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Behavioural responses to customer satisfaction: an empirical study

Athens Laboratory of Business Administration (ALBA), Athens, Greece Athens University of Economics and Business, Athens, Greece
Keywords Customer satisfaction, Consumer behaviour, Communications, Customer loyalty Abstract Investigates the behavioural consequences of customer satisfaction. More specifically, the authors examine the impact of customer satisfaction on customers' behavioural responses. The results support the notion of direct effects of customer satisfaction on three criterion variables (decision to stay with the existing service provider, engagement in word-of-mouth communications, and intentions to switch service providers). Implications for practice, study limitations, and directions for future research are discussed.

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Received April 1999 Revised March 2000

Antreas Athanassopoulos

Spiros Gounaris and Vlassis Stathakopoulos

Introduction The quest for service quality has been an essential strategic component for firms attempting to succeed and survive in today's fierce competitive environment (Phillips et al., 1983; Parasuraman et al., 1985; Reichheld and Sasser, 1990). As a result, in the last 15 years, we have witnessed an increasing number of research efforts on the subject. Review of the relevant literature reveals that the principal focus of service quality research has been twofold. First, the identification of service quality dimensions was of primary interest to researchers (Parasuraman et al., 1985, 1991a). Second, the development of measurement instruments of service quality was the focus of subsequent research efforts (Parasuraman et al., 1988, 1991b; 1993; Cronin and Taylor, 1992, 1994; Asubonteng et al., 1996; Buttle, 1996; Athanassopoulos 1998, 1999). Furthermore, the agenda of service quality has very quickly been enhanced by creating the domain of customer satisfaction where most aspects of the marketing mix have been included into its determination (i.e. service quality, convenience, price). In this research we shall be primarily concerned with the effects of customer satisfaction on the behavioural responses of customers, giving, therefore, a more integrated dimension into the research family that seeks to determine the antecedents of customer loyalty[1]. In recent years though, the customer satisfaction research agenda has shifted focus and concentrated on other equally important issues. For example, service quality has been related to its impact on the financial performance of the organization (Greising, 1994; Rust et al., 1995), consumer satisfaction (Spreng et al., 1996), switching behaviour (Keaveney, 1995), and behavioral intentions (Boulding et al., 1993; Cronin and Taylor, 1992).
The authors contributed equally to the article and are listed in alphabetical order.

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However, research examining the effects of customer satisfaction on behavioral responses has received very limited attention in the marketing literature (for exceptions see Boulding et al., 1993; Cronin and Taylor, 1992; Zeithaml et al., 1996). Yet, Zeithaml et al. (1996) indicated that examining the link between customer satisfaction and behavioral responses is a part of the many relations that need to be further investigated in order to better understand the link between customer satisfaction and financial outcomes of the organization. Moreover, Zahorik and Rust (1992) proposed that studying the behavioral responses to service programs can help managers estimate the financial consequences of customer satisfaction. According to the researchers cited above, the relationship between customer satisfaction and profits is a very complex one and includes many intermediate links. One such link is the relationship between customer satisfaction and behavioral responses. Hence, in order to better model the impact of customer satisfaction on profits, one has to first examine and comprehend how customer satisfaction influences behavioural responses. Therefore, the goal of this research is to help managers and researchers understand behavioral responses to customer satisfaction from the customers' perspective. Not only does this research effort differ from prior research on the subject, but also it extends the relevant literature in three important dimensions. First, unlike previous research that has focused on behavioral intentions (e.g. Zeithaml et al., 1996), our research concentrates on actual behavioural responses. In fact, Zeithaml et al. (1996, p. 44) called future researchers to further extend their work, by undertaking research that ``asks consumers to indicate their actual behaviors'' rather than their behavioral intentions. Second, it develops an extensive multiple-item behavioral responses measure. Third, our study involves a whole industry (i.e. the banking industry) and not a single or only a few providers within an industry, as is usually the case in many research studies. The rest of this paper is organised as follows. We first develop our conceptual model and associated research hypotheses that address the relationships between customer satisfaction and behavioural responses. We then describe the sample and measures employed in the study. We follow by reporting the empirical research results. Finally, we conclude by identifying study limitations and proposing future research directions. Conceptual framework and research hypotheses Figure 1 depicts the customer satisfaction-behavioural responses model that is advanced and tested. The major constructs in the model are customer satisfaction and consumers' behavioural responses. Service quality and customer satisfaction Service quality is being considered as one of the most important research topics, since it relates to costs (Crosby, 1979), financial performance (Buzzell and Gale, 1987), customer satisfaction (Spreng et al., 1996), customer retention

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Figure 1. Behavioural responses to customer satisfaction

