Call Center Services And Customer Loyalty - A Study In The Vietnamese Banking Industry.pdf

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Hong Nhung CALL CENTER SERVICES AND CUSTOMER LOYALTY A study in the Vietnamese banking industry MASTER OF BUSINESS (HONOURS[.]

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Hong Nhung CALL CENTER SERVICES AND CUSTOMER LOYALTY A study in the Vietnamese banking industry MASTER OF BUSINESS (HONOURS) Ho Chi Minh City – Year 2015 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Le Hong Nhung CALL CENTER SERVICES AND CUSTOMER LOYALTY A study in the Vietnamese banking industry ID: 22120061 MASTER OF BUSINESS (HONOURS) SUPERVISORS: PROF NGUYEN DONG PHONG DR NGUYEN PHONG NGUYEN Ho Chi Minh City – Year 2015 TABLE OF CONTENTS ABSTRACT CHAPTER 1: INTRODUCTION 1.1 Research background 1.2 Research gap 1.3 Research questions and objectives 1.4 Research scope and methodology 1.5 Thesis Structure CHAPTER 2: LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT 11 2.1 Theoretical foundation 11 2.1.1 Definition of a call center 12 2.1.2 Customer Loyalty 13 2.1.3 Perceived Customer Orientation 14 2.1.4 Customer Satisfaction 16 2.1.5 Perceived Service Quality 17 2.2 Proposed research model and hypotheses 20 Figure 1: Conceptual model 21 CHAPTER - RESEARCH METHODOLOGY 23 Figure 2: Research process 24 3.1 Measurement of constructs 24 3.1.1 Perceived service quality 25 3.1.2 Perceived customer orientation 26 3.1.3 Customer satisfaction 26 3.1.4 Customer loyalty 27 3.2 Sample 28 3.3 Data analysis method 29 CHAPTER 4: DATA ANALYSIS AND RESULTS 32 4.1 Reliability Analysis 32 Table 1: Item Statistics 33 4.2 Exploratory Factor Analysis (EFA) 34 4.2.1 EFA for individual construct 34 4.2.2 Multidimensional constructs – Perceived service quality and Customer loyalty 34 4.2.3 Customer orientation 35 4.2.4 Customer satisfaction 35 Table 2: KMO and Bartlett's Test 36 4.2.5 EFA for all variables 36 Table 3: KMO and Bartlett's Test 36 Table 4: RESULTS OF JOINT FACTOR ANALYSIS FOR ALL SCALES 37 4.3 Regression analysis 38 4.3.1 Simple regression analysis 38 Table 5: Model Summary of simple regression analysis 38 Table 6: ANOVA of simple regression analysis 39 Table 7: Coefficients of simple regression analysis 40 4.3.2 Multiple regression analysis: 40 Table 8: Model Summary of multiple regression analysis 41 Table 9: ANOVA of multiple regression analysis 41 Table 10: Coefficients of multiple regression analysis 43 Table 11 46 Summary of hypotheses testing result 46 CHAPTER 5: DISCUSSION AND IMPLICATION 47 5.1 Discussion 47 5.2 Implication 48 5.3 Limitations and directions for future research 50 REFERENCES 52 APPENDICES 62 Appendix 1: Questionnaire: Call center service and customer loyalty in bank services 62 APPENDIX 2: 65 EFA AND RELIABILITY TEST RESULTS - SCALES WITHOUT MODIFICATION 65 APPENDIX 3: 67 RESULTS OF UNIDIMENSIONALITY AND RELIABILITY TEST - REFINED SCALES 67 ABSTRACT This study aims to explore the impact of perceived service quality, customer satisfaction, and customer orientation on customer loyalty towards banking call center service A sample of 223 customers who used banking call center service in Ho Chi Minh City, Viet Nam was surveyed to test the model Structural equation modeling was used to analyze the data It found that customer satisfaction and customer orientation had positive effects on customer loyalty It also found that perceived service quality had positive effects on customer satisfaction Limitation of this study shows that the sample is selected conveniently and just from several districts in Ho Chi Minh City, so it is not representative of the population The finding suggests that banking managers should concentrate on service quality, make their services different and prominent from other banks Keywords Call center, customer loyalty, commercial bank, customer orientation CHAPTER 1: INTRODUCTION Banks play an important and active role in the financial and economic development of a country An effective banking system greatly influences the growth of a country in various sectors of the economy This study would like to explore the impact of perceived service quality, customer satisfaction, and customer orientation on customer loyalty towards banking call center service The first chapter shows you research background, research gap in Viet Nam situation, research questions and objectives, research scope and methodology, and thesis structure of the study 1.1 Research background In recent years, the banking industry plays an important role in Vietnam’s economy The contribution of commercial banks to increasing economic development is great The commercial banks not only continue being a great capital flow channel but also contributing to keep stable monetary purchasing power in economy As the role of