The research register for this journal is available at

http://www.mcbup.com/research_registers

The current issue and full text archive of this journal is available at
http://www.emerald-library.com/ft

Behavioural responses to
customer satisfaction: an
empirical study
Antreas Athanassopoulos

Athens Laboratory of Business Administration (ALBA), Athens, Greece

Spiros Gounaris and Vlassis Stathakopoulos

Responses to
customer
satisfaction
687
Received April 1999
Revised March 2000

Athens University of Economics and Business, Athens, Greece

Keywords Customer satisfaction, Consumer behaviour, Communications, Customer loyalty
Abstract Investigates the behavioural consequences of customer satisfaction. More specifically,
the authors examine the impact of customer satisfaction on customers' behavioural responses.
The results support the notion of direct effects of customer satisfaction on three criterion
variables (decision to stay with the existing service provider, engagement in word-of-mouth
communications, and intentions to switch service providers). Implications for practice, study
limitations, and directions for future research are discussed.

Introduction
The quest for service quality has been an essential strategic component for firms
attempting to succeed and survive in today's fierce competitive environment
(Phillips et al., 1983; Parasuraman et al., 1985; Reichheld and Sasser, 1990). As a
result, in the last 15 years, we have witnessed an increasing number of research
efforts on the subject. Review of the relevant literature reveals that the principal
focus of service quality research has been twofold. First, the identification of
service quality dimensions was of primary interest to researchers (Parasuraman
et al., 1985, 1991a). Second, the development of measurement instruments of
service quality was the focus of subsequent research efforts (Parasuraman et al.,
1988, 1991b; 1993; Cronin and Taylor, 1992, 1994; Asubonteng et al., 1996; Buttle,
1996; Athanassopoulos 1998, 1999). Furthermore, the agenda of service quality
has very quickly been enhanced by creating the domain of customer satisfaction
where most aspects of the marketing mix have been included into its
determination (i.e. service quality, convenience, price). In this research we shall be
primarily concerned with the effects of customer satisfaction on the behavioural
responses of customers, giving, therefore, a more integrated dimension into the
research family that seeks to determine the antecedents of customer loyalty[1].
In recent years though, the customer satisfaction research agenda has
shifted focus and concentrated on other equally important issues. For example,
service quality has been related to its impact on the financial performance of
the organization (Greising, 1994; Rust et al., 1995), consumer satisfaction
(Spreng et al., 1996), switching behaviour (Keaveney, 1995), and behavioral
intentions (Boulding et al., 1993; Cronin and Taylor, 1992).
The authors contributed equally to the article and are listed in alphabetical order.

European Journal of Marketing,

Vol. 35 No. 5/6, 2001, pp. 687-707.
# MCB University Press, 0309-0566

European
Journal of
Marketing
35,5/6
688

However, research examining the effects of customer satisfaction on

behavioral responses has received very limited attention in the marketing
literature (for exceptions see Boulding et al., 1993; Cronin and Taylor, 1992;
Zeithaml et al., 1996). Yet, Zeithaml et al. (1996) indicated that examining the
link between customer satisfaction and behavioral responses is a part of the
many relations that need to be further investigated in order to better
understand the link between customer satisfaction and financial outcomes of
the organization. Moreover, Zahorik and Rust (1992) proposed that studying
the behavioral responses to service programs can help managers estimate the
financial consequences of customer satisfaction. According to the researchers
cited above, the relationship between customer satisfaction and profits is a very
complex one and includes many intermediate links. One such link is the
relationship between customer satisfaction and behavioral responses. Hence, in
order to better model the impact of customer satisfaction on profits, one has to
first examine and comprehend how customer satisfaction influences
behavioural responses.
Therefore, the goal of this research is to help managers and researchers
understand behavioral responses to customer satisfaction from the customers'
perspective. Not only does this research effort differ from prior research on the
subject, but also it extends the relevant literature in three important
dimensions. First, unlike previous research that has focused on behavioral
intentions (e.g. Zeithaml et al., 1996), our research concentrates on actual
behavioural responses. In fact, Zeithaml et al. (1996, p. 44) called future
researchers to further extend their work, by undertaking research that ``asks
consumers to indicate their actual behaviors'' rather than their behavioral
intentions. Second, it develops an extensive multiple-item behavioral responses
measure. Third, our study involves a whole industry (i.e. the banking industry)
and not a single or only a few providers within an industry, as is usually the
case in many research studies.
The rest of this paper is organised as follows. We first develop our
conceptual model and associated research hypotheses that address the
relationships between customer satisfaction and behavioural responses. We
then describe the sample and measures employed in the study. We follow by
reporting the empirical research results. Finally, we conclude by identifying
study limitations and proposing future research directions.
Conceptual framework and research hypotheses
Figure 1 depicts the customer satisfaction-behavioural responses model that is
advanced and tested. The major constructs in the model are customer
satisfaction and consumers' behavioural responses.
Service quality and customer satisfaction
Service quality is being considered as one of the most important research
topics, since it relates to costs (Crosby, 1979), financial performance (Buzzell
and Gale, 1987), customer satisfaction (Spreng et al., 1996), customer retention

Responses to
customer
satisfaction
689
Figure 1.
Behavioural responses
to customer satisfaction

(Reichheld and Sasser, 1990), and differential competitive advantage (Iacobucci

et al., 1994). This recognition for the important role service quality plays in
business success has led to the development of alternative schools of thought
regarding service quality (e.g. Parasuraman et al., 1985, 1988; Gronroos, 1990;
Reeves and Bednar, 1994). This has ignited a lively and heated debate with
respect to the definition and measurement of service quality.
Early research efforts in the marketing literature focused on understanding
the structure and psychological processes underlying perceived service quality.
Customers' perceptions of service quality refer to the customers' assessment of
the overall excellence or superiority of the service (Zeithaml, 1988).
Parasuraman et al. (1985, 1988) conceptualised a customer's evaluation of
overall service quality as the gap between expectations and perceptions of
service performance levels. Furthermore, they propose that overall service
quality performance be measured by a five-dimensional construct. They
proposed the SERVQUAL instrument, which was designed to measure service
quality across a range of businesses and industries.
However, SERVQUAL has not been without criticisms. These criticisms
focus on both theoretical as well as operational issues (Buttle, 1996).
Asubonteng et al. (1996), based on a critical review of 18 service quality
empirical studies, reached the conclusion that the underlying SERVQUAL
dimensions are likely to be industry specific. For example, Carman (1990) found
between six and eight dimensions depending on industry, Headley and Miller
(1993) six in the consumption of medical services, while Clow et al. (1995) and
McAlexander et al. (1994) seven and ten respectively in the dental service
industry.
Moreover, Ford et al.'s (1993) empirical cross-cultural results seem to
indicate that the scale is also country specific. Support for this notion comes
also from Akviran (1994), who identified four dimensions in a survey
conducted in 31 major British organisations, in the fields of banking, building
societies, and retail. In addition, even though LeBlanc and Nguyen (1988), in
their study of the Canadian credit sector, proposed a five-dimensional construct
of service quality, the underlying dimensions differ from those described in

