Key antecedents of customer loyalty a study of small chartered commercial banks

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY: A STUDY OF SMALL CHARTERED COMMERCIAL BANKS MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY: A STUDY OF SMALL CHARTERED COMMERCIAL BANKS ID: 22110021 MASTER OF BUSINESS (Honours) SUPERVISOR: DR CAO HAO THI Ho Chi Minh City – Year 2014 ACKNOWLEDGEMENTS I would like to express my sincere gratitude to my supervisor, Dr Cao Hao Thi for the valuable advice, critical comments and encouragement he gave me I would like to express my gratitude to my ISB class friends for SPSS directions Your encouragement, excellent guidance, and support have greatly contributed to this thesis Finally, I would like to thank all of the respondents without whom, this research would have been impossible Ho Chi Minh City, March 01, 2014 Vu Thanh Hoan ABSTRACT It is costly to attract new customers so that the managers always try to find ways to retain their current customers and concentrate on different factors which enhances the customer loyalty among the customers of the organizations This research attempts to find the factors of customer loyalty and their relationships with banking industry in one of the developing countries i.e Vietnam, where the large part of banking industry are small chartered commercial banks In order to this, a questionnaire is designed and validated, then based on the data which were gained from the 150 respondents' answers to the designed questionnaire, the analysis is done and the results and the relations among the factors are explained Customer’s Perceived Quality, Customer Satisfaction, Customer Trust, Switching Cost and Customer Commitment are the factors which influence the Loyalty of the customers These factors also influence each other as well The relationships of different factors with each other are also studied and the SPSS software is used to analyze the data gathered from the respondents TABLE OF CONTENTS Chapter Introduction 1.1 Background 1.2 Research problems Research Objectives 1.4 Research Scope 1.5 Thesis structure .4 Chapter Literature Review 2.1 Customer loyalty 2.2 Customer's perceived quality .8 2.3 Customer satisfaction 11 2.4 Switching Cost 13 2.5 Customer Trust 16 2.6 Commitment 17 2.7 Research model and Hypothesis 18 Chapter Research Methodology 21 3.1 Research Process 21 3.2 Measurement scales 22 3.2.1 Perceived quality 22 3.2.2 Customer trust 22 3.2.3 Switching cost 23 3.2.4 Customer satisfaction 23 3.2.5 Customer commitment 24 3.2.6 Customer loyalty 24 3.3 Qualitative research 25 3.4 Sampling method 25 3.4.1 Sampling 26 3.4.2 Data collection 26 3.5 Data analysis methods 26 3.5.1 Cronbach’s alpha 26 3.5.2 Exploratory Factor Analysis 27 3.5.3 Multiple regression analysis 28 Chapter Data Analysis and results 29 4.1 General Information 29 4.2 Measurement assessment 30 4.2.1 Cronbach’s alpha 30 4.2.2 Exploratory Factor Analysis 31 4.3 Hypothesis testing 32 4.3.1 Testing customer satisfaction sub-model 34 4.3.2 Testing customer commitment sub-model 34 4.3.3 Testing customer loyalty sub-model 35 Chapter Conclusions and Implications 38 5.1 Conclusions .38 5.2 Implications .39 5.3 Limitations .41 References 42 Appendix 1: Questionaire 52 Appendix 2: Results of Exploratory factor analysis 58 Appendix 3: Simple linear regression results (S) 60 Appendix 4: Multiple linear regression results (CMT) 62 Appendix 5: Multiple linear regression results (CL) 64 LIST OF TABLE Table 3.1: Scale of perceived quality 22 Table 3.2: Scale of customer trust 22 Table 3.3: Scale of switching cost 23 Table 3.4: Scale of customer satisfaction 23 Table 3.5: Scale of customer commitment 24 Table 3.6: Scale of customer loyalty 24 Table 3.7: Cronbach’s alpha reliability coefficients 27 Table 4.1: General information about respondents 29 Table 4.2: Reliability analysis 30 Table 4.3: Rotated component matrix 31 LIST OF FIGURE Figure 2.1: A conceptual model 19 Figure 3.1: Research process 21 Figure 4.1: Customer satisfaction sub-model 32 Figure 4.2: Customer commitment sub-model 33 Figure 4.3: Customer loyalty sub-model 33 Figure 4.4: Multiple regression results 37 CHAPTER INTRODUCTION This chapter introduces the background of Vietnamese banking industry as well as the status of customer loyalty The research