OVERVIEW
This thesis aims to explore the connection between service quality and customer perceived value (CPV) within the B2B professional services sector, specifically focusing on Vietnam's general insurance industry CPV is recognized as a critical factor for achieving long-term profitability, particularly in high-involvement service industries To secure a competitive edge, businesses must enhance their customer service quality and elevate CPV, acknowledging that B2B customers perceive value differently than those in B2C and low-involvement scenarios.
Service quality is the gap between consumer perceptions and organizational expectations regarding services, which is vital for organizational success as it influences customer satisfaction, customer perceived value (CPV), repeat purchases, positive word of mouth (WOM), and overall business performance Despite its importance, there is a lack of research on service quality in high-involvement B2B contexts, especially in high-value transitions within the general insurance industry This thesis aims to apply the service quality concepts developed by Brady and Cronin to address this gap.
(2001), Parasuraman et al (1988) and Sánchez Pérez (2007) to build an in-depth understanding of how service quality affects CPV in the B2B context.
This thesis builds upon Brady and Cronin’s (2001) service quality model, specifically within the professional B2B context The model includes three key dimensions: interaction quality, which encompasses attitude, behavior, and expertise; physical environment quality, which involves ambient conditions, design, and social factors; and outcome quality, referring to waiting time, tangibles, and valence To tailor these dimensions to the general insurance sector, this thesis will develop and test new, original content for the scales, as the existing ones from Brady and Cronin (2001) are not suited for this context.
INSURANCE INDUSTRY IN VIETNAM – B2B CONTEXT
Insurance is categorized into two main types: Life Insurance and Non-life Insurance, also known as General Insurance General Insurance encompasses various forms such as medical, marine, fire, liability, property, travel, compensation, motor, engineering, fidelity guarantee, and personal accident insurance It provides financial compensation based on losses incurred from specific events Essentially, General Insurance is defined as any insurance that does not fall under the category of life insurance (Jerry and Richmond, 2012).
Recently Vietnam has been recognised as one of the fastest growing countries in Southeast Asia, with a huge demand for insurance according to the Insurance Association of Vietnam
(2018) For example, according to a report from the Vietnam Business Forum published in
In 2018, the Vietnamese insurance industry contributed approximately 2% to the national GDP, amounting to around $2.5 billion, with a notable growth rate of 14% The market size of this sector reached $4.64 billion However, insurance penetration in Vietnam remains low at about 2% of GDP, which is below the averages of ASEAN countries (3.5%), Asia (5.37%), and the global average (6.3%).
The Vietnamese government is prioritizing the advancement of communications and digital technology, designating the development of e-government as one of its top six national priorities since 2015 This focus is compelling large insurance companies to embrace digital technology in their operations, ultimately aiming to improve service quality.
The Insurance Association of Vietnam's special edition newspaper on the 2018 insurance market highlights the growing importance of advanced technologies in managing large insurance accounts for multinational clients These technologies, which include cloud-based software, apps, automation, and mobile communications, form a comprehensive, all-in-one service model that enhances digital business strategies Consequently, there is a pressing need for transformational infrastructure to improve customer experiences and innovate communication methods with clients and intermediaries, particularly in B2B professional services.
Professional services, defined by high knowledge intensity, low capital intensity, and a professional workforce, are characterized by their intangibility, inseparability, heterogeneity, and perishability (Von Nordenflycht, as cited in Gianfranco et al., 2015) However, professional B2B services, such as those in the insurance industry, encompass additional features that extend beyond traditional definitions To meet evolving market demands, insurance companies are rapidly re-engineering their service delivery models, which necessitates changes in their business strategies in response to competition, technological advancements, service quality, and customer satisfaction This research aims to deepen the understanding of the relationship between professional B2B services and the insurance sector.
Interest in service quality within B2B professional services is on the rise Academic literature identifies key characteristics of professional service organizations that can shape customer perceptions of service quality However, these elements may not encompass all factors that customers consider when assessing service quality This research presents a model illustrating how customers perceive service quality specifically in the context of B2B insurance services for general purposes.
RESEARCH OBJECTIVE
This thesis addresses significant gaps in the literature on service quality within the B2B professional service context, particularly in the high-value insurance industry It aims to develop and validate a new scale for measuring service quality in general insurance, focusing on its relationship with customer perceived value (CPV), satisfaction, word of mouth (WOM), and repurchase intention The primary objective is to explore how service quality impacts these key customer metrics.
RESEARCH QUESTIONS
The thesis is structured around 3 research questions The qualitative studies will provide answers to research questions 1 and the quantitative studies will investigate research questions 2 and 3.
Question 1: How do service quality dimensions (interpersonal skills, technical skills, digital technology and reliability) manifest in the B2B professional service context?
Question 2: Adopted into the B2B professional service context, are there significant relationships between each dimension of service quality (interpersonal skills, technical skills, digital technology and reliability) and customer perceived value?
Question 3: In the B2B professional service context, given adequate service quality, does customer perceived value affect customer satisfaction, WOM and repurchase intention?
