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Chaiyaset Promsri

PERCEIVED SERVICE QUALITY, EMPHAS IZ ING EMPATHY OF SERVICE PROVIDERS AND RETENTION OF CUSTOMERS IN A COMMERCIAL BANK IN BANGKOK, THAILAND. Chaiyaset Promsri. Dissertation Defense Doctor of Philosophy Lynn University. How is this picture related to Empathy?.

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Chaiyaset Promsri

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  1. PERCEIVED SERVICE QUALITY, EMPHASIZING EMPATHY OF SERVICE PROVIDERS AND RETENTION OF CUSTOMERS IN A COMMERCIAL BANK IN BANGKOK, THAILAND Chaiyaset Promsri Dissertation Defense Doctor of Philosophy Lynn University

  2. How is this picture related to Empathy? Put yourself in someone's shoes

  3. Introduction to the Problem • This problem was about the retention of customers in a commercial bank in Bangkok, Thailand. • Measuring customer perception of empathy in banking service providers’ and examining its impact on customer retention has not been reported in the literature.

  4. Independent Variables Service Quality Tangibles Reliability Responsiveness Assurance Empathy Dependent Variables Customer Retention Loyalty Non-Switching Willing to Pay More Positive Problem Response Length of Time Banking Variables

  5. Purpose of Study • To describe banking customers of the specific commercial bank headquarters in terms of socio-demographic characteristics, their perception of service quality of service providers, and customer retention. • To examine the relationships between socio-demographic characteristics, their perceptions of service providers empathy compared with other service quality dimensions and customer retention.

  6. Purpose of Study (Continued) • To examine the influence of customer socio-demographic characteristics and customer perceptions of service provider empathy compared with other service quality dimensions, in explaining customer retention, at the specific bank headquarters. • To generate implications for emotional intelligence training in customer retention strategies in the specific commercial bank

  7. Key terms • Empathy and other service quality dimensions were measured by 22-item of SERVQUAL instrument. • Customer retention was measured by the Modified 12-item of Behavioral Intentions Battery and length of time banking. • 9-item BIB was used for multiple regression analyses.

  8. Delimitations and Scope • Service providers were limited to banking providers who worked at the counter on the first floor of the bank, and were responsible for service delivery of banking transactions such as deposit and withdrawal. • Banking customers were able to read, write, and speak Thai language, and were 18 years or older. • Descriptive statistics used a 12-Item Modified Behavioral Intentions Battery • Inferential Statistics used a 9-Item Modified Behavioral Intentions Battery

  9. Literature Review Background • Service quality may not help to distinguish one company from another in the same industry based on the type of industry (Cronin & Taylor, 1992). Therefore, the use of emotional intelligence competence to increase service quality is considered in many organizations including service companies. Emotional intelligence is important for a service industry, where service providers are needed to be adaptive and able to deal with difficult customers (Weitz, Castleberry, & Tanner, 2000).

  10. Literature Review (Con.) • Major Concepts Reviewed • Customer Satisfaction • Customer Loyalty • Customer Retention • Service Quality • Behavioral Intentions • Emotional Intelligence • Empathy

  11. Literature Review (Con.) • Key Gaps • The literature review about the relationship between empathy and perceived service quality of customers was scant, especially in the banking industry. • As one of the service quality dimensions, empathy (viewed as emotional intelligence), may be an important dimension that relates to customer retention at the aggregate level, although literature in this area was scarce.

  12. Theoretical Framework Service Quality Customer Retention Tangibles Behavioral Intentions Reliability Loyalty Length of Time Responsiveness Non-Switching Assurance Willing to Pay More Positive Problem Response Empathy

  13. Research Questions • 1. What are the specific bank headquarters banking customers: (a) socio-demographic characteristics, (b) their perceptions of service quality of service providers using the SERVQUAL, and (c) customer retention (behavioral intentions of customers to do business and length of time as a banking customer of the specific bank headquarters)?

