Business Strategy Series

Emerald Article: Satisfaction and trust on customer loyalty: a PLS approach

Bee Wah Yap, T. Ramayah, Wan Nushazelin Wan Shahidan

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To cite this document: Bee Wah Yap, T. Ramayah, Wan Nushazelin Wan Shahidan, "Satisfaction and trust on customer loyalty: a PLS
approach", Business Strategy Series, Vol. 13 Iss: 4 pp. 154 - 167
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Satisfaction and trust on customer loyalty:

a PLS approach
Bee Wah Yap, T. Ramayah and Wan Nushazelin Wan Shahidan

1. Introduction

Bee Wah Yap is a Lecturer

in the Faculty of Computer
& Mathematical Sciences,
Universiti Teknologi MARA,
Selangor, Malaysia.
T. Ramayah is a Professor in
the School of Management,
Universiti Sains Malaysia,
Minden, Malaysia.
Wan Nushazelin Wan
Shahidan is a Lecturer in
the Faculty of Computer
& Mathematical Sciences,
Universiti Teknologi MARA,
Perlis, Malaysia.

The concept of customer satisfaction has received much research attention in recent years.
Satisfying customers is a business challenge in todays competitive marketplace. Today,
firms have realized how important it is to understand, meet and predict customers needs.
Customers have also become increasingly conscious of their value to their banks. Due to the
highly competitive nature in the banking sector, customers will be the key factor in
determining the success of the enterprise. In short, under such intense competition, the
bank that has the largest customer base and the highest customer retention rate will be a
market leader in the industry. Hence, knowing customers needs how they feel about the
company and their expectations have become critically important for maximizing customer
retention.
Studies have shown that the long-term success of a firm is closely related to its ability to
adapt to customer needs and changing preferences (Takala et al., 2006). However, there are
instances when satisfying customers is just not enough. Recent evidence shows that
customers may switch some or all of their businesses to other suppliers even when they are
fully satisfied (Buttle et al., 2002). There are many reasons why customers are likely to
change to other firms. Process improvements, the advent of new technology in banking,
change in customers priorities, customer personalization and improved quality of service
provided by competitors are just a few examples.
Research has shown that there is a positive relationship between customer satisfaction and
financial performance (Fornell et al., 1996). Another important issue is that customer loyalty
is increasingly being recognized by American businesses as a path to long-term business
profitability (Mittal and Lassar, 1998). Some business analysts have suggested that the cost
of recruiting a new customer is five times more than the cost of retaining an existing customer
(Reichheld and Sasser, 1990; Lam and Burton, 2006). Customer loyalty is also deemed as
critical to the conduct of business in todays competitive marketplace and banks are no
exception (Ehigie, 2006). Studies have shown that there is a positive relationship between
customer satisfaction and loyalty in the banking sectors (Hallowell, 1996; Lam and Burton,
2006; Ball et al., 2006). These studies have shown that customer satisfaction is a leading
factor in determining loyalty. In other words, the degree to which customers are satisfied with
their banking experience plays a central role in their loyalty to the bank. However, there are
also studies that suggest trust is more important than satisfaction in ensuring loyalty
(Ranaweera and Prabhu, 2003; Caceras and Paparoidamis, 2007).
Most banks outsource projects on customer satisfaction to survey companies while some
carry out their own small scale customer satisfaction surveys to improve their services.
However, most banks do not place emphasis on studying the level of trust and loyalty of their
customers. According to Reichheld (1993), satisfied customers are more likely to
concentrate their business with one bank. Studies by Kish (2000) and, Duncan and Elliot

PAGE 154

BUSINESS STRATEGY SERIES

VOL. 13 NO. 4 2012, pp. 154-167, Q Emerald Group Publishing Limited, ISSN 1751-5637

DOI 10.1108/17515631211246221

(2002) showed links between customer loyalty and organizational profitability, thus implying
that any organization with loyal customers has considerable competitive advantage. Hence,
in studies on customer satisfaction, trust and loyalty are essential and useful for banks in
developing their strategies for better customer retention. In order to gain competitive
advantage and overcome the problem of customer switching or defecting, it is imperative
that banks measure their customer satisfaction, trust and loyalty level. There are several
variations of the CSI model. The objective of this paper is to test a proposed CSI model and
re-examine the interrelationships between service quality, satisfaction, complaint handling,
trust and loyalty. The proposed conceptual model is given in section 2. A description of the
research methodology is presented in section 3 while the findings are discussed in section
4. The conclusion in section 5 highlights the aims achieved, limitations of the paper and
further possible research.

