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Impact of Customer Satisfaction on Customer Loyalty in the Banking Sector

Article · February 2017

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 International Journal of Scientific Engineering and Research (IJSER)
ISSN (Online): 2347-3878
Index Copernicus Value (2015): 62.86 | Impact Factor (2015): 3.791

Impact of Customer Satisfaction on Customer

Loyalty in the Banking Sector
Douglas Chiguvi1, Paul T. Guruwo2
1, 2
Marketing Management Lecturer & PhD Candidate, Department of Entrepreneurship, BA ISAGO University, P. Bag 149, Gaborone,
Botswana

Abstract: This study seeks to investigate the impact of customer satisfaction on customer loyalty in the banking sector in Botswana
and the effect of demographics as moderating constructs was also investigated. An explanatory research design was adopted in which a
self-administered questionnaire was distributed to forty-four respondents randomly selected from those who visited Standard Chartered
Bank. Data analysis was done by Statistical Packages for Social Sciences (SPSS version 16.0). The study revealed that there is a positive
relationship between customer satisfaction and customer loyalty. Banks were therefore recommended to influence customer satisfaction
positively with the aim of achieving customer loyalty.

Keywords: Customer satisfaction, Customer loyalty, gender, income, age and educational qualification

1. Background of the Study competition among the banks themselves brought shiver in
the performance of most banks one of which is Standard
The association between customer satisfaction and customer Chartered bank. Banks have suffered rapid decline in
loyalty is one of the most essential relationships for customer base and several challenges related to cash flow
marketing theory and practice, because loyalty impacts decline. The emergence of mobile banking among other
firms‟ financial performance and value (Wong, Tong and things have raised customer expectations and led to the need
Wong 2014). Also, the association between customer for Standard Chartered to focus on creating customer
satisfaction and customer loyalty links customer attitudes loyalty. Some theories argue that service quality has greater
(for example, how much customers are satisfied with firms‟ impact on loyalty (Poku, Zakari and Soali, 2013). However,
product or service) to customer behaviour (for example, according to Donio (2006) good service alone may be
customers‟ actual repurchase behaviour for the product or insufficient to influence repurchase behaviour. This
service) (Mohsan, Nawaz, Khan, Shaukat and Aslam 2011). insufficiency leaves managers and researchers alike with the
Past research has shown that even the most successful curiosity of acquiring additional information to answer the
brands will reach decline stage and that would require question of what exactly drives customer loyalty. Therefore,
serious promotions to bring back the brands on the world this study was done in order to determine the impact of
map, for example product restructuring (Santouridis and customer satisfaction on customer loyalty.
Trivellas 2010). To overcome the decline in performance,
constant reviews are made on creation of customer loyalty 2. Literature Review
(Birchall and Graham 1995). According to Bansal and Gupta
(2001) building customer loyalty is not a choice any longer 2.1 Customer satisfaction-Loyalty relationship
with businesses but it is the only way of building sustainable
competitive advantages. Hallowell (1996) defined satisfaction as a post choice
evaluative judgment of a specific transaction. It emanates
Standard Chartered is one of the leading banks in Botswana. from customer‟s perception of the value received during
The core business of the organization is to provide a wide transacting or relationship where value equates to perceived
range of banking services like, personal banking, private service quality relative to price and customer acquisition
banking and business banking. Since the organization is costs (Hallowell, 1996; Blanchard and Galloway, 1994).
facing stiff competition from competitors like FNB Bank,
Stanbic Bank, Banc ABC, Bank of Baroda and others, this According to Santouridis and Trivellas (2010) satisfaction
requires the organization to carry out some research and can therefore be seen as an output of customer service or
development programs so as to remain competitive. Rivals service encounters just as customer loyalty is. Schiffman, et
are there to unleash confusion with customers‟ minds and al (2010) advocate that customer satisfaction is identified by
perceptions. There is therefore the need to create defensive a response that pertains to a particular focus (purchase
strategies in order to withstand the overwhelming experience or associated product) and occurs at a certain
competition. The main focus should be on continuous time (post purchase or post consumption). This definition
innovation and concern for customers in order to prove supports the view that a consumer‟s level of satisfaction is
excellence in the service delivery. According to Kotler and determined by cumulative experience at the point of contact
Keller (2013) people usually buy brand names, signs and with the supplier (Santouridis and Trivellas, 2010). A
logos rather than the service themselves. marketer who adopts the marketing concept sees customer
satisfaction as the path to profits. To ensure survival and
Rapid and wide spread expansion and innovation of the success, organisations therefore have to satisfy their
mobile financial services (My Zaka, Orange money and customers. Chiguvi (2016) explains that customer
others) caused a great confusion in the banking sector and

