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According to Kotler et al. (1999), marketing is a process of profitably distributing customer satisfaction. In this context, they indicate “The goal of marketing is to attract new customers by promising superior value and to keep current customers by delivering satisfaction.” This definition of marketing emphasizes the importance of customer satisfaction. Ahmed and Amir (2011) indicate customer satisfaction as a measure of supplying products and services by a company to meet or surpass customer expectation. Therefore, customer satisfaction is the key differentiator as well as the key strategic measure to overcome competitors’ business strategies. As customer satisfaction is the key business performance indicator in a competitive environment, satisfying and delighting customers has become important in the process of marketing. Hence, this study mainly focuses on customer satisfaction in the service industry, particularly banking sector.
Zeithaml and Bitner (2003) argue that satisfying customers in service organizations leads to repeat purchase, customer loyalty, and customer retention which in turn results in gaining profit and revenue growth. Klaus and Marie (2006) suggest that in these service organizations, banks become the major financial service providers. Thus, commercial banks are the service establishments authorized by governments to accept deposits, pay interest, clear cheques, make loans, act as intermediaries in financial transactions and provide other financial services to their customers. These banks utilize various tools and mechanisms to satisfy their customers to retain them in their operations in the competitive environment.
In a service organization, customer satisfaction is created through marketing mix: 4Ps, viz., product, price, place and promotion; expanded 3Ps, viz., people, process and physical evidence (Zeithaml and Bitner, 2003; and Neilson and Chadha, 2008); and service quality dimensions, viz., reliability, responsiveness, assurance, empathy and tangibility (Levesque and McDougall, 1996; Yavas et al., 1997; Bloemer et al., 1998; Wang et al., 2003; Zeithaml and Bitner, 2003; Arasli et al., 2005; and Cristobal et al., 2007). Though these studies indicate many factors for creating customer satisfaction, this empirical investigation mainly focuses on exploring the roles of physical evidence and employee interaction in creating customer satisfaction in the banking sector in the northern part of Batticaloa District, Sri Lanka.
The study makes an attempt to compare and explore the level of customer satisfaction in terms of physical evidence and employee interaction between Earlier Established Banks (EEB) (Bank of Ceylon and People’s Bank—before 2008) and Newly Established Banks (NEB) (Sampath Bank and Commercial Bank—after 2008) in the region. The results indicate that all the banks have the attribute of high level customer satisfaction with the bank service provided in terms of physical evidence and employee interaction. This is consistent with the indicators considered for this study for each of the dimensions (physical evidence is measured by exterior appearance, interior appearance and other tangibles; and employee interaction by customer-employee relationship, emotions of employees and service recovery by employees). Further analysis confirms that there is a difference in the service being provided and the layout of physical evidence between EEB and NEB in creating customer satisfaction.
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