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European Journal of Market

Vol. 35 No. 5/6, 2001, pp. 687-7

# MCB University Press, 0309-0

Received April 19Revised March 20

Behavioural responses tocustomer satisfaction: an

empirical studyAntreas Athanassopoulos

Athens Laboratory of Business Administration (ALBA), Athens, Greece

Spiros Gounaris and Vlassis StathakopoulosAthens University of Economics and Business, Athens, Greece

Keywords Customer satisfaction, Consumer behaviour, Communications, Customer loyalty

Abstract Investigates the behavioural consequences of customer satisfaction. More specifically,the authors examine the impact of customer satisfaction on customers' behavioural responses.

The results support the notion of direct effects of customer satisfaction on three criterionvariables (decision to stay with the existing service provider, engagement in word-of-mouthcommunications, and intentions to switch service providers). Implications for practice, studylimitations, and directions for future research are discussed.

IntroductionThe quest for service quality has been an essential strategic component for firmsattempting to succeed and survive in today's fierce competitive environment(Phillips et al., 1983; Parasuraman et al., 1985; Reichheld and Sasser, 1990). As aresult, in the last 15 years, we have witnessed an increasing number of researchefforts on the subject. Review of the relevant literature reveals that the principal

focus of service quality research has been twofold. First, the identification ofservice quality dimensions was of primary interest to researchers (Parasuramanet al., 1985, 1991a). Second, the development of measurement instruments ofservice quality was the focus of subsequent research efforts (Parasuraman et al.,1988, 1991b; 1993; Cronin and Taylor, 1992, 1994; Asubonteng et al., 1996; Buttle,1996; Athanassopoulos 1998, 1999). Furthermore, the agenda of service qualityhas very quickly been enhanced by creating the domain of customer satisfactionwhere most aspects of the marketing mix have been included into itsdetermination (i.e. service quality, convenience, price). In this research we shall beprimarily concerned with the effects of customer satisfaction on the behaviouralresponses of customers, giving, therefore, a more integrated dimension into the

research family that seeks to determine the antecedents of customer loyalty[1].In recent years though, the customer satisfaction research agenda has

shifted focus and concentrated on other equally important issues. For example,service quality has been related to its impact on the financial performance ofthe organization (Greising, 1994; Rust et al., 1995), consumer satisfaction(Spreng et al., 1996), switching behaviour (Keaveney, 1995), and behavioralintentions (Boulding et al., 1993; Cronin and Taylor, 1992).

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However, research examining the effects of customer satisfaction onbehavioral responses has received very limited attention in the marketingliterature (for exceptions see Boulding et al., 1993; Cronin and Taylor, 1992;Zeithaml et al., 1996). Yet, Zeithaml et al. (1996) indicated that examining thelink between customer satisfaction and behavioral responses is a part of themany relations that need to be further investigated in order to betterunderstand the link between customer satisfaction and financial outcomes ofthe organization. Moreover, Zahorik and Rust (1992) proposed that studyingthe behavioral responses to service programs can help managers estimate thefinancial consequences of customer satisfaction. According to the researcherscited above, the relationship between customer satisfaction and profits is a verycomplex one and includes many intermediate links. One such link is therelationship between customer satisfaction and behavioral responses. Hence, inorder to better model the impact of customer satisfaction on profits, one has tofirst examine and comprehend how customer satisfaction influencesbehavioural responses.

Therefore, the goal of this research is to help managers and researchersunderstand behavioral responses to customer satisfaction from the customers'perspective. Not only does this research effort differ from prior research on thesubject, but also it extends the relevant literature in three importantdimensions. First, unlike previous research that has focused on behavioralintentions (e.g. Zeithaml et al., 1996), our research concentrates on actualbehavioural responses. In fact, Zeithaml et al. (1996, p. 44) called futureresearchers to further extend their work, by undertaking research that ``asksconsumers to indicate their actual behaviors'' rather than their behavioral

intentions. Second, it develops an extensive multiple-item behavioral responsesmeasure. Third, our study involves a whole industry (i.e. the banking industry)and not a single or only a few providers within an industry, as is usually thecase in many research studies.

The rest of this paper is organised as follows. We first develop ourconceptual model and associated research hypotheses that address therelationships between customer satisfaction and behavioural responses. Wethen describe the sample and measures employed in the study. We follow byreporting the empirical research results. Finally, we conclude by identifyingstudy limitations and proposing future research directions.

Conceptual framework and research hypothesesFigure 1 depicts the customer satisfaction-behavioural responses model that isadvanced and tested. The major constructs in the model are customersatisfaction and consumers' behavioural responses.

Service quality and customer satisfactionService quality is being considered as one of the most important researchtopics, since it relates to costs (Crosby, 1979), financial performance (Buzzelland Gale, 1987), customer satisfaction (Spreng et al., 1996), customer retention


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(Reichheld and Sasser, 1990), and differential competitive advantage (Iacobucciet al., 1994). This recognition for the important role service quality plays inbusiness success has led to the development of alternative schools of thoughtregarding service quality (e.g. Parasuraman et al., 1985, 1988; Gronroos, 1990;Reeves and Bednar, 1994). This has ignited a lively and heated debate withrespect to the definition and measurement of service quality.