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 International Journal of Scientific Engineering and Research (IJSER)
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satisfaction is the customer‟s feeling that a product has met expectation is confirmed when the perceived product or
or exceeded his/ her expectations. service performance is judged positive (positive
confirmation). Disconfirmation (negative confirmation)
Customer loyalty is defined as a commitment to continue occurs where the perceived product performance is below
purchasing a preferred product or service consistently expectation (Oliver, 1997).
regardless of situational factors and marketing efforts which
might result in switching behaviour (Chiguvi, 2016). The underlying logic of the expectation-confirmation theory
According to Mellroy and Barnett (2000) loyalty is a framework is described as follows: First, consumers form an
customer‟s commitment to do business with a given expectation of a specific product or service prior to a
organization, to purchase its goods or services repeatedly transaction. Second, after a period of consumption, they
and to recommend them to colleagues. The relationship was form perceptions about its performance. Third, they assess
argued to continue as long as customers feel they are its perceived performance against their original expectation
receiving better value than they would obtain from rival and determine the extent to which their expectation is
suppliers (Mellroy and Barnett, 2000). Customer loyalty is confirmed.
formed by sustained satisfaction of the customer
accompanied by emotional attachment formed with the Fourth, they develop a satisfaction level based on their
service provider that generates willingness and consistence confirmation level and the expectation on which that
in the relationship with preference, patronage and premium confirmation was based. Finally, they form a repurchase
(Rai and Medha, 2013). intention based on their level of satisfaction. It is important
to note that all constructs in the theory except expectation
Expectation-confirmation theory is widely used in the are post-purchase variables, and their assessment is based on
marketing and information systems literature (Oliver, 1999) the consumer‟s actual experiences with the service (Oliver,
to study consumer satisfaction and repurchase intention and 1999). In simple terms, if perceived performance is positive,
behaviour. The model gives implications that consumers buy positive confirmation will result and thereby resulting in
goods or services with anticipated performance expectations. satisfaction, satisfaction will lead to repurchase intension
The expectation is argued to be used as a standard and finally loyalty (Kim, Ferrin and Rao, 2003). The
(benchmark) or point of reference against which the product expectation- confirmation theory was diagrammatically
judgements are made. Once the product or service has been illustrated in Figure 2.0:
used, outcomes are compared against expectations. An

Figure 2: Expectation- Confirmation model: Source: Kim, Ferrin and Rao (2003)

The Theory of Reasoned Action was developed by Fishbein According Schiffman et al (2010) intention is determined by
in 1967. In 1975 Ajzen joined him in revising and expanding three variables: personal attitude toward certain behaviour,
the theory. The theory works together with its extension subjective norms and perceived behavioural control. The
(theory of planned behaviour) and the theories are often theory of planned behaviour asserts that specific attitudes
referred to as one (Pelletier and Mongeau, 1992). It was toward behaviour can result in intentions which lead to
developed on the basis of two assumptions: human beings behaviours. According to Pelletier and Mongeau (1992) the
are rational and they systematically use available theory of reasoned action proposes that, after assessment of
information; and take note of the consequences of their attitude, there is need to assess subjective norms (customers‟
actions before making decisions on whether to engage in beliefs about how relatives and friends will view certain
certain behaviours or not. This theory suggests that a human behaviour). The theory of reasoned action also states that
behaviour is determined by the intention to perform and that customer behaviour is influenced by perceived behavioural
intention is a function of attitude toward the behaviour or control (customers‟ perceptions about their ability to
subjective norm. Intention explains one‟s cognitive perform). The factors above were believed to influence
preparedness to perform certain behaviour and is argued to customer loyalty intension (conative loyalty).
be the closest antecedent of behaviour (Pelletier and
Mongeau, 1992). As a rule of this theory, the more favourable subjective norm
and an attitude is towards given behaviour and the greater
the perceived control the stronger the behavioural intention.
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 International Journal of Scientific Engineering and Research (IJSER)
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According to Ajzen and Fishbein (1975), intentions translate purchase behaviour or loyalty (Anderson and Sullivan,
directly to behaviour, suggesting that when it comes to 1993). A model explaining the theory was presented in
satisfaction and retention, satisfied customers have higher figure 2.1:
repurchase intentions, which can be translated into re-

