The effect of social value on the Bank customer loyalty (Case Study: branches of Mellat Bank in the city of Isfahan)

Transcription

1 ACADEMIE ROYALE DES SCIENCES D OUTRE-MER BULLETIN DES SEANCES Vol. 4 No. 2 May 2015 pp ISSN: The effect of social value on the Bank customer loyalty (Case Study: branches of Mellat Bank in the city of Isfahan) 1 Mohammad Sadeghee, 2 Dr. Saeed Landaran Isfahanee 1 Master of Business Administration, Department of Management and Accounting, Islamic Azad University, Mobarakeh Branch, Isfahan, Iran. 2 Assistant professor, Department of Management and Accounting, Islamic Azad University, Mobarakeh Branch, Isfahan, Iran Abstract: Creating loyalty in customers, especially among the bank clients, is a concept that since in today businesses the loyal customers become the main components of banks success is considered increasingly. This study examines the impact of social values on the Mellat Bank's customers' loyalty in the city of Isfahan. To this end, the effect of perceived functional, emotional, and dedicational values to customers' has been investigated. Finally, the perceived social values influence and customers' was examined on customers' loyalty. The aim of the present study was applied; the method was descriptive of survey kind. The studied samples were consisted of 196 bank clients who were selected randomly and simply. The required data and information was provided through questionnaire. For determining validity and reliability of the questionnaire, 21 questionnaires were distributed among the professors and bank customers, and using alpha Cronbach's reliability coefficient was 0.95 which showed its high and desirable coefficient. To analyze the research data, the descriptive statistics such as frequency tables were used to describe the statistical community. Then, linear regression analysis was applied to analyze the data and to test the hypotheses. To this end, the spss20 software was used. The results showed that perceived social values of functional, emotional, and dedicational dimensions had a significant positive impact on customers', and as well on the customer loyalty, generally, it can be said that social values influence on customer loyalty. Key words: Social values loyalty Perceived values INTRODUCTION In The business and the economy globalization and completion getting more dynamic, have changed the customers' roles in the organizations, today, in the organizations' look the customers are no longer only consumers. Customers in today's organizations accompany the members of the organization during goods and service production, procedures and processes, and through knowledge development and competitiveness. So, effective management of the customer relationship and creating and presenting value to the customer is considered as one of the most important topics of interest to researchers and managers [1]. Look at the customer loyalty is not only for profitability, but also it is a potential source of competitive advantage. The activities of the organizations' staffs are associated with the customer. These activities are a critical factor in the effective Corresponding Author: Mohammad Sadeghee 260 relationship development with customers. Therefore, the staffs' skills, attitudes, and behavior in this field are important because ultimately people are responsible to provide quality service that is expected by the customers [2]. In the financial institutions, the organization performance affects the customer attitudes. Another aspect is related to perceived social behavior of the banks that could affect the customer's final attitude. Social and ethical business practices are effective on customer attitudes towards the brand. In accordance with this concept, the customers are willing to actively support the companies committed to sustainable and ethical practices. The organizations' social methods can affect the customers' attitudes as understanding their values, and can work on the ending behavior of the customers as an affecting normative element [3]. The effect of the customer and loyalty is a key to business success, and the loyal customer meaning is