finance intermediary, commercial banks fund surplus money from savers and transfer into loans for borrowers who not have enough money to carry out a desired activity This helps enterprises and economy running smoothly and be an effectively capital flow channel (Mof, 2012).The commercial banks enforce monetary policy of the State Bank of Viet Nam (SBV) In 2013, SBV decreased operation interest rate 2% a year, decrease VND short-term interest rate 3% a year for priority sectors; decreases VND deposit interest rate ceiling 1% a year (Cafe F, 2014) Credit growth in 2013 reached 11%, higher nearly 8.91% than end of 2012 Raising capital maintained high growth rate at end of 2013, reached 15.6% compared to end of 2012 (Security Investment, 2014) These evidences show that the commercial banks become important capital flow channel for economy and contribute to keep monetary purchasing in stable Prof Dr Tran DinhThien – Director of Viet Nam Institute of Economics mentioned that control inflation rate around 6.04% was important contribution in operation of Government, attempt of the Banking industry and Finance in 2013 (Deposit Insurance of Vietnam, 2014) Allowance foreign banks’ investment brings to commercial banks many opportunities and challenges Practitioners in the banking industry face a large number of complex challenges in the global marketplace (Malhotra and Mukherjee, 2004) First of all, competition in banking industry becomes fierce According to the terms at joining in WTO in 2006, the Vietnamese banking industry has opened for seven years Foreign finance institutes have been allowed to hold Vietnamese commercial joint stock banks, and foreign bank appearance In the Vietnamese banking industry, switching cost of new commercial banks for attracting customers is not high, because current banks in Vietnam have not been outstanding in banking products and services strategy Competitive pressure of bank industry increases when foreign banks join in Vietnam market Foreign banks have a lot of advantages in professional services and modern technology Furthermore, foreign banks have wide networks all over the world (The Saigon Times, 2009) Foreign banks with professional products and services force Vietnamese commercial banks to have a change Customer service is still a big problem for Vietnamese commercial banks, and established call centers as a solution for them A competitiveness bank has a strong customer service, especially, in after-sell service The relationship of customer and bank should not end at the bank door Customers’ access after transaction adds value to the transaction (Feinberg et al, 2002) Bank call centers in Viet Nam have just established for less than ten years The first call center in Vietnamese commercial banks is Call center 247 of Asia Commercial Bank, established in 2005 This call center hasbeen appreciated since established (Viet Stock, 2005) Overall, banks in Viet Nam have less experience in this operation Call center is still a new service in Vietnam banking system 1.2 Research gap Call center allow bank to build, maintain, and manage customer relationships by conducting transactions, giving information, answering questions, solving problems and resolving complaints quickly, and less expensively than face to face contact Indeed, it appears that customers now expect and demand telephone and internet access to banks 24 hours a day seven days a week 365 days a year (Feinberg et al, 2002) In the literature, a number of studies about banking call center services (Feinberg et al, 2002; Dean, 2004; Keiningham et al, 2006; Jaiswal, 2008; Whiting &Donthu, 2009; Lau et al, 2013) have been conducted up to now There is little research developed for examining the determinants of customer loyalty on banking call center services In addition, very few scholars the research about this issue in Asia, especially, in Viet Nam Therefore, this research aim is to test the effects of factors such as service quality, customer orientation, customer satisfaction on customer loyalty in Vietnamese bank call centers The expectation result appreciates customer loyalty in Vietnamese commercial bank through call center service Based on this result, bank managers can satisfy customer needs, enhance service quality, build, and improve their call center service 1.3 Research questions and objectives The main purpose of this study is to identify adoption and development of Vietnamese commercial bank call center services through call center factors influencing directly to customer loyalty to the bank for a developing country case as well as how the call center factors influencing customer loyalty to the bank in Vietnam The study hopes to add to limited knowledge of Vietnamese banking customers by clarifying which factors are essential and critical for call