Modeling the factors that explain customer loyalty in retail banking
Literature suggests that achieving adequate customer loyalty is a significant determinant of growth and profitability. However, in South Africa, there is no evidence of a validated customer-loyalty-in-retail-banking scale. Thus, this study aimed to contribute to the literature by validating customer...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2021-09-01
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| Series: | Innovative Marketing |
| Subjects: | |
| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15559/IM_2021_03_Deventer.pdf |
| _version_ | 1797805650198134784 |
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| author | Marko van Deventer Ephrem Habtemichael Redda |
| author_facet | Marko van Deventer Ephrem Habtemichael Redda |
| author_sort | Marko van Deventer |
| collection | DOAJ |
| description | Literature suggests that achieving adequate customer loyalty is a significant determinant of growth and profitability. However, in South Africa, there is no evidence of a validated customer-loyalty-in-retail-banking scale. Thus, this study aimed to contribute to the literature by validating customer loyalty in retail banking as a six-factor structure comprising customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction, which practitioners can use as a marketing guide to better understand customer loyalty. Data was collected from one sample only once, and the sample size was selected (N = 400). Descriptive and confirmatory factor analyses were undertaken to achieve the study’s objective. Confirmatory factor analysis results validated customer loyalty in retail banking as a six-factor structure that includes customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction. The results show no serious multicollinearity between the latent factors and that acceptable internal-consistency reliability was returned for each factor. Moreover, the measurement model returned acceptable composite reliability together with construct, convergent and discriminant validity. Moreover, IFI, TLI, CFI, SRMR and RMSEA model fit index values suggest a good fitting model. Thus, the results concluded that this six-factor model is a reliable and valid instrument of customer loyalty in retail banking and is the first validated customer loyalty scale within the retail-banking context of South Africa. Retail banks are encouraged to use this instrument as a marketing guide in their quest to provide excellent banking services to their market segments, as well as build solid bank-customer relationships. |
| first_indexed | 2024-03-13T05:55:14Z |
| format | Article |
| id | doaj.art-ca0d5ba32d874d73af6c6f9aeaeb5a3a |
| institution | Directory Open Access Journal |
| issn | 1814-2427 1816-6326 |
| language | English |
| last_indexed | 2024-03-13T05:55:14Z |
| publishDate | 2021-09-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Innovative Marketing |
| spelling | doaj.art-ca0d5ba32d874d73af6c6f9aeaeb5a3a2023-06-13T06:52:19ZengLLC "CPC "Business Perspectives"Innovative Marketing1814-24271816-63262021-09-0117313514310.21511/im.17(3).2021.1115559Modeling the factors that explain customer loyalty in retail bankingMarko van Deventer0https://orcid.org/0000-0002-0000-4699Ephrem Habtemichael Redda1https://orcid.org/0000-0002-0233-1968Ph.D., Associate Professor, Economic and Management Sciences Faculty, Management Sciences Department, North-West UniversityPh.D., Professor of Marketing Management, Faculty of Economic and Management Sciences, Department of Marketing Management, North-West UniversityLiterature suggests that achieving adequate customer loyalty is a significant determinant of growth and profitability. However, in South Africa, there is no evidence of a validated customer-loyalty-in-retail-banking scale. Thus, this study aimed to contribute to the literature by validating customer loyalty in retail banking as a six-factor structure comprising customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction, which practitioners can use as a marketing guide to better understand customer loyalty. Data was collected from one sample only once, and the sample size was selected (N = 400). Descriptive and confirmatory factor analyses were undertaken to achieve the study’s objective. Confirmatory factor analysis results validated customer loyalty in retail banking as a six-factor structure that includes customer loyalty, service quality, customer commitment, trust, switching cost and customer satisfaction. The results show no serious multicollinearity between the latent factors and that acceptable internal-consistency reliability was returned for each factor. Moreover, the measurement model returned acceptable composite reliability together with construct, convergent and discriminant validity. Moreover, IFI, TLI, CFI, SRMR and RMSEA model fit index values suggest a good fitting model. Thus, the results concluded that this six-factor model is a reliable and valid instrument of customer loyalty in retail banking and is the first validated customer loyalty scale within the retail-banking context of South Africa. Retail banks are encouraged to use this instrument as a marketing guide in their quest to provide excellent banking services to their market segments, as well as build solid bank-customer relationships.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15559/IM_2021_03_Deventer.pdfcustomer loyaltyGeneration Ymeasurement modelretail bankingSouth Africa |
| spellingShingle | Marko van Deventer Ephrem Habtemichael Redda Modeling the factors that explain customer loyalty in retail banking Innovative Marketing customer loyalty Generation Y measurement model retail banking South Africa |
| title | Modeling the factors that explain customer loyalty in retail banking |
| title_full | Modeling the factors that explain customer loyalty in retail banking |
| title_fullStr | Modeling the factors that explain customer loyalty in retail banking |
| title_full_unstemmed | Modeling the factors that explain customer loyalty in retail banking |
| title_short | Modeling the factors that explain customer loyalty in retail banking |
| title_sort | modeling the factors that explain customer loyalty in retail banking |
| topic | customer loyalty Generation Y measurement model retail banking South Africa |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/15559/IM_2021_03_Deventer.pdf |
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