International Journal of Business

Management & Research (IJBMR)

ISSN(P): 2249-6920; ISSN(E): 2249-8036
Vol. 4, Issue 4, Aug 2014, 123-136
TJPRC Pvt. Ltd.

THE EFFECTS OF THE THREE SIDES OF THE SERVICE TRIANGLE MODEL ON

CUSTOMER RETENTION IN THE FINANCIAL SERVICE SECTOR OF GHANA
BEMPONG ERIC
Lecturer, Pan-Africa Christian University College, Winneba, Ghana

ABSTRACT
The elements of the service marketing triangle model are empirically found to influence the level of customer
retention in various service sectors. In this paper, the effects of the three sides of the service marketing triangle model on
customer retention in the financial services sector of Ghana were examined. Probability sampling techniques were used to
select 384 each of customers and employees from banks, non-bank financial institutions, microfinance institutions and
insurance companies. Data analysis was done using Pearsons correlation test, partial correlation test and Stepwise
Multiple Linear Regression analysis. Findings revealed that interactive market practice is significantly positively related to
customer retention (r = .845, p < .05) in the financial services sector of Ghana. Also, external market orientation
(r = .857, p < .05) and internal market practice (r = .843. p < .05) highly positively relate to customer retention. Moreover,
interactive market, external marketing and internal marketing significantly predict customer retention (p = .000) and
account for 90.4% of variance on it. Therefore, each of the three sides of the service marketing triangle impacts customer
retention in the financial services sector of Ghana. It is therefore recommended that financial service providers in Ghana
deliver services that are structured based on principles of the services marketing triangle model.

KEYWORDS: Service Marketing, Service Triangle Model, Internal Marketing, External Marketing, Interactive
Marketing, Customer Retention