Figure 2.1: Model on the Theory of Reasoned Action: Source: Hale, Householder and Greene (2004)

2.1.1 Role of moderating variables examine lots of product attributes together with alternatives
than their older counterparts. This has been argued to have
Gender an acceleration effect on consumer expectations and that
In the area of gender, researchers found out that personality makes them more difficult to satisfy (Szmigin and Carrigan,
differences had a bearing on satisfaction and loyalty trends, 2001). According Homburg and Gisering (2001)‟s research,
that is, males are more aggressive, assertive and independent age has a moderating effect on the relationship between
and have less anxiety compared to female customers customer satisfaction and loyalty.
(Fernandes, Proenca and Rambocas, 2014). According to
Homburg and Gisering (2001) women tend to invest more in Income
purchasing activity than men and pay more attention to the Studies have found out that high income earners are more
activities of marketers. It also has been suggested that innovative and adopt new products, services or technology
females can be easily influenced (Dewan and Mahajan, earlier compared to those with lower incomes (Anic and
2014) and are more likely to conform than males. Homburg Radas, 2006; Szmigin and Carrigan, 2001; and Schaninger
and Giering (2001) found that gender might moderate the and Sciglimpaglia 1981). Schaninger and Sciglimpaglia
relationship between customer satisfaction and loyalty and (1981) found that consumers with higher social status (high
that the loyalty effect of satisfaction with the sales process is income earners) tend to process more information and
stronger for female customer compared to their male examine product attributes and alternatives compared to
counterparts. However, on this topic, Evanschitzky and those with lower social status (low income earners). In their
Wunderlich (2006) found out that gender has no moderating study, Evanschitzky and Wunderlich (2006) found out that
role on the relationship between customer satisfaction and income has a moderating effect on loyalty for lower income
customer loyalty. customers. Higher income earners tend to have more choices
to evaluate and therefore have higher product or service
Age expectations (Schaninger and Sciglimpaglia 1981), this
Cognitive age has increasingly become important for might make them more difficult to satisfy than lower income
research, as young people are argued to be more willing to customers who have fewer alternatives and are more loyal.
test new product brands (Szmigin and Carrigan 2001).
According Dewan and Mahajan (2014) this might mean that Educational Qualifications
cognitively younger customers can be satisfied but not loyal Highly educated customers usually come first when it comes
as they might be more willing to switch whenever they to attraction by technological advancement (Schaninger and
discover better offers elsewhere. Anic and Radas (2006) Sciglimpaglia 1981). According to Fernandes, Proença and
propose that, younger customers are easy to satisfy but older Rambocas (2014) empirical findings have shown that there
customers can be satisfied more easily. According Anic and is a negative relationship between customer loyalty and
Radas (2006) older customers usually make decisions on the education, that is, the higher the customers‟ education level
bases of their experience and wisdom and concentrate much is the more their loyalty diminishes (Mittal and Kamakura,
on analysis of producers. They tend to resist change and are 2001). In general, highly educated customers search for as
less motivated by technological advancement (Dewan and much information as possible, are expected to be more
Mahajan, 2014). According to Szmigin and Carrigan (2001) aware of substitute products or services and have better
younger consumers tend to processing more information and capabilities of evaluating options making them more
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Licensed Under Creative Commons Attribution CC BY
Paper ID: IJSER151173 57 of 63
 International Journal of Scientific Engineering and Research (IJSER)
ISSN (Online): 2347-3878
Index Copernicus Value (2015): 62.86 | Impact Factor (2015): 3.791
difficult to satisfy (Fernandes, et al., 2014). In addition, Hsu (2007) this shows the possibility of educational
highly educated customers are associated with higher levels qualifications impacting on customer satisfaction-loyalty
of incomes (Fournier 1998) which correlates with lower outcomes. For all the moderating variables explained, a
loyalty levels. According to Cooil, Keiningham, Aksoy and conceptual model was designed (see Fig 2.0):

