Evaluating customer satisfaction after service recovery _ a study on the retail banking sector in Vietnam

Hence, this research is going to examine the way to evaluating customer satisfaction after service recovery in Vietnam retail banking sector.. Key words: Service recovery, Perceived just

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Pham Thi Hanh Huong

EVALUATING CUSTOMER SATISFACTION

AFTER SERVICE RECOVERY

A study on the retail banking sector in Vietnam

MASTER OF BUSINESS (Honours)

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

-

Pham Thi Hanh Huong

EVALUATING CUSTOMER SATISFACTION

AFTER SERVICE RECOVERY

A study on the retail banking sector in Vietnam

ID: 22110024

MASTER OF BUSINESS (Honours)

SUPERVISOR: Dr TRAN HA MINH QUAN

Also, the great thanks are to my family and friends around me, who are always beside and give

me useful advices during this study

Sincerely,

Pham Thi Hanh Huong

Abstract

Vietnam is one of emerging country with many potential to develop With the population over 88 million (2012), Vietnam is potential market to invest especially for banking market Nowadays, the number of the banks in Vietnam is increasing rapidly including the local and foreign banks; the competition for their existence becomes much more difficult than ever Hence, this research is going to examine the way to evaluating customer satisfaction after service recovery in Vietnam retail banking sector It concludes that ultimate success of any service recovery program implemented by a bank and can only be measured by maintenance of satisfied customer This study reveals that perceived justice plays important role and has significant effect

on emotions and customer satisfaction after service recovery In addition, the reality of competition among the banks and how they exist in competitive market like Vietnam will be mentioned in this research Conclusion was drawn and it is recommend based on the findings of the study that the banks in Vietnam should focus more on customers to satisfy them by improving service recovery

This study conducted a questionnaire survey to reach retail customers in Vietnam retail banking Data has been analysed mainly by descriptive analysis Analysis results suggest that how much service recovery effects on customer satisfaction and the specific relationships between 2 constructs will be come up eventually

The study concludes that the improvement of perceived justice may increase post-recovery satisfaction, which ultimately retains valued customers and built loyalty in customers’ perception

in Vietnam retail banking industry

Key words: Service recovery, Perceived justice, Emotions, Post-recovery satisfaction,

Retail banking

Table of Contents

Acknowledgement 1

Abstract 2

LIST OF APPENDIXS 5

LIST OF FIGURES 6

LIST OF TABLES 7

Chapter 1 9

INTRODUCTION 9

1.1 Research background 9

1.2 Research problems 12

1.3 Research Objective 13

1.4 Research Hypothesis 14

1.5 Thesis structure 14

Chapter 2 16

LITERATURE REVIEWS 16

2.1 Retail banking service recovery 16

2.2 Perceived justice with service recovery 17

2.3 Emotions 18

2.4 Post- recovery satisfaction 20

2.5 Model and Hypothesis 21

2.6 Summary 23

Chapter 3 24

RESEARCH METHODOLOGY 24

3.1 Research design process 24

3.2 Sample size 25

3.3 Data Collection 25

3.4 Pilot study 26

3.5 Main study 26

3.6 Data collection 27

3.7 Items measurement for service recovery and post-recovery satisfaction 28

3.8 Methodology of data analysis 29

3.9 Summary 30

Chapter 4 31

DATA ANALYSIS 31

4.1 Data analysis methods 31

4.2 Means and standard deviations of variables: 31

4.3 Research sample characteristics 33

4.4 Cronbach’s alpha coefficient of reliability test: 35

4.5 Exploratory Factor Analysis (EFA). 38

4.6 Multiple regression analysis for common model 41

4.7 Hypothesis testing result 48

4.8 Summary of findings 51

Chapter 5 53

CONCLUSIONS AND SUGGESTIONS 53

5.1 Conclusions 53

5.2 Managerial implications 54

5.3 Research limitation and future research directions 55

References 56

LIST OF APPENDIXS

Appendix 1: Questionnaire _English version 61

Appendix 2: Questionnaire - Vietnamese version 64

Appendix3: First time running – Eigen values 67

Appendix 4: First time running – Factor loading 68

Appendix 5: Second time running – Eigen values 69

Appendix 6: Second time running – factor loading 70

Appendix 7: Third time running – Eigen values 71

LIST OF FIGURES

Figure 1 The proportions of commercial banks over years in Vietnam 10 Figure2.1 The research model 22 Figure 3.1 Research process 25