INTRODUCTION
Rationally speaking, managements of businesses in all sectors expect to have significant influence on existing
customers and potential customers in the short and long runs. From the viewpoint of marketing, a business should be able
to make customers and sustain the growth of its customer-base. Marketing practice within a business entity provides a
framework of strategies for winning new customers, satisfying them by providing superior quality products or services and
creating and utilising opportunities for new customers (Kotler & Armstrong, 2010; Talebi et al. 2012). Meanwhile, the
extent, scope and method of achieving marketing objectives in an organisation is said to be based on whether services or
products are the needs the organisation wants to satisfy (Rawal, 2013; Kotler & Armstrong, 2010). This brings to light the
fact that marketing has two distinctive arms, namely service marketing and product marketing (Wellman & Molander,
2008; Kotler & Armstrong, 2006; Talebi et al. 2012).
To better understand what service marketing is, it is necessary to know what a service is. A service is any act or
performance that one party may offer another, is essentially intangible, does not result in the ownership of anything, and its
production may or may not be tied to a physical product (Yadav & Dabhade, 2013, p. 76). A service comprises of all
economic activities whose output is not a physical product or construction, consumed at the time it is produced and
provides added value in forms that are essentially intangible (Yadav & Dabhade, 2013; Kotler & Armstrong, 2010).
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In service marketing, an organisation uses its economic activities whose output is not a physical product or construction to
satisfy needs and wants while making and maximising value from this quest (Kotler & Armstrong, 2006).
Service marketing occupies three types of marketing, namely external marketing, internal marketing and interactive
marketing.
In external marketing, efforts are made by the organisation to set up customer expectations and make promises to
customers regarding what is to be delivered (Bellaouaied & Gam, 2011; Benea, 2008; Ahmad et al. 2012).
External marketing simply touches on anything that communicates to the customer before service delivery (Benea, 2008;
Ahmad et al. 2012). Internal marketing, on the other hand, refers to the activities that the organisation must carry out to
train, motivate and reward its employees in line with its marketing objective (Yadav & Dabhade, 2013). Internal marketing
is relevant to successful marketing practice because unless service employees are able and willing to deliver on the
promises made, the firm will not be successful in keeping its promises and the services (Bellaouaied & Gam, 2011;
Yadav & Dabhade, 2013). In interactive marketing, the actual service delivery takes place. At this stage, employees of the
organisation interact directly with customers to give them access to what has been promised (Yadav & Dabhade, 2013).
External marketing, internal marketing and interactive marketing make up the service marketing triangle.
Though this triangle is viewed as a conceptual representation of service marketing (Bellaouaied & Gam, 2011), it is
believed that its underlying principles practically influence a businesss market phenomena (Bellaouaied & Gam, 2011;
Yadav & Dabhade, 2013). Moreover, elements of the triangle, namely external marketing, internal marketing and
interactive marketing are interwoven. Thus in practice, external marketing interweaves with internal marketing, which in
turn permeate interactive marketing processes (Lings, 1999; Yadav & Dabhade, 2013). Even so, each element of the
triangle needs to be used at the right stage of service marketing. In this vein, interactive marketing orientation should be
driven by the nature of the firms external and internal market orientations so that expected impact can be maximally made
on customers (Lings, 1999).
It has been argued that elements of the service marketing triangle are interrelated in practice
(Lings & Greenley, 2009; Bellaouaied & Gam, 2011). However, stronger emphases have been laid on their individual and
collective effects on customer satisfaction and loyalty through service quality. According to Kotler & Armstrong (2010),
the primary influence a marketing activity is expected to make on a customer is to persuade him or her to patronise a
service and to keep patronising it as long as the service exists. Similarly, service quality influences customer satisfaction,
which in turn contributes to customer loyalty and retention (Angelova & Zekiri, 2011; Kotler & Armstrong, 2010).
In service marketing, service quality, customer satisfaction and customer retention are influenced by external marketing,
internal marketing and interactive marketing individually and collectively (Yadav & Dabhade, 2013), and this depends on
how well the three elements are jointly practiced in the organisation (Yadav & Dabhade, 2013; Lings, 1999; Lings and
Greenley, 2009). This means that service quality, customer satisfaction and customer retention are influenced by individual
elements of the service marketing triangle and as a composite model.
Since customer retention is of higher priority to an organisation relative to making new customers
(Cohen et al. 2007; Lings & Greenley, 2009), managements would need to give better attention to the effects of the service
marketing triangle on customer retention (Yadav & Dabhade, 2013). This is necessary if service providers must reach and
sustain expected growth levels. Nonetheless, many service providers do not have the opportunity to better understand the
nature of the effects of the service marketing triangle on customer retention and how its principles translate into successful
Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

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125

service marketing (Yadav & Dabhade, 2013). As a result, employee satisfaction and commitment is not made to fully
translate into service quality, customer satisfaction and customer retention in many organisations. This is fuelled by the fact
that the body of researches that examine the effects of the service marketing triangle on customer retention is small. Lings
& Greenley (2009) argue that if the number of available researches on this subject is increased, managements would better
understand the nature of the effects of the service marketing triangle on customer retention and how its principles translate
into successful service marketing and organisational financial performance.
In this study, the researcher focused on the financial services sector of Ghana to examine the individual and
collective effects of the three sides of the service marketing triangle on customer retention. The financial services sector
was considered as a result of its high potential for economic growth and its improvable contribution to employment,
corporate social responsibility and GDP in Ghana currently. Moreover, the body of researches available on the subject
from the viewpoint of the Ghanaian financial services sector is abysmally small.

STUDY OBJECTIVE
This paper sought to identify the individual and collective effects of the three sides of the service marketing
triangle model, namely internal marketing, external marketing and interactive marketing on customer retention in the
financial service sector of Ghana. It was to contribute to the scant body of researches available on the subject from a
Ghanaian perspective. Therefore, it would improve on the knowledge of managements of Ghanaian financial institutions
on the relevance of employing principles of the service marketing triangle model in creating added value for the
organisational and its customers.

