Determinants of customer loyalty in retail banking a case study of BIDVs branches and transaction offices in lam dong province

DETERMINANTS OF CUSTOMER LOYALTY IN RETAIL BANKING A case study of BIDV’s branches and transaction offices in Lam Dong Province In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In MARKETING By Student’s name: Ms: NGUYEN TRAN TRA LINH (MBA04019) Advisor: DR. NGUYEN QUYNH MAI International University - Vietnam National University HCMC August 2013 DETERMINANTS OF CUSTOMER LOYALTY IN RETAIL BANKING A case study of BIDV’s branches and transaction offices in Lam Dong Province In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In MARKETING By Ms: Nguyen Tran Tra Linh ID: MBA04019 International University - Vietnam National University HCMC August 2013 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree. Approved: ---------------------------------------------- --------------------------------------------- Dr. Mai Ngoc Khuong - Chairman Dr. Nguyen Quynh Mai - Advisor ---------------------------------------------- --------------------------------------------- Dr. Nguyen Quynh Mai - Secretary Dr. Ho Thi Bich Van – Examiner 2 ---------------------------------------------- --------------------------------------------- Dr. Nguyen Quang Trung – Examiner 1 Dr. Tu Van Binh - Member Acknowledge To complete this thesis, I have been benefited from the following people: First of all, I would like to express deep gratitude to my advisor, Dr. Nguyen Quynh Mai, School of Business, International University, Hochiminh City, for her effective academic advisory and her encouragement. Secondly, I would like to send my sincere thank you to the professors and lecturers at School of Business Administration, International University. The knowledge and skills that I have learned from them are useful to complete this thesis. My thanks also go to my friends, other students of MBA111, who are doing their theses at the same time with me, for your share and encouragement. I would like to thank managers and employees at BIDV‟s branches and transaction offices in Lam Dong Province, for their enthusiasm and help. Last but not least, I would like to express great gratitude to my parents and my sister who give me encouragement and financial support through the whole course. They have supported me with all the love. i Plagiarism Statements I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions. I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City. ii Copyright Statement This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis and no information derived from it may be published without the author‟s prior consent. © Nguyen Tran Tra Linh/ MBA04019/2011-2013 iii Table of Contents CHAPTER ONE – INTRODUCTION .........................................................................1 1. Background...........................................................................................................1 1.1. Overview of the banking industry in Vietnam ................................................1 1.2. Overview of the banking industry in Lam Dong Province ..............................2 1.3. BIDV‟s general Information and the network in Lam Dong Province .............3 1.3.1. General Information of BIDV .................................................................3 1.3.2. BIDV‟s network in Lam Dong Province .................................................4 2. Research Problem .................................................................................................5 3. Research Question ................................................................................................7 4. Research Objective ...............................................................................................7 5. Scope And Limitation ..........................................................................................7 6. Significance Of The Study ....................................................................................8 7. Structure Of Thesis ...............................................................................................8 CHAPTER TWO – LITERATURE REVIEW ............................................................9 1. 2. Customer Loyalty .................................................................................................9 1.1. Definition.......................................................................................................9 1.2. Importance of Customer Loyalty .................................................................. 10 1.3. Customer Loyalty Index ............................................................................... 11 Factors influence Customer Loyalty .................................................................... 12 2.1. Customer Satisfaction .................................................................................. 13 2.2. Service Quality ............................................................................................ 13 2.2.1. Concept ................................................................................................ 13 2.2.2. Impact of service quality on customer loyalty ....................................... 14 2.2.3. Service Quality Measurement ............................................................... 14 2.2.4. Service Quality Measurement in the banking industry ........................... 15 2.3. Corporate Image .......................................................................................... 16 2.4. Customer Trust ............................................................................................ 16 2.5. Switching Costs ........................................................................................... 17 iv CHAPTER THREE – RESEARCH METHODOLOGY ........................................... 18 1. Research Model & Hypotheses ........................................................................... 18 2. Research Process................................................................................................. 21 3. Measurement Design........................................................................................... 21 4. 5. 3.1. Customer Loyalty Measurement................................................................... 22 3.2. Customer Satisfaction Measurement ............................................................ 22 3.3. Service Quality Measurement ...................................................................... 22 3.4. Corporate Image Measurement .................................................................... 24 3.5. Customer Trust Measurement ...................................................................... 24 3.6. Switching costs Measurement ...................................................................... 24 Questionnaire Design .......................................................................................... 25 4.1. First draft of Questionnaire .......................................................................... 25 4.2. Pilot Test ..................................................................................................... 25 4.3. Final format of Questionnaire ...................................................................... 28 Data Collection Method ...................................................................................... 29 5.1. Sample ......................................................................................................... 29 5.2. Sample Size ................................................................................................. 29 5.3. Sampling...................................................................................................... 31 6. Data Analysis Method ......................................................................................... 32 7. Validity And Reliability ...................................................................................... 35 CHAPTER FOUR – DATA ANALYSIS .................................................................... 36 1. Sample Demographic .......................................................................................... 36 2. Descriptive Statistics ........................................................................................... 39 2.1. Customer Loyalty ........................................................................................ 40 2.2. Customer Satisfaction .................................................................................. 42 2.3. Service Quality ............................................................................................ 43 2.4. Corporate Image .......................................................................................... 45 2.5. Customer Trust ............................................................................................ 47 2.6. Switching Costs ........................................................................................... 48 3. Reliability Test ................................................................................................... 50 4. Exploratory Factor Analysis (EFA) ..................................................................... 51 v 5. Confirmatory Factory Analysis (CFA) ................................................................ 54 6. Correlation Testing ............................................................................................. 56 7. Structural Equation Modeling (SEM) .................................................................. 58 8. Multi-Group Structural Equation Modeling (MGSEM) ....................................... 62 9. One-Way ANOVA Testing ................................................................................. 64 CHAPTER FIVE – CONCLUSION AND RECOMMENDATION .......................... 67 1. 2. Conclusion .......................................................................................................... 67 1.1. Customer Loyalty & Customer Loyalty Index .............................................. 68 1.2. Factors influencing Customer Loyalty – Model Results ............................... 69 Recommendations ............................................................................................... 72 2.1. Applying Lean Six Sigma for banking business ........................................... 74 2.2. Building multi-channel system ..................................................................... 75 2.3. Enhancing banking infrastructure ................................................................. 76 2.4. Improving employee performance ................................................................ 76 2.4.1. Communication .................................................................................... 77 2.4.2. Employee appearance ........................................................................... 78 2.5. 3. Managing Corporate Image .......................................................................... 78 Limitation & Further Research Direction ............................................................ 80 REFERENCE .............................................................................................................. 81 APPENDIX .................................................................................................................. 92 vi List of Tables Table 1.1: BIDV‟s network in Lam Dong Province.................................................... 4 Table 3.1: Customer Loyalty Measurement .............................................................. 22 Table 3.2: Customer Satisfaction Measurement ....................................................... 22 Table 3.3: Service Quality Measurement - SERVQUAL Measurement .................... 23 Table 3.4: Service Quality Measurement – SYSTRA-SQ Measurement ................... 23 Table 3.5: Corporate Image Measurement................................................................ 24 Table 3.6: Customer Trust Measurement ................................................................. 24 Table 3.7: Switching costs Measurement ................................................................. 24 Table 3.8: First pilot test‟s result – Cronbach‟s Alpha .............................................. 26 Table 3.9: Second pilot test‟s result – Cronbach‟s Alpha.......................................... 27 Table 3.10: Final format of Questionnaire ................................................................ 29 Table 4.1: Customer Loyalty descriptive statistics ................................................... 40 Table 4.2: Customer Satisfaction descriptive statistics ............................................. 42 Table 4.3: Service Quality descriptive statistics ....................................................... 43 Table 4.4: Corporate Image descriptive statistics ..................................................... 45 Table 4.5: Customer Trust descriptive statistics ....................................................... 47 Table 4.6: Switching Costs descriptive statistics ...................................................... 48 Table 4.7: Reliability test‟s result - Cronbach's Alpha .............................................. 50 Table 4.8: Pattern matrix of variables ...................................................................... 52 Table.4.9: CFA Result - Standardized Regression Weights ...................................... 55 Table 4.10: Correlations testing result ...................................................................... 57 Table 4.11: Coefficient of correlation (r).................................................................. 57 Table 4.12: Regression Weights of Model 1............................................................. 59 Table 4.13: Regression Weights of Model 2............................................................. 60 Table 4.14: Model 2 - Squared Multiple Correlation ................................................ 61 Table 4.15: Model 2 - Regression Weights .............................................................. 61 Table 5.1: Five steps of Lean Six Sigma .................................................................. 74 Table 5.2: The Trust Creation Process ..................................................................... 78 Table 5.3: Strategic Brand Management Process ...................................................... 80 Table E.1: Cronbach‟s Alpha of Customer Loyalty ................................................ 110 Table E.2: Item-Total Statistics of Customer Loyalty ............................................ 110 vii Table E.3: Cronbach‟s Alpha of Customer Satisfaction .......................................... 110 Table E.4: Item-Total Statistics of Customer Satisfaction ...................................... 110 Table E.5: Cronbach‟s Alpha of Service Quality .................................................... 110 Table E.6: Item-Total Statistics of Service Quality ................................................ 110 Table E.7: Cronbach‟s Alpha of Corporate Image .................................................. 111 Table E.8: Item-Total Statistics of Corporate Image ............................................... 111 Table E.9: Cronbach‟s Alpha of Customer Trust .................................................... 111 Table E.10: Item-Total Statistics of Customer Trust............................................... 