The effect of relational benefits on customer loyalty_ An empirical study of Vietnamese banking industry

UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

NGUYEN THI AI TRAN

THE EFFECT OF RELATIONAL
BENEFITS ON CUSTOMER
SATISFACTION AND CUSTOMER
LOYALTY: AN EMPIRICAL STUDY
OF VIETNAMESE BANKING
INDUSTRY

MASTER OF BUSINESS (Honours)

Ho Chi Minh City – Year 2014


UNIVERSITY OF ECONOMICS HO CHI MINH CITY
International School of Business
------------------------------

NGUYEN THI AI TRAN

THE EFFECT OF RELATIONAL
BENEFITS ON CUSTOMER
SATISFACTION AND CUSTOMER
LOYALTY: AN EMPIRICAL STUDY
OF VIETNAMESE BANKING
INDUSTRY

ID: 22110067

MASTER OF BUSINESS (Honours)
SUPERVISOR: DR. NGUYEN THI MAI TRANG

Ho Chi Minh City – Year 2014


TABLE OF CONTENTS
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENTS
LIST OF FIGURES
LIST OF TABLES
CHAPTER 1: INTRODUCTION .............................................................................................1
1.1 Research Background .................................................................................................................... 1
1.2 Research Objectives ....................................................................................................................... 5
1.3 Research Scope and Research Methodology ................................................................................... 5
1.4 Structure of The Research .............................................................................................................. 6

CHAPTER 2: LITERATURE REVIEW .................................................................................8
2.1 Customer Loyalty .......................................................................................................................... 8
2.2 Customer Satisfaction .................................................................................................................... 9
2.3 Relational Benefits....................................................................................................................... 10
2.4 The Conceptual Model and Hypotheses of The Research.............................................................. 14

CHAPTER 3: RESEARCH METHODOLOGY ................................................................... 17
3.1 Research Design .......................................................................................................................... 17
3.1.1 The Unit of Observation ........................................................................................................ 17
3.1.2 Measures of The Constructs .................................................................................................. 17

3.2 Questionnaire Design ................................................................................................................ 19
3.3 Data Procedure ............................................................................................................................ 22
3.3.1 Qualitative Research ............................................................................................................. 22
3.3.2 Quantitative Research ........................................................................................................... 22
3.4 Data Analysis Method .............................................................................................................. 26

CHAPTER 4: DATA ANALYSIS AND DISCUSSIONS ...................................................... 28


4.1 Descriptive Statistics of Samples .................................................................................................. 28
4.2 The Reliability Test: The Cronbach’s Alpha Test......................................................................... 29
4.3 Exploratory Factor Analysis (EFA) .............................................................................................. 33
4.4 Regression Analyses .................................................................................................................... 36
4.4.1 Simple Regression Analysis .................................................................................................. 36
4.4.2 Multiple Regression Analysis ................................................................................................ 38

CHAPTER 5: CONCLUSIONS, IMPLICATIONS, AND LIMITATIONS......................... 45
5.1 Conclusions ................................................................................................................................. 45
5.2 Managerial implications ............................................................................................................... 46
5.3 Limitations .................................................................................................................................. 49

REFERENCES ........................................................................................................................ 50
APPENDICES ......................................................................................................................... 54
Appendix A: Guidelines for in-depth interviews ................................................................... 54
Appendix B: Questionnaire In English .................................................................................. 56
Appendix C: Questionnaire In Vietnamese ............................................................................ 59
Appendix D: Total variance explained in Exploratory Factor Analysis ............................... 62
Appendix E: Histogram, Normal Regression & Scatter Plot of Dependent Variable:
Customer Satisfaction ............................................................................................................. 64

