The interrelationship between internal marketing, employee perceived quality and customer satisfaction – a conventional banking perspective

Abstract

This study explores how internal marketing influences employees’ perceived ability to deliver service quality in the conventional banking industry in Oman. The influence of employee perceived service quality on customer satisfaction is also established. Data was obtained from retail banking branch employees at the customer front line of conventional banks in Oman using electronic surveys. A total of 355 responses were obtained for data analysis. The measurement and structural models were measured through structural equation modelling. The findings reveal that internal price, internal promotion, and internal performance management are influencers of service quality, with the latter having a direct relationship with customer satisfaction. In addition, service quality has a positive influence on customer satisfaction in conventional banks in Oman. The findings can guide conventional banking management in Oman on how internal marketing can promote service quality, ultimately leading to positive customer satisfaction experiences. Internal marketing as a strategy has been explored mostly in established western markets and not in the Middle Eastern region of the world. This study explores different internal marketing mix elements, which have been tested for the enablement of service quality and customer satisfaction in the conventional banking sector of Oman.

Keywords:

• internal marketing
• service quality
• customer satisfaction
• conventional banking
• frontier marke

PUBLIC INTEREST STATEMENT

There is a constant demand from customers for better service quality through value-added services, such as the speed of application processing, improved personalised services, and more specialised training to enable employees to competently address customer issues and needs. This has resulted in bringing internal marketing to the fore as a mechanism that enables employees to deliver higher levels of service quality and customer satisfaction. The findings from the data collected using a self-administered questionnaire indicated that internal price, internal promotion, and internal performance management are internal marketing elements that influence service quality, which influences customer satisfaction in the conventional banking environment of Oman. On a practical level, these findings are important as they inform conventional banks in Oman of the need to enhance internal marketing education amongst conventional bank managers at all levels. Furthermore, the internal marketing mix elements that banks need to focus on to strengthen internal service quality levels and secure customer satisfaction are highlighted.

1. Introduction

The deregulation of the banking industry, adoption of advanced technology, increased competition among banks and non-financial service providers, and evolving customer needs have all impacted the competitive landscape of the banking industry worldwide (Gupta & Xia, 2018). Banks are becoming more aware of how customers experience their services, with service experiences and long-term customer relationships gaining increased attention across academic literature. A key concept and prevailing theme in current marketing literature comprise the employees’ ability to develop strong internal relationships through internal marketing practices to facilitate the delivery of service excellence, thereby enabling the organisation to deliver on social exchange contracts and customer satisfaction. This is an important premise, considering that over 20 years ago Foreman and Money (1995) validated the importance of internal marketing as a strategy to deliver on external customer satisfaction expectations. Almost a decade later, Ahmed and Rafiq (2003) supported this premise, stating that by securing the satisfaction of employees as internal customers, the organisation can be better positioned to deliver on the needs of external customers.

However, the grounding principles of internal marketing have not been actively applied within the Middle Eastern business environment, while internal marketing strategies have been extensively used within established western market environments. Nevertheless, no previous studies have explored internal marketing and its linkage to service quality and customer satisfaction within a Middle Eastern environment, such as Oman (Hasen, 2014; Ismail & Sheriff, 2016). In Oman, internal marketing is still in the embryonic phase of awareness and development (H. Maki, personal communication, 18 October 2018). Hence, there is a need to assess whether internal marketing is implemented within Omani banks and if the internal marketing mix elements serve as enablers of service quality and customer satisfaction in conventional banking. To address this gap, it is necessary to explore the perceived implementation of internal marketing and any possible interrelationships between internal marketing, service quality, and customer satisfaction.

Since customers view employees as the brand or service, employees’ beliefs, attitudes, and behaviour could positively or negatively influence the organisation’s brand and competitive positioning (Du Preez et al., 2017). Consequently, when employees are treated as internal customers and the internal environment is structured to enable employees to do what is required of them, they are driven to ensure superior levels of service and meet the brand promises made to customers (Grace & Lo Iacono, 2015; Matanda & Ndubisi, 2013). Satisfied customers re-patronise the organisation and spread positive word of mouth, resulting in increased profits and market share (Bakar et al., 2017; Fraering & Minor, 2013). Therefore, if the internal marketing elements were to be arranged into a formal structure of interdependent variables and attention was to be given to those with the most power to influence employee and customer satisfaction, banks would be more empowered to ensure increased internal service quality levels, thereby enhancing external levels of service quality and satisfaction. Considering this, the aim of this research study is to investigate whether selected elements of the internal marketing mix influence employees’ ability to deliver service quality and in turn increase customer satisfaction. The employees’ perceptions of their ability to deliver service quality in a frontier market like Oman was studied, and how this relates to service quality and customer satisfaction was explored.

This research contributes to theory since it provides an alternative approach to the capture of quality of service delivery and the satisfaction of customers through the application of employee opinion. Internal marketing is a new phenomenon to businesses in the Middle East, and the proposed “10 internal marketing mix Ps” have not been tested before to enable service quality, specifically in the conventional banking sector of Oman. The 10 Ps model was used in the study since it can provide an improved understanding of the application of the selected internal marketing elements to enhance service quality and customer satisfaction within Oman’s conventional banking sector. Ahmed et al. (2003) and Harrington et al. (2017) stated that the internal marketing mix elements link employees, organisational strategy, and strategic objectives. Consequently, the different internal marketing elements in the 10 Ps model proposed are viewed as potential enablers for the development of strong internal relationships, wherein value is created for employees (satisfaction and well-being) to achieve the organisation’s desired results.

The study also contributes to managerial practice as it provides insight into how the selected internal marketing mix elements serve as potential enablers of service quality in a frontier market. Furthermore, the study explains how enhanced service quality levels can result in higher levels of customer satisfaction through the application of the internal marketing mix elements selected for this study.

This paper starts with an orientation towards the need for the study. The next section introduces the grounding theories applied to the study as well as the different hypothesised relationships and proposed model investigated in the study. This is followed by a discussion of the methodology, results, theoretical and practical contributions, and managerial implications.

2. Theoretical framework

2.1. The internal marketing mix elements and their relationship with service quality and customer satisfaction

Internal marketing is a strategy for the creation of high-performance organisational systems, which is achieved through the management of the interdependent elements of the internal marketing mix (Harrington et al., 2017; Komarac et al., 2017). The internal marketing mix elements are viewed as the controllable elements within the organisational environment, which have been divided into three groups: the traditional marketing mix elements, the service mix elements, and the contemporary mix elements. The internal marketing mix elements link employees to the organisation’s strategy and strategic objectives (Ahmed et al., 2003; Harrington et al., 2017). Each of these elements is viewed as an enabler for the development of strong internal relationships in which value is created for employees (satisfaction and well-being) to achieve the organisation’s desired results.

Since employees spend a significant part of their lives at work, the notion of creating value for employees may be more relevant than value creation for external customers (Grace & Lo Iacono, 2015). For example, banking customers in Oman simultaneously co-create value with a number of banks and other organisations, where one organisation can be easily substituted by another (J. Chang, personal communication, August 24 2018). This implies it is relatively easy for customers to switch banks if they are not satisfied with the service.