Early research efforts in the marketing literature focused on understandingthe structure and psychological processes underlying perceived service quality.Customers' perceptions of service quality refer to the customers' assessment ofthe overall excellence or superiority of the service (Zeithaml, 1988).Parasuraman et al. (1985, 1988) conceptualised a customer's evaluation ofoverall service quality as the gap between expectations and perceptions of

service performance levels. Furthermore, they propose that overall servicequality performance be measured by a five-dimensional construct. Theyproposed the SERVQUAL instrument, which was designed to measure servicequality across a range of businesses and industries.

However, SERVQUAL has not been without criticisms. These criticismsfocus on both theoretical as well as operational issues (Buttle, 1996).Asubonteng et al. (1996), based on a critical review of 18 service qualityempirical studies, reached the conclusion that the underlying SERVQUALdimensions are likely to be industry specific. For example, Carman (1990) foundbetween six and eight dimensions depending on industry, Headley and Miller(1993) six in the consumption of medical services, while Clow et al. (1995) and

McAlexander et al. (1994) seven and ten respectively in the dental serviceindustry.

Moreover, Ford et al.'s (1993) empirical cross-cultural results seem toindicate that the scale is also country specific. Support for this notion comesalso from Akviran (1994), who identified four dimensions in a surveyconducted in 31 major British organisations, in the fields of banking, buildingsocieties, and retail. In addition, even though LeBlanc and Nguyen (1988), intheir study of the Canadian credit sector, proposed a five-dimensional constructof service quality, the underlying dimensions differ from those described in

Figure Behavioural respons

to customer satisfacti


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Parasuraman et al.'s (1985, 1988) work. It must be noted, however, that in theseearly studies the dimensions of service quality had quite often includeddimensions beyond service quality and closer to customer satisfaction. Yet,despite its shortcomings, SERVQUAL seems to be a useful scale to use inmeasuring service quality by making appropriate adjustments for industry andcountry contextual effects.

Later research efforts (Cronin and Taylor, 1992) though cast doubts aboutthe utility and appropriateness of the disconfirmation paradigm advocated byParasuraman et al. (1985, 1988). These authors questioned whether or notcustomers routinely assess service quality in terms of expectations andperceptions. Rather, they advanced the notion that service quality is directlyinfluenced only by perceptions of service performance. In accordance, theydeveloped an instrument of service performance (SERVPERF) that seems toproduce better results than SERVQUAL (Asubonteng et al., 1996).

Apart from the debate among the above researchers for the merits ofSERVQUAL over SERVPERF and vice versa, however, it seems that, onbalance, the emerging literature supports the performance-based paradigmover the disconfirmation-based paradigm (Cronin and Taylor, 1994; Peter et al.,1992; Brown et al., 1992; Babakus and Boller, 1992; Babakus and Mangold,1992). Our research bears on these conclusions and adopts the performancebased SERVPERF paradigm.

The common thrust though of all research efforts on the subject is theconclusion that the criteria customers use to evaluate service quality arecomplex and difficult to determine precisely. This is due to the fact that:

. services are intangible;

. services are heterogeneous, meaning that their performance often variesfrom provider to provider, from customer to customer, and from contextto context;

. services cannot be placed in a time capsule and thus be tested and re-tested over time; and

. production of services is likely to be inseparable from theirconsumption.

Furthermore, customers do not assess service quality only on its outcome, butalso they consider the process of service delivery as well as the context

(Gronroos, 1990; Kotler, 1994).Customers of services observe and evaluate the production process as they

experience the service they receive (Zeithaml, 1988). Berry et al. (1985) arguedthat the service quality attributes of search, experience, and credence are usedby consumers to evaluate service quality. Search attributes, such as physicalfacilities, appearance of personnel, and the supplier's image can be consideredbefore consuming the service. Experience attributes, like responding quickly toa request and performing a service at the agreed time are assessed on the basisof the actual service experience. Finally, credence attributes like financial


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security of an investment cannot be determined even after repeated use of aservice. In this respect, services are difficult to evaluate because they containmany experience and credence attributes and because the actual service variesfrom one customer to the next (Zeithaml, 1988).

Behavioural responsesApart from the measurement issues, the real value of service quality emanatesfrom its decision-making implications. Several researchers (Fornell andWernerfelt, 1987; Rust and Zahorik, 1993) make the distinction betweenoffensive and defensive marketing policies. According to those researchers,offensive marketing actions refer to capturing new customers by investing inservice quality. However, service quality is only one of many other variables(e.g. price, advertising, image) that influence a customer's decision to consumethe service. Therefore, spending on service quality alone does not guarantee theattraction of new customers.