ACKNOWLEDGEMENT
I would like to give my gratefulness to my research instructor, Dr. Nguyen Thi Mai
Trang for her intensive support, valuable suggestions, instructions, and encouragement during
the time of doing my research.
I would like to express my deepest gratitude to Professor Nguyen Dong Phong, Professor
Nguyen Dinh Tho, Dr. Tran Ha Minh Quan for their valuable time as the members of the
proposal examination committee. Their comments and meaningful suggestions were contributed
great help for my completion of this research.
My sincere thanks are given to all of my teachers at International Business School –
University of Economics Ho Chi Minh City for their teaching and guidance during my MBA
course.
In addition, I would like to special express my thanks to all of my classmates, my
colleagues at Samsung Vina Insurance Company Limited and my friends who are working in
some banks in Ho Chi Minh City for their support and encouragement during the time I was
doing my research.


ABSTRACT
This study will examine the effect of relational benefits on customer satisfaction and
consequently, the influence of customer satisfaction on customer loyalty in Vietnamese banking
industry. Based on the theories and measurements of those factors existed in the current
liturature, and a qualitative research conducted in Vietnam, a model has been released following
measurement scale of those concepts. A quantitative research of 186 banking customers has been
done to evaluate the measurement scale and test the model.
The results of Cronbach’s alpha test show that the scale is satisfactory with the allowed
reliability and validity. It also can indicate that the theoretical model is suitable in Vietnam
banking industry and all hypotheses are accepted. For specific, the study shows that customer
satisfaction highly impacts on customer loyalty in Vietnamese banking industry. Moreover,
among relational benefits, special treatment benefits and confidence have positive impacts on

customer satisfaction, however, social benefits do not show the influence on customer
satisfaction. Besides, special treatment benefits also have been proved to have a strongest impact
on customer satisfaction.
In general, researching of the effects of these variables will support the banks’ managers
get thorough understanding of the effect of each relational benefits factors on customer
satisfaction, then, help them to identify which variables are the best predictors to customer
satisfaction to place emphasis on. Furthermore, the study also indicates that making customers
satisfied will remarkably affect to the loyalty of customers to the banks, which will help banks’
managers to release effective decisions to gain long-term loyal customers in such highly
competitive marketplace in Vietnam.


LIST OF FIGURES
Figure 2.1 Conceptual Model
Figure 3.1 Research Process
Figure E1 Histogram of Customer Satisfaction
Figure E2 Normal Plot of Customer Satisfaction
Figure E3 Scatter Plot of Customer Satisfaction


LIST OF TABLES
Table 3.1

The Result of Questionnaires Delivery

Table 4.1

Sample Characteristics

Table 4.2

Reliability Test Results

Table 4.3

KMO and Bartlett's Test of Independent Variables

Table 4.4

Rotated Component Matrix of Independent Variables

Table 4.5

KMO and Bartlett's Test of Dependent Variables

Table 4.6

Rotated Component Matrix of Dependent Variables

Table 4.7

Model Summary of Simple Regression Analysis

Table 4.8

ANOVA of simple regression analysis

Table 4.9

Coefficients of simple regression analysis

Table 4.10 Correlations matrix
Table 4.11 Model Summary of multiple regression analysis
Table 4.12 ANOVA of multiple regression analysis
Table 4.13 Coefficients of multiple regression analysis
Table 4.14 Summary of hypotheses testing result
Table D1

Total Variance Explained of Independent Variables

Table D2

Total Variance Explained of Dependent Variables

Table D3

Model Summary b of multiple regression analysis


CHAPTER 1: INTRODUCTION
1.1 Research Background

The globalization of economy has created an environment more competitive than ever in
Vietnam. All companies, with no exception in any industries, strive to differentiate themselves
from other rivals to get successful survival. In this perspective, customer loyalty has emerged as
an important aspect that most companies want to be strong at since it is considered as a
competitive advantage for all companies to achieve stable development.
Regarding services industry’s aspect, achieving loyalty of customers has become much
more important since the operation of service involves much on the interactions between service
providers and customers. In banking industry, for specific, achieving customer loyalty is a key to

