ACHIEVING CUSTOMER SATISFACTION IN THE EVOLVING BANKING MARKET: QUESTIONS OF OPTIMAL CO-CREATION

1. ACHIEVING CUSTOMER SATISFACTION IN THE EVOLVING BANKING MARKET: QUESTIONS OF OPTIMAL CO-CREATION

2. CONSUMER LOGISTICS (CL)Introduction • A theoretical framework involving activities performed to support the movement and handling of products from the point of acquisition to the point of consumption (intra-household and household-retail).

3. CONSUMER LOGISTICS (CL)…Introduction • Evaluate the applicability of CL Theory to the consumer financial services market. • Understand how financial services marketers can enhance customer satisfaction via CL.

4. CONSUMER LOGISTICS (CL)…Introduction • As you will see: • The study provides a surprising answer and… • The study raises a new, important question.

5. CL Theory • CL formally recognizes the consumer as an active part of the distribution channel (Granzin 1988; Granzin and Bahn 1989; Granzin and Painter 1996) : • Location • Transportation • Inventory • Handling and Storage • Communication

6. …CL Theory • CL Theory has traditionally been applied to product-based markets and not service-based markets. • The relationship between performance of CL functions, customer value, and satisfaction has not been assessed (Channel Theory).

7. Purpose of Study • Purpose 1: Develop CL scale applied to consumer services (banking). • Purpose 2: Explore how performance of CL functions affects perceptions of value (consisting of efficiency and effectiveness) and satisfaction.

8. Scale Development (Purpose 1) • Develop CL scale applied to consumer financial services (banking). • Methods Utilized: • Review past research • Focus Groups • Sample • Data Analysis: • Confirmatory Factor Analysis

9. …Scale Development (Purpose 1) • Scale Findings: CL Functions Reliability= 0.81 Inventory Transport. Reliability = 0.73 Communication Reliability = 0.74

10. Scale Development • INV1 I save my payment/withdrawal receipts to help reconcile my bank statements. • INV2 I carefully manage the amount of my savings/checking account balances. • INV3 I am very thorough with my financial record keeping. • INV4 I tend to keep my records for a long time. • INV5 I prefer a combination of methods to store banking records. • INV6 I make careful decisions about how to store my bank records. • TRAN1 Getting to a destination in as little time as possible is important to me. • TRAN2 I try to minimize the distance that I travel to the bank. • TRAN3 Getting to the bank easily (brick + mortar, ATM, online) is important to me. • COM1 When I consult with the bank, I spend a lot of time. • COM2 The bank helps me to determine which banking accounts to use. • COM3 The bank helps me to determine which banking services are important. • EFFIC1 The way I go about my banking allows me to minimize the amount of running around I must do. • EFFIC2 The way that I go about my banking allows me to minimize my banking costs. • EFFIC3 The way that I go about my banking is efficient. • EFFEC1 The way that I go about my banking has given me desired results. • EFFEC2 The way that I go about my banking allows me to achieve optimal outcomes. • EFFEC3 The way that I go about my banking is effective. • SAT1 I am pleased with my banking experience. • SAT2 I am satisfied with the way that my bank helps me to meet my banking needs. • SAT3 I am pleased with the benefits that have resulted from my banking activities.

11. CL--Value—Satisfaction (Purpose 2:) • Explore how performance of consumer logistics functions influences perceptions of consumer value, and satisfaction. • Data Analysis: • Structural Equations Modeling

12. CL—Value—Satisfaction (Purpose 2) Findings (standardized loadings, significant): CL Functions Value Dimensions Inventory .51 Efficiency -.18 .52 Satisfaction Transport. .15 Effectiveness .81 .21 Communication X square = 435.25 df = 214 GFI = 0.81 CFI = 0.88 RMSEA = 0.076

13. Theory Inventory Location Transportation Handling and Storage Communication Sample Inventory Transportation Communication DiscussionMeasurement model provides empirical support for the applicability of CL Theory to services marketing in the context of consumer banking.

14. …DiscussionStructural model provides empirical support for relationship between:CL—Value (Efficiency/Effectiveness)—Satisfaction. • Perform. of CL functions affects effectiveness (+). • Perform. of CL functions affects efficiency (+). • Effectiveness affects satisfaction (+). • Efficiency affects satisfaction ( - )!

15. …DiscussionRegarding the negative relationship between efficiency and satisfaction. • Although effectiveness of technology and changes in the service encounter have improved satisfaction in consumer banking. • Efficiency of technology and changes in the service encounter have decreased satisfaction in consumer banking. • Technology has made it possible to pass CL functions back to the consumer--CL functions that were previously performed by the bank are now performed by the consumer (co-creation) • There is a point at which this shift in co-creation will lead to decreased satisfaction (Broderick and Vachirapornpuk 2002).

16. Future Research • Study raises an important question. • How can CL be used to improve customer effectiveness and efficiency in a manner that leads to increased satisfaction … • Determine the optimal manner of allocating CL functions (co-creation) to consumer, without negatively affecting satisfaction vis-a-vis efficiency (Chan, Yim, Lam 2010) • Allocate too much/High Participation/Dissatisfaction • Allocate too little/Low Control/Dissatisfaction

17. Optimal CL Allocation/Optimal Satisfaction/Managing Co-creation Low Consumer Participation High Consumer Participation • Low Consumer Control (-) • Low Consumer Effort (+) • High Consumer Control (+) • High Consumer Effort (-) Satisfaction Optimization