center services Factors influencing the customer loyalty to the bank may be the foundations of related organizations that can help them to develop services more effective This study aims to examine key call center factors influencing the customer loyalty to the bank with these specific objectives identified as following To identify significant call center factors that influence customer loyalty to the bank The corresponding research question developed is: RQ1: What are the main factors influencing customer loyalty to the bank in Vietnam? To explore how the call center factors affect customer loyalty to the bank in Vietnam The corresponding research question developed is: RQ2: How the factors influence customer loyalty to the bank in Vietnam? This study aims to research the customer loyalty to bank in Vietnam by examining influencing factors such as service quality of the call center service, customer satisfaction toward the call center and customer orientation of call center service Call center services is a broad field but according to the specific of the context of this study, questionnaires of this study was only collected among people who have experience and tendency in using call center services over years in Ho Chi Minh City of Vietnam for necessary analysis 1.4 Research scope and methodology The study was carried out in Ho Chi Minh City using a sample of adults in working age Adults in working age have experience with bank services, because, nowadays, most of companies use salary payment service through ATM cards Moreover, adults in working age interact with potential customers Naver and Slater (1990) also pointed out that customer orientation is to understand the customers’ value chain, including current and future changes In conclusion, the central essence of customer beliefs is to emphasize customer first and a long term relationship with customers Customer orientation is a major component of service climate In terms of the practices related to service climate, Schneider et al (1998) suggested three areas: customer orientation, managerial practices, and customer feedback Customer orientation is the degree to which an organization emphasizes meeting customer needs and expectations for service quality (Dean, 2002) Customer orientation of the company also appears to be linked to customer loyalty A market orientation results in a customer-driven company, which is rewarded with customer loyalty and retention, and consequently superior performance (Naver and Slater, 1990) Schneider et al (1998) suggest that the common element, customer orientation, is likely to be associated with both service quality and customer loyalty Customer orientation of call centers affects customer loyalty to the providing organization (Dean, 2002) Customer orientation is directly related to customer loyalty, with some of the effect transmitted by perceived service quality This means that customers use the quality of call center service interactions as an indicator of an organization's commitment to understanding and meeting their needs (Dean, 2007) In view of the literature above, the following hypothesis is formulated to guide the study: H1: Perceived customer orientation of the call center is positively related to customer loyalty to the commercial bank 15 2.1.4 Customer Satisfaction Satisfaction has been analyzed in-depth in the marketing literature (Oliver, 1980, 1981; Johnson and Fornell, 1991; Edvardsson et al., 2000; Gustafsson et al., 2005) Oliver (1981, p 29) firstly defined it in the consumption context as "the summary psychological state resulting when the emotion surrounding disconfirmed expectations is coupled with the customer's prior feelings about the consumption experience." Anderson, Fornell and Lehman (1994) develop a more clear explanation for customer satisfaction: the customer satisfaction was one kind of purchase behaviors and the use experience of product, and it is the result which was generated by the buyer expected; customer satisfaction would be evaluated between that people used product consistency and the product performance and belief before purchase If there is consistency, the customer will satisfy; otherwise, they will generate unsatisfied result Focusing attention on services, satisfaction may be defined as an affective customer condition that results from a global evaluation of all the aspects that make up the customer relationship with the service provider (Severt, 2002) Satisfaction is understood as a global evaluation or attitude that evolves over time resulting from the interactions produced by the customer and the organization in the relationship (Eshghi et al., 2007) Every time a customer contacts a call center, an opportunity exists to transform a customer problem into a positive experience, resulting in a positive