However, employees are contractually bound to one organisation and it is more difficult for them to switch to another employer, as this depends on the availability of alternative opportunities, the right package, and termination terms (B. Al-Ismaili, personal communication, 31 October 2017). To this end, the organisation’s internal value proposition has a significant impact on employees’ financial, social, and psychological well-being (Grace & Lo Iacono, 2015). For instance, a well-designed financial reward programme incentivises employees to remain with organisations for longer periods of time (Kwon & Hein, 2013). Positive internal relationships and social dynamics offered through the organisation’s internal environment have a significant positive impact on employees’ experiences at work (Collins et al., 2016). Work-life balance and supportive supervisory relationships are but a few elements that contribute to psychological well-being. When all aspects of employee well-being and satisfaction are considered and structured holistically, value is created for employees. The internal marketing mix provides an attractive internal value proposition in which value can be created through the implementation of each of the marketing mix elements. When employees perceive that value has been provided, they produce value for customers through higher levels of service quality, which translates into elevated levels of customer satisfaction (Marques et al., 2018).

2.2. Validation for the inclusion of the additional contemporary internal marketing mix elements in the study

The contemporary mix of marketing elements comprises internal performance management, internal purpose, internal political power, and internal procurement. These elements serve as additional decision-making variables used to strengthen the internal environment and help in the development and sustainability of internal relationships (Egan, 2006; Mutharasu et al., 2013). The validation for the inclusion of each of these elements to the study and their relevance to the Omani banking sector are discussed next.

2.2.1. Validation for the selection of internal performance management as a contemporary internal marketing mix element and its inclusion in the study

Performance management systems are lacking in terms of identifying and tracking performance metrics, and most banks in Oman are not providing regular performance feedback to employees (A. Loots, personal communication, 3 March 2017). Performance feedback is a significant enabler of employee satisfaction and success, as it is viewed as being emotive and a modifier of future performance (Tricomi & DePasque, 2016). Internal performance management has been included as it is essential to manage how the service is performed and how internal suppliers are performing in accordance with internal customer expectations (Carter & Yeo, 2017; Constantinides, 2006; Grove et al., 2000; Yudelson, 1999). Furthermore, regular performance feedback provided to employees communicates that they are cared for and supported by their employers, thereby strengthening the employee-manager relationship. This results in higher levels of satisfaction motivating employees to serve customers well (Kim & Carlson, 2016).

2.2.2. Validation for the selection of internal purpose as a new internal marketing mix element and its inclusion in the study

Internal purpose recognises the importance of alignment between organisational and individual purpose. Due to the poor alignment of individual and organisational purpose, banks in Oman are missing opportunities to create more meaningful jobs and internal relationships for employees, which could have many benefits for employees and customers (R. de Bruin, personal communication, 3 March 2018). In addition, through actions like Corporate Social Responsibility initiatives, employees feel proud to belong to their bank, thereby strengthening the employee-organisation relationship. As a result, employees experience higher levels of satisfaction and give back to the organisation through enhanced service quality and customer satisfaction (I. Al Mughairi, personal communication, 15 October 2017; Carter & Yeo, 2017). Thus, internal purpose has been included as an additional element.

2.2.3. Validation for the selection of internal political power as a new internal marketing mix element and its inclusion in the study

Internal political power reflects the uncontrollable forces within the organisation’s environment, which affect the development of internal relationship and the delivery of internal service quality (Erkutlu & Chafra, 2016). In turn, poor internal service quality will impact the perception of external service delivery and the level of customer satisfaction experienced (Latif & Baloch, 2016). For the purpose of the study, wasta was positioned as the dominant political power in Omani banks. Wasta is referred to as a social influence defined as an occurrence in which organisational members attempt to, either directly or indirectly, influence other members by a means not authorised by formal standard operating procedures, in an effort to achieve personal or group objectives (Han et al., 2016). Pockets of wasta exist across the banks, which is expected in some cases and, if leveraged in a positive way, can be beneficial as a networking practice. However, it is important that political influences are managed. In some instances, wasta is used in the selection and promotion of employees, which creates a sense of unfairness and dissatisfaction (A. Loots, personal communication, 3 March 2017). As a form of favouritism, wasta impacts promotional decisions and political plays within these banks. When not controlled, this creates an environment of distrust in Omani retail banks, where employees do not feel safe to collaborate with one another or share knowledge, resulting in poor internal relationships, service delivery, and dissatisfied customers internally and externally (D. O’Riordan, personal communication, 2 March 2018).

2.2.4. Validation for the selection of internal procurement as a new internal marketing mix element and its inclusion in the study

Internal procurement as part of an internal marketing strategy recognises the importance of resources required to deliver the service—in this case, the recruitment of talented customer-orientated employees (Ng et al., 2016). The right employees may not be recruited into the right positions as a result of Omanisation targets, which state Omani employees must be recruited over expat employees, even if the Omani employee does not have the desired skill level or knowledge (A. Loots, personal communication, 3 March 2017). If the wrong employees are placed in the wrong roles, they will be unable to establish strong relationships or serve their internal or external customers adequately, which will have negative consequences for service quality and customer satisfaction objectives (Giannakis et al., 2015). Therefore, internal procurement has been suggested as an additional element for inclusion in this study.

2.3. Theories grounding the study

Relationship marketing theory and social exchange theory are applied as grounding theories to this study. The objective of relationship marketing is to increase mutual value in the exchange between the customer and the employee (Schulz et al., 2017). Internal marketing is the mechanism for aligning the internal market and internal practices with customer outcomes and external market objectives, such as service quality and customer satisfaction. This is achieved by maintaining effective relationships between the organisation and its employees (Tortosa Edo et al., 2015).

From a social exchange theory perspective, organisations are viewed as exchange networks in which relationships are guided by social exchange principles (Grace et al., 2017). Internal marketing contributes to social exchange, as when employees’ needs have been met and strong internal relationships have been created, they feel satisfied and obligated to reward the organisation with positive behaviour, such as trust and commitment (Wu & Lee, 2017). This further enhances the service experience, with external customers positively influencing their perceptions of service quality and ultimately customer satisfaction (Fatima & Razzaque, 2014; Proença & Castro, 2000).

Different research studies (Barnes et al., 2004; Bell & Bell, 1998; Boukis et al., 2015; Budhwar & Malhotra, 2009; Grönroos, 1999; Karanges et al., 2014; Namin & Moghaddam, 2014; Schulz et al., 2017; Ullah & Ahmad, 2017) have confirmed the linkages between internal marketing, relationship marketing theory, and social exchange theory, thereby reinforcing these as the grounding theories for internal marketing. However, no studies have been undertaken in the Middle Eastern region, nor in frontier markets where the relationship marketing and social exchange theories have been applied as the grounding theories to develop improved knowledge of internal marketing and the relationship between the internal marketing mix elements and service quality.

3. Theoretical model development

3.1. The interrelationship between internal product and employees’ perceived ability to deliver service quality in retail banks in Oman

Through the better design of job products, comprising the employees’ jobs and elements related to this, retail banks can provide higher levels of service quality, as employees are placed into positions that satisfy their needs, thereby enabling them to perform better (Barnes et al., 2004). When components, such as role fit, training and development, and career progression, are factored into job products, retail banks are better able to produce internal satisfaction and quality, resulting in external service quality (Reynolds-De Bruin, 2014).