2. Conceptual foundation
2.1 Review of CSI models
All customer satisfaction indices are usually calculated based on a structural model that
consists of antecedents and consequences of customer satisfaction. This section presents
several variations of CSI models. In the middle of the 1990s, CSI was gradually recognized
by governments and companies worldwide as a good instrument for measuring a nations or
companys output quality. The American Customer Satisfaction Index (ACSI) model
(Anderson and Fornell, 2000) introduced in 1994 is a structural model that links the latent
variables of customer expectations, perceived quality and perceived value to customer
satisfaction. Satisfaction is then linked to customer complaints and loyalty. The successful
experience of the Swedish and American customer satisfaction indexes inspired the
creation of the European Customer Satisfaction index (ECSI), founded by the European
Organization for Quality (EOQ), the European Foundation for Quality Management (EFQM),
and supported by the European Commission (DG III) (Martensen et al., 2000). The ECSI has
a similar model to the ACSI. Although the core model is standard, there are some variations
between them. The split between product quality (hardware) and service quality
(software) has been generalized. Quality is related to the consumers quality experience with
a service, and refers both to product quality or hardware and service quality or software. In
the ECSI model, the variable customer complaints was not taken into account. The
variable corporate image was included with effects on customer expectations, satisfaction
and loyalty. Graphically the ECSI model is displayed in Figure 1.
The CSI models have evolved year by year and additional factors have been included for the
main purpose to explain loyalty better. For example, a study by Ball et al. (2004) introduced
trust and communication in the ECSI model and their latest study in 2006 introduced
personalization as an antecedent of customer satisfaction, trust and also customer loyalty as
shown in Figure 2. From the model reported by Ball et al. (2006) the customer satisfaction
index (CSI) model consists of antecedents of customer satisfaction and the consequents of
customer satisfaction. Customer satisfaction is explained by a firms image, the customers
expectation, perceived value, perceived quality, and communication between firm and
customer and personalization. The two consequents of customer satisfaction are customer
loyalty and customer complaints. The antecedents of loyalty are customer satisfaction,
complaint handling, trust and personalization.
2.2 The proposed CSI model
Figure 3 presents the proposed research model of the study which was adapted from the
revised European Customer Satisfaction Index (ECSI) model by Ball et al. (2006). The
proposed model focuses on service quality as the key antecedent of customer satisfaction
and three antecedents of customer loyalty (trust, satisfaction and complaint handling). The
main difference between this model and the ECSI model is that satisfaction is proposed as
an antecedent of trust. This model also hypothesizes that complaint handling has an effect
on satisfaction, trust and loyalty.

VOL. 13 NO. 4 2012 BUSINESS STRATEGY SERIES PAGE 155

Figure 1 The European Customer Satisfaction Index (ECSI) model

Figure 2 The updated European Customer Satisfaction Index (ECSI) model revised by
Ball et al. (2006)

Customer expectation is not included in the proposed model because some studies have
found that customer expectation has no or very little impact on customer satisfaction and
loyalty (Martensen et al., 2000; Johnson et al., 2001). Moreover, Martensen et al. (2000)
recommended that the expectation variables be excluded in future ECSI models. The study
by Turkyilmaz and Ozkan (2007) also showed customer expectations have the lowest effect
on satisfaction. Although the study by Martensen et al. (2000) found that image has the
largest impact on satisfaction and loyalty, the study by Aydin and Ozer (2005) reported that
corporate image does not have a statistically significant effect on loyalty. The proposed CSI
model therefore concentrates only on five latent variables which are trust, perceived service
quality, satisfaction, complaint handling and loyalty.

