Social value in retail banking

Social value in retail bankingJuan Carlos Fandos Roig and Marta Estrada Guillen

Business Administration and Marketing,Universitat Jaume I of Castellon (Spain), Castellon, Spain

Santiago Forgas CollEconomy and Business Organization, Universitat de Barcelona, Barcelona,

Spain, and

Ramon Palau i SaumellUniversitat de Girona, Girona, Spain

Abstract

Purpose – The aim of this study is to analyze the influence of perceived value on customer loyalty,going into depth in the special case of social value.Design/methodology/approach – A total of 200 personal surveys have been conducted oncustomers of financial institutions, and structural equation modelling has been used to comparethe relationships arising.Findings – The importance of perceived value for consumer loyalty is confirmed, and the coreperformance of the service received is the main determinant of satisfaction. The effect of social valueon customer loyalty is also examined in two ways: as a determinant of the attitude of the individualand as a normative component directly influencing behavioral intentions.Research limitations/implications – This research was carried out in financial services. Furtherresearch of the proposed conceptual model across different industries and countries is needed todetermine the generalizability and consistency of this study’s findings.Practical implications – It highlights the interest of social marketing programs and corporatesocial responsibility to maintain the customer’s loyalty.Originality/value – The contribution of this work is that it makes it possible to study the effect ofsocial value along with other relational variables in consumer loyalty. The authors compared the effectof the core service performance with the social component as an element influencing the individual’sattitude and as a normative element.

Keywords Perceived value, Social value, Loyalty, Financial services, Customer loyalty

Paper type Research paper

1. IntroductionIn recent years there have been major changes in the consumer services business.In general, an increasingly open and competitive framework has been established;many businesses are indiscriminately implementing defensive strategies to avoidcustomer loss. Authors such as Jacoby and Chestnut (1978) believe that companiesshould strive to maintain long-term relationships with their clients to leverage theadvantages of a loyal customer to the company.

Relationship marketing includes all the activities of marketing to establish, developand maintain exchange relationships (Morgan and Hunt, 1994). From this relationalperspective it is intended to integrate the customer management process to improvethe productivity of marketing effort (Sheth and Parvatiyar, 1995). So, some studieshave shown that this perspective is not only profitable but is also a potential source ofcompetitive advantage (Reichheld and Sasser, 1990; Weinstein and Johnson, 1999).

Loyal customers generate more income than new clients and they also become thecompany’s best sales force with their references. Not only is this cheaper, it alsogenerates trust that usually makes customers coming via other customers’ references

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International Journal of BankMarketingVol. 31 No. 5, 2013pp. 348-367r Emerald Group Publishing Limited0265-2323DOI 10.1108/IJBM-02-2013-0013

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more loyal too (Gremler and Brown, 1999). In addition, the company is in a betterposition to find out customer preferences. This information makes it easier foremployees to work more productively, as they do their jobs with greater knowledgeof what the customer wants and values (Weinstein and Johnson, 1999; Rust et al., 2000).

Business organizations need to become value providers and they should do itdifferently from one to another because this skill will allow them to differentiate,improve performance and increase their chances of future survival (Lapierre, 2000;Huber et al., 2001; Callarisa et al., 2002). Customer-perceived value is the leadingconsumer endpoint, comparing the benefits received and the sacrifices borne (Zeithaml,1988; Monroe, 1990; Lovelock, 1991; Gale, 1994; Bigne et al., 2000; Teas and Agarwal,2000; Ulaga and Eggert, 2005; Sanchez et al., 2006). From this evaluation, which ismainly cognitive, the client will form a set of attitudes that will lead to furtherrelational behaviors by the consumer (Treacy and Wiersema, 1993; Reichheld, 1996;Woodruff, 1997; Parasuraman and Grewal, 2000; Tam, 2004; Wang et al., 2006).

In this sense, it is understood that if a customer buys from the same supplier againand is well disposed toward it affectively, he or she is really loyal to the provider (Shethand Parvatiyar, 1995; Gremler and Brown, 1996; Oliver, 1999; Cronin et al., 2000). In thefinancial services the main outcomes of the service will then influence the customer’sattitude. But other aspects related to the perceived social behavior of the provider candetermine the final attitude too (Garcıa de los Salmones et al., 2009). A review of theliterature identified a number of studies on social programs that found positive effectsof social and ethical business practices on customer attitudes toward the brand(Lafferty and Goldsmith, 2005) with stronger identification with the company, greaterbrand purchase and greater intention to seek employment with the company (Sen et al.,2006). In this sense, consumers are willing to actively support companies committed tocause-related marketing, environmentally friendly practices and ethics (Maignan andFerrell, 2004; McDonald and Rundle-Thiele, 2008; McDonald and Hung Lai, 2011).

But there is another way for social value to influence the customer’s loyalty. Firm’ssocial practices can directly influence the customers’ attitudes as they perceive valuefrom them, but they also enhance a social perception that works as a normativeelement influencing customers’ final behavior (Peterson and Hermans, 2004; McDonaldand Rundle-Thiele, 2008). After making a series of evaluations of service receivedrelating to all stages and aspects, customers also take into account the views oftheir social reference group. The opinion we really think people in our immediateenvironment will have of a particular company’s image and its customers can make usseek other options, even if we are satisfied with the service received. Somehow, thoughwe believe something works well, we always seek social approval of our actions.This is known as a normative feature (Fishbein and Ajzen, 1975, 1980).