From an internal perspective, product generally relates to the employee’s job (Haider & Akbar, 2017). When employees have been provided with elements, such as learning and development and career development plans, they are more empowered to deliver higher-level job performance to customers, thereby being more able to satisfy customer needs and expectations through enhanced levels of service quality (Bagga & Srivastava, 2014; Oyitso & Olomukoro, 2012). Therefore, it is hypothesised that:

H1: There is a significant positive relationship between the internal product element of the traditional marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.2. The interrelationship between internal price and employees’ perceived ability to deliver service quality in retail banks in Oman

Internal price considers the costs that employees incur to work for the organisation in the form of psychological and opportunity costs (Wilson et al., 2012). Employees experience satisfaction when they perceive the costs of working for an organisation to be low. Improved levels of satisfaction in turn affect the level of work effort afforded by employees, resulting in a more satisfying customer experience, higher levels of service quality, and external customer satisfaction (Bakotić, 2016). The psychological and opportunity costs experienced by employees to be in the service of the organisation result in stress and the notion that employees may have missed out on better opportunities elsewhere (Grayson & Sanchez-Hernandez, 2010). By controlling these costs, employees can perform their jobs well, which positively influences the relationships between staff at all levels. Such a positive influence will also lead to improved levels of internal and external service quality and the creation of satisfying experiences to internal and external customers to the organisation (Leung et al., 2011). Consequently, it is hypothesised that:

H2: There is a significant positive relationship between the internal price element of the traditional marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.3. The interrelationship between internal promotion and employees’ perceived ability to deliver service quality in retail banks in Oman

The internal promotion element is crucial in the understanding of employees’ needs and the communication of these across the organisation to create an internal market-orientated culture (Fang et al., 2014). Internal promotion is also key in the sharing of information and knowledge, ensuring the adherence to shared goals and the strengthening of congenial relationships between employees (Akkas et al., 2015). Internal promotion entails all communication activities to advise, excite, and prompt employees on the organisation’s vision, purpose, and strategic objectives (Bruhn & Schnebelen, 2017). Well-executed communication that is internal to the organisation emphasises internal relationships and the sharing of knowledge. Through such an approach, employee satisfaction is enhanced and employees are able to deliver higher levels of service quality to customers (King & Lee, 2016; Ventola, 2014). Thus, it is hypothesised that:

H3: There is a significant positive relationship between the internal promotion element of the traditional marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.4. The interrelationship between internal people and employees’ perceived ability to deliver service quality in retail banks in Oman

Internal people are the employees, which include the direct manager and co-worker perspectives (Reynolds-De Bruin, 2014). The relationship between co-workers creates the notion of teamwork, trust, and team-spirit feelings. If positive and trusting relationships exist between co-workers, these employees will bond better as a team (Ansari & Malik, 2017). Previous studies have shown that co-workers and supervisors support internal marketing objectives, whereby strong relationships can be fostered between employees and managers who enhance trust and collaboration (Ghoneim & El–Tabie, 2014). Through this approach, improved quality service levels and customer satisfaction are secured (Fazio et al., 2017). Hence, it is hypothesised that:

H4: There is a significant positive relationship between the internal people element of the services marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.5. The interrelationship between internal process and employees’ perceived ability to deliver service quality in retail banks in Oman

Effective, well-designed processes are crucial for internal and external customer satisfaction (Camgöz-Akdağ et al., 2016). Employees assess the level of internal service received from their internal suppliers and, if consistent and reliable, they perceive value, which results in feelings of satisfaction (Luu et al., 2016). Internal processes refer to how employees receive a job product, such as human resources (HR) processes, and the processes followed that allow internal suppliers to deliver material or information to internal customers (Ahmed & Rafiq, 2002). Studies show processes that are streamlined, effective, and automated enable employees to deliver within faster turnaround times, thereby improving the internal response capability, leading to improved levels of quality service delivery and more satisfied customers (Chan & Tay, 2018). Considering this, it is hypothesised that:

H5: There is a significant positive relationship between the internal process element of the services marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.6. The interrelationship between internal physical evidence and employees’ perceived ability to deliver service quality in retail banks in Oman

Internal physical evidence (which incorporates internal place) refers to the internal environment, such as the layout of office space, lighting, music, air quality, look and feel of the intranet, and any promotional material used to communicate with employees. These contribute to positive employee experiences and strengthen internal relationships (Johnson, 2013). When employees have pleasing work environments and equipment, they feel more satisfied, which leads to improved levels of quality service delivery and customer satisfaction (Taherdoost et al., 2014). For this reason, it is hypothesised that:

H6: There is a significant positive relationship between the internal physical evidence element of the services marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.7. The interrelationship between internal performance management and employees’ perceived ability to deliver service quality in retail banks in Oman

Performance management is an important way to generate satisfaction for employees and customers (Cambra-Fierro et al., 2014). There is evidence that by improving performance measurement systems and practices, employee engagement levels can be enhanced, which influences employee performance and positively impacts customer satisfaction (Bourne et al., 2013; Smith & Bititci, 2017). Internal performance management encompasses well-described key performance indicators (KPIs), visual metrics, and regular performance feedback (Laisasikorn & Rompho, 2014). One of the most effective methods of measuring individual and team performance relative to expectations is through programmes like Lean Management and Agile, coupled with regular feedback (Boak et al., 2017). In this way, employees understand how they contribute to the team’s performance (Tezel et al., 2016). As a result, increased employee satisfaction levels are secured, leading to improved service quality levels, which positively impact customer satisfaction. Considering the above, it is hypothesised that:

H7: There is a significant positive relationship between the internal performance management element of the contemporary marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.8. The interrelationship between internal purpose and employees’ perceived ability to deliver service quality in retail banks in Oman

Organisations focused on creating a connection between employees and the organisation’s mission and values are able to establish a socialised dynamic in which employees feel part of something bigger than themselves (Renjen, 2018). This results in an emotional attachment to the organisation that develops a feeling of internal purpose, which causes higher levels of employee satisfaction and service quality delivery levels (Karanika-Murray et al., 2015). Internal purpose can be described as the organisation’s philosophical heartbeat. It is regarded as emotional since it connects the heart and head (Kenny, 2014). Internal purpose supports internal marketing objectives, as employees who consider their work to be purposeful feel significant within the internal environment and develop a psychological attachment to the organisation. These employees go above and beyond to achieve the objectives of the organisation, such as service quality and customer satisfaction (P. Lategan, personal communication, 2 September 2018). Consequently, it is hypothesised that:

H8: There is a significant positive relationship between the internal purpose element of the contemporary marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.9. The interrelationship between internal political power and employees’ perceived ability to deliver service quality in retail banks in Oman

Internal political power refers to the complex mixture of power, influence and behaviour, which has an impact on the organisation and the relationships therein (Abbas & Awan, 2017). When employees perceive internal political power—in the context of this study referred to as wasta—to be high, it indicates dissatisfaction with their job and the organisation (Agarwal, 2016). When employees believe that leaders are controlling wasta influences, they feel they are being treated fairly and reward the organisation by delivering service quality and customer satisfaction (C. Bezuidenhout, personal communication, 22 October 2018). Therefore, it is hypothesised that:

H9: There is a significant positive relationship between the internal political power element of the contemporary marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.10. The interrelationship between internal procurement and employees’ perceived ability to deliver service quality in retail banks in Oman

Recruitment and selection strategies are strongly linked to organisational performance and customer satisfaction (Begum et al., 2014). Candidates selected due to their compatibility with the organisation’s culture and values are more likely to experience elevated levels of satisfaction and deliver higher levels of service quality (Chen et al., 2016). As a result, employees with positive attitudes and increased levels of satisfaction perform better and influence others to do the same (Susanty et al., 2013). Internal procurement encompasses the identification and hiring of skilled and experienced customer-orientated employees (Argue, 2015). Ahmed and Rafiq (2002) stated that recruitment and selection tactics are key competencies required for internal marketing success, as they enable organisational performance through the procurement of customer-minded employees who are able to deliver superior-quality service levels. This then drives enhanced satisfaction experiences amongst customers. As a consequence, it is hypothesised that:

H10: There is a significant positive relationship between the internal procurement element of the contemporary marketing mix and employees’ perceived ability to deliver service quality in retail banks in Oman.