Figure 2: Conceptual Model: Source: Anic and Radas (2006)

2.1.2 The relationship between customer satisfaction and characteristics (age, gender and income) on relationship
customer loyalty outcomes (loyalty). The findings show that young and
Customer loyalty is believed to be subject to several female customers were more likely to be loyal and to spread
influencing factors some of which are customer trusts, positive word-of-mouth than other market segments.
commitment and service quality (Santouridis and Trivellas Research findings on this topic revealed that older customers
2010; and Vuuren Lombard and Tonder, 2012). The were less likely to show behavioural loyalty than younger
hypothesis was that, there is a positive relationship between ones. On gender, their research found out that female
customer satisfaction and customer loyalty, that is, satisfied customers would demonstrate higher behavioural loyalty and
customers will repurchase from the satisfying organisation. positive word of mouth compared to their male counterparts.
However, nothing from their research has shown that
In a research conducted by Mohsan, Nawaz, Khan, Shaukat educational qualification can influence the relationship
and Aslam (2011) an attempt was made to address two between customer satisfaction and loyalty.
questions as follows. They sort to find the impact of
customer satisfaction on customer loyalty and the second Complementing the above literature, Dewan and Mahajan
question sort to find the impact of customer satisfaction on (2014) investigated on the customer satisfaction and the
intensions to switch. They hypothesised that customer moderating effects of demographics. Observations showed
satisfaction is significantly and positively associated with that there was a significant difference in the customer
customer loyalty and customer satisfaction is significantly satisfaction on the basis of gender, marital status, age and
and negatively associated with intentions to switch. They occupation. The male customers proved to be more
concluded that loyalty can be vulnerable because even if delighted and pleased with the bank as compared to the
consumers are satisfied with the services because they can female customers. The students group was the most satisfied
still defect if they feel they can get better value, convenience followed by the housewives and the salaried class. Thus, the
or quality elsewhere. Thus they pointed out that customer findings confirmed the hypothesis that satisfaction and
satisfaction may not be an accurate indicator of loyalty loyalty varies from person to person on the basis of age,
though it is essential for loyalty formation. They proposed gender or income. To add on, Anic and Radas (2006)
that it is impossible to have loyalty without satisfaction researched on the topic aimed at exploring relative
thereby confirming the hypothesis that satisfaction is importance of satisfaction and demographic factors in
significantly and positively associated with loyalty. building loyalty. The researcher hypothesised that female
customers have higher loyalty intensions compared to male
Some supporting literature came from Olajide and Israel customers. Secondly, age difference was hypothesised to
(2012) who conducted a research on the effect of customer influence loyalty and income was believed to have a
satisfaction on customer loyalty among bank customers in negative relationship with loyalty.
Ado-Ekiti Metropolis. More openly, the hypothesis tested
the relationship between customer satisfaction and customer 3. Research Methodology
loyalty. The study revealed that there is a significant
relationship between customer satisfaction and customer An explanatory research approach was adopted in order to
loyalty. examine and explain the cause-and-effect relationships
between customer satisfaction and loyalty and the strength
2.1.3 Moderating variables for the relationship between of association between the independent and dependent
customer satisfaction and loyalty variables in the banking sector. This research targeted all
Several literature was availed which supports the view that clients banking at Standard Chartered in Botswana and the
demographic factors like gender, income, age and number was unknown. Data was obtained through self-
educational qualification moderates between customer administered questionnaires and they were accessed on the
satisfaction and loyalty. The moderator role of demographics basis of simple random sampling. Close-ended questions
received supporting literature from the research by were used. The data collected from the questionnaires was
Fernandes, Proença and Rambocas (2014). The study aim sorted, coded, captured and edited for analysis. Statistical
was to investigate the impact of customer demographic
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ISSN (Online): 2347-3878
Index Copernicus Value (2015): 62.86 | Impact Factor (2015): 3.791
Package for Social Sciences (SPSS version 16) was used for P5000 who were 29.5% and those earning between P5000
analysing data. The researcher made use descriptive forms and P7500 made up 9.1% of the sample. High income