view of the organization (Barlow and Moller, 1996) Call centers which fail to provide a level of service that satisfies the customer are likely to face negative word of mouth publicity and loss of business to competitors (Wade, 2007) The precise nature of the interaction between customer satisfaction and loyalty is notoriously elusive but satisfaction would appear to have a positive effect on service loyalty 16 (Bloemer et al., 1999) Customer satisfaction is defined as the attitude resulting from what customers believe should happen (expectations) compared to what they believe did happen (performance perception) (Neal, 1999) Customers exhibit repeat purchase behavior from a service provider when they possess a positive attitudinal disposition toward the provider and consider using only one provider when a need for this service exists (Gremler& Brown, 1996) If a customer is satisfied with a firm, service or product, then a greater level of customer loyalty can be achieved (Lau et al., 2013) Customer satisfaction and loyalty are essential for banking service providers as the main source of customer acquisitions is wordof-mouth of the existing clientele Moreover, the acquisition of new customers is a lengthy and costly process Thus, providers should ensure customer satisfaction and loyalty of its existing clientele (Seiler et al., 2013) Loyalty is vulnerable because even if the customers are satisfied with the services rendered by the financial institutions, there is always an element of defect if they think they can get better value for money in other institutions Satisfaction is essential but not enough to gauge loyalty among customers In other words, we can have customer satisfaction without loyalty but it is difficult to comprehend having loyalty without satisfaction Therefore, all organizations should try and satisfy their customers and to ensure their loyalty (Anantha Raj, 2013) The following hypothesis is offered: H2: Customer satisfaction has a positive influence on customer loyalty 2.1.5 Perceived Service Quality Perceived service quality is defined as: “the consumer’s judgment about an entity’s excellence or superiority … it is a form of attitude … and results from a comparison of expectations with perceptions of performance” (Parasuraman et al, 1988, p.13) 17 Service quality involves around the ideas that it is the result of comparisons which customers make between their expectations about a service and their perceptions of the way the service has been performed Poor quality places a firm at a competitive disadvantage.(Christopher et al., 2005) For example, if customers perceive unsatisfied quality, they may change their business to elsewhere Service quality is difficult to identify and priorities performance improvements that are required, unless both perceptions and expectation of service are measured (Wu et al., 2014) Parasuraman, Berry, and Zeithaml(1991) refined into five dimensions to measure customer’s perceived value of service quality, which is known as SERVQUAL SERVQUAL Dimensions in Relation to the Banking Sector Five dimensions of SERVQUAL have been developed for the service sectors: tangibility, reliability, assurance, responsiveness, and empathy Tangibility represents physical facilities, equipment, and appearance of personnel Examples of the tangible factor related to banks include comfortable store designs, up-todate equipment for customer use and sufficient staff to provide service These aspects are important for retail banks, because there are extensive face-to-face contacts between a customer and an employee Therefore, maintaining a professional and comfortable store environment can increase customer satisfaction The next dimension is responsiveness, which represents the willingness to help customers and provide prompt service This service aims to enhance customer satisfaction Reliability means the ability to perform the promised service dependably and accurately The major reason for customers to choose banks for investment funds is because of the dependability and reputation of banks Banks always promise customers a high level of security during transactions Banking service can increase customers’ confidence and trust if 18 ... this operation Call center is still a new service in Vietnam banking system 1.2 Research gap Call center allow bank to build, maintain, and manage customer relationships by conducting transactions,... each of factors in the model, and research model of the study The foundational theories, definition of a call center and the related theories of each construct, including customer loyalty, customer. .. influence customer loyalty to the bank in Vietnam? This study aims to research the customer loyalty to bank in Vietnam by examining influencing factors such as service quality of the call center