PAGE 156 BUSINESS STRATEGY SERIES VOL. 13 NO. 4 2012

Figure 3 Proposed model and hypothesis

A detailed explanation of the variables (or factors) of the proposed CSI model is given as
follows.
2.2.1 Service quality. Gronroos (1984) proposed the concept of service quality whereby
service quality consists of two dimensions: technical quality which is the quality of what is
delivered; e.g. the quality and effectiveness of loan procedures of the bank, and functional
quality, which is the quality of how the service is delivered the care and manners of the
delivery personnel. Meanwhile, Fornell et al. (1996) defined two types of perceived quality,
which are product quality and service quality. Perceived product quality is the evaluation of
recent consumption experience of products while perceived service quality is the evaluation
of recent consumption experience of associated service like customer service, conditions of
product display, and the range of services and products. This study focuses on perceived
service quality because the industry selected in this paradigm, i.e. banking industry, is a
service industry (Levesque and McDougall, 1996).
Parasuraman et al. (1998) proposed five dimensions of the service experience in their
well-known SERVQUAL model. SERVQUAL measures service quality as five dimensions:
reliability, responsiveness, assurance, empathy and tangibles.
Delivery of high service quality to customers offers businesses an opportunity to
differentiate themselves in competitive markets (Yavas and Benkenstein, 2007). Service
quality seems to lead to positive word-of mouth, lessening of complaint tendencies and
continuity in bank-customer relationship (Caruana, 2002). Levesque and McDougall (1996)
stated that high service quality results in customer satisfaction and loyalty, greater
willingness to recommend to someone else, reduction in complaints and improved
customer retention rates. In this study, perceived service quality is defined as the
evaluation of relational service (or customer service) and enabling service features (such
as convenient branch locations, operating hours and range of services). The items for
service quality were adapted from the work of Beerli et al. (2004). Thus the following
hypothesis is proposed:
H1.

Service quality has a positive effect on satisfaction.

VOL. 13 NO. 4 2012 BUSINESS STRATEGY SERIES PAGE 157

2.2.2 Customer satisfaction. As reported by Fornell et al. (1996) customer satisfaction

improves a companys performance. Customer satisfaction has been conceptualized in two
different ways: transaction-specific satisfaction and overall satisfaction. Most studies focus
on overall satisfaction which refers to the customers overall (dis)satisfaction with the banks
based on all encounters and experiences with the particular bank. When dissatisfaction
occurs, customers become less likely to utilize additional services in the future, and more
likely to engage in switching behavior and vice-versa. According to Hansemark and
Albinsson (2004), satisfaction is an overall customer attitude towards a service provider or
an emotional reaction to the difference between what customers anticipate and what they
receive, regarding the fulfillment of some need, goal or desire. Customer satisfaction is
found to be positively correlated with customer loyalty (Hallowell, 1996; Bendall-Lyon and
Powers, 2003; Lam and Burton, 2006; Ball et al., 2006).
In this study, satisfaction is defined as an overall customer attitude towards a service
provider. The customer satisfaction measures were adapted from the work by Levesque and
McDougall(1996), and Dimitriades (2006) and the following hypothesis is proposed:
H2.

Satisfaction has a positive effect on trust.

H3.

Satisfaction has a positive effect on loyalty.

2.2.3 Trust. The study by Doney and Cannon (1997) showed that perceived service quality
was positive and significantly affects trust, and trust has positive and significant effects on
loyalty. Ranaweera and Prabhu (2003) argued that trust is a stronger emotion than
satisfaction and that it may therefore better predict loyalty. Their study confirmed that trust
has positive effect on retention or loyalty. Trust was also found by Hsu (2007) to have a
positive effect on loyalty and it helps to attract new customers and later can retain existing
ones besides influencing overall satisfaction.
According to Aydin and Ozer (2005), in order to gain trust; one party must believe that
another party will perform actions that will result in positive outcomes for it and the customer
should perceive quality as positive. Therefore, in building trust, the customer should not only
perceive positive outcomes but also believe these positive outcomes will continue in the
future. Their results showed that perceived service quality positively affected trust and trust
has positive effect on loyalty. According to Ganesan (1994), trust has two components:
performance or credibility trust and benevolence trust. Hence this study defined trust as
belief that the service provider will deliver as promised (credibility trust). and belief that the
service provider is acting in the best interests of the customers and will not take advantage of
the relationship (benevolence trust). The trust measure consists of four items adapted from
Ball et al. (2004) and Ball et al. (2006). Thus, the following hypothesis was proposed:
H4.

Trust has a positive effect on loyalty.

