LV Thạc sỹ_Customer satisfaction for brokerage service at VNS securities company

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ACKNOWLEDGEMENT

A work of this nature could not have been produced without assistant of some sort. I
wish to therefore acknowledge a few people and institution that helped in
realization of this research work.
First and foremost, I extend my gratitude to PhD …...

Last but not least, I would like to express my deep gratitude to my family who
provide continuous supports to me during my learning process and the course
of this research study


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ABREVIATIONS

VNSC: VNS Securities Company
HNX: Hanoi Stock Exchange
SERVQUAL: Service Quality
SSI: Saigon Securities Incorporate
SERVPERF: Service Performance
HoabinhSC: Hoa Binh Securities Company
PSI: Petrol Securities Company
FPTS: FPT Securities Company
SHS: Saigon – Hanoi Securities Company


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LIST OF FIGURES


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LIST OF TABLES

Table 4.1 Correlations matrix showing relationship amongst the various variables 39
Table 4.2: Model Summary(b).................................................................................40
Table 4.3: ANOVA(b)..............................................................................................40
Table 4.4: Coefficients(a)........................................................................................41


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TABLE OF CONTENT


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EXECUTIVE SUMMARY

Customer satisfaction is increasingly recognized as a main pillar for success in the
business environment and also the key to survive. It is necessary for the company to
satisfy customer in order to capture market share and improve profitability. In other
word, customer satisfaction helps the company to keep current customer and attract
more clients. Thanks to that, the company’s profit may increase.
The objectives of this research are to overview VNS Securities Company’s
brokerage service, investigate customer satisfaction on brokerage service and find
out what factors affecting to customer satisfaction and give recommendations and

solutions to improve customer satisfaction on VNSC’s brokerage service.
The search methodology is divided into two main parts. In the first part, literature
review of the satisfaction and attributes affecting satisfaction was conducted in
order to get better understanding of customer management and apply an appropriate
customer satisfaction measurement model in the case of VNS. In the second part,
data for analysis is collected through two sources: primary data from in depthinterview and survey; secondary data from newspaper, internet, VNSC’s internal
reports.
In depth-interview was conducted with some customers and staffs from brokerage
department. As for customer survey, a questionnaire was designed and sent out to
sample of 200 respondents in Hanoi. The quantitative analysis was taken by
applying SERVPERF model. Excel and SPSS software packages were used as the
tool for statistical analysis.
Result of quantitative and qualitative analyses are interesting and useful for
improving customer satisfaction in VNSC’s brokerage service. Main findings are as
below:
-

Customer satisfaction was mainly affected by five component of service
quality. In which responsiveness has the highest impact (0.328), next was


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reliability (0.305). The lowest effect was assurance component (0.153).
Empathy and tangible also were concerned by customers with beta
coefficient of 0.253 and 0.156 respectively
-

Customers felt satisfied with only reliability component (4.18) and gave
neutral marks for other ones. It meant that they were not really satisfied with

tangible, responsiveness, assurance and empathy.

-

Total customer satisfaction at the company’s brokerage service was not high
(3.83). Due to some the following reasons:
 The company’s equipments and facilities are not really modern.
 The company has not enough equipment to serve investors.
 Employees do not wear uniform when dealing with customers.
 Website’s information is insufficient and not updated.
 Extra services have no difference and do not meet customers’
requirements.
 Employees are lack of working skills and not really good at
communication. Moreover, they do not have enough professional
knowledge to consult customers.
 ...

According to analyzed results, the author gave some recommendations for the
company to solve its problems.
-

Improve professional qualification and soft skills of staffs through training
courses.

-

Periodic assessment on staffs, changing the way of recruitment, etc.

-

Other recommendations include restructure the Company, recruitment, apply
ISO.


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The recommendations help the company survive the competition, retain
customers and in the long run increase profitability.


