The effect of relational benefits on customer loyalty_ An empirical study of Vietnamese banking industry

Moreover, among relational benefits, special treatment benefits and confidence have positive impacts on customer satisfaction, however, social benefits do not show the influence on custo

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NGUYEN THI AI TRAN

THE EFFECT OF RELATIONAL BENEFITS ON CUSTOMER SATISFACTION AND CUSTOMER LOYALTY: AN EMPIRICAL STUDY

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NGUYEN THI AI TRAN

THE EFFECT OF RELATIONAL

BENEFITS ON CUSTOMER SATISFACTION AND CUSTOMER

LOYALTY: AN EMPIRICAL STUDY

ACKNOWLEDGEMENT

ABSTRACT

TABLE OF CONTENTS

LIST OF FIGURES

LIST OF TABLES

CHAPTER 1: INTRODUCTION 1

1.1 Research Background 1

1.2 Research Objectives 5

1.3 Research Scope and Research Methodology 5

1.4 Structure of The Research 6

CHAPTER 2: LITERATURE REVIEW 8

2.1 Customer Loyalty 8

2.2 Customer Satisfaction 9

2.3 Relational Benefits 10

2.4 The Conceptual Model and Hypotheses of The Research 14

CHAPTER 3: RESEARCH METHODOLOGY 17

3.1 Research Design 17

3.1.1 The Unit of Observation 17

3.1.2 Measures of The Constructs 17

3.2 Questionnaire Design 19

3.3 Data Procedure 22

3.3.1 Qualitative Research 22

3.3.2 Quantitative Research 22

3.4 Data Analysis Method 26

CHAPTER 4: DATA ANALYSIS AND DISCUSSIONS 28

4.4 Regression Analyses 36

4.4.1 Simple Regression Analysis 36

4.4.2 Multiple Regression Analysis 38

CHAPTER 5: CONCLUSIONS, IMPLICATIONS, AND LIMITATIONS 45

5.1 Conclusions 45

5.2 Managerial implications 46

5.3 Limitations 49

REFERENCES 50

APPENDICES 54

Appendix A: Guidelines for in-depth interviews 54

Appendix B: Questionnaire In English 56

Appendix C: Questionnaire In Vietnamese 59

Appendix D: Total variance explained in Exploratory Factor Analysis 62

Appendix E: Histogram, Normal Regression & Scatter Plot of Dependent Variable: Customer Satisfaction 64

Trang for her intensive support, valuable suggestions, instructions, and encouragement during the time of doing my research

I would like to express my deepest gratitude to Professor Nguyen Dong Phong, Professor Nguyen Dinh Tho, Dr Tran Ha Minh Quan for their valuable time as the members of the proposal examination committee Their comments and meaningful suggestions were contributed great help for my completion of this research

My sincere thanks are given to all of my teachers at International Business School – University of Economics Ho Chi Minh City for their teaching and guidance during my MBA course

In addition, I would like to special express my thanks to all of my classmates, my colleagues at Samsung Vina Insurance Company Limited and my friends who are working in some banks in Ho Chi Minh City for their support and encouragement during the time I was doing my research

consequently, the influence of customer satisfaction on customer loyalty in Vietnamese banking industry Based on the theories and measurements of those factors existed in the current liturature, and a qualitative research conducted in Vietnam, a model has been released following measurement scale of those concepts A quantitative research of 186 banking customers has been done to evaluate the measurement scale and test the model

The results of Cronbach’s alpha test show that the scale is satisfactory with the allowed reliability and validity It also can indicate that the theoretical model is suitable in Vietnam banking industry and all hypotheses are accepted For specific, the study shows that customer satisfaction highly impacts on customer loyalty in Vietnamese banking industry Moreover, among relational benefits, special treatment benefits and confidence have positive impacts on customer satisfaction, however, social benefits do not show the influence on customer satisfaction Besides, special treatment benefits also have been proved to have a strongest impact

on customer satisfaction

In general, researching of the effects of these variables will support the banks’ managers get thorough understanding of the effect of each relational benefits factors on customer satisfaction, then, help them to identify which variables are the best predictors to customer satisfaction to place emphasis on Furthermore, the study also indicates that making customers satisfied will remarkably affect to the loyalty of customers to the banks, which will help banks’ managers to release effective decisions to gain long-term loyal customers in such highly competitive marketplace in Vietnam