2.2.4 Loyalty. Loyalty of a firms customer has been recognized as the dominant factor in a
business organizations success. In the study by Lam and Burton (2006) they found that loyal
customers are more likely to participate in repeat purchases from a supplier or increase their
share of purchases from a particular supplier. They may also provide a recommendation of
business to their bank provider or engage in word of mouth promotion. Customer loyalty can
also lower costs and increase profitability, as the cost of recruiting a new customer is said to
be five times more than the cost of retaining an existing customer. It is also claimed that the
costs of customer retention are substantially less than the relative costs of customer
acquisition, and loyal customers, if served correctly, are said to generate increasingly more
profits each year when they stay with a company (Reichheld and Sasser, 1990; Lam and
Burton, 2006).
There are two dimensions to customer loyalty: behavioral and attitudinal. Behavior
dimension refers to a customers behavior on repeat purchases and indicates a preference
for brand or service. Attitudinal dimension refers to a customers intention to repurchase and
recommend, which are good indicators of loyal customers (Dick and Basu, 1994).

PAGE 158 BUSINESS STRATEGY SERIES VOL. 13 NO. 4 2012

According to Ehigie (2006) loyalty can be defined as a feeling of commitment on the part of
the customer to a product, brand, marketer or services: staying with same provider, likely to
take out new products with the bank and recommend the banks services. He also stated that
loyal customers visit banks more frequently than newly acquired customers do, and they can
be served at a reduced operating cost because there will be fewer complaints to deal with.
Loyalty includes a customers intention to return to a service provider as well as their intention
to recommend the provider to others (Bendall-Lyon and Powers, 2003) and a customers
desire to continue the relationship (even if competitors lower prices), willingness to
recommend to a friend, and intentions to continue patronizing (Ball et al., 2006).
Studies have shown that customer satisfaction is correlated with loyalty, and satisfaction has
been claimed to be a leading factor in determining loyalty (Ehigie, 2006). When customers
are not satisfied with the bank they are less likely to purchase additional services and then
this will lead to switching to other providers, as well as leading to negative word-of-mouth
(Bendall-Lyon and Powers, 2003). This study defined loyalty as the intention of customers to
continue to stay with the bank, intention to repurchase or return for future purchases and
willingness to recommend the bank and service to others. The loyalty measures consist of
two items adapted from Beerli et al.(2004) and one item from Ehigie (2006).
2.2.5 Complaint handling. Levesque and McDougall (1996) found that when customers face
a problem, they may respond by exiting (switching to new supplier), voicing (attempting to
remedy the problem by complaining) or stay loyal (staying with the supplier anticipating that
things will get better). They stated that when the service provider accepts responsibility
and resolves the problem, the customer becomes bonded to the organization. When the
customers complain, they give the firm a chance to rectify the problem and interestingly, if
the firm recovers successfully to increase loyalty and profits. A good recovery (complaint
handling) can turn angry, frustrated customers into loyal ones. Service recovery can help
reduce dissatisfaction, defection and increase loyalty (Spreng et al., 1995).
Johnston (2001) claimed that complaint handling not only results in customer satisfaction but
also leads to operational improvement and improved financial performance. Indeed
research on satisfaction with complaint processes specifically has also shown a clear
relationship of complaint handling with loyalty and repurchases intentions (Halstead and
Page, 1992).
Hansemark and Albinsson (2004) found that encouraging consumers to complain increased
their satisfaction, and this was especially the case for the most dissatisfied customers. Their
study found that dissatisfied customers can become satisfied when complaints are
welcomed and the problem is solved. This will show the customer that you care and are
trying enough. They believe there is more to win than to lose in handling a complaint,
referring both to chance of winning the customer back and to possible positive word of
mouth. The study by Levesque and McDougall (1996) found that customer complaint
handling can have an influence on customer satisfaction and retention. Complaint handling
in this study is defined as the extent to which their complaints will be handled by the bank.
The complaint handling measures were adapted from the work of Chatelin and Esposito
Vinzi (2002). This leads to the following three hypotheses:
H5.

Complaint handling has a positive effect on satisfaction.

H6.

Complaint handling has a positive effect on trust.

H7.

Complaint handling has a positive effect on trust.