European
Journal of
Marketing
35,5/6
690

Parasuraman et al.'s (1985, 1988) work. It must be noted, however, that in these
early studies the dimensions of service quality had quite often included
dimensions beyond service quality and closer to customer satisfaction. Yet,
despite its shortcomings, SERVQUAL seems to be a useful scale to use in
measuring service quality by making appropriate adjustments for industry and
country contextual effects.
Later research efforts (Cronin and Taylor, 1992) though cast doubts about
the utility and appropriateness of the disconfirmation paradigm advocated by
Parasuraman et al. (1985, 1988). These authors questioned whether or not
customers routinely assess service quality in terms of expectations and
perceptions. Rather, they advanced the notion that service quality is directly
influenced only by perceptions of service performance. In accordance, they
developed an instrument of service performance (SERVPERF) that seems to
produce better results than SERVQUAL (Asubonteng et al., 1996).
Apart from the debate among the above researchers for the merits of
SERVQUAL over SERVPERF and vice versa, however, it seems that, on
balance, the emerging literature supports the performance-based paradigm
over the disconfirmation-based paradigm (Cronin and Taylor, 1994; Peter et al.,
1992; Brown et al., 1992; Babakus and Boller, 1992; Babakus and Mangold,
1992). Our research bears on these conclusions and adopts the performance
based SERVPERF paradigm.
The common thrust though of all research efforts on the subject is the
conclusion that the criteria customers use to evaluate service quality are
complex and difficult to determine precisely. This is due to the fact that:
.
services are intangible;
.
services are heterogeneous, meaning that their performance often varies
from provider to provider, from customer to customer, and from context
to context;
.
services cannot be placed in a time capsule and thus be tested and retested over time; and
.
production of services is likely to be inseparable from their
consumption.
Furthermore, customers do not assess service quality only on its outcome, but
also they consider the process of service delivery as well as the context
(Gronroos, 1990; Kotler, 1994).
Customers of services observe and evaluate the production process as they
experience the service they receive (Zeithaml, 1988). Berry et al. (1985) argued
that the service quality attributes of search, experience, and credence are used
by consumers to evaluate service quality. Search attributes, such as physical
facilities, appearance of personnel, and the supplier's image can be considered
before consuming the service. Experience attributes, like responding quickly to
a request and performing a service at the agreed time are assessed on the basis
of the actual service experience. Finally, credence attributes like financial

security of an investment cannot be determined even after repeated use of a

service. In this respect, services are difficult to evaluate because they contain
many experience and credence attributes and because the actual service varies
from one customer to the next (Zeithaml, 1988).
Behavioural responses
Apart from the measurement issues, the real value of service quality emanates
from its decision-making implications. Several researchers (Fornell and
Wernerfelt, 1987; Rust and Zahorik, 1993) make the distinction between
offensive and defensive marketing policies. According to those researchers,
offensive marketing actions refer to capturing new customers by investing in
service quality. However, service quality is only one of many other variables
(e.g. price, advertising, image) that influence a customer's decision to consume
the service. Therefore, spending on service quality alone does not guarantee the
attraction of new customers.
On the other hand, defensive marketing actions refer to retaining existing
customers rather than attracting new ones. There are compelling arguments of
the superiority of the defensive impact of service quality over the
corresponding offensive one. For example, lowering customer defections can
have a strong impact on a company's profits (Reichheld and Sasser, 1990) as
well as market share (Rust and Zahorik, 1993). Similarly, Fornell and
Wernerfelt (1987) concluded that is better for a company to spend resources to
keep existing customers than to attract new ones. This is due to the fact that,
when customers are lost, new ones must be captured to replace them, and
replacing them is expensive for two main reasons. First, advertising,
promotion, sales, and uncovering their needs expenses are high, and second,
new customers need a ``grace'' period until they become profitable.
Moreover, customers who remain loyal to the company are likely to engage
in favourable word-of-mouth behavioural responses. In addition, the company
may be able to cross-sell to these customers or even charge them a premium
price.
Regardless though of the specific tools and methods a company follows,
consumers' reactions to service quality are unavoidable. As indicated in Figure
1, a customer's assessment of the service quality received determines the
action(s) the consumer will engage in. The model indicates that a customer's
assessment of service quality is positively related to the customer engaging in
word-of-mouth actions. On the other hand, when a customer's assessment of
service quality is negative, the customer will engage in unfavourable actions.
When a customer praises the company, this behavioural response is
indicative of the customer's decision to remain with the firm. Parasuraman et
al.'s (1988, 1991b) results indicated that when consumers' perceptions of service
quality are high, consumers are willing to recommend the company to others.
Reichheld and Sasser (1990) also support this notion. Further, Boulding et al.
(1993) found that service quality relates positively to saying positive things
regarding the company to others. More specifically, in studying the