IMPORTANCE OF THE STUDY
Research Gap Identification
A review of service marketing literature in Vietnam indicates that studies primarily focus on the level of interaction between service providers and clients (Le et al., 2013) While customer satisfaction is often viewed as the key to managing customer relationships, the impact of perceived value on customer satisfaction remains underexplored, particularly in B2B contexts (Minh et al., 2015) In contrast, research in B2C markets, such as that by Pham et al (2018), clearly establishes a relationship between convenience, perceived value, and repurchase intentions.
Research has highlighted the perceived value of service quality on customer revisit intention (2016) and its influence on customer satisfaction, particularly in automated teller machine services (Phan et al., 2015) However, there remains a significant gap in studies focusing on the application of service quality within the context of B2B services, especially in the insurance sector Most existing research has concentrated on health insurance (Do et al., 2014; Nguyen et al., 2012), leaving a lack of exploration into key sub-dimensions of service quality—such as service environments, service outcomes, and service interactions—in B2B professional services related to general insurance in Vietnam.
An analysis by Laplaca and Katrichis (2009) revealed that only 1,204 of 17,853 articles published in 24 marketing journals over the past 70 years focused on B2B marketing and accounting, representing just 6.7% of the total research, highlighting a significant gap in this area The scarcity of literature has resulted in a lack of comprehensive data on the relationship between customer perceived value (CPV) and service quality in B2B contexts Supporting this observation, Patrício et al (2011) noted that existing studies predominantly focus on B2C services, neglecting B2B services, which presents an opportunity cost Furthermore, research on B2B professional services in non-life insurance remains limited, particularly in emerging markets.
This study's credibility is enhanced by additional research indicating a significant gap in B2B-focused studies (Lambert and Enz, 2012) Moreover, this supporting research emphasizes a growing interest across diverse industries in B2B studies In the realm of marketing services, Madhavaram and Hunt also contribute to this expanding field of inquiry.
(2017) highlighted “research on B2B professional service is limited”
In the B2B professional services sector, the attitude, behavior, and expertise of service providers play a crucial role, much like in B2C contexts These services typically involve high levels of interaction, collaboration, and interpersonal communication between providers and clients, which is essential for understanding and addressing business clients' needs Effective interactions allow firms to respond proactively to client requirements, facilitating a quality exchange of information about specific products and services This is especially vital in the insurance industry, where products are intangible and often require customization to meet individual customer needs.
& Hunt, 2017) As a result, this thesis will encompass what all of these studies considered in a B2B setting with consideration towards professional services that require a high degree of involvement
Therefore, this thesis aims to synthesise what is discussed in the B2B context, especially in a professional high-involvement service context.
Academic Importance of the Research Topic
This study highlights critical research gaps, emphasizing that the quality of customer interactions is vital for B2B services, reinforcing our hypothesis While technology plays a crucial role in enhancing customer experience and delivering high-quality service, it is important to ensure that this does not compromise effective personal service and human interaction.
To stay competitive in the marketplace, businesses must blend technology with personal service This approach allows for effective management of digitally engaged customers, ultimately ensuring long-term competitiveness.
Managerial Importance of the Research Topic
On February 15, 2012, the Prime Minister of the Socialist Republic of Vietnam issued Decision No 193/QD-TTg about Vietnam insurance market development that: in the 2016-
In 2020, the insurance industry recognized the urgent need to modernize its information technology and infrastructure to enhance insurance management activities The general insurance sector focused on improving operational management through transaction indices and developing automated risk analysis systems, which support businesses by streamlining underwriting processes and providing early warnings to ensure peace of mind for insurance buyers This period presents an opportunity to assess the perceived value of business customers regarding the service quality of general insurance companies in Vietnam A significant factor influencing service quality is the integration of technology in insurance transactions, particularly affecting high-involvement B2B services like insurance Therefore, it is essential to identify the specific factors that contribute to creating value for organizational customers of B2B insurance services.
Our research highlights the need for caution in adopting technology for B2B professional services, particularly in the insurance sector We provide actionable recommendations to help general insurance companies leverage their strengths while addressing weaknesses, ultimately enhancing service quality and boosting customer satisfaction It is crucial to approach technology implementation carefully, as it can inadvertently lead to customer dissatisfaction if not managed properly Customers often do not view technological interactions as a suitable replacement for personal connections with service staff, which can diminish their overall service experience This perspective aligns with findings from previous studies, including those by Zolfagharian and Yazdanparast (2017), who explored customer behavior in relation to technology.
Research by Locander et al (2018) and Kim (2018) highlights the negative impact of employee behaviors on customer emotions, particularly in retail settings where technological changes can lead to dissatisfaction Complaining employees, often a result of altered job roles due to technology, can adversely affect customer experiences Additionally, the reduction of human interaction in service processes may lead customers to view technology as an inadequate substitute for personal engagement Therefore, organizations facing challenges in customer service quality should rethink their technology implementation strategies to enhance service delivery while minimizing potential issues associated with technological adoption This approach enables organizations to leverage their strengths and address weaknesses effectively.