Thus, customer-perceived value is the variable on which companies can thereforework to achieve the result of behavioral loyalty from consumers (Treacy andWiersema, 1993; Reichheld, 1996; Woodruff, 1997; Parasuraman and Grewal, 2000),although other social elements may have an influence too (Fishbein and Ajzen, 1975,1980; Peterson and Hermans, 2004; McDonald and Rundle-Thiele, 2008). For thisreason, it is necessary to understand the basics of consumers’ relational behavior(Reinartz and Kumar, 2003).

In this sense, the objective of this work is to study the formation of the consumerloyalty process in the banking sector with special interest in the social value. As thebanks have widespread invested in socially responsible initiatives to get some benefitsas increased profits, customer loyalty, trust or positive brand attitude (Sen et al., 2006)

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it is necessary to analyze in deep their effects in both customer satisfaction andcustomer loyalty. In this context, and relying on the behavioral model by Fishbeinand Ajzen (1975) and the work of Oliver (1999), we propose a model of consumerloyalty in the banking sector.

The formation of customer’s loyalty will be analyzed in two ways. First weexplore the direct effect of customer’s assessments of service performance on loyaltyvia attitudes, and second, we compare this influence with the influence ofthe normative factor of social perceived value on customer loyalty intentions. It isinteresting to know what takes place in the mind of the consumer between theevaluation of the product or service received and the materialization in a particularloyalty behavior.

The work is structured in three main parts. The first is devoted to explaining thetheoretical framework and the concepts of loyalty, perceived value and satisfaction andto proposing the relationships between them. The second part presents empiricalresearch on users of banking services. Finally, the conclusions reached and futureresearch directions are argued.

2. Consumer loyalty2.1. Theory of reasoned action by Fishbein and Ajzen (1975)As researchers in psychology know, it is a very difficult task to explain humanbehavior in all its complexity. However, approximations can be made at various levels,from the study of the psychological processes of the individual to researching theinfluence of environmental variables on individual behavior. In general, research onsocial psychology and personality has taken an intermediate approach, studying theoverall behavior of a person who processes the available information available and whois influenced by the environmental factors. In this way, concepts related to behavioralmeasures, such as attitudes and personal characteristics, have played an importantrole in trying to predict human behavior (Sherman and Fazio, 1983; Ajzen, 1988, 1989;Davis and Ajzen, 2002).

In this context, the relationship between attitude and behavior has beeninvestigated following the contributions of the theory of reasoned action (Fishbeinand Ajzen, 1975, 1980). Although this theory has its origins in the field of psychology, ithas been the basis of a significant number of pieces of marketing research over time(Davies et al., 2002). In its basic formulation, the components of theory of reasonedaction are three general constructs: behavioral intention, attitude and subjective norm.The theory suggests that a person’s behavioral intention depends on the person’sattitude about the behavior and subjective norms. This proposal starts from thepremise that human behavior has a great deal to do with the subject’s behavioralintention to perform a particular behavior. Thus, we introduce the central concept ofthe theory, behavioral intention, which attempts to redress the ability to predictbehavior from attitude (Novo, 2005).

Attitude is based on the beliefs and evaluations about a specific object. Throughpersonal experience, either by direct observation or by information received as a resultof deductive processes, the individual has a set of beliefs about a given object. Then, anobject is associated with several attributes. The totality of a person’s beliefs is the basisto determine their attitude, intentions and behavior, as in general, a person tends tocarry out the behaviors that he or she intends to. It is therefore an approach that seeshuman beings as essentially rational, because it uses the information available to makejudgments, evaluations and decisions.

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In addition the model proposes the subjective norms. The normative componentrefers to the influence of social environment on the behavior of the individual.The subjective norm is the individual’s perception about the approval or not of aspecific action by the environment. It is a subjective evaluation by the individualon whether people believe that they should perform the behavior or not. Therefore thesubjective norms will influence one’s behavioral intention as a normative component,meaning that social approval is required to perform some actions.

Consequently, and considering that we want to analyze the formation of customer’sloyalty taking into consideration the direct effect of customer’s assessments of serviceperformance via attitude and the influence of the normative factor of social perceivedvalue, the theory of reasoned action (Fishbein and Ajzen, 1975; Ajzen and Fishbein,1980) represents a theoretical framework that will help us to understand the customer’sbehavior as it includes in its original formulation these two components.

2.2. Definition and evolution of the concept of loyaltyResearch on consumer loyalty in its early days focussed on brand loyalty (Gremler andBrown, 1996), concentrating on the behavioral dimension of loyalty without payingmuch attention to what the customer thought (Jacoby and Chestnut, 1978; Gremler andBrown, 1996; Caruana, 2004). Like most research in the field of products, in the servicesarea many studies were carried out to measure behavior (Jacoby and Chestnut, 1978;Pritchard et al., 1999). In this sense, loyalty has often been defined as an observedbehavior (Newman and Werbel, 1973; Liljander and Strandvik, 1992; Shoemaker, 1998).Other authors have defined customer loyalty as the percentage of money spent on aspecific brand or at a particular establishment (Pritchard et al., 1999).

