Application of the European Customer Satisfaction Index to Postal Services. Structural Equation Models versus Partial Least Squares

Christina O'Loughlin () and Germà Coenders ()

No 4, Working Papers of the Department of Economics, University of Girona from Department of Economics, University of Girona

Abstract: Customer satisfaction and retention are key issues for organizations in today’s competitive market place. As such, much research and revenue has been invested in developing accurate ways of assessing consumer satisfaction at both the macro (national) and micro (organizational) level, facilitating comparisons in performance both within and between industries. Since the instigation of the national customer satisfaction indices (CSI), partial least squares (PLS) has been used to estimate the CSI models in preference to structural equation models (SEM) because they do not rely on strict assumptions about the data. However, this choice was based upon some misconceptions about the use of SEM’s and does not take into consideration more recent advances in SEM, including estimation methods that are robust to non-normality and missing data. In this paper, both SEM and PLS approaches were compared by evaluating perceptions of the Isle of Man Post Office Products and Customer service using a CSI format. The new robust SEM procedures were found to be advantageous over PLS. Product quality was found to be the only driver of customer satisfaction, while image and satisfaction were the only predictors of loyalty, thus arguing for the specificity of postal services.

Keywords: European Customer Satisfaction Index; ECSI; Structural Equation Models; Robust Statistics; Missing Data; Maximum Likelihood (search for similar items in EconPapers)
JEL-codes: C13 C39 C51 H42 L89 M11 (search for similar items in EconPapers)
Date: 2002-09
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (7)

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