SCOPE OF RESEARCH
Unit of Analysis
The focus of this research is on understanding customers' perceptions of value in relation to general insurance service providers Data was gathered from corporate employees and high-level executives, employing a key informant approach Qualified informants included middle-level employees, executives, and senior management, such as administration managers, purchasing managers, human resources managers, and a CEO’s assistant Each participant from OCGIS has either directly interacted with the insurance provider or contributed to the decision-making process.
Country and Sector Focus
The focus on the insurance industry in Vietnam is crucial due to the limited research on developing countries compared to developed ones As Vietnam transitions from central planning to market socialism, it faces significant changes in social, legal, and economic institutions, presenting strategic challenges for firms Notably, Vietnam's GDP growth reached 7.08 percent in 2018, the highest in over a decade, yet insurance penetration remains low at around 2 percent of national GDP This sector is gaining attention from businesses for its essential functions, including risk transfer, loss sharing, and investment development, which are vital for economic growth and enhancing business value.
General insurance, alongside life insurance, constitutes a major sector of the insurance industry, necessitating substantial customer engagement Despite its importance, there is a noticeable lack of research focusing on the impact of service quality in a B2B professional service context, particularly regarding its influence on Customer Perceived Value (CPV), customer satisfaction, word-of-mouth (WOM), and repurchase intentions This thesis aims to fill this critical gap in understanding.
3 Nguyen Bich Lam (2018) The Director General of Vietnam General Statistics Office
Digital technology is rapidly transforming various industries, enhancing products and services across sectors However, the insurance industry remains one of the slowest to embrace these digital advancements fully.
RESEARCH METHODOLOGY
Study 1 – Qualitative Study
The qualitative study in Vietnam involved three key steps: first, individual in-depth interviews with seven executives from various industries utilizing insurance services; second, a discussion group with sales representatives from general insurance firms to validate the terminology of identified antecedents; and finally, expert interviews followed by semi-structured interviews with six senior executives from three general insurance firms.
The exploratory phase was crucial in shaping the research focus, refining key constructs, and aiding in hypothesis development Its objectives included further investigation and validation of the primary constructs identified in the literature as drivers of professional insurance service performance and perceived value, as well as confirming and refining the measurement of perceived value within the B2B professional services context.
Study 2 – Quantitative Study
The second phase aimed to empirically test the research hypotheses and validate the developed framework through a quantitative analysis Data was collected via a survey administered to 547 organizational customers in Vietnam, specifically targeting managers with purchasing authority Firms were categorized based on their business sector and size To gather customer opinions, the author distributed the questionnaire to insurance companies’ sales managers during their annual policy renewal visits, ensuring that respondents were representative of their respective sectors and selected randomly.
The quantitative analysis showcased significant control by the researcher, utilizing statistics to display and quantify the collected data Exploratory factor analysis (EFA) and confirmatory factor analysis (CFA) were conducted using SPSS version 22 to refine the underlying constructs, while Cronbach’s coefficient alpha assessed internal reliability Additionally, structural equation modeling (SEM) with AMOS software version 22 was employed to test the proposed causal relationships outlined in the hypotheses.
CONTRIBUTIONS
Theoretical Contributions
Our research makes three key contributions to marketing literature, particularly in the B2B professional service context Unlike the predominant focus on B2C in existing studies, our work expands the service quality framework to address the unique expectations of B2B customers in high-involvement services like insurance Understanding how customer perceived value (CPV) influences satisfaction is essential for defining the dimensions of service quality in this sector.
This thesis employs a rigorous mixed methods approach, analyzing both qualitative and quantitative data from authentic executives and decision-makers in the B2B sector The selected samples are pertinent to the research phenomena and yield valuable insights into the significance of service quality dimensions.
This research investigates the negative impacts of digital technology in the B2B context concerning Customer Perceived Value (CPV) While digital technology is recognized as a crucial factor influencing service quality dimensions, existing literature typically anticipates a positive correlation between digital technology and customer satisfaction However, this thesis presents evidence that contradicts this expectation.
Managerial Contributions
This study confirms the key factors influencing service quality and customer perceived value (CPV) for value co-creation by integrating relevant theories The findings emphasize the importance for managers to identify their essential employees and equip them with the necessary skills and attributes to enhance performance Although the research focuses on a specific industry, the insights are applicable to managerial roles across various sectors, particularly for those coordinating multiple employee groups that interact directly with customers, thereby shaping customer experiences and perceptions.
From a managerial perspective, the findings of this study offer valuable insights into customers' perceptions of different products and services It provides actionable recommendations for general insurance companies to enhance their strengths and address their weaknesses in service quality, ultimately adding value to their offerings and improving customer satisfaction.
The research highlights how marketers can improve competitive resources by strategically implementing advanced technology at key moments to attract new clients and enhance loyalty and retention This practical insight serves as a guide for general insurance firms in effectively allocating resources to gain a competitive edge.