However, behavioral measures, such as repeat purchase or the sequence of visits,have been criticized for lacking a conceptual base and for giving a poor vision of whatis really a dynamic process (Day, 1969; Dick and Basu, 1994; Bloemer and De Ruyter,1998; Oliver, 1999; Szymigin and Carrigan, 2001; Carroll and Ahuvia, 2006). Forexample, a low level of repeat purchase of a particular service may result fromsituational factors such as unavailability, the pursuit of variety or lack of preference fora provider (Reinartz and Kumar, 2002). Thus, the behavioral concept of loyalty does notinclude the underlying motives for loyalty. However, it is the customer’s will, in termsof preferences or intentions, which plays an important role in determining loyalty(Bloemer and Kasper, 1995; Bloemer and De Ruyter, 1998; Yang and Peterson, 2004;Wang et al., 2006). In addition, the repeat purchase behavior cannot be based onconsumer preference, as there are a number of factors acting as barriers to the client(Liljander and Strandvik, 1992; Caruana, 2004; Yang and Peterson, 2004).

With purely behavioral loyalty approaches, it is impossible to detect any antecedentof repeat buying behavior, and companies therefore do not increase their knowledgeof how to obtain consumer loyalty. From a deterministic point of view, loyalty isconceptualized as an attitude or an intention to repurchase, and it is believed that theresearcher can search the factors that create this feeling of loyalty. The research in thisscope provides a better knowledge about how to create loyalty and keep customersfaithful to a particular brand (Oliver, 1999; Odin et al., 2001; Lichtle and Plichon, 2008).

Dick and Basu (1994) suggest a theoretical framework based on the concept ofloyalty as a construct comprising a part of attitudes, where there are positive feelingsand emotions, and a pattern of behavior. It follows, therefore, the coexistence oftwo dimensions of loyalty, an intentional and other behavioral (Sheth and Parvatiyar,1995; Gremler and Brown, 1996; Oliver, 1999; Szymigin and Carrigan, 2001; Carroll and

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Ahuvia, 2006). In this sense; Oliver (1999) defines customer loyalty as “a deepcommitment to repurchase a product or service preferred, therefore result in repeatpurchase the same brand. However, environmental influences and marketing effortshave the potential to cause behavior change.”

In addition, Oliver (1999) proposed a model of loyalty based on the cognition-affect-performance paradigm. According to this model, the loyalty behavior is conditionedby the intention of loyalty. This intention is determined by attitudes toward theproduct or service. The attitude formation model postulates the existence of cognitiveand affective elements that are the antecedents of the behavioral intention. Behavioralmeasurement of loyalty is complicated because behaviors are performed in a giventime and in a given place. However, many authors state that intentions are the bestpredictor of a person’s behavior (Fishbein and Ajzen, 1975, 1980; Liljander andStrandvik, 1992; Oliver, 1999; Caruana, 2004; Yang and Peterson, 2004; Lichtleand Plichon, 2008). In the present study, we agree with the attitude formation modeland the customer loyalty will be represented by the individual behavioral intentions.Actually, authors as Rauyruen and Miller (2007) delimit loyalty as a basicallyintentional term, representing the level of commitment that leads consumers torepurchase the same brand. In the banking services there are also a lot of examples thatuse this attitudinal model to address loyalty (Bloemer et al., 1998; Aldlaigan and Buttle,2005; De Matos et al., 2009; Garcıa de los Salmones et al., 2009) and in the same waywe will use it for our purpose.

3. Determinants of consumer loyalty3.1. Perceived valuePorter (1985) was the first to indicate that the creation of customer value is one wayto achieve competitive advantage, proposing a model known as the “value chain.”This value chain divides the actions made by the company in activities “primary” and“support,” breaking them into different steps, in order to facilitate the creation of valuein each. He proposes two ways of achieving better added value: carrying out activitiesmore efficiently (this will reduce the client’s sacrifices) or doing so in a unique way inthe market (bringing increased benefits to customers).

According to Woodruff (1997): “Customer value is a perceived preference andevaluation of the product attributes, the results obtained and the consequencesresulting from the use that allow the client to achieve their goals in different situationsof use.” This value is inherent in the use of the product, a fact that differentiates it frompersonal or organizational values. Second, it is perceived by customers, and cannot beobjectively determined by the seller.

Other researches have agreed to define the perceived value as an assessment thatthe client makes, comparing the benefits or utility derived from a product, serviceor relationship and the sacrifices or perceived costs (Zeithaml, 1988; Monroe, 1990;Lovelock, 1991; Gale, 1994; Bigne et al., 2000; Teas and Agarwal, 2000; Ulaga andEggert, 2005).

Specifying and deepening the conceptualization and dimensionality of perceivedvalue in the service context, we can identify two broad approaches. The first approachdefines perceived value as a construct composed of two parts: benefits received(economic, social and relationship) and sacrifices borne (price, time, effort, risk andconvenience) by the customer (Rapp and Collins, 1991, 1996; Grewal et al., 1998; Croninet al., 1997, 2000; Bigne et al., 2000).