3. Research method
3.1 Research setting and subjects
In light of globalization and financial liberalization leading to intense competition, financial
institutions should place emphasis on retaining their customers. The target population for
this study involves bank customers. Several banks were contacted via telephone but only

VOL. 13 NO. 4 2012 BUSINESS STRATEGY SERIES PAGE 159

one local bank agreed to allow the survey to be carried out. The two main reasons for
rejecting the proposed survey is that they have outsourced their customer satisfaction study,
and they are worried that customers will complain if were asked to answer questionnaires
while they are at the bank. The manager of the local bank requested that the survey be a
simple one so that it will not take up too much of the customers time. Since the sampling
frame was not available, the sample of this study consists of randomly selected customers
who came to the bank at the time the survey was conducted.
3.2 Sample size
Since the measures are continuous data, based on calculations suggested by Bartlett et al.
(2001), the minimum required sample size obtained using the Cochrans sample size
formula was 118. Sample size determination should take into consideration the statistical
techniques that will be deployed in the study. According to Hair et al. (2010) the ratio of
observations to independent variable should not fall below five (5:1) although the preferred
ratio recommended should be ten respondents for each independent variable (minimum
ratio of observation to variables is 10:1). Hence, considering the 23 variables to be used in
exploratory factor analysis and structural equation modeling, this study required a minimum
sample size of 230 respondents.
3.3 Data collection method
Data was collected via a developed structured questionnaire. Since no sampling frame was
available, samples could not be obtained via probability sampling method. The
questionnaire was distributed to the bank customers with the assistance of a support
letter from the bank requesting them to participate in this study. Participants were assured of
confidentiality and anonymity of their returned questionnaires. Self-administered
questionnaires with assistance from the researcher were used to ensure a better
response rate. Customers at the bank were given the questionnaires while they were
waiting for their turn to be served. An attempt was made to randomize data collection at
different times of the day and week. At the end of the data collection period, a total of 247
questionnaires were collected. However, only 239 fully completed questionnaires were used
for data analysis.
3.4 Measurement of variables
The questionnaire was developed by adapting measurements from various studies.
Measures for perceived service quality are adapted from Beerli et al. (2004). They reported
twenty items to measure perceived service quality but in this study the service quality
construct consists of only eight items. The trust construct consists of four items adapted from
the work of Ball et al. (2004) and Ball et al. (2006). The measures for customer satisfaction
construct consist of three items adopted from Levesque and McDougall (1996) and
Dimitriades (2006). The measures for complaint handling construct consists of three items
adapted from Chatelin and Esposito Vinzi (2002). The loyalty construct consists of five items
adapted from the work of Beerli et al. (2004) and Ehigie (2006). The items for each construct
and their scale of measurements are listed in Table I.
3.5 Data analysis
To test the hypotheses generated we used the partial Least squares (PLS) approach using
the Smart PLS M2 Version 2.0 (Ringle et al., 2005) to analyze the data. We used the
bootstrapping method (200 resamples) to determine the significance levels for loadings,
weights, and path coefficients (Chin, 1998; Gil-Garcia, 2008).

4. Results
4.1 Demographic profile of respondents
Of the 239 respondents, a total of 121 (51 percent) were female while 118 (49 percent) were
male. The age group of 31-40 (36 percent) and 21-30 (32 percent) account for the biggest

PAGE 160 BUSINESS STRATEGY SERIES VOL. 13 NO. 4 2012

Table I Results of measurement model

Model construct

Measurement item

Complaint handling

COMPLAIN1
COMPLAIN2
LOYAL1
LOYAL2
LOYAL3
LOYAL4
SAT1
SAT2
SAT3
SQ1
SQ2
SQ3
SQ4
SQ5
SQ6
SQ7
SQ8
TRUST1
TRUST2
TRUST3
TRUST4

Loyalty

Satisfaction

Service quality

Trust

Loading

CRa

AVEb

0.872
0.846
0.901
0.864
0.909
0.828
0.914
0.857
0.904
0.704
0.743
0.821
0.843
0.784
0.798
0.654
0.652
0.702
0.777
0.808
0.796