111 Table E.11: Cronbach‟s Alpha of Switching Cost .................................................. 111 Table E.12: Item-Total Statistics of Switching Costs.............................................. 111 Table F.1: Round 1 - KMO and Bartlett's Test ....................................................... 113 Table G.2: Round 1 - Total Variance Explained ..................................................... 113 Table G.3: Round 1 - Pattern Matrix ...................................................................... 114 Table G.4: Round 2 - KMO and Bartlett's Test ...................................................... 114 Table G.5: Round 2 - Total Variance Explained ..................................................... 114 Table G.6: Round 2 - Pattern Matrix ...................................................................... 115 Table G.7: Round 3 - KMO and Bartlett's Test ...................................................... 115 Table G.8: Round 3 - Total Variance Explained ..................................................... 116 Table G.9: Round 3 - Pattern Matrix ...................................................................... 116 Table G.10: Round 4 - KMO and Bartlett's Test .................................................... 116 Table G.11: Round 4 - Total Variance Explained ................................................... 117 Table G.12: Round 4 - Pattern Matrix .................................................................... 117 Table G.13: EFA‟s result - Cronbach‟s Alpha of Service Quality........................... 118 Table G.14: EFA‟s result - Item-Total Statistics of Service Quality ....................... 118 Table J.1: Education level – Test of Homogeneity of Variances ............................. 121 Table J.2: Education level – ANOVA .................................................................... 121 Table J.3: Income – Test of Homogeneity of Variances ......................................... 121 Table J.4: Income – ANOVA................................................................................. 121 viii List of Figures Figure 2.1: Net Promoter Score Equation ................................................................. 11 Figure 2.2: Determinants of Perceived Service Quality ............................................ 15 Figure 3.1: Research model ..................................................................................... 18 Figure 3.2: Research process ................................................................................... 21 Figure 4.1: The percentage gender of BIDV‟s customers ......................................... 36 Figure 4.2: The percentage education level of BIDV‟s customers ............................ 36 Figure 4.3: The percentage monthly income of BIDV‟s customers........................... 37 Figure 4.4: The percentage job categories of BIDV‟s customers .............................. 37 Figure 4.5: The length of working relationship between customers and BIDV ......... 38 Figure 4.6: Multichannel of BIDV ........................................................................... 38 Figure 4.7: Categories of BIDV‟s Products and Services ......................................... 39 Figure 4.8: Questionnaire response on Customer Loyalty ........................................ 40 Figure 4.9: Questionnaire response on Customer Satisfaction .................................. 42 Figure 4.10: Questionnaire response on Service Quality .......................................... 44 Figure 4.11: Questionnaire response on Corporate Image ........................................ 46 Figure 4.12: Questionnaire response on Customer Trust .......................................... 47 Figure 4.13: Questionnaire response on Switching Costs ......................................... 49 Figure 4.14: CFA result ........................................................................................... 54 Figure 4.15: Revised Model ..................................................................................... 56 Figure 4.16: SEM result – Model 1 .......................................................................... 59 Figure 4.17: SEM result – Model 2 .......................................................................... 60 Figure 4.18: Final research model ............................................................................ 62 Figure 4.19: MGSEM result – invariant model and variant model of Female/Male group ....................................................................... 63 Figure 4.20: MGSEM result – P-value ..................................................................... 64 Figure 4.21: Radar chart - Customer Loyalty & Education level .............................. 65 Figure 4.22: Radar chart - Customer Loyalty & Income ........................................... 66 Figure 5.1: Recommendations for enhancing BIDV‟s customer loyalty ................... 73 Figure E.1: The Trust Equation .............................................................................. 112 Figure G.1: MGSEM result – invariant model and variant model of Low/Medium/High Income group ............................................... 119 ix Abstract Purpose: Customer loyalty plays important role in retail banking because of its high interaction with customers. When the market is increasingly competitive, especially in the context of economic recession, more and more banks try to find how to retain their loyal customers and focus on factors enhancing customer loyalty. Therefore, the main purpose of this research is to investigate the factors that influence customer loyalty. Design/methodology/approach: In the research a causal modeling approach was used and a conceptual model was proposed after an extensive review of the literature. Data was collected from 377 habitual customers of BIDV‟s branches and transaction offices in Lam Dong Province. Descriptive statistics, reliability test, factor analysis (including EFA and CFA), correlation testing, structural equation modeling, and OneWay ANOVA testing were applied to analyze and confirm the conceptual model proposed in this research. Besides, Net-Promoter Score was calculated to provide valuable insights into the real situation of BIDV‟s customer loyalty in this region. Findings: The research finds that service quality, customer trust, and corporate image positively impact on customer loyalty. Furthermore, service quality and customer satisfaction are regarded as a component because they tend to overlap in the long term. Practical implications: The research can be used for a reference aim and reliability suggestions to enhance the customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province. Keywords: customer loyalty, retail banking, service quality x xi CHAPTER ONE – INTRODUCTION The first aim of this research is to investigate customer loyalty towards BIDV’s branches and transaction offices in Lam Dong Province. This chapter firstly introduces an overview of the banking industry in Vietnam and BIDV. Then the research problem, the research question and the research objectives, scope and limitation, the significance of this study and the structure of this thesis are presented. 1. Background 1.1. Overview of the banking industry in Vietnam The banking system is regarded as the “lifeblood” of the economy and plays the most important role in the financial intermediation system. According to The State Bank of Vietnam (http://www.sbv.gov.v), economy heavily depends on the banking sector. The worst performance of the banking industry inevitably leads the economy into a rapidly weak situation; and vice versa, the banking system is in an easily vulnerable position because of the economic instability. Furthermore, in the context of the deeper international integration, the Vietnam banking system should be strengthened and developed to take new opportunities and faced many difficulties and challenges. The banking industry in Vietnam is regulated by The State Bank of Vietnam (SBV), which has the object of ensuring effective administration, supervision, regulation and controls the banking businesses in Vietnam. Nowadays, competition in this industry has greatly increased as many new entrants have joined the industry. At the end of 2012, the banking industry includes 5 state-owned credit institutions, 34 joint-stock commercial banks, 4 joint-venture banks, 50 branches of foreign banks, 49 representative offices of 1 foreign banks, 5 wholly foreign-owned banks, 18 finance companies and 12 leasing companies. There is information on the SBV‟s web site (http://www.sbv.gov.vn). There are four remarkable periods in more two decades of major reform in this industry. Firstly, from 1990 to 1996, the quantity and sorts of credit institution dramatically increased, which had the objective of meeting a surge in demand of financial service. During the second period, 1997 – 2005, the two-level banking system which had just formed was consolidated and reorganized in the context of the Asian financial crisis. During the next period, from 2006 to 2010, higher charter capital and tighter regulation were on the way. Besides, wholly foreign-owned were appeared. Finally, from 2011 till now, the banking sector has faced many difficulties and challenges in the context of global economic crisis. The system of credit institutions has exposed the financial weaknesses and vulnerabilities, especially increased bad debts. In this situation, SBV took decisive and consistent management measures to ensure liquidity, the stability of the money, forex and gold markets, to reduce lending rates, and to restructure the banking sector. There is information on the SBV‟s web site (http://www.sbv.gov.vn). 1.2. Overview of the banking industry in Lam Dong Province According to SBV (http://www.sbv.gov.v), the activities of the banking industry which mainly boost capital mobilization and investment contribute to promoting sustainable region's economic and social development in The Central Highland in general and Lam Dong Province in particular. In a meeting of the Central Highland Steering Committee on July 22th 2013 at Lam Dong Province, it is reported that capital mobilization reaches VND 66 680 billion increased of 5.27% compared to those in 2012. However, at the end of June 2013, the 2 total credit balance in the region is VND 112 008 billion increased of 7.2% compared to those in 2012. Moreover, the banking sector importantly focuses on boosting agricultural production and investing projects related industrial plants such as rubber, coffee, pepper, and etc. which are known as one of the main competitive advantages of the Central Highland. There is information on the SBV‟s web site (http://www.sbv.gov.vn). In sum, the role of the banking industry in the Central Highland and also Lam Dong Province is to mobilize financial capital in economics, to contribute to reinforce competitive advantages of this region, to promote poverty alleviation and to enhance life standard and to gradually change the rural image of this region. 1.3. BIDV’s general Information and the network in Lam Dong Province 1.3.1. General Information of BIDV BIDV (formerly named the Bank for Construction of Vietnam) is a state-owned commercial bank established on 26 April 1957. On 24 June 1981, this bank was renamed as the Bank for Investment and Construction of Vietnam, and was renamed again as the Bank for Investment and Development of Vietnam on 14 November 1990. Following the policy of restructuring state-owned enterprises, BIDV was subsequently restructured into a state-owned corporation effective from 21 September 1996. BIDV is now a joint-stock commercial bank which officially started its operations since 01 May 2012. There is information on the BIDV‟s web site (http://bidv.com.vn). The Head Office of the Bank is located in BIDV Tower, 35 Hang Voi Street, Hoan Kiem District, Hanoi, Vietnam. BIDV has developed a wide network, covering 63 provinces and cities nationwide, including 117 branches and 432 transaction offices, 3 which is one of the top three commercial banks with the most extensive network in Vietnam. There is information on the BIDV‟s web site (http://bidv.com.vn). In spite of difficulties in the business environment, BIDV has still ensured its growth in terms of scale and total operating incomes increased. According to the BIDV‟s annual report, as at 31 December 2012, BIDV‟s total assets reached VND 484.785 billion increased of 19.5% compared to those in 2012. Moreover, this bank has focused on safe operation by making sufficient provision for credit losses, strengthening financial capacity, and operating expenses as well as complying with SBV prudent regulation. In order to become a leading and modern retail bank, BIDV‟s numerous retail banking activities were undertaken on the basis of newly-enhanced retail banking management techniques and the adoption of a customer-focused retail banking model at every branch, expanding and improving the quality of traditional and modern distribution channels, and upgrading the IT infrastructure and platform. As the result, by the end of 2012, retail funding reached VND 179,128 billion marking an impressive year over year increase of 38.64% and accounted for 49.76% of total fund mobilization compared to 45% in 2011.There is information on the BIDV‟s web site (http://bidv.com.vn). 