Relationship versus customer experience quality as determinants of relationship quality and relational outcomes for Kuwaiti retail banks

Abstract

Purpose The purpose of this paper is to investigate the extent to which customer experience and relationship marketing (RM), as two widely used service management approaches, can effectively determine satisfaction and commitment as two relational quality constructs, and their impact on loyalty and word-of-mouth (WoM) as relational outcomes for retail bank services in Kuwait. This country is chosen as an exemplar of an Arabian Peninsula culture with a predominantly Islamic heritage and a capital-surplus economy. Design/methodology/approach The relational benefits scale and customer experience quality were used as independent measures to collect data using multiple methods (interview, paper and pencil, online) from 1,013 customers of local and international banks. Standard translation procedures, CFA procedures and parallel analysis were employed to examine the dimensionality of all scales. SEM procedures were applied for each approach to assess its impact on the four indigenous dependent constructs using a multitude of fit indices, examination of validity and reliability measures for all constructs as well as structural paths. Findings Results show the factor structure of both scales differed from their original conceptualization, with fewer items forming each latent factor when applied in Kuwait. The explanatory and predictive power of the EXQ model performed slightly better than RBS, although both explained substantial variance on dependent measures, confirming their relevance despite the lack of noticeable correlation between most factors contained in both scales. Research limitations/implications This study underscores the importance of establishing the validity of measures prior to their cross-cultural application, with particular focus on the content validity of scale items to measure the intended construct properly. It also shows how two approaches can complement each other rather than compete to effectively manage bank services. As is the case with all cross-sectional research paradigms, longitudinal analysis linking expressed loyalty/WoM with actual behavior can better assess tested relationships than the current research. Practical implications Retail banks’ marketing strategy should simultaneously address customer relationships and customer experience to reduce attrition and enhance customer life-time value. Originality/value Effects of service experience and RM are examined in a Middle-Eastern market, where internationalization of banks has created strong competition, leading customers to view bank services as less differentiated. Caution and examination of service quality measures are needed before using them as metrics in annual reports and performance reviews.