CEDISC Thipsuda KITJAPIPAT Thailand, DBA Intake 4 9 April 2009 How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in

CEDISC

Thipsuda KITJAPIPATThailand, DBA Intake 4

9 April 2009

How well can SERVQUAL explain customer satisfaction, complaint

behavior and commitment in retail banking in Thailand?

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Introduction:• Thipsuda KITJAPIPAT• MSc (Hons), Murray State University, Murray,

Kentucky, USA, 1998• BA (Hons), Thammasat University, Bangkok,

Thailand, 1996• Marketing, Financial, Real Estate experiences

• Reports the survey results of Thai banks customers using the SERVQUAL instrument to determine the effect of service quality on customer satisfaction, complaint behavior and commitment

How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

CEDISCScope of the study

• Introduction• Background

• Research Question & Aim• Methods• Results

• Summary• Implications• Future work


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Background:

• SERVQUAL model is a particular conceptual model about service and service quality proposed by Parasuraman et al. (1985)


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Background: SERVQUAL consists of five dimensions


Tangibles

Reliability Responsiveness

Assurance Empathy

SERVQUAL

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Background:

• Tangibles: physical facilities, equipment, and appearance of personnel;

• Reliability: ability to perform the promised service dependably and accurately;

• Responsiveness: willingness to help customers and provide prompt service;

• Assurance: knowledge and courtesy of employees and their ability to inspire trust and confidence;

• Empathy: caring, individualized attention


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Research Question & Aim:• The main research question: “How well can

SERVQUAL explain customer satisfaction, complaints behavior and commitment in retail banking in Thailand?”

• Aim: A very limited number of published research directly concerning or related to this topic in Thailand, this study can partially fill the current void of available research on this topic


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Methods:

• Survey of customers of two different Thai banks using the SERVQUAL instrument

• Sample size of 500 respondents (personal clients)


CEDISCResults: Descriptive statistics, PCA, and PCR

• Descriptive statistics: summarize

the survey results • PCA (principal components analysis):

determine the dimensional structure of the scale

• PCR (principal component regression):

test the relationships between the factors and the dependent variables


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Descriptive statistics results:• Descriptive statistics: customers have good

experiences with most of the items and are satisfied with the measures used, but their response on commitment and complaint behavior are relatively low


Note: Customer expectations and perceptions were measured on a 7-point Likert scale where 1= much worse than expected and 7= much better than I expected.This scale measures perceptions relative to expectations. The mean scores greater than four (4) indicate respondents’ perceptions higher thanexpectations with a particular statement, whereas means of less than four (4) indicate respondents’ perceptions lower than expectations.

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Descriptive statistics of SERVQUAL for Bank A and Bank B

N Mean SD.

Bank A Bank B Bank A Bank B Bank A Bank B

Tangiblest1 : Up-to-date equipment 250 247 4.96 5.01 1.09 1.15

t2 : Appearance of physical facilities 249 245 4.91 4.94 1.19 1.30

t3 : Appearance of employees 248 245 5.21 5.23 1.14 1.05

t4 : Visual appeal of materials associated with service 245 243 4.88 5.09 1.09 1.11

Reliabilityrl1 : Keep promises to do something by a certain time 247 244 4.65 4.72 1.33 1.17

rl2 : Interest shown in solving a problem 249 244 4.73 4.80 1.17 1.11

rl3 : Performing the service right the first time 247 243 4.75 4.89 1.12 1.16

rl4 : Provide the services at the time promised 249 244 4.85 5.04 1.04 1.08

rl5 : Accuracy of records 249 246 5.09 5.15 1.13 1.23

Responsivenessrp1 : Telling exactly when services will be performed 250 247 4.88 4.88 1.23 1.26

