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The Customer Loyalty Cascade and Its Impact on Profitability in Financial Services

In: Partial Least Squares Structural Equation Modeling

Author

Listed:
  • Anne-Kathrin Hegner-Kakar

    (GfK SE
    Hamburg University of Technology (TUHH))

  • Nicole F. Richter

    (University of Southern Denmark)

  • Christian M. Ringle

    (Hamburg University of Technology
    The University of Newcastle, Faculty of Business and Law Callaghan)

Abstract

Building and maintaining successful, long-term relationships is one of the crucial tasks in today’s financial sector, the idea being that loyal customers purchase more, demonstrate a higher willingness to spend, and act as advocates for the company. However, there is also some controversy on whether profitability indeed increases with customer loyalty. We will analyze the process of loyalty development and evaluate if and how customer loyalty (positively) affects profitability. We will do so with reference to a four stage sequential loyalty model that grounds on a chain of effects from cognitive loyalty, affective loyalty, conative loyalty to action loyalty. We will make use of PLS structural equation modeling and analyze data of almost 7000 customers of a German bank surveyed by telephone. These analyses will support practitioners in the banking and financial sector in setting-up and steering their customer retention strategies and will provide a theoretical contribution to validating one of the most prominent customer loyalty models.

Suggested Citation

  • Anne-Kathrin Hegner-Kakar & Nicole F. Richter & Christian M. Ringle, 2018. "The Customer Loyalty Cascade and Its Impact on Profitability in Financial Services," International Series in Operations Research & Management Science, in: Necmi K. Avkiran & Christian M. Ringle (ed.), Partial Least Squares Structural Equation Modeling, chapter 0, pages 53-75, Springer.
    • Handle: RePEc:spr:isochp:978-3-319-71691-6_3
    DOI: 10.1007/978-3-319-71691-6_3
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    Citations

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    Cited by:

    1. Sonja Fourie & Michael Goldman & Michael McCall, 2023. "Designing for loyalty programme effectiveness in the financial services industry," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 28(3), pages 502-525, September.
    2. Mirza Mohammad Didarul Alam & Nor Azila Mohd Noor, 2020. "The Relationship Between Service Quality, Corporate Image, and Customer Loyalty of Generation Y: An Application of S-O-R Paradigm in the Context of Superstores in Bangladesh," SAGE Open, , vol. 10(2), pages 21582440209, May.
    3. Francisco Palací & Alejandro Salcedo & Gabriela Topa, 2019. "Cognitive and Affective Antecedents of Consumers’ Satisfaction: A Systematic Review of Two Research Approaches," Sustainability, MDPI, vol. 11(2), pages 1-26, January.
    4. Md Aslam Mia, 2024. "Loyalty of rural microfinance borrowers: International evidence," Bulletin of Economic Research, Wiley Blackwell, vol. 76(1), pages 67-94, January.

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