3.11. The interrelationship between employees’ ability to deliver service quality and their perceived ability to deliver on customer satisfaction in retail banks in Oman

Previous studies show that service quality is widely recognised as the dimension with the strongest influence on overall customer satisfaction (Olsen et al., 2014; Selvakumar, 2015). This is attributable to the notion that service quality results in fewer errors, assists in the development of stronger customer relationships, and improves overall responsiveness (Sahi et al., 2017). The level of service quality experienced by customers in the banking sector has a direct influence on how these customers behave—for example, how price-sensitive they are and their decision to buy more products and/or services (Ramanathan et al., 2018). Service quality and customer satisfaction are conceptualised as distinct constructs, with the understanding that service quality influences customer satisfaction, specifically within the banking industry (Narteh, 2018). In this regard, service quality is concerned with conformance to service design and specification, while customer satisfaction is concerned with monitoring and measuring how well the bank is delivering the service. The assumption here is that the better the service quality delivered, the higher the level of customer satisfaction (Famiyeh et al., 2018; Izogo & Ogba, 2015). In addition, various studies (Singh, 2016; Thusyanthy & Tharanikaran, 2017; Yuen & Thai, 2015) have proved that the quality of service delivered directly influences the satisfaction level of customers. Therefore, it is hypothesised that:

H11: There is a significant positive relationship between service quality and customer satisfaction.

Figure 1 provides an illustration of the theoretical model proposed for this study.

Figure 1. The proposed theoretical model. Source: Researchers’ own construct

4. Methodology

This study follows a descriptive research design (Churchill et al., 2010; Iacobucci & Churchill, 2015) and flows from Dr Leigh de Bruin’s doctoral thesis, published at the University of Johannesburg under the title Internal marketing and the delivery of service quality and customer satisfaction in the Oman banking industry. Ethical clearance for the study was provided by the ethical committee of the School of Consumer Intelligence and Information Systems (SCIIS) at the University of Johannesburg in South Africa. The ethical clearance number for the study is 2018MM07. Data was collected from conventional banking employees in Oman who directly engage with customers at all service points and who reside in the major cities of Oman. These employees denoted the sampling units and elements of the study and participated out of their own free will.

The study focused specifically on customer-facing employees working for the major conventional retail banks in Oman. The sampling process was conducted over three phases: the first phase entailed the use of judgement sampling to select the participating banks; the second phase used quota sampling to identify the type of employees for survey purposes and thus the sampling frame; and the third phase applied a census approach to survey employees in the sampling frame.

Phase one included non-probability sampling in the form of judgement sampling to select the conventional banks participating in the study, and comprised the sampling frame. Judgement sampling ensues when participants—in this case, the conventional banks of Oman—are selected according to the researcher’s belief that they will meet the study’s requirements (Hair et al., 2017). The sampling frame initially consisted of three banks representing the major conventional banks in Oman, since they hold 65.7% of the total banking assets combined in the country, thereby owning the bulk of the conventional banking market. However, during the study, one of the major banks pulled out of the study due to a potential merger with another bank and it was not in a position to be surveyed. The remaining two banks still had a combined net banking worth of 52% of the total bank assets in Oman, validating their participation in the study.

Phase two focused on the identification of the samples to be surveyed from the participating banks (Hair et al., 2017). The sampling frame consisted of conventional retail banking branch employees at the customer front line of the banking sector in Oman. Quota sampling was applied to identify employees for the survey. For this study, employees had to meet the specified quota in terms of being customer front-line retail banking branch employees. Through this approach, the researchers were able to ensure that appropriate subgroups of the banking population were included for survey purposes (Hair et al., 2017). The number of customer-facing employees for the selected conventional banks in Oman was 2 236. The HR directors of each bank arranged for lists of their branches’ customer-facing employees to be drawn and a census approach was applied, which led to the third phase.

Phase three included a census approach to survey the sample frame, given that the customer-facing branch employee population in the selected banks is relatively small, and each of these employees could be contacted with ease. A census is defined as a research method that includes the collection of data from every member of the defined population (Hair et al., 2017). Retail banks in Oman often experience low response rates when it comes to surveys, and a census approach enabled the researcher to obtain a larger sample size. A person-administered survey was conducted with respondents from the conventional banks to collect data. The person-administered surveys carried out with respondents from the selected conventional banks were conducted by the researcher at the employees’ workplaces. The researcher met with groups of employees and presented each employee with a questionnaire and clearly defined the study’s objectives. Furthermore, the researcher was present to clarify any areas of ambiguity and to check that the questionnaire had been completed correctly in full.

The questionnaire started with a prelude and included sections enquiring about the demographic profile and internal marketing, service quality, and customer satisfaction perceptions of respondents. The respondents had to indicate their level of agreement or disagreement to the different items that constitute the constructs in the study (internal marketing elements, service quality, and customer satisfaction). Once the questionnaire had been designed, a pretest was needed to assess the different items before they were translated into Arabic, with a further pretest being required once the Arabic translation was completed. A professional translator was used to translate the questionnaire from English into Arabic. The researcher then sat with the heads of communications from the conventional banks who participated in the study to ensure that the translation was correct. Each item of the questionnaire was explored individually. Both heads of communications from the participating banks would read the Arabic version of the question and then translate it back into English so that the researcher could assess whether the statement translated correctly and the meaning of each statement remained intact. Numerous changes were required due to the meanings of some items being lost in translation or poor Arabic words being used. Three drafts of the Arabic questionnaire were required until it was at a level deemed acceptable by all stakeholders (namely the different heads of communications and the HR directors of the participating banks). Once completed, the questionnaire was tested with the HR managers of the banks to ensure that the English adequately matched the Arabic. The questionnaire was then pretested with 30 customer-facing employees from both conventional banks that participated in the study. Following this pretest, no further changes were required and the questionnaire was fielded. The study applied a five-point Likert scale that ranged from 1 (strongly disagree) to 5 (strongly agree).

The questionnaire constituted four sections. The first section focused on demographic information to categorise the different types of employees who responded. The second section established the degree to which internal marketing is applied in the bank. The different internal marketing constructs contained various items that were adapted from Alwerthan (2016), Burin (2010), Demo et al. (2012), Karatepe (2013), Reynolds-De Bruin (2014), Sharma et al. (2016), Steger et al. (2012), and US Office of Personnel Management (2017). The third section measured employees’ perceived ability to deliver service quality, with the items used to measure this being adapted from Mohd-Shariff (2013). The fourth section measured employees’ perceived ability to deliver customer satisfaction, with items being adapted from Anaza (2010). Table 1 summarises the scales and sources.

Table 1. Constructs and scale items

Internal marketing mix elements	Sources
Internal product	Burin (2010)
Internal price	Burin (2010); Reynolds-De Bruin (2014); US Office of Personnel Management (2017)
Internal promotion	Burin (2010)
Internal people	Burin (2010); Reynolds-De Bruin (2014)
Internal process	US Office of Personnel Management (2017)
Internal physical evidence	Burin (2010); Reynolds-De Bruin (2014); US Office of Personnel Management (2017)
Internal performance management	Sharma et al. (2016); US Office of Personnel Management (2017)
Internal purpose	Steger et al. (2012)
Internal political power	Alwerthan (2016); Karatepe (2013)
Internal procurement	Demo et al. (2012); US Office of Personnel Management (2017)
Service quality	Sources
Service quality	Mohd-Shariff (2013)
Customer satisfaction	Sources
Customer satisfaction	Anaza (2010)

A total of 2 236 customer-facing employees, forming the sample frame of the study, completed questionnaire electronically. Ultimately, 355 questionnaires could be used, reflecting a response rate of 16%. Respondents were informed that their responses are anonymous and confidential in terms of the information provided on the questionnaire. Initially, the Arabic and English versions of the questionnaire were merged into one spreadsheet and mirrored one another (the English version was on the right side of the page and the Arabic version on the left side of the page). Codes were then applied to each section and item. The data from the electronic survey was extracted for the Arabic and English versions of the questionnaire, and the data from these converged into one spreadsheet as per the coding. The data was then added to the master spreadsheet, which already contained the manual capture. The data was now ready to be analysed.

