Measurement of Customer Satisfaction using Servqual at Indian Bank, Vellore

Rahul Dixit
and
Dr. Bhushan D Sudhakar Professor, VIT University

Abstract

Purpose:-

The paper aims to explore the five key dimensions of service quality (Servqual) –
Reliability, Responsiveness, Assurance, Empathy, Tangibles at Indian Bank and help in the
Measurement of Customer Satisfaction using the Servqual model developed by A. Parasuraman,
Valarie A. Zeithaml, and Leonard Berry.

Design/methodology/approach:-

The paper is based on the Servqual model developed by A. Parasuraman, Valarie A.

Zeithaml, and Leonard Berry. The Servqual scale constructed to measure customer perceptions
and expectations. It is a 44 item scale, out of which 22 items records customer expectations and
22 items records customer perceptions. The five Servqual key dimensions are Reliability,
Responsiveness, Assurance, and Empathy. The present study consists of a sample of 200 actual
customers of Indian bank, Vellore, comprising two branches 1) VIT branch and 2) Sathuvachari
branch. The data is collected from these two branches of Indian Bank at Vellore with sample size
of hundred at each branch. For this study, Descriptive Research Design is used where the data
is collected through the questionnaire. The information is gathered from the different customers
of the Indian bank.

To determine the customer satisfaction level, the following methodology are used

• Primary data

• Secondary data

The primary data are obtained through interviewing 200 account holders of different profession
& age group. 100 from each branch of Indian bank (Vellore Institute of Technology,
Sathuvachari).Interviewing are conducted using a structured questionnaire containing 22
questions representing the five dimensions of customer satisfaction measurement.

Five key dimensions of service quality — SERVQUAL

➢ Reliability

➢ Responsiveness

➢ Assurance

➢ Empathy

➢ Tangibles

The secondary data are collected from published literature, journals, company information (web
links), other related sources, etc.

Findings:-

The Findings shows the mean & standard deviation scores of each dimension of customer
satisfaction level along with the aggregate score of all dimensions.

Aggregate Customer Satisfaction Level score of Indian Bank is 5.47 which indicate highly
satisfied customers, Moreover, Indian Bank has established a strong position in terms of
Assurance, Tangibility & Responsiveness with a average Servqual score of 5.5(Assurance),
5.5(Tangibility) and 5.75(Responsiveness) and needs improvement in terms of Reliability and
Empathy with lower scores of 5.2(Reliability) and 5.4(Empathy).

There is a positive correlation between each dimensions of Servqual. The present study
contributes to the satisfaction level of the customers by examining the dimensionality of the
Servqual.

Research Limitations/Implications:-

The report has been conducted within a limited time frame. The study is self financed. Only
selected Branches in Vellore have been considered for the study. Samples were selected
conveniently. The sample size does not represent the total population. Further research in this
paper should examine the reliability and empathy variables which are very low.

Practical implications:-

The paper shows that reliability and empathy are major concern in the customer satisfaction
level. If these two dimensions are improved then the satisfaction level would increase and there
would be an equal score for every Servqual dimension.

Keywords:-

Indian Bank, Customer Satisfaction, Servqual, Vellore, VIT, Sathuvachari, Assurance,

Reliability Responsiveness, Empathy, Tangibility, Score.

Paper type: - Research Paper

Introduction:-

The banking industry in India seems to be unaffected from the global financial crises which
started from U.S in the last quarter of 2008. Despite the fallout and nationalization of banks
across developed economies, banks in India seems to be on the strong fundamental base and
seems to be well insulated from the financial turbulence emerging from the western economies.
The Indian banking industry is well placed as compare to their banking industries western
counterparts which are depending upon government bailout and stimulus packages.

The strong economic growth in the past, low defaulter ratio, absence of complex financial
products, regular intervention by central bank, proactive adjustment of monetary policy and so
called close banking culture has favored the banking industry in India in recent global financial
turmoil.