2 the profitability increase of (value creation) at lower costs. In today's dynamic world, creating and research done on the issue that why the Mellat bank's customers' loyalty is low? In the present study, it was maintaining the customer loyalty requires hard tried to identify the factors that cause the customers to working; e-commerce has reduced many barriers to the recede of Mellat bank. Therefore, evaluation of the rivals entry and provide the customer with customers' loyalty performance was necessitated, and it unprecedented ability to choose the among was required to study the influence method of social suppliers(seller) [4]. A review on the literature indicates that the staffs' different attitudes and responses can have either positive or negative influence on the customers' perception of the organization service quality. Loyal customers by introducing new customers can lead to more money earning, and they are converted into sales force of the company. This method is not only more cost effective but also includes more confident. Service values on the customers' loyalty and their impact on each other performance. In this study, following Javan and Martha (2013), the customer loyalty formation can be analyzed in two ways. The first step was to assess the direct effect of service quality evaluation by the customer on loyalty through attitudes, in the next stage, this influence was compared to the effect of normative factor on the perceived social value in the loyalty purposes. organizations, such as banks, need to be converted into value providers, and they should do this job much differently than others because it allows them to THEORETICAL FRAMEWORK AND HYPOTHESES differentiate their skills, improve performance, and increase their competitive power. The customer Theoretical framework: Today, the service perceived value is the outstanding consumer endpoint. Customer perception is a set of attitudes that more leads to the customer relationship conduct [5]. Ghafooree (2011) has investigated the impact of social and organizations such as banks seek to create a system for communicating among human resource management policies and expected performance of service personnel to create a positive impact on customer perception of organizational factors on the Tejarat Bank customers' the presented services quality and improving the levels of loyalty and establishment of bank relationship in the city, and has come to the conclusion that 63% of changes of the dependent variable of customer loyalty level have been determined by the independent variable of the social and organizational indicators. Also Najafi (2012) has shown that cognitive variables of service quality, perceived values, habits, and reputation has been effective on the customers' and trust in banking services electronics, and finally at the next stage, each of the and trust variables have significantly influenced on the customers' loyalty rates. Tiles (2011) showed that the bank name is the most important factor influencing the customer loyalty, as well the quality significantly and positively influence on the customer loyalty. Salmon et al. (2010) has assessed the impact of the social role of banks on the customer loyalty and showed that and trust in the institution's identity are the main determinants of loyalty, and also there is a positive and significant relationship between the dimensions of the corporate social responsibility and customer loyalty. This means that a bank, with correct moral behavior and strong social commitment, can turn its current clients into the permanent customers and improve their business performance. The purpose of this study was to study the formation of the customer loyalty process in the banking sector using special interest of the customers in the social financial outcomes of the organization has been confirmed in various studies. Satisfaction is a positive feeling that is created in a person after using the product or receiving a service, the respective sense is resulted from the conflict between the customer expectations and supplier performance [16]. On the other hand, the product use, its appearance, and the service quality effect on the perceived value, and perceived value positively affects the customer and after purchase intention. Marketing activities are mainly based on customer value. The perceived value in marketing is defined as the customer evaluation of the costs and benefits gained from the purchase of a product or service. In fact, it is a factor that comes after the perceived quality and perceived quality may be as a precondition variable for the assessment. Perceived value somehow indicates a balance between the customers' assessment of benefits and costs [24]. In this study, perceived social value in the mind of the customers includes perceived functional, emotional, and dedicational values. The perceived functional value is actually is the sense that comes after perceived value and indicates a kind of perception regarding the received goods or services. However, the dedicational perceived value is a kind of consumers' assessment from dedicational perspective that sacrifices a particular consuming position for the consumer. Finally, the perceived emotional value is the consumers' overall value. The central bank in 2013 announced that the assessment of the utility of a product according to their lowest percentage of loyalty of bank customers belonged to Mellat bank. In fact, this subject led to a perceptions of the receipts and payments. Customer is a driving factor in the consumer loyalty 261

3 development. Loyalty is a positive attitude towards an existing (brand, service, shop, or seller) and protectionist behavior towards that, indeed, loyalty is an attitude structure and state of steadfast in homage [9]. Today, organizations such as banks seek to build loyal customers because they have realized the fact that customer is as a crucial factor to the organizations success, and attracting new customers will be more expensive than keeping the existing customers. In fact, the best customers are the most loyal to the company [13]. Due to the above, the following conceptual model (Fig. 1) can be used. The study conceptual model is as a driving source; actually, a conceptual model or framework of the research is the logical outlining of the main variables in diagram form. The conceptual model expressing the relationship between the main variables, namely the perceived social values (functional, emotional, and dedicational) and the dependent variable of fidelity, the customer variable is considered as a mediator variable. The perceived value of interests (functional) Perceived value of dedication Consumers' Consumers' loyalty The perceived value of interests (emotional) Perceived social values HYPOTHESIS Customer is a feeling or attitude of the client regarding the goods or services which acts as a bridge between different solutions of the consumer purchase behavior. If the customers got satisfied with a particular service or product, they probably will repeat their purchase. The satisfied customers talk to other people about their good experiences, and the talks results become a positive oral advertising for the company (Davis et al., 2008, p. 281). Researches shows that 96% of customers never talk about bad behavior and poor quality of goods and services, but 90% of the dissatisfied customers do not go back to the same company. Each of these dissatisfied customers tells at least 9 persons about their dis, and 13% of these dissatisfied customers transfer their discontent to more than 20 people. The studies by Derch and Hayes Fig. 1: Conceptual model of research 262 (1998) suggest that usually keeping the existing customers is much less expensive than finding new customers with complex processes and high costs. The current customers already known to the organization and can easily communicate with them. The loyal customer may maintain contact with the organization over the years. Studies show that attracting a customer is six times more expensive than keeping current customers. The researchers believe that the concepts of organization success and customer are very close since customer is one of the key factors of success. So, we can conclude that in order to achieve success, the company's customers should be satisfied [8]. Value from the perspective of customer: Recently, among the management researchers a major trend is seen towards the value from the customer perspective, and this issue has been analyzed from several aspects.