After the editing and cleaning of the data, it was entered into SPSS 23.0. To develop an understanding of the demographic profile of the respondents, frequencies and descriptive statistics were calculated. In addition, respondents’ awareness of the internal marketing mix implementation at their bank and their perceived ability to deliver service quality and customer satisfaction were established through structural equation modelling (SEM). The assessment of the measurement and structural models was secured through Amos 25.0. Due to the complexity of the hypothesised framework in the study, it was decided that SEM would be appropriate for the data analysis, as it works well when testing models, based on well-developed theoretical models (Little, 2013). SEM is also able to represent the unobserved indicators and account for measurement errors (Maduku, 2015).

5. Empirical findings

5.1. Respondent profile

The profile of the respondents who participated in the study is included in Table 2 below.

Table 2. Demographic information of Omani retail bank employees

Items	Description	Frequency	Percentage
Age	18–25	43	6.9
	26–30	154	24.6
	31–35	162	25.8
	36–40	126	20.1
	41–45	77	12.3
	46–50	43	6.8
	51–55	15	2.4
	56–60	5	0.8
	61–65	1	0.2
	65 and above	1	0.1
	Total	627	100
Gender	Male	257	41.0
	Female	370	59.0
	Total	627	100
Nationality	Omani	562	89.5
	Expat	65	10.5
	Total	627	100
Years in bank	1–5	272	43.5
	6–10	152	24.3
	11–15	83	13.2
	16–20	41	6.4
	20 and above	79	12.6
	Total	627	100

Source: Authors’ own construct

The average age of the employees participating in the study was 31–35 (25.8%), followed by the 26–30 age category (24.5%). The majority of respondents were female (41%), Omani nationals (89.5%), and have been employed with their bank for one to five years (43.5%); while 24.3% have been employed by their bank for six to 10 years.

5.2. Descriptive statistics

With an overall mean score of 3.73 for the construct “perceived internal marketing mix implementation”, respondents indicated that internal marketing as a strategy is only partially implemented in retail banks in Oman. In addition, employees’ responses to their perceived ability to deliver service quality reflected an overall mean score of 4.53. This clearly reflects employees’ perceptions that they are capable of delivering service quality to the bank’s customer base. Lastly, how employees perceive themselves as capable of ensuring customer satisfaction secured a mean score of 4.17. This implies that most employees participating in the study believe that they are capable of satisfying the needs of customers.

Extra research was conducted outside of the study scope to determine the employee perception relative to customer perception. Customer perception of employees’ perceived ability to deliver service quality and customer satisfaction was also obtained.

Previous studies (Al-Ababneh, 2016; Alexiadou et al., 2017; Anaza, 2010; Dedeoğlu & Demirer, 2015; Ekinci & Dawes, 2009; Grandey, 2000; C. Hammond, personal communication, 22 February 2016; Kusluvan et al., 2010) on employee perceptions of their ability to deliver service quality and customer satisfaction show mixed results. These studies indicated that, in some instances, employees are unable to accurately assess themselves; while in other instances, perceptions are either in line with customer perception or employees degrade or overrate their ability to provide service quality and customer satisfaction. To validate whether employee perceptions are in line with customer expectations, an additional piece of research was conducted above and beyond the scope of the study to assess customer perception of service quality and customer satisfaction. A mean score of 2.87 was revealed for customer perception of service quality, meaning that customers are leaning towards disagreement that employees are empowered to serve them well. A mean score of 2.52 was obtained for customer perception of customer satisfaction, implying that customers do not agree that employees are empowered to provide customer satisfaction. Therefore, the study’s results suggest that employees have an exaggerated perception of their ability to deliver service quality and customer satisfaction, which is consistent with previous studies (Al-Ababneh, 2016; Ekinci & Dawes, 2009; Kusluvan et al., 2010). However, it should be noted that the exaggerated perception of an employee’s ability to deliver service quality and customer satisfaction could be due to various factors, such as emotional labour or personality traits (Dedeoğlu & Demirer, 2015). Moreo (2016) stated that emotional labour is experienced when employees are required to suppress their emotions, thereby creating an external appearance that is expected in the situation. This results in employees not being unbiased in their perceptions and developing a conscious belief that they have excelled their own performance. Employees may also have various understandings of service quality that are based on character traits. Individuals reflecting high levels of self-efficacy opinion can reflect excessive levels of self-confidence and exaggerate how they perform their tasks. On the other hand, employees with an external locus of control could not develop a negative perception towards their level of service delivery to customers, arguing that the service quality levels are due to factors external to themselves or their span of control (Dedeoğlu & Demirer, 2015). Numerous researchers (Chen & Peng, 2008; Davis et al., 2006; Graves et al., 2017) have challenged the trustworthiness of self-evaluation. However, the correct self-assessment of professional capabilities, specifically in the service industry, is perceived as critical to ensuring future business success (Koornneef et al., 2018). Kannaiah and Shanthi (2015) concurred, stating that it is imperative for employees to develop a clear comprehension of their gaps and empower themselves as individuals first, making it increasingly possible for them to function in a more productive manner and deliver on strategic objectives like service quality and customer satisfaction.

5.3. Measurement model assessment

With the aid of Amos 25.0, a confirmatory factor analysis (CFA) was conducted on the 62-item, 12-construct model to determine the psychometric properties of the model. The model was specified and adjusted based on modification indices calculated to improve the model fit—in this instance, the normed Chi-square (X²/df) (Jöreskog & Sörbom, 1993). The adjustments made to the model can be supported by literature, since covariances were only included between error terms of items measuring the same construct (Wang et al., 2014).

The final model displayed satisfactory fit indices: ꭙ2 = 1839,300. It is evident from Table 3 that all goodness-of-fit measures fall within the limits prescribed by Hair et al. (2014). The normed Chi-square is less than 3; the Normed Fit Index (NFI), Tucker Lewis Index (TLI), and Comparative Fit Index (CFI) are above the cut-off of 0.9; the Root Mean Square Error of Approximation (RMSEA) is less than 0.05; and the Adjusted Goodness of Fit Index (AGFI) is above the 0.8 cut-off.

Table 3. Measures for goodness-of-fit (measurement model)

DF	P	x2/df	NFI	AGFI	TLI	CFI	RMSEA
75	0.000	2,449	0.901	0.854	0.930	0.939	0.048

5.4. Reliability analysis, convergent and discriminant validity assessment

Table 4 provides insight into the factor loading, corrected item-correlations, means and standard deviations of the items used to measure the constructs of the study, as well as the Cronbach’s alpha score and average variance explained (AVE). When considering descriptive statistics for the items, it is evident that the mean scores vary between 2.17 and 4.16, and standard deviations vary between 0.81 and 1.21. This is indicative of regularity between the items measuring the constructs of the study.