LIST OF TABLES

Table 3.7.1 – Measurement items of Perceived Justice 28

Table 3.7.2 – Measurement items of Emotions & post recovery satisfaction 29

Table 4.1: Means & standard deviations of variables 32

Table 4.3.1: Demographic characteristics of sample 34

Table 4.4.1: Cronbach’s alpha coefficients for each measurement scale 36

Table 4.4.2: Final results of reliability test 37

Table 4.5.1–The result of KMO and Bartlett’s Test conducting EFA 39

Table 4.5.2–Total variance explained conducting EFA 39

Table 4.5.3 - Exploratory Factor Analysis (EFA) 40

Table 4.6.1.1–Model Summary 42

Table 4.6.1.2–ANOVA 42

Table 4.6.1.3–Coefficients of multiple linear regression analysis 42

Table 4.6.2.1–Model Summary 43

Table 4.6.2.2–ANOVA 43

Table 4.6.2.3–Coefficients of multiple linear regression analysis 44

Table 4.6.3.1–Model Summary 44

Table 4.6.3.2–ANOVA 45

Table 4.6.3.3–Coefficients of multiple linear regression analysis 45

Table 4.6.4.1–Model Summary 46

Table 4.6.4.2–ANOVA 46

Table 4.6.4.3–Coefficients of multiple linear regression analysis 46

Table 4.6.5.1–Model Summary 47

Table 4.6.5.2–ANOVA 47

Table 4.6.5.3–Coefficients of multiple linear regression analysis 48 Table 4.7.1–Coefficients of multiple linear regression analysis 51

to Barroso C and Martin A (1999), company not only increases the value of its business but it also could lower the costs by having loyal customers, which may not be achieved by only attracting new customers For that matter, many organizations (including banks) that resorted to having superior service quality have been found to be market leaders in terms of sales and long-term customer loyalty and retention (Anderson and Sullivan, 1993; Boulding et al., 1993; Eklöf J and Westlund, 2002)

In the past, state-owned commercial banks with advantages in capital and market share played key role in supporting most of organizations and corporations Nonetheless, with the significant development of private entities in the recent years, most of joint-stock commercial banks have had a remarkable improvement in expansion of their business and service network for small and medium corporations and their source of funds Hence, state –owned commercial banks had almost concentrated on state corporations

In the recent years, financial investment and banking business activities are developing quickly in Vietnam After joining WTO on 11th January 2007, there are dramatically growing number of foreign banks operated throughout Vietnam and certainly financial market will develop more Graph below is shown to see the number of banks increased over years and

proportion of charter capital of commercial banks in 2007

A statistics from State Bank of Vietnam, as of early Q3 2012, The State Bank of Vietnam identifies six 'state-owned credit institutions' or 'state-owned commercial banks' (SOCBs), 38 urban commercial joint stock banks (CJSBs), 32 branches of foreign banks and five joint venture banks There are also 17 finance companies and 54 representative offices of foreign banks In terms of the numbers of branches, VietinBank is the largest organisation, with a presence at 138 locations The other SOCBs also have large networks by local standards Agribank has 115; BIDV, 103; VBSP, 65; VDB, 62; and MDHDB, 32 Of the urban CJSBs, theorganisations which have over 25 branches are: Maritime CJSB (26); Techcombank (38); VIB (42); Sacombank (59); Vietcombank (59); Eximbank (35); Military Bank (36); ACB (54); Saigonbank (31); VP Bank (34); and EAB (28) None of the joint-venture banks have more than five branches

Figure 1 The proportions of commercial banks over years in Vietnam

Source: Vietnam Commercial Banking Report Q3 2012, available

athttps://www.google.com.vn/url?sa=f&rct=j&url=http://www.vccn.com/document/%3Fid%3D260&q=&esrc=s&e

i=jIuZUfHKEiTiQej5IGYAw&usg=AFQjCNEKlPFRcYLbasejAxfJceJIy7T9jg

One of the ways to build customer's loyalty is that managing service recovery since the main task of the banks is to provide services to their customers Service recovery refers to the actions a supplier takes in order to seek out dissatisfaction (Johnston, 1995) and as a response to poor service quality, i.e service failure (Grönroos, 1988; Hart, Heskett, & Sasser, 1990).Since the cost of gaining a new customer usually greatly exceeds the cost of retaining a customer Attracting new customers, by for instance commercials and other marketing actions, is about five times as expensive as keeping an existing one (Timm, 2001) Therefore, managers are increasingly concerned with minimizing customer defections Robinson (1978) underscored the historic emphasis on consumer orientation, reporting that almost all the studies focused on the person filing the complaint and the nature of the complaint

Businesses have much to earn by keeping happy customers It is less expensive to have a defensive strategy and keep existing customers than to have an offensive strategy and try to attract new customers (Mårtensson, 2009) Attracting new customers, by for instance commercials and other marketing actions, is about five times as expensive as keeping an existing one (Timm, 2001)

Like the banking industry in other countries, the Vietnam banking business environment has changed substantially in recent years Because of financial deregulation and globalization, banks in Vietnam face severe competition from oversea banks as well as other financial institutions

