Analysis of the Impact of Brand Loyalty on Increasing Sales and Organisational Performance in the Banking Industry: A Case Study on HSBC, UK

1.0 Introduction

1.1 Background

Brand loyalty is the most essential aspect of the organizations operating in service industry to enhance sustainability and position. As, brand loyalty is entirely linked with customer loyalty. ‘Customer loyalty’ is considered as one of the principal terms for the organizations operating under the umbrella of service-providers. This is because; the entire success of service providing organizations rests over the idea of developing an effective relationship with the target customers. However, in order to do so, the service providers try to analyze the changing demands and requirements of the customers so as to compete with the dynamic corporate scenario. After analyzing the demands, the service providers such as the banking institutions desire to offer best-quality of services in order to enhance their reliability and loyalty over the brand as compared to many other rival players in the market. Only then, the competitive advantage and sustainability of the banking institutions might get enhanced to a significant extent in this era of competitive banking as compared to many other rival players.

Moreover, improvement of customer loyalty leads to enhancement of the customer base resulting in intensification of the demands of the product lines. Along with this, the total sale and profit margin of the banking organizations also enahcnes leading to improvement of its brand image.

Apart from this, it may be inferred that customer loyalty and customer satisfaction enhances the retention cost of the customers thereby improving its purchase decisions. Hence, customer loyalty is directly related to brand loyalty and organisational performance.  Due to this regard, the global banking institutions such as HSBC tried to offer highest attention over the concept of brand loyalty. Hence, HSBC, UK introduced a wide variety of services for the target mass. This proved extremely effective for the organisation that enhanced its reputation and reliability within the minds.

Thus, the purpose of the research study is to analyze the importance of brand loyalty on increasing the total sales and performance of an organization. In order to examine this rationale, the researcher selected HSBC, UK. Hence by doing so, the effectiveness of brand loyalty might be evaluated in the banking institutions in regard to organizational sales and performance. 

impact-of-brand-loyalty-on-customer-organisation-hsbc-organisational-performance

Figure 1: Impact of brand loyalty on customer and organisation

(Source:Bitner, M. J. 2010, p. 78)

1.2 Research Aims

This study mainly tries to highlight the proportionality among brand loyalty over organizational sales and performance. The main aim of this study is to analyze the impact of brand loyalty over the total sales and performance of the banking organizations. In this regard, HSBC of London takes into consideration.

1.3 Research Objectives

This study includes the following objectives:

  • To identify the relationship between brand loyalty and sales as well as organisational performance
  • To analyse the impact of brand loyalty on increasing sales of HSBC
  • To analyse the impact of brand loyalty on increasing organisational performance of HSBC
  • To recommend ways to enhance brand loyalty of HSBC, UK, in order to increase its sales and performance within the banking sector of the country

1.4 Research Question

Brand loyalty is the catalyst that helps to enhance the performance and productivity of an organization.Due to this regard, most of the organizations operating in the segment of banking desires to offer dedicated focus over theconcept of brand loyalty (Bloemerand Kasper, 2008). However, due to which, banking institutions try to offer satisfactory services to its customers but its somewhere lagging back. Thus, by answering to the below mentioned questions, the research objectives might get fulfilled in an accurate way.

  • How brand loyalty is related with sales and performance of an organization?
  • In what ways, brand loyalty may enhance the total sales of HSBC?
  • How far brand loyalty influences organizational performance?
  • In what ways, brand loyalty of HSBC, UK increases the sales and performance within the banking segment of the nation?

1.5 Research Hypothesis

  • H0 Brand loyalty does not influences total sales and organizational performance
  • H1 Brand loyalty positively influences total sales and organizational performance

2.0 Literature Review

According to the Butcher (2009) in order to survive in the era of extensive competitiveness, customer requirements for the best quality as well as recessionary stress to control overall costs inspired the banking institutions to offer focus on brand loyalty. Brand loyalty is the most pertinent requirement of the banking institutions of the UK in this age to enhance sustainability and competitiveness. This is mainly because; the banking segment of the UK is extremely fragmented due tothe presence of numerous rival players. As a result of which, in order to enhance the level of brand loyalty, the banking institutions of the UKtryto develop inventive strategies. With the help of the inventive strategies, an organization might develop varied types of innovative products and services, thereby creating a distinct image within the UK. Thus, improvement in service quality may prove effective in enhancing the loyalty and dependency of the customers over the brands as compared to many other rival players (Caruana, 2008). Hence, brand loyalty entirely depends over the quality of products and services of the banking institutions in the entire globe. Other than this, improvement of brand loyalty attracts a wide range of customers towards the product lines of the organization. Hence, the total sales and demand of the product lines enhances to a significant extent among others. In lieu to this, the profitability and performance of the organization increases resulting in intensification of the dominance and reputation.