of simple tables for data presentation to fully give a clear earners (earning above P7500) occupied 27.3% of the
picture of the trends in the data obtained from research respondents.
questionnaires.
4.2 Customer Satisfaction and Customer Loyalty
4. Findings and Analysis
The researcher hypothesised that there is a positive
4.1 Demographic profile and response rate of bank relationship between customer satisfaction and customer
customers loyalty. The findings of the present research produced the
following in table 4.2:
Table 4.1: Demographic response rate
Questionnaire questions Frequency Percentage Frequency Table 4.2 Simple regression analysis for customer
Gender satisfaction and customer loyalty
Male 24 54.4% Unstandardized Standardized
Female 20 45.5% Coefficients Coefficients
Total 44 100%
Model B Std. Error Beta T Sig.
Age
18-25 21 47.7% 1 (Constant) 1.271 .371 3.431 .001
26-30 5 11.4% customer satisfaction .522 .134 .514 3.884 .000
Above 30 18 40.9%
Source: Primary Data
Total 44 100%
Educational Level
Ordinary level 14 31.8% The table above shows a positive relationship between
Advanced level 15 34.1% customer satisfaction and customer loyalty at a significance
Diploma or Degree 15 34.1% level of 0.00 (p<0.05, β=0.514). There is a moderate positive
Total 44 100% relationship depicted by a standardised coefficient of 0.514.
Income (P) According to Duijn (2011) the closer the coefficient to +1 is
0 – 2500 15 34.1% the stronger the positive relationship between the variables.
2500 – 5000 13 29.5%
5000 – 7500 4 9.1%
Thus a 0.514 coefficient confirms the hypothesis that there is
7500 – 10000 3 6.8% a positive relationship between customer satisfaction and
10000 – 12500 8 18.2% customer satisfaction. The strength of the relationship is
12500 – 15000 1 2.3% explained by table 4.3 below:
Total 44 100%
Source: Primary Data Table 4.3: Standardized regression square coefficient for
customer satisfaction and loyalty
Table 4.1 displayed the demographic frequencies of the Adjusted Std. Error of
respondents used during the research in terms of gender, Model R R Square R Square the Estimate
age, educational qualification and income. From the table, it 1 .514 .264 .113 .087
was noted that a larger proportion of the sample was
occupied by male respondents being 54.4% and female Table 4.3 shows the strength of the relationship between the
respondents were 45.5% of the sample. However, the two variables was denoted by the R square coefficient of
difference was slight and could not invalidate the research 0.264 implying that 26% of the fluctuation in customer
findings. loyalty is explained by changes in customer satisfaction.
This means that, there is a positive relationship between the
In terms of age frequency, the sample was higher proportion two though customer satisfaction alone is insufficient to
were the young (18-25) who made up 47.75% of the sample explain changes in customer loyalty.
followed by the old who made up 40.9% of the sample and
the least were the middle aged who made up 11.4% of the 4.3 The effect of moderating variables on the relationship
total respondents. These were representative enough and the between customer satisfaction and customer loyalty
researcher had to proceed with the data analysis.
After establishing that there is a positive relationship
Table 4.1 above also presented frequency by educational between customer satisfaction and loyalty, the researcher
qualifications of the respondents who participated in the had to consider the effect of moderating variables.
research. The composition proved to be even since highly Evanschitzky and Wunderlich (2006) define a moderating
educated (diploma or degree) and the lowly educated had the variable as a variable which changes the relationship
same frequency both being 34.1% and the least frequency between an independent and an outcome (dependent
was 31.8% being the middle educated. variable). A significant interaction between the moderator
and the independent variable implies that the effect of the
Income is another demographic variable which was used to independent variable depends on the level of the moderator
differentiate respondents obtained for research. The low effect. The moderating role of demographic variables was
income earners constituted the highest frequency, that is, multi-group causal analysis as suggested by Joreskog and
between Po and P2500 and they made up 34.1% of the Sorbom (1993). The examination of the effects of customer
sample, followed by those ranging between P2500 and satisfaction on customer loyalty revealed that customer
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satisfaction had a significant positive effect (β=.514, counterparts. The interaction between customer satisfaction
p=.000,) on customer loyalty (table 4.4). From the analysis, and gender significantly influenced the prediction of
it was learnt that gender negatively impacted on the customer loyalty (β=.414, p=003, ∆R2=.242). Thus, the
customer satisfaction-customer loyalty link (β=.-.306, p= second hypothesis - gender has a moderating effect on the
0.027) with the bias going towards male customer that is, relationship between customer satisfaction and loyalty, was
female customers were more loyal compared to their male accepted.

