Satisfaction and trust on customer loyalty: a PLS approach

Purpose – The purpose of this paper is to test some antecedents and outcomes of satisfaction in the banking sector in Malaysia. Design/methodology/approach – A research model based on the customer satisfaction index (CSI) was developed and tested using structural equation modeling technique with the use of partial least squares (PLS) approach. Data was analyzed using 239 bank customer responses. Findings – The results showed that satisfaction has a positive effect on trust and this trust leads to loyalty to the bank. Good complaint handling by banks will also elevate satisfaction, trust and loyalty. Research limitations/implications – This work contributes to the existing literature on CSI models by introducing customer satisfaction as an antecedent of trust. The findings are limited by the constraints of the number of measures and the participation of banks in this study. Practical implications – Banks should focus on building credibility trust and benevolence trust with their customers. Commercial service is of the utmost importance, and hence banks should develop strategies and train officers in delivering efficient communication and administrative service, as this will elevate customer satisfaction. Social implications – This work contributes to the understanding of customer behavior, needs and preferences, which can help banks to improve customer satisfaction, trust and loyalty. Originality/value – This paper adds to the existing literature on service satisfaction antecedents and outcomes in a developing country setting. Although there has been some research works on the same issue, their number has been very small in comparison to the literature appearing based on developed countries.