Afzal, 2013
Afzal, 2013
Afzal, 2013
ISSN 1990-9233
© IDOSI Publications, 2013
DOI: 10.5829/idosi.mejsr.2013.18.5.11749
1
COMSATS Institute of Information Technology, Okara, Pakistan
2
University of Education, Okara Campus, Pakistan
Abstract: In order to compete and survive successfully in today’s dynamic environment, all the service
providing organization focus on enhancing their customer base that arise after the fulfilment of needs and
wants of customers to maximize their ultimate profitability. Therefore, researchers all around the world have
emphasized on the customer satisfaction and customer loyalty. The current research study endeavours to
find out the relationship among customer satisfaction, demographics and customer loyalty. The data was
collected from a sample of 200 customers from different banks of Pakistan. The collected data then analysed
by Microsoft excel and SPSS16 by applying descriptive statistics and chi square analysis. The results
revealed that there was a positive impact of demographical characteristics and customer satisfaction on
customer loyalty.
Corresponding Author: Naureen Afzal, COMSATS Institute of Information Technology, Okara, Pakistan.
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Literature Review: To improve organizational about industry competiveness also influences level of
productivity and profitability, all the service providing satisfaction and loyalty. Continuous benefit packages
businesses are focusing now a day on the satisfaction provided by bank enhance customer satisfaction.
level of customers that lead to customers’ loyalty because Therefore customer value enhancement must be the
a satisfied and gratified customer is free advertiser of prime management focus [10]. However, focus only on
business, whether large or small. These days, banking satisfying the customers is not sufficient as it does not
sector of Pakistan is becoming competitive day by day. retain customer because due to service quality and loyalty
Like other businesses banking sector is also formulating issues, customers mostly switch from bank to bank [11].
customer based strategies generate more and more profits And due to poor services they terminate their relation
from existing loyal and retained customer than to create with the bank [12]. This behaviour has a significant impact
new customer base. Bank policies to make their staff more on plans involved in customer’s decisions regarding
customers focussed and service oriented lead to long selecting their banks. Thus satisfaction is the criteria for
term customer relations Banking industry in Pakistan is building long term customer relations and loyalty.
highly competitive. The possibility to select and recommend a bank is
Moreover, innovative services provided by foreign influenced by Customer satisfaction. It nurtures loyalty
banks operating in Pakistan like Standard Chartered up to extent that develops attitude to select and
Bank Ltd Dubai Islamic Bank Ltd etc. are exerting more recommend and eventually adopting the banking channel.
competitive pressures on locals banks as they have to Loyalty can be generated when customer recommend the
provide services on the same lines as foreign bank to same banking channel to others and this will only be
capture same market segment.Banks have to introduce possible when the customer will first be satisfied having
diverse products and services as the competition positive attitude towards the services of bank [13].
increases with enhanced service quality and satisfaction. It is a very good chance for those companies having
Need is to attract and retain customers by these satisfied customers to convert them into loyal ones over
strategies as many banks are losing their customer base a period of time. To satisfy and then retain customer is
to due to this increasing banking rivalry. [6] Customer necessary for banks to survive and prosper in competitive
dissatisfaction and different demographic factors are industry [14]. However, customer satisfaction is not the
the key elements in shifting attitude and they demonstrate only enough goal and to have gratified customers is vital.
bank inefficiency to retain customer base. In these This is the case where customer satisfaction leads to
circumstances, enhancing customer satisfaction is customer loyalty. Building customer loyalty becomes
considered as an essential element in sustaining long-term competitive advantage of a service provider. This is
customer relationship [7]. actually a marketing objective recycled by all market
Both the type of customer relationship and bank are players [15].
essential in banking industry and customer satisfaction Customer loyalty should be the ultimate objective of
and retention is based on nature of customer and service organizations [13]. A highly satisfied customer will be
quality. Many previous researchers have identified the more loyal for the bank and that loyal customer will be
determinants of generating valued customer base and less inclined towards attractive marketing by competitors
their perception about service in different cultures that [7]. Possibility of recommending the services of same
cannot be generalized in Pakistani context. For example, banking channel and maintaining long term relationship
the crucial factors that have an impact on satisfaction which generate high profits are positively related with the
level of customers are age level, confidentiality and satisfaction level [16]. Long term buying patterns can
speed of transaction, bank staff friendliness, billing be examined by loyal and gratified customers [14].