(Reichheld and Sasser, 1990), and differential competitive advantage (Iacobucci et al., 1994). This recognition for the important role service quality plays in business success has led to the development of alternative schools of thought regarding service quality (e.g. Parasuraman et al., 1985, 1988; Gronroos, 1990; Reeves and Bednar, 1994). This has ignited a lively and heated debate with respect to the definition and measurement of service quality. Early research efforts in the marketing literature focused on understanding the structure and psychological processes underlying perceived service quality. Customers' perceptions of service quality refer to the customers' assessment of the overall excellence or superiority of the service (Zeithaml, 1988). Parasuraman et al. (1985, 1988) conceptualised a customer's evaluation of overall service quality as the gap between expectations and perceptions of service performance levels. Furthermore, they propose that overall service quality performance be measured by a five-dimensional construct. They proposed the SERVQUAL instrument, which was designed to measure service quality across a range of businesses and industries. However, SERVQUAL has not been without criticisms. These criticisms focus on both theoretical as well as operational issues (Buttle, 1996). Asubonteng et al. (1996), based on a critical review of 18 service quality empirical studies, reached the conclusion that the underlying SERVQUAL dimensions are likely to be industry specific. For example, Carman (1990) found between six and eight dimensions depending on industry, Headley and Miller (1993) six in the consumption of medical services, while Clow et al. (1995) and McAlexander et al. (1994) seven and ten respectively in the dental service industry. Moreover, Ford et al.'s (1993) empirical cross-cultural results seem to indicate that the scale is also country specific. Support for this notion comes also from Akviran (1994), who identified four dimensions in a survey conducted in 31 major British organisations, in the fields of banking, building societies, and retail. In addition, even though LeBlanc and Nguyen (1988), in their study of the Canadian credit sector, proposed a five-dimensional construct of service quality, the underlying dimensions differ from those described in

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Parasuraman et al.'s (1985, 1988) work. It must be noted, however, that in these early studies the dimensions of service quality had quite often included dimensions beyond service quality and closer to customer satisfaction. Yet, despite its shortcomings, SERVQUAL seems to be a useful scale to use in measuring service quality by making appropriate adjustments for industry and country contextual effects. Later research efforts (Cronin and Taylor, 1992) though cast doubts about the utility and appropriateness of the disconfirmation paradigm advocated by Parasuraman et al. (1985, 1988). These authors questioned whether or not customers routinely assess service quality in terms of expectations and perceptions. Rather, they advanced the notion that service quality is directly influenced only by perceptions of service performance. In accordance, they developed an instrument of service performance (SERVPERF) that seems to produce better results than SERVQUAL (Asubonteng et al., 1996). Apart from the debate among the above researchers for the merits of SERVQUAL over SERVPERF and vice versa, however, it seems that, on balance, the emerging literature supports the performance-based paradigm over the disconfirmation-based paradigm (Cronin and Taylor, 1994; Peter et al., 1992; Brown et al., 1992; Babakus and Boller, 1992; Babakus and Mangold, 1992). Our research bears on these conclusions and adopts the performance based SERVPERF paradigm. The common thrust though of all research efforts on the subject is the conclusion that the criteria customers use to evaluate service quality are complex and difficult to determine precisely. This is due to the fact that: . services are intangible; . services are heterogeneous, meaning that their performance often varies from provider to provider, from customer to customer, and from context to context; . services cannot be placed in a time capsule and thus be tested and retested over time; and . production of services is likely to be inseparable from their consumption. Furthermore, customers do not assess service quality only on its outcome, but also they consider the process of service delivery as well as the context (Gronroos, 1990; Kotler, 1994). Customers of services observe and evaluate the production process as they experience the service they receive (Zeithaml, 1988). Berry et al. (1985) argued that the service quality attributes of search, experience, and credence are used by consumers to evaluate service quality. Search attributes, such as physical facilities, appearance of personnel, and the supplier's image can be considered before consuming the service. Experience attributes, like responding quickly to a request and performing a service at the agreed time are assessed on the basis of the actual service experience. Finally, credence attributes like financial