2.1 Impact of brand loyalty on increasing sales

The term brand loyalty acts as the backbone of the banking institutions in this era of extensive customer rivalry. This is because; brand loyalty helps a service related organization to create a distinctive image and position in the market. It is extremely essential for a service industry as it is a customer-centric organization.  So, the management of these organizations try to analyze the changing requirements and demands of the target mass. On the basis of such analysis, the banking institutions try to develop their products and services so as to satisfy the demands of the customers (Caruanaet al.2009). If the banking institutions of the UK become successful in fulfilling the requirements of their target group of customers, then their level of satisfaction and reliability over the brand might get enhanced. As a result of which, the level of retention of the customers might get enhanced resulting in an intensification of the total sale and profitability of the banking institutions in the market of UK.  Moreover, due to the improvement of the total sale and profitability, the brand image and loyalty of the banking institutions might get improved to a significant extent (Colgate et al.2010). Thus, it may be inferred that customer loyalty and satisfaction is directly related to the quality ofservices offered by the organization. Hence,  customer satisfaction leads to loyalty to the brand. On the contrary Diaz and Ruiz (2007) stated that as loyalty is a multi-dimensional concept so it may present both positive as well as negative responses. This means that a loyal consumer may not be a satisfied one (Ennew, and Binks 2010).  Hence, it may be revealed from above analysis that brand loyalty surely enhances customer base leading to improvement of organizational sales.

2.2 Service Quality leads to brand loyalty

Service quality also plays a significant role within a service industry. Since, its the service that helps a banking institution to improve the loyalty and  reliabilityof its target customers (Reichheld, 2010).

Service quality is described as the comparison within the expected services of the customers with the perceived services. As mentioned by the Fisher (2011) service quality is the perceptionary gap within the normative expectation and the perceived services of the organization. Most of the banking institutions desire to reduce such gaps by analyzing the feedbacksof the customers in an effective way. By doing so, the organization might implement the required features within their products and services resulting in the improvement of its total sale and demand among others (Glaveliet al.2008). Along with this, improvement of the total sale might also enhance the position and productivity of the banking institutions in global perspectives. Keeping this aspect in mind, HSBC of London offered high attention over the quality and benefits of its services (Hsbc.co.in 2014). It tried to evaluate the requirements of its target mass that proved extremely effective for the organization in enhancing its prosperity and profitability as shown below:

hsbc_profitablity-comparison

 

Figure 2: Profitability of HSBC

(Source: Hsbc.co.in 2014)

Thus, it may be inferred from the above discussion that the brand value and loyalty of HSBC is quite high in the market of UK as compared to its competitors such as Citibank, standard chartered, Goldman Sachs and many others. In against to the latter statement, it may be inferred that if HSBC fails to offer satisfactory services to its target mass,then its brand image and profitability might get hampered to a significant extent.

2.3 Impact of brand loyalty on increasing organisational performance

Organizational performance depends entirely on customer satisfaction and reliability. Since customer satisfaction increases customer dependency and trust resulting in improvement of organizational performance. Customer satisfaction is directly related to the quality of services offered by the banking institutions. Due to this regard, customer satisfaction is considered as the principal determinant of brand loyalty and reputation. Thus, as mentioned by Gremler and Brown (2009) that customer satisfaction is directly related to customer loyalty as well as customer retention. In this regard, HSBC desires to offer best-quality of services such as account activities, account information, facilities, product offerings, locker facilities and many others (Hsbc.co.in 2014). As a result of which, the level of customer satisfaction and loyalty of HSBC is extremely high as compared to Barclays, CIti Bank and others.

service-rating-comparison-hsbc-organisational-sales-performance

Figure 3: Service Rating Comparison

(Source:Johnston, R. 2007, p. 60)

2.4 Impact of Research theoretical Model on brand loyalty of HSBC

With the help of this model, an organization may analyze the factors on which brand loyalty is dependent. Then, after analyzingthese factors, the banking institutions like HSBC of UK might offer the highest concentration over tangibility, reliability, responsiveness, empathy and assurance among others. As, fulfillment of these factors might enhance the satisfaction and loyalty of the customers, thereby strengthening its market share and prosperity among others as shown in appendix. As a result of which, the retention ratio of the customers might get enhanced resulting in the improvement of the equity and distinctiveness of banking institutions (Gronroos, 2010). Due to this regard, HSBC decided to offer the best quality of services in terms of locker facilities, account information, account activities product facilities and others.This enhanced the market share and operating income of HSBC by US$22.56billion in the year 2013. Other than this, in order to improve its dependency and reliability within the minds of the target customers, HSBC introduced varied types of inventive services such as mortgage loans, car financing, insurances, credit cards, pension facilities, investments and many others. As a result of which, HSBC in the market of UK improved its gross lending, market share andprofit before tax(Hsbc.com 2014)significantly as presented below.