help banks gain sustainable competitive advantage, retain customer, grow in sales, and gain longterm customers. Obviously, there are many factors affecting customer loyalty. Achieving
customer satisfaction is known as one of them, showing a positive impact on loyalty of customer
(Zeithaml, Berry, & Parasuraman, 1996; Fornel, Johnson, Anderson, Cha, & Bryan, 1996;
Selness, 1993). When customers are satisfied, they are more likely to return to those service
providers and when there is an increase in satisfaction level, they will stay loyal to those
companies (Anderson & Sullivan, 1993). Therefore, numerous studies have been conducted to
identify and measure the components of satisfaction. In Vietnam, some important factors
affecting customer satisfaction have already been investigated such as service quality (Vu &
Nguyen, 2008; Lam, 2012; Nguyen, 2013), service personal value (Pham & Le, 2010), brand
(Nguyen, 2013; Ngo, 2012)... However, little research in Vietnam has been devoted to
investigate the impact of relational benefits on customer satisfaction. Besides, in the world,


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relational benefits have been widely studied, also in banking industry (Arturo, David, & Agueda,
2007; Sergios, 2010; Maria-Eugenia, 2008), however, these studies have showed the impact of
relational benefits on customer satisfaction or directly on customer loyalty only, not indicated the
impact of relational benefits on customer satisfaction, and consequently the influence of
customer satisfaction on customer loyalty. Hence, to address the gaps as mentioned above, this
study aims to investigate the effect of relational benefits on customer satisfaction, and
consequently the influence of customer satisfaction on customer loyalty in Vietnamese banking
industry.
As opposed to the marketing management, relationship marketing tends to become a
flourishing field as well as a generalized alternative conception in marketing theory and practice
perspective (Berry, 1983). According to Kinard and Capella (2006), a fundamental condition
for a relationship to develop over time is that both the firm and the customer perceive
positive outcomes, or benefits. The benefits the banks receive include loyalty of customers, longterm profitability, and sales growth. What the customer gets is associated with the service itself
and/or with benefits that can develop from being a regular customer of the company – called
relational benefits (Gwinner, Gremler & Bitner, 1998; Reynolds & Beatty, 1999). Gwinner et al.

(1998) and Hennig-Thurau et al. (2002) reveal that service comprises of the two components:
core service and relationship, however, the relationship benefits framework focuses on the
relationship component and defines relational benefits as the value a customer receives over and
above the core service.


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Relational benefits include three types of benefits: confidence benefits, social benefits,
and special treatment benefits (Gwinner et al., 1998; Patterson & Smith, 2001; Hennig-Thurau,
Gwinner, & Gremler, 2002). Confidence benefits are considered as psychological factors related
to feelings of security, reduced anxiety, and trust in the service provider or the keeping of
promises by the service providers (Gro¨nroos, 1990; Bitner, 1995). Social benefits refer to the
establishment of personal relationships between customers and employees derived from longterm relationships (Czepiel, 1990). Special treatment benefits are the combination of economic
benefits and service customization that customers receive from developing relationships with
companies, those benefits in this type are discounts, time savings, and additional services not
available to other customers derived from the consideration of special customers (Peterson,
1995).
Achieving relational benefits becomes especially important when the service is complex,
of high involvement, customized and delivered over a continuous stream of transactions, like in
the case of financial services (Kinard & Capella, 2006). In Vietnam, the development of banking,
as a result of the global crisis, has showed a downward trend in recent years. According to Dinh
(2013), especially from 2011 to 2013, Vietnamese State bank had revealed the situation of some
weak banks, among that, three banks including Saigon Commercial Bank, Tin Nghia Bank,
FicomBank had been consolidated to Saigon Commercial Bank in late 2011, one bank, which
was Habubank, had been merged to Sagon Hanoi Bank (SHB) in Aug, 2012, Tienphong bank
had positively found the share from two companies to restructure itself in 2011, some others
including GPBank, Navibank, TrustBank, and Western Bank were also described as weak banks
and they were in process to restructure.

