Relationship Marketing and Customer Loyalty: Do Customer Satisfaction and Customer Trust Really Serve as Intervening Variables?

Mohamad Rizan,Ari Warokka,Dewi Listyawati

doi:10.5171/2014.724178

Mohamad Rizan, Ari Warokka + Show 1 more

Open Access

https://doi.org/10.5171/2014.724178

Copy DOI

Abstract

To contend the traditional transaction marketing, which focuses on the completion of the transaction and the pursuit of maximizing profits for each transaction, the relationship marketing in the banking sector, on the other hand, offers the establishment of strong relationships and stable partnerships between the bank and its customer in order to maximize the pursuit of the interests of all aspects of the relationship. This paper examined the nature of linkages between relationship marketing and customer loyalty by using customer satisfaction and customer trust as the intervening variables. It investigated the customer perception on customer satisfaction’s characteristics and confidence in exchange partner's reliability and integrity as the mediating factors to build their trust on the banking services. The researchers employed 150 respondents of private banking as the sample. This paper used Structural Equation Modeling (SEM) to analysis the relationship. The results revealed that the relationship marketing tactics affected customer loyalty significantly through customer trust and customer satisfaction. It explicitly demonstrates that the banks have undertaken an organization-wide strategy to manage and nurture their interaction with clients and sales prospects as the base for their customer loyalty.

Highlights

The shift in the marketing paradigm (Gronroos, 1997), as a result of globalization of businesses and the evolving recognition of the importance of customer retention, customer loyalty, market economies and customer relationship economies, has brought companies to deliver the benefits that accrue to customers
The result of first hypothesis testing reveals that relational marketing tactics do not influence customer loyalty (β = -0.07, p
We argue that the samples, who are prime customers in majority, are not influenced by relational marketing tactics due to the fact that their chief objective in saving the money in the bank is for investment diversification purpose

Summary

Introduction

The shift in the marketing paradigm (Gronroos, 1997), as a result of globalization of businesses and the evolving recognition of the importance of customer retention, customer loyalty, market economies and customer relationship economies, has brought companies to deliver the benefits that accrue to customers. The global financial crisis has left bankers searching for a profitable path forward in a permanently altered competitive landscape It becomes worsened with the sunk-public trust in financial-services companies, underscoring the need for retail bankers to repair badly damaged customer relationships. Bose (2002) reports that it is becoming evident that companies have to modify fundamentally the way in which marketing is done, i.e. a shift from managing a big pool of clients to managing a specific customer base. This modification includes establishing, maintaining and enhancing relationships for the sake of building up long-term relationships with customers so that the economic goals are achieved. This effort is to answer the fact that it has been the practice by companies to devote greater attention and marketing effort to attracting new customers rather than retaining existing ones (Kotler, 2000)

Methods

Results

Conclusion