Applying Factor Analysis in Assessing Customer Satisfaction with Service Quality: The Case of Indian Banks

Abstract Service quality and customer satisfaction are the two most important factors that banks must understand if they want to remain competitive and grow. In today’s competitive environment delivering high quality service is the key for a sustainable competitive advantage. Customer satisfaction does have a positive effect on an organization’s profitability. Satisfied customers form the foundation of any successful business as customer satisfaction leads to repeat purchase, brand loyalty, and positive word of mouth. The broad objective of the study has been to identify the determinants or variables those to be considered for customer satisfaction in the context of public sector and private sector banks in the banking environment of India: to analyze the various factors considered while choosing the bank: To identify the responsible factors those may influence on future customer retention strategies. A structured questionnaire was developed and distributed to the 600 customers of public sector and private sector banks in NCR. Factor Analysis was used to analyse the data. Factor analysis revealed work culture and timeliness to be the most important factor for customer satisfaction with service quality. Keywords: Factor Analysis, Customer service, Expectation, Perception, Banking services