The Impact of Service Quality, Customer Satisfaction and Loyalty Programs on Customer's Loyalty
IntroductionBanks play an important role in economic development of any country. They gather idle savings and transform them in investments. Banks facilitate the trade process of inside and outside of country. Banks play an important role in mobility of capital (Saini, 2014) In today's world organization can achieve success through its customers that is why if a company does not satisfy its customers than other companies may attract those customer by providing satisfaction. In banking sector if a bank does not provide satisfied services to its customers than other bank have chance to retain that customer by providing better service to that customer. This research focuses on finding the impact of service quality, customer satisfaction and loyalty programs on customer's loyalty in banking sector of Pakistan. Banking sector plays an important role in growth of economy of any nation because of its function of circulation of money .Many banks are working in Pakistan like public bank, foreign bank and private bank but main bank of Pakistan is known as State Bank of Pakistan which gives loans take deposits, make payments and withdrawal (Hafiz, 2012).Every firm wants to maximize its profit through cost minimization which leads to customer satisfaction. Customer satisfaction is important area of interest for both organization and researchers. For provision of customer satisfaction service sector need to improve on further elements that were given as reason for satisfaction. Customer satisfaction is an important factor to increase sales because satisfaction leads to customer reliability and repurchase decision (Agbor, 2011).Different type of banks perform different kind of functions according to their defined roles in memorandum of association and articles of association .Central bank is a government bank and monitors the banking activities of other banks. Agricultural bank fulfill the requirement of farmers by lending them and industrial banks helps the industrialist. Commercial banks directly interact with general public and have large network then others. Central bank of Pakistan tries to improve service quality and productivity of commercial banks because of their direct contact with public (Munusamy, 2009).The State Bank of Pakistan Act, 1956 governs the State Bank of Pakistan. State Bank of Pakistan is lender of last resort, issues currency note, manages public debt and foreign exchange, deals with international financial institution, supervision of financial institution and handling monetary policy (Sayeed Abbasi, 2015) Commercial, investment and Islamic banks are main source of financing to support performance of national economy. Banking sector in Pakistan has aimed to improve bank's performance, to provide quality services through technological transformation, to make reliability of financial institution, to minimize corruption by reducing the number of state owned banks and to provide stable capital market. To eliminate the inefficiencies of Pakistan economy, banks have to strengthen their financial performance which can be possible through service quality by improvement in services (Aurangzeb, 2012).A Bank can survive long through its customer satisfaction. Bank can attract the more customer through its service quality because mostly banks have same products to offer. Improved service quality offered by banks give them competitive advantage that leads to increase in market share, profit good will, new customers, retention of customers and reduce the market cost through publicity of old customers. Quality service also enhance the financial performance of banks (Mensah, 2010).Customer satisfaction has great importance because a single unsatisfied customer can reduce more your business than 10 satisfied customer. Mores satisfied customer leads you to more business. So customer satisfaction is used in Pakistan's banks as effective tool to get competitive advantage. In banking sector relationship between customer and offered services and products is element of great importance for customer satisfaction.