0.849

0.738

0.930

0.768

0.921

0.796

0.912

0.567

0.854

0.596

Note: COMPLAIN3 and LOYAL5 were deleted due to low loadings of ,0.50; aComposite Reliability
(CR)(square of the summation of the factor loadings)/{(square of the summation of the factor
loadings) + (square of the summation of the error variances)}; bAverage Variance Extracted
(AVE) (summation of the square of the factor loadings)/{(summation of the square of the factor
loadings) + (summation of the error variances)}

portion of the sample followed by age 40-51 years (19 percent). For education attainment,
about 25 percent possessed diploma degree, 23 percent (Bachelor) and 18 percent
(Master). Only 7 percent had a PhD degree. Most of the respondents were professionals
(34.4 percent). Majority 66.5 percent of the respondents have been with the bank for more
than three years.
4.2 Measurement model
We used the two-step approach as suggested by Anderson and Gerbing (1988). We first
assessed convergent validity and reliability as shown in Table I and then the discriminant
validity in Table II. Convergent validity can be ascertained if the loadings are greater than 0.5
(Bagozzi and Yi, 1991), composite reliability greater than 0.7 (Gefen et al., 2000) and the
average variance extracted is greater than 0.5 (Fornell and Lacker, 1981).
We also tested for the discriminant validity (see Table II) using the Fornell and Lacker (1981)
criterion whereby the average variance shared between each construct and its measures
should be greater than the variance shared between the construct and other constructs. As
shown in Table II, the correlations for each construct is less than the square root of the
Table II Discriminant validity of constructs
Constructs
1. Complaint handling
2. Loyalty
3. Satisfaction
4. Service quality
5. Trust

0.859
0.463
0.486
0.608
0.444

0.876
0.832
0.592
0.595

0.892
0.581
0.684

0.753
0.566

0.772

Note: Diagonals represent the square root of the average variance extracted while the other entries
represent the correlations

VOL. 13 NO. 4 2012 BUSINESS STRATEGY SERIES PAGE 161

average variance extracted by the indicators measuring that construct indicating adequate
discriminant validity.

4.3 Structural model

The structural model was tested next. The results are presented in Table III and Figure 4. The
R 2 values ranged from 0.365 to 0.695 which suggest that the modeled variables can explain
36.5 to 69.5 percent of the variance of the respective dependent variables. As shown in
Table III, all hypotheses were fully supported.

5. Discussion
This study proposed a CSI model which is adapted from the ESCI model. This model
re-examines the relationship between satisfaction, trust and loyalty by proposing satisfaction
as an antecedent of trust. The results of this study support the findings in the literature that
service quality has a positive effect on customer satisfaction (Caruana, 2002; Levesque and
McDougall, 1996). This study also provided empirical evidence that satisfaction has a
positive effect on trust and this trust will eventually has a positive influence on loyalty to the
bank (Hallowell, 1996; Bendall-Lyon and Powers, 2003; Lam and Burton, 2006; Ball et al.,
2006). Complaint handling is found to have a significant effect on satisfaction, trust and
loyalty (Johnston, 2001; Hansemark and Albinsson, 2004; Levesque and McDougall, 1996).
Therefore, banks should not take complaint handling lightly as poorly handled complaints
may be viewed by consumers as banks incompetence and lack of care towards their
customers.

Table III Path coefficients and hypothesis testing

Hypothesis

Relationship

H1
H2
H3
H4
H5
H6
H7

Service quality ! satisfaction

Satisfaction ! trust
Satisfaction ! trust
Trust ! loyalty
Complaint handling ! satisfaction
Complaint handling ! trust
Complaint handling ! loyalty

Note: *p , 0.05; **p , 0.01

Figure 4 Results of the structural model analysis

PAGE 162 BUSINESS STRATEGY SERIES VOL. 13 NO. 4 2012

Coefficient

t-value

Supported

0.453
0.613
0.795
0.485
0.211
0.146
0.248

5.866**
14.216**
9.047**
8.944**
2.382**
2.305*
3.323**

Yes
Yes
Yes
Yes
Yes
Yes
Yes

5.1 Implications
Banks should focus on building credibility trust (belief that the provider will deliver as
promised) and benevolence trust (belief that the service provider is acting in the best
interests of the customers) with their customers. Commercial service is of utmost importance
and hence banks should develop strategies and train officers on delivering efficient
communication and administrative service as these will elevate customer satisfaction. In
conclusion, this study can be replicated and results could be further validated by collecting
more data from various banks. This would lead to a better generalization for the banking
sector. The CSI model can also be revised to include other antecedents of customer
satisfaction and loyalty and investigation of mediating and moderating effects of trust and
satisfaction on loyalty. Future research could also focus on standardizing the various
measurements of service quality, satisfaction, trust, complaint handling and loyalty.