Figure 3.1 Research Process

Figure E1 Histogram of Customer Satisfaction

Figure E2 Normal Plot of Customer Satisfaction

Figure E3 Scatter Plot of Customer Satisfaction

Table 4.1 Sample Characteristics

Table 4.2 Reliability Test Results

Table 4.3 KMO and Bartlett's Test of Independent Variables Table 4.4 Rotated Component Matrix of Independent Variables Table 4.5 KMO and Bartlett's Test of Dependent Variables Table 4.6 Rotated Component Matrix of Dependent Variables Table 4.7 Model Summary of Simple Regression Analysis Table 4.8 ANOVA of simple regression analysis

Table 4.9 Coefficients of simple regression analysis

Table 4.10 Correlations matrix

Table 4.11 Model Summary of multiple regression analysis Table 4.12 ANOVA of multiple regression analysis

Table 4.13 Coefficients of multiple regression analysis

Table 4.14 Summary of hypotheses testing result

Table D1 Total Variance Explained of Independent Variables Table D2 Total Variance Explained of Dependent Variables Table D3 Model Summary b of multiple regression analysis

The globalization of economy has created an environment more competitive than ever in Vietnam All companies, with no exception in any industries, strive to differentiate themselves from other rivals to get successful survival In this perspective, customer loyalty has emerged as

an important aspect that most companies want to be strong at since it is considered as a competitive advantage for all companies to achieve stable development

Regarding services industry’s aspect, achieving loyalty of customers has become much more important since the operation of service involves much on the interactions between service providers and customers In banking industry, for specific, achieving customer loyalty is a key to help banks gain sustainable competitive advantage, retain customer, grow in sales, and gain long-term customers Obviously, there are many factors affecting customer loyalty Achieving customer satisfaction is known as one of them, showing a positive impact on loyalty of customer (Zeithaml, Berry, & Parasuraman, 1996; Fornel, Johnson, Anderson, Cha, & Bryan, 1996; Selness, 1993) When customers are satisfied, they are more likely to return to those service providers and when there is an increase in satisfaction level, they will stay loyal to those companies (Anderson & Sullivan, 1993) Therefore, numerous studies have been conducted to identify and measure the components of satisfaction In Vietnam, some important factors affecting customer satisfaction have already been investigated such as service quality (Vu & Nguyen, 2008; Lam, 2012; Nguyen, 2013), service personal value (Pham & Le, 2010), brand (Nguyen, 2013; Ngo, 2012) However, little research in Vietnam has been devoted to investigate the impact of relational benefits on customer satisfaction Besides, in the world,

relational benefits have been widely studied, also in banking industry (Arturo, David, & Agueda, 2007; Sergios, 2010; Maria-Eugenia, 2008), however, these studies have showed the impact of relational benefits on customer satisfaction or directly on customer loyalty only, not indicated the impact of relational benefits on customer satisfaction, and consequently the influence of customer satisfaction on customer loyalty Hence, to address the gaps as mentioned above, this study aims to investigate the effect of relational benefits on customer satisfaction, and consequently the influence of customer satisfaction on customer loyalty in Vietnamese banking industry

As opposed to the marketing management, relationship marketing tends to become a flourishing field as well as a generalized alternative conception in marketing theory and practice perspective (Berry, 1983) According to Kinard and Capella (2006), a fundamental condition for a relationship to develop over time is that both the firm and the customer perceive positive outcomes, or benefits The benefits the banks receive include loyalty of customers, long-term profitability, and sales growth What the customer gets is associated with the service itself and/or with benefits that can develop from being a regular customer of the company – called relational benefits (Gwinner, Gremler & Bitner, 1998; Reynolds & Beatty, 1999) Gwinner et al (1998) and Hennig-Thurau et al (2002) reveal that service comprises of the two components: core service and relationship, however, the relationship benefits framework focuses on the relationship component and defines relational benefits as the value a customer receives over and above the core service