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Facing with this downward trend, many banks have showed their attempts by building
relational benefits to attract customers. In Asia Commercial Bank (ACB), for instance, the
application of core banking, in which the fragmented management system is switched to the
focused management system, is considered as a remarkable progress to allow all transactions can
be transferred to online banking transactions. This helps to bring convenience to customers by
accessing data and doing various transactions on the Internet. Besides, Viettinbank, whose
information security is put on top priority, has developed the overall safety security strategy to
attract customers. This modern system ensures that information security team who is in charge of
information security will continuously review and comply with the information security process
to form a continuous information security cycle for ViettinBank. Furthermore, some foreignowned banks like Standard Chartered Vietnam and Citi Bank Vietnam… have also continuously
released competitive offers to their priority banking service sector like offering direct priority
banking line, cash-back credit cards, discount policy to privileges…
These mentioned examples have indicated the attempts of banks in building relational
benefits to satisfy customers. However, as mentioned above, limited research has been done to
explore the effects of relational benefits on customer satisfaction and customer loyalty in
Vietnamese banking industry. As a result, this study aims to identify the factors among relational
benefits that significantly impact customer satisfaction and customer loyalty in Vietnamese
banking industry.


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1.2 Research Objectives
The overall objective of this research is to examine the effect of relational benefits on
customer satisfaction, consequently, the influence of customer satisfaction on customer loyalty.
Specifically, it investigates:


The relationship between customer satisfaction and customer loyalty.



The relationship between confidence benefits and customer satisfaction.



The relationship between social benefits and customer satisfaction.



The relationship between special treatment benefits and customer satisfaction.

1.3 Research Scope and Research Methodology
Ho Chi Minh City has been chosen to conduct survey for the study as it is known as one
of the biggest cities as well as the economic center of Vietnam. Respondents chosen are those
who are term deposit customers because they are believed to have used variety of banking
services, which vary from direct banking, debit card, online banking…when they get term
deposit with banks. Besides, they are also willing to spend time responding to questionnaires.
The study is conducted through two steps. The first step is conducted with qualitative
research by an in-depth interview with 8 respondents. The second step is done with quantitative
research by direct interview with 200 respondents at term deposit service banking counters.
SPSS is used as the main analysis tool to process the data and to implement the study,
which is included conducting the Cronbach’s Alpha Analysis to test the reliability of
measurement scale, Exploratory Factor Analysis (EFA) to test the validity of measurement


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scale, simple regression and multiple regression to evaluate the relationships among factors in
the research model. The research only approaches relational benefits as factors affecting
satisfaction and hence, fostering loyalty, other factors concerning customer satisfaction are
eliminated in this study.
1.4 Structure of The Research
The study includes five chapters:
Chapter 1: Introduction
This chapter presents research background, research problems, research objectives, research
methodology, and research scope of study.
Chapter 2: Literature Review and Hypotheses
The author provides the literature review of customer loyalty, customer satisfaction, and
relational benefits (confidence benefits, social benefits, and special treatment benefits). The
conceptual model as well as the hypotheses of the study is also established in this chapter.
Chapter 3: Research Methodology
The chapter displays the research design, research methodology, research process based on the
information mentioned on chapter 1 and chapter 2.
Chapter 4: Data Analysis and Data Results
This chapter presents the characteristics of research samples and the results of Cronbach’s alpha
analysis, EFA analysis, multiple regression, and simple regression analysis. The final model of
the research is built based on the results of those analyses.


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Chapter 5: Conclusions, Implications, and Limitations
Chapter 5 displays the conclusions, implications, and limitations of the study following the
results analyzed in the above chapters.