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Chapter 1

INTRODUCTION

1.1 Rationale
Brokerage service plays a very important role for any securities company,
especially with small and medium securities companies, when their main
activity is brokerage service. Fee from this activity brings main income for the
companies and makes up to 50% or more for turnover of the companies.
VNS is a medium size company, with total charter capital of 160 billions
Vietnam Dong. Like other small and medium securities companies, turnover
from brokerage service hold a large proportion in the Company’s income.
According to the data from Accounting Department over last years, turnover
from this activity contributed up to 60% to the Company’s turnover. In other
word, it is the main force brings the main profit for the Company.
Besides, customers can assess the Company via quality of brokerage service
through some activities such as investment consultancy, serving attitude of
brokers, information system for trading online…

Moreover, the competiveness in Vietnam stock market is more and more severe.
In 2000, the number of securities companies was 5, and this number has risen
every year, but in slow pace in period from 2000 to 2005, just 14 companies at
the end of 2005 with total amount of trading accounts about 31,316 accounts.
Until the end of 2006, with exploration of Vietnam stock market, State
Securities Commission of Vietnam received much more application for
establishing securities company. The result was the numbers of companies has
risen up to 64 in 2007 and currently is more than 100. Due to the high level of
competition, VNS Company is losing existing customers to their rivals as the
result of successful attempts to entice customers away thanks to their better
service quality. At the same time, dissatisfaction drives customers away and the
fact is that 20% of the Company’s customers are leaving each year.


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This is really a considerable number. It reflects that service quality of VNSC has
not met the expectation of customers. Therefore it is necessary for the Company
to improve its service quality especially in brokerage service to satisfy
customers much more since satisfying the customers not only help VNSC keep
current customers, but also help the Company draw potential customers due to
word-of-mouth advertising from current customers. Those customers are really
happy with service quality of the company will tell others, so when someone has
an intention to open an account, he or she will think of the company.
With the important roles of satisfying customers in both creating loyalty and
drawing new customers in order to create profits for the Company, I have
decided to choose the topic “Customer satisfaction for Brokerage service at VNS
Securities Company”
1.2. Objectives
VNSC as has recently faced more and more difficulties in attracting new

customers as well as keep current customers due to growing competition from
rivals who give preferential policies and better condition for customers.
Moreover, the Company is confronting with the fact that high proportion of
customers leaving each year. Therefore, this research is carried out to analyze
the current practices to satisfy VNSC’s customers, the factors that effect
customer satisfaction and to find out solutions to raise more satisfaction for
creating customer loyalty.
The specific objectives of the thesis are as followed:
 Finding dimensions that affect customer satisfaction
 Analysis and assess the customer satisfaction on VNSC’s brokerage
service
 Recommendations in order to improve customer satisfaction for the
Company.


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1.3. Research questions
- What are the key drivers of customer satisfaction on brokerage service?
- What did VNSC do to satisfy the customers?
- How did the customers satisfy with VNSC’s brokerage service?
- How to improve the customer satisfaction?
1.4. Research Methodology
1.4.1 Research process
Figure 1.1: Research process
Theory:
Customer satisfaction
SERVPEF Model

Building

questionnaires

Initial Service
quality attributes

Final attributes
to measure

Identify samples and
scale

Interview

Send survey to
customers

Collect response and
analyze

Collect response and run
statistical model

Initial survey

Adjustment

Findings &
recommendations

Source: Designed by author

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1.4.2 Source of data
The data including secondary data and primary data will be collected as below:
Secondary data is obtained through all sources as news paper, journals, website,
annual reports, and review, so on.
The author has used questionnaire survey with customers and in-depth interview
with staffs in related departments in order to collect primary data. The objective
of questionnaire survey is to obtain customers’ feeling and assessment about
VNSC’s service quality. The results from in-depth interviews were noted and to
complement for survey.
1.4.3 Research method
In order to reach objectives to serve the researching process, both qualitative and
quantitative methods are applied.
The quantitative method used in this study is the questionnaire survey with the
sample size of 200 customers, in there:
-

Number of current customers: 150

-

Number of customers who has leaved VNSC: 50

The questionnaires are designed with its base is SERVPERF concept. A total of
22 attributes were categorized under five dimensions as below:
-

Tangibles (6 attributes)

-

Reliability (5 attributes)

-

Responsiveness (4 attributes)

-

Assurance (4 attributes)

-

Empathy (4 attributes)

A five-point Likert’s scale ranging from dissatisfied (=1) to very satisfied (=5),
was used to measure the 22 attributes under five dimensions above.