1.3.2. BIDV’s network in Lam Dong Province Branch/ Transaction Office Lam Dong Branch - Chi Lang Transaction office - Da Lat Transaction office - Don Duong Transaction office - Duc Trong Transaction office Bao Loc Branch - Bao Lam Transaction office - Di Linh Transaction office Address 30 Tran Phu, Da Lat City - 26 Chi Lang Street, Ward 9, Da Lat City - 42, Hoa Binh Street, Ward 9, Da Lat City - 281, 2/4 Street, Thanh My Town, Don Duong District - 25, Tran Hung Dao Street, Duc Trong District 52 Le Thi Pha Street, Bao Loc City - Loc Thang Town, Bao Loc City - 619, Hung Vuong Street, Di Linh District Table 1.1: BIDV‟s network in Lam Dong Province (Source: http://bidv.com.vn) 4 2. Research Problem In the previous researches, it is strongly clear that loyalty in the services sector is more difficult to conceptualize than in the product sector due to the characteristics of services (Lee & Cunningham, 2001; Mittal & Lassar, 1998). For instance, intangibility and lack of standardization might influence reliability and confidence which play major roles in building or maintaining loyalty (Bloemer et al., 1998; Dick & Basu, 1994). However, theoretical and empirical researches have continued to investigate service loyalty, because customer loyalty is considered the backbone of service organizations (Gremler & Brown, 1996; Ruyter et al., 1997). More specifically, customer loyalty plays very crucial role in helping lower marketing costs, solicit more customers, and effectively operates trading leverage (Aaker, 1992), and is also a key factor in winning market share and developing sustainable competitive advantages (Jones et al., 2007; Lee et al., 2011; Lin & Wang, 2006;). In financial services, nowadays, the traditional product-oriented bank is becoming increasingly customer-oriented, which concentrates on customer loyalty as its main goal. In fact, the banking industry specific issues and characteristics affect consumer behavior and attitude, which play very important roles in the formation of bank loyalty (Javalgi & Moberg, 1997; Lewis & Soureli, 2006). Moreover, in the retail banking which have high interaction with customers, there are very slight differences in financial services and products between retail banks. It is shown that customer loyalty has obvious importance to all retail banks in the highly competitive market (Beerli et al., 2004). Besides, during the period of the global economic crisis and recession, customers who have become increasingly sophisticated and knowledgeable can be expected to become even less loyal 5 with a tendency to open their new accounts in many banks (Jones et al., 2007). Therefore, managers always try to find how to retain their current customers and concentrate on factors which enhances customer loyalty. There are not many researches on customer loyalty of BIDV in the list of Research Topics on the web site of BIDV Training School (http://bts.bidv.com.vn/). Although some topics seem to be relevant to bank loyalty, they have just embarked on building loyalty programs, for example, “The Points Rewards Program for customers who have saving accounts at BIDV named Earn Points, Get Rewards”, “The Promotion Program for customer use products and services at BIDV named Loyal Customer". There is information on the BIDV Training School‟s website (http://bts.bidv.com.vn/). Furthermore, by observation and mystery shopper as well, BIDV‟s branches and transaction offices in Lam Dong Province have not conducted any survey of customer satisfaction and customer loyalty. Additionally, the environment of the bank industry in Lam Dong Province is increasingly competitive. According to information from The State Bank – Lam Dong Branch, before 2000, there were just few branches and transaction offices of state-owned banks, such as: Vietinbank, Agribank and BIDV. However, from 2000 to now, the banking industry has undergone drastic changes in the quantity of credit institutions system. Many branches and transactions of other banks were established and have developed, including Asia Commercial Bank (ACB), DongA Bank (EAB), Vietnam International Bank (VIB), Eximbank, Techcombank, Sacombank, and etc. In sum, a significant gap exists in BIDV‟s branches and transaction offices in Lam Dong Province which should be investigated in order to propose highly effective 6 solutions and wise strategies what leads customers to become loyal toward this bank. Therefore, the subject of customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province has to be received much-needed attention. If customer loyalty and factors enhancing customer loyalty are investigated, BIDV‟s customer loyalty in this region can be improved and enhanced. 3. Research Question For these above-mentioned reasons, the research seeks to answer the following question: What factors that influence the customer loyalty in BIDV’s branches and transaction offices in Lam Dong province? 4. Research Objective Here are two main objectives of this research.  To define the factors that influence customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province;  To propose recommendations to enhance customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province 5. Scope And Limitation This research was conducted from March 2013 to August 2013, in Lam Dong Province and Ho Chi Minh City. There are three kinds of customers in BIDV including individual customers, corporate customers and financial institution. This research focuses on determining the loyalty of individual customers in retail banking of eight branches and transaction offices of BIDV in Lam Dong Province. The in-depth interviews with experienced managers of BIDV‟s branches and transaction offices in Lam Dong Provinces who understand their own customers more 7 than anyone can not be conducted because of the time limitation. Therefore, the recommendations of this research cannot be proposed specifically for each banking business of branches and transaction office of BIDV in Lam Dong Province. 6. Significance Of The Study It is expected to find out which factors improve customer loyalty in retail banking. By determining these factors, the research can be used for a reference aim and reliability suggestions in order to enhance the customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province. 7. Structure Of Thesis This research is structured and organized in five chapters as follows: Chapter 1 – Introduction: Introducing the thesis topic and a brief background about it, and then following by problem statement, research question, research objectives, scope and limitations, the significance of the research, and finally structure of the thesis. Chapter 2 – Literature Review: Presenting the related literature concerning customer loyalty and customer loyalty in retail banking. Chapter 3 – Research Methodology: Providing detail instrument of research model, research process, measurements and questionnaire design, data collection method and data analysis method. Chapter 4 – Discussions and Findings: Analyze collected data and interpret into the findings of the research Chapter 5 – Conclusion and Recommendations: Draw out conclusion and propose recommendations to enhance customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province. 8 CHAPTER TWO – LITERATURE REVIEW The purpose of this chapter is to list some literatures relevant to this research. The chapter begins with the definition and the importance of customer loyalty, and then follows by the net-promoter score which is popularly used to calculate customer loyalty in companies. Next, the most important and popular factors which influence customer loyalty are presented. These factors are customer satisfaction, service quality, corporate image, customer trust and switching cost. 1. Customer Loyalty 1.1. Definition The concept of customer loyalty has been received much consideration and attention from both academics and practitioners in many industries. Although there are so many different definitions about customer loyalty, there seem to be two basic approaches. One is the behavioral approach and another is the attitudinal approach. Firstly, in the behavioral approach, Oliver (1999) defined customer loyalty as: “… to re-buy product or service consistently in the future, thereby causing repetitive same brand or same brand-set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior.” In order words, customers who repeat purchase behavior such as amount of purchases, frequency of purchase and amount of brand switching have been regarded as loyal (Mercier, 2000; Zins, 2001). In contrast, the attitudinal approach incorporates consumer attitudes, preferences and disposition towards brands which allows greater insight into loyal behavior (Javalgi & Moberg, 1997). In addition, Reichheld (2003) defined customer loyalty as: “… to make an investment or personal sacrifice in order to strengthen a relationship with a 9 supplier who treats him well and gives him good value in the long term even if the supplier does not offer the best price in a particular transaction. Consequently, customer loyalty is about much more than to repeat purchases.” He also explained that a customer making frequent repeat purchases might not be loyal, and emphasized that a loyal customer might not buy again and again because of a decrease in his or her need for a product or service. Other researchers suggested that loyalty is formed both by the customer‟s attitude and behavioral intentions (Pedersen & Nysveen, 2001) and so it should be measured as a combination of attitudinal and behavioral dimensions (Dick & Basu, 1994). In sum, customer loyalty in this research is defined both the customer’s behavior which is to make frequent repeat purchases consistent in the future and customer’s attitude which is to make an investment or personal sacrifice in order to remain a longterm relationship with a company. 1.2. Importance of Customer Loyalty When markets become increasingly competitive, more and more companies recognize the importance of retaining current customers and are increasingly concerned to develop and maintain customer loyalty (McMullan & Gilmore, 2008). It is clear that it is always costly to attract new customers. Indeed, it takes five times as much effort, time and money to attract a new customer than to keep an existing customer (Kotler et al., 1996). Specifically, customer loyalty enables companies to reduce operational and marketing costs (Griffin, 1995) to guarantee income, to increase market share (Meidan, 1996); to maximize the level of profitability (Rauyruen & Miller, 2007) and can boost employees‟ morale and productivity (Lee & Cunningham, 2001). Besides, customer 10 loyalty can lead to price indifference, favorable word-of-mouth communication, endorsements and customer referrals, and resistance to competition (Barnes & Howlett, 1998). In sum, other factors besides customer loyalty play roles in driving a company‟s growth–economics; however, customer loyalty is clearly one of the most important drivers of growth (Reichheld, 2003). 1.3. Customer Loyalty Index Among of ways measuring customer loyalty, using Net-Promoter Score (NPS) is very effective for a company to produce a clear measure of an organization's performance through its customers' eyes. Net Promoter Score (NPS) is a customer loyalty metric introduced by Reichheld, (2003). NPS provides valuable insights into how to get more promoters and fewer detractors and a clear measure of an organization‟s performance through its customers‟ eyes. According to Bain & Company, NPS has been adopted by several companies, including E.ON, Philips, GE, Apple Retail, American Express, Amazon, Rackspace, TD Bank, Harley-Davidson, Charles Schwab, Zappos, Costco, Vanguard, and Dell. This below equation is how we calculate a Net Promoter Score for a company. Figure 2.1: Net Promoter Score Equation (Source: http://www.netpromotersystem.com) 11 Firstly, asking customers “How likely is it that you would recommend our company to a friend or colleague?” is to count up the ratio of promoters to detractors. The answer is settled on a scale which 10 means “extremely likely” to recommend, 5 means neutral, and 0 means “not at all likely”. Based on the responses on a 0 to 10 rating scale, the company‟s customers can be divided into three categories including “promoters” (910 rating–extremely likely to recommend), “passively satisfied” (7-8 rating), and “detractors” (0-6 rating–extremely unlikely to recommend). More specifically, “promoters” are loyal enthusiasts who keep buying from a company and urge their friends to do the same, “passives” are satisfied but unenthusiastic customers who can be easily wooed by the competition, and “detractors” are unhappy customers trapped in a bad relationship. Then NPS is calculated by subtracting the percentage of detractors from the percentage of promoters (Reichheld, 2003). According to Bain & Company, a company that gains world-class loyalty receives NPS of 75% to more than 80% and an average firm has an NPS efficiency of only 5 percent to 10 percent; while a firm has a negative NPS meaning that they are creating more detractors than promoters. 2. Factors influence Customer Loyalty Customer loyalty in service may be affected by many different variables which vary among services, according to the specific characteristics of each service industry (Harrison, 2000; Lewis & Soureli, 2006). In the retail banking industry, the most important and popular variables are customer satisfaction, service quality, corporate image, customer trust and switching costs (Athanassopoulos, 1997; Beerli. et al., 2004; Blanchard & Galloway, 1994; Lewis & Soureli, 2006; Newman & Cowling, 1996). 12 2.1. Customer Satisfaction Customer satisfaction has been receiving more attention in researches. Oliver (1997) defined customer satisfaction as “consumers‟ post-purchase evaluation and affective response to the overall product or service experience”. Jamal and Naser (2002) described customer satisfaction as the full meeting of customer expectation towards service or a product after using. Egan (2004) put the definitions of several authors together and stated that customer satisfaction as a psychological process of evaluating perceived performance outcomes based on predetermined expectations. Many studies have found that higher levels of customer satisfaction could lead to greater customer loyalty (Anderson & Sullivan, 1993; Beerli et al, 2004; Bolton & Drew, 1991; Boulding et al., 1993; Fornell, 1992; Levesque, & McDougall, 1996; Lewis & Soureli, 2006). It is strongly clear customer satisfaction, in the highly competitive market, is regarded as the substance of organizational success, because customer satisfaction can lead to customer retention and then to profitability for the organization (Jamal & Naser, 2002). Therefore, enhancing customer satisfaction should be a key driver for firms in building and improving customer loyalty. 2.2. Service Quality 2.2.1. Concept Service quality is a concept that has aroused considerable interest and debate in researches because of the difficulties in both defining it and measuring it (Wisniewski, 2001). Service quality is commonly defined as the difference between customer expectations of service and perceived service (Asubonteng et al., 1996; Lewis & Mitchell, 1990; Wisniewski & Donnelly, 1996). If expectations are greater than 13 performance, perceived quality is less than satisfactory and hence customer dissatisfaction occurs (Lewis & Mitchell, 1990; Parasuraman et al., 1985). 2.2.2. Impact of service quality on customer loyalty The previous studies on customer loyalty have acknowledged that service quality has both direct and indirect effects on customer loyalty (Olsen, 2002). These researches have also indicated that service quality influences organizational performance, including increasing sales profit, remaining competitive advantage, improving current customer relations, attracting new potential customers, winning market share, enhancing corporate image and finally promoting customer loyalty (Caruana, 2002; Duncan & Elliot, 2002, Ehigie, 2006; Fisher, 2001; Kish, 2000; Levesque & Mc. Dougal, 1996; Newman, 2001; Szymigin & Carrigan, 2001). To sum up, the success of a service provider depends on its high service quality which has a positive effect on customer loyalty (Panda, 2003). 