Customer Loyalty and Service Quality in Telecoms Research

The Telecoms Industry: Service Quality and Customer Loyalty

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 surveyed 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 concluded that customer satisfaction and service quality do make a substantial difference in determining whether customers will be retained.

Kim, Park, and Jeong (2004) examined how a Korean telecommunications company focused on retaining customers in their article "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 service determined customer satisfaction most strongly. Cost — the 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, those customers would feel more loyal to the company and would not switch even if a competitor offered better incentives. This study showed that building a relationship with customers can help improve customer loyalty.

Khatibi, Ismail, and Thyagarajan (2002), in their article "What drives customer loyalty: An analysis from the telecommunications industry," examined the main telecoms provider in Malaysia — the Digital Line II Service offered by Telekom Malaysia Berhad (TMB). They used the SERVQUAL tools advocated by Parasuraman et al. to measure 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). They also arrived at conclusions regarding SERVQUAL's reliability in three specific areas: 1) having a fault-reporting center, 2) response time, and 3) restoration time. Each of these three elements affected customer satisfaction. Customers who waited longer before service was restored, for instance, had less inclination to remain loyal to the company. The study's findings contradict earlier research suggesting that there was no significant relationship between customer satisfaction and customer loyalty. Khatibi et al. (2002) showed the contrary — that in the Malaysian telecoms industry there is a direct link between customer satisfaction and customer loyalty. The reason is that customers want fast, stable, and responsive telecoms services, and if a company cannot provide such reliability, customers will look elsewhere.

Lee's (2013) article "Major moderators influencing the relationships of service quality, customer satisfaction and customer loyalty" examines how these three variables interact in the telecoms industry. The researcher used reliability analysis, factor analysis, and hierarchical regression analysis and found that service quality impacted customer satisfaction, which in turn impacted customer loyalty. In other words, if the telecoms operator delivers quality service, the customer is likely to be satisfied and loyal. 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 notes 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 researchers is whether service quality is an antecedent to customer satisfaction.

Lee's hypotheses were that 1) "service quality has a positive and significant influence on customer satisfaction," 2) "service quality positively and significantly influences customer loyalty," and 3) "customer satisfaction has a positive and significant influence on customer loyalty" (p. 3). His measures found all three hypotheses to be correct, based on perceived value, perceived price, and perceived switching cost. He defined the construct of service quality as "the customer's overall perceived assessment of service performance" (Lee, 2013, p. 4), measured using a seven-point scale assessing overall service quality, along with measures for superior or inferior quality and low versus high standards (p. 4). 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 "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 of describing "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 that expectations exceeded perceptions and that customers were not satisfied with their service. The study did not address, however, whether these findings impacted customers' loyalty to any one company. If quality was poor across the board, customers would have little reason to switch to another firm.

Switching Barriers, Relationship Quality, and Loyalty

In the study "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 whether 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)," examined factors influencing customer loyalty in Ghana using Vodafone as their frame of reference. The researchers used a slightly modified version of SERVQUAL as the analytical framework and performed regression analysis to interpret the data. They found that customer satisfaction is influenced by service quality, but also found no significant relationship between customer satisfaction and customer loyalty. This result is likely because Vodafone is the dominant telecoms supplier in Ghana and customers have few alternative options — they must largely accept service regardless of their level of satisfaction.

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.

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.

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.

Lee, H. S. (2013). Major moderators influencing the relationships of service quality, customer satisfaction and customer loyalty. Asian Social Science, 9(2), 1.

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.

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.

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.

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.