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The main purpose of survey by questionnaire is to determine customers’
perception to the performance of brokerage service, also to understand further
about the customer’s needs and how they satisfy with the Company’s brokerage
service.
Qualitative method is in-depth interviews that were conducted with VNS’s
customers and staffs. Number of customers and staffs for interviewing will be 20

and 10 respectively. Information selected from interviews will supplement the
design of questionnaires and findings gained from questionnaire survey.
1.4.4 Data analysis
We use both quantitative and qualitative approaches in our analysis. However
we focus more on quantitative methods. According to Creswell (1994),
quantitative research focuses on examining a problem based on testing a theory
and analysing it using statistical techniques. In order to investigate the
hypothesised relationships in this study, we employ statistical techniques using
correlation, and regression analyses. All measurements were at 5% level of
significance. We also made use of descriptive statistics as well such as averages
and frequencies using Statistical Package for the Social Sciences (SPSS) version
11.5.
Further in data analysis, the author treated the Likert’s measurements as interval
data making use of parametric statistics. Hence the author applied Pearson’s
correlation coefficient which is a parametric measure of correlation rather than
spearman ranked correlation which does not assume normality in the distribution
of data.
Data extracted from questionnaire was encoded and cleaned, then would be
processed through below three steps:
 The reliability of each variable was assessed through Cronbach Alpha
coefficient. Any variable has item-total correlation lower than 0.4 (<0.4)
would be abstracted. And scale will be accepted when Cronbach Alpha
coefficient meet requirement (>0.7)


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 Explore Factor Analysis (EFA) was used to test the discrimination value of
variables. Variable has Factor loading smaller than 0.4 (<0.4) will be
abstracted. Extraction method applied is Principle Component Analysis with

varimax method, eigenvalue is higher than 0.1 (>0.1). Scale is accepted when
Total extracted-variance exceeds 50%
 Testing research model by Linear Regression Method with significant of 5%.
1.5. Scope of research
Subject: The research was conducted with focus on assessing customer
satisfaction on VNSC’s brokerage service.
Customers: The thesis focuses on clients with contract duration of 12months and
above. Most of them are customers of Trading Division.
Employees: the thesis focuses mainly on staffs of Trading Division No.1, No.2
and No.3, Transaction Division who contact directly with customers
Both of customers and employees were researched belong to VNSC head office
in Hanoi.
1.6. Research structure
Chapter 1: Introduction
Provide an introduction including the rationale of the research, objectives,
research methodologies, scope of the research and structure of research report.
Chapter 2: Theoretical Background
Provides theoretical background of satisfaction, definition and measurement of
satisfaction.
Chapter 3: Overview of VNS Securities Company
Provides overview of the Company, organization structure, services,
performance and overview the company’s brokerage service.
Chapter 4: Customer Satisfaction at VNS’s Brokerage Service
Figure out factors that make the customer feel satisfied based on attributes of
service quality and based on customers’ view.
Analysis factors that effects the customers’ satisfaction.
Chapter 5: Recommendations to improve to improve customer satisfaction
on VNSC’ brokerage service

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Chapter 2
THEORETICAL BACKGROUND ON CUSTOMER SATISFACTION
OF BROKERAGE SERVICE

