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Emerald Group Publishing Limited
Executive summary of “Does usage level of online services matter to customers’ bank loyalty?”
Article Type: Executive summary and implications for managers and executives From: Journal of Services Marketing, Volume 28, Issue 4
This summary has been provided to allow managers and executives a rapid appreciation of the content of the article. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research undertaken and its results to get the full benefit of the material present.
Remember the days when, if you wanted to get money from your bank, to check the balance, to pay a bill and to move money into a different account, you had to call in and wait your turn in a queue until a clerk was available? You can, of course, still do that at many banks, but these days you are more likely to do business via a telephone, a computer or an ATM. It is quicker and you can do it when the bricks-and-mortar banks are closed, and as a result, the banks do not need as many branches and have far fewer employees. Win, win all round? Well, maybe.
Organizations in the service industries – such as banks – worry about customer loyalty. Their survival depends on retaining and attracting customers, and they know that being loyal to a company which has friendly, efficient frontline employees to welcome you, to ask how you are and who probably know you is very different from being loyal to a technological transaction system, no matter how efficient and easy-to-use it is.
It is quite a problem. Interactive services are now part of a dynamic banking environment which meets customer demands for faster, easier, independent and real-time services. All banks are constantly upgrading their computer technology to increase the efficiency of their services and allow their customers’ diversified and ubiquitous usage. It is relatively easy and inexpensive to construct and offer online services to customers. However, keeping the customer loyal is another thing. The relatively low set-up costs create higher levels of competition and lower switching costs. The difficulty for banks making the right choices is that they know customers like the efficiency of online banking, but the more they use those services, the less loyal they may become.
It is, without a doubt, to the benefit of the bank services provider to encourage customers to frequently and continuously use online services, and practically, all bank customers have been offered numerous incentives to do so. However, providing varied services online is a sort of commitment and creates the expectation of effective, convenient and quality service. Otherwise, the customer will not be satisfied.
However, as a technology-mediated environment, e-commerce is a virtual system that lacks direct face-to-face interaction. Thus, the more the customer uses these online services, the weaker his or her relationship with the service provider becomes. Basically, customers with high levels of service usage feel less committed to the bank because of the absence of interpersonal relationships, and bank loyalty deteriorates and customers may be easily tempted by rival banks. That is why many banks are creatively extending their relationship marketing strategy to online services by offering a personal contact as an alternative, to build and maintain stable long-lasting relationships with their customers.
In “Does usage level of online services matter to customers’ bank loyalty?” Dr Shalom Levy evaluates the relationship between the customer’s relative usage levels of online banking and bank loyalty, and examines the effect of customer satisfaction with the quality of online banking and the services’ convenience in this relationship. The study proposes a conceptual framework, integrating these factors.
Augmented online services might act as a double-edged sword. The more the customer uses online services, the more his or her relationship with the bank deteriorates, the more customer loyalty to the bank decreases and the more the customer is open to the temptations of rival banks. However, there is also a direct effect of satisfaction with service quality and loyalty. Thus, loyalty could be maintained through investment in building and maintaining customer satisfaction with service quality.
Online bank service providers cannot just build user-oriented Internet interfaces and think their work is done. They must invest in relation-based attachments with the customers, maintain close relationships with their customers, customize the financial services, increase switching costs and sustain customer loyalty. Service providers should look for reliable substitutes for human, face-to-face interaction processes and provide customers with a personal touch. They should also include special technological features in every virtual step the customer makes online; they should make unmediated connection with a human touch available to help the customer with any and all problems.
Customers’ ability to face and solve problems is a matter of experience and time, so until then there is a real need to provide customer assistance. Online bank service providers should continuously stimulate customers, offer incentives and build stable and ongoing relationships with them, both online and offline, to maintain customer satisfaction and customer loyalty.
To read the full article enter 10.1108/JSM-09-2012-0162 into your search engine.
(A précis of the article “Does usage level of online services matter to customers’ bank loyalty?” Supplied by Marketing Consultants for Emerald.)