security of an investment cannot be determined even after repeated use of a service. In this respect, services are difficult to evaluate because they contain many experience and credence attributes and because the actual service varies from one customer to the next (Zeithaml, 1988). Behavioural responses Apart from the measurement issues, the real value of service quality emanates from its decision-making implications. Several researchers (Fornell and Wernerfelt, 1987; Rust and Zahorik, 1993) make the distinction between offensive and defensive marketing policies. According to those researchers, offensive marketing actions refer to capturing new customers by investing in service quality. However, service quality is only one of many other variables (e.g. price, advertising, image) that influence a customer's decision to consume the service. Therefore, spending on service quality alone does not guarantee the attraction of new customers. On the other hand, defensive marketing actions refer to retaining existing customers rather than attracting new ones. There are compelling arguments of the superiority of the defensive impact of service quality over the corresponding offensive one. For example, lowering customer defections can have a strong impact on a company's profits (Reichheld and Sasser, 1990) as well as market share (Rust and Zahorik, 1993). Similarly, Fornell and Wernerfelt (1987) concluded that is better for a company to spend resources to keep existing customers than to attract new ones. This is due to the fact that, when customers are lost, new ones must be captured to replace them, and replacing them is expensive for two main reasons. First, advertising, promotion, sales, and uncovering their needs expenses are high, and second, new customers need a ``grace'' period until they become profitable. Moreover, customers who remain loyal to the company are likely to engage in favourable word-of-mouth behavioural responses. In addition, the company may be able to cross-sell to these customers or even charge them a premium price. Regardless though of the specific tools and methods a company follows, consumers' reactions to service quality are unavoidable. As indicated in Figure 1, a customer's assessment of the service quality received determines the action(s) the consumer will engage in. The model indicates that a customer's assessment of service quality is positively related to the customer engaging in word-of-mouth actions. On the other hand, when a customer's assessment of service quality is negative, the customer will engage in unfavourable actions. When a customer praises the company, this behavioural response is indicative of the customer's decision to remain with the firm. Parasuraman et al.'s (1988, 1991b) results indicated that when consumers' perceptions of service quality are high, consumers are willing to recommend the company to others. Reichheld and Sasser (1990) also support this notion. Further, Boulding et al. (1993) found that service quality relates positively to saying positive things regarding the company to others. More specifically, in studying the

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behavioural responses of their students they found that students who were delighted with the quality of the studies had also the tendency to say positive things about the school and recommend it to companies and recruiters as a pool for recruiting purposes. Other researchers (see Richins, 1983; Scaglione, 1988; Singh, 1988) have indicated that when consumers perceive to have experienced inferior service performance they are likely to engage in complaining behavioural responses to third parties (i.e. exhibiting negative word-of-mouth communications). In general, these negative communicational responses stem from the dissatisfaction felt by the consumers due to poor service quality. Finally, Zeithaml et al. (1996), in their multicompany/multi-industry study of the relationship between service quality and behavioural intentions, inferred that service quality is positively associated with communicational behavioural intentions (e.g. intention to recommend the service producer and/or complaining behaviour). Even though behavioural intentions may be an imperfect proxy for behavioural responses (cf. Keaveney, 1995) nevertheless, we advance the following hypothesis: H1: Perceptions of high customer satisfaction are positively related to positive word-of-mouth communications. Several studies have examined the association between customer satisfaction and service switching. The reasoning behind customers switching behavioural responses has been related to perceptions of quality in the banking industry (Rust and Zahorik, 1993), overall dissatisfaction in the insurance industry (Crosby and Stephens, 1987), and service encounter failures in the retail industries (Kelley et al., 1993). Although customers perceiving service performance to be inferior may represent one of the reasons that motivate customers to switch services, it is not the only one. For example, Bitner (1990) advocates the effects of the time, money constraints, access to information, lack of credible alternatives, switching costs, and habit which may affect service loyalty. Similarly, Cronin and Taylor (1992) suggest that convenience, good value for money and availability might enhance customer satisfaction and subsequently behavioural intentions. Moreover, Keaveney (1995), in his grounded theory development model of customer switching behaviour, proposed eight reasons (price, inconvenience, core service failures, service encounter failures, competitive issues, ethical problems, and involuntary factors) for switching services. Finally, Zeithaml et al. (1996) concluded that service quality is associated negatively with unfavourable behavioural intentions (e.g. propensity to switch). However, the main thrust of the above studies is that service switching is conceptualised and operationalised as ``intentions to switch''. Even though direct application of these results to the ``action to switch'' is limited by the fact that behavioural intentions do not perfectly map actual behavioural responses, we propose the following hypothesis:

H2: Perceptions of high customer satisfaction are negatively related to switching behaviour expressed either in terms of intention and/or decision to switch. Research methodology Sample selection The sample of customer responses was drawn from the general area of Athens, Greece. Personal interviews, based on a questionnaire, were conducted by trained personnel in order to increase the validity and reliability of the responses. The sample consisted of 793 individual customers of commercial retail banks. Since this study did not intend to measure quality perceptions in relation to any particular bank, respondents were randomly approached in the street and shopping centres. Although the sample is clearly a convenience one, the interviews were conducted at different locations and on different days as well as at uniformly distributed time intervals, in order to reduce location, date, and time related response-bias. An analysis of the respondents' demographic characteristics is presented in Table I.