2.1 Brokerage service
2.1.1 Definition of brokerage service
In the broadest sense, brokerage activities in the field of securities include
activities such as marketing, securities investment consultancy, signed a contract
to provide customer service, open securities accounts for customers, receive
customer's purchase order, payment and settlement transactions, providing
certificates of securities. In narrow meaning, a securities brokerage service is a
stock trading activity in which the security company is on behalf of client to
conduct all transaction through the trading mechanism on the Stock Exchange,
or OTC market that the customer will be responsible for the results of
transaction. Brokers just carry out transactions as customer’s orders and enjoy
the service fee, they are not at risk from such transactions.
Brokerage is also understood as a representative - on behalf of customers to buy
or sell a certain stock.
In general, brokerage is an activity where the company acts as an intermediary
to sell and buy shares on behalf of the company’s customers. Beside there, duty
in brokerage service includes collecting and valuating information both on
domestic or foreign stocks market, government bonds, information about
economy... on that basis, gives appropriate advice to customers
2.1.2 Characteristics of brokerage service
Brokerage service is like any other services which have below characteristics:


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Intangibility
Services are activities performed by the provider, unlike physical products they
cannot be seen, tasted, felt, heard or smelt before they are consumed. Since,
services are not tangibles, they do not have features that appeal to the customers
senses, their evaluation, unlike goods, is not possible before actual purchase and
consumption. The marketer of service cannot rely on product-based clues that
the buyer generally employs in alternative evaluation prior to purchase. So, as a
result of this, the services are not known to the customer before they take them.
Inseparability
Production and consumption of many services are inseparable e.g. delivering a
lecture. Quality in services often occurs during service delivery whereas quality
in products is usually engineered at the manufacturing plant and delivered intact
to the customer. Unlike goods producers, service providers do not have the
benefit of a factory serving as a buffer between production and consumption.
Service customers are often in the service factory, observing and evaluation the
production process as they experience the services.
Perish ability
Services are deeds, performance or act whose consumption take place
simultaneously; they tend to perish the absence of consumption. Hence, services
cannot be stored. The services go waste if they are not consumed simultaneously
i.e. value of service exists at the point when it is required.
The perishable character of services adds to the service marketers problems. The
inability of service sector to regulate supply with the changes in demand; poses
many quality management problems.
Variability
Brokerage services, as performances are difficult for customers to evaluate prior
to purchase. The criteria customers use to evaluate service quality may be more
difficult for the Company to comprehend. How customers evaluate investment

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services offered by a stockbroker is more complicated and varied than how they
evaluate trouser materials. The only criteria that count in evaluating service
quality are defined by customers. Service-quality perceptions stem from how
well a provider perform customers’ expectations about how the provider should
perform.
Simultaneity
The fact that brokerage services are created and consumed simultaneously and,
thus, cannot be stored is a critical feature in the management of services. This
inability to inventory services precludes using the traditional manufacturing
strategy of relying on inventory as a buffer to absorb fluctuations in demand.
The simultaneous production and consumption in services also eliminates many
opportunities for quality-control intervention. A product can be inspected before
delivery, but services must rely on other measures to ensure the quality of
services delivered. Customers’ presence in these facilities and their participation
in the service process expose them to errors.
2.2 Customer Satisfaction in brokerage service
2.2.1 Definition of customer satisfaction
Customer satisfaction is increasingly recognized as a main pillar for success in
the business environment and also the key to survive. Organization has to know
how satisfied customers feel. Due to that, the word “satisfaction” is central to
many definitions and in marketing context, it is used to have many “specific”
meanings. Anders Gustafsson, Michael D.Johnson, & Inger Roos (2005) brought
customer satisfaction definition as a customer’s overall evaluation of date. This
satisfaction has positive influences on retaining customers among different
variety of services and products. In service enterprise, service quality directly
affects customer satisfaction.
Kotler (2007) interpreted “Satisfaction as a person's feelings of pleasure or

disappointment resulting from comparing a product's perceived performance (or
outcome) in relation to his or her expectations”