LITERATURE REVIEW
By observation, much of contemporary marketing literature embraces service marketing and its underlying
elements. This section of the paper reviews literature on services marketing and its outlook in terms of the service
marketing triangle model.
All service-based businesses, through service marketing, use their economic activities, whose output is not a
physical product or construction, to satisfy needs and wants, while making and maximising value from this quest
(Kotler & Armstrong, 2006). According to Yadav & Dabhade (2013, p. 76), a service is any act or performance that one
party may offer another, is essentially intangible, does not result in the ownership of anything, and its production may or
may not be tied to a physical product. A service constitutes all economic activities whose output is not a physical product
or construction, consumed at the time it is produced and provides added value in forms that are essentially intangible
(Yadav & Dabhade, 2013; Kotler & Armstrong, 2010). Service marketing comprises of three types of marketing, namely
external marketing, internal marketing and interactive marketing (Kotler & Armstrong, 2010; Lings & Greenley, 2009).
External

marketing

basically

involves

setting

promises

to

customers

and

potential

customers

(Bellaouaied & Gam, 2011; Benea, 2008; Ahmad et al. 2012). Moreover, the three key features of external marketing
include: (1) marketing to end-users who are customers (Yadav & Dabhade, 2013); (2) pricing strategy, promotional
activities, and all communications with customers (Ahmad et al. 2012); and (3) performances to capture the attention of the
market and arouse interest in the service (Benea, 2008; Ahmad et al. 2012).

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Internal marketing deals with enabling the promise made in external marketing (Benea, 2008; Ahmad et al. 2012).
At this level, the service provider expects to tailor and deploy available human resources in a manner that can render
promises made in external marketing fulfilling. The key activity here is to market to employees, which may mean
marketing to well-qualified sales persons and marketing line managers (Yadav & Dabhade, 2013). It also involves training,
motivational and teamwork programs, as well as all communications with all employees including sales persons and field
workers in the financial institution (Benea, 2008; Ahmad et al. 2012). It involves an enablement of employees to perform
the service effectively and keeping up the promise made to the customer (Ahmad et al. 2012).
Interactive marketing entails delivering the promise made to customers in external marketing (Yadav & Dabhade,
2013; Lings & Greenley, 2009). With it, the service institution expects to use its employees to deliver services that fulfil
the promise made. It constitutes real-time marketing and is known as moment of truth and service encounter
(Yadav & Dabhade, 2013, p. 80). In interactive marketing, decisive moment of interaction between the front-office
employees and customers is made. Most marketing writers consider this stage to be more critical because improper
interactive marketing compromises efforts and resources deployed in external and internal marketing (Yadav & Dabhade,
2013).
When mention is made of the service marketing triangle model, external marketing, internal marketing and
interactive marketing are seen to interplay from the viewpoint of organisational marketing objective (Bitner et al. 1994).
The service marketing triangle model does not only consist of external marketing, internal marketing and interactive
marketing. Rather, it explains the interrelationship among these elements of service marketing and how it translates into
customers service quality perceptions and their loyalty (Bitner et al. 1994; Lings & Greenley, 2009). A major side of its
argument is that elements of the model affect customers individually and collectively only when the three have been
systematically implemented (Bitner et al. 1994; Yadav & Dabhade, 2013): external marketing, followed by internal
marketing and interactive marketing (Bitner et al. 1994). However, some argue that employees are needed to carry out
external marketing; so internal marketing should precede external marketing (Bitner et al. 1994; Lings & Greenley, 2009).
The figure below shows the service triangle model.

