The Effect of Customer Satisfaction on Loyalty: A Moderating Role of Corporate Communication in the Banking Sector

Abstract

In the 21st global competitive arena, the ultimate objective of any institution is to transform satisfied customers into loyal customers. Customer loyalty is highly affected by the satisfaction they obtain out of any service. Therefore, it is crucial to understand the relationship between customer satisfaction and customer loyalty. This study aims to examine the effect of customer satisfaction on customer loyalty with the mediating role of corporate communication. To collect data for the study, a convenience sampling method was used and 275 customers from different banks in Biratnagar participated in the survey. Structural equation modeling (SEM) was used to test the proposed hypothesis. The results depict that customer satisfaction positively and significantly associates with customer loyalty and this association is also strongly mediated by corporate communication. Moreover, corporate communication has a direct and positive influence on customer loyalty. This study has theoretical implications as it provides a better understanding of the relationship between satisfaction and loyalty.

Causal Factors of Customer Loyalty in Sri Lankan Banks

“…For instance, Mistrean (2023) suggests that understanding the nature of loyalty and the factors that contribute to it, such as switching costs, can help banks retain customers. Moreover, a study by Mishra (2022) found that customer satisfaction, closely related to perceived switching costs, positively influences customer loyalty. Therefore, switching costs act as a barrier and significantly affect customer loyalty in the banking sector (Mishra, 2022;Mistrean, 2023).…”

“…Moreover, a study by Mishra (2022) found that customer satisfaction, closely related to perceived switching costs, positively influences customer loyalty. Therefore, switching costs act as a barrier and significantly affect customer loyalty in the banking sector (Mishra, 2022;Mistrean, 2023).…”

“…Mariska and Khasanah (2022) found that loyalty fully mediates the influence of company image on switching intention, underscoring the necessity for managers to nurture a robust corporate image actively. Furthermore, (Mishra, 2022) demonstrated that corporate communication, a construct intimately linked to corporate image, directly positively affects customer loyalty. Consequently, constructing a robust corporate image constitutes an essential prerequisite for establishing and preserving customer loyalty within the banking industry (Kanwal et al, 2022;Mariska & Khasanah, 2022).…”

“…It also recommends prompt complaint resolution, flexible loan/deposit options, leveraging social networks to inspire trust, and tailored customer retention strategies based on loyalty drivers (Mistrean, 2023). Banks should implement a multifaceted approach comprehensively addressing these factors, enhancing customer loyalty and thereby boosting long-term profitability and performance (Mishra, 2022).…”

“…This review will cover several key topics, including customer loyalty, perceived quality, perceived value, customer satisfaction, trust, switching costs, and corporate image. Each factor uniquely shapes customer loyalty and has been the subject of extensive research and debate (Kanwal et al, 2022;Mishra, 2022). Next section presents establishing the research hypotheses.…”