Clearly, with the fast development of banks in Vietnam, if the banks do not have a term strategy to have good business performance, they cannot exist in the long run It is known commonly that customers are the lifeblood of any banks nowadays As a result, the service providers have to put more efforts if they want to be winners in this battle Improving service recovery is a way the banks can maintain and attract more customers Therefore, the challenge is

long-to keep them coming back long-to you, long-to provide them with service that is so exceptional they wouldn't think of taking their business elsewhere That includes solving their problems (Tschohl, 2010)

The focus of my research is on Vietnam retail banking industry Service recovery problems have had a lot of attentions from management and academic circles, especially in market condition in emerging economies nowadays The literature on Vietnam retail banking is analysed

to give a knowledge base to examine service recovery improvement The aim of this research is

to investigate the importance of service recovery, and from then propose some ideas for further improvement and look at implications Recognizing the importance and significant impact of service quality as a competitive weapon is a recent phenomenon in Vietnam banking

1.2 Research problems

Many years ago, while Vietnam was not the open market, banking system dominated by state-owned banks They operated in non-competitive environment, and these banks did not feel compelled to care about service quality issues They considered lending and deposit as their primary services and Therefore, they just paid attention to branch expansion, gaining market share and they targeted the mass market for deposits with basically same services There was not marketing department in the many banks at that time and they even put low priority to satisfaction of customer needs Their training course were primarily transaction (accounting) oriented

In recent years, after Vietnam joined WTO 2007, many foreign banks have started to pay attention to the country’s potential for growth like Vietnam Vietnamese banks have faced huge competition from overseas banks and other financial institutions due to globalization and deregulation Although, foreign banks in Vietnam still have some limitations for their operations, they put their effort to establish their presence in retail banking service in the future And the

competition for survival in the banking market has become difficult than ever As a positive affecting, Vietnam banking business environment has some substantial changes There are a lot

of new services offered by the bank such as: ATMs (Automatic Teller Machines), SMS banking, phone banking, internet banking, credit card, replacement of the new electronic for data processing to serve customers better

In the current competition retail banking industry context, customers always have more opportunities to choose the best provider for them So, to satisfy customers is extremely important tasks There have been many studies on service recovery, but how to reduce service failures, how to service recovery have effective and satisfy the expectations of the customers is not mentioned adequately This study will show the way to recover a service failure and how to satisfy customer satisfaction after recovery

Actually, the Vietnam banking system has gone through many huge changes in competition and higher expectation of customer by offering new products and services, conducting low-interest strategies and promotion campaigns However, according to Tschohl, (2010) happy customers will drive your business You must care for them, nurture them, and do whatever it takes to earn their undying loyalty We all know that advertising can bring a customer through the doors to your business once The challenge is to keep them coming back to you, to provide them with service that is so exceptional they wouldn't think of taking their business elsewhere That includes solving their problems Bank managers believe that customers will be loyal whether they receive higher value than from other competitors (Dawes & Swailes, 1999)

1.3 Research Objective

The retail banking industry becomes more competitive and complex along with demanding customers increasingly How does a bank secure and retain more customers?

Furthermore, with respect of the subject of this study, how can banks survive in this dynamic environment?

This study has two objectives related to perceived justice, customer satisfaction after service recovery in Vietnam retail banking industry First, the study explores each construct which is based on the existing related literature In addition, measurements of three dimensions

of perceived justice and customer satisfaction are investigated at the same time The relationship between service recovery and post-recovery satisfaction will be tested Second, the research also seeks to analyze reality of competition among the banks in Vietnam on service recovery From then, some proposals and implications for improvement are also raised at the end of research In general, the main objective of this research is the goal that that should be achieved during the

thesis The main objective is shown as below: What should the banks in Vietnam do to improve

service recovery as long-term strategy to attract retail customers?

1.4 Research Hypothesis

Based on the research question and objective, a hypothesis has been developed as

following: There is a positive correlation between perceived justice and post-recovery

satisfaction in retail banking sector

The idea of this hypothesis is finding out the significant role of service recoveries and how to improve it and therefore, all banks have realized the importance of concentrating service recovery as a way to increase post-recovery satisfaction, customer satisfaction, their loyalty, and

to improve their core competence and business performance

I Chapter 1 - Introduction

This chapter discusses about the research background, problem definition of research, research

objective, and hypothesis An overview of Vietnam banking industry on service recovery is also

described This chapter is also closed with structure of the thesis

II Chapter 2 – Literature reviews

This chapter discusses about the literature review regarding to retail banking service recovery,

perceived justice, positive emotions, negative emotions, post-recovery satisfaction and

relationship between them

III Chapter 3 - Research Methodology

This chapter discusses how the researcher is conducting research, what kind of research and how

to collect and measure the data which help the researcher in building this research