Responses to
customer
satisfaction
691

European
Journal of
Marketing
35,5/6
692

behavioural responses of their students they found that students who were
delighted with the quality of the studies had also the tendency to say positive
things about the school and recommend it to companies and recruiters as a pool
for recruiting purposes.
Other researchers (see Richins, 1983; Scaglione, 1988; Singh, 1988) have
indicated that when consumers perceive to have experienced inferior service
performance they are likely to engage in complaining behavioural responses to
third parties (i.e. exhibiting negative word-of-mouth communications). In
general, these negative communicational responses stem from the
dissatisfaction felt by the consumers due to poor service quality.
Finally, Zeithaml et al. (1996), in their multicompany/multi-industry study of
the relationship between service quality and behavioural intentions, inferred
that service quality is positively associated with communicational behavioural
intentions (e.g. intention to recommend the service producer and/or
complaining behaviour). Even though behavioural intentions may be an
imperfect proxy for behavioural responses (cf. Keaveney, 1995) nevertheless,
we advance the following hypothesis:
H1: Perceptions of high customer satisfaction are positively related to
positive word-of-mouth communications.
Several studies have examined the association between customer satisfaction
and service switching. The reasoning behind customers switching behavioural
responses has been related to perceptions of quality in the banking industry
(Rust and Zahorik, 1993), overall dissatisfaction in the insurance industry
(Crosby and Stephens, 1987), and service encounter failures in the retail
industries (Kelley et al., 1993).
Although customers perceiving service performance to be inferior may
represent one of the reasons that motivate customers to switch services, it is not
the only one. For example, Bitner (1990) advocates the effects of the time,
money constraints, access to information, lack of credible alternatives,
switching costs, and habit which may affect service loyalty.
Similarly, Cronin and Taylor (1992) suggest that convenience, good value for
money and availability might enhance customer satisfaction and subsequently
behavioural intentions. Moreover, Keaveney (1995), in his grounded theory
development model of customer switching behaviour, proposed eight reasons
(price, inconvenience, core service failures, service encounter failures, competitive
issues, ethical problems, and involuntary factors) for switching services. Finally,
Zeithaml et al. (1996) concluded that service quality is associated negatively with
unfavourable behavioural intentions (e.g. propensity to switch).
However, the main thrust of the above studies is that service switching is
conceptualised and operationalised as ``intentions to switch''. Even though
direct application of these results to the ``action to switch'' is limited by the fact
that behavioural intentions do not perfectly map actual behavioural responses,
we propose the following hypothesis:

H2: Perceptions of high customer satisfaction are negatively related to

switching behaviour expressed either in terms of intention and/or
decision to switch.
Research methodology
Sample selection
The sample of customer responses was drawn from the general area of Athens,
Greece. Personal interviews, based on a questionnaire, were conducted by trained
personnel in order to increase the validity and reliability of the responses.
The sample consisted of 793 individual customers of commercial retail
banks. Since this study did not intend to measure quality perceptions in
relation to any particular bank, respondents were randomly approached in the
street and shopping centres. Although the sample is clearly a convenience one,
the interviews were conducted at different locations and on different days as
well as at uniformly distributed time intervals, in order to reduce location, date,
and time related response-bias. An analysis of the respondents' demographic
characteristics is presented in Table I.

Demographic variable
Age of respondent
Up to 20 years
20-30 years
30-40 years
40-50 years
50-60 years
60 years and older
Missing
Gender
Male
Female
Missing
Income (in GDR)a
Up to 1 million
1-3 million
3.4.5 million
4.5-6 million
More than 6 million
Missing
Education
Up to high school
College
University
Missing
Note:
Income is annual per person. E1 = GDR324

Responses to
customer
satisfaction
693

Valid percent
6.1
32.0
19.0
20.1
13.3
9.6
0.6
54.6
45.4
2.4
12.6
32.3
22.3
12.3
20.5
2.6
46.4
25.7
27.9
6.7

Table I.
Demographic
characteristics of the
sample (n = 793)

European
Journal of
Marketing
35,5/6
694

Research instrument
To operationalise customer satisfaction, we used 31 question-items that sought
to evaluate different aspects of the service encounter. Given that, as it was
indicated earlier, measuring customer satisfaction is industry and country
specific, we:
.
included items that represent the five dimensions of service quality
described by Parasuraman et al. (1991a, 1991b); and
.
added items that sought to capture extra dimensions of customer
satisfaction specific to the banking industry as well as to the Greek
banking context (Athanassopoulos, 1999).
These extra items were derived from ten personal in-depth interviews with
managers of the banking sector. More specifically, we first asked two
marketing managers and one customers service manager from three different
retail banks to describe which factors, according to their expert opinion,
comprise the broader notion of customer satisfaction in retail banking. Next,
their answers were further probed by asking seven branch managers from four
other retail banks to comment on the factors suggested by the marketing
managers and the customers service manager.
The rationale behind this approach is that we expected marketing and/or
customers service managers to have a solid, broad, understanding of what
really satisfies bank customers. However, because branch managers are closer
to the customer and day-to-day encounters, their opinion was used as a ``filter''
in order to unveil the satisfaction factors that their experience has shown really
matter for the consumers. The items for which a congruency in the opinion of
the managers was asked were eventually the ones included in the
questionnaire.
As to the nature of the measurement, this was similar to that of Cronin and
Taylor (1992, 1994). They report convincing evidence that researchers are
better off when measuring perceived customer satisfaction directly instead of
attempting to estimate it as the result of the gap between consumer
expectations and consumer perceptions.
A seven-item battery was developed to gauge the range of customers'
behavioral responses to customer satisfaction examined in this study. The
seven items were grouped into three a priori categories: word-of-month
communications, intentions to switch, and decision to switch. However, the
respondents were not aware of these groupings. All the items included in the
study are presented in the Appendix. As a preamble to the statistical results of
the research, we did not find solid evidence about the independence of the
categories, intention and decision to switch and therefore the two categories
will be collapsed to one.
Measurement purification
Following Gerbing and Anderson (1988), we employed confirmatory factor
analysis (CFA) in order to examine the dimensionality of the customer