Table 4. Factor loadings, means, standard deviations, p-value, Cronbach’s alpha, composite reliability, and average variance explained

Construct	Items	Factor loadings	Corrected item-total correlation	p-value	Cronbach’s alpha	CR	AVE	Final numbers of items and (initials)
EXOGENEOUS FACTORS—INTERNAL MARKETING MIX
Internal product	PRD1	0.85	0.73	0.01	0.849	0.844	0.644	3(5)
	PRD2	0.81	0.74	0.01
	PRD3	0.73	0.68	0.01
Internal price	PRI1	0.76	0.68	0.01	0.825	0.820	0.533	4(6)
	PRI2	0.67	0.64	0.01
	PRI3	0.73	0.66	0.01
	PRI5	0.76	0.62	0.01
Internal promotion	PRO1	0.68	0.54	0.01	0.698	0.691	0.529	2(4)
	PRO2	0.77	0.54	0.01
Internal people	PEO1	0.92	0.87	0.01	0.938	0.937	0.789	4(6)
	PEO2	0.87	0.83	0.01
	PEO3	0.88	0.85	0.01
	PEO4	0.88	0.85	0.01
Internal process	PRC1	0.80	0.70	0.01	0.803	0.801	0.573	3(4)
	PRC2	0.72	0.64	0.01
	PRC4	0.74	0.60	0.01
Internal physical evidence	PHY1	0.73	0.65	0.01	0.820	0.823	0.539	4(6)
	PHY3	0.72	0.60	0.01
	PHY4	0.81	0.72	0.01
	PHY5	0.67	0.60	0.01
Internal performance management	PRM1	0.71	0.66	0.01	0.885	0.884	0.605	5(6)
	PRM2	0.82	0.78	0.01
	PRM3	0.85	0.79	0.01
	PRM4	0.75	0.69	0.01
	PRM5	0.75	0.70	0.01
Internal purpose	PUR1	0.81	0.69	0.01	0.807	0.801	0.574	3(5)
	PUR2	0.70	0.64	0.01
	PUR3	0.76	0,65	0.01
Internal political power	POW1	0.95	0.87	0.01	0.933	0.934	0.875	2(5)
	POW2	0.92	0.87	0.01
Internal procurement	PCR3	0.82	0.76	0.01	0.905	0.908	0.713	4(6)
	PCR4	0.87	0.81	0.01
	PCR5	0.89	0.83	0.01
	PCR6	0.79	0.73	0.01
Construct	Items	Factor loadings	Corrected item-total correlation	p-value	Cronbach’s alpha	CR	AVE	Final numbers of items and (initials)
ENDOGENEOUS FACTORS—SERVICE QUALITY AND CUSTOMER SATISFACTION
Service quality	SQU1	0.84	0.76	0.01	0.909	0.914	0.680	5(5)
	SQU2	0.80	0.76	0.01
	SQU3	0.80	0.76	0.01
	SQU4	0.84	0,77	0.01
	SQU5	0.84	0.79	0.01
Customer satisfaction	SAT2	0.77	0.70	0.01	0.855	0.854	0.661	3(5)
	SAT4	0.87	0.78	0.01
	SAT5	0.80	0.71	0.01

The Cronbach’s alpha scores varied between 0.698 and 0.938, exceeding the cut-off value of 0.60, as stipulated by Hair et al. (2017). The composite reliability (CR) scores for all the constructs varied between 0.791 and 0.937, therefore exceeding the cut-off value of 0.7, concluding acceptable levels of reliability. The validity of the constructs used in this study’s model was assessed by investigating convergent and discriminant validity through CFA. All items held factor loading values above the 0.5 threshold, as stipulated by Hair et al. (2014), suggesting convergent validity. The AVE was calculated as an additional assessment of convergent validity, with scores for all the constructs exceeding the 0.5 threshold, thus confirming convergent validity for these scales (Hair et al., 2014).

Discriminant validity was also assessed by determining whether the constructs’ AVEs exceed the corresponding interconstruct correlations. Table 5 provides insight into the correlation and square root of AVE’s matrix, and the results show that the square root of the AVEs for all constructs are greater than their correlations with other constructs, hence confirming discriminant validity.

Table 5. Discriminant validity: Correlation and square root of AVE matrix

	POW	PRO	PEO	PRC	PCR	PRM	PRD	PRI	PUR	SQU	SAT	PHY
POW	0.936
PRO	−0.030	0.727
PEO	−0.011	0.535	0.888
PRC	0.075	0.737	0.556	0.757
PCR	0.018	0.619	0.487	0.748	0.844
PRM	0.016	0.733	0.680	0.727	0.657	0.778
PRD	0.033	0.689	0.490	0.693	0.562	0.622	0.802
PRI	0.111	0.729	0.537	0.739	0.624	0.653	0.794	0.730
PUR	−0.010	0.727	0.592	0.688	0.688	0.748	0.689	0.702	0.758
SQU	−0.128	0.490	0.319	0.366	0.335	0.476	0.185	0.191	0.455	0.825
SAT	−0.083	0.587	0.387	0.419	0.417	0.560	0.306	0.292	0.484	0.755	0.813
PHY	0.039	0.554	0.394	0.722	0.604	0.533	0.475	0.582	0.588	0.263	0.307	0.734

5.5. Structural model assessment

Once the psychometric properties of the model had been evaluated and underlying assumptions tested, it was imperative to evaluate the structural properties. As with the measurement model, the following goodness-of-fit measures were assessed, namely Chi-square, the normed Chi-square (Χ²/df), Goodness of Fit Index (GFI), AGFI, TLI, CFI, NFI, and RMSEA. The values for the Normed Fit Index (NFI), Relative Fit Index (RFI), Incremental Fit Index (IFI), Tucker Lewis Index (TLI) and Comparative Fit Index (CFI) are all above the cut-off of 0.9, and the RMSEA is below a value of 0.08 (see Table 6). It is evident from Hair et al. (2014) that, although a goodness-of-fit measure might exceed the cut-off, as is the case with the normed Chi-square (Χ²/df) in the structural model, considering the goodness-of-fit measures in combination, adequate model fit is evident.

Table 6. Measures for goodness-of-fit (structural model)

DF	P	x2/df	NFI	AGFI	TLI	CFI	RMSEA
75	0.000	2,449	0.901	0.879	0.930	0.939	0.048

The results of the structural model matched the results in the final measurement model, except for a slight variation in the AGFI. The final structural model is reflected in Figure 2. Therefore, it can be concluded that the structural model fits the data in a satisfactory manner and the hypotheses testing could be performed.

Figure 2. Structural model for conventional banking in Oman

Source: Researchers’ own construct

The results of the hypothesised relationships are reflected by Figure 2. A discussion of the outcome of the hypotheses is provided in the section that follows.

6. Discussion

The results indicate that internal promotion (β = 0.228; p = 0.01) and internal performance management (β = 0.378; p = 0.01) positively impact employees’ perceived ability to deliver service quality in conventional banking. Internal promotion illustrated the strongest regression score; thus, it is considered to be the strongest influencer of employees’ perceived ability to deliver service quality. The results also revealed that internal price has a statistically significant (β = −0.764; p = 0.01), but negative effect on employees’ perceived ability to deliver service quality in conventional banking. Internal product, internal people, internal process, internal physical evidence, internal purpose, internal political power, and internal procurement do not have a significant impact on employees’ perceived ability to deliver service quality in conventional banking (they all have a p-value larger than 0.05). The results also revealed that service quality has a significant and positive influence on customer satisfaction in conventional banking (β = 0.533; p = 0.01).

Furthermore, the findings of the study indicating that price has a significant, but negative relationship with service quality are not aligned with the theory supporting internal price, in which prior research validated internal price as an enabler of employees’ perceived ability to deliver service quality. Previous research exploring the relationship between reward and internal and external service quality shows a positive relationship between these variables, indicating that when rewards are in place, employees feel encouraged to share knowledge and serve customers well (ElSamen & Alshurideh, 2012; Susanti et al., 2015). In addition, the negative relationship between internal price and service quality is mainly due to the fact that Oman is still considered to be a developing country and reward frameworks are not as advanced as the western world, which causes a number of challenges. For example, rewards are not linked to service quality objectives and, in some instances, because KPIs are not clear and specific metrics are not in place, rewards are not clearly aligned with performance and may be perceived as being unfair (Budhwar & Mellahi, 2016; J. Chang, personal communication, 24 August 2018). Some incentives are not paid on time due to manual processes, and these time delays create feelings of distrust. As a result, employees develop negative attitudes, are not focused on service delivery, and may become careless, causing a negative customer experience.