IV Data analysis

Data from questionnaire is precisely analyzed Descriptive analysis is mainly used as a method

of analysis Factor analysis is also done before it investigates the relationship between service

recovery and post-recovery satisfaction At the end, it defines problems of service recovery

which customers face and proposes recommendation for management in improving service

recovery This chapter is ended with summary of findings

V Conclusion and suggestions

This chapter talks about the final result of research and implications for managerial Vietnam

retail banking At the end, limitation and future research directions will be discussed

Chapter 2

LITERATURE REVIEWS

This chapter reviews the theoretical framework for this thesis, including factors such as retail banking service recovery, perceived justice, emotions, and post-recovery satisfaction This chapter also proposes hypotheses and model that will be tested in this thesis

2.1 Retail banking service recovery

In recent years, extant literature has devoted efforts to service recovery Contributions include both theoretical model and empirical assessments The Johnston has cited a definition of service recovery’s multi-dimensional nature in his study about that subject in 1998 Furthermore, Bhandari et al (2007) offer a multi-dimensional approach to evaluate service recovery, suggest that managing service recovery should be under taken in a similar service, and thus managers need to understand customers’ recovery expectations

These studies analyzed service recovery from a variety of different angles, including organizational responses to service recovery (Davidow, 2003), the relationship between satisfaction with service recovery and cumulative satisfaction (McCollough et al., 2000), why certain people do not complain (Stephens and Gwinner, 1998), the influence of the competitive environment on service firms’ recovery efforts (Estelami, 2000)

Service recovery strategies can be classified tangibly into psychological and tangible strategies (Miller et al., 2000) Psychological recovery strategies refer to actions that can directly improve customer psychological dissatisfaction, such as apology and explanation, while tangible recovery strategies provide tangible compensation, such as provide another free service, refund, gift, discount, and coupon, to reduce customer practical loss According to Sheth et al (2000), service recovery refers to actions taken by a service provider in an attempt to resolve the problem that caused a service failure Effective service recovery results in complainant satisfaction and

recovery (Karatepe and Ekiz,2004; Bolton, 1998)

Concern about service failure and recovery is the way banks can maintain and attract more customers In addition, service recovery can keep customers’ confidence in a service provider’s service delivery, increase business with existing clients, attract more new customers, reduce dissatisfied customers with fewer mistakes, maximize a company’s profits and increase customer satisfaction (Berry et al., 1994 and Lee et al., 2000)

2.2 Perceived justice with service recovery

Service failures are interpreted as typical conflict, service recovery actions performed to deal with a service failure can be evaluated based on perceived justice Banking service providers and their customers can't prevent the incidents that happen during exchange processes Therefore, they expect more equal behavior and they do their evaluation based on perceived justice

In general, recovery strategies of a firm are normally evaluated by using the three components of justice, namely distributive justice, procedural justice, and interactional justice (Maxham III & etemeyer, 200 irtz Mattila, 2004 Chebat Slusarczyk, 200 Schoefer Ennew, 200 Collier Bienstock, 200 Schoefer, 2008 del o-Lanza et al., 2009)

2.2.1 Distributive justice

Distributive justice concerns the nature of allocation of goods in society It refers to whether the failed customer has received monetary compensation Most failed customers can perceive distributive justice of service recovery efforts after they have received a discount, coupons, refund, free giveaways or alternative goods as compensation from the offending service provider (Goodwin & Ross, 1992; Blodgett et al., 1997; Tax et al., 1998; Hoffman & Kelley, 2000) Distributive justice can be evaluated by customer perception of the fairness, equality, necessity, and value of the compensation (Blodgett et al., 1997; Tax et al., 1998; Smith et al.,

1999; Maxham III & Netemeyer, 2003; Wirtz & Mattila, 2004)

2.2.2 Procedural justice

Procedural justice is perceived fairness customer feels about the service recovery procedure and standard during service delivery in aspects such as accessibility, timing, process control, delay and flexibility to adapt to the consumer s recovery needs (del o-Lanza, 2009).In service recovery context, procedural justice means the customer’s perception of justice for the several stages of procedures and processes needed to recover the failed service (Mattila, 2001)

2.2.3 Interactional justice

Interactional justice focuses on interpersonal interactions during the process of service delivery, it is the fairness customer feels about the way being treated by service providers during the service recovery interaction process Interactional justice is generally evaluated by reliability, clear explanation of the problem, sincerity, apologetic attitude, communication, politeness, respect, detailed attention to problems, willingness to hear complaints, and resolve the problem (Blodgett et al., 1997; Smith et al., 1999; Wirtz & Mattila, 2004)

Based on theories, empirical researches and results from direct interviewing with customers, consider the direct relationship between perceived justice and post-recovery satisfaction Hypothesis 1 is thus proposed as follows:

 H1a – Perceived distributive justice positively influences post-recovery satisfaction in retail banking sector

 H1b – Perceived procedural justice positively influences post-recovery satisfaction in retail banking sector

 H1c – Perceived interactional justice positively influences post-recovery satisfaction in retail banking sector

2.3 Emotions

Emotion of customers is a paramount importance for service providers It reflects the success or failure of the service recovery that customers received, it is also reveal the victory of service providers when service failure after that Consistent with previous research by De Witt

&Brady(2003), Keaveney (1995), Stephens & Gwinner (1998) have suggested that customer’s emotions have important practical implications, because how customers feel about a service impacts on customer satisfaction definitely after recovering a service failure, post-purchase intension, negative word of mouth, complaining to third parties and loyalty

Emotions typically have a specific referent, e.g customer is angered by inattentive service (Bagozzi et al.,1999) Emotion is defined by Erevelles (1998) as being higher in intensity, and is usually associated with a stimulus object Oliver(1997) further pointed out that emotion tends to

be more cognitively involved than affect

Studies have provided that emotions consist of two dominant dimensions including positive and negative, they are independent and have distinct tendency (Watson et al., 1988; Cacioppo & Gardner, 1993; Cacioppo et al., 1997).Customers may display negative emotions if they are displeased with the recovery outcome or perceive injustice of the recovery process, or positive emotions in opposite sense (Weiss et al., 1999)

According to Laros & Steenkamp (2005),positive emotion is related to contentment, happiness, love, and pride, whereas negative emotion is related to anger, fear, sadness, and shame Emotions are increasingly viewed as essential in researching how customers evaluate service failure and recovery (Bagozzi et al., 1999; Weiss et al., 1999; Schoefer, 2008; Schoefer

& Diamantopoulos, 2008).Many researchers (e.g., Weiss et al., 1999 illiam, 1999 Chebat Slusarczyk 200 Schoefer Ennew, 200 Schoefer, 2008 del o-Lanza et al., 2009) studied post-recovery customer emotions under the framework of perceived justice Their findings suggest that low perceived justice leads to highly negative emotions (anger, fury, and

unhappiness) and low positive emotions (happiness, pleasure, and joy) (Schoefer & Ennew, 2005)

In service recovery measures applied in the banking industry, increasing the level of distributive justice raises pleasant emotions, while reducing distributive justice makes customers disappointed (William, 1999) Increasing distributive justice, procedural justice, and interactional justice can reduce negative emotions and enhance positive emotions of customers The hypothesis designed for this part is based on the following assumptions:

 H2a – Perceived distributive justice positively influences positive emotion in retail banking sector

 H2b – Perceived procedural justice positively influences positive emotion in retail banking sector

 H2c – Perceived interactional justice positively influences positive emotion in retail banking sector

 H2d – Perceived distributive justice negatively influences negative emotion in retail banking sector

 H2e – Perceived procedural justice negatively influences negative emotion in retail banking sector

 H2f –Perceived interactional justice negatively influences negative emotion in retail banking sector

2.4 Post- recovery satisfaction

Post-recovery satisfaction is one of the most important problems concerning all type of business organizations, which is justified by philosophy of the customer-orientation and main principles of constant improvement of modern enterprises In simpler words, post-recovery satisfaction is the customer’s evaluation of whether a service recovery has met his or her needs

and expectations Obviously, if the performance does not meet expectation, the customer is dissatisfied If providers could increase levels of customer satisfaction after service recovery could maintain customer loyalty and make more profits For this reason, post-recovery satisfaction must be measured into a number of analytic parameters Customer satisfaction after recovery analysis is considered as the most reliable feedback system, considering that it provides

a direct, effective, meaningful and objective way to get the clients’ expectations and preferences Evaluating the customer satisfaction after service recovery is essential task for a company

in order to evaluate the relationship between customers and the performance of its service recovery According to Gerson (1993), modern management literatures consider customer satisfaction as a key task to evaluate a standard of performance a possible standard of excellence for any business firm In additions, perhaps, companies are able to evaluate and motive employees’ performance through measurement of customer satisfaction (Hill, 199 )

Hypothesis 3is thus proposed as follow:

 H3a - Positive emotion positively influences post-recovery satisfaction in retail banking sector

 H3b - Negative emotion negatively influences post-recovery satisfaction in retail banking sector

2.5 Model and Hypothesis

Based on the literature review, author develops hypothesis and theoretical framework of the model:

(H2a,b,c,d,e,f) (H3a, H3b)

(H1a,b,c)

Figure2.1 The research model

 H1a –Perceived distributive justice positively influences post-recovery satisfaction in retail banking sector

 H1b – Perceived procedural justice positively influences post-recovery satisfaction in retail banking sector

 H1c – Perceived interactional justice positively influences post-recovery satisfaction in retail banking sector