satisfaction dimensions and the behavioural responses dimensions. Table II

lists the results pertaining to the presence of the underlying customer
satisfaction dimensions in retail banking. It also contains results concerning
the behavioural response measurement scale that seeks to encapsulate the
behaviour of individual customers as a result of their responses to the
perceived customer satisfaction status.
The CFA hypothesised model was tested using the EQS 5 model developed
by Bentler (1990), using the maximum likelihood estimation procedure. The
basis of the statistical analysis was the covariance matrix of the observed
responses. Overall fit and the significance of the loading of individual variables
on the hypothesised factors were considered. Table III shows the fit indices
using the chi-square test, Bentler's comparative fit index and the root mean
square of approximation (RMSEA).
The RMSEA measures the lack of fit and takes parsimony into account by
assessing the discrepancy per degree of freedom between the population
covariance matrix and the fitted matrix. That is, it penalises for overfitting.
The measurement model was first tested for the adequacy of a six factor
solution concerning the dimensionality of the construct of ``customer
satisfaction'' and ``a three factors solution for behavioural responses''. For both
cases, the results from a six and three factor solution have been tested
extensively via all possible solutions of reduced dimensionality by collapsing
dimensions and the results obtained were always inferior. For illustrative
purposes, the information in Table III tests results concerning the potential
unidimensionality of the two cases.
The test statistics for each one of the model structures are in favour of the
proposed dimensions concerning the two constructs. Using the Bentler and
Bonnet (1980) and Byrne (1989) criterion of ratio 2 /d.f., one can conclude that
an inadequate fit occurs when values greater than three are obtained, which
was not the case in the models selected. Using more reliable test statistics, such
as the goodness of fit index (GFI) and the comparative fit index, both models
Customer satisfaction
measurement
6 factors
1 factor
Chi-square (2 )
Degrees of freedom (d.f.)
2 /d.f.
GFIa
CFIa
RMSEAb

584
260
2.2
0.94
0.94
0.04

1,954
276
7.07
0.81
0.70
0.088

Responses to
customer
satisfaction
695

Behavioural responses
measurement
2 factors
1 factor
27
8
3.03
0.98
0.99
0.033

523
10
52.3
0.83
0.79
0.255

Notes:
a
CFI and GFI values close to 1 indicate a good fit
b
The lower the RMSEA values, the better the model is considered. Values below 0.1 suggest
adequate fit

Table II.
Summary statistics of
model fit

European
Journal of
Marketing
35,5/6
696

Table III.
Construct reliability
and validity of the
proposed factor
structures

Customer satisfaction

Employee competence (F1) (five items)

Reliability (F2) (five items)
Product innovation (F3) (four items)
Pricing (F4) (three items)
Physical evidence (F5) (five items)
Convenience (F6) (three items)
Behavioural responses
Intention and decision to switch (four items)
Word-of-mouth communications (three items)

Cronbach's
alpha

Construct
reliabilitya

Variance
explainedb
(%)

0.79
0.88
0.76
0.81
0.79
0.79

0.91
0.98
0.97
0.82
0.90
0.95

74
92
90
78
86
86

0.77
0.87

0.97
0.98

97
97

Notes:
P 2 P 2 P 
a
Construct reliability:
j j =
j j
j ej , where j is standardised ML
the estimated parameter
parameter estimate and ej is the error term about
P 2 P 2 P 
b
Variance explained: j j = j j j ej

yield adequate estimates. The adequacy of the model estimates was also
confirmed by the small (less than 0.1) RMSEA values.
Prior to discussing the interpretation of the items' loading on each factor, it
is worth exploring a series of diagnostic tests concerning the reliability and
validity of the proposed measures, based on the empirical results shown in
Table IV.
The results in Table IV confirm the reliability and validity of the six
customer satisfaction dimensions, since all indices concerned exhibited high
values on their corresponding scales. Similarly, the results support the twodimensional solution concerning consumers' behavioural responses to
customer satisfaction. It must be noted, however, that the rejection of the threedimensional solution could well be attributed to the lack of appropriate scale
items that would encapsulate consumer attitudes in a better way. Moreover, the
problem could well be associated with the single time frame of the study
concerned that does not accommodate the dynamic nature of behavioural

Table IV.
Correlation coefficients
among the customer
satisfaction factors
(discriminant validity)

responses that would be based on the conversion process of the intentions to

switch to actual decisions to switch.
In addition, we estimated the discriminant validity of the facets of customer
satisfaction using the factor-correlation indices shown in Table IV, as indicated
by Venkatraman (1989). The correlation of the antecedents of customer
satisfaction is a well-established phenomenon in both theoretical and empirical
terms (see Parasuraman et al., 1988; Cronin and Taylor, 1992).
The findings of this research are also in line with the recent work by Taylor
(1997) concerning the second order and interactive effects between customer
satisfaction and service quality as predictive indicators of customer loyalty.
The correlation estimates of the factor solutions prompted further testing of the
hypothesis of having better underlying factor structures. This particular issue
was tested via two alternative ways.
The first step included re-estimation of the factor-model assuming a single
factor solution which gave very poor fit indices (GFI = 0.7). The second step
included iterative re-estimation of the factor-model, eliminating one factor at a
time and assigning its items to one of the remaining factors. The fit indices
obtained were again inferior to the solution reported in Table V, and thus the
proposed factor structures did pass the discriminant validity tests.
Next, we developed a full-scale model fit of the six-factor solution that was
chosen to encapsulate the dimensions of customer satisfaction in retail
banking. Information concerning the fit indices can be found in Table VI.
As Table VI shows, the six-factor solution is made of question items that
were scrutinised prior to their final selection. For each factor, a number of items
were dropped from the initial candidate list, based on the results of the
measurement model. Hence, from the initial list of 31 question items only 25
were deemed as appropriate to tap the customer satisfaction dimensions.
The estimated coefficients associated with the factor structures are all
accompanied by statistical significance at the 1 percent level. Despite the
relatively satisfactory overall fit of the CFA model some question-items have
appeared with relatively small factor coefficients.
The final model presented in Table VI contains some question-items with
rather low standardised coefficients that were retained in the model for two
reasons. First, they indicate managerial relevance with the construct that we
sought to measure. Second, a re-assessment of the model in their absence did
not alter significantly the overall fit of the model and the coefficients of the
remaining question items.
These empirical results seem to support our earlier position that customer
satisfaction dimensions tend to be industry specific as well as country specific.
In that notion, our results have similarities with results reported in other
studies from other national environments of retail banking (see Laroshe et al.,
1986; LeBlanc and Nguyen, 1988; Blanchard and Galloway, 1994;
Athanassopoulos, 1999). Yet, the most important issue arising from the list of
factors identified in Table VI should be the fact that customer satisfaction is
recognised as a multidimensional construct.