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Demographic variable Age of respondent Up to 20 years 20-30 years 30-40 years 40-50 years 50-60 years 60 years and older Missing Gender Male Female Missing Income (in GDR)a Up to 1 million 1-3 million 3.4.5 million 4.5-6 million More than 6 million Missing Education Up to high school College University Missing
a

Valid percent 6.1 32.0 19.0 20.1 13.3 9.6 0.6 54.6 45.4 2.4 12.6 32.3 22.3 12.3 20.5 2.6 46.4 25.7 27.9 6.7

Note: Income is annual per person. E1 = GDR324

Table I. Demographic characteristics of the sample (n = 793)

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Research instrument To operationalise customer satisfaction, we used 31 question-items that sought to evaluate different aspects of the service encounter. Given that, as it was indicated earlier, measuring customer satisfaction is industry and country specific, we: . included items that represent the five dimensions of service quality described by Parasuraman et al. (1991a, 1991b); and . added items that sought to capture extra dimensions of customer satisfaction specific to the banking industry as well as to the Greek banking context (Athanassopoulos, 1999). These extra items were derived from ten personal in-depth interviews with managers of the banking sector. More specifically, we first asked two marketing managers and one customers service manager from three different retail banks to describe which factors, according to their expert opinion, comprise the broader notion of customer satisfaction in retail banking. Next, their answers were further probed by asking seven branch managers from four other retail banks to comment on the factors suggested by the marketing managers and the customers service manager. The rationale behind this approach is that we expected marketing and/or customers service managers to have a solid, broad, understanding of what really satisfies bank customers. However, because branch managers are closer to the customer and day-to-day encounters, their opinion was used as a ``filter'' in order to unveil the satisfaction factors that their experience has shown really matter for the consumers. The items for which a congruency in the opinion of the managers was asked were eventually the ones included in the questionnaire. As to the nature of the measurement, this was similar to that of Cronin and Taylor (1992, 1994). They report convincing evidence that researchers are better off when measuring perceived customer satisfaction directly instead of attempting to estimate it as the result of the gap between consumer expectations and consumer perceptions. A seven-item battery was developed to gauge the range of customers' behavioral responses to customer satisfaction examined in this study. The seven items were grouped into three a priori categories: word-of-month communications, intentions to switch, and decision to switch. However, the respondents were not aware of these groupings. All the items included in the study are presented in the Appendix. As a preamble to the statistical results of the research, we did not find solid evidence about the independence of the categories, intention and decision to switch and therefore the two categories will be collapsed to one. Measurement purification Following Gerbing and Anderson (1988), we employed confirmatory factor analysis (CFA) in order to examine the dimensionality of the customer

satisfaction dimensions and the behavioural responses dimensions. Table II lists the results pertaining to the presence of the underlying customer satisfaction dimensions in retail banking. It also contains results concerning the behavioural response measurement scale that seeks to encapsulate the behaviour of individual customers as a result of their responses to the perceived customer satisfaction status. The CFA hypothesised model was tested using the EQS 5 model developed by Bentler (1990), using the maximum likelihood estimation procedure. The basis of the statistical analysis was the covariance matrix of the observed responses. Overall fit and the significance of the loading of individual variables on the hypothesised factors were considered. Table III shows the fit indices using the chi-square test, Bentler's comparative fit index and the root mean square of approximation (RMSEA). The RMSEA measures the lack of fit and takes parsimony into account by assessing the discrepancy per degree of freedom between the population covariance matrix and the fitted matrix. That is, it penalises for overfitting. The measurement model was first tested for the adequacy of a six factor solution concerning the dimensionality of the construct of ``customer satisfaction'' and ``a three factors solution for behavioural responses''. For both cases, the results from a six and three factor solution have been tested extensively via all possible solutions of reduced dimensionality by collapsing dimensions and the results obtained were always inferior. For illustrative purposes, the information in Table III tests results concerning the potential unidimensionality of the two cases. The test statistics for each one of the model structures are in favour of the proposed dimensions concerning the two constructs. Using the Bentler and Bonnet (1980) and Byrne (1989) criterion of ratio 12 /d.f., one can conclude that an inadequate fit occurs when values greater than three are obtained, which was not the case in the models selected. Using more reliable test statistics, such as the goodness of fit index (GFI) and the comparative fit index, both models
Customer satisfaction measurement 6 factors 1 factor Chi-square (12 ) Degrees of freedom (d.f.) 12 /d.f. GFIa CFIa RMSEAb 584 260 2.2 0.94 0.94 0.04 1,954 276 7.07 0.81 0.70 0.088 Behavioural responses measurement 2 factors 1 factor 27 8 3.03 0.98 0.99 0.033 523 10 52.3 0.83 0.79 0.255

