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Factor Effects Customer Switching Behavior in Banks by Adnan Tariq Alvi(ciit/FA13-MSMS-009/lhr)

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Now a dayís bank should have critical strategy to develop profitable and long-term relationship with its customer and profitability closely associated with loyalty of customers. New technology has an impact on the behavior of the customer. Customerís way to purchase the financial products and their Banking preference is change. Bank management should know the factor which cause switching. Researchers investigate a combination of several factor and strategy to reduce the negative effect and increase long term relationship with customers. Now we talk about the factors which affect the customer switching behavior and also talk about the effect of customer switching on the bank. Bank face low profit, low share of market due to customer switching, new cost incurred to build new customer. Major factors of Asian customer bank switching are service failures, pricing, inconvenience .But overall there are 7 factors which discuses below.
Price: Price directly effect on customer satisfaction, sometime people perceived unfavorable price. When their customer percept that this bank charge unfavorable price from them. Then they switch to another bank. High the unfavorable price higher will be the switching behavior Reputation: If customer is not satisfied with the reputation of the bank then also switching behavior is high.
Service Quality: If the bank provides high service quality then switching behavior is low
Effective advertising competition: If the competition is high and banks have effective competition than its competitor then customer switching behavior is low
Distance: Distance is also very important factor in switching behavior of customer .Now a days it didnít matter for young people but traditional people always weight age this factor to switch from one to another bank. If customer thinks that the bank distance is favorable then also switching behavior is low Switching cost:
Demographic characteristics: High income people and student also switch from one bank to another. First of all researchers develop questionnaire it had three sections in first section questions is on the customer switch the bank last three year.
How Customer Switching Cost Minimize
Increase in bank competitions banks must fallow the customer oriented strategies. Price should be include minimum interest rate, high deposited rate. Second is service quality bank management not shall only focus on the range of product but also focus on the people who deliver that products to customers. Third is reputation management should use relationship marketing approach, honest communication, win the customer trust. Effective advertising competition customer understands the offering and also the process. Distance some people still think that the face to face communication is better so bank should have favorable distance from its potential customers. Involuntary switching can be prevent the loss by the electronic media. Young people and high income people should be retain by special benefits and superior services benefits.

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