Customer satisfaction, a business term, is a measure of how products and services supplied by a
company meet or surpass customer expectation. It is seen as a key performance indicator within
business and is part of the four perspectives of a Balanced Scorecard. In a competitive
marketplace where businesses compete for customers, customer satisfaction is seen as a key
differentiator and increasingly has become a key element of business strategy.

Customers in Vellore no longer want to wait in long queues and spend hours in banking
transactions. This change in customer attitude has gone hand in hand with the development of
ATMs, phone and net banking along with availability of service right at the customer's doorstep.
With the emergence of universal banking, banks aim to provide all banking product and service
offering less than one roof and their endeavor is to be customer centric.

With the emergence of economic reforms in world in general and in India in particular, private
banks have come up in a big way with prime emphasis on technical and customer focused issue.

HYPOTHESES:-

H0: There is no significance difference between age and servqual variables

H01: There is no significant difference between Indian bank desks employees are neat appearing
to the materials associated with the service.

H02: There is no significant difference between Indian Bank performs the service right the first
time to Indian bank provides its service at the time it promises to do so.
H03: There is no significant difference between Employees in Indian bank always willing to help
to the employees in Indian bank are never too busy to respond to your request

H04: There is no significant difference between Indian bank operating hours to the employees of
Indian bank understanding specific needs

Measurement

The study instrument includes 22 questions regarding customer expectations and 22 questions
regarding customer perceptions. The gap between them is very less. Seven point likert scale is
used with 1 = strongly disagree to 7 = strongly agree.

The average scores are calculated separately and then aggregate scores are generated. It is 5.47
which is positive sign regarding customers satisfaction level.

CALCULATIONS TO OBTAIN UNWEIGHTED SERVQUAL SCORE

Average Tangible SERVQUAL score ________5.5________

Average Reliability SERVQUAL score ________5.2________

Average Responsiveness SERVQUAL score ________5.75_______

Average Assurance SERVQUAL score ________ 5.5_______

Average Empathy SERVQUAL score _________5.4_______

TOTAL 27.35

AVERAGE (= Total / 5) UNWEIGHTED SERVQUAL SCORE __________5.47________

Results: - correlation between Servqual variables

 Symmetric Measures

Asymp. Approx.
a b
Value Std. Error Approx. T Sig.
Interval by Interval Pearson's c
.381 .089 5.802 .000
R
Ordinal by Ordinal Spearman c
.259 .066 3.770 .000
Correlation
N of Valid Cases
200

a. Not assuming the null hypothesis.

b. Using the asymptotic standard error assuming the null hypothesis.
c. Based on normal approximation.

There is a positive correlation between Indian bank modern looking equipment to Indian bank’s
physical facilities is visually appealing, since the value is 0.381 which is in between 0 and 0.5.

Symmetric Measures

Asymp. Approx.
a b
Value Std. Error Approx. T Sig.
Interval by Interval Pearson's c
.256 .072 3.733 .000
R
Ordinal by Ordinal Spearman c
.198 .069 2.850 .005
Correlation
N of Valid Cases
200

a. Not assuming the null hypothesis.

b. Using the asymptotic standard error assuming the null hypothesis.
c. Based on normal approximation.

There is a positive correlation between Indian bank sincere interest in solving problem to its
promises to do something by a certain time, since the value is 0.256 which is in between 0 and
0.5.

Chi-square tests:-
H01: There is no significant difference between Indian bank desks employees are neat appearing
to the materials associated with the service

C
hi-Squa
reTe
sts

Asym p
.
Sig
.
Va
lue d
f (2
-sid
e d
)
P ea rso n a
4
3.4
04 1
6 .0
00
C hi-S q ua re
Like lihoo dR atio 2
5.7
60 1
6 .0
58
Line a r-by-Linear
.3
17 1 .5
73
A sso ciation
No fV alid
2
00
C ase s
a
. 1
3cells(52.0
% )h
avee xpe
cte
dco un
t lessth
an
5
.Th
em in
imum e
xpectedcou
nt is.04.