 H2a – Perceived distributive justice positively influences positive emotion in retail banking sector

 H2b – Perceived procedural justice positively influences positive emotion in retail banking sector

 H2c – Perceived interactional justice positively influences positive emotion in retail banking sector

 H2d – Perceived distributive justice negatively influences negative emotion in retail banking sector

 H2e – Perceived procedural justice negatively influences negative emotion in retail banking sector

Negative emotions

Post-recovery Satisfaction

 H2f –Perceived interactional justice negatively influences negative emotion in retail banking sector

 H3a - Positive emotion positively influences post-recovery satisfaction in retail banking sector

 H3b - Negative emotion negatively influences post-recovery satisfaction in retail banking sector

2.6 Summary

Post-recovery satisfaction is one of the most important problems concerning all type of service failure, which is justified by philosophy of the customer-orientation and main principles

of constant improvement of modern enterprises For this reason, post-recovery satisfaction must

be measured into a number of analytic parameters Evaluating customer satisfaction after service recovery is considered as a reliable feedback system, considering that it provides a direct, effective, meaningful and objective way to get the expectations of customers

Chapter 3

RESEARCH METHODOLOGY

This chapter presents the research design process, data collection method and how to find out relationship between service recovery and post-recovery satisfaction, intended for evaluating customer satisfaction after service recovery in Vietnam retail banking sector The research procedure is implemented through a combination between qualitative research and quantitative research

3.1 Research design process

Due to nature of problem, the chosen method for doing this research is the combination

of literature review and survey conduction The purpose of these methods is comparing between theory and reality, seeing how service recovery impact on customer satisfaction in Vietnam retail banking context

Hussey and Hussey (1997) defined secondary data as data which already existed, conducted by other researchers rather than the user The secondary data is collected by using literature review The key purpose of reviewing literature is helping to develop a good understanding and insight into relevant previous research Literature review is conducted to get the background knowledge of the research topic, and therefore make process of writing the dissertation a bit easier later

This research requires doing literature review to find out the relationship between service recovery and banking retail customer satisfaction after recovery Moreover, literature review method will also be used to describe what are the most commonly used terms in service recovery and post-recovery satisfaction from articles or theories of famous authors, and then based on that, banks in Vietnam might find the suitable way to improve their own service recovery quality into

a better one

The research process includes eight steps as below Figure

Figure 3.1 Research process

3.2 Sample size

The sample size depends on a number of aspects, such as expectation of reliability, method

of data analysis and others Hair et al (1995) showed that “It is generally agreed that the minimum sample for appropriate use for statistical analysis is equal to or greater than 5 times of independent variables, but not less than 100” This study has 24 items, so the minimum size for each convenience shop data and supermarkets data in this research is n = 5*24 = 120

3.3 Data Collection

Define Research problem Literature Review

- Reliability analysis (Cronbach’s Alpha)

- Validity analysis (Exploratory Factor analysis)

- Hypothesis testing (Regression & ANOVA)

analysis)

Conclusions & Suggestions

All the data were collected with questionnaires which is easy to study the opinions and perceptions of large group of people at low cost and in a limited time frame The questionnaire is easily understood by all of respondents irrespective of their education level without compromising on the quality of the expected result

3.4 Pilot study

There is a pilot study that was conducted before formal main survey in order to control errors such as ambiguous or repetitive questions Furthermore, its purpose is to check if the questions asked are appropriate for customers and emphasized the importance of for service recovery, the influence of service recovery on post-recovery satisfaction and covered all its attributes and the consistence the questionnaire from start to finish.According to Saunder et al (2007), it is very necessary to test questionnaire to find out the difficulties for answering the questions and ensure that data collected could answer the main research question

Furthermore, the pilot study is the most important part to test if the data collected can analysed and findings from them appears to make sense (Smith et al, 1991).The pilot questionnaire was conducted with 30 customers in 5 selected banks to check whether the questions designed are accurate and logical to define the influence of service recovery on post-recovery satisfaction in Vietnam retail banking context.The purpose of testing was for reliability and consistence of the questionnaire and to make sure that all of respondents interpret the questions with the same way as planned

As a result, the respondents had concerns related to length of the questionnaire and the ability of an average customer could interpret all the questions, the process and how to score

their answer correctly based on scale from 1 to 5 (the level increased from Disagree to Agree)

3.5 Main study

Main study was quantitative research to collect data for examining research model.The

whole survey took place in 5 banks including the domestic banks which were chosen to stand for Vietnam banking market.The questionnaire was sent to customers who are selected randomly from the list of customer which researcher was given from chosen banks with branch manager’s permission.The official survey was conducted with final questionnaire by face-to-face interview, online survey and sending email to convenience customers The research question for this study

is composed of 4 different sections: general information, perception of service performance level, rating emotion & post recovery satisfaction and personal information