Figure 1: Service Marketing Triangle Model

Research also points to the interrelationships among elements of the service marketing triangle. Firstly, research
has revealed that external marketing is positively related to internal marketing (Yadav & Dabhade, 2013; Lings &
Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

The Effects of the Three Sides of the Service Triangle Model on Customer Retention in the Financial Service Sector of Ghana

127

Greenley, 2009). This implies in practice that enhanced internal market orientation would augment the impact of external
market orientation. In other words, the better employees are trained, motivated and rewarded to accomplish marketing
functions, the higher customers understand the promise delivered by an organisation. Moreover, external marketing is
empirically found to positively influence interactive marketing (Bellaouaied & Gam, 2011; Benea, 2008). That is, the
better the approach to the delivery of promise to customers, the better customers understand this promise and the better
interactive marketing impacts customers service quality perceptions and loyalty. Even so, Yadav & Dabhades (2013)
empirical study shows that interactive marketing is positively influenced by internal marketing. This is as a result of the
fact that employees and their commitment to marketing functions form the basis of successful external and interactive
marketing (Yadav & Dabhade, 2013; Lings & Greenley, 2009).
Apart from their interrelationships, empirical investigations by Bellaouaied & Gam (2011) and Benea (2008)
suggest that external marketing, internal marketing and interactive marketing individually and collectively positively
influence and impact customer retention. As a result of their interrelationships, the correlation of each of the elements of
the service marketing triangle to customer retention is moderated by its co-elements (Yadav & Dabhade, 2013).
This means that the influence of each element of the model on customer retention is contributed to by its co-elements.
In this situation, the strength of the relationship between an element and customer satisfaction when the influence of the
other elements is controlled for is smaller relative to when their influences are not controlled for.
Based on assumptions underlying the service marketing triangle model and empirical evidences on the effects of
external marketing, internal marketing and interactive marketing on customer retention, the following hypotheses were
tested in this study.

HYPOTHESES
H01: There is no significant relationship between internal market orientation (IMO) and customer retention in the
financial service sector of Ghana.
H02: There is no significant relationship between external market orientation (EMO) and customer retention in the
financial service sector of Ghana.
H03: There is no significant relationship between interactive marketing practice (IMP) and customer retention in
the financial service sector of Ghana.
H04: Customer retention is not significantly predicted by IMO, EMO and IMP among financial service providers
in Ghana.

METHODOLOGY
In this paper, the quantitative research technique was adopted owing to the need to test the hypotheses stated in an
objectivist philosophical stance. The quantitative research technique also made room for determining the reliability of
items in the instruments used in collecting data. It is coupled with randomisation techniques of selecting respondents to
ensure that findings and conclusions of this study could be generalised over the entire financial service sector in Ghana.
The population of this study was employees and customers of firms in the financial service sector of Ghana.
Sectors considered include banking, insurance, non-bank financial institutions and micro-finance institutions. The sampling
frame of this study was customers and employees who had been affiliated to the head offices of the selected financial firms
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for at least two (2) years. Customers and employees affiliated to the head offices of the financial firms were used as
sources of information because they practically had better access to market orientation programs and policies. As a result
of the need to ensure that respondents provided accurate information in this study, members of the sampling frame were to
be affiliated to the participating financial firms for at least 2 years as customers and employees.
Probability sampling procedures were used in this study to select participating firms and respondents. Cluster
sampling was used to select five firms from each of the sectors considered. Therefore, 20 financial firms were selected.
The number of members in the sampling frame of customers was above 100,000. Considering the credibility and
appropriateness of the sampling principle of Krejcie & Morgan (1970), the simple random sampling technique was used to
select 384 customers. On the other hand, the sampling frame of employees consisted of 1,234 employees. By applying the
same sampling principle, a sample size of approximately 291 was applicable. But due to the need to ensure that equal
numbers of employees and customers were used to ensure that unbiased comparisons were made in this study, this sample
size was adjusted upward to 384. This upward adjustment is acceptable according to Krejcie & Morgan (1970).
A standard self-administered questionnaire was used in this study to gather data from responding employees and
customers. This instrument was used to collect data on customer retention, IMO, EMO and IMP. Customer retention was
measured using the SERVLOYAL scale. IMO, EMO and IMP were measured using Lings (2004) adjusted model of
service marketing orientation that uses items on the general scales of customer/employee satisfaction, loyalty and
commitment. Tables 1 and 2 come with the reliability statistics associated with the instrument used in collecting data.
Table 1: Case Processing Summary

Valid
Cases

N
378

%
100.0

Excludeda

.0

Total

378

100.0

a. Listwise deletion based on all variables

in the procedure.