2.2.3. Service Quality Measurement The measurement service quality allows for comparison before and after changes and the establishment of clear standards for service quality. Edvardsen et al. (1994) stated that the starting point in developing service quality is to analyze and measure it. The model of service quality developed by Parasuraman et al. (1985) is the most popular model for measuring service quality. There are 5 major gaps in the service quality model; however, this research focuses on investigating the Gap5 between customer expectations and their perceptions of the service quality, which is as a result of the influences exerted from the customer side and the shortfalls on the part of the service provider. Parasuraman et al (1985) initially identified ten key determinants of service quality, including Reliability, Responsiveness, 14 Competence, Access, Courtesy, Communication, Credibility, Security, Understanding, Tangibles. However, Parasuraman et al (1988) mentioned that SERVQUAL with five dimensions can better help in assessing the expectations of customers and service quality perceptions. It focuses on the core value which managers need to take attention and action in order to improve service quality. The following figure is the determinants of service quality with five dimensions. Determinants of service quality 1. Tangibles 2. Reliability 3. Responsiveness 4. Assurance 5. Empathy Word of Mouth Communication Personal Needs Past Experience Expected Service GAP 5 Perceived Service Quality Perceived Service Figure 2.2: Determinants of Perceived Service Quality 2.2.4. Service Quality Measurement in the banking industry Although most of the studies of the banking industry have measured service quality by applying the SERVQUAL model (Athanassopoulos, 1997; Blanchard & Galloway, 1994; Marshall & Smith, 1999; Newman & Cowling, 1996), a number of researchers have developed and validated new scales for this industry. Among of these researches, SYSTRA-SQ is one of new well-known measures of bank service quality, especially for the retail banking, which was developed by Aldaigan & Buttle (2002). The patrimony, reliability and validity of the scale in their research demonstrated that SYSTRA-SQ is a measure of high utility for the retail banking. SYSTRA-SQ measurement consists of four dimensions, including service system quality (containing the functional quality attributes and the technical organizational attributes), behavioral service quality, service transactional accuracy and machine service 15 quality. These items were categorized against the technical and functional service quality schema proposed by Grönroos (1978, 1982, 1990, 1994, 1997, 1999, 2000, and 2006). 2.3. Corporate Image Corporate image is described as the overall impression on the mind of the public about a firm (Barich & Kotler, 1991). According to MacInnis and Price (1987), corporate image is the result of an evaluation process, which stems from ideas, feelings and consumption experiences with an organization retrieved from memory and transformed into mental images (Yuille & Catchpole, 1977). In the researches, corporate image is demonstrated to positively affect customer loyalty (Johnson et al., 2001; Juhl et al., 2002; Kristensen et al., 2000; Lewis & Soureli, 2006; Nguyen & LeBlanc, 2001). Although a customer does not have enough information about a firm, information obtained from different sources such as advertisements and word of mouth not only retains loyal customers but also attracts new customers (Bloemer et al, 1998; Lewis & Soureli, 2006; Nguyen & LeBlanc, 1998). Therefore, corporate image is considered as an antecedent of customer loyalty. 2.4. Customer Trust The trust appears when a party believes that the other party‟s actions would result in positive outcomes for itself, and therefore to develop some form of positive behavioral intention towards the other party (Anderson & Narus, 1990; Aydin & Ozer, 2005). Accordingly, when customers trust a company, they are to form a positive buying intention towards the company (Lau & Lee, 1999). Moreover, to trust a company, customers should not only perceive positive outcomes but also believe that these positive outcomes will continue in the future (Aydin & Ozer, 2005). 16 It is claimed that there is a positive relationship between customer trust and customer loyalty in previous research (Chaudhuri & Holbrook, 2001; Gundlach & Murphy, 1993; Lau & Lee, 1999). Trust reflects the credibility (Ganesan, 1994), which affects the long-term orientation of a customer by reducing the customer‟s perception of risk (Erdem et al., 2002; Ganesan, 1994). Specifically, trust reduces uncertainty in an environment in which consumers feel vulnerable and unsafe, as they know that they can rely on the trusted brand (Chaudhuri & Holbrook, 2001). Therefore, customer trust has been recognized as an important role in enhancing customer loyalty. 2.5. Switching Costs Switching costs are defined as one-time costs facing the buyer when switching from one company to another company (Porter, 1998). Besides objectively measurable monetary costs, switching costs may also consist of the time, relationship and psychological effort when customers decide to become loyal customers of a new service provider (Bloemer et al., 1998; Klemperer, 1987). The benefit of switching cost is to prevent consumers from switching service providers (Ganesh et al., 2000; Keaveney & Parthasarathy, 2001). This is why switching costs can be regarded as barriers that deter customers from demanding a rival firm‟s brand (Aydin & Ozer, 2005). In the context of a market having switching costs, customers select a service provider from a number of functionally identical brands, and then they continue buying the same brand even competing brands become cheaper. In other words, the customer behaves loyally toward the service provider (Klemperer, 1987). For these reasons, switching costs are a factor that directly influences customer loyalty (Bloemer et al., 1998; Burnham et al., 2003; Jones et al., 2002; Lee et al., 2001). 17 CHAPTER THREE – RESEARCH METHODOLOGY This chapter presents the methodological detail instrument used in conducting this research and provides a justification for steps taken. The chapter begins with the research model & hypotheses, the research process, and then follows by measurements and questionnaire design. Finally, data collection method (including sample, sample size and sampling), and data analysis method is presented. 1. Research Model & Hypotheses After reviewing above-mentioned literature, a casual model is proposed in which the dependent variable is Customer Loyalty and independent variables regarded as the antecedents of loyalty are Customer Satisfaction, Corporate Image, Customer Trust and Switching Costs. Further, the indirect effect of Service Quality on Customer Loyalty via Customer Satisfaction is supported. H5.1 Service Quality Customer Satisfaction H1 H5.2 Corporate Image Customer Trust Switching Costs H2 Customer Loyalty H3 H4 Figure 3.1: Research model The research hypotheses of the research model are as below. Effect of Customer Satisfaction on Customer Loyalty: In the researches of customer loyalty in retail banking, Beerli et al. (2004) strongly affirmed that the relationship between satisfaction and loyalty is positive and statistically significant, which satisfaction has a greater weightier on loyalty than switching costs. This strong 18 relationship is demonstrated again in the research of Lewis & Soureli (2006). Furthermore, a substantial amount of research concludes that satisfaction is an important determinant of customer loyalty (Asuncion et al., 2004; Bearden & Teel, 1983; Cronin & Taylor, 1992; Dick & Basu, 1994; Drake et al., 1998; Moutinho & Smith, 2000; Nguyen & LeBlanc, 1998; Oliver, 1997). H1: There is a positive impact of Customer Satisfaction on Customer Loyalty. Effect of Corporate Image on Customer Loyalty: It is clear that the image of a bank can play a very important role in retaining loyal customers and attracting new customers as well (Bloemer et al., 1998; Nguyen & LeBlanc, 1998). The positive and statistically significant relationship between corporate image and customer loyalty is confirmed in the studies (Johnson et al., 2001; Juhl et al., 2002; Kristensen et al., 2000; Lewis & Soureli, 2006; Nguyen & LeBlanc, 2001). Hence, if the image of a bank is better, its impact on customer loyalty is greater. H2: There is a positive impact of Corporate Image on Customer Loyalty. Effect of Customer Trust on Customer Loyalty: Because of the emotional nature of customer loyalty, customer trust in the service provider‟s reliability and integrity is extremely important (Bejou et al., 1998; Pedersen & Nysveen, 2001). In the research of Lewis & Soureli (2006), it is strongly evidence that customer loyalty is affected by customer trust. This relationship is also proved in other researches (Ballester & Aleman, 2001; Chaudhuri & Holbrook, 2001; Gundlach & Murphy, 1993; Lau & Lee, 1999). Therefore, the greater customer trust is, the greater customer loyalty is. H3: There is a positive impact of Customer Trust on Customer Loyalty. 19 Effect of Switching Costs on Customer Loyalty: Switching costs include monetary costs, time, relationship and the psychological effort generated from the uncertainty of building a working relationship with a new service provider (Ruyter et al., 1998). In retail banking, the positive and significant relationship between switching costs and customer loyalty is demonstrated in the research of Beerli et al. (2004). Moreover, other researches also insist that switching costs can be significantly influential in determining customer loyalty (Andreassen & Lindestad, 1998; Aydin & Ozer, 2005; Bloemer et al., 1998; Burnham et al., 2003; Dawes & Swailes, 1999; Harrison, 2000; Jones et al., 2002; Lee & Cunningham, 2001; Jones et al., 2002). Hence, customer loyalty is greater if switching costs are greater. H4: There is a positive impact between Switching Costs on Customer Loyalty. Effects of Service Quality on Customer Satisfaction: There are researches reporting a causal link between service quality and customer satisfaction (Anderson & Sullivan, 1993; Bolton & Drew, 1991; Cronin & Taylor, 1992). In retail banking, it is strongly proved that there is a relationship between customer satisfaction and customer loyalty (Berlin et al., 2004; Lewis & Soureli, 2006). While customer satisfaction is an antecedent of service quality in the research of Beerli et al. (2004), service quality is an antecedent of customer satisfaction in the research of Lewis & Soureli (2006). Here are set of hypotheses for this relationship. H5.1: Service Quality has a positive impact on Customer Satisfaction. H5.2: Customer Satisfaction has a positive impact on Service Quality. H5.3: There exists a bidirectional relationship between Service Quality and Customer Satisfaction. 20 2. Research Process Literature review & Research model First draft of Questionnaire First pilot test Questionnaire adjustment Second pilot test Final format of Questionnaire Data collection - Sample: BIDV’s customers in Lam Dong Province - Sample size: 377 - Sampling: Cluster - Data Analysis Reliability Test EFA, CFA Correlation testing SEM MGSEM, One-Way ANOVA Objective 1: Objective 2: To define the factors that influence customer loyalty To propose recommendations to enhance customer loyalty Figure 3.2: Research process In this phase of research, it is divided into four main steps: - Step1: Review related literature to create the research model and design questionnaire - Step2: Conduct two pilot tests which both qualitative and quantitative methods are used to confirm the model and to refine questionnaire - Step3: Conduct a survey and analyze data - Step4: Draw out conclusion and propose recommendations 3. Measurement Design Measurements were based on the literature review of previous researches and semi-structured interviews with some bank employees and customers in the pilot tests. 21 3.1. Customer Loyalty Measurement Measurement Description Customers recommend a Word of mouth bank to their friends, colleague or family. Customers continue using Re-buying the product / service in the product/service future Customers would not Priority hesitate to choose a bank when they have new need. Customers are consistent Consistency with a bank even though a better bank is offered. Author/Source Reichheld (2003), Aydin & Ozer (2005), Lewis & Soureli (2006), Afsar et al. (2010) Reichheld (2003), Aydin & Ozer (2005), Lewis & Soureli (2006), Afsar et al. (2010), Aydin & Ozer (2005), Lewis & Soureli (2006), Jamal & Anastasiadou (2009), Afsar et al. (2010) Aydin & Ozer (2004), Lewis & Soureli (2006), Jamal & Anastasiadou (2009), Afsar et al. (2010) Table 3.1: Customer Loyalty Measurement 3.2. Customer Satisfaction Measurement Measurement Overall satisfaction Fulfilled demand Comparison Ideal bank Description Author/Source Moutinho & Smith, (2000), Beerli et al. (2004), Jamal & Anastasiadou (2009), Afsar et al. (2010) Beerli et al. (2004), Lewis & Soureli (2006), Jamal & Anastasiadou (2009), Afsar et al. (2010) Customer are generally satisfied with a bank A bank fulfills the customer‟s demand A bank gains more satisfaction than others from customers It is an ideal bunk in the customer‟s mind Beerli et al. (2004), Lewis & Soureli (2006), Jamal & Anastasiadou (2009) Lewis & Soureli (2006), Jamal & Anastasiadou (2009), Table 3.2: Customer Satisfaction Measurement 3.3. Service Quality Measurement Firstly, SERVQUAL Measurement, a well-known scale created by Parasuraman et al. (1988) is applied. In retail banking, most of empirical studies have measured service quality by adapting the SERVQUAL model (Blanchard & Galloway, 1994; Marshall & Smith, 1992). However, the result of reliability test in the first pilot test is rather bad. 22 For this reason, SYSTRA-SQ Measurement, which is a new measurement of bank service quality in retail banking developed by Aldaigan & Buttle (2002), was applied with the result that the value of Cronbach‟s Alpha is good in the final pilot test. SERVQUAL Measurement Measurement Reliability Responsiveness Assurance Empathy Tangible Description Ability to perform the promised service dependably and accurately Willingness to help customers and provide prompt service Knowledge and courtesy of employees and their ability to inspire trust and confidence. Caring, individualized attention the firm provides its customers Physical facilities, appearance of personnel and equipment Author/Source Parasuraman et al. (1988) Table 3.3: Service Quality Measurement – SERVQUAL Measurement SYSTRA-SQ Measurement Measurement Description This factor focuses on machines and equipment Machine service quality. It relates to their reliability and performance quality in terms of satisfactory output when used by customers. Service system The functional quality attributes include listening to quality customers, ease of availability and accessibility, (functional speed of response and organizational appearance. performance) Service system The technical organizational attributes include quality quality of advice, flexibility and customized service (technical solutions, promise fulfillment, employee performance) empowerment and customer updating on service. It is composed of behavioral attributes such as Behavioral politeness, courtesy, friendliness and helpfulness of service quality the employee. It also contains the employee‟s service attitude Service It is derived from the customer‟s experience of the transaction frequency of errors in transactions and employees‟ accuracy mistakes when performing service for customers. Author/Source Aldaigan & Buttle (2002) Table 3.4: Service Quality Measurement – SYSTRA-SQ Measurement 23 3.4. Corporate Image Measurement Measurement Sustainability Description A bank is stable and firmly established Innovation A bank is innovative and forwardlooking. Business ethic A bank does business in an ethical way Market leader A bank is a leading bank in the banking industry. Author/Source Aydin & Ozer (2005), Lewis & Soureli (2006), Souiden et al. (2006) Aydin & Ozer (2005), Lewis & Soureli (2006), Souiden et al. (2006) Lewis & Soureli (2006), Souiden et al. (2006) Aydin & Ozer (2005), Lewis & Soureli (2006), Souiden et al. (2006) Table 3.5: Corporate Image Measurement 3.5. Customer Trust Measurement Measurement Description Credibility Customers believe the information from a bank How customers perceive the consistency of the bank‟s actions, and these actions connection with its words How secure or safe the customers feel sharing with a bank. A bank acts to the best interest of customers Reliability Intimacy Self-interest Author/Source Aydin & Ozer (2005), Pedersen & Nysveen (2001), Lewis & Soureli (2006), Aydin & Ozer (2005), Pedersen & Nysveen (2001), Lewis & Soureli (2006) Pedersen & Nysveen (2001), Aydin & Ozer (2005) Pedersen & Nysveen (2001), Aydin & Ozer (2005) Table 3.6: Customer Trust Measurement 3.6. Switching costs Measurement Measurement Selection Time Money Relationship Description Customers are undecided about which bank to choose It is time-consuming to do business with a new bank It is costly to do business with a new bank Customer bother to establish a new working relationship Author/Source Lewis & Soureli (2006), Beerli et al. (2004) Aydin & Ozer (2005), Lewis & Soureli (2006) Aydin & Ozer (2005), Lewis & Soureli (2006) Aydin & Ozer (2005), Lewis & Soureli (2006) Table 3.7: Switching costs Measurement 24 4. Questionnaire Design The questionnaire is designed to match with the objectives of the study and conceptual framework. 