A Structural Equations Approach to Assessing Alternative Service Quality Metrics within an Extended Service Quality, Customer Satisfaction, Customer Loyalty Model

Purpose – This study's aim is to contribute to the setting/industry specific metrics vs. the SERVQUAL metric debate by evaluating, against each other, two banking specific and two generic metrics in a banking setting. The study also revisits the causality of relationships between customer loyalty dimensions and the effects of customer satisfaction on the latter.Design/methodology/approach – The two stages, literature review and empirical survey, study drew evidence from Greek banking, through a specially designed research instrument. Data was analyzed under a structural equations approach. LISREL 8.72 was used for the analysis.Findings – Though generic, SERVQUAL outperformed all other metrics in terms of both grasping the particularities of the research setting and reflecting service quality's effects on its immediate derivatives: Customer Satisfaction and Customer Loyalty. The banking specific BANQUAL-R and BSQ metrics failed in all above respects. Customer Satisfaction's effects among Loyalty's dimensions were found unequal. The causality of relationships between Loyalty dimensions runs from Word-of-Mouth to Business Extension passing through Business Retention. Practical implications – SERVQUAL is as good as ever for providing reliable service quality measurement in banking. Proposed industry specific service quality metrics should be used with extreme caution. Customer satisfaction campaigns should better be targeted at attitudinal rather than behavioural loyalty. The proposed structural equations investigative framework is worth adopting.Originality/value – The originality/value of this study rests upon its unique Structural Equations modeling design of assessing alternative service quality metrics within an extended model also encompassing customer satisfaction and customer loyalty. To the best of the authors' knowledge no such study has been reported in the literature