The Role of Social Media Engagement in Influencing Customer Loyalty in Saudi Banking Industry
The Role of Social Media Engagement in Influencing Customer Loyalty in Saudi Banking Industry
The Role of Social Media Engagement in Influencing Customer Loyalty in Saudi Banking Industry
Marketing
ISSN: 2146-4405
Department of Marketing, College of Business Administration, Prince Sattam bin Abdulaziz University, Alkharj, Saudi Arabia.
*Email: a.ajina@psau.edu.sa
ABSTRACT
Social media has gained significant popularity in the modern era, as people are spending an increasing amount of time over platforms like Facebook,
Twitter and Instagram. This has instigated the organizations to amend their marketing communication techniques and to invest in the development
of activities which may engage the customers. The aim of this research paper is to determine the role of social media engagement in influencing the
customer loyalty from the perspective of the banking sector of Saudi Arabia. In order to ascertain this role, a combination of quantitative and qualitative
methods has been employed in order to obtain relevant data and to come up with the conclusions. The regression analysis and the in-depth analysis of
the qualitative data have established that the use of social media engagement has influenced the customers’ loyalty in the banking sector. Therefore,
banks should further focus on the social media in enhancing the customers’ loyalty. Moreover, qualitative analysis suggests that customer loyalty gives
strength to the financial position of the banks.
Keywords: Social media, Customers’ loyalty, Banking sector
JEL Classifications: G21, L82
1. INTRODUCTION 2018). According to Skwire and Skwire (2013), the role of social
media is very important to engage the customer with any brand
Consumer engagement is referred to the actions and activities and to win the loyalty as well.
that organizations undertake in order to begin an open line of
communication with the external stakeholders (Palmatier et al., In case of Saudi Arabia, some literature has highlighted the
2017). Instigating the customers to actively engage with the importance of social media in brand development and customers’
organization may enhance the experience which may in turn have a engagement. For example, Alam (2017) investigates the role of
potential to build the loyalty in the customers (Brodie et al., 2015). social media on the brand preferences in the general context of
Owing to the advancements in the information and communication available brands in the Saudi Arabia. He finds some evidences
technology, communication with the masses has become easier in favor of the hypothesized relationship. Al Saud and Khan
and necessary in order to increase awareness of firms’ offered (2013) investigate the role of Facebook and Twitter on the brand
product (Management Association, Information Resources, 2018). development in the Saudi Arabia. They find that both media
The use of social media platforms has become one of the most remain very effective in the brand development. Abduljadail
effective ways to reach the target consumer and to engage them. (2017) investigates the effect of the Facebook on the customer
From the perspective of the banking sector, social media may be engagement in the six sectors of Saudi Arabia including the
used to collaborate and to interact with the customers to develop financial sector. He finds that the advertisement with exploiting the
a favorable and long lasting relationship (Haro-de-Rosario et al., benefit of local culture is found very important in the perception
This Journal is licensed under a Creative Commons Attribution 4.0 International License
of the Saudi customers. Further, both local and global brands have that customer engagement drives the purchase decisions of the
been used the cultural traits in the advertisement on the Facebook consumers in favor of particular brands and also gives strength
which remains very effective for the customer engagement. to the future interactions with the organization (Chu and Kim,
2011; Palmatier et al., 2017). In addition to the management of
The existing global literature has highlighted that customer customer relationship, the companies attempt to raise awareness
engagement is beneficial for banking institutions. It has also been about their products through the process of customer engagement
demonstrated that social media platforms are the most effective by offerings the current schemes and special offers etc. Customer
medium for the communication with the tech savvy customers of engagement is commonly achieved via marketing campaigns and
the modern era. However, there is lack of adequate research on other outreach programs which are mostly conducted over the
the way that consumer engagement activities over social media digital media in the present era.
platforms facilitate in winning the customers’ loyalty from the
perspective of banking institutions in the Saudi Arabia. Though, The rapid advancements in the domain of information and
some literature has investigated the effect of social media on the communication technology have made it easier to engage in
customers’ engagement and brand development but still no study the open line of communication with the decision makers of the
specifically covers this issue in the banking sector of the Kingdom. organization (Management Association, Information Resources,
This present research tries to fill this literature gap. Hence, the 2018). In addition, the consumers are no longer satisfied by playing
aim of this research paper is to determine the role of social media a passive role in the process of marketing communications of the
in determining the customers’ engagement with the brand which organizations. In the modern era, the consumers want to have
may play a constructive role in influencing the customer loyalty an active role through participating in the process of product
in the banking sector of Saudi Arabia. development by providing feedbacks and grievances. Dessart et al.