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Notes: a CFI and GFI values close to 1 indicate a good fit b The lower the RMSEA values, the better the model is considered. Values below 0.1 suggest adequate fit

Table II. Summary statistics of model fit

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Employee competence (F1) (five items) Reliability (F2) (five items) Product innovation (F3) (four items) Pricing (F4) (three items) Physical evidence (F5) (five items) Convenience (F6) (three items) Behavioural responses Intention and decision to switch (four items) Word-of-mouth communications (three items)

Customer satisfaction Cronbach's alpha 0.79 0.88 0.76 0.81 0.79 0.79 0.77 0.87 Construct reliabilitya 0.91 0.98 0.97 0.82 0.90 0.95 0.97 0.98

Variance explainedb (%) 74 92 90 78 86 86 97 97

Table III. Construct reliability and validity of the proposed factor structures

Notes:  2  2  a Construct reliability: j !j a j !j j ej , where !j is standardised ML parameter estimate and ej is the error term about the estimated parameter  b Variance explained: j !2 a j !2 j ej j j

yield adequate estimates. The adequacy of the model estimates was also confirmed by the small (less than 0.1) RMSEA values. Prior to discussing the interpretation of the items' loading on each factor, it is worth exploring a series of diagnostic tests concerning the reliability and validity of the proposed measures, based on the empirical results shown in Table IV. The results in Table IV confirm the reliability and validity of the six customer satisfaction dimensions, since all indices concerned exhibited high values on their corresponding scales. Similarly, the results support the twodimensional solution concerning consumers' behavioural responses to customer satisfaction. It must be noted, however, that the rejection of the threedimensional solution could well be attributed to the lack of appropriate scale items that would encapsulate consumer attitudes in a better way. Moreover, the problem could well be associated with the single time frame of the study concerned that does not accommodate the dynamic nature of behavioural

Table IV. Correlation coefficients among the customer satisfaction factors (discriminant validity)

responses that would be based on the conversion process of the intentions to switch to actual decisions to switch. In addition, we estimated the discriminant validity of the facets of customer satisfaction using the factor-correlation indices shown in Table IV, as indicated by Venkatraman (1989). The correlation of the antecedents of customer satisfaction is a well-established phenomenon in both theoretical and empirical terms (see Parasuraman et al., 1988; Cronin and Taylor, 1992). The findings of this research are also in line with the recent work by Taylor (1997) concerning the second order and interactive effects between customer satisfaction and service quality as predictive indicators of customer loyalty. The correlation estimates of the factor solutions prompted further testing of the hypothesis of having better underlying factor structures. This particular issue was tested via two alternative ways. The first step included re-estimation of the factor-model assuming a single factor solution which gave very poor fit indices (GFI = 0.7). The second step included iterative re-estimation of the factor-model, eliminating one factor at a time and assigning its items to one of the remaining factors. The fit indices obtained were again inferior to the solution reported in Table V, and thus the proposed factor structures did pass the discriminant validity tests. Next, we developed a full-scale model fit of the six-factor solution that was chosen to encapsulate the dimensions of customer satisfaction in retail banking. Information concerning the fit indices can be found in Table VI. As Table VI shows, the six-factor solution is made of question items that were scrutinised prior to their final selection. For each factor, a number of items were dropped from the initial candidate list, based on the results of the measurement model. Hence, from the initial list of 31 question items only 25 were deemed as appropriate to tap the customer satisfaction dimensions. The estimated coefficients associated with the factor structures are all accompanied by statistical significance at the 1 percent level. Despite the relatively satisfactory overall fit of the CFA model some question-items have appeared with relatively small factor coefficients. The final model presented in Table VI contains some question-items with rather low standardised coefficients that were retained in the model for two reasons. First, they indicate managerial relevance with the construct that we sought to measure. Second, a re-assessment of the model in their absence did not alter significantly the overall fit of the model and the coefficients of the remaining question items. These empirical results seem to support our earlier position that customer satisfaction dimensions tend to be industry specific as well as country specific. In that notion, our results have similarities with results reported in other studies from other national environments of retail banking (see Laroshe et al., 1986; LeBlanc and Nguyen, 1988; Blanchard and Galloway, 1994; Athanassopoulos, 1999). Yet, the most important issue arising from the list of factors identified in Table VI should be the fact that customer satisfaction is recognised as a multidimensional construct.