And then, those are translated from English into Vietnamese since the survey is conducted

to most of Vietnamese people The translation work is done obtaining cooperation from a professional translator The detail of the questionnaire in Vietnamese version will be shown in Appendix 2

3.6 Data collection

All the data were collected withquestionnaires which is easy to study the opinions and perceptions of large group of people at low cost and in a limited time frame The questionnaire is easily understood by all of respondents irrespective of their education level without compromising on the quality of the expected result The use of questionnaire is advantageous in that it enables the researcher to reach a large number of potential respondents, will be financially economical to employ and guarantees respondents confidentiality (Bryman & Bell, 2007)

Based on rule of five observations per parameter estimated, for the survey, 300 questionnaires were distributed directly and email to respondents After the data collection, total

250 responses were collected, 17 responses were eliminated because respondents indicated that they had a service failure from banking Finally, 233 responses were used as a valid data for this research In this main study, exploratory factor analysis (EFA) was used to assess measurement scales

3.7 Items measurement for service recovery and post-recovery satisfaction

As mentioned in chapter 2, The 24 questions are listed as below was chosen to evaluated customer satisfaction after service recovery “This bank” in each item represents the selected bank by respondent at general information part of questionnaires

Table 3.7.1 – Measurement items of Perceived Justice

Río-2 This bank took good compensation measures to solve the problem

3 This bank 's efforts were sufficient to offer a satisfactory compensation

4 I think this bank was quite fair when compensating me for the problem that occurred

5 In general, this bank was able to compensate me adequately to solve the problems it had in the delivery of the service

Perceived Justice

Procedural (PJ)

6 I think my problem was resolved in the right way

7 I think this bank has good policies and practices for dealing with problems

8 Despite the trouble caused by the problem, this shopping website was able

to respond adequately

9 This bank proved flexible in solving the problem

10 This bank tried to solve the problem as quickly as possible

Perceived

Interactional

Justice (IJ)

11.The employees in this bank showed interest in my problem

12 The employees in this bank did everything possible to solve my problem

13 The employees in this bank proved able and to have enough authority to solve the problem

14 The employees in this bank showed interest in being fair when solving the problem

15 The treatment and communication with employees of this bank to solve the problem were acceptable

Table 3.7.2 – Measurement items of Emotions & post recovery satisfaction

Emotions

(EM)

Positive Emotion (PEM)

16 I feel happy after service recovery encounters of this bank

Schoefer and Ennew (2005); Schoefer and Dianantopoulo

19 I feel angry after service recovery encounters of this bank

20 I am in a bad mood after service recovery encounters of this bank

21 I feel upset after service recovery encounters of this bank

23 Overall, I was satisfied with the way this complaint was resolved

24 Overall, I was pleased with the service recovery encounters I experienced

3.8 Methodology of data analysis

Hussey and Hussey (1997, p 4) defined “Methodology refers to the overall approach to the research process, from the theoretical underpinning to the collection and analysis of the data” (Business Research- A practical guide for undergraduate and postgraduate students) According

to Silverman (1994), “like theories, methodologies could not be true or false, but more or less useful”

Cronbach’s alpha is used to test reliability of measurement scales The constructs with high reliability are those in which the items are highly inter-correlated It states that they are all measured with the same construct (Hair et al, 1998) In generally, the value of Cronbach’s Alpha for acceptable reliability is 0.7, it could decrease to 0.6 in exploration research, and any variables, which have the value of Correlated Item-Total Correlation below 0.4, would consider

to be rejected (Hair et al, 1998)

In this study, EFA (Exploratory Factor Analysis) method was used mostly for data reductions reason and test validity of measurement scale (discriminatory and convergence) (Nguyen, 2011).EFA has been used to explore the possible underlying factor structure of a set of observed variables without imposing a preconceived structure on the outcome After that, author ran simple linear regression and multiple linear regressions to test relationship between variables

3.9 Summary

This part discussed the research methodology and the justification for the selected methodology It further analyzed the principles and procedures which were used to answer the main research question, based on literature review and research questions In addition, it discussed how to measure the service quality and customer satisfaction and questionnaire is used for measurement

Therefore, Vietnam bankers can apply the knowledge and findings of this research to increase customer satisfaction, to build and improve competitive edge and maintain long-term profits

Chapter 4

DATA ANALYSIS

This chapter shows the outcome of the questionnaire and analyses of their relevance to objective and the research questions At first, the collected data was analyzed to identify the sample demographics to have a broader idea about the sample Secondly, the relationship of service recovery and post-recovery satisfaction was tested by using the SPSS and excel program And finally, it identified the problems which customer faced and then some suggestions for service recovery improvement to retain the existing customers and attract new customers were presented

