Customer Service in the Telecoms Industry

The Telecoms Industry
In the study by Lai, Griffin and Babin (2009) entitled “How quality, value, image, and satisfaction create loyalty at a Chinese telecom,” the researchers used an integrative model to assess the relationship between multiple variables related to consumers’ experience of telecoms in China. The researchers conducted a survey of 118 Chinese telecommunications customers and found that service quality has a direct impact on value perception. Value and customer satisfaction, moreover, were found to determine the extent to which the customer would be loyal to the firm. Corporate image perceptions were also found to impact customer satisfaction. The researchers were able to conclude that customer satisfaction and service quality do make a substantial difference in determining whether customers will be retained or not.
Kim, Park and Jeong (2004) examined how a Korean telecommunications company focused on retaining customers in their article entitled “The effects of customer satisfaction and switching barrier on customer loyalty in Korean mobile telecommunication services.” The researchers found that customer satisfaction played the most significant part in determining customer loyalty. Factors that had a significant impact on customer satisfaction were call quality, value-added services, and customer support. Service quality and customer services determined customer satisfaction the most. Cost (price of services) was the primary reason for switching to a new carrier, however. If one carrier offered the same services at a lower cost, customers were more likely to switch. However, if a telecoms operator developed an interpersonal relationship with customers, customers would feel more loyal to the company and would not switch even if the other company offered better incentives. This study showed that building a relationship with customers can help to improve customer loyalty.
Khatibi, Ismail and Thyagarajan (2002) in their article entitled “What drives customer loyalty: An analysis from the telecommunications industry” look at the main telecoms provider in Malaysia, Digital line II Service offered by Telekom Malaysia Berhad (TMB). They use the SERVQUAL tools advocated by Parasuraman et al. to measure the service quality and satisfaction in the Digital line II Service. The researchers found a “significant relationship between customer satisfaction and the implementation of service quality” (Khatibi et al., 2002, p. 34). The researchers also arrived at conclusions regarding SERVQUAL: they concluded that it is reliable in three ways—1) when it comes to having a fault-reporting center, 2) when it comes to response time, and 3) when it comes to restoration time. Each of these three elements affected customer satisfaction. Customers who were left waiting longer before service was restored, for instance, had less inclination to be loyal to the company. The study’s findings contradict earlier research on the topic of the relationship between customer satisfaction and customer loyalty, which suggested that there was no significant relationship. Khatibi et al. (2002) showed the contrary—i.e., that in the telecoms industry in Malaysia there is a direct link between customer satisfaction and customer loyalty. The reason for this is that customers want fast, stable, and responsive telecoms services—and if a company cannot provide such reliability, customers will look elsewhere for it.
Lee’s (2013) article “Major moderators influencing the relationships of service quality, customer satisfaction and customer loyalty” looks at how service quality, customer satisfaction and customer loyalty go together in the telecoms industry. The researcher used reliability analysis, factor analysis, and hierarchical regression analysis and found that service quality impacted customer satisfaction which impacted customer loyalty. In other words, if the telecoms operator is able to deliver quality service, the customer is going to be satisfied and loyal to the company. Lee discusses the five dimensions of SERVQUAL introduced by Parasuraman et al (1988)—reliability, responsiveness, assurance, empathy, and tangibles—and shows that the Parasuraman model was confirmed in later research. However, Lee (2013) also points out that Cronin and Taylor (1992) and Teas (1993) “argued that performance measures as perceived quality is superior to the ‘perceptions-minus-expectations’ measures” (p. 2). The question that remains for some is whether service quality is an antecedent to customer satisfaction. The hypotheses of Lee were that 1) “Service quality has a positive and significant influence on customer satisfaction” and that 2) “Service quality positively and significantly influences customer loyalty” and that 3) “Customer satisfaction has a positive and significant influence on customer loyalty” (p. 3). Lee’s (2013) measures found that all three hypotheses were correct by looking at perceived value, perceived price and perceived switching cost. He then measured constructs starting with Service quality, which was defined as “the customer’s overall perceived assessment of service performance” (Lee, 2013, p. 4). This construct was measured by looking at “Overall service quality of this provider” using a seven-point scale to assess it, along with measures for superior or inferior quality and low vs. high standards (p. 4). The construct for customer satisfaction was defined as “a customer’s positive feeling about a service provider and the overall evaluation of the consumption experience” (p. 4) and customer loyalty was defined as “a service provider’s ability to maintain its customers’ loyalty and persuade them to recommend its services to potential customers” (p. 4).