4.1. First draft of Questionnaire The first draft of the questionnaire includes two parts, which one is customer‟s evaluation on loyal and the antecedents of loyal and another is customer‟s information. In the first part, there are six components including Customer Loyalty (with 4 statements), Service Quality (with 5 statements based on SERVQUAL Measurement), Customer Satisfaction (with 4 statements), Corporate Image (with 4 statements) and Customer Trust (with 4 statements), Switching costs (with 4 statements). Ten-point Likert-scale, ranged from 0 (extremely likely to disagree/Not at all likely to disagree) to 10 (extremely likely to agree) is used. In sum, there are total 25 statements in this part, which describe the customer‟s experience on the constructs of the research model. In the second part, customer‟s information is asked including age, gender, education level, job situation, and income. Besides, the information between customers and BIDV is also exploited with the contents of the length of working relationship, transaction channel and products/services which customers usually use. 4.2. Pilot Test In order to perfect the questionnaire for a survey, both qualitative and quantitative methods are used for a pilot test. Firstly, semi-structured interviews were conducted to six employees and customers at the Lam Dong Branch in May 2013. The objectives of this step are to confirm interviewees‟ understanding definitions in the questionnaire and to select the 25 appropriate items of Service Quality based on SERVQUAL measurement on the list. Finally, some words were changed to make definitions intelligible and illuminating. Secondly, a customer survey was conducted to check the reliability of measurements. Data is obtained from 39 customers who use BIDV‟s service/product many times per year and all their relationships with this bank are over 6 months. This survey is conducted at the Lam Dong Branch in May 2013. Then, the data was checked by using Cronbach‟s Alpha value if a scale is reliable or not. Because the sample is small, EFA (Exploratory factor analysis) cannot be used at that time. The result of the preliminary study is as the below table. Variable Customer Loyalty Customer Satisfaction Service Quality Corporate Image Customer Trust Switching Costs Cronbach’s Alpha .830 .731 .702 .811 .839 .945 N of Item 4 4 5 4 4 4 Table 3.8: First pilot test‟s result – Cronbach‟s Alpha According to Table 3.8, the value of Cronbach‟s Alpha of Service Quality is 0.702, which seems to be not good. This is why SYSTRA-SQ, a new measure of bank service quality in retail banking developed by Aldaigan & Buttle (2002) were chosen to replace SERVQUAL measurement. For the new measurement, it was examined again through qualitative and quantitative methods like the first pilot test. Besides, the Cronbach‟s Alpha of Switching Costs is nearly 0.95, which should be readjusted. To select appropriate items of Service Quality based on SYSTRA-SQ measurement on the list, in the qualitative method of the second pilot test, semistructured interviews were conducted to eight employees and customers at the BIDV‟s branch at Lam Dong Branch. Beside, this step is also to confirm how customers 26 understand the definitions in the questionnaire. Finally, some words were changed to make the definitions more intelligible than that in the first pilot test; and some items were replaced and some new items were added to refine measurements. Finally, the questionnaire adjusted from semi-structure interviews‟ result is used for the next step of the second pilot test. The purpose of this survey is to check the reliability of measurements and to establish the final format of questionnaire for the fullscale study. In this quantitative method, data are obtained from 42 habitual customers whose length of working relationship with BIDV‟s branch or transaction office is over 6 months. This survey is conducted at the Lam Dong Branch. Then, reliability test was used to exam the reliability of measurements and the result of the preliminary study is as the below table. Variable Customer Loyalty Customer Satisfaction Service Quality Corporate Image Customer Trust Switching costs Cronbach’s Alpha .835 .832 .843 .882 .866 .914 N of Item 4 4 5 4 4 4 Table 3.9: Second pilot test‟s result – Cronbach‟s Alpha Table 3.9 shows that the reliability statistics of all measurement factors in the pilot test. It shows that the minimum value of Cronbach‟s Alpha is 0.832 (of Customer Satisfaction), and the maximum value is 0.914 (of Switching costs). All these Cronbach‟s Alpha values are higher than 0.8 which makes this research more reliable for conducting the full-scale study. Besides, there is no value of Corrected Item-Total Correlation which is lower than 0.3. The detailed reliability test‟s result of the second pilot test is displayed in Appendix B. Therefore, all the measurement‟s items of constructs are kept in the formal questionnaire. 27 4.3. Final format of Questionnaire Based on the result of two pilot tests, the first draft of the questionnaire was redesigned and refined to make all words in statements more intelligible and all items of measurements appropriate for conducting a full-scale study. The final format of the questionnaire has the same structure like the first draft of questionnaire covering customer‟s evaluation on loyal and the antecedents of loyal and customer‟s information. In the first part, there are 25 statements with 10 points Likert-scale which 0 means “Not at all likely to disagree” to recommend, 5 means “neutral”, and 10 means “extremely likely to agree” displayed in the below table. IMAGE CORPORATE SERVICE QUALITY CUSTOMER SATISFACTION CUSTOMER LOYLATY Variable Measurement Word of mouth Re-buying product/service Code CLO1 Priority CLO3 Consistency CLO4 Overall satisfaction CSA1 Fulfilled demand CSA2 Comparison Ideal bank Machine service quality Functional performance Technical performance Behavioral service quality Service transaction accuracy Sustainability Innovation Business ethic Market leader CSA3 CSA4 CLO2 SQA1 Statement I would recommend BIDV to friends/family/others. I intend to do more business with BIDV in the next years. I consider BIDV as my first choice for future purchases. Even a better bank is recommended, my preference for this bank would not change. In general, I am satisfied with BIDV based on my experiences. From my experiences, BIDV does really meet my needs. I am satisfied with BIDV more than other banks. BIDV is close to expectations of my ideal bank. BIDV has modern and convenient facilities and equipment. SQA2 BIDV has quick and simple application procedures. SQA3 BIDV has flexible and customized service solution. SQA4 BIDV‟s employees are polite, helpful, and friendly. SQA5 CIM1 CIM2 CIM4 CIM5 There is no error in transactions and employee‟s mistakes when I conduct banking business at BIDV. BIDV is a stable and firmly established bank. BIDV is an innovative and forward-looking. BIDV bank does business in an ethical way BIDV is a leading bank in the banking industry. 28 CUSTOMER TRUST SWITCHING COSTS Credibility CTR1 Reliability CTR2 Intimacy CTR3 Self-interest Selection Time Money Relationship CTR4 SWC1 SWC2 SWC3 SWC4 I believe the message/information of BIDV I believe my accounts/banking transactions are safe with BIDV I believe that BIDV‟s employees keep my information secret. I believe that BIDV has my best interests at heart. I am hesitant to choose which other bank to use I think it would take a lot of time to change a bank. I think it would take lots of money to change a bank. I have invested a lot in the relationship with BIDV. Table 3.10: Final format of Questionnaire Based on the items of constructs, and to avoid the language barrier the initial Vietnamese draft of the questionnaire was designed. Then the questionnaires are translated into English for the report. Appendix C & Appendix D are shown Vietnamese and English versions of the questionnaire. 5. Data Collection Method 5.1. Sample The target sample is the BIDV‟s customers who are living in Lam Dong Province and have experience with branches and transaction offices of this bank in this region. According to Keller (1993) suggested that loyalty is established in customer‟s mind when the favorable attitude of customers for the brand of services or products are manifested in repeated purchasing behavior. Therefore, the sample will be chosen and collected from BIDV‟s customers in Lam Dong Province who have used the banking service at least 3 times that are confirmed from the opinions of BIDV‟s employees and customers in the above-mentioned pilot tests. 5.2. Sample Size The sample size is taken by determining the population proportion in studies. Specifically, McClave et al. (2006) stated that the use of the population proportion was 29 presented to determine the amount of a sample size to preset the whole group of population which can be used for unknown population. In this research, it is impossible to get the number of proportion exactly. For this reason, the formula developed by Smith (2011) is referred to calculate the sample size. Formula 𝑝𝑞𝑧 2 𝑁= 𝐸2 In which:  N stands for Necessary sample size  z2 stands for The Square of the confidence interval in standard error units Here is the Z for the most common confidence levels: (90%  Z = 1.645); (95%  Z = 1.96); (99%  Z = 2.326). The sample size is normally determined with 95% confidence level (Zikmund, 2003). The level of risk is called by sampling error to be the level of precision. In this case, the confidence level is 95%. It means that 95 out of 100 samples have true population value.  p is the estimated proportion of success. For a conservative approach, let p = 0.5 (Levine et al., 1999)  q = (1 – p)  E2 is the square of the maximum allowance for error between the true proportion and sample proportion. The allowable error is usually 0.05 or 5% (Hanley and LippmanHand, 1983) Finally, the total sample is estimated as below: 𝑁= 𝑝𝑞𝑧 2 0.5 1 − 0.5 (1.96)2 = = 384.16 𝐸2 0.052 30 Besides, a ratio of ten responses per free parameters is required to obtain trustworthy estimates (Bentler & Chou, 1987). Others suggest a rule of thumb of ten subjects per item in scale development is prudent (Flynn & Pearcy, 2001). However, if data is found to violate multivariate normality assumptions, the number of respondents per estimated parameter increases to 15 (Bentler & Chou 1987; Hair, 1998). In this research, each of the constructs to be measured had four to five items and there are total 25 items. Therefore, a sample size from 250 to 375 is required. However, a sample size exceeding 400 to 500 becomes „too sensitive‟, as almost any difference is detected, making all goodness-of-fit measures indicate a poor fit (Hair, 1998). In conclusion, the sample size is collected to round up to 300 to 400 respondents in order to get the result more reliable for this research. 5.3. Sampling For this study, Cluster Sampling is the most suitable selection of categories of the probability sampling methods. First, it is impossible to have the list of BIDV‟s customers in Lam Dong Province because its rule of the banking industry is to keep customer‟s information secret and secure. Besides, there are total 8 branches and transaction offices geographically distributed in Lam Dong Province that is easily divided into clusters. According to Sekaran & Bougie (2010), population in cluster sampling is divided into clusters, in which a cluster is a natural aggregation of elements in a population and then randomly some clusters are drawn from the group. In a selected cluster, all elements may be selected for study or a random sample can be further drawn from the cluster. Similarly, Hyndman (2008) also defined that “A cluster sample is a probability sample in which each sampling unit is a collection, or cluster, of elements. The population is 31 divided into clusters and one or more of the clusters is chosen at random and sampled. Sometimes the entire cluster is sampled, on other occasions a simple random sample of the chosen clusters is taken…” In this study, population was divided into 8 clusters which correspond with 8 branches and transaction offices of BIDV in Lam Dong Province. To obtain from 300 to 400 questionnaires, each cluster was expected to be collected more than 50 questionnaires. A survey with a total of 800 questionnaires was conducted at 8 branches and transaction office of BIDV during nearly a six – week period in Lam Dong Province. Some branches and transaction office allowed the researcher to contact customers, while others just received questionnaires and let their employees send them to their customers and then gave them back to the researcher. Finally, data collected from 8 branches and transaction offices of BIDV in Lam Dong Province were 480 questionnaires. However, 103 respondents are not appropriate for the research because they did not complete their questionnaires. Therefore, the final sample consists of 377 habitual customers of BIDV‟s branches and transaction offices in Lam Dong Province. The sample size is between 300 and 400 indicated that data may be reliable for this research. 