Mortgage Market Share for high street banks in UK market
Gross lending (H2010-11)         Market Share (H2010-11)
HSBC £14.9 bn £6.7 bn 21% 20%
Barclays £8.6 bn £7.6 bn 14% 12%
LIOYD £10.9 bn £4.9 bn 11% 8%
Citi Bank £8.9 bn £.8 bn 14% 12%

Figure 4: Mortgage Market Share for high street banks in UK market

(Source:Johnston, R. 2007, p. 58)

profit-before-taxation-hsbc-organisational-performance-brand-loyalty

 

Figure 5: Profit before taxation of HSBC

(Source: Hsbc.com 2014)

Thus, it might be clearly revealed from the above mentioned figure, that facility is directly related to the customer satisfaction and loyalty. However, if the level of satisfaction of the target mass is high, then the rate of brand loyalty might also get improved to a significant extent (Joseph et al.2007). Hence, brand loyalty is highly influenced by the factors or facilities offered by the brands or banking institutions in the entire globe.

2.5 Conceptual framework

interrelationship-of-brand-loyalty-organisational-sales-performance-hsbc

Figure 2: Conceptual Framework of brand loyalty on organisational sales and performance

                             (Source: Johnston, R. 2007, p. 51)

3.0 Research Methodology

In order to analyze the impacts of this topic, both qualitative and quantitative methods need to be used. Therefore, a mixed approach need to be followed as the study is exploratory in nature. 

3.1 Type of Investigation

In this study, the researcher tries to analyze the impact of brand loyalty in enhancing the total sales and performance of the organizations functioning in the banking industry. However, in order to fulfil this research, the relationships of brand loyalty and customer loyalty is evaluated along with  impact on quality of services over brand loyalty and effect of customer satisfaction on brand loyalty is evaluated in an effective way within the nation of the UK. By doing so, the gaps present within this study is also reduced in an effective way (Levesqueet al.2008). Thus, the researcher used exploratory research philosophy in order to accomplish the objectives of this research.

3.2 Data Collection Method

Since, the research follows a mixed method, therefore both primary and secondary sources are used.  In order to attain the primary data and facts, the employees and managers of HSBC are questioned thoroughly regarding varied aspects. On the other hand, in order to attain secondary information, online sites, company websites, journals and  articles are evaluated in an effective way (Nguyen and Leblanc, 2009). After evaluating all the facts and information, the final questionnaire is developed and is presented to all the selected respondents of the organization (HSBC). The, questions are formulated on the basis of the research objectives of the study and then all these questions are evaluated to attain the final objectives with the help of the selected samples (Newman, 2011). Hence, the researcher used both survey and interview methods to analyse the importance of brand loyalty over organizational sales and performance.

3.3 Data Analysis Method

Descriptive analysis is used for analyzing the data and facts gathered from respondents. Only then the researcher may accomplish the objectives of this research study in an effective way.

3.4 Sampling Method

In order to accomplish the objectives of this study, both simple random as well as purposive sampling might be used. As, it may prove effective in analyzing the aspects of the objectives of the study in an effective way resulting fromthe selectionof therespondents in a random way. Along with this, this method acts as an unbiased technique of sampling so it is highly effective in this study. Apart from this, as certain specific purposes are analyzed in this study so, purposive sampling method is used. Thus, with the help of these above mentioned methods, the objectives and questions of the research study are evaluated from the selected samples.

3.5 Accessibility Issues:

Data accessibility is one of the key factors for any research work. As mentioned by Oliver (2008) without the accessibility of the relevant data the researcher cannot fulfil the goals and objectives of any research work. In this study, the secondary data can be collected from the websites of HSBC and the relevant journals. On the other hand, the researcher will collect the primary data from the feedbacks of the bank managers and the customers of HSBC.

3.6 Ethical Issues:

According to the view of Saunders et al. (2009) the researcher needs to maintain the ethical issues for the authenticity of the research work. In this research work, the researcher will collect the secondary data from the reliable sources only. No manipulation of the data will be done in the research work. The feedbacks will be taken based on the consent of the managers and the customers. Only the questions relevant to the study will be asked for the purpose of primary research.

4.0 Anticipated outcomes:

In case of the exploratory research work, the researcher anticipates the outcomes during the time of preparing the proposals and in the due course of the research work tries to match the desired outcomes with the actual results. As mentioned by Saunders et al. (2009) the main purpose of the research is to meet the desired goals and objectives. In this study, the researcher has anticipated to determine the factors that can increase the customer loyalty. On the other hand, the researcher expects to develop the relation between the customer loyalty and brand loyalty. With the analysis of the acquired data, the researcher will also investigate how the performance of HSBC can influence the performance of the overall banking sector of UK.