Angelova and Zekiri (2011) applied the American Customer Satisfaction Model (ACSI Model) in their study entitled “Measuring customer satisfaction with service quality using American Customer Satisfaction Model (ACSI Model).” The researchers applied the model to the Macedonian telecoms industry with the purpose being to “describe how customers perceive service quality and whether they are satisfied with services offered by T-Mobile, ONE, and VIP (three mobile telecom players)” (Angelova & Zekiri, 2011, p. 232). The researchers found the expectations exceeded perceptions and that customers were not satisfied with their service. The study did not mention, however, whether these findings impacted the customers’ loyalty to any one company. If quality was bad across the board, customers would have little reason to change anyway to another firm.
In the study entitled “The effects of relationship quality and switching barriers on customer loyalty” by Liu, Guo and Lee (2011), the researchers focused on switching barriers and relationship quality to determine if these factors had an impact on customer loyalty. The researchers surveyed 311 participants and used Structural equation modeling to analyze the data. They found that “Satisfaction, trust, and switching barriers have positive effects on loyalty” (p. 71). They also observed that “playfulness and service quality impact satisfaction while service quality and intimacy affect trust” (Liu et al., 2011, p. 71).
Boohene and Agyapong (2011) in their study “Analysis of the antecedents of customer loyalty of telecommunication industry in Ghana: The case of Vodafone (Ghana)” looked at what factors influence customer loyalty in Ghana and the used the firm Vodafone specifically for a frame of reference. The researchers used a slightly modified version of the SERVQUAL as the framework for analyzing the data and they performed regression analysis to interpret the data. They found that customer satisfaction is influenced by service quality, but they also found that there was no relationship between customer satisfaction and customer loyalty. This is likely because Vodafone is the major telecoms supplier in Ghana and customers do not have many alternative options other than to accept service that they may not be satisfied with.
Other Industries
In the study by Sadeh, Mousavi, Garkaz and Sadeh (2011) entitled “the structural model of e-service quality, e-customer satisfaction, trust, customer perceived value and e-loyalty,” the researchers looked at the e-retailing industry to determine if there was a relationship between e-service quality, e-customer satisfaction, trust, customer perceived value and e-loyalty. They DEMATEL analysis to conduct the measurements and surveyed 30 experts from the industry to obtain the data on e-retailing in Iran. They found that the major factors impacting loyalty are privacy, fulfillment and Efficiency, in other words service quality.
In the study by Chu, Lee and Chao (2012) entitled “Service quality, customer satisfaction, customer trust, and loyalty in an e-banking context,” the researchers looked at the relationship between service quality, customer satisfaction, trust and loyalty in the banking industry, particularly with respect to banking online. The researchers surveyed 422 participants and found that service quality does impact customer satisfaction, trust and loyalty. Unless banks provide quality service online there is nothing preventing customers from changing banks—especially since there are a number of competitors in the field who can compete in terms of service quality. The more banks there are that can offer better service, the less likely customers are going to feel that they are stuck accepting inadequate or unsatisfactory service from any one bank in particular when there are others they can go to.
Van Vuuren, Roberts-Lombard and Van Tonder (2012) in their study entitled
“Customer satisfaction, trust and commitment as predictors of customer loyalty within an optometric practice environment,” showed that there are other factors that determine customer loyalty in the optometric industry in South Africa aside from customer satisfaction. They surveyed 357 patients and found that customer satisfaction did correlate most strongly with customer loyalty with a particular optometric company but they also found that it was not the only significant factor. Other factors that impacted customer loyalty included trust and commitment on the part of the optometric practice. If the customer found the business to be less than trustworthy or felt that the business was not committed to the customer’s needs, the customer was more likely to switch to a different practice to try to have his needs met. This study showed that in the case of the optometric industry, customers may be satisfied with service when defined in a narrow way, but when issues of trust and customer-oriented service (i.e., commitment) are factored into the situation customers’ views change substantially. Thus, it could be argued that customers are changing because the service is not up to the high quality that they expect and their perception of service alters their view of the company. Because of these subtle distinctions in terms of how service is defined and the variables that are used to construct the definition of service, there is a need for a better understanding of what is precisely being measured and why.