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Brown (1992): The state in which customer needs, wants and expectations
throughout the product or service's life are met or exceeded resulting in repeat
purchase, loyalty and favorable worth-of mouth.
Bruhn (2003): Customer satisfaction is an experience-based assessment made by
the customer of how far his own expectations about the individual characteristics
or the overall functionality of the services obtained from the provider have been
fulfilled.
In general, satisfaction is the degree of emotional states from comparison of
perception gained from the products and services with expectation. And
satisfaction level is a function of the difference between perception and
expectations
S (satisfaction) = P (perception) - E (expectation)
Relationship between S, P, E is a determinant factor in all aspects of service. If
the perceived performance is less than expectations, the customer will be
dissatisfied. On the other hand, if the perceived performance exceeds
expectations, the customer will be satisfied, highly satisfied or delighted.
Otherwise, if the perceived expectations are met with performance, customers
are in an indifferent or neutral stage.
2.2.2 Attributes of customer satisfaction for brokerage service
2.2.2.1 Tangible attributes
Tangible include the physical evidence of the company where supplies services.
It involves: Physical facilities, Appearance of personnel, Office is equipped with
modern facilities
As for brokerage service, Tangible attributes include:

 The company has modern-looking equipment
 The company’s physical facilities are visually attractive
 Employees are neat in appearance


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 Adequate facilities for customers
 Website: easy to access, updated information
2.2.2.2 Reliability attributes
Reliability: involves consistency of performance and dependability. It means
that the firm performs the service right the first time. It also means that the firm
honours its promises. Specifically it involves:
-

Keeping records correctly

-

Performing the service at the designated time

As for brokerage service, Reliability attributes include:
 Keep promised words
 Sincere interest in solving a customer’s problem
 Perform the service right the first time
 Provide services at the time being promised to do so
 Insist on error-free record
2.2.2.3 Assurance attributes
Assurance: The knowledge and courtesy of employees and their ability to
convey trust and confidence:

-

Making customer feel safe in their transactions.

-

Employees who are consistently in courteous

-

Employees who have the knowledge to answer customer question

As for brokerage service, Assurance attributes include
 The behaviour of employees will instil confidence in customer
 Customer will feel safe in their transaction
 Employee will be consistently courteous with customers


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 Employee will have knowledge to answer customers’ question
2.2.2.4 Responsiveness attributes
Responsiveness shows the willing to help customers and to provide prompt
service of the company as well as its staffs. Responsiveness includes:
-

Giving prompt service

-

Willing to help customer

-

Readiness to respond to customer’s request

As for brokerage service, responsiveness attributes include:
 Tell customers when exactly services will be performed
 Give prompt service to customers
 Be willing to help customers
 Never be too busy to respond to customers’ request
2.2.2.5 Empathy attributes
Empathy involves the provision of caring, individualized attention to customers.
It means:
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Giving customers individual attention

-

Employees who understand the need of their customers

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Convenient business hours

As for brokerage service, empathy attributes include:
 Give customers individual care and attention
 Have operating hours convenient to all customers
 Have employees who give customers personal attention

 Have the customers’ best interest at heat
 Understand customers’ specific needs


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2.2.3 Factors influence on customer satisfaction for brokerage service
Service quality
Service quality is defined in different ways depending on the research
objectives. Understanding service quality is the basis for implementing measures
to improve the quality of brokerage service. Therefore, it is not only important in
establishing development targets but also orienting the company how to promote
its strength at the best. Service quality can be understood through its
characteristics. Overall, service quality includes the following features:


Outstanding feature

For customers, quality of service is expressed via its outstanding feature
compared to their other services. This preeminent helps quality of service to
become a competitive advantage of service providers. The assessment of the
superior service quality is influenced greatly by customers’ perception. This
relationship has great significance for evaluating the quality of service from
customers in marketing research activities and customer satisfaction.
 Specific feature
Quality service includes the most core and quintessential value that essential in
creating the specific feature of products and services. Therefore, service or
product of high quality will contain more many "outstanding features" than low
quality of services. This distinction is associated with tangible or intangible
identifying remarkable attributes of products and services. Thanks to this

characteristic, customer can identify the Company’s quality of service different
from that of its competitors. However, it is really difficult in define the core
features of the service fully and accurately in practice. As a result, this feature
has no absolute value but only relatively one to help knowing the quality of
services in specific cases easier.