STRUCTURE OF THE THESIS
This thesis comprises seven chapters as follows:
Chapter 1 provides a comprehensive overview of the thesis, outlining the research background, key questions, and objectives It emphasizes the significance of the study, details the research methodology employed, highlights the contributions made by the thesis, and explains its overall structure.
Chapter 2 offers a comprehensive literature review, starting with an overview of the service industry and B2B professional services It examines key concepts such as service quality, customer perceived value (CPV), and their impact on customer satisfaction and loyalty, including word-of-mouth (WOM) and repurchase intentions Additionally, the chapter explores the role of technology in enhancing the insurance industry.
Chapter 3 begins by reviewing previous studies and their findings, which serve as a foundation for developing the research hypotheses and conceptual model central to this thesis.
Chapter 4 outlines the research methodology utilized in this study, focusing on both qualitative and quantitative approaches as suitable designs for hypothesis testing and measurement scale development within the insurance sector It details the research approach, questionnaire design, pre-testing procedures, sampling plan, and the statistical analysis methods employed, while also addressing the concepts of reliability and validity.
Chapter 5 outlines the stages of a qualitative exploratory study, utilizing in-depth interviews, focus groups, and expert interviews It includes a literature review to establish the scales and key constructs, which will serve as the foundation for developing research hypotheses and the conceptual model in the subsequent chapter.
Chapter 6 presents the results and findings, beginning with an analysis of scale development from the previous chapter, along with demographic and descriptive statistics It then details the processes of Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA), concluding with the outcomes of the Structural Equation Modeling (SEM) analysis.
Chapter 7, the final chapter, includes discussion of the study results, contributions, practical implications, limitations and directions for future study.
INTRODUCTION
This chapter's literature review addresses the research questions and gaps identified earlier, focusing on two main areas: Customer Perceived Value (CPV) and service quality The CPV section emphasizes the professional B2B customer's viewpoint on service quality, while the service quality section reviews various models, particularly highlighting the key model proposed by Brady and Cronin (2001).
This chapter will integrate the literature on service quality and Customer Perceived Value (CPV) within the context of Vietnamese general insurance and the professional B2B sector The key dependent variables examined include customer satisfaction, repurchase intention, and word-of-mouth communication.
CUSTOMER PERCEIVED VALUE
Customer Perceived Value Definition
Customer Perceived Value (CPV) is defined by Zeithaml (1988) as the overall assessment of a product's utility based on the balance of what is received versus what is given McDougall and Levesque (2000) further explain that the perceived value of a service can be influenced by the costs associated with its consumption, which may vary with the quantity consumed For our research, we adopt Zeithaml's (2000) definition, emphasizing that customers evaluate the utility of a service based on their perceptions of the value received.
In the context of services marketing, CPV (Consumer Perceived Value) is defined as the consumer's overall evaluation of a product or service based on their perceptions of what they receive versus what they give, as noted by Parasuraman et al (1988) and Zeithaml (1988) While extensive research has been conducted on CPV over the years, much of it has addressed perceived value in general contexts rather than specifically in B2B professional services Consequently, this thesis will not delve into that existing body of literature, with a comprehensive list of these studies available in Appendix 2.1 for reference.
Components of Customer Perceived Value
The essential components of CPV are product quality, service quality and price (Duchessi,
2004) Regarding these essential components, Duchessi (2004) formed them into the
The "value cube" concept indicates that businesses can increase value by meeting or exceeding customer expectations across key components: product quality, service quality, and price Achieving innovative customer value requires significant advancements in all three dimensions at once Understanding the various aspects of the value cube is essential for business success, as customers base their purchasing decisions on how well these factors align with their expectations (Duchessi, 2004; Lemon et al., 2001; Zeithaml and Bitner, 1996).
This thesis will concentrate exclusively on the service quality aspect of customer perceived value (CPV), intentionally excluding considerations of product quality and pricing The subsequent sections will explore the relationship between CPV and service quality in detail.
SERVICE QUALITY IN THE B2B PROFESSIONAL SERVICE CONTEXT17
Service Quality
Service quality is the assessment of how well a service meets customer expectations, as highlighted by Cronin and Taylor (1992) and Parasuraman et al (1988) It encompasses the distinction between technical quality, which refers to what is delivered, and functional quality, which pertains to how the service is provided Additionally, service quality can be evaluated through process quality, assessed during the service, and output quality, evaluated after the service is completed (Grünroos, 1984) Ultimately, the service must fulfill the needs and demands of the customer, as emphasized by Zeithaml and Bitner (2003).
Service quality is a critical evaluation that captures customers' perceptions across specific dimensions, including reliability, responsiveness, assurance, empathy, and tangibles According to Brady and Cronin (2001), service quality comprises three key dimensions: interaction quality, physical environment quality, and outcome quality, which are particularly relevant in the insurance sector Their model builds on the foundational work of Parasuraman et al (1988) and has evolved to include the impact of digital technology and employee behavior (Giebelhausen, 2014) Understanding the role of employee interactions and digital tools is essential in today's business environment, especially within the B2B high-involvement professional service context (Lamberton and Stephen, 2016).
