CUSTOMER LOYALTY IN RETAIL GAMBLING

BY VANDEN BOWEN // 163801

Summary

Method

Model 2

Revised Conceptual Model

The UK retail gambling industry has changed considerably over the last decade, with market contraction and consolidation taking place. This dynamic is expected to continue. Although the introduction of the internet has produced new opportunities for retail bookmakers, it has created significant challenges; the internet has expanded consideration sets for customers and intensified competition. It is now widely accepted that a loyal customer base has the potential to both increase revenues and reduce costs (Gremler and Brown, 1998), resulting in greater profitability. As no previous academic work could be found, the study aimed to identify the possible antecedents (determinants) of customer loyalty in the retail gambling industry of the UK. A review of the extant literature was first undertaken to construct a hypothetical conceptual model, which was then used to guide the collection and analysis of customer perspectives through the use of questionnaires. Preliminary results of the questionnaires were then used to inform in-depth interviews with practitioners for purposes of confirmation, triangulation and meaning. Following the synthesis of existing theories and primary research, the hypothetical conceptual model was revised to find that a number of antecedents were interrelated; satisfaction, relationships with employees and service quality were found to be directly linked to loyalty, whilst other constructs were considered indirectly associated to loyalty through a mediatory role. Although the exploratory nature of the study limited the degree to which generalisations could be made, the provision of competitive offerings and exceptional levels of service were considered crucial aspects of developing effective loyalty strategies.

Both deductive and inductive methodological approaches were utilised in the study, identified by Saunders et al (2007) as a feature of a pragmatic research philosophy; the principal argument of which is that the most important determinant of the research philosophy is not the way in which it is approached, but the use of appropriate mechanisms in relation to the research question (Robson, 2002). The pragmatic research approach extended to data collection, as mixed methods research was used. 70 Customer questionnaires were distributed to collect quantitative data as it enabled the testing of hypotheses, exploration of relationships and identification of trends (Saunders et al, 2007). 2 Practitioner interviews collected qualitative data for purposes of confirmation, triangulation and meaning. Questionnaires were distributed using convenience sampling in a betting shop in Bath. The research method tested the hypothetical conceptual model by asking respondents questions measuring their levels of attitudinal and behavioural loyalty and the possible antecedents in the context of retail gambling. For purposes of reliability and comparison, the questionnaire made use of instruments that had been used successfully in previous studies which assessed loyalty in other service environments. Questionnaire data analysis involved descriptive analysis using Microsoft Excel, with scores of less than 3 indicating disagreement, scores of 3 indicating impartiality and scores higher than 3 indicating agreement. Quantitative data was also subject to and statistical analysis using SPSS. Audio recorded, semi-structured interviews were conducted after the preliminary questionnaire results had been distributed to practitioners. Practitioners were asked to discuss the quantitative data, resulting in the production of a practitioner perspective of the possible antecedents of customer loyalty in the UK retail gambling industry. Interview data analysis involved data reduction and verbatim quote extraction.

The collection and analysis of quantitative data was used to inform practitioner interviews. The findings of the practitioner interviews were synthesised with the questionnaire results and existing academic discourse to revise the conceptual model of the possible antecedents of customer loyalty in the UK retail gambling industry.
Perceived Value

Satisfaction

Brand Image

Perceived Superiority of Offerings

Relationship with Employees

Social Bonding

Service Quality

Loyalty
Switching Costs

5 2 Introduction
New technologies have presented operators in the UK retail gambling industry with both opportunities and challenges; the internet has intensified competition and widened consideration sets for customers, and maintaining a profitable retail estate has become a central issue of concern for bookmakers. It is now widely accepted that a loyal customer base has the potential to both increase revenues and reduce costs (Gremler and Brown, 1998), resulting in greater profitability.

Results
Commitment Proportionate spend

Allowing for unreturned and unusable questionnaires, the response rate for the questionnaire equated to 77%. When compared to a Mintel study (King, 2011), the demographic data was broadly indicative of what one might expect from the UK betting shop population. The survey population as a whole displayed slight levels of both attitudinal and behavioural loyalty. Individual responses were then ranked by loyalty score, with the lowest quintile (disloyal) and highest quintile (loyal) compared for analytical purposes:
5.0 'Disloyal' All 'Loyal'

Attitudinal Loyalty
Trust

Behavioural Loyalty
Willingness to co-operate Willingness to recommend

Conclusions

Research Question and Objectives

Mean Score

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 SATISFACTION BRAND IMAGE SERVQUAL SOCIAL BONDING PERC. VALUE PERC. SUP OFF. REL. EMP

The study aimed to provide operators without the resources to conduct their own research a starting point for customer loyalty strategies; in order to do this the following research question was answered: What are the possible antecedents of customer loyalty in the UK retail gambling industry?

To summarise, the completion of the research objectives has resulted in the production of a new conceptual model of customer loyalty in UK retail gambling. Those confident of the reliability of the model can conduct their own small scale research or build on it through further contextual study. The most important managerial implications of the study concern satisfaction, service quality and relationships with employees: satisfaction is the result of an efficient service and competitive offerings. It is considered a prerequisite to loyalty; whilst betting shop operators with high levels of customer dissatisfaction should focus their efforts on the eradication of dissatisfaction, attempts to gain loyalty through increasing high levels of satisfaction may be subject to diminishing returns. Instead, retail gambling loyalty strategies should be geared toward the provision of exceptional levels of customer service and the development of meaningful relationships with customers. The primary limitation of the study was an unavoidable one: whilst convenience sampling is beneficial for conducting exploratory research (Henry, 1990), there is a low likelihood of the sample being representative. Consequently, the results should not be considered indicative of the whole UK retail gambling population until confirmed on a generalisable sample. Three avenues for future research were suggested: 1. Replication of the study on a similar scale. 2. Conducting the study on a generalisable sample. 3. A more specific study investigating fewer antecedents in greater depth.