precision, billing clearness, billing properness, price Similarly all the repeated customers are mostly satisfied
affordability and service orientation [8]. A Bahraini and ones and they never think to switch to other financial
survey conducted among college students specified that institution [17].
young customers while choosing their banks paid more In the same, study in North American banking
attention on determinants like reputation of bank, industry explained positive relation between customer
appropriate location of branch ATM and parking area satisfaction level and loyalty [18]. Rust an zahorik (1993)
provided [9]. [19] reveald greater repurchase intentions with greater
Customer satisfaction in banking industry is driven level of satisfaction level.Moreover, the intention to
by fundamental performance dimensions of service switch is decreased by high level of customer satisfaction
provider. Moreover, retail bank’s perception and interest characterised by different demographic patterns [15].
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The importance of quality of service, its awareness Customer. This study is focussing on the different
among people and its relation with the satisfaction level demographic factors of customers that create satisfaction
is highly emphasized in service providing industry and finally loyalty is built by satisfied customers.
[20, 21]. So, it is concluded by many researchers that
important ingredient of customer satisfaction is quality Objective: Gap is found from previous data that no study
service. Willingness to terminate banking relation is was significantly made in Pakistani Context on customer
continuously decreased as the loyalty with service demographic factors, satisfaction level and its impact on
provider increases. Further, it was explained by customer loyalty. The objective of my study will be to
Chakravarty, Feinberg and Rhee (2004) [22] that a large examine what actual impacts on the loyalty of bank
percentage of those customers leave their banks that customers due to customer satisfaction and different
have some bad experiences in recent past. As a demographic patterns.
dissatisfied customer share his bad experiences with
other potential customers and it damage the reputation The Objective of My Study Is to Determine If Any:
of bank. This concludes that customer satisfaction,
demographics and loyalty are highly inter related that Relationship of customer demographic factors and
build selection criteria for the bank. loyalty of customers in banking sector of Pakistan.
Now days, all service providers are in competition Relationship of customer satisfaction and loyalty of
to create loyal customers market share. As in this case customers in banking sector of Pakistan.
marketing, operational expenses are reduced and
profitability is enhanced. Moreover loyal customers are Research Question:
already familiar with the organization culture and less
information cost is incurred. They become part time To what extent customer customers demographics
advertiser of that service industry. Therefore, they not have an impact on customer satisfaction?
only stuck to organization themselves, being cheapest To What extent customer satisfaction has an impact
for firm but also serve as marketers for the potential on customer’s loyalty?
customers of business. Therefore in this era in order to
build loyal customer, every bank must first generate Theoretical Framework: The theoretical model of this
profile of their customers then they should meet their research is as under in which customer demographics
expectation in order to develop their repurchase and customer satisfaction are independent variable
intentions [23]. while customer loyalty act as dependent variable.
Customer satisfaction and customer loyalty is further
Background of Study: It has not so for been decided as operational zed into different elements.in the same way
how the word bank originated. Banking is in fact as demographics is also converted into segments as age,
primitive as human society. From the times when man gender, qualification etc.
realizes the importance of money as medium of exchange,
the need of a controlling agency was felt. Modern
banking evolved through era of Greeks, Chinese, Romans
and Egyptians when people not only deposited their
money but also kept ornaments for safety and security.
Modern bank can be defined in Law and banking
Dr.Herbert L.Hart as. “a person or company carrying on
the business of receiving moneys and collecting drafts
for customers to the obligation of honouring cheques
drawn upon them from time to time by the customers to
the extent of amount available on their accounts. ”Now a
day’s many types of banks are in our society like
commercial banks, retail banks, merchant’s bank,
investment bank, mortgage bank, saving bank, central
bank.etc. But one thing is common between all. That is Fig 7.1: theoretical model
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H2: There is an impact of age on customer loyalty in not be useful because customers are dispersed and to
banking sector of Pakistan. collected data within a time frame will not be possible.