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The second approach is based on the concept of perceived value as amultidimensional construct (Woodruff, 1997; De Ruyter et al., 1997, 1998; Sweeneyand Soutar, 2001; Sanchez et al., 2006). In addition to the functional dimension, thisview of value comprises an affective dimension that includes social and emotionalaspects of the individual more deeply related to consumer purchasing behavior. Thefunctional benefits are those more related to economic aspects, such as: service qualityand performance, advising, time and money savings, better purchasing decisions,simplicity and convenience, etc. The affective dimension is less developed, but reflectsthe feelings and emotions generated by the products or services. This affectivedimension is divided into an emotional dimension, related to internal feelings oremotions, and a social dimension, related to the social approval (Sweeney and Soutar,2001; Sanchez et al., 2006; Moliner et al., 2007).

From an integrative point of view we can say that these two approaches are nottotally exclusive. In fact, in the case of financial services, from the multidimensionalperspective there are several components that provide benefits. At the functional levelwe have benefits of the facilities, the staff and the benefits of the service received(Sweeney and Soutar, 2001; Sanchez et al., 2006; Moliner et al., 2007). We can name thisdimension as perceived value of functional benefits.

But the functional ones are not the only benefits that can be offered to a serviceprovider, in this case financial services. Because of the experience of service, therelationships with employees or the feeling of doing good business, a customermay experience positive feelings that make him feel good, that add him value and thatlead him to a satisfactory feeling (Sweeney and Soutar, 2001; Sanchez et al., 2006;Moliner et al., 2007). Therefore, we have the dimension of perceived value of emotionalbenefits.

Against the benefits, it is necessary to consider the sacrifices that customers need todo to access and to receive the service (Bigne et al., 2000). These sacrifices may be aneconomic cost or may be non-economic in terms of ease, convenience, availabilityor quickness. When the costs and inconveniences are reduced, the perception of valueby the customer will be higher (Ulaga and Eggert, 2005). This dimension is known asperceived value of sacrifices.

Finally a social dimension of perceived value is also recognized. This dimensionis slightly complex and refers to the degree of social acceptance that peoplebelieve to have their purchase for what it is thought in their environment (Shethet al., 1991). If the individual is convinced of the social approval of the purchase thiswill bring him a positive value (Sweeney and Soutar, 2001; Sanchez et al., 2006;Moliner et al., 2007).

Similarly, an assumption of social disapproval acts as a barrier to the purchase(Lee et al., 2009). Therefore, the assessment of social value is more related to the socialimage that keeps the supplier due to such issues as social practices carried out by thecompany (Garcıa de los Salmones et al., 2009; Ferguson et al., 2010). In the case ofbanking social practices it became widespread, so this dimension can be evaluated andstudied in depth (McDonald and Rundle-Thiele, 2008).

For our work, we will support us in this multidimensional but integrativeperspective of perceived value. This will follow the approaches provided bySweeney and Soutar (2001) and Sanchez et al. (2006), as it allows the customerperspective in terms of a rational dimension and emotional and social development,which we believe provides a more complete approach to what happens in the mindsof consumers.

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3.2. SatisfactionCustomer satisfaction remains a most interesting constructs within the field ofmarketing (Oliver, 1999). Customer satisfaction is truly critical to the success ofcommercial companies. However, there is no consensus on its definition (Szymanskiand Henard, 2001).

Satisfaction is traditionally conceived as the confirmation of expectations,which follows the paradigm of disconfirmation (Yi, 1990; Fornell, 1992; Oliver, 1993).The dominant paradigm says that consumers have standards prior to consumption,and, seeing the same performance values and comparing these perceptions, they forma feeling of agreement or disagreement that produces an assessment of satisfaction.The most common standard expectations are predicative, but also other standardshave been proposed (Fournier and Mick, 1999). Thus, a consumer will be satisfiedwhen their assessment of a product or service (perceptions) confirms or exceeds theirexpectations.

But, besides this cognitive process of disagreement, the affective component ofsatisfaction is very important because consumers are two emotional states: one basedon positive conditions, and another based on negative conditions, although they mayoccur simultaneously (Oliver, 1993, 1996).

For our study, we will follow the conceptualization of Oliver (1993), which definessatisfaction as an emotional state experienced by the individual to the relationshipwith the organization. The affective or emotional state referred to Oliver (1993) is verysimilar to an attitude. In this sense, under Oliver’s (1999) model, cognitive evaluationsare the ones that generate attitudes. In a similar way, Fishbein and Ajzen (1975)make proposals on individuals’ formation of attitudes. Thus, based on these models,we propose that the perceived value of functional benefits will determine the formationof satisfaction as this variable refers to the assessment of the facilities, staff and servicequality. In addition, there are several papers that confirm this relationship (Yangand Peterson, 2004; Caruana and Fenech, 2005). Consequently, we propose ourfirst hypothesis:

H1. The perceived value of functional benefits directly and positively influencescustomer satisfaction.

Similarly, the evaluation of sacrifices is made from a basically cognitive perspective.This variable refers to the perception of cost experienced by the customer, botheconomic and non-economic. It is seen from a positive perspective, that is, the customervalues how reasonable and adequate are the sacrifices incurred for the service received.So as more reasonable and adequate the sacrifices are the higher perceived value willbe to the customer and higher will be the satisfaction (Sweeney and Soutar, 2001;Sanchez et al., 2006; Moliner et al., 2007). In this way we propose:

H2. The perceived value of sacrifices directly and positively influences customersatisfaction.