4 The concept of value in the context of marketing texts has been discussed under the titles of relationship marketing, pricing strategies, and consumer behavior over the rest. The important issue is that value is determined by the customers' view of the market, and the customer's perception of what paid and what received, not by the manufacturer and supplier's desires and assumptions. Value is not what produced but what the customer receives [15]. Shes et al. in 1991 proposed the theory of use value and divided the customer value into five key dimensions which include: 1) the functional value which is related to economic utility and represents the product or service interests from the perspective of the economy and refers to the quality and performance characteristics of the product. 2) Social values which represents the social desirability and reputation of having the product in the mind of friends, colleagues, and other members of the reference group. 3) Emotional value which represents to mental and the customer sensitivity to price changes, the benefits of lifetime customer value, positive performance through increasing the predictive power, increasing the barriers to entry of new competitors, recommending the organization to others [12].One of the requirements of loyalty, especially in services, is customer ; loyalty is the direct result of customer and the customer satisfying experiences influences on their future purchase intentions, and ultimately their loyalty. Satisfaction is a leading factor in determining customer loyalty [14]. The researchers also showed that customer influence and customer loyalty and customer selection in the banking industry [1]. Therefore, the following hypothesis is proposed: H5: customer has a significant impact on customer loyalty. Finally with regard to the content of the above assumptions, the following hypothesis generally can be raised: The main hypothesis: the perceived social values have a significant impact on customer loyalty. emotional consequences of the product and the product's ability to create sentiment and attractive opportunities. 4) Cognitive value which refers to new METHODOLOGY and surprising aspects of the product and its degree of freshness and novelty. 5) Situational value that refers to Data and Instruments: An experimental study on the a set of situations that can be encountered by the impact of social values (functional, dedication and customer when deciding on the product [23]. In recent emotional) was done on the Mellat bank's customers years, Eidipour [10] examined the impact of customer loyalty. For this purpose, a questionnaire with two value on city loyalty in the territory of banking in Iran. sections was used. The first part included the His obtained results suggested that the functional value, demographic information such as age, gender, level of emotional, social, and dedicational value perceived by education, and working experience with Bank. The the client has a direct positive effect on the customer second part of the questions was related to the proposed. According to the information given, the model. The questionnaire consisted of 50 questions following assumptions are raised: using a Likert scale of five options from 1 (strongly H1: The perceived value of interests (functional) has a disagree) to 5 (strongly agree). To verify the significant impact on customer. questionnaire formal validity, the supervisor, H2: The perceived value of dedication has a significant professionals, experts in the studied population, and impact on customer. some executives' was obtained. A pilot study was done H 3: The perceived value of interests (emotional) has a through distributing 21 questionnaires. The preliminary significant impact on customer. test would ensure the questionnaire validity and will H 4: Social perceived value has a significant impact on help us refine our questions. After determining the customer. sample size, the questionnaires were distributed among Loyalty is an important factor in the continued success the participants. The study population included clients of the organizations, their capability to maintain the of the Mellat Bank headquarters in the city of Isfahan. current customers and make them loyal to the The population is infinite, so, using simple random organization's name or services (Alksan drys et al., sampling method and Cochran formula, the sample size 2006). Loyal customers through repurchase, more was calculated 196 individual. After collecting the data, purchase, buying new goods or services, pay higher Cronbach's alpha coefficients were calculated using prices, oral preaching to others lead to the organizations SPSS software. In Human Sciences researches, the success [4]. It is also widely accepted that keeping the alpha coefficient higher than 70% is desirable. existing customers is more cost effective than attracting Therefore, the questionnaire reliability, which was new customers [6]. Competitiveness of many industries equal to 0/956, had high and desirable coefficient. and services refers to the ability of an organization to Demographic data: The findings indicated that 69% of create loyal customers (Rowley, 2004). Loyal the respondents were male and 31% female. The customers are succeeded much positive effects and highest frequency was respectively in the age group of benefits for the organizations some of which include 31 to 40 years 45/4%, 51 to 60 years 23%, and 41 to 50 reducing the attracting new customers cost, reducing years 20.9%. In terms of education, holders of 263

