Author(s)

H. Chi, Y. Zhang & J.-J. Wang

Abstract

Customer Relationship Management (CRM) enjoys increasing attention since customers are known to be of pivotal importance to the long-term profitability and development of enterprises as well as commercial banks. With the competition among banks being more and more severe, customers’ loyalty has become the decisive factor of a bank’s profitability, as an increase in customer retention rate can be very profitable. In this paper, a structural equation model (SEM) is used to research into the measurement of customer loyalty and the factors that influence it. Based on an American Customer Satisfaction Index (ACSI) model, this model takes into consideration Chinese commercial banks’ specific situations and improves the latent variables, manifest variables and the structure of the ACSI model. Then a partial least squares (PLS) approach is adopted to estimate the parameters in SEM. By using this model, further analysis can be conducted. A numerical example has been offered with the data deriving from a practical survey of a Chinese commercial bank. The results of the example have been analyzed and corresponding measures can be taken to improve services, thus increasing customer loyalty. Keywords: customer loyalty, structural equation model (SEM), partial least squares (PLS) estimation procedure. 1 Introduction Since China entered the World Trade Organization (WTO) in the year 2001, the opening pace of the Chinese financial industry has been much quicker. As a part

Keywords

customer loyalty, structural equation model (SEM), partial least squares (PLS) estimation procedure.