Table 1 shows the case processing summary of reliability test on the instrument used in collecting data in this
study. The table shows that no item has been removed from the instrument. Thus all items in the questionnaires were worth
responding. Possibly, therefore, the instrument used in collecting data was adequately reliable.
Table 2: Reliability Statistics
Cronbach's Alpha
.944

N of Items
4

Table 2 shows the reliability coefficient; thus the Cronbachs apha value, associated with Table 1. From the table,
the reliable coefficient of 944 indicates that the instrument used in data collection was highly reliable. It must however be
noted that items in the instrument were consolidated into four major items that represent IMO, EMO, IMP and customer
retention.
The Statistical Package for Social Sciences (SPSS) was used for data analysis. Data analysis was backed with the
normality assumption. As a result, the Shapiro-Wilk test was used to verify the normality of data. Cronbachs alpha was
Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

The Effects of the Three Sides of the Service Triangle Model on Customer Retention in the Financial Service Sector of Ghana

129

used to identify reliability of the instruments used in data collection. All hypotheses were tested using parametric statistical
tools owing to the fact that data used were continuous. Moreover, their distributions were assumed to take the characteristic
nature of a normal distribution. The first, second and third research hypotheses were tested using Pearsons product
moment correlation test. The fourth research hypothesis was tested using stepwise multiple linear regression.

RESULTS
This part of the paper focuses on a disclosure of findings on each research hypothesis. Results are presented in
view of the assumption that data employed in this study are normally or approximately normally distributed. Before
findings on each research hypothesis are presented, therefore, the normality of data used must be verified. Table 3 comes
with the Shapiro-Wilk test of normality. It is worth mentioning that 98% response rate was achieved in data collection.
Table 3: Tests of Normality
Shapiro-Wilk
Statistic df Sig.
.867
378 .402

Customer retention
IMO

.864

378 .321

EMO

.889

378 .122

IMP

.894

378 .542

Table 3 shows statistics associated with the Shapiro-Wilk test of normality. The null hypothesis states that data on
each of the variables in the table are normally or approximately normally distributed. At 5% significance level, data on
customer retention (p =.402), IMO (p = .321), EMO (p = .122) and IMP (p = .542) are normally distributed (p >. 05).
The normality assumption made is therefore satisfied. As a result, a basis for valid conclusions is established.
Table 4: Correlation between Customer Retention and IMP

Pearson Correlation
Customer retention

IMP

Customer
Retention
1

Sig. (2-tailed)

IMP
.845**
.000

378

378

Pearson Correlation

.845**

Sig. (2-tailed)

.000

378

378

**. Correlation is significant at the 0.05 level (2-tailed).

Table 4 shows Pearsons correlation test between customer satisfaction and IMP. It comes with findings on the
first null hypothesis which states that there is no significant relationship between internal marketing practice (IMP) and
customer retention in the financial service sector of Ghana. This hypothesis is tested at 5% significance level. From the
table, this test is significant, r (378) = .845, p = .000. Thus, the relationship between IMP and customer retention is
positively high. This implies that as internal marketing practice is enhanced in financial institutions in Ghana, customer
retention is enhanced. There is therefore a higher tendency for the first null hypothesis to be rejected.