6. Data Analysis Method Valid questionnaires were coded, and then the raw collected data will be processed by SPSS and AMOS software. Data go through these analysis methods: Descriptive statistics: The goal of descriptive statistics is to summarize and to present numerical information in a manner that is illuminating and useful. In this 32 research, this technique is used to evaluate Customer Loyalty, Customer Satisfaction, Service Quality, Corporate Image, Customer Trust and Switching Costs. Reliability test: Reliability test through Cronbach‟s alpha as a method that is frequently used that assessing the consistency of the entire scale. Geogry & Mallery (2003) provide that the following rules of thumb: “_> 0.9 – Excellent, _>0.8 – Good; _>0.7 – Acceptable, _>0.6 – Questionable, >0.5 – Poor, and _ 15 million 14.6% ≤5 >10 million 15 37.7% million 19.4% >5 - 10 million 28.4% Retirement 1.3% Enterprise owner 18.1% Employment 52.5% Unemployment & Seeking employment 0.8% Trading 25.7% Figure 4.3: The percentage of monthly income BIDV‟s customers Figure 4.4: The percentage job categories of BIDV‟s customers Analyzing the subgroups of job categories and income are always mentioned in the researches which their subject is to mainly focus on customer behavior. According to Figure 4.3, the percentage of customers whose monthly income is over 10 million is just 34%. Figure 4.4 shows that about 52.5% of customers are in “employment”. Figure 4.5 shows that just 15.7% of customers have remained their working relationships with BIDV for over 5 years. This is explained that BIDV‟s branches and transactions in Lam Dong Province are not successful to build consumer loyalty as well as to attract potential customers even though they have existed in this region for more than 10 years since the opening day. 37 61% 23.3% 15.7% < 1 year 1 year - 5 years > 5 years Figure 4.5: The length of working relationship between customers and BIDV 100.0% 73.2% 58.1% ATM Online 0% Branch Call Center Figure 4.6: Multichannel of BIDV According to the response of 377 respondents, all of them usually come to branches or transaction offices to conduct their banking transactions. It is shown that retail branches still remain a core banking channel in Lam Dong Province. While contacting with the bank through call center is entirely not interested by customers because of its nature of security and too complicated process. Furthermore, these branches and transaction in this region do not really improve the quality of call center over the past years; even some do not have this channel. For example, call center service has just implemented at Duc Trong District in July 2013. This is why customers are not familiar with call centers of the bank. Figure 4.6 shows that more than 50% of customers spend time in online to execute their transactions. This is proved that customers have a tendency to rely more heavily on direct channels when technology rapidly changes the way consumers behave and interact. In the increasingly competitive market of the banking industry, there is slightly difference which exists in financial services and products among banks. However, the 38 diversification of products and services is one of the competitive advantages that can enable customers more loyal with a bank. Card Service 66% Wire transferring 61.4% Saving account 57.9% E-bank 56.3% Account service 44.0% Loan Others 31.6% 6.7% Figure 4.7: Categories of BIDV‟s Products and Services Figure 4.7 shows that three kinds of services and products that customer use most are card service, wire transferring and saving account in this retail banking market. Besides, more and more customers use e-bank because of its effectiveness, convenience and simple registering procedure. 2. Descriptive Statistics Descriptive statistics are used to describe the basic features of the data. This technique shows us an estimate of the center of a distribution of value. In this research, mean is the average of customer‟s evaluation level on the performance of BIDV‟s branches and transaction offices in Lam Dong Province based on variables. In questionnaire design, ten-point Likert-scale, ranged from 0 to 10 is used for customer‟s selection, which corresponds with ten levels of the customer‟s evaluation. However, to make it clearer and simpler the level of the customer‟s evaluation on each statement, it is divided into three levels based on Reichheld‟s viewpoint (2003), which are alternately “promoters” (9-10 rating), “passively satisfied” (7-8 rating), and “detractors” (0-6 rating). 39 2.1. Customer Loyalty All the four items of Customer Loyalty (CLO1–Word of mouth, CLO2–Rebuying product/service, CLO3–Priority, CLO4–Consistency) have medium mean value. “Rebuying product/service” and “Priority” have higher scores among of four items while “Word of mouth” and “Consistency” have lower scores. The values of the standard deviation are from 1.270 to 1.280 (< =1.67), which shows the relatively similar evaluation of almost customers in term of Customer Loyalty. Item Consistence Mean Std. Deviation Minimum Maximum 6.98 1.280 2 10 CLO1 CLO3 Word of mouth Priority 7.00 7.30 1.238 1.207 5 4 10 10 CLO2 Re-buying product/service 7.42 1.270 5 10 Code CLO4 Table 4.1: Customer Loyalty descriptive statistics According to Table 4.1, it is shown that loyal in the customer behavior is better expressed than in the customer‟s attitude. In other words, customers are willing to continue using products/services or select BIDV for their new demand in the future. However, they are not too eager to recommend this bank to their friends, colleague or their family; and they are also hesitant to choose BIDV if a better bank is offered. Consistency 31% Word of mouth 34% Priority 26% Re-buying product/service 23.9% 0% 58.9% 10.1% 54.9% 11.1% 62.9% 11.1% 56.2% 20% 40% Detractors 60% 19.9% 80% Passively satisfied Figure 4.8: Questionnaire response on Customer Loyalty 40 100% Promoters Figure 4.8 is shown that more than 50% of customers are passively satisfied in each statement about Customer Loyalty. It is able to say that they have a tendency to become loyal customers; however, it does not mean BIDV‟ customer loyalty is really good because of the very low percentage of promoters (just about 10% to 20%), and high percentage of detractors (from 23.9% to 31%). Based on the given definition of bank loyalty and research findings, the percentage of customers regarded as detractors is about 20%-30% of the total. This shows that they are not true loyalty. They are not willing to recommend the bank to their family, friends and/or colleague even though they have the intention to continue using BIDV‟s products/services and to consider BIDV as their first choice for future purchase. In addition, they are lacking in emotional attachment or commitment to their banks and they are willing to defect to competitor banks that serve them better than BIDV. However, just 10%-20% customers regarded as promoters can be characterized as really truly loyal, since they are willing to provide good referrals about the bank to others, and are more resolute in their selections when a better bank is offered. Moreover, they want to be remaining customers of their bank, and would consider it as their main choice for future purchases. With the response score, Net-Promoter Score (NPS) of BIDV‟s branches and transaction office in Lam Dong Province is calculated in the following equation: NPS = %Promoter - %Detractor = 11.1% - 34% = - 22.9% It is clear that BIDV‟s branches and transaction offices in Lam Dong Province have a negative Net-Promoter Score, which means that they are creating more detractors than promoters. Therefore, it is vital to improve customer loyalty of BIDV‟s branches 41 and transaction offices in Lam Dong Province as fast as possible in the increasingly competitive market, if they do not want to lose their loyal customers to their competitors. Frequencies or Descriptives of Descriptive Statistics is commonly used to analyze customer loyalty, for example, the research of Lewis & Soureli (2006). Besides this technique, in this research, NPS is used to assert the reliability of these findings again. Moreover, this NPS shows the real situation of BIDV‟s customer loyalty in this region, which has to be improved and developed in order to retain current customers. 2.2. Customer Satisfaction All the four items of Customer Satisfaction (CSA1–Overall satisfaction, CSA2– Fulfilled demand, CSA3–Comparision, CSA4–Ideal bank) have also medium mean values. The lowest score is “Ideal bank” and the highest score is “Overall satisfaction”. The values of the standard deviation are from 1.168 to 1.348 (< =1.67), which means that most of customers have the same evaluations in term of Customer Satisfaction. Code Item Mean Std. Deviation CSA4 CSA2 CSA3 CSA1 Ideal bank Fulfilled demand Comparison Overall satisfaction 6.92 7.45 7.48 7.65 1.168 1.182 1.288 1.348 Minimum Maximum 3 4 4 4 9 10 10 10 Table 4.2: Customer Satisfaction descriptive statistics Ideal bank 32.4% Fulfilled demand 22.0% Comparison 21.0% Overall satisfaction 20.4% 0% 59.9% 7.7% 58.9% 54.4% 24.7% 49.6% 20% Detractors 40% 19.1% 30.0% 60% Passively satisfied 80% Promoters Figure 4.9: Questionnaire response on Customer Satisfaction 42 100% Table 4.2 & Figure 4.9 show BIDV well serves customers because there are 30% of promoters when asking about their overall satisfaction toward BIDV and the mean value of this item is the highest in all of Customer Satisfaction dimensions. However, it is clear BIDV‟s branches and transaction offices do not meet customer expectation because the mean value of the variable CSA2 is 7.45. In fact, BIDV‟s loyal customers are truly unsatisfied with its service quality as well as performance. For example, its banking facilities are not as modern and convenient than other banks; or the frequency of errors in transactions and employees‟ mistake is rather high. For this reason, the mean value of “Comparison” is just 7.48, which partly explains that the percentage of loyal customers having over five-year working relationship with BIDV is 15.7%. Therefore, BIDV has to make a full effort to become the ideal bank in the customer's mind. 2.3. Service Quality All measurements in Service Quality (SQA1–Machine service quality, SQA2– Service system quality/functional performance, SQA3–Service system quality/technical performance, SQA4–Behavioral service quality, SQA5–Service transaction accuracy) score pretty high. In these, “Service system quality – Functional performance” and “Behavioral service quality” score highest. The values of the standard deviation are from 0.983 to 1.205 (< =1.67), which shows that there are too much different between most of customer‟ evaluations about Service Quality. Code SQA5 SQA1 SQA3 SQA4 SQA2 Item Service transaction accuracy Machine service quality Technical performance Behavioral service quality Functional performance Mean 7.20 7.51 7.71 7.82 7.98 Std. Deviation .983 1.205 1.182 1.070 1.084 Minimum 5 4 4 5 5 Table 4.3: Service Quality descriptive statistics 43 Maximum 9 10 10 10 10 As the above-mentioned mean values of Customer Satisfaction, it is obvious that mean values of Service Quality are from 7.20 to 7.98. It is explained that Service Quality has a positive impact on Customer Satisfaction which is proved in studies in retail banking. (Beerli et al., 2004; Lewis & Soureli., 2006; Jamal & Anastasiadou, 2009) Service transaction accuracy Machine service quality 14.3% Behavioral service quality 10.9% Detractors 22.0% 58.4% 27.3% 61.5% 27.6% 55.7% 9.3% 0% 7.2% 59.9% 18.0% Technical performance Functional performance 70.3% 22.5% 20% 40% Passively satisfied 35.0% 60% 80% 100% Promoters Figure 4.10: Questionnaire response on Service Quality According to Nielsen (2012), 67% of Vietnamese consumers choose the bank because of its quick and simple application procedure. It is also true in this region that the mean value of BIDV‟ service system quality – functional performance shown through its application procedure is among the highest of these dimensions of Service Quality. Additionally, the percentage of promoters make up 35% and it is just 9.3% of detractors. The remaining item of service system quality, technical performance shown through flexible and customized solution has the third highest score. In fact, BIDV employees try their best to serve their customers and BIDV‟s management has its customer‟s best interest at heart. The quality of behavioral service performed by BIDV‟s employees is positively evaluated by its customers. In general, BIDV‟s employees are polite and helpful. However, friendliness and openness is not homogeneous in all branches and transaction 44 offices. In some transaction offices, employees are not always smile on customers or they are too formal and impersonal when communicating with customers. For this reason, its mean value is higher than other items but is not the highest in all of them. “Service transaction accuracy” which its mean value is the lowest and only 7.2% of respondents are promoters should be improved. High frequency of errors in transactions and employees‟ mistake can enable customers to reduce their trust as well as loyalty towards a bank. Besides, the mean value of “Machine service quality” is also low. In fact, banking facilities is not satisfied with customers. For example, parking is not convenient for customers when they come to conduct transactions at branches and transaction offices; or it takes more than 15 minutes for customers to receive the SMS from mobile banking service. 2.4. Corporate Image All measurements in Corporate Image (CIM1–Innovation, CMI2–Sustainability, CIM3– Business ethic, CIM4–Market leader) have high mean value. The lowest score is “Innovation” and the highest score is “Market leader”. The values of the standard deviation are from 0.996 to 1.091 (< =1.67), which shows that there are nearly completed similarity between most of customer‟ awareness of Corporate Image. Code Item Mean Std. Deviation Minimum Maximum CIM2 CIM3 CIM1 CIM4 Innovative Business ethic Sustainability Market leader 7.85 8.02 8.10 8.13 1.091 1.030 .906 .996 4 5 5 6 10 10 10 10 Table 4.4: Corporate Image descriptive statistics According to “The Annual Report of Credibility Index Vietnam 2012” released by the Vietnam Chamber of Commerce and Industry and the Corporate Rating Company, 45 BIDV was awarded an A rating – the highest given to a commercial bank in Vietnam. This is why BIDV‟s loyal customers in Lam Dong Province think of its branches and transaction offices as the leading, sustainable, ethical and innovative bank. Innovation 10.0% 58.4% 31.6% Business ethic 7.4% 54.9% 37.7% Sustainability 4.0% 60.2% 35.8% Market leader 5.3% 57.0% 37.7% 0% 20% Detractors 40% Passively satisfied 60% 80% 100% Promoters Figure 4.11: Questionnaire response on Corporate Image The first awareness of BIDV‟s image in almost loyal customers asked is the leading bank in banking sector in this region. It is easily understood that BIDV is one of five state-owned banks in Vietnam regarded as the greatest triumphs of this banking industry and sustainable banks as well. However, the image of BIDV regarded as an innovative and forward-looking bank is not clearly defined in the customer‟s mind. That shows through the lowest mean value and just 31.6% of promoters. According to VnEconomy‟s web site, in Vietnam, more and more bank officials and employees have recently been prosecuted for violating the law and professional ethics such as the fraudulent appropriation of money from customers or withdrawing money from banks. These cases have been sounding the alarm for the problems of business ethics in the banking system. Therefore, customers quickly decide to choose another better bank if their current bank has a bad reputation in business ethic. For this reason, it is an extremely important to take a hard concern of business ethic to build a strong bank‟s image. Indeed, BIDV really rather well control this subject. That is why 46 there are 37.7% of promoters in BIDV‟s loyal customers, although the mean value of Business Ethic is the third highest. 