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7.3.6 Bank Success

So what is the effective added value in controlling customer satisfaction and customer loyalty? Customer satisfaction and loyalty have long been decisive for company success, well before the digital age (Anderson et al. 1994; Homburg and Rudolph 1997). The added value can be defined from the perspective of the customer and of the bank—the basis for a relationship between equals.

From the customers' perspective, their behaviour—if they are satisfied— changes in various different aspects. Satisfied customers—who at the same time are loyal customers—repeatedly purchase the same product, or a different product from the same provider (Anderson and Sullivan 1993).[1] They have low price sensitivity (Reichheld 1996), a higher fault tolerance, and contribute to product development (Braunstein 2001).

Successful customer loyalty is also reflected in the communication behaviour of the customer. Satisfied customers are more willing to communicate the advantages of the product to other interested parties. If the recommendation quota of loyal customers increases, this makes acquiring new customers easier. For their part, new customers who have been acquired via recommendations tend to display a more loyal behaviour than those acquired, for example, via an advertising campaign (Huber et al. 2006) (Fig. 7.10).

The behaviour of satisfied customers has various positive effects on bank success. The turnover of the bank increases as a result of the repeated sales of the same or different products (cross-selling) to existing customers (Huber et al. 2006). Banks can better estimate the creditworthiness of their existing customers—which

Fig. 7.10 Behaviour of satisfied bank customers (Source Own illustration)

Fig. 7.11 Influence of satisfied bank customers on the bank success (Source Own illustration)

Fig. 7.12 Customer satisfaction and company value (Source Matzler and Stahl 2002, p. 49)

decreases risks and the information costs of providing loans. Investment recommendations can also be optimised, because there is a broader information base and investment history, compared to new customers. Due to their lower price sensitivity, existing customers are also less receptive to cheaper competing offers. Finally, innovation risk can also be minimised by involving customers in product development at an early stage, while at the same time the innovation potential is raised due to the innovative capabilities of the customers (Fig. 7.11).

Realising all of this potential can lead to an increase in company value. Matzler and Stahl presented in detail the influence of customer satisfaction on cash flow, and thus on the value of the company (Matzler and Stahl 2002). There is no explicit mention of customer loyalty as a concept, but it is contained at least implicitly in the subject of repeat purchases and cross-selling (Fig. 7.12).

  • [1] Numerous empirical studies show the positive effect of customer loyalty on a company's success (Bahradwaj 1996; Butz and Goodstein 1995; Kalwani and Narayandas 1995).
 
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