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International Journal of Research p-ISSN: 2348-6848

e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

Effecting Factors of Customer Switching Behavior and Customer


loyalty Behaviors in the Banking Industry

*Chukariya Satish Kumar **Dr.R.K .Sawalikar


* Research Scholar, Department of Business Management, RTM University, Nagpur,
satish.chukariya@yahoo.co.in
** Department of Business Management Sardar Patel Mahavidyalaya, Chandrapur

ABSTRACT

This Study is to investigate the factors impacts on customer switching behavior and
affecting customer switching behavior and loyal, respectively.
loyalty in the banking Industry. It is an
applied causal study, in which data analysis Keywords: Customer Switching Behavior,
is done via structural equations method. The Loyalty, Service Quality, Customer
research population includes customers of Satisfaction, Distance.
State Bank, Ramanthapur, Hyderabad. For
data collection, a questionnaire was INTRODUCTION
randomly distributed between 100 customers
of the above mentioned bank, among which, With the intense competition and increasing
89 questionnaires were returned and globalization in the financial markets, bank
analyzed. The reliability and validity of the management must develop customer-
questionnaire were confirmed using oriented strategies in order to compete
Cronbach's Alpha. Results from data successfully in the competitive banking
analysis show that these factors i.e service environment. The longer a bank can retain a
quality, customer satisfaction, distance, customer, the greater revenue and cost
reputation have negative and positive savings from that customer. However,
customers are also more prone to changing

Available online: http://internationaljournalofresearch.org/ P a g e | 1003


International Journal of Research p-ISSN: 2348-6848
e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

their banking behavior when they can them and limitation of existing resources,
purchase nearly identical financial products necessitates, more than ever, the
provided by the banks. In order to stay investigation into
competitive, bank managers need to customer switching behavior in banking
understand the factors that influence and industry for retaining existing customers and
determine consumers bank switching acquiring appropriate competitive position.
behavior. If the bank management obtains a complete
understanding of factors affecting customer
The creation of a long-term relationship with switching behavior, it can effectively
customers is an important strategy for the prevent harmful consequences of customer
majority of financial institutions in loss and develop long-term customer-
competitive markets. Banking industry relationship.
should be profitable and have durable
relationships with the customers to develop LITERATURE REVIEW
and survive in today's turbulent
environment. Several studies show that bank De-regulation, the advent of new
profitability is closely correlated with technologies in the financial services
customer-loyalty and customer-retention. In industry, and latent financial services impact
order to reduce their expenses and minimize consumer behavior. Currently, consumers
the costs of attracting new customers, banks are capable of purchasing
always try to prevent losing their current relatively similar financial products
customers; therefore, it can be said that there provided by different banks. This may
is a close relationship between customer expose consumers to the probability of
loyalty and bank profitability. switching to an alternative bank. Customer
switching behavior refers to the
as increasing number of banks, using new condition in which a customer abandons a
technologies in service-provision, service provider or a financial institution
privatizations of Several factors affect customer behavior,

Available online: http://internationaljournalofresearch.org/ P a g e | 1004


International Journal of Research p-ISSN: 2348-6848
e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

among which four factors have been Service quality in marketing literature
identified as refers to a general definition of a customers'
responsible for customers' service-provider assessment of services. It is believed that
switching: service quality is the result of comparison
between customers
Customer satisfaction refers to the extent expectations of service to be received and
to which customers are happy after receiving perceptions of the service actually received .
products and services. It seems that In marketing literature, marketing is defined
customer satisfaction is a feeling evoked by as: overall customers' assessment of the
the assessment of service quality. The basis company's services. The perceived service
and foundation of customer satisfaction are quality means customer's assessment of
his expectations and perception of services. his/her expectations of service to be received
Every customer has expectations, and if the and perceptions of the service actually
actual services do not match his/her received. The concept of service quality
expectations, he/she will become includes service delivery process and service
dissatisfied. outcomes.