2.5. Customer Trust All the four items of Customer Trust (CTR1–Credibility, CTR2–Reliability, CTR3–Intimacy and CTR4–Sefl-interest) have also pretty high mean values. In these, “Reliability” and “Credibility” score highest. The values of the standard deviation are from 1.159 to 1.263 (< =1.67), which means that almost of loyal customers have the nearly similar level of trust in BIDV. Code CTR3 CTR4 CTR1 CTR2 Item Intimacy Self-interest Credibility Reliability Mean 7.34 7.39 7.82 7.83 Std. Deviation 1.241 1.263 1.126 1.159 Minimum Maximum 3 10 3 10 5 10 5 10 Table 4.5: Customer Trust descriptive statistics. Intimacy 24.2% Self-interest 24.1% 57.8% 18.0% 55.2% 20.7% Credibility 13.3% 54.9% 31.8% Reliability 13.3% 55.4% 31.3% 0% 20% Detractors 40% Passively satisfied 60% 80% 100% Promoters Figure 4.12: Questionnaire response on Customer Trust Building and boosting customer trust are one of the biggest challenges for all banks in this industry in everywhere. Based on the research of Lewis and Soureli (2006), it is able to say that the more customers trust in their bank, the more loyal they are. According to Table 4.5 and Figure 4.12 show that BIDV‟s customer trust might be pretty good through the fairly high mean values. It means that BIDV customers believe the 47 message or information provided by BIDV and they also trust that their accounts or banking transactions are safe with this bank. However, 24.2% of loyal customers could not trust BIDV‟s employee not to tell their information to someone. Furthermore, making customers believe that management has the customer‟s best interest at heart is still a big challenge for BIDV, while just 18% of loyal customers totally trust in this statement and Self-Interest has the lowest mean value. Hence, what is the real situation of BIDV‟s customer trust in this region? To evaluate BIDV‟s customer trust more exactly, the Trust equation (Green, 2007) is referred. The trust score for BIDV‟s branches and transaction offices is 8.81 displayed in Appendix F whereas theoretical maximum is 30. It is partially explained that just 15.7% of customers in total sample have remained their relationships with BIDV for over 5 years. However, this trust score cannot compare with the standard trust score of the retail banking based on all banks in Lam Dong Province because of the research limitation. Therefore, this trust score in theory might be evaluated lower than it in reality. In sum, it is obviously that customer trust is one of the biggest challenges that all banks in general and BIDV in particular are now facing. 2.6. Code SWC1 SWC2 SWC4 SWC3 Switching Costs Item Selection Time Relationship Money Mean 6.14 6.36 6.48 6.53 Std. Deviation 1.877 1.718 1.731 1.715 Minimum Maximum 1 10 0 10 0 10 0 10 Table 4.6: Switching Costs descriptive statistics All measurements in Switching Costs (SWC1–Seletion, SWC2–Money, SWC3– Time and SWC4–Relationship) have also low mean values. The lowest score is 48 “Selection” and “Money” and “Relationship” score highest. The values of the standard deviation are from 1.715 to 1.877 (> =1.67), which shows that customer‟ evaluations vary considerably in term of Switching Costs. Selection 51.0% Time 40.8% 53.6% 8.2% 32.6% 13.8% Relationship 50.4% 35.0% 14.6% Money 49.6% 36.1% 14.3% 0% 20% Detractors 40% Passively satisfied 60% 80% 100% Promoters Figure 4.13: Questionnaire response on Switching Costs The low mean values of Switching Costs dimensions and about 50% of customers are detractors shown on each statement prove that customers in this region are not hesitant to change their bank even though it is time-consuming and costly to build new working relationship with a new bank. Besides, the nature of the increasingly competitive market in this industry that is slightly different existing among banks contributes to grow customer‟s switching intention. Among of Switching Costs, Money and Relationship are the considerable factors if a customer wants to change from his or her current bank to a better bank. Therefore, if a bank tries to remain a good long-term relationship with customers and conducts an appropriate pricing strategy, switching other banks might not happen. Most customers in Lam Dong Province whose education level is “College or University” are more knowledgeable about banks so that they easily decide to select a new bank. Besides, they are also willing to spend time on doing new procedures in that bank. In conclusion, the nature of low switching costs this region should be importantly considered. 49 3. Reliability Test To test the reliability of the sample data, Cronbach‟s Alpha is popularly used as a measure of the internal consistency of a test score for a sample of examinees. Moreover, it is necessary to calculate and report Cronbach‟s Alpha when using a Likert-type scale (Gliem & Gliem, 2003). Below table shows the reliability statistics of all measurement factors in this research. Variable Customer Loyalty Customer Satisfaction Service Quality Corporate Image Customer Trust Switching costs Cronbach’s Alpha .918 .867 .876 .919 .941 .897 N of Item 4 4 5 4 4 4 Table 4.7: Reliability test‟s result – Cronbach‟s Alpha Table 4.7 shows that the minimum value of Cronbach‟s Alpha is 0.867 (of Customer Satisfaction), and highest value is 0.941 (of Customer Trust). All of Cronbach‟s Alpha values in this full-scale study are better than these initial values in the pilot tests. Based on the above-mentioned rules of thumb of Geogry & Mallery (2003), these Cronbach‟s alpha values of Customer Satisfaction, Service Quality, and Switching Cots are good, which makes this research worth for further study. The very high value of Cronbach‟s alpha of Customer Loyalty, Corporate Image, and Customer Trust are ranked excellent in this rule-of-thumb. Besides, these values do not exceed 0.95, which proves that there is no significant multicollinearity (Bland & Alman, 1997). This result demonstrates that the measurement scale is well designed and trustworthy. Moreover, the values of corrected item-total correlation in all factors show no item should be deleted because they could not increase the current result. Therefore, all the items of each factor should be kept in this research, which was displayed in more detail in Appendix E. 50 4. Exploratory Factor Analysis (EFA) Exploratory Factor Analysis is a technique to evaluate interdependence. It studies all interrelationships without defining variables to be dependent or independent. In this research, EFA is applied to test the model with The Kaiser-Meyer-Olkin (KMO) and Bartlett‟s test by using the Principal Axis Factoring with Promax rotation. KMO is an index used to examine the appropriateness of factor analysis. High values (between 0.5 and 1.0) with statistical significance value (sig < 0.05) indicate the factor analysis is appropriate. In other words, values below 0.5 imply that factor analysis may not be appropriate (Gerbing & Anderson, 1988; Rietveld & Van Hout 1993; Field, 2000). Gerbing & Anderson (1988) insist that Principal-Axis Factoring is relatively equal in their capacities to extract the correct model and is more commonly reported in social and behavioral science research reports than Principal Components with Varimax rotation. To ensure the practical significance of EFA, Factor Loading should be equal or higher than 0.5 (Hair et al., 1998), Total Variance Explained is over 50% (Gerbing & Andension, 1998). In this research, the factor analysis process is repeated in 4 rounds shown in Appendix G due to the cross-factor loading of the variables. In all 4 rounds of the factor analysis process, each KMO is about 0.9 (>0.5) with statistical significance (sig = .000) and each Total Varian Explained is over 70% (>50%) which prove the appropriateness of factor analysis. In the first round, 6 initial components are converted into 5 components. Item SQA5 is deleted because of cross-loading factor and 24 remaining items are kept for the next step. In the second round, 5 previous components still play the main role. Item 51 CSA2 is removed because of cross-loading factor and there are 23 remaining items. In the third round, 5 these components continue to be 5 major components. Item CSA4 is excluded because of cross-loading. Finally, these 22 variables are tested again in the final round. The result of the round is described in the following table. SQA3 SQA4 CSA1 SQA2 CSA3 SQA1 CIM1 CIM3 CIM2 CIM4 CLO3 CLO4 CLO2 CLO1 SWC3 SWC4 SWC2 SWC1 CTR4 CTR3 CTR2 CTR1 1 .849 .815 .812 .800 .784 .567 Pattern Matrixa Factor 2 3 4 5 .903 .870 .830 .815 .977 .823 .791 .778 .928 .825 .819 .751 .999 .979 .674 .672 Extraction Method: Principal Axis Factoring. Rotation Method: Promax with Kaiser Normalization. a. Rotation converged in 5 iterations. Table 4.8: Pattern matrix of variables According to Table 4.8, the factor analysis has pulled out 5 major factors from 22 variables whereas the number of factors in the initial research model is 6. Two factors including Customer Satisfaction and Service Quality are grouped into a component. Because the number items of Service Quality are more than the number items of Customer Satisfaction, the new component is named Service Quality which includes 52 CSA1, CSA3, SQA1, SQA2, SQA3 and SQA4. Its value of Cronbach‟s Alpha is 0.907 without deleted items increasing the current result displayed in Appendix E. Besides, Table 4.13 is also shown that items of 4 remaining factors which are alternatively Customer Image, Customer Loyalty, Switching Costs, and Customer Trust are initially kept as a final format of the questionnaire. There has been much debate in the literature regarding the overlap and distinction between customer satisfaction and service quality. According to the research of Beerli et al. (2004) and Lewis & Soureli, 2006), Customer Satisfaction and Service Quality are commonly separated, which have the strong causal relationship. Furthermore, Anderson et al. (1994) clarify the distinction between satisfaction and service quality. Besides, service quality is considered an antecedent of customer satisfaction (Gotlieb et al, 1994). Whereas, Dabholkar et al. (1993, 1995, 1996) proposed to examine overlap or distinctions between customer satisfaction and service quality and concluded that they tend to be distinct factors in the short term, but tend to overlap in the long term. Based on the standpoint of Dabholkar et al. (1993, 1995, 1996), Customer Satisfaction and Service Quality are regarded as a component in this research because our target sample of this research is BIDV‟s habitual customers. Most of them have a longterm working relationship with BIDV‟s branches and transaction offices in Lam Dong Province. The findings and conclusions of Dabholkar et al. (1993, 1995, 1996) prove the reliability and validity of the research, even though the overlap between customer satisfaction and service quality has not appeared in the previous studies. Besides, that also positively contributes towards Dabholkar‟s conclusions about the relationship between customer satisfaction and service quality in a long time in her study. 53 5. Confirmatory Factory Analysis (CFA) Confirmatory Factory Analysis is a better method to assess the validity and reliability of measures (Bagozzi & Foxall, 1996). The goodness-of-fit of CFA is used to further assess the unidimensionality and convergent validity among the constructs. Figure 4.14: CFA result CFA is applied with following indexes: Chi-square, Chi-square/df, Comparative Fit Index (CFI), Tucker & Lewis Index (TLI), Root Mean Square Error Approximation 54 (RMSEA). All factors are reliability for the next analyzing steps if GFI, TLI and CFI are equal or above 0.9 (Bentler & Bonett, 1980); Chi-square/df is equal or lower 2 (Chisquare/df ≤3 can be accepted in some cases) (Carmines & McIver, 1981); and RMSEA is equal or lower 0.08 (RMSEA ≤ 0.05 is excellent) (Steiger, 1990). Therefore, these evidences which are GFI = 0.931, TLI = 0.981, CFI = 0.984 (>0.9), Chi-square/df = 1.669 ( 10 million – 15 million > 5 million – 10 million > 15 million High school or less College/University Vocational training Master or higher Education level 105 < 1 year The length of working relationship 1 year – 5 years > 5 years The times of banking transaction ≥ 3 times < 3 times Branch Call centre Channels ATM Online Saving account E-bank Account service Card service Wire transferring Others Products/Services Loan THANKS FOR YOUR HELP! 106 Appendix D: Survey Questionnaire (Vietnamese version) Kính chào Anh/Chị! Hiê ̣n tại tôi đang thực hiê ̣n đề tài nghiên cứu về lòng trung thành của khách hàng tại các chi nhánh/văn phòng giao di ̣ch của ngân hàng BIDV tại Tỉnh Lâm Đồng. Rất mong Anh/Chị dành ra vài phút đ ể giúp tôi trả lời những câu hỏi dưới đây. Tấ t cả mọi 107han107 tin sẽ được giữ bí mật và phục vụ duy nhấ t cho mục đích nghiên cứu. Xin chân thành cảm ơn Anh/Chị! Xin Anh/Chị vui lòng chỉ chọn 1 ô mà Anh /Chị cảm thấy đúng nhất , phù hợp nhất cho mỗi phát biể u dưới đây. Anh/Chị có thể khoanh tròn vào con số , hay đánh dấ u  hoă ̣c . Mức điể m từ 1 tới 10, trong đó: - Mức 0: là mức thấ p nhấ t , là mức mà Anh/Chị cảm thấy hoàn toàn không đồ ng ý . - Mức 5: là mức bình thường , là mức mà Anh/Chị cảm thấy bình thường - Mức 10: là mức cao nhấ t, là mức mà Anh/Chị cảm thấy hoàn toàn đồng ý . CHẤT LƯỢNG DICH VỤ CỦ A NGÂN HÀ NG ̣ Cơ sở vâ ̣t chấ t, trang thiế t bi ̣của BIDV hiê ̣n đa ̣i, tiê ̣n nghi. 0 1 2 3 4 5 6 7 8 9 10 Quy trin ̀ h thủ tu ̣c ta ̣i BIDV nhanh chóng , đơn giản. 0 1 2 3 4 5 6 7 8 9 10 Các vấn đề của tôi tại BIDV được giải quyết thỏa đáng, linh hoạt. 0 1 2 3 4 5 6 7 8 9 10 Nhân viên BIDV luôn tỏ ra lich ̣ sự, nhiê ̣t tiǹ h và thân thiê ̣n với tôi. 0 1 2 3 4 5 6 7 8 9 10 Không có sai sót xảy ra trong quá trình giao dịch tại BIDV. 0 1 2 3 4 5 6 7 8 9 10 Thời gian qua, đánh giá chung, tôi hài lòng về BIDV. 0 1 2 3 4 5 6 7 8 9 10 BIDV đã đáp ứng đươ ̣c nhu cầ u của tôi. 0 1 2 3 4 5 6 7 8 9 10 So các ngân hàng khác , tôi hài lòng về ngân hàng BIDV hơn. 0 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 10 SỰ HÀ I LÒNG CỦ A KHÁCH HÀ NG BIDV đáp ứng đươ ̣c mong đơ ̣i của tôi về 1 0 ngân hàng lý tưởng . HÌNH ẢNH/THƯƠNG HIÊU ̣ NGÂN HÀ NG BIDV là mô ̣t ngân hàng phát triể n bề n vững và ổn định. 0 107 BIDV là mô ̣t ngân hàng đổ i mới và tiên tiế n . 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 Tôi tin vào những thông tin đươ ̣c cung cấ p từ BIDV. 0 1 2 3 4 5 6 7 8 9 10 Tôi tin vào sự an toàn, chính xác khi giao dịch với BIDV. 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 0 1 2 3 4 5 6 7 8 9 10 Tôi phân vân khi quyế t đinh ̣ cho ̣n la ̣i mô ̣t ngân hàng mới . 0 1 2 3 4 5 6 7 8 9 10 Sẽ tốn tiền nếu chuyể n sang ngân hàng khác . 0 1 2 3 4 5 6 7 8 9 10 Sẽ tốn thời gian nế u chuyể n sang ngân hàng khác 0 1 2 3 4 5 6 7 8 9 10 Tôi đầ u tư quá nhiề u vào những mố i quan hê ̣ tại BIDV. 0 1 2 3 4 5 6 7 8 9 10 Tôi khuyên gia đin ̀ h , người thân, bạn bè lựa chọn BIDV. 0 1 2 3 4 5 6 7 8 9 10 Tôi sẽ tiế p tu ̣c sử du ̣ng dich ̣ vu ̣ của BIDV . 