Relational benefits include three types of benefits: confidence benefits, social benefits, and special treatment benefits (Gwinner et al., 1998; Patterson & Smith, 2001; Hennig-Thurau, Gwinner, & Gremler, 2002) Confidence benefits are considered as psychological factors related

to feelings of security, reduced anxiety, and trust in the service provider or the keeping of promises by the service providers (Gro¨nroos, 1990; Bitner, 1995) Social benefits refer to the establishment of personal relationships between customers and employees derived from long-term relationships (Czepiel, 1990) Special treatment benefits are the combination of economic benefits and service customization that customers receive from developing relationships with companies, those benefits in this type are discounts, time savings, and additional services not available to other customers derived from the consideration of special customers (Peterson, 1995)

Achieving relational benefits becomes especially important when the service is complex,

of high involvement, customized and delivered over a continuous stream of transactions, like in the case of financial services (Kinard & Capella, 2006) In Vietnam, the development of banking,

as a result of the global crisis, has showed a downward trend in recent years According to Dinh (2013), especially from 2011 to 2013, Vietnamese State bank had revealed the situation of some weak banks, among that, three banks including Saigon Commercial Bank, Tin Nghia Bank, FicomBank had been consolidated to Saigon Commercial Bank in late 2011, one bank, which was Habubank, had been merged to Sagon Hanoi Bank (SHB) in Aug, 2012, Tienphong bank had positively found the share from two companies to restructure itself in 2011, some others including GPBank, Navibank, TrustBank, and Western Bank were also described as weak banks and they were in process to restructure

Facing with this downward trend, many banks have showed their attempts by building relational benefits to attract customers In Asia Commercial Bank (ACB), for instance, the application of core banking, in which the fragmented management system is switched to the focused management system, is considered as a remarkable progress to allow all transactions can

be transferred to online banking transactions This helps to bring convenience to customers by accessing data and doing various transactions on the Internet Besides, Viettinbank, whose information security is put on top priority, has developed the overall safety security strategy to attract customers This modern system ensures that information security team who is in charge of information security will continuously review and comply with the information security process

to form a continuous information security cycle for ViettinBank Furthermore, some owned banks like Standard Chartered Vietnam and Citi Bank Vietnam… have also continuously released competitive offers to their priority banking service sector like offering direct priority banking line, cash-back credit cards, discount policy to privileges…

foreign-These mentioned examples have indicated the attempts of banks in building relational benefits to satisfy customers However, as mentioned above, limited research has been done to explore the effects of relational benefits on customer satisfaction and customer loyalty in Vietnamese banking industry As a result, this study aims to identify the factors among relational benefits that significantly impact customer satisfaction and customer loyalty in Vietnamese banking industry

1.2 Research Objectives

The overall objective of this research is to examine the effect of relational benefits on customer satisfaction, consequently, the influence of customer satisfaction on customer loyalty Specifically, it investigates:

 The relationship between customer satisfaction and customer loyalty

 The relationship between confidence benefits and customer satisfaction

 The relationship between social benefits and customer satisfaction

 The relationship between special treatment benefits and customer satisfaction

1.3 Research Scope and Research Methodology

Ho Chi Minh City has been chosen to conduct survey for the study as it is known as one

of the biggest cities as well as the economic center of Vietnam Respondents chosen are those who are term deposit customers because they are believed to have used variety of banking services, which vary from direct banking, debit card, online banking…when they get term deposit with banks Besides, they are also willing to spend time responding to questionnaires

The study is conducted through two steps The first step is conducted with qualitative research by an in-depth interview with 8 respondents The second step is done with quantitative research by direct interview with 200 respondents at term deposit service banking counters

SPSS is used as the main analysis tool to process the data and to implement the study, which is included conducting the Cronbach’s Alpha Analysis to test the reliability of measurement scale, Exploratory Factor Analysis (EFA) to test the validity of measurement

scale, simple regression and multiple regression to evaluate the relationships among factors in the research model The research only approaches relational benefits as factors affecting satisfaction and hence, fostering loyalty, other factors concerning customer satisfaction are eliminated in this study

1.4 Structure of The Research

The study includes five chapters:

Chapter 1: Introduction

This chapter presents research background, research problems, research objectives, research

methodology, and research scope of study

Chapter 2: Literature Review and Hypotheses

The author provides the literature review of customer loyalty, customer satisfaction, and relational benefits (confidence benefits, social benefits, and special treatment benefits) The conceptual model as well as the hypotheses of the study is also established in this chapter

