Explaining the role of customer engagement in creating value for the banking industry based on the perceived value and the value provided to the customer

Document Type : Research Paper

Authors

1 Ph.D. Student in Department of Management, Tabriz Branch, Islamic Azad University, Tabriz, Iran

2 Assistant Professor, Department of Management, Tabriz Branch, Islamic Azad University, Tabriz, Iran

3 Associate Professor, Faculty of Economics and Management, University of Tabriz. Tabriz, Iran

4 Associate Professor, Department of Management, Tabriz Branch, Islamic Azad University, Tabriz, Iran

10.22034/jbar.2023.14694.3668

Abstract

Introduction: The primary goal of sustainable businesses is to create superior value for customers and gain value from them. That is, to achieve success, companies need to create value for customers as they create their own values for the company. The co-creation of value is a form of marketing strategy or business strategy that underscores the perpetual creation and recognition of shared values of the company and customers. The main challenge facing companies in this field is to associate the value created for the customers with the perceived value of the customer. This ultimately leads to the customer's participation in value creation for the company. However, it poses a major challenge to marketers due to the nature of the service and its intangible characteristics, especially in the service sector. The main question raised and addressed in this paper is “Which type of value created by service companies can increase the customer's perceived value and ultimately provoke the customer's participation in value creation?”  The literature has explored the consequences of perceived value, mostly in the form of loyalty and word-of-mouth advertising, but the customer's participation in value creation for the company has scarcely been recognized as an outcome of the customer's perceived value. Given the research gap in this field, this research sets out to explain the role of customer participation in creating value for the banking industry based on the perceived value and the value presented to the customer.
Methodology : In this applied research, a causal method was adopted, and the data collection was conducted through a field survey. The statistical population consisted of the customers of Bank Maskan in the city of Tabriz of whom a sample of 955 customers filled out the research questionnaire. The study sample was selected using the available sampling method. The questionnaire was developed after a detailed review of numerous studies in the corresponding literature. A pre-test was administered based on the feedback of some bank managers and marketing professors, and some suggestions were finally proposed for the correction of the statements to ensure the compatibility of the items with the experimental results. All the research variables were measured on a 7-point Likert scale (completely disagree = 1 to completely agree = 7). The data were collected, tested and analyzed using the SPSS and Amos software programs.
Results and Discussion: In this research, data analysis was conducted at the descriptive level using statistical indicators to describe the demographic characteristics of the sample. Then, at the inferential level, the fit of measurement models was evaluated using "confirmatory factor analysis". Finally, to test the assumptions and investigate the relationships among the research variables, a two-step structural equation modeling approach was utilized. According to the results, the indicators demonstrated a desirable fit for the research model. The Chi-square value was 3.48, which is within the acceptable range (1 to 5), thus illustrating the good fit of the structural model. Moreover, since the RMSEA fit index (0.05) was less than 0.1, the model had a good fit. Other fitness indices were also within this acceptable range.
The results revealed that utilitarian and hedonistic values exert positive and significant effects on the perceived value of customers in Bank Maskan. An interesting finding was that the effect of the hedonic value on the perceived value eclipsed that of the utilitarian value. Considering the type of banking services, the opposite was expected. The customers’ perceived value had positive and significant effects on all the three dimensions of the customer engagement value (customer lifetime value, influence value, and customer knowledge value).
Conclusion: The present study demonstrated that customers desire to receive services with a greater perceived value. These customers are more likely to forge stronger relationships with banks and create value for banks through their cooperative behaviors. This study stressed the importance of utilizing value-based strategies, which transform the value of customers and relationships. Grounded in the banking industry, this study found that the experience and value presented to the customer in the form of utilitarian and hedonic values could increase the perceived value of the customer, thus helping to raise the level of the customer participation in creating value for the bank.
As suggested by the results of this study, customers, rather than being solely preoccupied with making profits in their transactions with the bank, look for social identity and the creation of a suitable emotional link with the bank. Providing such values (i.e., utilitarian and hedonistic values) by the bank plays a crucial role in the customer's perceived value. Moreover, the banks that offer a high perceived value can instigate further participation of customers through their social influence (e.g., introducing services to others), knowledge sharing (e.g., providing feedback and suggestions for performance improvement), customer referrals (e.g., referring a new customer to the bank) and expanded use of services and transactions. Engaging customers as a tactic would yield favorable results in marketing.

Keywords

References

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Journal of Business Administration Researches
Volume 14, Issue 29
December 2022
Pages 153-180

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