rp2 : Giving prompt service to customers 249 246 4.73 4.87 1.37 1.35

rp3 : Willingness of employees to help customers 248 246 4.94 5.06 1.27 1.30

rp4 : Responding to customer requests 249 241 4.80 4.85 1.28 1.16

Assurancea1 : Trustworthiness of employees 248 244 5.10 5.22 1.13 1.14

a2 : Safety in transactions 248 246 4.95 5.04 1.10 1.15

a3 : Politeness of employees 250 248 5.12 5.16 1.22 1.15

a4 : Knowledge of personnel in answering questions 249 242 5.07 5.23 1.12 1.10

Empathye1 : Individual attention I receive 247 245 4.70 4.86 1.24 1.17

e2 : Having convenient operating hours 248 244 4.76 4.90 1.29 1.19

e3 : Personal attention given to customers 249 244 4.77 5.02 1.24 1.18

e4 : Having the customer’s best interests at heart 248 243 4.85 4.92 1.20 1.11

e5 : Understanding the specific needs of customers 247 245 4.80 4.96 1.19 1.11

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Descriptive statistics of satisfaction, commitment, and complaint for Bank A and Bank B

ITEM

N Mean SD.

Bank A Bank B Bank A Bank B Bank A Bank B

Satisfactionst1: Appearance of the bank’s physical facilities 232 235 4.44 4.35 0.73 0.87

st2: Ability of bank to perform the promised service 232 234 4.37 4.30 0.67 0.83

st3: Willingness of bank to help customers 230 229 4.28 4.17 0.82 0.85

st4: Knowledge and courtesy of employees 227 231 4.32 4.30 0.80 0.80

Commitmentcm1: Continue to do business with this bank 249 242 3.08 3.31 0.95 0.90

cm2: Continue to do business even if it increases its fees 249 235 2.89 2.95 0.93 0.94

Complaintscp1: Complain to other customers if experience a problem 250 233 2.26 2.36 0.92 0.91

cp2: Complain to employees if experience a problem 250 232 2.22 2.29 0.94 0.94

Notes: (1) Satisfaction was measured on a 7-point Likert scale where 1=very unsatisfied and 7=very satisfied.(2) Commitment and Complaint Behavior were measured on a 7-point scale where 1= very unlikely and 7= very

likely. The results of the study show a range of scores from 1 to 5 (not reaching 7).

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•Only four items (cm1, cm2, cp1 and cp2) below the mid-point of four (4), suggesting there are some customers who feel less likely to continue to do business with the bank and some who are less likely to complain about the bank’s service.

•Four items of satisfaction (st1, st2, st3 and st4) in Bank A and Bank B exceed the mid-point of four (4) on the scale, suggesting that the samples have a tendency to be satisfied with the banks’ service quality .

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•Results of commitment and complaint behavior in Bank A and Bank B are less likely, suggesting that the customers might not do business with the banks in the future.

• Lower complaint behavior scores, which might mean that the customers are satisfied with the banks’ services or that Thai customers have a cultural trait that they do not like to complain or talk negatively (even though they have problems or bad experiences with the banks’ services, they might not complain to other customers or to the banks’ employees).

•Most of the service quality score items fall close to the mid-point of four (4), between four and five. As to why many responses are close to neutral, it might have a cultural issue. As one bank customer said, “When given the chance Thai people prefer to be neutral, they don’t like to be divided one way or the other”.

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Factor 2: Tangibles Factor 3: Reliability

Factor 1: Responsiveness, Assurance, Empathy

PCA results

PCA Results:PCA: the items could be separated into only three factors---Factor 1: responsiveness, assurance and empathy;Factor 2: tangibles;Factor 3: reliability

CEDISCFactor analysis of combined results for Bank A and Bank B

Variables and items Eigen value

Factor loadings

Percentage variance

Cum percentage

Cronbach alpha

Responsiveness, assurance, empathy (factor 1) 11.508 52.307 63.356 0.9481 rp3: Willingness of employees to help customers 0.586 rp4: Responding to customer requests 0.536 a1: Trustworthiness of employees 0.651 a2: Safety in transactions 0.62 a3: Politeness of employees 0.732 a4: The knowledge in answering questions 0.713 e2: Having convenient operating hours 0.533 e3: Personal attention given to customers 0.705 e4: Having the customer's best interests at heart 0.73 e5: Understanding the specific needs of customers 0.681 Tangibles (factor 2) 1.327 6.031 11.049 0.8034 t1: Having modern-looking/ up-to-date equipment 0.71 t2: Appearance of physical facilities 0.705 t3: Appearance of employees 0.567 Reliability (factor 3) 1.104 5.018 5.018 0.8709 rl2: Interest shown in solving a problem 0.665 rl3: Performing the service right the first time 0.65 rl4: Provide the services at the time promised 0.583