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Table 5: Correlation between Customer Retention and EMO

Customer
Retention

EMO

.857**

Pearson Correlation
Customer retention

Sig. (2-tailed)

.000

378

Pearson Correlation
EMO

.857

378

**

Sig. (2-tailed)

.000

378

1
378

**. Correlation is significant at the 0.05 level (2-tailed).

Table 5 contains results of testing the second null hypothesis. This hypothesis states that there is no significant
relationship between external marketing orientation and customer retention in the financial service sector of Ghana.
This test is done at 5% significance level. From the table, there is a higher likelihood that this hypothesis is not true,
r (378) = .875, p = .000. In other words, EMO and customer retention are highly positively correlated. Thus, as external
market orientation is enhanced in the financial institutions, customer retention improves. There is therefore ample evidence
that the null hypothesis is not true. It is therefore rejected.
Table 6: Correlation between Customer Retention and IMO

Pearson Correlation
Customer retention

Customer
Retention
1

Sig. (2-tailed)

IMO

.843**
.000

N
Pearson Correlation

IMO

378
.843

378

**

Sig. (2-tailed)

.000

378

1
378

**. Correlation is significant at the 0.05 level (2-tailed).

Table 6 comes with results of testing the third research hypothesis, which states that there is no significant
relationship between internal market orientation and customer retention in the financial service sector of Ghana.
This hypothesis is also tested at 5% significance level. From the table, this test is significant, r (378) = .843, p = .000.
Evidently, IMO has a high positive relationship to customer retention. Invariably, as internal market orientation is
enhanced among financial institutions in Ghana, customer retention is improved. There is much evidence that the third null
hypothesis is not true; therefore it is considered for rejection.
The fourth null hypothesis states that customer retention is not significantly predicted by practices of internal,
external and interactive marketing among financial service providers in Ghana. This test is done using stepwise multiple
regression analysis. Tables 7 to 9 come with its results.

Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

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131

Table 7: Model Summary

Model

.857a

.934

.951c

.734

Adjusted R
Square
.734

Std. Error of
the Estimate
1.73176

.872

.871

1.20375

.904

.904

1.04205

R Square

a. Predictors: (Constant), EMO

b. Predictors: (Constant), EMO, IMP
c. Predictors: (Constant), EMO, IMP, IMO

Table 7 is the model summary of the prediction of customer retention by EMO, IMP and IMO. In the first model,
EMO accounts for about 73.4% of variance on customer retention. In the second model, EMO and IMP account for about
87.1% of variance on customer retention. EMO, IMP and IMO account for about 90.4% of variance on customer retention.
Each of the models in the table is strong. Yet, EMO appears to account for a higher level of variance on customer retention
relative to IMO and IMP.
Table 8: ANOVAd
Model
Regression
1

Sum of Squares df
3117.355
1

Residual

1127.621

376

Mean Square
3117.355

F
1.039E3

Sig.
.000a

1.277E3

.000b

1.178E3

.000c

2.999

Total

4244.976

377

Regression

3701.593

1850.796

Residual

543.383

375

1.449

Total

4244.976

377

Regression

3838.862

1279.621

Residual

406.114

374

1.086

Total

4244.976

377

a. Predictors: (Constant), EMO

b. Predictors: (Constant), EMO, IMP
c. Predictors: (Constant), EMO, IMP, IMO
d. Dependent Variable: Customer retention

Table 8 shows the F tests associated with models in Table 7. For each model in the table, the linear prediction of
customer retention is significant at 5% significance level (p = .000). Thus the test is significant when EMO serves as the
sole predictor, F (1, 376) = 103.9, p = .000; when EMO and IMP collectively serve as predictors, F (2, 375) = 127.7,
p = .000; and when EMO, IMP and IMO collectively serve as predictors, F (3, 74) = 117.8, p = .000.
Table 9: Coefficientsa
Unstandardized
Coefficients

Standardized
Coefficients

B Std. Error
.318
.197

Beta

EMO

.939

.029

.857

(Constant)

-.537

.144

Model

1
2
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(Constant)

t
1.612

Sig.

