The Non-linear relationship between customer satisfaction and customer loyalty in retail banking - an empirical investigation

Chris Baumann, Suzan Burton, Gregory Elliott

Research output: Contribution to journalConference paper

Abstract

The customer loyalty literature has investigated the association between customer satisfaction and a customer’s loyalty and revealed mixed results. While some studies indicate that the relationship is linear, others have found a very low correlation between the two constructs, and in some cases there was a non-linear relationship. While the bank marketing literature is generally extensive, this particular issue has not been empirically tested in retail banking, a gap investigated by this study. A non-linear relationship between customer satisfaction and customer loyalty was found, and a model explaining 57% of a customer’s variation was developed. This study incorporated potential predictors of loyalty beyond the attitudinal dimensions traditionally tested for their association with loyalty measures, and found that market conditions such as switching costs and benefits, as well as the length of the relationship add explanatory power. The model can be used by bankers to profile customers who are likely to defect, and this will allow practitioners to implement pro-active marketing action to prevent customer switching.
Original languageEnglish
Pages (from-to)483-485
Number of pages3
JournalProceedings of the thirty-seventh annual meeting of the Western Decision Sciences Institute
Publication statusPublished - 2008
EventWestern Decision Sciences Institute Annual Meeting (37th : 2008) - San Diego, CA
Duration: 18 Mar 200822 Mar 2008

    Fingerprint

Cite this