Thus, we have cognitive aspects of value determining satisfaction, understood as anindividual’s attitude toward a particular supplier. In short, the cognitive approachassumes that people perform their actions from a rational perspective. However, theemotional approach considers that there are a number of reactions reasoned that formin the subconscious of the consumer (Derbaix and Vanden Abeele, 1985; Derbaix and

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Pham, 1998; Sanchez et al., 2006). Moreover, for a full explanation of the attitudes andbehaviors of consumers it is necessary to take into account the cognitive and affectiveevaluations (Hales, 1991; Derbaix and Pham, 1998; Peter and Olson, 1999; Sanchezet al., 2006). The multidimensional approach tries to explain the concept of perceivedvalue from a global perspective, taking into account both the cognitive and theaffective system (Sanchez et al., 2006). Therefore, in our work we propose that valueassessments made by the customer based on emotional benefits will also determine thesatisfaction toward the supplier (Yang and Peterson, 2004; Caruana and Fenech, 2005).As a result, we formulate the third hypothesis:

H3. The perceived value of emotional benefits directly and positively influencescustomer satisfaction.

Other studies have examined the impact on consumers of perceived benefits of socialprograms on consumer’s attitudes toward a brand. For example, Brown and Dacin(1997) found a positive influence of combined programs of socially responsiblebusiness practices on improving consumer’s attitude toward the firm, including beliefsabout the company’s honesty, consumer responsiveness and truth in advertising andpro-employee attitudes. Sen and Bhattacharya (2001) research supported suggestionsthat a company’s efforts in social domains had a direct effect on the attractiveness ofthe company’s products, in addition to a positive effect on customer’s evaluations.Other research also supports the idea that socially responsible companies are likely tobe viewed more favorably by consumers gaining better attitudes toward their productsor services (Maignan and Ferrell, 2004; McDonald and Rundle-Thiele, 2008; McDonaldand Hung Lai, 2011). We can therefore say that customers obtain a positive social valueby dealing with companies with good social image that leads to customer satisfaction(McDonald and Rundle-Thiele, 2008; Garcıa de los Salmones et al., 2009; McDonaldand Hung Lai, 2011). As a result we propose:

H4. The social value directly and positively influences customer satisfaction.

Following the sequence proposed in the Oliver’s (1999) work and also in the model byFishbein and Ajzen (1975), we have generated an affective state in the form ofconsumer satisfaction that is the main determinant of the customer’s intentionof returning to the same institution the next time he or she requires their services(Caruana and Fenech, 2005). In this respect, we propose the following hypothesis:

H5. Customer satisfaction directly and positively influences loyalty.

However, there are other elements which, even though they may not be the maindeterminants of the customer’s loyalty, may come to influence it significantly. One ofthem is the social value. It is known that social value may influence individualsatisfaction reporting a pleasant feeling, knowing that the correct decision has beenmade (Moliner et al., 2007). But it is also true that the social value can act as anormative element (Garcıa de los Salmones et al., 2009; Ferguson et al., 2010). Aftermaking a series of evaluations of service received at all stages and aspects, customersalso take into account the views of their social reference group. The opinion we reallythink people in our immediate environment will have of a particular company and itscustomers can make us seek other options in future, even if we are satisfied with the

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service received. Somehow, though we believe something works well, we alwaysseek social approval of our actions (Fishbein and Ajzen, 1975, 1980). The fact is thatsocial practices not only influence customer’s internal attitudes, they also enhancea social perception that works as a normative element influencing our final intentions(Peterson and Hermans, 2004; McDonald and Rundle-Thiele, 2008). In this respect, wepropose the following hypothesis:

H6. Social value perceived by the consumer directly and positively influencesloyalty.

In order to illustrate the hypotheses, we present the theoretical framework that willserve as a reference for this study (Figure 1).

4. Data analysisIn the empirical part of the work we are going to test the model proposed in theprevious section in the banking sector. This sector is chosen because of its tremendousdynamism and level of competition. In addition, in the current economic crisis isdecisive for financial institutions strive for customer’s loyalty as a way of success.We could say that for financial institutions is essential to maintain loyal customers toget a future of stability. Furthermore, our study deals of social value as the social imagethat customer’s perceive from the social practices carried out by the company. As faras the banking social practices are widespread and have great tradition so thiscommercial sector is suitable for our purposes. We can therefore evaluate the mostinfluential features in the final consumer’s loyalty.

Fieldwork was conducted during February 2005, with 200 valid surveys toindividual users of bank services, assuming a sampling error of 77.07 percent for aconfidence level of 95.5 percent. The sample was composed by 49.5 percent women and50.5 percent men stratified by age according to data provided by the National Register.The study was conducted in the Spanish provinces of Castellon and Valencia becausethey have one of the highest bank branch densities per capita in the country. In thisarea there is a high competence between banks, thrifts and credit unions and thereforeeffective loyalty programs are essential to keep the business. There is also a growinginterest in social issues, especially by the local entities (thrifts and credit unions), sothat we can evaluate the importance of their activities in the final customer loyalty.

The questionnaire design was based on scales used in previous works, with someitems adapted to the specific characteristics of our research (Table I).

