Customer Empowerment, Customer Retention, and Performance of Firms: Role of Innovation and Customer Delight as Mediators Through Satisfaction

Introduction

In the current competitive and dynamic business environment customers seek the value product and services, where innovations may be considered as an important element for customer satisfaction. Innovation is all about offering product and services in such a way that it may fulfil the expected need want and desire of the customers, but at the same time, it may also provide pleasure and satisfaction through astounding and attractive features in the product and services (Potra et al., 2018) Customer satisfaction is considered and verified as a source of mediator between service quality and firm’s performance (Otto et al., 2020). Whereas innovative products or services are all about offering unique products & services or techniques to customers which makes the use of product and services more convenient and easier (Mahmoud et al., 2017; Michel et al., 2008). Innovation plays a vital role in the banking industries across the globe. Innovation is not only contributing towards the customer’s satisfaction, but it helps in value addition to the corporate reputation of the banking institutions as well as reduces the cost and makes them stronger in the competitive position of the bank (Berraies & Hamouda, 2018).

It has noticed that the industrial revolution brought changes for the producers as well as digital revolution and innovation has changed the lifestyle of customers. In the current business scenario relationships between companies and consumers are changing, i.e., it has changed the trends of traditional marketing concepts in favour of the empowerment of consumers (Berraies & Hamouda, 2018; Chatterjee & Kamesh, 2020). In today's business world, the customer's power is enhanced and it is expected that if the customer is happy, he will only continue to use the company and its products. By making the product more innovative and more focused on the ongoing performance of the business, companies today are shifting their strategic focus from gaining new customers to retaining existing ones (Yin et al., 2019). Nowadays customer satisfaction is one of the basic requirements of the services industry in developing countries. It has also observed that there is an integrated perspective on customer satisfaction and innovation that leads to customer retention and financial performance of the business. Customer satisfaction and innovation both directly and indirectly affect the financial performance of the firm because customer’s satisfaction & innovation are key factors that strongly connected to the customer retention and it leads to improving the financial performance of the firm (Shin et al., 2018).

Innovation is important for gaining a competitive edge, and customer satisfaction and innovation affect a firm's financial performance. Innovation can affect product and service quality, boosting firm performance (Ngo & O’cass, 2013). To gain a competitive advantage, companies must understand how to create, communicate, and deliver value products to customers (Ulaga, 2011).

According to the findings of previous studies, it is clear that the empowerment of customers has a significant impact on the level of satisfaction experienced by customers (Castillo, 2017; O’Cass & Ngo, 2011). According to the findings of this study, the empowerment of customers does not have a significant impact on the degree to which customers are satisfied or how long they remain customers. Comparative research between India's public sector banks and the country's private sector banks has been conducted, and the findings of that research indicate that customers favor private banks over public sector banks (Ahmed et al., 2020; Kant & Jaiswal, 2017; Virk & Mahal, 2012). It is evident from people perceptions also that customer satisfaction in pirate banks is very low because of bad behaviour of employees in these banks. It is accepted by the employees of the bank that though; they are making lots of efforts to enhance customer satisfaction in public sector banks but accepted that it is hard to achieve. While it is found that customer empowerment has significant impact on Firm’s performance and the results are aligned with the findings of previous researches (Berraies & Hamouda, 2018; Sharanya & Kumari, 2019). This research is unique in nature to highlight the harsh reality of Indian public sector banks.