The data regarding the qualitative variables will be
H3: There is an impact of Gender on customer loyalty collected through the adopted questionnaire. A five point
in banking sector of Pakistan. likrt scale was developed in which responses ranges
from 1-5, 1= strongly disagree, 2 = disagree, 3 = neutral,
H4: There is an impact of Academic qualification on 4= agree, 5 = strongly agree. Scale reliability was
customer loyalty in banking sector of Pakistan. measured by Cranach’s Alpha and it was found
significant of.788. Questionnaire is based on three
H5: There is an impact of marital status on customer portions, customer satisfaction and customer loyalty and
loyalty in banking sector of Pakistan. is also including questions to collect demographic
patterns regarding age, gender, occupation. Qualification,
H6: There is an impact of duration of relationship on monthly income.
customer loyalty in banking sector of Pakistan. The data is analysed by using Microsoft excel and
SPSS-16 and finding are analysed and interpreted by
H7: There is an impact of customer category on customer different descriptive statistics, demographic frequencies
loyalty in banking sector of Pakistan. and chi- square analysis.
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32.5% respondents were salaried income people. When Above table shows chi-square value of 432.550 and
respondents were analysed with age perspective it was significance value of.000 which is less than critical value
found that people of age between 26-45 were 77% of total of 0.05.therefore H4 is accepted that there is a positive
more loyal to their bank than young customers. Data impact of academic qualification on customer loyalty.
showed 9.5% were below age of 30.Academic qualification
reveals that mostly respondents (small businessmen) were 5: Association between marital status and customer
graduation as they were 78 % of total data. loyalty
Marital status Customer loyalty
Chi-square Analysis: Chi-Square 52.020 b
1.094E2 a
Df 1 19
1: Association between customer satisfaction and
Asymp. Sig. .000 .000
customer loyalty
Customer satisfaction Customer loyalty
Above table shows chi-square value of 52.020 and
Chi-Square 1.298E2b 1.094E2b
significance value of.000 which is less than critical value
Df 22 19
of 0.05.therefore H5 is accepted that there is a positive
Asymp. Sig. .000 .000
impact of marital status on customer loyalty.
Above table shows chi-square value of 1.298 and
6: Association between duration of relationship with the
significance value of.000 which is less than critical value
bank and customer loyalty
of 0.05.therefore H1 is accepted that there is a positive
impact of customer satisfaction on customer loyalty. Duration of relationship Customer loyalty
Chi-Square 17.980b 1.094E2b
2: Association between age and customer loyalty Df 5 19
Age Customer loyalty Asymp. Sig. .003 .000
Chi-Square 74.680a 1.094E2b
df 3 19 Above table shows chi-square value of 17.980 and
Asymp. Sig. .000 .000 Asymp.sig. Value of.003 which is less than critical value
of 0.05.therefore H6 is accepted that there is a positive
Above table shows chi-square value of 74.680 and impact of duration of relationship on customer loyalty.
significance value of.000 which is less than critical value
of 0.05.therefore H2 is accepted that there is a positive 7: Association between customer category and customer
impact of age on customer loyalty. loyalty
Customer category Customer loyalty
3: Association between genderand customer loyalty Chi-Square 56.830b 1.094E2b
Gender Customer loyalty Df 2 19
Chi-Square 7.220a 1.094E2b Asymp. Sig. .000 .000
Df 1 19
Asymp. Sig. .007 .000 Above table shows chi-square value of 56.830 and
Asymp.sig. Value of.000 which is less than critical value
Above table shows chi-Square value of 7.220 and of 0.05.therefore H7 is accepted that there is a positive
significance value of.007 which is slightly greater than impact of category of customer on customer loyalty.
critical value of 0.05.therefore H3 is rejected that there is Therefore, overall findings revealed that there is
an impact of gender on customer loyalty positive impact of customer satisfaction on customer
loyalty and customer demographics (age, gender,
4: Association between academic qualification and academic qualification, customer category, customer
customer loyalty relationship tenure) on the loyalty level of customers as
Academic qualification Customer loyalty when they are satisfied with their service provider only
Chi-Square 432.550b 1.094E2a then loyalty builds for primary bank and they never
Df 4 19 switch to other financial service providers of same
Asymp. Sig. .000 .000 industry.
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