H6H4

H2

H1

H5

H3

Satisfaction

Perceived value ofbenefits (functional)

LoyaltyPerceived value ofsacrifices

Perceived value ofbenefits (emotional)

Social value

Figure 1.Theoretical framework

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To measure the perceived value we used a scale based on Moliner et al. (2007) andSanchez et al. (2006) because they worked with the multidimensional approach of theconcept as we do. Satisfaction is based on the scale of Bloemer and Odekerken-Schroder (2002) and loyalty was measured by a scale based on items used in previousstudies by Casado and Mas (2002) and Eggert and Ulaga (2002) because all these scalesare widely accepted in the field of services marketing and fit perfectly to the purpose ofour work. We used a structured questionnaire with closed questions and a five-pointLikert scale. In order to produce a final questionnaire, a pretest was conducted with 20users of banking services.

4.1. Validation of scalesIn our model the different variables to study are reflective in nature, according to thecriteria of Jarvis et al. (2003). Consequently, to validate the scales, dimensionality,validity and reliability will be considered. The method used to test the theoreticalmodel proposed involves the application of two-step approach proposed by Andersonand Gerbing (1988). The first stage is to determine the quality of the measurementscales used. It is performed a confirmatory factor analysis with all scales together. Thesecond step is the contrast of the conceptual model relationships. This approach allowsus to maximize the performance of both: the quality of the measurement scale and theresults obtained from the relations raised in the conceptual model.

The models were estimated with the EQS 6.1 statistical software application(Bentler, 1995). First, we carried out a study of the dimensionality, reliability andvalidity of the used scales (Table II).

Regarding to the measurement of perceived value, from the confirmatory factoranalysis of the 11 items that finally make up the scale, we obtained four dimensions:Perceived value of benefits (functional), perceived value of benefits (emotional),perceived value of sacrifices and social value. Three items are obtained for satisfactionand four items are obtained for loyalty. As can be observed in Table II, the probabilityassociated with w2 reaches a value higher than 0.05, thus indicating an overall good fitof the scales (Joreskog and Sorbom, 1996). Convergent validity is demonstrated in twoways. Factor loadings are significant and higher than 0.5 (Bagozzi, 1980; Bagozzi andYi, 1988; Hair et al., 2006) and second because the average variance extracted (AVE) foreach of the factors is higher than 0.5 (Fornell and Larcker, 1981). The reliability ofthe scale is demonstrated because the composite reliability indices of each of thedimensions obtained are higher than 0.6 (Bagozzi and Yi, 1988).

Variable Indicators No. items References

Perceivedvalue

Perceived value of benefits(functional) 3

Sweeney and Soutar (2001),Sanchez et al. (2006),Moliner et al. (2007)

Perceived value of benefits(emotional) 3Perceived value of sacrifices 3Social value 2

Satisfaction Satisfaction 3 Bloemer and Odekerken-Schroder (2002)

Loyalty Behavioral intentions 4 Casado and Mas (2002),Eggert and Ulaga (2002)

Table I.Measurement of variables

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Table III shows the discriminant validity of the constructs considered, which wasevaluated through AVE (Fornell and Larcker, 1981). Therefore, a construct must sharemore variance with its indicators than with other constructs in the model. Thishappens when the square root of the AVE between each pair of factors is higher thanthe estimated correlation between those factors, as occurs here, thereby ratifying itsdiscriminant validity. As a result, the first step was successfully completeddetermining the good quality of the measurement scales used.

4.2. Causal relationship analysisTo test H1-H6 we perform an analysis of the causal relationships for the total sample(Anderson and Gerbing, 1988). This is adequate because goodness adjustment indexes

Items Factor loading t-value

Perceived value of benefits ( functional) (CR¼ 0.92; AVE¼ 0.81)Overall evaluation of the facilities 0.91 FixedOverall rating of staff 0.84 18.02Overall rating of the service offered 0.91 21.68Perceived value of benefits (emotional) (CR¼ 0.87; AVE¼ 0.72)I am happy with the financial services I have contracted 0.76 FixedThe staff gives me positive feelings 0.83 12.58Overall I am happy with this bank 0.89 12.83Perceived value of sacrifices (CR¼ 0.85; AVE¼ 0.69)In general the payment of fees is justified by what I receive 0.74 FixedThe service is good for the cost it generates for me 0.91 12.47The total effort I do is reasonable 0.96 12.67Social value (CR¼ 0.83; AVE¼ 0.72)It is highly regarded on a social level 0.74 FixedPeople I know approve me coming here 0.93 7.90Satisfaction (CR¼ 0.92; AVE¼ 0.82)I am satisfied 0.91 FixedMy expectations have been met 0.92 16.46If I compare with others, the satisfaction level was high 0.85 13.72Loyalty (CR¼ 0.86; AVE¼ 0.66)I feel a great loyalty 0.72 FixedIn general I have no complaints 0.87 12.72My intention is to continue relationships with this organization 0.74 9.83I recommend this bank to my family and friends 0.76 14.54

Notes: CR, composite reliability; AVE, average variance extracted. Fit of the model: w2¼ 112.7956,df¼ 118, p¼ 0.61803; RMSEA¼ 0.017; CFI¼ 0.997; NNFI¼ 0.998

Table II.Analysis of thedimensionality, reliabilityand validity of used scales

1 2 3 4 5 6

1. Perceived value of sacrifices 0.832. Social value 0.52 0.853. Perceived value of benefits (functional) 0.61 0.65 0.904. Satisfaction 0.63 0.63 0.72 0.905. Loyalty (positive) 0.69 0.68 0.69 0.71 0.816. Perceived value of benefits (emotional) 0.69 0.60 0.67 0.68 0.72 0.85

Notes: Below the diagonal: correlation estimated between the factors. Diagonal: square root of AVE

Table III.Discriminant validityof used scales

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are acceptable, since all statistics exceed the optimum values (Figure 2). Therefore, theprobability of the w2 is higher than 0.05, the CFI is close to unity and the RMSEA isclose to 0. The result of the analysis shows that four of the six relationshipshypothesized in the model are supported (Anderson and Gerbing, 1988).