4.1 Data analysis methods

After selecting data, SPSS (Statistical Package for the Social Sciences) was used to calculate the result SPSS is a computer statistic program that provides statistical data analysis SPSS allows for analytical reporting, graphics, modelling and in-depth data access and preparation “It can be used by market researchers, heath researchers, survey companies, government, education researchers and others” (Sulaiman, 2002) Regarding this research, SPSS

is used to test the correlation between customer satisfactions after service recovery in Vietnam retail banking Other information and data found through literature review or questionnaires of customer will be checked and analysed in relation to the main objective of dissertation

4.2 Means and standard deviations of variables:

Arithmetic mean (or more simply the mean) indicates the central tendency of all variables

In other words, mean is an average for distribution The means of each construct are ranger from 2.52 to 3.31 for perceived justice items; from 2.08 to 3.09 in emotion items and from 2.98 to 3.66

of post-recovery satisfaction items

On the other hand, standard deviation is a measure of dispersion It indicates that the standard deviation is essentially the average amount of variation around the mean The standard deviations of three constructs are ranger from 0.898 to 1.067 for perceived justice items; from 1.092 to 1.359 in emotion items and from 0.871 to 1.107 of post-recovery satisfaction items Detail of mean and standard deviation of each variable are demonstrated in table 4.1:

Table 4.1: Means & standard deviations of variables

Perceived Justice items Mean

Standard Deviation

DJ1 1 Considering the trouble caused and the time lost, the compensation I

received from this service recovery banking was acceptable 2.67 1.012

DJ2 2 This bank took good compensation measures to solve the problem 2.52 1.005

DJ3 3 This bank 's efforts were sufficient to offer a satisfactory compensation 3.15 1.047

DJ4 4 I think this bank was quite fair when compensating me for the problem that

DJ5 5 In general, this bank was able to compensate me adequately to solve the

problems it had in the delivery of the service 2.64 1.029

PJ1 6 I think my problem was resolved in the right way 3.05 .962

PJ2 7 I think this bank has good policies and practices for dealing with problems 3.27 1.076

PJ3 8 Despite the trouble caused by the problem, this shopping website was able

PJ4 9 This bank proved flexible in solving the problem 2.90 1.003

PJ5 10 This bank tried to solve the problem as quickly as possible 3.25 1.063

IJ1 11.The employees in this bank showed interest in my problem 3.28 1.140

IJ2 12 The employees in this bank did everything possible to solve my problem 3.28 1.003

IJ3 13 The employees in this bank proved able and to have enough authority to

IJ4 14 The employees in this bank showed interest in being fair when solving the

IJ5 15 The treatment and communication with employees of this bank to solve

the problem were acceptable 3.27 .969

Overall 15 of Perceived Justice items

Emotion items

Mean Standard

Deviation

PE1 16 I feel happy after service recovery encounters of this bank 2.94 1.359

PE2 17 I have a warm feeling after service recovery encounters of this bank 3.09 1.306

PE3 18 I am being valued after service recovery encounters of this bank 3.02 1.106

NE1 19 I feel angry after service recovery encounters of this bank 2.13 1.100

NE2 20 I am in a bad mood after service recovery encounters of this bank 2.08 1.092

NE3 21 I feel upset after service recovery encounters of this bank 2.26 1.101

Post-Recovery Satisfaction items

Mean Standard

Deviation

PRS1 22 Overall, I felt that this service recovery encounters would have been

PRS2 23 Overall, I was satisfied with the way this complaint was resolved 2.98 .871

PRS3 24 Overall, I was pleased with the service recovery encounters I

Overall 24 of Measurement Items

Note: Highlight color RED: Highest

Highlight color YELLOW: Lowest

4.3 Research sample characteristics

Five demographic characteristics variables are adapted in this questionnaire They are the most frequently asked items in academic survey: gender, age group, marriage status, education level and average income

The ratio of gender between male and female is 43.3% and 56.7% respectively The targeted ratio for this variable is about 50% each but female outnumbers male by approximately

13% In age group, four different age groups are comparatively well distributed except the group

of range from 26 to 35 years old counted 70 people, occupied30% of the total responses

However, its shows that there are many middle aged bank users In marriage status distribution, married group has 28.8% and single group has 65.2% of total respondents

In terms of education level, those who hold university or college degree are counted 130out

of 233 This trend of data indicates that people with higher education are tend to have more interests in banking services than those who have lower education level

From 5 to 10 million dong and from 11 to 20 million dong are the largest part of average income The survey mainly carried out random for customer of 5 banking (Vietcombank, BIDV, ACB Bank, Sacombank, MB bank) These are five of the most representative bank in Vietnam, that could be regarded as typical of the banking sector to provide services a diverse and flexible, high quality and stable customers

Detail of mean and demographic characteristics of sample are shown in table 4.2:

Table 4.3.1: Demographic characteristics of sample