objectives are proposed in this chapter Base on the objectives, research scope is proposed and thesis structure is presented 1.1 Background Loyalty to a bank can be thought of as continuing patronage over time The degree of loyalty can be gauged by tracking customer accounts over defined time periods and noting the degree of continuity in patronage (Yi and Jeon, 2003) During the past decade, the financial service sector has undergone drastic changes, resulting in a market place which is characterized by intense competition, little growth in primary demand and increased deregulation (Bloemer, Ruyter and Peeters, 1998) In the new market place, the occurrence of committed and often inherited relationships between a customer and his or her bank is becoming increasingly scarce (Li-Ting Huang et al, 2007) Several strategies have been attempted to retain customers In order to increase customer loyalty, many banks have introduced innovative products and services (Alam and Khokhar, 2006) However, as such innovations are frequently followed by similar change; it has been argued that a more viable approach for banks is to focus on less tangible and less 50 Yi,Y.,&Jeon,H.(2003) Effects of loyalty programs on value perception, program loyalty, and brand loyalty Journal of Academy of Marketing Science, 31(.3),229-241 Zeithaml, V.A., Berry, L.L & Parasuraman, A (1988) Communication and control processes in the delivery of service quality Journal of Marketing, 52, 3548 51 APPENDIX 1: BẢNG CÂU HỎI KHẢO SÁT Xin chào Anh/Chị, Tôi tên Vũ Thanh Hoàn – học viên cao học Viện Đào Tạo Quốc Tế (ISB) – Trường Đại Học Kinh Tế Thành phố Hồ Chí Minh Hiện nay, thực nghiên cứu vấn đề “ Những nhân tố định lòng trung thành khách hàng: Trường hợp ngân hàng thương mại cổ phần có vốn điều lệ nhỏ” Rất mong anh/chị dành thời gian thực khảo sát bên Đồng thời cam kết thông tin anh/chị cung cấp giữ bí mật phục vụ cho mục đích nghiên cứu Nếu có đóng góp, ý kiến quan tâm đến kết khảo sát, anh/chị vui lòng thông tin qua địa email thanhhoanvu@gmail.com Part I: Xin vui lòng đánh chéo (X) vào ô anh/ chị chọn: a Ngân hàng mà công ty bạn giao dịch thường xuyên thuộc loại hình sau đây?  NH TM Nhà nước  NH TM Cổ Phần  NH 100% vốn nước  Chi nhánh NH nước  NH Liên Doanh b Các loại hình dịch vụ ngân hàng mà công ty bạn sử dụng (một hay nhiều lựa chọn)  Giao dịch tài khoản  Tiền gửi  Thanh toán quốc tế  Vay vốn  Bảo lãnh c Công ty bạn giao dịch với ngân hàng?  ngân hàng  ngân hàng  Từ ngân hàng trở lên d Công ty bạn biết ngân hàng cách nào:  Truyền thông, báo chí  Ngân hàng tiếp thị  Đối tác giới thiệu  Khác:………………… Part II: Đối với câu phần này, anh/chị vui lòng đánh dấu chéo (X) để lựa chọn 52 mức độ đánh giá anh/chị Xin vui lòng chọn câu trả lời theo quy ước: Hoàn toàn đồng ý ST T 10 11 12 13 14 15 16 Hoàn toàn không đồng ý Các tiêu đánh giá Hệ thống thiết bị hỗ trợ giao dịch ngân hàng đại (máy ATM, POS, internet banking, phone banking …) Trang phục nhân viên ngân hàng gọn gàng thiện cảm Các chuyên viên quan hệ khách hàng am hiểu sản phẩm dịch vụ ngân hàng Các nhân viên ngân hàng dành quan tâm đặc biệt đến công ty Ngân hàng thông tin cho công ty bạn dịch vụ tiện ích gia tăng từ đầu Nhân viên ngân hàng giải vấn đề khách hàng họ hứa làm Dựa vào kinh nghiệm giao dịch công ty ngân hàng qua, bạn biết ngân hàng cung cấp dịch vụ quảng cáo thành thật Bạn cảm thấy an toàn công ty sử dụng dịch vụ ngân hàng bạn biết ngân hàng không lừa dối gây ảnh hưởng xấu tới lợi ích công ty Việc thay đổi ngân hàng tốn nhiều thời gian tìm hiểu thông tin ngân hàng Thay đổi giao dịch sang ngân hàng khác không chắn công ty bạn hài lòng với ngân hàng Tốn nhiều chi phí công ty bạn để thay đổi sang ngân hàng khác Tốn nhiều thời gian công ty bạn để thay đổi sang ngân hàng khác Ngân hàng giao dịch đáp ứng nhu cầu công ty bạn Công ty ạn hài lòng với giải ngân hàng phàn nàn công ty Công ty bạn hài lòng với dịch vụ ngân hàng trực tuyến nhanh chóng tiện lợi Công ty bạn hài lòng với lãi suất phí dịch vụ Mức độ đánh giá 7 7 7 7 7 7 7 7 53 17 18 19 20 21 22 23 ngân hàng Công ty sử dụng dịch vụ ngân hàng Dự định công ty việc sử dụng dịch vụ ngân hàng không thay đổi Công ty bạn không thay đổi ngân hàng, đối tác tin cậy có giới thiệu ngân hàng khác Để thay đổi đánh giá công ty với ngân hàng cần suy nghĩ nhiều Công ty bạn giới