First, it is verified that both perceived value of functional benefits and perceivedvalue of emotional benefits have a direct and positive effect on customer satisfaction(Table IV). Therefore, H1 and H3 cannot be rejected. Also, the effects of satisfactionand social value on loyalty are direct and positive supporting H5 and H6. However,perceived value of sacrifices and social value do not have a direct influence onsatisfaction, and then we have to reject H2 and H4.

In order to improve the model obtained, we suggest an alternative model (Figure 3)in which not significant relations have been removed. It has also added a non-posedrelation between the perceived value of sacrifices and loyalty as their consideration greatlyimproves the goodness adjustment indexes of the model and its explanatory power.

The fitment of the model is adequate because the goodness adjustment indexesare acceptable, since all statistics exceed the acceptable values. The fitment of the

0.210.01*

0.06*

0.59

0.82

0.35

Satisfaction


LoyaltyPerceived value ofsacrifices


Social value

FV1

FV2

FV3

SC1

SC1

SC1

EV1

EV2

EV3

SA3SA1 SA2

SV1 SV2

LO1

LO2

LO3

LO4

Hypothesis supported

Hypothesis not supported

Note: *Significant level is 0.05

Figure 2.Causal relations

Hypothesis Path Parameter t Results

RelationshipsH1 Value functional benefits-satisfaction 0.59 5.19 SupportedH2 Value (sacrifices)-satisfaction 0.06 1.10 Not supportedH3 Value emotional benefits-satisfaction 0.35 3.30 SupportedH4 Social value-satisfaction 0.01 0.12 Not supportedH5 Satisfaction-loyalty 0.82 8.24 SupportedH6 Social value-loyalty 0.21 2.92 Supported

Notes: Fit of the model: w2¼ 124,4550, df¼ 121, p¼ 0.39636; RMSEA¼ 0.012; CFI¼ 0.998;NNFI¼ 0.998

Table IV.Structural model

relationships obtained

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alternative model is even better than the original one was. As a result, we confirmthe support to the H1, H3, H5 and H6 and also a non-posed relation between theperceived value of sacrifices and loyalty is supported (Table V).

Analyzing the direction and the intensity of the effects it can be determined that thevalue of functional benefits is the variable that contributes the highest value to overallsatisfaction. Although with a smaller effect but also notable is the importance ofthe value of emotional benefits in the formation of satisfaction. On the formationof customer loyalty the effects are, from highest to lowest importance, satisfaction,social perceived value and perceived value of sacrifices.

Therefore, the value of functional benefits is the most influential factor in the finaldecision to return, or not, to the same provider next time. Also the emotional value isvery important for the satisfaction, and subsequently for the customer’s loyalty.Then we can say that the core elements of the service as the facilities, the staff and theoverall service received are the most important to motivate the customer’s loyalty. Alsois important the emotional service experience and the feelings aroused by the bank onthe person to generate a positive attitude toward the brand. In this sense we can saythat, when forming an attitude toward the bank, the consumer values functionalaspects more highly than emotional ones.

But in an alternative way to the attitudinal one, we can find that the social valueand the perceived sacrifices have a significant importance on customer’s loyalty.Consequently, a customer, even when satisfied, social component and perceived valueof sacrifices have both an important influence in his final decision.

0.13

0.20

0.61

0.74

0.34

Satisfaction


Loyalty

Perceived value ofsacrifices


Social value

FV1

FV2

FV3

SC1

SC1

SC1

EV1

EV2

EV3

SA3SA1 SA2

LO1

LO2

LO3

LO4

SV1

SV2

Figure 3.Causal relations(alternative model)

Hypothesis Path Parameter t Results

RelationshipsH1 Value functional benefits-satisfaction 0.61 5.57 SupportedH3 Value emotional benefits-satisfaction 0.34 3.14 SupportedH5 Satisfaction-loyalty 0.74 7.95 SupportedH6 Social value-loyalty 0.20 2.99 SupportedNon-posed value (sacrifices)-loyalty 0.13 2.11 Supported

Notes: Fit of the model: w2¼ 81.1030, df¼ 121, p¼ 0.99797; RMSEA¼ 0.015; CFI¼ 0.997;NNFI¼ 0.996

Table V.Structural modelrelationships obtainedfor the alternativemodel proposed

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5. ConclusionsIn this study we are attempting to find variables that help us explain the formation ofconsumer loyalty. In this case we are working with financial services clients.Such services usually are not bought on impulse; on the contrary, the client makes aseries of assessments over time to decide which will be his usual branch. In this sense,we believe the individual will follow a rational process of studying availableinformation and considering past experience in order to make a decision.