  14. Research Questions • 2. What are the relationships between customer socio-demographic characteristics, their perceptions of service providers empathy compared with other SERVQUAL dimensions, and customer retention (behavioral intentions of customers and length of time as a banking customer of the specific bank headquarters)? • 3. What are the contributions of customer socio-demographic characteristics in explaining customer retention (behavioral intentions of banking customers and length of time as a banking customer of the specific bank headquarters)?

  15. Research Hypothesis • 1. Among banking customers of the specific bank headquarters in Thailand, perception of service provider empathy, assurance, reliability, responsiveness, and tangibles are significant explanatory variables of customer retention (behavioral intentions and length of time banking).

  16. Methodology • A correlational and explanatory survey research design was used to answer the research questions and test the hypothesis in this study. • Systematic Sampling was used. • Every 10th person was selected over a two-week period to obtain a sample of 400.

  17. Data Producing Sample • A total of 765 subjects was selected. • Of those selected, there were 400 that agreed to participate in a response rate of 52%. • The final data sample of usable forms for multiple regression analysis was 355.

  18. Instrumentation • The survey questionnaire used in this study contained three parts to measure variables. • Part 1: Socio-Demographic Profile • Part 2: The 22-item SERVQUAL • Part 3: 12-item Modified BIB

  19. Modification of BIB • Reversed scored 5 items instead of 2. These items include 6,7, 10, 11,12. • Item #13 was deleted in this study. • High scores are associated with favorable behavioral intentions. Lower scores are associated with unfavorable behavioral intentions. • Renamed three dimensions: “Switching” to “Non-Switching to Competitors”, “Pay More” to ‘Willing to Pay More” and “External Response” to “Positive Problem Response”

  20. Behavioral Intentions of Customers

  21. Methods of Data Analysis • For research question #1, descriptive statistics including measures of central tendency, variation, and frequency distributions. • For research question #2, Pearson r correlation coefficients, independent t-test, and ANOVA. • For research question #3, two separate multiple regression models • For research hypothesis, the two separate multiple regression analyses were used to explore the relationships between service provider dimensions and two different dependent variables that measure retention. • Other Analyses: coefficient alphas and correlations (internal consistency and concurrent validity)

  22. Results for RQ 1 • (a) socio-demographic characteristics, • (b) their perceptions of service quality of service providers using the /SERVQUAL/, • (c) customer retention (behavioral intentions of customers to do business and length of time as a banking customer of the specific bank headquarters)?

  23. Results for RQ 1(Gender)

  24. Results for RQ 1(Age)

  25. Results for RQ 1(Marital Status)

  26. Results for RQ 1(Employment)

  27. Results for RQ 1(Income)

  28. Results for RQ 1(Occupation)

  29. Results for RQ 1(Education)

  30. Results for RQ 1(ISP)

  31. Results for RQ 1(LT Banking)

  32. Result for RQ 1Means for SERVQUAL Dimensions • Assurance (M = 4.79) • Tangible (M = 4.53) • Reliability (M = 4.50) • Empathy (M = 3.72) • Responsiveness (M = 3.40) • Average Item Score (M = 4.15)

  33. Results for RQ 2 • What are the relationships between customer socio-demographic characteristics, their perceptions of service providers empathy compared with other /SERVQUAL /dimensions, and customer retention (behavioral intentions of customers and length of time as a banking customer of the specific bank headquarters)?

  34. Results for RQ 2 - Pearson r • SERVQUAL • A weak positive relationship was demonstrated between assurance and income (r = .14, p≤ .05). • BIB • There was a weak positive relationship between loyalty and income (r = .12, p≤ .05). For “positive problem response”, a weak positive relationship was shown with age (r = -.10, p≤ .05). • Length of Time Banking • A strong positive relationship was found between length of time banking at the bank and age (r = .64, p≤ .01). The relationship between length of time banking and income resulted in a strong positive relationship (r = .54, p≤ .01).

