A Study on Customer Satisfaction in Banking Industry in Sri Lanka
CHAPTER 1
INTRODUCTION
World class companies have taken more market share by providing notably better customer service. Executives know that to stand out in a crowded field of competitors, customer service is a very critical component in achieving and maintaining a high level of customer satisfaction. When pressures move the organization to meet only performance goals and measurements such as overhead absorption, shipping dollar targets, labour efficiency, purchase price variance and the like, however, customer service often takes a back seat to these other concerns. The result can be a plunge in customer satisfaction and ultimately, if allowed to continue, erosion in market shares. Because of globalization, internationalization, technical innovations, law deregulations, and market saturation, the current situation of the banking industry is changing. The intensity of competition increases due to new products and services as well as the entrance of competitors from other industries, such as the so-called non- and near-banks. Even more, the continuously growing educational standard as well as better opportunities to gather information induce enormous changes in customer behavior. Thus, competition for customers becomes more difficult and, considering the growing intensity of competition, the major banks’ need for sustained competitive advantage increases Organisations often think the way to measure customer satisfaction is to examine the number of customer complaints. The problems with this method is that it is reactive, it only responds (if at all) after the event and it does not really measure satisfaction only dissatisfaction. Monitoring complaint levels does not really tell if the customers are any more or less satisfied with the product or service. For example, consider how many times you have been dissatisfied with a product or service - say once a month. Now how many times have you written to complain - possibly once or twice or maybe
INTRODUCTION
World class companies have taken more market share by providing notably better customer service. Executives know that to stand out in a crowded field of competitors, customer service is a very critical component in achieving and maintaining a high level of customer satisfaction. When pressures move the organization to meet only performance goals and measurements such as overhead absorption, shipping dollar targets, labour efficiency, purchase price variance and the like, however, customer service often takes a back seat to these other concerns. The result can be a plunge in customer satisfaction and ultimately, if allowed to continue, erosion in market shares. Because of globalization, internationalization, technical innovations, law deregulations, and market saturation, the current situation of the banking industry is changing. The intensity of competition increases due to new products and services as well as the entrance of competitors from other industries, such as the so-called non- and near-banks. Even more, the continuously growing educational standard as well as better opportunities to gather information induce enormous changes in customer behavior. Thus, competition for customers becomes more difficult and, considering the growing intensity of competition, the major banks’ need for sustained competitive advantage increases Organisations often think the way to measure customer satisfaction is to examine the number of customer complaints. The problems with this method is that it is reactive, it only responds (if at all) after the event and it does not really measure satisfaction only dissatisfaction. Monitoring complaint levels does not really tell if the customers are any more or less satisfied with the product or service. For example, consider how many times you have been dissatisfied with a product or service - say once a month. Now how many times have you written to complain - possibly once or twice or maybe