Reject Ho1: There is a significant difference between Indian bank desks employees are neat
appearing to the materials associated with the service

H02: There is no significant difference between Indian Bank performs the service right the first
time to Indian bank provides its service at the time it promises to do so
C
hi-S
qua
reT
ests

Asym p
.
Sig.
V
alu
e d
f (2
-sid
e d
)
Pea rs on a
2
88.4
13 3
0 .0
00
Chi-S q ua re
L
ike lihoo dR atio 5
7.0
42 3
0 .0
02
L
ine a r-by -L
inear
9
.06
0 1 .0
03
Ass o ciation
No fV alid
2
00
Cas e s
a
. 3
0cells(71.4
% )h
avee xpe
cte
dc oun
tlessth
an
5
.Th
em in
imum e
xpectedcou
nt is.01
.

Reject Ho2: There is a significant difference between Indian bank performs the service right the
first time to Indian bank provides its service at the time it promises to do so.

Conclusion:-
Customer satisfaction is an important theoretical as well as practical issue for most marketers and
consumer researchers. Customer satisfaction is increasingly becoming a corporate goal as more
and more companies strive for quality in their products and services. Customer satisfaction is the
feeling or attitude of a customer towards a product or service after it has been used and is
generally described as the full meeting of one's expectations. Customer satisfaction is a major
outcome of marketing activity whereby it serves as a link between the various stages of
consumer buying behavior.

The main contention of the study is to highlight the customer satisfaction through service quality
provided by the Indian Bank, Vellore. Another contention is to demonstrate the performance of
each dimension of the servqual variables.

Customer satisfaction level should be measured based on the customer’s perception of the
services offered & received. Customer perception of the services offered & received is a
significant determinant of Customer Satisfaction measurement. This perception may be
developed from past or present experience. The Findings shows the mean & standard deviation
scores of each dimension of customer satisfaction level along with the aggregate score of all
dimensions.

Aggregate Customer Satisfaction Level score of Indian Bank is 5.47 which indicate highly
satisfied customers, where satisfactory level is considered in between 5.00 to 5.50.

Moreover, Indian Bank has established a strong position in terms of Assurance, Tangibility &
Responsiveness, indicating that customers of Indian Bank are very much reliable on the services
it provides. Overall the customers have expressed positive perception in terms of Reliability and
Empathy.

References:-
Websites

➢ www.indianbanksassociation.org
 ➢ www.indian-bank.com

➢ www.wikipedia.com

➢ www.researchandmarket.com

Books and Journals

➢ Parasuraman, A., Zeithaml, V.A. and Berry, L.L. (1994), "Reassessment of expectations
as a comparison standard in measuring service quality: implications for future research",
Journal of Marketing, Vol. 58, pp. 111-124.

➢ Interrogating SERVQUAL: a critical assessment of service quality measurement in a

high street retail bank, Karin Newman, Professor, Middlesex University Business School,
London, UK

➢ Lovelock, Cristopher, 2001, service Marketing: People, Technology, Strategy, 4the

Edition, Prentic Hall

➢ Jha, S. M. 2000, Bank Marketing Millennium Edition, Mumbai: Himalaya

➢ Bitner, MJ, and AR Hubbert, 1994, "Encounter Satisfaction versus overall Satisfaction
versus Quality", in Rust, R T and Oliver, R L (Eds), Service Quality: New Directions in
Theory and Practice, London: Sage

➢ Oliver, R L, 1980, "Cognitive Model of the Antecedents and Consequences of

satisfaction Decisions", Journal of marketing Research, Vol. 17, No, pp 460-9

➢ A. Parasuraman, Valarie A. Zeithaml, and Leonard Berry, SERVQUAL: A Multiple

Item Scale for Measuring Customer Perceptions of Service Quality, Journal of Retailing
64 (1988).

➢ Anne M. Smith, "Measuring Service Quality: Is SERVQUAL Now Redundant?" Journal

of Marketing Management (Jan/Feb/Aril 1955) pp 257-276