Answering the research question required the completion of the following objectives: 1. 2. 3. Creation of a hypothetical conceptual model for the antecedents of customer loyalty in UK retail gambling. Subsequent testing of the hypothetical conceptual model through primary research. Creation of a revised conceptual model for the antecedents of customer loyalty in UK retail gambling.

The results pertinent to each of the hypotheses were analysed using descriptive analysis: in every instance, respondents displaying higher levels of loyalty were more likely to agree with questions which assessed the possible antecedents of their loyalty. This trend was subject to further confirmation when Kendall Tau-B B correlation coefficient analysis was undertaken; whilst the strength of the relationships varied, it was evident that each of the possible antecedents played a role in loyalty formation. Satisfaction, relationships with employees and service quality were directly associated with loyalty, whilst perceived value, brand image, social bonding and perceived superiority of offerings played an indirect role. Practitioners agreed with the majority of the findings, whilst providing insights which answered the research question in greater depth.

In an effort to answer the research question in greater depth, a subordinate objective was proposed: 4. Where applicable, highlight the managerial implications of any findings.

Model 1

Hypothetical Conceptual Model 6 Discussion 8 Reflections

The slight levels of loyalty displayed by the survey population paralleled previous studies in the context of casino gambling (McCain ( 2003; Phillips et al, 2010); ); the homogenous nature of the service and intense competition appear to reduce the costs of switching for customers, increasing their propensity to look and use alternatives. Descriptive and statistical analysis confirmed relationships between the possible antecedents and loyalty, although many of the constructs were found to be weaker, indirect and interrelated; such behaviour suggests that it is the synergistic efforts of the constructs which creates loyalty. Whilst such findings produce managerial complications, practitioners considered the provision of competitive offerings a prerequisite to loyalty, and the delivery of excellent service crucial in loyalty formulation. Customer-questionnaire questionnaire responses and practitioner feedback relevant to the direct antecedents of loyalty were consistent with academic discourse identified in the literature review; in line with Oliver (1990), satisfaction was identified as a prerequisite to loyalty, whilst service quality and relationships with employees were considered primary drivers of customer loyalty. The indirect and mediatory nature of the other possible antecedents that were assessed in the study provided further evidence that service loyalty variables differ from service to service. These findings paralleled the sentiments of Harrison (2000), and provide a sound rationale for further study to be undertaken.
Proportionate spend

Following a literature review, widely accepted loyalty indicators, their possible antecedents and their respective hypotheses were combined to form a conceptual framework; they are useful in assisting in the development, refinement and discussion of ideas surrounding exploratory concepts (Robson, 2002).

Perceived Value

H4 Satisfaction

H2

Service Quality

Whilst I was satisfied with the finished report, the process itself was by no means straightforward; despite starting the project early, I felt that I could have been more organised throughout. I began to consider my dissertation at the end of my second year and read around prospective areas of interest during the summer, this helped me to start the dissertation module with a strong grasp of the direction and scope of my project; but my lack of organisation during the project hindered my ability to plan and respond to factors beyond my control. I expected data access to be relatively straightforward, but my employer was reluctant to allow an unpaid work placement, which I required for secondary data collection and documentary analysis; had I been more organised, I would have requested permission well in advance, clearly articulated the potential value of the project and ensured I had a backup plan. I was not as organised as this and refused to consider alternatives until I had no other choice; my hesitance to modify my proposed project put me behind schedule and hindered my progress. After I finally changed the research methods, I was pleased with the data collected; I attribute this to careful thought of the results and discussion chapters at the research design stage, as well as the helpfulness, enthusiasm and professionalism of the participants. My willingness to learn from and incorporate the ideas of practitioners helped me utilise the interviews, this made for an interesting and enjoyable discussion chapter and a balanced study. Sourcing and working closely with practitioners also gave me the opportunity to develop my networking and interpersonal skills. Although I was warned that qualitative data analysis was time consuming, it took longer than expected, and I would have definitely benefited by conducting the interviews sooner rather than later. I was pleased with my ability to study independently throughout the module. Had I lacked this skill, it is unlikely that I would have been able to implement basic statistical analysis in to the project, the addition of which gave me confidence in both the results and report. At points during the development of the project, I struggled to stay focused and maintain my initial levels of enthusiasm when the project ran in to complications. Toward the end of the production of the report, I became better at managing my frustration after realising it only hindered my progress. I now realise that some of the complications and frustrations that I experienced were unavoidable, and perhaps necessary; as a complex piece of work, it was irrational to expect instantaneous outcomes when improvements can only emerge after time and effort. All things considered I feel that the project came together well; however, greater organisational and time management skills would have enhanced the end study and aided me in balancing the project with other commitments which also required my attention and effort throughout the module.

Relationship with Employees H1 Social Bonding

Brand Image

H7

H5

Perceived Superiority of Offerings

H8

H3

Loyalty
H6 Switching Costs

Commitment

H9 Attitudinal Loyalty Behavioural Loyalty

Following the discussion, the conceptual model (model 2) was revised.

Trust

H10

Willingness to co-operate

Willingness to recommend

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