Factors driving student satisfaction and loyalty in Australian universities : the importance of institutional image

This paper outlines the findings of a study employing a Partial Least Squares (PLS) structural equation methodology to test a customer satisfaction model of the drivers of student satisfaction and loyalty in higher education settings. Drawing upon a moderately large sample of students enrolled in four ‘types’ of Australian universities, the findings suggest that student loyalty is predicted by student satisfaction, which is in turn predicted by the perceived image of the host university. While the perceived quality of "humanware" (e.g. people and process) and "hardware" (e.g. infrastructure and tangible service elements) has an impact on perceived value, this was found to be weak and indeterminate. Of most importance was the impact of the institution’s institutional image, which strongly predicted perceived value, and to a lesser extent student satisfaction. The findings have implications for newer, less prestigious universities seeking to compete in a more deregulated, market driven environment.