Collinearity Statistics
Tolerance

VIF

1.000

1.000

.108

32.241 .000
-3.743 .000

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Table 9: Contd.,
.529
21.458 .000

EMO

.580

.027

IMP

.523

.026

.561

1.781

.561

1.781

(Constant)

-.719

.125

EMO

.423

.027

.386

15.527 .000

.414

2.415

IMP

.412

.025

IMO

.301

.027

.390

16.733 .000

.471

2.123

.290

11.243 .000

.386

2.593

.495

20.080 .000
-5.736 .000

a. Dependent Variable: Customer

retention

Table 9 shows the coefficients associated with Tables 7 and 8. The t-tests are significant for each model at 5%
significance level. Invariably, EMO significantly predicts customer retention as a sole predictor (p = .000). When EMO
and IMP serve as co-predictors, each significantly predict customer retention at 5% significance level (p <.05). Also, when
EMO, IMP and IMO collectively serve as predictors, each significantly predicts customer retention at 5% significance
level (p < .05). Evidently, customer retention is significantly predicted by external market orientation, interactive
marketing process and internal market orientation.
Table 10: Partial Correlations

Customer satisfaction*IMO

Control
Variable
EMO, IMP

Customer satisfaction*EMO

IMO, IMP

.857

.626

.231

Customer satisfaction*IMP

EMO, IMO

.845

.654

.191

Variable Pair

Original r

Controlled r

.843

.503

Change
in r
.340

Table 10 shows the partial correlations of customer retention and IMO; customer retention and EMO; and
customer retention and IMP. The correlation between customer retention and IMO is positively strong (r = .843). However,
when EMO and IMP are controlled for, this relationship is reduced substantially (r = .503). Also, the strong relationship
between customer satisfaction and EMO is reduced (r = .626) when IMO and IMP are controlled for. Moreover, the high
positive relationship between customer retention and IMP is reduced when EMO and IMO are controlled for. In essence,
EMO, IMP and IMO influence and empower each other in their high positive relationship to customer retention.

DISCUSSIONS
The theoretical and empirical literature review of this study showed that elements of the service marketing
triangle model individually and collectively influence customer retention. Results of this study were expected to confirm
this evidence from previous studies. Firstly, the relationship between internal marketing practice and customer retention is
positively high among financial service providers in Ghana. This implies that as internal marketing is enhanced in financial
institutions in terms of employee training, reward and motivation, customer retention is highly enhanced, or service
providers are able to sustain the patronage of existing customers. This is because suitable training equips employees with
the competencies needed to carry out all activities of service marketing efficiently. Moreover, internal marketing is
relevant to successful marketing practice because unless service employees are able and willing to deliver on the promises
made, the firm will not be successful in keeping its promises and the services (Bellaouaied & Gam, 2011). Meanwhile, the

Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

The Effects of the Three Sides of the Service Triangle Model on Customer Retention in the Financial Service Sector of Ghana

