1. CEDISC Thipsuda KITJAPIPAT Thailand, DBA Intake 4 9 April 2009 How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

2. CEDISC Introduction: Thipsuda KITJAPIPAT MSc (Hons), Murray State University, Murray, Kentucky, USA, 1998 BA (Hons), Thammasat University, Bangkok, Thailand, 1996 Marketing, Financial, Real Estate experiences Reports the survey results of Thai banks customers using the SERVQUAL instrument to determine the effect of service quality on customer satisfaction, complaint behavior and commitment How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

3. CEDISC Scope of the study Introduction Background Research Question & Aim Methods Results Summary Implications Future work How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

4. CEDISC Background: SERVQUAL model is a particular conceptual model about service and service quality proposed by Parasuraman et al. (1985) How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

5. CEDISC Background: SERVQUAL consists of five dimensions How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand? Tangibles Reliability Responsiveness AssuranceEmpathy SERVQUAL

6. CEDISC Background: Tangibles: physical facilities, equipment, and appearance of personnel; Reliability: ability to perform the promised service dependably and accurately; Responsiveness: willingness to help customers and provide prompt service; Assurance: knowledge and courtesy of employees and their ability to inspire trust and confidence; Empathy: caring, individualized attention How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

7. CEDISC Research Question & Aim: The main research question: “How well can SERVQUAL explain customer satisfaction, complaints behavior and commitment in retail banking in Thailand?” Aim: A very limited number of published research directly concerning or related to this topic in Thailand, this study can partially fill the current void of available research on this topic How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

8. CEDISC Methods: Survey of customers of two different Thai banks using the SERVQUAL instrument Sample size of 500 respondents (personal clients) How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

9. CEDISC Results: Descriptive statistics, PCA, and PCR Descriptive statistics: summarize the survey results PCA (principal components analysis): determine the dimensional structure of the scale PCR (principal component regression): test the relationships between the factors and the dependent variables How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

10. CEDISC Descriptive statistics results: Descriptive statistics: customers have good experiences with most of the items and are satisfied with the measures used, but their response on commitment and complaint behavior are relatively low How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand? Note: Customer expectations and perceptions were measured on a 7-point Likert scale where 1= much worse than expected and 7= much better than I expected. This scale measures perceptions relative to expectations. The mean scores greater than four (4) indicate respondents’ perceptions higher than expectations with a particular statement, whereas means of less than four (4) indicate respondents’ perceptions lower than expectations.

11. CEDISC Descriptive statistics of SERVQUAL for Bank A and Bank B N Mean SD. Bank ABank BBank ABank BBank ABank B Tangibles t1 : Up-to-date equipment2502474.965.011.091.15 t2 : Appearance of physical facilities2492454.914.941.191.30 t3 : Appearance of employees2482455.215.231.141.05 t4 : Visual appeal of materials associated with service2452434.885.091.091.11 Reliability rl1 : Keep promises to do something by a certain time2472444.654.721.331.17 rl2 : Interest shown in solving a problem2492444.734.801.171.11 rl3 : Performing the service right the first time2472434.754.891.121.16 rl4 : Provide the services at the time promised2492444.855.041.041.08 rl5 : Accuracy of records2492465.095.151.131.23 Responsiveness rp1 : Telling exactly when services will be performed2502474.88 1.231.26 rp2 : Giving prompt service to customers2492464.734.871.371.35 rp3 : Willingness of employees to help customers2482464.945.061.271.30 rp4 : Responding to customer requests2492414.804.851.281.16 Assurance a1 : Trustworthiness of employees2482445.105.221.131.14 a2 : Safety in transactions2482464.955.041.101.15 a3 : Politeness of employees2502485.125.161.221.15 a4 : Knowledge of personnel in answering questions2492425.075.231.121.10 Empathy e1 : Individual attention I receive2472454.704.861.241.17 e2 : Having convenient operating hours2482444.764.901.291.19 e3 : Personal attention given to customers2492444.775.021.241.18 e4 : Having the customer’s best interests at heart2482434.854.921.201.11 e5 : Understanding the specific needs of customers2472454.804.961.191.11