Controversy Among Scholars
The researchers are all in agreement among the variables that are interrelated in terms of customer service, customer satisfaction, customer loyalty and trust. All of the studies showed a link between service quality, customer satisfaction and customer loyalty except the study by Boohene and Agyapong (2011) and their study can be considered an outlier given the nation (Ghana) and the fact that Vodafone is the major telecoms operator there. In countries where there is some choice, the relationship between the three variables is stronger. This contrasts sharply with the findings in the study by Chu et al. (2012), which showed that in the banking industry, for example, where there are numerous competitors in the industry that can compete in terms of service quality customers have more options and are more likely to base their customer loyalty decisions on service factors since there are no major obstacles to switching services. In a country where options are limited like in Ghana, service may be poor and satisfaction may be poor but customer loyalty is not going to be affected because building out a telecoms infrastructure requires a great deal of capital and few companies can enter into the industry to compete; in other words, the high barrier to entry works in Vodafone’s favor in that case.
Some studies defined customer service more precisely than others and other studies focused on extra variables to show that they could also be considered as factors in a decision to switch to a different provider—such as cost (price of service) and whether or not there were additional options. The main controversy in the past has been about whether customer satisfaction actually predicts customer loyalty or if there is merely an expectation and a perception.
References
Angelova, B., & Zekiri, J. (2011). Measuring customer satisfaction with service quality using American Customer Satisfaction Model (ACSI Model). International journal of academic research in business and social sciences, 1(3), 232. Retrieved from http://hrmars.com/admin/pics/381.pdf
Boohene, R., & Agyapong, G. K. (2011). Analysis of the antecedents of customer loyalty of telecommunication industry in Ghana: The case of Vodafone (Ghana). International Business Research, 4(1), 229-240. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.662.3208&rep=rep1&type=pdf
Chu, P. Y., Lee, G. Y., & Chao, Y. (2012). Service quality, customer satisfaction, customer trust, and loyalty in an e-banking context. Social Behavior and Personality: an international journal, 40(8), 1271-1283.
Lai, F., Griffin, M., & Babin, B. J. (2009). How quality, value, image, and satisfaction create loyalty at a Chinese telecom. Journal of business research, 62(10), 980-986. Retrieved from shorturl.at/BMTY7
Lee, H. S. (2013). Major moderators influencing the relationships of service quality, customer satisfaction and customer loyalty. Asian Social Science, 9(2), 1. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.428.6730&rep=rep1&type=pdf
Liu, C. T., Guo, Y. M., & Lee, C. H. (2011). The effects of relationship quality and switching barriers on customer loyalty. International Journal of Information Management, 31(1), 71-79.
Khatibi, A. A., Ismail, H., & Thyagarajan, V. (2002). What drives customer loyalty: An analysis from the telecommunications industry. Journal of Targeting, Measurement and Analysis for Marketing, 11(1), 34-44. Retrieved from https://link.springer.com/content/pdf/10.1057/palgrave.jt.5740065.pdf
Kim, M. K., Park, M. C., & Jeong, D. H. (2004). The effects of customer satisfaction and switching barrier on customer loyalty in Korean mobile telecommunication services. Telecommunications policy, 28(2), 145-159. Retrieved from shorturl.at/imDEX
Sadeh, E., Mousavi, L., Garkaz, M., & Sadeh, S. (2011). The structural model of e-service quality, e-customer satisfaction, trust, customer perceived value and e-loyalty. Australian Journal of Basic and Applied Sciences, 5(3), 532-538. Retrieved from https://pdfs.semanticscholar.org/4b10/75566909c85ad0bffde26080021aa7c299ad.pdf
Van Vuuren, T., Roberts-Lombard, M., & Van Tonder, E. (2012). Customer satisfaction, trust and commitment as predictors of customer loyalty within an optometric practice environment. Southern African Business Review, 16(3), 81-96.