(2015) claim that the organizations, who have successful adopted
The present research is motivated to investigate the said hypothesis the strategies to ensure the active engagement of the customer
because of three reasons. First, the relevance of social media would in the marketing communication activities, are able to secure a
be evaluated in the process of customer engagement. Second, this competitive advantage in the industry.
research ascertains the way that customer engagement can lead to
the formation of a loyal customers’ base. Thirdly, the relevance of 2.2. Consumer Engagement through Social Media
customer loyalty has been analyzed from the perspective of the Platforms
banking sector. Finally, there has been inadequate research on With the rising popularity of the information and communication
this theme in the context of the baking industry in Saudi Arabia. technology, the general public is spending a substantial part of
Therefore, the present research is conducted in order to bridge their time in the online activities (Chu and Kim, 2011). Therefore,
the gap in the scant marketing literature about the way that banks marketers have realized that digital channels should be used in
may utilize on the social platforms in order to win the consumers’ order to allure the consumers. Digital or online channels are using
loyalty and to ascertain the sound financial conditions. wide arrays of networks like websites, mobile applications, e-mail
and social media platforms in order to attract the consumers of
The rest paper is organized in such a way that second section the target market (Guesalaga, 2016). The rising popularity of
discusses the literature, third elaborates the methodology, forth the use of social media among the younger generation has led
section displays the quantitative and qualitative analyses and last to the emergence of a facet of marketing in favor of the social
section concludes the study. media marketing (Tiago and Veríssimo, 2014). In other words,
social media marketing is the aspect of marketing where the
2. LITERATURE REVIEW organizations conduct the marketing communications over social
media platforms. This is also done to assure maximum visibility
This section discusses a comprehensive idea about the concept among the target audience.
of customer engagement and the relevance of such marketing
strategies in the process of enhancement of customer loyalty. To communicate with each and another, people have become
This section also highlights the use of social media platforms increasingly reliant on the use of social networking websites
for engaging the two-way communication with the consumers. (Lin and Lu, 2011). The rising popularity of social media has
Further, the use of such strategies from the perspective of the instigated the organizations to make significant changes to their
banking institutions has also been reviewed. communication strategies. Farook and Abeysekara (2016) have
inferred that people use social media platforms in order to develop
2.1. Consumer Engagement their personal network. Therefore, organizations should use such
Engagement of the consumers is a facet of the discipline of channels in order to reach the target audiences and to cultivate
customer relationship with management of a business. This the long-term relationships with the customers. The participation
marketing strategy enables organizations to facilitate the process in an open line of communication with the organization through
of development of favorable and long lasting relationships the process of expressing grievances and support, a customer
with the consumers. According to Kumar (2013), organizations makes a direct commitment with the firm which facilitates the
utilize various channels both online as well as offline in order to process of relationship-building. The use of social media website
instigate an open line of communication with the consumers and like Facebook has a significant impact on consumer engagement
other external stakeholders. Various academicians have opined which also helps in increasing the market share of the companies.
Maintenance of an active online presence of networking with Khan et al. (2016) propound that the online banking experience
the clientele of the organization, both existing and potential, has plays a crucial role in the mediating the consumer engagement and
favorable impact on the company’s financial condition. loyalty towards the banking institutions. Engagement through the
online banking services is more likely to create a stronger loyalty
2.3. Consumer Engagement in Influencing the towards the banking products’ brand. Therefore, the investment
Customer Loyalty in the improvement of the online banking experience is more
The engagement of the consumer in the business processes plays likely to facilitate the brand loyalty in this modern era (Rather
a significant role in the enhancement of the loyalty (Brodie et al., and Sharma, 2017). Haro-de-Rosario et al. (2018) state that the
2015; Acar and Putoni, 2016). Hence, it is crucial to undertake banks have increasingly adopted the use of social media platforms
a customer focused marketing strategy in order to secure a like Facebook and Twitter in order to post the information about
significant base of loyal customers. In other words, the products their offers which help in building the trust among the customers.