Considering that the results showed a significant positive relationship exists between the internal promotion element and employees’ perceived ability to deliver service quality, previous studies are supported (Al-Tokhais, 2016; Longo & Narduzzo, 2017; Proctor, 2014; Quaratino & Mazzei, 2018). These studies indicated that internal communication and the channels used influence employees’ attitudes and behavioural intentions, which influence internal and external service quality. Improved communication strengthens internal relations and knowledge sharing, enabling cooperation across departments for the benefit of the collective, ultimately securing an improvement in internal service quality and external service quality. The results of the study also show that internal performance management is an enabler of service quality. Although significant and positive, the strength of the relationship between internal performance management and employees’ perceived ability to deliver service quality is considered mild. This implies that improvements are required in performance management to strengthen the impact of this element on service quality. The findings support previous studies conducted (Malhotra & Mukherjee, 2006; Umamaheswari, 2014), which proved that a positive relationship exists between performance management and internal service quality, resulting in external service quality.

Furthermore, it is noted that according to the SEM results, employees’ perceived ability to deliver service quality is related to the following two predictors in terms of conventional banking in Oman: internal price and internal promotion. Therefore, it can be argued that as improvements are made to internal price and internal promotion, service quality is enhanced and customer satisfaction is improved. The results support previous research linking service quality to customer satisfaction (Awoke, 2015; Gera, 2013; Kaura, 2013). The conclusion is that superior levels of service quality result in higher levels of customer satisfaction (Izogo & Ogba, 2015; Mohd-Shariff, 2013).

From the results, it can be seen that the selected internal marketing mix elements only partially influence employees’ ability to deliver service quality in Oman’s conventional banking industry. A reason for this can be that Oman is perceived as a frontier market with little knowledge of the internal marketing concept. At the time of conducting this study, no previous research on the topic had been conducted in Oman or in the Gulf Cooperation Council countries, since prior studies on internal marketing have been established in predominantly western markets. Considering that Oman has developed an interest in internal marketing at a later stage in the development of the field, the internal marketing mix elements are in a different stage of their life cycle compared to developed markets (Hasen, 2014; Ismail & Sheriff, 2016). Consequently, this has an influence on the aptitude of these elements to influence service quality and perceived customer satisfaction, resulting in some of the proposed hypotheses being rejected in the study, as reflected by Table 7.

Table 7. Hypotheses testing

Hypothesis	Independent variable	Dependent variable	β	Sig.	Finding
H1	Internal product	Service quality	−0.107	p > 0.05	Rejected
H2	Internal price	Service quality	−0.764	p < 0.05	Accepted
H3	Internal promotion	Service quality	1.097	p < 0.05	Accepted
H4	Internal people	Service quality	0.046	p > 0.05	Rejected
H5	Internal process	Service quality	−0.271	p > 0.05	Rejected
H6	Internal physical evidence	Service quality	0.06	p > 0.05	Rejected
H7	Internal performance management	Service quality	0.378	p < 0.05	Accepted
H8	Internal purpose	Service quality	−0.202	p > 0.05	Rejected
H9	Internal political power	Service quality	0.053	p > 0.05	Rejected
H10	Internal procurement	Service quality	0.171	p > 0.05	Rejected
H11	Service quality	Customer satisfaction	0.533	p < 0.05	Accepted

Against the background of the discussion above and the results flowing from the study as reflected in Table 7, it is noted that only four hypotheses were accepted—namely H2, H3, H7, and H11. The other seven hypotheses—H1, H4–6, and H8–10—were rejected.

7. Theoretical and practical contributions

This study contributes to theory and management practice. From a managerial perspective, the study contributes by guiding conventional banks in frontier markets in the Middle East to develop greater knowledge of how internal marketing can be used as an important strategy to strengthen service quality. Internal marketing is recognised as a strategy where employees are treated with the same level of importance as customers to achieve the internal and external service quality objectives (Mbengo & Chinakidzwa, 2014). In this study, only internal price, internal promotion, and internal performance management are considered factors that could positively influence improved service quality delivery. Therefore, in future, conventional banks in Oman will be expected to put greater emphasis on internal marketing as a strategy to improve service quality amongst employees. Most studies conducted in internal marketing have occurred in mature western markets. Currently, the internal marketing mix elements are neither performing as part of a formal programme in conventional Omani banks, nor leveraging off one another in value-adding ways. This could be the case in other frontier markets, hence a deeper understanding of internal marketing within frontier markets is required.

Theoretically, the study contributes as follows. Firstly, the findings of the study confirm that the measurement scales used to investigate the internal marketing, service quality, and customer satisfaction constructs are reliable and valid. The proposed model in the study has been corroborated, validating the relationships between the internal marketing mix elements, service quality, and customer satisfaction in a frontier Middle Eastern market context. Moreover, the study contributes to relationship marketing, social exchange, and services marketing literature by proposing valuable measurement dimensions that can be used in conventional banking, specifically within frontier markets.

Secondly, the internal marketing mix elements, as conventionally perceived in mature western markets, are not operating effectively within conventional banks in Oman. This is because Oman, as a frontier market, is a late mover in internal marketing strategy and, as a result, some of the internal marketing mix elements are in a different stage of the life cycle when compared to more mature markets. Consequently, the internal marketing mix elements still require further development in frontier markets to drive service quality and customer satisfaction. Through the study, the most important elements that influence employees’ ability to deliver service quality in Oman as a frontier market are identified—namely internal price, internal promotion, and internal performance management. Hence, the focus must be on these elements.

Thirdly, the level of service quality delivered by conventional banking employees to external customers in Oman impacts the level of customer satisfaction experienced by customers. Theory supporting the positive relationship between service quality and customer satisfaction as hypothesised in the study was found to be relevant to conventional banking in the Middle East (Izogo & Ogba, 2015). Understanding what drives service quality, and in turn customer satisfaction, is a key area of exploration in frontier markets. Thus, the findings of this research contribute to the growing body of literature on service quality and customer satisfaction within frontier markets, specifically within the Middle East. The study can guide conventional banks in frontier and Middle Eastern markets on how to improve their competitive advantage through an internal marketing approach that centres on satisfying and empowering employees to secure enhanced service quality and customer satisfaction levels.

8. Managerial implications

Considering the results of the study, it is clear that increased internal marketing education is required in conventional banking in Oman. Currently, internal marketing is not applied as a strategy that is part of a formal programme in the country, nor do its elements leverage off one another in value-adding ways. As a result, the researchers have identified the following broad guidelines that conventional bank management in Oman could consider to improve employee service quality levels and customer satisfaction.

8.1. Guideline 1: Strengthening service quality through internal price as an internal marketing element

Given the collectivist nature of Oman’s market and the objectives of an internal market-orientated culture, specifically regarding the sharing of knowledge, a balance between individual and team rewards should be maintained. Previous findings on team versus individual rewards show that team-based evaluation and reward systems perform much better compared to individual-based rewards for a large number of team situations (Chan et al., 2014; Ladley et al., 2015). Individual performance also improves as a result of team performance (Ladley et al., 2015). Banks could provide team KPIs and visible team metrics to stimulate greater team performance. Rewarding employees for collective behaviour and showing care for employees can enhance group-level social capital. This boosts employees’ satisfaction and gets employees to work together, solve unique problems, and share information (Reynolds-De Bruin, 2014). Therefore, it is important for banks to further investigate how the right balance of team and individual rewards can be achieved to improve overall organisational performance.