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CHAPTER 2: LITERATURE REVIEW
This chapter represents literature and theories of the concepts in the research model,
which have been conducted by many studies related to those concepts in the world. At first, the
theory of customer loyalty and customer satisfaction has been displayed following by the
hypotheses proposed. After that, relational benefits are defined along with its components
including confidence benefits, social benefits, and special treatment benefits. The hypotheses of
relational benefits have been proposed based on the findings in previous studies. Finally, the
research model has been established and the relationships hypothesized among these constructs
are also displayed.
2.1 Customer Loyalty
Customer loyalty is defined by Oliver, Rust, and Varki (1997) as a commitment formed
for being a steady customer or purchasing again in the future for the preferred product or service
regardless of the marketing efforts or situational effects. Bitner (1990) describes loyalty as a
process, in which, at the end of the process, satisfaction has effects to perceived quality, which
could cause loyalty and intention to certain behavior. Gremler and Brown (1996) also offer one
definition of customer loyalty concerning to the purpose of this study, which is the degree a
customer exhibits repeated purchasing behavior from a service provider, possesses a positive
attitudinal disposition towards the provider, and considers using only this provider when a need
for this service exists.
Regarding the characteristics of loyal customers, the results of many studies have been
proposed. Dick and Basu (1994) claims that loyal customers are less motivated to search for


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alternatives, more resistant to counter persuasion from other brand and more likely to pass along
positive word-of-mouth communication about the service to other consumers. According to
Peterson (1995), loyal customers contribute huge amounts of revenue and demand less time and

attention which makes them as an important asset of a company. Furthermore, Bowen, and Chen
(2001) find that there is a positive correlation between loyal customer and profitability. There are
many factors affecting customer loyalty, one of those can be told is customer satisfaction, since
customers are satisfied, they are more likely to return to those service providers while
dissatisfied customers go elsewhere (Anderson & Sullivan, 1993).
2.2 Customer Satisfaction
Customer satisfaction is considered as a very useful metric in managing and monitoring
businesses. Although customer satisfaction has been discussed widely in research literature, no
single definition of it has been agreed on by researchers. However, a considerable amount of
studies on this field has been conducted and gives deep insights on customer satisfaction from
variety of views. Regarding services marketing’s perspective; satisfaction is defined as a
cognitive-based phenomenon (Westbrook, 1987). Cognition has been studied mainly in terms of
the expectations paradigm, which states that expectations originate from the customer’s beliefs
about the level of performance that a product or a service would provide, and consumers are
satisfied when their purchase results exceed their expectations (Oliver, 1980).
Homburg, Koschate, and Hoyer (2006) also recognize that the affect of experience during
the acquisition and consumption of the product or service can also significantly influence on
satisfaction judgments, each experience creates an evaluation and an accompanying emotional


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reaction on the customer. In their study, Lewis and Soureli (2006) point out that consumer
satisfaction can be evaluated by how satisfied the customers are with the frontline employees, the
core service or the organization in general. This is also the reason why many different researches
have built various dimensions in order to measure the level of consumer satisfaction more
accurately. Besides, customer satisfaction is also the key and value outcome of good marketing
practices (Greenland & Looney, 2007).
It can be referred that although customer satisfaction can be perceived with different
perspectives, its objective is to bring about development to company such as higher future

profitability, provide referrals to other customers, and more of the companies’ product and
service used. Numerous studies have been done and validated the influence of customer
satisfaction on customer loyalty (Zeithaml et al., 1996; Fornel et al., 1996; Selness, 1993). As a
result, following previous studies, the researcher anticipates that customer satisfaction will
positively affect customer loyalty. The following hypothesis is proposed:
Hypothesis 1: Customer satisfaction has a positive effect on customer loyalty.
2.3 Relational Benefits
A relational – as opposed to transactional – exchange exists when this exchange is
characterized by emotional and social bonds between the partners, such as trust and commitment,
when it involves regular, long-term interactions and communication between the parties and is
based on shared benefits and burdens (Berry, 1983).
Relational benefits are known as the result of the establishment of long-lasting
relationships with the service provider (Gwinner et al., 1998; Hennig-Thurau et al., 2002).