The Hierarchical Model (Brady and Cronin, 2001)
The Brady and Cronin (2001) model of service quality identifies three primary dimensions: interaction quality, physical environment quality, and outcome quality, each comprising three sub-dimensions Interaction quality encompasses attitude, behavior, and expertise; physical environment quality includes ambient conditions, design, and social factors; while outcome quality is defined by waiting time, tangibles, and valence.
Brady and Cronin’s scales provide a detailed assessment of service quality dimensions, particularly highlighting Interaction Quality, which gauges customers' perceptions of their interactions with a company's employees Jha et al (2019) emphasized the significance of employees as a key service-related resource The attitude of employees, encompassing traits such as friendliness, willingness to assist, and understanding of customer needs, plays a crucial role in shaping these perceptions, as illustrated in Table 2.1 These insights are valuable and applicable to this thesis.
Table 2.1 Items of Interaction Quality
You can count on the employees at XYZ being friendly (r).
The attitude of XYZ’s employees demonstrates their willingness to help me (sp).
The attitude of XYZ’s employees shows me that they understand my needs (em).
I can count on XYZ’s employees taking actions to address my needs (r).
XYZ’s employees respond quickly to my needs (sp).
The behaviour of XYZ’s employees indicates to me that they understand my needs (em).
You can count on XYZ’s employees knowing their jobs (r).
XYZ’s employees are able to answer my questions quickly (sp).
The employees understand that I rely on their knowledge to meet my needs (em).
The scale used in our research did not include crucial elements such as the "ability to listen" and "ability to express themselves nonverbally," which are essential for frontline staff in insurance companies to effectively gather information and understand customer needs This omission may stem from the scale's focus on the general service industry rather than the specific nuances of the insurance sector Nonetheless, we found the scale relevant to our study due to its applicability across various service industries, including insurance To comprehensively evaluate interaction quality, we also incorporated supplementary scales from Rentz et al (2002) to address the limitations of the model proposed by Brady and Cronin (2001).
In the B2B landscape of the general insurance sector, consultants must possess a profound understanding of their clients' business strategies to effectively address their needs By leveraging their knowledge of products and the claims settlement process, these professionals can provide valuable consultation, ensuring that customers feel supported by insurance firm employees This expertise is essential and closely linked to the technical skills required in the industry.
Considering the complex nature of the service environment, our appraisal revealed a significant gap To address this, we employed qualitative research methods, allowing us to identify effective scales for measuring interaction quality from the customer's perspective by incorporating their perceptions.
In the insurance sector, the service environment is distinct from other customer service industries, as it emphasizes service interaction over the physical environment Unlike sectors such as restaurants, hotels, airports, and hospitals, where customers spend significant time on-site, insurance services allow salesmen to visit clients at their offices, enabling customers to manage their policies, pay premiums, and report losses from the comfort of their homes using online platforms This shift highlights the need to assess customer perceptions of the physical environment provided by insurance service providers, as illustrated in Table 2.2.
Table 2.2 Items of Physical Environment Quality
At XYZ, you can rely on there being a good atmosphere (r).
XYZ’s ambiance is what I’m looking for in a service provider (sp).
XYZ understands that its atmosphere is important to me (em).
This service provider’s layout never fails to impress me (r).
XYZ’s layout serves my purposes (sp).
XYZ understands that the design of its facility is important to me (etn).
I find that XYZ’s other customers consistently leave me with a good impression of its service (r).
XYZ’s other customers do not affect its ability to provide me with good service (sp).
XYZ understands that other patrons affect my perception of its service (em).
In the B2B general insurance sector, the physical environment includes websites that facilitate customer research on benefits, price comparisons, and service selection Social media platforms also play a role in providing technical consultancy and connecting users to official company websites that offer services like issuing insurance certificates and settling claims efficiently This analysis highlights that only the 'Design' and 'Social Factors' aspects of the service environment are relevant, as customers do not experience a tangible ambiance on websites, and user awareness of others on the site is limited However, social media interactions do allow for some degree of 'Social Factors' as users can observe peer interactions The importance of 'Design' is paramount for virtual customer engagement, as a user-friendly interface is essential to prevent customers from abandoning the site This design aspect is particularly critical since online users can easily leave a website compared to a physical store While 'Ambient Conditions' may become relevant when customers must visit physical locations, such as hospitals for claims, this factor is not directly influenced by insurers Therefore, the emphasis on 'Design' and the impact of 'Social Factors' in social media interactions are crucial for driving sales, overshadowing the lesser relevance of 'Ambient Conditions.'
Despite recognizing the diverse qualities of the physical environment, a significant gap remained To address this, we conducted qualitative research to identify the relevant scales for measuring environmental quality, focusing on a customer perception-based perspective.