Chapter 3: Research Methodology

The chapter displays the research design, research methodology, research process based on the information mentioned on chapter 1 and chapter 2

Chapter 4: Data Analysis and Data Results

This chapter presents the characteristics of research samples and the results of Cronbach’s alpha analysis, EFA analysis, multiple regression, and simple regression analysis The final model of the research is built based on the results of those analyses

Chapter 5: Conclusions, Implications, and Limitations

Chapter 5 displays the conclusions, implications, and limitations of the study following the results analyzed in the above chapters

CHAPTER 2: LITERATURE REVIEW

This chapter represents literature and theories of the concepts in the research model, which have been conducted by many studies related to those concepts in the world At first, the theory of customer loyalty and customer satisfaction has been displayed following by the hypotheses proposed After that, relational benefits are defined along with its components including confidence benefits, social benefits, and special treatment benefits The hypotheses of relational benefits have been proposed based on the findings in previous studies Finally, the research model has been established and the relationships hypothesized among these constructs

are also displayed

2.1 Customer Loyalty

Customer loyalty is defined by Oliver, Rust, and Varki (1997) as a commitment formed for being a steady customer or purchasing again in the future for the preferred product or service regardless of the marketing efforts or situational effects Bitner (1990) describes loyalty as a process, in which, at the end of the process, satisfaction has effects to perceived quality, which could cause loyalty and intention to certain behavior Gremler and Brown (1996) also offer one definition of customer loyalty concerning to the purpose of this study, which is the degree a customer exhibits repeated purchasing behavior from a service provider, possesses a positive attitudinal disposition towards the provider, and considers using only this provider when a need for this service exists

Regarding the characteristics of loyal customers, the results of many studies have been proposed Dick and Basu (1994) claims that loyal customers are less motivated to search for

alternatives, more resistant to counter persuasion from other brand and more likely to pass along positive word-of-mouth communication about the service to other consumers According to Peterson (1995), loyal customers contribute huge amounts of revenue and demand less time and attention which makes them as an important asset of a company Furthermore, Bowen, and Chen (2001) find that there is a positive correlation between loyal customer and profitability There are many factors affecting customer loyalty, one of those can be told is customer satisfaction, since customers are satisfied, they are more likely to return to those service providers while dissatisfied customers go elsewhere (Anderson & Sullivan, 1993)

2.2 Customer Satisfaction

Customer satisfaction is considered as a very useful metric in managing and monitoring businesses Although customer satisfaction has been discussed widely in research literature, no single definition of it has been agreed on by researchers However, a considerable amount of studies on this field has been conducted and gives deep insights on customer satisfaction from variety of views Regarding services marketing’s perspective; satisfaction is defined as a cognitive-based phenomenon (Westbrook, 1987) Cognition has been studied mainly in terms of the expectations paradigm, which states that expectations originate from the customer’s beliefs about the level of performance that a product or a service would provide, and consumers are satisfied when their purchase results exceed their expectations (Oliver, 1980)

Homburg, Koschate, and Hoyer (2006) also recognize that the affect of experience during the acquisition and consumption of the product or service can also significantly influence on satisfaction judgments, each experience creates an evaluation and an accompanying emotional

reaction on the customer In their study, Lewis and Soureli (2006) point out that consumer satisfaction can be evaluated by how satisfied the customers are with the frontline employees, the core service or the organization in general This is also the reason why many different researches have built various dimensions in order to measure the level of consumer satisfaction more accurately Besides, customer satisfaction is also the key and value outcome of good marketing practices (Greenland & Looney, 2007)

It can be referred that although customer satisfaction can be perceived with different perspectives, its objective is to bring about development to company such as higher future profitability, provide referrals to other customers, and more of the companies’ product and service used Numerous studies have been done and validated the influence of customer satisfaction on customer loyalty (Zeithaml et al., 1996; Fornel et al., 1996; Selness, 1993) As a result, following previous studies, the researcher anticipates that customer satisfaction will positively affect customer loyalty The following hypothesis is proposed:

Hypothesis 1: Customer satisfaction has a positive effect on customer loyalty

2.3 Relational Benefits

A relational – as opposed to transactional – exchange exists when this exchange is characterized by emotional and social bonds between the partners, such as trust and commitment, when it involves regular, long-term interactions and communication between the parties and is based on shared benefits and burdens (Berry, 1983)