In addition, Schlechter et al. (2015) stated that non-financial rewards should become an integral part of employees’ job offerings to ensure the future recruitment and current retention of talented employees. Neuroscience has established that acknowledgement has the most influence on trust when it occurs immediately after a goal has been met, when it comes from peers, and when it is public. Public recognition through monthly or quarterly award ceremonies not only uses the power of the crowd to celebrate success, but also inspires others to aim for excellence (Zak, 2017). The recognition of top performers in weekly or monthly meetings becomes key. A wall or noticeboard could be used in the office in which employees and management can thank employees for a job well done. The chief executive office could send out a personal thank-you card to employees who have gone above and beyond to serve customers well. Moreover, by providing family-friendly practices, such as onsite childcare, companies cater for some of the social challenges experienced and communicate to employees that they and their families are cared for.

8.2. Guideline 2: Strengthening service quality through internal promotion as an internal marketing element

Induction or orientation is a company-specific programme that focuses on assisting new employees to the job to settle into their roles quicker and become productive as soon as possible (Foot & Hook, 2011). Induction is used to connect new employees (hearts and minds) to their organisation. Within the induction programme, the purpose, vision and values should be clearly communicated to employees, and information needs to be provided about the organisation, their department, dress code, and any other pertinent details. The induction programme directly influences the quality of customer service, as it has been proved that only well-inducted newcomers are able to provide superior customer service (Thao, 2015). It is also important that the employee is orientated into the organisation through a formal orientation programme. A buddy system works well, where a colleague may be selected to team up with the new person to provide basic information, answer questions, and take the new employee on a guided tour. In this way, employees are formally introduced to their co-workers and immediately engaged in the organisation’s culture and customs, which helps facilitate their transition (Thao, 2015).

Furthermore, social platforms like Facebook for Work and Yammer enable the establishment of social communities and communities of practice in which employees across the entire organisation can be linked. Since the branches often feel disconnected from the rest of the organisation, social platforms provide the means to connect people, share success stories, be encouraging, and share knowledge across the bank (L. Atassi, personal communication, 4 November 2018). However, it is important to note that prior to deploying these networks, a policy is developed that clearly defines the purpose of the social network. Additionally, analytical tools should be implemented to monitor and analyse qualitative and quantitative data obtained from activities pertaining to the social network. Guidance on appropriate conversations and the facilitation of meaningful collaboration can be established through a feedback mechanism to ensure that the retail bank’s objectives have been met.

“Advergames” is another medium in which Omani retail banks can communicate with employees regarding new products and services. This is a digital game created for the brand with the aim of conveying internal advertising messages. Advergames secures greater social interaction within the organisation, allowing employees to compete, collaborate or connect through this online platform (De la Hera Conde-pumpido, 2014). These advertisements create awareness for employees, thus the messages communicated must be clear, as employees need to communicate the promises made in the advergames to customers.

8.3. Guideline 3: Strengthening service quality through internal performance management as an internal marketing element

An annual performance appraisal is not enough. A monthly performance feedback session should be set up between employees and their direct supervisors or managers. In this session, the employees’ performance relative to the achievement of their KPIs should be reflected on. Employees should provide a self-assessment in terms of what they feel they are and are not doing well, and communicate where they require support. The direct manager may provide his/her assessment of the employee’s performance and together they discuss how improvements can be made and reinforce the accountability of the employee in this regard. Managers may also provide positive feedback and recognition, and encourage employees where necessary. Personal development and career development plans can be reflected on and updated, and managers can reinforce the importance of the employee’s job in relation to the broader organisational objectives. When monthly feedback is provided, employees have an understanding of how they are performing throughout the year, which motivates them to maximise their chances of earning positive feedback by delivering service excellence and customer satisfaction (Tricomi & DePasque, 2016).

Moreover, as part of creating an internal market-orientated culture, it is essential that banks focus on quality management systems grounded on process, procedures, and responsibility for achieving the desired outcomes. This element has strong ties with the mix’s internal process element. Only through the application of the process and assignment of responsibility can positive outcomes, such as superior service quality and customer satisfaction, be affected. Quality management systems, such as Total Quality Management and Lean Management, suggest that the first step is to understand internal and external customer needs and requirements, which can be facilitated through “voice of customer” sessions. Once the customers’ needs have been identified, they must be translated into “critical to quality” measures, such as turnaround times, error rates, and carry-overs. These measures must then be displayed visually and openly within the workplace and updated daily for employees and management to see. In this way, nothing is hidden and all employees are aware of key performance measures. Furthermore, each team should conduct a daily production meeting that takes place around their team’s visual board, where the metrics are updated and employees discuss what is going well, what is not going well, and how they can solve the problems as a team. Thus, continuous improvement can be achieved and service quality improved on an ongoing basis, resulting in more positive customer experiences.

8.4. Guideline 4: Strengthening customer service through improved service quality

Employees’ needs are more successfully satisfied when they are provided with the required training to enhance their skills and overall performance. In addition, their performance is enhanced when they are empowered to map their careers more successfully, when open communication channels are secured to strengthen engagement at all levels, when internal relationship building is improved, and when an organisational culture is developed that successfully instils a sense of purpose amongst employees. Through this approach, commercial banks will be able to secure increased levels of assurance, reliability, responsiveness and empathy amongst their employees, resulting in higher levels of customer satisfaction.

9. Conclusion

The aim of this study was to determine the interrelationships between internal marketing and employees’ perceived ability to deliver service quality and customer satisfaction to conventional retail banking customers. It was established that conventional banking customer-facing employees are enabled through the internal price, internal promotion, and internal performance management elements. The study provides direction to the management of conventional banks in Oman on how to apply the internal marketing mix as a strategy to enhance internal service quality, thereby delivering on external customer satisfaction with greater success. To improve service quality, it is recommended that a stronger emphasis be placed on internal promotion through increased internal communication around the vison and objectives of the bank; more focus is needed on reducing the psychological costs of working for the bank, impacting internal price and visual performance metrics; and regular feedback is required to enhance internal performance management. When enhanced service quality levels are achieved, customers experience greater levels of customer satisfaction. An understanding of the above will assist conventional banks in Oman, and potentially conventional banks in other frontier markets, to create superior service experiences that benefit employees as internal customers and the external customer segments of the bank.

The study is limited, considering that internal marketing, service quality, and customer satisfaction were only explored from a conventional banking perspective in Oman. Future studies could explore these constructs in different financial enterprises or service industries within the Middle Eastern region and beyond. In addition, the inclusion of new internal marketing Ps could be considered to explore their influence on service quality or perceived value and employee turnover intention in a conventional or Islamic banking environment.

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Leigh de Bruin

Dr Leigh de Bruin is a managing partner at Palmyra Business Consulting, a management consulting company based in Oman. She holds a PhD in Marketing Management from the University of Johannesburg in South Africa.

Mornay Roberts-Lombard

Mornay Roberts-Lombard is a professor in the Department of Marketing Management at the University of Johannesburg in South Africa. His areas of specialisation are relationship marketing and customer relationship management. Prof. Roberts-Lombard has published numerous articles in international and South African journals, and delivered conference papers at various international platforms in his fields of expertise.

Christine de Meyer-Heydenrych

Christine de Meyer-Heydenrych is an associate professor in the Department of Marketing Management at the University of Johannesburg. She has 16 years of experience in academia and specialises in services marketing and retailing. Prof. De Meyer-Heydenrych has published 20 articles in local and international journals, including the prestigious Journal of Services Marketing.