Table 4.4: Moderated regression analysis of gender on customer satisfaction and customer loyalty relationship

The hypothesis that income has a moderating effect on the Table 4.6: Moderated regression analysis of age on
relationship between customer satisfaction and customer customer satisfaction and customer loyalty relationship
loyalty was tested and the results indicated that satisfaction
had a significant positive effect on customer loyalty (β=.514,
p=.000). Table 4.4, shows that income had a negative effect
on customer loyalty (β=-.405, p= .021), which implied that,
the more income customers had, the less loyal they were to
the banks. The interaction between customer satisfaction and
income was significant enough to explain changes in
customer loyalty (β=.127, p=.003, ∆R2) showing a
moderating effect. That confirmed the third hypothesis that
income had a 6.5% moderating effect on customer
satisfaction-loyalty link. Having tested the moderating role of education on customer
satisfaction-loyalty relationship, the findings on table 4.6
Table 4.5 Moderated regression analysis of income on the revealed that customer satisfaction had a significant positive
relationship between customer satisfaction and customer effect on customer loyalty (β=.514, p=.000). Further analysis
loyalty proved that education have a negative relationship with
loyalty (β= -.069, p=.610) (Table 4.6). The collective effect
of customer satisfaction and education in determining
customer loyalty was significant as shown by table 4.7
below (β=-.612, p=.009, ∆R2=.067). Thus 6.7% of the
moderator effect on the relationship between satisfaction and
loyalty is explained by educational qualifications of
customers. This condition therefore implied education is a
moderator to the satisfaction loyalty as hypothesised in this
research.