On the other hand, defensive marketing actions refer to retaining existingcustomers rather than attracting new ones. There are compelling arguments ofthe superiority of the defensive impact of service quality over thecorresponding offensive one. For example, lowering customer defections canhave a strong impact on a company's profits (Reichheld and Sasser, 1990) aswell as market share (Rust and Zahorik, 1993). Similarly, Fornell andWernerfelt (1987) concluded that is better for a company to spend resources tokeep existing customers than to attract new ones. This is due to the fact that,when customers are lost, new ones must be captured to replace them, andreplacing them is expensive for two main reasons. First, advertising,

promotion, sales, and uncovering their needs expenses are high, and second,new customers need a ` grace'' period until they become profitable.Moreover, customers who remain loyal to the company are likely to engage

in favourable word-of-mouth behavioural responses. In addition, the companymay be able to cross-sell to these customers or even charge them a premiumprice.

Regardless though of the specific tools and methods a company follows,consumers' reactions to service quality are unavoidable. As indicated in Figure1, a customer's assessment of the service quality received determines theaction(s) the consumer will engage in. The model indicates that a customer'sassessment of service quality is positively related to the customer engaging in

word-of-mouth actions. On the other hand, when a customer's assessment ofservice quality is negative, the customer will engage in unfavourable actions.

When a customer praises the company, this behavioural response isindicative of the customer's decision to remain with the firm. Parasuraman etal.'s (1988, 1991b) results indicated that when consumers' perceptions of servicequality are high, consumers are willing to recommend the company to others.Reichheld and Sasser (1990) also support this notion. Further, Boulding et al.(1993) found that service quality relates positively to saying positive thingsregarding the company to others. More specifically, in studying the


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behavioural responses of their students they found that students who weredelighted with the quality of the studies had also the tendency to say positivethings about the school and recommend it to companies and recruiters as a poolfor recruiting purposes.

Other researchers (see Richins, 1983; Scaglione, 1988; Singh, 1988) haveindicated that when consumers perceive to have experienced inferior serviceperformance they are likely to engage in complaining behavioural responses tothird parties (i.e. exhibiting negative word-of-mouth communications). Ingeneral, these negative communicational responses stem from thedissatisfaction felt by the consumers due to poor service quality.

Finally, Zeithaml et al. (1996), in their multicompany/multi-industry study ofthe relationship between service quality and behavioural intentions, inferredthat service quality is positively associated with communicational behaviouralintentions (e.g. intention to recommend the service producer and/or

complaining behaviour). Even though behavioural intentions may be animperfect proxy for behavioural responses (cf. Keaveney, 1995) nevertheless,we advance the following hypothesis:

H1: Perceptions of high customer satisfaction are positively related topositive word-of-mouth communications.

Several studies have examined the association between customer satisfactionand service switching. The reasoning behind customers switching behaviouralresponses has been related to perceptions of quality in the banking industry(Rust and Zahorik, 1993), overall dissatisfaction in the insurance industry(Crosby and Stephens, 1987), and service encounter failures in the retail

industries (Kelley et al., 1993).Although customers perceiving service performance to be inferior may

represent one of the reasons that motivate customers to switch services, it is notthe only one. For example, Bitner (1990) advocates the effects of the time,money constraints, access to information, lack of credible alternatives,switching costs, and habit which may affect service loyalty.

Similarly, Cronin and Taylor (1992) suggest that convenience, good value formoney and availability might enhance customer satisfaction and subsequentlybehavioural intentions. Moreover, Keaveney (1995), in his grounded theorydevelopment model of customer switching behaviour, proposed eight reasons

(price, inconvenience, core service failures, service encounter failures, competitiveissues, ethical problems, and involuntary factors) for switching services. Finally,Zeithaml et al. (1996) concluded that service quality is associated negatively withunfavourable behavioural intentions (e.g. propensity to switch).

However, the main thrust of the above studies is that service switching isconceptualised and operationalised as ` intentions to switch''. Even thoughdirect application of these results to the ``action to switch'' is limited by the factthat behavioural intentions do not perfectly map actual behavioural responses,we propose the following hypothesis:


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H2: Perceptions of high customer satisfaction are negatively related toswitching behaviour expressed either in terms of intention and/ordecision to switch.

Research methodologySample selectionThe sample of customer responses was drawn from the general area of Athens,Greece. Personal interviews, based on a questionnaire, were conducted by trainedpersonnel in order to increase the validity and reliability of the responses.

The sample consisted of 793 individual customers of commercial retailbanks. Since this study did not intend to measure quality perceptions inrelation to any particular bank, respondents were randomly approached in thestreet and shopping centres. Although the sample is clearly a convenience one,the interviews were conducted at different locations and on different days as

well as at uniformly distributed time intervals, in order to reduce location, date,and time related response-bias. An analysis of the respondents' demographiccharacteristics is presented in Table I.