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According to Sergios (2010), the initial in-depth evidence on the nature of relational benefits
comes from two qualitative studies during the late 1990s. A first qualitative study was conducted
by Beatty et al. (1996) on relationship between customers and sales associates in a fashion retail
chain, based on the interviews with customers and sales associates, as well as on observations. It
is concluded that three key elements which motivate customers to develop and enhance the
relationship with the sales assistants are trust, friendship, and functionality. Trust is based on
sales assistants’ ability to solve customer problems honestly and skillfully. Friendship represents
the social aspect of the relationship and results in a better understanding of the customers’ needs.
Functionality implies the benefits of a convenient, hassle-free shopping, mainly based on the
help of the sales assistant in finding exactly what the customer needs with no waste of time.
After that, a second quantitative research was conducted by Gwinner et al. (1998) with
300 customers in three service categories. The result of this study validates three types of
relational benefits including confidence benefits, which reduced anxiety and knowing what to

expect, social benefits which is understood as personal recognition of customers, familiarity with
employees, and friendship, and finally, special treatment benefits which are described as price
discounts, faster service, and customized services.
Empirical studies that followed early work have been based on the typology of Gwinner
et al. (1998) and have validated the three types of relational benefits including social,
confidence, and special treatment in various service contexts (Hennig-Thurau et al., 2002;
Kinard & Capella, 2006). Confidence benefits are considered as psychological factors related to
feelings of security, reduced anxiety, and trust in the service provider or the keeping of promises


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by the service providers (Gro¨nroos, 1990; Bitner, 1995). Social benefits refer to the
establishment of personal relationships between customers and employees derived from longterm relationships (Czepiel, 1990). Special treatment benefits are the combination of economic
benefits and service customization that customers receive from developing relationships with
companies, those benefits in this type are discounts, time savings, and additional services not
available to other customers derived from the consideration of special customers (Peterson,
1995).
Regardless of the service type, confidence benefits have been found to be the most
important type of benefits (Gwinner et al., 1998), and its effect on loyalty primarily occurs
through satisfaction (Hennig-Thurau et al., 2002). In addition, Beatty et al. (1996) also affirms
that these benefits received by customers can be classified in two main categories: functional and
social benefits. Functional benefits include confidence benefits and special treatment benefits.
Social benefits consist of the social benefits.
Confidence benefits is mentioned as the first component in relational benefits, which are
described as a detailed combination of psychological benefits in relation to trust in the marketer,
reduction in perceived operation risks and a decrease in anxiety. In another definition,
confidence benefits refer to psychological factors related to feelings of security, reduced anxiety,
and trust in the service provider or the keeping of promises by the provider (Gronroos, 1990;
Bitner, 1995). Gwinner et al.(1998) in his study states that regardless of the service type,

confidence benefits have been found to be the most important type of relation benefits in


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face-to-face encounters and it plays a positive impact on customer satisfaction. Hence, the first
hypothesis is formulated:
Hypothesis 2: Confidence benefits have a positive effect on customer satisfaction.
The second component of relational benefits is social benefits, which are defined by
benefits of a social nature which adopt the form of personal recognition by employees in direct
dealings, or the forging of links and social relationships, which are gratifying for the customer.
On the other hand, social benefits include enjoying a personal relationship with the service
providers. Although Henning-Thurau et al. (2002) could not find a positive relationship between
social benefits and satisfaction, however, it is reasonable to claim that social benefits would have
a positive influence on satisfaction even though these benefits tend to focus more on relationships
than results. Reynolds and Beatty (1999) also explains that this is due to the importance
attributed by customers to social interaction with financial frontline employees more than to any
other relational benefits. As a result, the following hypothesis has been proposed:
Hypothesis 3: Social benefits have a positive effect on customer satisfaction.
The last component of relational benefits is special treatment benefits, which consist of
an extensive range of benefits or economic advantages which come in the form of first-rate
levels of service, preferential treatment, special operation conditions, and time saving. This type
of benefits is the principal motivation for the customer to develop a long term relationship with
the service providers. Following Peterson (1995), money savings is the main motivation for
engaging in relational exchanges. Hence, there are discounts, time savings, and additional
services not available to other customers derived from the consideration of special customers. In


