Academic journal article Economics & Sociology

Bank Customers' Satisfaction, Customers' Loyalty and Additional Purchases of Banking Products and Services. a Case Study from the Czech Republic

Academic journal article Economics & Sociology

Bank Customers' Satisfaction, Customers' Loyalty and Additional Purchases of Banking Products and Services. a Case Study from the Czech Republic

Article excerpt

Introduction

A commercial bank achieves its basic goals through offering banking products and services to its clients. Consequently, bank clients have important status: they are buying the bank's products and thereby creating appropriate profits for the bank and support its competitive ability.

Bank customers' satisfaction is currently at the center of attention of researchers and bankers, as it represents an important marketing variable for most companies, especially those working in more competitive markets. Banking experience proves that achieving a reasonable rate of customer satisfaction represents a challenge for the bank and it is a permanent process with varied results.

A satisfied customer is of great importance for the bank. Keeping a current customer faithful requires five times less effort, time and money than getting a new one. Such a customer is willing to pay higher prices, is a free form of advertising for the bank, and is inclined to purchase further products. He or she raises in bank employees a sense of satisfaction and pride in their work and business (Koraus, 2011; Titko and Lace, 2010). In this context, Bilan (2013) states that consumers don't want to play games - if they feel that something has gone wrong, they go away and choose another supplier.

Banking practice confirms that achieving a reasonable level of customer satisfaction is an extremely difficult task for a bank and is a permanent process with varied results. Customers in many countries show a significant level of dissatisfaction and many banks recognize the fact that there is a need to increase the level of customer care.

Krawcheck (2012) states that the current incompatibility between customer dissatisfaction (relatively high) and customers' willingness to purchase other products (relatively low) is unsustainable. Bank management is usually rewarded on the basis of bank income. However, the financial crisis demonstrated the fact that not all profits are made in the same way. Profits resulting from the additional purchases of satisfied customers are in the medium and long term more valuable than the profits resulting from trading, cutting costs or increasing net interest income. According to Krawcheck, bank management should pay more attention to other factors than profit only: above all, to customer satisfaction. Additional purchases by satisfied customers lead to more solid profits. Retaining dissatisfied customers who do not switch banks because of some pragmatic obstacle, such as high switching costs, is really risky. At the same time this means a business opportunity for competing banks.

Brush, Dangol and O'Brien (2012) share the same opinion. They declare that a bank's capability to increase revenues is contingent on the extent to which it can increase the quantity of products sold by attracting new customers and/or selling complementary products to its existing customers. Customers are more likely to purchase complementary products from the same firm when they face capability-based switching costs.

Banking customer care should lead to a higher level of overall client satisfaction and also the satisfaction partial activities of commercial banks. It is generally assumed that a satisfied customer is a loyal customer and that loyalty is proved by a higher level of additional purchases in comparison to customers who are dissatisfied. More satisfied customers tend to be more loyal and to recommend the bank to other consumers.

These aspects of commercial banks are examined in detail below.

1. Theoretical background

The achievement of a high degree of banking customer satisfaction and loyalty represents an important field for banking management.

Customers of retail banks with favorable perceptions of service quality had higher satisfaction. Customer satisfaction mediates the impact of service quality on loyalty (Karapete, 2011). This study investigated customer satisfaction as a mediator of the effects on loyalty of service environment, interaction quality, empathy, and reliability. …

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