Relational benefits are known as the result of the establishment of long-lasting relationships with the service provider (Gwinner et al., 1998; Hennig-Thurau et al., 2002)

According to Sergios (2010), the initial in-depth evidence on the nature of relational benefits comes from two qualitative studies during the late 1990s A first qualitative study was conducted

by Beatty et al (1996) on relationship between customers and sales associates in a fashion retail chain, based on the interviews with customers and sales associates, as well as on observations It

is concluded that three key elements which motivate customers to develop and enhance the relationship with the sales assistants are trust, friendship, and functionality Trust is based on sales assistants’ ability to solve customer problems honestly and skillfully Friendship represents the social aspect of the relationship and results in a better understanding of the customers’ needs Functionality implies the benefits of a convenient, hassle-free shopping, mainly based on the help of the sales assistant in finding exactly what the customer needs with no waste of time

After that, a second quantitative research was conducted by Gwinner et al (1998) with

300 customers in three service categories The result of this study validates three types of relational benefits including confidence benefits, which reduced anxiety and knowing what to expect, social benefits which is understood as personal recognition of customers, familiarity with employees, and friendship, and finally, special treatment benefits which are described as price discounts, faster service, and customized services

Empirical studies that followed early work have been based on the typology of Gwinner

et al (1998) and have validated the three types of relational benefits including social, confidence, and special treatment in various service contexts (Hennig-Thurau et al., 2002; Kinard & Capella, 2006) Confidence benefits are considered as psychological factors related to feelings of security, reduced anxiety, and trust in the service provider or the keeping of promises

by the service providers (Gro¨nroos, 1990; Bitner, 1995) Social benefits refer to the establishment of personal relationships between customers and employees derived from long-term relationships (Czepiel, 1990) Special treatment benefits are the combination of economic benefits and service customization that customers receive from developing relationships with companies, those benefits in this type are discounts, time savings, and additional services not available to other customers derived from the consideration of special customers (Peterson, 1995)

Regardless of the service type, confidence benefits have been found to be the most important type of benefits (Gwinner et al., 1998), and its effect on loyalty primarily occurs through satisfaction (Hennig-Thurau et al., 2002) In addition, Beatty et al (1996) also affirms that these benefits received by customers can be classified in two main categories: functional and social benefits Functional benefits include confidence benefits and special treatment benefits Social benefits consist of the social benefits

Confidence benefits is mentioned as the first component in relational benefits, which are described as a detailed combination of psychological benefits in relation to trust in the marketer, reduction in perceived operation risks and a decrease in anxiety In another definition, confidence benefits refer to psychological factors related to feelings of security, reduced anxiety, and trust in the service provider or the keeping of promises by the provider (Gronroos, 1990; Bitner, 1995) Gwinner et al.(1998) in his study states that regardless of the service type, confidence benefits have been found to be the most important type of relation benefits in

face-to-face encounters and it plays a positive impact on customer satisfaction Hence, the first hypothesis is formulated:

Hypothesis 2: Confidence benefits have a positive effect on customer satisfaction

The second component of relational benefits is social benefits, which are defined by benefits of a social nature which adopt the form of personal recognition by employees in direct dealings, or the forging of links and social relationships, which are gratifying for the customer

On the other hand, social benefits include enjoying a personal relationship with the service providers Although Henning-Thurau et al (2002) could not find a positive relationship between social benefits and satisfaction, however, it is reasonable to claim that social benefits would have

a positive influence on satisfaction even though these benefits tend to focus more on relationships than results Reynolds and Beatty (1999) also explains that this is due to the importance attributed by customers to social interaction with financial frontline employees more than to any other relational benefits As a result, the following hypothesis has been proposed:

Hypothesis 3: Social benefits have a positive effect on customer satisfaction

The last component of relational benefits is special treatment benefits, which consist of

an extensive range of benefits or economic advantages which come in the form of first-rate levels of service, preferential treatment, special operation conditions, and time saving This type

of benefits is the principal motivation for the customer to develop a long term relationship with the service providers Following Peterson (1995), money savings is the main motivation for engaging in relational exchanges Hence, there are discounts, time savings, and additional services not available to other customers derived from the consideration of special customers In

the study, Reynolds and Beatty (1999) reveals that the special treatment provided by a financial service provider can be perceived as a part of the overall service, so that this benefit will increase customer satisfaction Thus, the following hypothesis is developed:

Hypothesis 4: Special treatment benefits have a positive effect on customer satisfaction

As stated by Marzo, Pedraja, and Rivera (2004), both the firms and the customers in a relationship must get benefit to continue this relationship over time In banking industry, these types of benefits are very relevant because banking is an environment where customers and employees contact in a highly personal level (Arturo et al, 2007) It is believed that these benefits make the customers more satisfied to the employees who provides the service and to the bank as

a whole Hence, it has been indicated that relational benefits have their place in the research streams of service marketing management

Based on the reviews of some related literature and hypotheses developed, the following model is proposed (see Figure 2.1)

2.4 The Conceptual Model and Hypotheses of The Research

The conceptual framework is presented in Figure 2.1 and is consisted of four hypotheses from H1 to H4 H1 indicates that customer satisfaction has an impact on customer loyalty The group factors from H2 to H4 are independent and quantitative variables, which have influence on customer satisfaction The below conceptual framework is used as the foundation for this research project:

Figure 2.1 Conceptual Model

Although service quality is the biggest factor affecting customer satisfaction (Clemes, Gan and Ren, 2011), we put it out of the model to focus on the effect of relational benefits

There are total four hypotheses developed in this research:

H 1 : Customer satisfaction has a positive effect on customer loyalty

H 2 : Confidence benefits have a positive effect on customer satisfaction

H 3 : Social benefits have a positive effect on customer satisfaction

H 4 : Special treatment benefits have a positive effect on customer satisfaction

In summary, this chapter presents theoretical background of the concepts in the model Based on literature review, customer satisfaction influences customer loyalty Besides, customer satisfaction is also impacted by relational benefits, including confidence benefits, social benefits,

Confidence Benefits

Customer satisfaction

and special treatment benefits Moreover, those concepts are chosen to set up the model because these relationships have already been investigated and tested in many studies in the world in previous time This study has been conducted to investigate these relationships in Vietnam context, banking industry for specific The next chapter will present the methodology, which is used to analyze the data and tested hypotheses of the research model

CHAPTER 3: RESEARCH METHODOLOGY

This chapter displays a research methodology to conduct this study In the first part, research design is presented with unit of observation and measure of constructs, then, measurement scales are presented to develop questionnaire After that, the questionnaire design

is described to explore the structure and content of the questionnaire The data procedure displays the qualitative research and the quantitative research of the study Finally, the data process method is presented on the methods used to process the data

3.1 Research Design

3.1.1 The Unit of Observation

The study objective is to investigate the effect of relational benefits on customer satisfaction, and customer loyalty in the Vietnamese banking industry so that the bank’s customer, term deposit service customer for specific, is the unit of observation The banks are allocated with various kinds of banks in Ho Chi Minh City including: Joint Stock Commercial Bank, Wholly Foreign –Owned Bank, Foreign Banks’ s Branch

3.1.2 Measures of The Constructs

The scale of the study was established based on the theory and the scales which had been used many researchers on their studies before The scale was mostly based on the scale of Maria–Eugenia, Irene, and Gloria (2008), Li-Wei (2009), Anderson and Sullivan (1993)

 Customer Loyalty was measured by five items borrowed from the scale of Anderson and Sullivan (1993)

When I need to make a purchase, this bank is my first choice

To me, this bank is the best one to do business with

I believe that this is my favorite bank

I seldom consider switching to another bank

I will do more business with this bank in the future years

 Customer Satisfaction was measured by five items borrowed from the scale of Li-Wei (2009)

This bank is a good firm to do business with

I am satisfied with the competence of salesperson of this bank

I am satisfied with the service quality of this bank

I am satisfied with the relationship with this bank

In general, I am satisfied with the services offered by this bank

 Confidence Benefits were measured by six items borrowed from the scale of Eugenia et al (2008)