Outcome quality measures reflect customers' perceptions of service delivery, emphasizing their desire for high-quality service delivered promptly Customers prefer providers with extensive networks, strong financial backing, and the ability to customize products A positive service experience often leaves customers feeling satisfied.
Table 2.3 Items of Outcome Quality
Waiting time at XYZ is predictable (r).
XYZ tries to keep my waiting time to a minimum (sp).
This service provider understands that waiting time is important to me (em).
I am consistently pleased with the _ at XYZ (r).
I like XYZ because it has the _ that I want (sp).
XYZ knows the kind of _its customers are looking for (em).
When I leave XYZ, I usually feel that I had a good experience (r).
I believe XYZ tries to give me a good experience (sp).
I believe XYZ knows the type of experience its customers want (em).
In the B2B general insurance sector, minimizing waiting times is essential for customer satisfaction, as clients seek prompt compensation through straightforward claim processes Insurance providers strive to meet expected service standards while offering tailored, appealing products and services Key factors influencing customer preferences include the significance of waiting times and the perception of positive experiences, highlighting the importance of delivering quality service and tangible benefits.
Customers cannot fully evaluate service quality until a loss occurs, making trust reliant on the promises outlined in their insurance contracts Therefore, it is essential for insurance firms to offer clear information in these agreements Additionally, the reputation of the insurance provider plays a crucial role, encompassing factors such as branding, financial stability, and the insurer's capacity to reinsure other companies.
Our analysis revealed a significant gap in the factors influencing service quality outcomes Consequently, we conducted a qualitative study to identify relevant scales for assessing customer perceptions of service quality.
To ensure the accuracy of our qualitative research, we adopted a robust measurement scale, specifically Brady and Cronin’s model of service quality measurement This model has demonstrated its reliability through extensive testing and has been selected by various researchers for their studies (Pemer and Skjúlsvik, 2019; Niu, 2019; Levin et al., 2018; Sửderlund et al., 2018; Sipe et al., 2018; Siguaw et al., 2019).
Service Quality Measurement in General Insurance Sector – Context of B2B
2.3.3.1 The differences between the B2B and B2C, along with the differentiation of theory and practice
To clearly understand B2B and B2C marketing, it is essential to highlight their differences, as noted by Hutt and Speh (2012) A key distinction lies in the nature of demand; B2C demand is primarily emotionally driven, while B2B demand is more focused on choices, according to Lilien (2016) Additionally, Hâkansson and Snehota (1995) emphasized that B2B demand places a greater emphasis on relationship building compared to B2C demand.
Coviello and Brodie (2001) argue that the marketing strategies for B2B and B2C demand types exhibit minimal differences, suggesting that this area may not warrant significant academic focus However, bridging the gap between theory and practical application can illuminate the distinctions between these marketing approaches By contributing to the development of knowledge in this field, our research, alongside others, can guide individuals in selecting appropriate theories for their marketing strategies Numerous examples exist that differentiate B2B and B2C marketing, including the identification of unique characteristics for each service type.
B2B professional services are characterised by complexity (de Brentani and Ragot, 1996), knowledge intensity (Wang and Ma, 2014) and specialised skills and knowledge (La et al.,
Customisation has become a key focus for value creation and a major concern for CEOs, particularly in the insurance service industry (BizEd, 2016; Chan, Yim, and Lam, 2010) The industry offers various B2B insurances, such as property, casualty, and cargo insurances, which are frequently purchased by organizations, generating significant revenue for providers Typically, a committee is responsible for deciding on insurance provider bids, as illustrated in Appendix 2.3.
Personal lines of insurance, including homeowner, accident, vehicle, and travel insurances, typically involve individual decision-making in a B2C context, where one person often purchases insurance online According to Lilien (2016), B2C customers are significantly influenced by their personal preferences, a factor that does not play a role in B2B transactions, where decision-making is typically conducted by groups.
Angus et al (2015) explored the distinctions between B2B and B2C professional services, referencing prior research by Maister (2007) and Von Nordenflycht (2010) They identified key characteristics of B2B services, including highly professional staff, customized facilities, significant intangibility, and a high level of symmetrical information exchange between suppliers and customers, all of which influence customer perceptions of service quality Cortez and Johnston (2017) noted that B2B marketing services and products are expanding beyond developed economies into emerging markets This study evaluates these features within the context of the Vietnamese marketplace.
2.3.3.2 General insurance in the context of B2B professional service
The insurance industry is a complex and fragmented sector (Robson, 2015; Kumar et al.,
Insurance is categorized into two main types: life insurance and non-life insurance, also known as general insurance Unlike tangible products that can be physically touched and measured, insurance products are intangible The insurance industry faces inherent risks and uncertainties, positioning insurers as crucial sources of support and guidance for policyholders navigating their businesses This article emphasizes the key characteristics of general insurance, which are consistent across many countries: insurance policies cannot be transferred to others, they function as contracts of indemnity, are typically short-term and renewable, lack surrender value, and provide compensation based on the actual loss incurred or the sum insured.
