The Influence Of Product Quality And Service Quality On Loyalty Through The Satisfaction Of The Priority Savings Customer Of The XYZ Bank Of The Petisah Medan Sub -Branch Office

by ADMIN 178 views

The Influence of Product Quality and Service Quality on Loyalty through the Satisfaction of the Priority Savings Customer of the XYZ Bank of the Petisah Medan Sub-Branch Office

Introduction

The banking industry is one of the most important service sectors in the financial sector, playing a crucial role in collecting funds from the public and channeling them again. Bank XYZ Petisah Medan Sub-Branch Office has been striving to achieve the targets set by management, with a significant increase in the number of customers from 279 to 356 people in the period March 2018 to February 2019. However, a total of 48 customers withdrew funds from their savings accounts, and several others closed their accounts for a year. This phenomenon has a significant impact on the performance of Bank XYZ, prompting this study to investigate the cause of the decline in the number of priority savings customers.

The Importance of Product Quality and Service Quality in Customer Loyalty

Customer loyalty is a critical aspect of any business, and the banking industry is no exception. In the current digital era, where interbank competitions are getting tougher, efforts to improve the quality of products and services are essential. Product quality and service quality are two critical factors that influence customer loyalty. Product quality refers to the features and benefits of a product that meet or exceed customer expectations, while service quality refers to the level of service provided to customers, including responsiveness, empathy, and resolution of issues.

The Role of Customer Satisfaction as an Intermediate Variable

Customer satisfaction is a critical intermediate variable that links product quality and service quality to customer loyalty. When customers are satisfied with the products and services provided, they are more likely to be loyal to the bank. Customer satisfaction is influenced by various factors, including product features, service quality, and communication. In the context of Bank XYZ, customer satisfaction is a critical factor that determines customer loyalty.

Research Methodology

This study uses an analysis of the relationship between more than two variables to investigate the influence of product quality and service quality on customer loyalty. The research population includes all Bank XYZ bank customers at the Petisah Medan Branch Office, with samples taken using purposive sampling. The hypothesis testing tool used is Structural Equation Modeling (SEM) - Partial Least Square (PLS).

Results and Discussion

The first test results show that product quality has a positive influence on customer satisfaction, with P-values ​​of 0,000. Likewise, with the quality of service, which also has a significant effect on customer satisfaction with P-Values ​​0,000. Furthermore, customer satisfaction has proven to have a significant effect on customer loyalty. However, this study also found that product quality and service quality did not have a significant direct effect on customer loyalty, with P-values ​​of 0.413 and 0.057 respectively. This shows that although customers feel the satisfaction of the quality of products and services, it does not directly increase their loyalty.

The Importance of Improving Service Quality and Strengthening Customer Confidence

Customer loyalty is actually formed when customers are satisfied with the services provided. Therefore, it is very important for Bank XYZ to focus on improving service quality and strengthening customer confidence in the products offered. In creating satisfaction, banks need to make various efforts, such as employee training in customer service and improve communication about existing products, so that customers feel more comfortable and valued.

Conclusion

In conclusion, this study highlights the importance of product quality and service quality in influencing customer loyalty through customer satisfaction. The results of this study show that product quality and service quality have a significant effect on customer satisfaction, but not directly on customer loyalty. Therefore, Bank XYZ needs to focus on improving service quality and strengthening customer confidence in the products offered to increase customer loyalty. By doing so, Bank XYZ can prevent account closure and unwanted withdrawal of funds, ultimately achieving long-term success.

Recommendations

Based on the findings of this study, the following recommendations are made:

  1. Improve Service Quality: Bank XYZ should focus on improving service quality by providing responsive, empathetic, and effective customer service.
  2. Strengthen Customer Confidence: Bank XYZ should strengthen customer confidence in the products offered by providing clear and concise information about the products and services.
  3. Employee Training: Bank XYZ should provide employee training in customer service to ensure that employees are equipped to provide excellent customer service.
  4. Communication: Bank XYZ should improve communication about existing products and services to ensure that customers are aware of the products and services offered.

