Exploring the Relationship between Ethical Sales Behavior, Relationship Quality, and Customer Loyalty

Laith Alrubaiee

doi:10.5539/ijms.v4n1p7

Abstract

In today's heightened ethical awareness and increased competitive pressure, the implications of ethical behavior for financial institutions have become a vital determinant of customer loyalty. The purpose of this study is to develop a conceptual framework to investigate the relationship between ethical sales behavior, relationship quality, and customer loyalty. The proposed model is tested on data collected from 217 bank customers. Structural equation modeling technique was employed using AMOS 7.0 to verify the reliability and validity of the multi-item scales and to test the hypothesized relationships. Result indicates that ethical behavior did increase customer loyalty to the bank; yet this effect was not direct, but mediated by customer trust and customer commitment to the bank. Findings also indicate that, customer trust in the bank has positive effects on customer commitment to the bank. The result of this study positions customer trust and customer commitment as the primary mechanism through which the beneficial effects of ethical sales behavior are realized. However, the study show that perceived ethical behavior has a major impact on the development and maintenance of the customer-bank relationship. Bank manager, which value the critical importance of long term relationships with their customers, should achieve an environment where the potential for unethical behavior is at a minimum.

Highlights

In today's heightened ethical awareness and highly competitive environment in the financial services industry, the ability of a financial institution to compete on price has become increasingly difficult
The paper contributed to the ethical sales behavior - customer loyalty relationship literature by empirically validating the role of ethical sales behavior as perceived by the bank customer in developing customer loyalty through customer trust in and customer commitment to the bank
According to Chen and Mau (2009), "if the customers think their salesperson’s sales behaviors are ethical they would tend to trust the salesperson as well as the company." The results show that ethical sales behavior plays a major role in affecting customer trust in and customer commitment to the bank as it has positive effects on customer trust and positive effects on customer commitment

Summary

Introduction

In today's heightened ethical awareness and highly competitive environment in the financial services industry, the ability of a financial institution to compete on price has become increasingly difficult. For a bank to maximize its long-term performance in such aspects as customer retention and loyalty, it must build, maintain and enhance long-term and mutually beneficial relationships with its target customers (Alrubaiee & Alnazer, 2010; Reynolds & Beatty, 1999; Levesque & McDougall, 1996) In this era of strategic customer relationship environment, business ethics has become a significant boardroom topic (Nill & Schibrowsky, 2007; Dunfee et al 1999). Study aims to empirically investigate the mediating effect of customers' trust and customer commitment in ethical sales behavior - customer loyalty relationship Such understanding could contribute to improving the ethical behavior of the salespeople and enhance the opportunity to build long-term profitable customer relationships in the context of Jordanian banking industry. This study is of great value to the banking sector since it shows bank managers how to gain customers' trust , commitment and loyalty to the bank through the ethical behavior of their frontline employees

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Conclusion