Customer Loyalty In Banking

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In the banking sector, loyal customers are more profitable because they stick to the bank and thus easier to serve than those who are not faithful. Bowen and Shoemaker (1998) argues that a small increase in customer loyalty can lead to a substantial increase in profits. Furthermore, the longer the customer remains loyal to the firm, the more beneficial it is to the firm (Kim and Cha, 2002). Reichheld and Sasser (1990) found that firms can increase their profits 2-8% by reducing customer defections by 5%. Therefore, keep loyal customers represent a strategy to achieve sustainable competitive advantage and .http (Roberts et al., 2003): //drive.google.com/drive/folders/0B4PsNRge25GdZFV4Um9ENEdSaHc Quality of service is the attitude or global judgment…show more content…
This has resulted in promotional campaigns in both electronic and print media on how they provide better services than their competitors. In an effort to outperform their competitors, banks have introduced “Technovative” service, in which technology is being used to improve service delivery to customers. The banks have introduced Automated Teller Machines (ATMs), internet banking and other e-banking services as well as customer care services. Thus, the development and sustainability of customer loyalty is important in creating and maintaining competitive advantage. The success of firm performance is affected by the level of customer loyalty because acquiring new customers is far more expensive that maintaining existing ones. Therefore, firms that desire to remain competitive, need to build and enhance relationships with loyal customers because of its benefits that include profitability, business referral and publicity, customer share and competitive positioning (Hennih-Thurau et al., 2002). Given that it is increasingly becoming difficult to achieve customer loyalty in a competitive environment and that it remains ambiguous regarding its underlying determinants (Liang and Wang, 2005), researchers have attempted to develop models suited to investigate customer loyalty in a variety of con-texts. In reviewing these models, it has been established that service quality, customer satisfaction, perceived value, trust and commitment are the most critical variables in creating and maintaining customer loyalty (Kim and Cha, 2002; Liang and Wang, 2005; Palmatier et

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