Reputation, as social symbols and/or brand, Convenience location is regarded as


can significantly affect the performance and important factor in its performance
survival of the company; moreover, assessment. Easy communication and
customer decision may be affected by bank convenience accessibility, and appropriate
reputation. A positive reputation can working hours are important to customers.
strengthen customers' trust in the bank. On In fact, accessibility refers to having access
the other hand, a negative reputation to the location of service provider, which
increases the possibility of customers includes finding clear ways about service
switching banks. provision environment. All these factors
depend on the location, and convenience

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International Journal of Research p-ISSN: 2348-6848
e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

location of the bank is an important factor the future. In addition, customer-loyalty as a


affecting customer switching behavior, since relationship between the defined ratios of
it has direct impact on customers' attitude to support. Moreover, recent studies
accessibility to the banks. Location of show that customer-loyalty is based on three
service provision is an important factor factors namely behavior, attitude, and
capable of preventing customers switching integrated concept of perception.
behavior. The majority of customers is
convenience-seeking clients and expects to METHODOLOGY
receive services wherever and anytime they This is an applied study as it seeks for
wish. To service-providers, customer-loyalty solutions to improve loyalty and prevent
is an important source of competitive switching behavior of the customers of the
advantage. Literature review show that to banks. It is also a causal research as the
increase the profitability of a service firm, researcher tries to investigate the factors
the correlation between customer-loyalty affecting customers switching behavior and
and records of that firm should be loyalty in the banking industry.
investigated. They believe that customer
loyalty history includes corporate image, Field of Study

perceived value, etc. The majority of firms


develop strategies that encourage customer- For collecting the required data, field

loyalty, as this reduces their costs. On the method was used, in which the State Bank,

other hand, loyal customers value more the Ramanthapur, Hyderabad was selected as

firm and create a positive mental image the field of study.

towards it.
Data Collection Instrument

Loyalty: The loyalty as having deep A questionnaire was used to investigate the

commitment to a product or service that factors affecting customer switching

leads to repurchase from the same brand in behavior in banking industry. The designed
questionnaire includes descriptive section

Available online: http://internationaljournalofresearch.org/ P a g e | 1006


International Journal of Research p-ISSN: 2348-6848
e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

comprised of demographic items (age, 3. Bank reputation the bank's customer


switching behavior.
gender, educational level, number of visiting
the bank per month). To measure 4. Bank reputation affects the bank's
customer loyalty.
questionnaire's indices, a 5-point Liker
based scale, as the most common
Validity and Reliability of Measurement
measurement scale, was employed.
Instruments

Variables considered
In this study, Cronbach's alpha was used to
evaluate reliability. To evaluate and measure
Independent Variables: 1. Consumer
the reliability in the initial stages of the
Satisfaction
research, 30 questionnaires were used for
2. Reputation
data collection. Cronbach's alpha of 0.706
3. Distance
was obtained. Since it is higher than 0.7, the
4. Service
questionnaire has adequate validity.
Quality
Dependent Variables: 1.Switching
Results from Hypotheses
Behavior
2.Consumer
Regarding the results from the hypothesis, it
Loyalty
is seen that customer-satisfaction negatively
Hypotheses:
affects customer switching behavior.
The following Hypothesis are formulated for
Therefore, customer satisfaction does not
conducting the study
lead to customer switching behavior. In
other words, customer dissatisfaction with
1. Consumer Satisfaction affects the bank's
bank affects customers abandoning the bank.
customer switching behavior.
Result from the next hypothesis Regarding
2. Consumer Satisfaction affects the bank's
the results from the second hypothesis, it is
customer loyalty.
seen that customer-satisfaction positively

Available online: http://internationaljournalofresearch.org/ P a g e | 1007


International Journal of Research p-ISSN: 2348-6848
e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

affects customer-loyalty. Therefore, on customers switching behavior, and do not


customer-satisfaction causes customer- lead to customers' bank switching behavior.
loyalty. Regarding the results from the third In addition, customer-satisfaction,
hypothesis, it is seen that bank-reputation reputation, superior service quality, and
negatively affects customers' bank switching distance have positive effect on customer-
behavior. Therefore, there is a significant loyalty, and lead to customer-retention and
correlation between a good bank-reputation new customer-attraction.
and weaker customer's intention of
switching behavior. Result from the fourth References
hypothesis Regarding the results from the
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satisfaction, reputation, superior service
quality, and distance have negative impact

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International Journal of Research p-ISSN: 2348-6848
e-ISSN: 2348-795X
Available at https://edupediapublications.org/journals
Volume 03 Issue 11
July2016

statements. Journal of Marketing


Management, 18, 1-19.
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