Satisfied, loyal….and leaving? The effect of trust and commitment on consumer satisfaction and loyalty: a study of a non-bank deposit taker and retail banks in New Zealand

A primary concern amongst many organisations is to develop loyal consumers, and banks are no exception. With increasing competition from non-bank deposit takers and disruptive sources such as crowd funding, consumer choice is broadening and their bargaining power increasing. Consumer loyalty is becoming an even more important concern for banks future success. Based in relationship marketing and the New Zealand wider consumer retail banking market, this quantitative research study examines the effects dimensions of trust and commitment have on the relationship between customer satisfaction and loyalty. In pursuit of this understanding the research studies consumers holding debt securities in New Zealand banking and non-bank deposit taker sectors. A theoretical model of business to consumer relationship was developed drawing on research from the realms of organisational behaviour, social psychology and services marketing. The model was formed around the direct relationship between satisfaction and the construct dimensions true and spurious loyalty (Dick & Basu, 1994). Four additional construct dimensions, affective trust, cognitive trust, affective commitment and normative commitment reflect the extant literatures’ indicated effects within the satisfaction loyalty relationship (Morgan & Hunt, 1994, Harris & Goode, 2004). The overall model suggests consumer satisfaction leads to loyalty while the affective dimensions of trust and commitment determines the consumer’s level of true or spurious loyalty. Consistent with the model, twenty six hypotheses are developed. To add rigour, a competing model, extending the theoretical model by including a calculative dimension of commitment was developed from the relevant literature. Consistent with a positivist methodology, a questionnaire was developed and tested, data collected from 316 respondents and structural equation modelling used to test the theoretical and competing models. Construct validity and reliability, and measurement model convergent and discriminant validity were established. Path coefficients of the hypothesised relationships between latent variables represented in the theoretical model were determined and results presented. Finally, an independent samples t-test and Levene’s test for homogeneity was conducted to establish the difference between nonbank deposit taker and retail bank consumers in relation to trust, commitment, true loyalty and satisfaction. The results are significant as they indicate for all construct dimensions apart from calculative commitment, non-bank deposit takers displayed significantly higher scores than retail banks. Contrary to the literature the research results suggest calculative commitment is not a significant loyalty influencer in the New Zealand banking context and satisfaction has a positive rather than negative effect on spurious loyalty. The results indicate affective commitment is a significant influencer of true loyalty while the cognitive dimensions of trust and commitment negatively affect both loyalty dimensions. The impact on the bank marketing and operational practitioners is substantial as current marketing and business practices may be actually decreasing true consumer loyalty