol. 9 No. 2, pp. 113-25. Zealand Marketing Academy Conference (the Pearson
Vilcassim, N.J. and Jain, D.C. (1991), “Modeling purchase- Education ANZMAC Distinguished Marketing Educator of
timing and brand-switching behavior incorporating the Year Award). Her research has been recognized by eight
explanatory variables and unobserved heterogeneity”, awards from conferences and journals, and she has been the
Journal of Marketing Research, Vol. 28 No. 1, pp. 29-41. Chief Investigator on Australian Research Council (ARC)
Woodside, A.G. and Bearden, W.O. (1977), “Longitudinal funded work in the marketing of socially undesirable goods.
analysis of consumer attitude, intention, and behavior She is a reviewer for the Australian Research Council, and a
toward beer brand choice”, Advances in Consumer Research, member of the Editorial Board of International Journal of Bank
Vol. 4 No. 1, pp. 349-56. Marketing.
Yu, Y.T. and Dean, A. (2001), “The contribution of
emotional satisfaction to consumer loyalty”, International Executive summary and implications for
Journal of Service Industry Management, Vol. 12 No. 3,
managers and executives
pp. 234-50.
Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), This summary has been provided to allow managers and executives
“The behavioral consequences of service quality”, Journal a rapid appreciation of the content of the article. Those with a
of Marketing, Vol. 60 No. 2, pp. 31-46. particular interest in the topic covered may then read the article in
toto to take advantage of the more comprehensive description of the
About the authors research undertaken and its results to get the full benefit of the
material present.
Chris Baumann is a Senior Lecturer at Macquarie University
in Sydney, Australia. His research includes customer loyalty, Deserved or not, banking the world over has a tarnished
competitiveness in education and society, ethnic marketing, reputation. All the more reason for retail banks to think about
and East Asia (China and Korea). Dr Baumann has in excess how to persuade existing customers that they are getting
of 30 publications in international journals and conference competitive services and products combined with service
proceedings with roughly 100 citations. Chris has been quality and satisfaction essential to earning their loyalty.
awarded several times for his research and teaching, including Deserved or not, it’s many people’s perception that retail
from the Australian government for his enthusiastic approach banks and other financial institutions are “all the same” these
to education. At the Academy of International Business (AIB) days. All the more reason to find ways to convince customers
Conference in 2010, Chris won a Best Reviewer Award. He to stay loyal and persuade others to defect from rival
has been appointed as a Visiting Professor at Seoul National institutions.
University (SNU) in South Korea and at Aarhus University in Given the industry’s fierce competition, intensified by the
Denmark, and Chris also teaches Macquarie students in global financial crisis, bankers need to better understand the
Hong Kong. He has a long-standing relationship with Simon drivers of customer loyalty. In addition, there is conclusive
156
Modeling customer satisfaction and loyalty Journal of Services Marketing
Chris Baumann, Greg Elliott and Suzan Burton Volume 26 · Number 3 · 2012 · 148 –157
evidence that commercial customers and private consumers The study has practical implications for bankers and service
no longer just bank with one institution but are increasingly providers in other industries, especially those based on
using a number of banks at the same time and direct their “membership” or “subscription” relationships, such as
“loyalty” towards multiple banks. The motivators for multi- insurance products, frequent travelers, churches, charities,
banking may include the desire to spread risk, and and professional associations. In other “non-subscription”
opportunism, in addition to a range of structural businesses such as restaurants, resorts and casinos, the logic
explanations such as location, family and business of identifying “tiered” loyalty segments and matching “tiered”
relationships. For all financial institutions, a better service offerings is equally relevant, and this study identifies
understanding of customer loyalty and its indicators, and potentially generic drivers of customer loyalty (affective
being able to predict future intentions have become crucial. attitude, overall satisfaction, switching benefits and costs,
In “Modeling customer satisfaction and loyalty: survey data and length of the relationships).
vs data mining” Chris Baumann et al. investigate the factors While the specifics of the model identified in this study may
that help to explain consumers’ behavioral intentions in retail not be universal, it delineates a “generic” process for
banking. In particular, they examine the associations between identifying specific drivers of loyalty across a broad range of
customer satisfaction, perceived service quality, recent and service industry contexts. Having identified “tiers” of
current consumer behavior, and a customer’s long-term customers in terms of their value or “preferred” status, the
intentions to remain a customer. challenge for organizations such as restaurants, resorts and
They conclude that banks need to work assiduously at casinos next becomes that of delivering matching “tiered”
ensuring that they continue to offer competitive products and
service offerings.
that they continue to closely manage personal relationships
The task of “customer acquisition” is typically performed
and reward valued customers – in other words, that they go to
within the marketing function as it relies on attracting non-
the heart of customer relationship management.
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)
157
This article has been cited by:
1. Yujie Wei, Faye S. McIntyre, Richard Soparnot. 2015. Effects of relationship benefits and relationship proneness on relationship
outcomes: a three-country comparison. Journal of Strategic Marketing 23, 436-456. [CrossRef]
2. Peter Schofield, Peter Reeves. 2015. Does the factor theory of satisfaction explain political voting behaviour?. European Journal
of Marketing 49:5/6, 968-992. [Abstract] [Full Text] [PDF]
3. Shuiqing Yang. 2015. Understanding B2B customer loyalty in the mobile telecommunication industry: a look at dedication and
constraint. Journal of Business & Industrial Marketing 30:2, 117-128. [Abstract] [Full Text] [PDF]
4. Kwabena G. Boakye, Thomas McGinnis, Victor R. Prybutok, Audhesh K. Paswan. 2014. Development of a service continance
model with IT service antecedents. Journal of Retailing and Consumer Services 21, 717-724. [CrossRef]
5. Wang Rongxin, Xiu Debin, Zhou Yushan, Liu Congning, Shi YunboData Mining Research in Early Warning Model of Chlorine
Gas Monitoring Wireless Sensor Network 711-715. [CrossRef]
6. Huimin Jiang, C. K. Kwong, W. H. Ip, Zengqiang Chen. 2013. Chaos-Based Fuzzy Regression Approach to Modeling Customer
Satisfaction for Product Design. IEEE Transactions on Fuzzy Systems 21, 926-936. [CrossRef]
7. Wang Mengmeng, Xiu Debin, Wang Rongxin, Du Fang, Shi YunboData mining research in wireless sensor network based on
genetic BP algorithm 243-247. [CrossRef]
8. Jaroslav Belás, Lubor Homolka. 2013. The development of customers’ satisfaction in the banking sector of Slovakia in the
turbulent economic environment. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis 61, 1995-2003. [CrossRef]
Downloaded by 178.18.19.221 At 03:53 26 October 2015 (PT)