The contribution of this paper is to propose a behavioral model of consumer loyaltyin banking services, which can identify the evidence used by the client to finally carryout a loyalty behavior. We take into account both cognitive and affective dimensions toformulate the model and in a special depth social value is studied. It presents perceivedvalue as a multidimensional variable consisting of four dimensions (two cognitive andtwo affective) that can help us to identify the aspects of service that are most importantfor consumers.

In this sense, the models by Fishbein and Ajzen (1975) and Oliver (1999) referring tothe logical sequence cognition-affect-intention have been ratified. Thus, the cognitiveevaluations made by financial services clients on the functional benefits of theorganization have proved crucial in determining customer satisfaction. Among thesefunctional benefits of value, quality of service, the facilities and the staff should behighlighted as the most important aspects of financial services for the customers.

On the other hand, we also found that the emotional benefits are very important inexplaining the final decision on repurchase behavior. Although less than the functionalbenefits, emotional issues are revealed to be among the factors to take into accountif we want to achieve customer loyalty.

Sacrifices have no effect on individual satisfaction, but they have influence onrepurchase intentions. That means that the perception of sacrifices does not generategreater customer satisfaction, but it does help to take the decision to return. In thisregard we would like to stress two points. In most services, the sacrifices are thecompensation that must be paid to receive the service itself. It is an item that does notprovides enjoyment or direct utility to the receiver. Therefore it seems logical that doesnot affect the satisfaction. However, it certainly has an impact on the individual’sresources, and depending on their evaluation will think whether to return or not.

However, not all services and all situations are identical so it can vary from one toanother, and this is the second point to stress. In financial services the economic costsare often difficult to calculate and non-financial sacrifices are not easy to assess.Considering that we are studying a service directly related to our money and in whichwe need so important features such as security, reliability or otherwise, we thinkthat the sacrifices are of secondary importance. That means that if the total cost isreasonable there will be no difficulties. The benefits will determine loyalty. But thesituation would change if they perceive an excessive cost. Therefore caution should betaken on this. Although this is not the core issue, it cannot be neglected either.

Social value is also important in order to make the final decision. It seems that goodreputation of a company is vitally important. Being necessary but not enough, it istherefore important to highlight the influence of social value. If we compare the effectthrough attitude and as a normative element we can conclude that, in terms ofsatisfaction and attitude, the benefits received (specially the functional ones) mattermore to customers than social subjects (Peterson and Hermans, 2004). Social issues areimportant, but in our study, they are not influential in terms of satisfaction and positiveattitudes, as customers seek features related to their particular needs (Soderlund, 2006;

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McDonald and Rundle-Thiele, 2008). However, as a normative element the social valueis crucial. In itself this aspect does not determine loyalty, but if this component werenot positive (good social practices and good social image), probably we might expectthat customers were not loyal. Even if they were satisfied with the services received,they surely would search for another company. Thus, the company must demonstratecompetence in its everyday work and on every visit made by the customer. That is, onone hand we must strive to have satisfied customers, but also we have to work tomaintain a good social image.

The study is limited, particularly in two respects. The first relates to the timing, asvariables with dynamic features are being studied and the present study is cross-sectional. The second limitation is the empirical application to a very specific area, inthis case banking, which has very specific conditions. Studies in other economicsectors would be interesting, in order to compare the results obtained.

As future research, it would be interesting to study the relationship of loyalty in theproposed model including variables such as commitment, trust and cost-switching,as these are considered important elements in maintaining customer loyalty. Theintroduction of moderating variables, such as involvement, would improve the explanatorypower of the proposed model.

As implications for management we can say that consumer loyalty is the outcomevariable that companies want to achieve. But to achieve such loyalty, it is necessary tounderstand the evaluations made by an individual and the arguments they are theygoing to take into account in order to perform certain loyalty behavior. In this sense wepropose perceived value dimensions on which firms, in this case, financial institutions,can develop their work in order to retain customers. We all agree that, in order tomaintain our customers, we need to give them not only value but even greater valuethan our competitors. Well, in the case of financial institutions, in this work, it is theperceived value broken down into easily identifiable dimensions that can help to weighthe importance of each one to the client. We have obtained that the functional benefitsare the most determining factors of loyalty. Financial institutions must therefore striveto offer a good service, with a suitable quality level and to maintain this level over time.

On the other hand we must not neglect emotional value, which includes affectiveaspects of perceived value. In this sense, customer care staff play a key role when itcomes to not overwhelming the customer, providing overall positive feelings to makethe client feel comfortable. It will therefore be necessary for the staff to be well qualifiedin terms of financial knowledge and well informed about the services their businessoffers. It is also essential that these contacts should have the social skills andmotivation needed to make the customer feel well looked after at all times.

Finally, this paper emphasizes the role of social value, as it has a decisive influenceover individual’s final behavior. In that sense, it is necessary for any financialinstitution to maintain a good social reputation.

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Further reading

MacKenzie, S.B. and Lutz, R.J. (1989), “An empirical examination of the structural antecedents ofattitude toward the ad in an advertising pretesting context”, Journal of Marketing, Vol. 53No. 2, pp. 48-65.

Petrick, J.F. (2002), “Experience use history as a segmentation tool to examine golf travellers’satisfaction, perceived value and repurchase intentions”, Journal of Vacation Marketing,Vol. 8 No. 4, pp. 332-342.

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Corresponding authorJuan Carlos Fandos Roig can be contacted at: [email protected]

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