Development Relationship Marketing and Customer Switching Behavior in Islamic Banking in East Java (Evidence in Indonesia)

Abstract

The author tries to explain the relationship between relational bonding, customer value, and customer loyalty that mediate the satisfaction and delight on three consumer groups (stayers, dissatisfied switchers, and satisfied switchers) in the Islamic banking industry in East Java, Indonesia. Important insights provided by this study are as follows : (1) Products that meet or exceed customer utilitarian needs will increase customer satisfaction and (2) products that meet or exceed customer hedonic needs will increase customers delight. Data were obtained from sample of 613 customers of Islamic banks in East Java. In addition, there are three important findings. First, for stayers, three types of bondings (financial, social, and structural) increase customers utilitarian and hedonic values, leading to increment of customer loyalty. Second, for dissatisfied switchers, only structural bond that has significant impact on the customer utilitarian value, which significantly will increase customer loyalty. Third, for the satisfied switchers, social bond influences the hedonic value significantly, while the structural bond significantly influences utilitarian value. In addition, utilitarian and hedonic values influence customer loyalty significantly.

Keywords: Relationship marketing, delight, Customer loyalty, Utilitarian value; Hedonic value, and Islamic banking.