  35. Results for RQ 2 - t-Test • SERVQUAL • Analyses of t-tests revealed that males scored significantly higher in SERVQUAL dimensions of tangibles (t = 1.59, p≤ .05), reliability (t = 1.33, p≤ .05), and assurance (t = 1.29, p≤ .05). • Females scored significantly higher in responsiveness and empathy SERVQUAL dimensions (p≤ .05). • For both males and females, assurance and tangibles were the highest rated SERVQUAL dimensions, and responsiveness and empathy were the lowest rated dimensions.

  36. Results for RQ 2Independent T-Test • BIB • For both males and females, loyalty was the highest rated BIB dimension, and positive problem response was the lowest rated dimension. • Length of Time Banking • Males had significantly higher time in years, than females (t= 2.97, p≤ .01), however, this was approximately only a 6-month difference.

  37. Results for RQ 2ANOVA • SERVQUAL • Differences in dimension scores according to marital status were found for the dimension of reliability and assurance • No differences in dimension total scores according to marital and employment status were found • BIB • Differences in dimension scores according to marital status were found for the dimension of loyalty • There were no differences found in dimension total scores according to employment status

  38. Results for RQ 3 • What are the contributions of customer socio-demographic characteristics in explaining customer retention (behavioral intentions of banking customers and length of time as a banking customer of the specific bank headquarters)?

  39. Results for RQ 3Multiple Regression • Socio-Demographic in Explaining Customer Retention Measured by 9-item Modified Behavioral Intentions  the overall equation was not significant (p=.289) The adjusted R2 explained less than 1% • Socio-Demographic in Explaining Customer Retention Measured by Length of Time Banking  the overall equation was significant (p=.0001) The adjusted R2 explained 44%

  40. Results for Hypothesis • 1. Among banking customers of the specific bank headquarters in Thailand, perception of service provider empathy, assurance, reliability, responsiveness, and tangibles are significant explanatory variables of customer retention (behavioral intentions and length of time banking), using 9-item Modified BIB.

  41. Multiple Regression for SERVQUAL Dimensions in Explaining Customer Retention Measured by Behavioral Intentions • the overall equation was significant (p=.0001) • Four variables except responsiveness are significant explanatory variables of customer retention. However, empathy was inversely associated with customer retention.

  42. Multiple Regression for SERVQUAL Dimensions in Explaining Customer Retention Measured by Length of Time Banking • the overall equation was not significant (p<.634)

  43. Cronbach’s Coefficient of SERVQUAL Dimensions Other findings

  44. Cronbach’s Coefficient of the 9-item Modified Behavioral Intentions Battery Dimensions Other findings

  45. Interpretations • The finding supports Zeithaml et al’s (1996) proposition that service quality leads to favorable behavioral intentions. • The finding also supports Boles et al’s (1997) who found that the quality of salespeople impacts the attitudes and intentions of customers.

  46. Interpretations • This partially supports Berry, and Zeithaml’s findings, in 1991, on positive and significant links between perceived service quality of customers. This also confirms the proposition by Zeithaml et al (1996) • Study findings also confirm Moira’s (1997) proposition

  47. Interpretations • Empathy (Not Support) • The less empathic skills service providers, the more favorable behavioral intentions of customers to do business with the bank. • This finding is also inconsistent with Gittell’s (2002) findings, and Banes and Howlett’s. • This finding did not confirm the concept of Goleman (1998) and Chapman (2002).

  48. Interpretations • Empathy (Support) • Findings support Mattila (1999) who indicated that customers with a Western cultural background rely more on tangible cues than Asian ones. • Findings also support the proposition by Strauss and Mang (1999) that cultural differences have a significant affect on customer service evaluation. • Findings also support Sultan and Simpson (2000) that the relative importance of SERVQUAL dimensions are significantly different for reliability and tangibility, but not for responsiveness, assurance, or empathy.

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