of the organization may change over time but the loyalty helps the
company to secure the higher returns from the customer’s lifetime 3. RESEARCH METHODOLOGY
value. Solem (2016) argues that the consumer engagement leads
to the creation of value through the active participation of the 3.1. Research Philosophy
customers in the marketing communication process. This value The research philosophy chosen for this research is positivism
thereafter leads to the higher levels of satisfaction derived from because a highly structured method has been adopted for testing
the brand which afterward inculcates a sense of loyalty in the the hypothesis. Positivism is the most appropriate philosophy for
minds of the customers. Further, he concludes that the consumers, this research because the data have been obtained through survey
who use social media to participate in the organization’s brand and interviews for further analyses (Mackey and Gass, 2015).
engagement strategies, express higher levels of satisfaction. In fact, Kuada (2012) argues that the positivism approach may enable the
there exists a strong positive correlation between brand loyalty and research to obtain primary data from various sources about the
consumer participation in the short term perspective. Moreover, role of social media channels in the process of enhancing customer
the companies engaged in the service sector business may gain loyalty. Therefore, we also prefer the positivism approach.
substantial customer loyalty by investing in consumer engagement
strategies through the social media platforms. 3.2. Research Approach
We follow the deductive approach because we begin with a
So et al. (2016) inquire the service industry and conclude that the theory to be tested based on the data which have been collected
engagement of the consumer is beneficial for the management via primary collection methods (Panneerselvam, 2014). Green
of the customer relationships. They also establish the strong et al. (2012) elaborate that deductive approach is preferable if
lineages between customer engagement and customer loyalty. a hypothesis is developed from an already existing theory and
In other words, the customer loyalty in service institutions can thereafter conclusions are drawn from data analyses. This present
be strengthened through the utilization of customer engagement research paper also aims at testing a hypothesis from established
tactics as well as though the delivery of a favorable service theory “to test the role of social media engagement in determining
experience. Fernandes and Esteves (2016) propound that the the process of enhancing customer loyalty for a selected sample.”
propensity of the consumers’ engagement varies widely based on So, a deductive approach is the most suitable method here.
the perspective of the service. In the service sector which requires
a high involvement like health care, the propensity of engagement 3.3. Research Method
may be claimed higher than that of low involvement of the retail The research method relies on a combination of quantitative and
sector. They also conclude a positive correlation between the qualitative analyses. For example, primary data has been collected
favorable behaviors of the consumers and the propensity of to ascertain the role of social media engagement in the process
consumption. Therefore, a business needs to invest for ensuring of enhancing customer loyalty through a survey. Further, we
the engagement of the consumers in order to enhance the customer also conduct the interviews with two bank managers. The survey
loyalty and long-term relations with the organization. may form the quantitative data which would be arranged in a
spreadsheet and thereafter transported for the statistical analyses
2.4. Consumer Engagement in the Banking Industry (Miles et al., 2014). On the other hand, the interviews may consider
Khan et al. (2016) state that with the rising popularity of the qualitative data which would be analyzed with respect to the
digital media in the modern era, the younger generation of qualitative methods (Neuman, 2013).
the customers is more likely to be loyal to a bank who offers
the online services. An exploratory study on retail banking 3.4. Questionnaire Design
by Sondhi et al. (2017) propounds that the engagement of the The close ended questions have been drafted in the questionnaire.
consumers may result in building the trust, loyalty, commitment Each question has been associated with a Likert scale, wherein a
and advocacy of the consumers. In addition, the duration of respondent may select the option which is most suitable for him
the relationship with the customers has a significant impact on (Miles et al., 2014). The questionnaire comprises of demographic
the value creation abilities of the engagement strategies. On questions in order to ensure that a wide variety of respondents is
the other hand, Kosiba et al. (2018) conclude that the trust and maintained to reduce the chances of biasness toward a particular
loyalty of a customer towards the financial institutions may sect. Separate questions have been traced for both the dependent
enhance the propensity to engage. and independent variables which may facilitate the process of
testing of the hypothesis afterwards. Our dependent variable is hypothesis is tested if such inference is also valid for our chosen
the customer loyalty (Loyal) and the independent variable is the sample.
social media engagement (Engag). H0: The use of social media channels does not have a positive
impact in enhancing customer loyalty.