0 1 2 3 4 5 6 7 8 9 10 Nế u có nhu cầ u mới, BIDV luôn là sự lựa chọn đầu tiên. 0 1 2 3 4 5 6 7 8 9 10 Dù được giới thiệu 1 ngân hàng tố t hơn, tôi vẫn cho ̣n BIDV. 0 1 2 3 4 5 6 7 8 9 10 BIDV là mô ̣t ngân hàng kinh doanh có đa ̣o đức BIDV là mô ̣t ngân hàng hàng đầ u ta ̣i Viê ̣t Nam. NIỀM TIN CỦ A KHÁCH HÀ NG Tôi tin nhân viên BIDV giữ bí mâ ̣t các thông tin cá nhân của tôi. Tôi tin BIDV luôn đă ̣t lơ ̣i ić h khách hàng lên trên hế t . CHI PHÍ CHUYỂN ĐỔI SỰ TRUNG THÀ NH CỦ A KHÁCH HÀ NG THÔNG TIN CÁ NHÂN Nghề nghiê ̣p: Sinh viên/Học Sinh Làm chủ doanh nghiệp Không đi làm & đang tim ̀ viê ̣c Về hưu Làm thuê (công chức Nhà Nước, nhân viên công ty…) Thu nhập trung bình hàng tháng: Buôn bán, Tự kinh doanh… Từ 5 triê ̣u trở xuố ng Từ trên 10 triê ̣u – 15 triê ̣u Từ trên 5 triê ̣u – 10 triê ̣u Từ trên 15 triê ̣u 108 Trình độ học vấn: Cấ p ba hoă ̣c thấ p hơn Đa ̣i ho ̣c/Cao đẳ ng Trung cấ p nghề Cao ho ̣c và trên cao ho ̣c Dưới 1 năm Thời gian giao dich ̣ với ngân hàng: 1 năm – 5 năm Trên 5 năm Số lầ n giao dich: ̣ < 3 lầ n ≥ 3 lầ n Chi nhánh/Phòng giao dịch Kênh giao dich ̣ với ngân hàng: Gọi tới trung tâm khách hàng ATM Truy câ ̣p trang Web Ngân Hàng/Internet banking… Các sản phẩm /dịch vụ sử dụng: Tiế t Kiê ̣m E-bank/Ngân hàng điê ̣n tử Tài khoản và Tiền Gửi Dịch vụ thẻ: Thẻ ATM, Visa… Chuyể n Tiề n/Nhâ ̣n tiề n Dịch vụ khác Vay (tín dụng) Giới Tính: Nữ Nam XIN CHÂN THÀ NH CẢM ƠN CÁC ANH/CHỊ! 109 Appendix E: Reliability Test’ result of the full-scale study  Customer Loyalty Cronbach‟s Alpha N of Items .918 4 Table E.1: Cronbach‟s alpha of Customer Loyalty CLO1 CLO2 CLO3 CLO4 Scale Mean if Item Scale Variance if Corrected ItemCronbach‟s Alpha if Deleted Item Deleted Total Correlation Item Deleted 21.71 11.756 .792 .900 21.28 11.501 .801 .897 21.40 11.582 .849 .881 21.73 11.422 .804 .896 Table E.2: Item-Total Statistics of Customer Loyalty  Customer Satisfaction Cronbach‟s Alpha N of Items .867 4 Table E.3: Cronbach‟s alpha of Customer Satisfaction CSA1 CSA2 CSA3 CSA4 Scale Mean if Item Scale Variance if Corrected ItemCronbach‟s Alpha Deleted Item Deleted Total Correlation if Item Deleted 21.86 9.884 .725 .829 22.06 10.893 .713 .833 22.03 10.262 .718 .831 22.59 10.903 .724 .829 Table E.4: Item-Total Statistics of Customer Satisfaction  Service Quality Cronbach‟s Alpha N of Items .876 5 Table E.5: Cronbach‟s alpha of Service Quality SQA1 SQA2 SQA3 SQA4 SQA5 Scale Mean if Item Scale Variance if Corrected ItemDeleted Item Deleted Total Correlation 30.70 13.103 .684 30.24 13.251 .773 30.51 12.985 .721 30.40 13.624 .729 31.02 14.755 .636 Table E.6: Item-Total Statistics of Service Quality 110 Cronbach‟s Alpha if Item Deleted .857 .834 .847 .845 .866  Corporate Image Cronbach‟s Alpha N of Items .919 4 Table E.7: Cronbach‟s alpha of Corporate Image CIM1 CIM2 CIM3 CIM4 Scale Mean if Item Scale Variance if Corrected ItemDeleted Item Deleted Total Correlation 24.01 7.899 .857 24.26 7.335 .772 24.08 7.333 .841 23.98 7.670 .803 Table E.8: Item-Total Statistics of Corporate Image Cronbach‟s Alpha if Item Deleted .884 .912 .886 .899  Customer Trust Cronbach‟s Alpha N of Items .941 4 Table E.9: Cronbach‟s alpha of Customer Trust CTR1 CTR2 CTR3 CTR4 Scale Mean if Item Scale Variance if Corrected ItemDeleted Item Deleted Total Correlation 22.56 11.645 .860 22.55 11.482 .852 23.04 10.974 .850 22.99 10.681 .877 Table E.10: Item-Total Statistics of Customer Trust Cronbach‟s Alpha if Item Deleted .923 .925 .920 .917  Switching Costs Cronbach‟s Alpha N of Items .897 4 Table E.11: Cronbach‟s alpha of Switching Cost SWC1 SWC2 SWC3 SWC4 Scale Mean if Item Scale Variance if Corrected ItemCronbach‟s Alpha if Deleted Item Deleted Total Correlation Item Deleted 19.38 21.980 .704 .894 19.16 22.398 .771 .867 18.99 21.447 .850 .838 19.04 22.350 .766 .868 Table E.12: Item-Total Statistics of Switching Costs 111 Appendix F: The Trust Equation Figure F.1: The Trust Equation  Trust is the sum of Credibility, Reliability and Intimacy, divided by SelfOrientation.  The Trust Score of BIDV‟s branches and transaction offices in Lam Dong Province:.  TRUST SCORE = (Credibility + Reliability + Intimacy) / (1 – Self-Interest)  TRUST SCORE = (7.83 + 7.82 + 7.34)/ (1-7.39) = 8.81 112 Appendix G: The result of EFA in 4 rounds  ROUND 1 Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Approx. Chi-Square Bartlett‟s Test of Sphericity df Sig. Table G.1: Round 1 – KMO and Bartlett‟s Test Initial Eigenvalues .920 9281.662 300 .000 Extraction Sums of Squared Loadings Factor Rotation Sums of Squared Loadingsa % of Cumulative % of Cumulative Total Variance % Variance % 1 11.457 45.828 45.828 11.167 44.667 44.667 2 3.044 12.175 58.003 2.753 11.011 55.678 3 1.905 7.619 65.622 1.612 6.446 62.124 4 1.443 5.771 71.392 1.168 4.673 66.797 5 1.134 4.537 75.929 .916 3.664 70.460 6 .760 3.041 78.970 7 .582 2.327 81.297 8 .510 2.040 83.336 9 .484 1.934 85.271 10 .445 1.781 87.052 11 .379 1.517 88.569 12 .343 1.370 89.939 13 .314 1.257 91.196 14 .301 1.202 92.398 15 .276 1.106 93.504 16 .274 1.095 94.599 17 .266 1.065 95.664 18 .215 .861 96.525 19 .201 .804 97.329 20 .182 .726 98.056 21 .163 .652 98.708 22 .151 .605 99.313 23 .135 .539 99.853 24 .025 .099 99.951 25 .012 .049 100.000 Extraction Method: Principal Axis Factoring. When factors are correlated, sums of squared loadings cannot be added to obtain a total variance. Total Table G.2: Round 1 – Total Variance Explained 1 CSA4 CSA3 SQA3 CSA1 CSA2 SQA2 SQA4 SQA5 SQA1 CIM1 Factor 3 2 .796 .791 .783 .772 .768 .756 .740 .712 .694 .214 .897 113 4 5 Total 9.425 7.838 7.608 8.007 2.994 CIM3 .867 CIM2 .823 CIM4 .809 CLO3 .907 CLO4 .795 CLO1 .751 CLO2 .746 CTR4 CTR3 CTR1 CTR2 SWC3 SWC4 SWC2 SWC1 Extraction Method: Principal Axis Factoring. Rotation Method: Promax with Kaiser Normalization. Rotation converged in 6 iterations. .969 .941 .679 .678 .928 .824 .820 .751 Table G.3: Round 1 - Pattern Matrix  ROUND 2 Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Approx. Chi-Square Bartlett's Test of Sphericity df Sig. .918 8872.857 276 .000 Table G.4: Round 2 - KMO and Bartlett's Test Initial Eigenvalues Factor Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 10.988 3.043 1.789 1.440 1.118 .656 .573 .488 .478 .439 .371 .315 .310 .287 .276 .273 .264 .204 .185 .177 .153 .135 .025 .012 % of Variance 45.785 12.681 7.455 5.999 4.658 2.734 2.388 2.035 1.993 1.830 1.546 1.311 1.292 1.195 1.152 1.136 1.100 .851 .770 .736 .639 .562 .103 .051 Cumulative % 45.785 58.466 65.921 71.920 76.577 79.311 81.699 83.734 85.726 87.557 89.103 90.414 91.706 92.901 94.052 95.188 96.288 97.139 97.909 98.645 99.284 99.846 99.949 100.000 Extraction Sums of Squared Loadings Total 10.706 2.753 1.491 1.175 .912 % of Variance 44.607 11.469 6.213 4.896 3.800 Cumulative % 44.607 56.076 62.289 67.185 70.985 Table G.5: Round 2 - Total Variance Explained 114 Rotation Sums of Squared Loadingsa Total 8.892 7.643 7.480 7.866 2.982 1 SQA3 CSA1 CSA3 SQA2 SQA4 CSA2 CSA4 SQA1 CIM1 CIM3 CIM2 CIM4 CLO3 CLO4 CLO1 CLO2 CTR4 CTR3 CTR2 CTR1 SWC3 SWC4 SWC2 SWC1 Factor 3 2 .825 .807 .803 .781 .773 .727 .717 .667 4 5 .202 .899 .869 .823 .810 .937 .812 .771 .764 .989 .961 .673 .672 .928 .824 .819 .752 Extraction Method: Principal Axis Factoring. Rotation Method: Promax with Kaiser Normalization. a. Rotation converged in 6 iterations. Table G.6: Round 2 - Pattern Matrix  ROUND 3 Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Approx. Chi-Square Bartlett's Test of Sphericity df Sig. .915 8475.993 253 .000 Table G.7: Round 3 - KMO and Bartlett's Test Initial Eigenvalues Factor Total 1 2 3 4 5 6 7 8 9 10 11 10.486 3.043 1.674 1.439 1.111 .573 .545 .486 .472 .437 .368 % of Variance 45.593 13.231 7.277 6.256 4.829 2.492 2.368 2.111 2.051 1.900 1.601 Cumulative % 45.593 58.824 66.101 72.357 77.186 79.678 82.045 84.156 86.207 88.108 89.709 Extraction Sums of Squared Loadings Total 10.211 2.752 1.372 1.180 .906 115 % of Variance 44.394 11.966 5.967 5.130 3.939 Cumulative % 44.394 56.360 62.327 67.457 71.396 Rotation Sums of Squared Loadingsa Total 8.250 7.419 7.241 2.974 7.716 12 .311 1.354 91.063 13 .309 1.344 92.407 14 .287 1.246 93.653 15 .275 1.196 94.849 16 .267 1.159 96.008 17 .221 .962 96.970 18 .188 .819 97.790 19 .177 .768 98.558 20 .159 .690 99.248 21 .136 .591 99.838 22 .025 .108 99.947 23 .012 .053 100.000 Extraction Method: Principal Axis Factoring. a. When factors are correlated, sums of squared loadings cannot be added to obtain a total variance. Table G.8: Round 3 - Total Variance Explained 1 SQA3 CSA1 CSA3 SQA4 SQA2 CSA4 SQA1 CIM1 CIM3 CIM2 CIM4 CLO3 CLO4 CLO2 CLO1 SWC3 SWC4 SWC2 SWC1 CTR4 CTR3 CTR2 CTR1 Factor 3 2 .844 .813 .811 .802 .784 .664 .600 4 5 .221 .900 .869 .823 .809 .958 .822 .778 .775 .927 .824 .819 .752 .987 .965 .687 .685 Extraction Method: Principal Axis Factoring. Rotation Method: Promax with Kaiser Normalization. Rotation converged in 6 iterations. Table G.9: Round 3 - Pattern Matrix  ROUND 4 Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Approx. Chi-Square Bartlett's Test of Sphericity df Sig. Table G.10: Round 4 - KMO and Bartlett's Test 116 .909 8182.350 231 .000 Initial Eigenvalues Factor % of Variance 45.599 13.828 7.097 6.529 5.026 2.582 2.313 2.184 2.051 1.831 1.532 1.415 1.354 1.254 1.214 1.007 .862 .804 .730 .618 .113 .056 Total 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 10.032 3.042 1.561 1.436 1.106 .568 .509 .481 .451 .403 .337 .311 .298 .276 .267 .222 .190 .177 .161 .136 .025 .012 Extraction Sums of Squared Loadings Cumulative % 45.599 59.427 66.524 73.053 78.079 80.661 82.975 85.159 87.210 89.041 90.573 91.987 93.341 94.595 95.809 96.817 97.679 98.483 99.213 99.831 99.944 100.000 Total 9.766 2.751 1.263 1.182 .906 % of Variance 44.390 12.506 5.740 5.372 4.119 Rotation Sums of Squared Loadingsa Cumulative % 44.390 56.896 62.636 68.008 72.126 Table G.11: Round 4 - Total Variance Explained 1 SQA3 SQA4 CSA1 SQA2 CSA3 SQA1 CIM1 CIM3 CIM2 CIM4 CLO3 CLO4 CLO2 CLO1 SWC3 SWC4 SWC2 SWC1 CTR4 CTR3 CTR2 CTR1 Factor 3 2 4 5 .849 .815 .812 .800 .784 .567 .903 .870 .830 .815 .977 .823 .791 .778 .928 .825 .819 .751 .999 .979 .674 .672 Table G.12: Round 4 - Pattern Matrix 117 Total 7.690 7.249 6.996 2.969 7.503  SERVICE QUALITY – Cronbach’s Alpha Cronbach's Alpha N of Items .907 6 Table G.13: EFA‟s result - Cronbach‟s Alpha of Service Quality Scale Mean if Item Deleted SQA1 SQA2 SQA3 SQA4 CSA1 CSA3 38.64 38.18 38.44 38.34 38.50 38.67 Scale Variance if Item Deleted 25.854 25.677 25.003 26.022 23.341 24.486 Corrected ItemTotal Correlation Cronbach's Alpha if Item Deleted .663 .781 .764 .757 .789 .728 Table G.14: EFA‟s result - Item-Total Statistics of Service Quality 118 .902 .886 .888 .890 .884 .893 Appendix H: The result of MGSEM EDUCATION LEVEL: Invariant model of Low/Medium/High Income group Variant model of Low/Medium/High Income group Figure G.1: MGSEM result – invariant model and variant model of Low/Medium/High Income group 119  P-Value = 0.799 > 0.05 120 Appendix J: The result of One-Way ANOVA Testing  EDUCATION LEVEL Customer Loyalty Levene Statistic .436 df1 df2 3 373 Sig. .727 Table J.1: Education level - Test of Homogeneity of Variances Customer Loyalty Between Groups Within Groups Total Sum of Squares 35.137 315.572 350.710 df Mean Square 11.712 .846 3 373 376 F 13.844 Sig. .000 Table J.2: Education level – ANOVA  INCOME Customer Loyalty Levene Statistic .461 df1 3 df2 373 Sig. .710 Table J.3: Income - Test of Homogeneity of Variances Customer Loyalty Between Groups Within Groups Total Sum of Squares 18.865 331.845 350.710 df Mean Square 3 6.288 373 .890 376 Table J.4: Income - ANOVA 121 F 7.068 Sig. .000 [...]... branches and transaction offices in Lam Dong Province 5 Scope And Limitation This research was conducted from March 2013 to August 2013, in Lam Dong Province and Ho Chi Minh City There are three kinds of customers in BIDV including individual customers, corporate customers and financial institution This research focuses on determining the loyalty of individual customers in retail banking of eight branches. .. answer the following question: What factors that influence the customer loyalty in BIDV’s branches and transaction offices in Lam Dong province? 4 Research Objective Here are two main objectives of this research  To define the factors that influence customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province;  To propose recommendations to enhance customer loyalty of BIDV‟s branches. .. branches and transaction offices of BIDV in Lam Dong Province The in- depth interviews with experienced managers of BIDV‟s branches and transaction offices in Lam Dong Provinces who understand their own customers more 7 than anyone can not be conducted because of the time limitation Therefore, the recommendations of this research cannot be proposed specifically for each banking business of branches and transaction. .. and transactions of other banks were established and have developed, including Asia Commercial Bank (ACB), DongA Bank (EAB), Vietnam International Bank (VIB), Eximbank, Techcombank, Sacombank, and etc In sum, a significant gap exists in BIDV‟s branches and transaction offices in Lam Dong Province which should be investigated in order to propose highly effective 6 solutions and wise strategies what leads... mobilization compared to 45% in 2011.There is information on the BIDV‟s web site (http://bidv.com.vn) 1.3.2 BIDV’s network in Lam Dong Province Branch/ Transaction Office Lam Dong Branch - Chi Lang Transaction office - Da Lat Transaction office - Don Duong Transaction office - Duc Trong Transaction office Bao Loc Branch - Bao Lam Transaction office - Di Linh Transaction office Address 30 Tran Phu, Da Lat... environment of the bank industry in Lam Dong Province is increasingly competitive According to information from The State Bank – Lam Dong Branch, before 2000, there were just few branches and transaction offices of state-owned banks, such as: Vietinbank, Agribank and BIDV However, from 2000 to now, the banking industry has undergone drastic changes in the quantity of credit institutions system Many branches and. .. and indirect effects on customer loyalty (Olsen, 2002) These researches have also indicated that service quality influences organizational performance, including increasing sales profit, remaining competitive advantage, improving current customer relations, attracting new potential customers, winning market share, enhancing corporate image and finally promoting customer loyalty (Caruana, 2002; Duncan... banking management techniques and the adoption of a customer- focused retail banking model at every branch, expanding and improving the quality of traditional and modern distribution channels, and upgrading the IT infrastructure and platform As the result, by the end of 2012, retail funding reached VND 179,128 billion marking an impressive year over year increase of 38.64% and accounted for 49.76% of total... the main purpose of this research is to investigate the factors that influence customer loyalty Design/methodology/approach: In the research a causal modeling approach was used and a conceptual model was proposed after an extensive review of the literature Data was collected from 377 habitual customers of BIDV‟s branches and transaction offices in Lam Dong Province Descriptive statistics, reliability... transaction office of BIDV in Lam Dong Province 6 Significance Of The Study It is expected to find out which factors improve customer loyalty in retail banking By determining these factors, the research can be used for a reference aim and reliability suggestions in order to enhance the customer loyalty of BIDV‟s branches and transaction offices in Lam Dong Province 7 Structure Of Thesis This research .. .DETERMINANTS OF CUSTOMER LOYALTY IN RETAIL BANKING A case study of BIDV’s branches and transaction offices in Lam Dong Province In Partial Fulfillment of the Requirements of the Degree of MASTER... individual customers in retail banking of eight branches and transaction offices of BIDV in Lam Dong Province The in- depth interviews with experienced managers of BIDV‟s branches and transaction offices. .. network in Lam Dong Province Branch/ Transaction Office Lam Dong Branch - Chi Lang Transaction office - Da Lat Transaction office - Don Duong Transaction office - Duc Trong Transaction office Bao