Responses to
customer
satisfaction
697

European
Journal of
Marketing
35,5/6
698

CSPa

Errorb

0.65
0.78
0.73
0.71

0.03
0.03
0.04
0.04

0.59

0.06

0.59
0.57

0.09
0.04

0.47
0.71

0.03
0.04

(F3) Product innovation

The bank offers a wide product variety
The bank offers flexible products that meet my needs
The new products that my bank offers meet my needs
The bank offers telephone services

0.60
0.88
0.74
0.49

0.05
0.02
0.04
0.03

(F4) Pricing
The loan interest rates of my bank are higher than other banks
The deposit interest rates of my bank are lower than other banks
I feel I pay a lot on commissions charged

0.68
0.52
0.61

0.04
0.05
0.07

0.78
0.83

0.03
0.01

0.69
0.49

0.02
0.07

0.61
0.82

0.08
0.02

0.55
0.79
0.49

0.08
0.03
0.08

(F1) Employee competence

The bank's employees know very well the bank's products
You receive prompt service from the bank's employees
Bank employees have the necessary knowledge to serve you promptly
Bank employees do not hesitate to find the time to serve you better
Bank employees know what your needs are and how the bank's products
can satisfy them
(F2) Reliability
It informs me without errors of my transactions
If there is a problem, the bank is willing to discuss it with me
You do not have to visit your bank many times to solve a particular
problem
It is a bank that is worth trusting

(F5) Physical evidence

There is a warm friendly atmosphere inside the bank
Employees of the bank are well dressed and appear neat
The atmosphere inside the bank gives you a positive impression for the
services it offers
The interior design of the premises facilitates the transactions
The climate among the bank's employees contributes to receiving better
service
Employees of the bank have a friendly behaviour

Table V.
Measurement model
concerning the
customer satisfaction
construct

(F6) Convenience
The bank's branch is near your workplace
The bank's branch is near other state buildings and other banks
The bank's branch is near shopping centres I usually visit
Notes:
a
Completely standardised parameter
b
Standardised error

As it is well known in the literature, there are conflicting empirical findings as

to whether the customers recognise the differential nature of service quality
drivers (see Babakus and Boller, 1992; Davis, 1991; Parasuraman et al., 1988).
The findings of the current study, however, without resolving the issue,
provide additional insights about the possibility of having multiple dimensions

Word-of-mouth communications
I have recommended the bank to friends and acquaintances
I have encouraged friends and acquaintances to do business with the
bank
I have informed other customers of the bank about complaints I have
about the services offered by the bank (R)
Intention to switch
In the near future I intend to intensify my efforts to find a better bank
In the last year I have thought very seriously to switch banks
I have decided to do less business with the bank in the future
I have decided to switch to another bank that offers better service

CSPa

Errorb

0.91

0.01

0.92

0.01

0.89

0.02

0.93
0.92
0.94
0.96

0.02
0.01
0.01
0.01

Notes:
a
Completely standardised parameter
b
Standardised error
(R): denotes reverse coded item

Responses to
customer
satisfaction
699

Table VI.
Measurement model
concerning the
behavioural responses
construct

of service quality with the presence of additional factors, such as money for
value, innovativeness, and convenience.
A similar measurement model was also developed and tested concerning the
consumers' behavioural responses construct. These results are portrayed in
Table VII. A clear distinction has been proposed and verified in the results
concerning the presence of two dimensions of consumers' behavioural
responses to customer satisfaction, such as word of mouth communications
and then a mixture between intention and decision to switch. The latter has
strong managerial implications, since it signals differential behavioural
patterns between customers thinking of switching to competition and those
that have already decided to do so. It is understood that the intention of
individual customers to defect to a different supplier of services does not
materialise since there are numerous factors that may enable or disable the
defections. Such factors include, inter alia, the presence of a better alternative,
the cost to defect, and the time to search for alternatives. The detailed study
about the relationship between the consumers' intentions to defect and their
Structural equation model
Chi-square (2 )
Degrees of freedom (d.f)
2 /d.f.
GFIa
CFIa
RMSEAb

770
473
1.76
0.942
0.962
0.031

Notes:
CFI and GFI values close to 1 indicate a good fit
b
The lower the RMSEA values, the better the model is considered
a

Table VII.
Structural model
relationships between
customer satisfaction
and behavioural
responses

European
Journal of
Marketing
35,5/6
700

Figure 2.
Structural equation
coefficients concerning
the effect of customer
satisfaction on
behavioural responses

actual decisions is context specific (i.e. there is a difference between services,

durable and non-durable goods) that needs to be studied dynamically over a
long time framework.
Results
Having tested the measurement models concerning the constructs of customer
satisfaction and behavioural responses, the next step was to link the two
constructs via the development of a structural equation regression model,
whereby the statistical association between customer satisfaction factors and
the behavioural responses factors will be sought. In this model, the two
construct factors concerning the behavioural responses will be represented via
an overall ``behavioural response'' latent factor.
In Figure 2, we show the standardised estimates of the relationships among
the constructs under investigation. As it can be seen in Table VII, the model
exhibits, in an absolute sense, a very satisfactory fit with all statistical indices
scoring very satisfactory.
Prior to discussing the findings of the proposed fitted model in Figure 2, it is
worth observing that the behavioural response construct consists of very
satisfactory factor items (intention and decision to switch and word-of-mouth
communications). The two factors are represented at an aggregate level without
having pursued any aggregations in the model fit process. That is, all factors
were presented with their full question-items and no averaging took place for
the question-items of each factor. The coefficients attached to individual paths
from the constructs to the latent factors correspond to standardised path