TableDemograph

characteristics of tsample (n = 79

Demographic variable Valid percent

Age of respondentUp to 20 years 6.120-30 years 32.030-40 years 19.0

40-50 years 20.150-60 years 13.360 years and older 9.6

Missing 0.6 Gender

Male 54.6Female 45.4

Missing 2.4Income (in GDR)a

Up to 1 million 12.61-3 million 32.33.4.5 million 22.34.5-6 million 12.3

More than 6 million 20.5 Missing 2.6

EducationUp to high school 46.4College 25.7University 27.9

Missing 6.7

Note:a Income is annual per person. E1 = GDR324


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Research instrumentTo operationalise customer satisfaction, we used 31 question-items that soughtto evaluate different aspects of the service encounter. Given that, as it wasindicated earlier, measuring customer satisfaction is industry and country

specific, we:

. included items that represent the five dimensions of service qualitydescribed by Parasuraman et al. (1991a, 1991b); and

. added items that sought to capture extra dimensions of customersatisfaction specific to the banking industry as well as to the Greekbanking context (Athanassopoulos, 1999).

These extra items were derived from ten personal in-depth interviews withmanagers of the banking sector. More specifically, we first asked twomarketing managers and one customers service manager from three different

retail banks to describe which factors, according to their expert opinion,comprise the broader notion of customer satisfaction in retail banking. Next,their answers were further probed by asking seven branch managers from fourother retail banks to comment on the factors suggested by the marketingmanagers and the customers service manager.

The rationale behind this approach is that we expected marketing and/orcustomers service managers to have a solid, broad, understanding of whatreally satisfies bank customers. However, because branch managers are closerto the customer and day-to-day encounters, their opinion was used as a ``filter''in order to unveil the satisfaction factors that their experience has shown reallymatter for the consumers. The items for which a congruency in the opinion of

the managers was asked were eventually the ones included in thequestionnaire.As to the nature of the measurement, this was similar to that of Cronin and

Taylor (1992, 1994). They report convincing evidence that researchers arebetter off when measuring perceived customer satisfaction directly instead ofattempting to estimate it as the result of the gap between consumerexpectations and consumer perceptions.

A seven-item battery was developed to gauge the range of customers'behavioral responses to customer satisfaction examined in this study. Theseven items were grouped into three a priori categories: word-of-monthcommunications, intentions to switch, and decision to switch. However, the

respondents were not aware of these groupings. All the items included in thestudy are presented in the Appendix. As a preamble to the statistical results ofthe research, we did not find solid evidence about the independence of thecategories, intention and decision to switch and therefore the two categorieswill be collapsed to one.

Measurement purificationFollowing Gerbing and Anderson (1988), we employed confirmatory factoranalysis (CFA) in order to examine the dimensionality of the customer


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satisfaction dimensions and the behavioural responses dimensions. Table IIlists the results pertaining to the presence of the underlying customersatisfaction dimensions in retail banking. It also contains results concerningthe behavioural response measurement scale that seeks to encapsulate the

behaviour of individual customers as a result of their responses to theperceived customer satisfaction status.

The CFA hypothesised model was tested using the EQS 5 model developedby Bentler (1990), using the maximum likelihood estimation procedure. Thebasis of the statistical analysis was the covariance matrix of the observedresponses. Overall fit and the significance of the loading of individual variableson the hypothesised factors were considered. Table III shows the fit indicesusing the chi-square test, Bentler's comparative fit index and the root meansquare of approximation (RMSEA).

The RMSEA measures the lack of fit and takes parsimony into account byassessing the discrepancy per degree of freedom between the populationcovariance matrix and the fitted matrix. That is, it penalises for overfitting.

The measurement model was first tested for the adequacy of a six factorsolution concerning the dimensionality of the construct of ` customersatisfaction'' and ``a three factors solution for behavioural responses''. For bothcases, the results from a six and three factor solution have been testedextensively via all possible solutions of reduced dimensionality by collapsingdimensions and the results obtained were always inferior. For illustrativepurposes, the information in Table III tests results concerning the potentialunidimensionality of the two cases.

The test statistics for each one of the model structures are in favour of the

proposed dimensions concerning the two constructs. Using the Bentler andBonnet (1980) and Byrne (1989) criterion of ratio 12/d.f., one can conclude thatan inadequate fit occurs when values greater than three are obtained, whichwas not the case in the models selected. Using more reliable test statistics, suchas the goodness of fit index (GFI) and the comparative fit index, both models

Table Summary statistics

model

Customer satisfactionmeasurement

Behavioural responsesmeasurement

6 factors 1 factor 2 factors 1 factor

Chi-square (12 ) 584 1,954 27 523

Degrees of freedom (d.f.) 260 276 8 1012/d.f. 2.2 7.07 3.03 52.3GFIa 0.94 0.81 0.98 0.83CFIa 0.94 0.70 0.99 0.79RMSEAb 0.04 0.088 0.033 0.255

Notes:a CFI and GFI values close to 1 indicate a good fitb The lower the RMSEA values, the better the model is considered. Values below 0.1 suggestadequate fit


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yield adequate estimates. The adequacy of the model estimates was alsoconfirmed by the small (less than 0.1) RMSEA values.