3.5. Ethical Consideration H1: The use of social media channels has a positive impact in
The consideration of the ethical factors is essential because it enhancing enhance customer loyalty.
may reduce the probability for the errors to produce the un-biased
results (Choy, 2014). Therefore, the objectives of the research have 4. ANALYSES AND DISCUSSIONS
been explained to the respondents before carrying-out the survey
and the confidentiality of the information has also been assured 4.1. Quantitative Analysis
to them. Further, we have also confirmed that the questions in the In this section, the data obtained from the survey of the consumers
survey and in the interview may easily understand and are also has been analyzed with the help of the statistical software
free of technical jargons. SPSS. A total of 250 questionnaires were distributed among the
consumers. However, only 141 of the response-sheets could
3.6. Data Collection and Sampling be found valid for further consideration. This is because; 8 of
In this study, we collect a combination of quantitative and the respondents claimed not to use any social media platform
qualitative data. In order to collect quantitative data, a well- and the remaining 101 could not be considered because of the
structured questionnaire is designed which facilitates the process missing data. Table 1 shows the descriptive statistics of the
of gathering data from a significantly larger number of respondents respondents’ data. The average =1 and standard deviation =0 of
(Neuman, 2013). This also enables us to utilize time in a judicious usage is showing that we only consider the respondents who are
manner. Around 250 questionnaires were distributed but 141 user of social media. Average of gender is 1.3475 and 92 of the
response-sheets with the complete answers were received and respondents were found as male while 49 were female. Average
considered for the analysis. The collected data is analyzed with the of age is 2.7731 which shows that a majority of the respondents
help of the statistical software SPSS. We utilize the non-probability almost 37% is belonged to the age group of 26-35 years whereas
sampling technique wherein the all individuals in the population do the age groups i.e. 36-45 years and 46-55 years made up of 22%
not have the same chance of being selected (Ahmad et al., 2014). and 17% of the respondents respectively. The average of income is
This sampling technique reduces the possibility of an unbiased 2.9078 which is approximately 3 and a majority of respondents is
data set. The convenience sampling has been chosen, wherein the belonged to income group of $ 40,000–$59,000 in the 3rd option of
sample of the study has been selected based on our suitability. the questionnaire. Further, average of number of media is 3.0709
which is close to the 3 and 75% of the population claimed to use 3
The qualitative data have been collected through interviews. Two social media platforms. The average of Platform is 1.9645 which
managers from banking institutions have been interviewed. The is close to 2. Therefore, the response of the question “which was
selected bank managers were asked a series of questions with the preferred mode for receiving updates from the bank” showed
an aim of obtaining detailed information which might enable that about 88% of the respondents claimed that it was Twitter.
us to ascertain the impact of customer loyalty on the financial
performance of the banking organizations (Taylor et al., 2015; Table 1 also shows the average of our two major constructs of
Silverman, 2016). The responses were noted and compared for Social Media Engagement (Engag) and Customer Loyalty (Loyal)
similarities and dissimilarities. in which each construct carries three items. The results shows that
average of the all items of Engag is >3.5 and we may claim that
3.7. Hypothesis customers are inclined to the response of agree (4th Likert scale
In the theoretical predictions, the social media may play a of the questionnaire). Moreover, the overall average of construct
major role in the engagement of the consumers. The following of Engag is also found at 3.72 which is again corroborating that
Further, the qualitative findings imply that the managers on customer engagement. International Journal of Business and
believe that there is a strong positive correlation between the Management Invention, 5, 115-125.
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banks. Therefore, the banking industry in Saudi Arabia should A comparative study between service contexts. Services Marketing
Quarterly, 37(2), 125-139.
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