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CSPa (F1) Employee competence The bank's employees know very well the bank's products You receive prompt service from the bank's employees Bank employees have the necessary knowledge to serve you promptly Bank employees do not hesitate to find the time to serve you better Bank employees know what your needs are and how the bank's products can satisfy them (F2) Reliability It informs me without errors of my transactions If there is a problem, the bank is willing to discuss it with me You do not have to visit your bank many times to solve a particular problem It is a bank that is worth trusting (F3) Product innovation The bank offers a wide product variety The bank offers flexible products that meet my needs The new products that my bank offers meet my needs The bank offers telephone services (F4) Pricing The loan interest rates of my bank are higher than other banks The deposit interest rates of my bank are lower than other banks I feel I pay a lot on commissions charged (F5) Physical evidence There is a warm friendly atmosphere inside the bank Employees of the bank are well dressed and appear neat The atmosphere inside the bank gives you a positive impression for the services it offers The interior design of the premises facilitates the transactions The climate among the bank's employees contributes to receiving better service Employees of the bank have a friendly behaviour (F6) Convenience The bank's branch is near your workplace The bank's branch is near other state buildings and other banks The bank's branch is near shopping centres I usually visit Notes: a Completely standardised parameter b Standardised error 0.65 0.78 0.73 0.71 0.59 0.59 0.57 0.47 0.71 0.60 0.88 0.74 0.49 0.68 0.52 0.61 0.78 0.83 0.69 0.49 0.61 0.82 0.55 0.79 0.49

Errorb 0.03 0.03 0.04 0.04 0.06 0.09 0.04 0.03 0.04 0.05 0.02 0.04 0.03 0.04 0.05 0.07 0.03 0.01 0.02 0.07 0.08 0.02 0.08 0.03 0.08

Table V. Measurement model concerning the customer satisfaction construct

As it is well known in the literature, there are conflicting empirical findings as to whether the customers recognise the differential nature of service quality drivers (see Babakus and Boller, 1992; Davis, 1991; Parasuraman et al., 1988). The findings of the current study, however, without resolving the issue, provide additional insights about the possibility of having multiple dimensions

CSPa Word-of-mouth communications I have recommended the bank to friends and acquaintances I have encouraged friends and acquaintances to do business with the bank I have informed other customers of the bank about complaints I have about the services offered by the bank (R) Intention to switch In the near future I intend to intensify my efforts to find a better bank In the last year I have thought very seriously to switch banks I have decided to do less business with the bank in the future I have decided to switch to another bank that offers better service Notes: a Completely standardised parameter b Standardised error (R): denotes reverse coded item 0.91 0.92 0.89 0.93 0.92 0.94 0.96

Errorb 0.01 0.01 0.02 0.02 0.01 0.01 0.01

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Table VI. Measurement model concerning the behavioural responses construct

of service quality with the presence of additional factors, such as money for value, innovativeness, and convenience. A similar measurement model was also developed and tested concerning the consumers' behavioural responses construct. These results are portrayed in Table VII. A clear distinction has been proposed and verified in the results concerning the presence of two dimensions of consumers' behavioural responses to customer satisfaction, such as word of mouth communications and then a mixture between intention and decision to switch. The latter has strong managerial implications, since it signals differential behavioural patterns between customers thinking of switching to competition and those that have already decided to do so. It is understood that the intention of individual customers to defect to a different supplier of services does not materialise since there are numerous factors that may enable or disable the defections. Such factors include, inter alia, the presence of a better alternative, the cost to defect, and the time to search for alternatives. The detailed study about the relationship between the consumers' intentions to defect and their
Structural equation model Chi-square (12 ) Degrees of freedom (d.f) 12 /d.f. GFIa CFIa RMSEAb
a

770 473 1.76 0.942 0.962 0.031

Notes: CFI and GFI values close to 1 indicate a good fit b The lower the RMSEA values, the better the model is considered

Table VII. Structural model relationships between customer satisfaction and behavioural responses

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actual decisions is context specific (i.e. there is a difference between services, durable and non-durable goods) that needs to be studied dynamically over a long time framework. Results Having tested the measurement models concerning the constructs of customer satisfaction and behavioural responses, the next step was to link the two constructs via the development of a structural equation regression model, whereby the statistical association between customer satisfaction factors and the behavioural responses factors will be sought. In this model, the two construct factors concerning the behavioural responses will be represented via an overall ``behavioural response'' latent factor. In Figure 2, we show the standardised estimates of the relationships among the constructs under investigation. As it can be seen in Table VII, the model exhibits, in an absolute sense, a very satisfactory fit with all statistical indices scoring very satisfactory. Prior to discussing the findings of the proposed fitted model in Figure 2, it is worth observing that the behavioural response construct consists of very satisfactory factor items (intention and decision to switch and word-of-mouth communications). The two factors are represented at an aggregate level without having pursued any aggregations in the model fit process. That is, all factors were presented with their full question-items and no averaging took place for the question-items of each factor. The coefficients attached to individual paths from the constructs to the latent factors correspond to standardised path