Prior to discussing the interpretation of the items' loading on each factor, itis worth exploring a series of diagnostic tests concerning the reliability andvalidity of the proposed measures, based on the empirical results shown inTable IV.

The results in Table IV confirm the reliability and validity of the sixcustomer satisfaction dimensions, since all indices concerned exhibited highvalues on their corresponding scales. Similarly, the results support the two-dimensional solution concerning consumers' behavioural responses tocustomer satisfaction. It must be noted, however, that the rejection of the three-dimensional solution could well be attributed to the lack of appropriate scaleitems that would encapsulate consumer attitudes in a better way. Moreover, theproblem could well be associated with the single time frame of the studyconcerned that does not accommodate the dynamic nature of behavioural

Table III.Construct reliabilityand validity of theproposed factorstructures

Customer satisfaction

Cronbach'salpha

Constructreliabilitya

Varianceexplainedb

(%)

Employee competence (F1) (five items) 0.79 0.91 74Reliability (F2) (five items) 0.88 0.98 92Product innovation (F3) (four items) 0.76 0.97 90Pricing (F4) (three items) 0.81 0.82 78Physical evidence (F5) (five items) 0.79 0.90 86Convenience (F6) (three items) 0.79 0.95 86

Behavioural responsesIntention and decision to switch (four items) 0.77 0.97 97Word-of-mouth communications (three items) 0.87 0.98 97

Notes:a Construct reliability: j !j

2

a j !j 2

j ej , where !j is standardised MLparameter estimate and ej is the error term about the estimated parameterb Variance explained:

j !

2j a

j !

2j

j ej

Table IV.Correlation coefficientsamong the customersatisfaction factors(discriminant validity)


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responses that would be based on the conversion process of the intentions toswitch to actual decisions to switch.

In addition, we estimated the discriminant validity of the facets of customersatisfaction using the factor-correlation indices shown in Table IV, as indicated

by Venkatraman (1989). The correlation of the antecedents of customersatisfaction is a well-established phenomenon in both theoretical and empiricalterms (see Parasuraman et al., 1988; Cronin and Taylor, 1992).

The findings of this research are also in line with the recent work by Taylor(1997) concerning the second order and interactive effects between customersatisfaction and service quality as predictive indicators of customer loyalty.The correlation estimates of the factor solutions prompted further testing of thehypothesis of having better underlying factor structures. This particular issuewas tested via two alternative ways.

The first step included re-estimation of the factor-model assuming a singlefactor solution which gave very poor fit indices (GFI = 0.7). The second stepincluded iterative re-estimation of the factor-model, eliminating one factor at atime and assigning its items to one of the remaining factors. The fit indicesobtained were again inferior to the solution reported in Table V, and thus theproposed factor structures did pass the discriminant validity tests.

Next, we developed a full-scale model fit of the six-factor solution that waschosen to encapsulate the dimensions of customer satisfaction in retailbanking. Information concerning the fit indices can be found in Table VI.

As Table VI shows, the six-factor solution is made of question items thatwere scrutinised prior to their final selection. For each factor, a number of itemswere dropped from the initial candidate list, based on the results of the

measurement model. Hence, from the initial list of 31 question items only 25were deemed as appropriate to tap the customer satisfaction dimensions.The estimated coefficients associated with the factor structures are all

accompanied by statistical significance at the 1 percent level. Despite therelatively satisfactory overall fit of the CFA model some question-items haveappeared with relatively small factor coefficients.

The final model presented in Table VI contains some question-items withrather low standardised coefficients that were retained in the model for tworeasons. First, they indicate managerial relevance with the construct that wesought to measure. Second, a re-assessment of the model in their absence didnot alter significantly the overall fit of the model and the coefficients of the

remaining question items.These empirical results seem to support our earlier position that customer

satisfaction dimensions tend to be industry specific as well as country specific.In that notion, our results have similarities with results reported in otherstudies from other national environments of retail banking (see Laroshe et al.,1986; LeBlanc and Nguyen, 1988; Blanchard and Galloway, 1994;Athanassopoulos, 1999). Yet, the most important issue arising from the list offactors identified in Table VI should be the fact that customer satisfaction isrecognised as a multidimensional construct.


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As it is well known in the literature, there are conflicting empirical findings as

to whether the customers recognise the differential nature of service quality

drivers (see Babakus and Boller, 1992; Davis, 1991; Parasuraman et al., 1988).