Maria-I believe there is less risk that something will go wrong

I feel I can trust this bank

I am confident the service will be performed correctly by this bank

I have less anxiety when I use services in this bank

I know what to expect from this bank

I get the bank’s highest level of service

 Social Benefits were measured by four items borrowed from the scale of Maria-Eugenia

et al (2008)

I am recognized by this bank’s employees

I am familiar with the employee(s) that perform the service

I have developed a friendship with this bank’s employees

They know my name

 Special Treatment Benefits were measured by five items borrowed from the scale of Maria-Eugenia et al (2008)

I get discount or deals from this bank that most consumers do not

The prices I get from this bank are better than those other customers get

They do services for me that they do not do for most customers

I am placed higher on the priority list when there is a line

I get master service than most customers

3.2 Questionnaire Design

The questionnaire was divided into three sections The first section of the questionnaire was used for screening information, which helped to make sure that the questionnaire was answered by the right respondents, who were in use of term deposit banking service Two screening questions were required to answer before conducting the questionnaire: “Have you used the term deposit banking service in the last 6 months?” Intention of author also had been declared in the answers, which were “If the answer is “Yes”, please keep moving on question 2” and “If the answer is “No”, please stop answering here, thank you so much for your time!” After

that, the respondent, who answered “Yes” with the first question would be required to answer the second one “Which bank are you using term deposit service most often?” The bank the respondent answered was marked as “X” in order to orient the respondents to the specific bank mentioned through the questionnaire All questionnaires were believed to be done at the term deposit service counters at banks, therefore, all respondents were considered to be target respondents The consent form was also used in this section, which clarified in details the privacy protection commitment to respondents, estimated duration of response, and the intention

of the author as well as the importance of conducting the questionnaires

The second section explored the effect of relational benefits on customer satisfaction and customer loyalty All the terms were developed by other previous researchers to capture the domain of the constructs For specific, relational benefits including confidence benefits, social benefits, and special treatment benefits were measured by 15 items of Maria-Eugenia et al (2008); customer satisfaction was investigated by 5 items of Li-Wei (2009); and customer loyalty was evaluated by 5 items by Anderson and Sullivan (1993) After that, the subject of the concepts was eliminated to avoid responding bias, the total of 200 questionnaires were used to display the second section

The third section presented the demographics information such as gender, age, and employment of the respondents

Likert scale which varied from (1) strongly disagree to (7) strongly agree was used to exploit the respondent opinions The process of research was as follows:

Figure 3.1 Research process

3.3 Data Procedure

3.3.1 Qualitative Research

Based on previous researches on the effect of relational benefits on customer satisfaction and customer loyalty, four hypotheses were established in this study The model was adjusted and the preliminary scale was firstly established An in-depth interview was conducted with eight respondents to make sure they could understand the questionnaire clearly and have no problem answering it Besides, the author was also willing to receive all recommendations from the interviewees to improve the questionnaire As a result, only minor changes were suggested to modify from responses and no statements were removed

(See Appendix A)

Finally, all items were adjusted to make respondents thoroughly understood and respondents agreed that the factors in the research affecting customer loyalty in Vietnamese banking industry

3.3.2 Quantitative Research

According to the preliminary research, the questionnaire was adjusted to make the respondents understand the questions easily Then, the official questionnaires were released in mass The process of the quantitative research was as follows:

First, the preliminary questionnaire was established in English based on the model of Maria-Eugenia et al (2008), Li-Wei (2009), Anderson and Sullivan (1993) After that, the questionnaire was translated into Vietnamese for researching purpose in Vietnam market

(See Appendix B & C)

Second, the sample size of the research was estimated to conduct questionnaires Hair, Black, Babin & Anderson (2009) stated that the minimum sample for appropriate use for statistical analysis was equal to or greater than five times of number of variables, but not less than 100 Therefore, with the model of five factors with twenty – five variables, the sample size should be at least: 25*5=125 observations

Regarding Exploratory Factor Analysis (EFA), the sample size needed was also at least five times for each scale and larger than 100 (Hair et al, 2009) Thus, the minimum sample size required by EFA was also 125 observations

As recommended by Tabachnick and Fidell (1991), the sample for standard multiple regression analysis was n > 50 + 8m (m= number of independent variables) Four independent variables founded in this research, hence the sample required to run multiple regression was: n > 50 + 8 * 4= 82 observations