By implementing these recommendations, Bank XYZ can increase customer loyalty and ultimately achieve long-term success.

Limitations of the Study

This study has several limitations, including:

  1. Sample Size: The sample size of this study is relatively small, which may limit the generalizability of the findings.
  2. Data Collection: The data used in this study was collected through a survey, which may be subject to biases and limitations.
  3. Measurement Tools: The measurement tools used in this study may not be comprehensive or accurate, which may limit the validity of the findings.

Future Research Directions

Future research should focus on investigating the influence of product quality and service quality on customer loyalty in other contexts, such as retail banking or online banking. Additionally, future research should investigate the role of other factors, such as customer experience and customer engagement, in influencing customer loyalty.

References

  • [List of references cited in the study]

Appendix

  • [Appendix materials, including additional tables and figures]
    Frequently Asked Questions (FAQs) about the Influence of Product Quality and Service Quality on Loyalty through the Satisfaction of the Priority Savings Customer of the XYZ Bank of the Petisah Medan Sub-Branch Office

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the influence of product quality and service quality on customer loyalty through customer satisfaction, with a focus on the priority savings customers of the XYZ Bank of the Petisah Medan Sub-Branch Office.

Q: What is the significance of this study?

A: This study is significant because it highlights the importance of product quality and service quality in influencing customer loyalty, which is a critical aspect of any business, including banking. The findings of this study can be used by banks to improve their service quality and strengthen customer confidence in their products, ultimately leading to increased customer loyalty.

Q: What are the key findings of this study?

A: The key findings of this study are:

  1. Product quality has a positive influence on customer satisfaction.
  2. Service quality has a positive influence on customer satisfaction.
  3. Customer satisfaction has a significant effect on customer loyalty.
  4. Product quality and service quality do not have a significant direct effect on customer loyalty.

Q: What are the implications of this study?

A: The implications of this study are:

  1. Banks should focus on improving service quality to increase customer satisfaction and loyalty.
  2. Banks should strengthen customer confidence in their products by providing clear and concise information about the products and services.
  3. Employee training in customer service is essential to ensure that employees are equipped to provide excellent customer service.
  4. Communication about existing products and services is critical to ensure that customers are aware of the products and services offered.

Q: What are the limitations of this study?

A: The limitations of this study are:

  1. The sample size is relatively small, which may limit the generalizability of the findings.
  2. The data used in this study was collected through a survey, which may be subject to biases and limitations.
  3. The measurement tools used in this study may not be comprehensive or accurate, which may limit the validity of the findings.

Q: What are the future research directions?

A: Future research should focus on investigating the influence of product quality and service quality on customer loyalty in other contexts, such as retail banking or online banking. Additionally, future research should investigate the role of other factors, such as customer experience and customer engagement, in influencing customer loyalty.

Q: What are the practical implications of this study for banks?

A: The practical implications of this study for banks are:

  1. Improve service quality to increase customer satisfaction and loyalty.
  2. Strengthen customer confidence in their products by providing clear and concise information about the products and services.
  3. Provide employee training in customer service to ensure that employees are equipped to provide excellent customer service.
  4. Improve communication about existing products and services to ensure that customers are aware of the products and services offered.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are:

  1. The study highlights the importance of product quality and service quality in influencing customer loyalty.
  2. The study demonstrates the mediating role of customer satisfaction in the relationship between product quality and service quality and customer loyalty.
  3. The study contributes to the existing literature on customer loyalty and service quality.

Q: What are the managerial implications of this study?

A: The managerial implications of this study are:

  1. Managers should focus on improving service quality to increase customer satisfaction and loyalty.
  2. Managers should strengthen customer confidence in their products by providing clear and concise information about the products and services.
  3. Managers should provide employee training in customer service to ensure that employees are equipped to provide excellent customer service.
  4. Managers should improve communication about existing products and services to ensure that customers are aware of the products and services offered.