Figure 2. Structural equation coefficients concerning the effect of customer satisfaction on behavioural responses

coefficients indicating the degree of association between the behavioural responses and individual customer satisfaction latent factors. For example, the effect of the latent factor ``physical evidence'' has path coefficient 0.213 and was significant at 1 percent level. Furthermore, at the level of the behavioural responses structural factor and also the word-of-mouth and intention/decision to switch factors we also have information concerning the ``disturbance'' terms which provide information about the explained covariance of the model. The disturbance term for behavioural responses can furthermore be converted into the pseudo-R2 term similar to a regression fit model. In our case such fit has been 1 0.5022 = 0.74, which is a highly satisfactory result. Turning now to the two basic hypotheses of the study we can observe the following: . H1 predicted that bank consumers would react to customer satisfaction perceptions by engaging in word-of-mouth actions. The word-of-mouth communications construct has a significant positive loading on the behavioural response factor, thus fully supporting H1. As a matter of fact, the case of word-of-mouth encapsulates the essence of positive loyalty in the Greek retail banking environment since the case of increased levels of purchasing did not prove to be significant in the statistical validation of the loyalty construct. . H2 on the other hand, posited that when bank consumers have inferior perceptions of customer satisfaction, they would engage in unfavourable behavioural responses. The construct has significant negative loadings on the behavioural response factor, hence providing strong support for H2. Aside of the variation explained, the structural equation coefficients of the six latent factors of customer satisfaction led to a number of additional observations concerning the initial research hypotheses: . Employee competence affects consumer behavioural responses. The more ``exotic'' side of customer satisfaction, statistically valid in the measurement model of customer satisfaction, proved to have significant effects on consumers' behavioural responses. In a highly interactive service environment, such as that of retail banking, consumers determine very often their position concerning the bank from their attitudes towards staff competence. This reaction can be attributed to either the limited information customers have concerning the banking products they use, and also the fact that in an environment where the banking products are considered as equal, the only differentiating point is the service provided by people, who are not equal. . Reliability seems to be a driving force of customers' behavioural responses. The factor of reliability reflects to a large extent ``core'' components of the service function in the sense that the individual question items encapsulate issues associated with the security of transactions, the mistakes and more generally the feeling of trust promoted by the bank. The reliability factor exhibited a strong positive

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effect on the behavioural responses of the customers. Furthermore, the case of reliability can also be seen as a customer satisfaction factor which is considered as given since customers would not be prepared to transact with a bank that may run under reduced levels of reliability. Physical evidence is a key factor toward the consumers' behavioural responses. Physical evidence is also recognised for its importance on the performance ratings of individual banks. It is important to note that issues of a tangible nature are better linked to consumer memory and ultimately gain higher importance on the behavioural customer responses. It is also evident that having two factors of a tangible nature, reliability and physical evidence, with such high effects indicates that the customer feedback reflects their medium and long-term memory and are not instant reactions to recent contacts with the banks' personnel. Furthermore, the case of physical evidence draws to a large extent predetermined and not variable levels of satisfaction since having decided upon the bank you do business with it means you are to a large extent satisfied from issues of physical evidence. The limited effect of product innovation should not deter us for its importance. Product innovation in services has been found in previous research as being a quite important element of customer satisfaction. In this research, product innovation has been found to have a significant effect on the behavioural responses of customers. This effect, however, was found to be of less importance compared to other service satisfaction characteristics such as employee competence, physical evidence and service reliability. It must be borne in mind, however, that in a competitive market where its customers are not known for their demanding character for product innovations (see Athanassopoulos, 1999), it seems that the case of innovation-based competition will take some more time before it becomes a driving force of the behaviour of individual customers. In any case, the positive effect on behavioural responses is a satisfactory result by its own means. Value for money does play an important role on the formation of consumer behavioural responses. Value for money is indeed a factor associated with customer satisfaction and, as it was noted, it constitutes an additional dimension in the agenda of customer satisfaction beyond the familiar dimensions developed by Parasuraman et al. (1988). Value for money, therefore, plays a positive role into the customers' behavioural responses. That is, the results indicate that value for money has a negative effect on behavioural responses. This is in line with traditional theory of quality, indicating that higher customer satisfaction may lead to higher customer tolerance concerning premium pricing. Pricing is a quite problematic factor in assessing customer satisfaction since it is not clear whether the responses on satisfaction from pricing incorporate the level of service or not. Under the