Third, the sample size of 200 observations was collected, which was satisfactory with both EFA and multiple regression analysis’s conditions in sample Convenience sampling was chosen as the sampling technique 200 term deposit service customers from 5 banks in Hochiminh area were asked to complete a questionnaire at term deposit banking service counters when they came there to do transactions Five banks with various kinds used to conduct questionnaires included Joint stock commercial Bank for Foreign Trade of Vietnam, Asia Commercial Bank Limited (Joint Stock Commercial Bank), Shinhan Bank Vietnam Limited

(Wholly Foreign – owned Banks), Standard Charted Bank Vietnam Limited, HSBC Vietnam Limited (Foreign Banks’ s Branch), 40 observations were conducted in each bank

Table 3.1: The Result of Questionnaires Delivery

issuing

Number of collecting Percent

Joint Stock Commercial

Banks

Joint stock commercial Bank for

Wholly Foreign – owned

Foreign Banks’ s Branch

Standard Charted Bank Vietnam

Fifth, the data was coded and analyzed by SPSS as follows:

 Confidence Benefits

R1 I believe there is less risk that something will go wrong

R2 I feel I can trust this bank

R3 I am confident the service will be performed correctly by this bank

R4 I have less anxiety when I use services in this bank

R5 I know what to expect from this bank

R6 I get the bank’s highest level of service

 Social Benefits

R7 I am recognized by this bank’s employees

R8 I am familiar with the employee(s) that perform the service

R9 I have developed a friendship with this bank’s employees

R10 They know my name

 Special Treatment Benefits

R11 I get discount or deals from this bank that most consumers do not

R12 The prices I get from this bank are better than those other customers get

R13 They do services for me that they do not do for most customers

R14 I am placed higher on the priority list when there is a line

R15 I get master service than most customers

 Customer Satisfaction

R16 This bank is a good firm to do business with

R17 I am satisfied with the competence of salesperson of this bank

R18 I am satisfied with the service quality of this bank

R19 I am satisfied with the relationship with this bank

R20 In general, I am satisfied with the services offered by this bank

 Customer Loyalty

R21 When I need to make a purchase, this bank is my first choice

R22 To me, this bank is the best one to do business with

R23 I believe that this is my favorite bank

R24 I seldom consider switching to another bank

R25 I will do more business with this bank in the future years

3.4 Data Analysis Method

The data was analyzed by SPSS, which could help to process many analyses including the descriptive statistics to identify the characteristic of the sample of the study, Cronbach Alpha’s analysis to test the reliability of the scale, Exploratory Factor Analysis in order to identify the factors affecting customer satisfaction and customer loyalty, and Linear Regression Analysis to identify the degree of affects of each factor to customer satisfaction and customer loyalty

The data was then entered into a datasheet to be analyzed by SPSS Basic descriptive statistics was performed and a regression analysis was run to help with hypothesis testings

In summary, this chapter has presented the structure and content of questionnaire, the sample size, the measurement scale construct, and research method used to collect and analyze the data The questionnaires were collected from respondents at term deposit banking counters This study was designed into two steps The first step was conducted with the qualitative research, which was processed with the in-depth interview to test the measurement scale After

this step, some slight adjustments was done to release the official survey The second step was displayed with the quantitative research, the revised questionnaires were released in mass and the total of 186 valid questionnaires was used for processing the data with regression method

Chapter 4 will describe data analysis results of main survey

CHAPTER 4: DATA ANALYSIS AND DISCUSSIONS

This chapter represents the results that have been found out by the study First of all, the basic and categorizing information is summarized at the descriptive statistics After that, the author moves on to test the reliability of the scale by using Cronbach’s Alpha reliability then exploratory factor analysis (EFA) After proving that the scale itself is internally reliable and valid, the author brings the models to tests using two regression analyses: simple regression and multiple regression

4.1 Descriptive Statistics of Samples

The sample size of 186 was used, of which 84 was male (45.2%) and 102 was female (54.8%) The biggest majority of respondents were office employees and business owners who accounted for 49.5% and 23.7%, respectively, of the samples

Dominant age groups were people between 22 and 35 years old inclusively, totaling 39.8% of all respondents This somewhat reflected the age structure of Vietnam work force as a whole

Table 4.1 Sample Characteristics