Academic journal article International Journal of Business

Customer Satisfaction Index as A Performance Evaluation Metric: A Study on Indian E-Banking Industry

Academic journal article International Journal of Business

Customer Satisfaction Index as A Performance Evaluation Metric: A Study on Indian E-Banking Industry

Article excerpt

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I.INTRODUCTION

Performance evaluation is imperative to provide a true and fair picture of the financial health of an organization (Debasish, 2006). The performance evaluation system of businesses in India has been traditionally based on financial indicators which are criticized for being historic and lacking a futuristic outlook (Anand et al., 2005). The drawback of the financial measures is that they are lagging indicators of performance and do not focus on customer needs and satisfaction (Pandey, 2005). Hence, the focus shifted to quality and customer-based metrics to facilitate a more integrated and balanced approaches to performance measurement (Bititci et al., 2012). Since it is generic and universally measurable, customer satisfaction is the most commonly applied metric of the various non-financial customer metrics used by firms (Gupta and Zeithaml, 2006). Customer satisfaction measures are proved to be key indicators of customer retention, purchase behaviour, revenue growth and financial performance (Ittner and Larcker, 1998; Chenhall and Langfield-Smith, 2007). Customer Satisfaction Index (CSI) is one such non-financial measure used for quantifying and improving customer satisfaction across firms and industries (Fornellet al., 1996). The national CSIs such as American Customer Satisfaction Index (ACSI) and European Customer Satisfaction Index (ECSI) are the widely established indices used to frequently monitor the health of the economy, industries and individual firms (Neely, 1999; European Performance Satisfaction Index [EPSI] Report, 2007). They act as a complement to traditional indices such as price and productivity metrics (Fornell et al., 1996). Since there is no such standard metric for qualitative performance evaluation in India, an initiative was made through this study to develop and validate the Customer Satisfaction Index for E-Banking (CSI-EB) model in the Indian context.

Following the first section of Introduction, the second section briefly reviews the existing national CSIs and their applications in different regions and contexts. The third section describes the objective of the present study. The fourth section presents the conceptual framework and the variables used for this study. The fifth section elaborates the research methodology that was used to develop and validate the proposed CSI-EB conceptual model. The sixth section presents the analysis of study results and the final section comprises of concluding remarks followed by managerial implications and directions for further research.

II.LITERATURE REVIEW

With the changing economy, performance measures must also change. The research on performance measures underwent an evolution with the establishment of customer satisfaction indices at national level. Sweden was the first country to introduce a customer satisfaction based national economic indicator called Swedish Customer Satisfaction Barometer (SCSB) to raise the quality and competitiveness of its market and industries (Fornell, 1992). The idea was to provide a uniform and comparable measurement approach for regular benchmarking over time and across firms on how well they satisfy their customers (Fornell et al., 1996). A national CSI contributes to a greater and holistic view of economic output, which helps in monitoring and improving the standard of living and economic policy decisions (Anderson and Fornell, 2000).

The Swedish Customer Satisfaction Barometer (SCSB) introduced in 1989 was the first national CSI for consumer products and services. It was established based on customer inputs from 100 leading companies from over 30 industries representing almost 70 percent of the Swedish market (Fornell, 1992). Motivated by the SCSB, national CSIs were established for other countries. The American Customer Satisfaction Index (ACSI) was set up in 1994 as a representative of the entire U.S. economy comprising more than 200 firms from over 40 industries of seven important consumer sectors (Fornell et al. …

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