coefficients indicating the degree of association between the behavioural

responses and individual customer satisfaction latent factors. For example, the
effect of the latent factor ``physical evidence'' has path coefficient 0.213 and was
significant at 1 percent level. Furthermore, at the level of the behavioural
responses structural factor and also the word-of-mouth and intention/decision to
switch factors we also have information concerning the ``disturbance'' terms
which provide information about the explained covariance of the model. The
disturbance term for behavioural responses can furthermore be converted into
the pseudo-R2 term similar to a regression fit model. In our case such fit has
been 1 0.5022 = 0.74, which is a highly satisfactory result. Turning now to the
two basic hypotheses of the study we can observe the following:
.
H1 predicted that bank consumers would react to customer satisfaction
perceptions by engaging in word-of-mouth actions. The word-of-mouth
communications construct has a significant positive loading on the
behavioural response factor, thus fully supporting H1. As a matter of
fact, the case of word-of-mouth encapsulates the essence of positive
loyalty in the Greek retail banking environment since the case of
increased levels of purchasing did not prove to be significant in the
statistical validation of the loyalty construct.
.
H2 on the other hand, posited that when bank consumers have inferior
perceptions of customer satisfaction, they would engage in unfavourable
behavioural responses. The construct has significant negative loadings on
the behavioural response factor, hence providing strong support for H2.
Aside of the variation explained, the structural equation coefficients of the six
latent factors of customer satisfaction led to a number of additional
observations concerning the initial research hypotheses:
.
Employee competence affects consumer behavioural responses. The more
``exotic'' side of customer satisfaction, statistically valid in the
measurement model of customer satisfaction, proved to have significant
effects on consumers' behavioural responses. In a highly interactive
service environment, such as that of retail banking, consumers
determine very often their position concerning the bank from their
attitudes towards staff competence. This reaction can be attributed to
either the limited information customers have concerning the banking
products they use, and also the fact that in an environment where the
banking products are considered as equal, the only differentiating point
is the service provided by people, who are not equal.
.
Reliability seems to be a driving force of customers' behavioural
responses. The factor of reliability reflects to a large extent ``core''
components of the service function in the sense that the individual
question items encapsulate issues associated with the security of
transactions, the mistakes and more generally the feeling of trust
promoted by the bank. The reliability factor exhibited a strong positive

Responses to
customer
satisfaction
701

European
Journal of
Marketing
35,5/6

702

effect on the behavioural responses of the customers. Furthermore, the

case of reliability can also be seen as a customer satisfaction factor
which is considered as given since customers would not be prepared to
transact with a bank that may run under reduced levels of reliability.
Physical evidence is a key factor toward the consumers' behavioural
responses. Physical evidence is also recognised for its importance on the
performance ratings of individual banks. It is important to note that
issues of a tangible nature are better linked to consumer memory and
ultimately gain higher importance on the behavioural customer
responses. It is also evident that having two factors of a tangible nature,
reliability and physical evidence, with such high effects indicates that
the customer feedback reflects their medium and long-term memory and
are not instant reactions to recent contacts with the banks' personnel.
Furthermore, the case of physical evidence draws to a large extent
predetermined and not variable levels of satisfaction since having
decided upon the bank you do business with it means you are to a large
extent satisfied from issues of physical evidence.
The limited effect of product innovation should not deter us for its
importance. Product innovation in services has been found in previous
research as being a quite important element of customer satisfaction. In
this research, product innovation has been found to have a significant
effect on the behavioural responses of customers. This effect, however,
was found to be of less importance compared to other service
satisfaction characteristics such as employee competence, physical
evidence and service reliability. It must be borne in mind, however, that
in a competitive market where its customers are not known for their
demanding character for product innovations (see Athanassopoulos,
1999), it seems that the case of innovation-based competition will take
some more time before it becomes a driving force of the behaviour of
individual customers. In any case, the positive effect on behavioural
responses is a satisfactory result by its own means.
Value for money does play an important role on the formation of
consumer behavioural responses. Value for money is indeed a factor
associated with customer satisfaction and, as it was noted, it constitutes
an additional dimension in the agenda of customer satisfaction beyond
the familiar dimensions developed by Parasuraman et al. (1988). Value
for money, therefore, plays a positive role into the customers'
behavioural responses. That is, the results indicate that value for money
has a negative effect on behavioural responses. This is in line with
traditional theory of quality, indicating that higher customer
satisfaction may lead to higher customer tolerance concerning premium
pricing. Pricing is a quite problematic factor in assessing customer
satisfaction since it is not clear whether the responses on satisfaction
from pricing incorporate the level of service or not. Under the

assumption of pricing as a matter of value for money, the results

indicate that the behavioural responses are negatively affected by value
for money assessment.
Discussion
Customer satisfaction has long been recognised as playing an essential role for
success and survival in today's competitive environment. Not surprisingly,
considerable research has been conducted on what customer satisfaction meant
to customers and developing instruments that measure customer satisfaction.
Further, recognising the importance of the link between customer satisfaction
and profits, research has contributed to our understanding of the impact of
customer satisfaction on financial outcomes of the service providers.
Even though the above issues have not been researched conclusively, the
customer satisfaction research agenda has now shifted focus. Issues of interest
today include understanding the effects of customer satisfaction on intended
and unintended consequences on customers. For example, latest research
reports concentrate on the behavioural intentions of customer satisfaction
(Zeithaml et al., 1996). Our study attempts to further contribute in this research
stream not only conceptually, but also empirically.
In particular, the purpose of our study was to examine the impact of
customer satisfaction on customers' behavioural responses. Our study is one of
the first in marketing to investigate such effects. Overall, the results provide
strong support for the notion of direct effects of customer satisfaction on the
behavioural responses of customers. More specifically, our findings indicate
that when customers assess customer satisfaction to be high, they:
.
decide to stay with the existing service provider; and
.
subdue their negative behavioural intentions.
Furthermore, our results indicate that customer satisfaction is associated
positively with word-of-mouth communications.
On a different issue about the empirical assessment of the customer
satisfaction dimensions, the research results confirmed prior research on the issue
and indicated that the customer satisfaction dimensions are not only industry
specific, but also country specific. Indeed, there is a differentiation on the factors
that constitute the elements of the service bundle important to customers
depending on industry, culture, and country. In this respect, our research revealed
the existence of six customer satisfaction dimensions (i.e. employee competence,
reliability, product innovation, value for money, physical, and convenience).
The empirical findings of our research effort have also practical implications
for service providers that strive to organise their service offerings in order to
accomplish their corporate objectives. Service organisations should seek to
develop strategies that enhance positive behavioural responses to customer
satisfaction and prohibit negative ones.
Such strategies can include meeting customers' desired-service levels,
preventing service problems from occurring, dealing effectively with