Notes: KMO (Kaiser-Meyer-Olkin test of sampling adequacy) = 0.959; Bartlett’s test of sphericity = 6728.369 (p < 0.01), overall alpha coefficient = 0.9147

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Regression results:

• Regression analysis: three factors are related to customer satisfaction, commitment and complaint behavior but their explanatory power is low


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Regression of satisfaction on three the SERVQUAL factors

Bank A

Error!

Note: ** p-value < 0.05

Bank B


Dimensions Beta t p-value

(Constant) 4.346 111.74 .000 Factor 1 (responsiveness-assurance-empathy) .237 6.036 .000 Factor 2 (tangibles) .202 5.022 .000 Factor 3 (reliability) .069 1.780 .076 R Square R Square (Adj) .230 .219 Regression Equations – Satisfaction

Satisfaction = 4.346** + (.237) factor 1** + (.202) factor 2** + (.069) factor 3 R2 (Adj) = 0.219

Dimensions Beta t p-value (Constant) 4.289 108.12 .000 Factor 1 (responsiveness-assurance-empathy) .138 3.032 .003 Factor 2 (tangibles) .099 2.129 .034 Factor 3 (reliability) .189 3.846 .000 R Square R Square (Adj) .148 .135 Regression Equations – Satisfaction

Satisfaction = 4.289** + (.138) factor 1** + (.099) factor 2** + (.189) factor 3** R2 (Adj) = 0.135

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Regression of commitment on three SERVQUAL factors Bank A


Bank B


Dimensions Beta t p-value (Constant) 2.916 50.688 .000 Factor 1 (responsiveness-assurance-empathy) 084 1.453 .148 Factor 2 (tangibles) .174 3.037 .003 Factor 3 (reliability) .093 1.631 .104 R Square R Square (Adj) .060 .047

Regression Equations – Commitment Commitment = 2.916** + (.084) factor 1+ (.174) factor 2** + (.093) factor 3 R2 (Adj) = 0.047

Dimensions Beta t p-value (Constant) 3.094 55.454 .000 Factor 1 (responsiveness-assurance-empathy) 144 2.278 .148 Factor 2 (tangibles) .095 1.464 .003 Factor 3 (reliability) .015 0.220 .104 R Square R Square (Adj) .039 .024

Regression Equations – Commitment Commitment = 3.094** + (.144) factor 1+ (.095) factor 2** + (.015) factor 3 R2 (Adj) = 0.024

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Regression of complaint behavior on three SERVQUAL factors

Bank A


Bank B


Dimensions Beta t p-value (Constant) 2.177 39.254 .000 Factor 1 (responsiveness-assurance-empathy) -.124 -1.845 .066 Factor 2 (tangibles) -.021 -.310 .757 Factor 3 (reliability) -.044 -.651 .516 R Square R Square (Adj) .018 .004

Regression Equations – Complaints Complaints = 2.177** - (.124) factor 1* - (.021) factor 2 - (.044) factor 3 R2 (Adj) = 0.004

Dimensions Beta t p-value (Constant) 2.332 39.670 .000 Factor 1 (responsiveness-assurance-empathy) -.153 -2.274 .024 Factor 2 (tangibles) -.026 -.366 .715 Factor 3 (reliability) -.130 -.1.822 .070 R Square R Square (Adj) .046 .032

Regression Equations – Complaints Complaints = 2.332** - (.153) factor 1** - (.026) factor 2 - (.130) factor 3* R2 (Adj) = 0.032

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• SERVQUAL explains very little of the variance in the three dependent variables, so the SERVQUAL instrument seems to not have much explanatory power in the Thai situation

• Three derived factors of the service quality (satisfaction: Bank A with Adjusted R square = 21.9 % and Bank B with Adjusted R square = 13.5 %) are most strongly related to customer satisfaction; the independent variables explain 21.9 percent for Bank A and 13.5 percent for Bank B of the variation in the criterion variable


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• Commitment and complaint behavior, the relationship of the independent variables explains only 4.7 percent for Bank A and 2.4 percent for Bank B for commitment and 0.4 percent for Bank A and 3.2 percent in Bank B for complaint behavior

• The weak link between these variables and commitment and complaint behavior might be attributed to the possibility that competence works through some intervening variable to influence customer commitment, and complaint behavior


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Summary:

• The study indicates that the SERVQUAL explains very

little of the variance in two of the three dependent

variables and does not have much explanatory power in

the Thai situation.

