The effects of service quality perceptions on satisfaction, loyalty and willingness to recommend – A study of delinquent bank customers

Abstract

This study has two objectives. First is to develop a framework assessing the relationships between service quality, customer satisfaction, customer loyalty and willingness to recommend (WtR) in delinquent bank customer setting. Second objective is to evaluate the applicability of SERVPERF type of instrument in delinquent customer setting and to identify the number of service quality dimensions. Delinquent customers are those customers who fail to pay the monthly amount specified in the loan repayment plan. Since delinquent customers are a new area of interest, the applicability of SERVPERF type of instrument has not been evaluated before in this context. Furthermore, this study brings more information in service quality studies, since the number of service quality dimensions is still without a consensus. In addition, the differences between the low-risk and high-risk customer segments are evaluated in this study.

The theoretical base of the study was built on models of service quality, customer satisfaction, customer loyalty and willingness to recommend (WtR). SERVPERF instrument was used as a base for the questionnaire that was developed for the purposes of this study. The data for the study was collected in the autumn of 2011 through a quantitative online survey. All the respondents were customers of a Bank X’s collection department. A total of 164 usable responses were obtained for further analysis. Three main analytical methods were used in the study: factor analysis, correlation analysis, and t-test.

An adjusted framework was built up based on the results. The study identified two distinct service quality dimensions: Humanity and Assurance. The original SERVPERF study identifies five dimensions, which means that this paper contributes to the discussion of service quality dimensions. Results provide evidence that SERVPERF type of instrument is applicable in delinquent customer setting and thus managers can safely use it. Overall the risk-customers were highly satisfied with the service quality. Significant correlations between perceived service quality and customer satisfaction to overall quality were found. Furthermore, results indicate strong relations between satisfaction to overall quality, customer loyalty and willingness to recommend (WtR). In conclusion, the results provide evidence that service quality affects positively to customer satisfaction, which in turn influences customer loyalty and WtR. However, the study revealed that there are no significant differences between low-risk and high-risk customers’ service quality perceptions.