Gaining competitive advantage through quality of services in financial industry
1University of Oulu, Oulu Business School, Department of Management and International Business, Management
|Online Access:||PDF Full Text (PDF, 1.5 MB)|
|Persistent link:|| http://urn.fi/URN:NBN:fi:oulu-201306061522
|Publish Date:|| 2013-06-13
|Thesis type:||Master's thesis
This study views broadly the concept of competitive advantage by exploring it from different angles. Approaches on competitive advantage are made from management, marketing and service quality literature. By exploring the subject widely, this study adds insight to competitive advantage literature and shows the competitive area among financial institutions, including banks and insurance companies. Thus, the purpose of this study is to discover the factors in finance organizations’ services, which affects positively on customers by creating customer loyalty.
The study is implemented as a qualitative multi-case study so empirical material is gathered and analyzed for this purpose. The empirical material consists from fifty semi-structured interviews, where the interviewees have been selected to meet the criteria of this study. The empirical research was constructed to explore three aspects, firstly to solve the key factors that effect on customers’ satisfaction and loyalty within financial industry. Secondly, to achieve information of behavior elements with their vendors, and thirdly, to determine the factors, which are linked to customer defection. All these aspects were analyzed as the model for competitive advantage was created.
Positive perceived quality on core services, such as price, billing, and Internet bank account are the foundation of the relationship between a customer and a bank or insurance company. Still, customer loyalty cannot be built around core services because they only produce averagely satisfied customers. The key factors that create competitive advantage through customer’s loyalty are personalization, communication, experience, company’s reputation and positive experiences from service employees. All these factors were linked to trust, which played a central role with loyalty.
Conclusions indicate that the positive factors for customer loyalty are strongly related with the positive experiences that the customers had with companies’ employees, since majority of the cases were linked to experiences from employees, thus the loyalty was depended on employees, not core services. The competitive benefit of customer loyalty came through in four areas: in positive word-of-mouth, in choosing behavior, in duration of relationships and in centralizing behavior.
The new findings suggest that personalization of bank and insurance services is the top factor for loyalty and that they should actively reach out to their customers. As for insurance companies, insurance policy claims appear to act like a complaint management experience, and a competitive strategy can be built around health insurances. The results also point out that customer become more price-sensitive as their service costs go up, thus customers with low costs are more loyal than customers with high costs.
Based on the findings of this study it can be said that managers are misguided when trying to enhance competitive advantage by concentrating on IT-solutions. The study shows that business in finance sector is very people-centric, where the relationships are formed between persons. Companies should discover new ways to please and impact their customers’ emotions because that is the area, which gives back the lost bargaining power by raising their switching costs. There is also no room for service errors for it is the main reason why companies are losing customers, followed by core product failure and loss of trust.
© Joonas Mäntymaa, 2013. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.