The findings of the current study, however, without resolving the issue,

provide additional insights about the possibility of having multiple dimensions

Table V.Measurement modelconcerning thecustomer satisfaction

construct

CSPa Errorb

(F1) Employee competenceThe bank's employees know very well the bank's products 0.65 0.03

You receive prompt service from the bank's employees 0.78 0.03Bank employees have the necessary knowledge to serve you promptly 0.73 0.04Bank employees do not hesitate to find the time to serve you better 0.71 0.04Bank employees know what your needs are and how the bank's products

can satisfy them 0.59 0.06

(F2) ReliabilityIt informs me without errors of my transactions 0.59 0.09If there is a problem, the bank is willing to discuss it with me 0.57 0.04You do not have to visit your bank many times to solve a particular

problem 0.47 0.03It is a bank that is worth trusting 0.71 0.04

(F3) Product innovationThe bank offers a wide product variety 0.60 0.05The bank offers flexible products that meet my needs 0.88 0.02The new products that my bank offers meet my needs 0.74 0.04The bank offers telephone services 0.49 0.03

(F4) PricingThe loan interest rates of my bank are higher than other banks 0.68 0.04The deposit interest rates of my bank are lower than other banks 0.52 0.05I feel I pay a lot on commissions charged 0.61 0.07

(F5) Physical evidenceThere is a warm friendly atmosphere inside the bank 0.78 0.03Employees of the bank are well dressed and appear neat 0.83 0.01The atmosphere inside the bank gives you a positive impression for the

services it offers 0.69 0.02The interior design of the premises facilitates the transactions 0.49 0.07The climate among the bank's employees contributes to receiving better

service 0.61 0.08Employees of the bank have a friendly behaviour 0.82 0.02

(F6) ConvenienceThe bank's branch is near your workplace 0.55 0.08The bank's branch is near other state buildings and other banks 0.79 0.03The bank's branch is near shopping centres I usually visit 0.49 0.08

Notes:a Completely standardised parameterb

Standardised error


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of service quality with the presence of additional factors, such as money forvalue, innovativeness, and convenience.

A similar measurement model was also developed and tested concerning theconsumers' behavioural responses construct. These results are portrayed inTable VII. A clear distinction has been proposed and verified in the resultsconcerning the presence of two dimensions of consumers' behaviouralresponses to customer satisfaction, such as word of mouth communicationsand then a mixture between intention and decision to switch. The latter has

strong managerial implications, since it signals differential behaviouralpatterns between customers thinking of switching to competition and thosethat have already decided to do so. It is understood that the intention ofindividual customers to defect to a different supplier of services does notmaterialise since there are numerous factors that may enable or disable thedefections. Such factors include, inter alia, the presence of a better alternative,the cost to defect, and the time to search for alternatives. The detailed studyabout the relationship between the consumers' intentions to defect and their

Table VMeasurement mod

concerning tbehavioural respons

constru

CSPa Errorb

Word-of-mouth communicationsI have recommended the bank to friends and acquaintances 0.91 0.01

I have encouraged friends and acquaintances to do business with thebank 0.92 0.01

I have informed other customers of the bank about complaints I haveabout the services offered by the bank (R) 0.89 0.02

Intention to switchIn the near future I intend to intensify my efforts to find a better bank 0.93 0.02In the last year I have thought very seriously to switch banks 0.92 0.01I have decided to do less business with the bank in the future 0.94 0.01I have decided to switch to another bank that offers better service 0.96 0.01

Notes:a Completely standardised parameterb Standardised error

(R): denotes reverse coded item

Table VStructural mod

relationships betwecustomer satisfacti

and behaviourrespons

Structural equation model

Chi-square (12 ) 770Degrees of freedom (d.f) 47312/d.f. 1.76GFIa 0.942CFIa 0.962RMSEAb 0.031

Notes:a CFI and GFI values close to 1 indicate a good fitb The lower the RMSEA values, the better the model is considered


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actual decisions is context specific (i.e. there is a difference between services,durable and non-durable goods) that needs to be studied dynamically over along time framework.

ResultsHaving tested the measurement models concerning the constructs of customersatisfaction and behavioural responses, the next step was to link the twoconstructs via the development of a structural equation regression model,whereby the statistical association between customer satisfaction factors andthe behavioural responses factors will be sought. In this model, the twoconstruct factors concerning the behavioural responses will be represented viaan overall ` behavioural response'' latent factor.

In Figure 2, we show the standardised estimates of the relationships amongthe constructs under investigation. As it can be seen in Table VII, the modelexhibits, in an absolute sense, a very satisfactory fit with all statistical indicesscoring very satisfactory.

Prior to discussing the findings of the proposed fitted model in Figure 2, it isworth observing that the behavioural response construct consists of verysatisfactory factor items (intention and decision to switch and word-of-mouthcommunications). The two factors are represented at an aggregate level withouthaving pursued any aggregations in the model fit process. That is, all factorswere presented with their full question-items and no averaging took place forthe question-items of each factor. The coefficients attached to individual pathsfrom the constructs to the latent factors correspond to standardised path

Figure 2.Structural equationcoefficients concerningthe effect of customersatisfaction onbehavioural responses