assumption of pricing as a matter of value for money, the results indicate that the behavioural responses are negatively affected by value for money assessment. Discussion Customer satisfaction has long been recognised as playing an essential role for success and survival in today's competitive environment. Not surprisingly, considerable research has been conducted on what customer satisfaction meant to customers and developing instruments that measure customer satisfaction. Further, recognising the importance of the link between customer satisfaction and profits, research has contributed to our understanding of the impact of customer satisfaction on financial outcomes of the service providers. Even though the above issues have not been researched conclusively, the customer satisfaction research agenda has now shifted focus. Issues of interest today include understanding the effects of customer satisfaction on intended and unintended consequences on customers. For example, latest research reports concentrate on the behavioural intentions of customer satisfaction (Zeithaml et al., 1996). Our study attempts to further contribute in this research stream not only conceptually, but also empirically. In particular, the purpose of our study was to examine the impact of customer satisfaction on customers' behavioural responses. Our study is one of the first in marketing to investigate such effects. Overall, the results provide strong support for the notion of direct effects of customer satisfaction on the behavioural responses of customers. More specifically, our findings indicate that when customers assess customer satisfaction to be high, they: . decide to stay with the existing service provider; and . subdue their negative behavioural intentions. Furthermore, our results indicate that customer satisfaction is associated positively with word-of-mouth communications. On a different issue about the empirical assessment of the customer satisfaction dimensions, the research results confirmed prior research on the issue and indicated that the customer satisfaction dimensions are not only industry specific, but also country specific. Indeed, there is a differentiation on the factors that constitute the elements of the service bundle important to customers depending on industry, culture, and country. In this respect, our research revealed the existence of six customer satisfaction dimensions (i.e. employee competence, reliability, product innovation, value for money, physical, and convenience). The empirical findings of our research effort have also practical implications for service providers that strive to organise their service offerings in order to accomplish their corporate objectives. Service organisations should seek to develop strategies that enhance positive behavioural responses to customer satisfaction and prohibit negative ones. Such strategies can include meeting customers' desired-service levels, preventing service problems from occurring, dealing effectively with

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dissatisfied customers, solving service problems effectively when they occur, and confronting customer complaints positively. Our research effort though it is not without limitations. First, our behavioural responses battery needs further development. More specifically, additional items are needed to strengthen the psychometric properties of each of the individual scales. Second, the present study investigated only three types of consumers' behavioural responses. Certainly future researchers might consider further augmenting the proposed model by including additional consumers' actual behaviours, such as loyalty, communicating to internal employees and paying more. Third, the context of our study (retail banking in Greece) also limits the generalisability of the findings. Therefore, the model should be applied in other service contexts (e.g. retailing, telecommunications, air transportation, insurance) and other international settings. Finally, data from longitudinal studies would be particularly useful for capturing the process dynamics of the relationship between customer satisfaction and behavioural responses.
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. . . .

It does not err in informing me of my transactions. If there is a problem, the bank is willing to discuss it with me. You do not have to visit your bank many times to solve a particular problem. It is a bank that is worth trusting.

. . . . . . . . . . . . .

There is a warm friendly atmosphere inside the bank. Employees of the bank are well dressed and appear neat. The atmosphere inside the bank gives you a positive impression for the services it offers. The interior design of the premises facilitates the transactions. The climate among the bank's employees contributes to receiving better service. Employees of the bank have a friendly behaviour. The bank's employees know very well the bank's products. Employees of the bank are polite. Employees of the bank behave with discretion when you face a problem. You receive prompt service from the bank's employees. Bank employees have the necessary knowledge to serve you promptly. Bank employees do not hesitate to find the time to serve you better. Bank employees know what your needs are and how the bank's products can satisfy them. The bank's employees often refer you to their supervisors in order not to serve you personally and promptly. There is ample parking space in your bank. The bank's branch is near your workplace. The bank's branch is near other state buildings and other banks. The bank's branch is near shopping centres I usually visit. The loan interest rates of my bank are higher than other banks. The deposit interest rates of my bank are lower than other banks. I feel I pay a lot on commissions charged. The bank offers a wide product variety. The bank offers flexible products that meet my needs. The new products that my bank offers meet my needs. The bank offers telephone services. The bank's ATM network collaborates with other banks ATM networks. The bank's ATM network is large and serves my needs.

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. . . . . . . . . . . . .

Question items for behavioural responses Please indicate the degree to which you agree / disagree with each one of the statements below:
. . . . .

In the near future I intend to intensify my efforts to find a better bank. In the last year I have thought very seriously to switch banks. I have recommended the bank to friends and acquaintances. I have encouraged friends and acquaintances to do business with the bank. I have informed other customers of the bank about complaints I have about the service offered by the bank. I have decided to do less business with the bank in the future. I have decided to switch to another bank that offers better service.

. .