In some regions, purchasing certain insurances is legally mandated, such as car insurance, which is required upon buying a vehicle Additionally, property insurance is commonly acquired to safeguard a property, especially when a mortgage is involved in its purchase.
Personal insurance options, including accident, travel, homeowner, and vehicle insurance, are readily accessible to consumers online In contrast, business insurance types, such as casualty, cargo, and property insurance, cater to global enterprises and represent a significant revenue stream for insurers The purchasing decisions for these business insurance services are typically made by a committee that evaluates and approves supplier bids, as detailed in Appendix 2.3 – The Organisational Buying Process.
In decision-making processes, conflicting inputs from individuals with diverse objectives and motivations can hinder consensus Conversely, having too few decision-makers may overlook important stakeholder perspectives Therefore, achieving favorable purchasing outcomes and maintaining a competitive advantage relies heavily on an effective decision-making framework.
The analysis indicates that the insurance industry, particularly general insurance, aligns with the characteristics of B2B professional services, which are marked by complexity, knowledge intensity, and specialized skills Customization has become vital for value creation and is a primary focus for CEOs B2B services differ from B2C by exhibiting high information asymmetry, intangibility, and tailored offerings Additionally, factors such as experience properties, credence properties, and associated risks play a crucial role in B2B professional services Research highlights the growing prevalence of B2B professional services, presenting transformative opportunities for companies to elevate their operations.
Charles Taylor (2016), a prominent insurance service provider, emphasizes that insurance is vital for successful trade, industry, and commerce, as it offers the financial security businesses need for trading goods, making capital investments, and protecting their workforces and assets Recent research by Kumar et al (2018) expands the definition of professional services, categorizing insurance products as intangible offerings where customers pay based on agreed terms When purchasing insurance, customers are essentially buying a promise from the insurer, allowing them to assess service quality from their first interaction This evaluation enables customers to compare their expectations with the actual service received, a topic that will be explored further in the next section.
2.3.3.3 Service quality measurement in general insurance sector
Service quality dimensions can vary significantly across different contexts, impacting the importance of each variable in various industries, as noted by Babakus and Boller (1992) and Brady and Cronin (2001) Additional research supports the notion that these dimensions are often industry-specific (Asubonteng et al., 1996) This study aims to deepen the understanding of how these service quality dimensions relate specifically to B2B professional services and the insurance sector.
Bailey et al (2018) emphasize that the communication skills, service attitudes, behaviors, and knowledge of sales staff are crucial for a company's success, aligning with Brady and Cronin's (2001) findings Customers expect effective communication from insurance agents and frontline staff (Christie, 2017) Grönroos (1998) identifies six criteria for perceived service quality: professionalism and skills; attitudes and behaviors; accessibility and flexibility; reliability and trustworthiness; recovery; and reputation and credibility Among these, expertise and professionalism, along with attitudes and behaviors, are key components of interaction quality (Brady and Cronin, 2001) In the context of general insurance, attitudes and behaviors can be categorized as interpersonal skills, while expertise and professionalism correspond to technical skills A qualitative study further refines these terms, ensuring clarity in the insurance sector context, as earlier definitions were found to be inadequate and subsequently removed for precision in the study.
In the Brady and Cronin (2001) model, the physical environment dimension encompasses ambient conditions, design, and social factors, as illustrated in Figure 2.1 The term "technology" is initially employed in Chapter 2 and is further clarified through qualitative research, using more precise terminology relevant to the insurance sector.
Consumers are significantly influenced by the technological environment around them, as highlighted by Thaichon and Quach (2016) The internet serves as a vital platform for sharing information about service providers, their products, and services (Jenkins et al., 2018; Lewis, 2019; Pascoe, Wright, and Winzar, 2017) Furthermore, the dynamic interactions between service staff and customers are increasingly reliant on digital technologies, including tablets, point-of-sale terminals, and kiosks.
RELATED THEORIES
Social Exchange Theory
Sykes and Matza (1957) suggest that positive social exchange relationships can enhance neutralization, fostering loyalty and a sense of duty among employees to reciprocate good treatment Building on social exchange theory, Cropanzano et al (2017) investigated the outcomes of exceptional social interactions, focusing on the exchange of resources during these interactions This theory is particularly relevant in the business sector, especially within general insurance, as it helps explain and analyze business transactions It plays a crucial role in buyer-supplier relationships, generating value for both organizational customers and service providers, particularly in the realm of B2B services.
Social exchange theory is a significant framework in organizational behavior, as highlighted by Cropanzano and Mitchell (2005) and further emphasized by Cropanzano et al (2017), who regard it as a key perspective in management, sociology, and social psychology In the insurance industry, salespeople must possess not only extensive professional knowledge but also the ability to understand customer needs and timing for effective advice This approach fosters a satisfaction-enhancing intention that is crucial for maintaining business relationships (Thompson, 2017) Ultimately, a business customer's overall satisfaction with their service provider positively influences their future intention to repurchase (Thibaut, 2017).