133

strong positive relationship between IMO and customer retention is confirmatory to findings in the study of Bellaouaied &
Gam (2011) and Benea (2008). Moreover, appropriate reward and motivation influence employee commitment.
Also, EMO and customer satisfaction are highly and positively correlated, r (378) = .875, p = .000. Thus, as
external market orientation is improved in the financial institutions, customer retention is also augmented. This is as a
result of the fact that customer patronage, to which customer satisfaction and retention feed, would drive how well
customers understand and perceive the promise delivered by service providers through external marketing. To customers,
this promise must be pragmatic, rich, satisfactory and achievable (Kotler & Armstrong, 2010; Lings & Greenley, 2009).
It was also found in this study that interactive marketing makes a high and positive relationship to customer retention,
r (378) = .843, p = .000. This means that as interactive marketing orientation is enhanced among financial institutions in
Ghana, customer retention is improved. This finding is also confirmatory to the empirical evidence provided by
Bellaouaied & Gam (2011).
It was further found that customer retention is predicted by IMO, EMO and IMP, where these elements
collectively account for 90.4% of variance on customer retention. However, EMO alone accounts for about 73.4% of
variance on customer retention. Thus, EMO alone impacts customer satisfaction at a higher level relative to IMP and IMO,
though EMO, IMP and IMO significantly predict customer retention individually at 5% significance level (p < .05).
The strong predictive qualities of IMO, EMO and IMP are supported in the studies of Bellaouaied & Gam (2011), Benea
(2008), and Yadav & Dabhade (2013). However, unlike this study, IMO was found to contribute the highest variance on
customer retention (Yadav & Dabhade, 2013). Nonetheless, EMO could also contribute the highest variability on customer
retention depending on its rigor in practice relative to IMO and IMP. For instance, it is argued that employees, no matter
how committed and competent they are, cannot be able to influence customer retention much when external marketing
does not sit well with customers prior to internal and interactive marketing (Lings & Greenley, 2009). To this end, the
finding that EMO accounts for the highest variance on customer retention is acceptable.
This study indicated that the correlation between customer retention and IMO is positively strong (r = .843), but it
is reduced substantially (r = .503) when EMO and IMP are collectively and individually controlled for. This means that
external marketing and interactive marketing contribute to the influence posed by internal marketing on customer retention.
In essence, IMO poses lesser influence on customer retention when its empowerment from EMO and IMP is taken away.
This phenomenon is acknowledged based on empirical evidences by Benea (2008) and Yadav & Dabhade (2013).
Similarly, the strong relationship between customer satisfaction and EMO is moderated by IMO and IMP, and the high
positive relationship between customer retention and IMP is reduced when EMO and IMO are collectively and individually
controlled for. Again, this is supported by Benea (2008) and Yadav & Dabhade (2013).

CONCLUSIONS AND RECOMMENDATION

Based on findings of this study, the relationship between IMP and customer retention is positively high,
r (378) = .845, p = .000. This implies that as internal marketing practice is enhanced in financial institutions in Ghana,
customer retention is also highly enhanced. Moreover, EMO and customer retention are highly and positively correlated,
r (378) = .875, p = .000. Thus, as external market orientation is improved in the financial institutions, customer retention is
also augmented. Evidently, IMO makes a high and positive relationship to customer retention, r (378) = .843, p = .000.
Invariably, as internal market orientation is enhanced among financial institutions in Ghana, customer retention is
improved.
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Customer retention is predicted by IMO, EMO and IMP. In this regard, they collectively account for 90.4% of
variance on customer retention. However, EMO alone accounts for about 73.4% of variance on customer retention.
Furthermore, EMO alone impacts customer satisfaction at a higher level relative to IMP and IMO, though EMO, IMP and
IMO significantly predict customer retention individually at 5% significance level (p < .05).
Though the correlation between customer retention and IMO is positively strong (r = .843), this relationship is
reduced substantially (r = .503) when EMO and IMP are collectively and individually controlled for. Also, the strong
relationship between customer satisfaction and EMO is reduced (r = .626) when IMO and IMP are collectively and
individually controlled for. Similarly, the high positive relationship between customer retention and IMP is reduced when
EMO and IMO are collectively and individually controlled for. Therefore, EMO, IMP and IMO influence and empower
each other in their high positive relationship to customer retention.
In short, the three sides of the service marketing triangle model individually and collectively impact customer
retention. Consequently, enhanced level of internal and external market orientation and interactive marketing among
financial service providers in Ghana improves customer retention.
To this end, there is the need for financial services in Ghana to be delivered in a framework of strategies whose
development is influenced by the collective principles of the service marketing triangle model and by the individual
principles of external market orientation, internal market orientation and interactive marketing. It is suggested that future
studies identify how the service marketing triangle model impacts financial performance in terms of return on investment
(ROI) in the financial services sector. This consideration in future researches would reveal the financial implications of
employing principles of the service marketing triangle model in the financial services sector in Ghana. Future studies could
also identify the effects of individual elements of internal marketing, external marketing and interactive marketing in the
financial services sector of Ghana.

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