The effect of service quality and customer satisfaction on customer loyalty

Abstract

Purpose The purpose of this paper is to investigate the impact of customer satisfaction, service quality, the perceived value of services, corporate image and corporate reputation on customer loyalty and their relationship in the Turkish banking industry. Mediation effects of the perceived value and corporate image and reputation are also studied. Understanding the relationships between the determinants of customer loyalty toward the bank helps management to use corporate image and reputation more effectively in its strategy, thus enhancing the institution’s position in the minds of consumers. Design/methodology/approach A model is proposed to explore the relationships of service quality and customer satisfaction with a perceived value and their effect on transforming the corporate image and corporate reputation into the form of customer loyalty toward the bank. A survey is designed within this framework and SEM analysis is conducted in order to study the nature of relationships between variables of interest hypothesized to affect customer behavior and customer loyalty. Mediation tests for perceived value and corporate image and reputation are also conducted. Findings The findings of the survey indicate that corporate image and corporate reputation can be used as a common marketing benchmark to measure a bank’s performance. The results demonstrated that customers perceive quality and satisfaction effects loyalty through perceived value, image and reputation. Research limitations/implications The study was conducted in Izmir, the third biggest city of Turkey. The sample is composed of regular customers, and the sample size is enough for the study but more studies are needed to generalize the results. Practical implications The results provide information to bank managers to effectively assist them to offer appropriate customer service levels sustaining satisfaction, quality and value to the customers within the transactions. Originality/value The paper studies the determinants of customer loyalty in the Turkish banking industry and considers the effects of corporate image and corporate reputation as measured by customer satisfaction, service quality and perceived value, on customer loyalty toward banks in Turkey. This model is not studied in bank marketing in Turkey and also in the banking literature.

Multiple Mediating Effects on the Quality of and Loyalty to Banking Services

“…This might occur when customers perceive they are receiving the consistent and quality service they expect; thus, the bank's image became less important. Concerning mediating or indirect effects, perceived value is a strong mediator between service quality and customer loyalty, supporting the findings of Ozkan et al (2019). It can be inferred from this that once a bank customers believe they are receiving reasonable value for money in comparison with other banks, they become attached to and will remain with their service provider.…”

“…Furthermore, several studies have shown that service quality exerts a significant positive impact on both corporate image and perceived value (Bakar et al, 2017;Zameer, Tara, Kausar, & Mohsin, 2015), which in turn notably affect behavioral intentions, such as long-term relationships, word-of-mouth marketing, and re-patronization (Bakar et al, 2017;Lewis & Soureli, 2006;Nguyen & Leblanc, 1998). As a result, service quality indirectly affects behavioral intentions via customer satisfaction (Cronin, Brady, and Hult, 2000;Lewis & Soureli, 2006;Nguyen & Leblanc, 1998) as well as on customer satisfaction and loyalty through corporate image and perceived value (Cronin, Brady, and Hult, 2000;Lewis & Soureli, 2006;Ozkan, Süer, Keser, & Kocakoç, 2019). In addition, perceived value exerts a two-way mediating effect: between customer satisfaction to corporate image, and perceived quality to corporate image (Nguyen & Leblanc, 1998).…”

The Effect of Perception of Health Care Service Quality on Patient Satisfaction and Loyalty in Mother and Child Hospital

“…Then, H2 is accepted. This finding is consistent with the prior studies (Amin and Zahora Nasharuddin, 2013;Demirci Orel and Kara, 2014;Mohamed and Azizan, 2015;Özkan et al, 2019;Su et al, 2016) that there is a relationship between health care service quality and patient satisfaction. When health care service is delivered and perceived as high-quality service, patients' expectations will be more fulfilled, patients will give positive emotional evaluation concerning the service, and patients satisfaction will come as a result.…”

An empirical investigation of the factors affecting customer lifetime value

“…There are sample studies on customer satisfaction with its relationship with the service quality as a major construct (Özkan et al, 2019;Huang et al, 2019). Raza et al (2020) and Joudeh (2017) found that all the dimensions had a significant and positive influence on the satisfaction of the customer.…”