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the study, Reynolds and Beatty (1999) reveals that the special treatment provided by a financial
service provider can be perceived as a part of the overall service, so that this benefit will increase
customer satisfaction. Thus, the following hypothesis is developed:
Hypothesis 4: Special treatment benefits have a positive effect on customer satisfaction.
As stated by Marzo, Pedraja, and Rivera (2004), both the firms and the customers in a
relationship must get benefit to continue this relationship over time. In banking industry, these
types of benefits are very relevant because banking is an environment where customers and
employees contact in a highly personal level (Arturo et al, 2007). It is believed that these benefits
make the customers more satisfied to the employees who provides the service and to the bank as
a whole. Hence, it has been indicated that relational benefits have their place in the research
streams of service marketing management.
Based on the reviews of some related literature and hypotheses developed, the
following model is proposed (see Figure 2.1)
2.4 The Conceptual Model and Hypotheses of The Research
The conceptual framework is presented in Figure 2.1 and is consisted of four hypotheses
from H1 to H4. H1 indicates that customer satisfaction has an impact on customer loyalty. The
group factors from H2 to H4 are independent and quantitative variables, which have influence on
customer satisfaction. The below conceptual framework is used as the foundation for this
research project:


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H2

Confidence Benefits

H3
Customer
satisfaction

Social Benefits

Special Treatment
Benefits

H1

Customer loyalty

H4

Figure 2.1 Conceptual Model
Although service quality is the biggest factor affecting customer satisfaction (Clemes, Gan and
Ren, 2011), we put it out of the model to focus on the effect of relational benefits.
There are total four hypotheses developed in this research:
H1: Customer satisfaction has a positive effect on customer loyalty.
H2: Confidence benefits have a positive effect on customer satisfaction.
H3: Social benefits have a positive effect on customer satisfaction.
H4: Special treatment benefits have a positive effect on customer satisfaction.
In summary, this chapter presents theoretical background of the concepts in the model.
Based on literature review, customer satisfaction influences customer loyalty. Besides, customer
satisfaction is also impacted by relational benefits, including confidence benefits, social benefits,


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and special treatment benefits. Moreover, those concepts are chosen to set up the model because
these relationships have already been investigated and tested in many studies in the world in
previous time. This study has been conducted to investigate these relationships in Vietnam

context, banking industry for specific. The next chapter will present the methodology, which is
used to analyze the data and tested hypotheses of the research model.


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CHAPTER 3: RESEARCH METHODOLOGY
This chapter displays a research methodology to conduct this study. In the first part,
research design is presented with unit of observation and measure of constructs, then,
measurement scales are presented to develop questionnaire. After that, the questionnaire design
is described to explore the structure and content of the questionnaire. The data procedure
displays the qualitative research and the quantitative research of the study. Finally, the data
process method is presented on the methods used to process the data.
3.1 Research Design
3.1.1 The Unit of Observation
The study objective is to investigate the effect of relational benefits on customer
satisfaction, and customer loyalty in the Vietnamese banking industry so that the bank’s
customer, term deposit service customer for specific, is the unit of observation. The banks are
allocated with various kinds of banks in Ho Chi Minh City including: Joint Stock
Commercial Bank, Wholly Foreign –Owned Bank, Foreign Banks’ s Branch.
3.1.2 Measures of The Constructs
The scale of the study was established based on the theory and the scales which had been
used many researchers on their studies before. The scale was mostly based on the scale of
Maria–Eugenia, Irene, and Gloria (2008), Li-Wei (2009), Anderson and Sullivan (1993).


Customer Loyalty was measured by five items borrowed from the scale of Anderson and
Sullivan (1993).