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

Demand fulfilment

Purpose of service is to fulfil customer’s needs. Therefore, a service of quality
must have ability to meet customer’s demand and consider their requirements
as a basis for improving its quality. If customers feel that service does not fulfil
their needs, they will satisfy with the quality of service they were offered. In the
business environment nowadays, this feature becomes more important than ever
for any service provider. Because they must always pay attention to and try their
best to meet customer’s needs.
2.3 Customer satisfaction assessing model for brokerage service
2.3.1 Kano Model of customer satisfaction
Professor Kano discovered Kano Model to determine customer satisfaction
based on four identifiers: threshold attributes, performance attributes, and
excitement attributes and indifferent attributes. These identifiers can be used to
measure customer satisfaction of a product as well as services.
A competitive product meets basic attributes, maximises performances
attributes, and includes as many “excitement” attributes as possible at a cost the
market can bear.
Threshold Attributes

Threshold (or basic) attributes are the expected attributes or “musts” of a
product, and do not provide an opportunity for product differentiation.
Increasing the performance of these attributes provides diminishing returns in
terms of customer satisfaction, however the absence or poor performance of
these attributes results in extreme customer dissatisfaction.
Threshold attributes are not typically captured in QFDs (Quality Function
Deployment) or other evaluation tools as products are not rated on the degree to
which a threshold attribute is met, the attribute is either satisfied or not.


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Performance Attributes
Performance attributes are those for which more is generally better, and will
improve customer satisfaction. Conversely, an absent or weak performance
attribute reduces customer satisfaction. Of the needs customers verbalise, most
will fall into the category of performance attributes. These attributes will form
the weighted needs against which product concepts will be evaluated. The price
for which customer is willing to pay for a product is closely tied to performance
attributes.
Excitement Attributes
Excitement attributes are unspoken and unexpected by customers but can result
in high levels of customer satisfaction, however their absence does not lead to
dissatisfaction. Excitement attributes often satisfy latent needs – real needs of
which customers are currently unaware. In a competitive marketplace where
manufacturers’ products provide similar performance, providing excitement
attributes that address “unknown needs” can provide a competitive advantage.
Although they have followed the typical evolution to a performance then a
threshold attribute, cup holders were initially excitement attributes.
Indifferent Attributes

Products often have attributes that cannot be classified according to the Kano
Model. These attributes are often of little or no consequence to the customer, and
do not factor into consumer decisions.


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Figure 2.1: Kano Model of customer satisfaction

Source: Kano (1984)
2.3.2 Customer satisfaction Index
Customer satisfaction Index include the factors or variables, each factor is
composed from more specific indicators (items) of the product or
service. Customer satisfaction is defined as a comprehensive evaluation of the
use or after-services of the business and this is at the core of the CSI
model. Around these variables is a system of causal relationships (cause and
effect) from the initial factors such as expectations of customers, the image of
enterprises and products, perceived quality and perceived value of products or
services to the outcome variables of satisfaction, such as customer loyalty or
customer complaints


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Figure 2.2: American Customer Satisfaction Index – ACSI
Complaint

Expectations

Perceived

value

Customer
Satisfaction
Loyalty

Perceived quality

Source: ACSI (2008)
In the model of American satisfaction index (ACSI), the Perceived value is
affected by perceived quality and customer expectations. Meanwhile, customer
expectations have a direct impact on the Perceived quality. In fact, when
customer’s expectations are higher, the customers’ standard of perceived quality
for products is also higher or vice versa. Thus, requirements of quality product
and service provided to customers need to be ensured and fulfilled based on
their satisfaction. Customer satisfaction is created from perceived quality,
expectations and Perceived value, if the quality and perceived value higher than
expectations will create customers’ loyalty. Otherwise, there will be a complaint
about products that they used.
Figure 2.3: European Customer Satisfaction Index – ECSI
Image
Expectations
Perceived
value
Perceved quality
-Product
Service

Customer
satisfactio

n

Loyalty