• SERVQUAL cannot explain to a significant degree all

aspects of customer satisfaction, complaint behavior

and commitment in retail banking in Thailand


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•Factor 1 (responsiveness, assurance and empathy)has the highest impact on complaint behavior and has an inverse variation with complaint behavior

•Banks in Thailand could improve their service quality by improving the staff behavior since most of the items relate to services from bank staff

•Employee training programs or performance incentive programs for employees could be of value than improve their bank services by renovating the bank image

Implications:

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Future work:• Use both a larger and a greater variety of

samples to provide greater depth of information

• Selective high-potential customers to compare the differences between high-potential and other customers

• An investigation of the relationships in other sectors/ industry

• Trans-national studies across different economies


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Thank You

CEDISC•

Appendices: Part 2: Study measures• The following statements relate to your feeling about XXXX Bank. Please respond to each question by circling

the number which best reflects your own perceptions

Servqual• Having modern-looking/ up-to-date equipment much worst than I expected 1—2---3---4—5---6---7 much better than I expected• Appearance of physical facilities much worst than I expected 1—2---3---4—5---6---7 much better than I expected• Appearance of employeesmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Visual appeal of the materials associated with the service (such as pamphlets or statement)much worst than I expected 1—2---3---4—5---6---7 much better than I expected• Keeping promises to do something by a certain timemuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Interest shown in solving a problemmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Performing the service right the first timemuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Provide the services at the time promisedmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Accuracy of recordsmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Telling customers exactly when services will be performedmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Giving prompt service to customersmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Willingness of employees to help customersmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected


CEDISC Appendices: Part 2: Study measures

• The following statements relate to your feeling about XXXX Bank. Please respond to each question by circling the number which best reflects your own perceptions

Servqual (continued)• Responding to customer requestsmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Trustworthiness of employeesmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Safety in transactionsmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Politeness of employeesmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• The knowledge of the personnel in answering customer questionsmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Individual attention I receivemuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Having convenient operating hoursmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Personal attention given to customersmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Having the customer’s best interests at heartmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected• Understanding the specific needs of the customersmuch worst than I expected 1—2---3---4—5---6---7 much better than I expected


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Appendices: Part 2: Study measures

• The following statements relate to your feeling about XXXX Bank. Please respond to each question by circling the number which best reflects your own perceptions

• Satisfaction• The appearance of the bank’s physical facilities, equipment, personnel, and communication materials

very unsatisfied 1—2---3---4—5—6--7 very satisfied• The ability of the bank to perform the promised service dependably and accuratelyvery unsatisfied 1—2---3---4—5—6--7 very satisfied • The willingness of the bank to help customers and provide prompt servicevery unsatisfied 1—2---3---4—5—6--7 very satisfied• The knowledge and courtesy of the bank’s employees and their ability to convey trust and

confidencevery unsatisfied 1—2---3---4—5—6--7 very satisfied• The caring, individualized attention the bank provides its customersvery unsatisfied 1—2---3---4—5—6--7 very satisfied• Commitment• To continue to do business at this bankvery unlikely 1—2---3---4—5—6--7 very likely• Continue to do business with this bank even if it increases its feesvery unlikely 1—2---3---4—5 —6--7 very likely• Complaint• Complain to other customers if you experience a problem with this bank’s servicevery unlikely 1—2---3---4—5—6--7 very likely• Complain to this bank’s employees if you experience a problem with this bank’s servicevery unlikely 1—2---3---4—5—6--7 very likely


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Thank You

Documents

CEDISC Thipsuda KITJAPIPAT Thailand, DBA Intake 4 9 April 2009 How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in