Responses to
customer
satisfaction
703

European
Journal of
Marketing
35,5/6
704

dissatisfied customers, solving service problems effectively when they occur,

and confronting customer complaints positively.
Our research effort though it is not without limitations. First, our behavioural
responses battery needs further development. More specifically, additional items
are needed to strengthen the psychometric properties of each of the individual
scales. Second, the present study investigated only three types of consumers'
behavioural responses. Certainly future researchers might consider further
augmenting the proposed model by including additional consumers' actual
behaviours, such as loyalty, communicating to internal employees and paying
more. Third, the context of our study (retail banking in Greece) also limits the
generalisability of the findings. Therefore, the model should be applied in other
service contexts (e.g. retailing, telecommunications, air transportation, insurance)
and other international settings. Finally, data from longitudinal studies would be
particularly useful for capturing the process dynamics of the relationship
between customer satisfaction and behavioural responses.
Note
1. In the remainder of the paper the terms ``service quality'' and ``customer satisfaction'' will
be used interchangeably for convenience purposes, having in mind that the overriding
concept of this paper is the notion of customer satisfaction.
References
Akviran, N.K. (1994), ``Developing an instrument to measure customer service quality in branch
banking'', International Journal of Bank Marketing, Vol. 12 No. 6, pp. 10-18.
Asubonteng, P., McCleary, K.J. and Swan, J.E. (1996), ``SERVQUAL revisited: a critical review of
service quality'', The Journal of Services Marketing, Vol. 6 No. 6, pp. 62-81.
Athanassopoulos, A. (1998), ``Another look into the agenda of customer satisfaction: focusing on
service providers own and perceived viewpoints'', International Journal of Bank
Marketing, Vol. 15 No. 7.
Athanassopoulos, A.D. (1999), ``Customer satisfaction cues to support market segmentation and
explain switching behaviour'', Journal of Business Research, Vol. 47 No. 3, pp. 191-207.
Babakus, E. and Boller, G.W. (1992), ``An empirical assessment of the SERVQUAL scale'', Journal
of Business Research, Vol. 24, pp. 253-68.
Babakus, E. and Mangold, W.G. (1992), ``Adapting the SERVQUAL scale to hospital services: an
empirical investigation'', Health Service Research, Vol. 26 No. 6, pp. 767-80.
Bentler, P. and Bonnet, D. (1980), ``Significance tests and goodness of fit in the analysis of
covariance structures'', Psychological Bulletin, Vol. 88, pp. 588-606.
Berry, L.L., Zeithaml, V.A. and Parasuraman, A. (1985), ``Quality counts in services too'', Business
Horizon, Vol. 28 No. 3, pp. 44-52.
Bitner, M.J. (1990), ``Evaluating service encounters: the effects of physical surroundings and
employee responses'', Journal of Marketing, Vol. 54, April, pp. 69-82.
Boulding, W., Kalra, A., Staelin, R. and Zeithaml, V.A. (1993), ``A dynamic process model of
service quality: from expectations to behavioral intentions'', Journal of Marketing
Research, Vol. 30, February, pp. 7-27.
Brown, T.J., Churchill, G.A. Jr and Peter, J.P. (1992), ``Improving the measurement of service
quality'', A.C. Nielsen working paper, No. 91-4, University of Wisconsin Madison,
Madison, WI.

Buttle, F. (1996), ``SERVQUAL: review, critique, research agenda'', European Journal of

Marketing, Vol. 30 No. 1, pp. 8-32.
Buzzell, R.D. and Gale, B.T. (1987), The PIMS Principles, Free Press, New York, NY.
Byrne, B. (1989), A Primer of LISREL, Basic Assumptions and Programming for Confirmatory
Factor Analysis Models, Springer Verlag, New York, NY.
Carman, J.M. (1990), ``Consumer perceptions of service quality: an assessment of the SERVQUAL
dimensions'', Journal of Retailing, Vol. 66 No. 1, pp. 33-45.
Clow, K.E., Fisher, A.K. and O'Bryan, D. (1995), ``Patient expectations of dental services'', Journal
of Health Care Marketing, Vol. 15 No. 3, pp. 23-31.
Cronin, J.J. Jr and Taylor, S.A. (1992), ``Measuring service quality: a reexamination and
extension'', Journal of Marketing, Vol. 56, July, pp. 55-68.
Cronin, J.J. Jr and Taylor, S.A. (1994), ``SERVPERF versus SERVQUAL: reconciling performancebased and perceptions-minus-expectations measurement of service quality'', Journal of
Marketing, Vol. 60, April, pp. 31-46.
Crosby, L.A. and Stephens, N. (1987), ``Effects of relationship marketing on satisfaction,
retention, and prices in the life insurance industry'', Journal of Marketing Research, Vol. 24,
November, pp. 404-11.
Crosby, P.B. (1979), Quality Is Free, McGraw-Hill, New York, NY.
Davis, M. (1991), ``How long should a customer wait for service?'', Decision Science, Vol. 22 No. 2,
pp. 421-34.
Ford, J.W., Joseph, M. and Joseph, B. (1993), ``Service quality in higher education: a comparison of
universities in the United States and New Zealand using SERVQUAL'', working paper,
Old Dominion University, Norfolk, VA.
Fornell, C. and Wernerfelt, B. (1987), ``Defensive marketing strategy by customer complaint
management: a theoretical analysis'', Journal of Marketing Research, Vol. 24, November,
pp. 337-46.
Gerbing, D.N. and Anderson, J.C. (1988), ``An updated paradigm for scale development
incorporating unidimensionality and its assessment'', Journal of Marketing Research,
Vol. 25, May, pp. 186-92.
Greising, D. (1994), ``Quality: how to make it pay'', Business Week, 8 August, pp. 54-9.
Gronroos, C. (1990), Service Management and Marketing, Lexington Books, Lexington, MA.
Headley, D.E. and Miller, S.J. (1993), ``Measuring service quality and its relationship to future
consumer behaviour'', Journal of Health Care Marketing, Vol. 13 No. 4, pp. 32-41.
Keaveney, S.M. (1995), ``Customer switching behaviour in service industries: an exploratory
study'', Journal of Marketing, Vol. 59, April, pp. 71-82.
Kelley, S.W., Hoffman, K.D. and Davis, M.A. (1993), ``A typology of retail failures and recoveries'',
Journal of Retailing, Vol. 69, Winter, pp. 429-52.
Kotler, P. (1994), Marketing Management, Prentice-Hall, Englewood Cliffs, NJ.
LeBlanc, G. and Nguyen, N. (1988), ``Customers' perceptions of service quality in financial
institutions'', International Journal of Bank Marketing, Vol. 6 No. 4, pp. 7-18.
McAlexander, J.H., Kaldenberg, D.O. and Koening, H.F. (1994), ``Service quality measurement:
examination of dental practices sheds more light on the relationships between service
quality, satisfaction, and purchase intentions in a health care setting'', Journal of Health
Care Marketing, Vol. 14 No. 3, pp. 34-40.
Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1991a), ``Understanding customer expectations
of service'', Sloan Management Review, Vol. 32, Spring, pp. 39-48.
Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1991b), ``Refinement and reassessment of
SERVQUAL scale'', Journal of Retailing, Vol. 67 No. 4, pp. 420-50.

