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Credit where it is due: drivers of loyalty to credit cards

Sanjai K. Parahoo (Hamdan Bin Mohammed e‐University, Dubai International Academic City, Dubai, United Arab Emirates)

International Journal of Bank Marketing

ISSN: 0265-2323

Article publication date: 27 January 2012

2545

Abstract

Purpose

In a fiercely competitive industry, credit card issuers need to develop a loyal customer base and motivate their card holders to use their cards at a sufficient level to assure profitability. The purpose of this article is to propose a consumer model of customer loyalty in the credit card industry.

Design/methodology/approach

A model of customer loyalty incorporating service quality, value and involvement is developed theoretically and validated empirically through SEM using data collected from a global sample of 114 credit card holders.

Findings

The loyalty model proposed was validated, showing that the independent variable, i.e. customer involvement, had path loadings of 0.32 and 0.26 on quality and value, respectively, while both service quality and value had direct effects on loyalty, with path loadings of 0.30 and 0.51, respectively.

Research limitations/implications

Customer involvement has been shown to directly influence both service quality and value, and it should be further investigated for its effect on sustaining relationships, as well as a variable for segmenting customers.

Practical implications

In order to develop sustainable relationships, marketers of credit cards should leverage involvement in their customers by employing strategies such as branding, positioning, and attractive and flexible frequent use benefits. Further, credit card customers desire high service quality, but at an affordable cost, therefore making value a prime consideration for achieving loyalty.

Originality/value

This study has identified “involvement” as an independent variable that provides stability and sustainability to the firm‐customer relationship. Despite its pertinence, this customer characteristic that may be also used to segment customers has not been investigated in prior quantitative studies.

Keywords

Citation

Parahoo, S.K. (2012), "Credit where it is due: drivers of loyalty to credit cards", International Journal of Bank Marketing, Vol. 30 No. 1, pp. 4-19. https://doi.org/10.1108/02652321211195677

Publisher

:

Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited

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