The fourth hypothesis for this research was that age is a Table 4.7: Moderated regression analysis of education on
moderating variable for the relationship between customer the link between customer satisfaction and customer loyalty.
satisfaction and customer loyalty. The analysis indicated that
customer satisfaction had a significant positive effect on
customer loyalty (β=.514, p=.000). As shown in table 4.5,
age has a positive effect on customer loyalty (β=.241, p=
.071) which means that, as customers get older, they become
more loyal. The combination of customer satisfaction and
age had a significant influence on the determination of
customer loyalty (β=.722, p= .006, ∆R2 =.227). Thus 22.7%
of the moderator effect on customer satisfaction and loyalty
link is explained by age. The results therefore confirmed that
age moderates the two and thus accepting the forth As shown by the tests of the moderated regression analysis
hypothesis. above, demographic factors (gender, age, income and
education) have got influence on the relationship between
customer satisfaction and customer loyalty and have to be
considered whenever the company influences satisfaction
with the aim of achieving customer loyalty.
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5. Discussion them are information seekers and are aim at attaining as
much value of their expenditure.
Standardised coefficient calculated for the relationship
between customer satisfaction and customer loyalty shows 6. Conclusions and Recommendations
that there is a moderate relationship between the constructs.
These findings got support from previous researches by The main aim of the study was to establish the impact of
Chiou and Shen (2006); Mohsan, Nawaz, Khan, Shaukat and customer satisfaction on customer loyalty in the banking
Aslam (2011); Olajide and Israel (2012); Santouridis and sector. It was hypothesised that customer satisfaction had a
Trivellas (2010); Vuuren, Lombard and Tonder (2012); positive influence on customer loyalty. The second aim of
Wong, Tong and Wong (2014); and Yu and Dean (2001). the research was to determine moderating variables for the
This positive relationship was also noted by Dimitriades relationship between customer satisfaction and customer
(2006) and is believed to be causal in nature, that is, if loyalty. For that objective, four hypotheses were put forward
companies need to attain loyalty then satisfaction has to be one of which proposed that gender had a moderating effect
improved (Santouridis and Trivellas 2010). However some on the relationship between customer satisfaction and
of the researchers have argued that the strength of the customer loyalty. It was also hypothesised that age had a
relationship between the two can be influence by other moderating effect and that customer income and education
variables called moderating variables. moderated the relationship between customer satisfaction
and customer loyalty. The research study showed that there
Moderated multiple regression analysis on the moderator was a moderate positive relationship between the variables
role of demographic factors revealed that gender had an as depicted by a beta weight of 0.514 at a significance level
acceptable influence on the relationship between customer of 0.000. On the second objective, moderated multiple
satisfaction and loyalty. Analysis of the research findings regression analysis was used and evidence proved that
revealed that income is a moderating variable for the gender, consumer age, income and educational qualifications
relationship between customer satisfaction and customer played partial moderating roles on the relationship between
loyalty. The moderation effect was also noted in previous customer satisfaction and customer loyalty. Using the
researches some of which include research by Homburg and findings of this study, the researcher concluded that
Giering (2001); Schaninger and Sciglimpaglia (1981); companies had to influence customer satisfaction positively
Evanschitzky and Wunderlich (2006) Serenko; Turel and with the prime aim of achieving customer loyalty. It was
Yol (2006). It was found out that high income customers are also noted that demographic factors like gender, customer
less loyal compare to the lower income customers. This age, income and educational qualifications had influence on
implies that, high income customer are much concerned the relationship between customer satisfaction and customer
about value and therefore management must aim at loyalty. It was also concluded that Female customers were
achieving as much value as possible if the company is to more loyal and could be easily satisfied compared to male
retain a sustainable customer base. customers. The older aged tended to be more loyal compared
to the younger even if they were satisfied by the service.
As shown in the table 4.6, age has a moderating effect on the High income earners were highly educated were also less
relationship between customer satisfaction and customer loyal and proved to be high information seekers and were
loyalty. There is a positive moderating effect, that is, as more willing to test new things thus being less loyal
customers become older, they become easier to satisfy and compared to lower income earners. It was also concluded
more loyal. The positive moderating role of age on customer that highly educated customers were less loyal compared to
satisfaction-loyalty link gains support from previous less educated ones. On the basis of the above conclusions,
researches by Evanschitzky and Wunderlich (2006); banks are recommended to engage in customer satisfaction
Homburg and Giering (2001); Koco (2001); and Szmigin enhancing programmes like quality controls, facilitating
and Carrigan (2001). Younger customers are less loyal and convenience of outlets and services for example, internet
are keen to switch suppliers to where they feel maximum and mobile banking with the goal of retaining a reasonable
value can be achieved. Thus Standard Chartered has to aim amount of loyal customers who might have be attracted by
at creating customer value and provide tangible benefits in the likes of mobile financial services like My Zaka, Orange
order to increase switching costs and reduce possibilities of Money. Banks are also recommended to take a closer look
losing customers. on the effect of gender on the relationship between customer
satisfaction and customer loyalty whenever they positively
The final hypothesis made on this research paper stated that, influence satisfaction. It is important for the bank to
education had a moderating effect on the link between continue on innovation and production of new services so as
customer satisfaction and customer loyalty. Research to cater for male customers who are aggressive and willing
findings confirmed that it moderates the relationship as to test new things. Age effects on the satisfaction and loyalty
shown in table 4.7 above. A wealth of findings was availed link are also supposed to be considered when engaging in
supporting this conditions some of which come from Dewan loyalty schemes.
and Mahajan (2014); Alba and Hutchinson (1987); and
Mittal and Kamakura (2001). From the findings, it High income earner customers were also viewed to be less
concluded that highly educated customers are less loyal loyal compared to low income earners whose choices are
compared to low income counterparts. This implies that, only restricted by their purchasing power. The research also
managers and sales personnel have to aim at achieving value revealed that highly educated customers are less loyal
especially through information provision because most of compared to those who are less educated. With this in mind,
banks must know that the educated are information seekers
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Index Copernicus Value (2015): 62.86 | Impact Factor (2015): 3.791
and their value can be attained through information [15] Evanschitzky, H., and Wunderlich, M., (2006) „An
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Loyalty Model‟: Journal of Service Research, Volume
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ISSN (Online): 2347-3878
Index Copernicus Value (2015): 62.86 | Impact Factor (2015): 3.791
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