SME banking loyalty (and disloyalty): a qualitative study in Hong Kong

Regan Lam · Suzan Burton

150 citations0/0 files storedInternational Journal of Bank Marketing

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Customer Service Quality and Loyalty Banking Sector Performance and Management Customer churn and segmentation

Abstract

Purpose To investigate the extent of loyalty, and the reasons underlying banking behaviour by business customers from the small to medium enterprise (SME) sector in Hong Kong, and to thereby contribute to a better understanding of the drivers of customer loyalty. Design/methodology/approach A total of 32 in‐depth qualitative interviews were carried out with decision makers from SMEs in Hong Kong. Content analysis was employed to analyze the interview data. Findings In contrast with earlier studies on banks' share of wallet in the SME segment in the USA and Australia, a lack of loyalty or “disloyalty” appears to be the norm within this sector in Hong Kong. Perceived service quality and the length of business relationship appear to have strong associations with loyalty behaviour, in terms of customers' willingness to continue to use a bank and/or to recommend the bank to others. Research limitations/implications Since the study is qualitative, a larger empirical study would be useful to attempt to replicate our results in this and other geographic markets. Practical implications The results suggest that the Hong Kong SME market is characterized by high level of disloyalty, and that attaining 100 per cent loyalty from this group of customers will be very difficult. Instead, a banking strategy that focuses on service and on developing a sustained relationship with the customer may have the greatest chance of maximising the share‐of‐wallet of SME customers. The study offers important marketing implications for banks which are operating, or are planning to operate, business banking in Hong Kong and comparable Asian markets. Originality/value It is the first paper to study the incidence of, and reasons underlying, SME banking loyalty in an Asian market. It shows that disloyalty appears to be the norm in this sector, presenting a reminder to managers and researchers that customer loyalty may be the exception, rather than the norm.

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References

1979Prospect Theory: An Analysis of Decision under Risk 1988Prospect theory: An analysis of decision under risk 1984Content Analysis: An Introduction to its Methodology.1985A Conceptual Model of Service Quality and Its Implications for Future Research 1996The Behavioral Consequences of Service Quality 1987Developing Buyer-Seller Relationships 2013Handbook of Social Psychology 1994Customer Loyalty: Toward an Integrated Conceptual Framework

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