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coefficients indicating the degree of association between the behaviouralresponses and individual customer satisfaction latent factors. For example, theeffect of the latent factor ` physical evidence'' has path coefficient 0.213 and wassignificant at 1 percent level. Furthermore, at the level of the behaviouralresponses structural factor and also the word-of-mouth and intention/decision toswitch factors we also have information concerning the ``disturbance'' termswhich provide information about the explained covariance of the model. Thedisturbance term for behavioural responses can furthermore be converted intothe pseudo-R2 term similar to a regression fit model. In our case such fit hasbeen 1 0.5022 = 0.74, which is a highly satisfactory result. Turning now to thetwo basic hypotheses of the study we can observe the following:

. H1 predicted that bank consumers would react to customer satisfactionperceptions by engaging in word-of-mouth actions. The word-of-mouthcommunications construct has a significant positive loading on the

behavioural response factor, thus fully supporting H1. As a matter offact, the case of word-of-mouth encapsulates the essence of positiveloyalty in the Greek retail banking environment since the case ofincreased levels of purchasing did not prove to be significant in thestatistical validation of the loyalty construct.

. H2 on the other hand, posited that when bank consumers have inferiorperceptions of customer satisfaction, they would engage in unfavourablebehavioural responses. The construct has significant negative loadings onthe behavioural response factor, hence providing strong support forH2.

Aside of the variation explained, the structural equation coefficients of the six

latent factors of customer satisfaction led to a number of additionalobservations concerning the initial research hypotheses:

. Employee competence affects consumer behavioural responses. The more` exotic'' side of customer satisfaction, statistically valid in themeasurement model of customer satisfaction, proved to have significanteffects on consumers' behavioural responses. In a highly interactiveservice environment, such as that of retail banking, consumersdetermine very often their position concerning the bank from theirattitudes towards staff competence. This reaction can be attributed toeither the limited information customers have concerning the banking

products they use, and also the fact that in an environment where thebanking products are considered as equal, the only differentiating pointis the service provided by people, who are not equal.

. Reliability seems to be a driving force of customers' behaviouralresponses. The factor of reliability reflects to a large extent ` core''components of the service function in the sense that the individualquestion items encapsulate issues associated with the security oftransactions, the mistakes and more generally the feeling of trustpromoted by the bank. The reliability factor exhibited a strong positive


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effect on the behavioural responses of the customers. Furthermore, thecase of reliability can also be seen as a customer satisfaction factorwhich is considered as given since customers would not be prepared totransact with a bank that may run under reduced levels of reliability.

. Physical evidence is a key factor toward the consumers' behaviouralresponses. Physical evidence is also recognised for its importance on theperformance ratings of individual banks. It is important to note thatissues of a tangible nature are better linked to consumer memory andultimately gain higher importance on the behavioural customerresponses. It is also evident that having two factors of a tangible nature,reliability and physical evidence, with such high effects indicates thatthe customer feedback reflects their medium and long-term memory andare not instant reactions to recent contacts with the banks' personnel.Furthermore, the case of physical evidence draws to a large extent

predetermined and not variable levels of satisfaction since havingdecided upon the bank you do business with it means you are to a largeextent satisfied from issues of physical evidence.

. The limited effect of product innovation should not deter us for itsimportance. Product innovation in services has been found in previousresearch as being a quite important element of customer satisfaction. Inthis research, product innovation has been found to have a significanteffect on the behavioural responses of customers. This effect, however,was found to be of less importance compared to other servicesatisfaction characteristics such as employee competence, physicalevidence and service reliability. It must be borne in mind, however, thatin a competitive market where its customers are not known for theirdemanding character for product innovations (see Athanassopoulos,1999), it seems that the case of innovation-based competition will takesome more time before it becomes a driving force of the behaviour ofindividual customers. In any case, the positive effect on behaviouralresponses is a satisfactory result by its own means.

. Value for money does play an important role on the formation ofconsumer behavioural responses. Value for money is indeed a factorassociated with customer satisfaction and, as it was noted, it constitutesan additional dimension in the agenda of customer satisfaction beyond

the familiar dimensions developed by Parasuraman et al. (1988). Valuefor money, therefore, plays a positive role into the customers'behavioural responses. That is, the results indicate that value for moneyhas a negative effect on behavioural responses. This is in line withtraditional theory of quality, indicating that higher customersatisfaction may lead to higher customer tolerance concerning premiumpricing. Pricing is a quite problematic factor in assessing customersatisfaction since it is not clear whether the responses on satisfactionfrom pricing incorporate the level of service or not. Under the


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assumption of pricing as a matter of value for money, the resultsindicate that the behavioural responses are negatively affected by valuefor money assessment.

DiscussionCustomer satisfaction has long been recognised as playing an essential role forsuccess and survival in today's competitive environment. Not surprisingly,considerable research has been conducted on what customer satisfaction meantto customers and developing instruments that measure customer satisfaction.Further, recognising the importance of the link between customer satisfactionand profits, research has contributed to our understanding of the impact ofcustomer satisfaction on financial outcomes of the service providers.