12. CEDISC Descriptive statistics of satisfaction, commitment, and complaint for Bank A and Bank B ITEM NMeanSD. Bank ABank BBank ABank BBank ABank B Satisfaction st1: Appearance of the bank’s physical facilities2322354.444.350.730.87 st2: Ability of bank to perform the promised service2322344.374.300.670.83 st3: Willingness of bank to help customers2302294.284.170.820.85 st4: Knowledge and courtesy of employees2272314.324.300.80 Commitment cm1: Continue to do business with this bank2492423.083.310.950.90 cm2: Continue to do business even if it increases its fees2492352.892.950.930.94 Complaints cp1: Complain to other customers if experience a problem2502332.262.360.920.91 cp2: Complain to employees if experience a problem2502322.222.290.94 Notes: (1) Satisfaction was measured on a 7-point Likert scale where 1=very unsatisfied and 7=very satisfied. (2) Commitment and Complaint Behavior were measured on a 7-point scale where 1= very unlikely and 7= very likely. The results of the study show a range of scores from 1 to 5 (not reaching 7).

13. CEDISC Descriptive statistics of satisfaction, commitment, and complaint for Bank A and Bank B Only four items (cm1, cm2, cp1 and cp2) below the mid-point of four (4), suggesting there are some customers who feel less likely to continue to do business with the bank and some who are less likely to complain about the bank’s service. Four items of satisfaction (st1, st2, st3 and st4) in Bank A and Bank B exceed the mid-point of four (4) on the scale, suggesting that the samples have a tendency to be satisfied with the banks’ service quality.

14. CEDISC Descriptive statistics of satisfaction, commitment, and complaint for Bank A and Bank B Results of commitment and complaint behavior in Bank A and Bank B are less likely, suggesting that the customers might not do business with the banks in the future. Lower complaint behavior scores, which might mean that the customers are satisfied with the banks’ services or that Thai customers have a cultural trait that they do not like to complain or talk negatively (even though they have problems or bad experiences with the banks’ services, they might not complain to other customers or to the banks’ employees). Most of the service quality score items fall close to the mid-point of four (4), between four and five. As to why many responses are close to neutral, it might have a cultural issue. As one bank customer said, “When given the chance Thai people prefer to be neutral, they don’t like to be divided one way or the other”.

15. CEDISC How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand? Factor 2: TangiblesFactor 3: Reliability Factor 1: Responsiveness, Assurance, Empathy PCA results PCA Results: PCA: the items could be separated into only three factors--- Factor 1: responsiveness, assurance and empathy; Factor 2: tangibles; Factor 3: reliability

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17. Regression results: Regression analysis: three factors are related to customer satisfaction, commitment and complaint behavior but their explanatory power is low How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

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21. SERVQUAL explains very little of the variance in the three dependent variables, so the SERVQUAL instrument seems to not have much explanatory power in the Thai situation Three derived factors of the service quality (satisfaction: Bank A with Adjusted R square = 21.9 % and Bank B with Adjusted R square = 13.5 %) are most strongly related to customer satisfaction; the independent variables explain 21.9 percent for Bank A and 13.5 percent for Bank B of the variation in the criterion variable How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

22. CEDISC Commitment and complaint behavior, the relationship of the independent variables explains only 4.7 percent for Bank A and 2.4 percent for Bank B for commitment and 0.4 percent for Bank A and 3.2 percent in Bank B for complaint behavior The weak link between these variables and commitment and complaint behavior might be attributed to the possibility that competence works through some intervening variable to influence customer commitment, and complaint behavior How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

23. CEDISC Summary: The study indicates that the SERVQUAL explains very little of the variance in two of the three dependent variables and does not have much explanatory power in the Thai situation. SERVQUAL cannot explain to a significant degree all aspects of customer satisfaction, complaint behavior and commitment in retail banking in Thailand How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

24. CEDISC How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand? Factor 1 (responsiveness, assurance and empathy) has the highest impact on complaint behavior and has an inverse variation with complaint behavior Banks in Thailand could improve their service quality by improving the staff behavior since most of the items relate to services from bank staff Employee training programs or performance incentive programs for employees could be of value than improve their bank services by renovating the bank image Implications:

25. CEDISC Future work: Use both a larger and a greater variety of samples to provide greater depth of information Selective high-potential customers to compare the differences between high- potential and other customers An investigation of the relationships in other sectors/ industry Trans-national studies across different economies How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

26. CEDISC Thank You

27. CEDISC Appendices: Part 2: Study measures The following statements relate to your feeling about XXXX Bank. Please respond to each question by circling the number which best reflects your own perceptions Servqual Having modern-looking/ up-to-date equipment much worst than I expected 1—2---3---4—5---6---7 much better than I expected Appearance of physical facilities much worst than I expected 1—2---3---4—5---6---7 much better than I expected Appearance of employees much worst than I expected 1—2---3---4—5---6---7 much better than I expected Visual appeal of the materials associated with the service (such as pamphlets or statement) much worst than I expected 1—2---3---4—5---6---7 much better than I expected Keeping promises to do something by a certain time much worst than I expected 1—2---3---4—5---6---7 much better than I expected Interest shown in solving a problem much worst than I expected 1—2---3---4—5---6---7 much better than I expected Performing the service right the first time much worst than I expected 1—2---3---4—5---6---7 much better than I expected Provide the services at the time promised much worst than I expected 1—2---3---4—5---6---7 much better than I expected Accuracy of records much worst than I expected 1—2---3---4—5---6---7 much better than I expected Telling customers exactly when services will be performed much worst than I expected 1—2---3---4—5---6---7 much better than I expected Giving prompt service to customers much worst than I expected 1—2---3---4—5---6---7 much better than I expected Willingness of employees to help customers much worst than I expected 1—2---3---4—5---6---7 much better than I expected How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

28. CEDISC Appendices: Part 2: Study measures The following statements relate to your feeling about XXXX Bank. Please respond to each question by circling the number which best reflects your own perceptions Servqual (continued) Responding to customer requests much worst than I expected 1—2---3---4—5---6---7 much better than I expected Trustworthiness of employees much worst than I expected 1—2---3---4—5---6---7 much better than I expected Safety in transactions much worst than I expected 1—2---3---4—5---6---7 much better than I expected Politeness of employees much worst than I expected 1—2---3---4—5---6---7 much better than I expected The knowledge of the personnel in answering customer questions much worst than I expected 1—2---3---4—5---6---7 much better than I expected Individual attention I receive much worst than I expected 1—2---3---4—5---6---7 much better than I expected Having convenient operating hours much worst than I expected 1—2---3---4—5---6---7 much better than I expected Personal attention given to customers much worst than I expected 1—2---3---4—5---6---7 much better than I expected Having the customer’s best interests at heart much worst than I expected 1—2---3---4—5---6---7 much better than I expected Understanding the specific needs of the customers much worst than I expected 1—2---3---4—5---6---7 much better than I expected How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

29. CEDISC Appendices: Part 2: Study measures The following statements relate to your feeling about XXXX Bank. Please respond to each question by circling the number which best reflects your own perceptions Satisfaction The appearance of the bank’s physical facilities, equipment, personnel, and communication materials very unsatisfied 1—2---3---4—5—6--7 very satisfied The ability of the bank to perform the promised service dependably and accurately very unsatisfied 1—2---3---4—5—6--7 very satisfied The willingness of the bank to help customers and provide prompt service very unsatisfied 1—2---3---4—5—6--7 very satisfied The knowledge and courtesy of the bank’s employees and their ability to convey trust and confidence very unsatisfied 1—2---3---4—5—6--7 very satisfied The caring, individualized attention the bank provides its customers very unsatisfied 1—2---3---4—5—6--7 very satisfied Commitment To continue to do business at this bank very unlikely 1—2---3---4—5—6--7 very likely Continue to do business with this bank even if it increases its fees very unlikely 1—2---3---4—5 —6--7 very likely Complaint Complain to other customers if you experience a problem with this bank’s service very unlikely 1—2---3---4—5—6--7 very likely Complain to this bank’s employees if you experience a problem with this bank’s service very unlikely 1—2---3---4—5—6--7 very likely How well can SERVQUAL explain customer satisfaction, complaint behavior and commitment in retail banking in Thailand?

30. CEDISC Thank You