 

Timetable

Topics Week 1 Week 2 Week 3 Week 4 Week 5 Week 6
Introduction
Determine aim and objectives.
Accumulate secondary data
Analyse the secondary data
Determine Research Methodology  

 

Gather primary details
Interpret the primary responses.
Link with the objectives and recommend strategies.

 

Figure 2: Gantt chart

(Source: self-created)

 

 

References

Bitner, M. J. (2010). “Evaluating service encounters the effects of physical surroundings and employee responses,”Journal of Marketing, 52(2), pp. 69-82.

Bloemer, J. M .M. and Kasper, H.D.P. (2008). “The complex relationship between consumer satisfaction and brand loyalty”,Journal of Economic Psychology, 16, pp. 311-329.

Butcher, K. (2009). “Evaluative and relational influences on service loyalty”,International Journal of Service Industry Management, 12(4), pp. 310-327.

Caruana, A. (2008). “Service loyalty. The effects of service quality and the mediating role of customer satisfaction”,European Journal of Marketing, 36(7/8), pp. 811-828.

Caruana, A., Money, A.H. and Berthon, P.R. (2009). “Service quality and satisfaction- the moderating role of value”,European Journal of Marketing, 34(11/12), pp.1338-1352.

Colgate, M., Stewart, K., and Kinsella, R. (2010). “Customer defection: a study of the student market in Ireland”,International Journal of Bank Marketing, 14(3), pp. 23-29.

Diaz, A.B.C., and Ruiz,F.J. M. (2007). “The consumer’s reaction to delays in service”,International Journal of Service Industry Management, 13(2), pp. 118-140.

Ennew, C.T., and Binks, M. R. (2010). “The impact of service quality and service characteristics on customer retention: small businesses and banks in the UK”,British Journal of Management, 7(1), pp.219-230.

Fisher, A. (2011). “Winning the battle for customers”,Journal of Financial Services Marketing, 6(2), pp. 77-83.

Glaveli, N., Petridou, E., Liassides, C., and Spathis, C. (2008). “Bank service quality: evidence from five Balkan countries”,Managing Service Quality, 16(4), pp. 380-391.

Gremler, D. D. and Brown, S.W. (2009). “Service loyalty: its nature, importance and implications”,Proceedings American Marketing Association, 12(1), pp. 171-180.

Gronroos, C. (2010). “A service quality model and its marketing implications”,European Journal of Marketing, 18(4), pp. 36-44.

Hsbc.co.in (2014). HSBC Bank | BookMyShow Offer. [Online] available at: http://www.hsbc.co.in/1/PA_ES_Content_Mgmt/content/website/personal/accounts/tmd_bookmyshow.htm?WT.ac=INM_HP_TMD_Bookmyshow [Accessed on 14th November, 2014].

Hsbc.com (2014). HSBC Holdings plc –  Financial and regulatory reports. [Online] available at: http://www.hsbc.com/investor-relations/financial-and-regulatory-reports [Accessed on 14th November, 2014].

Johnston, R. (2007). “The determinants of service quality: satisfiers and dissatisfiers”,International Journal of Service Industry Management, 6(5), pp. 53-71.

Joseph, M., Sekhon, Y., Stone, G., and Tinson, J. (2007). “An exploratory study on the use of banking technology in the UK. A ranking of importance of selected technology on consumer perception of service delivery performance”,International Journal of Bank Marketing, 23(5), pp. 397-413

Levesque, T. J. and McDougall, G.H.G. (2008). “Managing customer satisfaction: the nature of service problems and customer exit, voice and loyalty”,Asia Pacific Journal of Quality Management, 2(2), pp. 40-58.

Newman, K. (2011). “Interrogating SERVQUAL: a critical assessment of service quality measurement in a high street retail bank”,International Journal of Bank Marketing, 19(3), pp. 126-139.

Nguyen, N. and Leblanc, G. (2009). “Corporate image and corporate reputation in customers’ retention decisions in services”,Journal of Retailing and Consumer Services, 8(4), pp. 227-236.

Saunders, M., Lewis, P. and Thornhill, A. (2009) Research methods for businessstudents, 5th ed., Harlow: Prentice Hall.

Reichheld, F. F. (2010). The Loyalty Effect: The Hidden Force Behind Loyalty. Boston: Harvard Business School.

 

 

Appendix

 

Tangibility

 theoretical-model-brand-loyalty-hsbc-organisational-performance Figure 6: Research theoretical model of brand loyalty and facilities

(Source: Reichheld, F. F. 2010, p. 121)

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