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No. 2, pp. 285-309.
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Marketing Research, Blackwell, Cambridge, MA, pp. 52-78.
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6th ed., Prentice Hall, Upper Saddle River, NJ.
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Denmark: results of application of European Customer Satisfaction Index methodology, Total Quality
Management, Vol. 11 No. 7, pp. 1007-15.
Sekaran, U. and Bougie, R. (2010), Research Methods for Business: A Skill Building Approach, Wiley,
Chichester.

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Appendix
Table AI Measurement items for each construct
Label
Service quality
SQ1
SQ2
SQ3
SQ4
SQ5
SQ6
SQ7
SQ8
Complaint handling
COMPLAIN1
COMPLAIN2
COMPLAIN3

Trust
TRUST1
TRUST2
TRUST3
TRUST4

Satisfaction
SAT1
SAT2
SAT3

Loyalty
LOYAL1
LOYAL2
LOYAL3
LOYAL4
LOYAL5

Construct

Source

When you have a problem, bank shows a sincere

interest in solving it
Employee of bank solves your problems when
they promise to do so
Employees of bank give you prompt service
Employees of bank are willing to help you
Employees of bank are never too busy to
respond to your request
Banks give you individual and personal attention
Bank has operating hours convenient to all its
customers
Bank has convenient branch locations

Adapted from Beerli et al. (2004). Scale 1 (very

dissatisfied) to 7 (very satisfied)

How well was your most recent complaint

handled?
Imagine you have to complain to this bank
because of bad quality of service/product
How well do you think your complaint will be
handled?

Adapted from Chatelin and Esposito Vinzi (2002).

Scale: (1) extremely poor to (10) extremely well

I feel that I can rely on this bank to serve well

The bank treats me in an honest way in every
transaction
I believe that I can trust this bank will not try to
cheat me
This bank is reliable because it is mainly
concerned with the customers interests

Adapted from Ball et al. (2004) and Ball et al.

(2006). (1) strongly disagree to (7) strongly
agree

Overall, I am satisfied with this bank

My bank meets my expectations
The overall quality of the service provided by this
bank is excellent

Adapted from Levesque and McDougall (1996)

and Dimitriades (2006). (1) strongly disagree
to (7) strongly agree

I prefer this bank above others

I intend to continue using this bank
I would recommend this bank to others
I am a customer loyal to my bank
I am thinking of closing my account with this bank

Adapted from Beerli et al. (2004) and

Ehigie (2006) Scale: (1) strongly disagree
to (7) strongly agree

About the authors

Bee Wah Yap received her MSc (Statistics) from the University of California, Riverside, USA
and her PhD (Statistics) from the University of Malaya, Malaysia. Currently she is an
Associate Professor in the Department of Statistics, Faculty of Computer and Mathematical
Sciences. She teaches courses in multivariate analysis, statistical modeling and data
mining. She is an avid researcher, especially in the areas of applied and computational
statistics. Her publications have appeared in Expert Systems with Applications, Applied
Stochastic Models in Business and Industry, International Journal of Business and Social

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Science, Journal of Statistical Computation and Simulation and Journal of Applied Sciences.
She is constantly invited to review papers for international journals and proceedings. Bee
Wah Yap is the corresponding author and can be contacted at: beewah@tmsk.uitm.edu.my
T. Ramayah has a MBA from the Universiti Sains Malaysia (USM). Currently he is an
Associate Professor at the School of Management at USM. He teaches mainly courses in
research methodology and business statistics. Apart from teaching, he is an avid
researcher, especially in the areas of technology management and adoption in business and
education. His publications have appeared in Computers in Human Behavior, Resources
Conservation and Recycling, Direct Marketing: An International Journal, Information
Development, Journal of Project Management, Management Research News, International
Journal of Information Management, International Journal of Services and Operations
Management, Engineering, Construction and Architectural Management, and North
American Journal of Psychology. He is constantly invited to serve on the editorial boards
and program committees of many international journals and conferences of repute. His
profile can be accessed at www.ramayah.com
Wan Nushazelin Wan Shahidan received her MSc (Statistics) from the Universiti Teknologi
MARA. Currently she is a Lecturer in the Faculty of Computer and Mathematical Sciences,
Universiti Teknologi MARA. She teaches courses in mathematics and statistics. She is an
avid researcher, especially in the areas of applied statistics.

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