Role and Script Theory
Social exchange behaviors between frontline employees and customers during service encounters, such as insurance transactions, can be understood through role and script theory (Wang, Beatty, and Liu, 2012) According to Solomon et al (1985), both employees and customers assume specific roles during these interactions, following a predetermined script For instance, when a customer enters to purchase an insurance service, they embody the 'customer' role, initiating a defined exchange This script establishes transaction norms and outlines expected behaviors, facilitating a smooth interaction, as emphasized by Leigh and Rethans (1984) and Schank and Abelson (2013), who further support Solomon et al.'s findings.
Recognizing the potential for psychological discomfort when deviations occur from established protocols is crucial, especially for customers, as it can adversely affect their satisfaction Therefore, it is essential for frontline staff to exhibit strong interpersonal skills alongside technical expertise to enhance customer satisfaction during service interactions.
Customer Self-Service Technology (SST)
Technological advancements through digitization have transformed the interactions between service providers and customers, leading to enhanced service quality (Barrett et al., 2015; Lovelock and Gummesson, 2004; Tsou and Hsu, 2017) Self-service technologies (SST), such as interactive kiosks, the internet, and telephone/interactive voice response systems, allow customers to engage with services independently, without the need for a service employee These technologies are particularly useful in the insurance sector for tasks like conducting transactions and accessing vital information, including terms and conditions, coverage benefits, and claims procedures.
Research indicates that Self-Service Technology (SST) enhances customer satisfaction and loyalty, enabling businesses to effectively reach new customer segments (Bitner et al., 2002; Meuter et al., 2005) Beyond improving efficiency, SST empowers both employees and customers by adding value through increased convenience (Hsieh, 2005; Yang and Klassen, 2008).
Understanding the factors that influence customer perceptions and the adoption of self-service technologies (SSTs) is limited In the insurance sector, interactions between customers and frontline employees increasingly incorporate SSTs Consequently, it is essential to explore how customers evaluate the characteristics of SST services and the impact these services have on overall service outcomes.
OUTCOMES OF SERVICE QUALITY
Customer Satisfaction
Customer satisfaction is crucial for meeting consumer needs and desires, especially in a highly competitive environment This significance has prompted researchers and practitioners to investigate its causes and dimensions extensively.
Customer satisfaction is the overall assessment of a company's performance after a purchase, reflecting how well its products or services meet customer expectations (Fornell, 1992; Garbarino and Johnson, 1999; Giese and Cote, 2000; Schirmer, 2018) It is achieved through continuous improvement and effective management systems (Kobylanski and Pawlowska, 2012) Customers expect a dynamic and seamless service delivery process that is straightforward and aligns with their standards, ensuring they receive the specific services they need (Foropon et al., 2013; Ilieska, 2013).
Numerous studies have highlighted the crucial role of customer satisfaction in influencing loyalty and behavioral intentions, establishing it as a key predictor of repurchase intention (Larivière et al., 2016; Phillip et al., 2003; Rose et al., 2012; Schirmer, 2018; Safa and Von, 2015; Tsai et al., 2016; White and Yu, 2005; Zhang et al., 2011) Specifically, Liao et al (2017) demonstrated that consumer satisfaction significantly affects repurchase intentions across various services Ultimately, enhancing customer satisfaction not only fosters customer retention but also directly contributes to a firm’s profitability by driving repurchase intentions (Larivière et al., 2016).
Repurchase Intention
Repurchase intention refers to the positive attitude of consumers that leads to repeat purchases, as defined by Bayraktar et al (2012) as an individual’s judgment about purchasing a product or service Researchers like Chiu et al (2009), Hellier et al (2003), and Kuan et al (2008) emphasize that this intention reflects customers' willingness to buy again from a website It is influenced by individual circumstances and existing situations, making it a dependent variable that can enhance service delivery, management insight, and strategic planning Previous studies have primarily focused on repurchase intention to forecast future behaviors of B2B customers in the general insurance industry, where word of mouth (WOM) significantly impacts decision-making.
Word of Mouth (WOM)
Interpersonal communication plays a crucial role in management and social science, particularly in understanding customer behavior Research by Engel et al (1995) highlights that customers are significantly influenced by information received through word-of-mouth (WOM) rather than relying solely on their own research This trend is further supported by additional studies, indicating that the experiential nature and intangibility of services lead customers to prefer recommendations over personal investigation (Murray, 1991; Zeithaml et al.).
Baker, Donthu, and Kumar (2016) define word-of-mouth (WOM) as an interactive exchange of information about a brand between consumers that is not driven by commercial motives This definition aligns with earlier studies by Arndt (1967) and others Research indicates a strong connection between tie strength and service purchase decisions (Peter and Chatura, 2015) WOM is effective in shaping attitudes and influencing purchase decisions, particularly for credence products (Bhayani, 2016) Consumers often rely on WOM from trusted sources for both everyday items and long-term purchases, highlighting its significance in decision-making (Auf et al., 2016; Zamil, 2011).