5 bachelor's degree with 46/2%, and holders of doctoral degree 4.8% respectively were the most and the lowest number of the population education degree. However, the education level of 30.1% of the participants was associate degree and less. Finally, in terms of cooperation with banks, those with work experience of 6 to 10 years 39.8% were the highest experience percentage, and participants with a history of less than 5 years and more than 15 years respectively with 25% and 19% were the minimum number of the participants' experience. In Table 1, the descriptive indicators related to variables such as the mean, and standard deviation is provided. Table 1 showed that the highest mean was attributed to customer and after that customer loyalty. The lowest mean was then allocated to social value. Table 1: The study main variables mean in the view of the samples SD Mean Components and indicators Perceived social value Customer Customer loyalty TESTING HYPOTHESIS Pearson correlation test: Table 2 indicates the results of the Pearson correlation test and indeed the correlation matrix between the study variables. The table shows that there is a significant correlation between the main variables of the research and their elements at the error level of 0.05 and Regression: The study was conducted to test the hypotheses using linear and multiple regression method. In regression analysis, it was sought to estimate and analyze a mathematical relation so that the unknown variable can be quantified using the known variable or variables. The determination coefficient is (2 R) and coefficient square is (R), and got used to understand how well independent variables can predict the dependent variables. Table 2: Results of Pearson correlation test between variables Loyalty Satisfaction Test statistic Study main variables 0.385** 0.577** Pearson coefficient Significance Applied Social Value 0.226** 0.443** Pearson coefficient Significance Social value of deduction 0.292** 0.460** Pearson coefficient Significance Emotional and social value 0.398** 0.645** Pearson coefficient Significance Perceived social value 0.384** 1** Pearson coefficient Significance Satisfaction *Correlation is significant at the level of 0/05. (Double coverage) ** Correlation is significant at the level of 0/01. (Double coverage) Testing hypotheses using regression test: After reviewing the requirements of regression, hypothesis testing was conducted using this method. In table 3, the hypothesis regression test results with regression coefficients, standardized coefficients, T statistic, and significance level are presented. After all hypotheses testing, the significance level of less than 0/05 was obtained. Significance level T statistic Standardized coefficients Table 3: Hypotheses testing using regression test Regression coefficient (β ) Model Functional values Dedicational values Emotional values Social values Social values Dependent variable Hypothesis H1 H2 H3 H4 H5 Main hypothesis 264

6 The adjusted determination coefficient of the model in the first hypothesis testing was equal to So, about 33% of the dependent variable changes (customer ) can be explained by the independent variable (perceived functional social value). Also, the results in table 2 showed that the regression coefficient was equal to 2.533, that is unites were added to customer in return for a unit of increase in functional value (H1 confirmation). The adjusted determination coefficient of the model in the second hypothesis testing was equal to 19%, so, about 19% of the dependent variable changes (customer ) can be explained by the independent variable (perceived dedicational social value). Also, according to the obtained results, the regression coefficient was equal to 2.452, it means unites were added to customer as the result of an increase in dedicational value (H2 confirmation). After testing the second hypothesis, the adjusted determination coefficient of the model was equal to So, about 21% of the change in the dependent variable (customer ) can be explained by the independent variable (emotional value). Also according to the obtained results, the regression coefficient was equal to , it means for one increase unit in emotional value, customer will be increased units (H3 confirmation). In analyzing the fourth hypothesis, the adjusted determination coefficient of the model was equal to So, about 41% of the changes in the dependent variable (customer ) can be explained by the independent variable (soc ial value). The regression coefficient was equal to that is for an increase in social value, units were added to customer (H4 confirmation). After testing the fifth hypothesis, the adjusted determination coefficient of the model was equal to 0.143, that is only about 14% of the change in the dependent variable (loyalty) can be explained by the independent variable (customer ). Also, the regression coefficient was equal to 0.251, it means for an increase in customer, units will be added to loyalty (H5 confirmation). Finally, the adjusted determination coefficient of the model in the main assumption was equal to Thus, only about 15% of the dependent variable changes (loyalty) can be explained by the independent variable (social values). The regression coefficient was equal to that is per unit increase in perceived social value, customer loyalty will increase units (the main hypothesis confirmation). CONCLUSION Maintain and development of customer loyalty in the banking industry regarding the current competitive environment is one of the basic necessities for survival 265 in this industry. Hence, this research seeks to answer the fundamental need of Mellat Bank to maintain and build customer loyalty with value behavior approach designed and practiced, and since customer orientation,, respect, and attention, and planning in terms of the customers' wants, needs, preferences, and values is an important step in obtaining customers'. All the organizations' policies and strategies should be designed and implemented in this regard. Generally, the test results using Pearson correlation showed that the social values with the dimensions of perceived social values, functional interests perceived social values, social values perceived of deduction, and perceived social value of emotional interest are positively and significantly correlated with customer. Also, Pearson correlation test results indicated that there was a significant positive correlation between customer and customer loyalty. The results using linear regression analysis showed that perceived social values with functional, dedicational, and emotional dimensions had a significant and positive impact on customer, and customer has a significant impact on customer loyalty, totally, it can be said that social values influence on customer loyalty. The results obtained by the present study were in contrast to the results obtained by Bagheree (2012) that in the present study the perceived value had no significant impact on improving customer loyalty in Mellat bank's branches in the city of Mashhad. However, results of the present study are in line with results of the study done by Khazayee Pool (2012) so that customer value influence positively on customer and loyalty. As well, results of the present study confirmed the results obtained in the researches by Najafi (2011), Goenzy et al. (2004) on the impact and relationship of the variables of and trust on customer loyalty. REFERENCES 1. Andreassen T.W, Lindestad B. 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