thiệu ngân hàng cho đối tác Công ty bạn khách hàng trung thành ngân hàng Công ty bạn tiếp tục sử dụng dịch vụ ngân hàng 7 5 4 3 2 7 7 Part III: Thông tin công ty Anh/chị: a Số năm hoạt động công ty:  Mới thành lập b  từ năm trở lên Lĩnh vực hoạt động công ty:  Nông, lâm nghiệp, thủy sản c  từ đến năm  Công nghiệp xây dựng  Thương mại dịch vụ Số lượng lao động công ty:  < 100 lao động  100 – 200 lao động Xin chân thành cảm ơn hợp tác quý anh/chị  > 200 lao động 54 SURVEY QUESTIONAIRE Dear Sir/Madam, My name is Vu Thanh Hoan – a student of Master program from International School of Business (ISB) – University of Economics Ho Chi Minh City I am studying the study on “Key antecedents of customer loyalty: A study of small chartered commercial banks” I would appreciate for your support if you spend a few minutes for filling this questionnaire For more information, please contact email address thanhhoanvu@gmail.com Part I: Please tick (X) on your chosen answers: a Which kind of ownership is your most frequently transacted bank?  State owned banks  Commercial banks  100% Foreign invested banks  Foreign bank’ branches  Joint venture banks b The types of banking services your company is using (one or more options)  Account transaction  Deposit  Loans  Guarantee  Foreign trade c How many banks is your company has transactions with?  Only bank  banks  More than banks d How your company approach your bank:  Magazines, papers  Bank marketing  Partners’ recommendations  Other reasons:………………… Part II: For this part of the questionnaire, would you please mark cross (X) in order to assess the level your selection Please select one answer only by this convention: Totally agreed Totally disagreed No Assessment criteria You agree this bank’s facilities are attractive and modern (such as ATM machines, telephone banking, internet…) You agree this bank’s employees are tidy in The level of assessment 7 55 10 11 12 13 14 15 16 17 18 19 appearance You agree that customer representatives knowledgeable You agree that employees of the bank pay special attention to your company You agree this bank informed your company of its side services from the beginning You agree employees of this bank solve your company’s problems when they promise to so Based on your company’s experience with this bank in the past, you know it delivers what it promises in its advertisements and it is honest You feel secure when your company uses products and services of the bank because you know that the bank will never let your company down and will never cheat your company Change to another bank involves investing time in searching for information about other banks Change to another bank involves a risk and uncertainty in choosing which might turn out not to satisfy your company It would cost your company a lot of money to switch from your bank to another bank It would cost your company a lot of time to switch from your bank to another bank You agree this bank meets your company’s needs Your company satisfied with the way complaints are handled Your company satisfied with the online services and their promptness Your company satisfied with the pricing issues Your company would always use this bank’s services Your company’s intention to use the services of this bank would not be changed Even if close partners recommended another bank, your company would not change your preference for this bank 7 7 7 7 7 7 5 4 3 2 7 5 4 3 2 7 56 20 21 22 23 To change your company’s preference from this bank would require major rethinking You would recommend your company’s bank to the others Your company is a loyal customer to this bank Your company intends to keep purchasing products/services from this bank 7 7 5 4 3 2 Part III: Information about your company: a The number of years your company’s operation:  Newly established  to years  more than years b The sector that your company works in:  Agriculture, rural  Industry and Construction  Commerce and Service c The number of labours:  < 100 members Thanks for your cooperation  100 – 200 members  > 200 members 57 APPENDIX 2: RESULTS OF EXPLORATORY FACTOR ANALYSIS (EFA) Total Variance Explained Co Initial Eigenvalues Extraction Sums of Squared Rotation Sums of Squared Loadings Loadings mpo nent Total % of Cumulative Variance % Total % of Cumulative Variance % Total % of Cumulative Variance % 6.098 26.513 26.513 6.098 26.513 26.513 2.649 11.515 11.515 2.254 9.798 36.311 2.254 9.798 36.311 2.643 11.492 23.007 2.042 8.880 45.192 2.042 8.880 45.192 2.551 11.091 34.098 1.608 6.993 52.184 1.608 6.993 52.184 2.536 11.026 45.125 1.230 5.349 57.533 1.230 5.349 57.533 2.226 9.679 54.804 1.153 5.013 62.546 1.153 5.013 62.546 1.781 7.742 62.546 873 3.796 66.342 820 3.564 69.905 748 3.253 73.159 10 695 3.021 76.180 11 659 2.866 79.046 12 597 2.596 81.642 13 571 2.483 84.125 14 517 2.249 86.374 15 477 2.073 88.447 16 434 1.885 90.332 17 401 1.743 92.076 18 389 1.692 93.767 19 360 1.567 95.334 20 327 1.421 96.755 21 299 1.299 98.054 22 263 1.144 99.198 23 184 802 100.000 58 Extraction Method: Principal Component Analysis Rotated Component Matrixa Component PQ1 089 721 124 162 069 020 PQ2 -.001 746 255 002 122 241 PQ3 113 754 325 151 022 -.017 PQ4 174 787 131 088 259 022 T5 138 016 142 288 674 -.177 T6 105 007 143 176 733 -.163 T7 -.076 234 -.133 119 702 202 T8 051 172 109 -.062 664 074 SW9 725 035 033 143 093 140 SW10 776 159 023 138 -.062 130 SW11 779 127 125 067 -.008 116 SW12 791 008 047 143 195 -.005 S13 055 139 711 013 087 208 S14 -.049 230 719 146 104 128 S15 104 212 698 157 102 154 S16 141 175 764 227 -.005 -.003 CMT17 156 -.040 214 655 213 164 CMT18 258 133 150 770 033 016 CMT19 116 120 160 708 184 220 CMT20 051 184 041 756 052 107 CL22 154 070 093 260 173 653 CL23 169 -.048 205 038 -.135 683 CL21 068 173 133 147 -.058 710 Extraction Method: Principal Component Analysis Rotation Method: Varimax with Kaiser Normalization a Rotation converged in iterations 59 APPENDIX 3: SIMPLE LINEAR REGRESSION RESULTS (S) Model Summaryb Model R R Square 507a Adjusted R Std Error of the Square Estimate 257 252 45686 a Predictors: (Constant), PQ b Dependent Variable: S ANOVAa Model Sum of Squares Df Mean Square Regression 10.661 10.661 Residual 30.891 148 209 Total 41.552 149 F Sig 51.080 000b a Dependent Variable: S b Predictors: (Constant), PQ Coefficientsa Model Unstandardized Standardized Coefficients Coefficients B (Constant) Std Error T Sig Beta Collinearity Statistics Tolerance 2.882 321 8.984 000 444 062 507 7.147 000 VIF PQ a Dependent Variable: S 1.000 1.000 60 61 APPENDIX 4: MULTIPLE LINEAR REGRESSION RESULTS (CMT) Model Summaryb Model R R Square 486a Adjusted R Std Error of the Square Estimate 236 226 49971 a Predictors: (Constant), T, S b Dependent Variable: CMT ANOVAa Model Sum of Squares Df Mean Square Regression 11.352 5.676 Residual 36.707 147 250 Total 48.059 149 F Sig .000b 22.731 a Dependent Variable: CMT b Predictors: (Constant), T, S Coefficientsa Model Unstandardiz Standar ed dized Coefficients Coeffici T Sig Correlations Collinearity Statistics ents B Std Beta Error (Const Partia order l Part Tolera VIF nce 1.651 500 3.303 001 S 368 080 342 4.616 000 407 356 333 944 1.059 T 286 078 273 3.682 000 354 291 265 944 1.059 ant) Zero- a Dependent Variable: CMT 62 63 APPENDIX 5: MULTIPLE LINEAR REGRESSION RESULTS (CL) Model Summaryb Model R R Square 473a Adjusted R Std Error of the Square Estimate 224 208 44576 a Predictors: (Constant), CMT, SW, S b Dependent Variable: CL ANOVAa Model Sum of Squares Regression Df Mean Square F 8.374 2.791 Residual 29.010 146 199 Total 37.384 149 Sig .000b 14.049 a Dependent Variable: CL b Predictors: (Constant), CMT, SW, S Coefficientsa Model Unstandardiz Standar ed dized Coefficients Coeffici t Sig Correlations Collinearity Statistics ents B Std Beta Error (Consta Zero- Parti P Toler order al art ance 2.151 446 4.821 000 S 233 076 246 3.067 003 371 246 SW 149 067 176 2.226 028 311 181 CMT 184 074 208 2.469 015 375 200 nt) 24 VIF 828 1.208 849 1.178 747 1.338 a Dependent Variable: CL 62 80 64 ...UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business Vu Thanh Hoan KEY ANTECEDENTS OF CUSTOMER LOYALTY: A STUDY OF SMALL CHARTERED COMMERCIAL BANKS ID: 22110021 MASTER... their ability in the risk taking, leading to the low ratio of loan over the mortgage value and the loan giving to one customer Small chartered capital commercial banks also have less tangible facilities... traditional of the small chartered banks, but the real estate industry got a crunch, therefore all the banking industry is focus on the retail market The limitation in capital of commercial affects