Even though the above issues have not been researched conclusively, thecustomer satisfaction research agenda has now shifted focus. Issues of interesttoday include understanding the effects of customer satisfaction on intendedand unintended consequences on customers. For example, latest researchreports concentrate on the behavioural intentions of customer satisfaction(Zeithaml et al., 1996). Our study attempts to further contribute in this researchstream not only conceptually, but also empirically.

In particular, the purpose of our study was to examine the impact ofcustomer satisfaction on customers' behavioural responses. Our study is one ofthe first in marketing to investigate such effects. Overall, the results providestrong support for the notion of direct effects of customer satisfaction on thebehavioural responses of customers. More specifically, our findings indicatethat when customers assess customer satisfaction to be high, they:

.

decide to stay with the existing service provider; and. subdue their negative behavioural intentions.

Furthermore, our results indicate that customer satisfaction is associatedpositively with word-of-mouth communications.

On a different issue about the empirical assessment of the customersatisfaction dimensions, the research results confirmed prior research on the issueand indicated that the customer satisfaction dimensions are not only industryspecific, but also country specific. Indeed, there is a differentiation on the factorsthat constitute the elements of the service bundle important to customersdepending on industry, culture, and country. In this respect, our research revealed

the existence of six customer satisfaction dimensions (i.e. employee competence,reliability, product innovation, value for money, physical, and convenience).

The empirical findings of our research effort have also practical implicationsfor service providers that strive to organise their service offerings in order toaccomplish their corporate objectives. Service organisations should seek todevelop strategies that enhance positive behavioural responses to customersatisfaction and prohibit negative ones.

Such strategies can include meeting customers' desired-service levels,preventing service problems from occurring, dealing effectively with


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dissatisfied customers, solving service problems effectively when they occur,and confronting customer complaints positively.

Our research effort though it is not without limitations. First, our behaviouralresponses battery needs further development. More specifically, additional itemsare needed to strengthen the psychometric properties of each of the individualscales. Second, the present study investigated only three types of consumers'behavioural responses. Certainly future researchers might consider furtheraugmenting the proposed model by including additional consumers' actualbehaviours, such as loyalty, communicating to internal employees and payingmore. Third, the context of our study (retail banking in Greece) also limits thegeneralisability of the findings. Therefore, the model should be applied in otherservice contexts (e.g. retailing, telecommunications, air transportation, insurance)and other international settings. Finally, data from longitudinal studies would beparticularly useful for capturing the process dynamics of the relationship

between customer satisfaction and behavioural responses.

Note

1. In the remainder of the paper the terms ` service quality'' and ` customer satisfaction'' willbe used interchangeably for convenience purposes, having in mind that the overriding

concept of this paper is the notion of customer satisfaction.

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Appendix. Scale items

(All are five-point scales ranging from 1 (` strongly disagree'') to 5 (` strongly agree'').)

Question items concerning customer satisfactionPlease indicate the degree to which you agree/disagree with each one of the statements below,referring to the characteristics your main bank possesses (offers to you):

. It does not err in informing me of my transactions.

. If there is a problem, the bank is willing to discuss it with me.

. You do not have to visit your bank many times to solve a particular problem.

. It is a bank that is worth trusting.


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. There is a warm friendly atmosphere inside the bank.

. Employees of the bank are well dressed and appear neat.

. The atmosphere inside the bank gives you a positive impression for the services it offers.

.

The interior design of the premises facilitates the transactions.. The climate among the bank's employees contributes to receiving better service.

. Employees of the bank have a friendly behaviour.

. The bank's employees know very well the bank's products.

. Employees of the bank are polite.

. Employees of the bank behave with discretion when you face a problem.

. You receive prompt service from the bank's employees.

. Bank employees have the necessary knowledge to serve you promptly.

. Bank employees do not hesitate to find the time to serve you better.

. Bank employees know what your needs are and how the bank's products can satisfythem.

. The bank's employees often refer you to their supervisors in order not to serve youpersonally and promptly.

. There is ample parking space in your bank.

. The bank's branch is near your workplace.

. The bank's branch is near other state buildings and other banks.

. The bank's branch is near shopping centres I usually visit.

. The loan interest rates of my bank are higher than other banks.

. The deposit interest rates of my bank are lower than other banks.

.

I feel I pay a lot on commissions charged.. The bank offers a wide product variety.

. The bank offers flexible products that meet my needs.

. The new products that my bank offers meet my needs.

. The bank offers telephone services.

. The bank's ATM network collaborates with other banks ATM networks.

. The bank's ATM network is large and serves my needs.

Question items for behavioural responsesPlease indicate the degree to which you agree / disagree with each one of the statements below:

.

In the near future I intend to intensify my efforts to find a better bank.. In the last year I have thought very seriously to switch banks.

. I have recommended the bank to friends and acquaintances.

. I have encouraged friends and acquaintances to do business with the bank.

. I have informed other customers of the bank about complaints I have about the serviceoffered by the bank.

. I have decided to do less business with the bank in the future.

. I have decided to switch to another bank that offers better service.

behavioural responses

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