Responses to
customer
satisfaction
705

European
Journal of
Marketing
35,5/6
706

Parasuraman, A., Berry, L.L. and Zeithaml, V.A. (1993), ``More on improving service quality
measurement'', Journal of Retailing, Vol. 69, Spring, pp. 140-7.
Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1985), ``A conceptual model of service quality
and its implications for future research'', Journal of Marketing, Vol. 43, Fall, pp. 41-50.
Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1988), ``A multiple-item scale for measuring
consumer perceptions of service quality'', Journal of Retailing, Vol. 64 No. 1, pp. 12-40.
Peter, J.P., Churchill, G.A. Jr and Brown, T.J. (1992), ``Caution in the use of difference scores as
measures of marketing constructs'', A.C. Nielsen working paper No. 91-2, University of
Wisconsin Madison, Madison, WI.
Phillips, L.D., Chang, D.R. and Buzzell, R. (1983), ``Product quality, cost position and business
performance: a test of some key hypotheses'', Journal of Marketing, Vol. 47, Spring, pp. 26-43.
Reeves, C.A. and Bednar, D.A. (1994), ``Defining quality: alternatives and implications'', Academy
of Management Review, Vol. 13, pp. 419-45.
Reichheld, F. and Sasser, W.E. Jr (1990), ``Zero defections: quality comes to services'', Harvard
Business Review, Vol. 68, September/October, pp. 105-11.
Richins, M. (1983), ``Negative word-of-mouth by dissatisfied consumers: a pilot study'', Journal of
Marketing, Vol. 47, Winter, pp. 68-78.
Rust, R.T. and Zahorik, A.J. (1993), ``Customer satisfaction, customer retention, and market
share'', Journal of Retailing, Vol. 69 No. 2, pp. 193-215.
Rust, R.T., Zahorik, A.J. and Keiningham, T.L. (1995), ``Return on quality (ROQ): making service
quality financially accountable'', Journal of Marketing, Vol. 59, April, pp. 58-70.
Scaglione, F. (1988), ``Two-way communication: tapping into gripes and profits'', Management
Review, Vol. 77, September, pp. 51-3.
Singh, J. (1988), ``Consumer complaint intentions and behaviour: definitional and taxonomical
issues'', Journal of Marketing, Vol. 52, January, pp. 93-107.
Spreng, R.A., MacKenzie, S.B. and Olshavsky, R.W. (1996), ``A re-examination of the
determinants of consumer satisfaction'', Journal of Marketing, Vol. 60, July, pp. 15-32.
Taylor, S. (1997), ``Assessing regression-based importance weights for quality perceptions and
satisfaction judgments in the presence of higher order and/or interaction effects'', Journal
of Retailing, Vol. 73 No. 1, pp. 135-59.
Venkatraman, N. (1989), ``Strategic orientation of business enterprise: the construct,
dimensionality and measurement'', Management Science, Vol. 35 No. 8, pp. 942-62.
Zahorik, A.J. and Rust, R.T. (1992), ``Modeling the impact of service quality on profitability: a
review'', Advances in Services Marketing, Vol. 1, pp. 247-76.
Zeithaml, V.A. (1988), ``Consumer perceptions of price, quality and value: a means-end model and
synthesis of evidence'', Journal of Marketing, Vol. 52, July, pp. 2-22.
Zeithaml, V.A., Berry, L.L. and Parasuraman, A. (1996), ``The behavioral consequences of service
quality'', Journal of Marketing, Vol. 60, April, pp. 31-46.
Appendix. Scale items
(All are five-point scales ranging from 1 (``strongly disagree'') to 5 (``strongly agree'').)
Question items concerning customer satisfaction
Please indicate the degree to which you agree/disagree with each one of the statements below,
referring to the characteristics your main bank possesses (offers to you):
.

It does not err in informing me of my transactions.

If there is a problem, the bank is willing to discuss it with me.

You do not have to visit your bank many times to solve a particular problem.

It is a bank that is worth trusting.

There is a warm friendly atmosphere inside the bank.

Employees of the bank are well dressed and appear neat.

The atmosphere inside the bank gives you a positive impression for the services it offers.

The interior design of the premises facilitates the transactions.

The climate among the bank's employees contributes to receiving better service.

Employees of the bank have a friendly behaviour.

The bank's employees know very well the bank's products.

Employees of the bank are polite.

Employees of the bank behave with discretion when you face a problem.

You receive prompt service from the bank's employees.

Bank employees have the necessary knowledge to serve you promptly.

Bank employees do not hesitate to find the time to serve you better.

Bank employees know what your needs are and how the bank's products can satisfy
them.

The bank's employees often refer you to their supervisors in order not to serve you
personally and promptly.

There is ample parking space in your bank.

The bank's branch is near your workplace.

The bank's branch is near other state buildings and other banks.

The bank's branch is near shopping centres I usually visit.

The loan interest rates of my bank are higher than other banks.

The deposit interest rates of my bank are lower than other banks.

I feel I pay a lot on commissions charged.

The bank offers a wide product variety.

The bank offers flexible products that meet my needs.

The new products that my bank offers meet my needs.

The bank offers telephone services.

The bank's ATM network collaborates with other banks ATM networks.

The bank's ATM network is large and serves my needs.

Question items for behavioural responses

Please indicate the degree to which you agree / disagree with each one of the statements below:
.

In the near future I intend to intensify my efforts to find a better bank.

In the last year I have thought very seriously to switch banks.

I have recommended the bank to friends and acquaintances.

I have encouraged friends and acquaintances to do business with the bank.

I have informed other customers of the bank about complaints I have about the service
offered by the bank.

I have decided to do less business with the bank in the future.

I have decided to switch to another bank that offers better service.

Responses to
customer
satisfaction
707